Exhibit 10.25
WAIVER, CONSENT AND AMENDMENT
TO THE CLASS A PREFERRED STOCK PURCHASE
AGREEMENT DATED MAY 27, 1997, THE PURCHASE
AND SALE AGREEMENT DATED DECEMBER 17, 1997,
THE PURCHASE AND SALE AGREEMENT DATED
JANUARY 5, 1998, BETWEEN iNAME, Inc. (formerly named GLOBECOMM, INC.) AND
THE PERSONS IDENTIFIED THEREIN,
AND INVESTORS' RIGHTS AGREEMENT BETWEEN iNAME, INC.,
(formerly named GLOBECOMM, INC.) AND THE PERSON IDENTIFIED HEREIN
WAIVER, CONSENT, AMENDMENT and AGREEMENT, dated as of the 31st day of
July, 1998, by and among iNAME, INC., (formerly named GLOBECOMM, INC.), a
Delaware corporation (the "Company"), doing business at 00 Xxxxxxxx, Xxxxx 000,
Xxx Xxxx, Xxx Xxxx and the undersigned holders of Class A Preferred Stock of the
Company, together constituting the holders of a majority of the Class A
Preferred Stock of the Company issued pursuant to the Class A Preferred Stock
Purchase Agreement dated May 27, 1997, the Purchase and Sale Agreement dated
December 17, 1997 and the Purchase and Sale Agreement dated January 5, 1998,
Xxxxxx Xxxxxx, residing at 000 Xxxxxxxxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx, in his
capacities as holder of Class A Preferred Stock, Class B Common Stock and
controlling stockholder (the "Controlling Stockholder"), and the holders of
Class C Preferred Stock. The holders of Class A Preferred Stock that are parties
to the Stock Purchase Agreement (as defined below) shall be referred to
collectively as the "Original Purchasers" and the holders of Class C Preferred
Stock and/or Warrants who are parties to this Agreement shall be referred to
collectively as the "Additional Purchasers." The Original Purchasers and the
Additional Purchasers are collectively referred to as the "Purchasers." The
Company and the Purchasers are collectively referred to as the "Parties."
WHEREAS, the Company and the Original Purchasers are parties to a
certain (i) Class A Preferred Stock Purchase Agreement dated as of May 27, 1997,
(ii) Purchase and Sale Agreement dated December 17, 1997, and (iii) Purchase and
Sale Agreement dated January 5, 1998 (collectively, the "Stock Purchase
Agreement"); and
WHEREAS, Section 11.6 of the Stock Purchase Agreement provides that the
Stock Purchase Agreement may be modified by the written consent of the Company
and the holders of a majority of the shares of Class A Preferred Stock issued to
the Original Purchasers pursuant to the Stock Purchase Agreement; and
WHEREAS, the Company and the holders of a majority of the Class A
Preferred Stock issued pursuant to the Stock Purchase Agreement desire, among
other things, to waive and amend certain provisions of the Stock Purchase
Agreement in order to permit the sale by the Company of shares of Class C
Preferred Stock to the Additional Purchasers at a price per share
of SEVEN DOLLARS ($7.00), and to provide that the Additional Purchasers become
parties to this Agreement and be bound by the same obligations and entitled to
the same rights and benefits as the Original Purchasers thereunder, as more
fully set forth herein; and
WHEREAS, the Company and the Additional Purchasers are parties to a
Class C Preferred Stock Purchase Agreement dated simultaneously herewith (the
"Class C Preferred Stock Purchase Agreement"); and
WHEREAS, in order to induce the Additional Purchasers to invest funds
in the Company pursuant to the Class C Preferred Stock Purchase Agreement, the
Original Purchasers, the Additional Purchasers and the Company agree that this
Agreement shall govern the rights of the Original Purchasers, the Additional
Purchasers and the Company with respect to the subject matter set forth herein
and in connection with the terms and provisions as set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter contained, the Parties hereto do hereby agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 DEFINITIONS. The following terms, as used herein, shall
have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such Person.
"Agreement" means this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Books and Records" means all books, ledgers, files, reports,
documents, plans and operating records of, or maintained by, the Company, and
all other data in the possession of the Company relating to or reasonably
required for the operation of the Company's business.
"Class A Common Stock" means the thirty million (30,000,000) shares of
Class A Common Stock that the Company is authorized to issue by way of the
Company's Amended and Restated Certificate of Incorporation, and amendments
thereto.
"Class A Preferred Stock" means the six million (6,000,000) shares of
Class A Preferred Stock that the Company is authorized to issue by way of the
Company's Amended and Restated Certificate of Incorporation, and amendments
thereto.
"Class A Demand Registration" has the meaning set forth in Section
4.1.3. of this Agreement.
"Class B Common Stock" means the five million (5,000,000) shares of
Class B Common Stock that the Company is authorized to issue by way of the
Company's Amended and Restated Certificate of Incorporation, and amendments
thereto.
"Class C Preferred Stock" means the six million (6,000,000) shares of
Class C Preferred Stock that the Company is authorized to issue by way of the
Company's Amended and Restated Certificate of Incorporation, and amendments
thereto.
"Class C Demand Registration" has the meaning set forth in Section
4.1.4. of this Agreement.
"Class D Preferred Stock" means the five million (5,000,000) shares of
Class D Preferred Stock that the Company is authorized to issue by way of the
Company's Amended and Restated Certificate of Incorporation, and amendments
thereto.
"Company Stock" means any shares of any class of authorized capital
stock in the Company.
"Confidential Information" means any information concerning the
businesses and affairs of the Company that is not already generally available to
the public.
"Controlling Stockholder" has the meaning set forth in the preface
above.
"Incidental Registration" has the meaning set forth in Section 4.1.1.
of this Agreement.
"Indemnified Party" and "Indemnifying Party" has the meaning set forth
in Section 4.7. of this Agreement.
"Fully Diluted Shares Outstanding" has the meaning set forth in Section
6.3.3. of this Agreement.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a corporation, an
association, a joint stock company, a trust, a joint venture, an unincorporated
organization, or a governmental entity (or any department, agency, or political
subdivision thereof).
"Purchasers" means the meaning set forth in the preface above.
"Registrable Securities" means (i) the Class A Common Stock issuable or
issued upon conversion of the Shares or the Warrant Shares, (ii) any Class A
Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
the securities referenced in (i) and (iii) any other shares of capital stock of
the Corporation into or for which the Class A Common Stock may be converted into
or exchanged pursuant to a recapitalization or reclassification of the Company's
capital stock.
"SEC" means the Securities and Exchange Commission.
"Security Interest" means any mortgage, pledge, lien, encumbrance,
charge, or other security interest, other than (A) liens for taxes not yet due
and payable or for taxes that the taxpayer is contesting in good faith through
appropriate proceedings, (B) purchase money liens securing rental payments under
capital lease arrangements, and (C) liens, charges, encumbrances, easements,
rights-of-way, building and use restrictions, exceptions, reservations and
limitations that do not in any material respect adversely detract from the value
of the property subject thereto or materially impair the operation of the
Company.
"Shares" means the shares of Class A Preferred Stock or Class C
Preferred Stock, as the case may be, issued or to be issued to the Purchasers
pursuant to the Stock Purchase Agreement, as amended, and the Class C Preferred
Stock Purchase Agreement.
"Warrant Shares" means the shares of capital stock of the Company
issuable upon the exercise of the Warrants.
"Warrants" means the warrants for the purchase of capital stock of the
Company issued or to be issued to the Additional Purchasers under the Class C
Preferred Stock Purchase Agreement.
Section 1.2 OTHER TERMS. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section 1.3 OTHER DEFINITIONAL PROVISIONS. The words "herein,"
"hereof," "hereto" and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The terms defined in the singular shall
have a comparable meaning when used in the plural, and vice versa, and in such
gender, as the sense and circumstances require.
ARTICLE II
CONSENT OF THE ORIGINAL PURCHASERS
The Original Purchasers (i) ratify and approve the written consent of
the Board of Directors attached hereto as Exhibit A in all respects, including
the rights and preferences afforded the holders of the Class A Common Stock,
Class A Preferred Stock, Class B Common Stock, Class C Preferred Stock and Class
D Preferred Stock, (ii) agree and consent that the Company's Certificate of
Incorporation be amended and modified, in accordance with the terms set forth in
the Amended and Restated Certificate of Incorporation attached as Exhibit B and
(iii) consent to the issuance of Class C Preferred Stock pursuant to the Class C
Preferred Stock Purchase Agreement.
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ARTICLE III
MODIFICATIONS
To the extent that any provision in this Agreement conflicts with the
terms of the Stock Purchase Agreement, the terms of this Agreement shall control
and supercede the conflicting sections of the Stock Purchase Agreement
concerning the subject matter contained herein. Without limiting the foregoing,
the Parties, the Company and the Controlling Stockholder agree and consent that
section 7 ("Registration Rights"), other than section 7.7 ("Conversion of
Shares"); section 8.1 ("Modification of Bylaws); section 8.2 ("Financial
Statements"); section 8.3 ("Inspection"); section 8.5 ("Arm's Length
Transactions"); section 8.6 ("Termination"); section 8.7 ("Voting Agreement");
section 8.9 ("Transfer of Class B Common Stock"); section 9 ("Preemptive
Rights"); section 10.3 ("Restriction on the Declaration of Dividends"); and
section 11.6 ("Waivers; Amendments") of the Stock Purchase Agreement and section
4.A of the Purchase and Sale Agreement dated December 17, 1997 and the Purchase
and Sale Agreement dated January 5, 1998, each between the Company and the
Additional Purchasers (as defined therein) (insofar as such section relates to
the aforementioned sections of the Stock Purchase Agreement) are deleted in
their entirety, and the rights afforded to the Original Purchasers by virtue of
those sections are modified and amended as set forth in Sections 4, 5, 6 and 7
of this Agreement.
ARTICLE IV
REGISTRATION RIGHTS
The Company and the Purchasers covenant and agree as follows:
Section 4.1 REGISTRATION
4.1.1. INCIDENTAL REGISTRATION. If at any time the Company proposes to
register any Company Stock under the Act for its own account or for the account
of any of its stockholders, in connection with an underwritten public offering
of such Company Stock, on a form that would also permit registration of the
Registrable Securities, the Company shall, each such time, give the Purchasers
not less than twenty (20) days written notice of such proposed registration (the
"Incidental Registration"). Upon the written request of the Purchasers, given
within twenty (20) days after receipt of any such notice from the Company, the
Company shall, subject to Section 4.1.2., cause to be included in such
registration all of the Registrable Securities the Purchasers request be
registered in such registration. There shall be no restriction with respect to
the number of times the Purchasers may request such Incidental Registration.
