EXHIBIT 10.4
THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
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THIRD AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this "Agreement ")
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dated as of February 16, 2000 by and among PartMiner, Inc., a New York
corporation (the "Company"), Boston Ventures Limited Partnership V ("Boston
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Ventures"), Seacoast Capital Partners Limited Partnership and Seacoast Investors
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LLC (together, "Seacoast"), Vulcan Securities Limited ("Vulcan"), Cahners
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Information Holdings, Inc. ("CIH"), Information Handling Services Inc. ("IHS"),
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Xxxx X. Xxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxxx Xxxxxxx Salem, Xxxxx X. Xxxx, Xxxxx
X. XxXxxxxxx, III, IHD-PM, LLC (IHD-PM, LLC and Messrs. Dahan, Galvin, Jeng and
XxXxxxxxx and Xx. Xxxxx collectively, the "Individual Stockholders"), Xxxxxx
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Nissanoff ("DN"), Integral Capital Partners IV, L.P. and Integral Capital
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Partners IV MS Side Fund, L.P. (together, "Integral"), Agile Software Corp.
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("Agile"), Impact Venture Partners L.P. ("Impact"), OMI Partnership Holdings
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Ltd. ("Onex"), Generation Capital Partners L.P., State Board of Administration
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of Florida and Generation Parallel Management Partners, L.P. (together, "GP"),
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Broadview SLP ("Broadview") and The Xxxxxxx Xxxxx Group, Inc. ("Goldman")
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(Integral, Agile, Impact, Onex, GP, Broadview and Goldman collectively, the
"Series B Investors").
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INTRODUCTION
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The Company, Boston Ventures, Seacoast, Vulcan's assignor and DN
entered into a Stockholders Agreement dated as of March 16, 1999 (the "March 16
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Agreement").
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In order to induce CIH to make an investment in the Company, Boston
Ventures, Vulcan's assignor, Seacoast, the Company, CIH and DN entered into an
Amended and Restated Stockholders Agreement dated as of September 10, 1999 (the
"September 10 Agreement"), which amended and restated the March 16 Agreement.
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In order to induce Vulcan's assignor to make an additional investment
in the Company, and IHS and the Individual Stockholders to make an investment
in the Company, and to provide for the ongoing ownership and governance of the
Company, Boston Ventures, Vulcan, Seacoast, the Company, CIH, IHS, the
Individual Stockholders (with the exception of IHD-PM, LLC) and DN have entered
into the Second Amended and Restated Stockholders Agreement dated as of December
6, 1999 (the "December 6 Agreement"), which amended and restated the September
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10 Agreement.
Whereas, on this day IHD-PM, LLC purchased shares of Common Stock from
Xxxxx and Xxxxx Xxxxxxxx pursuant to that certain Common Stock Purchase
Agreement dated February 15, 2000 (the "IHD-PM, LLC Common Stock Agreement").
In order to induce the Series B Investors to make an investment in the
Company, the signatories to the December 6 Agreement, IHD-PM, LLC and the Series
B Investors wish to enter into this Agreement, which amends and restates the
December 6 Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
Section 1.01. Certain Definitions. As used herein, "Purchase
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Agreement" means the Stock Purchase Agreement dated March 16, 1999 among the
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Company, Boston Ventures, Vulcan's assignor and DN, as amended from time to
time. As used herein, "Series A Shares" means the Company's Series A Preferred
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Stock, $.01 par value per share, issued and sold by the Company pursuant to the
Purchase Agreement. As used herein, "Seacoast Purchase Agreement" means the
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Stock Purchase Agreement dated March 16, 1999 among the Company, DN and
Seacoast, as amended from time to time. As used herein, "CIH Purchase
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Agreement" means the Stock Purchase Agreement dated September 10, 1999 among the
Company, DN and CIH, as amended from time to time. As used herein, "Series B
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Purchase Agreement" means the Preferred Stock Purchase Agreement dated February
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16, 2000 among the Company and the Series B Investors (and Boston Ventures,
Seacoast, CIH and Vulcan), as such may be amended from time to time, whereby the
Company has issued and sold shares of its Series B Convertible Preferred Stock
(the "Series B Shares") to the Series B Investors. As used herein, "Purchasers"
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means Boston Ventures or its Full Transferee, Vulcan or its Full Transferee,
Seacoast or its Full Transferee, CIH or its Full Transferee, IHS or its Full
Transferee, each Individual Stockholder or his/her respective Full Transferee
and each Series B Investor or its respective Full Transferee. As used herein,
"Full Transferee" means a stockholder of the Company who first becomes a
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stockholder as a result of acquiring more than 50% of the securities of the
Company presently held by Boston Ventures, Vulcan, Seacoast, CIH, IHS, any
Individual Stockholder or any Series B Investor, respectively. As used herein,
"Management Stockholders" means DN and any other person or entity who may after
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the date hereof become a holder of capital stock, options or warrants of the
Company and who becomes (or is required to become) a party to this Agreement as
provided herein, other than the Purchasers or any Full Transferee of Boston
Ventures, Vulcan, Seacoast, CIH, IHS, any Individual Stockholder or any Series B
Investor. As used herein, "Stockholders" means the Purchasers and the
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Management Stockholders. As used herein, "Stock" means all capital stock of the
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Company held by a Stockholder. As used herein, "Majority of the Purchasers"
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means the Purchasers holding a majority of the total number of shares of the
Company's outstanding common stock (on an as-converted basis) held by all such
Purchasers. All other capitalized terms used herein and not otherwise defined
shall have the meanings given to them in the Series B Purchase Agreement.
ARTICLE II
BOARD OF DIRECTORS; VOTING
Section 2.01. Board Size. The Board of Directors of the Company
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shall consist of seven directors. At all meetings (and written actions in lieu
of meetings) of stockholders of the Company at which the number of directors of
the Company is to be determined, each Stockholder shall vote all of such
Stockholder's Stock to fix the number of directors of the
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Company at seven.
