Exhibit 10.13
XXXXXXXX.XXX, INC.
FORM OF SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "AGREEMENT") dated as of __________, 1999, by and among XXXXXXXX.XXX,
INC., a Delaware corporation having a principal place of business at 000 Xxxx
00xx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the "COMPANY"), and each of
the investors named on the attached EXHIBIT A and having a principal place of
business as set forth thereon (each an "INVESTOR" and collectively the
"INVESTORS"), as such EXHIBIT A may be amended from time to time to add such
other person(s) who may hereafter become a party to this Agreement.
RECITALS
WHEREAS, on April 20, 1998 the Company and certain of the Investors
(collectively, the "SERIES A INVESTORS") entered into that certain Series A
Convertible Preferred Stock Purchase Agreement (the "SERIES A PURCHASE
AGREEMENT"), pursuant to which the Company issued and sold to the Series A
Investors an aggregate of 3,346,715 shares of the Company's Series A Convertible
Preferred Stock, $.001 par value per share (the "SERIES A STOCK");
WHEREAS, on April 20, 1998 the Company and certain of the Investors
(collectively, the "SERIES B INVESTORS") entered into that certain Series B
Convertible Preferred Stock Purchase Agreement (the "SERIES B PURCHASE
AGREEMENT"), pursuant to which the Company issued and sold to the Series B
Investors an aggregate of 6,597,596 shares of the Company's Series B Convertible
Preferred Stock, $.001 par value per share (the "SERIES B STOCK");
WHEREAS, on November 13, 1998 and December 4, 1998 the Company and
certain of the Investors (collectively, the "SERIES C INVESTORS") entered into
that certain Series C Convertible Preferred Stock Purchase Agreement (the
"SERIES C PURCHASE AGREEMENT"), pursuant to which the Company issued and sold to
the Series C Investors an aggregate to 7,301,811 shares of the Company's Series
C Convertible Preferred Stock, $.001 par value per share (the "SERIES C STOCK"
and, together with the Series A Stock and the Series B Stock, the "PREFERRED
Stock");
WHEREAS, on April 20, 1998 the Series A Investors and Series B
Investors entered into that certain Investors' Rights Agreement (the "Investors'
Rights Agreement"), and on November 13, 1998 the Investors' Rights Agreement was
amended and restated to provide certain rights to the Series C Investors (the
"Amended and Restated Investors' Rights Agreement");
WHEREAS, the Company desires to issue and sell shares of its Common
Stock (as defined below) to Comcast Interactive Investments, Inc. ("Comcast")
pursuant to a Common Stock Purchase Agreement (the "Comcast Stock Purchase
Agreement") and it is a condition to
the closing of the transactions contemplated by the Comcast Stock
Purchase Agreement that the Company and the Investors enter into this Agreement
to provide certain rights to Comcast;
WHEREAS, pursuant to Section 4.3 of the Amended and Restated Investors'
Rights Agreement, the Amended and Restated Investors' Rights Agreement may be
amended, waived, discharged or terminated by the written consent of the Company
and the holders of at least two-thirds of the Registrable Shares, and that any
such amendments, waivers, discharges or terminations effected in accordance with
Section 4.3 of the Amended and Restated Investors' Rights Agreement shall be
binding upon all parties thereto, including those not signing such amendment,
waiver, discharge or termination; and
WHEREAS, by entering into this Agreement, the Company, and the Series A
Investors, Series B Investors and Series C Investors whose signatures are set
forth on the signature pages hereto, which Investors constitute the holders of
at least two-thirds of the Registrable Shares, hereby consent to amending the
Amended and Restated Investors' Rights Agreement in the manner set forth herein.
NOW, THEREFORE, in consideration of the promises and mutual agreements
set forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties agree as follows:
SECTION I
DEFINITIONS; REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"C-MAX" shall mean C-Max Capital Limited Partnership - I, a Florida
limited partnership and an Investor hereunder.
"COMCAST SHARES" shall mean shares of Common Stock issued to Comcast
pursuant to the Comcast Stock Purchase Agreement.
"COMMISSION" shall mean the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"COMMON STOCK" shall mean the Common Stock, $.001 par value, of the
Company.
"CONVERSION SHARES" shall mean shares of Common Stock issued or
issuable upon conversion of the Preferred Stock.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
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"EXCLUDED STOCK" shall mean (i) the Reserved Employee Shares, (ii)
securities issuable as a stock dividend or upon any subdivision of shares of
Common Stock, provided that the securities issued pursuant to such stock
dividend or subdivision are limited to additional shares of Common Stock, (iii)
securities issuable pursuant to a Qualified Public Offering, (iv) debt
securities without equity features or conversion privileges (provided, however,
that any debt security convertible into the Company's capital stock shall be
Excluded Stock if a majority of the Board of Directors approves its issuance),
(v) securities issued in connection with equipment or debt financing or leases
(including securities issued in consideration of guarantees of such financing or
leases) which are approved by the Series A Investor Director, the Series B
Investor Director and the Series C Investor Director, (vi) up to an aggregate of
200,000 shares of Common Stock (or options or warrants to purchase such shares
of Common Stock) issuable to consultants or vendors to the Company at prices or
exercise prices determined by the Board of Directors to be not less than fair
market value, (vii) the shares of Common Stock issued or issuable upon
conversion of the Preferred Stock, (viii) the shares of Common Stock issued or
issuable upon exercise of the options and warrants contemplated by the
capitalization table of the Company provided as a schedule to the Series C
Purchase Agreement (ix) the shares of stock issuable upon exercise of a warrant
issued, or to be issued, to Citicorp, N.A. to purchase 100,000 shares of Common
Stock, as described in a certain Letter Agreement by and between the Company and
Citicorp, N.A., dated June 20, 1997, and (x) if expressly approved by the
Company's Board of Directors, including a majority of the Series A Investor
Director, the Series B Investor Director and the Series C Investor Director,
securities issued (a) to vendors, customers or co-venturers or other persons in
similar commercial or corporate partnering situations, or (b) in connection with
an acquisition by the Company or an affiliate of the Company.
"QUALIFIED PUBLIC OFFERING" shall mean a firm commitment underwritten
public offering of the Company's Common Stock underwritten by a nationally
recognized full-service investment bank pursuant to which (i) the aggregate
gross proceeds received by the Company are at least $15,000,000, and (ii) the
price per share is not less than $10.00 (following appropriate adjustment in the
event of any stock dividends, stock split, combination or other similar
recapitalization affecting such shares).
"REGISTER," "REGISTERED" and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act (as hereinafter defined) and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SHARES" shall mean the Series A Registrable Shares, the
Series B Registrable Shares and the Series C Registrable Shares.
