ZAPME! CORPORATION EXHIBIT 10.1
FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Fourth Amended and Restated Investors' Rights Agreement (this
"Agreement") is dated as of August 4, 1999 by and among ZapMe! Corporation (the
"Company"), and the individuals and entities set forth on EXHIBIT A hereto
(individually an "Investor" and collectively, the "Investors").
RECITALS
WHEREAS, certain of the Investors (the "Prior Holders") and the Company
are parties to that certain Third Amended and Restated Investors' Rights
Agreement dated as of March 31, 1999 (the "Prior Agreement"), and were granted
pursuant thereto certain rights regarding, among other things, financial
information, Company Board Meeting visitation, registration of the Company's
securities under the Securities Act and Company records inspection
(collectively, the "Rights");
WHEREAS, pursuant to Section 3.4 of the Prior Agreement, the Majority
Holders (as defined in the Prior Agreement) may, with the written consent of the
Company, amend or waive on behalf of all Holders any provision of the Prior
Agreement so long as the effect thereof will not be adverse to the relative
rights of a particular class of Holders (as defined in the Prior Agreement) or
amend or waive certain rights of Ares or the Ares Affiliates (each as defined in
the Prior Agreement);
WHEREAS, the Investors set forth on Exhibit A under the caption "New
Investors" (the "New Investors") in connection with their proposal to purchase
shares of the Company's Series E Preferred Stock pursuant to that certain Series
E Preferred Stock Purchase Agreement dated of even date herewith (the "Purchase
Agreement"), desire to obtain the types of Rights referenced above;
WHEREAS, the Company and the Prior Holders, to induce the New Investors
to purchase the Series E Preferred Stock pursuant to the Purchase Agreement,
desire to grant the New Investors the types of Rights referenced above and to
amend and restate the Prior Rights Agreement as provided herein;
WHEREAS, the Company has entered into an agreement with Pacesetter
Capital Corporation ("Pacesetter") dated December 11, 1998 (the "Pacesetter
Agreement") whereby Pacesetter has arranged, and may in the future arrange,
lease or other specific equipment financing for the Company (collectively, the
"Lease Transactions") with various lessors (the "Lessors");
WHEREAS, the Lease Transactions arranged pursuant to the Pacesetter
Agreement require the Company to issue certain warrants (the "Warrants") to the
Lessors which may be issued to or transferred in full or in part to Pacesetter;
WHEREAS, the terms of the Warrants provide that the securities issuable
upon exercise of the Warrants (the "Warrant Securities") shall have registration
rights;
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereby agree as follows:
1. RESTRICTIONS ON TRANSFERABILITY OF
SECURITIES; REGISTRATION RIGHTS.
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following
terms shall have the meanings set forth below:
(a) "Ares Affiliate" shall mean (i) Ares Leveraged Investment
Fund, L.P., Ares Leveraged Investment Fund II, L.P. and ZM Co-Investments LLC
(collectively, "Ares"); (ii) any affiliate of Ares (provided that any other
person whose investment activities are managed or advised under contract by
either Ares or another person who manages or advises the investment
activities of Ares (a "Manager") or an affiliate of a Manager shall be deemed
to be an affiliate of such holder for purposes of this clause ); provided
that such person shall only be an Ares Affiliate for so long as such person
is an affiliate of Ares or a person the investment or management activities
of which are managed or advised by any of the foregoing; (iii) in the event
of the dissolution, liquidation or winding up of Ares or other Ares Affiliate
that is a corporation or a partnership, the stockholders of any such
corporation or the partners of any such partnership, all of the stockholders
which in the case of a corporation or all of the partners of which in the
case of a partnership are the persons who were the stockholders of any such
corporation or the partners of any such partnership immediately prior to the
dissolution, liquidation or winding up of such person; or (iv) a trust
transferee established to hold Restricted Securities for the benefit of Ares
or by an affiliate of Ares.
(b) "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
(c) "Common Stock" means the Company's Common Stock, par value
$0.01 per share.
(d) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(e) "Holder" shall mean each Investor which holds Registrable
Securities and any assignee or successor thereof which has been transferred
Registrable Securities and the rights hereunder in accordance with the
provisions hereof.
(f) "Initiating Holders" shall mean the Investors who, in the
case of a demand registration under Section 1.4, are in the aggregate Holders
of not less than twenty-five percent (25%) of the outstanding Series C
Registrable Securities and Series D Registrable Securities then held by the
Holders of Series C Registrable Securities and Series D Registrable
Securities; PROVIDED, HOWEVER, that whether or not they are Holders of not
less than twenty-five percent (25%) of the outstanding Series C Registrable
Securities and Securities Series D Registrable Securities then held by the
Holders of Series C Registrable Securities and Series D Registrable
Securities, (i) one (1) of
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the three demand registrations available under Section 1.4 may only be
exercised by one or more Ares Affiliates for as long as the Ares Affiliates
are Holders of not less than 15% of the Series D Registrable Securities
originally issued to them on March 31, 1999 and May 28, 1999 (as if the
Series D Preferred Stock converted into Common Stock and subject to
subsequent adjustment for stock splits, stock dividends, reverse stock
splits, recapitalizations and the like) and (ii) one (1) of the three demand
registrations available under Section 1.4 may only be exercised by one or
more Holders of Series C Registrable Securities who are, in the aggregate,
Holders of not less than fifty percent (50%) of the outstanding Series C
Registrable Securities then held by the Holders of Series C Registrable
Securities for as long as the Holders of Series C Registrable Securities are
Holders of not less than 15% of the Series C Registrable Securities
originally issued to them on August 27, 1998 (as if the Series C Preferred
Stock converted into Common Stock and subject to subsequent adjustment for
stock splits, stock dividends, reverse stock splits, recapitalizations and
the like).
(g) "Investors" and "Investor" are defined in the preamble and
shall include any transferee of Restricted Securities in a transfer permitted
hereunder.
(h) "Majority Holders" shall mean the Investor or Investors
who in the aggregate hold (or are deemed to hold) EACH OF (i) greater than
fifty percent (50%) of the Series C Registrable Securities, (ii) greater than
fifty percent (50%) of the Series D Registrable Securities and (iii) greater
than fifty percent (50%) of the Series E Registrable Securities.
(i) "Registrable Securities" shall mean (i) the Xxxxxxx Note
Shares, (ii) the Series C Registrable Securities, (iii) the Series D
Registrable Securities, (iv) the Series E Registrable Securities, (v) only
for purposes of all registrations pursuant to Section 1.5 following the first
registration thereunder and all registrations on Form S-3 under Section 1.7,
the Xxxxxxx Warrant Shares, (vi) all shares of Common Stock of the Company
now or hereafter held by Pacesetter, Leasing Technologies International, Inc.
("LTI"), Imperial Bank, or any of the Lessors, including, without limitation,
the shares of Common Stock issued or issuable upon conversion of the shares
of Series D Preferred Stock now or hereafter held by any Lessor (including
the Series D Preferred Stock or other securities issued or issuable upon
exercise of the warrants to purchase Series D Preferred Stock held by any
Lessor) or any shares of Common Stock otherwise issuable under warrants held
by any Lessor, and (vii) any Common Stock issued as a dividend or other
distribution with respect to or in exchange for or in replacement of the
shares referenced in (i)-(vi) above, provided, however, that Registrable
Securities shall not include shares of Common Stock which have previously
been registered or which have been sold to the public either pursuant to a
registration statement or Rule 144, or which have been sold in a private
transaction in which the transferor's rights under this Agreement are not
assigned.
(j) The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness
of such registration statement.
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(k) "Registration Expenses" shall mean all expenses incurred
in effecting any registration pursuant to this Agreement, including, without
limitation, all registration, qualification, and filing fees, printing
expenses, escrow fees, reasonable fees and disbursements of counsel,
including one counsel for all Holders participating in such registration,
blue sky fees and expenses, and expenses of any regular or special audits
incident to or required by any such registration, but shall not include
Selling Expenses.
(l) "Restated Articles" shall mean the Amended and Restated
Articles of Incorporation of the Company.
(m) "Restricted Securities" shall mean the Registrable
Securities, shares of Series C Preferred Stock, shares of Series D Preferred
Stock, shares of Series E Preferred Stock and the Xxxxxxx Warrant.
(n) "Rule 144" shall mean Rule 144 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from time to
time, or any similar successor Rule that may be promulgated by the Commission.
(o) "Rule 145" shall mean Rule 145 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from time to
time, or any similar successor Rule that may be promulgated by the Commission.
(p) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(q) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities.
(r) "Series C Registrable Securities" shall mean (i) the
shares of Common Stock issued upon conversion or issuable assuming the
conversion of the Company's Series C Preferred Stock and any additional
shares of Common Stock issued to the holders of the Company's Series C
Preferred Stock pursuant to Section 5(b) of Article V(B) of the Restated
Articles and (ii) any other shares of capital stock of the Company issued in
exchange for any such shares of Common Stock or other shares of capital stock
of the Company referred to in this clause (ii) upon a reclassification,
merger or other transaction involving the exchange of equity interests in the
Company for Common Stock or other shares of capital stock of the Company
referred to in this clause (ii) or issued as a distribution thereon.