Section 2.02. Election of Directors. Except as provided in Section
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2.04 below, at all meetings (and written actions in lieu of meetings) of
stockholders of the Company at which directors are to be elected, each
Stockholder shall vote all of such Stockholder's Stock to elect, as directors of
the Company (in addition to any other directors of the Company):
(a) one nominee designated by Boston Ventures, who may be an Affiliate
of Boston Ventures;
(b) one nominee designated by Vulcan, who may be an Affiliate of
Vulcan;
(c) one nominee designated by Seacoast, who may be an Affiliate of
Seacoast;
(d) two nominees designated by DN, or in case of the death or
disability of DN, two nominees designated by the Management Stockholders;
(e) one nominee designated by CIH, who may be an Affiliate of CIH;
and
(f) one nominee designated by the majority vote of the other six
directors of the Company's Board of Directors.
Section 2.03. Removal. Each Stockholder agrees to vote such
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Stockholder's Stock, at all meetings (and written actions in lieu of meetings)
of stockholders of the Company, (a) to remove any director designated under
Subsection 2.02(a), if so requested by Boston Ventures, (b) to remove any
director designated under Subsection 2.02(b), if so requested by Vulcan, (c) to
remove any director designated under Subsection 2.02(c), if so requested by
Seacoast, (d) to remove any director designated under Subsection 2.02(d), if so
requested by DN or the Management Stockholders, as the case may be, (e) to
remove any director designated under Subsection 2.02(e), if so requested by CIH
and (f) to remove any director designated under Subsection 2.02(f), if so
requested by the majority vote of the other six directors of the Company's Board
of Directors. Each Stockholder agrees not to vote such Stockholder's Stock in
favor of the removal of any director other than in accordance with the preceding
sentence.
Section 2.04. Vacancies. Each Stockholder agrees to vote such
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Stockholder's Stock, at all meetings (and written actions in lieu of meetings)
of stockholders of the Company, to fill any vacancy on the Board of Directors
caused by the resignation or removal of any director to be designated under
Subsections 2.02(a), (b), (c), (d), (e) or (f), with a nominee selected as
provided therein.
Section 2.05. Compensation Committee. The Board of Directors shall
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at all times maintain a Compensation Committee consisting of the four directors
appointed by a majority of the Purchasers. The Compensation Committee shall
have sole authority, on behalf of the Board of Directors, to set the
compensation (including salary, bonus, benefits, and other amounts) to be paid
to officers and senior managers of and consultants to the Company and the
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Subsidiaries, and, subject to the approvals required hereunder, to grant stock
options and issue shares of stock or other equity or equity-related interests to
or for the benefit of employees or consultants. The approval of a majority of
the members of the Compensation Committee shall be required to take action by
the Compensation Committee; provided that no member of the Compensation
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Committee may vote on his or her own compensation.
Section 2.06. Meetings. The Company will cause its Board of
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Directors to meet on a regular basis, not less often than quarterly, and will
give each director at least 3 days prior notice of the time and place of any
meeting.
Section 2.07. Subsidiaries. The Company will cause the Boards of
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Directors and Committees thereof of each Subsidiary of the Company to have the
same composition as those of the Company, as provided in this Article II, and to
cause all Subsidiaries to be in compliance with the terms of this Article II as
if such Subsidiary were a party hereto to the same extent as the Company.
Section 2.08. Observation Rights. Until the consummation of a
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Qualified Public Offering (as defined in Section 7.01 hereof), the Company shall
permit a representative of Integral (the "Representative") to attend all
meetings of the Board of Directors (whether in person, telephonically or
otherwise) in a non-voting, observing capacity and shall provide to the
Representative, concurrently with the members of the Board of Directors and in
the same manner, notice of such meeting and a copy of all materials provided to
such members. Any oral or written exchange of confidential and/or proprietary
information between the Company and the Representative shall be governed by the
terms of a confidentiality agreement to be executed between the Company and
Integral promptly after the date hereof.
Section 2.09. Conflict with By-Laws. To the extent that any
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provision of this Article II conflicts with the By-Laws of the Company, such
provisions shall be subject to appropriate amendments to the By-Laws to be
adopted within 30 days after the Closing.
ARTICLE III
TRANSFER RESTRICTIONS
Section 3.01. No Transfer. (a) No Management Stockholder may sell,
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pledge, give, assign, distribute, hypothecate, mortgage or transfer (all
hereinafter referred to as "transfer") any Stock owned by such Management
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Stockholder, directly or indirectly, to any other person or entity, (i) as long
as at least one Purchaser holds in excess of 50% of the Stock originally
purchased by Boston Ventures, Vulcan's assignor, Seacoast, CIH or the Series B
Investors pursuant to the Purchase Agreement, the Seacoast Purchase Agreement,
the CIH Purchase Agreement or the Series B Purchase Agreement, respectively, or
(ii) as permitted by Section 3.02.
(b) Prior to the initial public offering of the Company's securities
(whether or not a Qualified Public Offering), no Stockholder (other than Agile)
may transfer any Stock to any
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person or entity operating a Competitive Business (as defined below) other than
an affiliate of such Stockholder (including any affiliated investment funds).
Notwithstanding the foregoing, Boston Ventures may transfer Stock to its limited
partners, Seacoast may transfer Stock to its limited partners, Onex may transfer
its Stock to its limited partners, GP may transfer its Stock to its limited
partners and Integral may transfer Stock to its limited partners and members.
For purposes of this Agreement, the term "Competitive Business" shall mean (i)
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any business that develops or sells products or services that are competitive
with the Company's CAPSXpert database, (ii) any business that develops or sells
software for component and supplier management that is competitive with the
Company's products, (iii) any business that sells or distributes electronic
components that is competitive with the Company's products or (iv) any business
that provides an e-commerce web site which aggregates pricing and availability
data for electronic components that is competitive with the Company's products.
Section 3.02. Exceptions to Restrictions. Notwithstanding any other
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provision of this Agreement, the following transfers of Stock may be consummated
without restriction:
(a) Transfers of Stock between a Management Stockholder and his
guardian or conservator.
