Exhibit 4.2
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
THIS THIRD AMENDED AND RESTATED RIGHTS AGREEMENT (this "Rights
Agreement") is entered into as of February 17, 2000 by and among Context
Integration, Inc., a Delaware corporation (the "Company"), the holders of Series
A Preferred Stock of the Company listed on Schedule A attached hereto (the
"Series A Purchasers"), the holders of Series B Preferred Stock of the Company
listed on Schedule A attached hereto (the "Series B Purchasers"), the holders of
Series C Preferred Stock of the Company listed on Schedule A attached hereto
other than Teck Xxxx Xxx and Xxxxx X. Xxxxx (the "Series C Purchasers" and
together with the Series A Purchasers and the Series B Purchasers, the
"Purchasers" and each a "Purchaser"), and the holders of Common Stock listed on
Schedule A attached hereto (the "Common Holders"). The Purchasers and the
Common Holders are collectively referred to as the "Investors".
RECITALS:
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A. The Series A Purchasers, the Series B Purchasers, the Series C
Purchasers and the Common Holders (together, the "Existing Rights Holders")
possess certain rights pursuant to that Second Amended and Restated Rights
Agreement dated as of December 22, 1999 (the "Prior Agreement");
B. The Existing Rights Holders and the Company have determined that
the Company's impending initial registered underwritten public offering of its
securities to the general public has eliminated the necessity for a right of
first refusal on shares of stock held by the Common Holders; and
C. The Existing Rights Holders and the Company desire to amend and
restate the Prior Agreement and to accept the rights created pursuant hereto in
lieu of the rights granted to them under the Prior Agreement.
AGREEMENT:
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NOW, THEREFORE, in consideration of the mutual promises, covenants
and conditions set forth herein and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the Existing Rights
Holders agree that the Prior Agreement shall be amended and restated in its
entirety by this Rights Agreement and the parties hereto agree as follows:
1. Registration Rights.
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1.1 Definitions. As used in this Rights Agreement, the following
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terms shall have the following respective meanings:
(a) The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the declaration or ordering of the effectiveness of such registration
statement.
(b) The term "Registrable Securities" means (i) any and all shares of
Common Stock issued or issuable upon conversion of the Company's Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, (ii) for
purposes of Sections 1.3, 1.5, 1.6, 1.7, 1.8, 1.10, 1.12 and 1.13 of this Rights
Agreement only, the shares of Common Stock held, now or hereafter, by the Common
Holders (other than Common Stock issued or issuable upon conversion of the
Company's Series C Preferred Stock) and (iii) any and all shares of Common Stock
issued pursuant to any stock split, stock dividend, recapitalization or similar
event on the Common Stock listed in (i) and (ii); provided, however, that any
and all shares described in clauses (i)-(iii) above which have been resold to
the public either pursuant to a registration statement or Rule 144 or resold in
a private transaction in which the rights under this Section 1 are not assigned
in accordance with Section 1.10 shall cease to be Registrable Securities upon
such resale, and any shares as to which registration rights have terminated
pursuant to Section 1.13 below shall cease to be Registrable Securities upon
such termination.
(c) The term "Holder" means any Investor who holds Registrable
Securities and any holder of Registrable Securities to whom registration rights
have been transferred in compliance with Section 1.10 hereof.
(d) The term "Initiating Holders" means any Holder or Holders holding
thirty percent (30%) or more of the aggregate of the Registrable Securities then
outstanding.
(e) The term "SEC" means the Securities and Exchange Commission.
(f) The term "Registration Expenses" shall mean all expenses incurred
by the Company in complying with subsections 1.2, 1.3 and 1.4 hereof, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, fees
and disbursements of one (1) special counsel for all Holders which are selling
Registrable Securities under such registration statement, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company.)
1.2 Demand Registration.
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(a) Request for Registration. In case the Company shall receive from
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Initiating Holders a written request that the Company effect a registration with
respect to Registrable Securities, the Company will:
(i) give, within five (5) days of receiving such written request
from the Initiating Holders, written notice of the proposed registration to all
other Holders; and
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(ii) as soon as practicable, use its best efforts to effect such
registration (including, without limitation, the execution of an undertaking to
file post-effective amendments, appropriate qualifications under the applicable
blue sky or other state securities laws and appropriate compliance with
exemptive regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Initiating
Holder's or Initiating Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
given within thirty (30) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to take any
action to effect such registration pursuant to this subsection 1.2:
(A) at any time prior to the earlier to occur of (i) March 14,
2002 or (ii) six (6) months following the effective date of the registration
statement under the Securities Act for the Company's initial registered
underwritten public offering of its securities to the general public (other than
a registration statement relating either to the sale of securities to employees
of the Company pursuant to a stock option, stock purchase or similar plan or a
SEC Rule 145 transaction) (the "IPO");
(B) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as required by the Securities Act;
(C) after the Company has effected three (3) such registrations
pursuant to this subsection 1.2(a) and such registrations have been declared or
ordered effective;
(D) if the aggregate gross proceeds of such registration equal
less than Three Million Dollars ($3,000,000); or
(E) if the Company, within ten (10) days of the receipt of the
request of the Initiating Holders, gives notice of its bona fide intention to
effect the filing of a registration statement with the SEC within thirty (30)
days of receipt of such request (other than with respect to a registration
statement relating to a Rule 145 transaction, an offering solely to employees or
any other registration which is not appropriate for the registration of
Registrable Securities), and does so file within said thirty (30) day period and
makes reasonable efforts to cause such registration to become effective.
Subject to the foregoing clauses (A) through (E), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within ninety (90) days, after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Company shall furnish to such Initiating Holders a certificate
signed by the President of the Company stating that in the good faith judgment
of the Company's board of directors (the "Board of Directors") of the Company,
it would be seriously detrimental to the
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Company and its stockholders for such registration statement to be filed on or
before the date filing would be required, the Company shall have the right to
defer such filing for a period of not more than one hundred twenty (120) days
after the furnishing of such a certificate of deferral; and provided further,
however, that the Board of Directors shall not exercise such right to defer a
filing more than once in any consecutive twelve (12) month period. If the
Initiating Holders withdraw their request for registration once requested
pursuant to this Section 1.2, then the Initiating Holders will forfeit their
right to one (1) registration pursuant to Section 1.2(a)(ii)(C); provided,
however, that if (i) notice of such withdrawal is given within 60 days after the
exercise by the Company of its right to delay a filing pursuant to subsection
1.2 or (ii) if at the time of such withdrawal, the Holders have learned of a
material adverse change in the condition, business or prospects of the Company
from that known to the Holders at the time of their request and have withdrawn
the request with reasonable promptness following disclosure by the Company of
such material adverse change, then the Holders shall not have to forfeit a
demand right pursuant to subsection 1.2.
(b) Underwriting. If the Initiating Holders intend to distribute the
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Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as part of their request made pursuant to
subsection 1.2 and the Company shall include such information in the written
notice referred to in subsection 1.2(a)(i). In such event, the underwriter
shall be selected by a majority in interest of the Initiating Holders subject to
the consent of the Company, which consent shall not be unreasonably withheld.