4.1.2. PRO RATA INCIDENTAL REGISTRATION OF COMPANY STOCK. If the
managing underwriter of any offering described in the first sentence of Section
4.1.1 determines that the number of shares proposed to be sold by the Company or
by other stockholders of Company Stock is greater than the number of shares that
the underwriter believes feasible to sell at the time, at the price and upon the
terms approved by the Company, then the number of shares of Company Stock that
the underwriter believes may be sold shall be
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allocated for inclusion in the registration statement in the following order of
priority: (A) Company Stock sold for the account of any holders of the Company's
securities if the registration was initiated by such holders pursuant to
contractual demand registration rights and Company Stock sold for the account of
Lycos, Inc. ("Lycos"), pursuant to contractual incidental registration rights
that permit it to participate in such an offering on a pro rata basis with such
holders, pro rata among such holders and Lycos according to the number of shares
requested to be registered by such holders and Lycos; (B) Company Stock sold for
the account of the Company; and (C) pro rata among the Purchasers whose shares
are being registered therein pursuant to Section 4.1.1. and any other holders of
securities of the Company exercising contractual incidental registration rights
(other than holders described in clause (A) above), according to the number of
shares requested to be registered by Purchasers and other holders; provided,
however, that (1) as between the Company, on the one hand, and such Purchasers
and other holders referred to in clause (C) above, at least ten percent (10%) of
the Purchasers' and such other holders' Registrable Securities requested to be
included shall be included in such underwriting (other than the initial
underwriting); and (2) the right of the Purchasers and other holders to
participate in the offering shall have priority over the purchasers of Class A
Common Stock and Class B Common Stock . If a Purchaser disapproves of the terms
of the underwriting, it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter; provided, however, the election to
withdraw occurs within ten (10) days after such Purchaser receives notice of the
terms of the underwriting.
4.1.3. CLASS A PREFERRED STOCKHOLDERS' DEMAND REGISTRATION. On or after
the earlier of (A) 180 days after the effective date of a registration statement
filed by the Company in connection with an initial public offering of any
Company Stock or other securities under the Act, or (B) May 31, 1999, then, upon
written request of the Original Purchasers holding in the aggregate greater than
fifty percent (50%) of the Class A Preferred Stock held by the Original
Purchasers that the Company effect the registration under the Act of all or a
portion of the Registrable Securities and specifying the intended method of
disposition thereof, the Company shall, within fifteen (15) days after the
Company has received such written notice, promptly commence and use its best
efforts to consummate the registration under the Act of the Registrable
Securities, or such portion thereof, and of all other stock or securities which
the Company has been requested to register by any other holder of the Company's
securities that is entitled to include securities in such registration (the
"Class A Demand Registration"); provided, however, that (1) the Original
Purchasers in the aggregate will be entitled to request three (3) Class A Demand
Registrations, provided that either (a) the Registrable Securities requested to
be included in such Class A Demand Registration constitute at least twenty
percent (20%) of the total number of Registrable Securities issued hereunder or
(b) the anticipated gross receipts from the offering exceed ten million dollars
($10,000,000), (2) a registration will not count as one of such three permitted
Class A Demand Registrations until it has become effective, (3) the Company may
delay the filing of a registration statement under the Act as required by this
Section 4.1.3. for a period of up to sixty (60) days after the request of the
Original Purchasers if the Board of Directors of the Company determines in good
faith that such Class A Demand Registration would be materially adverse to the
interests of the Company, and in such event, the Original Purchasers will be
entitled to withdraw such request and such Class A Demand Registration will not
be counted as a
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Class A Demand Registration hereunder, and (4) the Company will not be required
to effect a Class A Demand Registration within six (6) months after the
effective date of a previous Class A Demand Registration, Class C Demand
Registration (defined below) or registration in which the Original Purchasers
were given registration rights pursuant to Section 4.1.1.
4.1.4. CLASS C PREFERRED STOCKHOLDERS' DEMAND REGISTRATION. On or after
the earlier of (A) 180 days after the effective date of a registration statement
filed by the Company in connection with an initial public offering of any
Company Stock or other securities under the Act, or (B) July 31, 2000, then,
upon written request of the Additional Purchasers holding in the aggregate
greater than fifty percent (50%) of the Class C Preferred Stock that the Company
effect the registration under the Act of all or a portion of the Registrable
Securities and specifying the intended method of disposition thereof, the
Company shall, within fifteen (15) days after the Company has received such
written notice, promptly commence and use its best efforts to consummate the
registration under the Act of the Registrable Securities, or such portion
thereof, and of all other stock or securities which the Company has been
requested to register by any other holder of the Company's securities that is
entitled to include securities in such registration (the "Class C Demand
Registration"); provided, however, that (1) the Additional Purchasers shall be
entitled to request one (1) Class C Demand Registration, provided that either
(a) the Registrable Securities requested to be included in such Class C Demand
Registration constitute at least twenty percent (20%) of the total number of
Registrable Securities issued hereunder or (b) the anticipated gross receipts
(before underwriters discounts and commissions and costs of such registration)
from the offering exceed ten million dollars ($10,000,000), (2) a registration
will not count as the permitted Class C Demand Registration until it has become
effective, (3) the Company may delay the filing of a registration statement
under the Act as required by this Section 4.1.4. for a period of up to sixty
(60) days after the request of the Additional Purchasers if the Board of
Directors of the Company determines in good faith that such Class C Demand
Registration would be materially adverse to the interests of the Company, and in
such event, the Additional Purchasers will be entitled to withdraw such request
and such Class C Demand Registration will not be counted as the Class C Demand
Registration hereunder (provided, however, that the Company shall not use this
right more than once in any 180 day period) and (4) the Company will not be
required to effect a Class C Demand Registration within six (6) months after the
effective date of a registration in which the Additional Purchasers were given
registration rights pursuant to Section 4.1.1. In the event that the Additional
Purchasers exercise the demand registration right hereunder, and shares
requested to be registered by Lycos in connection therewith are included in such
registration on a pro rata basis with the Additional Purchasers' Registrable
Securities, pursuant to section 11 of the letter agreement between Lycos and the
Company dated March 9, 1998 or otherwise, account for 30% or more of the shares
offered in such registered offering, then the Additional Purchasers shall have
the right to one (1) additional Class C Demand Registration hereunder.
4.1.5. PRO RATA DEMAND REGISTRATION OF COMPANY STOCK. (a) In the event
a Class A Demand Registration or Class C Demand Registration (each a "Demand
Registration") is initiated subsequent to the initial public offering of any
Company Stock
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or other securities under the Act and such Demand Registration is an
underwritten offering, and the managing underwriter advises the Purchasers and
the Company in writing that in the underwriter's opinion the number of shares
requested to be included exceeds the number that can be sold in such offering,
then the number of shares of Company Stock that the underwriter believes may be
sold shall be allocated for inclusion in the registration statement in the
following order of priority: (A) shares requested to be included by the Original
Purchasers, in the case of a Class A Demand Registration, or the Additional
Purchasers, in the case of a Class C Demand Registration, together with the
shares requested to be included by Lycos to the extent Lycos is entitled to
participate in such offering on a pro rata basis with the Original Purchasers or
the Additional Purchasers, as applicable, pursuant to contractual incidental
registration rights, that in the opinion of such underwriter can be sold prior
to the inclusion of any securities of any other security holder of the Company;
provided that, if the managing underwriter advises the Company in writing that
in its opinion the aggregate number of shares requested for inclusion by the
Original Purchasers, in the case of a Class A Demand Registration, or the
Additional Purchasers, in the case of a Class C Demand Registration, together
with such shares of Lycos, exceeds the number of such shares that can be sold in
such offering, then the Company shall include in the registration statement only
such number of shares, pro rata among the Original Purchasers, in the case of a
Class A Demand Registration, or the Additional Purchasers, in the case of a
Class C Demand Registration, and Lycos, based upon the number of shares
requested to be registered by each of the Original Purchasers or the Additional
Purchasers, as applicable, and Lycos, which in the opinion of such underwriter
can be sold; (B) shares sold for the account of the Company; and (C) pro rata
among the Original Purchasers, in the case of a Class C Demand Registration, or
pro rata among the Additional Purchasers, in the case of a Class A Demand
Registration, and any other holders of securities of the Company exercising
contractual incidental registration rights other than any holders whose shares
are included pursuant to clause (A) above.
(b) In the event a Demand Registration is initiated prior to the
Company giving notice under Section 4.1.1. that it proposes to register any
Company Stock under the Act in its initial public offering of any Company Stock
or other securities under the Act and such Demand Registration is an
underwritten offering, and the managing underwriter advises the Purchasers and
the Company in writing that in the underwriter's opinion the number of shares
requested to be included exceeds the number that can be sold in such offering,
then the number of shares of Company Stock that the underwriter believes may be
sold shall be allocated for inclusion in the registration statement in the
following order of priority: (A) shares requested to be included by the Original
Purchasers, in the case of a Class A Demand Registration, or the Additional
Purchasers, in the case of a Class C Demand Registration, together with the
shares requested to be included by Lycos to the extent Lycos is entitled to
participate in such offering on a pro rata basis with the Original Purchasers or
the Additional Purchasers, as applicable, pursuant to contractual incidental
registration rights, that in the opinion of such underwriter can be sold prior
to the inclusion of any securities of any other security holder of the Company;
provided that, if the managing underwriter advises the Company in writing that
in its opinion the aggregate number of shares requested for inclusion by the
Original Purchasers, in the case of a Class A Demand Registration, or the
Additional Purchasers, in the case of a Class C Demand Registration, together
with such shares of Lycos, exceeds the number of such
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shares that can be sold in such offering, then the Company shall include in the
registration statement only such number of shares, pro rata among the Original
Purchasers, in the case of a Class A Demand Registration, or the Additional
Purchasers, in the case of a Class C Demand Registration, and Lycos, based upon
the number of shares requested to be registered by each of the Original
Purchasers or the Additional Purchasers, as applicable, and Lycos, which in the
opinion of such underwriter can be sold; (B) pro rata among the Original
Purchasers, in the case of a Class C Demand Registration or pro rata among the
Additional Purchasers, in the case of a Class A Demand Registration, and any
other holders of securities of the Company exercising contractual incidental
registration rights other than any holders whose shares are included pursuant to
clause (A) above; and (C) shares sold for the account of the Company.
(c) If the Original Purchasers make a written request to exercise
rights to a Class A Demand Registration under Section 4.1.3. prior to the
Additional Purchasers making a written request to exercise rights to a Class C
Demand Registration under Section 4.1.4., then the registration following from
such request shall be a Class A Demand Registration. If the Additional
Purchasers make a written request to exercise rights to a Class C Demand
Registration under Section 4.1.4. prior to the Original Purchasers making a
written request to exercise rights to a Class A Demand Registration under
Section 4.1.3., then the registration following from such request shall be a
Class C Demand Registration.