(s) "Series D Registrable Securities" shall mean (i) the
shares of Common Stock issued upon conversion or issuable assuming the
conversion of the Company's Series D Preferred Stock and any additional
shares of Common Stock issued to the holders of the Company's Series D
Preferred Stock pursuant to Section 5(b) of Article V(B) of the Restated
Articles and (ii) any other shares of capital stock of the Company issued in
exchange for any such shares of Common Stock or other shares of capital stock
of the Company referred to in this clause (ii) upon a reclassification,
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merger or other transaction involving the exchange of equity interests in the
Company for Common Stock or other shares of capital stock of the Company
referred to in this clause (ii) or issued as a distribution thereon.
(t) "Series E Registrable Securities " shall mean (i) the
shares of Common Stock issued upon conversion or issuable assuming the
conversion of the Company's Series E Preferred Stock and (ii) any other
shares of capital stock of the Company issued in exchange for any such shares
of Common Stock or other shares of capital stock of the Company referred to
in this clause (ii) upon a reclassification, merger or other transaction
involving the exchange of equity interests in the Company for Common Stock or
other shares of capital stock of the Company referred to in this clause (ii)
or issued as a distribution thereon.
(u) "Xxxxxxx Note Shares" shall mean the shares of Common
Stock issuable directly or indirectly upon conversion of the note issued to
Xxxxxxx Capital Partners, Ltd. pursuant to the Xxxxxxx Purchase Agreement.
(v) "Xxxxxxx Purchase Agreement" shall mean that certain
Convertible Note and Warrant Purchase Agreement dated May 7, 1998 pursuant to
which a note and warrant were issued by the Company to Xxxxxxx Capital
Partners, Ltd.
(w) "Xxxxxxx Warrant" shall mean that certain warrant issued
to Xxxxxxx Capital Partners, Ltd. pursuant to the Xxxxxxx Purchase Agreement.
(x) "Xxxxxxx Warrant Shares" shall mean the shares of Common
Stock issuable directly or indirectly upon exercise of the Xxxxxxx Warrant.
1.2 RESTRICTIONS ON TRANSFER.
(a) Each Investor agrees not to make any disposition of all or
any portion of the Restricted Securities held by such Investor unless and
until the transferee has agreed in writing for the benefit of the Company to
be bound by this Section 1.2, provided and to the extent such Section is then
applicable, and:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) Such Investor shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and
(B) if reasonably requested by the Company, such Investor shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such
shares under the Securities Act;
Notwithstanding the provisions of paragraphs (i) and (ii) above, no
such registration statement or opinion of counsel shall be necessary for a
transfer by an Investor which is (A) by a
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partnership to its partners or retired partners in accordance with partnership
interests, (B) by a corporation to its shareholders in accordance with their
interest in the corporation or to any majority-owned subsidiary, (C) by a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, (D) by an Investor to such
Investor's family member or a trust for the benefit of such Investor, (E) in
the case of Gilat Satellite Networks, Ltd. only, to a Gilat Affiliate (as
defined in the Series D Preferred Stock Purchase Agreement between Gilat and
the Company dated as of December 3, 1998), (F) in the case of an Ares
Affiliate, to another Ares Affiliate, or (G) in the case of Dell USA L.P., to
any of its affiliates, provided, in any such case, that the transferee will
be subject to the terms of this Section 1.2 to the same extent as if such
transferee were an original Investor hereunder.
(b) Each certificate representing Restricted Securities shall
(unless otherwise permitted by the provisions of this Agreement) be stamped
or otherwise imprinted with a legend substantially similar to the following
(in addition to any legend required under applicable state securities laws):
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD OR TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER SUCH ACT
OR UNLESS THE COMPANY HAS RECEIVED AN OPINION OF COUNSEL OR OTHER EVIDENCE,
SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT SUCH REGISTRATION IS NOT
REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder
shall have obtained an opinion of counsel at such Investor's expense (which
counsel may be counsel to the Company) reasonably acceptable to the Company
to the effect that the securities proposed to be disposed of may lawfully be
so disposed of without registration, qualification or legend.
(d) Any legend endorsed on an instrument pursuant to
applicable state securities laws and the stop-transfer instructions with
respect to such securities shall be removed upon receipt by the Company of an
order of the appropriate blue sky authority authorizing such removal.
1.3 COMPANY RIGHT OF FIRST REFUSAL. In addition to the provisions
of Section 1.2 hereof, each Investor agrees not to assign, encumber or
dispose of any interest in Restricted Securities except as provided by this
Section 1.3.
(a) RIGHT OF FIRST REFUSAL.
(i) In the event that an Investor desires (or is
required) to sell or transfer any Restricted Securities, such Investor shall
first offer such Restricted Securities for sale to the Company upon the terms
and conditions specified herein (the "Right of First Refusal") by delivering
a notice (the "Notice") to the Company stating (1) the Investor's bona fide
intention to sell or otherwise transfer such Restricted Securities, (2) the
number of Restricted Securities to be sold or otherwise transferred, (3) the
price for which the Investor proposes to sell such Restricted Securities
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and (4) all additional material terms and conditions, if any, of the proposed
sale or transfer. The Notice shall also state the name of the proposed buyer
or transferee, if known. If the proposed buyer or transferee is unknown at
the time such notice is given, the Investor shall so state in the Notice;
PROVIDED, HOWEVER, that the Investor may not sell or transfer any Restricted
Securities to any competitor of the Company or any party whose interests are
materially adverse to the Company, each as determined in good faith by the
Board of Directors. The Investor shall attach to the Notice a copy of the
written offer, if any, reflecting the terms and conditions of the proposed
sale or transfer of the Restricted Securities to the third party.
(ii) Within fifteen (15) days following receipt by the
Company of the Notice (the "Acceptance Period"), the Company may elect to
purchase all but not less than all of the Restricted Securities to which the
Notice refers, at the price per share and on the same terms and conditions
(including as to form of consideration) as set forth in the Notice.
(iii) If the Company elects to purchase such Restricted
Securities hereunder, it shall notify the Investor in writing of its
intention to purchase such Restricted Securities hereunder and either (1) set
a date for the closing of the transaction at a place to be mutually agreed to
by the Investor and the Company not later than ten (10) days from the date of
such notice at which time the Company shall tender payment for the Restricted
Securities so purchased, or (2) include payment in immediately available
funds for the Restricted Securities with the Company's notice to the
Investor. At such closing, the certificate(s) representing the Restricted
Securities so purchased shall be delivered to the Company and canceled or, in
the case of payment by the Company by mail, such certificate(s) shall be
deemed canceled as of the date of the mailing of the Company's notice and,
thereafter, shall be promptly returned by the Investor to the Company by
certified or registered mail.
(iv) If the Company does not elect to purchase all of
the shares to which the Notice refers or does not purchase all of the shares
within the required time, the Investor may sell or otherwise transfer such
Restricted Securities at the price and on substantially the same terms and
conditions specified in the Notice or at a higher price, provided that such
sale or transfer is consummated within one hundred and twenty (120) days from
the earlier of (1) the lapse of the Acceptance Period or (2) the date of the
Company's notice, whether written or oral, advising the Investor that the
Company does not intend to purchase the Restricted Securities hereunder; and
provided further, that any such sale or transfer is made in accordance with
all of the terms and conditions set forth in this Agreement. In the event the
Restricted Securities are not disposed of by the Purchaser within such one
hundred and twenty (120) day period, such Restricted Securities shall once
again be subject to the Right of First Refusal herein provided.
(b) INVOLUNTARY TRANSFER.
(i) In the event of any transfer by operation of law or
other involuntary transfer of all, or a portion, of the Restricted Securities
held by an Investor, the Company shall have an option to purchase all of the
Restricted Securities so transferred (the "Involuntary Transfer Option") at a
price determined in good faith by the Board of Directors of the Company to
represent the then-current market value of the Restricted Securities. Upon
such a transfer, the person
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acquiring the subject shares shall promptly notify the Secretary of the
Company of such transfer. Notwithstanding the foregoing, an Investor shall
not be required to comply with this Section 1.3(b) if such compliance would
conflict with any law, Rule or regulation.
(ii) The Company shall notify the Investor and the person
acquiring the Restricted Securities as to whether the Company wishes to
purchase the Restricted Securities pursuant to the Involuntary Transfer
Option within fifteen (15) days following the date on which the Company was
notified of the transfer. If the Company elects to purchase such shares
hereunder, it shall set a date for the closing of the transaction at a place
specified by the Company not later than ten (10) days from the date of the
Company's notice to the Investor and the person acquiring the Restricted
Securities. At such closing, the Company shall tender payment for the
Restricted Securities in the form of a check and the certificate(s)
representing the shares so purchased shall be canceled.
