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EXHIBIT 10.26
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
This Agreement, dated as of March 13, 2000, is among Digital Commerce
Corporation, a Delaware corporation (the "Company"), Weston Presidio Capital
III, L.P., a Delaware limited partnership, Highland Capital Partners V Limited
Partnership, a Delaware limited partnership, and the other investors listed in
Schedule A (collectively, and together with their permitted successors and
assigns, the "Investors"), the holders of Preferred Stock listed on Schedule B
hereto (collectively, the "Other Preferred Holders") and the other security
holders of the Company listed in Schedule C from time to time in effect (the
"Management Stockholders" and collectively with the Investors and the Other
Preferred Holders, the "Holders"). The parties agree as follows:
1. DEFINITIONS. Certain capitalized terms are used in this Agreement as
specifically defined below in this Section 1. Except as the context otherwise
explicitly requires, (a) the capitalized term "Section" refers to sections of
this Agreement, (b) the capitalized term "Exhibit" refers to exhibits to this
Agreement, (c) references to a particular Section include all subsections
thereof, (d) the word "including" shall be construed as "including without
limitation", (e) accounting terms not otherwise defined herein have the meaning
provided under GAAP, (f) references to a particular statute or regulation
include all rules and regulations thereunder and any successor statute,
regulation or rules, in each case as from time to time in effect and (g)
references to a particular Person include such Person's successors and assigns
to the extent not prohibited by this Agreement and the other Investor
Agreements. References to "the date hereof" mean the date first set forth above.
Capitalized terms used and not otherwise defined herein are used herein as
defined in the Purchase Agreement.
1.1. "Common Stock" means the common stock, $0.01 par value, of the
Company.
1.2. "Company" is defined in the preamble.
1.3. "Exchange Act" means the Securities and Exchange Act of 1934.
1.4. "Form S-1", "Form S-2", "Form S-3", "Form S-4" and "Form S-8" mean
such respective forms under the Securities Act as in effect on the date hereof
or any successor registration forms under the Securities Act subsequently
adopted by the SEC.
1.5. "Holder" is defined in the preamble.
1.6. "Investors" is defined in the preamble.
1.7. "Management Stockholders" is defined in the preamble.
1.8. "Other Preferred Holder" is defined in the preamble.
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1.9. "Preferred Stock" means the Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock of the Company.
1.10. "Purchase Agreement" means the Securities Purchase Agreement dated
as of the date hereof among the Company and the Investors.
1.11. "Qualified Public Offering" is defined in section 7.2 of the
Certificate of Designation.
1.12. "Register", "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement or similar document in
compliance with the Securities Act.
1.13. "Registrable Securities" means (a) the Common Stock issued or
issuable upon conversion, exchange or exercise of the Preferred Stock, (b) any
Common Stock issued (or issuable upon the conversion, exchange 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, either
such Preferred Stock, or the Common Stock issued or issuable upon conversion,
exchange or exercise of such Preferred Stock, and (c) any Common Stock issued to
the Management Stockholders, either directly or pursuant to options, warrants or
other rights under employee plans or hereafter issued or issuable as a dividend
or other distribution with respect thereto or in exchange therefor or
replacement thereof; provided, however, that any shares previously sold to the
public pursuant to a registered public offering or pursuant to Rule 144 under
the Securities Act shall cease to be Registrable Securities.
1.14. "Registrable Securities then outstanding" means the sum of (a) the
number of shares of Common Stock outstanding which are Registrable Securities
plus (b) the number of shares of Common Stock issuable pursuant to then
exercisable, exchangeable or convertible securities which upon issuance would be
Registrable Securities.
1.15. "Registration Period" means the period commencing on the date that
is 180 days after the effective date of the first Qualified Public Offering of
the Company and terminating on the date that is three and one half years after
the effective date of such Qualified Public Offering.
1.16. "Required Investors" means those Investors who own at least a
majority of the Registrable Securities then outstanding (on an as converted,
exercised and/or exchanged basis) owned by all Investors.
1.17. "Rule 144" is defined in Section 8.
1.18. "SEC" means the Securities and Exchange Commission or any successor
agency.
