Exhibit 4
Xxxxxxx.xxx Inc.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Agreement dated as of December 31, 1999 is entered into by and
among Xxxxxxx.xxx Inc., a Delaware corporation (the "Company"), those persons
listed on Exhibit A (the "Preferred Stockholders"), eliance Corporation
("eliance") and Xxxxx Xxxxx, Xxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxxxx and Xxxxxx
Xxxxxx (the "Founders").
RECITALS
WHEREAS, the Company and the Series A Preferred Stockholders have
entered into a Series A Preferred Stock Purchase Agreement dated December 29,
1999, and the Company and the Series B Preferred Stockholder have entered into a
Series B Preferred Stock Purchase Agreement of even date herewith (each, a
"Purchase Agreement") and the Company has issued certain shares of capital stock
of the Company to the Preferred Stockholders; and
WHEREAS, the Company, the Preferred Stockholders and the Founders
desire to amend and restate that certain Investor Rights Agreement dated
December 29, 1999 on the terms herein, to provide for certain arrangements with
respect to (i) the registration of shares of capital stock of the Company under
the Securities Act of 1933 and (ii) the Preferred Stockholders' right of first
refusal with respect to certain issuances of securities of the Company, and to
admit the Series B Preferred Stockholders as parties to this Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
REGISTRATION RIGHTS
1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"COMMISSION" means the Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"COMMON STOCK" means the common stock, $0.01 par value per
share, of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"INITIATING HOLDERS" means the Stockholders initiating a
request for registration pursuant to Section 2.1(a).
"INITIAL PUBLIC OFFERING" means the initial underwritten
public offering of shares of Common Stock pursuant to an effective
Registration Statement.
"OTHER HOLDERS" means holders of securities of the Company
(other than Stockholders) who are entitled by contract with the Company, to
have securities included in a Registration Statement.
"PROSPECTUS" means the prospectus included in any
Registration Statement, as amended or supplemented by an amendment or
prospectus supplement, including post-effective amendments, and all material
incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
"REGISTRATION STATEMENT" means a registration statement
filed by the Company with the Commission for a public offering and sale of
securities of the Company (other than a registration statement on Form S-8 or
Form S-4, or their successors, or any other form for a similar limited
purpose, or any registration statement covering only securities proposed to
be issued in exchange for securities or assets of another corporation).
"REGISTRATION EXPENSES" means the expenses described in
Section 2.4.
"REGISTRABLE SHARES" means (i) the shares of Common Stock
issued or issuable upon conversion of the Shares issued to the Preferred
Stockholders pursuant to the Purchase Agreements, (ii) any shares of Common
Stock held by eliance or any Founder on the date hereof, (iii) any shares of
Common Stock, and any shares of Common Stock issued or issuable upon the
conversion or exercise of any other securities, acquired by the Preferred
Stockholders pursuant to Section 3 of this Agreement, (iv) any shares of
Common Stock held by eliance on the date hereof (including those held by Xxxx
Xxxxxx, as escrow agent) that are distributed by eliance to any of the
Preferred Stockholders, and (v) any other shares of Common Stock issued in
respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); PROVIDED, HOWEVER,
that shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares upon (i) any sale pursuant to a Registration Statement or
Rule 144 under the Securities Act or (ii) any sale in any manner to a person
or entity which, by virtue of Section 5 of this Agreement, is not entitled to
the rights provided by this Agreement. Wherever reference is made in this
Agreement to a request or consent of holders of a certain percentage of
Registrable Shares, the determination of such percentage shall include shares
of Common Stock issuable upon conversion of the Shares even if such
conversion has not been effected.
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"SECURITIES ACT" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the Commission issued under such Act, as they each may, from time to time, be
in effect.
"SELLING STOCKHOLDER" means any Stockholder owning
Registrable Shares included in a Registration Statement.
"SHARES" shall have the meaning specified in Subsection 1.2
of the Purchase Agreement.
"STOCKHOLDERS" means the Preferred Stockholders, the
Founders and any persons or entities to whom the rights granted under this
Agreement are transferred by any Preferred Stockholders or Founders, their
successors or assigns pursuant to Section 5 hereof.
