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EXHIBIT 4.3
RIGHTS AGREEMENT
This Shareholder Rights Agreement (the "Agreement") is made as of the
21st day of April, 1999 by and among NewsReal, Inc., a Delaware corporation (the
"Company"); the investors whose names and addresses appear on Schedule I hereto
(the "QIP Investors"); the investors whose names and addresses appear on
Schedule II hereto (the "Managing Founders"); and CNNfn, a division of Cable
News Network LP, LLLP, a Delaware limited liability limited partnership (the
"Investor").
RECITALS
A. The Company and the Investor have entered into a Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement"), pursuant to
which the Company has agreed to issue the Investor 470,638 shares (the
"Purchased Shares") of common stock, par value $.001 per share of the Company
("Common Stock"), plus up to 1,122,363 shares (the "Additional Shares") of
Common Stock (1) upon the issuance of shares to the QIP Investors following
exercise of their rights and conversion of certain outstanding indebtedness of
the Company under the Conversion Agreement with the Company dated as of April
21, 1999, and (2) upon the issuance of shares to the Managing Founders and
employees following exercise of performance options granted to the Managing
Founders and employees by the Company.
B. The Company desires to extend various rights to the Investor
pursuant to this Agreement that are consistent with the rights granted to
Infoseek Corporation ("Infoseek") under the Shareholders Agreement dated as of
December 11, 1997 (the "Shareholders Agreement"), by and among the Company,
Infoseek, the QIP Investors, and the Managing Founders of the Company, without
requiring an amendment to the Shareholders Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto agree as follows:
1. COVENANTS OF THE PARTIES.
(a) Legends. Until such time as the provisions of this Agreement
shall terminate, the certificates or other instruments evidencing shares of any
class or series of the capital stock of the Company, including securities
convertible into or exchangeable for shares of capital stock of the Company
("Capital Stock"), or warrants or options to purchase shares of Capital Stock
("Options") at any time subject to this Agreement will bear the following legend
reflecting the restrictions on the transfer of such securities subject to this
Agreement:
"The securities evidenced hereby are subject to the terms of that
certain Rights Agreement, dated as of April 21, 1999, by and among
the Company and certain investors identified therein, including
certain restrictions on transfer. A copy of
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this Agreement has been filed with the Secretary of the Company and
is available upon request."
(b) Election of Directors and Board Observer.
(i) As of the date hereof, the Board of Directors of the Company
(the "Board") will consist of up to five directors, of which three directors
shall be designated by the Managing Founders, and, for as long as the QIP
Investors in the aggregate are a 5% QIP Investor (as defined below), two
directors shall be designated by the QIP Investors. From and after the date
hereof and at all times throughout the term of this Agreement prior to the date
on which the Company completes an IPO (as defined below), the Investor shall
take all commercially reasonable action within its power, including but not
limited to the voting of all shares of Capital Stock of the Company owned by it,
required to cause the Board to be constituted as set forth above. Directors
designated by the Managing Founders pursuant to this Section l(b)(i) are
hereinafter referred to as the "Management Directors" and directors designated
by the QIP Investors pursuant to this Section 1(b)(i) or pursuant to Section
1(b)(ii) below are hereinafter referred to as the "QIP Directors." In addition,
prior to the IPO and for so long as the Investor beneficially owns (whenever
used herein, beneficially owns, or words of similar import shall be construed in
accordance with Rule 13d-3 under the Exchange Act) at least 5% of the
outstanding shares of Common Stock, the Investor may designate one person to
observe all Board proceedings (the "Board Observer"). The Board Observer shall
not have any of the powers vested in the members of the Board, or any right to
vote on matters presented to the Board. The Board Observer shall be entitled to
notice of, and to attend, all meetings of the Board, but the Board Observer
shall not be counted for purposes of determining whether a quorum is present at
any meeting of the Board. The Investor acknowledges and agrees that any action
duly taken by the Board shall not be invalidated by virtue of the fact that the
Board Observer was not properly notified of, or in attendance at, the meeting at
which such action was taken.
(ii) Election of QIP Directors. From the date on which the
Company completes its IPO and for as long as the QIP Investors in the aggregate
own beneficially at least 10% of the outstanding shares of Common Stock (a "10%
QIP Investor"), the Company will nominate and use its best efforts to have two
individuals designated by such 10% QIP Investor elected to the Board, and the
Investor shall take all commercially reasonable action within its power,
including, but not limited to, the voting of all shares of Capital Stock owned
by it, required to cause the election of such individuals to the Board. From
the date on which the Company completes its IPO and for as long as the QIP
Investors in the aggregate own beneficially at least 5% but less than 10% of the
outstanding shares of Common Stock (a "5% QIP Investor"), the Company will
nominate and use its best efforts to have one individual designated by such 5%
QIP Investor elected to the Board and the Investor shall take all action within
its power, including, but not limited to, the voting of all shares of Capital
Stock owned by it, required to cause the election of such individuals to the
Board.
(iii) Replacement Directors. In the event that any Management
Director or QIP Director (a "Withdrawing Director") designated in the manner set
forth in Section 1(b) hereof is unable to serve, or once having commenced to
serve, is removed or withdraws from the Board, such Withdrawing Director's
replacement (the "Substitute Director")
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will be designated by the Managing Founders or the QIP Investors, as the case
may be. A Management Director may be removed, with or without cause, by the
Managing Founders, and the Managing Founders shall thereafter have the right to,
nominate a replacement for such director. A QIP Director may be removed, with or
without cause, by the QIP Investors, and the QIP Investors shall thereafter have
the right to nominate a replacement for such director. However, at such time as
the QIP Investors in the aggregate cease to be a 5% QIP Investor, the QIP
Investors shall, at the request of the Company, use reasonable efforts to cause
the resignation of the QIP Director(s) then serving on the Board. The Investor
and the Company agree to take all commercially reasonable action within their
respective power, including but not limited to the voting of Capital Stock of
the Company owned by them, to cause the election of such Substitute Director
promptly following his or her nomination pursuant to this Section 1(b)(iii).