"RESERVED EMPLOYEE SHARES" shall mean shares of Common Stock (or
options to purchase such shares of Common Stock) issued or issuable at not less
than fair market value to officers, employees or directors of, or consultants
to, the Company pursuant to any stock purchase or option plan or other employee
stock bonus arrangement as provided by the Company's Board of Directors. The
number of Reserved Employee Shares shall not exceed 5,300,000 shares of Common
Stock (inclusive of shares subject to currently outstanding employee options)
prior to the one (1) year anniversary of the execution of this Agreement;
PROVIDED, HOWEVER, that after the one (1) year anniversary, the number of shares
set aside for
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Reserved Employee Shares may be increased (or decreased) by the vote of the
Board of Directors.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SERIES A INVESTOR DIRECTOR" shall have the meaning given to that term
in the Amended and Restated Shareholders Agreement entered into
contemporaneously herewith.
"SERIES B INVESTOR DIRECTOR" shall have the meaning given to that term
in the Amended and Restated Shareholders Agreement entered into
contemporaneously herewith.
"SERIES C INVESTOR DIRECTOR" shall have the meaning given to that term
in the Amended and Restated Shareholders Agreement entered into
contemporaneously herewith.
"SERIES A REGISTRABLE SHARES" shall mean (i) the shares of Common Stock
issued or issuable upon conversion of the Series A Stock; (ii) an aggregate of
864,557 shares of Common Stock issued or issuable by the Company to certain
Investors upon the exercise of certain warrants issued on March 27, 1997, April
14, 1997, July 10, 1997, July 24, 1997, August 7, 1997, August 27, 1997,
September 22, 1997 and January 15, 1998 in connection with that certain Note and
Warrant Purchase Agreement dated March 27, 1997, as such warrants and such Note
and Warrant Purchase Agreement have been amended from time to time (such
warrants collectively referred to herein as the "SERIES A OUTSTANDING
WARRANTS"); and (iii) shares issued or issuable upon an adjustment for (a) stock
splits, stock dividends and the like (including, without limitation, any such
adjustments with respect to the securities referred to in (i) and (ii) above),
and (b) in the Series A Outstanding Warrants as in effect on the date hereof.
Notwithstanding the foregoing, Series A Registrable Shares shall not include
shares of Common Stock issued or issuable pursuant to the foregoing which (i)
have been registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with the
registration statement covering them, (ii) are publicly sold pursuant to Rule
144 under the Securities Act or, as to any one holder, all of his or its shares
may be sold in a single transaction, or (iii) are eligible for sale under Rule
144(k) under the Securities Act.
"SERIES B REGISTRABLE SHARES" shall mean (i) the shares of Common Stock
issued or issuable upon conversion of the Series B Stock; (ii) an aggregate of
702,777 shares of Common Stock issued or issuable by the Company to certain
Investors upon the exercise of certain warrants issued on November 26, 1997,
February 2, 1998, February 12, 1998 and February 26, 1998 in connection with
those certain Note and Warrant Purchase Agreements dated November 26, 1997,
February 2, 1998 and February 12, 1998, respectively, as such warrants and such
Note and Warrant Purchase Agreement have been amended from time to time (such
warrants collectively referred to herein as the "SERIES B OUTSTANDING WARRANTS"
and, together with the Series A Outstanding Warrants, the "OUTSTANDING
WARRANTS"); (iii) the shares of Common Stock issued or issuable by the Company
to certain of the Investors upon the exercise of certain warrants issued in
connection with the sale of the Series B Stock; (iv) the 60,000 shares of Common
Stock issued or issuable by the Company to Mr. Xxxxx Xxxxxx upon the exercise of
a warrant issued in connection with the execution of an advisory agreement with
the
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Company; and (v) shares issued or issuable upon an adjustment for stock splits,
stock dividends and the like (including, without limitation, any such
adjustments with respect to the securities referred to in (i) above).
Notwithstanding the foregoing, Series B Registrable Shares shall not include
shares of Common Stock issued or issuable pursuant to the foregoing which (i)
have been registered under the Securities Act pursuant to an effective
registration statement filed thereunder and disposed of in accordance with the
registration statement covering them, (ii) are publicly sold pursuant to Rule
144 under the Securities Act or, as to any one holder, all of his or its shares
may be sold in a single transaction, or (iii) are eligible for sale under Rule
144(k) under the Securities Act.
"SERIES C REGISTRABLE SHARES" shall mean the shares of Common Stock
issued or issuable upon conversion of the Series C Stock and shares issued or
issuable upon an adjustment for stock splits, stock dividends and the like
(including, without limitation, any such adjustments with respect to the
securities referred above). Notwithstanding the foregoing, Series C Registrable
Shares shall not include shares of Common Stock issued or issuable pursuant to
the foregoing which (i) have been registered under the Securities Act pursuant
to an effective registration statement filed thereunder and disposed of in
accordance with the registration statement covering them, (ii) are publicly sold
pursuant to Rule 144 under the Securities Act or, as to any one holder, all of
his or its shares may be sold in a single transaction, or (iii) are eligible for
sale under Rule 144(k) under the Securities Act.
1.2. RESTRICTIVE LEGEND. (a) Each certificate representing Preferred
Stock or Conversion Shares shall, except as otherwise provided in Section 1.3,
be stamped or otherwise imprinted with a legend substantially in the following
form:
"TRANSFER RESTRICTED
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS (I) UPON TRANSFER PURSUANT TO AN AMENDED AND
RESTATED SHAREHOLDERS AGREEMENT BY AND AMONG THE COMPANY AND
ITS SHAREHOLDERS, AND (II) PURSUANT TO AN AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT BY AND AMONG THE COMPANY AND
CERTAIN SHAREHOLDERS. A COPY OF THE AMENDED AND RESTATED
SHAREHOLDERS AGREEMENT AND A COPY OF THE AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT MAY BE OBTAINED FROM THE COMPANY
WITHOUT CHARGE UPON THE WRITTEN REQUEST OF THE HOLDER HEREOF.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SHARES UNDER
THAT ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, AN
EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE."
(b) Each certificate representing Comcast Shares shall be stamped or
otherwise imprinted with a legend substantially in the following form:
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"TRANSFER RESTRICTED
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS PURSUANT TO A SECOND AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT BY AND AMONG THE COMPANY AND
CERTAIN SHAREHOLDERS. A COPY OF THE SECOND AMENDED AND
RESTATED INVESTORS' RIGHTS AGREEMENT MAY BE OBTAINED FROM THE
COMPANY WITHOUT CHARGE UPON THE WRITTEN REQUEST OF THE HOLDER
HEREOF.
