EXHIBIT 5
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SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This Second Amended and Restated Stockholders Agreement dated as of
July 22, 2004 (the "Agreement") by and among (i) XXX.xxx, Inc., a Delaware
corporation (the "Company"), (ii) the investors (the "Warrant Investors") listed
on Schedule A and Schedule B to the Note and Warrant Purchase Agreement dated as
of July 18, 2003 (the "Purchase Agreement"), (iii) the holders (the "Series X
Investors") of shares of Series X Convertible Preferred Stock, par value $.001
per share (the "Series X Preferred Stock") of the Company, (iv) the holders (the
"Series Y Investors") of shares of Series Y Convertible Preferred Stock, par
value $.001 per share (the "Series Y Preferred Stock") of the Company, and (v)
the holders (the "Guarantee Warrant Holders") of the warrants (the "Guarantee
Warrants") exercisable for shares of the Common Stock, par value $0.0005 per
share (the "Common Stock"), of the Company issued or to be issued in connection
with the guaranty of the Company's obligations under that certain Revolving
Credit and Term Loan Agreement dated as of December 13, 2002 by and between the
Company and Fleet National Bank. The Series X Investors, the Series Y Investors,
the Warrant Investors and the Guarantee Warrant Holders are referred to herein
individually as an "Investor", and collectively as the "Investors":
WITNESSETH:
WHEREAS, the Series X Investors are the holders of all of the
outstanding shares of Series X Preferred Stock;
WHEREAS, the Series Y Investors, who were the holders of all of the
outstanding shares of Series Y Preferred Stock, have converted all of the
outstanding shares of Series Y Preferred Stock into shares of Common Stock but
remain entitled to certain rights under Articles III and IV of this Agreement;
WHEREAS, the Guarantee Warrant Holders are the holders of all of the
outstanding Guarantee Warrants exercisable for shares of the Common Stock of the
Company;
WHEREAS, the Warrant Investors acquired notes in the aggregate
principal amount of $30,000,000 (the "Notes") and warrants (the "Investor
Warrants") to purchase up to an aggregate of 157,894,737 shares of Common Stock
pursuant to the terms of the Purchase Agreement;
WHEREAS, the Company and the Series X Investors have entered into (or
are contemplating entering into) the Recapitalization Agreement dated as of July
22, 2004 (the "Recapitalization Agreement"), which contemplates that (i) each
Series X Investor will convert all the shares of Series X Preferred Stock it
holds into shares of Common Stock in accordance with the Company's certificate
of incorporation; (ii) the Company will issue and deliver to the Series X
Investors an aggregate of 11,710,142 shares of Common Stock in full satisfaction
of the Company's obligations to pay Accruing Dividends (as defined in the
Company's certificate of incorporation as applicable to the Series X Preferred
Stock) upon conversion of the Series X Preferred Stock; and (iii) the Company
will issue and deliver to the Series X Investors an
aggregate of 14,000 shares of a newly designated class of preferred stock, par
value $.001 per share (the "Series Z Preferred Stock"), of the Company;
WHEREAS, the Company, the Series X Investors, the Series Y Investors,
the Warrant Investors and the Guarantee Warrant Holders have previously entered
into an Amended and Restated Stockholders Agreement dated as of July 18, 2003,
as amended (the "Existing Stockholders Agreement");
WHEREAS, the Company, the Warrant Investors, certain of the Guarantee
Warrant Holders and the Series X Investors desire to provide for the composition
of the Company's Board of Directors and certain other matters as set forth in
this Agreement; and
WHEREAS, it is contemplated in the Recapitalization Agreement that this
Agreement be executed by the parties hereto and that the Existing Stockholders
Agreement be terminated and superceded hereby;
WHEREAS, the parties are willing to execute this Agreement and to be
bound by the provisions hereof;
NOW, THEREFORE, in consideration of the foregoing and of other good and
valuable consideration, the parties agree as follows:
ARTICLE I
THE BOARD OF DIRECTORS; ELECTIONS
1.1 Board of Directors.
(a) Number of Directors. For so long as the Warrant Investors listed
on Schedule A of the Purchase Agreement (the "Designating Warrant Investors")
beneficially own outstanding Notes with an aggregate principal amount of at
least $5,000,000 or at least 26,315,790 shares of Common Stock issued or
issuable upon exercise of the Investor Warrants, then, subject to the provisions
of the certificate of incorporation of the Company (the "Charter"), the number
of directors constituting the entire Board of Directors of the Company shall be
fixed at no more than nine (9); provided that such number may be increased by
resolution of the Board (i) to the extent necessary to comply with Section 1.3,
(ii) in connection with any merger, consolidation, acquisition, business
combination or similar transaction contemplated by the Company or (iii) with the
prior consent of the Designating Warrant Investors, if any, beneficially owning
a majority of the shares of Common Stock issued or issuable upon exercise of the
Investor Warrants owned by such Designating Warrant Investors (or, if the
Designating Warrant Investors beneficially own less than 26,315,790 shares of
Common Stock issued or issuable upon exercise of the Investor Warrants, with the
prior consent of the Designating Warrant Investors holding at least a majority
of the aggregate principal amount owing under the Notes held by the Designating
Warrant Investors).