2. REGISTRATION RIGHTS
2.1 REQUIRED REGISTRATIONS.
(1) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), (i) a Stockholder or Stockholders holding in the aggregate at least
20% of the Registrable Shares, (ii) eliance or (iii) a Stockholder or
Stockholders holding in the aggregate at least 75% of the Series B Preferred
Stock of the Company may request, in writing, that the Company effect the
registration on Form S-3 (or such successor form), of Registrable Shares having
an aggregate value of at least $1,000,000 (based on the then current public
market price).
(2) Upon receipt of any request for registration pursuant to
this Section 2, the Company shall promptly give written notice of such proposed
registration to all other Stockholders. Such Stockholders shall have the right,
by giving written notice to the Company within 30 days after the Company
provides its notice, to elect to have included in such registration such of
their Registrable Shares as such Stockholders may request in such notice of
election, subject in the case of an underwritten offering to the approval of the
managing underwriter as provided in Section 2.1(d) below.
(3) Thereupon, the Company shall, as expeditiously as
possible, use its reasonable best efforts to effect the registration on an
appropriate registration form of all Registrable Shares which the Company has
been requested to so register (provided, however, that the Company will only be
obligated to effect such registration on Form S-3 (or any successor form)).
(4) If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2.1(a) and the Company shall include such information
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in its written notice referred to in Section 2.1(b). The right of any other
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.1(a) shall be conditioned upon such other Stockholder's participation
in such underwriting on the terms set forth herein. If the managing underwriter
determines that the marketing factors require a limitation of the number of
shares to be underwritten, the number of Registrable Shares to be included in a
Registration Statement filed pursuant to this Section 2.1, shall be reduced pro
rata among the requesting Stockholders (including the Initiating Holders) based
on the quotient of (1) the total Registrable Shares to be included in the
Registration Statement, divided by (2) the total number of Registrable Shares
that requested registration.
(5) The Initiating Holders shall have the right to select the
managing underwriter(s) for any underwritten offering requested pursuant to
Section 2.1(a), subject to the approval of the Company, which approval will not
be unreasonably withheld.
(6) The Company shall not be required to effect more than one
registration pursuant to Section 2.1(a) initiated by eliance, one registration
pursuant to Section 2.1(a) initiated by the holders of Series B Preferred Stock
or two registrations pursuant to Section 2.1(a) initiated by Stockholders other
than eliance or the holders of Series B Preferred Stock. For purposes of this
Section 2.1(f), a Registration Statement shall not be counted until such time as
such Registration Statement has been declared effective by the Commission
(unless the Initiating Holders withdraw their request for such registration
(other than as a result of information concerning the business or financial
condition of the Company which is made known to the Stockholders after the date
on which such registration was requested) and elect not to pay the Registration
Expenses therefor pursuant to Section 2.4).
(7) If at the time of any request to register Registrable
Shares by Initiating Holders pursuant to this Section 2.1, the Company is
engaged or has plans to engage in a registered public offering or is engaged in
any other activity which, in the good faith determination of the Company's Board
of Directors, would be adversely affected by the requested registration, then
the Company may at its option direct that such request be delayed for a period
not in excess of 120 days from the date of such request, such right to delay a
request to be exercised by the Company not more than once in any 12-month
period.
2.2 INCIDENTAL REGISTRATION.
(1) Whenever the Company proposes to file a Registration
Statement on Form S-3 (other than a Registration Statement filed pursuant to the
Initial Public Offering), it will, prior to such filing, give written notice to
all Stockholders of its intention to do so; PROVIDED, that no such notice need
be given if no Registrable Shares are to be included therein as a result of a
determination of the managing underwriter pursuant to Section 2.2(b). Upon the
written request of a Stockholder or Stockholders given within 10 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company shall use its reasonable
best efforts to cause all Registrable Shares which the Company has been
requested by such Stockholder or Stockholders to register to
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be registered under the Securities Act to the extent necessary to permit their
sale or other disposition in accordance with the intended methods of
distribution specified in the request of such Stockholder or Stockholders;
provided that the Company shall have the right to postpone or withdraw any
registration effected pursuant to this Section 2.2 without obligation to any
Stockholder.