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE
TRANSFERRED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT COVERING SUCH SHARES UNDER
THAT ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS, IN
THE OPINION OF COUNSEL SATISFACTORY TO THE COMPANY, AN
EXEMPTION FROM REGISTRATION THEREUNDER IS AVAILABLE."
1.3. REQUIRED REGISTRATION.
(a) Following the earlier to occur of (a) the third anniversary of the
date of execution and delivery of this Agreement, and (b) the date which is six
(6) months following the date of a Qualified Public Offering, either (i) the
holders of Series A Registrable Shares constituting at least fifty percent (50%)
of the Series A Registrable Shares then owned beneficially or of record by
Investors and Investor Transferees (as hereinafter defined), (ii) (A) the
holders of Series B Registrable Shares constituting at least fifty percent (50%)
of the Series B Registrable Shares then owned beneficially or of record by
Investors and Investor Transferees or (B) C-Max, or (iii) the holders of Series
C Registrable Shares constituting at least fifty percent (50%) of the Series C
Registrable Shares then owned beneficially or of record by Investors and
Investor Transferees, may request that the Company use commercially reasonable
efforts to register under the Securities Act all or any portion of the
Registrable Shares held by such requesting holder or holders for sale in the
manner specified in such notice; PROVIDED, HOWEVER, that the Company may, by
notice to the requesting holders, delay such requested registration if the
Company's Board of Directors determines that such registration at the time
requested would have a material adverse effect upon the Company; PROVIDED,
FURTHER, HOWEVER, that the Company's ability to delay such registration shall be
limited to durations of no longer than ninety (90) days and the Company shall
not delay more than once during any twelve (12) month period.
(b) The Company shall not be obligated pursuant to this Section 1.3 to
effectuate more than: (i) one (1) registration before a Qualified Public
Offering for the benefit of the holders set forth in Section 1.3(a)(i) above;
(ii) one (1) registration before a Qualified Public Offering for the benefit of
the holders set forth in Section 1.3(a)(ii) above; (iii) one (1) registration
before a Qualified Public Offering for the benefit of the holders set forth in
Section 1.3(a)(iii) above; (iv) one (1) registration after a Qualified Public
Offering for the benefit of the holders set forth in Section 1.3(a)(i) above;
(v) one (1) registration after a Qualified Public Offering for the benefit of
the holders set forth in Section 1.3(a)(ii) above; or (vi) one (1) registration
after a Qualified Public Offering for the benefit of the holders set forth in
Section 1.3(a)(iii). In addition, the aggregate offering price of the
Registrable Shares to be sold pursuant
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to each such registration shall be at least $5,000,000. Notwithstanding anything
to the contrary contained herein, no request may be made under this Section 1.3:
(i) within one hundred eighty (180) days after the effective date of a
registration statement filed by the Company covering a firm commitment
underwritten public offering of securities of the Company under the Securities
Act; or
(ii) during the period starting with the date sixty (60) days prior to
the Company's estimated date of filing of, and ending on the date six (6) months
immediately following the effective date of any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan), provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective and that the Company's
estimate of the date of filing such registration statement is made in good
faith.
(c) Following receipt of any notice under Section 1.3(a), the Company
shall promptly notify all Investors and Investor Transferees from whom notice
has not been received and, as soon thereafter as practicable, shall use its
reasonable efforts to register under the Securities Act, for public sale in
accordance with the method of disposition specified in such notice from
requesting holders, the number of shares of Registrable Shares specified in such
notice (and in all notices received by the Company from other holders within
twenty (20) days after the giving of such notice by the Company). If such method
of disposition shall be an underwritten public offering, the Company shall
designate the managing underwriter of such offering, following consultation and
subject to the approval of the Investors and Investor Transferees from whom
notice has been received, which approval shall not be unreasonably withheld or
delayed. All sellers must participate in the underwriting. The Company's
registration obligation hereunder shall be deemed satisfied only when a
registration statement or statements covering shares of Registrable Shares
specified in notices received as aforesaid, for sale in accordance with the
method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
(d) The Company shall be entitled to include in any registration
statement referred to in this Section 1.3, for sale in accordance with the
method of disposition specified by the requesting holders, shares of Common
Stock to be sold by the Company for its own account and for the account of other
selling shareholders, except as and to the extent that, in the reasonable
opinion of the managing underwriter (if such method of disposition shall be an
underwritten public offering), such inclusion would materially adversely affect
the marketing of the shares of Common Stock to be sold. Except for registration
statements on Form X-0, X-0 or any successor thereto, and subject to Section
1.3(b), the Company will not file with the Commission any other registration
statement with respect to its Common Stock, whether for its own account or that
of other shareholders, from the date of receipt of a notice from requesting
holders pursuant to this Section 1.3 until the completion of the lesser of the
period of distribution of the shares of Registrable Shares registered thereby
and 90 days from the effective date of the registration statement, unless the
Registrable Shares shall be entitled to be included therein in accordance with
Section 1.4 below.
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(e) The Company will use commercially reasonable efforts to maintain
the effectiveness of any Form S-1 used to register the shares pursuant to this
Section 1.03 for up to ninety (90) days or such earlier time as all of the
Registrable Shares have been sold.
1.4. INCIDENTAL REGISTRATION.
(a) If, at any time, the Company determines to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Form S-8 or its then equivalent, or in
connection with a Rule 145 transaction or Form S-4 or its equivalent, or another
form not available for registering the Registrable Shares for sale to the
public), each such time it will give prompt written notice to all holders of
outstanding Registrable Shares, including each holder who has the right to
acquire Registrable Shares, and the holders of the Comcast Shares of its
intention so to do and of the proposed method of distribution of such
securities. Upon the written request of any such holder, received by the Company
within twenty (20) days after the giving of any such notice by the Company, to
include in the registration all or any part of the Registrable Shares and the
Comcast Shares, the Company will use commercially reasonable efforts to cause
the Registrable Shares and the Comcast Shares as to which registration shall
have been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
and under the conditions such registration is permitted under the Securities Act
and this Section 1.4. In the event that any registration pursuant to this
Section 1.4 shall be, in whole or in part, an underwritten public offering of
Common Stock, the number of shares of Registrable Shares and Comcast Shares to
be included in such an underwriting may be reduced (pro rata among the
requesting holders based upon the number of shares of Registrable Shares and
Comcast Shares owned by such holders) if and to the extent that the managing
underwriter shall be of the opinion that the inclusion of some or all of the
Registrable Shares or Comcast Shares would adversely affect the marketing of the
securities to be sold by the Company therein. Any such limitation shall be
imposed in such manner so as to avoid any diminution in the number of shares the
Company may register for sale by giving first priority for the shares to be
registered for issuance and sale by the Company, by giving second priority for
any Registrable Shares to be registered pursuant to Section 1.3 hereof and the
Comcast Shares, and by giving third priority for the Registrable Shares to be
registered for sale by any other Investor pursuant to the terms of this Section
1.4. Notwithstanding the foregoing provisions, the Company may, in its sole
discretion, terminate or withdraw any registration statement referred to in this
Section 1.4 without thereby incurring any liability to the holders of
Registrable Shares and Comcast Shares.