1.19. "Securities Act" means the Securities Act of 1933.
1.20. "Series B Preferred Stock" means the Series B Convertible Preferred
Stock, par value $0.01 per share, of the Company.
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1.21. "Series C Preferred Stock" means the Series C Convertible Preferred
Stock, par value $0.01 per share, of the Company.
1.22. "Series D Preferred Stock" means the Series D Redeemable
Convertible Preferred Stock, par value $0.01 per share, of the Company.
1.23. "Violation" is defined in Section 7.1.
2. REQUEST FOR REGISTRATION.
2.1. Long- Form Request Rights. If the Company shall receive at any time
during the Registration Period a written request from the Holders owning at
least a majority of the Registrable Securities then outstanding and owned by the
Holders that the Company effect the registration on Form S-1 or Form S-2 (or any
successor form) under the Securities Act of at least 10% of the Registrable
Securities issued pursuant to the Purchase Agreement, then the Company shall,
within five days after the receipt thereof, give written notice of such request
to all Holders. If the Holders initiating such registration intend to distribute
such shares by means of an underwritten offering, they shall so advise the
Company in such written request. Subject to the limitations of this Section 2,
the Company shall use its best efforts to effect such a registration as soon as
practicable, covering all the Registrable Securities which the Holders shall
request in writing within 20 days after receipt of such notice, all other shares
of Common Stock that the Company is contractually obligated, as of the date
hereof, to include in such a registration and all other shares of Common Stock
that the Company may wish to include, subject to any limitation imposed by the
lead underwriters as set forth in Section 2.3. The Company shall use its best
efforts to cause such registration statement to become effective.
2.2. Short Form Request Rights. At any time after the Company becomes
eligible to file a Registration Statement on Form S-3 (or any such successor
form relating to secondary offerings), Holders holding a majority of the
Registrable Securities then outstanding and owned by the Holders may request the
Company, in writing, to effect the registration on Form S-3 (or such successor
form) and any related qualification or compliance with respect to all or a part
of the Registrable Securities held by such Holders; provided, however, that (a)
in the case of a request by Other Preferred Holders or the Management
Stockholders, such Other Preferred Holders and Management Stockholders shall
have requested to register a number of Registrable Securities equal to or
greater than 10% of the Registrable Securities held by such Other Preferred
Holders and Management Stockholders on the date hereof and (b) in the case of a
request by Investors, such Investors shall have requested to register a number
of Registrable Securities equal to or greater than 10% of the aggregate number
of Registrable Securities originally issued to all of the Investors pursuant to
the Purchase Agreement. Upon receipt of such notice, then the Company shall,
promptly after the receipt thereof, give written notice of such request to all
Holders. If the holders of Registrable Securities initiating such registration
intend to distribute such shares by means of an underwritten offering, they
shall so advise the Company in such written request. Subject to the limitations
of this Section 2, the Company shall use its best efforts to effect such a
registration as soon as practicable, covering all the Registrable Securities
which
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the Holders shall request in writing within 20 days after receipt of such
notice, all other shares of Common Stock that the Company is contractually
obligated, as of the date hereof, to include in such a registration and all
other shares of Common Stock that the Company may wish to include, subject to
any limitation imposed by the lead underwriter as set forth in Section 2.3. The
Company shall use its best efforts to cause such registration statement to
become effective; provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance pursuant to this
Section 2.2 if Form S-3 is not available for such offering by the Holders.
2.3. Underwritten Offering. The lead underwriter for the proposed
offering to be registered under this Section 2 shall be selected by the Board of
Directors, subject to the approval of the holders of a majority of the
Registrable Securities initiating the request, whose approval shall not be
unreasonably withheld in the case of a nationally or regionally recognized firm.
The right of any Holder to include its Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of the Registrable Securities to be sold by such
Holder in the underwriting. All Holders proposing to sell Registrable Securities
in such offering shall (together with the Company as provided in Section 4.5)
enter into an underwriting agreement in customary form with the lead underwriter
for such underwriting. Notwithstanding any other provision of this Section 2, if
the lead underwriter for the offering advises the Company in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities which would otherwise be so underwritten, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated as follows:
(a) First, to the holders of Registrable Securities initiating
the registration and any holders of equity securities of the Company
which carry registration rights applicable to such registration issued
prior to the date of this Agreement, pro rata in accordance with the
number of shares requested by the initiating holders of Registrable
Securities and such other holders of securities to be included in such
offering.