The right of any Holder to registration pursuant to subsection 1.2 shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting (unless
otherwise mutually agreed by a majority in interest of the Initiating Holders
and such Holder) to the extent provided herein. The Company shall (together
with all Holders proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
underwriter or underwriters. Notwithstanding any other provision of this
subsection 1.2, if the underwriter advises the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, the Initiating Holders shall so advise all Holders, and the number
of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such Holders; provided, however, that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced unless all
other securities are first entirely excluded from the underwriting. If any
Holder of Registrable Securities disapproves of the terms of the underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company,
the underwriter and the Initiating Holders. Any Registrable Securities which
are excluded from the underwriting by reason of the underwriter's marketing
limitation or withdrawn from such underwriting shall be withdrawn from such
registration.
(c) Company Shares. If the managing underwriter has not limited the
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number of Registrable Securities to be underwritten, the Company may include
securities for its own account or for the account of others in such registration
if the managing underwriter so agrees and if
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the number of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited.
1.3 Company Registration.
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(a) Registration. If at any time or from time to time, the Company
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shall determine to register any of its securities, for its own account or the
account of any of its stockholders, other than a registration on Form S-8
relating solely to employee stock option or purchase plans, or a registration on
Form S-4 relating solely to an SEC Rule 145 transaction, or a registration on
any other form (other than Form X-0, X-0, X-0 or S-18, or their successor forms)
or any successor to such forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will:
(i) promptly give to each Holder written notice thereof and
(ii) use its reasonable best efforts to include in such
registration (and compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made within
twenty (20) days after receipt of such written notice from the Company, by any
Holder or Holders, except as set forth in subsection 1.3(b) below.
(b) Underwriting. If the registration of which the Company gives
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notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to subsection 1.3(a)(i). In such event the right of any Holder to
registration pursuant to subsection 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other stockholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
subsection 1.3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and (i) if such
registration is the first registered offering of the sale of the Company's
securities to the general public, the underwriter may limit the number of
Registrable Securities to be included in the registration and underwriting, or
may exclude Registrable Securities entirely from such registration and
underwriting, or (ii) if such registration is other than the first registered
offering of the sale of the Company's securities to the general public, the
underwriter may limit the amount of securities to be included in the
registration and underwriting by the Company's stockholders; provided, however,
the number of Registrable Securities to be included in such registration and
underwriting under this subsection 1.3(b)(ii) shall not be reduced to less than
thirty percent (30%) of the aggregate securities included in such registration
without the prior consent of at least a majority of the Holders who have
requested their shares to be included in such registration and underwriting. The
Company shall so advise all Holders of Registrable Securities which would
otherwise be registered and underwritten pursuant hereto, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among Holders requesting registration in
proportion,
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as nearly as practicable, to the respective amounts of Registrable Securities
held by each of such Holders as of the date of the notice pursuant to subsection
1.3(a)(i) above; provided, however, that in no instance shall Registrable
Securities held by the Common Holders (other than Common Stock issued upon
conversion of the Company's Series C Preferred Stock) be included in such
registration and underwriting if such inclusion would reduce the number of
shares of Registrable Securities held by other Holders able to be included in
such registration and underwriting. If any Holder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice to
the Company and the underwriter. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
1.4 Form S-3. In addition to the rights and obligations set forth in
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subsection 1.2 above, if Holders request that the Company file a registration
statement on Form S-3 (or any successor to Form S-3) for a public offering of
shares of Registrable Securities, the reasonably anticipated aggregate price to
the public of which (net of underwriting discounts and commissions) would exceed
Two Million Dollars ($2,000,000) and the Company is then a registrant entitled
to use Form S-3 to register the shares for such an offering, the Company shall
use its best efforts to cause such shares to be registered for the offering as
soon as practicable on Form S-3 (or any successor form to Form S-3); provided,
however, the Company shall not be required to effect a registration pursuant to
this subsection 1.4:
(a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;
(b) if the Company, within ten (10) days of the receipt of the
request of the Holders, gives notice of its bona fide intention to effect the
filing of a registration statement with the SEC within thirty (30) days of
receipt of such request (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), and does so file within said thirty (30) day period and makes
reasonable efforts to cause such registration to become effective;
(c) during a period of one hundred twenty (120) days following the
effective date of a registration statement;
(d) if the Company has effected two (2) registration pursuant to this
subsection 1.4 within a twelve (12) month period from the date of such request;
or
(e) if the Company shall furnish to such Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors, it would be seriously detrimental to the Company and its
stockholders for such registration statement to be filed on or before the date
filing would be required, in which case the Company shall have the right to
defer such filing for a period of not more than one hundred twenty (120) days
after the furnishing of such a certificate of deferral; provided, however, that
the Board of Directors shall not exercise such right to defer a filing more than
once in any consecutive twelve (12)- month period.
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In the event such Holders propose to offer the shares of Registrable
Securities pursuant to this subsection 1.4 by means of an underwriting, the
proposed underwriter(s) shall be reasonably acceptable to the Company, provided,
however, that in the event such underwriter(s) is (are) not reasonably
acceptable to the Company, the Company shall be required to furnish to the
Holders, within twenty (20) days of the receipt of the request for registration
from Holders pursuant to this subsection 1.4, the names of at least two (2)
underwriters acceptable to the Company, who agree to act as underwriter for the
proposed offering on terms no less favorable to the Holders than those terms
proposed in writing by the underwriter(s) selected by the Holders. The Company
shall give written notice to all Holders of the receipt of a request for
registration pursuant to this subsection 1.4 and shall provide a reasonable
opportunity (but in no event less than 20 days) for other Holders to participate
in the registration, provided that if the registration is for an underwritten
offering, the terms of subsection 1.2(b) shall apply to all participants in such
offering.
1.5 Expenses of Registration. All Registration Expenses incurred in
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connection with any registration pursuant to this Section 1 shall be borne by
the Company except as follows:
(a) The Company shall not be required to pay for expenses of any
registration proceeding begun pursuant to subsection 1.2 if the request for
which has been subsequently withdrawn by the Initiating Holders (in which case,
such expenses shall be borne by the Holders requesting such withdrawal), unless
either (i) notice of such withdrawal is given within 60 days after the exercise
by the Company of its right to delay a filing pursuant to subsection 1.2, (ii)
if at the time of such withdrawal, the Holders have learned of a material
adverse change in the condition, business or prospects of the Company from that
known to the Holders at the time of their request and have withdrawn the request
with reasonable promptness following disclosure by the Company of such material
adverse change or (iii) the Holders forfeit a demand right as provided in
subsection 1.2.
(b) The Company shall not be required to pay fees or
disbursements of legal counsel of a Holder other than a single law firm selected
by a majority in interest of all Holders selling Registrable Securities in a
registration pursuant to subsection 1.2, 1.3 or 1.4.
(c) The Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities.
1.6 Registration Procedures. In the case of each registration
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effected by the Company pursuant to this Rights Agreement, the Company will keep
each Holder participating therein advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. Except as otherwise provided in subsection 1.5, at its expense the
Company will:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for (i) up to one hundred eighty
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(180) days or, if a shorter period, until securities included in the
registration statement are sold if such registration statement is on Form S-3
(or successor form thereto) and (ii) up to one hundred twenty (120) days or, if
a shorter period, until securities included in the registration are sold if such
registration statement is on a form other than Form S-3 (or successor form
thereto);
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them;
(d) Use its reasonable 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 requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions unless the Company is
already subject to service in such jurisdictions;
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement;
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Section 1, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 1, if such securities are being
sold through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent public accountants of the Company, in form and substance as is
customarily given by independent certified public
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accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Holders requesting registration of Registrable
Securities.