(c) Financial and Business Information. From and after the date
hereof, the Company shall deliver to the Investor so long as the Investor
beneficially owns securities representing at least 5% of the outstanding voting
securities of the Company:
(i) Monthly and Quarterly Statements - as soon as practicable,
and in any event within 10 days after the close of each month of each fiscal
year of the Company in the case of monthly statements and 30 days after the
close of each of the first three fiscal quarters of each fiscal year of the
Company in the case of quarterly statements, a consolidated balance sheet,
statement of income and statement of cash flows of the Company and any
subsidiaries as at the close of such month or quarter and covering operations
for such month or quarter, as the case may be, and the portion of the Company's
fiscal year ending on the last day of such month or quarter, all in reasonable
detail and prepared in accordance with GAAP, subject to audit and year-end
adjustments, setting forth in each case in comparative form the figures for the
comparable period of the previous fiscal year. The Company shall also provide
comparisons of each pertinent item to the budget referred to in subsection (iii)
below.
(ii) Annual Statements - as soon as practicable after the end of
each fiscal year of the Company, and in any event within 90 days thereafter,
duplicate copies of:
A. consolidated and consolidating balance sheets of the Company
and any subsidiaries at the end of such year; and
B. consolidated and consolidating statements of income,
stockholders' equity and cash flows of the Company and any
subsidiaries for such year, setting forth in each case in
comparative form the figures for the previous fiscal year, all
in reasonable detail and accompanied by an opinion thereon of
independent certified public accountants of recognized national
standing selected by the Company, which opinion shall state that
such financial statements fairly present the financial position
of the Company and any subsidiaries on a consolidated basis and
have been prepared in accordance with GAAP (except for changes
in application in which such accountants concur) and that the
examination of such accountants in connection with such
financial statements has been made in accordance
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with generally accepted auditing standards, and accordingly
included such tests of the accounting records and such other
auditing procedures as were considered necessary in the
circumstances, and the Company shall also provide comparisons of
each pertinent item to the budget referred to in subsection
(iii) below.
(iii) Business Plan; Projections - no later than 10 days prior
to the commencement of each fiscal year of the Company, an annual business plan
of the Company and projections of operating results, prepared on a monthly
basis, and a three year business plan of the Company and projections of
operating results. Within 45 days of the close of each semi-annual fiscal period
of the Company, the Company shall provide the Investor with an update of such
monthly projections.
(iv) Audit Reports - promptly upon receipt thereof, one copy of
each other financial report and internal control letter submitted to the Company
by independent accountants in connection with any annual, interim or special
audit made by them of the books of the Company.
(v) Other Reports - promptly upon their becoming available, one
copy of each financial statement, report, notice or proxy statement sent by the
Company to stockholders generally, of each financial statement, report, notice
or proxy statement sent by the Company or any of its subsidiaries to the SEC or
any successor agency, if applicable, of each regular or periodic report and any
registration statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by the Company or any subsidiary
with, or received by such Person in connection therewith from, any domestic or
foreign securities exchange, the SEC or any successor agency or any foreign
regulatory authority performing functions similar to the SEC, of any press
release issued by the Company or any subsidiary, and of any material of any
nature whatsoever prepared by the SEC or any successor agency thereto or any
state blue sky or securities law commission which relates to or affects in any
way the Company or any subsidiary.
(vi) Progress Report - prior to each regularly scheduled meeting
of the Board, a narrative report shall be delivered to the Investor describing
the Company's activities since the date of the last such report, including a
description of business development, operating results and marketing efforts.
(vii) Requested Information - with reasonable promptness, the
Company shall furnish the Investor with such other data and information as from
time to time may be reasonably requested.
2. TRANSFERS OF STOCK.
2.1. Right to Transfer. The QIP Investors, the Managing Founders and
the Investor shall have the right to Transfer shares of Capital Stock or Options
(including shares of Capital Stock underlying the Options) at any time;
provided, however, that each such party's
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respective rights pursuant to this Section 2.1 are subject to Sections 2.2, 2.3,
2.4 and 2.5 hereof. For purposes of this Agreement, a "Transfer" shall mean any
direct or indirect sale, gift, assignment or other disposition or transfer of
shares of Capital Stock or Options, or any interest therein, and any pledge or
hypothecation of shares of Capital Stock or Options, or any interest therein.
Notwithstanding anything herein to the contrary, nothing in this Agreement shall
preclude or prevent any Transfer: (i) to the Company; (ii) to the Investor's
partners, upon the liquidation, dissolution or winding up of the Investor, to a
partnership of which an Affiliate of the Investor is the general partner, or to
any other Affiliate (which, for this purpose, shall be deemed to include any
Person for which CNNfn, Cable News Network LP, LLLP, or any of its Affiliates
has or exercises investment discretion) of the Investor; or (iii) which may be
required by law or by a regulatory authority.
2.2. Right of First Offer. (a)(i) The QIP Investors, the Managing
Founders and the Investor (the "Transferring Shareholder") shall, prior to
selling, offering to sell or soliciting any offers for the Transfer of shares of
Capital Stock or Options (including shares of Capital Stock underlying the
Options), give written notice to each of the other shareholders of the Company
which are parties to this Agreement (the "Non-Transferring Investors")
specifying the number of shares of Capital Stock that such Transferring
Shareholder desires to Transfer (the "Transfer Stock"). The notice shall
constitute an invitation to each of the Non-Transferring Investors to offer to
purchase a portion of the Transfer Stock for cash and/or marketable securities
equal to such Non-Transferring Investor's Offer Percentage (as defined below).
Each of the parties hereto agrees to take all commercially reasonable
action within its power to cause the other parties to be able to exercise its
rights under this Section 2.2.
(ii) In the event Infoseek provides a written invitation to
offer (as provided in Section 2.3(a) of the Shareholders Agreement) or any other
notice or offer regarding the Transfer of any of the shares of Common Stock
owned by Infoseek to any of the QIP Investors or Managing Founders, each such
QIP Investor or Managing Founder shall promptly provide the Investor with a copy
of such of written invitation to offer, and/or other notice or offer, and shall
share its right of first offer under Section 2.3 of the Shareholders Agreement
with the Investor, and shall treat the Investor in all respects, as if the
Investor were a Non-Transferring Investor under such section.
(iii) A "Non-Transferring Investor's Offer Percentage" shall
mean a percentage obtained by: (A) if Infoseek is not a Non-Transferring
Investor (as defined in Section 2.3(a) of the Shareholders Agreement), dividing
(x) the number of shares of Common Stock beneficially owned by such
Non-Transferring Investor, by (y) the total number of shares of Common Stock
beneficially owned by the Non-Transferring Investors in the aggregate; or (B) if
Infoseek is a Non-Transferring Investor (as defined in Section 2.3(a) of the
Shareholders Agreement), multiplying the percentage obtained in (A) above by a
fraction, the numerator of which is the number of shares included in the
Transfer Stock less the number of shares Infoseek is invited to purchase
pursuant to Section 2.3(a) of the Shareholders Agreement and the denominator of
which is the number of shares included in the Transfer Stock.
