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EXHIBIT 4.2
XXXXXXXXXXXX.XXX INC.
SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
AUGUST 27, 1999
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TABLE OF CONTENTS
PAGE
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SECTION 1
RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS...................................2
1.1 CERTAIN DEFINITIONS..................................................2
1.2 RESTRICTIONS.........................................................3
1.3 RESTRICTIVE LEGEND...................................................4
1.4 NOTICE OF PROPOSED TRANSFERS.........................................4
1.5 REQUESTED REGISTRATION...............................................5
1.6 COMPANY REGISTRATION.................................................7
1.7 REGISTRATION ON FORM S-3.............................................8
1.8 EXPENSES OF REGISTRATION.............................................8
1.9 REGISTRATION PROCEDURES..............................................9
1.10 INDEMNIFICATION......................................................9
1.11 INFORMATION BY HOLDER...............................................11
1.12 RULE 144 REPORTING..................................................11
1.13 TRANSFER OF REGISTRATION RIGHTS.....................................12
1.14 STANDOFF AGREEMENT..................................................12
1.15 TERMINATION OF RIGHTS...............................................12
1.16 OTHER REGISTRATION RIGHTS...........................................13
SECTION 2
RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS........................................13
2.1 INVESTORS' RIGHT OF FIRST OFFER.....................................13
2.2 ELECTION OF DIRECTORS...............................................15
2.3 TERMINATION OF RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS.......16
SECTION 3
AFFIRMATIVE COVENANTS OF THE COMPANY..................................................16
3.1 FINANCIAL INFORMATION...............................................16
3.2 DELIVERY OF INFORMATION.............................................16
3.3 INSPECTION..........................................................16
3.4 EXPENSES OF THE BOARD OF DIRECTORS..................................17
3.5 RESERVED EMPLOYEE SHARES............................................17
3.6 ACQUISITION OF STOCK................................................17
3.7 TITLES AND SALARIES.................................................17
3.8 BOARD OF DIRECTORS MEETINGS.........................................17
3.9 IRC SECTION 305.....................................................17
3.10 BOARD OF DIRECTORS..................................................17
3.11 POSITIVE COVENANTS..................................................18
3.12 NEGATIVE COVENANTS..................................................19
3.13 STOCK RESTRICTION AGREEMENTS........................................20
3.14 OBSERVER RIGHTS.....................................................20
3.15 TERMINATION OF SECTION 3 RIGHTS.....................................20
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SECTION 4
MISCELLANEOUS.........................................................................20
4.1 GOVERNING LAW.......................................................20
4.2 THIRD PARTIES.......................................................20
4.3 SURVIVAL............................................................20
4.4 SUCCESSORS AND ASSIGNS..............................................20
4.5 ENTIRE AGREEMENT; AMENDMENT.........................................20
4.6 EFFECT OF AMENDMENT OR WAIVER.......................................21
4.7 RIGHTS OF HOLDERS...................................................21
4.8 NOTICES, ETC........................................................21
4.9 DELAYS OR OMISSIONS.................................................21
4.10 COUNTERPARTS........................................................22
4.11 SEVERABILITY OF THIS AGREEMENT......................................22
EXHIBIT A SERIES A PREFERRED INVESTOR SCHEDULE
EXHIBIT B SERIES B PREFERRED INVESTOR SCHEDULE
EXHIBIT C SERIES C PREFERRED INVESTOR SCHEDULE
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SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the
"Agreement") is entered into as of this 27th day of August, 1999 by and among
(i) XxxxxxxXxxxx.xxx Inc., a Delaware corporation (the "Company"), with
principal offices located at 0000 Xxxxxx Xxxxxxxxx Xxxxxx, X.X., Xxxxxxxxxx,
X.X. 00000, (ii) those holders of the Company's Series A Preferred Stock (the
"Series A Preferred") listed on Exhibit A attached hereto (the "Series A
Investors"), (iii) Xxxxx & Xxxxxx, Inc. ("B&T"), a Delaware corporation with its
principal office at Five LakePointe Plaza, Suite 500, 0000 Xxxxx Xxxxx Xxxxxxx,
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000, (iv) those holders of the Company's Series B
Preferred Stock (the "Series B Preferred") listed on Exhibit B attached hereto
(the "Series B Investors"), (v) those holders of the Company's Series C
Preferred Stock (the "Series C Preferred" and together with the Series A
Preferred and Series B Preferred, the "Preferred Stock") listed on Exhibit C
attached hereto (the "Series C Investors" and together with the Series A
Investors and Series B Investors, the "Investors"), (vi) Xxxx X. Xxxx and (vii)
Xxxxxxx X. Xxxx.