(b) The Company will use commercially reasonable efforts to maintain
the effectiveness of any form used to register the shares pursuant to this
Section 1.04 for up to ninety (90) days or such earlier time as all of the
Registrable Shares and Comcast Shares have been sold.
1.5. REGISTRATION ON FORM S-3. If at any time the holders of at least
twenty percent (20%) of the Registrable Shares then owned beneficially or of
record by Investors and Investor Transferees request that the Company file a
registration statement on Form S-3 or any successor thereto for a public
offering of all or any portion of the Registrable Shares held by such requesting
holder or holders, the reasonably anticipated aggregate price to the public (net
of
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underwriting discounts and commissions) of which would exceed $2,000,000, and
the Company is a registrant entitled to use Form S-3 or any successor thereto to
register such shares, then the Company shall use all commercially reasonable
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of Registrable Shares specified in such notice.
Whenever the Company is required by this Section 1.5 to use all reasonable
efforts to effect the registration of Registrable Shares, each of the procedures
and requirements of Section 1.3 (including but not limited to the requirement
that the Company notify all holders of Registrable Shares and Comcast Shares
from whom notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration. The Company shall
be obligated to register Registrable Shares and Comcast Shares pursuant to this
Section 1.5 on two occasions; PROVIDED, HOWEVER, that such obligation shall be
deemed satisfied only when a registration statement or statements covering all
shares of Registrable Shares and Comcast Shares specified in notices received as
aforesaid, for sale in accordance with the method of disposition specified by
the requesting holders, shall have become effective. The Company will use its
commercially reasonable efforts to maintain the effectiveness of any Form S-3
for a period of up to one hundred eighty (180) days or such earlier time as all
of the Registrable Shares and Comcast Shares have been sold.
1.6. LIMITATION ON REGISTRATION REQUEST. Notwithstanding any other
provision of this Agreement, the right of a holder of Registrable Shares to
request registration of the same by the Company pursuant to Sections 1.3, 1.4
and 1.5 hereof, or the right of a holder of Comcast Shares to include Comcast
Shares in a registration pursuant to Section 1.3(c) or 1.4 hereof, shall not
apply with respect to such holder upon the earliest to occur of (a) all of such
holder's Conversion Shares or Comcast Shares can be sold in compliance with the
volume and other restrictions set forth in Rule 144 of the Securities Act, (b)
all of such holder's Conversion Shares or Comcast Shares may be sold in
compliance with Rule 144(k) of the Securities Act, or (c) five (5) years from
the date of the consummation of the Qualified Public Offering.
1.7. REGISTRATION PROCEDURES. If and whenever the Company is required
by the provisions of Sections 1.3, 1.4 or 1.5 to use its commercially reasonable
efforts to effect the registration of any Registrable Shares or Comcast Shares
under the Securities Act, the Company will, at its cost and expense (including
without limitation, payment of the costs and expenses described in Section 1.8),
as expeditiously as reasonably practicable:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 1.3,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use all reasonable efforts to cause such registration statement
to become and remain effective for the period set forth in Section 1.3, 1.4, or
1.5, as applicable;
(b) prepare and file as expeditiously as reasonably practicable and in
any event within ninety (90) days with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in Section 1.7(a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Registrable
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Shares and Comcast Shares covered by such registration statement in accordance
with the sellers' intended method of disposition set forth in such registration
statement for such period;
(c) furnish to each seller of Registrable Shares and Comcast Shares and
to each underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Registrable Shares and Comcast Shares covered by such
registration statement;
(d) use all reasonable efforts to register or qualify the Registrable
Shares and Comcast Shares covered by such registration statement under the
securities or "blue sky" laws of such jurisdictions as the sellers of
Registrable Shares and Comcast Shares or, in the case of an underwritten public
offering, the managing underwriter reasonably shall request, PROVIDED, HOWEVER,
that the Company shall not for any such purpose be required to qualify generally
to transact business as a foreign corporation in any jurisdiction where it is
not so qualified or to consent to general service of process in any such
jurisdiction;
(e) use all reasonable efforts to list the Registrable Shares and
Comcast Shares covered by such registration statement with NASDAQ or any
securities exchange on which the Common Stock of the Company is then listed, or
NASDAQ or such securities exchange as shall be selected by the Company, or, if
the Company fails to make an application to so list within thirty (30) days of a
request for the same by the Investors in connection with a Qualified Public
Offering, the Investors may determine the place of listing, subject to
qualification by the Company to list its shares thereon;
(f) immediately notify each seller of Registrable Shares and Comcast
Shares and each underwriter under such registration statement, at any time when
a prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing. The sellers
of Registrable Shares and Comcast Shares agree upon receipt of such notice
forthwith to cease making offers and sales of Registrable Shares and Comcast
Shares pursuant to such registration statement or deliveries of the prospectus
contained therein for any purpose until the Company has prepared and furnished
such amendment or supplement to the prospectus as may be necessary so that, as
thereafter delivered to purchasers of such Registrable Shares and Comcast
Shares, such prospectus shall not include an untrue statement of a material fact
or omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing;
(g) notify each seller of Registrable Shares and Comcast Shares under
such registration statement of (i) the effectiveness of such registration
statement, (ii) the filing of any post-effective amendments to such registration
statement, or (iii) the filing of a supplement to such registration statement;
10
(h) at the request of any seller of Registrable Shares or Comcast
Shares, use all reasonable efforts to furnish on the date that Registrable
Shares and Comcast Shares are delivered to the underwriters for sale pursuant to
such registration: (i) an opinion dated such date of counsel representing the
Company for the purposes of such registration, addressed to the sellers (with a
copy provided to the underwriters), and in customary form; and (ii) a letter
dated such date from the independent public accountants retained by the Company,
addressed to the sellers (with a copy provided to the underwriters) and covering
such matters with respect to such registration as such underwriters reasonably
may request; and
(i) make available for inspection upon reasonable notice during the
Company's regular business hours by each seller of Registrable Shares or Comcast
Shares, any underwriter participating in any distribution pursuant to such
registration statement, and any attorney, accountant or other agent retained by
such seller or underwriter, all material financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers and directors to supply all information reasonably requested by any
such seller, underwriter, attorney, accountant or agent in connection with such
registration statement.