(b) Transfers of Stock of a deceased Management Stockholder to his
executors or administrators or to trustees under his will and thereafter to
transferees enumerated in Subsection (c) below.
(c) Transfers of Stock of a Management Stockholder to the Management
Stockholder's spouse, to any of his children or their issue (or to
custodians for the benefit of minor children or issue), or to the
Stockholder's parents or siblings, or to a trust, the sole beneficiaries of
which consist of any of the foregoing.
(d) Transfers of Stock by DN to Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx
pursuant to the letter agreement dated July 30, 1997 among DN and Xxxxx
Xxxxxxxxx Nissanoff and Xxxxx Xxxxxxxx and Xxxxx Xxxxxxxx.
(e) Transfers of Stock by DN to the employees of the Company set forth
on Schedule 2.05(b) of the Purchase Agreement.
(f) Transfers of Stock by Xxxxx and Xxxxx Xxxxxxxx to Integral Capital
Partners IV, L.P., Integral Capital Partners IV MS Side Fund, L.P. and IHD-
PM, LLC.
All Stock transferred pursuant to this Section shall remain subject to
the restrictions contained herein applicable to the initial Management
Stockholders in the hands of the transferee.
Section 3.03. Drag-Along Requirement. In the event that the Board of
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Directors of the Company approves a sale or merger of the Company or a sale of
all or substantially all of the assets of the Company, and the transaction is
approved by a Majority of the Purchasers in
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accordance with Article VII of this Agreement, each Stockholder: (a) will vote
the Stock held by it in favor of such transaction and will not dissent to any
such transaction or seek appraisal of its Stock, or exercise any similar rights
with respect to such transaction; (b) will execute any agreement reasonably
required of it in connection with such transaction, including without limitation
any stock purchase or similar agreement; and (c) will cooperate with the Company
in all respects in consummating any such transaction.
Section 3.04. Legends. All certificates representing shares of Stock
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issued to a Stockholder shall bear substantially the following legend:
THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR THE SECURITIES LAWS
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OF ANY STATE. SUCH SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT, AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED IN THE
ABSENCE OF EFFECTIVE REGISTRATION STATEMENTS COVERING SUCH SECURITIES
UNDER THE ACT AND ANY APPLICABLE STATE SECURITIES LAWS, UNLESS THE
HOLDER SHALL HAVE OBTAINED AN OPINION OF COUNSEL, SATISFACTORY TO THE
COMPANY, THAT SUCH REGISTRATION IS NOT REQUIRED.
In addition to the foregoing, all certificates representing shares of
Stock issued to a Management Stockholder after the date hereof shall bear
substantially the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
RESTRICTIONS ON TRANSFER AND OTHER OBLIGATIONS CONTAINED IN A
STOCKHOLDERS AGREEMENT, AS AMENDED, BETWEEN THE COMPANY AND CERTAIN OF
ITS STOCKHOLDERS, A COPY OF WHICH IS ON FILE WITH THE COMPANY AND WILL
BE FURNISHED WITHOUT COST TO THE HOLDER HEREOF UPON WRITTEN REQUEST TO
THE SECRETARY.
ARTICLE IV
PREEMPTIVE RIGHTS
Section 4.01. Notice of Sale. The Company will give the Purchasers
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and DN (each an "Offeree") at least 30 days prior written notice of any proposed
sale or issuance for cash or cash equivalents by the Company of any capital
stock, or any stock or security convertible into or exchangeable for capital
stock and any right, warrant or option to acquire capital stock or such
convertible securities ("Common Stock Equivalents") or any evidence of
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indebtedness issued in conjunction with Common Stock Equivalents, except for (a)
the grant of options and warrants to purchase shares of the Company's Common
Stock (and the issuance of shares of the Company's Common Stock upon the
exercise of such options and warrants, including any of the foregoing
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that are presently outstanding) by the Compensation Committee of the Company's
Board of Directors, (b) the sale by the Company of Common Stock pursuant to a
Qualified Public Offering, as hereafter defined, (c) the issuance of shares of
Common Stock upon conversion or exercise of Common Stock Equivalents as to which
each Offeree was offered the opportunity to purchase its Proportionate
Percentage (as hereinafter defined) or as to which each Offeree was not required
to be offered such opportunity, (d) the issuance of any Common Stock Equivalent
pursuant to a stock split, stock dividend or similar event which is approved by
the Company's Board of Directors, (e) in connection with the acquisition of any
other entity or business by merger, purchase of assets or purchase of capital
stock approved by the majority vote of the Company's Board of Directors or (f)
in connection with equity issuances to strategic investors or partners, as
determined by the majority vote of the Board of Directors. Such notice will
identify the number of shares or amount of securities to be issued, the class of
shares or securities to be issued, the approximate date of issuance, and the
price and other terms and conditions of the issuance. Such notice will also
include an offer (the "Offer") to sell to each Offeree its Proportionate
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Percentage of such securities (the "Offered Securities") at the price and on the
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other terms as are proposed for such sale or issuance, which Offer by its terms
shall remain open for a period of 15 days from the date of receipt of such
notice and which offer may be accepted by any such Offeree in its sole
discretion.
Section 4.02. Acceptance. Each Offeree shall give notice to the
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Company of its intention to accept an Offer prior to the end of the 15-day
period of such Offer, setting forth such portion of the Offered Securities which
such Offeree elects to purchase (the "Notice of Acceptance"). If any Offeree
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fails to subscribe for its Proportionate Percentage of the Offered Securities,
the other Offerees shall be entitled to purchase such Offered Securities that
are not subscribed for by such Offeree in the same proportion in which they were
initially entitled to purchase the Offered Securities. The Company shall notify
each Offeree five (5) days following the expiration of the 15-day period
described above of the amount of Offered Securities which each Offeree may
purchase pursuant to the foregoing sentence and each Offeree shall then have 10
days from the delivery of such notice to indicate such additional amount, if
any, that such Offeree wishes to purchase.