(c) RESTRICTION ON ALIENATION. Each Investor agrees that it
will not sell, transfer, or otherwise dispose of any of the Restricted
Securities unless it complies with the provisions of this Section 1.3, if
applicable. Any sale, transfer or disposition or purported sale, transfer or
disposition of any Restricted Securities by an Investor shall be null and
void unless the terms, conditions and provisions of this Section 1.3, if
applicable, are complied with. Each Investor further authorizes the Company
to refuse, or to cause its Transfer Agent to refuse, to transfer or record
any Restricted Securities to be transferred in violation of this Agreement.
(d) OBLIGATIONS BINDING UPON TRANSFEREES. All transferees of
Restricted Securities or any interest therein will receive and hold such
Restricted Securities or interests subject to the provisions of this
Agreement, including, insofar as applicable, the Company's Right of First
Refusal and Involuntary Transfer Option under this Section 1.3.
(e) TERMINATION OF RESTRICTIONS. The Right of First Refusal
and Involuntary Transfer Option granted by this Section 1.3 shall terminate
at such time as any registered initial public offering of Common Stock of the
Company, Merger Event or Liquidation Event occurs, as "Merger Event" or
"Liquidation Event" are defined in the Restated Articles.
(f) EXCLUDED TRANSFERS. The restrictions on transfer of this
Article 1.3 shall not apply to a transfer by an Investor which is (A) a
partnership to its partners or retired partners in accordance with
partnership interests, (B) a corporation to its shareholders in accordance
with their interest in the corporation or to a majority-owned subsidiary,
(C) a limited liability company to its members or former members in
accordance with their interest in the limited liability company, (D) to the
Investor's family member or trust for the benefit of an individual Investor,
(E) made by way of inheritance or bequest, (F) made, in the case of Gilat
Satellite Networks, Ltd. only, to a Gilat Affiliate (as defined in the Series D
Preferred Stock Purchase Agreement between Gilat and the Company dated as of
December 3, 1998), (G) made, in the case of an Ares Affiliate only, to
another Ares Affiliate or (H) made, in the case of Dell USA L.P., to one of
its affiliates, provided, in any such case, that the transferee will be
subject to the terms of this Section 1.3 to the same extent as if such
transferee were an original Investor hereunder.
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1.4 DEMAND REGISTRATION.
(a) DEMAND FOR REGISTRATION. In case the Company shall receive
from the Initiating Holders a written demand that the Company effect any
registration, qualification or compliance with respect to all or a part of
the Registrable Securities, and only in the event that the aggregate offering
price of the Registrable Securities proposed to be registered equals or
exceeds two million dollars ($2,000,000) (provided that the determination of
the aggregate offering price of the Registrable Securities proposed to be
registered shall be made by the Initiating Holders in good faith), the
Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders, which notice, in any event,
shall be given at least twenty (20) business days before the effectiveness of
any registration under this Section 1.4; and
(ii) use its best efforts to effect such registration,
qualification or compliance as soon as practicable (including, without
limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable regulations
issued under the Securities Act and any other governmental requirements or
regulations), in respect of such Registrable Securities and as may be so
requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such
request in writing received by the Company within twenty (20) days after
receipt of such written notice from the Company; PROVIDED, that the Company
shall NOT be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 1.4:
(A) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company
is already subject to service in such jurisdiction and except as may be
required by the Securities Act;
(B) Before the earlier to occur of March 31, 2004 or six
(6) months after the effective date of the Company's first registered
offering to the general public of its securities for its own account;
(C) After the Company has effected three registrations
pursuant to this Section 1.4(a), so long as such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold.
Subject to the foregoing clauses (A) through (C), the Company shall
file a registration statement covering the Registrable Securities so demanded
pursuant to this Section 1.4(a); PROVIDED, HOWEVER, that if the Company shall
furnish to the Initiating Holders a certificate signed by the President of the
Company stating that, in the good faith judgment of the Board of Directors, it
would be seriously detrimental to the Company and its shareholders for such
registration statement to be filed the Company shall have the right to defer
such filing for a period of not more than ninety (90)
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days after receipt of the demand of the Initiating Holders; PROVIDED,
HOWEVER, that the Company may not utilize this right more than once in any
twelve month period.
(b) UNDERWRITING. The Initiating Holders of any given demand
registration pursuant to this Section 1.4 shall determine the method of
distribution. If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to Section 1.4 and
the Company shall include such information in the written notice referred to
in this Section 1.4(a)(i). The right of any Holder to registration pursuant
to Section 1.4 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent requested and provided herein.
The Company shall (together with all Holders and other parties
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative(s) of an
underwriter or underwriters of recognized national standing (the "Underwriter's
Representative") selected for such underwriting by the Company, subject to the
approval of the Initiating Holders, which shall not be unreasonably withheld.
Notwithstanding any other provision of this Section 1.4, if the Underwriter's
Representative advises the Company and the Initiating Holders in writing at any
time prior to effectiveness that marketing factors require a limitation of the
number of shares to be underwritten, the Company shall so advise all holders of
Registrable Securities, and the Underwriter's Representative may limit the
number of Registrable Securities to be included in the registration and
underwriting; PROVIDED, HOWEVER, that if the registration was demanded (i) by
the Holders of not less than twenty-five (25%) of the outstanding Series C
Registrable and Securities Series D Registrable Securities then any such
limitation will first exclude securities that are not Series C Registrable
Securities or Series D Registrable Securities, and to the extent Series C
Registrable Securities and/or Series D Registrable Securities are excluded, they
shall be excluded on a pro-rata basis in proportion to the number of Series C
Registrable Securities and/or Series D Registrable Securities held by each such
Holder; or (ii) by one or more Holders of Series C Registrable Securities or by
one or more Ares Affiliates, then any such limitation will first exclude
securities that are not Series C Registrable Securities or Series D Registrable
Securities held by an Ares Affiliate, and to the extent Series C Registrable
Securities and/or Series D Registrable Securities held by an Ares Affiliate are
excluded, they shall be excluded on a pro-rata basis in proportion to the number
of Series C Registrable Securities and/or Series D Registrable Securities held
by each such Holder. The Company and/or the Underwriters's Representative may,
in their sole discretion, round the number of securities offered hereunder to
the nearest 100 shares. No securities excluded from the underwriting by reason
of the Underwriter's Representative marketing limitation shall be included in
such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the Underwriter's Representative and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration; PROVIDED, HOWEVER, that, if by the withdrawal of
such Registrable Securities a greater number of Registrable Securities held by
other participating Holders may be included in such registration (up to the
maximum of any limitation imposed by the
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Underwriter's Representative), then the Company shall allocate such greater
number of Registrable Securities first to the Initiating Holders of such
registration, on a pro-rata basis in proportion to the number of Registrable
Securities then held by each such Initiating Holder, and second to such other
Holders on a pro rata basis in proportion to the number of shares of
Registrable Securities requested by such other Holders. Any Registrable
Securities so withdrawn from registration shall be subject to the market
standoff provisions set forth in Section 1.14 hereof.
If the Underwriter's Representative has not limited the number of
Registrable Securities to be underwritten, the Company may include securities
for its own account or for the account of other shareholders of the Company in
such registration if the Underwriter's Representative so agrees.
(c) WITHDRAWAL. The Initiating Holders at any time prior to the
effective date of any registration pursuant to this Section 1.4 may withdraw
its demand for such registration by giving written notice to the Company and
such registration shall not count towards determining if the Company has
effected three registrations pursuant to Section 1.4(a)(ii)(C); PROVIDED,
HOWEVER, that the Initiating Holders shall be responsible for the reasonable
expenses of such registration so long as the Company shall have complied in
good faith with its obligations hereunder to effect such registration as soon
as practicable after the demand of the Initiating Holders, and, PROVIDED,
FURTHER, that the Initiating Holders will not be responsible for any such
expenses if they withdraw their demand within ten (10) business days after
the end of a registration deferral period effected by the Company pursuant to
Section 1.4(a)(ii).
1.5 COMPANY REGISTRATION.
(a) If at any time or from time to time the Company shall determine
to register any of its securities either for its own account or the account
of a security holder or holders exercising their registration rights pursuant
to Section 1.4 or 1.7, other than (i) a registration relating solely to
employee benefit plans or a registration relating to a corporate
reorganization or other transaction under Rule 145, or (ii) a registration in
which the only equity security being registered is Common Stock issuable upon
conversion of debt securities which are also being registered, the Company
will:
(i) promptly give to each Holder written notice thereof, which
notice, in any event, shall be given at least twenty (20) business days
before the effectiveness of any registration under this Section 1.5; and
(ii) use its best efforts to include in such registration (and
any related qualification under blue sky laws or other compliance), except as
set forth in Section 1.5(b) below, and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests,
made by any Holder and received by the Company within twenty (20) days after
the written notice from the Company described in clause (i) above is mailed
or delivered by the Company. Such written request may specify all or a part
of a Holder's Registrable Securities.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a
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part of the written notice given pursuant to Section 1.5(a)(i). In such
event, the right of any Holder to registration pursuant to this Section 1.5
shall be conditioned upon such Holder's participation in such underwriting
and the inclusion of such Holder's Registrable Securities in the underwriting
to the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and the
other holders of securities of the Company distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the representative of the underwriter or underwriters selected by
the Company.