(b) Second, to all other Holders pro rata in accordance with
the number of Registrable Securities requested by such Holders to be
included in such offering; provided, however, that Registrable
Securities held by Management Stockholders shall be included pursuant
to this clause (b) only if the Company and the lead underwriter shall
have furnished to the Holders requesting registration pursuant to this
Section 3 a certificate signed by the President of the Company stating
that in their good faith judgment, participation by such Management
Stockholders in the registration will not negatively impact such
offering.
(c) Third, to the Company for the shares requested to be sold
by it in such offering.
2.4. Number of Requests. The Company is obligated to effect only two
registrations on Form S-1 or Form S-2 pursuant to this Section 2. No limit
applies on the number of registrations the Company is obligated to effect on
Form S-3 pursuant to this Section 2.
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2.5. Deferral of Registration. Notwithstanding the foregoing provisions
of this Section 2, the Company shall not be obligated to effect the filing of a
registration statement pursuant to this Section 2 if the Company shall furnish
to the Holders requesting a registration statement pursuant to this Section 2 a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, the filing of such
registration statement would have an adverse affect upon the Company. The
Company shall have the right to defer such filing for a period of not more than
90 days after receipt of the request for a registration under this Section 2;
provided, however, that the Company may not utilize the right set forth in the
preceding sentence more than once in any 18-month period.
3. INCIDENTAL ("PIGGY-BACK") REGISTRATION. If the Company proposes to register
any of its capital stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than the initial public offering of securities of the Company or a registration
on Form S-8 or Form S-4 relating to an acquisition), the Company shall promptly
give each Holder written notice of such registration. Upon the written request
of any Holder given within 30 days after such notice, the Company shall, subject
to the further provisions of this Section 3, use its best efforts to include in
such registration all of the Registrable Securities that each such Holder has
requested to be registered to become effective under the Securities Act and all
other shares of Common Stock that the Company is contractually obligated, as of
the date hereof, to include in such a registration. The Company shall be under
no obligation to complete any offering of its securities it proposes to make
under this Section 3 and shall incur no liability to any Holder for its failure
to do so. Notwithstanding any other provisions of this Section 3, if the lead
underwriter for the offering advises the Company in writing that marketing
factors require a limitation of the number of shares to be underwritten, then
the Company shall so advise all Holders of Registrable Securities which would
otherwise be so underwritten, and the number of shares of Registrable Securities
that may be included in the underwriting shall be allocated as follows:
(a) First, to the Company and any holder of equity securities
of the Company which carry registration rights granted prior to the
date of this Agreement (unless such registration rights permit such
equity securities to be cut back by the underwriters on a pari passu
basis with the Registrable Securities) for shares requested to be sold
by them in such offering.
(b) Second, to the Holders requesting registration in such
offering pro rata in accordance with the number of Registrable
Securities requested by the Holders to be included in such offering;
provided, however, that Registrable Securities held by Management
Stockholders shall be included pursuant to this clause (b) only if the
Company and the lead underwriter shall have furnished to the Holders
requesting registration pursuant to this Section 3 a certificate signed
by the President of the Company stating that in their good faith
judgment, participation by such Management Stockholders in the
registration will not negatively impact such offering.
4. OBLIGATIONS OF THE COMPANY. In connection with any registration of
Registrable Securities pursuant to this Agreement, the Company shall take the
following actions, as expeditiously as reasonably possible:
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4.1. Effectiveness of Registration. In cooperation with the selling
Holders as contemplated by Section 5.2, the Company shall 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.
Upon the request of the Holders of a majority of the Registrable Securities
registered thereunder, the Company shall keep any registration statement filed
pursuant to Section 2 effective for up to one hundred eighty (180) days or until
the Holders have informed the Company in writing that the distribution of their
securities has been completed.