(2) If the registration for which the Company gives notice
pursuant to Section 2.2(a) is of a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.2(a). In such event, the right of any
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.2 shall be conditioned upon such Stockholder's participation in such
underwriting on the terms set forth herein. All Stockholders proposing to
distribute their securities through such underwriting shall (together with the
Company, Other Holders, and any officers or directors of the Company
distributing their securities through such underwriting) enter into an
underwriting agreement with the underwriter or underwriters selected for the
underwriting by the Company. Notwithstanding any other provision of this Section
2.2, if the managing underwriter determines that the inclusion of all shares
requested to be registered would adversely affect the offering, the Company may
limit the Registrable Shares to be included in the registration and
underwriting. The Company shall so advise all holders of Registrable Shares
requesting registration, and the number of shares that are entitled to be
included in the registration and underwriting shall be allocated in the
following manner. The securities of the Company held by officers and directors
of the Company (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent deemed advisable by the managing
underwriter, and, if a further limitation on the number of shares is required,
the number of shares that may be included in such registration and underwriting
shall be allocated among all Stockholders and Other Holders requesting
registration in proportion, as nearly as practicable, to the respective number
of shares of Common Stock (on an as-converted basis) which they held at the time
the Company gives the notice specified in Section 2.2(a). If any Stockholder or
Other Holder would thus be entitled to include more securities than such holder
requested to be registered, the excess shall be allocated among other requesting
Stockholders and Other Holders pro rata in the manner described in the preceding
sentence. If any holder of Registrable Shares or any officer, director or Other
Holder disapproves of the terms of any such underwriting, such person may elect
to withdraw therefrom by written notice to the Company, and any Registrable
Shares or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
2.3 REGISTRATION PROCEDURES.
(1) If and whenever the Company is required by the provisions
of this Agreement to use its reasonable best efforts to effect the registration
of any offer and sale of Registrable Shares under the Securities Act, the
Company shall:
(1) file with the Commission a Registration Statement
with respect to such offer and sale of Registrable Shares and use its reasonable
best efforts to cause that Registration Statement to become effective as soon as
possible;
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(2) as expeditiously as practicable prepare and file
with the Commission any amendments and supplements to the Registration Statement
and the prospectus included in the Registration Statement as may be necessary to
comply with the provisions of the Securities Act (including the anti-fraud
provisions thereof) and to keep the Registration Statement effective for 12
months from the effective date or such lesser period until all such Registrable
Shares are sold;
(3) as expeditiously as practicable furnish to each
Selling Stockholder such reasonable numbers of copies of the Prospectus,
including any preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents as such Selling Stockholder may
reasonably request in order to facilitate the public sale or other disposition
of the Registrable Shares owned by such Selling Stockholder;
(4) as expeditiously as practicable use its
reasonable best efforts to register or qualify the Registrable Shares covered by
the Registration Statement under the securities or Blue Sky laws of such states
as the Selling Stockholders shall reasonably request, and do any and all other
acts and things that may be necessary or desirable to enable the Selling
Stockholders to consummate the public sale or other disposition in such states
of the Registrable Shares owned by the Selling Stockholder; PROVIDED, HOWEVER,
that the Company shall not be required in connection with this paragraph (iv) to
qualify as a foreign corporation or execute a general consent to service of
process in any jurisdiction;
(5) as expeditiously as practicable, cause all such
Registrable Shares to be listed on each securities exchange or automated
quotation system on which similar securities issued by the Company are then
listed;
(6) promptly cause its transfer agent and registrar
to take all appropriate steps with respect to all such Registrable Shares not
later than the effective date of such registration statement;
(7) promptly make available for inspection by the
Selling Stockholders, any managing underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney or accountant or other
agent retained by any such underwriter or selected by the Selling Stockholders,
all financial and other records, pertinent corporate documents and properties of
the Company and cause the Company's officers, directors, employees and
independent accountants to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
Registration Statement subject to their entering into customary confidentiality
agreements;
(8) as expeditiously as practicable, notify each
Selling Stockholder, promptly after it shall receive notice thereof, of the time
when such Registration Statement has become effective or a supplement to any
Prospectus forming a part of such Registration Statement has been filed; and
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(9) as expeditiously as practicable following the
effectiveness of such Registration Statement, notify each seller of such
Registrable Shares of any request by the Commission for the amending or
supplementing of such Registration Statement or Prospectus.