R E C I T A L S :
WHEREAS, the Company, the Series A Investors and B&T have entered into
that certain Investors' Rights Agreement (the "Original Agreement"), dated as of
August 6, 1998;
WHEREAS, the Company, the Series A Investors, Series B Investors and
B&T entered into that certain Amended and Restated Investors Rights Agreement
(the "Second Agreement"), dated as of February 25, 1999;
WHEREAS, on the date hereof the Company and the Series C Investors are
entering into that certain Series C Convertible Preferred Stock Purchase
Agreement (the "Series C Stock Purchase Agreement"), pursuant to which the
Company is authorized to issue and sell to the Series C Investors an aggregate
of up to 8,928,571 shares of the Series C Preferred at one or more closings to
be held on or prior to sixty (60) days from the date hereof;
WHEREAS, it is a condition to the closing of the transactions
contemplated by the Series C Stock Purchase Agreement that the Company and the
Investors enter into this Agreement to, among other things, amend and restate
the rights granted pursuant to the Second Agreement in order to provide the
Series C Investors with certain rights in connection with the Series C
Investors' ownership of shares of Series C Preferred;
WHEREAS, pursuant to Section 4.5 of the Second Agreement, the Second
Agreement or any term thereof may be amended, waived, discharged or terminated
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided, however, that
(i) a majority of the outstanding Registrable Securities whether or not
converted by the Series A Investors and B&T and (ii) a majority of the
outstanding Registrable Securities whether or not converted held by the Series B
Investors, each group voting separately as a class, may waive or amend, on
behalf of the Investors and other holders of Shares, any provisions of the
Second Agreement benefiting the Series A Investors and Series B Investors so
long as the effect thereof will be that the Series A Investors and Series B
Investors and other holders of Shares will be treated equally; and
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WHEREAS, by entering into this Agreement, the Series A Investors whose
signatures are set forth on the signature pages hereto, which Series A Investors
constitute a majority of the outstanding Registrable Securities and the Series B
Investors whose signatures are set forth on the signature pages hereto, which
Series B Investors constitute a majority of the outstanding Registrable
Securities, hereby consent to amending the Second Agreement in the manner set
forth herein.
NOW THEREFORE, in consideration of the mutual agreements, covenants and
conditions contained herein, the Company and each of the Investors hereby agree
as follows:
SECTION 1
RESTRICTIONS ON TRANSFERABILITY; REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS.
All capitalized terms used herein and not defined below shall have the
meanings set forth in the Series C Stock Purchase Agreement. The following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"CONVERSION SHARES" shall mean the Common Stock issued or issuable upon
conversion of the Preferred Stock.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"HOLDER" shall mean Xx. Xxxx, Xx. Xxxx, B&T and any Investor holding
Registrable Securities and any person holding Registrable Securities to whom the
rights under this Agreement have been transferred in accordance with Section
1.13 hereof.
"INITIATING HOLDERS" shall mean any Investors or transferees of any
Investors under Section 1.13 hereof who in the aggregate are Holders of not less
than twenty percent (20%) of the Registrable Securities; provided, that Xx. Xxxx
or Xx. Xxxx shall be Initiating Holders for purposes of Section 1.7 without
regard to the percentage of Registrable Securities held by them.
"REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 1.5 and 1.6 hereof, including, without limitation,
all registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
all fees and disbursements of one counsel for the Holders (as limited by Section
1.8), and the expense of any special audits incident to or required
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by any such registration (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
"REGISTRABLE SECURITIES" shall mean (i) the Conversion Shares; and (ii)
any Common Stock of the Company issued or issuable in respect of the Shares or
Conversion Shares or other securities issued or issuable with respect to the
Shares or Conversion Shares upon any stock split, stock dividend,
recapitalization, or similar event, or any Common Stock otherwise issued or
issuable with respect to the Shares or Conversion Shares; (iii) the shares of
Common Stock purchased by B&T pursuant to that certain Stock Purchase Agreement
and Warrant, each dated July 10, 1998; and (iv) the shares of Common Stock held
by Xx. Xxxx and Xx. Xxxx, provided, however, that shares of Common Stock or
other securities shall only be treated as Registrable Securities if and so long
as they have not been (A) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act under Rule 144 so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend referred to by the Securities Act as set forth in
Section 1.3 hereof.
"RULE 144" means Rule 144 promulgated under the Securities Act.
"RULE 145" means Rule 145 promulgated under the Securities Act.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth under "Registration Expenses," all fees and
disbursements of counsel for any Holder.
"SHARES" shall mean the shares of Series A Preferred sold pursuant to
the Series A Convertible Preferred Stock Purchase Agreement, dated August 6,
1998, and the shares of Series B Preferred sold pursuant to the Series B
Convertible Stock Purchase Agreement dated February 25, 1999, and the shares of
Series C Preferred sold pursuant to the Series C Stock Purchase Agreement.
1.2 RESTRICTIONS.
The Shares and the Conversion Shares shall not be sold, assigned,
transferred or pledged except upon the conditions specified in this Agreement,
which conditions are intended to ensure compliance with the provisions of the
Securities Act. Each Investor will cause any proposed purchaser, assignee,
transferee or pledgee of the Shares and the Conversion Shares to agree to take
and hold such securities subject to the provisions and upon the conditions
specified in this Agreement.