Section 4.03. Closing. Upon the closing of the sale or issuance as
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to which the Company has given notice under Section 4.01, each Offeree shall
purchase from the Company, and the Company shall sell to each Offeree, the
Offered Securities subscribed for by each Offeree at the terms specified in the
Offer, which shall be the same terms at which all other persons or entities
acquire such securities in connection with such sale or issuance.
Section 4.04. Sale to Others. If the Offerees do not subscribe for
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all of the Offered Securities, the Company shall have 60 days from the end of
the foregoing 15- or 10-day period, whichever is applicable, to sell all or any
part of the balance of the Offered Securities which an Offeree has not agreed to
purchase, to any other persons or entities, in all material respects on terms
and conditions which are no more favorable to such other persons or entities or
less favorable to the Company than those set forth in the Offer. Any Offered
Securities not purchased by an Offeree or other persons or entities in
accordance with Sections 4.03 or 4.04 may not be sold or otherwise disposed of
until they are again offered under the procedures
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specified in this Article IV.
Section 4.05. Proportionate Percentage. For purposes of this Article
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IV, "Proportionate Percentage" shall mean (a) the number of shares of Common
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Stock held by an Offeree (for this purpose, treating each option, warrant and
convertible security as the number of shares of Common Stock for which it is
then exercisable or convertible), divided by (b) the number of outstanding
shares of Common Stock (determined as provided in clause (a) above).
ARTICLE V
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company shall comply with the following covenants unless otherwise
approved by a Majority of the Purchasers:
Section 5.01. Corporate Existence. The Company shall, and shall
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cause each Subsidiary to, maintain its corporate existence, foreign
qualifications, and all rights, permits, licenses and authorizations material to
its business. Notwithstanding the foregoing, the corporate existence of any
Subsidiary may be terminated with the approval of a majority of the members of
the Board of Directors of the Company.
Section 5.02. Use of Proceeds. The Company shall use the net
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proceeds from the sale of the Series B Shares to the Series B Investors
principally for repaying certain outstanding indebtedness and for working
capital and general corporate purposes.
Section 5.03. Annual Financial Statements. The Company shall furnish
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each Purchaser annual audited, consolidated and consolidating financial
statements of the Company and the Subsidiaries, including a balance sheet and
statements of income, cash flow and stockholders equity, within 90 days after
the end of each fiscal year, certified by a nationally recognized independent
public accounting firm reasonably acceptable to the Company's Board of
Directors, accompanied by an opinion of the Company's independent public
accountant.
Section 5.04. Quarterly Financial Statements. The Company shall
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furnish each Purchaser quarterly consolidated and consolidating unaudited
financial statements of the Company and the Subsidiaries, including balance
sheets and statements of income, cash flow and stockholders equity, which shall
show a comparison to budget, within 45 days after the end of each month
accompanied by (a) management's analysis of results, and (b) a statement of the
Company's chief executive or chief financial officer explaining any variation of
such results from the budgeted results for such quarter set forth in the Budget
(as hereinafter defined) for such fiscal year.
Section 5.05. Budget. For each fiscal year of the Company,
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management of the Company shall prepare and submit a monthly and annual
operating plan and budget, cash flow projections and profit and loss
projections, all in reasonable detail (collectively, the "Budget") for such
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fiscal year to the Board of Directors of the Company for its approval. The
Company shall
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furnish each Purchaser the approved Budget promptly after its approval, but in
any event no later than 30 days prior to the beginning of each such fiscal year.
The Company shall not make material changes to the Budget without the prior
approval of its Board of Directors, and upon such approval information
concerning such material changes shall be furnished to each Purchaser.
Section 5.06. Other Information. The Company shall deliver to each
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Purchaser: (a) promptly after the occurrence thereof, written notice and a
description of any event, circumstance or condition, including any litigation,
claim or proceeding before any court or governmental authority, which has a
material adverse effect upon the Company, its consolidated financial condition,
results of operations, properties, prospects or business, (b) promptly after
receipt thereof, any material report or communication received by the Company or
any Subsidiary from its independent public accountants, including without
limitation any so-called "management letter", (c) promptly after the occurrence
thereof, a description of any material (on a consolidated basis) default by the
Company or any Subsidiary under any material agreement or arrangement of the
Company or any Subsidiary, including without limitation any agreement or
instrument relating to any material indebtedness of the Company or any
Subsidiary, (d) promptly upon making such materials available, copies of all
reports and other materials sent or made available generally to the stockholders
of the Company, or any material portion thereof, (e) promptly upon such
materials being filed, all materials submitted to the Securities and Exchange
Commission (the "Commission") or any securities exchange, and (f) such other
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information with respect to the Company or any Subsidiary, or their respective
businesses, affairs, properties, prospects and any other matters relating
thereto which may be reasonably requested by any Purchaser, and which does not
impose an undue burden on management or interfere with management's
responsibilities to the Company.
Section 5.07. Inspection. The Company will permit any person
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designated by a Purchaser, at reasonable intervals, on reasonable notice, to
visit and inspect any of the properties of the Company and the Subsidiaries,
during normal business hours, to examine their books, records and other
materials relating thereto (and to make copies thereof and take extracts
therefrom) and to discuss their affairs, finances and accounts with, and to be
advised as to the same by, their officers, employees, counsel and independent
certified public accountants.
Section 5.08. Books and Accounts. The Company shall, and shall cause
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each Subsidiary to, keep complete and accurate records and books of account and
construe and report under all terms and provisions of this Agreement and all
agreements contemplated hereby in accordance with generally accepted accounting
principles consistently applied.
Section 5.09. Key Man Life Policy. The Company shall use its best
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efforts to keep the key man life insurance policy currently in effect with
respect to DN in full force and effect until such time as DN ceases to be
employed by the Company. The Company will add a designee, if any, of each
Purchaser as a notice party to such policy, and will request that the issuer of
such policy provide such designee with 10 days notice before such policy is
assigned or terminated for any reason, or before any changes are made in the
designation of the beneficiary thereof. The Company shall use commercially
reasonable efforts to purchase (a) key man life
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insurance for Xxxx Xxxxxxxxxx and (b) D&O insurance.
