EXHIBIT 4.2
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
June 30, 1999
TABLE OF CONTENTS
Page
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1. INFORMATION RIGHTS AND RIGHT OF REFUSAL............. 1
1.1 Financial Information.......................... 1
1.2 Inspection Rights.............................. 2
1.3 Board Visitation Rights........................ 2
1.4 Right of Refusal............................... 2
1.5 Vesting Imposed................................ 3
1.6 Termination of Certain Rights.................. 3
2. REGISTRATION RIGHTS................................. 4
2.1 Definitions.................................... 4
2.2 Request for Registration....................... 5
2.3 Piggyback Registrations........................ 6
2.4 Form S-3 Registration.......................... 8
2.5 Obligations of the Company..................... 9
2.6 Furnish Information............................ 10
2.7 Delay of Registration.......................... 10
2.8 Indemnification................................ 10
2.9 Rule 144 Reporting............................. 12
2.10 Termination of the Company's Obligations....... 13
2.11 Limitations on Subsequent Registration Rights.. 13
2.12 "Market Stand-Off" Agreement................... 13
2.13 S-3 Registration Requirements.................. 14
3. RIGHT OF FIRST OFFER................................ 14
3.1 General 14
3.2 New Securities................................. 14
3.3 Procedures..................................... 15
3.4 Failure to Exercise............................ 15
3.5 Termination.................................... 16
4. ASSIGNMENT AND AMENDMENT............................ 16
4.1 Assignment..................................... 16
4.2 Amendment of Rights............................ 17
5. DRAG ALONG RIGHTS................................... 17
5.1 Drag Along Right............................... 17
6. GENERAL PROVISIONS.................................. 17
6.1 Notices 17
6.2 Entire Agreement............................... 18
6.3 Governing Law.................................. 18
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6.4 Severability................................... 18
6.5 Third Parties.................................. 18
6.6 Successors And Assigns......................... 18
6.7 Captions....................................... 18
6.8 Counterparts................................... 18
6.9 Costs And Attorneys' Fees...................... 18
6.10 Adjustments for Stock Splits, etc.............. 18
6.11 Termination of Prior Agreement................. 18
6.12 Aggregation of Stock........................... 18
Exhibit A - Schedule of Investors
Exhibit B - Schedule of Prior Investors
ii
INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (this "Agreement")
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is made and entered into as of June 30, 1999 (the "Effective Date") by and among
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Digital Broadcast Network, a Missouri corporation (the "Company"), certain
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purchasers of the Company's Class A Common Stock, listed on Exhibit A hereto
(each, a "Prior Investor" and collectively, the "Prior Investors"), and the
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Investors listed on Exhibit B hereto (each, a "Series A Investor", and
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collectively with the Prior Investors, the "Investors").
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R E C I T A L S
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WHEREAS, each of the Prior Investors posses certain registration rights,
information rights, rights of first refusal and other rights pursuant to a
Rights Agreement by and among the Company and each of the Prior Investors (each,
a "Prior Agreement" and collectively, the "Prior Agreements");
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WHEREAS, each of the Prior Agreements may be amended only with the written
consent of the Company and the Prior Investors;
WHEREAS, each of the Series A Investors is a party to the Series A
Preferred Stock Purchase Agreement of even date herewith (the "Series A
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Agreement") between the Company and the Series A Investors, pursuant to which
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the Series A Investors are purchasing shares of the Series A Preferred Stock of
the Company (the "Series A Stock");
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WHEREAS, in order to induce the Company to enter into the Series A
Agreement and to induce the Series A Investors to invest funds in the Company
pursuant to the Series A Agreement, each of the Prior Investors hereby agree to
waive its rights under its respective Prior Agreement and to amend and restate
in its entirety its respective Prior Agreement, and the Investors and the
Company hereby agree that this Agreement shall govern the rights of the
Investors to cause the Company to register shares of the common stock of the
Company (the "Common Stock") issued or issuable to such Investors and to such
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other persons described in this Agreement, and certain other matters as set
forth herein;
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. INFORMATION RIGHTS AND RIGHT OF REFUSAL.
1.1 Financial Information. The Company covenants and agrees that,
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commencing on the date of this Agreement, (i) with respect to each of the Prior
Investors, for so long as it holds at least 40% of the Class A Common Stock (the
"Class A Stock") purchased by it pursuant to the respective Stock Purchase
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Agreement, by and among the Company and such Prior Investors (each, a "Class A
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Agreement"), and (ii) with respect to each Series A Investor, for so long as it
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holds at least 40% of the Series A Stock purchased by it pursuant to the Series
A Agreement, and/or the equivalent
number (on an as-converted basis) of shares of Common Stock issued upon
conversion of such shares of Series A Stock (the "Series A Conversion Stock"),
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the Company will:
(a) Annual Reports. Furnish to such Investor, as soon as
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practicable and in any event within 120 days after the end of each fiscal year
of the Company, an audited consolidated balance sheet as of the end of such
fiscal year, an audited consolidated statement of operations and an audited
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 compiled by an
independent certified public accountant;
(b) Quarterly Reports. Furnish to such Investor as soon as
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practicable, and in any case within 45 days of 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, an
unaudited statement of operations 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, or other comparable officer,
explaining any significant differences in the statements from the Company's
operating plan and budget for the period and stating that such statements are in
accordance with and were prepared from the books and records of the Company as
of the date and for the fiscal quarter covered, and fairly present the financial
position of the Company;
(c) Annual Budget. Furnish to such Investor (i) monthly
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financial statements compared against the Company's annual operating plan, as
provided to the board of directors of the Company (the "Board"), and (ii) a copy
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of the Company's annual operating plan, prepared on a monthly basis, within 30
days prior to the beginning of the Company's fiscal year.