For purposes of Section 1.7(a) and 1.7(b) and of Section 1.3(d), the
period of distribution of Registrable Shares and Comcast Shares in a firm
commitment underwritten public offering shall be deemed to extend until each
underwriter has completed the distribution of all securities purchased by it,
and the period of distribution of Registrable Shares and Comcast Shares in any
other registration shall be deemed to extend until the earlier of the sale of
all Registrable Shares and Comcast Shares covered thereby and 90 days after the
effective date of such registration statement, with reasonable extensions to be
granted for suspensions thereof.
In connection with and as a condition to each registration hereunder,
the sellers of Registrable Shares and Comcast Shares shall (a) provide such
information and execute such documents as may reasonably be required in
connection with such registration, (b) agree to sell Registrable Shares and
Comcast Shares on the basis provided in any underwriting arrangements, and (c)
complete and execute all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required or requested
under the terms of such underwriting arrangements.
In connection with each registration pursuant to Sections 1.3, 1.4 or
1.5 covering an underwritten public offering, the Company and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
1.8. EXPENSES. All expenses incurred by the Company in complying with
Sections 1.3, 1.4 and 1.5, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, transfer taxes, fees of transfer agents and registrars, and the
reasonable fees and disbursements of one counsel for the sellers of Registrable
Shares and Comcast Shares (which fees and expenses do not exceed $15,000 in the
aggregate), but
11
excluding any Selling Expenses, are called "Registration Expenses." All
underwriting discounts and selling commissions applicable to the sale of
Registrable Shares and Comcast Shares and the fees of more than one counsel are
called "Selling Expenses."
The Company will pay all Registration Expenses in connection with each
registration statement under Sections 1.3, 1.4 or 1.5. The Company shall not,
however, be required to pay for the Registration Expenses of any registration
proceeding begun pursuant to Section 1.3 or 1.5, the request for which is
subsequently withdrawn by the requesting holders of Registrable Shares, in which
event the Registration Expenses shall be borne by the requesting holders of the
Registrable Shares in proportion to the number of shares for which registration
was requested. All Selling Expenses in connection with each registration
statement under Sections 1.3, 1.4 or 1.5 shall be borne by the participating
sellers in proportion to the number of Registrable Shares and Comcast Shares
sold by each, or by such participating sellers other than the Company (except to
the extent the Company shall be a seller) as they may agree.
1.9. INFORMATION BY HOLDER. The holder or holders of Registrable Shares
and Comcast Shares included in any registration shall furnish to the Company
such information regarding such holder or holders of Registrable Shares and
Comcast Shares, the Registrable Shares and Comcast Shares held by them and the
distribution proposed by such holder or holders of Registrable Shares and
Comcast Shares as the Company may reasonably request in writing and as shall be
required in connection with any registration (including any amendment to a
registration statement or prospectus), qualification or compliance referred to
in this Section 1.9.
1.10. LOCK-UP AGREEMENTS. Each holder of Registrable Shares and Comcast
Shares shall agree to be bound by such lock-up agreements (not to exceed a
period of 180 days following the date of the prospectus relating to any such
underwriting) as the managing underwriter of any such registration shall specify
as a requirement to any such underwriting, provided that the entry of such
holder of Registrable Shares or Comcast Shares into such agreements shall be
conditioned upon at least ninety percent (90%) of the then current shareholders
(including all shareholders, who, together with their affiliates, hold at least
one percent (1%) of the then outstanding shares of the Company's capital stock)
and all executive key officers (including, at a minimum, Xxxxx Xxxxxx) and
directors of the Company also agreeing to execute such lock-up agreement
regardless of the number of shares of the capital stock of the Company then
owned by them.
1.11. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of a registration of any of the Registrable Shares or
Comcast Shares under the Securities Act pursuant to Sections 1.3, 1.4 or 1.5,
the Company will indemnify and hold harmless each seller of such Registrable
Shares or Comcast Shares thereunder, each underwriter of such Registrable Shares
or Comcast Shares thereunder and each other person, if any, who controls such
seller or underwriter within the meaning of Section 15 of the Securities Act,
from and against any losses, claims, damages or liabilities, joint or several,
to which such seller, underwriter or controlling person may become subject under
the Securities Act or under any other statute or at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in any registration statement under
which
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such Registrable Shares or Comcast Shares were registered under the Securities
Act pursuant to Sections 1.3, 1.4 or 1.5, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof, 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 or any violations of applicable law relating to such
registration, and will pay the reasonable legal fees and other expenses of each
such seller, each such underwriter and each such controlling person incurred by
them in connection with investigating or defending any action whether or not
resulting in any liability insofar as such loss, claim, damage, liability or
action results from the foregoing, PROVIDED, HOWEVER, that the Company will not
be liable to a seller in any such case if and to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission so made in reliance
upon and in conformity with information furnished in writing by any such seller,
any such underwriter or any such controlling person specifically for use in such
registration statement or prospectus; and, PROVIDED, FURTHER, HOWEVER, that the
Company will not be liable to a holder in any such case to the extent that any
such loss, claim, damage, liability or action arises out of or is based upon an
untrue or alleged untrue statement or omission or an alleged omission made in
any preliminary prospectus or final prospectus if (1) such holder failed to send
or deliver a copy of the final prospectus or prospectus supplement with or prior
to the delivery of written confirmation of the sale of the Registrable Shares or
Comcast Shares, and (2) the final prospectus or prospectus supplement would have
corrected such untrue statement or omission.
(b) In the event of a registration of any of the Registrable Shares or
Comcast Shares under the Securities Act pursuant to Sections 1.3, 1.4 or 1.5,
each seller of such Registrable Shares or Comcast Shares thereunder, severally
and not jointly, will indemnify and hold harmless the Company, each person, if
any, who controls the Company within the meaning of the Securities Act, each
officer of the Company who signs the registration statement, each director of
the Company, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the registration statement
under which such Registrable Shares or Comcast Shares were registered under the
Securities Act pursuant to Sections 1.3, 1.4 or 1.5, any preliminary prospectus
or final prospectus contained therein, or any amendment or supplement thereof,
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 pay the reasonable legal fees and
other expenses of the Company and each such officer, director, underwriter and
controlling person incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; PROVIDED, HOWEVER,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information furnished in
writing to the Company by such seller specifically for use in such registration
statement or prospectus; and PROVIDED, FURTHER, HOWEVER, that the liability of
each seller hereunder shall be limited to the amount of gross proceeds received
by such seller in connection with such registration.