Section 5.10. Insurance. The Company shall, and shall cause each
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Subsidiary to, use its best efforts to have in full force and effect (a)
insurance on all assets and activities of a type and amount customarily insured,
covering property damage and loss of income by fire or other casualty, and (b)
adequate insurance protection against all liabilities, claims and risks against
which it is customary for companies similarly situated as the Company and the
Subsidiaries to insure.
Section 5.11. Compliance with Laws. The Company will, and will cause
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each of its Subsidiaries to, comply with all applicable laws, rules,
regulations, orders and decrees of all governmental authorities, with respect to
which the failure to comply could have a material adverse effect on the
business, affairs, properties, prospects or condition of the Company or any
Subsidiary.
Section 5.12. Rule 144A Information. Subject to a confidentiality
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agreement with applicable third parties reasonably acceptable to the Company,
the Company shall, upon the written request of any Purchaser, provide to such
Purchaser or to any prospective institutional transferee of the Series A Shares
or Series B Shares designated by such Purchaser, such financial or other
information as is reasonably available to the Company or can be reasonably
obtained by the Company without material expense and as such Purchaser may
reasonably determine is required to permit such transfer to comply with the
requirements of Rule 144A promulgated under the Act.
Section 5.13 Amendments to By-Laws. The Company will use its best
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efforts to cause its By-Laws to be amended in accordance with Section 2.09 of
this Agreement.
ARTICLE VI
NEGATIVE COVENANTS OF THE COMPANY
The Company shall comply with the following covenants unless otherwise
approved by a Majority of the Purchasers:
Section 6.01. Interested Transactions. The Company shall not, and
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shall not permit any Subsidiary to, buy, sell or lease any assets to or from,
borrow or lend any money to or from, or deal with or enter into any other
transactions or agreements with, any stockholders (other than the Purchasers and
their Affiliates), officer or director, or any known relative or Affiliate of
any of the foregoing, other than (a) as expressly contemplated by this Agreement
or any other agreement contemplated hereby or (b) those that are (i) fully
disclosed in advance to the Board of Directors, (ii) on terms no less favorable
to the Company or any Subsidiary than could have been obtained from an
unaffiliated third party, and (iii) approved by a disinterested majority of the
Board of Directors of the Company.
Section 6.02. Mergers. The Company shall not, and shall not permit
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any Subsidiary to, (a) merge or consolidate with any person or entity, other
than a wholly-owned
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Subsidiary in a transaction in which the Company is the surviving corporation
and in which its Certificate of Incorporation is not altered, or (b) sell, lease
(as lessor) or otherwise dispose of all or any substantial portion of its
assets.
Section 6.03. Dividends. The Company shall not, and shall not permit
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any Subsidiary to, pay or declare any dividend or make any distribution of money
or other property on account of any its Capital Stock, other than dividends of a
Subsidiary payable to the Company, or accord any other payment, benefit or
preference to any share of capital stock, other than dividends payable solely in
shares of Common Stock.
Section 6.04. Redemptions. The Company shall not, and shall not
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permit any Subsidiary to, purchase, redeem or otherwise acquire any share of
capital stock, or any options, warrants, convertible securities or other rights
to acquire capital stock other than (a) pursuant to Article VII of this
Agreement and (b) pursuant to the terms of grants of options, stock appreciation
rights, restricted shares of common stock, warrants and restricted stock units
pursuant to compensation or incentive plans approved by the Compensation
Committee, including any of the foregoing that are presently outstanding.
Section 6.05. Acquisitions and Investments. The Company shall not,
----------------------------
and shall not permit any Subsidiary to:
(a) make any acquisition of securities or assets in excess of
$1,000,000; or
(b) make any loan or advance to any person or entity other than in the
ordinary course of business or make any investment in or with any other person
or entity except: (i) investments in evidences of indebtedness issued or fully
guaranteed by the United States of America and having a maturity of not more
than one year from the date of acquisition; (ii) investments and certificates of
deposit, notes, acceptances and repurchase agreements having a maturity of not
more than one year from the date of acquisition issued by a bank organized in
the United States having capital, surplus and undivided profits of at least
$50,000,000; (iii) loans or advances from a Subsidiary to the Company or from
the Company or a Subsidiary to another Subsidiary; (iv) investments in A-rated
(or equivalent) or better commercial paper having a maturity of not more than
one year from the date of acquisition; and (v) investments in "money market"
fund shares or in "money market" accounts fully insured by the Federal Deposit
Insurance Corporation and sponsored by banks and other financial institutions,
or in "money market" accounts sponsored by brokerage firms provided with such
"money market" fund or "money market" accounts invested principally in
investments of the types described in the foregoing clauses of this Subsection
(b).
Section 6.06. Limitation on Restrictions of Subsidiary Payments. The
-------------------------------------------------
Company shall not permit any Subsidiary, directly or indirectly, to create or
permit to exist any encumbrances or restrictions on the ability of any
Subsidiary to (a) pay dividends or make any other distributions on its capital
stock or any interest or participation in its profit owned by any of the Company
or any Subsidiary, or pay any indebtedness owed by any of the Subsidiaries, (b)
make loans or advances to the Company; or (c) transfer any of its properties or
assets to the
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Company.
Section 6.07. No Conflicting Agreements. The Company shall not, and
-------------------------
shall not permit any Subsidiary to, enter into or amend any agreement, contract,
commitment or understanding which restricts or prohibits the exercise by the
Purchasers of any of their rights under this Agreement, any other agreement or
instrument contemplated hereby or the Certificate of Incorporation of the
Company, or restricts or prohibits the ability of the Company or any Subsidiary
to comply with its obligations to the Purchasers under this Agreement, any other
agreement or instrument or the Certificate of Incorporation of the Company.