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(b) Upon receipt of a notice pursuant to Section 2.2(a), the
recipient thereof (the "Offeror") shall have a period of 15 days within which to
submit a proposal (the "Proposal") to the Transferring Shareholder to purchase
all, but not less than all, of the Transfer Stock which they are invited to
purchase pursuant to Section 2.2(a). If all of the shares of Transfer Stock
offered to the Non-Transferring Investors and, if required by the Shareholders
Agreement, to Infoseek are not fully subscribed by such Non-Transferring
Investors and, if applicable, Infoseek by the fifteenth day following receipt of
the notice delivered pursuant to Section 2.2(a), the remaining shares of
Transfer Stock will be reoffered to the Non-Transferring Investors offering to
purchase their full allotment upon the terms set forth in this Section 2.2(b),
until all such shares of Transfer Stock are fully subscribed for or until the
expiration of a period of 30 days following the receipt of a notice pursuant to
Section 2.2(a) (the "Offer Period").
(c) The Transferring Shareholder then shall have a period of ten (10)
days from the end of the Offer Period within which to respond in writing to the
Proposal. If the Transferring Shareholder accepts the Proposal, the Offeror and
the Transferring Shareholder shall be bound to consummate the transaction in
accordance with the Proposal as promptly as practicable. If the Transferring
Shareholder accepts the Proposal and the transaction is not consummated through
no fault of the Transferring Shareholder within 45 days of the acceptance of the
Proposal so delivered or if a Proposal to purchase all, but not less than all,
the Transfer Stock is not made by the Non-Transferring Investors in accordance
with the provisions of Section 2.2(b) prior to the expiration of the Offer
Period, the Transferring Shareholder shall, for a period of 180 days thereafter,
be free to Transfer the Transfer Stock in any manner and to any person
notwithstanding the provisions of Sections 2.2(a) and 2.2(b) and this Section
2.2(c). After such 180-day period, the Transferring Shareholder shall not
Transfer the Transfer Stock without again complying with the provisions of
this Section 2.2.
(d) In the event the Transferring Shareholder rejects the Proposal,
the Transferring Shareholder may, within the 180 days after the expiration of
the Offer Period, Transfer the Transfer Stock but only for consideration that is
in the Transferring Shareholder's good faith reasonable judgment more favorable
to the Transferring Shareholder on an overall basis than the consideration
contained in the Proposal. The Transferring Shareholder may not, following the
expiration of such 180-day period following the expiration of the Offer Period,
Transfer the Transfer Stock without again complying with the provisions of this
Section 2.2.
2.3. Participation Rights.
(a) (i) Neither the Investor, any QIP Investor nor any Managing
Founder (with the Investor and such other shareholders being referred to as the
"Initiating Shareholder(s)") shall be permitted to Transfer, in a single
transaction or series of related transactions, any shares of Capital Stock
unless: (x) if the Investor is an Initiating Shareholder, the Investor shall
have first complied with the applicable provisions of Section 2.2 hereof and, if
any of the QIP Investors or any Managing Founder is an Initiating Shareholder,
such shareholder shall have first complied with the applicable provisions of
Section 2.2 hereof and of Sections 2.1(b) and 2.3 of the Shareholders Agreement;
and (y) the terms and conditions of such Transfer shall include an offer to each
of the Investor and the shareholders listed on Schedules I and II who do not
initiate such
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a Transfer (hereinafter referred to as the "Non-Initiating Investors") to
include in such Transfer, at the option of each Non-Initiating Investor, such
other Non-Initiating Investor's Participation Amount (as defined below) at the
same price (subject to the following provisions) and on the same terms and
conditions applicable to the shares of Capital Stock to be transferred by the
Initiating Shareholder. Each of the parties hereto agrees to take all
commercially reasonable action within its power to cause the other parties to be
able to exercise its rights under this Section 2.3.
(ii) In the event Infoseek provides a Participation Notice (as
defined in Section 2.4 of the Shareholders Agreement) and/or a copy of a
Participation Offer (as defined in Section 2.4 of the Shareholders Agreement) or
any other notice or offer regarding the Transfer of any of the shares of Common
Stock owned by Infoseek to any of the QIP Investors or any of the Managing
Founders, each such shareholder shall promptly provide the Investor with a copy
of such of Participation Notice, and/or Participation Offer and/or other notice
or offer, and shall share its participation rights under Section 2.4 of the
Shareholders Agreement with the Investor, and shall treat the Investor in all
respects, as if the Investor were a non-Initiating Investor under such section.
(iii) A "Non-Initiating Investor's Participation Amount" shall
mean an amount of shares equal to the shares of Common Stock the third party
actually proposes to purchase multiplied by a fraction, the numerator of which
shall be the number of shares of Common Stock issued and owned by such
Non-Initiating Investor and the denominator of which shall be: (A) if Infoseek
is not a Participating Shareholder (as defined in Section 2.4(b) of the of
Shareholders Agreement) in such Transfer, the aggregate number of shares of
Common Stock issued and owned by the Initiating Shareholder and each
Non-Initiating Investor exercising its rights under this Section 2.3(a); and (B)
if Infoseek is a Participating Shareholder in such Transfer, the aggregate
number of shares of Common Stock issued and owned by the Initiating Shareholder,
each Non-Initiating Investor exercising its rights under this Section 2.3(a) and
Infoseek. In each case, each of the Initiating Shareholder and exercising
Non-Initiating Investors shall be entitled to a pro rata portion of the net sale
proceeds with respect to such transfer based upon the number of shares of Common
Stock included or deemed to be included in such Transfer.