Notwithstanding any other provision of this Section 1.5, if the
representative of the underwriters advises the Company in writing that
marketing factors require a limitation on the number of shares to be
underwritten, and the Company so advises the Holders of Registrable
Securities, the representative may (subject to the limitations set forth
below) limit the number of Registrable Securities to be included in, the
registration and underwriting; PROVIDED, HOWEVER, that such underwriting
limitation shall be applied first to exclude shares that are not Registrable
Securities, and any balance of the shares to be excluded then shall be
allocated pro rata among the Holders of Registrable Securities in proportion
to the number of Registrable Securities requested by each such Holder to be
included in such registration and underwriting, except that the underwriter's
representative may (i) in the case of the Company's initial registered public
offering, exclude some or all Registrable Securities from such registration
and underwriting on a pro rata basis as described above and (ii) in the case
of any subsequent registered public offering (other than a registered public
offering effected pursuant to Section 1.4), not limit the number of shares of
Registrable Securities to be included in such registration and underwriting
to less than thirty-five percent (35%) of the securities included in such
public offering (based on aggregate market values). If any person does not
agree to the terms of any such underwriting, he shall be excluded therefrom
by written notice from the Company or the underwriter. Any Registrable
Securities or other securities excluded or withdrawn from such underwriting
shall be withdrawn from such registration.
If shares are so withdrawn from the registration or if the number of
shares of Registrable Securities to be included in such registration was
previously reduced as a result of marketing factors, the Company shall then
offer to all persons who have retained the right to include securities in the
registration the right to include additional securities in the registration in
an aggregate amount equal to the number of shares so withdrawn. Any Registrable
Securities so withdrawn shall be subject to the market standoff provisions of
Section 1.14 hereof.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.5 prior to the effectiveness of such registration whether or not
any Holder has elected to include Registrable Securities in such registration.
1.6 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.4, 1.5 and 1.7 hereof shall be paid by the Company.
1.7 REGISTRATION ON FORM S-3 AND FOLLOWING THE INITIAL PUBLIC
OFFERING OF THE COMPANY. After its initial public offering, the Company shall
use its best efforts to qualify for registration on
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Form S-3 under the Securities Act or any comparable or successor form or
forms. After the Company has qualified for the use of Form S-3, in addition
to the rights contained in the foregoing provisions of this Section 1, the
Holders of Registrable Securities shall have the right to demand
registrations on Form S-3; PROVIDED, HOWEVER, that the proposed aggregate
offering price to the public of the securities to be so registered (net of
underwriting discounts and commissions, if any) would exceed $2,000,000
(provided that the determination of the aggregate offering price of the
Registrable Securities proposed to be registered shall be made by the Holders
demanding such registration in good faith); and, PROVIDED FURTHER, that the
Company shall not be required to effect more than two registrations pursuant
to this Section 1.7 in any twelve (12) month period. In the event the
registration is proposed by the Holders of a majority of the Registrable
Securities to be included in such registration to be part of a firm
commitment underwritten public offering, (i) the substantive provisions of
Section 1.5(b) shall be applicable to each such registration initiated under
this Section 1.7, and (ii) subject to the reasonable approval of the Holders
of a majority of the Registrable Securities to be included in such
registration, the Company shall be entitled to select the underwriter, which
shall be an investment bank of recognized national standing.
Notwithstanding the foregoing, the Company shall not be obligated to
take any action pursuant to this Section 1.7:
(a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service or process in effecting such
registration, qualification or compliance, unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act;
(b) if the Company, within ten (10) days of the receipt of the
request of the Holders, gives notice of its BONA FIDE intention to effect the
filing of a registration statement with the Commission within ninety (90)
days of receipt of such demand (other than with respect to a registration
statement relating to Rule 145 transaction, an offering solely to employees,
or any other registration which is similarly not appropriate for the
registration of Registrable Securities);
(c) on the date filing of, and ending on the date six (6) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan or any other registration which is similarly not appropriate for the
registration of Registrable Securities); or
(d) if the Company shall furnish to the Holders proposing to
distribute Registrable Securities a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors
it would be seriously detrimental to the Company or its shareholders for
registration statements to be filed in the near future, then the Company's
obligation to use its reasonable best efforts to file a registration
statement shall be deferred for a period not to exceed 90 days from the
receipt of the demand to file such registration by such Holders, provided
that the Company may not exercise this deferral right more than once in any
twelve (12) month period with respect to any one such demand for registration.
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1.8 REGISTRATION PROCEDURES. In the case of each registration
effected by the Company pursuant to Section 1, the Company will prepare and
file with the Commission a registration statement on an appropriate term
including the Registrable Securities being registered and, subject to Section
1.5(c), will use its best efforts to cause such registration statement to
become effective and will keep each Holder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will use its best efforts to:
(a) Keep such registration continuously effective for a period of
one hundred and eighty (180) days or until the Holder or Holders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs; provided, however, that such 180 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;
(b) Prepare and file with the Commission 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 Securities Act with respect to the disposition of
all securities covered by such registration statement and so that such
registration statement and prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(c) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus,
as a Holder from time to time may reasonably request;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities 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 or incomplete in the light of
the circumstances then existing, and at the request of any such seller,
prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchasers of such shares, such prospectus
shall not include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or incomplete in the light of the
circumstances then existing;
(e) 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;
(f) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such registration statement and a CUSIP
number for all such Registrable Securities, in each case not later than the
effective date of such registration;
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(g) Otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement covering
the period of at least twelve months, but not more than eighteen months,
beginning with the first month after the effective date of the Registration
Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act; and
(h) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 1 hereof, the Company will
enter into an underwriting agreement in form reasonably necessary to effect
the offer and sale of Common Stock, provided such underwriting agreement
contains customary underwriting provisions and provided further that if the
underwriter so requests the underwriting agreement will contain customary
contribution and indemnification provisions. The Company will retain the
necessary counsel and accountants in order to provide the legal opinions on
behalf of the Company and comfort letters required by such underwriting
agreement and shall provide copies thereof to each seller of Registrable
Securities who so requests.
1.9 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers,
directors, partners, members, legal counsel, and accountants and each person
controlling such Holder within the meaning of Section 15 of the Securities
Act, with respect to which registration, qualification, or compliance has
been effected pursuant to this Section 1, and each underwriter, if any, and
each person who controls any such underwriter within the meaning of Section
15 of the Securities Act, against all expenses, claims, losses, damages, and
liabilities (or actions, proceedings, or settlements in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any prospectus, offering circular, or other
document (including any related registration statement, notification, or the
like) incident to any such registration, qualification, or compliance, or
based on 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, or any violation by the Company of the Securities Act or the
Exchange Act or any Rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, qualification, or compliance, and will reimburse each
such Holder, each of its officers, directors, partners, members, legal
counsel, and accountants and each person controlling such Holder, each such
underwriter, and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating
and 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
or underwriter to the extent that any such claim, loss, damage, liability, or
expense arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by such Holder or
underwriter and stated to be specifically for use therein. It is agreed that
the indemnity agreement contained in this Section 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 has not been unreasonably withheld).
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(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification,
or compliance is being effected, indemnify (severally, but not jointly) the
Company, each of its directors, officers, partners, members and each
underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, each
other such Holder, and each of their officers, directors, partners and
members, and each person controlling such Holder, against all claims, losses,
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 and
such Holders, directors, officers, partners, members, persons, underwriters,
or control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending 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 such Holder and stated to be
specifically for use therein, provided, however, that the obligations of such
Holder hereunder shall not apply to amounts paid in settlement of any such
claims, losses, damages, or liabilities (or actions in respect thereof) if
such settlement is effected without the consent of such Holder (which consent
shall not be unreasonably withheld).
(c) Each party entitled to indemnification under this Section 1.9
(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 claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of such claim
or any litigation resulting therefrom, PROVIDED, HOWEVER, that counsel for
the Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be 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 under this
Section 1, to the extent such failure is not materially prejudicial; and
PROVIDED FURTHER, that the Indemnifying Party shall not assume the defense
for matters as to which representation of both the Indemnifying Party and the
Indemnified Party by the same counsel would be inappropriate due to actual or
potential differing interests between them or if the Indemnified Party has
reasonably concluded that there may be one or more legal defenses available
to it which are different from or additional to those available to the
Indemnifying Party, but shall instead in such event pay the fees and costs of
separate counsel for the Indemnified Party or any other Indemnified 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 that: (i) contains an admission of
fault on the part of any Indemnified Party; or (ii) does not include as an
unconditional term thereof the giving by the claimant or plaintiff to each
such Indemnified Party of a release from all liability in respect to such
claim or litigation. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an
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Indemnifying Party may reasonably request in writing and as shall be
reasonably required in connection with defense of such claim and litigation
resulting therefrom.