4.1.6. CLASS A PREFERRED STOCKHOLDERS' AND CLASS C PREFERRED
STOCKHOLDERS' FORM S-3 DEMAND REGISTRATION RIGHTS. If at any time the Original
Purchasers holding in the aggregate greater than fifty percent (50%) of the
Class A Preferred Stock held by the Original Purchasers, or the Additional
Purchasers holding in the aggregate greater than fifty percent (50%) of the
Class C Preferred Stock, request that the Company effect a Form S-3 registration
under the Act of all or a portion of the Registrable Securities, the Company
shall, within fifteen (15) days after the Company has received such written
notice, promptly commence and use its best efforts to consummate the Form S-3
registration of the Registrable Securities under the Act; provided, however, (A)
the aggregate fair market value of the Registrable Securities requested to be
registered shall be greater than two million dollars ($2,000,000), (B) the
Company shall only be required to file one Form S-3 registration every twelve
(12) months, and (C) the Original Purchasers or Additional Purchasers who
request that the Company effect a Form S-3 registration shall not be required to
participate in such Form S-3 registration.
4.1.7. BENEFIT OF MORE FAVORABLE RIGHTS. Except for the differences
afforded the Original Purchasers and Additional Purchasers set forth in this
Agreement, if at any time registration rights are granted with respect to
Company Stock or capital stock of any Affiliate of the Company which are on
terms more favorable to the holders of such securities with respect to any
material terms applicable thereto including, without limitation, the number of
times or the circumstances under which such rights may be exercised, the
expenses to be paid by the Company or any Affiliate of the Company in connection
therewith or the duration of the availability of such rights, the Company agrees
that such more favorable terms will be exercisable by the Purchasers
automatically and without further action by the Company. The Company covenants
to give written notice to the Purchasers not less than ten (10) days in advance
of the granting of
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registration rights with respect to Company Stock or capital stock of any
Affiliate of the Company.
4.1.8. CLASS A PREFERRED STOCKHOLDERS' TERMINATION OF REGISTRATION
RIGHTS. Notwithstanding any provision to the contrary, no Original Purchaser
shall be entitled to exercise any right provided for in this Section 4.1. after
five (5) years following the consummation of the sale of Company Stock pursuant
to a registration statement filed by the Company under the Act in connection
with the initial firm commitment underwritten offering of its securities to the
general public.
4.1.9. CLASS C PREFERRED STOCKHOLDERS' TERMINATION OF REGISTRATION
RIGHTS. Upon the date which is thirty (30) months following a firm commitment
underwritten public offering pursuant to a registration statement under the Act,
the public offering price of which is not less than two hundred percent (200%)
of the then applicable Conversion Price of the Class C Preferred Stock (as
defined in the Class C Preferred Stock Purchase Agreement) and an offering
amount of not less than twenty million dollars ($20,000,000) (a "Qualified
Offering"), then the Additional Purchasers shall not be entitled to exercise any
right provided for in this Section 4.1, provided that the rights provided under
4.1.1. shall continue with respect to Registrable Securities issued or issuable
upon exercise of a Warrant (or conversion of a Warrant Share issued or issuable
upon exercise of a Warrant) until twenty four (24) months after the date of the
exercise of such Warrant if such date is after the date specified above.
Section 4.2 OBLIGATIONS OF THE COMPANY. Where required under Section
4.1. to use its best efforts to effect the registration of any of the Shares,
the Company shall, as expeditiously as reasonably possible,
4.2.1. Prepare and file with the SEC a registration statement with
respect to such Shares and use its best efforts to cause such registration
statement to become effective and, upon the request of the holders of a majority
of the Registrable Securities, keep such registration statement effective for up
to one hundred twenty (120) days;
4.2.2. Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to comply with the provisions of the Act with respect to the
disposition of all securities covered by such registration;
4.2.3. Furnish to the Purchaser such numbers of copies of such
registration statement and prospectus, including any preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as the
Purchaser may reasonably request in order to facilitate the disposition of the
Registrable Securities;
4.2.4. Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement; and
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4.2.5. Otherwise comply with all applicable rules and regulations of
the SEC.
Section 4.3 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Section 4 that the
Purchaser shall furnish to the Company such information regarding the Purchaser,
the Registrable Securities held by the Purchaser, and the intended method of
disposition thereof as the Company or its appointed agents shall reasonably
request and as shall be required in connection with the action to be taken by
the Company.
Section 4.4 CLASS A PREFERRED STOCKHOLDERS' REGISTRATION EXPENSES. In
the case of any registration effected pursuant to Section 4, the Company shall
bear all registration and qualification fees and expenses, and all costs and
disbursements of counsel for the Company; provided, however, that (A) each
Original Purchaser shall bear the fees and costs of such Original Purchaser's
own counsel and all underwriting discounts and commissions with respect to the
Registrable Securities sold by such person and (B) the Company shall not be
required to pay for any expenses of any Class A Demand Registration begun if the
registration request is subsequently withdrawn at the request of a majority in
interest of the Original Purchasers to be registered (in which case all
participating Original Purchasers shall bear such expenses), unless the holders
of a majority of the Original Purchasers agree in writing that the Class A
Demand Registration so withdrawn shall be counted as one of the three permitted
Class A Demand Registrations; provided further that, if the Original Purchasers
elect to engage counsel other than counsel for the Company in connection with a
Class A Demand Registration, the Company shall bear the fees and expenses, and
all costs and disbursements of one firm to act as such counsel to all Original
Purchasers up to a maximum aggregate amount of fifteen thousand dollars
($15,000).
Section 4.5 CLASS C PREFERRED STOCKHOLDERS' REGISTRATION EXPENSES. In
the case of any registration effected pursuant to Section 4, the Company shall
bear all registration and qualification fees and expenses, and all costs and
disbursements of counsel for the Company; provided, however, that (A) each
Additional Purchaser selling Registrable Securities shall bear the fees and
costs of such Additional Purchaser's own counsel and all underwriting discounts
and commissions with respect to the Registrable Securities sold by such person,
and (B) the Company shall not be required to pay for any expenses of the Class C
Demand Registration begun if the registration request is subsequently withdrawn
at the request of a majority in interest of the Additional Purchasers (in which
case the withdrawing Additional Purchasers shall bear such expenses); provided
that, if the Additional Purchasers elect to engage counsel other than counsel
for the Company in connection with a Class C Demand Registration, the Company
shall bear the fees and expenses, and all costs and disbursements of one firm to
act as such counsel to all Additional Purchasers up to a maximum aggregate
amount of fifteen thousand dollars ($15,000).
Section 4.6 SELECTION OF UNDERWRITERS.
4.6.1. COMPANY SELECTION. If a registration pursuant to Section 4.1.1.
of this Agreement involves an underwritten offering, the Company shall have the
right to select the investment bankers and managers to administer the offering.
The Company shall not be required under Section 4.1.1. to register the Shares in
such registration unless the
11
Purchasers accept the terms of the underwriting as agreed upon between the
Company and the underwriter.
4.6.2. ORIGINAL PURCHASERS' SELECTION. If a registration pursuant to
Section 4.1.3. or 4.1.6. involves an underwritten offering, then the Original
Purchasers shall have the right to select the investment bankers and managers to
administer the offering; provided, however, that the selection of such
investment bankers and managers shall be subject to the approval of the Company,
such approval not to be unreasonably withheld.
4.6.3. ADDITIONAL PURCHASERS' SELECTION. If a registration pursuant to
Section 4.1.4, or pursuant to Section 4.1.6 at the demand of the Additional
Purchasers, involves an underwritten offering, then the Additional Purchasers
shall have the right to select the investment bankers and managers to administer
the offering; provided, however, that the selection of such investment bankers
and managers shall be subject to the approval of the Company, such approval not
to be unreasonably withheld.
Section 4.7 INDEMNIFICATION. If any Registrable Securities are included
in a registration statement pursuant to this Section 4, then,
4.7.1. To the extent permitted by law, the Company shall indemnify and
hold harmless the Purchasers, agents for the Purchasers, any underwriter for
each Purchasers, and each Person, if any, who controls such Person within the
meaning of the Act, against any losses, claims, damages or liabilities, joint or
several, to which they may become subject under the Act or otherwise, insofar as
such losses, claims, damages, or liabilities arise out of any untrue statement
or alleged untrue statement of material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained in
the registration statement, or any amendments or supplements to the registration
statement, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, and will reimburse the Purchasers,
the agents for the Purchasers, such underwriter, or controlling Person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall 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 omission based upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Purchasers or underwriter and stated to be specifically for use therein.
4.7.2. To the extent permitted by law, each Purchaser, severally and
not jointly, shall indemnify and hold harmless the Company, each of its
directors, each of its officers who have signed such registration statement, and
any underwriter for the Company against any losses, claims, damages or
liabilities to which the Company or any such director, officer, or underwriter
may become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained in the
registration statement or any amendments or supplements to the registration
statement, or arise out of
12
or are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statement therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission was
made in such registration statement, preliminary prospectus, or amendments or
supplement thereto, in reliance upon and in conformity with written information
furnished by such Purchaser duly executed and stated to be expressly for use
therein, and such Purchaser will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
Person, or underwriter in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, that such Purchaser's
liability under this Section 4.7.2. shall not exceed the amount of the gross
proceeds of the offering of such Purchaser's Registrable Securities included
therein.
4.7.3. Each party entitled to indemnification (the "Indemnified Party")
shall give notice to the party required to provide indemnification
("Indemnifying Party") promptly after such Indemnified Party has knowledge of
any claim as to which indemnity may be sought, and shall permit the Indemnifying
Party (at its expense) to assume the defense of any such claim or any litigation
resulting therefrom; provided, however, that counsel for the Indemnifying Party,
who shall conduct the defense of such claim or litigation, shall be reasonably
satisfactory to the Indemnified Party, and the Indemnified Party may participate
in such defense at such party's expense; provided, further, that the failure by
any Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 4.7., except to the
extent that the failure results in an omission of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged solely as a result of
the failure to give notice; provided, further, that a refusal to permit the
Indemnifying Party to conduct such defenses by such counsel shall relieve such
Indemnifying Party of its obligations under this Section 4.7. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to the entry of any judgment or enter
into any settlement that does not include as an unconditional term the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation.