(b) In the event that an Initiating Shareholder receives a bona
fide offer or offers from a third party to purchase or otherwise acquire shares
of Capital Stock (the "Participation Offer"), the Initiating Shareholder shall
then cause the Participation Offer to be reduced to writing and shall give each
of the Non-Initiating Investors (including the Investor) written notice thereof
(a "Participation Notice"). Each Participation Notice shall contain a true and
correct copy of the Participation Offer and shall identify the third party, the
number of the shares of Capital Stock with respect to which the Initiating
Shareholder has a bona fide offer (the "Designated Shares"), the price per share
at which the sale is proposed to be made and all other material terms and
conditions of the Participation Offer. After the Initiating Shareholder shall
have complied with the provisions of Section 2.2 hereof, and, except with
respect to the Investor, Sections 2.1 and 2.3 of the Shareholders Agreement, to
the extent applicable, each of the Non-Initiating Investors shall have the right
and option, within 10 days after the Participation Notice
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is given to him (the "Participation Period"), to accept the Participation Offer
for the number of shares of Common Stock as determined pursuant to Section 2.3
hereof. Each of the Non-Initiating Investors may exercise such option by
providing the Initiating Shareholder with timely written notice to that effect.
Such notice shall constitute an irrevocable acceptance of the Participation
Offer. For purposes of this Section 2.3, each person exercising such option
shall be referred to as a "Participating Shareholder".
(c) The Initiating Shareholder shall send notice to each of the
Participating Shareholders not less than 20 days prior to the date upon which
the Transfer pursuant to this Section 2.3 shall be consummated, which notice
shall contain the date, time and location of the closing. The Participating
Shareholders shall deliver at the closing to the Initiating Shareholder the
certificate or certificates or other instrument representing all of their shares
of Capital Stock to be included in such sale (the "Other Shares").
(d) If at the termination of the Participation Period any of the
shareholders shall not have accepted the offer contained in the Participation
Notice, such person will be deemed to have waived any rights under this Section
2.3 with respect to the Transfer of shares of Capital Stock of the Company to
such third party. The Initiating Shareholder shall have 90 days within which to
sell the Designated Shares and the Other Shares to the third party, at a price
equal to that contained in the Participation Notice and on the terms set forth
in the Participation Notice. If such sale does not occur within such 90-day
period, the Initiating Shareholder shall not consummate such sale without again
complying with the provisions of this Section 2.3.
(e) The decision whether to effect a Transfer pursuant to this
Section 2.3 shall be in the sole and absolute discretion of the Initiating
Shareholder.
2.4 Drag-Along Rights. (a) If at any time and from time to time the
Company or the QIP Investors determine, in accordance with, and pursuant to,
the provisions of Section 7(b) of the Securities Purchase Agreement dated as of
December 11, 1997, between the QIP Investors, the Company and the Managing
Founders, to sell the Company to a third party that is not an affiliate the QIP
Investors (the "Proposed Transferee"), the QIP Investors shall have the right
("Drag-Along Right") to require the Investor to sell to the Proposed Transferee
all shares of Capital Stock and Options then owned by the Investor, upon the
same terms and conditions and concurrently with the sale by the QIP Investors of
their shares of Capital Stock. The Investor agrees to take all steps necessary
to enable it to comply with the provisions of this Section 2.4, to facilitate
the QIP Investors' exercise of its Drag-Along Right.
(b) To exercise a Drag-Along Right, the QIP Investors shall give
the Investor a written notice (a "Drag-Along Notice") containing (a) the name
and address of the Proposed Transferee and (b) the proposed purchase price,
terms of payment and other material terms and conditions of the Proposed
Transferee's offer. The Investor shall thereafter be obligated to sell the
shares of Capital Stock and Options subject to such Drag-Along Notice.
(c) If the QIP Investors determine to exercise their rights, in
accordance with Section 2.4 hereof, to require the Investor to sell all shares
of Capital Stock and
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Options then owned by the Investor, then the QIP Investors in their sole
discretion have the right to determine that a sale of all or substantially all
of the assets of the Company, a voluntary liquidation of the Company or a merger
of the Company (each a "sale of the Company") is preferable to a sale of all of
the capital stock of the Company, whereupon the QIP Investors shall give written
notice to the Investor of the QIP Investors' determination to cause a sale of
the Company (a "Sale Notice"). Upon receipt of such Sale Notice, the Investor
agrees to use its good faith efforts to cooperate with the QIP Investors in
effecting a sale of the Company, including, without limitation, voting shares
of capital stock of the Company beneficially owned by the Investor in favor of
or granting written consent to a sale of the Company.
2.5. Certain Conditions to Stock Issuances and Transfers. No Transfer
of Capital Stock or Options owned by the Investor shall be valid or recorded in
the Company's stock transfer books unless the transferees of such Capital Stock
or Options shall have furnished to the Company (a) the written agreement of the
transferee to be bound by the terms and conditions of this Section 2.5 and, to
the extent applicable, Section 2.6 (as if such transferee were a party hereto),
(b) if required by the Company's Board of Directors, a written opinion of
counsel (which opinion shall be reasonably satisfactory to the Company) that the
proposed Transfer may be effected without registration under the Securities Act
and (c) a written agreement to the effect that the transferee is acquiring such
Capital Stock for its own account, for investment, and not with a view to, or
for sale in connection with, the distribution thereof, and such transferee
understands that such Capital Stock has not been registered under the Securities
Act and that such Capital Stock must be held indefinitely unless a subsequent
disposition thereof is registered under the Securities Act or exempt from the
registration requirements thereof.
2.6. Representations and Warranties. Each party hereto represents and
warrants to each other party solely as to such party:
(a) if such party is not an individual or a corporation, it is a
validly existing partnership as indicated on the signature page of this
Agreement.
(b) if such party is not an individual, the execution, delivery
and performance by such party of this Agreement has been duly authorized.
(c) if such party is an individual, he has full power and
authority to enter into this Agreement.
(d) if such party is a corporation, it is validly existing and
in good standing in the jurisdiction in which it is incorporated.
(e) the agreements set forth in this Agreement constitute valid
and binding obligations of such party.
(f) the execution, delivery and performance of this Agreement by
such party will not (i) violate any provision of law, any order of any court or
other agency of government applicable to the Investor, any provision of any
note, bond, mortgage, indenture, license, lease, contract, agreement or other
instrument or obligation to which such party or its
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properties or assets are bound, or the organizational documents of such party or
(ii) conflict with, result in a breach of or constitute (with due notice or
lapse of time or both) a default under any such note, bond, mortgage, indenture,
license, lease, contract, agreement or other instrument or obligation, or result
in the creation or imposition of any lien, charge, restriction, claim or
encumbrance of any nature upon any of the securities of the Company owned by
such party.