1.7 Indemnification.
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(a) The Company will indemnify and defend each Holder of Registrable
Securities and each of its officers, directors and partners, and each person
controlling such Holder, with respect to which a registration has been effected
pursuant to this Rights Agreement, and each underwriter, if any, and each person
who controls any underwriter against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement or prospectus incident to such registration, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statement therein not misleading,
or any violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act of 1934, as amended, ("Exchange Act"), or any state
securities law applicable to the Company or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any such state law and in each
case relating to action or inaction required of the Company in connection with
any such registration, and will reimburse each such Holder, each of its
officers, directors and partners, and each person controlling such Holder, each
such underwriter and each person who controls any such underwriter, as incurred
for any reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection 1.7(a) shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld);
and provided further, however, that the Company will not be liable in any such
case to the extent that any such claim, loss, expense, damage or liability
arises out of or is based on any untrue statement or omission based upon and
made in conformity with written information furnished to the Company by such
Holder (or its representative) or underwriter specifically for use therein.
(b) Each Holder will, if Registrable Securities held by or issuable
to such Holder are included in the securities as to which such registration is
being effected, indemnify and defend the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company within the
meaning of the Securities Act, and each other such Holder, each of its officers,
directors and partners and each person controlling such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement or
prospectus incident to such registration, or any 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 Company and
such Holders, directors, officers, partners, persons, underwriters or control
persons for any reasonable legal or any other expenses incurred in connection
with investigating, defending or settling any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement or prospectus in reliance upon
and in conformity with written
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information furnished to the Company by the Holder in an instrument duly
executed by such Holder specifically for use therein; provided, however, that
the indemnity agreement contained in this subsection 1.7(b) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the Holder (which consent
shall not be unreasonably withheld); and provided further, that the total amount
for which any Holder shall be liable under this subsection 1.7(b) shall not in
any event exceed the aggregate proceeds received by such Holder from the sale of
Registrable Securities held by such Holder in such registration.
(c) Each party entitled to indemnification under this subsection 1.7
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld), and the Indemnified Party may participate in such
defense at its own expense; and provided further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations hereunder, unless such failure resulted in
prejudice to the Indemnifying Party; and provided further, however, that an
Indemnified Party (together with all other Indemnified Parties which may be
represented without conflict by one counsel) shall have the right to retain one
separate counsel, with the fees and expenses to be paid by the Indemnifying
Party, if representation of such Indemnified Party by the counsel retained by
the Indemnifying Party would be inappropriate due to a conflict of interests
between such Indemnified Party and any other party represented by such counsel
in such proceeding. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) If the indemnification provided for in this subsection 1.7 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any claim, loss, damage, liability, action, or expense
referred to therein, then the Indemnifying Party, in lieu of indemnifying such
Indemnified Party hereunder, shall contribute to the amount paid or payable by
such Indemnified Party as a result of such claim, loss, damage, liability,
action, or expense in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party on the one hand and of the Indemnified Party on
the other in connection with the statements or omissions that resulted in such
claim, loss, damage, liability, action or expense as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to written information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, the total amount for which
any Holder shall be liable under this
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subsection 1.7(d) shall in no event exceed the aggregate proceeds received by
such Holder from the sale of Registrable Securities held by such Holder in such
registration.
1.8 Information by Holder. Any Holder or Holders of Registrable
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Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
1.9 Rule 144 Reporting. With a view to making available to Holders
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the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees at all times to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144 of the Securities Act, after ninety (90)
days after the effective date of the first registration filed by the Company for
an offering of its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to furnish
to such Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), 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 the Holder may reasonably request in complying with
any rule or regulation of the SEC allowing the Holder to sell any such
securities without registration.
1.10 Transfer of Registration Rights. Holders' rights to cause the
-------------------------------
Company to register their securities and keep information available, granted to
them by the Company under subsections 1.2, 1.3, 1.4 and 1.9, may be assigned to
a transferee or assignee of at least three hundred fifty thousand (350,000)
shares (as adjusted for stock splits, stock dividends, recapitalization and like
events occurring after the date hereof) of a Holder's Registrable Securities not
sold to the public, provided, that the Company is given written notice by such
Holder at the time of or within a reasonable time after said transfer, stating
the name and address of said transferee or assignee and identifying the
securities with respect to which such registration rights are being assigned and
if immediately following such transfer the transferee is bound by the terms and
conditions of sections 1, 3 and 7 of this Agreement. Notwithstanding anything
else in this subsection 1.10, any Holder may transfer rights to a transferee of
fewer than three hundred fifty thousand (350,000) shares (as adjusted for stock
splits, stock dividends, recapitalizations and like events occurring after the
date hereof) of a Holder's Registrable Securities if such transferee is an
affiliate (as defined in the
-11-
Securities Act) of such Holder and if immediately following such transfer the
transferee is bound by the terms and conditions of this Agreement.
1.11 Limitations on Subsequent Registration Rights. From and after
---------------------------------------------
the date hereof, the Company shall not, without the prior written consent of the
Holders (which consent will not be unreasonably withheld) of not less than a
majority of the Registrable Securities then outstanding enter into any
agreement, with any holder or prospective holder of any securities of the
Company which would allow such holder or prospective holder to demand any
registration or include such securities in any registration filed under
subsections 1.2, 1.3 or 1.4 hereof if such inclusion would adversely affect the
rights of any Holder (or any qualifying transferee under subsection 1.10) under
such subsections, including reducing the number of shares of Registrable
Securities of a Holder able to be included in any registration.
1.12 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
---------------------------
during the period of duration (not to exceed one hundred eighty (180) days)
specified by the lead underwriter of common stock or other securities of the
Company following the effective date of a registration statement of the Company
filed under the Securities Act, it shall not, to the extent requested by the
Company (pursuant to a request from such underwriter), directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase, pledge or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any securities of the
Company held by it at any time during such period except common stock included
in such registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
(b) such agreement shall not be required unless all officers and
directors of the Company and all holders of two percent or more of the Company's
outstanding capital stock (on a common-equivalent basis) enter into similar
agreements;
(c) such agreement shall permit transfers of the Company's capital
stock to affiliates of the Holder during the market stand-off period; provided,
however, that it shall be a condition to the transfer that the transferee
execute an agreement stating that the transferee agrees to be bound by the
provisions of this subsection 1.12; and
(d) such agreement shall not cover securities of the Company
acquired in the public markets.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Registrable Securities of each Holder
(and the shares of securities of every other person subject to the foregoing
restriction) until the end of such period.
Each Holder agrees not to transfer or sell any securities of the Company
unless the transferee agrees to be bound by this Market Stand-Off Agreement.
-12-
1.13 Termination of Registration Rights. The obligations of the Company
----------------------------------
pursuant to this Section 1 ("Registration Rights") shall terminate with respect
to any Holder on the earlier of (i) the date seven (7) years after the closing
of the IPO, or (ii) the date on which the Holder owns less than 1% of the
Company's outstanding stock and can sell all of his/her remaining Registrable
Securities under Rule 144 during any three (3)-month period.