Section 4.8 REPORTS UNDER THE SECURITIES EXCHANGE ACT OF 1934. With a
view toward making available to the Purchasers the benefits of SEC Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit the Purchaser to sell its Registrable Securities to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(i) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its shares to the general public;
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(ii) take such action, including the voluntary registration of its
Common Stock under Section 12 of the Securities Exchange Act of 1934, as is
necessary to enable the holders of Registrable Securities to utilize Form S-3
for the sale of their shares, such action to be taken as soon as practicable
after the end of the fiscal year in which the first registration statement filed
by the Company for the offering of its shares to the general public is declared
effective;
(iii) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the Securities Exchange Act
of 1934; and
(iv) furnish to any holder of the Registrable Securities, so long as
the holder of the Registrable Shares owns any shares, forthwith upon request (i)
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the effective
date of the first registration statement filed by the Company), the Act and the
Securities Exchange Act of 1934 (at any time after it has become subject to such
reporting requirements), or as to its qualification that it qualifies as a
registrant whose shares may be resold pursuant to Form S-3 (at any time after it
so qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any holder of
Registrable Securities of any rule or regulation of the SEC which permits the
selling of any such shares without registration or pursuant to such form.
Section 4.9 LOCK-UP PERIOD. The Purchasers agree that it shall not, to
the extent requested by the underwriter of the Company, sell or otherwise
transfer or dispose of any Registrable Securities of the same or similar class
as the Registrable Securities being registered by the Company during the one
hundred eighty (180) day period following the effective date of a registration
statement filed by the Company; provided, however, that (A) such agreement shall
be applicable only to the first registration statement of the Company that
covers shares of the Company to be sold to the public in an underwritten
offering, (B) the holders of Class B Common Stock and the holders of at least
ninety percent (90%) of Class A Common Stock are subject to identical or
substantially similar time restrictions, (C) all officers and directors of the
Company and all other persons with registration rights enter into similar
agreements, and (D) nothing contained herein shall prohibit any holder of
Company Stock from transferring any Registrable Securities to a trust
established for estate planning purposes. Notwithstanding anything to the
contrary set forth herein, the terms of this Section 4.9 may not be amended or
modified, directly or indirectly, without the express written consent of each
holder of Registrable Securities detrimentally affected by such amendment or
modification and any such amendment or modification made without such holder's
consent shall not be applicable to that holder.
Section 4.10 TRANSFER OF REGISTRATION RIGHTS. The registration rights
of the Purchasers under this Section 4 may be assigned and transferred (i) by
the Additional Purchasers to any Affiliate of such Additional Purchaser to whom
any of the shares owned by the Additional Purchasers are transferred, and (ii)
by any Purchaser to any transferee who acquires at least five thousand (5,000)
Registrable Securities (adjusted to reflect subsequent stock splits,
combinations, stock dividends and recapitalizations); provided, however, that
the Company is given written notice by the Purchasers at the time of such
assignment and transfer stating the
14
name and address of the transferee and identifying the securities with respect
to which the rights under this Section 4 are being assigned and transferred. For
the purposes of this Section 4.10, a change in control of an Affiliate of an
Additional Purchaser holding shares entitling such Affiliate to the registration
rights hereunder, such that such Affiliate is subsequent to such change of
control no longer an Affiliate of an Additional Purchaser, shall be deemed an
attempted transfer of the registration rights hereunder and such former
Affiliate of an Additional Purchaser shall not be entitled to such registration
rights.
ARTICLE V
OTHER COVENANTS
Section 5.1 ORIGINAL PURCHASERS' DESIGNATION OF DIRECTOR AND OBSERVER.
The Original Purchasers shall have the right to elect one director to the board;
provided, however, that the right of the Original Purchasers to elect such
director shall terminate in the event that there are not outstanding at least
500,000 shares of Class A Preferred Stock held by the Original Purchasers
(adjusted to reflect subsequent stock splits, combinations, stock dividends and
recapitalizations); provided further that, in the event the Original Purchasers
shall lose their rights to elect a member to the Board of Directors, the
Original Purchasers shall have the right to invite a representative designated
by the Original Purchasers to attend all meetings of its Board of Directors in a
nonvoting observer capacity; provided, however, (1) that such representative
shall agree to hold in confidence and trust and to act in a fiduciary manner
with respect to all Confidential Information concerning the Company furnished to
such representative in connection with any such meeting of the Board of
Directors, and (2) the Company reserves the right to withhold any information
and to exclude such representative from any meeting or portion thereof if access
to such information or attendance at such meeting would reasonably be expected
to adversely affect the attorney-client privilege between the Company and its
counsel. Subject to the conditions set forth in this section, the Controlling
Stockholder, the Original Purchasers and the Additional Purchasers agree to use
their best efforts to cause the person or persons so named to be nominated for
election to the Board of Directors of the Company at the time and in the manner
proper for such nominations whereupon the Controlling Stockholder, the Original
Purchasers and the Additional Purchasers agree to cast all of the votes they are
entitled to cast in such election, subject to the limitations set forth below,
whether at the next annual meeting or a special meeting of the stockholders, by
written consent in lieu of a meeting or otherwise, for the election of such
nominees to the Board of Directors of the Company.
Section 5.2 CLASS C PREFERRED DESIGNATION OF DIRECTOR AND OBSERVER. The
Board of Directors of the Company shall, by way of written consent in lieu of a
meeting or otherwise, (i) resolve to permit Sycamore Ventures (or its
Affiliates) to nominate and elect a director to the board; provided, however,
that (a) any such director shall be subject to the approval of the Company's
Board of Directors, such approval not to be unreasonable withheld, and (b) such
right shall terminate at such time as Sycamore Ventures ceases to hold at least
50% of the Class A Common Stock it shall hold immediately following the closing
of the Class C Preferred Stock Purchase Agreement (on an as converted basis
after giving effect to all conversion price adjustments), and (ii) resolve to
permit the Sycamore Venture (or its Affiliate) to designate one observer to the
board to attend all meetings of its Board of Directors in a nonvoting observer
capacity; provided, however, (a) that such representative shall agree to hold in
confidence and
15
trust and to act in a fiduciary manner with respect to all Confidential
Information concerning the Company furnished to such representative in
connection with any such meeting of the Board of Directors, and (b) the Company
reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof if access to such information
or attendance at such meeting would reasonably be expected to adversely affect
the attorney-client privilege between the Company and its counsel or would
result in disclosure of trade secrets to such observer. Subject to the
conditions set forth in this section, the Controlling Stockholder, the Original
Purchasers and the Additional Purchasers agree to use their best efforts to
cause the person or persons so named to be nominated for election to the Board
of Directors of the Company at the time and in the manner proper for such
nominations whereupon the Controlling Stockholder, the Original Purchasers and
the Additional Purchasers agree to cast all of the votes they are entitled to
cast in such election, subject to the limitations set forth below, whether at
the next annual meeting or a special meeting of the stockholders, by written
consent in lieu of a meeting or otherwise, for the election of such nominees to
the Board of Directors of the Company.
Section 5.3 FINANCIAL STATEMENTS. So long as a Purchaser owns any
Shares, the Company shall use its best efforts to deliver to such Purchaser the
following financial information of the Company within the time period provided:
5.3.1. Within one hundred and twenty days (120) days after the end of
each fiscal year of the Company, a statement of operations, a balance sheet of
the Company as of the end of such fiscal year, and statements of operations,
changes in financial position, and changes in shareholder equity for such fiscal
year (including all footnotes to same), which year-end financial reports shall
be audited and certified in accordance with generally accepted accounting
principles by independent certified public accountants of nationally recognized
standing selected by the Company;
5.3.2. Within thirty (30) days after the end of each calendar month, an
unaudited statement of operations for such calendar month and a balance sheet as
of the end of such calendar month;
5.3.3. Within thirty (30) days after the end of each of the first three
quarters of the fiscal year, an unaudited statement of operations for such
fiscal quarter and a balance sheet as of the end of such fiscal quarter; and
5.3.4. During the fourth quarter of the preceding year, a budget and
business plan for the next fiscal year.
Section 5.4 INSPECTION. So long as a Purchaser together with all of its
Affiliates owns at least an aggregate of fifty thousand (50,000) Shares
(adjusted to reflect subsequent stock splits, combinations, stock dividends and
recapitalizations), the Company shall permit such Purchaser, at its expense, to
visit and inspect the Company's properties, to examine its books of account and
records, and to discuss the Company's affairs, finances, and accounts with the
Company's officers and independent public accountants, all at such reasonable
times as may be requested by such Purchaser; provided, however, that the Company
shall not be obligated pursuant to this Section 5.4. to provide any information
(A) that the Company is obligated to hold confidential by the terms of any
agreement with a third party, or (B) in the event the
16
Purchaser owns an equivalent or larger investment in a Competitor of the Company
unless such Purchaser is a passive investor in the Company and such Competitor
(provided that such Purchaser shall be considered a passive investor only if
such Purchaser would be entitled to report holdings of greater than five percent
(5%) on a Schedule 13G if the Company and such Competitor were publicly traded).
A "Competitor" of the Company for the purposes of this Agreement shall mean any
Person any one of whose primary businesses is providing internet e-mail
services.
Section 5.5 ARMS' LENGTH TRANSACTIONS. The Company shall not enter into
any transaction, agreement, arrangement, sale, purchase, or lease with any
holder of shares of Company Stock, or any other Person, that provides for
receipt by the Company of less than fair and reasonable consideration for the
money, property or services provided by the Company pursuant to such
transaction, agreement, arrangement, sale, purchase, or lease.
Section 5.6 TERMINATION. The Company's obligations and the Purchaser's
rights under Sections 5.3.2., 5.3.4. and 5.4. shall terminate upon the effective
date of the registration statement filed by the Company in connection with a
Qualified Offering of the Company's stock or other securities under the Act as
and to the extent the Company is otherwise subject to the periodic reporting
requirements of the Securities Exchange Act of 1934, as amended.
Section 5.7 TRANSFER OF CLASS B COMMON STOCK.