(b) Election of Directors. At any time at which stockholders of the
Company will have the right to, or will vote for or consent in writing to, the
election of directors of the Company, then, and in each such event, the
Investors to the extent entitled to by law or the Company's certificate of
incorporation shall vote (or, if applicable, consent with respect to) all shares
of capital stock or voting securities of the Company presently owned or
hereafter acquired by them (whether owned of record or over which any such
person exercises voting control) in favor of the following actions:
(i) for so long as VantagePoint Venture Partners III (Q), L.P.,
VantagePoint Venture Partners III, L.P., VantagePoint Communications Partners,
L.P. and VantagePoint Venture Partners 1996, L.P. (collectively, "VantagePoint")
beneficially own at least 39,000,000 shares of Common Stock, to cause and
maintain the election to the Board of Directors of two (2) designated
representatives (the "VantagePoint Directors") of VantagePoint, who shall
initially be Xxxxx X. Xxxxxx and Xxxxxx Xxxxxxxx;
(ii) to cause and maintain the election to the Board of Directors
of the Company's Chief Executive Officer (the "CEO Director"), at and after such
time as such Chief Executive Officer is appointed by the Board of Directors and
during the period such person serves as the Company's Chief Executive Officer;
(iii) for so long as the Designating Warrant Investors
beneficially own outstanding Notes with an aggregate principal amount of at
least $5,000,000 or at least 26,315,790 shares of Common Stock issued or
issuable upon exercise of the Investor Warrants, to cause and maintain the
election to the Board of Directors of one (1) designated representative of the
Designating Warrant Investors beneficially owning a majority of the shares of
Common Stock issued or issuable upon exercise of the Investor Warrants owned by
such Designating Warrant Investors (or, if the Designating Warrant Investors
beneficially own less than 26,315,790 shares of Common Stock issued or issuable
upon exercise of the Investor Warrants, the Designating Warrant Investors
holding at least a majority of the aggregate principal amount owing under the
Notes held by the Designating Warrant Investors) (the "Warrant Investor
Director"), who shall initially be Xxxxxxx X. Xxxxxxxx; and
(iv) to cause and maintain the election to the Board of Directors
of at least five (5) independent directors, who shall be nominated by the
Nominating Committee (as defined below) and none of whom shall be an affiliate
of any Series X Investor or Warrant Investor (the "Independent Directors"),
three of whom shall initially be Xxxxxx X. Xxxxxxxxxx, Xxxxxx X. Xxxxxxxx, Xx.
and Xxxx X. Xxxxxx.
(c) Vacancies and Removal. Each director shall serve until his or her
successor is elected and qualified or until his or her earlier resignation or
removal. Any vacancy in the office of a VantagePoint Director may be filled only
by a designated representative of VantagePoint and in each case in accordance
with the requirements of this Agreement for designation of the VantagePoint
Director. Any vacancy in the office of a Warrant Investor Director may be filled
only by a designated representative of the Designating Warrant Investors
beneficially owning a majority of the shares of Common Stock issued or issuable
upon exercise of the Investor
Warrants owned by such Designating Warrant Investors (or, if the Designating
Warrant Investors beneficially own less than 26,315,790 shares of Common Stock
issued or issuable upon exercise of the Investor Warrants, the Designating
Warrant Investors holding at least a majority of the aggregate principal amount
owing under the Notes held by the Designating Warrant Investors) and in each
case in accordance with the requirements of this Agreement for designation of
the Warrant Investor Director. Any vacancy in the office of an Independent
Director may be filled only by persons selected by either the Nominating
Committee or a majority of the remaining Independent Directors then in office.
The remaining members of the Board of Directors shall appoint such designated
representative(s) who shall become a VantagePoint Director, a Warrant Investor
Director or an Independent Director, as the case may be, to the Board of
Directors at the meeting of the Board of Directors next following such
designation.
(d) Attendance at Meetings. Each of the Investors shall attend, in
person or by proxy, and vote its shares of the capital stock of the Company in
accordance with this Agreement at, each annual meeting of the stockholders of
the Company and each special meeting of the stockholders of the Company
involving the election of directors of the Company. The Company shall take all
action required under the Delaware General Corporation Law, the Charter and the
Company's by-laws to ensure that the appropriate director designees provided for
in Section 1.1(b) hereof are submitted for the approval of the Company's
stockholders at each meeting of the stockholders of the Company.
1.2 Nominating Committee. The Company shall maintain a Nominating
Committee of the Board of Directors (the "Nominating Committee") that shall
nominate the Independent Directors. The Nominating Committee shall be comprised
solely of Independent Directors.
1.3 Independent Directors. Notwithstanding anything to the contrary in
this Agreement, each of the Company and the Investors represents and covenants
that they shall take such actions as may reasonably be required to maintain such
number of directors as may be required to provide for such number of independent
directors as required by applicable Securities and Exchange Commission ("SEC")
rules and regulations and the rules and regulations of any stock market or
exchange on which the Company's Common Stock is traded.