(2) If the Company has delivered a Prospectus to the Selling
Stockholders and after having done so the Prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders and, if requested, the Selling Stockholders shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.
(3) In the event that, in the judgment of the Company, it is
advisable to suspend use of a Prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all Selling Stockholders
to such effect, and, upon receipt of such notice, each such Selling Stockholder
shall immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Stockholder has received copies of a
supplemented or amended Prospectus or until such Selling Stockholder is advised
in writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Notwithstanding anything
to the contrary herein, the Company shall not exercise its rights under this
Section 2.3(c) to suspend sales of Registrable Shares for a period in excess of
60 days in any 365-day period.
2.4 ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses for all registrations under this Agreement other than a registration
initiated by eliance pursuant to Section 2.1 (for which eliance shall pay all
Registration Expenses); PROVIDED, HOWEVER, that if a registration under
Section 2.1 is withdrawn at the request of the Initiating Holders (other than
as a result of information concerning the business or financial condition of
the Company which is made known to the Stockholders after the date on which
such registration was requested) and if the Initiating Holders elect not to
have such registration counted as a registration requested under Section 2.1,
the Initiating Holders shall pay the Registration Expenses of such
registration pro rata in accordance with the number of their Registrable
Shares included in such registration. For purposes of this Section, the term
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all
registration and filing fees, exchange listing fees, printing expenses, fees
and expenses of counsel for the Company and the fees and expenses of one
counsel selected by the Selling Stockholders to represent the Selling
Stockholders, state Blue Sky fees and expenses, and the expense of any
special audits incident to or required by any such registration, but
excluding underwriting
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discounts, selling commissions and the fees and expenses of Selling
Stockholders' own counsel (other than the counsel selected to represent all
Selling Stockholders).
2.5 INDEMNIFICATION AND CONTRIBUTION.
(1) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the Selling Stockholders selling such Registrable
Shares, each underwriter of such Registrable Shares, and each other person, if
any, who controls such seller 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 such seller, underwriter or controlling
person may become subject under the Securities Act, the Exchange Act, state
securities or Blue Sky laws or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement under which such sale of Registrable
Shares was registered under the Securities Act, any preliminary prospectus or
final prospectus contained in the Registration Statement, or any amendment or
supplement to such Registration Statement, or arise out of or are based upon the
omission or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; and the
Company will reimburse such seller, underwriter and each such controlling person
for any legal or any other expenses reasonably incurred by such seller,
underwriter or controlling person in connection with investigating or defending
any such loss, claim, damage, liability or action; PROVIDED, HOWEVER, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof. (1)
(2) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each Selling
Stockholder, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses, claims,
damages or liabilities, joint or several, to which the Company, such directors
and officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
any Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to the Registration Statement, or arise out of or are
based upon any omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, if
the statement or omission was made in reliance upon and in
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conformity with information relating to such Selling Stockholder furnished in
writing to the Company by or on behalf of such Selling Stockholder specifically
for use in connection with the preparation of such Registration Statement,
prospectus, amendment or supplement; PROVIDED, HOWEVER, that the obligations of
a Stockholder hereunder shall be limited to an amount equal to the proceeds, net
of brokerage or underwriting commissions, to such Stockholder of Registrable
Shares sold in connection with such registration.
(3) Each party entitled to indemnification under this Section
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; PROVIDED, that counsel for the Indemnifying
Party that shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, PROVIDED, FURTHER, that the failure of any Indemnified Party to
give notice promptly as provided herein shall not relieve the Indemnifying Party
of its obligations under this Section except to the extent that the Indemnifying
Party is adversely affected by such failure. The Indemnified Party may
participate in such defense at such party's expense; PROVIDED, HOWEVER, that the
Indemnifying Party shall pay such expense 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 the Indemnified Party and
any other party represented by such counsel in such proceeding; PROVIDED FURTHER
that in no event shall the Indemnifying Party be required to pay the expenses of
more than one law firm per jurisdiction as counsel for the Indemnified Party.