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1.3 RESTRICTIVE LEGEND.
Each certificate representing (i) the Shares, (ii) the Conversion
Shares, and (iii) any other securities issued in respect of the securities
referenced in clauses (i) and (ii) upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall (unless
otherwise permitted by the provisions of Section 1.4 below) be stamped or
otherwise imprinted with legends in the following form (in addition to any
legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH SALE OR TRANSFER IS
EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF
SAID ACT. THE COMPANY MAY REASONABLY REQUEST AN OPINION OF COUNSEL
(WHICH MAY BE COUNSEL FOR THE COMPANY) STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
Each Investor and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
1.4 NOTICE OF PROPOSED TRANSFERS.
The holder of each certificate representing Restricted Securities, by
acceptance thereof, agrees to comply in all respects with the provisions of this
Section 1. Prior to any proposed sale, assignment, transfer or pledge of any
Restricted Securities, unless there is in effect a registration statement under
the Securities Act covering the proposed transfer, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied at such holder's expense by either
(i) an unqualified written opinion of legal counsel who shall be, and whose
legal opinion shall be, reasonably satisfactory to the Company, addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be effected without registration under the Securities Act, (ii) a "no
action" letter from the Commission to the effect that the transfer of such
securities without registration will not result in a recommendation
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by the staff of the Commission that action be taken with respect thereto, or
(iii) any other evidence reasonably satisfactory to counsel to the Company,
whereupon the holder of such Restricted Securities shall be entitled to transfer
such Restricted Securities in accordance with the terms of the notice delivered
by the holder to the Company. The Company will not require such a legal opinion
or "no action" letter (a) in any transaction in compliance with Rule 144, (b) in
any transaction in which an Investor which is a corporation distributes
Restricted Securities solely to its majority-owned subsidiaries, affiliates or
stockholders for no consideration, or (c) in any transaction in which an
Investor which is a partnership or a limited liability company distributes
Restricted Securities solely to partners, members or other equity holders
thereof for no consideration; provided that each transferee agrees in writing to
be subject to the terms of this Section 1.4. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legends
referring to the Securities Act set forth in Section 1.3 above, except that such
certificate shall not bear such restrictive legend if, in the opinion of counsel
for such holder and the Company, such legend is not required in order to
establish compliance with any provisions of the Securities Act.
1.5 REQUESTED REGISTRATION.
(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any registration,
qualification or compliance with respect to the Registrable Securities, the
reasonably anticipated aggregate offering price of which exceeds five million
dollars ($5,000,000), the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (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 and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within thirty (30) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.5:
(1) 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;
(2) Prior to the earlier of (i) six (6) months following the
closing date of the first public offering of the Company's securities to the
general public which is
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effected pursuant to a registration statement filed with, and declared effective
by, the Commission under the Securities Act (the "Initial Public Offering") or
(ii) August 6, 2001;
(3) Prior to ninety (90) days following the closing date of
the Company's Initial Public Offering;
(4) If the Company delivers notice to the Holders within
thirty (30) days of such request that the Company intends to file a registration
statement for the Company's Initial Public Offering within ninety (90) days;
(5) (a) After the Company has effected two (2) such
registrations pursuant to this Section 1.5(a) with respect to rights held
hereunder by the Series A Investors, (b) after the Company has effected two (2)
such registrations pursuant to this Section 1.5(a) with respect to rights held
hereunder by the Series B Investors and (c) after the Company has effected two
(2) such registrations pursuant to this Section 1.5(a) with respect to rights
held hereunder by the Series C Investors; or
(6) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be detrimental to the Company
or its shareholders for a registration statement to be filed in the near future,
then the Company's obligation to use its best efforts to register, qualify or
comply under this Section 1.5 shall be deferred for a period not to exceed
ninety (90) days from the date of receipt of written request from the Initiating
Holders; provided, however, that the Company may not utilize this right more
than once in any twelve (12) month period.
Subject to the foregoing clauses (1) through (6), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders.
(b) Underwriting. If a registration pursuant to Section 1.5 is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as part of the notice given pursuant to Section 1.5(a)(i).
The right of any Holder to registration pursuant to Section 1.5 shall be
conditioned upon such Holder's participation in the underwriting arrangements
required by this Section 1.5 and the inclusion of such Holder's Registrable
Securities in the underwriting, to the extent requested, to the extent provided
herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders (which managing underwriter
shall be reasonably acceptable to the Company). Notwithstanding any other
provision of this Section 1.5, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
Holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated first among all Holders thereof other than Xx. Xxxx and Xx. Xxxx in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration statement
and then, to the extent any
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Registrable Securities may be included that are held by Xx. Xxxx and Xx. Xxxx,
in proportion to the amounts held by them; provided, however, that with respect
to any public offering following the Initial Public Offering, the number of
shares allocated among all Holders (including Xx. Xxxx and Xx. Xxxx) shall not
be less than thirty percent (30%) of the number of shares to be sold in such
public offering. No Registrable Securities excluded from the underwriting by
reason of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of
shares allocated to any Holder to the nearest one hundred (100) shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration.