(d) If the indemnification provided for in this Section 1.9 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 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 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 alleged untrue statement of a material fact or
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 of 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.
1.10 INFORMATION BY HOLDER. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in connection with any
registration, qualification, or compliance referred to in this Section 1.
1.11 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written
consent of the Majority Holders, enter into any agreement with any holder or
prospective holder of any securities of the Company giving such holder or
prospective holder any registration rights which are senior or more
advantageous in any respects to the rights granted hereunder.
1.12 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission that may permit the sale
of the Restricted Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information regarding the Company
available as those terms are understood and defined in Rule 144 under the
Securities Act, at all times from and after ninety (90) days following the
effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act at any time after it has become subject to such reporting
requirements; and
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(c) So long as a Investor owns any Restricted Securities, furnish
to the Investor forthwith upon written request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at
any time from and after ninety (90) days following the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
a copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed as a Investor may reasonably request in
availing itself of any Rule or regulation of the Commission allowing a
Investor to sell any such securities without registration.
1.13 TRANSFER OR ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Securities granted to a Holder by the
Company under this Section 1 may be transferred or assigned by a Holder in
connection with the transfer of such Registrable Securities, provided that
the Company is given written notice at the time of or within a reasonable
time after said transfer or assignment, stating the name and address of the
transferee or assignee and identifying the securities with respect to which
such registration rights are being transferred or assigned, and, provided
further, that the transferee or assignee of such rights assumes in writing
the obligations of such Holder under this Section 1; and provided further
that such transferee acquires at least 50,000 shares of Registrable
Securities (as presently constituted and subject to subsequent adjustment for
stock splits, stock dividends, reverse stock splits, recapitalizations and
the like) or all remaining shares held by any Holder
1.14 MARKET STANDOFF AGREEMENT. In connection with any firm commitment
underwritten initial public offering of the Company's securities in
connection with an effective registration statement under the Securities Act,
each Holder agrees, upon the request of the underwriters managing such
underwritten offering of the Company's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any securities of the Company (other than those included in the
registration) without the prior written consent of such underwriters for such
period of time not to exceed one hundred eighty (180) days from the effective
date of such registration, as may be requested by the underwriters, provided
that the officers and directors of the Company and any beneficial holders of
five percent (5%) or more of the number of shares of outstanding Common Stock
also agree to such restrictions. With respect to any other firm commitment
underwritten public offering of the Company's securities in connection with
an effective registration statement under the Securities Act, upon the
request of the underwriters managing such underwritten offering of the
Company's securities, each Holder who is an officer, director or affiliate
(as that term is defined in Rule 144) of the Company or is a beneficial
holder of five percent (5%) or more of the number of shares outstanding
Common Stock agrees not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company (other than those included in the registration) without the prior
written consent of such underwriters for such period of time not to exceed
ninety (90) days from the effective date of such registration, as may be
requested by the underwriters, provided that the officers and directors of
the Company and any beneficial holders of five percent (5%) or more of the
number of shares of outstanding Common Stock also agree to such restrictions.
Each Holder agrees
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that the Company may instruct its transfer agent to place stop-transfer
notations in its records to enforce the provisions of this Section 1.14.
1.15 TERMINATION OF REGISTRATION RIGHTS. The rights granted pursuant to
Sections 1.4, 1.5 and 1.7 of this Agreement shall terminate as to any Holder
upon the earlier of (i) the date five (5) years after the effective date of
the initial registered public offering of the Common Stock of the Company or
(ii) the date one (1) year after such time that such Holder may sell all the
Registrable Securities held by such Holder under Rule 144(k), so long as the
Company's Common Stock is traded on either the New York Stock Exchange or on
NASDAQ, or any successor exchange or listing thereto.
2. COVENANTS OF THE COMPANY.
The Company hereby covenants and agrees as follows:
2.1 BASIC FINANCIAL INFORMATION. The Company will furnish the
following reports to each Investor:
(a) As soon as practicable after the end of each fiscal year of
the Company (including, without limitation, fiscal 1998), and in any event
within ninety (90) days thereafter, an audited consolidated balance sheet of
the Company and its subsidiaries, if any, as at the end of such fiscal year,
and audited consolidated statements of income and cash flows of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles consistently applied and setting
forth in each case in comparative form the figures for the previous fiscal
year, all in reasonable detail and certified by independent public
accountants of recognized national standing selected by the Company, and a
Company-prepared comparison to the Company's operating plan for such year.
(b) As soon as practicable after the end of the first, second,
and third quarterly accounting periods in each fiscal year of the Company,
and in any event within forty-five (45) days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as of the end of
each such quarterly period, and consolidated statements of income and cash
flows of the Company and its subsidiaries, if any, for such period and for
the current fiscal year to date, prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in
comparative form the figures for the corresponding periods of the previous
fiscal year and to the Company's operating plan then in effect and approved
by its Board of Directors, subject to changes resulting from normal year-end
audit adjustments, all in reasonable detail and certified by the principal
financial or accounting officer of the Company, except that such financial
statements need not contain the notes required by generally accepted
accounting principles.
2.2 ADDITIONAL INFORMATION AND RIGHTS.
(a) The Company will permit any Investor or its representative,
so long as such Investor or its representative either (i) owns at least
50,000 shares of Restricted Securities (subject to subsequent adjustment for
stock splits, stock dividends, reverse stock splits, recapitalizations and
the
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like) or (ii) represents that it is a "venture capital operating company" for
purposes of Department of Labor Regulation Section 2510.3-101 (each, a
"Significant Holder"), and provided such Investor is not reasonably
identified by the Board of Directors of the Company as a competitor of the
Company, to visit and inspect any of the properties of the Company, including
its books of account and other records (and make copies thereof and take
extracts therefrom), and to discuss its affairs, finances and accounts with
the Company's officers and its independent public accountants, all at such
reasonable times and as often as any such person may reasonably request.
(b) The Company will deliver the reports described below in this
Section 2.2 to each Significant Holder:
(i) Annually (and in any event no later than ten (10)
days after adoption by the Board of Directors of the Company) the financial
plan of the Company, in such manner and form as approved by the Board of
Directors of the Company, which financial plan shall include at least a
projection of income and a projected cash flow statement for each fiscal
quarter in such fiscal year and a projected balance sheet as of the end of
each fiscal quarter in such fiscal year. Any material changes in such
financial plan shall be delivered to each Significant Holder as promptly as
practicable after such changes have been approved by the Board of Directors
of the Company.
(ii) With reasonable promptness, such other information
and data with respect to the Company and its subsidiaries as any such person
may from time to time reasonably request.
(iii) As soon as practicable after transmission or
occurrence and in any event within ten (10) days thereof, copies of any
response or communications delivered to any class of the Company's security
holders or broadly to the financial community, including any filings by the
Company with any securities exchange, the Securities and Exchange Commission
or the National Association of Securities Dealers, Inc.
(c) The provisions of Section 2.1 and this Section 2.2 shall not
be in limitation of any rights which any Investor or Significant Holder may
have with respect to the books and records of the Company and its
subsidiaries, or to inspect their properties or discuss their affairs,
finances and accounts, under the laws of the jurisdictions in which they are
incorporated.
(d) Anything in Section 2 to the contrary notwithstanding, no
Investor or Significant Holder by reason of this Agreement shall have access
to any trade secrets or confidential information of the Company. Each
Significant Holder hereby agrees to hold in confidence and trust and not to
misuse or disclose any confidential information provided pursuant to this
Section 2.2 or obtained pursuant to Section 2.12. Notwithstanding the
foregoing sentence, a Significant Holder may disclose confidential
information obtained pursuant to this Section 2.2 or Section 2.12 if the
Company has previously made such information available to the public
generally or if required by law or regulation or to assert a claim or
defense, provided the Company is given reasonable advance notice of the
intended disclosure and an opportunity to seek confidential treatment or an
appropriate court order preventing public disclosure.
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(e) From the date the Company becomes subject to the reporting
requirements of the Exchange Act (which shall include any successor federal
statute), and in lieu of the financial information required pursuant to
Sections 2.1 and 2.2, copies of its annual reports on Form 10-K and its
quarterly reports on Form 10-Q, respectively.
(f) Each Investor who represents to the Company that it is a
"venture capital operating company" for purposes of Department of Labor
Regulation Section 2510.3-101 shall in addition have the right to consult
with and advise the officers of the Company as to the management of the
Company.
(g) The information and other rights granted to an Investor under
Section 2.1 and 2.2 may be transferred or assigned by an Investor in
connection with the transfer of Restricted Securities, provided that the
Company is given written notice at the time of or within a reasonable time
after said transfer or assignment, stating the name and address of the
transferee or assignee and identifying the securities with respect to which
such rights are being transferred or assigned, and, provided further, that
the transferee or assignee of such rights is not reasonably deemed to be a
competitor of the Company; and provided further that such transferee acquires
at least 50,000 shares of Restricted Securities (as presently constituted and
subject to subsequent adjustment for stock splits, stock dividends, reverse
stock splits, recapitalizations and the like) or all remaining shares held by
any Investor.