The Indemnifying Party also shall be responsible for the expenses of such
defense if the Indemnifying Party does not elect to assume such defense. No
Indemnifying Party, in the defense of any such claim or litigation shall, except
with the consent of each Indemnified Party, consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect of such claim or litigation, and no
Indemnified Party shall consent to entry of any judgment or settle such claim or
litigation without the prior written consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(4) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 2.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to any losses, claims, damages and liabilities
referred to herein, then the Indemnifying Party 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 to
which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Stockholders on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Stockholders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact related to information supplied by the Company
or the Stockholders and the
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parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Stockholders
agree that it would not be just and equitable if contribution pursuant to this
Section 2.5 were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph of Section 2.5, (a)
in no case shall any one Stockholder be liable or responsible for any amount in
excess of the proceeds received by such Stockholder from the offering of
Registrable Shares and (b) the Company shall be liable and responsible for any
amount in excess of such proceeds, net of brokerage or underwriting commissions
PROVIDED, HOWEVER, that 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.
2.6 OTHER MATTERS WITH RESPECT TO UNDERWRITTEN OFFERINGS. In
the event that Registrable Shares are sold pursuant to a Registration Statement
in an underwritten offering pursuant to Section 2.1, the Company agrees to (a)
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use its reasonable best
efforts to cause its legal counsel to render customary opinions to the
underwriters with respect to the Registration Statement.
2.7 INFORMATION BY HOLDER. Each holder of Registrable Shares
included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification, listing or compliance referred to in this
Agreement, including, without limitation, in connection with the NASD Rules of
Fair Practice in an underwritten offering.
2.8 "STAND-OFF" AGREEMENT; CONFIDENTIALITY OF NOTICES. Each
Stockholder, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Common Stock, shall not sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by such Stockholder for a period of 180 days following the
effective date of a Registration Statement; PROVIDED, that:
(1) such agreement shall only apply to the Initial
Public Offering; and
(2) all officers and directors of the Company enter
into similar agreements.
The Company may impose stop-transfer instructions with respect to the
Registrable Shares or other securities subject to the foregoing restriction
until the end of such 180-day period.
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Any Stockholder receiving any written notice from the Company regarding
the Company's plans to file a Registration Statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.
2.9 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company
shall not, without the prior written consent of Stockholders holding at least a
majority of the Registrable Shares then held by all Stockholders, enter into any
agreement (other than this Agreement) with any holder or prospective holder of
any securities of the Company which grant such holder or prospective holder
rights to include securities of the Company in any Registration Statement,
unless (a) such rights to include securities in a registration initiated by the
Company or by Stockholders are not more favorable than the rights granted to
Other Holders under Section 2.2 of this Agreement, and (b) no rights are granted
to initiate a registration, other than registration pursuant to a registration
statement on Form S-3 (or its successor) in which Stockholders are entitled to
include Registrable Shares on a pro rata basis with such holders based on the
number of shares of Common Stock (on an as-converted basis) owned by
Stockholders and such holders.
2.10 RULE 144 REQUIREMENTS. After the registration by the
Company of a class of securities under Section 12 of the Exchange Act the
Company agrees to:
(1) make and keep current public information about
the Company available, as those terms are understood and defined in Rule 144;
(2) 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 Exchange Act (at any time after it has become subject
to such reporting requirements); and (1)
(3) furnish to any holder of Registrable Shares upon
request (i) a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 and of the Securities Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
(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 such holder may
reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
2.11 TERMINATION. All of the Company's obligations to register
Registrable Shares under Sections 2.1 and 2.2 of this Agreement shall terminate
five years after the closing of the Initial Public Offering.