1.2 Inspection Rights. As to each Prior Investor, for so long as
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such Prior Investor holds at least 40% of the shares of Class A Stock purchased
by it pursuant to its respective Class A Agreement and as to Series A Investor,
for so long such Series A Investor holds at least 40% of the shares of the
Series A Stock purchased by it pursuant to the Series A Agreement, and/or the
equivalent number (on an as-converted basis) of shares of Series A Conversion
Stock or any combination thereof, the Company shall permit such Investor, at
such 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 such Investor, but not exceeding once in each fiscal quarter;
provided however, that the Company shall not be obligated under this Section 1.2
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to provide information which it deems in good faith to be a trade secret or
similar confidential information if the Prior Investor or Series A Investor does
not first execute an appropriate nondisclosure agreement, and/or does not comply
with the Company's reasonable security procedures.
1.3 Board Visitation Rights. The Company covenants and agrees that,
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as to each Series A Investor, for so long as such Series A Investor holds at
least 600,000 shares of the Series A Stock purchased by it pursuant to the
Series A Agreement, and/or the equivalent number (on an as-converted basis) of
shares of Series A Conversion Stock, one (1) representative designated by such
Series A Investor (a "Series A Investor's Representative") (i) shall be entitled
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to attend each meeting of the Board as an observer and shall be given reasonable
notice of each meeting of the
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Board in the same manner and at the same time that directors of the Company are
given notice of such meeting and (ii) shall be entitled to receive the same
information, documents and Board packages distributed to the other directors in
connection with such meeting and (iii) any and all such other documents which
are in the ordinary course distributed to the members of the Board. Each Series
A Investor and Series A Investor's Representative shall comply with all
reasonable confidentiality restrictions and guidelines imposed by the Company
with respect to such information and the matters discussed in such meetings. Any
Series A Investor's Representative may be changed or replaced from time to time
at a particular Series A Investor's discretion by written notice to the Company.
Failure to give reasonable notice shall not be deemed to negate the affirmative
vote or consent of the board of directors of the Company.
1.4 Right of Refusal.
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(a) Defined. As used in this Section 1.4, the term "Right of
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Refusal" means a right of first refusal granted to the Company by a
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securityholder of the Company pursuant to a written agreement (including the Co-
Sale Agreement dated the date hereof, by and between the Company and certain
shareholders is set forth therein) which provides that if such securityholder or
its assigns offers to sell, pledge or otherwise transfer any shares of the
Company's capital stock to any third party (a "Prospective Transferee"), then
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the Company shall first be entitled to purchase all or some portion of such
offered shares at the same price and on the same terms offered to the
Prospective Transferee; provided, such Right of Refusal shall not be applicable
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to: (i) a gratuitous transfer of such shares, provided and only if such
transferor obtains the Company's prior written consent to such transfer; which
such consent shall not be unreasonably withheld (ii) a transfer of title to such
shares effected pursuant to the transferor's will or the laws of intestate
succession; or (iii) a transfer to the Company in pledge as security for any
purchase-money indebtedness incurred by the transferor in connection with the
acquisition of such shares.
(b) Representation; Covenant to Maintain Right of Refusal. The
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Company represents and warrants to the Series A Investors that all shares of
Common Stock that are outstanding on the Effective Date or that are subject to
any stock options or similar rights to acquire shares of Common Stock from the
Company that are outstanding on the Effective Date, are subject, to a Right of
Refusal in favor of the Company, except as provided in Schedule 1.4(b) hereto.
The Company further covenants and agrees with the Series A Investors to impose a
Right of Refusal with respect to: (i) all shares of Common Stock and any other
shares of the Company's capital stock (other than shares purchased by the
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Investors, shares purchased pursuant to the Series A Agreement or shares issued
pursuant to pre-existing agreements, including the Company's employee stock
option plan to be approved by the Company's shareholders) that are hereafter
issued by the Company or that may hereafter be subject to any stock options,
warrants or similar rights granted by the Company; and (ii) any shares issued in
replacement of the shares described in (i) above, or as a result of a stock
dividend or stock split in respect of such shares or in replacement of such
shares in a recapitalization or similar transaction (the shares of the Company's
stock described in (i) and (ii) above hereinafter referred to as "Subject
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Shares"). The Company shall not assign any Right of Refusal it holds to purchase
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Subject Shares to any party other than the Series A Investors without the prior
written consent of each such Series A Investor.
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(c) Grant of Secondary Refusal Right to Investors. If the Company
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declines to fully exercise its Right of Refusal with respect to any Subject
Shares, it must so notify each Investor in writing at least 20 days prior to the
expiration of the Company's Right of Refusal with respect to any Subject Shares,
and then each Investor shall have the right, for a period of 20 days after
receipt of the Company's written notice that the Company has declined to fully
exercise the Right of Refusal with respect to any such Subject Shares, to
purchase that percentage of the remaining Subject Shares determined by dividing
(i) the total number of shares of Class A Stock and/or Series A Stock (the
"Preferred Stock") then owned by such Investors by (ii) the total number of
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shares of Preferred Stock then owned by all Investors, at the same price and on
the same terms that such Subject Shares were offered to the Prospective
Transferee(s) of such Subject Shares; provided however, that if any such
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Prospective Transferee has offered to pay for any Subject Shares with property,
services or any other non-cash consideration, then the Investors shall
nevertheless have the right to pay for such Subject Shares with cash in an
amount equal to the fair value of the non-cash consideration offered by the
Prospective Transferee in question, where the fair value of such non-cash
consideration shall be conclusively determined in good faith by the Board.
1.5 Vesting Imposed. The Company shall maintain, and shall not
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modify, the Right of Refusal, the vesting conditions or the repurchase rights
described in Section 3.28 of the Series A Agreement as such apply to each of the
Founders (as defined below), without the prior written consent of the holders of
at least 60% of the Series A Stock, which consent will not be unreasonably
withheld. As used herein, the term "Founders" means Xxxx Xxxx, Xxxx Xxxxx, and
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Xxxxxxx Xxxxxxxxx.