4.2. Amendments. The Company shall prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement, and use its best efforts to
cause each such amendment to become effective, as may be necessary to comply
with the Securities Act with respect to the disposition of all securities
covered by such registration statement; provided, however, that nothing
contained in this Section 4.2 will be deemed to increase the Company's
obligations pursuant to the last sentence of Section 4.1.
4.3. Copies of Registration Statement. The Company shall furnish to each
Holder such number of conformed copies of such registration statement and of
each such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such registration
statement (including each preliminary prospectus and any summary prospectus), in
conformity with the requirements of the Securities Act, such documents
incorporated by reference in such registration statement or prospectus, and such
other documents, as such Holder may reasonably request in order to facilitate
the disposition of its Registrable Securities covered by such registration
statement.
4.4. State Qualifications. The Company shall use its best efforts to
register or qualify such Registrable Securities under or exempt such Registrable
Securities from registration or qualification requirements of the securities or
blue sky laws of such jurisdictions as each Holder shall reasonably request, and
do all other acts which may be necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of its Registrable Securities
covered by such registration statement; provided, however, that the Company
shall not be required to qualify as a foreign corporation in any state where it
is not then required to qualify.
4.5. Underwriting Agreement. The Company shall enter into and perform its
obligations under an underwriting agreement, in customary form not inconsistent
with this Agreement, with the lead underwriter of such offering.
4.6. Changes in Prospectus. The Company shall notify each Holder of
Registrable Securities covered by such registration statement, at any time when
a prospectus relating thereto covered by 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. The
Company shall promptly file such
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amendments and supplements which may be required pursuant to Section 4.2 on
account of such event and use its best efforts to cause each such amendment and
supplement to become effective. Upon receipt of such notice and pending the
effectiveness of such amendments and/or supplements, each Holder agrees not to
sell any Registrable Securities pursuant to such Registration.
4.7. Opinions and Comfort Letters. The Company shall furnish on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Agreement (a) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given by issuer's counsel
to the underwriters in an underwritten public offering, addressed to the
underwriters and to the Holders requesting registration of Registrable
Securities and (b) a letter dated such date, from the independent certified
public accountants of the Company, in form and substance as is customarily given
by the issuer's independent certified public accountants to underwriters in an
underwritten public offering, addressed to the underwriters and to the Holders
requesting registration of Registrable Securities.
4.8. Transfer Agent. The Company shall provide a transfer agent and
registrar for such Registrable Securities not later than the effective date of
such registration statement.
4.9. Listing Shares. The Company shall apply for listing and use its best
efforts to list the Registrable Securities being registered on any national
securities exchange on which a class of the Company's equity securities are
listed. If the Company does not have a class of equity securities listed on a
national securities exchange, but does have equity securities listed for trading
on the automated quotation system of the National Association of Securities
Dealers, Inc., the Company shall apply for qualification and use its best
efforts to qualify the Registrable Securities on such automated quotation
system.
5. PREPARATION OF REGISTRATION STATEMENT.
5.1. Information by Selling Holders. The selling Holders shall furnish to
the Company such information regarding themselves, the Registrable Securities
held by them, and the intended method of disposition of such Registrable
Securities as shall be required to effect the registration of their Registrable
Securities.
5.2. Participation in Preparation of Registration Statement. In
connection with the preparation and filing of each registration statement
registering Registrable Securities under the Securities Act, the Company will
give the selling Holders, their underwriters and one counsel selected by the
selling Holders and approved in writing by the Required Investors, the
opportunity to participate in the preparation of such registration statement,
each prospectus included therein or filed with the SEC, and each amendment
thereof or supplement thereto, and will give each of them such access to its
books and records and such opportunities to discuss the business of the Company
with its officers and the independent public accountants who have certified its
financial statements as shall be necessary, in the reasonable opinion of such
selling
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Holder and such underwriters or their respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act to protect
themselves from liability thereunder.
5.3. Underwriting Agreement. Each selling Holder shall enter into and
perform its obligations under an underwriting agreement with the lead
underwriter for such offering in customary form not inconsistent with this
Agreement, including furnishing any opinion of counsel and agreeing to
indemnification obligations reasonably requested by the lead underwriter, but in
no event will any holder be liable for indemnification obligations in excess of
the net offering proceeds received by such Holder.