2.3 RIGHT OF FIRST REFUSAL. The Company hereby grants to each Holder
of at least 50,000 Registrable Securities (as presently constituted and
subject to subsequent adjustment for stock splits, stock dividends, reverse
stock splits, recapitalizations and the like) the right of first refusal to
purchase a pro rata share of New Securities (as defined in this Section 2.3)
which the Company may, from time to time, propose to sell and issue. A
Holder's pro rata share, for purposes of this right of first refusal, is the
ratio of the number of shares of Common Stock owned by such Holder
immediately prior to the issuance of New Securities, assuming full conversion
of all Preferred Stock, to the total number of shares of Common Stock
beneficially held by all Holders immediately prior to the issuance of New
Securities, assuming full conversion of all Preferred Stock and exercise of
all outstanding rights, options and warrants to acquire Common Stock of the
Company held by all Holders. Each Holder of at least 50,000 Registrable
Securities (as presently constituted and subject to subsequent adjustment for
stock splits, stock dividends, reverse stock splits, recapitalizations and
the like) shall have a right of over-allotment such that if any Holder fails
to exercise its right hereunder to purchase its pro rata share of New
Securities hereunder, the other Holders may purchase the non-purchasing
Holder's portion on a pro rata basis within ten (10) days from the date such
non-purchasing Holder fails to exercise its right hereunder to purchase its
pro rata share of New Securities. This right of first refusal shall be
subject to the following provisions:
(a) "New Securities" shall mean any capital stock (including
Common Stock and/or Preferred Stock) of the Company whether now authorized or
not, and rights, options or warrants to purchase such capital stock, and
securities of any type whatsoever that are, or may become, convertible into
capital stock; provided that the term "New Securities" does not include (i)
any securities issued pursuant to the Purchase Agreement or outstanding on
the date of this
-21-
Agreement; (ii) securities issued upon conversion of the Company's Preferred
Stock; (iii) any additional shares of Common Stock issued pursuant to Section
5(c) of Article V(B) of the Restated Articles; (iv) securities issued
pursuant to the acquisition of another business entity or business segment of
any such entity by the Company by merger, purchase of substantially all the
assets or other reorganization whereby the Company will own more than fifty
percent (50%) of the voting power of such business entity or business segment
of any such entity; (v) any borrowings, direct or indirect, from financial
institutions or other persons by the Company, whether or not presently
authorized, including any type of loan or payment evidenced by any type of
debt instrument, provided such borrowings do not have any equity features
including warrants, options or other rights to purchase capital stock and are
not convertible into capital stock of the Company; (vi) securities issued to
employees, consultants, officers or directors of the Company pursuant to any
stock option, stock purchase or stock bonus plan, agreement or arrangement
approved by the Board of Directors; (vii) securities issued to vendors or
customers or to other persons in similar commercial situations with the
Company if such issuance is approved by the Board of Directors; (viii)
securities issued in connection with obtaining lease financing, whether
issued to a lessor, guarantor or other person; (ix) securities issued in an
underwritten public offering pursuant to a registration under the Securities
Act; (x) securities issued in connection with any stock split, stock dividend
or recapitalization of the Company; (xi) securities issued to strategic
investors in connection with corporate partnering transactions not
principally designed to raise capital, up to an aggregate of $50,000,000 on
terms approved by the Board of Directors; and (xii) any right, option or
warrant to acquire any security convertible into the securities excluded from
the definition of New Securities pursuant to subsections (i) through (xi)
above.
(b) In the event the Company proposes to undertake an issuance of
New Securities, it shall give each Holder of at least 50,000 Registrable
Securities (as presently constituted and subject to subsequent adjustment for
stock splits, stock dividends, reverse stock splits, recapitalizations and
the like) written notice of its intention, describing the type of New
Securities, and their price and the general terms upon which the Company
proposes to issue the same. Each such Holder shall have twenty (20) days
after any such notice is mailed or delivered to agree to purchase such
Holder's pro rata share of such New Securities for the price and upon the
terms (including as to form of consideration) specified in the notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.
(c) In the event the Holders of at least 50,000 Registrable
Securities (as presently constituted and subject to subsequent adjustment for
stock splits, stock dividends, reverse stock splits, recapitalizations and
the like) fail to exercise fully their right of first refusal within said
twenty (20) day period and after the expiration of the 10-day period for the
exercise of the over-allotment provisions of this Section 2.3, the Company
shall have one hundred twenty (120) days thereafter to sell or enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall
be closed, if at all, within one hundred twenty (120) days from the date of
said agreement) to sell the New Securities in respect of which such Holders'
right of first refusal option set forth in this Section 2.3 was not
exercised, at a price and upon terms (including as to form of consideration)
no more favorable to the purchasers thereof than specified in the Company's
notice to the Holders pursuant to Section 2.3(b). In the event the Company
has not sold within said 120-day
-22-
period or entered into an agreement to sell the New Securities in accordance
with the foregoing within one hundred twenty (120) days from the date of said
agreement, the Company shall not thereafter issue or sell any New Securities,
without first again offering such securities to the Holders in the manner
provided in Section 2.3(b) above.
(d) The right of first refusal granted to a Holder under this
Section 2.3 may be transferred or assigned by such Holder in connection with
the transfer of Registrable Securities, provided that the Company is given
written notice at the time of or within a reasonable time after said transfer
or assignment, stating the name and address of the transferee or assignee and
identifying the securities with respect to which such rights are being
transferred or assigned, and, provided further that such transferee acquires
at least 50,000 shares of Registrable Securities (as presently constituted
and subject to subsequent adjustment for stock splits, stock dividends,
reverse stock splits, recapitalizations and the like) or all remaining shares
held by any Holder.
2.4 PROMPT PAYMENT OF TAXES, ETC. The Company will timely file all
required tax returns and reports and will promptly pay and discharge, or
cause to be paid and discharged, when due and payable (or prior to the
expiration of any applicable extensions therefor), all lawful taxes,
assessments and governmental charges or levies imposed upon the income,
profits, property or business of the Company or any subsidiary; provided,
however, that any such tax, assessment, charge or levy need not be paid if
the validity thereof shall currently be contested in good faith by
appropriate proceedings and if the Company shall have set aside on its books
adequate reserves with respect thereto in accordance with generally accepted
accounting principles, and provided, further, that the Company will pay all
such taxes, assessments, charges or levies forthwith upon the commencement of
proceedings to foreclose any lien which may have attached as security
therefor. The Company will promptly pay or cause to be paid when due, or in
conformance with customary trade terms or otherwise in accordance with
policies related thereto adopted by the Company's Board of Directors, all
other indebtedness incident to operations of the Company.
2.5 MAINTENANCE OF PROPERTIES AND LEASES. The Company will keep its
properties and those of its subsidiaries in good repair, working order and
condition, reasonable wear and tear excepted, and from time to time make all
needful and proper repairs, renewals, replacements, additions and
improvements thereto; and the Company and its subsidiaries will at all times
comply with each material provision of all leases to which any of them is a
party or under which any of them occupies property if the breach of such
provision might have a material and adverse effect on the business, assets,
operations, condition (financial or otherwise) or results of operations of
the Company.
2.6 INSURANCE. Except as otherwise decided in accordance with policies
adopted by the Company's Board of Directors, the Company will keep its assets
and those of its subsidiaries which are of an insurable character insured by
financially sound and reputable insurers against loss or damage by fire,
explosion and other risks customarily insured against by similarly situated
companies in the Company's line of business, and the Company will maintain,
with financially sound and reputable insurers, insurance against other
hazards and risks and liability to persons and
-23-
property to the extent and in the manner customary for companies in similar
businesses similarly situated.
2.7 ACCOUNTS AND RECORDS. The Company will keep true records and books
of account in which full, true and correct entries will be made of all
dealings or transactions in relation to its business and affairs in
accordance with generally accepted accounting principles applied on a
consistent basis.
2.8 INDEPENDENT ACCOUNTANTS. The Company will retain independent
public accountants of recognized national standing who shall audit and
certify the Company's financial statements at the end of each fiscal year. In
the event the services of the independent public accountants so selected, or
any firm of independent public accountants hereafter employed by the Company,
are terminated, the Company will promptly thereafter notify the Investors and
will request the firm of independent public accountants whose services are
terminated to deliver to the Investors a letter from such firm setting forth
the reasons for the termination of their services. In the event of such
termination, the Company will promptly thereafter engage another firm of
independent public accountants of recognized national standing. In its notice
to the Investors the Company shall state whether the change of accountants
was recommended or approved by the Board of Directors of the Company or any
committee thereof.
2.9 COMPLIANCE WITH REQUIREMENTS OF GOVERNMENT AUTHORITIES. The
Company and all its subsidiaries shall duly observe and conform to all laws,
statutes, rules, regulations and valid requirements of governmental
authorities relating to the conduct of their businesses or to their
properties or assets.