1.6 Termination of Certain Rights. The Company's obligations under
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Sections 1.1 through 1.5 above will terminate upon the earlier of: (a) the
closing of the Company's initial firm commitment underwritten public offering of
its Common Stock pursuant to an effective registration statement filed under the
Securities Act of 1933, as amended (the "Securities Act"), which would trigger
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the automatic conversion of each outstanding share of Series A Stock; or (b) the
closing of an acquisition of the Company by another corporation or entity by a
consolidation or merger in which the holders of the Company's outstanding voting
stock immediately prior to such transaction own, immediately after such
transaction, securities representing less than 50% of the voting power of the
corporation or other entity surviving such transaction. Notwithstanding the
foregoing, the Company's obligations under Section 1.3 will only terminate upon
the earlier to occur of (i) the date on which all of the shares of the Series A
Stock cease to be Restricted Securities under the Securities Act, (ii) the date
on which the holders of the Series A Stock no longer have a contractual right to
nominate members of the Board or (iii) the date on which any Investor having
rights under Section 1.3 ceases to hold at least 600,000 shares (as adjusted for
stock splits, dividends or recombination) of the Series A Stock.
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Section 2:
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(a) Registration. The terms "register", "registered" and
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"registration" refer to a registration effected by preparing and filing a
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registration statement or similar document in
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compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(b) Registrable Securities. The term "Registrable Securities"
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means: (1) all the shares of Common Stock issued or issuable upon the conversion
of any shares of Series A Stock and (2) any shares of Common Stock issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, in
exchange for or in replacement of any shares of Common Stock or Series A Stock
described in clause (1) of this subsection (b) and (3) the shares of Class A
Stock purchased by the Prior Investors pursuant to their respective Class A
Agreements; excluding in all cases, however, any Registrable Securities sold by
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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.
Notwithstanding the foregoing, the term Registrable Securities shall include,
for purposes of Sections 2.3 and 2.8 hereof only, shares of Class A Common Stock
held by the holders of the Class A Common Stock, as of the date hereof.
(c) Registrable Securities Then Outstanding. The number of
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shares of "Registrable Securities then outstanding" shall mean the number of
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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) Holder. For purposes of Sections 2, 3 and 4 of this
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Agreement, the term "Holder" means any person owning of record Registrable
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Securities or any assignee of record of such Registrable Securities to whom
rights under Section 2 or Section 3 have been duly assigned in accordance with
this Agreement; provided however, that for purposes of this Agreement, a record
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holder of shares of Series A Stock convertible into such Registrable Securities
shall be deemed to be the Holder of such Registrable Securities; and provided
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further, that the Company shall in no event be obligated to register shares of
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Series A Stock, and that Holders of Registrable Securities will not be required
to convert their shares of Series A Stock into Common Stock in order to exercise
the registration rights granted hereunder until immediately before the closing
of the offering to which the registration relates (and then only to the extent
necessary to sell the Registrable Securities to be sold in such offering).
Notwithstanding the foregoing, the term Holder shall include, for purposes of
Sections 2.3 and 2.8 hereof only, each of the holders of the Class A Common
Stock.
(e) Form S-3. The term "Form S-3" means such form under the
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Securities Act as is in effect on the date hereof or any successor registration
form under the Securities Act subsequently adopted by the SEC which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) SEC. The term "SEC" or "Commission" means the U.S.
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Securities and Exchange Commission.
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2.2 Request for Registration.
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(a) If the Company shall receive at any time subsequent to the
third anniversary of the Closing (as such term is defined in the Series A
Agreement) a written request from the Holders of at least 50% of the Registrable
Securities then outstanding that the Company file a registration statement under
the Securities Act having an aggregate offering price of not less than
$25,000,000, then the Company shall:
(i) within 20 days of the receipt thereof, give written
notice of such request to all Holders; and
(ii) use its best efforts to effect as soon as practicable,
in accordance with Section 2.5 below, the registration under the Securities Act
of all Registrable Securities which the Holders request to be registered,
subject to the limitations of subsection 2.2(b).
(b) If the Holders initiating the registration request
hereunder (the "Initiating Holders") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to subsection 2.2(a)
and the Company shall include such information in the written notice referred to
in subsection 2.2(a). The underwriter will be selected by the Company and shall
be reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include his or her Registrable Securities
in such registration shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 2.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities requested to be registered by each Holder; provided
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however, that the number of shares of Registrable Securities to be included in
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such underwriting shall not be reduced unless all other securities are first
entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, the Company may delay filing a
registration statement, and may withhold efforts to cause the registration
statement to become effective, if the Company (i) determines in good faith that
such registration might interfere with the negotiation or completion of any
transaction that is being executed by the Company (whether or not a final
decision has been made to close such transaction) at the time the right to delay
is exercised, or (ii) shall furnish to the Holders requesting a registration
statement pursuant to this Section 2.2 a certificate signed by the Chief
Executive Officer of the Company stating that in the good faith judgment of the
Board it would be seriously detrimental to the Company and its shareholders for
such registration statement to be filed and it is therefore essential to deter
the filing of such
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registration statement, the Company shall have the right to defer taking action
with respect to such filing for a period of not more than 90 days after receipt
of the request of the Initiating Holders; provided however, that the Company may
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not utilize either of these rights more than once in any 12-month period. If,
after a registration statement becomes effective, the Company advises the
Holders of registered shares that the Company considers it appropriate for the
registration statement to be amended, the Holders of such shares shall suspend
any further sales of their registered shares until the Company advises them that
the registration statement has been amended.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 2.2:
(i) after the Company has effected two registrations
pursuant to this Section 2.2 and such registrations have been declared or
ordered effective;
(ii) during the period starting with the date 90 days
prior to the Board's good faith estimate of the filing date (provided that
notice of such estimated filing date is given to the Initiating Holders within
30 days of their request for registration) and ending on the date 180 days after
the effective date of, a registration subject to Section 2.3 hereof; provided
that the Company is actively employing in good faith reasonable efforts to cause
such registration statement to become effective; or
(iii) if the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below.