2. Right of First Offer.
--------------------
2.1 If, at any time prior to the termination of this right of first offer
pursuant to subsection 2.6, the Company should desire to issue in a transaction
not registered under the Securities Act in reliance upon a claimed exemption
thereunder, any Equity Securities (as hereinafter defined), it shall give each
Purchaser, Xxxxxxx X. Xxxx ("Xxxx"), and each of Xxxxx X. Xxxxxxx, Teck Xxxx
Xxx, Xxxxx X. Xxxxx and Xxxxx Xxxxxx (each a "Founder," and collectively, the
"Founders") the right to purchase such Purchaser's, Xxxx'x or such Founder's, as
applicable, pro rata share (or any part thereof) of all of such privately
offered Equity Securities on the same terms as the Company is willing to sell
such Equity Securities to any other person. Each Purchaser's, Xxxx'x and
Founder's, as applicable, pro rata share of the Equity Securities shall be equal
to that percentage of the outstanding Common Stock then held by such Purchaser,
Xxxx or Founder, as applicable. For purposes of this subsection 2.1, the
outstanding Common Stock shall include (a) outstanding shares of Common Stock,
and (b) shares of Common Stock issued or issuable upon exercise and/or
conversion of any then outstanding options (which are fully vested), warrants,
Series A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock.
2.2 Prior to any sale or issuance by the Company of any Equity Securities,
the Company shall notify each Purchaser, Xxxx and each Founder in writing of its
intention to sell and issue such securities, setting forth the terms under which
it proposes to make such sale. Within ten (10) business days after receipt of
such notice, each Purchaser, Xxxx and each Founder shall notify the Company in
writing whether such Purchaser, Xxxx or such Founder desires to exercise the
option to purchase such Purchaser's, Xxxx'x or such Founder's, as applicable,
pro rata share (or any part thereof) of the Equity Securities so offered. If a
Purchaser, Xxxx or a Founder, as applicable, elects to purchase such
Purchaser's, Xxxx'x or such Founder's, as applicable, pro rata share, then such
Purchaser, Xxxx or Founder shall have a right of over-allotment such that if any
other Purchaser, Xxxx or Founder fails to purchase such Purchaser's, Xxxx'x or
Founder's, as applicable, pro rata share of the Equity Securities, such
Purchaser(s), Xxxx and such Founder(s) who have elected to purchase their pro
rata shares may purchase, on a pro rata basis, that portion of the Equity
Securities which such other Purchasers, Xxxx'x and Founder(s), as applicable,
elected not to purchase.
2.3 After termination of the ten (10) business day period specified in
subsection 2.2 above, the Company may, during a period of ninety (90) days
following the end of such ten (10) day period, sell and issue such Equity
Securities as to which (a) the Purchasers, Xxxx or Founders have no right under
this Section 2 to purchase or (b) the Purchasers, Xxxx and Founders do not
indicate a desire to purchase, to another person upon the same terms and
conditions as those set forth in the notice to the Purchasers, Xxxx and the
Founders. In the event the Company has not
-13-
sold the Equity Securities, or has not entered into an agreement to sell the
Equity Securities, within said ninety (90)-day period, the Company shall not
thereafter issue or sell any Equity Securities without first offering such
securities to the Purchasers, Xxxx and the Founders in the manner provided
above.
2.4 If a Purchaser, Xxxx or a Founder gives the Company written notice
that such Purchaser, Xxxx or such Founder desires to purchase any of the Equity
Securities offered by the Company, payment for the Equity Securities shall be by
check, or wire transfer, against delivery of the Equity Securities at the
executive offices of the Company within ten (10) business days after giving the
Company such notice, or, if later, the closing date for the sale of such Equity
Securities. The Company shall use its reasonable best efforts to take all such
actions as may be required by any regulatory authority in connection with the
exercise by a Purchaser, Xxxx or Founder of the right to purchase Equity
Securities as set forth in this Section 2.
2.5 The right of first offer contained in this Section 2 shall not apply
to the issuance by the Company of the following Equity Securities: (a) Common
Stock reserved for issuance to employees, consultants, directors or officers of
the Company pursuant to stock grant, stock purchase and/or stock option plans or
any other stock incentive program, agreement or arrangement approved by the
Board of Directors, (b) as part of an acquisition by the Company of all or
substantially all of the assets or shares of another company or entity or an
identifiable business division or segment of another company or entity in each
case approved by the Board of Directors, (c) any transaction or series of
related transactions (including, without limitation any reorganization, merger
or consolidation) which will result in the holders of the outstanding voting
equity securities of the Company immediately prior to such transaction holding
less than fifty percent (50%) of the voting equity securities of the surviving
entity immediately following such transaction, (d) pursuant to equipment
financing or leasing arrangements or in connection with strategic partnering
transactions in each case approved by the Board of Directors, (e) issued upon
conversion of the Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock of the Company, (f) issued in connection with any stock split,
stock dividend, recapitalization or similar event, or (g) issued in connection
with an underwritten public offering of shares of the Company's capital stock.
2.6 The right of first offer contained in this Section 2 shall terminate
upon the earlier to occur of (a) Xxxxx 00, 0000, (x) the closing of the IPO or
(c) the closing of (i) a merger or consolidation of the Company with or into any
other corporation in which the Company's stockholders shall own less than fifty
percent (50%) of the voting securities of the surviving corporation or (ii) a
sale, transfer, or disposition of all or substantially all of the assets of the
Company.
2.7 The term "Equity Securities" shall mean (a) Common Stock or Preferred
Stock, rights, options or warrants to purchase Common Stock or Preferred Stock,
(b) any security other than Common Stock or Preferred Stock having voting rights
in the election of the Board of Directors, not contingent upon a failure to pay
dividends, (c) any security convertible into or exchangeable for any of the
foregoing except that Equity Securities shall not include the Series A
-14-
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock, and (d)
any agreement or commitment to issue any of the foregoing.
2.8 A Purchaser's right to purchase any Equity Securities pursuant to
this Section 2 may be assigned by a Purchaser to an affiliate (as defined in the
Securities Act) of a Purchaser.
3. Company's Right of First Refusal.
--------------------------------
3.1 Grant. The Company is hereby granted the right of first refusal (the
-----
"Right of First Refusal"), exercisable in connection with any proposed sale or
other transfer of the Company's capital stock now or hereafter owned by any
Purchaser or Common Holder (the "ROFR Shares"). For purposes of this Section 3,
the term "transfer" shall include any assignment, pledge (other than a pledge to
the Company), encumbrance or other disposition for value of the ROFR Shares
intended to be made by the holder of such ROFR Shares (the "Owner"); provided,
however, that the term "transfer" shall not include or apply to any disposition
of ROFR Shares to (a) any of the issue of the Owner or to any trustee or
trustees for the benefit of any issue of the Owner, or (b) the heirs or estate
of the Owner upon the death of the Owner or (c) any affiliate (as defined in the
Securities Act) of the Owner; and provided further, however, that in the case of
clauses (a), (b) and (c) above, the transferees shall furnish the Company with a
written agreement to be bound by or comply with all provisions of this Section
3. Notwithstanding the foregoing, the term "transfer" shall not include or apply
to any disposition of ROFR Shares by or from an Owner to his former spouse
pursuant to a divorce decree under applicable state law; provided, however, that
such ROFR shares shall continue to be subject to the terms of this Rights
Agreement as if such shares were held by the Owner. In addition, such former
spouse shall furnish the Company with a written agreement to be bound by or
comply with all provisions of this Section 3.