6. EXPENSES OF REGISTRATION. All expenses other than underwriting discounts and
commissions relating to Registrable Securities incurred in connection with each
of the registrations, filings or qualifications pursuant to Sections 2 or 3,
including all registration, filing and qualification fees, all fees and expenses
in connection with compliance with state securities or blue sky laws, printing
and delivery expenses, fees and disbursements of counsel and independent public
accountants for the Company, and the reasonable fees and disbursements of one
law firm acting as counsel for the selling Holders (which are not anticipated to
exceed $20,000 barring unforeseen circumstances) shall be paid by the Company.
Underwriting discounts and commissions relating to Registrable Securities will
be paid ratably by the Holders of such Registrable Securities.
7. INDEMNIFICATION.
7.1. Company Indemnification. To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, the officers, directors, partners,
agents and employees of each Holder, any underwriter (as defined in the
Securities Act) for such Holder, and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Exchange
Act, against any losses, claims, damages or liabilities (joint or several) to
which any of them may become subject under the Securities Act, the Exchange Act,
other federal or state law or otherwise, and to reimburse them for any legal or
any other expenses reasonably incurred by them in connection with investigating
any claim, or defending any action or proceeding, insofar as such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (a "Violation"): (a) any untrue statement or alleged untrue statement
of a material fact contained or incorporated by reference in any registration
statement under which Registrable Securities were registered, including any
preliminary prospectus or final prospectus contained therein or any amendments
or supplements thereto, (b) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading, or (c) any violation or alleged violation by the Company of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation under the Securities Act, the Exchange Act or any state securities
law. The indemnity provisions in this Section 7.1 shall not apply to amounts
paid in settlement of any 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 to a Holder in
any such case for any such loss, claim, damage, liability or action (i) to the
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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 or on behalf of such Holder,
underwriter or controlling person or (ii) in the case of a sale directly by a
Holder of Registrable Securities (including a sale of such Registrable
Securities through any underwriter retained by such Holder to engage in a
distribution solely on behalf of such Holder) such untrue statement or alleged
untrue statement or omission or alleged omission was contained in a preliminary
prospectus and corrected in a final or amended prospectus, and such Holder
failed to deliver a copy of the final or amended prospectus at or prior to the
confirmation of the sale of the Registrable Securities, as the case may be, to
the person asserting any such loss, claim, damage or liability in any case where
such delivery is required by the Securities Act.
7.2. Holder Indemnification. To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors,
officers and employees, each person, if any, who controls the Company within the
meaning of the Securities Act, each agent and any underwriter for the Company,
and any other Holder selling securities in such registration statement or any of
its directors, officers, partners, agents or employees or any person who
controls such Holder or underwriter, against any losses, claims, damages or
liabilities (joint or several) to which any of them may become subject, under
the Securities Act, the Exchange Act or other federal or state law or otherwise,
and to reimburse them for any legal or any other expenses reasonably incurred by
them in connection with investigating any claim, or defending any action or
proceeding, 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 occurred in reliance
upon and in conformity with written information furnished by or on behalf of
such Holder expressly for use in connection with such registration; provided,
however, that the liability of any Holder hereunder shall be limited to the
amount of proceeds received by such Holder in the offering giving rise to the
Violation or if the offering is terminated, the amount such Holder would have
received; and provided, further, that the indemnity provisions in this Section
7.2 shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder (which consent shall not be unreasonably withheld).
7.3. Notice, Defense and Counsel. Promptly after receipt by an
indemnified party under this Section 7 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 7, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume and control the
defense thereof with counsel mutually reasonably 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 differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall
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relieve such indemnifying party of any liability to the indemnified party under
this Section 7 only to the extent the indemnifying party is actually prejudiced
in its ability to defend such action.