1.6 COMPANY REGISTRATION.
(a) Notice of Registration. If at any time or from time to time, the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) the
Company's Initial Public Offering, (ii) a registration relating solely to
employee benefit plans, or (iii) a registration relating solely to a transaction
subject to Rule 145, the Company will:
(i) promptly give to each Holder written notice thereof; 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 Securities specified in a written request
or requests made within thirty (30) days after receipt of such written notice
from the Company by any Holder.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
Holders who have demanded such registration). Notwithstanding any other
provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting, on a pro rata
basis based on the total number of securities (including, without limitation,
Registrable Securities) entitled to registration pursuant to registration rights
granted to the participating Holders other than Xx. Xxxx and Xx. Xxxx by the
Company at the time of the filing of the registration statement and then, to the
extent any Registrable Securities may be included that are held by Xx. Xxxx and
Mr.
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Levy, in proportion to the amounts held by them; provided, however, that (i) in
no event shall any shares being sold by a shareholder exercising a demand
registration right either pursuant to or substantially the same as that granted
in Section 1.5 hereof be excluded from the offering, except as provided in
Section 1.5(b), and (ii) that with respect to any public offering following the
Initial Public Offering, the number of shares allocated among all Holders of
Registrable Shares exercising its rights under this Section 1.6 shall not be
less than thirty percent (30%) of the number of shares to be sold in such public
offering. To facilitate the allocation of shares in accordance with the above
provisions, the Company or the underwriters may round the number of shares
allocated to any Holder or other holder to the nearest one hundred (100) shares.
If any Holder or other holder disapproves of the terms of any such underwriting,
he or she may elect to withdraw therefrom by written notice to the Company and
the managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.7 REGISTRATION ON FORM S-3.
In addition to the rights set forth in Section 1.5, if the Initiating
Holders request that the Company file a registration statement on Form S-3 (or
any successor thereto) for a public offering of shares of Registrable Securities
the reasonable anticipated aggregate price to the public of which would exceed
one million dollars ($1,000,000), and the Company is a registrant entitled to
use Form S-3 to register securities for such offering, the Company shall use its
best efforts to cause such shares to be registered for the offering on such form
(or any successor thereto). The Company shall not be obligated to file (i) more
than four (4) registration statements under this Section 1.7 in any consecutive
twelve (12) month period.
1.8 EXPENSES OF REGISTRATION.
All Registration Expenses incurred in connection with demand
registrations pursuant to Section 1.5, all Company registrations pursuant to
Section 1.6, and all registrations on Form S-3 pursuant to Section 1.7 shall be
borne by the Company, provided that the Company shall not be required to pay the
Registration Expenses of any registration proceeding begun pursuant to Section
1.5, the request of which has been subsequently withdrawn by the Initiating
Holders. In such case, (i) the Holders of Registrable Securities to have been
registered shall bear all such Registration Expenses pro rata on the basis of
the number of shares to have been registered, and (ii) the Company shall be
deemed not to have effected a registration pursuant to subparagraph 1.5(a) of
this Agreement. Notwithstanding the foregoing, however, if at the time of the
withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said
Registration Expenses. In such case, the Company shall be deemed not to have
effected a registration pursuant to subparagraph 1.5(a) of this Agreement.
Unless otherwise stated, all Selling Expenses relating to securities registered
on behalf of the Holders and all other
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registration expenses incurred in connection with any registration pursuant to
this Section 1 shall be borne by the Holders of the registered securities
included in such registration pro rata on the basis of the number of shares so
registered.
1.9 REGISTRATION PROCEDURES.
In the case of each registration, qualification or compliance effected
by the Company pursuant to this Section 1, the Company will keep each Holder
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed;
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(c) Use its best efforts to register and qualify the securities
covered by the registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(d) In the event of any underwritten public offering, enter into
and perform all its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement; and
(e) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statement therein not misleading in light of the circumstances then existing.
1.10 INDEMNIFICATION.
(a) The Company will indemnify each Holder of Registrable Securities
included in a registration pursuant to this Agreement, each of its officers
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or
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liabilities (or actions in respect thereof), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, 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 not misleading, or any violation by the
Company of the Securities Act, the Exchange Act, state securities laws or any
rule or regulation promulgated under such laws applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
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 or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by any Holder, controlling person or
underwriter and stated to be specifically for use therein.
(b) Each Holder, severally and not jointly, will, if Registrable
Securities held by such Holder 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, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers, directors and
partners and each person controlling such Holder within the meaning of Section
15 of the Securities Act, 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, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, such 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, as such expenses are incurred, in each
case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein. Notwithstanding the foregoing, the liability of
each Holder under this Section 1.10(b) shall be limited to an amount equal to
the net proceeds of the shares sold by such Holder.
(c) Each party entitled to indemnification under this Section 1.10
(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
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Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, however, that an Indemnified Party
(together with all other Indemnified Parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding. The failure of any Indemnified Party to give notice
as provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 1.10 unless the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action. 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.