5.7.1. CLASS B COMMON STOCK EXIT CONDITION. Except as provided in this
Section 5.7., (i) unless the Original Purchasers shall have been provided the
opportunity to sell, transfer or dispose of one hundred percent (100%) of their
Class A Preferred Stock or the shares of Class A Common Stock or other Company
Stock into which the Shares may be converted or for which they may be exchanged,
for an amount equal to or greater than each Original Purchaser's aggregate
investment, as set forth on Schedule A to the Stock Purchase Agreement,
multiplied by ten (10), in cash, or in freely-tradable securities for which a
public market exists, or assets of equivalent fair market value (as determined
by the Board of Directors in good faith evidenced by a board resolution adopted
by the affirmative votes of a majority of the directors, excluding Xxxxxx Xxxxxx
or his Affiliates, even though the remaining directors be less than a quorum),
and such sale, transfer or disposition shall have been consummated with respect
to all Original Purchasers electing to participate therein prior to November 30,
1999 (the "10x Exit Condition"), and (ii) unless the Additional Purchasers shall
have been provided the opportunity to sell, transfer or dispose of one hundred
percent (100%) of the Shares or the shares of Class A Common Stock or other
Company Stock into which the Shares may be converted or for which they may be
exchanged, for an amount equal to or greater than each Additional Purchaser's
aggregate investment, as set forth in the Class C Preferred Stock Purchase
Agreement, multiplied by three (3), in cash, or in Marketable Securities (as
defined below), within twenty four (24) months from the date of this Agreement,
or thirty (30) months from the date of this Agreement if the Company has
completed a registration under the Act in connection with a Qualified Offering
within twenty four (24) months of the date upon which the Additional Purchasers
purchaser shares of Class C Preferred Stock (the "3x Exit Condition"), then the
shares of Class B Common
17
Stock shall not be transferable by the Controlling Stockholder as shares of
Class B Common Stock and any purported transfer thereof shall be void ab initio,
and the Company covenants and agrees that such transfer shall not be reflected
on the stock transfer books of the Company. "Marketable Securities" means: (i)
securities issued or directly and fully guaranteed and insured by the United
States Government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of less than six months from the date of acquisition; or (ii) short
term debt instruments with a maturity of less than 90 days from the date of
issuance of an issuer rated at least A by Standard & Poors Rating Services or
equity securities of an issuer with a market capitalization of at least
$150,000,000, which equity securities are traded on a major nationally
recognized exchange (other than the NASDAQ small cap index or the NASDAQ
bulletin board).
5.7.2. CONFIRMATION OF OCCURRENCE. The Company covenants and agrees
that no transfer of Class B Common Stock shall be given effect by the Company or
reflected on the Company's stock transfer ledger unless the Company shall first
have obtained confirmation in writing by a majority in interest of each of the
Original Purchasers and the Additional Purchasers, such confirmation to be
provided by the Purchasers in good faith, that the 10x Exit Condition and 3x
Exit Condition has been satisfied.
5.7.3. LEGEND RESTRICTION. The Controlling Stockholder covenants and
agrees to deliver promptly upon the execution of this Agreement all of the
shares of Class B Common Stock to the Company in order that the Company may
include a legend on the certificates representing such shares to the effect of
the foregoing.
Section 5.8 VOTING AGREEMENT. In any vote to be taken by the Original
Purchasers in accordance with Sections 4.1.3, 4.1.6, 5.1 or 6.2. of this
Agreement, or by the Purchasers or the Holders (as such terms are defined in the
Stock Purchase Agreement) in accordance with Sections 7.7. or 8.8. of the Stock
Purchase Agreement, as the case may be, the Controlling Stockholder agrees and
consents to vote, in equal proportion to the votes cast by the remaining
Original Purchasers or Purchasers or Holders, as the case may be, his shares of
Class A Preferred Stock, any capital stock of the Company issued upon conversion
thereof, any capital stock of the Company issued as (or issued upon the
conversion or exercise of any warrant, right or other security issued as) a
dividend or other distribution with respect thereto, or in exchange for or in
replacement of said securities with respect thereto.
In addition, if at any time the number of authorized but unissued
shares of Class C Preferred Stock shall not be sufficient to effect the
obligations of the Company to issue additional shares of Class C Preferred
Stock, the Controlling Stockholder agrees to cast all of the votes he is
entitled to cast to approve the same and give effect thereto (whether at the
next annual meeting or a special meeting of stockholders, by written consent in
lieu of a meeting or otherwise).
Section 5.9 RESTRICTION ON THE DECLARATION OF DIVIDENDS, REDEMPTION,
ETC. The Company shall not declare dividends on any class of Company Stock and
shall not redeem, repurchase or otherwise acquire for value any shares of
Company Stock without the consent of the holders of a majority in interest of
the Class A Preferred Stock held by the Original Purchasers, other than
redemptions, repurchases or other acquisitions of Class C Preferred Stock,
18
Warrants or Warrant Shares or Class A Common Stock issuable upon conversion of
Class C Preferred Stock pursuant to the terms of the Class C Preferred Stock
Purchase Agreement, the terms of the Warrants, the Company's Amended and
Restated Certificate of Incorporation and any amendment thereto or this
Agreement.
Section 5.10 APPROVAL BY HOLDERS OF CLASS A PREFERRED SHARES AND CLASS
C PREFERRED SHARES OF ISSUANCE OF CERTAIN SHARES OF THE COMPANY/DEEMED FAIR
MARKET VALUE. The holders of Class C Preferred Stock party hereto and the
holders of Class A Preferred Stock party hereto do approve in all respects the
issuance of securities to Digital Equipment Corporation, Cable News Network,
Inc, CNET, Inc., and Xxxxxxx.xxx, Inc., respectively, in accordance with the
contracts with such Persons set forth on Schedule 3.21 to the Class C Preferred
Stock Purchase Agreement in connection with a bona fide commercial business
arrangement with each such entity, and do also approve the issuance of up to a
maximum aggregate 35,000 shares of Class A Preferred Stock to InfoSpace, Inc.
Also in connection with the issuance of any of the aforementioned securities (i)
the holders of Class C Preferred Stock party hereto do agree that, for the
purposes of article V, section 3(c)(iv) ("Conversion Price Adjustments") of the
Company's Amended and Restated Articles of Incorporation, as amended, the fair
market value of the consideration per share received in consideration of any
such security at the time it was issued shall be deemed to be equal to or
greater than the Class C Conversion Price (as such term is defined in the
Company's Amended and Restated Articles of Incorporation, as amended) in effect
immediately prior to the issuance of such stock, and (ii) the holders of Class A
Preferred Stock party hereto do agree that, for the purposes of section 10.1
("Anti-Dilution Rights") of the Stock Purchase Agreement, the fair market value
of the consideration per share received in consideration of any such security at
the time it was issued shall be deemed to be greater than the Share Price (as
such term is defined in the Stock Purchase Agreement) in effect immediately
prior to the issuance of such stock.
Section 5.11 ESTABLISHMENT OF COMPENSATION COMMITTEE OF BOARD OF
DIRECTORS The Board of Directors of the Company, at or prior to the first
regular meeting of the Board of Directors of the Company following the date
hereof, shall establish and thereafter at all times shall maintain a
compensation committee (the "Compensation Committee") which shall be comprised
of three directors of the Board of Directors of the Company, two of whom shall
be non-management directors.
Section 5.12 CONFIDENTIALITY. Any information obtained from the
Company, whether included in financial statements distributed pursuant to
Section 5.3, obtained in the course of the exercise of rights of inspection
arising under Section 5.4, or otherwise, shall be maintained confidential and
not disclosed to any third party and used only for purposes of monitoring and
administering the Purchaser's investment in the Company; provided, each
Purchaser's obligation under this Agreement to hold all information received
from the Company from reports, inspections or otherwise in confidence shall not
prohibit such Purchaser from disclosing such information (i) if such information
is public, (ii) to its investment advisers, attorneys, accountants, consultants
and other professionals to the extent necessary to obtain their services in
connection with such Purchaser's investment in the Company, provided that such
persons agree to hold such information confidential, (iii) to any prospective
purchaser of any shares of the Company owned by such Purchaser as long as such
prospective purchaser agrees in writing to be bound by the confidentiality
provisions of this Agreement and so long as such prospective purchaser is not a
19
Competitor of the Company and does not hold shares of a Competitor of the
Company (except that such prospective purchaser may hold shares of a Competitor
of the Company if it is a passive investor with respect thereto (determined in
the same manner as in Section 5.4)), (iv) to any of such Purchaser's affiliates,
provided that such affiliates agree to hold such information confidential as
provided herein, or (v) upon request, to a regulatory body, stock exchange or
court having jurisdiction over the Purchaser or by court or administrative order
or as otherwise required by applicable law or regulation or listing or trading
agreement concerning such Purchaser or the Company, subject in each case to
allowing the Company to seek a protective order with respect to disclosure of
any such information.
ARTICLE VI
PREEMPTIVE RIGHTS
Section 6.1 RIGHTS OF INCLUSION.
6.1.1. GENERAL. Except as provided in Section 6.1.6., if, at any time,
the Controlling Stockholder proposes to transfer shares of Company Stock to a
third party (a "Proposed Purchaser"), the Controlling Stockholder shall (i)
first, afford each Purchaser any right of first refusal to purchase such shares
arising under Section 6.4, then (ii) second, afford each Purchaser the
opportunity to participate in such transfer in accordance with this Section 6.1.
6.1.2. RIGHT TO PARTICIPATE. Each Purchaser, with respect to the
proposed transfers set forth in Section 6.1.1., whether pursuant to clause (i)
or (ii) of Section 6.1.1. (the "Tag-Along Purchaser"), shall have the right to
transfer, at the same price and upon identical terms and conditions as such
proposed transfer, the number of shares of Company Stock owned by the Purchaser
equal to (A) the total number of shares of Company Stock proposed to be
transferred by the Controlling Stockholder multiplied by (B) a fraction, the
numerator of which is the total number of shares of Class A Common Stock then
owned by such Tag-Along Purchaser plus the aggregate number of shares of Class A
Common Stock issuable upon conversion, exchange or exercise of all convertible
securities, options or warrants then owned by such Tag-Along Purchaser as of the
close of business on the second day preceding the mailing date of the Transfer
Notice (as defined below) and the denominator of which is the total number of
shares of Class A Common Stock then owned by (1) all of the Purchasers, (2) the
Controlling Stockholder, and (3) all other stockholders of the Company having
tag-along or similar rights to participate in the proposed transfer (the
"Transfer Allotment") plus the number of shares of Class A Common Stock issuable
upon conversion, exchange or exercise of all convertible securities, options or
warrants then owned by any Person referenced in (1), (2) or (3) is then
convertible. At the time any transfer to a Proposed Purchaser is proposed, the
Controlling Stockholder shall give notice to the Purchasers' of their right to
sell shares of Company Stock hereunder (the "Transfer Notice"), which notice
shall identify the Proposed Purchaser and state the number of shares of Company
Stock proposed to be transferred, the proposed offering price, the proposed date
of any such
20
transfer (the "Transfer Date") and any other material terms and conditions of
the proposed transfer. The Transfer Notice shall also contain a complete and
correct copy of any offer to the Controlling Stockholder by the Proposed
Purchaser to purchase such shares of Company Stock.
