EXHIBIT 4.3
INVESTOR RIGHTS AGREEMENT
-------------------------
This INVESTOR RIGHTS AGREEMENT (this "Agreement") is made and entered into
---------
as of the 5th day of June, 1995 by and between ANALYTICAL GRAPHICS, INC., a
Pennsylvania corporation (the "Company"), and XXX X. XXXX, (the "Investor").
R E C I T A L S
- - - - - - - -
A. The Investor has agreed to purchase from the Company, and the Company
has agreed to sell to the Investor, shares of the Company's Series A Preferred
Stock ("Series A Stock") on the terms and conditions set forth in that certain
------ -----
Series A Preferred Stock Purchase Agreement, of even date herewith by and
between the Company and the Investor (the "Series A Agreement").
------------------
B. The Series A Agreement provides that the Investor shall be granted
certain information and registration rights, all as more fully set forth herein.
1. INFORMATION RIGHTS.
------------------
1.1 FINANCIAL INFORMATION. The Company covenants and agrees that,
---------------------
commencing on the date of this Agreement, for so long as the Investor holds
shares of Series A Stock issued under the Series A Agreement or shares of Common
Stock of the Company ("Common Stock") issued upon the conversion of such shares
of Series A Stock ("Conversion Stock") the Company will:
(A) ANNUAL REPORTS. Furnish to the Investor, as soon as
--------------
practicable and in any event within seventy-five (75) days after the end of
each fiscal year of the Company, a consolidated Balance Sheet as of the end
of such fiscal year, a consolidated Statement of Income and a consolidated
Statement of Cash Flows of the Company and its subsidiaries for such year,
setting forth in each case in comparative form the figures from the
Company's previous fiscal year (if any), all prepared in accordance with
generally accepted accounting principles and practices and audited by
nationally recognized independent certified public accountants. The Company
hereby covenants and agrees to deliver to the Investor all audited
financial statements required by this Section 1. 1 (a), for the Company's
1994 fiscal year, on or before September 1, 1995; and
(B) QUARTERLY REPORTS. Furnish to the Investor as soon as
-----------------
practicable, and in any case within forty five (45) days after the end of
each fiscal quarter of the Company (except the last quarter of the
Company's fiscal year), quarterly unaudited financial statements, including
an unaudited Balance Sheet, and an unaudited Statement of Income and an
unaudited Statement of Cash Flows, together with a comparison to the
Company's operating plan and budget and statements of the Chief Financial
Officer of the Company explaining any significant differences in the
statements from the Company's operating plan and budget for the period and
stating that such statements fairly present the consolidated financial
position and consolidated financial results of the Company for the fiscal
quarter covered.
1.2 INSPECTION RIGHTS. The Company shall permit the Investor, at the
-----------------
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Investor. The Investor agrees to hold all information received from such
inspections in confidence, and not to use or disclose any of such information to
any third party, except to the extent such information may be made publicly
available by the Company.
1.3 TERMINATION OF CERTAIN RIGHTS. The Company's obligations under
-----------------------------
Sections l.l and 1.2 above will terminate upon the closing of the Company's
initial public offering of Common Stock pursuant to an effective registration
statement filed under the U.S. Securities Act of 1933, as amended (the
"Securities Act").
2. REGISTRATION RIGHTS.
-------------------
2.1 DEFINITIONS. For purposes of this Section 2:
-----------
(A) REGISTRATION. The terms "register," "registered," and
------------
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement
(B) REGISTRABLE SECURITIES. The term "Registrable Securities"
---------------------- ----------------------
means: (1) all shares of Conversion Stock that are now owned or may
hereafter be acquired by the Investor or any of the Investor's permitted
successors and assigns; and (2) any shares of Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, all
such shares of Common Stock described in clause (1) of this subsection (b);
excluding in all cases, however, any Registrable Securities sold by a
---------
person in a transaction in which rights under this Section 2 are not
assigned in accordance with this Agreement or any Registrable Securities
sold to the public or sold pursuant to Rule 144 promulgated under the
Securities Act.