7.4. Contribution in Lieu of Indemnification. If the indemnification
provided for in Sections 7.1 or 7.2 is unavailable, for any reason other than as
specified in the last sentence of Section 7.3, to a person that would have been
an indemnified party in respect of any losses, claims, damages or liabilities
(or actions in respect thereof) referred to therein, then each person that would
have been an indemnifying party thereunder shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of the indemnifying party on the one hand and such indemnified party on
the other in connection with the untrue or alleged untrue statements of a
material fact or omissions which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof). The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the indemnifying party or
such indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to above
in this Section 7.4 shall include any legal or other expenses in connection with
investigating or defending any such action or claim (which shall be limited as
provided in Section 7.3 if the indemnifying party has assumed the defense of any
such action in accordance with the provisions thereof). No person guilty of
fraudulent misrepresentation (within the meaning of section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
7.5. Survival of Rights and Obligations. The obligations of the Company
and the Holders under this Section 7 shall survive the completion of any
offering of Registrable Securities.
8. REPORTS UNDER EXCHANGE ACT. In order to provide to the Holders the benefits
of Rule 144 under the Securities Act and any other rule or regulation of the SEC
that may at any time permit a Holder to sell securities of the Company to the
public without registration ("Rule 144"), and in order to make it possible for
Holders to register the sale of the Registrable Securities pursuant to a
registration on Form S-3, the Company agrees to:
8.1. Public Information. Make and keep public information available, as
those terms are understood and defined in Rule 144, at all times after 90 days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public.
8.2. Exchange Act Registration. Take such action, including the voluntary
registration of its Common Stock under section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable (but not
later than 90 days) after the end of the fiscal year in which the first
registration statement filed by the Company for the offering of its securities
to the general public is declared effective.
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8.3. Timely Filing. File with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act.
8.4. Compliance; Information. Furnish to any Holder, so long as the
Holder owns any Registrable Securities, forthwith upon request (a) a written
statement by the Company whether it has complied with the reporting requirements
of Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold in a secondary offering pursuant to Form S-3 (at any time after it so
qualifies), (b) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (c)
such other information as may be required by Rule 144 in order to permit the
selling of any such securities without registration.
9. LOCK-UP AGREEMENTS. If requested by the lead underwriter in connection with
an underwritten offering, whether under this Agreement or otherwise, the Holders
shall enter into lock-up agreements pursuant to which they will not, for a
period of seven days prior to, and 90 days following, the effective date of a
registration statement for the offering of the Company's securities, or any
other period reasonably requested by the lead underwriter not to exceed 180
days, publicly offer or sell any of the Registrable Securities without the prior
consent of the lead underwriter, provided that (a) the officers and directors of
the Company enter into lock-up agreements with terms at least as restrictive and
(b) the Holders shall be able to offer publicly and sell Registrable Securities
free from the lock-up provisions contemplated by this Section 9 for at least 90
consecutive days in each period of 360 consecutive days.
10. LIMITATIONS ON OTHER REGISTRATION RIGHTS. The Company shall not, without the
prior written consent of the Required Investors, enter into any agreement with
any holder or prospective holder of any securities of the Company which would
allow such holder or prospective holder to (a) require the Company to effect a
registration, or (b) include any securities in any registration filed under
Sections 2 or 3 unless, under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such securities will not reduce the amount of
Registrable Securities to be included by the Holders or the Company.
11. GENERAL.
11.1. Notices. Any notice or other communication in connection with this
Agreement shall be deemed to be delivered if in writing addressed as provided
below and if either (a) actually delivered at such address, whether by telecopy,
overnight or two-day courier (b) in the case of a letter, seven business days
shall have elapsed after the same shall have been deposited in the United States
mails, postage prepaid and registered or certified, return receipt requested or
(c) transmitted to any address outside of the United States, by telecopy and
confirmed by overnight or two-day courier:
-11-
12
If to the Company, to it at 00000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, Xxxxxxxx 00000, telecopy: (000) 000-0000, telephone: (000) 000-0000, or
at such other address as the Company shall have specified by notice actually
received by the Principal Holders.
If to the Investors, to the Investors' respective addresses set forth on
Schedule A or B, or at such other address as the Investors shall have specified
by notice actually received by the Company, in each case with a copy to WPC and
Highland.
If to any other Holder, to it at its address set forth in the securities
registers of the Company.