6.1.3. NOTICE. Each Tag-Along Purchaser that wishes to participate in
the transfer shall provide written notice (the "Tag-Along Notice") to the
Controlling Stockholder within thirty (30) days of the Transfer Notice. The
Tag-Along Notice shall set forth the number of shares of Company Stock that the
Purchaser elects to include in the transfer, which shall not exceed such
Purchaser's Transfer Allotment. The Tag-Along Notice shall also specify the
aggregate number of additional shares of Company Stock owned of record by such
Tag-Along Purchaser as of the date of the Tag-Along Notice, if any, which such
Tag-Along Purchaser desires also to include in the transfer (the "Additional
Shares") in the event there is any under-subscription for the entire amount of
all Tag-Along Purchasers' Transfer Allotments. In the event there is an
under-subscription by a Tag-Along Purchaser for the entire amount of the
Tag-Along Purchaser's Transfer Allotments, the Controlling Stockholder shall
apportion the unsubscribed Tag-Along Purchaser's Transfer Allotments to
Tag-Along Purchasers whose Tag-Along Notices specified an amount of Additional
Shares, which apportionment shall be on a pro rata basis among such Tag-Along
Purchasers in accordance with the number of Additional Shares specified by all
such Tag-Along Purchasers in their Tag-Along Notices. The Tag-Along Notice given
by each Purchaser shall constitute its binding agreements to sell such shares of
Company Stock as against such Purchaser on the terms and conditions applicable
to the transfer.
6.1.4. NON PARTICIPATION. If a Tag-Along Notice is not received by the
Controlling Stockholder prior to the expiration of the thirty (30) day period
specified in Section 6.1.3. above, the Controlling Stockholder shall have the
right to sell or otherwise transfer the number of shares of Company Stock
specified in the Transfer Notice to the Proposed Purchaser without any
participation by such Purchaser, but only on terms and conditions with respect
to the consideration paid by the Proposed Purchaser and other material terms a
reasonable investor would consider in making its decision to invest which are no
more favorable in any material respect to the Controlling Stockholder than as
stated in the Transfer Notice to the Purchaser, and only if such Transfer occurs
on a date within sixty (60) days of the Transfer Date.
6.1.5. REPRESENTATIONS. The Purchaser shall be obligated to make
representations as to (A) good title and the absence of a Security Interest
against the Shares and, (B) the validity and binding effect of any agreements
entered into by the Purchaser in connection with such transfer; provided,
however, that each Purchaser shall make such representations and warranties
severally and not jointly.
6.1.6. EXCEPTIONS. The provisions of this Section 6.1. shall not apply
to any transfer by the Controlling Stockholder (A) to the spouse or family
members of the Controlling Stockholder, (B) to a Proposed Purchaser of Company
Stock in one or a series of related transactions having an aggregate fair market
value of one million dollars ($1,000,000) or less, (C) pursuant to a Qualified
Offering or any Rule 144 transaction, or
21
(D) of Shares sold in connection with customary trading activities at any time
following a Qualified Offering.
Section 6.2 RIGHTS TO COMPEL.
6.2.1. GENERAL. Except as provided in Section 5.7. and subject to
Section 6.4., if, at any time the Controlling Stockholder proposes to transfer
all or any portion of his shares of Company Stock to a Proposed Purchaser in a
bona fide arms' length transaction, and, in connection therewith, the
Controlling Stockholder obtains an opinion of a nationally-recognized investment
banking firm to the effect that the transfer to the Proposed Purchaser is fair
to the Controlling Stockholder and the Purchasers from a financial point of
view, then the Controlling Stockholder may require the Purchasers to transfer
all or a portion of the Shares (the "Designated Shares") to the Proposed
Purchaser in accordance with this Section 6.2.; provided, however, that (i) the
Purchasers may, by consent of a majority in interest of the Original Purchasers
and a majority in interest of the Additional Purchasers, waive the right to
obtain such fairness opinion in any proposed transfer by the Controlling
Stockholder, and (ii) the rights afforded the Controlling Stockholder by this
Section 6.2 shall be conditioned upon the purchase price per share for the Class
C Preferred Stock being greater than or equal to six dollars ($6.00) (adjusted
to reflect subsequent stock splits, combinations, stock dividends and
recapitalizations).
6.2.2. REQUIREMENT TO PARTICIPATE. The Purchasers, with respect to the
proposed transfers set forth in Section 6.2.1., shall be required to transfer
the Designated Shares to the Proposed Purchaser at the same price per share of
Company Stock and upon no less favorable terms and conditions as such proposed
transfer upon which the Controlling Stockholder is selling his shares of Company
Stock. The Designated Shares shall be determined by multiplying the shares of
Company Stock owned by the Purchasers by a fraction, the numerator of which
shall be the number of shares of Company Stock to be sold by the Controlling
Stockholder and the denominator of which is the total shares of Company Stock
owned by the Controlling Stockholder.
6.2.3. NOTICE. The Controlling Stockholder shall send written notice
(the "Drag-Along Notice") of the exercise of such rights pursuant to this
Section 6.2. to the Purchasers, setting forth the consideration per share of
Company Stock to be paid by the Proposed Purchaser and the other terms and
conditions of such transaction. The Purchasers shall only be obligated to make
representations as to (A) good title and the absence of a Security Interest
against their Designated Shares, (B) the validity and binding effect of any
agreements entered into by the Purchasers in connection with such transfer, and
each such Purchaser shall make such representations and warranties severally and
not jointly.
6.2.4. NONPARTICIPATION. In the event that a Purchaser fails to deliver
certificates representing the Designated Shares to the Proposed Purchaser on the
consummation of the sale of the Controlling Shareholder's shares of Company
Stock to such Proposed Purchaser, the Company shall cause the Books and Records
of the Company to show that such shares of Company Stock are bound by the
provisions of this Section 6.2.
22
6.2.5. FAILURE TO CLOSE. If, within ninety (90) days after the
Controlling Stockholder gives the Drag-Along Notice, the sale of all of
Controlling Stockholder's shares of stock in accordance herewith has not been
completed, the Purchaser shall not be obligated to transfer any Designated
Shares to the Proposed Purchaser, and all the restrictions on sale or other
disposition contained in the Agreement with respect to the shares of Company
Stock shall again be in effect.
6.2.6. REMITTANCE OF SALE PROCEEDS. Simultaneously with the
consummation of the sale of the Controlling Stockholder's shares of Company
Stock, and the Purchaser's shares of Company Stock, the Controlling Stockholder
shall notify the Purchaser of the consummation of the sale, and shall cause the
Proposed Purchaser to remit directly to the Purchaser that has delivered its
shares of Company Stock, the total sales price of the Purchaser's shares of
Company Stock sold or otherwise disposed of pursuant thereto and shall furnish
such other evidence of the completion and time of completion of such sale or
other disposition and the terms thereof as may be reasonably requested by the
Purchaser.
Section 6.3 RIGHT OF FIRST OFFER OF COMPANY STOCK.
6.3.1. GENERAL. Subject to the terms and conditions specified in this
Section 6.3., the Company grants each Purchaser a right of first offer with
respect to future sales by the Company of Company Stock or other securities
exercisable or convertible into Company Stock. Each time the Company proposes to
offer (i) additional shares of capital stock of any or all classes or series
thereof, (ii) rights, options or warrants to purchase shares of its capital
stock, or (iii) securities convertible into such capital stock (the "New
Offering"), the Company shall first make an offer to each Purchaser to
participate in the New Offering in an amount proportional to the number of
shares of Class A Common Stock then owned by such Purchaser plus the aggregate
number of shares of Class A Common Stock issuable upon conversion, exchange or
exercise of all convertible securities, options or warrants then owned by such
Purchaser at the time of the New Offering in accordance with the following
provisions. The rights set forth in this Section 6.3 with respect to the sale of
additional shares of Class C Preferred Stock pursuant to the Class C Preferred
Stock Purchase Agreement shall become enforceable by the Additional Purchasers
sixty (60) days after the sale of the Class C Preferred Stock in accordance with
the Class C Preferred Stock Purchase Agreement (the "Effective Date"), and in
the event the Company makes a New Offering prior to the Effective Date, the
Additional Purchasers shall have no right to participate in such offering.
6.3.2. NOTICE. The Company shall provide a written notice (the
"Offering Notice") of the New Offering to the Purchasers stating (i) the
Company's bona fide intention to offer such shares, rights, options, warrants or
other securities (ii) the number of such shares, rights, options, warrants or
other securities to be offered, and (iii) the price and terms upon which it
proposes to offer such shares, rights, options, warrants or other securities.
6.3.3. ELECTION TO PURCHASE. Within twenty (20) business days following
the date of the Offering Notice (the "Election Period"), each Purchaser may
elect to purchase or
23
obtain, at the price and on the terms specified in the Offering Notice, up to
that portion of each class and type of such shares, rights, options, warrants or
other securities which equals one hundred percent (100%), multiplied by a
fraction the numerator of which is the number of shares of Class A Common Stock
then owned by such Purchaser plus the aggregate number of shares of Class A
Common Stock issuable upon conversion, exchange or exercise of all convertible
securities, options or warrants then owned by such Purchaser is then convertible
and the denominator of which is the total number of shares of Class A Common
Stock then outstanding plus the aggregate number of shares of Class A Common
Stock issuable upon conversion, exchange or exercise of all convertible
securities, options or warrants then outstanding ("Fully Diluted Shares
Outstanding")(such Purchaser's "Offering Allotment"). In the event a Purchaser
desires to participate in the New Offering, the Purchaser shall provide the
Company with written notice of his intention to participate in the New Offering
(the "Election Notice"), and shall specify in the Election Notice that amount of
such shares, rights, options, warrants or other securities which the Purchaser
desires to purchase (such Purchaser's "Elected Shares"). The Election Notice
shall also specify the aggregate number of additional shares, rights, options,
warrants or other securities, if any, which such Purchaser desires to purchase
(such Purchaser's "Additional Elected Shares") in the event there is any
under-subscription for the entire amount of all Purchasers' Offering Allotments.
In the event there is an under-subscription by a Purchaser for the entire amount
of such Purchaser's Offering Allotment, the Company shall apportion the
unsubscribed portion of such Purchaser's Offering Allotments to Purchasers whose
Offering Notices specified an amount of Additional Elected Shares, which
apportionment shall be on a pro rata basis among such Purchasers in accordance
with the number of Additional Elected Shares specified by all such Purchasers in
their Election Notices.
6.3.4. TRANSFER TO PROPOSED PURCHASER. At any time after the Offering
Notice is given, the Company may offer for sale the New Offering, less the
amount reserved for the Purchasers in accordance with Section 6.3.3. and, if the
shares, rights, options, warrants or other securities referred to in the
Offering Notice are not elected to be purchased as provided in Section 6.3.3.,
the Company may, during the ninety (90) day period following the expiration of
the Election Period, offer for sale the remaining unsubscribed portion of the
New Offering to any Person at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Offering Notice. If the
Company does not consummate the sale of the New Offering within such period, the
right provided hereunder shall be deemed to be revived and such shares, rights,
options, warrants or other securities shall not be offered unless first
reoffered to the Purchasers in accordance with this section.