3.2 Notice of Intended Disposition. In the event the Owner desires to
------------------------------
accept a bona fide third-party offer for any or all of the ROFR Shares (the
shares subject to such offer to be hereinafter called, solely for the purposes
of this Section 3 the "Target Shares"), the Owner shall promptly deliver to the
Secretary of the Company written notice (the "Disposition Notice") of the offer
and the basic terms and conditions thereof, including the proposed purchase
price.
3.3 Exercise of Right. The Company (or its assignees) shall, for a period
-----------------
of thirty (30) days following receipt of the Disposition Notice, have the right
to repurchase any or all of the Target Shares specified in the Disposition
Notice (a) at a per share cash purchase price equal to Book Value (as defined
below) and upon substantially the same other terms and conditions specified
therein, in the case of a Disposition Notice given prior to (and not relating
to) the closing of the IPO by a Common Holder other than Xxxx and (b) upon
substantially the same terms and conditions specified therein, in the case of a
Disposition Notice given by a Purchaser or Xxxx or, after (or relating to) the
closing of the IPO, by a Common Holder other than Xxxx. Such right shall be
exercisable by written notice (the "Exercise Notice") delivered to the Owner
prior to the expiration of the thirty (30) day exercise period. If such right is
exercised with respect to all the Target Shares specified in the Disposition
Notice, then the Company (or its assignee) shall effect the repurchase of the
Target Shares, including payment of the purchase price therefor, not more than
five (5) business
-15-
days after delivery of the Exercise Notice. At such time the Owner shall deliver
to the Company the certificates representing the Target Shares to be purchased,
each certificate to be properly endorsed for transfer. The Target Shares so
purchased shall thereupon be canceled and cease to be issued and outstanding
shares of the Company's capital stock.
In the case of a Disposition Notice given by a Purchaser or Xxxx, should
the purchase price specified in the Disposition Notice be payable in property
other than cash or evidences of indebtedness, the Company (or its assignees)
shall have the right to pay the purchase price in the form of cash equal in
amount to the value of such property. If the Owner and the Company (or its
assignees) cannot agree on such cash value within ten (10) days after the
Company's receipt of the Disposition Notice, the valuation shall be made by an
appraiser of recognized standing selected by the Owner and the Company (or its
assignees), or, if they cannot agree on an appraiser within twenty (20) days
after the Company's receipt of the Disposition Notice, each shall select an
appraiser of recognized standing, and the two appraisers shall designate a third
appraiser of recognized standing, whose appraisal shall be determinative of such
value. The cost of such appraisal shall be shared equally by the Owner and the
Company. The closing shall then be held on the latter of (i) the date five (5)
business days following delivery of the Exercise Notice or (ii) the date fifteen
(15) business days after such cash valuation shall have been made.
3.4 Non-Exercise of Right. In the event the Exercise Notice is not
---------------------
given to the Owner within thirty (30) days following the date of the Company's
receipt of the Disposition Notice, the Owner shall have a period of thirty (30)
days thereafter, in which to sell or otherwise dispose of the Target Shares upon
terms and conditions (including the purchase price) no more favorable to the
third-party purchaser than those specified in the Disposition Notice. The
third-party purchaser shall acquire the Target Shares free and clear of all the
terms and provisions of this Right of First Refusal. In the event the Owner
does not sell or otherwise dispose of the Target Shares within the specified
thirty (30) day period, the Right of First Refusal shall continue to be
applicable to any subsequent disposition of the Target Shares by the holder of
such Target Shares until such right terminates in accordance with Section 3.7
3.5 Partial Exercise of Right. In the event the Company (or its
-------------------------
assignees) makes a timely exercise of the Right of First Refusal with respect to
a portion, but not all, of the Target Shares specified in the Disposition
Notice, the Owner shall have the option, exercisable by written notice to the
Company delivered within thirty (30) days after the date of the Disposition
Notice, to effect the sale of the Target Shares pursuant to one or both of the
following alternatives:
(a) sale or other disposition of all the Target Shares to a
third-party purchaser in compliance with the requirements of section 3.4, as if
the Company did not exercise the Right of First Refusal hereunder; or
(b) sale to the Company (or its assignees) of the portion of the
Target Shares which the Company (or its assignees) has elected to purchase, such
sale to be effected in substantial conformity with the provisions of Section
3.3, and sale or other disposition of the remaining Target Shares to a third
party purchaser in compliance with Section 3.4, as if the Company did not
exercise the Right of First Refusal as to such remaining shares.
-16-
Failure of the Owner to deliver timely notification to the Company under
this Section 3.5 shall be deemed to be an election by the Owner to sell the
Target Shares pursuant to alternative (a) above.
3.6 Recapitalization. In the event of any stock dividend, stock
----------------
split, recapitalization or other transaction affecting the Company's outstanding
capital stock effected without receipt of consideration, then any new,
substituted or additional securities or other property which is by reason of
such transaction distributed with respect to the ROFR Shares shall be
immediately subject to the Right of First Refusal hereunder, but only to the
extent the ROFR Shares are at a time covered by such right.
3.7 Termination. The Right of First Refusal under this Section 3
-----------
shall terminate and cease to have effect upon the earliest to occur of (a) the
first date on which shares of Common Stock are held of record by more than five
hundred (500) persons, (b) the closing of the IPO, or (c) the date of closing of
(i) a merger or consolidation of the Company with any other corporation or other
business entity in which the Company's stockholders shall own less than fifty
percent (50%) of the voting securities of the surviving corporation or business
entity or (ii) a sale, transfer, or disposition of all or substantially all of
the assets of the Company or outstanding capital stock of the Company.
3.8 Legend. All certificates representing ROFR Shares subject to the
------
Right of First Refusal shall be endorsed with the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN-
INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN
RIGHTS OF FIRST REFUSAL UPON AN ATTEMPTED TRANSFER OF THE SHARES. THE
SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY OF
SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
3.9 Co-Sale Rights Subordinate to Right of First Refusal. The
----------------------------------------------------
Company's Right of First Refusal and all of the rights attendant thereto
(regardless of whether exercised by the Company or, as provided in Subsection
3.3, its assignees) set forth in this Section 3 are senior to any rights of co-
sale granted by the Company or any of the Company's stockholders. Any and all
such rights of co-sale are subordinate to the Company's Right of First Refusal
and all rights attendant thereto (regardless of whether exercised by the Company
or, as provided in Subsection 3.3, its assignees) set forth in this Section 3
and shall pertain only to shares as to which the Company's Right of First
Refusal is not exercised.
3.10 Book Value. For purposes of this Section 3, "Book Value" shall
----------
be determined according to this Section 3.10. The accounting firm regularly
retained by the Company
-17-
shall determine the book value per share of Common Stock, which shall be
calculated by dividing (x) the book value of the Company (total assets at book
value less total liabilities), but not treating as assets any intangible assets
(including, without limitation, contract rights with clients, future income and
goodwill), or any accounts receivable remaining unpaid after 150 days after the
date of invoice, by (y) the fully-diluted total number of shares of Common
Stock.
For purposes of the foregoing calculation:
(a) An asset value equal to the greater of (i) the original purchase
price paid for shares of preferred stock or (ii) the amount that would be
payable in respect of such shares upon the dissolution and liquidation of the
Company, shall be allocated to such shares as their preference value and
deducting in arriving at the Company's total assets.