1.11 INFORMATION BY HOLDER.
The Holder or Holders of Registrable Securities included in any
registration shall furnish to the Company such information regarding such Holder
or Holders, the Registrable Securities held by them and the distribution
proposed by such Holder or Holders as the Company may request in writing and as
shall be required in connection with any registration, qualification or
compliance referred to in this Section 1.
1.12 RULE 144 REPORTING.
With a view to making available the benefits of certain rules and
regulations of the Commission which may at any time permit the sale of the
Restricted Securities to the public without registration, after such time as a
public market exists for the Common Stock of the Company, the Company agrees to
use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144, at all times after the effective date that
the Company becomes subject to the reporting requirements of the Securities Act
or the Exchange Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as an Investor owns any Restricted Securities, to
furnish to each Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in
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the possession of or reasonably obtainable by the Company as an Investor may
reasonably request in availing itself of any rule or regulation of the
Commission allowing an Investor to sell any such securities without
registration.
1.13 TRANSFER OF REGISTRATION RIGHTS.
The rights to cause the Company to register securities granted
Investors under Sections 1.5, 1.6 and 1.7 may be assigned to a transferee or
assignee reasonably acceptable (unreasonable transferees or assignees would
include, but not be limited to, competitors or potential competitors of the
Company as determined by the Board of Directors prior to transfer) to the
Company in connection with any transfer or assignment of Registrable Securities
by an Investor (together with any affiliate); provided that (a) such transfer
may otherwise be effected in accordance with applicable securities laws, (b)
notice of such assignment is given to the Company, (c) such transferee or
assignee covenants to be bound by the registration rights provisions in this
Agreement, and (d) such transferee or assignee (i) is a wholly-owned subsidiary,
affiliate, or constituent partner (including limited partners, retired partners,
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) of such Investor, (ii) is any family member or trust for the benefit
of Xx. Xxxx, Xx. Xxxx or any individual Investor, or (iii) acquires from Xx.
Xxxx, Xx. Xxxx or such Investor at least fifty thousand (50,000) shares of
Restricted Securities (as appropriately adjusted for stock splits and the like).
1.14 STANDOFF AGREEMENT.
Each Holder holding more than one percent (1 %) of the Company's Common
Stock on a fully-diluted basis agrees in connection with the Initial Public
Offering and the first public offering of the Company's securities thereafter
(other than a registration of securities in a transaction subject to Rule 145 or
with respect to an employee benefit plan) that, upon request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days from the effective date of such registration) as may
be requested by the Company or such managing underwriters; provided, that (i)
the officers and directors of the Company also agree to such restrictions, and
(ii) the holders of the Company's securities with registration rights similar to
those granted in Sections 1.5, 1.6 and 1.7 herein also agree to, or are bound
by, such restrictions.
1.15 TERMINATION OF RIGHTS.
The rights of any particular Holder to cause the Company to register
securities under Sections 1.5, 1.6 and 1.7 shall terminate with respect to such
Holder on the fifth year anniversary of the effective date of the Company's
Initial Public Offering.
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1.16 OTHER REGISTRATION RIGHTS.
The Company shall not grant any registration rights to any existing or
future holder of equity securities of the Company, or securities convertible
into Common Stock of the Company, which rights are more favorable than the
registration rights granted to the Investors.
SECTION 2
RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS
2.1 INVESTORS' RIGHT OF FIRST OFFER.
(a) Right of First Offer. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Investor the
right of first offer to purchase its Pro Rata Portion of any New Securities (as
defined in subsection 2.1(b)) which the Company may, from time to time, propose
to sell and issue. An Investor's "Pro Rata Portion" for purposes of this Section
2.1 is the ratio that (x) the sum of the number of shares of the Company's
Common Stock then held by such Investor and the number of shares of the
Company's Common Stock issuable upon conversion of the Preferred Stock then held
by such Investor bears to (y) the sum of the total number of shares of Company's
Common Stock then outstanding and the number of shares of the Company's Common
Stock issuable upon conversion of the then outstanding securities exercisable
for or convertible into, directly or indirectly, shares of Common Stock.