Section 6.08. Issuance of Securities. The Company shall not, and
----------------------
shall not permit any Subsidiary to, issue shares of capital stock or options,
warrants, convertible securities or other rights which may afford any person or
entity the right to acquire shares of any class of capital stock of the Company
or any Subsidiary, except (a) upon the exercise or conversion of options listed
on a Schedule to this Agreement, or (b) the issuance of additional shares of
Common Stock and options and other rights to acquire shares of Common Stock.
Section 6.09. Financings. The Company shall not, and shall not permit
----------
any Subsidiary to, enter into or materially modify any debt financing of the
Company or any Subsidiary, other than conventional senior debt on customary
terms, financing obtained in the ordinary course of business, including, but not
limited to, any line of credit or other bank facility, or in accordance with the
terms of this Agreement.
Section 6.10. Line of Business. The Company shall not, and shall not
----------------
permit any Subsidiary to, engage in any line of business other than (a) the
sale, distribution, procurement and/or transfer of electronic components and
information related thereto, (b) providing services related to the sale,
distribution, procurement and/or transfer of electronic components and
information related thereto, and (c) any e-commerce or other online activity
related to the sale, distribution, procurement and/or transfer of electronic
components and information related thereto.
ARTICLE VII
RIGHT TO PUT CERTAIN SECURITIES
Section 7.01. Right of the Purchasers to Put Certain Securities. If
-------------------------------------------------
the Company has not completed a Qualified Public Offering and except in the case
of a liquidation or dissolution of the Company, then (a) at any time on or after
the fifth anniversary of the date of issuance by the Company to a Purchaser,
with respect to the Series A Shares or Series B Shares, (b) at any time on or
after the seventh anniversary of the date of issuance by the Company to a
Purchaser, with respect to the Common Stock, or (c) if earlier, upon exercise by
any other Stockholders of a put right under this Article VII (each of the
foregoing being referred to herein as a "Securities Put Event"), then each
--------------------
Purchaser shall have the right, by giving notice to the Company, to require the
Company to purchase all of the Stock and Common Stock Equivalents of the Company
owned by it in accordance with this Article VII. As used herein, "Qualified
---------
Public Offering" means a public offering by the Company of its Common Stock
---------------
pursuant to a
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registration statement under the Act, other than a registration relating solely
to a transaction under Rule 145 under the Act (or any successor thereto) or to
an employee benefit plan of the Company in which the aggregate net proceeds to
the Company exceed $30 million at a public offering price per share of at least
$6.06 (as adjusted for any subsequent stock dividends, stock splits or
recapitalizations).
Section 7.02. Purchase Price. The Company shall repurchase the Stock
--------------
and Common Stock Equivalents of the Purchaser exercising its rights under
Section 7.01 at a price equal to its fair market value; provided, however, that
-------- -------
if the Securities Put Event under clause 7.01(i) occurs after the eighth
anniversary of the date hereof, the repurchase price shall be equal to the
original purchase price paid therefor by the original Purchaser of such Stock
and Common Stock Equivalents. For purposes of determining the fair market value
of the Stock and Common Stock Equivalents, the Stock and Common Stock
Equivalents shall be valued as if it were being sold as part of the sale of all
outstanding equity securities of the Company to an unrelated third party in an
arms-length transaction for cash only, without deduction for illiquidity,
minority interest, lack of control or any other similar considerations, and all
proceeds of such sale were being distributed in accordance with the Company's
Certificate of Incorporation proportionately among the holders of the Company's
capital stock on a fully-diluted basis (excluding options, warrants and
conversion privileges not then exercisable), with holders of currently
exercisable options or warrants receiving the net value thereof. The fair
market value of the Stock and Common Stock Equivalents shall be determined as
follows:
(a) By Agreement. The Company and such Purchaser shall endeavor in
------------
good faith to agree on the fair market value of the Stock and Common Stock
Equivalents to be repurchased.
(b) By Appraisal. If the Company and such Purchaser are unable to
------------
agree on the value of the Stock and Common Stock Equivalents within 30 days
after delivery of the notice under Section 7.01, the fair market value of the
Stock and Common Stock Equivalents to be repurchased shall be determined by
appraisal (the "Appraised Value") by a nationally recognized investment banker
---------------
with experience in the industry in which the Company and the Subsidiaries are
engaged, selected by the such Purchaser and reasonably acceptable to the
Company's Board of Directors (excluding such Purchaser's Director), which
investment banker shall not be affiliated with the Company or such Purchaser.
If, within 45 days after delivery of the notice referred to in Section 7.01, an
investment banker has not been selected, such Purchaser and the Company's Board
of Directors (excluding such Purchaser's Director) shall each select an
investment banker, and such investment banker shall select a third investment
banker meeting the criteria specified above who shall conduct the appraisal.
The appraiser shall value the Company and the Stock and Common Stock Equivalents
to be purchased as if (i) the Company and such Stock and Common Stock
Equivalents were being sold as part of the sale of all outstanding securities of
the Company to an unrelated third party in an arms-length transaction for cash
only, without deduction for illiquidity, minority interest, lack of control or
any other similar consideration, and (ii) all proceeds of the deemed sale
referred to above were being distributed among the Stockholders in accordance
with the Certificate of Incorporation (treating Common Stock Equivalents as the
number of shares of Stock for which they would then be exercisable in
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accordance with the preceding clause).
Section 7.03. Payment. Within 20 days following the final
-------
determination of the purchase price under Section 7.02, or such other time as
shall be agreed to by the Company and such Purchaser, the Company shall purchase
the Stock and Common Stock Equivalents held by such Purchaser at the price
determined in accordance with Section 7.02, and such Purchaser shall deliver to
the Company, upon receipt of payment therefor, certificates for the Stock and
Common Stock Equivalents duly endorsed for transfer to the Company. Payment
shall be made by wire transfer of immediately available funds to an account
designated by such Purchaser.
Section 7.04. Certain Remedies. In the event that the Company does
----------------
not fulfill its obligation to pay the purchase price of all or any portion of
the Stock pursuant to this Article VII within the time frame set forth in
Section 7.03, the unpaid portion of the purchase price of the Stock will bear
interest at the lesser of (i) fifteen percent (15%) or (ii) the highest rate
permitted by applicable law, compounding semi-annually. The Company will, upon
the request of any such Purchaser exercising its rights under Section 7.01,
execute and deliver to such Purchaser a promissory note in form and substance
reasonably satisfactory to such Purchaser evidencing such obligation.