(b) The Company's total assets and total liabilities shall be determined
by reference to the most recent balance sheet of the Company that has been
audited or reviewed by the accounting firm regularly retained by the Company.
The foregoing shall apply even if a fiscal year has transpired since the date of
such balance sheet, so long as such firm is proceeding in the normal course in
the preparation of its auditor's or reviewer's report in respect of the
Company's financial statements for such fiscal year and so long as not more than
ninety (90) days have so transpired.
(c) A fully-diluted basis assumes (i) the exercise of all stock options
and warrants and other contingent obligations to issue shares of Common Stock
(other than the conversion of shares of preferred stock), whether or not such
options, warrants or other obligations are presently vested or exercisable, and
(ii) the Company's receipt of the related exercise prices and other applicable
consideration.
4. Information Rights.
------------------
4.1 Annual Financial Information. As soon as practicable after the
----------------------------
end of each fiscal year, and in any event within ninety (90) days thereafter,
the Company will furnish to each Purchaser, so long as such Purchaser still
holds shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock (or Common Stock issued upon conversion of the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock), audited
financial statements, including consolidated balance sheets of the Company and
its subsidiaries, if any, as at the end of such fiscal year and consolidated
statements of income and surplus and consolidated statements of changes in
financial position of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year.
Not later than thirty (30) days prior to the beginning of each fiscal year of
the Company, the Company will deliver to each Purchaser the Company's business
plan and projected operating budget for the next fiscal year.
4.2 Quarterly Financial Information. As soon as available and in any
-------------------------------
event within forty-five (45) days after each quarterly accounting period (other
than the fourth such quarterly period in a fiscal year; provided, however, that
the annual information provided by the Company to the Purchasers pursuant to
Section 4.1 includes such financial information for the fourth quarter), the
-18-
Company will furnish to each Purchaser, so long as such Purchaser still holds
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock (or Common Stock issued upon conversion of the Series A
Preferred Stock, Series B Preferred Stock or Series C Preferred Stock),
quarterly financial statements of the Company, including a balance sheet, profit
and loss statement, cash flow analysis and a comparison to budget.
4.3 Confidentiality of Information. Each Purchaser agrees that any
------------------------------
information obtained by it pursuant to subsections 4.1 and 4.2 will not be
disclosed to any person or entity without the prior written consent of the
Company; provided however, that such consent shall not be unreasonably withheld
and that notwithstanding the foregoing, each Purchaser may disclose such
information without the prior written consent of the Company to its partners,
legal counsel, professional accountants, advisors or employees in order to
evaluate this investment and as may be necessary to continue to evaluate the
Company. Each Purchaser agrees that any recipient of information obtained by
the Purchaser pursuant to subsections 4.1 and 4.2 shall agree to be bound by the
provisions of this subsection 4.3 respect to such information. Each Purchaser's
obligations under this subsection 4.3 shall not apply to any information which:
(a) was in the public domain at the time it was communicated to
the Purchaser by the Company;
(b) entered the public domain subsequent to the time it was
communicated to the Purchaser through no fault of the Purchaser;
(c) was in the Purchaser's possession free of any obligation of
confidence at the time it was communicated to the Purchaser by the Company;
(d) was rightfully communicated to the Purchaser by a third party
free of any obligation of confidence subsequent to the time it was communicated
to the Purchaser by the Company;
(e) was disclosed by the Purchaser in response to a valid order
by a court or other governmental body, was otherwise required by law, or was
necessary to establish the rights of either party under this Rights Agreement;
or
(f) was independently developed by the Purchaser without using
the confidential information of the Company.
4.4 Transfer of Information Rights. The Purchasers' rights to
------------------------------
receive financial information pursuant to this Section 4 are not assignable
except to a transferee of the Series A Preferred Stock, Series B Preferred Stock
or Series C Preferred Stock or Common Stock issuable upon conversion of the
Series A Preferred Stock, Series B Preferred Stock or Series C Preferred Stock
made in compliance with this Rights Agreement and the Second Amended and
Restated Co-Sale Agreement. The Company may prohibit the transfer of any
Holders' rights under this subsection 4.4 to any proposed transferee or assignee
who the Company reasonably believes is a competitor of the Company.
-19-
4.5 Termination of Covenants. The covenants set forth in subsections
------------------------
4.1, 4.2 and 4.3 shall terminate and be of no further force and effect upon the
earlier to occur of (a) the closing of the IPO or (b) upon any merger or
consolidation of the Company with any other corporation in which the
stockholders of the Company immediately prior to such transaction shall own less
than fifty percent (50%) of the voting securities of the surviving corporation.
5. Attendance at Board Meetings. Xxxxxxx X. Xxx (or a representative
----------------------------
appointed by Xx. Xxx), Xxxxx Xxxxxxxx (or a representative chosen by GE Capital
Equity Investments, Inc.) and each Founder who is not then a director of the
Company shall have the right to attend all meetings of the Board of Directors in
a nonvoting observer capacity and to receive notice of such meetings and to
receive the information provided by the Company to the Board of Directors. The
covenants set forth in this Section 5 shall terminate and be of no further force
and effect upon the earlier to occur of (a) the closing of the IPO or (b) upon
any merger or consolidation of the Company with any other corporation in which
the stockholders of the Company immediately prior to such transaction shall own
less than fifty percent (50%) of the voting securities of the surviving
corporation.
6. Expenses Incurred in Connection with Attending Board Meetings. The
-------------------------------------------------------------
Company agrees to reimburse all reasonable costs and expenses incurred by the
directors representing the Purchasers in attending all meetings of the Board of
Directors or any committee thereof in accordance with Company policy. The
covenants set forth in this Section 6 shall terminate and be of no further force
and effect upon the earlier to occur of (a) the closing of the IPO or (b) upon
any merger or consolidation of the Company with any other corporation in which
the stockholders of the Company immediately prior to such transaction shall own
less than fifty percent (50%) of the voting securities of the surviving
corporation.
7. General.
-------
7.1 Waivers and Amendments. With the written consent of the holders
----------------------
of at least a majority of the Registrable Securities (other than Registrable
Securities of the Common Holders), the obligations of the Company and the rights
of the parties under this agreement may be waived (either generally or in a
particular instance, either retroactively or prospectively, and either for a
specified period of time or indefinitely), and with the same consent the
Company, when authorized by resolution of its Board of Directors, may enter into
a supplementary agreement for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Rights
Agreement; provided, however, that no such modification, amendment or waiver
shall reduce the aforesaid majority of Registrable Securities consent
requirement without the consent of all of the Holders of the Registrable
Securities; and provided further, however, that no such modification, amendment
or waiver shall adversely affect the rights of holders of any series of
Preferred Stock in a manner different from holders of all other series of
Preferred Stock without the prior written consent of the holders of a majority
of the series of Preferred Stock so affected, and that no such modification,
amendment or waiver shall affect the rights of the Common Holders under this
Rights Agreement without the prior written consent of a majority of the Common
Holders. Upon the effectuation of each such waiver, consent, agreement of
amendment or modification, the Company shall promptly give written notice
thereof to the record holders of the Registrable Securities who
-20-
have not previously consented thereto in writing. This Rights Agreement or any
provision hereof may be changed, waived, discharged or terminated only by a
statement in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, except to the extent
provided in this subsection 7.1.