(C) REGISTRABLE SECURITIES THEN OUTSTANDING. The number of
---------------------------------------
shares of "Registrable Securities then outstanding" shall mean the number
---------------------------------------
of shares of Common Stock which are Registrable Securities and (1) are then
issued and outstanding or (2) are then issuable pursuant to the exercise or
conversion of then outstanding and then exercisable options, warrants or
convertible securities.
(D) SEC. The term "SEC" or "Commission" means the U.S.
---
Securities and Exchange Commission.
2.2 PIGGYBACK REGISTRATIONS.
-----------------------
(A) REGISTRATION RIGHTS. The Company shall notify the Investor
-------------------
in writing at least thirty (30) days prior to filing any registration
statement under the Securities Act for purposes of effecting a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of
2
securities of the Company, but excluding registration statements relating
---------
to any employee benefit plan or a corporate reorganization) and will afford
the Investor an opportunity to include in such registration statement all
or any part of the Registrable Securities then held by the Investor. If the
Investor desires to include in any such registration statement all or any
part of the Registrable Securities held by the Investor, it shall, within
twenty (20) days after receipt of the above-described notice from the
Company, so notify the Company in writing, and in such notice shall inform
the Company of the number of Registrable Securities the Investor wishes to
include in such registration statement. If the Investor decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, the Investor shall nevertheless continue
to have the right to include any Registrable Securities in any subsequent
registration statement or registration statements as may be filed by the
Company with respect to offerings of its securities all upon the terms and
conditions set forth herein.
(B) UNDERWRITING. If a registration statement under which the
------------
Company gives notice under this Section 2.2 is for an underwritten
offering, then the Company shall so advise the Investor in writing. In such
event, the right of the Investor to have its Registrable Securities
included in a registration pursuant to this Section 2.2 shall be
conditioned upon the Investor's participation in such underwriting and the
inclusion of the Investor's Registrable Securities in the underwriting to
the extent provided herein. In connection with such underwritten offering,
the Investor shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriters selected for such
underwriting. Notwithstanding any other provision of this Agreement, if the
managing underwriter or underwriters determine(s) in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude shares
(including Registrable Securities) from the registration and the
underwriting, and the number of shares that may be included in the
registration and the underwriting shall be allocated, first, to the Company
-----
in full, and second, to the Investor; provided however, that the right of
------ -------- -------
the underwriters to exclude shares (including Registrable Securities) from
the registration and underwriting as described above shall be restricted so
that: (i) the number of Registrable Securities included in any such
registration is not reduced below twenty-five percent (25 %) of the shares
included in the registration, except for a registration relating to the
Company's initial public offering from which all Registrable Securities may
be excluded; and (ii) all shares that are not Registrable Securities and
are held by persons who are employees or directors of the Company (or any
subsidiary of the Company) shall first be excluded from such registration
and underwriting before any Registrable Securities are so excluded. If the
Investor disapproves of the terms of any such underwriting, the Investor
may elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the
effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the registration.
(C) EXPENSES. All expenses incurred in connection with a
--------
registration pursuant to this Section 2.2 (excluding underwriters' and
brokers' discounts and commissions), including, without limitation all
federal and "blue sky" registration and
3
qualification fees, printers' and accounting fees, fees and disbursements
of counsel for the Company and reasonable fees and disbursements of counsel
for the Investor shall be borne by the Company. The Investor shall bear its
proportionate share (based on the total number of shares sold in such
registration) of all discounts, commissions or other amounts payable to
underwriters or brokers in connection with such registration.
2.3 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
--------------------------
registration of any Registrable Securities under this Agreement, the Company
shall, as expeditiously as reasonably possible:
(A) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of
the Investor, keep such registration statement effective for up to ninety
(90) days.
(B) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(C) Furnish to the Investor such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as the
Investor may reasonably request in order to facilitate the disposition of
the Registrable Securities owned by the Investor that are included in such
registration.
(D) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue
Sky laws of such jurisdictions as shall be reasonably requested by the
Investor, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(E) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering.
(F) Notify the Investor at any time when a prospectus relating
to such registration statement 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 in the light of the circumstances then
existing.