2.10 MAINTENANCE OF CORPORATE EXISTENCE, ETC. The Company shall
maintain in full force and effect its corporate existence, rights and
franchises and all licenses and other rights in or to use patents, processes,
licenses, trademarks, trade names or copyrights owned or possessed by it or
any subsidiary and deemed by the Company to be necessary to the conduct of
its business.
2.11 EMPLOYEE AND OTHER STOCK ARRANGEMENTS. The Company will not,
without the written approval of the Majority Holders, issue any of its
capital stock, or grant an option or rights to subscribe for, purchase or
acquire any of its capital stock, to any employee, consultant, officer or
director of the Company or a subsidiary except for (a) the issuance of up to
5,400,000 shares of Common Stock under the Company's 1997 and 1998 Stock
Option Plans and (b) the issuance of additional shares of additional Common
Stock or options or rights exercisable for shares of Common Stock, such
additional shares not to exceed on an aggregate basis 5% of the outstanding
Common Stock of the Company as of the date hereof on a fully diluted basis.
2.12 ATTENDANCE AT BOARD MEETINGS. Each Significant Holder or its
representative shall have the right to attend all meetings of the Board of
Directors in a nonvoting observer capacity, to receive notice of such
meetings and to receive the information provided by the Company to the Board
of Directors; provided, however, that the Company may require as a condition
precedent to any Significant Holder's rights under this Section 2.12 that
each person proposing to attend any meeting of the Board of Directors and
each person to have access to any of the information provided
-24-
by the Company to the Board of Directors shall agree to abide by the
confidentiality provisions set forth in Section 2.2(d) with respect to all
information so received during such meetings or otherwise; and, provided
further, that the Company reserves the right not to provide information and
to exclude such Significant Holder (or its representative) from any meeting
of its Board of Directors if delivery of such information or attendance at
such meeting by such Significant Holder (or its representative) would result
in disclosure of trade secrets to such Significant Holder or its representative
or would adversely affect the attorney-client privilege between the Company
and its counsel or if such Significant Holder or its representative is a
direct competitor of the Company.
2.13 TRANSACTIONS WITH AFFILIATES. The Company shall not, without the
approval of the disinterested members of the Company's Board of Directors ,
engage in any loans, leases, contracts or other transactions with any
director, officer, key employee or other affiliate of the Company, or any
member of any such person's immediate family, including the parents, spouse,
children and other relatives of any such person, on terms less favorable than
the Company would obtain in a transaction with an unrelated party, as
determined in good faith by the Board of Directors.
2.14 OTHER CAPITAL STOCK. The Company shall not issue any other capital
stock of the Company other than the Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock or capital stock which is junior in
all respects to the Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock without the written prior approval of the Majority
Holders.
2.15 PUBLIC COMPANY. The Company shall exert reasonable best efforts to
complete a Qualified Public Offering, as such term is defined in Section 4(b)
of Article V(B) set forth in the Restated Articles, as soon as possible
following the date hereof.
2.16 TERMINATION OF COVENANTS. The covenants set forth in this Section 2
shall terminate and be of no further force and effect after the closing of a
Qualified Public Offering, as such term is defined in Section 4(b) of
Article V(B) set forth in the Restated Articles.
3. MISCELLANEOUS.
3.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of California, as applied to agreements among
California residents entered into and to be performed entirely within
California.
3.2 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
3.3 ENTIRE AGREEMENT. This Agreement (including the Exhibits hereto)
constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
3.4 AMENDMENT; WAIVER. Except as otherwise provided above, any
provision of this Agreement may be amended or the observance thereof may be
waived (either generally or in a
-25-
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Majority Holders. Notwithstanding the
foregoing, (i) no amendment shall be made to this Agreement which adversely
affects the relative rights and preferences of a particular class of Holders
(i.e., the Series C Registrable Securities, the Series D Registrable
Securities, the Series E Registrable Securities, the Xxxxxxx Note Shares or
the Xxxxxxx Warrant Shares) without the written consent of a majority of the
Registrable Securities held by the Holders in such adversely affected class
and (ii) in no event shall the rights of Ares or an Ares Affiliate under
Section 1.1(f) (as applied in Section 1.4), Section 1.2, Section 1.3(f) or
this Section 3.4 be amended or waived, except upon the written consent of
Ares or such Ares Affiliate. Any amendment or waiver effected in accordance
with this Section 3.4, as applicable, shall be binding upon each Investor,
Holder of Registrable Securities at the time outstanding, each future holder
of any of such securities, and the Company.
3.5 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by United States
first-class mail, postage prepaid, sent by facsimile or delivered personally
by hand or nationally recognized courier, addressed (a) if to an Investor, as
indicated on the list of Investors attached hereto as EXHIBIT A, or at such
other address as such holder or permitted assignee shall have furnished to
the Company in writing, or (b) if to the Company, at such address or
facsimile number set forth on Exhibit A or as the Company shall have
furnished to each Investor in writing. All such notices and other written
communications shall be effective on the date of mailing, facsimile transfer
or delivery.
3.6 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any Holder, upon any breach or default of the
Company under this Agreement, shall impair any such right, power or remedy of
such Investor nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default therefore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any Investor of any breach or default under this
Agreement or any waiver on the part of any Investor of any provisions or
conditions of this Agreement must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies,
either under this Agreement or by law or otherwise afforded to any Investor,
shall be cumulative and not alternative.
3.7 RIGHTS; SEPARABILITY. Unless otherwise expressly provided herein,
an Investor's rights hereunder are several rights, not rights jointly held
with any of the other Investors. In case any provision of the Agreement shall
be invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
3.8 CONFIDENTIAL INFORMATION. Each Investor acknowledges that the
information received by them pursuant hereto may be confidential and for its
use only, and it will not use such confidential information in violation of
the Exchange Act or reproduce, disclose or disseminate such information to
any other person (other than its employees or agents having a need to know
the contents of such information, and its attorneys) except in connection
with the exercise of rights
-26-
under this Agreement. Notwithstanding the foregoing sentence, an Investor may
disclose such confidential information if the Company has previously made
such information available to the public generally or if required by law or
regulation or to assert a claim or defense, provided the Company is given
reasonable advance notice of the intended disclosure and an opportunity to
seek confidential treatment or an appropriate court order preventing public
disclosure.
3.9 TITLES AND SUBTITLES. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing or interpreting this Agreement.
3.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Counterparts may be executed and delivered
by facsimile, provided that such delivery is promptly followed by the
delivery of hard copy of the same.
3.11 PRIOR AGREEMENT. Upon the execution of this Agreement by (i) the
Company, (ii) the New Investors, (iii) the Warrant Holders and (iv) the
holders of a majority of the Series C Registrable Securities and the holders
of a majority of the Series D Registrable Securities, this Agreement shall
supersede and replace the Prior Agreement, which shall be terminated and
cease to have any further force and effect. Each Series C Holder and Series D
Holder executing this Agreement hereby waives any and all rights of the
Holders of Registrable Securities granted pursuant to Section 2.3 of the
Prior Agreement with respect to all shares of the Company's Series E
Preferred Stock to be issued pursuant to the Purchase Agreement. Each Series C
Holder and Series D Holder executing this Agreement hereby consents, pursuant
to the terms of Section 2.14 of the Prior Agreement, to the issuance of the
Series E Preferred Stock.
-27-
3.12 NEW HOLDERS. If a warrant to purchase the Company's Series D
Preferred Stock or Common Stock is granted by the Company to a Lessor, then,
notwithstanding anything in Section 3.4 to the contrary, no consent of any
Holder shall be required to add such Lessor as a party to this Agreement.
Each such Lessor shall execute a counterpart to this Agreement in
substantially the form attached hereto as EXHIBIT B and, upon execution by
such Lessor and by the Company, shall be considered a 'Holder' and an
'Investor' for purposes of this Agreement and shall be added to EXHIBIT A
under the caption 'Warrant Investors.'
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-28-
IN WITNESS WHEREOF, the parties hereto have executed this Fourth
Amended and Restated Investor's Rights Agreement effective as of the day and
year first above written.
ZAPME! CORPORATION DELL USA L.P.
BY DELL GEN. P. CORP., ITS GENERAL PARTNER
By: /s/ Xxxxx Xxxxxxxxx By: /s/ Xxxxxx X. Xxxxx
------------------------- ---------------------------------------
Chairman and Chief
Title: Executive Officer Print your name: Xxxxxx X. Xxxxx
---------------------- --------------------------
Title: Vice President and Assistant
Secretary
------------------------------------
INVESTOR
By: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
Print your name: Xxxxxxx Xxxxxxx
--------------------------
PACESETTER CAPITAL CORPORATION
By:
---------------------------------------
Print your name:
--------------------------
Title:
------------------------------------
LEASING TECHNOLOGIES INTERNATIONAL, INC.