7.2 Governing Law. This Rights Agreement shall be governed in all
-------------
respects by the laws of the State of Delaware as such laws are applied to
agreements between Delaware residents entered into and to be performed entirely
within Delaware.
7.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
7.4 Entire Agreement. This Rights Agreement and the Second Amended
----------------
and Restated Co-Sale Agreement constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and this Rights
Agreement shall supersede and cancel all prior agreements between the parties
hereto with regard to the subject matter hereof except for the right of first
refusal set forth in the Amended and Restated Stockholder Agreement dated March
13, 1997 among the Company and its stockholders identified therein; provided,
however, that (a) the provisions of the Right of First Refusal set forth in this
Rights Agreement are superior to and have priority over the provisions of the
right of first refusal provisions set forth in the Stockholder Agreement and (b)
the right of first refusal provisions set forth in the Stockholder Agreement are
expressly subordinate to the provisions of the Right of First Refusal set forth
in this Rights Agreement.
7.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be effective on (i) the date
of delivery by facsimile (with confirmation of receipt by phone) or personally
or (ii) the business day after deposit with an overnight courier service or
(iii) five (5) business days after deposit in the United States first class mail
by certified or registered mail. All notices not delivered personally or by
facsimile will be sent with postage and other charges prepaid and addressed (a)
if to any Purchaser, at such party's address as set forth in the Company's
records, or at such other address as such party shall have furnished to the
Company in writing, with a copy to Weil, Gotshal & Xxxxxx LLP, 0000 Xxxx Xxxx
Xxxx, Xxxxx Xxxx, Xxxxxxxxxx 00000, Attention: Xxxxxxx Xxxxxxx, Esq., Facsimile:
(000) 000-0000 or (b) if to the Company, Context Integration, Inc., Xxx Xxx xx
Xxxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Facsimile: (000) 000-0000,
or at such other address as the Company shall have furnished to the Purchaser in
writing with a copy to Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, 000 Xxxx Xxxx Xxxx,
Xxxx Xxxx, Xxxxxxxxxx, 00000-0000, attention: Xxxxxxxxx X. Xxxxx, Esq.,
facsimile: (000) 000-0000.
7.6 Severability. In case any provision of this Rights Agreement
------------
shall be invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions of this Rights Agreement shall not in
any way be affected or impaired thereby.
-21-
7.7 Titles and Subtitles. The titles of the sections and subsections
--------------------
of this Rights Agreement are for convenience of reference only and are not to be
considered in construing this Rights Agreement.
7.8 Counterparts. This Rights Agreement may be executed in any
------------
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
-22-
IN WITNESS WHEREOF, the parties hereby have executed this Rights Agreement
on the date first above written.
"COMPANY"
CONTEXT INTEGRATION, INC.,
a Delaware corporation
By: /s/ Xxxxxxx Xxxxx
_____________________________________
Name: Xxxxxxx Xxxxx
Title: CEO
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
GE Capital Equity Investments, Inc., a
Delaware corporation
By: /s/ Xxxxx Xxxxxxxx
___________________________________
Name: Xxxxx Xxxxxxxx
_________________________________
Title: Senior Vice President
________________________________
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
Atlas Venture Fund III, L.P.
By: Atlas Venture Associates III, LLC,
its general partner
By: /s/ Xxxxxx Xxxxxx
______________________________________
Member Manager
Name:
"PURCHASER"
Atlas Venture Entrepreneurs' Fund III, L.P.
By: Atlas Venture Associates III, LLC,
its general partner
By: /s/ Xxxxxx Xxxxxx
______________________________________
Member Manager
Name:
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
RBC Ventures II, Ltd.
By: RBC Management LLC, its general partner
By:______________________________________
Name:
Title:
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
Internet Capital Group, Inc.
By: /s/ Xxxxxxxxxxx Xxxxxxxxx
______________________________________
Name: Xxxxxxxxxxx Xxxxxxxxx
Title: Managing Director
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
Sigma Partners III, L.P.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
General Partner
Name:
"PURCHASER"
Sigma Associates III, L.P.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
General Partner
Name:
"PURCHASER"
Sigma Investors III, L.P.
By: /s/ Xxxx Xxxxxxx
--------------------------------------
General Partner
Name:
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
Xxxxxx XxXxxxxx and Xxxxxxx XxXxxxxx
XxXxxxxx TTEES UAD (6/2/86)
By:____________________________________
Xxxxxx XxXxxxxx, Trustee
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
/s/ Xxxxx Xxxxxx
------------------------------------------
Xxxxx Xxxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February 17, 2000
"PURCHASER"
______________________________________
Xxxx X. Xxxxxxx
"PURCHASER"
/s/ Xxxxx Xxxxx
______________________________________
Xxxxx Xxxxx
"PURCHASER"
/s/ Xxxxxx Xxxxx
______________________________________
Xxxxxx Xxxxx
"COMMON HOLDER"
Xxxxx Xxxxxx
______________________________________
(Printed Name)
/s/ Xxxxx Xxxxxx
______________________________________
(Signed Name)
"COMMON HOLDER"
Teck Xxxx Xxx
______________________________________
(Printed Name)
/s/ Teck Xxxx Xxx
______________________________________
(Signed Name)
"COMMON HOLDER"
Xxxxx X. Xxxxx
______________________________________
(Printed Name)
/s/ Xxxxx X. Xxxxx
______________________________________
(Signed Name)
Schedule A
Common Stockholders
-------------------
Xxxxx Xxxxx
X.X. Xxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxx
Series A Preferred Stockholders
-------------------------------
Internet Capital Group, Inc.
Sigma Partners III, L.P.
Sigma Associates III, L.P.
Sigma Investors III, L.P.
Donald & Xxxxxxx XxXxxxxx
Xxxxx Xxxxxx
Xxxx X. Xxxxxxx
Series B Preferred Stockholders
-------------------------------
Atlas Venture Fund III, L.P.
Atlas Venture Entrepreneurs' Fund III, L.P.
RBC Ventures
Internet Capital Group, Inc.
Sigma Partners III, L.P.
Sigma Associates III, L.P.
Sigma Investors III, L.P.
Donald & Xxxxxxx XxXxxxxx
Xxxxx Xxxxxx
Xxxx X. Xxxxxxx
Series C Preferred Stockholders
-------------------------------
GE Capital Equity Investments, Inc.
Atlas Venture Fund III, L.P.
Atlas Venture Entrepreneurs' Fund III, L.P.
RBC Ventures II, Ltd.
Internet Capital Group, Inc.
Sigma Partners III, L.P.
Sigma Associates III, L.P.
Sigma Investors III, L.P.
Donald & Xxxxxxx XxXxxxxx
Xxxxx Xxxxxx
Xxxx X. Xxxxxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxx
2
CONTEXT INTEGRATION, INC.
AMENDMENT TO THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
This Amendment to the Third Amended and Restated Rights Agreement (the
"Amendment") is entered into as of March 2, 2000 by and among Context
Integration, Inc., a Delaware corporation (the "Company"), the holders of Series
A Preferred Stock of the Company listed on Schedule A attached hereto (the
"Series A Purchasers"), the holders of Series B Preferred Stock of the Company
listed on Schedule A attached hereto (the "Series B Purchasers"), the holders of
Series C Preferred Stock of the Company listed on Schedule A attached hereto
other than Teck Xxxx Xxx and Xxxxx X. Xxxxx (the "Series C Purchasers" and
together with the Series A Purchasers and the Series B Purchasers, the
"Purchasers" and each a "Purchaser"), and the holders of Common Stock listed on
Schedule A attached hereto (the "Common Holders"). The Purchasers and the
Common Holders are collectively referred to as the "Investors".