Section 7.05. Expenses. The Company will bear all reasonable costs
--------
of determining Appraised Value in connection with any exercise of rights of the
Purchasers hereunder.
ARTICLE VIII
MISCELLANEOUS
Section 8.01. Notices. All notices under this Agreement shall be in
-------
writing. Any notice shall be deemed to have been duly given if delivered
personally, three (3) business days after mailing registered or certified mail,
return receipt requested, or sent by nationally recognized overnight delivery
service, to the parties hereto at the addresses set forth on Exhibit A hereto.
---------
Upon notice from any Stockholder of a change of address, the Company's Board of
Directors will cause Exhibit A to be amended to reflect the new address of such
---------
Stockholder. The address of any new Stockholder shall be added by the Board to
Exhibit A.
---------
Section 8.02. Binding Effect and Benefit. This Agreement shall be
--------------------------
binding upon, and inure to the benefit of, the Company and the Stockholders and
their respective heirs, legal representatives, successors and Full Transferees,
except that neither the Company nor any Purchaser that acquires Stock from a
Management Stockholder shall be subject to the obligations of the Management
Stockholders hereunder. Notwithstanding the foregoing, a Purchaser's rights
hereunder shall terminate upon the transfer of such Purchaser's Stock to a Full
Transferee.
Section 8.03. Waivers, Entire Agreement, Modifications. No party
----------------------------------------
shall be deemed to waive any rights hereunder unless such waiver be in writing
and signed by the Company, Management Stockholders holding a majority of the
Common Stock held by
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Management Stockholders and the Purchasers or, in the event the right to be
waived is that of less than all the Purchasers, those Purchasers with such
right. A waiver in writing on one occasion shall not be construed as a consent
to or a waiver of any right or remedy on any future occasion.
Section 8.04. Governing Law, Construction. This Agreement shall be
---------------------------
governed by and construed and enforced in accordance with the internal laws of
the State of New York. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision hereof shall be prohibited by or invalid
under any such law, such provision shall be ineffective to the extent of such
prohibition or invalidity, without invalidating or nullifying the remainder of
such provision or any other provisions of this Agreement.
Section 8.05. Transferees of Stockholders. Notwithstanding anything
---------------------------
herein to the contrary, no Stockholder shall transfer any Stock (except to the
Company) unless the person, firm, corporation or other entity so acquiring such
Stock shall first become a signatory to this Agreement, agreeing to be bound by
all the terms of this Agreement. Notwithstanding anything herein to the
contrary, a Full Transferee of Boston Ventures, Vulcan, Seacoast, CIH, IHS,
Individual Stockholder or any Series B Investor shall obtain, in lieu of Boston
Ventures, Vulcan, Seacoast, CIH, IHS, any Individual Stockholder or any Series B
Investor all of the rights, benefits and obligations of Boston Ventures, Vulcan,
Seacoast, CIH, IHS, any Individual Stockholder or any Series B Investor
hereunder, respectively. All transferees of a Purchaser other than a Full
Transferee who shall become a party to this Agreement shall be deemed to be
Management Stockholders hereunder. The Company shall not transfer any shares of
Stock on its books which have been transferred in violation of this Agreement,
or to treat as the owner of such shares of Stock, or to accord the right to vote
as such owner or to pay dividends to, any person or entity to which any such
shares of Stock shall have been transferred, from and after any transfer of any
share of Stock made in violation of this Agreement.
Section 8.06. Representations of Stockholders. Each Stockholder
-------------------------------
represents and warrants to each other party that such Stockholder is not bound
by any agreement or commitment that conflicts with or would interfere with the
performance of such Stockholder's obligations under this Agreement.
Section 8.07. Termination. This Agreement shall terminate upon a
-----------
Qualified Public Offering.
Section 8.08. Confidentiality. Each Stockholder agrees to keep
---------------
confidential (a) all material confidential information regarding the other
Stockholders of which the Stockholders become aware by virtue of, or in
connection with, their performance of this Agreement and (b) any trade secrets
or other confidential information of a business, financial, marketing,
technical, or other nature pertaining to the Company and identified as such by
the Company (or which clearly constitutes confidential information), including
information of others that the Company has agreed to keep confidential and has
informed the Stockholders of such ("Confidential Information"). Each
------------------------
Stockholder shall not disclose any such Confidential Information to any
- 15 -
third party, except (i) to the extent disclosure of such Confidential
Information is required for performance of this Agreement, (ii) for such
employees, independent contractors, representatives and advisors of the
Stockholders that have a need to know such information to perform their
obligations under this Agreement and (iii) as may be required by law or
regulation. The term "Confidential Information" shall not be deemed to include
any information which (i) at the time of disclosure is or thereafter becomes
generally available to and known by the public (other than as a result of
disclosure directly or indirectly by the Stockholders), (ii) was available to
the Stockholders on a non-confidential basis from a source other than one of the
Stockholders or their employees, independent contractors, representatives and
advisors, provided that such source is not in breach of any obligations or
confidentiality to the Stockholders, or (iii) has been independently acquired or
developed by the Stockholders without violating any of the Stockholder
obligations pursuant to this Agreement. Each Stockholder agrees that its
respective employees, independent contractors, representatives and advisors
directly involved in the execution, delivery and performance of this Agreement
shall be promptly informed by such Stockholder of the confidential nature of the
Confidential Information. Notwithstanding the foregoing, a Stockholder may
disclose Confidential Information in the event that such Stockholder is required
or becomes legally compelled (by oral questions, interrogatories, requests for
information or documents, subpoena, civil investigative demand or similar
process) to disclose such Confidential Information; provided, however, that such
-------- -------
Stockholder shall promptly advise the non-disclosing Stockholder of such request
or legal compulsion and to the extent that the non-disclosing Stockholder
secures a legally enforceable protective order, the disclosing Stockholder shall
comply with such protective order.