By:
---------------------------------------
Print your name:
--------------------------
Title:
------------------------------------
EXISTING INVESTOR
Entity Name:
------------------------------
By:
---------------------------------------
Print your name:
--------------------------
Title:
------------------------------------
(SIGNATURE PAGE TO THE FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT)
IMPERIAL BANK
By:
---------------------------------------
Print your name:
--------------------------
Title:
------------------------------------
(SIGNATURE PAGE TO THE FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT)
EXHIBIT A
INVESTOR ("PRIOR HOLDERS")
JNC STRATEGIC FUND, LTD.
Address: c/o Olympia Capital (Cayman) Ltd.
Xxxxxxxx Xxxxx, 00 Xxxx Xxxxxx
Xxxxxxxx XX 00, Xxxxxxx
Attn: Xxxxxx Xxxxx
with a copy to:
Xxxxxxx Xxxxxxxxxx
Encore Capital Management LLC
00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxx, XX 00000
RESONANCE LIMITED
Address: c/o Pergrine Corporate Service Limited
Burleigh Manor, Peel Road
Douglas, Isle of Man IM15EP
British Isles
Tel: 000-00-000-000-000
Fax: 000-00-000-000-000
XXXXX XXXXXXXXX
Address: 000 Xxxx Xxxxx Xxxxxx
Xxxx Xxxxx, XX 00000
Tel: ( ) 000-0000
XXXXX XXXXXXX
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Tel: (000) 000-0000
CAVCO OF NORTH FLORIDA, INC.
Address: 0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXX XXXXXX
Address: x/x Xxxxxxx Xxxxxxx Partners, Ltd.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
GILAT SATELLITE NETWORKS LTD.
Address: Gilat House
Yegia Kapayim Street,
Daniv Park
Kiryat Xxxx,
Petach Tikva 49130
Israel
Attn: Xxx Xxxxxxx
Tel: 000-000-0-000-0000
Fax: 000-000-0-000-0000
ARES LEVERAGED INVESTMENT FUND, L.P.
Address: 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
ARES LEVERAGED INVESTMENT FUND II, L.P.
Address: 0000 Xxxxxx xx xxx Xxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
SYLVAN LEARNING SYSTEMS, INC.
Address: 0000 Xxxxxxxxx Xx.,
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXX XXXXXXX
Address: 0000 Xxxx Xxxxx Xxxx,
Xxxx, XX 00000
Tel:
Fax:
XXXXX XXXXXXX
Address: 0000 Xxxxxxx Xx., Xxxxx 000
Xxxxxxxxxxx, XX 00000
Tel:
Fax:
X. X. XXXXXX
Address: 000 Xxxxxxxx Xxxxxx,
Xxxx Xxxx, XX 00000
Tel:
Fax:
STERLING ZAPME LLC
Address: 000 Xxxxxx Xx., Xxxxx 000
Xxxxxxxxxx, XX 00000
Attn: Xxxxxx X. Xxxxxxx
Tel:
Fax:
TROCADERO GROUP LLC
Address: 0000 Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxxxxx, XX 00000
Tel:
Fax:
QUINCE ASSOCIATES, L.P.
Address: 000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Tel:
Fax:
DRAKE HOLDINGS LIMITED
Address: 00 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx, X0X0X0, Xxxxxx
Tel:
Fax:
ENCORE CAPITAL MANAGEMENT, LLC
Address: 00000 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Tel:
Fax:
STRONG RIVER INVESTMENTS LTD
Address: 000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel:
Fax:
HEADWATERS CAPITAL
Address: 000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxx
Tel:
Fax:
XXXX XXXXXXXXXX
Address: Xxxxxxxx Investors LLC
000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel:
Fax:
XXXXXXX X. XXXXXXXX
Address: Xxxxxxxx Investors LLC
000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel:
Fax:
XXXXXXX X. XXXXX
Address: Xxxxxxxx Investors LLC
000 Xxxxxxx Xxx., 00xx Xxxxx
Xxx Xxxx, XX 00000
Tel:
Fax:
WS INVESTMENT COMPANY 99A
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXX X. XXXXXXXXXXX
Address: Centraal Corporation
0 Xxxxxx Xxxx Xxx, 0xx Xxxxx
Xxx Xxxxxx, XX 00000-0000
Tel: (000) 000 0000
Fax: (000) 000 0000
XXXXXXX XXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
QUESTMARK PARTNERS, L.P.
Address: c/o QuestMark Management Co., Inc.
Xxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxxxx
Tel: ( )
Fax: ( )
ZM CO-INVESTMENT LLC
Address: 1999 Avenue of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attn: Xxxx Xxxxxxx
Tel: ( )
Fax: ( )
LANCASTER EQUITIES, LLC
Address: 0000 Xxxxxxxxx Xx.
Xxxxxxxxx, XX 00000
Attn: Xxxxxx XxXxxx
Tel: ( )
Fax: ( )
ZAP INVESTMENTS, LLC
Address: 0000 Xxxxxxxxx Xx.
Xxxxxxxxx, XX 00000
Attn: Xxxxxxx X. Xxxxxxxxx
Tel: ( )
Fax: ( )
PHOENIX WORLDWIDE LIMITED
Address: c/o Kleinhadler Halevy Law Firm
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, 00000, Isreal
Attn: Xxxx Xxxxxx
Tel: ( )
Fax: ( )
MAPLE PROPERTIES LIMITED
Address: c/o Kleinhadler Halevy Law Firm
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, 00000, Isreal
Attn: Xxxx Xxxxxx
Tel: ( )
Fax: ( )
XXX XXXXXXX
Address: c/o Gilat Satellite Networks, Ltd.
Yegia Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxx Xxxxx, 00000, Isreal
Tel: ( )
Fax: ( )
EL QUESTOR LIMITED
Address: c/o Kleinhadler Halevy Law Firm
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, 00000, Isreal
Attn: Xxxx Xxxxxx
Tel: ( )
Fax: ( )
XXXXXX LTD.
Address: c/o Kleinhadler Halevy Law Firm
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, 00000, Isreal
Attn: Xxxx Xxxxxx
Tel: ( )
Fax: ( )
YOUNG PROPERTIES LIMITED
Address: c/o Kleinhadler Halevy Law Firm
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, 00000, Isreal
Attn: Xxxx Xxxxxx
Tel: ( )
Fax: ( )
XXXXXX LIMITED
Address: c/o Kleinhadler Halevy Law Firm
00 Xxxxxxxx Xxxxxx
Xxx Xxxx, 00000, Isreal
Attn: Xxxx Xxxxxx
Tel: ( )
Fax: ( )
XXXXXXX XXXX
Address: 7 Aliya St.
Ramat-Hasharon 47249, Isreal
Tel: ( )
Fax: ( )
XXXXXXX XXXXXX
Address: 00000 Xxxxxxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
Tel: ( )
Fax: ( )
XXXXX XXXXX
Address: 0000 Xxxxxxxx Xx.
Xxxxxxxx, XX 00000
Tel: ( )
Fax: ( )
XXXXXX X. XXXXXXXX
Address: Xxx Xxxxxxx Xxxx., Xxxxx 000
Xxx Xxxx, XX 00000
Tel: (408)
Fax: (408)
XXXXX X. XXXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (650) 493-
XXXXXX X. XXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXX X. XXXXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXX X. XXXXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXXX X. XXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXX XXXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXXX X. XXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXXX X. XXXXXX
Address: 000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
XXXXXXX XXXXXX
Address: Centraal Corporation
0 Xxxxxx Xxxx Xxx, 0xx Xxxxx
Xxx Xxxxxx, XX 00000-0000
Tel: (000) 000 0000
Fax: (000) 000 0000
INVESTOR ("NEW INVESTORS")
DELL USA L.P.
Address: Xxx Xxxx Xxx
Xxxxx Xxxx, Xxxxx 00000
Attn: Vice President, Business Development
Tel:
Fax:
XXXXXXX XXXXXXX
Address: 0000 XxxXxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Tel: (000) 000-0000
Fax: (000) 000-0000
INVESTOR ("WARRANT HOLDERS")
PACESETTER CAPITAL CORPORATION
Address: 000 Xxxxxxxxxx Xxxxxx Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000-0000
Attn: Xx. Xxx X. XxXxxxxx, President
Tel: (000) 000-0000
Fax: (000) 000-0000
LEASING TECHNOLOGIES INTERNATIONAL, INC.
Address:
Tel: ( )
Fax: ( )
IMPERIAL BANK
Address:
Tel: ( )
Fax: ( )
COMPANY
ZAPME! CORPORATION:
0000 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
Tel: (000) 000-0000
Facsimile: (000) 000-0000
Attn: Xxxxx X. Xxxxx,
Vice President, Business Development
General Counsel and Secretary
EXHIBIT B
IN WITNESS WHEREOF, pursuant to Section 3.12 of the Fourth Amended and
Restated Investors' Rights Agreement (the "Agreement") the parties have executed
this signature page to the Agreement this ___ day of _______, ____.
ZAPME! CORPORATION
By:
----------------------------------
Title:
-------------------------------
[WARRANT INVESTOR]
Name:
--------------------------------
Signature:
---------------------------
Print your name:
---------------------
Title (if applicable):
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