11.2. Amendments, Waivers and Consents. Any provision in this Agreement
to the contrary notwithstanding, changes in or additions to this Agreement may
be made, and compliance with any covenant or provision herein set forth may be
omitted or waived, only by written agreement signed by (a) the Company and (b)
the Required Investors and if a copy of such modification shall be delivered to
any Holders who did not execute the same; provided, however, that any such
modification adversely affecting the Management Stockholders in a manner
distinct from the effect of such modification on the other Holders shall require
the written consent of the Management Stockholders holding a majority of the
Registrable Securities then outstanding owned by all Management Stockholders.
11.3. Binding Effect; Assignment. This Agreement shall be binding upon
and inure to the benefit of the personal representatives, successors and assigns
of the respective parties hereto. The Company shall not have the right to assign
its rights or obligations hereunder or any interest herein without obtaining the
prior written consent of the Investors holding a majority of the Registrable
Securities then outstanding owned by the Investors. The Holders may assign or
transfer their rights and obligations under this Agreement to the extent (a) the
assignment or transfer of such Registrable Securities is permitted by the other
agreements between the respective Holders and the Company and (b) that such
assignee or transferee owns or obtains Registrable Securities having a fair
value of at least $250,000.
11.4. Severability. If any provision of this Agreement shall be found by
any court of competent jurisdiction to be invalid or unenforceable, such
provision shall, to the maximum extent allowable by law, be modified by such
court so that it becomes enforceable and, as modified, shall be enforced as any
other provision hereof, all the other provisions hereof continuing in full force
and effect.
11.5. Headings. The headings contained in this Agreement are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
11.6. Entire Agreement. This Agreement constitutes the entire agreement
of the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous understandings, whether written or oral.
11.7. Counterparts. This Agreement may be executed in counterparts, all
of which together shall constitute the same instrument.
-12-
13
11.8. Joinder of Additional Parties. Future holders of the Company's
capital stock (or of options, warrants, conversion rights or other rights to
acquire such capital stock) may become party hereto as a Holder by executing a
joinder hereto in a form reasonably satisfactory to the Company.
11.9. Choice of Law. This Agreement shall be governed by and construed in
accordance with the laws (other than the conflict of laws rules) of the State of
Delaware.
[the remainder of this page is intentionally blank]
-13-
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The parties have caused this Agreement to be duly executed under seal as
of the date first above written.
DIGITAL COMMERCE CORPORATION
By /s/ Xxxx Xxxxxx
-----------------------------------------
Title: President
INVESTORS:
WESTON PRESIDIO CAPITAL III, L.P.
By: WESTON PRESIDIO CAPITAL
MANAGEMENT III, L.P.,
its General Partner
By /s/ Xxxxx X. xxx Xxxxxxxxx
-----------------------------------------
General Partner
WESTON PRESIDIO ENTREPRENEUR FUND,
L.P.
By: WESTON PRESIDIO CAPITAL
MANAGEMENT III, L.P.,
its General Partner
By /s/ Xxxxx X. xxx Xxxxxxxxx
--------------------------------
Title:
HIGHLAND CAPITAL PARTNERS V LIMITED
PARTNERSHIP
By: HIGHLAND MANAGEMENT
PARTNERS V LIMITED PARTNERSHIP,
its General Partner
By: HIGHLAND MANAGEMENT
PARTNERS V, INC.,
its General Partner
By /s/ Illegible
--------------------------------
Authorized Officer
15
HIGHLAND CAPITAL PARTNERS V-B
LIMITED PARTNERSHIP
By: HIGHLAND MANAGEMENT
PARTNERS V LIMITED PARTNERSHIP,
its General Partner
By: HIGHLAND MANAGEMENT
PARTNERS V, INC.,
its General Partner
By /s/ Illegible
--------------------------------
Authorized Officer
HIGHLAND ENTREPRENEURS' FUND V
LIMITED PARTNERSHIP
By: HEF V LIMITED PARTNERSHIP, its
General Partner
By: HIGHLAND MANAGEMENT
PARTNERS V, INC.,
its General Partner
By /s/ Illegible
--------------------------------
Authorized Officer
eSENTINEL VENTURE CAPITAL, L.L.C.