ARTICLE II
ADDITIONAL VOTING COVENANTS
[Intentionally Omitted]
ARTICLE III
REGISTRATION OF THE SHARES; COMPLIANCE WITH THE SECURITIES ACT
3.1 Registration Rights. (a) One or more holders (the "Initiating
Holders") of (i) at least 50% of the shares of Common Stock issued, to be issued
or issuable upon conversion of the
Series X Preferred Stock and upon exercise of the outstanding Guarantee Warrants
and Investor Warrants beneficially owned by the holders of the Series X
Preferred Stock, (ii) at least 50% of the shares of Common Stock issued, to be
issued or issuable upon conversion of the Series Y Preferred Stock and upon
exercise of the outstanding Guarantee Warrants and Investor Warrants
beneficially owned by the holders of the Series Y Preferred Stock or (iii) at
least 50% of the shares of the Common Stock issued, to be issued or issuable
upon exercise of the outstanding Investor Warrants beneficially owned by the
Designating Warrant Investors, may notify (the "Initiating Holder Notice") the
Company in writing that it or they intend to offer or cause to be offered for
public sale Registrable Shares (as defined below) held by them and, if
applicable, that they intend to distribute the Registrable Shares by means of an
underwriting. Upon the receipt of the Initiating Holder Notice, the Company
shall provide written notice (the "Notice") to all remaining holders of
Registrable Shares. Upon written request of any such holder given within 10 days
of the date of the Notice, the Company will use its best efforts to cause such
of the Registrable Shares as may be requested by any holder thereof (including
the Initiating Holders, the "Participating Investors") to be registered on Form
S-3 or, if Form S-3 is not then available, on such other form that is available
for use by the Company (a "Registration Statement") under the Securities Act of
1933, as amended (the "Act") as expeditiously as possible; provided, however,
that the minimum market value of any offering and registration of Registrable
Shares made pursuant to this Section 3.1 shall be at least $5,000,000; provided
further, however, that the minimum market value requirement in the immediately
preceding proviso shall not apply to an offering and registration of all
Registrable Shares beneficially owned by the Designating Warrant Investors if
the Purchase Agreement is terminated pursuant to Section 1.5 thereof and the
Company fails to pay the Termination Amount (as defined therein) on or before
the second business day after receipt by the Company of the Termination Notice
(as defined therein). Notwithstanding the foregoing, the Company shall not be
obligated to register the Registrable Shares of any holder who fails to provide
promptly the Company such information as it may reasonably request at any time
to enable the Company to comply with any applicable law or regulation or to
facilitate preparation of a Registration Statement. "Registrable Shares" means
the shares of Common Stock issued, to be issued or issuable upon conversion of
the Series X Preferred Stock, the Series Y Preferred Stock, the Guarantee
Warrants and the Investor Warrants or issued as payment of interest in
accordance with the terms of the senior secured promissory notes issued pursuant
to the Purchase Agreement, excluding any such shares of Common Stock that have
been (A) registered under the Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them or (B) publicly sold pursuant to Rule 144 under the Act.
(b) In connection with any registration under this Agreement involving
an underwriting, the underwriter shall be selected by the Participating Holders
that hold a majority of Registrable Shares proposed to be included in the
underwriting, with the consent of the Company, such consent to not be
unreasonably withheld. The Company shall not be required to include any
Registrable Shares in such registration unless the holders thereof accept the
terms of the underwriting as agreed upon among the Company, the Initiating
Holders and such underwriters. If in connection with any registration under this
Agreement involving an underwriting, the managing underwriter shall impose a
limitation on the number of Registrable Shares which may be included in any such
Registration Statement because, in its judgment, such
limitation is necessary to effect an orderly public distribution, then the
Company shall be obligated to include in such Registration Statement only the
amount as is determined in good faith by such managing underwriter. All
Investors proposing to distribute their securities through such underwriting
shall, together with the Company, enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting; provided, however that no Investor shall be required to make any
representations, warranties or indemnities except as they relate to such
Investor's ownership of Registrable Shares and authority to enter into the
underwriting agreement and to such Investor's intended method of distribution,
and the liability of such Investor shall be limited to an amount equal to the
net proceeds of the offering received by such Investor. If the number of
Registrable Shares to be included in the offering is less than the total number
of shares which the holders of Registrable Shares have requested to be included,
then the reduction shall be made on a pro rata basis, based upon the aggregate
number of Registrable Shares requested to be included in such Registration
Statement; provided, however, that, if the Investors holding Registrable Shares
request to include such Registrable Shares in the offering, in no event may (i)
less than 51% of the total number of shares of Common Stock to be included in
such underwriting be made available for Registrable Shares beneficially owned by
Series X Investors; (ii) less than 15% of the total number of shares of Common
Stock to be included in such underwriting be made available for Registrable
Shares beneficially owned by Series Y Investors; and (iii) less than 34% of the
total number of shares of Common Stock to be included in such underwriting be
made available for Registrable Shares beneficially owned by Designating Warrant
Investors, except that no reduction shall be made in the number of Registrable
Shares beneficially owned by the Designating Warrant Investors to be included in
any such offering if the Purchase Agreement is terminated pursuant to Section
1.5 thereof and the Company fails to pay the Termination Amount (as defined
therein) on or before the second business day after receipt by the Company of
the Termination Notice (as defined therein).
(c) Notwithstanding the foregoing, the Company shall not be required to
effect more than one registration during any six-month period pursuant to this
Section 3.1. If prior to the time the Company receives an Initiating Holder
Notice, the Board of Directors has directed the Company to proceed with a public
offering under the Act, no registration of Registrable Shares shall be initiated
pursuant to this Section 3 until 180 days after the effective date of the
registration statement registering such public offering. With respect to a
proposed offering of Registrable Shares pursuant to a fully underwritten public
offering, the Company shall not publicly announce or file any other registration
statement for a period of 90 days after the effective date of such Registration
Statement without the prior written consent of the holders of a majority of the
Registrable Shares included in such Registration Statement, other than a
registration statement on Form S-4 or Form S-8 or any successor form thereto.