2.7. Injunctive Relief. The parties hereto hereby declare that it is
impossible to measure in money the damages which will accrue to the parties
hereto by reason of the failure of any party hereto to perform any of its
obligations set forth in this Section 2. Therefore, the parties hereto shall
have the right to specific performance of such obligations, and if any party
hereto shall institute any action or proceeding to enforce the provisions
hereof, the parties hereto hereby waive the claim or defense that the party
instituting such action or proceeding has an adequate remedy at law. Such
remedies shall, however, be cumulative and not exclusive and shall be in
addition to any other remedies which any party may have under this Agreement or
otherwise.
2.8. Termination. The provisions of Section 2 shall terminate upon
the closing of, and shall not apply to the Transfer of shares of Capital Stock
pursuant to, an IPO.
3. REGISTRATION RIGHTS.
3.1. Definitions.
As used in this Section 3.1:
(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 (and any post-effective amendments filed or
required to be filed) and the declaration or ordering of effectiveness of such
registration statement;
(b) the term "Registrable Securities" means (i) the shares of Common
Stock owned by the QIP Investors (the "QIP Shares"), (ii) any additional shares
of Common Stock acquired by the QIP Investors and (iii) any capital stock of the
Company issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the shares of Common Stock referred to in
clause (i) or (ii);
(c) the term "Registrable Inside Securities" means (i) any shares of
Common Stock then held by the Investor, Infoseek or the Managing Founders and
(ii) any capital stock of the Company issued as a dividend or other distribution
with respect to, or in exchange for or in replacement of, the shares of Common
Stock referred to in clause (i);
(d) the term "Registrable Investor Securities" means (i) any shares
of Common Stock then held the Investor or any of its affiliated corporations,
divisions or shareholders, and (ii) any capital stock of the Company issued as a
dividend or other distribution
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with respect to, or in exchange for or in replacement of, the shares of C in
clause (i);
(e) the tern "Holder" shall mean any holder of Registration ?????????
(f) the term "Inside Holder" shall mean any holder ??????????????????
Securities;
(g) the term "Initiating Holder" shall mean any Holder???????????????
aggregate are Holders of more than 50% of the then outstanding Registrable
Securities;
(h) the term "Initiating Investor Holder" shall mean any Investor
Holder or Holders who in the aggregate holds more than 50% of the then
outstanding Registrable Investor Securities;
(i) the term "Investor Holder" shall mean any holder of Registrable
Investor Securities;
(j) the term "Other Shareholders" shall mean any other shareholders
of the Company who are granted registration rights that would affect the rights
granted to the Investor under this Agreement;
(k) "Registration Expenses" shall mean all expenses incurred by the
Company in compliance with Section 2 hereof, including, without limitation, all
registration and filing fees, listing fees, printing expenses, fees and
disbursements of counsel for the Company, fees and expenses of one counsel for
all the Holders, the Inside Holders and the Investor Holder, 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);
(l) "Selling Expenses" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities, the
Registrable Inside Securities and the Registrable Investor Securities;
(m) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar law then in force; and
(n) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar law then in force.
3.2. Requested Registration.
(a) At any time following an initial public offering of the Common
Stock, or any security issued in exchange for or as replacement of the Common
Stock pursuant to a registration under the Securities Act (the "IPO"), if the
Company shall receive from an Initiating
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Investor Holder a written request that the Company effect any registration with
respect to all or a part of the Registrable Investor Securities, the Company
will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all Holders of Registrable
Securities and all Inside Holders of Registrable Inside
Securities; and
(ii) as soon as practicable, use its diligent best efforts to
effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) as may be so
requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Investor
Securities as are specified in such request, together with all
or such portion of the Registrable Securities and Registrable
Inside Securities of any Holders or Inside Holders joining in
such request as are specified in a written request received by
the Company within 10 business days after written notice from
the Company is given under Section 3.2(a)(i) above; provided
that the Company shall not be obligated to effect, or take any
action to effect, any such registration pursuant to this Section
3.2:
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 or applicable rules or regulations
thereunder;
B. After the Company has effected one (1) such
registration pursuant to this Section 3.2 and such
registration has been declared or ordered effective and
the sale of at least fifty percent (50%) (it being agreed
that if less than such amount shall have been sold due to
any limitation placed by an underwriter on the number of
shares to be sold, the Company will effect one (1)
additional registration on the same terms and conditions)
of such Registrable Investor Securities shall have closed;
or
C. If the Registrable Investor Securities, Registrable
Securities and Registrable Inside Securities requested by
all Investor Holders, Holders and Inside Holders to be
registered pursuant to such request have an anticipated
aggregate public offering price (before any underwriting
discounts and commissions) (the "Aggregate Offering
Price") of less than $3,500,000.
The registration statement filed pursuant to the request of the
Initiating Investor Holder may, subject to the provisions of Section 3.2(b)
below, include other securities of the
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Company or securities which are held by Persons who, by virtue of agreements
with the Company, are entitled to include their securities in any such
registration.
The registration rights set forth in this Section 3 shall be
assignable, in whole or in part, to any transferee of Common Stock (who shall be
bound by all obligations of this Section 3).
(b) If the Initiating Investor Holder intends to distribute the
Registrable Investor Securities covered by its request by means of an
underwriting, it shall so advise the Company as a part of its request made
pursuant to Section 3.2.
If holders of securities of the Company other than Registrable
Investor Securities who are entitled, by contract with the Company or otherwise,
to have securities included in such a registration (the "Other Shareholders")
request such inclusion, the Investor Holder shall offer to include the
securities of such Other Shareholders in the underwriting and may condition such
offer on their acceptance of the further applicable provisions of this
Section 3. The Investor Holder, Holders and Inside Holders whose shares are to
be included in such registration and the Company shall (together with all Other
Shareholders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected for such underwriting by the
Initiating Investor Holder and reasonably acceptable to the Company.
Notwithstanding any other provision of this Section 3.2, if the representative
advises the Investor Holder in writing that marketing factors require a
limitation on the number of shares to be underwritten, the securities of the
Company held by Other Shareholders, other than the Holders and Inside Holders,
shall be excluded from such registration to the extent so required by such
limitation. If, after the exclusion of such shares, further reductions are still
required, the number of shares included in the registration by each Holder and
Inside Holder shall be reduced on a pro rata basis (based on the number of
shares held by such Holder and Inside Holder) by such minimum number of shares
as is necessary to comply with such request. If, after the exclusion of such
shares, further reductions are still required, the number of shares included in
the registration by the Investor Holder shall be reduced by such minimum number
of shares as is necessary to comply with such request. No Registrable Investor
Securities or any other securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
If the Investor Holder or any Other Shareholder who has requested inclusion in
such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Investor Holder. The securities
so withdrawn shall also be withdrawn from registration. If the underwriter has
not limited the number of Registrable Investor Securities to be underwritten,
the Company may include its securities for its own account in such registration
if the representative so agrees and if the number of Registrable Investor
Securities, Registrable Securities and Registrable Inside Securities which would
otherwise have been included in such registration and underwriting will not
thereby be limited.