(e) The Company shall pay all expenses incurred in connection
with each registration requested pursuant to this Section 2.2 (excluding
underwriters' or brokers' discounts and commissions and the selling Holders' pro
rata share of applicable filing fees and registration fees) including, without
limitation, all printers', attorneys' and accounting fees and the reasonable
fees and disbursements of one counsel for the selling Holder or Holders and
counsel for the Company, and the Company's pro rata share of applicable filing
fees and registration fees.
2.3 Piggyback Registrations. The Company shall notify all Holders
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of Registrable Securities in writing at least 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 securities of the
Company, but (i) excluding registration statements relating to any registration
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under Section 2.4 of this Agreement, to a stock option, stock purchase or
similar plan or any transaction registered pursuant to Rule 145 promulgated
under the Securities Act (a "Rule 145 Transaction"), and (ii) excluding a
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registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities or a registration in which the
only Common Stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered) and will afford each such
Holder an opportunity to include in such registration statement all or any part
of the Registrable Securities then held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by such Holder shall, within 20 days after receipt of the above-
described
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notice from the Company, so notify the Company in writing, and in such notice
shall inform the Company of the number of Registrable Securities such Holder
wishes to include in such registration statement. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder 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. Any Holder who elects to include some or all of its Registrable
Securities pursuant to this Section 2.3 shall cooperate with the Company in the
preparation of any and all documents and instruments the Company deems necessary
or convenient for the preparation of any applicable registration statement, and
such Holders shall supply the Company with any and all information the Company
deems necessary or convenient with respect to any registration statement.
(a) Underwriting. If a registration statement for which the
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Company gives notice pursuant to this Section 2.3 is for an underwritten
offering, then the Company shall so advise the Holders of Registrable
Securities. In such event, the right of any Holder's Registrable Securities to
be included in a registration pursuant to this Section 2.3 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 Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter(s) 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
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Company and second, to each of the Holders requesting inclusion of their
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Registrable Securities in such registration statement on a pro rata basis based
upon the total number of Registrable Securities requested to be registered by
such Holder, provided, however, that the right of the underwriters to exclude
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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 25% of all the
shares included in the registration, except for a registration relating to the
Company's initial public offering of its Common Stock, from which all
Registrable Securities may be excluded; and (ii) all shares that are not
Registrable Securities shall first be excluded from such registration and
underwriting before any Registrable Securities are so excluded. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least 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. For any
Holder which is a partnership or corporation, the partners, retired partners and
shareholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing persons shall be deemed to be a single "Holder", and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder", as defined in this sentence.
(b) Expenses. All expenses incurred in connection with a
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registration pursuant to this Section 2.3 (excluding underwriters' and brokers'
discounts and commissions)
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including, without limitation, all federal and "blue sky" registration and
qualification fees, printers' and accounting fees and disbursements of one
counsel for the selling Holder or Holders and counsel for the Company shall be
borne by the Company.
2.4 Form S-3 Registration. In case the Company shall receive from
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any Holder or Holders of at least 40% of all Registrable Securities then
outstanding a written request or requests that the Company effect a registration
on Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, then the
Company will:
(a) Notice. Promptly, but in no event later than 20 days
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after receipt of the Holders' request give written notice of the proposed
registration and the Holder's or Holders' request therefor, and any related
qualification or compliance, to all other Holders; and
(b) Registration. As soon as practicable, effect such
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registration and all such qualifications and compliances as may be so requested
and as would permit or facilitate the sale and distribution of all or such
portion of such Holder's or Holders' Registrable Securities as are specified in
such request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 20 days after receipt of such written notice from
the Company; provided however, that the Company shall not be obligated to effect
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any such registration, qualification or compliance pursuant to this Section 2.4.
(1) if Form S-3 is not available for such offering by the
Holders;
(2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $5,000,000;
(3) If the Company elects to delay filing a registration
statement, and withholding efforts to cause the Form S-3 registration statement
to become effective, if the Company (i) determines in good faith that such
registration might interfere with the negotiation or completion of any
transaction that is being executed by the Company (whether or not a final
decision has been made to close such transaction) at the time the right to delay
is exercised or (ii) shall furnish to the Holders a certificate signed by the
President or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board, it would be seriously detrimental to the Company
and its shareholders for such Form S-3 Registration to be effected at such time,
in which event the Company shall have the right to defer the filing of the Form
S-3 registration statement no more than once during any 12-month period for a
period of not more than 90 days after receipt of the request of the Holder or
Holders under this Section 2.4. If, after a Form S-3 registration statement
becomes effective, the Company advises the holders of registered shares that the
Company considers it appropriate for such registration statement to be amended,
the holders of such shares shall suspend any further sales of their registered
shares until the Company advises them that such registration statement has been
amended.
- 9 -
(4) if the Company has, within the 12-month period
preceding the date of such request, already effected one registration on Form S-
3 for the Holders pursuant to this Section 2.4.
(c) Expenses. The Company shall pay all expenses incurred in
--------
connection with each registration requested pursuant to this Section 2.4
(excluding underwriters' or brokers' discounts and commissions) including,
without limitation, all filing, registration and qualification, printers',
attorneys' and accounting fees and the reasonable fees and disbursements of one
counsel for the selling Holder or Holders and counsel for the Company.
2.5 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
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to 90 successive 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 Holders 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 they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use its reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(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. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an underwriting agreement.
(f) 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.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
- 10 -
(h) Notify each Holder 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 in the light of the circumstances then existing.
(i) Furnish, at the request of any Holder requesting
registration of Registrable Securities, on the date that such 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 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, or if not underwritten, in form and substance as is customarily
given to underwriters and reasonably satisfactory to counsel to the Holder
offering the greatest number of Registrable Securities for sale in the
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities, 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, or if not
underwritten, in form and substance as is customarily given to underwriters and
reasonably satisfactory to counsel to the Holder offering the greatest number of
Registrable Securities for sale in the registration, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
2.6 Furnish Information. Each Selling Shareholder covenants and
-------------------
agrees to furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to timely effect the registration of their
Registrable Securities. Additionally, the Company shall have no obligation with
respect to any registration requested pursuant to Sections 2.2 or 2.4 if, due to
the operation of this Section 2.6, the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's
obligations to initiate such registration as specified in Section 2.2 or 2.4.