(d) The registration rights set forth in this Agreement shall expire
and terminate on July 1, 2008.
(e) The Company may include shares of Common Stock to be sold by it in
any registration requests pursuant to this Section 3.1 so long as all
Registrable Shares requested for inclusion in any such Registration Statement
shall have been included therein and, in the case of
an underwritten public offering, the inclusion of any shares of Common Stock to
be sold by the Company does not, in the opinion of the managing underwriter of
such offering, reduce the offering price of the shares to be sold by the holders
of Registrable Shares included in such Registration Statement.
3.2 Incidental Registration. If the Company at any time (other than
pursuant to Section 3.1) proposes to register any of its securities under the
Act for sale to the public, whether for its own account or for the account of
security holders other than the Investors or both (except with respect to
registration statements on Forms X-0, X-0 or another form not available for
registering the Registrable Shares for sale to the public), each such time it
will give written notice to each Investor then holding Registrable Shares of its
intention so to do. Upon the written request of any such Investor, received by
the Company within 30 days after the giving of any such notice by the Company,
to register any of such Registrable Shares, the Company will use its best
efforts to cause such Registrable Shares as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company. In the event that
any registration pursuant to this Section 3.2 shall be, in whole or in part, an
underwritten public offering of Common Stock, the number of shares of
Registrable Shares to be included in such an underwriting may be reduced (pro
rata among the requesting Investors based upon the number of Registrable Shares
owned by such Investors) if and to the extent that the managing underwriter
shall be of the opinion that such inclusion would adversely affect the marketing
of the securities to be sold by the Company therein; provided, however, that
such number of Registrable Shares shall not be reduced if any shares are to be
included in such underwriting for the account of any person other than the
Company or the requesting Investors, and provided, further, however, that in no
event may less than 30% of the total number of shares of Common Stock to be
included in such underwriting be made available for Registrable Shares.
Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 3.2 without thereby incurring
any liability to the holders of Restricted Stock.
3.3 Registration Procedures. Whenever the Company is required by the
provisions of this Agreement to use its reasonable best efforts to effect the
registration of any of the Registrable Shares under the Act, the Company shall:
(a) file with the SEC a Registration Statement with respect to such
Registrable Shares and use its reasonable best effort to cause that Registration
Statement to become effective;
(b) prepare and file with the SEC such amendments and supplements to
such Registration Statement and the prospectus contained therein (the
"Prospectus") and used in connection therewith as may be necessary to keep such
Registration Statement current, effective and free from any material
misstatement or omission to state a material fact for a period not exceeding the
earlier of (i) July 1, 2008, (ii) the date on which the Participating Investors
may sell the Registrable Shares included in such Registration Statement without
restriction by the volume limitations of Rule 144(e) of the Act or (iii) such
time as all Registrable Shares have been sold;
(c) furnish to the Participating Investors or the underwriter, if any,
with respect to any Registrable Shares registered under a Registration Statement
such number of copies of such Registration Statement, Prospectuses, including
the preliminary prospectuses, in conformity with the requirements of the Act and
such other documents as the Participating Investors may reasonably request, in
order to facilitate the public sale or other disposition of all or any of the
Registrable Shares by the Participating Investor; provided, however, that the
obligation of the Company to deliver copies of Prospectuses, including the
preliminary prospectuses, to the Participating Investor shall be subject to the
receipt by the Company of reasonable assurances from the Participating Investor
that the Participating Investor and the underwriter, if any, will comply with
the applicable provisions of the Act and of such other securities or blue sky
laws as may be applicable in connection with any use of such Prospectuses or
preliminary prospectuses;
(d) file documents required of the Company for normal blue sky
clearance in states specified in writing by the Participating Investor or the
underwriter, if any; provided, however, that the Company shall not be required
to qualify to do business or consent to service of process in any jurisdiction
in which it is not now so qualified or has not so consented; and
(e) use its commercially reasonable efforts to cause all such
Registrable Shares to be listed on each securities exchange or quotation system
on which similar securities issued by the Company are then listed or traded.
3.4 Transfer of Registrable Shares after Registration; Suspension.
(a) Each Participating Investor agrees that it will not effect any
disposition of the Registrable Shares or its right to purchase the Registrable
Shares that would constitute a sale within the meaning of the Act except as
contemplated in a Registration Statement referred to in Sections 3.1 or 3.2 and
as described below or as otherwise permitted by law, and that it will promptly
notify the Company of any changes in the information set forth in a Registration
Statement or any Prospectus regarding the Participating Investor or its plan of
distribution.
(b) Except in the event that paragraph (c) below applies, the Company
shall (i) if deemed necessary by the Company, prepare and file from time to time
with the SEC a post-effective amendment to a Registration Statement or a
supplement to the related Prospectus, a new Prospectus or a supplement or
amendment to any document incorporated therein by reference or file any other
required document so that such Registration Statement will not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
so that, as thereafter delivered to purchasers of the Registrable Shares being
sold thereunder, such Prospectus will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; (ii) provide the Participating Investor
copies of any documents filed pursuant to Section 3.4(b)(i); and (iii) inform
each Participating Investor that the Company has complied with its obligations
in Section 3.4(b)(i) (or that, if the Company has filed a post-effective
amendment to such Registration Statement which has not yet been declared
effective, the Company will notify the Participating Investor to that effect,
will use its reasonable best efforts to secure the effectiveness of such
post-effective amendment as promptly as possible and will promptly notify the
Participating Investor when the amendment has become effective).