By: SENTINEL CAPITAL PARTNERS, L.P., its
member
By: SENTINEL PARTNERS, L.P., its general
partner
By: SENTINEL PARTNERS, INC., its general
partner
By /s/ Illegible
-----------------------------------------
Name:
Title:
16
eSENTINEL VENTURE CAPITAL II, L.L.C.
By: SENTINEL CAPITAL PARTNERS II, L.P.,
its member
By: SENTINEL PARTNERS II, L.P., its general
partner
By: SENTINEL PARTNERS II, INC., its general
partner
By /s/ Illegible
------------------------------------------
Name:
Title:
XXXXX X. XXXXXXXXXX
/s/ Xxxxx X. Xxxxxxxxxx
--------------------------------------------
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
--------------------------------------------
17
SAP INVESTMENTS, INC.
By /s/ Xxxxx X. XxXxx
--------------------------------------------
Name: Xxxxx X. XxXxx
Title: Chief Executive Officer
XXXX XXXXXXX
/s/ Xxxx Xxxxxxx
-----------------------------------------------
THE ROMAN ARCH FUND L.P.
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx, its E.V.P.
THE ROMAN ARCH FUND II L.P.
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx, its E.V.P.
XXXXXXX CAPITAL CORP.
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: President
18
RRE VENTURES II L.P.
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx, its General Partner
RRE VENTURES FUND II L.P.
By /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Xxxxxx X. Xxxxxxx, its General Partner
19
MANAGEMENT STOCKHOLDERS
XXXX XXXXXX
/s/ Xxxx Xxxxxx
----------------------------------------------
XXXXXXX X. XXXXXXX
/s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
ATOCHA, L.P.
By /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Xxxxxx Xxxxxxx, general partner
20
SCHEDULE A TO REGISTRATION
RIGHTS AGREEMENT
Investors
Number of Common
Name and Address Shares at Closing
(assuming conversion of
Series D Preferred)
Weston Presidio Capital III, L.P. 2,448,907
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Weston Presidio Entrepreneur Fund, L.P. 121,902
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Highland Capital Partners V 1,814,991
Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Highland Capital Partners V -B 467,887
Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Highland Entrepreneurs' Fund V 287,931
Limited Partnership
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
21
eSentinel Venture Capital, L.L.C. 51,373
000 Xxxxx Xxxxxx -- 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
eSentinel Venture Capital II, L.L.C. 856,945
000 Xxxxx Xxxxxx -- 00xx xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxxx X. Xxxxx 17,156
First Century Partners
00 Xxxxxxx Xxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxx X. Xxxxxxxxxx 17,156
X.X. Xxxxxxxxxx & Co., Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
SAP Investments, Inc. 856,937
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
-2-
22
Xxxx Xxxxxxx 514,162
Shaker Investments
000 Xxxx Xxxxxx - Xxxxx 000
Xxx Xxxx, Xxx Xxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
The Roman Arch Fund L.P. 64,270
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
The Roman Arch Fund II L.P. 64,270
Xxx Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Xxxxxxx Capital Corp. 42,847
0000 Xxxxxx xx xxx Xxxxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
RRE Ventures II L.P. 434,182
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
RRE Ventures Fund II L.P. 79,980
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
---------
Total 8,140,896
-3-
23
SCHEDULE B TO REGISTRATION
RIGHTS AGREEMENT
Other Preferred Holders
Name and Address Number of Common Shares
at Closing (assuming
conversion of Series B and
Series C Preferred)
Atocha, L.P 11,032,515
0000 Xxxxxxxx Xxxxx
XxXxxx, Xxxxxxxx 00000
----------
Total 11,032,515
24
SCHEDULE C TO REGISTRATION
RIGHTS AGREEMENT
Management Stockholders
Number of
Stockholders and Address Shares of Common Stock
held at Closing
Xxxx Xxxxxx 25,000
Digital Commerce Corporation
00000 Xxxxxxx Xxxxxx Xxxxx - Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Xxxxxxx X. Xxxxxxx 1,573,427
Digital Commerce Corporation
00000 Xxxxxxx Xxxxxx Xxxxx - Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
---------
TOTAL 1,598,427