2.7 Delay of Registration. No Holder shall have any right to
---------------------
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of Section 2.
2.8 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) By the Company. To the extent permitted by law, the
--------------
Company will indemnify and hold harmless each Holder, the partners, officers and
directors 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 Securities Exchange Act of 1934,
as amended (the "1934 Act"), against any losses, claims, damages or liabilities
--------
(joint or
- 11 -
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 in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, 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 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 such Holder, partner, officer, director,
underwriter or controlling person 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 2.8(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 such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by law, each
------------------
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed the registration statement, each
person, if any, who controls the Company within the meaning of the Securities
Act, any underwriter and any other Holder selling securities under such
registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder within the meaning of the
Securities Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, partner or
director, officer or controlling person of such other Holder 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 thereto)
arise out of or are based upon any Violation due to information specifically
provided by the Selling Holder for inclusion in the registration statement; and
each such Holder will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, underwriter or
other Holder, partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; provided however, that the indemnity agreement
-------- -------
contained in this subsection 2.8(b) shall not
- 12 -
apply to amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of such Holder,
which consent shall not be unreasonably withheld; and provided further, that the
-------- -------
total amounts payable in indemnity by a Holder under this Section 2.8(b) in
respect of any Violation shall not exceed the net proceeds received by such
Holder in the registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party
------
under this Section 2.8 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 2.8,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided however, that an indemnified party
-------- -------
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
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
2.8 to the extent so prejudiced, 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 2.8.
(d) Contribution. In order to provide for just and equitable
------------
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.8 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.8, then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so that such Holder
is responsible for the portion represented by the percentage that the public
offering price of its Registrable Securities offered by and sold under the
registration statement bears to the public offering price of all securities
offered by and sold under such registration statement, and the Company and other
selling Holders shall be responsible for the remaining portion; provided
--------
however, that, in any such case, (A) no such Holder will be required to
-------
contribute any amount in excess of the public offering price of all such
Registrable Securities offered and sold by such Holder pursuant to such
registration statement, and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
- 13 -
(e) Survival. The obligations of the Company and Holders
--------
under this Section 2.8 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
2.9 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 the Company has become subject to the reporting
requirements of the 1934 Act, 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 in
accordance with the requirements of Rule 144(c), 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 a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request (i) a written statement by the
Company as to its compliance 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 for an offering of its securities to the general public),
and of the Securities Act and the 1934 Act (at any time after it has become
subject to the reporting requirements of the 1934 Act), (ii) a copy of the most
recent annual or quarterly report of the Company and (iii) such other reports
and documents of the Company as a Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Holder to sell any
such securities without registration (at any time after the Company has become
subject to the reporting requirements of the 1934 Act).
2.10 Termination of the Company's Obligations. The Company shall
----------------------------------------
have no obligations provided in Section 2 hereof with respect to: (i) any
request or requests for registration made by any Holder on a date more than
three years after the closing date of the Company's initial public offering; or
(ii) any Registrable Securities proposed to be sold by a Holder in a
registration pursuant to Sections 2.2, 2.3 or 2.4 hereof if, in the reasonable
opinion of counsel to the Company, all such Registrable Securities proposed to
be sold by a Holder may then be sold in a three-month period without
registration under the Securities Act pursuant to Rule 144 under the Securities
Act; provided however, that the provisions of this Section 2.10 shall not apply
-------- -------
to any Holder who owns more than 1% of the Company's outstanding capital stock
until such time as such Holder owns less than 1% of the Company's outstanding
capital stock.
2.11 Limitations on Subsequent Registration Rights. From and after
---------------------------------------------
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least two-thirds of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Sections
2.2, 2.3 or 2.4 hereof, unless under the terms of such agreement, such holder or
prospective holder may include
- 14 -
such securities in any such registration only to the extent that the inclusion
of such securities will not reduce the amount of Registrable Securities of the
Holders to be included or (b) to demand registration of their securities.
2.12 "Market Stand-Off" Agreement. Investor hereby agrees that,
---------------------------
during the period of duration specified by the Company and an underwriter of
Common Stock or other securities of the Company, following the effective date of
a registration statement of the Company filed under the Securities Act, it shall
not, to the extent requested by the Company and such underwriter, directly or
indirectly sell, offer to sell, contract to sell (including, without limitation,
any short sale), grant any option to purchase or otherwise transfer or dispose
of (other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except Common Stock included
in such registration; provided however, that:
-------- -------
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
(b) all officers and directors of the Company and all other
persons with registration rights (whether or not pursuant to this Agreement)
enter into similar agreements; and
(c) such market stand-off time period shall not exceed 180 days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in this
Section 2.12 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or to a registration relating solely to a Commission Rule 145
transaction on Form S-14 or Form S-15 or similar forms which may be promulgated
in the future.
2.13 S-3 Registration Requirements. Notwithstanding anything else
-----------------------------
contained in this Agreement, the Company shall not become obligated to become
subject to the 1934 Act and, each Investor acknowledges, until such time as the
Company becomes subject to the 1934 Act, the Company will be legally precluded
from registering securities under a Form S-3 and, accordingly, no provisions in
this Agreement to the contrary shall be deemed to require the Company to
undertake such a registration until the Company legally is qualified to do so.