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(c) Promptly after receipt by an indemnified party hereunder of notice
of the commencement of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party hereunder, notify
the indemnifying party in writing thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability that it may have to
such indemnified party other than under this Section 1.11 and shall only relieve
it from any liability that it may have to such indemnified party under this
Section 1.11 if and to the extent the indemnifying party is prejudiced by such
omission. In case any such action shall be brought against any indemnified party
and it shall notify the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 1.11 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof; PROVIDED,
HOWEVER, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded (based on the advice of counsel) that there may be reasonable defenses
available to it which are different from or additional to those available to the
indemnifying party or if the interests of the indemnified party reasonably may
be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred, it being understood, however, that the indemnifying party shall not,
in connection with any one such action or separate but substantially similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of more than
one separate firm of attorneys (together with appropriate local counsel as
required by the local rules of such jurisdiction) at any time for all such
indemnified parties.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Registrable Shares or Comcast Shares exercising rights under this Agreement, or
any controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 1.11 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 1.11 provides for indemnification in such case, or (ii)
contribution under the Securities Act may be required on the part of any such
selling holder or any such controlling person in circumstances for which
indemnification is provided under this Section 1.11; then, and in each such
case, the Company and each such holder will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in such proportion as may be reasonable taking into account such
matters as (i) their relative fault as to the matters giving rise to such
losses, claims, damages or liabilities, (ii) their relative ability or
opportunity to have avoided such losses, claims, damages or liabilities,
PROVIDED, HOWEVER, that, in any such case, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 12(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
14
(e) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.
1.12. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock or the Preferred Stock by way of a stock
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
1.13. RULE 144 REPORTING AND RULE 144A INFORMATION. With a view to
making available the benefits of certain rules and regulations of the Commission
that may at any time permit the resale of the Registrable Shares or Comcast
Shares without registration, the Company will:
(a) at all times after 90 days after the first registration statement
covering a public offering of securities of the Company under the Securities Act
shall have become effective or following registration under Section 12 of the
Exchange Act, use its commercially reasonable efforts to:
(i) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(ii) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(iii) furnish to each holder of Registrable Shares and Comcast Shares
forthwith upon request a written statement by the Company as to its compliance
with the reporting requirements of such Rule 144 and of the Securities Act and
the Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Registrable Shares or Comcast
Shares without registration; and
(b) at any time, at the request of any holder of Preferred Stock or
Registrable Shares or Comcast Shares, make available to such holder and to any
prospective transferee of such Preferred Stock or Registrable Shares or Comcast
Shares the information concerning the Company described in Rule 144A(d)(4) under
the Securities Act.
1.14. DAMAGES. The Company recognizes and agrees that the holders of
Registrable Shares and Comcast Shares will suffer irreparable harm and will not
have an adequate remedy at law if the Company fails to comply with any provision
of Section 1, and the Company expressly agrees that, in the event of such
failure, the holders of Registrable Shares, Comcast Shares or any other person
entitled to the benefits of Section 1 shall be entitled to seek
15
specific performance of any and all provisions of Section 1 and may seek to
enjoin the Company from continuing to commit any further breach of this Section
1.
SECTION 2
INFORMATION RIGHTS; INSPECTION RIGHTS; SMALL BUSINESS
ADMINISTRATION EXAMINER AUDITS
2.1 INFORMATION RIGHTS. As long as any Investor or any Investor
Transferee owns any Preferred Stock (and, with respect to clauses (d) - (h)
below, as long as any Investor or any Investor Transferee owns at least three
percent (3%) of the Company's Common Stock on an as converted basis) each such
Investor, or any Investor Transferee, shall be entitled to receive, and the
Company shall mail to any such Investor or Investor Transferee, at the times
specified, the following reports:
(a) as soon as available, and in any event within thirty (30) days
after the end of each month, a balance sheet for the Company as of the end of
such month and the related statements of income, shareholder's equity and
cashflows for the year to date, prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company as true, correct and complete;
(b) as soon as available and in any event within ninety (90) days after
the end of each fiscal year of the Company, a balance sheet of the Company as of
the end of such fiscal year and the related statements of income, shareholders'
equity and cash flows for the fiscal year then ended, prepared in accordance
with generally accepted accounting principles and audited by a firm of
independent public accountants of national recognition selected by the Board of
Directors of the Company and reasonably acceptable to the Investors;
(c) no later than thirty (30) days prior to the start of each fiscal
year, the Company's annual operating plan, including, without limitation,
consolidated capital and operating expense budgets, cash flow projections and
income and loss projections for the Company and its subsidiaries in respect of
such fiscal year, all itemized in reasonable detail and prepared on a monthly
basis, and, promptly after preparation, any revisions to any of the foregoing;
(d) promptly following receipt by the Company, each audit response
letter, accountant's management letter and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company or any of its subsidiaries;
(e) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, investigations and inquiries that are likely to
materially adversely affect the Company or any of its subsidiaries;
16
(f) promptly upon sending, making available or mailing the same, all
press releases, reports and financial statements that the Company sends or makes
available to its shareholders;
(g) promptly, from time to time, such other material information
regarding the business, prospects, financial condition, operations, property or
affairs of the Company and its Subsidiaries as such Investor reasonably may
request; and
(h) as soon as practicable, but in any event within forty-five (45)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited profit or loss statement, schedule as to the
sources and application of funds for such fiscal quarter and an unaudited
balance sheet and a statement of stockholder's equity, as of the end of such
fiscal quarter and a statement showing the number of shares of each class and
series of capital stock and securities convertible into or exercisable for
shares of capital stock outstanding at the end of the period, the number of
common shares issuable upon conversion of exercise of any outstanding securities
convertible or exercisable for common shares and the exchange ratio or exercise
price applicable thereto, all in sufficient detail as to permit the Investor to
calculate its percentage equity ownership in the Company.
The obligations of the Company to furnish financial information to the
Investors and the Investor Transferees pursuant to this Section 2.1 shall
terminate upon the earlier to occur of (i) the completion of a Qualified Public
Offering, or (ii) such time as the Company otherwise becomes subject to the
reporting requirements of the Exchange Act.