(c) Subject to paragraph (d) below, in the event (i) of any request by
the SEC or any other federal or state governmental authority during the period
of effectiveness a Registration Statement for amendments or supplements to a
Registration Statement or related Prospectus or for additional information; (ii)
of the issuance by the SEC or any other federal or state governmental authority
of any stop order suspending the effectiveness of a Registration Statement or
the initiation of any proceedings for that purpose; (iii) of the receipt by the
Company of any notification with respect to the suspension of the qualification
or exemption from qualification of any of the Registrable Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for such
purpose; or (iv) of any event or circumstance which, in the good faith
determination of the Company's Disinterested Directors upon the advice of
counsel, necessitates the making of any changes in a Registration Statement or
Prospectus, or any document incorporated or deemed to be incorporated therein by
reference, so that, in the case of such Registration Statement, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and that in the case of the Prospectus, it will not
contain any untrue statement of a material fact or any omission to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; then the Company shall deliver a certificate in writing to the
Participating Investors (the "Suspension Notice") to the effect of the foregoing
and, upon receipt of such Suspension Notice, the Participating Investors will
refrain from selling any Registrable Shares pursuant to such Registration
Statement (a "Suspension") until the Participating Investor's receipt of copies
of a supplemented or amended Prospectus prepared and filed by the Company, or
until it is advised in writing by the Company that the current Prospectus may be
used, and has received copies of any additional or supplemental filings that are
incorporated or deemed incorporated by reference in any such Prospectus. In the
event of any Suspension, the Company will use its reasonable best efforts to
cause the use of the Prospectus so suspended to be resumed as soon as reasonably
practicable. In addition to and without limiting any other remedies (including,
without limitation, at law or at equity) available to the Participating
Investor, the Participating Investor shall be entitled to specific performance
in the event that the Company fails to comply with the provisions of this
Section 3.4(c).
(d) Notwithstanding the foregoing paragraphs of this Section 3.4, the
Participating Investor shall not be prohibited from selling Registrable Shares
under a Registration Statement as a result of Suspensions on more than two
occasions of not more than 60 days each in any twelve-month period.
(e) Provided that a Suspension is not then in effect, a Participating
Investor may sell Registrable Shares under a Registration Statement, provided
that it arranges for delivery of a current Prospectus to the transferee of such
Registrable Shares.
3.5 Indemnification.
(a) In the event of any registration of any of the Registrable Shares
under this Agreement, the Company agrees to indemnify and hold harmless each
Participating Investor, each underwriter, if any, of such Registrable Shares,
and each other person, if any, who controls such Participating Investor or
underwriter within the meaning of Section 15 of the Act from and against any
losses, claims, damages or liabilities to which such Participating Investor,
underwriter or controlling person may become subject (under the Act or
otherwise) insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of, or are based upon any untrue
statement of a material fact contained in a Registration Statement or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading and the Company will
reimburse such Participating Investor, underwriter or controlling person for any
reasonable legal or other reasonable expenses incurred in investigating,
defending or preparing to defend any such action, proceeding or claim, or
preparing to defend any such action, proceeding or claim, provided, however,
that the Company shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of, or is based upon, an untrue
statement or alleged untrue statement made in such Registration Statement or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Participating Investor specifically for use in preparation of a
Registration Statement or any statement or omission in any Prospectus that is
corrected in any subsequent Prospectus that was delivered to the Participating
Investor or underwriter prior to the pertinent sale or sales by such
Participating Investor or underwriter. For purposes of this Section 3.5, the
term "Registration Statement" shall include any final Prospectus, exhibit,
supplement or amendment included in or relating to a Registration Statement
referred to in Sections 3.1 or 3.2 and any documents incorporated by reference
therein. The Company shall reimburse each Participating Investor, underwriter or
controlling person for the amounts provided for herein on demand as such
expenses are incurred.
(b) Each Participating Investor agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors and officers and each
person, if any, who controls the Company within the meaning of Section 15 of the
Act from and against any losses, claims, damages or liabilities to which the
Company, officer, director or controlling person may become subject (under the
Act or otherwise), insofar as such losses, claims, damages or liabilities (or
actions or proceedings in respect thereof) arise out of, or are based upon any
untrue or alleged untrue statement of a material fact contained in a
Registration Statement or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading if such untrue statement or omission was made in reliance upon and in
conformity with information furnished by or on behalf of the Participating
Investor specifically for use in preparation of such Registration Statement or
documents incorporated by reference therein, and the Participating Investor will
reimburse the Company, officer, director or controlling person, as the case may
be, for any reasonable legal or other reasonable expenses reasonably incurred in
investigating, defending or preparing to defend any such action, proceeding or
claim; provided that the Participating Investor's obligation to indemnify the
Company shall be limited to the net proceeds received by the Investor from the
sale of the Registrable Shares included in such Registration Statement. The
Participating Investor shall reimburse the Company for the amounts provided for
herein on demand as such expenses are incurred.