(c) Registration Expenses. The Investor Holder shall be
responsible for the Registration Expenses incurred with respect to any request
for registration under this Section 3.2
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in proportion to the number of Registrable Investor Securities over the total
number of securities actually registered.
3.3. Company Registration.
(a) If the Company shall determine to register any of its equity
securities either for its own account or for the account of a security holder or
holders exercising their respective demand registration rights under the
Shareholders Agreement, other than a registration relating solely to employee
benefit plans, or a registration on Form S-4 or any similar or successor form
relating solely to a SEC Rule 145 transaction, or a registration on Form S-8 or
any similar or successor form, or any registration form which does not permit
secondary sales, the Company will:
(i) promptly give to the Investor Holder a written notice thereof
(which shall include a list of the jurisdictions in which the Company
intends to attempt to qualify such securities under the applicable
blue sky or other state securities laws); and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Investor Securities specified
in a written request or requests, made by the Investor Holder within
fifteen days after receipt of the written notice from the Company
described in clause (i) above, except as set forth in Section 3.3(b)
below. Such written request may specify all or a part of the Investor
Holder's Registrable Investor Securities.
(b) If the registration pursuant to this Section 3.3 involves an
underwritten offering of the securities being registered, whether or not for
sale for the account of the Company, to be distributed on a firm commitment
basis by or through one or more underwriters of recognized national or regional
standing under underwriting terms appropriate for such a transaction, the
Company shall so advise each of the Holders, Inside Holders and Investor Holder
as a part of the written notice given pursuant to Section 3.3(a)(i). In such
event, the right of each of the Holders, Inside Holders and Investor Holder to
registration pursuant to this Section 3.3 shall be conditioned upon such
Holders', Inside Holders' or Investor Holders, as the case may be, participation
in such underwriting and the inclusion of such Holders' or Inside Holders', as
the case may be, Registrable Securities, Registrable Inside Securities or
Registrable Investor Securities, as the case may be, in the underwriting to the
extent provided herein. The Holders, Inside Holders and Investor Holders whose
shares are to be included in such registration shall (together with the Company
and the Other Shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for underwriting by
the Company. Notwithstanding any other provision of this Section 3.3, if the
representative determines in good faith that marketing factors require a
limitation on the number of shares to be underwritten, the Company shall so
advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: the number of
securities that may be included in the registration and underwriting by
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each of the Holders, Inside Holders, Investor Holders and the Other Shareholders
shall be reduced, on a pro rata basis (based on the number of shares held by
such holder), by such minimum number of shares as is necessary to comply with
such limitation. If any of the Holders, Inside Holders, Investor Holders or any
Other Shareholders disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company and the
underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
3.4. Expenses of Registration.
Except as set forth in Section 3.2(c) hereof, all Registration
Expenses incurred in connection with any registration, qualification or
compliance pursuant to this Agreement shall be borne by the Company, and all
Selling Expenses shall be borne by the Holders, Inside Holders and Investor
Holder of the securities so registered pro rata on the basis of the number of
their shares so registered; provided, however, that the Company shall not be
required to pay any Registration Expenses if, as a result of the withdrawal of a
request for registration by any of the Holders, Inside Holders, Investor Holder
or Other Shareholders, as applicable, the registration statement does not become
effective, in which case each of the Holders, Inside Holders, Investor Holder
and Other Shareholders requesting registration, including such holder(s) so
withdrawing, shall bear such Registration Expenses pro rata on the basis of the
number of their shares so included in the registration request.
3.5. Registration Procedures.
In the case of each registration effected by the Company pursuant to
this Agreement, the Company will keep the Holders, Inside Holders and Investor
Holder, as applicable, advised in writing as to the initiation of each
registration and as to the completion thereof. At its expense, the Company will:
(i) keep such registration effective for a period of 180 days or
until the Holders, Inside Holders and Investor Holder, as applicable,
have completed the distribution described in the registration
statement relating thereto, whichever first occurs; provided,
however, that such 180-day period shall be extended for a period of
time equal to the period during which the Holders, Inside Holders and
Investor Holders, as applicable, refrain from selling any securities
included in such registration in accordance with provisions in
Section 3.9 hereof; provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the
Securities Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment which
(y) includes any prospectus required by Section 10(a) of the
Securities Act or (z) reflects facts or events representing a
material or fundamental change in the information set forth in the
registration statement, the incorporation by reference of information
required to be included in (y) and (z) above to be contained in
periodic reports filed pursuant to Section 12 or 15(d) of the
Exchange Act in the registration statement; and
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(ii) furnish such number of prospectuses and other documents incident
thereto as each of the Holders, Inside Holders and Investor Holder,
as applicable, from time to time may reasonably request.
3.6. Indemnification.
(a) The Company will indemnify the Investor Holders, each of their
respective officers, directors, shareholders, members and partners, and each
person controlling the Investor Holder, as the case may be, with respect to each
registration which has been effected pursuant to this Agreement, and each
underwriter (including any officers, directors and partners), if any, and each
person who controls any underwriter within the meaning of the Securities Act,
against all claims, losses, damages, expenses 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 prospectus, offering
circular or other document (including any registration statement, notification
or the like) incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse the Investor Holder, each of their respective officers,
directors and partners, and each person controlling the Investor Holders, each
such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating and defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission based upon written information furnished to the
Company by the Investor Holders or underwriter and stated to be specifically for
use therein.
(b) The Investor Holder will, if Registrable Investor Securities held
by it are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter, each other Holder, Inside Holder and Other
Shareholder and each of their officers, directors, and partners, and each person
controlling such other Holder, Inside Holder and Other Shareholder against all
claims, losses, 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 such registration statement, prospectus, offering
circular or other document made by the Investor Holder, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements by the Investor Holder, as the case may be,
therein not misleading, and will reimburse the Company and such other Holder,
Inside Holder and Other Shareholders, directors, officers, partners, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending 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
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statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by the Investor
Holder, as the case may be, and stated to be specifically for use therein;
provided, however, that the obligations of the Investor Holder hereunder and
under Section 3.6(d) shall be limited to an amount equal to the net proceeds to
the Investor Holder of securities sold pursuant to such registration statement
or prospectus.