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3. RIGHT OF FIRST OFFER
3.1 RIGHTS OF STOCKHOLDERS
(1) Except as set forth in Section 3.1 (g), the Company shall
not issue, sell or exchange, agree to issue, sell or exchange, or reserve or set
aside for issuance, sale or exchange, (i) any shares of its Common Stock, (ii)
any other equity securities of the Company, including, without limitation,
shares of preferred stock, (iii) any option, warrant or other right to subscribe
for, purchase or otherwise acquire any equity securities of the Company, or (iv)
any debt securities convertible into capital stock of the Company (collectively,
the "Offered Securities"), unless in each such case the Company shall have first
complied with this Section 3.1. The Company shall deliver to each Stockholder a
written notice of any proposed or intended issuance, sale or exchange of Offered
Securities (the "Offer"), which Offer shall (i) identify and describe the
Offered Securities, (ii) describe the price and other terms upon which they are
to be issued, sold or exchanged, and the number or amount of the Offered
Securities to be issued, sold or exchanged, and (iii) identify the persons or
entities (if known) to which or with which the Offered Securities are to be
offered, issued, sold or exchanged and (iv) offer to issue and sell to or
exchange with such Stockholder (A) a pro rata portion of the Offered Securities
determined by dividing the aggregate number of shares of Common Stock then held
by such Stockholder (giving effect to the conversion of all shares of
convertible preferred stock then held) by the total number of shares of Common
Stock then held by all Stockholders (giving effect to the conversion of all
outstanding shares of convertible preferred stock) (the "Basic Amount") , and
(B) any additional portion of the Offered Securities attributable to the Basic
Amounts of other Stockholders as such Stockholder shall indicate it will
purchase or acquire should the other Stockholders subscribe for less than their
Basic Amounts (the "Undersubscription Amount").
(2) To accept an Offer, in whole or in part, a Stockholder
must deliver a written notice to the Company within 15 days of delivery of the
written notice of the Offer described in Section 3.1 (a), setting forth the
portion of the Stockholder's Basic Amount that such Stockholder elects to
purchase and, if such Stockholder shall elect to purchase all of its Basic
Amount, the Undersubscription Amount (if any) that such Stockholder elects to
purchase (the "Notice of Acceptance"). If the Basic Amounts subscribed for by
all Stockholders are less than the total of all of the Basic Amounts available
for purchase, then each Stockholder who has set forth an Undersubscription
Amount in its Notice of Acceptance shall be entitled to purchase, in addition to
the Basic Amounts subscribed for, the Undersubscription Amount it has subscribed
for; PROVIDED, HOWEVER, that if the Undersubscription Amounts subscribed for
exceed the difference between the total of all of the Basic Amounts available
for purchase and the Basic Amounts subscribed for (the "Available
Undersubscription Amount"), each Stockholder who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Stockholder bears to the total Undersubscription Amounts subscribed
for by all Stockholders, subject to rounding by the Board of Directors to the
extent it deems reasonably necessary.
-12-
(3) The Company shall have 90 days from the expiration of the
period set forth in Section 3.1(b) above to issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been
given by the Stockholders (the "Refused Securities"), but upon terms and
conditions substantially similar to the Offer and (including, without
limitation, unit prices and interest rate spreads over prevailing interest
rates) which are not more favorable, in the aggregate, to the acquiring person
or persons or less favorable to the Company than those set forth in the Offer.
(4) In the event the Company shall propose to sell less than
all the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 3.1(c) above), then each Stockholder may, at its sole
option and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that the Stockholder
elected to purchase pursuant to Section 3.1(b) above multiplied by a fraction,
(i) the numerator of which shall be the number or amount of Offered Securities
the Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Stockholders pursuant to Section 3.1(b) above
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Stockholder so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue, sell or exchange more than the reduced
number or amount of the Offered Securities unless and until such securities have
again been offered to the Stockholders in accordance with Section 3.1(a) above.
(5) Upon the closing of the issuance, sale or exchange of all
or less than all of the Refused Securities, the Stockholders shall acquire from
the Company, and the Company shall issue to the Stockholders, the number or
amount of Offered Securities specified in the Notices of Acceptance, as reduced
pursuant to Section 3.1(d) above if the Stockholders have so elected, upon the
terms and conditions specified in the Offer. The purchase by the Stockholders of
any Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Stockholders of a purchase agreement relating to
such Offered Securities reasonably satisfactory in form and substance to the
Stockholders, the Company and their respective counsel.