(b) Definition of New Securities. Except as set forth below, "New
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New
Securities" does not include (i) the Shares or the Conversion Shares, (ii)
securities offered to the public generally pursuant to a registration statement
under the Securities Act, (iii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially all of
the assets or shares or other reorganization whereby the Company or its
shareholders own not less than a majority of the voting power of the surviving
or successor corporation, (iv) any shares of the Company's Common Stock or
related options convertible into or exercisable for such Common Stock issued to
employees, officers and directors of, and consultants to, the Company, pursuant
to any arrangement approved by the Board of Directors of the Company including
the members of the Board of Directors appointed by the Series B Investors and
Series C Investors, (v) shares of the Company's Common Stock or related options
convertible into or exercisable for such Common Stock issued to any bank,
equipment lessor or other similar financial institution if and to the extent
that the transaction in which such sale or grant is to be made is unanimously
approved by the Company's Board of Directors, (vi) shares of the capital stock
of the Company issued pursuant to any existing rights or agreements that have
been disclosed to the Investors, including, without limitation, convertible
securities, options and warrants, provided that the Company shall have complied
with the right of first offer established by this Section 2.1 with respect to
the initial sale or grant by the Company of such rights or agreements, or (vii)
stock issued in connection with any stock split, stock dividend or
recapitalization by the Company; provided however, that shares of the
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Company's Common Stock issued pursuant to (iv) shall not, in the aggregate,
exceed 2,030,836 shares of Common Stock, or such other number of shares of
Common Stock as the Board of Directors shall, in its sole discretion, from time
to time approve as being issuable pursuant to the Company's Stock Option Plans
in accordance with Section 3.12.
(c) Notice of Right. In the event the Company proposes to undertake
an issuance of New Securities, it shall give each Investor written notice of its
intention, describing the type of New Securities and the price and terms upon
which the Company proposes to issue the same. Each Investor shall have fifteen
(15) days from the date of receipt of any such notice to agree to purchase
shares of such New Securities (up to the amount referred to in subsection 2.1
(a)), for the price and upon the terms specified in the notice, by giving
written notice to the Company and stating therein the quantity of New Securities
to be purchased. If any Investor fails to agree to purchase its full Pro Rata
Portion within such fifteen (15) day period, the Company will give the Investors
that did so agree (the "Electing Investors") notice of the number of shares
which were not subscribed for by the non-electing Investors. Such notice may be
by telephone if followed by written confirmation within two (2) days. The
Electing Investors shall have ten (10) business days from the date of such
notice to agree to purchase their Pro Rata Portion of all of the New Securities
not purchased by such non-electing Purchasers.
(d) Exercise of Right. If any Investor exercises its right of first
offer hereunder, the closing of the purchase of the New Securities with respect
to which such right has been exercised shall take place within ninety (90)
calendar days after each Investor gives notice of such exercise, which period of
time shall be extended in order to comply with applicable laws and regulations.
Upon exercise of such right of first offer, the Company and such Investor shall
be legally obligated to consummate the purchase contemplated thereby and shall
use their best efforts to secure any approvals required in connection therewith.
(e) Lapse and Reinstatement of Right. In the event an Investor fails
to exercise the right of first offer provided in this Section 2.1 within said
fifteen (15) day period, the Company shall have ninety (90) days thereafter to
sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within sixty (60) days from the date
of said agreement) to sell the New Securities not elected to be purchased by
such Investor at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities or entered into an agreement
to sell the New Securities within said ninety (90) day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) days
from the date of said agreement), the Company shall not thereafter issue or sell
any New Securities without first offering such securities to each Investor in
the manner provided above.
(f) Assignment. The right of each Investor to purchase any part of
the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of an Investor, or other persons or
organizations who acquire at least one hundred thousand (100,000) shares of
Restricted Securities (as adjusted for stock splits and the like).
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2.2 ELECTION OF DIRECTORS. The Holders shall vote their respective
shares of the Company's capital stock in favor of the nominees to the
Corporation's Board of Directors who are nominated as follows:
(i) for as long as at least 100,000 shares of Series A
Preferred are outstanding, the holders of at least one-half (50%) the Series A
Preferred then outstanding shall be entitled to nominate one (i) representative
to be elected as a member of the Corporation's Board of Directors;
(ii) for as long as at least 200,000 shares of Series B
Preferred are outstanding, FBR Technology Venture Partners I, L.P. shall be
entitled to nominate one (1) representative to be elected as a member of the
Corporations Board of Directors and Xxxxxxxx Fund, LP shall be entitled to
nominate one (1) representative to be elected as a member of the Corporation's
Board of Directors;
(iii) for as long as B & T holds at least 500,000 shares of
Common Stock, B & T shall have the right to nominate one (1) representative to
be elected as a member of the Corporation's Board of Directors;
(iv) for as long as at least 900,000 shares of Series C are
outstanding (as adjusted for stock splits, combinations, dividends or similar
recapitalizations) shall remain outstanding, Tribune Company shall be entitled
to nominate one (1) representative;
(v) for so long as Xxxx X. Xxxx continues in the employ of
the Corporation or holds at least 100,000 shares of Common Stock, Xxxx X. Xxxx
shall be entitled to nominate a member of the Corporation's Board of Directors;
(vi) for so long as Xxxxxxx X. Xxxx continues in the employ
or the Corporation or holds at least 100,000 shares of Common Stock, Xxxxxxx X.
Xxxx shall be entitled to nominate a member of the Corporation's Board of
Directors; and
(vii) any representatives to be elected as a member of the
Corporation's Board of Directors to replace any representative due to the
failure of the named parties in paragraphs (i) through (vi) above to continue to
meet the conditions of such respective provisions, shall be mutually agreed upon
between the Corporation and the holders of two-thirds (66 2/3%) of the then
outstanding Preferred Stock, which approval may be withheld or given in the sole
and absolute discretion of the holders of the Preferred Stock.