6.3.5. EXCEPTIONS. The right of first offer in this Section 6.3. shall
not be applicable (A) to a Qualified Offering, (B) to the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable securities
outstanding as of the date hereof, (C) to the issuance of securities in
connection with an acquisition, a bona fide commercial strategic partnership or
a bona fide commercial business arrangement by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise (including
but not limited to Digital Equipment Corporation, Cable News Network, Inc, CNET,
Inc., GeoCities and Xxxxxxx.xxx, Inc. described on Schedule 3.21
24
to the Class C Preferred Stock Purchase Agreement), (D) to the issuance of
options to employees, consultants or directors of the Company in accordance with
a stock option plan approved by the Board of Directors and the Compensation
Committee thereof, (E) to the issuance of up to 1,225,250 shares of Class C
Preferred Stock and 428,850 Warrants within 60 days of the initial closing of
the Class C Preferred Stock Purchase Agreement at the same price and on
substantially similar terms and conditions as those set forth therein (it being
understood that the offer of certain of such shares to the Original Purchasers
is in satisfaction of the right of first offer granted such Original Purchasers
as set forth in Section 9.3 of the Stock Purchase Agreement (before giving
effect to this Agreement) which, any other provision of this Agreement
notwithstanding, shall govern the rights of such Original Purchasers to purchase
shares of Class C Preferred Stock issued pursuant to the Class C Preferred Stock
Purchase Agreement) and (F) to the issuance of up to a maximum aggregate 35,000
shares of Class A Preferred Stock to InfoSpace, Inc.
6.3.6. TERMINATION. The rights provided in this Section 6.3. shall
terminate upon the Company's sale of its Class A Common Stock in a Qualified
Offering.
Section 6.4 PURCHASERS' RIGHT OF FIRST REFUSAL OF CONTROLLING
STOCKHOLDER'S STOCK.
6.4.1. GENERAL. Subject to the terms and conditions specified in this
Section 6.4., the Controlling Stockholder grants the Purchasers a right of first
refusal with respect to future sales by the Controlling Stockholder of any of
his Company Stock. Each time the Controlling Stockholder receives a written
offer to purchase any of his Company Stock from a third party which the
Controlling Stockholder intends to accept (the "Resale Offering"), the
Controlling Stockholder shall first provide each Purchaser the opportunity to
purchase that number of shares of Company Stock which the Controlling
Stockholder desires to sell in the Resale Offering which results from multplying
the total number of shares the Controlling Stockholder desires to sell in the
Resale Offering by a fraction the numerator of which is the number of shares of
Class A Common Stock then owned by such Purchaser plus the aggregate number of
shares of Class A Common Stock issuable upon conversion, exchange or exercise of
all convertible securities, options or warrants then owned by such Purchaser and
the denominator of which is the number of Fully Diluted Shares Outstanding in
accordance with the following provisions.
6.4.2. NOTICE. The Controlling Stockholder shall immediately provide a
written notice (the "Resale Notice") of the Resale Offering to the Purchasers
stating (i) the identity of the third party, (ii) the number of such shares
proposed to be purchased by such third party, and (iii) the price and terms upon
which the third party proposes to purchase such shares and including any
documents with respect thereto.
6.4.3. ELECTION TO PURCHASE. Each Purchaser may elect to purchase or
obtain, at the price and on the terms specified in the Resale Notice, up to that
portion of such shares which equals one hundred percent (100%), multiplied by a
fraction, the numerator of which is the number of shares of Class A Common Stock
held by such Purchaser as of the date of the Resale Notice plus the aggregate
number of shares of Class A Common
25
Stock issuable upon conversion, exchange or exercise of all convertible
securities, options or warrants then held by such Purchaser and the denominator
of which is the number of Fully Diluted Shares Outstanding (such Purchaser's
"Resale Offering Allotment"). In the event a Purchaser desires to participate in
the Resale Offering, within twenty (20) days following the date of delivery of
the Resale Notice the Purchaser shall provide the Company and the Controlling
Stockholder with written notice of his intention to participate in the Resale
Offering (the "Resale Election Notice"), and shall specify in the Resale
Election Notice that amount of such shares which the Additional Purchaser
desires to purchase (such Purchaser's "Resale Elected Shares"). The Resale
Election Notice shall also specify the aggregate number of additional shares of
the Controlling Stockholder's Company Stock, if any, which such Purchaser
desires purchase (such Purchaser's "Additional Resale Shares") in the event
there is any under-subscription for the entire amount of all Purchasers' Resale
Offering Allotments. In the event there is an under-subscription by a Purchaser
for the entire amount of such Purchaser's Resale Offering Allotment, the Company
shall apportion the unsubscribed portion of such Purchaser's Resale Offering
Allotment to Purchasers whose Resale Election Notices specified an amount of
Additional Resale Shares, which apportionment shall be on a pro rata basis among
such Purchasers in accordance with the number of Additional Resale Shares
specified by all such Purchasers in their Resale Election Notices.
6.4.4. TRANSFER TO PROPOSED PURCHASERS. If the Purchasers fail to
purchase any portion of the shares specified in and in accordance with the
Resale Notice within thirty (30) days of the delivery of the Resale Election
Notice, the Controlling Stockholder shall thereupon have the right, within the
ninety (90) day period thereafter, to sell his Company Stock, reduced by the
amount purchased by the Purchasers, to the proposed third party purchaser at a
price not less than, and upon terms no more favorable to the proposed third
party purchaser than those specified in the Resale Notice. If the Controlling
Stockholder does not consummate the sale of the Resale Offering within the
above-mentioned ninety (90) day period, the rights provided hereunder to the
Purchasers shall be deemed to be revived and such shares shall not be offered
unless first reoffered to the Purchasers in accordance with this section.
6.4.5. EXCEPTIONS. The right of first refusal of the Controlling
Stockholder's Company Stock in this Section 6.4. shall not be applicable (A) to
or after a Qualified Offering, (B) in the event that the Controlling Stockholder
transfers, sells or disposes of greater than fifty one percent (51%) of his
Company Stock in one transaction, (C) in the event that the Controlling
Stockholder transfers, sells or disposes of his Company Stock in connection with
an acquisition, a bona fide commercial strategic partnership or a bonafide
commercial business arrangement by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise with a
business entity or investor not generally considered a financial investor and,
(D) to the sale by the Controlling Stockholder of not more than 100,000 shares,
in the aggregate, of Class B Common Stock in any one or a series of
transactions.
6.4.6. TERMINATION. The rights provided in this Section 6.4. shall
terminate upon the Company's sale of its Class A Common Stock in a Qualified
Offering.
26
ARTICLE VII
MISCELLANEOUS
Section 7.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the Parties
(including permitted transferees of any shares of Registrable Securities).
Without limiting any other rights of transfer herein, each Additional Purchaser
may transfer, assign and convey its shares of capital stock of the Company and
its rights and obligations thereunder to an Affiliate of such Additional
Purchaser, and such Affiliate shall be deemed to be an "Additional Purchaser"
for purposes of construction of this Agreement. Nothing in this Agreement is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or liability
under or by reason of this Agreement, except as expressly provided in this
Agreement.
Section 7.2 NOTICES. All notices hereunder shall be in writing and be
given by registered or certified mail, postage and registration fees prepaid, or
by overnight delivery, and shall be deemed given when so mailed as follows:
If to the Company, to it at:
Xxxx Xxxxxx, President
GlobeComm, Inc.
00 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
With a copy to:
Law Offices of Xxxxx X. Xxxxxx
000 Xxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
and to:
Xxxxx Xxxxxxxx, Esq.
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Original Purchasers, to them at
the addresses set forth in Schedule A.
27
With a copy to:
Xxxxx Xxxxxxxx, Esq.
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
If to the Additional Purchasers,
to them at the addresses
set forth in Schedule B
With a copy to:
Xxxx Xxxx, Esq.
Xxxxxx, Xxxxx & Xxxxxxx LLP
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
The foregoing addresses may be changed by notices given in the manner set forth
in this section.
Section 7.3 GOVERNING LAW. This Agreement shall be construed and
enforced in accordance with, and governed by, the laws of the State of Delaware
without giving effect to the principles of the conflict of laws thereof.
Section 7.4 WAIVERS; AMENDMENTS. The waiver by the undersigned of any
of the provisions of this Agreement or the Stock Purchase Agreement shall not
operate or be construed as a waiver of any subsequent breach. This Agreement or
the Stock Purchase Agreement may be amended, and any provision of this Agreement
may be waived, only by a written amendment executed by (i) the Company, (ii) the
Controlling Stockholder, (iii) in the case of any amendment affecting the rights
or obligations of the Original Purchasers, the holders of a majority of the
outstanding shares of Class A Preferred Stock purchased by the Original
Purchasers or stock issuable on conversion of such shares and (iv) in the case
of any amendment affecting the rights or obligations of the Additional
Purchasers, the holders of a majority of shares of Class C Preferred Stock
purchased by the Additional Purchasers or stock issuable on conversion of such
shares. Notwithstanding the foregoing, the Company will provide each Purchaser
with written notice and sufficient information, sufficiently far in advance of a
date a decision is required, to enable such Person to make an informed and
considered decision with respect to any proposed amendment, waiver or consent in
respect of any of the provisions hereof. The Company will not, directly or
indirectly, pay or cause to be paid any remuneration, whether by way of
supplemental or additional interest, fee or otherwise, to any holder of capital
stock of the Company as consideration for or as an inducement to the entering
into by any such holder of any waiver or amendment to any of the terms and
provisions of this Agreement, unless prior to the payment of any remuneration to
any holder of capital stock of the Company, the holders of Class C Preferred
Stock shall, ratably, have been offered the opportunity to provide any such
waiver or amendment upon the same financial terms and conditions as any holder
of capital stock who has consented to the waiver or amendment of any of the
terms of this Agreement. No waiver or amendment of the
28
provisions in the preceding sentence shall be effective with respect to any
Purchaser unless consented to in writing by such Purchaser.
Section 7.5 HEADINGS. The section headings contained in this Agreement
are for reference purposes only and shall not affect the construction and
interpretation of this Agreement
Section 7.6 SEVERABILITY. The invalidity of all or any part of any
section of this Agreement shall not render invalid the remainder of such
section. If any provision of this Agreement is so broad as to be unenforceable,
such provision shall be interpreted to be only so broad as is enforceable.