(6) Any Offered Securities not acquired by the Stockholders or
other persons in accordance with Section 3.1(c) above may not be issued, sold or
exchanged until they are again offered to the Stockholders under the procedures
specified in this Section 3.1.
(7) The rights of the Stockholders under this Section 3 shall
not apply to:
(1) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of shares of
Common Stock;
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(2) the issuance of any shares of Common Stock upon
conversion of convertible securities;
(3) the issuance of shares of Common Stock, or the
grant of options therefor, including, without limitation, shares issued upon
exercise of options outstanding on the date of this Agreement (such number to be
proportionately adjusted in the event of any stock splits, stock dividends,
recapitalizations or similar events occurring on or after the date of this
Agreement) to officers, directors, consultants and employees of the Company or
any subsidiary pursuant to any plan, agreement or arrangement approved by a vote
of not less than a majority of the Board of Directors of the Company;
(4) securities issued solely in consideration for the
acquisition (whether by merger or otherwise) by the Company or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity;
(1) Shares of Common Stock issued prior to December
31, 1999 in connection with acquisitions of companies or assets or licenses of
assets or services to be provided by the sellers of such assets or the
licensors;
(2) shares of Common Stock sold by the Company in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act.
3.2 TERMINATION. This Section 3 shall terminate upon the earlier of the
following events:
(1) The sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise; or (1)
(2) The closing of the Initial Public Offering.
4. TRANSFERS OF RIGHTS. This Agreement, and the rights and obligations
of each Stockholder hereunder, may be assigned by such Stockholder to (i) any
person or entity to which at least 250,000 Shares are transferred by such
Stockholder, (ii) to Global Crossing or Pacific Capital pursuant to any transfer
contemplated under Section 9.4 of the Company's Series B Preferred Stock
Purchase Agreement, dated as of December 31, 1999, or (iii) to any partner or
stockholder of such Stockholder to whom Registrable Shares are transferred, and
such transferee shall be deemed a "Stockholder" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company, including a notice address for such transfer, and agrees in writing to
be bound by this Agreement.
5. NEGATIVE COVENANTS. In addition to any other rights provided by law,
so long at least 250,000 shares of Preferred Stock are outstanding, the Company
shall not, without the prior written consent of a majority of the Preferred
Stockholders:
-14-
(1) Amend or repeal any material provision of, or add any
material provision to, the Company's Certificate of Incorporation or By-Laws;
(2) Authorize or issue any new or existing class or classes of
capital stock ranking as to dividends, liquidation or voting rights superior to
or on a parity with any preference or priority of the Series A Preferred Stock,
or any warrants or options (other than an option grant to an employee in the
ordinary course of business approved by the Board of Directors;
(3) Reclassify any Common Stock into shares having any
preference or priority as to dividends or liquidation superior to or on a parity
with any such preference or priority over the Serires A Preferred Stock;
(4) Change accounting methods or policies in any material
respect or change the Company's auditors;
(5) Declare any dividend;
(6) Issue long-term debt (including convertible securities);
or
(7) Pledge assets, except in connection with indebtedness
incurred in the normal course of the Company's business.
6. GENERAL.
(1) SEVERABILITY. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(2) SPECIFIC PERFORMANCE. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each Stockholder and the Company shall be entitled to specific
performance of the agreements and obligations of the other parties hereunder and
to such other injunctive or other equitable relief as may be granted by a court
of competent jurisdiction.
(3) GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York (without
reference to the conflicts of law provisions thereof).
(4) NOTICES. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) three business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or
-15-
(ii) one business day after being sent via a reputable nationwide overnight
courier service guaranteeing next business day delivery, in each case to the
intended recipient as set forth below:
If to the Company, at One Dundas Street West, Suite 2500, X.X. Xxx 00,
Xxxxxxx, Xxxxxxx X0X 0X0, Attention: President, or at such other address or
addresses as may have been furnished in writing by the Company to the Series A
Preferred Stockholders, with a copy to 00 Xxxxxxxxxx Xxxxxx Xxxx, Xxxxx 0000,
X.X. Xxx 000, Xxxxxxx, Xxxxxxx X0X IN2, Attention: Xxx Xxxxxxxx, Esq.