(c) In the case of any vacancy (other than a vacancy caused by
removal) in the office of a director occurring among the directors elected by
holder(s) of stock pursuant to this Section 2.2, the remaining directors so
elected by such holder(s) may by affirmative vote of at least one-half (50%)
thereof (or the remaining director so elected if there be but one and, if there
are no such directors remaining, by the holder(s) who has the right to designate
such director as described in this Section 2.2, if such holder(s) has the
authority to designate a representative to the Board of Directors or, if no such
particular stockholder has such rights by the affirmative vote of the holders of
a majority of the shares of that class or series), elect successor or successors
to hold office for the unexpired term of the director or directors whose place
or places shall be vacant. Any director who shall have been elected by any
particular holder(s) or by any
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directors so elected as provided in the immediately preceding sentence hereof
may be removed during the aforesaid term of office, either with or without
cause, by, and only by, the affirmative vote of the holder(s) of stock entitled
to elect such director or directors, given either at a special meeting of such
holder(s) duly called for that purposed or pursuant to a written consent of
stockholders, and any vacancy thereby created may be filled by the holder(s) of
stock represented at the meeting or pursuant to unanimous written consent.
2.3 TERMINATION OF RIGHT OF FIRST OFFER AND ELECTION OF DIRECTORS.
The right of first offer granted under Section 2.1 of this Agreement and the
election of directors provision set forth under Section 2.2 of this Agreement
shall terminate immediately prior to and be of no further force or effect on or
after the date of the closing of the Company's first sale of its Common Stock
pursuant to an firm commitment underwritten public offering (a "Qualifying
Public Offering") pursuant to which all outstanding shares of Preferred Stock
are converted, automatically or otherwise, into shares of Common Stock of the
Company.
SECTION 3
AFFIRMATIVE COVENANTS OF THE COMPANY
The Company hereby covenants and agrees as follows:
3.1 FINANCIAL INFORMATION. So long as an Investor is a Holder, the
Company will furnish to such Holder, as soon as practicable after the end of
each fiscal year, but in no event more than ninety (90) days after the end of
such fiscal year, an audited consolidated balance sheet of the Company and
audited consolidated statements of income, shareholders' equity and cash flows
for such year, as well as annual budgets. Additionally, the Company will deliver
to such Holder, as soon as practicable after the end of each calendar quarter,
and calendar month, consolidated balance sheets of the Company and consolidated
statements of income and cash flow for such calendar quarter or calendar month
and for the current fiscal year to date.
3.2 DELIVERY OF INFORMATION. So long as a Series B Investor or Series C
Investor is a Holder, the Company will furnish to such Holder the same written
information it delivers to its Board of Directors. In addition, the Company will
deliver to a Holder all other information reasonably requested by such Series B
Investor or Series C Investor. All information hereafter furnished to such
Holder hereunder shall be deemed confidential and shall be kept in strict
confidence by such Holder under appropriate safeguards; provided, that the
foregoing restriction shall not apply to any information which (i) as shown by
written records, was lawfully in the possession of such Holder prior to any
disclosure by the Company, so long as the source of such information was not
bound by a confidentiality agreement with the Company in respect thereof, or
(ii) is generally available to the public other than as a result of disclosure
by such Holder.
3.3 INSPECTION. The Company shall permit each Investor, at such
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 3.3 to provide access to any information which it
reasonably considers to be a trade secret or similar confidential information.
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3.4 EXPENSES OF THE BOARD OF DIRECTORS. The Company shall pay the
reasonable, preapproved expenses of the members of the Board of Directors,
including airfare and hotel costs, incurred in connection with their service on
the Board of Directors.
3.5 RESERVED EMPLOYEE SHARES. The shares of Common Stock reserved for
employees, officers, of, and consultants to, the Company (the "Employee
Shares"), are to be issued from time to time solely under the Company's 1998
Stock Plan (the "Stock Plan") as may be determined and approved by the Board of
Directors subject to Section 3.12 hereof. Unless otherwise agreed to by the
Board of Directors and subject to Section 3.12 hereof, Employee Shares subject
to options issued under the Stock Plan or other approved plans will vest, until
the option holder's employment with or services to the Company terminate, over a
four year period on an equal monthly basis. The Company shall retain a right of
first refusal, which right shall be freely assignable and, with respect to all
such Employee Shares subject to such options, the holder of such Employee Shares
shall agree to a market standoff provision consistent with the market standoff
provision contained in Section 1.14.
3.6 ACQUISITION OF STOCK. All shares of Preferred Stock held or
acquired by the Investors or by affiliated entities or persons shall be
aggregated together for the purpose of determining the availability of any
rights under this Section 3.
3.7 TITLES AND SALARIES. Titles of Company management shall be agreed
upon by the Board of Directors. All salaries must be reviewed and approved by
the Board of Directors.