Section 8.09. Consent and Waiver. Boston Ventures, Seacoast, Vulcan,
------------------
CIH, IHS, the Individual Stockholders and DN each being a signatory to one or
more of the following documents, (i) the December 6 Agreement, (ii) the Amended
and Restated Registration Rights Agreement dated December 6, 1999, by and among
the Company, Boston Ventures, Seacoast, Vulcan, CIH, IHS and the Individual
Stockholders, (iii) the CIH Purchase Agreement, or (iv) the Agreement and Plan
of Merger between the Company, Partminer Acquisition Corp., IQXpert Holdings,
Inc., IHS, Vulcan and the Individual Stockholders, hereby consent to the
transactions contemplated by: (A) the Series B Purchase Agreement by and between
the Company and the Series B Investors, (B) the Amended and Restated
Registration Rights Agreement dated the date hereof by and among the parties
hereto (other than DN), (C) this Agreement and (D) all other agreements or
instruments contemplated by the foregoing agreements (drafts of which have been
provided to Boston Ventures, Seacoast, Vulcan, CIH, IHS, the Individual
Stockholders and DN). Boston Ventures, Seacoast, Vulcan, CIH, IHS, the
Individual Stockholders and DN, and each further waives any preemptive rights or
notice provisions and any restrictions on transfers of stock and the granting of
registration rights as contemplated in this agreement, the Series B Agreement,
the Registration Rights Agreement and the Common Stock Purchase Agreements
between Xxxxx and Xxxxx Xxxxxxxx and Integral Capital Partners IV L.P., Integral
Capital Partners IV MS Side Fund, L.P. and IHD-PM, LLC. Each of Boston
Ventures, Seacoast, Vulcan, CIH, IHS and the Individual Stockholders hereby
waives any rights such Purchaser has under Articles IV and VI of the December 6
Agreement in respect of the sale of Series B Shares pursuant to the Series B
Purchase Agreement, except to the extent of any rights such Purchaser may have
under the Series B Purchase Agreement or, with respect to the Individual
Stockholders,
- 16 -
pursuant to the IHD-PM, LLC Common Stock Purchase Agreement.
Section 8.10. Treatment of IHS and Individual Stockholders.
--------------------------------------------
Notwithstanding anything to the contrary contained herein, neither IHS nor any
Individual Stockholder will be deemed to be a Purchaser for purposes of (a) the
definition "Majority of the Purchasers" or (b) Article 4, and Sections 5.05,
5.07, 5.09, 5.12, 7.01, 7.02, 7.03, 7.04 and 7.05 of this Agreement.
- 17 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as a sealed instrument as of the date and year first above written.
PARTMINER, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Name:
------------------------------------
Xxxxxx Xxxxxxxxx
BOSTON VENTURES LIMITED
PARTNERSHIP V
By: Boston Ventures Management, Inc.
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name:
VULCAN SECURITIES LIMITED
By: /s/ Xxxxxxx xxx Xxxxxx
---------------------------------
Name:
SEACOAST CAPITAL PARTNERS
LIMITED PARTNERSHIP
By: Seacoast I Advisors LLC,
its General Partner
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name:
SEACOAST INVESTORS LLC
By: /s/ Xxxx X. Xxxxxxx
---------------------------------
Name:
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CAHNERS INFORMATION HOLDINGS, INC.
By: /s/ Xxxxxxx Xxxxxxxx
---------------------------------
Name:
INFORMATION HANDLING SERVICES INC.
By: /s/ L. Xxxxxxxxxxx Xxxxx
---------------------------------
Name:
/s/ Xxxx X. Xxxxx
------------------------------------
Xxxx X. Xxxxx
/s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxxx Xxxxxxx Salem
------------------------------------
Xxxxxxxx Xxxxxxx Salem
/s/ Xxxxx X. Xxxx
------------------------------------
Xxxxx X. Xxxx
/s/ Xxxxx X. XxXxxxxxx III
------------------------------------
Xxxxx X. XxXxxxxxx III
IHD-PM, LLC
By: /s/ Xxxx X. Xxxxx
---------------------------------
Name: Xxxx X. Xxxxx
- 19 -
INTEGRAL CAPITAL PARTNERS IV, L.P.
By: Integral Capital Management IV, LLC,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
INTEGRAL CAPITAL PARTNERS IV
MS SIDE FUND, L.P.
By: Integral Capital Partners NBT, LLC,
its General Partner
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager
AGILE SOFTWARE CORP.
By: /s/ Xxxxxx X. Xxxxxxxx
---------------------------------
Name:
IMPACT VENTURE PARTNERS L.P.
By: /s/ Xxxx Xxxx
---------------------------------
Name:
OMI PARTNERSHIP HOLDINGS LTD.
By: /s/ A.R. Melman
---------------------------------
Name:
- 20 -
GENERATION CAPITAL PARTNERS PARTNERS L.P.
By: Generation Partners L.P., as General
Partner
By: Generation Capital Company LLC,
as General Partner
By: /s/ Xxxx Xxxxxxxx
----------------------------
Xxxx Xxxxxxxx
Managing Director
STATE BOARD OF ADMINISTRATION OF FLORIDA
By: Generation Parallel Management
Partners L.P., as Manager
By: Generation Capital Company LLC,
as General Partner
By: /s/ Xxxx Xxxxxxxx
----------------------------
Xxxx Xxxxxxxx
Managing Director
GENERATION PARALLEL MANAGEMENT PARTNERS L.P.
By: Generation Capital Company LLC,
as General Partner
By: /s/ Xxxx Xxxxxxxx
----------------------------
Xxxx Xxxxxxxx
Managing Director
BROADVIEW SLP
By: /s/ Xxxxx Xxxxxx
---------------------------------
Name:
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THE XXXXXXX SACHS GROUP, INC.
By: /s/ Xxxxxx Xxxxxxxxx
---------------------------------
Name:
- 22 -