(c) Promptly after receipt by any indemnified person of a notice of a
claim or the beginning of any action in respect of which indemnity is to be
sought against an indemnifying person pursuant to this Section 3.5, such
indemnified person shall notify the indemnifying person in writing of such claim
or of the commencement of such action and such indemnifying person shall assume
the defense of any such claim or any litigation resulting therefrom; provided,
however that the omission to so notify the indemnifying person will not relieve
such indemnifying person from any liability which it may have to any indemnified
person under this Section 3.5 unless and except to the extent that the
indemnifying person is prejudiced by such omission. After such notice, such
indemnifying person shall not be liable to such indemnified person for any legal
expenses subsequently incurred by such indemnified person in connection with the
defense thereof, provided, however, that if there exists an actual or potential
conflict of interest that would make it inappropriate, in the opinion of counsel
to the indemnified person, for the same counsel to represent both the
indemnified person and such indemnifying person or any affiliate or associate
thereof, the indemnified person shall be entitled to retain its own counsel at
the expense of such indemnifying person; provided, however, that no indemnifying
person shall be responsible for the fees and expenses of more than one separate
counsel (together with appropriate local counsel) for all indemnified parties.
In no event shall any indemnifying person be liable in respect of any amounts
paid in settlement of any action unless the indemnifying person shall have
approved the terms of such settlement; provided that such consent shall not be
unreasonably withheld. No indemnifying person shall, without the prior written
consent of the indemnified person, effect any settlement of any pending or
threatened proceeding in respect of which any indemnified person is or could
have been a party and indemnification could have been sought hereunder by such
indemnified person, unless such settlement includes an unconditional release of
such indemnified person from all liability on claims that are related to the
subject matter of such proceeding.
(d) If the indemnification provided for in this Section 3.5 is
unavailable to or insufficient to hold harmless an indemnified person under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying person shall contribute to the amount paid or payable by
such indemnified person as a result of such losses, claims, damages or
liabilities (or actions in respect thereof) in such proportion as is appropriate
to reflect the relative fault of the Company on the one hand and the
Participating Investor, as well as any other Participating Investors under such
registration statement, on the other in connection with the statements or
omissions or other matters which resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault shall be determined by reference
to, among other things, in the case of an untrue statement, whether the untrue
statement relates to information supplied by the Company on the one hand or a
Participating Investor or other Participating Investor on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement.
The Company and the Participating Investor agree that it would not be just and
equitable if contribution pursuant to this subsection (d) were determined by pro
rata allocation (even if the Participating Investor and other Participating
Investor s were treated as one entity for such purpose) or by any other method
of allocation which does not take into account the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified person as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified person in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), the
Participating Investor shall not be required to contribute any amount in excess
of the net proceeds of such Registrable Shares included in such Registration
Statement received by such Participating Investor. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Investor's obligations in this subsection to
contribute shall be in proportion to its sale of Registrable Shares to which
such loss relates and shall not be joint with any other Participating Investor.
(e) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation, the
provisions of this Section 3.5, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 3.5
fairly allocate the risks in light of the ability of the parties to investigate
the Company and its business in order to assure that adequate disclosure is made
in a Registration Statement as required by the Act and the Exchange Act. The
parties are advised that federal or state public policy as interpreted by the
courts in certain jurisdictions may be contrary to certain of the provisions of
this Section 3.5, and the parties hereto hereby expressly waive and relinquish
any right or ability to assert such public policy as a defense to a claim under
this Section 3.5 and further agree not to attempt to assert any such defense.
3.6 Termination of Conditions and Obligations. The conditions precedent
imposed by this Section 3 or otherwise under this Agreement upon the
transferability of shares of Common Stock (including shares of Common Stock to
be issued or issuable upon conversion of shares of Series X Preferred Stock or
Series Y Preferred Stock or exercise of Guarantee Warrants and Investor
Warrants) shall cease and terminate as to any particular number of the such
shares when such shares shall have been effectively registered under the Act and
sold or otherwise disposed of in accordance with the intended method of
disposition set forth in such Registration Statement covering such Registrable
Shares or at such time as an opinion of counsel satisfactory to the Company
shall have been rendered to the effect that such conditions are not necessary in
order to comply with the Act.
3.7 Information Available. So long as a Registration Statement is
effective covering the resale of Registrable Shares owned by a Participating
Investor, the Company will furnish to the Participating Investor on demand:
(a) as soon as practicable after it is available, one copy of (i)
its Annual Report to Stockholders (which Annual Report shall contain financial
statements audited in accordance with generally accepted accounting principles
by a national firm of certified public accountants), (ii) its Annual Report on
Form 10-K and (iii) its Quarterly Reports on Form 10-Q (the foregoing, in each
case, excluding exhibits); and
(b) upon the request of the Participating Investor, all exhibits
excluded by the parenthetical to subparagraph (a) of this Section 3.7 as filed
with the SEC and all other information that is made available to shareholders.
3.8 Expenses. All expenses other than underwriting discounts and
commissions incurred in connection with registrations, filings or qualifications
pursuant to Sections 3.1 or 3.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for all the Participating Investors shall be borne
by the Company. Notwithstanding the foregoing, the Company shall not be
obligated to pay any expenses of the holders of the Registrable Shares in
connection with any registration initiated pursuant to Section 3.1 of this
Agreement if such registration statement is withdrawn, delayed or abandoned at
the request of the Participating Investors or if any Participating Investors
withdraw their request to register their Registrable Shares and the market value
of the Registrable Shares to be then registered is less than $5,000,000;
provided, however, that if at the time of such withdrawal, the Participating
Investors have learned of a material adverse change in the condition, business,
or prospects of the Company from that known to the Participating Investors at
the time of their request and have withdrawn the request with reasonable
promptness following disclosure by the Company of such material adverse change,
then such Participating Investors shall not be required to pay any such expenses
and shall retain their rights pursuant to Section 3.1 or 3.2.