(G) Furnish, at the request of the Investor, on the date that
its Registrable Securities are delivered to the underwriters for sale, if
such securities are being sold through underwriters, or, if such securities
are not being sold through
4
underwriters, on the date that the registration statement with respect to
such securities becomes effective, (i) an opinion, dated as of such date,
of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to the
Investor, addressed to the underwriters, if any, and to the Investor, and
(ii) a "comfort" letter dated as of such date, from the independent
certified public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory
to the Investor, addressed to the underwriters, if any, and to the Investor
requesting registration of Registrable Securities.
2.4 FURNISH INFORMATION. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Section 2.2 that the
Investor shall furnish to the Company such information regarding the Investor,
the Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to timely effect the registration of its
Registrable Securities.
2.5 DELAY OF REGISTRATION. The Investor shall not have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.6 INDEMNIFICATION. In the event any Registrable Securities are
---------------
included in a registration statement under Section 2.2:
(A) BY THE COMPANY. To the extent permitted by law, the Company
--------------
shall indemnify and hold harmless the Investor and its partners, any
underwriter (as defined in the Securities Act) for the Investor and each
person, if any, who controls the Investor or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended,
(the "1934 Act") (collectively, "Investor Indemnitees"), against any
losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Securities Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation"):
---------
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto;
(ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make
the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of
the Securities Act, the 1934 Act, any federal or state securities
law or any rule
5
or regulation promulgated under the Securities Act, the 1934 Act
or any federal or state securities law in connection with the
offering covered by such registration statement;
and the Company will reimburse each of the Investor Indemnitees for any
legal or other expenses reasonably incurred by them, as incurred, in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement
-------- -------
contained in this subsection 2.6(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any Investor
Indemnitees, including without limitation, any information furnished by the
Investor to the Company pursuant to Section 2.4 hereof..
(B) BY THE INVESTOR. To the extent permitted by law, the
---------------
Investor will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement,
and each person, if any, who controls the Company within the meaning of the
Securities Act or the 1934 Act (collectively, "Company Indemnitees"),
against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such Company Indemnitee may become subject under
the Securities Act, the 1934 Act or other federal or state law, but only,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by the
Investor, and known by the Investor to be furnished, expressly for use in
connection with such registration, including without limitation any
information furnished by the Investor to the Company pursuant to Section
2.4 hereof; and the Investor will reimburse any legal or other expenses
reasonably incurred by the Company or any such Company Indemnitee as
incurred in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
-------- -------
agreement contained in this subsection 2.6(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if
such settlement is effected without the consent of the Investor which
consent shall not be unreasonably withheld; and provided further, that the
-------- -------
total amounts payable in indemnity by the Investor under this Section
2.6(b) in respect of any Violation shall not exceed the net proceeds
received by the Investor in the registered offering out of which such
Violation arises.
(C) NOTICE. Promptly after receipt by an indemnified party under
------
this Section 2.6 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
2.6, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to
6
participate in, and, to the extent the indemnifying party so desires,
jointly with any other indemnifying party similarly noticed, to assume the
defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain
-------- -------
its own counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained
by the indemnifying party would be inappropriate due to actual or potential
conflict of interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.6, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any
liability that it may have to any indemnified party otherwise than under
this Section 2.6.
(D) DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing
-------------------------------------
indemnity agreements of the Company and the Investor are subject to the
condition that, insofar as they relate to any Violation made in a
preliminary prospectus but eliminated or remedied in the amended prospectus
on file with the SEC at the time the registration statement in question
becomes effective or the amended prospectus filed with the SEC pursuant to
SEC Rule 424(b) (the "Final Prospectus"), such indemnity agreement shall
----------------
not inure to the benefit of any person if a copy of the Final Prospectus
was furnished to the indemnified party and was not furnished to the person
asserting the loss, liability, claim or damage at or prior to the time such
action is required by the Securities Act.