3. RIGHT OF FIRST OFFER.
3.1 General. Each Holder, for purposes of this Section 3 the term
-------
Holder shall mean, (i) with respect to each of the Investors, for so long as it
holds at least 40% of the Series A Stock purchased by it pursuant to the Series
A Agreement and (ii) with respect to each of the Prior Investors, for so long as
it holds at least 40% of the Class A Stock purchased by it pursuant to the Class
A Agreement, and any party to whom such Holder's rights under this Section 3
have been duly assigned in accordance with Section 4.1(b) and in such event, if
the assignee qualifies under
- 15 -
Section 4.1(b) then the transferor Prior Investor shall retain its rights under
this section 3.1 so long as the transferor holds at least 20% of the Class A
Stock purchased by it pursuant to the Class A Agreement, (each such Holder or
----
assignee hereinafter referred to as a "Rights Holder") has the right of first
-------------
offer to purchase such Rights Holder's Pro Rata Share (as defined below) of all
(or any part) of any "New Securities" (as defined in Section 3.2) that the
Company may from time to time issue after the date of this Agreement. A Rights
Holder's "Pro Rata Share" for purposes of this right of first offer is the ratio
--------------
of (a) the number of Registrable Securities as to which such Rights Holder is
the Holder (and/or is deemed to be the Holder under Section 2.1(d)) to (b) a
number of shares of Common Stock equal to the sum of (i) the total number of
shares of Common Stock then outstanding plus (ii) the total number of shares of
Common Stock into which all then outstanding shares of Series A Stock of the
Company are then convertible plus (iii) then outstanding options to purchase
shares of Common Stock pursuant to equity incentive plans approved by the Board.
3.2 New Securities. "New Securities" shall mean any Common Stock
-------------- --------------
or preferred stock of the Company, whether now authorized or not, and rights,
options or warrants to purchase such Common Stock or preferred stock, and
securities of any type whatsoever that are, or may become, convertible or
exchangeable into such Common Stock or preferred stock; provided however, that
-------- -------
the term "New Securities" does not include:
---- --- -------
(i) shares of the Common Stock (and/or options or warrants
therefor) issued or issuable to employees, officers, directors, contractors,
advisors or consultants of the Company pursuant to stock options or other stock
incentive agreements or plans approved by the Board, including the approval of
the directors nominated by the holders of the Series A Stock (the "Series A
Directors");
(ii) any Common Stock or other securities issuable upon
conversion of or with respect to any then outstanding shares of Preferred Stock
or Common Stock or other securities issuable upon conversion thereof;
(iii) any shares of the Company's Common Stock or
preferred stock (or any other security of the Company) issued in connection with
any stock split or stock dividend;
(iv) any securities offered by the Company to the public
pursuant to a registration statement filed under the Securities Act;
(v) any securities issued pursuant to the acquisition of
another corporation or entity by the Company by consolidation, merger, purchase
of all or substantially all of the assets or other reorganization in which the
Company acquires, in a single transaction or series of related transactions, all
or substantially all of the assets of such other corporation or entity, 50% or
more of the voting power of such other corporation or entity, or 50% or more of
the equity ownership of such other entity, provided such issuance is approved by
the Board, including the approval of the Series A Directors; or
(vi) any capital stock (and/or options or warrants
therefor) issued to parties providing the Company with equipment leases, real
property leases, loans provided by commercial lenders, credit lines, guaranties
of indebtedness, cash price reductions or similar financing,
- 16 -
provided each such issuance is approved by the Board, including the approval of
the Series A Directors; or
(vii) any capital stock (and/or options or warrants
therefor) issued to parties pursuant to pre-existing contracts and any capital
stock issued pursuant to any New Security whereby all Holders waived their
rights of refusal under this Agreement.
3.3 Procedures. In the event that the Company proposes to
----------
undertake an issuance of New Securities, it shall give to each Rights Holder
written notice of its intention to issue New Securities (the "Notice"),
------
describing the type of New Securities and the price and the general terms upon
which the Company proposes to issue such New Securities. Each Rights Holder
shall have twenty (20) days from the date of mailing of any such Notice to agree
in writing to purchase up to such Rights Holder's Pro Rata Share of such New
Securities for the price and upon the general terms specified in the Notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased (not to exceed such Rights Holder's Pro Rata Share).
Notwithstanding the terms set forth in the Notice, each Holder shall have the
right to pay cash for New Securities offered in the Notice. If any Rights Holder
fails to so agree in writing within such twenty (20) day period to purchase up
to such Rights Holder's full Pro Rata Share of an offering of New Securities (a
"Nonpurchasing Holder"), then such Nonpurchasing Holder shall forfeit the right
--------------------
hereunder to purchase that part of its Pro Rata Share of such New Securities
that it did not so agree to purchase and the Company shall promptly give each
Rights Holder (if any) who has timely agreed to purchase its full Pro Rata Share
of such offering of New Securities (a "Purchasing Holder") written notice of the
-----------------
failure of any Nonpurchasing Holder to purchase such Nonpurchasing Rights
Holder's full Pro Rata Share of such offering of New Securities (the
"Overallotment Notice"). Each Purchasing Holder shall have a right of
--------------------
overallotment such that such Purchasing Holder may agree to purchase a portion
of the Nonpurchasing Holder's unpurchased Pro Rata Share of such offering on a
pro rata basis according to the relative Pro Rata Shares of the Purchasing
Holders at any time within ten (10) days after receiving the Overallotment
Notice.
3.4 Failure to Exercise. In the event that the Rights Holders fail
-------------------
to exercise in full the right of first offer within such twenty plus ten day
period, then the Company shall have 120 days thereafter to sell the New
Securities with respect to which the Rights Holders' rights of first offer
hereunder were not exercised, at a price and upon general terms not materially
more favorable to the purchasers thereof than specified in the Company's Notice.
In the event that the Company has not issued and sold the New Securities within
such 120 day period, then the Company shall not thereafter issue or sell any New
Securities without again first offering such New Securities to the Rights
Holders pursuant to this Section 3.