(c) Each party entitled to indemnification under this Section 3.6
(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 that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved by the Indemnified Party (whose timely approval
shall not unreasonably be withheld) and the Indemnified Party may participate in
such defense at such party's expense (unless the Indemnified Party shall have
reasonably concluded that there may be a conflict of interest between the
Indemnifying Party and the Indemnified Party in such action, in which case the
fees and expenses of counsel shall be at the expense of the Indemnifying Party),
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
under this Agreement unless the Indemnifying Party is materially prejudiced
thereby. 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. Each Indemnified Party shall furnish such information regarding
itself or the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with the defense of
such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 3.6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
herein, 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 loss, liability, claim, damage 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 which resulted in such loss,
liability, claim, damage 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 (or alleged omission) to state a material fact relates to 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.
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(e) The foregoing indemnity agreement of the Company and the Investor
Holders is subject to the condition that, insofar as they relate to any loss,
claim, liability or damage made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the time the
registration statement in question becomes effective or the amended prospectus
filed with the SEC pursuant to SEC Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of any underwriter if a copy
of the Final Prospectus was furnished to the underwriter and was not furnished
to the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act.
3.7. Information by the Investor Holder.
The Investor Holder holding securities included in any registration
shall furnish to the Company such information regarding the Investor Holder as
an Investor Holder and the distribution proposed by the Investor Holder as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Agreement.
3.8. Rule 144 Reporting.
With a view to making available the benefits of certain rules and
regulations of the SEC which may permit the sale of restricted securities to the
public without registration, the Company agrees to:
(i) make and keep public information available as those terms are
understood and defined in Rule 144, at all times from and after
ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an
offering of its securities to the general public;
(ii) use its best efforts to 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
(iii) so long as the Investor Holder owns any Registrable Investor
Securities, furnish to the Investor Holder, upon request, a written
statement by the Company as to its compliance with the reporting
requirements of Rule 144 (at any time from and after ninety (90) days
following 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 as the Investor Holder may
reasonably request in availing itself of any rule or regulation of
the SEC allowing the Investor Holder to sell any such securities
without registration.
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3.9. "Market Stand-off" Agreement.
The Investor Holder agrees, if requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, not to sell or
otherwise transfer or dispose of any Common Stock (or other securities) of the
Company held by such Investor Holder during such period as the underwriter may
reasonably require, such period not to exceed 180 days following the effective
date of a registration statement of the Company filed under the Securities Act,
provided that:
(a) such agreement only applies to the IPO; and
(b) all Holders, Inside Holders and all officers and directors of the
Company enter into similar agreements.
If requested by the underwriters, the Investor Holder shall execute a
separate agreement to the foregoing effect. The Company may impose stop-transfer
instructions with respect to the shares (or securities) subject to the foregoing
restriction until the end of said period. The provisions of this Section 3.9
shall be binding upon any transferee who acquires Registrable Investor
Securities, provided that such transferee is entitled to the registration rights
provided hereunder.
3.10. Termination.
The registration rights set forth in this Agreement shall not be
available to any Investor Holder if all of the Registrable Investor Securities
then owned by such Investor Holder could be sold in any 90-day period pursuant
to Rule 144 under the Securities Act (without giving effect to the provisions of
Rule 144(k)).
3.11. Assignment.
The rights set forth in this Section 3 may be assigned, in whole or
in part, to any transferee of Registrable Securities, Registrable Inside
Securities or Registrable Investor Securities (who shall be considered
thereafter to be a Holder, Inside Holder or Investor Holder, respectively,
depending upon the nature of the securities already held by the transferee, and
shall be bound by all obligations and limitations of this Section 3).
3.12 No Inconsistent Agreements.
The Company will not hereafter enter into any agreement with respect
to its securities which is inconsistent with the rights granted to the Investor
Holder in this Agreement.
4. SUBSCRIPTION RIGHTS.
(a) If at any time after the date hereof and prior to the IPO, the
Company proposes to issue equity securities of any kind (the term "equity
securities" shall include for these
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purposes any warrants, options or other rights to acquire equity securities and
debt securities convertible into equity securities) of the Company (other than
the issuance of securities (i) to the public in a firm commitment underwriting
pursuant to a registration statement filed under the Securities Act, (ii)
pursuant to the acquisition of another corporation by the Company by merger,
purchase of substantially all of the assets or other form of reorganization,
(iii) pursuant to an employee or director stock option plan, stock bonus plan,
stock purchase plan or other management equity program), (iv) pursuant to the
issuance of shares of Common Stock following the conversion of certain
indebtedness by the QIP Investors under the Conversion Agreement, or (v)
pursuant to the issuance of shares of Common Stock following the exercise of
Performance Options by the Managing Founders and certain employees, as described
in Section 2.5 of the Stock Purchase Agreement), then, as to each of the QIP
Investors, Infoseek and the Investor, the Company shall:
(i) give written notice setting forth in reasonable detail (1)
the designation and all of the terms and provisions of the securities proposed
to be issued (the "Proposed Securities"), including, where applicable, the
voting powers, preferences and relative participating, optional or other special
rights, and the qualification, limitations or restrictions thereof and interest
rate and maturity; (2) the price and other terms of the proposed sale of such
securities; (3) the amount of such securities proposed to be issued; and (4)
such other information as the QIP Investors, Infoseek or the Investor may
reasonably request in order to evaluate the proposed issuance; and
(ii) offer to issue to each of the QIP Investors, Infoseek and
the Investor upon the terms described in subparagraph (i) above a portion of the
Proposed Securities (the "Subscription Securities") equal to a percentage
determined by dividing (x) the number of shares of Common Stock beneficially
owned by such holder of securities, by (y) the total number of shares of Common
Stock beneficially owned (within the meaning of Rule 13d-3 under the Exchange
Act) by all holders of Common Stock immediately preceding the issuance of the
Proposed Securities.