3.9 Prior Registration Rights Agreement. Pursuant to Section 1.11 of
the Amended and Restated Investors Rights Agreement dated July 16, 1999 (the
"Investors Rights Agreement") by and among the Company, VantagePoint and certain
other parties thereto, VantagePoint hereby consents to the registration rights
set forth in this Agreement.
3.10 "Lock-Up" Agreements with Underwriters. If on any occasion of
registration in which the Company proposes to file a registration statement
under the Act pursuant to a firmly-underwritten public offering, the managing
underwriter shall request an agreement by the Investors not to sell any capital
stock of the Company so held by each Investor for a period of 90 days after the
effectiveness of any such registration statement in order to effect an orderly
public distribution thereof, then the Investors shall agree to enter into and
execute such an agreement with such managing underwriter and the Company
pertaining to a restriction on the transfer of any shares of capital stock of
the Company then held by the Investor during such 90-day period, provided that
VantagePoint may elect to agree to such shorter period that it, after consulting
with the managing underwriter, in its sole opinion deems advisable, provided
that such shorter period is applicable to all other Investors.
ARTICLE IV
MISCELLANEOUS
4.1 Notices. All notices, requests, consents and other communications
to be given or otherwise made to any party to this Agreement shall be deemed to
be sufficient if contained in a written instrument, delivered by hand in person,
by express overnight courier service, or by electronic mail or facsimile
transmission (with a confirming copy sent by U.S. mail, first class, postage
prepaid mail), or by registered or certified mail, return receipt requested,
postage prepaid, addressed to the Company at 000 Xxxx Xxxxx Xxxxx, Xxxxx Xxxxx,
Xxx Xxxxx, XX 00000, Attention: Senior Vice President and General Counsel, Fax
No: (000) 000-0000, and with a copy to Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP, 000 Xxxx
Xxxxxx, Xxxxxx, XX 00000, Attention: Xxxx X. Xxxxxxx, and to such other parties
at the address set forth in Schedule A to the Company's Series X Convertible
Preferred Stock Purchase Agreement dated as of November 14, 2001 (the "Series X
Stock Purchase Agreement") or Schedule A to the Series Y Convertible Preferred
Stock Purchase Agreement dated as of December 28, 2001 (the "Series Y Stock
Purchase Agreement"), or Schedule A or Schedule B to the Purchase Agreement, as
the case may be, or at such other address as may hereafter be designated in
writing by the addressee, with a copy to the respective party's counsel listed
therein. All notices shall be considered to be delivered three (3) days after
dispatch in the event of first class or registered mail, and on the next
succeeding business day in the event of electronic mail or facsimile
transmission (with confirmation of receipt) or overnight courier service.
4.2 Restrictive Legend. During the term of this Agreement the
certificate(s) evidencing the shares of Series X Preferred Stock, Series Y
Preferred Stock and Series Z Preferred Stock, and any shares of Common Stock to
be issued or issuable upon conversion of shares of Series X Preferred Stock or
Series Y Preferred Stock or exercise of Guarantee Warrants or Investor Warrants,
subject to this Agreement may be inscribed by the Company with the following
legend, or one substantially similar thereto:
The shares of stock represented by this certificate are subject to
certain voting agreements as set forth in a Stockholders
Agreement, as amended from time to time, by and among the
registered owner of this certificate, the Company and certain
other stockholders of the Company, a copy of which is available
for inspection at the offices of the Secretary of the Company.
4.3 Entire Agreement; Amendment. This Agreement constitutes the entire
agreement of the parties with respect to the subject matter hereof and neither
this Agreement nor any provision hereof may be waived, modified, amended or
terminated except by a written agreement signed by the party against whom the
waiver, amendment or termination is to be effective; provided, however, that the
Series X Investors holding at least a majority of the outstanding shares of
Series X Preferred Stock, voting as a separate class, the Series Y Investors
holding at least a majority of the outstanding shares of Series Y Preferred
Stock, voting as a separate class, the holders of any Guarantee Warrants then
outstanding representing at least a majority of the Common Stock issuable upon
exercise of the Guarantee Warrants, voting as a separate class, and the holders
of any Investor Warrants then outstanding representing at least a majority of
the Common Stock issuable upon exercise of the Investor Warrants, voting as a
separate class, may effect any such waiver, modification, amendment or
termination on behalf of all of the Series X Investors, the Series Y Investors,
the holders of the Guarantee Warrants and the holders of the Investor Warrants,
respectively; provided further, however, that (i) any such waiver, amendment or
modification made with the consent of less than all of the Series X Investors
may only be made in a manner which applies to all Series X Investors in the same
fashion, (ii) any such waiver, amendment or modification made with the consent
of less than all of the Series Y Investors may only be made in a manner which
applies to all Series Y Investors in the same fashion, (iii) any such waiver,
amendment or modification made with the consent of less than all holders of the
Guarantee Warrants may only be made in a manner which applies to all such
holders of the Guarantee Warrants in the same fashion, (iv) any such waiver,
amendment or modification made with the consent of less than all holders of the
Investor Warrants may only be made in a manner which applies to all such holders
of the Investor Warrants in the same fashion; and (v) if this Agreement is
amended, modified or terminated, or a waiver with respect to all parties hereto
is given, without the unanimous consent of the Series X Investors, the Series Y
Investors, the holders of the Guarantee Warrants or the holders of the Investor
Warrants, all such Series X Investors, Series Y Investors, holders of the
Guarantee Warrants or holders of the Investor Warrants that are not a party to
such agreement shall be given prompt notice of such amendment, modification,
termination or waiver. Notwithstanding anything to the contrary in this
Agreement, (a) if the Designating Warrant Investors do not have the right to
designate at least one Warrant Investor Director pursuant to Section 1.1(b)(iii)
hereof, then no approval or signature of any Designating Warrant Investors shall
be necessary for the waiver, amendment or termination of any provision of
Article I hereof; and (b) if the Designating Warrant Investors do not
beneficially own any Investor Warrants, then no approval or signature of any
Designating Warrant Investors shall be necessary for the waiver, amendment or
termination of any provision of Article III hereof. No waiver hereunder shall be
deemed a waiver of any subsequent breach or default of the same or similar
nature.