Section 7.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
constitute one and the same instrument. This Agreement may contain more than one
counterpart of the signature page and may be executed by the affixing of the
signatures of each of the Parties to one of these counterpart signature pages.
All of the counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
Section 7.8 AGGREGATION OF STOCK. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
Section 7.9 CONSTRUCTION. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.
Section 7.10 ENTIRE AGREEMENT. This Agreement and the Stock Purchase
Agreement (with respect to the Original Purchasers only) and the Class C
Preferred Stock Purchase Agreement (with respect to the Additional Purchasers
only) contain the entire agreement of the Parties. The Parties are not bound by
any oral statements that are made outside of this Agreement.
Section 7.11 BENEFIT OF MORE FAVORABLE RIGHTS. If, within sixty (60)
days following the initial closing under the Class C Preferred Stock Purchase
Agreement, the Company grants to a third party investor rights which are more
beneficial than the preferences afforded to the Additional Purchasers pursuant
to this Agreement, with respect to Company Stock or capital stock of any
Affiliate of the Company, which are on terms more favorable to the holders of
such securities with respect to any of the material terms applicable thereto,
including, without limitation, the number of times or the circumstances under
which such rights may be exercised, the expenses to be paid by the Company or
any Affiliate of the Company in connection therewith or the duration of the
availability of such rights, the Parties agree that such more favorable terms
will be exercisable by the Additional Purchasers automatically and without
further action by the Company or any of the other Parties.
29
Section 7.12 ADDITIONAL PURCHASERS. It is contemplated that the Company
shall issue up to an additional 1,225,250 shares of Class C Preferred Stock and
an additional 428,850 Warrants within the sixty (60) day period immediately
following the initial closing of the Class C Preferred Stock Purchase Agreement
on the terms and conditions set forth therein. Each purchaser of such additional
shares shall become party to this agreement and be deemed an Additional
Purchaser hereunder, shall agree to assume all of the obligations of an
Additional Purchaser hereunder and shall be entitled to all of the rights of an
Additional Purchaser hereunder.
30
WHEREAS, the Parties have executed this Agreement as of the date first
above written:
iNAME, INC. (formerly named GLOBECOMM, INC.)
/s/ Xxxx Xxxxxx
----------------------------------------
By: Xxxx Xxxxxx
Title: President
HOLDERS OF CLASS A PREFERRED STOCK
----------------------------------------
Xxxx Xxxxxxxx
----------------------------------------
Xxxx Xxxxxxx
-----------------------------------------
Xxxx Xxxxxxx
-----------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxx Xxxxxxxx
-----------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxxx
31
-----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxxxx
-----------------------------------------
Xxxxxxx Xxxxxxxxx
/s/ Xxx Xxxxxx
-----------------------------------------
Xxx Xxxxxx
/s/ Xxxxx Xxxxxxx
-----------------------------------------
Xxxxx Xxxxxxx
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
-----------------------------------------
Trevor Fettor
/s/ Xxx Xxxxxxx
-----------------------------------------
Xxx Xxxxxxx
/s/ Xxxxxx Xxxxxx
-----------------------------------------
Xxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxxx
32
IMAGE PARTNERS, INC.
By:
-----------------------------------
Name:
Title:
/s/ Xxxx Xxxxx
--------------------------------------
Xxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
--------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxx Xxx
--------------------------------------
Xxxx Xxx
--------------------------------------
Xxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxx
/s/ Xxxxx Xxxxxxx
--------------------------------------
Xxxxx Xxxxxxx
--------------------------------------
Xxxx Xxxxxxx
33
/s/ Josiah Low
--------------------------------------
Josiah Low
/s/ Xxxxx XxXxxxxxxxx
--------------------------------------
Xxxxx XxXxxxxxxxx
/s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx
--------------------------------------
Xxxxxx Xxxxxxxxxx
--------------------------------------
Xxxxxx Xxxxxxxxxx
/s/ Xxx Xxxx
--------------------------------------
Xxx Xxxx
/s/ Xxxxxx Xxxx
--------------------------------------
Xxxxxx Xxxx
--------------------------------------
Xxxxxx Xxxxxx
XXXXX X. SIM AND D. XXXXX SIM AS
JOINT TENANTS IN COMMON
-------------------------------------
Xxxxx X. Sim
34
--------------------------------------
D. Xxxxx Sim
---------------------------------------
Xxxxx Xxxxx
---------------------------------------
Xxxx Xxxxxxxx
/s/ Xxxxxxx Xxxxxxx
---------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxx Xxxxxx
---------------------------------------
Xxx Xxxxxx
/s/ Xxxxx Xxxxxx
---------------------------------------
Xxxxx Xxxxxx
35
PURCHASERS OF CLASS C PREFERRED STOCK
-----------------------------------------
Xxxxx X. Xxxxxxxx
-----------------------------------------
Xxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx, III
-----------------------------------------
Xxxxxx X. Xxxxxxxxxxxx
CITI GROWTH FUND II OFFSHORE, L.P.
By:______________________________________
Name:
-----------------------------------------
Xxxxx X. Xxxxx
-----------------------------------------
J. Xxxxx Xxxxxx
36
CG ASIAN AMERICAN FUND, L.P.
By:_______________________________________
Name:
-------------------------------------------
Riza Dekidjiev, Jr.
-------------------------------------------
Xxxxx Xxxxxx
-------------------------------------------
Xxxxx X. Xxxxx
-------------------------------------------
Xxxxxx X. Xxxxx
--------------------------------------------
Xxxxxxx X. Xxxx
-------------------------------------------
Xxxxxx X. Xxxxx
PRINCETON GLOBAL FUND, L.P.
By:______________________________________
Name:
37
-----------------------------------------
Subir K. Xxx
XXXXXXXX COMMUNICATIONS AND INFORMATION FUND, INC.
By J&W Xxxxxxxx & Co. Incorporated, its investment advisor
By:_______________________________________
Name:
-----------------------------------------
Kilin To
-----------------------------------------
Xxxx X. Xxxxxxx
THE XXXXXXX CHILDREN IRREVOCABLE TRUST,
XXXXXXXXX X. XXXXXXX AS TRUSTEE
By:_______________________________________
Name:
38
SCHEDULE A
Xxxx Xxxxxxxx
000 Xxxxxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxxxxx
000 Xxxx Xxxx
Xxx Xxxxxx, XX 00000
Xxxxxxx Xxxxxxxx
00 Xxxxxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Xxxxx Xxxxxx
00000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Xxxxxxx Xxxxxxxxx
000 Xxxx Xxx
Xxx Xxxx, XX 00000
Xxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxx Xxxxxx
00 Xxxxx Xxxxxx
XxxXxx, XX 00000
Trevor Fettor
0000 Xxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxx Xxxxxxx
00 Xxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
39
Xxxxxx Xxxxxx
000 Xxxxxxx Xxx
Xxxxxxxx, XX 00000
OR
Xxxxxx Xxxxxx
000 Xxxxxxxxxxxx Xxxx
Xxxxxxx, XX 00000
Xxxxxx Xxxxxxxxx
Image Partners
Xxxx Xxxxx
0000 Xxxx Xxxxxx, #00
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxxxx
000 Xxxx 00xx Xxxxxx,00X
Xxx Xxxx, XX 00000
Xxxx Xxx
000 Xxxx 00xx Xxxxxx, #0X
Xxx Xxxx, XX 00000
Xxxx Xxxxxxx
00 Xxxxxx Xxx
Xxx Xxxxx, XX 00000
Xxxxx Kurcheon
Xxxxx Xxxxx
000 Xxxxx Xxxxxxxxx Xxx.
Xxx Xxxxxxx, XX 00000
Rens Lipsuis
00X Xxxxx Xxxxxxxx
Xxxxx, Xxxxxx
Josiah Low
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxxxxxx
0000 Xxxx Xxxxxxxxxx Xxxx
00
Xxxxxx, XX 00000
Xxxxxx Xxxxxxxxxx
00 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Xxx Xxxx
Xxxxxx Xxxx
00 Xxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxxx Xxxxxx
000 Xxxx Xxx, 00xx Xxx
Xxx Xxxx, XX 00000
Xxxxx and Xxxxx Sim
Xxxxx Xxxxx
000 Xxxxx Xxxxx Xxxx
Xxxxxxxxx Xxxx, XX 00000
Xxxx Xxxxxxxx
Xxx Xxxxxx
000 Xxxxxx Xxx,#000
Xxx Xxxx, XX 00000
Xxxxxxx Xxxxxxx
Brain Zimmet
41
SCHEDULE B
Xxxxx X. Xxxxxxxx
00 Xxxxxx Xxxx
Xxxxxx, XX 00000
Xxxxx X. Xxxxxxx
000 Xxxxxx Xxxxx, #0
Xxxxxxxxx XX 00000
Xxxxxxx Xxxxxx, III
00 Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxxxxx
00 Xxxxxxxxxx Xxxxxx
Xxx, XX 00000
Citi Growth Fund II Offshore
c/- Sycamore Ventures
000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
Xxxxx X. Xxxxx
00 Xxxx 00xx Xxxxxx, Xxx 0X
Xxx Xxxx, XX 00000
J.Xxxxx Xxxxxx
0 Xxxxxxx Xxxxx
Xxxxxx, XX 00000
CG Asian American Fund, L.P.
c/- Sycamore Ventures
989 Xxxxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxx
000 Xxxxx Xxxx
Xxxxxxxxxxx, XX00000
Riza Dekidjiev, Jr.
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
00
Xxxxx Xxxxxx
000 Xxxx 00xx Xxxxxx, Xxx. 00X
Xxx Xxxx, XX 00000
Xxxxx X. Xxxxx
000 Xxxxxx Xxxx Xxxx
Xxxxxxxx XX 00000
Xxxxxx X. Xxxxx
Xxxxxxxxxx Xxxxx Xxxxx
Xxx Xxxxxx, XX 00000
Xxxxxx X. Xxxxx
0000 Xxxxxxx Xxxx
Xxxxxx Xxxxxx, XX 00000-0000
Princeton Global Fund
c/- Sycamore Ventures
000 Xxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxxxxx, XX 00000
Xxxxx X. Xxx
00 Xxxxxxx Xxxxx
Xxxxxxxxx Xxxxxxxx XX 00000
Xxxxxxxx Communication Information Fund, Inc.
000 Xxxx Xxx
Xxx Xxxx, XX 00000
Kilin To
0000 Xxxxxx Xxxx
Xxxxxxxxx XX 00000
Xxxx X. Xxxxxxx
X.X. Xxx 000
Xxxxxxx XX 00000
The Xxxxxxx Children Irrevocable Trust,
Xxxxxxxxx X. Xxxxxxx as Trustee
X.X. Xxx 000
Xxxxxxx XX 00000
43