If to a Preferred Stockholder, at his or its address set forth on
EXHIBIT A, or at such other address or addresses as may have been furnished to
the Company in writing by such Preferred Stockholder, with a copy to Xxxx and
Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxxxx Xxxxx, Esq. in
the case of a Serires A Preferred Stockholder, or with a copy to Xxxxx, Xxxxx &
Xxxxx, 0000 Xxxxxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx X. Xxxxxxxxxxxxx in
the case of the Serires B Preferred Stockholder.
If to Founder, at his or her address set forth below his or her
signature to the Agreement, or at such other address or address as have been
furnished in writing by the Founder of the Company.
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(5) COMPLETE AGREEMENT. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
(6) AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived (either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 66% of the Registrable Shares held by all of the Stockholders; PROVIDED,
that this Agreement may be amended with the consent of the holders of less than
all Registrable Shares only in a manner which affects all such holders in the
same fashion. Any such amendment, termination or waiver effected in accordance
with this Section 6(f) shall be binding on all parties hereto, even if they do
not execute such consent. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
-16-
(7) PRONOUNS. Whenever the context may require, any pronouns
used in this Agreement shall include the corresponding masculine, feminine or
neuter forms, and the singular form of nouns and pronouns shall include the
plural, and vice versa.
(8) COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
(9) SECTION HEADINGS. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
-17-
[COUNTERPART SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]
Executed as of the date first written above.
COMPANY
XXXXXXX.XXX INC.
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name:
Title:
PURCHASERS
INSIGHT CAPITAL PARTNERS III, L.P.
By: Insight Venture Associates III, LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Member
INSIGHT CAPITAL PARTNERS III-COINVESTORS, L.P.
By: Insight Venture Associates III, LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Member
INSIGHT CAPITAL PARTNERS III-CAYMAN, L.P.
By: Insight Venture Associates III, LLC
Its General Partner
By: /s/ Xxxxxxx Xxxxxx
---------------------------------------
Name: Xxxxxxx Xxxxxx
Title: Managing Member
W-W-H Investors LLC
By: /s/ Xxxxxx Xxxxx
--------------------------------------------
Name:
------------------------------------------
Title:
-----------------------------------------
Imprimis SB LP
By: /s/ Xxxxxx Xxxxx
--------------------------------------------
CIBC WMC INC.
By: /s/ Xxxxx Xxxxxx
--------------------------------------------
Name:
Title:
FOUNDERS
/s/ Xxxxx Xxxxx
-----------------------------------------------
Xxxxx Xxxxx
Address:
---------------------------------------
---------------------------------------
---------------------------------------
/s/ Xxxxx Xxxxxx
-----------------------------------------------
Xxxxx Xxxxxx
Address:
---------------------------------------
---------------------------------------
---------------------------------------
/s/ Xxxx Xxxxxxx
-----------------------------------------------
Xxxx Xxxxxxx
Address:
---------------------------------------
---------------------------------------
---------------------------------------
/s/ Xxx Xxxxxx
-----------------------------------------------
Xxx Xxxxxx
Address:
---------------------------------------
---------------------------------------
---------------------------------------
/s/ Xxxxxx Xxxxxx
-----------------------------------------------
Xxxxxx Xxxxxx
Address:
---------------------------------------
---------------------------------------
---------------------------------------
1391343 Ontario Limited
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------------
Xxxxx Xxxxxxxx
Title:
Address:
ELIANCE CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------------
Its:
-------------------------------------------
EXHIBIT A
PREFERRED STOCKHOLDERS
NAME AND ADDRESS
InSight Capital Partners (Co-Invest) III, L.P.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
InSight Capital Partners (Cayman) III, L.P.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
InSight Capital Partners (Co-Invest) III, L.P.
000 Xxxx 00xx Xxxxxx, Xxxxx 0000
Xxx Xxxx, XX 00000
W-W-H Investors LLC
000 X. Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
Imprimis SB LP
000 X. Xxxxxx Xxx.
Xxxxxxxxx, XX 00000
CIBC WMC Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