4.4 Governing Law. The provision of Article I of this Agreement shall
be governed by and construed in accordance with the laws of the State of
Delaware, without giving effect to the principles of the conflicts of laws
thereof, and all other provisions of this Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
effect to the principles of the conflicts of laws thereof.
4.5 Additional Parties. The Company shall take all necessary action to
ensure that each person who shall on or after the date hereof acquire shares of
Series X Preferred Stock, Series Y Preferred Stock, Guarantee Warrants or
Investor Warrants shall become a party to this Agreement by executing and
delivering to the Company an Instrument of Adherence, and such additional party
shall thereafter be added to Annex I hereto and be deemed a Series X Investor, a
Series Y Investor, a holder of Guarantee Warrants or a holder of Investor
Warrants, as the case may be, for all purposes of this Agreement without the
requirement of consent of the other parties hereto.
4.6 Severability. If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
4.7 Captions. Captions are for convenience only and are not deemed to
be part of this Agreement.
4.8 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.9 Remedies. Each of the parties to this Agreement will be entitled
to enforce its rights under this Agreement specifically, to recover damages by
reason of any breach of any provision of this Agreement and to exercise all
other rights existing in its favor. The parties hereto agree and acknowledge
that money damages may not be an adequate remedy for any breach of the
provisions of this Agreement and that any party may in its sole discretion apply
to any court of law or equity of competent jurisdiction for specific performance
or injunctive relief in order to enforce or prevent any violations of the
provisions of this Agreement.
4.10 Termination of Existing Stockholders Agreement. Upon execution and
delivery of this Agreement, the Existing Stockholders Agreement shall be
terminated and shall be of no further force and effect; provided, however, that
the Series Y Investors shall continue to be entitled to rights under Articles
III and IV of this Agreement in lieu of their rights under Articles III and IV
of the Existing Stockholders Agreement, regardless of whether such Series Y
Investors execute this Agreement.
4.11 Effective Date. This Agreement shall become effective immediately
upon the execution and delivery of this Agreement by the parties hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first above written.
XXX.XXX, INC.
By: /s/ Xxxx X. Xxxxxxxx
Name: Xxxx X. Xxxxxxxx
Title: V.P. - Corporate Affairs,
General Counsel and Secretary
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
DEUTSCHE BANK AG LONDON,
BY DB ADVISORS LLC AS INVESTMENT ADVISOR
By: /s/ Xxxx Xxxxxx
Name: Xxxx Xxxxxx
Title: Managing Director
Address: 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
THE VANTAGEPOINT ENTITIES
c/o VANTAGEPOINT VENTURE PARTNERS
0000 XXXXXXX XXXXX
XXX XXXXX, XX 00000
VANTAGEPOINT VENTURE PARTNERS III (Q),
L.P.
By: VantagePoint Venture Associates
III, L.L.C., its general partner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Managing Member
VANTAGEPOINT VENTURE PARTNERS III, L.P.
By: VantagePoint Venture Associates
III, L.L.C., its general partner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Managing Member
VANTAGEPOINT COMMUNICATIONS
PARTNERS, L.P.
By: VantagePoint Communications
Associates, L.L.C., its general
partner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Managing Member
VANTAGEPOINT VENTURE PARTNERS 1996, L.P.
By: VantagePoint Associates, L.L.C.,
its general partner
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Managing Member
ANNEX I
-------
XXX.XXX, INC.
Instrument of Adherence
The undersigned, _____________________, in order to become the owner or
holder of [________ shares] [Warrants to purchase shares] of the [Common
Stock/Series X Preferred Stock/Series Y Preferred Stock] of XXX.XXX, INC., a
Delaware corporation (the "Company"), hereby agrees to become a party to that
certain Second Amended and Restated Stockholders Agreement (the "Agreement")
dated as of July 22, 2004 (as may be amended from time to time in accordance
with its terms) (the "Agreement") among the Company and the other parties
thereto, and to be bound by all provisions thereof. The undersigned agrees to
become an Investor (as defined in the Agreement) under the terms of the
Agreement. This Instrument of Adherence shall take effect and shall become a
part of said Agreement immediately upon execution by the undersigned hereto and
acceptance thereof by the Company.
Executed as a contract under seal as of the date set forth below:
Signature:
----------------------------
Name:
---------------------------------
By:
-----------------------------------
Address:
-------------------------------
Social Security No.:
-------------------
Date:
----------------------------------
Accepted :
XXX.XXX, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Date:
---------------------------------