(b) Each of the Investor, Infoseek and the QIP Investors must
exercise its purchase rights hereunder within ten (10) days after receipt of
such notice from the Company. If all of the Subscription Securities offered to
the QIP Investors, Infoseek and the Investor are not fully subscribed by the QIP
Investors, Infoseek or the Investor, the remaining Subscription Securities will
be reoffered to the remaining shareholders who are subject to the Shareholders
Agreement purchasing their full allotment upon the terms set forth in this
Section 4 (likewise any then remaining Subscription Securities will be reoffered
to the Investor upon the terms set forth in this Section 4), until all such
Subscription Securities are fully subscribed for or until the QIP Investors,
Infoseek and the Investor have subscribed for all such Subscription Securities
which they desire and are entitled to purchase, except that such remaining
shareholders must exercise their purchase rights within five days after receipt
of all such reoffers. To the extent that the Company offers two or more
securities in units, the Investors must purchase such units as a whole and will
not be given the opportunity to purchase only one of the securities making up
such unit.
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(c) Upon the expiration of the offering periods described above, the
Company will be free to sell such Subscription Securities that the QIP
Investors, Infoseek and the Investor have not elected to purchase during the 180
days following such expiration on terms and conditions no more favorable to the
purchasers thereof than those offered to such remaining shareholders. Any
Subscription Securities offered or sold by the Company after such 180 day period
must be reoffered to the holders of the Securities pursuant to this Section 4.
(d) The election by either of the QIP Investors, Infoseek or the
Investor not to exercise their subscription rights under this Section 4 in any
one instance shall not affect their respective rights (other than in respect of
a reduction in their percentage holdings) as to any subsequent proposed
issuance. Any sale of such securities by the Company without first giving the
QIP Investors, Infoseek and the Investor the rights described in this Section 4
shall be void and of no force and effect.
5. INTERPRETATION OF THIS AGREEMENT.
(a) Directly or Indirectly. Where any provision in this Agreement
refers to action to be taken by any Person, or which such Person is prohibited
from taking, such provision shall be applicable whether such action is taken
directly or indirectly by such Person.
(b) Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of Delaware applicable to contracts
made and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and subsections of
this Agreement are inserted for convenience only and shall not be deemed to
constitute a part thereof.
6. MISCELLANEOUS.
(a) Subsequent Shareholders. This Agreement shall be fully applicable
to (i) all shares of Capital Stock or Options owned by the parties hereto,
whether now owned or hereafter acquired, (ii) all who subsequently acquire a
community property or any other interest in any such shares of Capital Stock or
Options subject to this Agreement and (iii) any of the shares of Capital Stock
and Options subject to this Agreement transferred by a party hereto to any other
person in accordance with Section 2.5. Any person acquiring an interest in
Capital Stock and Options subject to this Agreement, to the extent contemplated
by Section 2.5, and every spouse of an Investor, whether or not it is believed
that such spouse has or may acquire an interest in Capital Stock and Options,
shall execute and deliver to the Company a separate Rights Agreement in the form
of this Agreement pursuant to which such person acknowledges that he or she is
bound by all of the terms and provisions of this Agreement; provided, however,
that the failure to execute and deliver such a Rights Agreement shall not be
deemed to relieve such person of the restrictions imposed by this Agreement. Any
attempted dispositions in breach of this Agreement shall be void.
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(b) Notices. (i) All communications under this Agreement shall be in
writing and shall be delivered by hand or mailed by overnight courier or by
registered or certified mail, postage prepaid:
(1) if to the QIP Investors, c/x Xxxxx Fund Management LLC at 000
Xxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxx, Xxx Xxxx 00000, marked for attention
of Xxxxxxx X. Xxxx, Esq., or at such other address as the QIP Investors may
have furnished the Company in writing,
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
One Citicorp Center
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxxxxx X. Xxxxx, Esq.
Facsimile: 000-000-0000, or
(2) if to Investor, to:
Xx. Xxxxx Xxxxxx
CNNfn, a division of Cable News Network LP, LLLP
0 Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
with a copy by mail and fax, which shall not constitute notice, to:
Cable News Network LP, LLLP
Xxx XXX Xxxxxx
X.X. Xxx 000000
Xxxxxxx, XX 00000
Attention: General Counsel
Fax: (000) 000-0000
(3) if to the Company, to:
NewsReal, Inc.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer & General Counsel
Fax: (000) 000-0000
with a copy by mail and fax, which shall not constitute notice, to:
-22-
23
Fulbright & Xxxxxxxx L.L.P.
Market Square
000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx Xxxxxxxx, Esq.
Facsimile: 000-000-0000
(4) if to any of the Managing Founders, at the address of such
Managing Founder shown on Schedule II, or at such other address as the
Managing Founder may have furnished the Company in writing
(ii) Any notice so addressed shall be deemed to be given: if
delivered by hand, on the date of such delivery; if mailed by courier, on the
first business day following the date of such mailing; and if mailed by
registered or certified mail, on the third business day after the date of such
mailing.
(e) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties.
(f) Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto relating to the
subject matter hereof and supersede all prior agreements or understandings with
respect to the subject matter hereof among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of each of the Company, the QIP Investors,
and the Investor. As between the QIP Investors, the Managing Founders and
Infoseek, nothing in this Agreement shall be deemed to modify or amend the
rights or obligations of such parties arising under the Securities Purchase
Agreement or the Shareholders Agreement.
(g) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
-23-
24
IN WITNESS WHEREOF, the duly authorized representatives of the
undersigned corporations have executed this Agreement as of the date first
written above.
CNNFN, A DIVISION OF CABLE NEWS NETWORK LP,
LLLP
By: /s/ XXX XXXXXX
-----------------------------------------
Name: Xxx Xxxxxx
Title:
NEWSREAL, INC.
By: /s/ XXXXX X. XXXXXXXX
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President & CEO
25
QUANTUM INDUSTRIAL PARTNERS, LDC
By: /s/ XXXX XXXXXXXXX
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title:
GEOSOR CORPORATION
By: /s/ XXXX XXXXXXXXX
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title:
/s/ XXXX XXXXXXXXX
--------------------------------------------
XXXX XXXXXXXXX
/s/ XXXXXXX XXXXXXX
--------------------------------------------
XXXXXXX XXXXXXX
/s/ XXXXXXX XXXX
--------------------------------------------
XXXXXXX XXXX
-25-
26
/s/ XXXXX XXXXXXXX
--------------------------------------------
XXXXX XXXXXXXX
/s/ XXXXXXX XXXXX
--------------------------------------------
XXXXXXX XXXXX
/s/ XXXXXXXXX XXXXXXX
--------------------------------------------
XXXXXXXXX XXXXXXX
/s/ XXXXX XXXXX
--------------------------------------------
XXXXX XXXXX
-26-