3.5 Termination. This right of first offer shall terminate (i)
-----------
immediately before the closing of the first underwritten sale of Common Stock to
the public pursuant to a registration statement filed with, and declared
effective by, the SEC under the Securities Act, covering the offer and sale of
Common Stock to the public at an offering price of at least $21.40 per share
(such offering price being subject to proportional adjustment to reflect
subdivisions, combinations, stock dividends and similar transactions affecting
the number of outstanding shares of Common Stock) for an aggregate gross public
offering price (calculated before deduction of underwriters' discounts and
commissions) of at least $25,000,000, or (ii) upon (a) the acquisition of all or
substantially all the
- 17 -
assets of the Company or (b) an acquisition of the Company by another
corporation or entity by consolidation or merger in which the holders of the
Company's outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than 50% or
more of the voting power of the corporation or other entity surviving such
transaction.
4. ASSIGNMENT AND AMENDMENT.
4.1 Assignment. Notwithstanding anything herein to the contrary:
----------
(a) Information Rights. The rights of each Investor under
------------------
Section 1.1 or 1.2 hereof may be assigned only to a party who acquires from
Investor (or Investor's permitted assigns) at least that number of shares of
Series A Stock and/or an equivalent number (on an as-converted basis) of shares
of Series A Conversion Stock or Class A Stock, as the case may be, described in
Section 1.1 or 1.2 hereof, respectively. The rights of the Investors under
Sections 1.3, 1.4, 1.5 and 1.6 hereof may not be assigned except to a subsidiary
of any Investor that acquires at least 50% of the shares of Series A Stock or
Class A Stock purchased by such Investor under the Series A or Class A Agreement
and/or an equivalent number (on an as-converted basis) of shares of Series A
Conversion Stock and in the event that an Investor is a limited liability
company, the Investor shall have the right to distribute its rights to its
members who receive Registrable Securities, provided that in all cases the
rights of said members shall be aggregated with all other members and/or said
limited liability company for purposes of exercising any rights under this
Agreement.
(b) Registration Rights; Refusal Rights. The registration
-----------------------------------
rights of a Holder under Section 2 hereof and the rights of first offer of a
Rights Holder under Section 3 hereof may be assigned only to: (i) any partner or
retired partner, member or retired member of any such Holder or Rights Holder
which is a partnership or limited liability company; (ii) any family member or
trust for the benefit of any Holder or Rights Holder who is an individual; (iii)
with respect to the registration rights under Section 2, to any transferee who
acquires at least 20% of the shares of Registrable Securities then held by such
Holder; and (iv) with respect to the rights of first offer under Section 3, to
any transferee who acquires at least 20% of the shares of Registrable Securities
then held by such Holder; 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 4.
4.2 Amendment of Rights. Unless otherwise provided for herein, 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 Investors
(and/or any of the Investors' respective permitted successors or assigns)
holding shares of Series A Stock and/or Series A Conversion Stock and/or Class A
Stock representing and/or convertible into a majority of all of the Investors'
Shares (as defined below). As used herein, the term "Investors' Shares" shall
-----------------
mean the shares of Common Stock then issuable upon conversion of all then
outstanding shares of Series A Stock issued under the Series A Agreement
- 18 -
plus all then outstanding shares of Conversion Stock that were issued upon the
conversion of any shares of Preferred Stock issued under the Series A Agreement,
plus all then outstanding shares of Class A Stock. Any amendment or waiver
effected in accordance with this Section 4.2 shall be binding upon each
Investor, Holder and Rights Holder, each permitted successor or assignee of each
Investor, Holder or Rights Holder, and the Company.
The foregoing notwithstanding, the rights of any Prior Investor shall not
be amended or waived in an adverse manner without the prior written consent of
such Prior Investor.
5. DRAG ALONG RIGHTS.
5.1 Drag Along Rights. Anything contained herein to the contrary
-----------------
notwithstanding, if at any time, the Board (at a meeting at which the entire
Board is present) and the holders of 2/3 of the Series A Stock shall approve a
proposal for (i) the sale of the capital stock of the Company, (ii) the merger
or consolidation of the Company, or (iii) the sale by the Company or its
subsidiaries of all or substantially all of their assets (each, an "Approved
--------
Sale Proposal"), and the Company has received from an independent nationally
-------------
recognized investment banking firm, approved by 2/3 of the Board, which approval
shall not be unreasonably withheld, a fairness opinion stating that the terms
and conditions of Approved Sale Proposal are fair and equitable to the holders
of the Company's Common Stock in all material respects, then such Investors (or
their designated representative) may deliver a notice (a "Required Sale Notice")
--------------------
with respect to such Approved Sale Proposal to each other shareholder stating
that such Investors have approved or propose to effect the Approved Sale
Proposal and providing the identity of the persons involved in such Approved
Sale Proposal and the terms thereof. Each such shareholder, upon receipt of a
Required Sale Notice, shall be obligated, which obligation shall be enforceable
by the holders of a majority of the Series A Stock (or their designees), to (i)
sell their shares of capital stock of the Company and participate in the
transaction (a "Required Sale") contemplated by the Approved Sale Proposal, (ii)
-------------
vote their shares of stock in favor of such Approved Sale Proposal at any
meeting of shareholders called to vote on or approve such Approved Sale Proposal
and (iii) otherwise to take all necessary action to cause the Company and the
shareholders to consummate such Approved Sale Proposal. Any such Required Sale
Notice may be rescinded by such Investors by delivering written notice thereof
to all of the shareholders. Upon the consummation of the Required Sale, each
shareholder shall receive the same proportion of the aggregate consideration
from such Required Sale that such holder would have received if a Liquidation
Event (as defined in the Company's Articles of Incorporation) had occurred and
such consideration had been distributed by the Company pursuant to the rights
and preferences set forth in the Company's Articles of Incorporation (giving
effect to applicable orders of priority) and if any shareholders of a Class Are
given an option as to the form and amount of consideration to be received, all
shareholders of such class will be given the same option. Notwithstanding the
foregoing, in the event that the Approved Sale Proposal would result in proceeds
(if other than cash, the fair market value of which shall be determined by the
Board) to the Company's shareholders in an amount less than two (2) times the
Original Issue Price (as that term is defined in Section 1 of the Company's
Series A Certificate of Designation (the "Certificate")), then in such event the
Board approval required by the first sentence of this Section 5.1 shall be made
without the participation of the Series A Directors (as that term is defined in
Section 4.3 of the Certificate).