2.2 INSPECTION RIGHTS. As long as any Investor or any Investor
Transferee owns any Preferred Stock, the Company shall permit each Investor and
such persons as it may designate, subject to the Company's reasonable approval
and the execution of a confidentiality agreement acceptable to the Company, at
such Investor's expense, upon not less than three (3) business days prior notice
to the Company to visit and inspect, during normal business hours and without
disruption to the Company's business, any of the properties of the Company and
its subsidiaries, examine their books (and take copies and extracts therefrom),
discuss the affairs, finances and accounts of the Company and its subsidiaries
with their officers and employees, and consult with and advise the management of
the Company and its subsidiaries as to their affairs, finances and accounts, all
at reasonable times and upon reasonable notice. The Investors and their approved
designees agree that he or it will keep confidential and will not disclose,
divulge or use (other than for purposes of monitoring its investment in the
Company) any confidential, proprietary or secret information which such Investor
may obtain from the Company pursuant to financial statements, reports and other
materials submitted by the Company to such Investor pursuant to this Agreement,
or pursuant to inspection rights granted hereunder, unless such information is
known to the public through no fault of any Investor or its designees or
representatives; PROVIDED, HOWEVER, an Investor may disclose such information
(i) to its attorneys, accountants and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (ii) to any prospective permitted transferee of the Preferred Stock, so
long as the prospective transferee agrees to be bound by the provisions of this
Section 2.2, (iii) to any general partner or affiliate of such Investor, and
(iv) to any other Investor.
17
2.3 SMALL BUSINESS ADMINISTRATION EXAMINER AUDITS. So long as any of
the Investors which holds shares of the capital stock of the Company is a Small
Business Investment Company, and at any reasonable time and from time to time
during normal business hours and upon prior notice, the Company will provide
Small Business Administration examiners access to its books and records for
Small Business Administration audit purposes. In addition, upon request by the
Investors, the Company shall deliver or cause to be delivered copies of any and
all documents, costs, or other instruments which the Investors may request from
time to time (a) in response to a request for production of the same for the
Small Business Administration, or (b) in compliance with any instrument under
the Small Business Investment Act.
SECTION 3
RIGHT TO PURCHASE NEW SECURITIES
3.1 PARTICIPATION RIGHTS. The Company shall, at least ten (10) days
prior to any issuance by the Company of any of its securities other than
Excluded Stock to any party, give written notice of such issuance to each holder
of Registrable Shares (the "OFFEREES"). The Company's written notice to the
Offerees shall describe the securities proposed to be issued by the Company and
specify the number, price and payment terms. Each holder of the Registrable
Shares shall have the right, for a period of twenty (20) days from such notice,
to purchase, at the same price and on the same terms and conditions, that number
of additional securities of the Company as would be necessary to preserve such
holder's percentage interest in the equity of the Company on a fully diluted, as
converted basis, as of the time immediately prior to such issuance. Each Offeree
may accept the Company's offer as to the full number of securities offered to it
or any lesser number, by written notice thereof given by it to the Company prior
to the expiration of the aforesaid twenty (20) day period, in which event the
Company shall promptly sell and such Offeree shall buy, upon the terms
specified, the number of securities agreed to be purchased by such Offeree.
The Company shall be free at any time after the end of the aforesaid
twenty (20) day period and prior to ninety (90) days after the date of its
notice of offer to the Offerees, to offer and sell to any third party or parties
the number of such securities not agreed by the Offerees to be purchased by
them, at a price and on payment terms no less favorable to the Company than
those specified in such notice of offer to the Offerees. However, if such third
party sale or sales are not consummated within such ninety (90) day period, the
Company shall not sell such securities as shall not have been purchased within
such period without again complying with this Section 3.1. The obligations of
the Company under this Section 3.1 shall terminate upon the completion of a
Qualified Public Offering. Notwithstanding anything contained in this Agreement
to the contrary, the written notice of an offer to purchase newly issued shares
to which a participation right applies (as provided in the preceding paragraph)
need not be given prior to the purchase by the party intending to purchase the
newly issued shares, provided such offer is sent within five (5) days thereafter
and remains open for a twenty (20) day period from the receipt thereof, and
further provided that the Company has set aside a number of shares sufficient to
satisfy the obligations of the Company pursuant to this section.
18
SECTION 4
MISCELLANEOUS
4.1 SUCCESSORS AND ASSIGNS. All covenants and agreements contained in
this Agreement by or on behalf of any of the parties hereto shall bind and inure
to the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Preferred Stock, Registrable
Shares or Comcast Shares), whether so expressed or not; PROVIDED, HOWEVER, that
the rights conferred in this Agreement on the Investors shall only inure to the
benefit of a transferee of Preferred Stock, Registrable Shares or Comcast Shares
if: (a) (1) there is transferred to such transferee at least 100,000 Registrable
Shares or Comcast Shares (the transferee in any such case being referred to as a
"INVESTOR TRANSFEREE"), or (2) such transferee is an affiliate of the
transferor; and (b) such transfer may otherwise be effected in accordance with
applicable securities laws; and (c) notice of such transfer or assignment is
given to the Company and such Transferee has agreed in writing to be bound by
the terms of this Agreement and the Amended and Restated Shareholders Agreement.
The parties acknowledge that the Amended and Restated Shareholders Agreement
terminates upon the closing of a Qualified Public Offering.
4.2 GOVERNING LAW. This Agreement is executed and delivered in the
State of New York, and this Agreement shall be governed by and construed in
accordance with the laws of the State of New York for all purposes and in all
respects, without giving effect to the conflict of law provisions thereof.
4.3 INTEGRATION; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof, and
supersede any previous agreement or understanding between or among the parties
with respect to such subjects, including, without limitation, the Investors'
Rights Agreement and the Amended and Restated Investors' Rights Agreement. No
party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; PROVIDED, HOWEVER, that
with the written consent of the Company and the holders of at least two-thirds
of the Registrable Shares any provisions of this Agreement may be waived,
modified or amended, on behalf of all parties hereto, and such waiver,
modification or amendment may be given or withheld for any reason or no reason
in the sole discretion of any party. Notwithstanding the foregoing, the number
of registrations that the Company is required to make under Sections 1.4 and 1.5
of this Agreement may not be modified or amended without the prior written
consent of Comcast. Any amendments, waivers, discharges or terminations of this
Agreement effected in accordance herewith shall be binding upon all parties
hereto, including those not signing such amendment, waiver, discharge or
termination.
4.4 NOTICES. All notices, requests, demands, and other communications
under this Agreement shall be in writing and shall be deemed to have been duly
given on the date of service if served personally on the party to whom notice is
to be given, on the date of transmittal of
19
services via telecopy to the party to whom notice is to be given (with a
confirming copy being delivered within 24 hours thereafter), or on the third day
after mailing if mailed to the party to whom notice is to be given, by first
class mail, registered or certified, postage prepaid, or on the date of receipt
if served via overnight courier providing a receipt and properly addressed as
set forth on SCHEDULE I hereto. Any party may change its address for purposes of
this paragraph by giving notice of the new address to each of the other parties
in the manner set forth above.