(E) SURVIVAL. The obligations of the Company and the Investor
--------
under this Section 2.6 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
2.7 RULE 144 REPORTING. With a view to making available the benefits
------------------
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(A) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all
times after 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) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the 1934 Act (at any time after it has become subject to
such reporting requirements); and
(C) So long as the Investor owns any Registrable Securities, to
furnish to the Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule
144 (at any time after 90 days after 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 1934
Act
7
(at any time after it has become subject to the reporting requirements of
the 1934 Act), a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents of the Company as the
Investor may reasonably request in availing itself of any rule or
regulation of the Commission allowing the Investor to sell any such
securities without registration (at any time after the Company has become
subject to the reporting requirements of the 1934 Act).
3. ASSIGNMENT AND AMENDMENT.
------------------------
3.1 ASSIGNMENT. Notwithstanding anything herein to the contrary:
----------
(A) INFORMATION RIGHTS. The rights of the Investor under Section
------------------
1.1 or 1.2 hereof may be assigned only to a party who acquires from the
Investor (or the Investor's permitted assigns) all 6,000 shares of Series A
Stock or an equivalent number (on an as-converted basis) of shares of
Registrable Securities issued upon conversion thereof.
(B) REGISTRATION RIGHTS. The registration rights of the Investor
-------------------
under Section 2 hereof may be assigned only to a party who acquires all
6,000 shares of Series A Stock or an equivalent number (on an as-converted
basis) of Registrable Securities issued upon conversion thereof; provided,
--------
however that no party may be assigned any of the foregoing rights unless
-------
the Company is given written notice by the assigning party at the time of
such assignment stating the name and address of the assignee and
identifying the securities of the Company as to which the rights in
question are being assigned; and provided further that any such assignee
-------- -------
shall receive such assigned rights subject to all the terms and conditions
of this Agreement, including without limitation the provisions of this
Section 3.
3.2 AMENDMENT OF RIGHTS. Any provision of this Agreement may be
-------------------
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Investor.
3.3 NOTICES. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the Investor at:
0 Xxxxxxxx Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
or, in the case of the Company, at:
000 Xxxxxxxx Xxxxxx
Xxxx xx Xxxxxxx, Xxxxxxxxxxxx 00000
Attention: Xxxx X. Xxxxxxxx
8
with a copy to:
Xxxxx X. Xxxxx, Esquire
Xxxxxxxx Xxxxxxxxx
000 Xxxxxxx Xxxx Xxxx
Xxxxxxxxx Xxxxxxxxx Center
Xxxxxxxxx, Xxx Xxxxxx 00000
or at such other address as any party or the Company may designate by giving ten
(10) days advance written notice to all other parties.
3.4 ENTIRE AGREEMENT. This Agreement, together with all the Exhibits
----------------
hereto, constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.
3.5 GOVERNING LAW. This Agreement shall be governed by and construed
-------------
exclusively in accordance with the internal laws of the Commonwealth of
Pennsylvania as applied to agreements among Pennsylvania residents entered into
and to be performed entirely within Pennsylvania excluding that body of law
relating to conflict of laws and choice of law.
3.6 SEVERABILITY. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
3.7 THIRD PARTIES. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
3.8 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 3.1,
----------------------
the provisions of this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and permitted assigns of the parties hereto.
3.9 CAPTIONS. The captions to sections of this Agreement have been
--------
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
3.10 COUNTERPARTS. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
3.11 COSTS AND ATTORNEYS' FEES. In the event that any action, suit or
--------------------------
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
9
3.12 ADJUSTMENTS FOR STOCK SPLITS, ETC. Wherever in this Agreement
---------------------------------
there is a reference to a specific number of shares of Common Stock or Preferred
Stock of the Company of any class or series, then, upon the occurrence of any
subdivision, combination or stock dividend of such class or series of stock, the
specific number of shares so referenced in this Agreement shall automatically be
proportionally adjusted to reflect the effect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend
3.13 AGGREGATION OF STOCK. All shares held or acquired by affiliated
--------------------
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
THE COMPANY: THE INVESTOR:
----------- ------------
ANALYTICAL GRAPHICS, INC.,
a Pennsylvania corporation
By: /s/ Xxxx X. Xxxxxxxx By: /s/ Xxx X. Xxxx
--------------------- ---------------
Xxx X. Xxxx
Title: President & CEO
---------------
10