RECITALS:
--------
A. The Holders of Registrable Securities (as defined in the Third Amended
and Restated Rights Agreement) possess certain registration rights pursuant to
the Third Amended and Restated Rights Agreement dated as of February 17, 2000
(the "Rights Agreement").
B. Under Section 7.1 of the Rights Agreement, the Company and the Holders
of a majority of the Registrable Securities and a majority of the Common Holders
may amend the Rights Agreement.
AGREEMENT:
---------
NOW, THEREFORE, in consideration of the mutual promises, covenants and
conditions set forth herein and other good and valuable consideration the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
8. Section 1.3(a) of the Rights Agreement is hereby amended and restated to
read in full as follows:
1.3 Company Registration.
--------------------
(a) Registration. If at any time or from time to time, the
------------
Company shall determine to register any of its securities, for its own account
or the account of any of its stockholders, other than a registration on Form S-8
relating solely to employee stock option or purchase plans, or a registration on
Form S-4 relating solely to an SEC Rule 145 transaction, or a registration on
any other form (other than Form X-0, X-0, X-0 or S-18, or their successor forms)
or any successor to such forms, which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of Registrable Securities, the Company will:
-3-
(i) promptly give to each Holder written notice thereof and
(ii) use its reasonable best efforts to include in such
registration (and compliance), and in any underwriting involved therein, all the
Registrable Securities specified in a written request or requests, made within
twenty (20) days after receipt of such written notice from the Company, by any
Holder or Holders, except as set forth in subsection 1.3(b) below; provided,
however, that the Company shall not be required to notify Holders of Registrable
Securities and such Holders shall not be entitled to include Registrable
Securities in a registration statement relating to the Company's first
registered offering of the sale of the Company's securities to the general
public, the closing of which occurs on or prior to August 31, 2000.
9. All other provisions of the Rights Agreement shall remain in full
force and effect.
-4-
IN WITNESS WHEREOF, the parties hereby have executed this Amendment to the
Rights Agreement on the date first above written.
"COMPANY"
CONTEXT INTEGRATION, INC.,
a Delaware corporation
By: Xxxxx Xxxxx
--------------------------
Name: Xxxxx Xxxxx
Title: Chief Financial
Officer
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
AMENDMENT TO RIGHTS AGREEMENT
February ___, 2000
"PURCHASER"
GE Capital Equity Investments, Inc.,
a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
AMENDMENT TO RIGHTS AGREEMENT
February ___, 2000
"PURCHASER"
Atlas Venture Fund III, L.P.
By: Atlas Venture Associates III, LLC,
its general partner
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Member Manager
Name:
"PURCHASER"
Atlas Venture Entrepreneurs' Fund III, L.P.
By: Atlas Venture Associates III, LLC,
its general partner
By: /s/ Xxxxxx Xxxxxx
-------------------------------------
Member Manager
Name:
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
AMENDMENT TO RIGHTS AGREEMENT
February 28, 2000
"PURCHASER"
RBC Ventures II, Ltd.
By: RBC Management LLC, its general partner
By: /s/ Xxxxx Xxxxxxx
-------------------------------------
Name: Xxxxx Xxxxxxx
Title: Sole Member
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
AMENDMENT TO RIGHTS AGREEMENT
February ___, 2000
"PURCHASER"
Internet Capital Group, Inc.
By: /s/ X.X. Xxxxxxxx
----------------------------
Name: X.X. Xxxxxxxx
Title: Managing Director
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
AMENDMENT TO RIGHTS AGREEMENT
February ___, 2000
"PURCHASER"
Sigma Partners III, L.P.
By: /s/ Xxxxxx Xxxxxx
-------------------------
General Partner
Name: Xxxxxx Xxxxxx
"PURCHASER"
Sigma Associates III, L.P.
By: /s/ Xxxxxx Xxxxxx
-------------------------
General Partner
Name: Xxxxxx Xxxxxx
"PURCHASER"
Sigma Investors III, L.P.
By: /s/ Xxxxxx Xxxxxx
-------------------------
General Partner
Name: Xxxxxx Xxxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
AMENDMENT TO RIGHTS AGREEMENT
February ___, 2000
"PURCHASER"
Xxxxxx XxXxxxxx and Xxxxxxx XxXxxxxx
XxXxxxxx TTEES UAD (6/2/86)
By:_____________________________________
Xxxxxx XxXxxxxx, Trustee
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February __, 2000
"PURCHASER"
/s/ Xxxxx Xxxxxx
----------------------------------
Xxxxx Xxxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February __, 2000
"PURCHASER"
/s/ Xxxx X. Xxxxxxx
----------------------------------
Xxxx X. Xxxxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February __, 2000
"PURCHASER"
/s/ Xxxxx Xxxxx
----------------------------------
Xxxxx Xxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February __, 2000
"PURCHASER"
/s/ Xxxxxx Xxxxx
----------------------------------
Xxxxxx Xxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
CONTEXT INTEGRATION, INC.
THIRD AMENDED AND RESTATED RIGHTS AGREEMENT
February __, 2000
"COMMON HOLDER"
Xxxxx Xxxxx
----------------------------------
(Printed Name)
/s/ Xxxxx Xxxxx
----------------------------------
(Signed Name)
X.X. Xxx
----------------------------------
(Printed Name)
/s/ X.X. Xxx
----------------------------------
(Signed Name)
Xxxxx Xxxxxx
----------------------------------
(Printed Name)
/s/ Xxxxx Xxxxxx
----------------------------------
(Signed Name)
Xxxxx Xxxxxxx
----------------------------------
(Printed Name)
/s/ Xxxxx Xxxxxxx
----------------------------------
(Signed Name)
Schedule A
Common Stockholders
-------------------
Xxxxx Xxxxx
X.X. Xxx
Xxxxx Xxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxx
Series A Preferred Stockholders
-------------------------------
Internet Capital Group, Inc.
Sigma Partners III, L.P.
Sigma Associates III, L.P.
Sigma Investors III, L.P.
Donald & Xxxxxxx XxXxxxxx
Xxxxx Xxxxxx
Xxxx X. Xxxxxxx
Series B Preferred Stockholders
-------------------------------
Atlas Venture Fund III, L.P.
Atlas Venture Entrepreneurs' Fund III, L.P.
RBC Ventures
Internet Capital Group, Inc.
Sigma Partners III, L.P.
Sigma Associates III, L.P.
Sigma Investors III, L.P.
Donald & Xxxxxxx XxXxxxxx
Xxxxx Xxxxxx
Xxxx X. Xxxxxxx
Series C Preferred Stockholders
-------------------------------
GE Capital Equity Investments, Inc.
Atlas Venture Fund III, L.P.
Atlas Venture Entrepreneurs' Fund III, L.P.
RBC Ventures II, Ltd.
Internet Capital Group, Inc.
Sigma Partners III, L.P.
Sigma Associates III, L.P.
Sigma Investors III, L.P.
Donald & Xxxxxxx XxXxxxxx
Xxxxx Xxxxxx