4.5 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
4.6 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
4.7 DISPUTE RESOLUTION. If the parties should have a material dispute
arising out of or relating to this Agreement or the parties' respective rights
and duties hereunder, then the parties will resolve such dispute in the
following manner: (i) any party may at any time deliver to the others a written
dispute notice setting forth a brief description of the issue for which such
notice initiates the dispute resolution mechanism contemplated by this Section
4.7; (ii) during the forty-five (45) day period following the delivery of the
notice described in Section 4.7 (i) above, appropriate representatives of the
various parties will meet and seek to resolve the disputed issue through
negotiation, (iii) if representatives of the parties are unable to resolve the
disputed issue through negotiation, then within thirty (30) days after the
period described in Section 4.7(ii) above, the parties will refer the issue (to
the exclusion of a court of law) to final and binding arbitration in New York,
New York in accordance with the then existing rules (the "Rules") of the
American Arbitration Association ("AAA"), and judgment upon the award rendered
by the arbitrators may be entered in any court having jurisdiction thereof;
provided, however, that the law applicable to any controversy shall be the law
of the State of New York, regardless of principles of conflicts of laws. In any
arbitration pursuant to this Agreement, (i) discovery shall be allowed and
governed by the New York Code of Civil Procedure and (ii) the award or decision
shall be rendered by a majority of the members of a Board of Arbitration
consisting of three (3) members, one of whom shall be appointed by each of the
respective parties and the third of whom shall be the chairman of the panel and
be appointed by mutual agreement of said two party-appointed arbitrators. In the
event of failure of said two arbitrators to agree within sixty (60) days after
the commencement of the arbitration proceeding upon the appointment of the third
arbitrator, the third arbitrator shall be appointed by the AAA in accordance
with the Rules. In the event that either party shall fail to appoint an
arbitrator within thirty (30) days after the commencement of the arbitration
proceedings, such arbitrator and the third arbitrator shall be appointed by the
AAA in accordance with the Rules. Nothing set forth above shall be interpreted
to prevent the parties from agreeing in writing to submit any dispute to a
single arbitrator in lieu of a three (3) member Board of Arbitration. Upon the
completion of the selection of the Board of Arbitration (or if the parties agree
otherwise in writing, a single arbitrator), an award or decision shall be
rendered within no more than forty-five (45) days. Notwithstanding the
foregoing, the request by either party for preliminary or permanent
20
injunctive relief, whether prohibitive or mandatory, shall not be subject to
arbitration and may be adjudicated only by the courts of the State of New York
or the U.S. District Court in New York.
4.8 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
[REMAINDER OF PAGE LEFT BLANK INTENTIONALLY]
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IN WITNESS WHEREOF, the Company and the Investors have executed this
Agreement under seal as of the day and year first above written.
THE COMPANY:
XXXXXXXX.XXX, INC.
By:
-------------------------------------------
Xxxxx Xxxxxx, President and CEO
THE INVESTORS:
ZERO STAGE CAPITAL V LIMITED PARTNERSHIP
By: Zero Stage Capital Associates Limited
Partnership, its General Partner
By:
-------------------------------------------
Xxxxxxx X. Xxxx, General Partner
ZERO STAGE CAPITAL VI LIMITED PARTNERSHIP
By:Zero Stage Capital Associates Limited
Partnership, its General Partner
By:
-------------------------------------------
Xxxxxxx X. Xxxx, General Partner
COMCAST INTERACTIVE INVESTMENTS, INC.
By:
-------------------------------------------
Name:
Title:
22
DOLL TECHNOLOGY INVESTMENT FUND, a California
limited partnership
By:Doll Technology Investment Management,
L.L.C., its General Partner
By:
-------------------------------------------
Xxxxx R. Doll, Managing Member
DOLL TECHNOLOGY AFFILIATES FUND, L.P.
By:Doll Technology Investment Management,
L.L.C.,its General Partner
By:
-------------------------------------------
Xxxxx X. Xxxx, Managing Member
DOLL TECHNOLOGY SIDE FUND, L.P.
By:Doll Technology Investment Management,
L.L.C. its General Partner
By:
-------------------------------------------
Xxxxx R. Doll, Managing Member
CRYSTAL INTERNET VENTURE FUND, L.P.
By:Crystal Venture Ltd.., its
General Partner
By:
----------------------------------------
Xxxxxx Xxxxxxx, Vice President
OPEN TEXT CORPORATION
By:
----------------------------------------
Xxxxxx Xxxxxx, Chief Financial Officer
23
INFOTECH VENTURES, LTD.
By:
----------------------------------------
Mr. Lip-Bu Tan
---------------------------------------
Mr. Xxxxx Xxxxxx
C-MAX CAPITAL LIMITED PARTNERSHIP - I
By: C. Max Capital Company, its General
Partner
By:
-------------------------------------
Name:
Title:
XL CAPITAL CORPORATION
By:
-------------------------------------
Name:
Title:
PROSPECT STREET NYC DISCOVERY FUND, L.P.
By:
-------------------------------------
Name:
Title:
--------------------------------------
Xx. Xxxx Xxxxxx
24
-------------------------------------
Xx. Xxxxx Xxxxxxxxx
-------------------------------------
Xx. Xxxxxxx X. Day
-------------------------------------
Xx. Xxxxxx X. Xxxxxx
-------------------------------------
Xx. Xxxxx Xxxxxx
-------------------------------------
Xx. Xxxxxxx Xxxxxx
-------------------------------------
Xx. Xxxx Xxxxxx
-------------------------------------
Xx. Xxxxxxx X. Xxxx
-------------------------------------
Xx. Xxxxxx Xxxx
-------------------------------------
Xx. Xxxx Xxxxxx
25
-------------------------------------
Mr. Xxxxx Xxxxxxx
CAMELOT OFFSHORE FUND LTD.
By:
----------------------------------
Name:
Title:
CAMELOT CAPITAL L.P.
By:
-----------------------------------
Name:
Title:
THE MARKS FAMILY LIMITED PARTNERSHIP
By:
---------------------------------
Name:
Title:
XXXX & ASSOCIATES LIMITED PARTNERSHIP
By:
----------------------------------
Name:
Title:
XXXX & ASSOCIATES II LTD.
By:
---------------------------------
Name:
Title:
26
---------------------------------
Xx. Xxxxxxx X. Xxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxxx and
Xxxxxxx X. Xxxxxxxx, Trustees of
Xxxxxxxx X. Xxxxxxxx Trust U/A
7-22-95
DAHLM PARTNERS
By:
-------------------------------
Name:
Title:
----------------------------------
Xx. Xxxxxxx Xxxxxx
-----------------------------------
Mr. Xxxxxxxx Xxxxxx
-----------------------------------
Ms. Xxxxxxx Xxxxx
-----------------------------------
Xx. Xxxxxx Xxxxx
----------------------------------
Mr. Xxxxxxx Xxxxx
27