- 19 -
6. GENERAL PROVISIONS.
6.1 Notices. Any notice, request or other communication required
-------
or permitted hereunder shall be in writing and shall be deemed to have been duly
given when personally delivered or five days after deposit in the U.S. mail by
registered or certified mail, return receipt requested, postage prepaid, as
follows:
(a) if to an Investor, at such Investor's respective address
as set forth on Exhibit A hereto.
---------
(b) if to the Company, at 000 Xxxxxxx Xxxxxxx, Xxxxxxxxxxxx,
Xxxxxxxx 00000; attn: General Counsel.
Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder by giving ten days advance
notice to all other parties. Notice shall conclusively be deemed to have been
given when personally delivered or when deposited in the mail in the manner set
forth above.
6.2 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.
6.3 Governing Law. This Agreement shall be governed by and
-------------
construed exclusively in accordance with the internal laws of the State of
Missouri as applied to agreements to be performed entirely within Missouri,
excluding that body of law relating to conflict of laws and choice of law.
6.4 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.
6.5 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.
6.6 Successors And Assigns. Subject to the provisions of Section 4,
----------------------
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.
6.7 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.
- 20 -
6.8 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.
6.9 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.
6.10 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 affect on the outstanding shares of such
class or series of stock by such subdivision, combination or stock dividend.
6.11 Termination of Prior Agreement. Each of the parties hereto
------------------------------
agree that this Agreement supersedes, replaces in its entirety and renders null
and void, each of the Prior Agreements.
6.12 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. Entities and
persons shall be considered affiliated with another entity or person only if
they control, are controlled by or are under common control with such other
entity or person.
- 21 -
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE COMPANY:
Digital Broadcast Network,
a Missouri corporation
By:\s\ Xxxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxxx
Title: Chief Executive Officer
Address: 000 Xxxxxxx Xxxxxx
Xxxxxxxxxxxx, Xxxxxxxx 00000
[Signature Page to Investors' Rights Agreement]
INVESTORS:
CHASE VENTURE CAPITAL ASSOCIATES, L.P.
a California Limited Partnership
By: Chase Capital Partners,
its sole General Partner
By: \s\ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
General Partner
[Signature Page to Investors' Rights Agreement]
NEW ENTERPRISE ASSOCIATES VIII,
LIMITED PARTNERSHIP
By: NEA Partners VIII, Limited Partnership
Its General Partner
By: [UNINTELLIGIBLE]
------------------
Its: General Partner
----------------
NEA VENTURES 1999, LIMITED
PARTNERSHIP
By: Vice President
By: \s\ Xxxxx Xxxxxxxxxx
-----------------------
Its: Vice President
----------------
NEA PRESIDENTS FUND, L.P.
By: NEA General Partners, L.P.
By: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: General Partner
-----------------
[Signature Page to Investors' Rights Agreement]
XXXXXXXX X, L.P.
By: Xxxxxxxx X Management, L.L.C.
Its: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: Managing Director
XXXXXXXX ASSOCIATES FUND IV, L.P.
By: Xxxxxxxx IX Management, L.L.C.
Its: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: Managing Director
XXXXXXXX PRINCIPALS FUND, L.L.C.
By: Xxxxxxxx X Management, L.L.C.
Its: General Partner
By: [UNINTELLIGIBLE]
----------------
Its: Managing Director
[Signature Page to Investors' Rights Agreement]
SPECTRUM EQUITY INVESTORS III, L.P.
By: Spectrum Equity Associates, III, L.P.
Its: General Partner
By: \s\ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
Its: Duly Authorized Signatory
SEI III ENTREPRENEURS' FUND, L.P.
By: SEI III Entrepreneurs' LLC
Its: General Partner
By: \s\ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
Its: Duly Authorized Signatory
SPECTRUM III INVESTMENT MANAGERS'
FUND, L.P.
By: \s\ Xxxxxx X. Xxxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxxx
Its: Duly Authorized Signatory
[Signature Page to Investors' Rights Agreement]
HEWLETT-PACKARD COMPANY
By: \s\ Xxxxx X. Xxxxx
--------------------
Xxxxx X. Xxxxx
Senior Vice President and General
Manager,
Finance and Complements Group
Address: 000 Xxxxx Xxxxxx
Xxxxxxxx Xxxx, XX 00000
[Signature Page to Investors' Rights Agreement]
PRIOR INVESTORS:
ASCEND COMMUNICATIONS INCORPORATED
By: \s\ Xxxxxxx Xxxxxxxxx
---------------------
Name: Xxxxxxx Xxxxxxxxx
-----------------
Its: Assistant Treasurer
-------------------
STIFEL CAPCO, L.L.C.
By:
------------------------
Name:
---------------------
Its:
----------------------
[Signature Page to Investors' Rights Agreement]
PRIOR INVESTORS:
ASCEND COMMUNICATIONS INCORPORATED
By:
------------------------
Name:
---------------------
Its:
----------------------
STIFEL CAPCO, L.L.C.
By: \s\ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
--------------
Its:
---------------------
[Signature Page to Investors' Rights Agreement]
EXHIBIT A
---------
Schedule of Investors
Series A Investors Address Shares of Series A Stock
-------------------------- ------------------------
Name and Address No. of Shares Purchased
---------------- -----------------------
Chase Venture Capital Associates, L.P. 1,378,505
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
New Enterprise Associates VIII, Limited Partnership 924,768
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
NEA Ventures 1999, Limited Partnership 467
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
NEA Presidents Fund, L.P. 9,345
0000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Mayfield X, L.P. 813,084
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
Mayfield Associates Fund IV, L.P. 28,037
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
Mayfield Principals Fund, L.L.C. 93,458
0000 Xxxx Xxxx Xxxx
Xxxxx 000
Xxxxx Xxxx, XX 00000