3.8 BOARD OF DIRECTORS MEETINGS. The Board of Directors shall meet on a
monthly basis until such time as the unanimous Board of Directors determine
otherwise. The meetings shall be held at the principal office of the Company or
in any other place the directors may determine. If the Chairman is not present
at a meeting of the Board of Directors, the directors present may appoint one of
their number to act as Chairman for the purpose of the meeting. A meeting of
directors may be held by means of any telephone, electronic or other
communications facilities which permit all persons participating in the meeting
to communicate with each other simultaneously and instantaneously, and a
director participating in a meeting by those facilities is deemed to be present
at that meeting.
3.9 IRC SECTION 305. So long as any shares of Preferred Stock remain
outstanding, the Company will not, without approval of holders of a majority of
each series of Preferred Stock then outstanding, do any act or thing which would
result in taxation of the holders of shares of the Preferred Stock under Section
305 of the Internal Revenue Code of 1986, as amended (or any comparable
provision of the Internal Revenue Code as hereafter from time to time amended).
3.10 BOARD OF DIRECTORS.
(a) In any and all elections of directors of the Company (whether at
a meeting or by written consent in lieu of a meeting), all parties hereto shall
vote or cause to be voted all shares of the Company's capital stock then owned
by him or it, or over which he or it has voting control, and otherwise use his
or its respective best efforts, so as to fix the number of directors as set
forth in Section 2.2 of this Agreement and to elect the nominees nominated in
accordance with Section 2.2 of this Agreement.
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(b) The Company shall provide each of the Investors with 30 days'
prior written notice of any intended mailing of a notice to the Investors for a
meeting at which directors are to be elected. The Company agrees to nominate and
recommend for election as directors only the individuals designated pursuant to
Section 2.2 of this Agreement.
3.11 POSITIVE COVENANTS. Subject to Section 3.15, so long as
Registrable Securities are outstanding, the Company will:
(a) promptly pay and discharge, or cause to be paid and discharged,
when due and payable, all lawful taxes, assessments, and governmental charges or
levies imposed upon the income, profits, property, or business of the Company or
any subsidiary; provided, however, that any such tax, assessment, charge, or
levy need not be paid if the validity thereof shall currently be contested in
good faith by appropriate proceedings and if the Company shall have set aside on
its books adequate reserves with respect thereof, and provided further, that the
Company will pay all such taxes, assessments, charges, or levies forthwith upon
the commencement of proceedings to foreclose any lien that may have attached as
security therefor;
(b) keep its properties and those of its subsidiaries in good
repair, working order, and condition, reasonable wear and tear excepted, and
from time to time make all needful and proper repairs, renewals, replacements,
additions, and improvements thereto;
(c) keep its assets and those of its subsidiaries that are of an
insurable character insured by financially sound and reputable insurers against
loss or damage by fire, extended coverage, and explosion insurance in amounts
customary for companies in similar businesses similarly situated; and the
Company will maintain, with financially sound and reputable insurers, insurance
against other hazards, risks, and liabilities to persons and property to the
extent and in the manner customary for companies in similar businesses similarly
situated;
(d) keep true records and books of account in which full, true, and
correct entries will be made of all dealings or transactions in relation to its
business and affairs in accordance with generally accepted accounting principles
applied on a consistent basis;
(e) duly observe and conform to all valid requirements of
governmental authorities relating to the conduct of their businesses or to their
property or assets;
(f) maintain in full force and effect its corporate existence,
rights, and franchises and all licenses and other rights to use patents,
processes, licenses, trademarks, trade names, or copyrights owned or possessed
by it or any subsidiary and deemed by the Company to be necessary to the conduct
of its business;
(g) the Company will retain independent public accountants of
recognized national standing who shall certify the Company's financial
statements at the end of each fiscal year. In the event the services of the
independent public accountants so selected, or any firm of independent public
accountants hereafter employed by the Company are terminated, the Company will
promptly thereafter notify the Investors and will request the firm of
independent public accountants whose services are terminated to deliver to the
Investors a letter from such firm setting forth the reasons for the termination
of their services. In the event of such termination, the Company will promptly
thereafter engage another firm of independent public
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accountants of recognized national standing. In its notice to the Investors the
Company shall state whether the change of accountants was recommended or
approved by the Board of Directors of the Company or any committee thereof;
(h) cause each person now or hereafter employed by it or any
subsidiary with access to confidential information to enter into a proprietary
information and inventions agreement substantially in form acceptable to the
Company and the Investors;
(i) and hold monthly meetings of the Board of Directors.
3.12 NEGATIVE COVENANTS.
(a) Subject to Section 3.15, so long as any shares of Series B
Preferred or Series C Preferred remain outstanding, the Company will not execute
any Major Actions (as hereinafter defined) without the majority vote of the
Board of Directors, which vote must include the affirmative vote of both members
of the Board of Directors nominated by the Series B Investors and the member of
the Board of Directors nominated by Tribune Company, as the case may be. Major
Actions shall be limited to the following:
(i) the issuance of indebtedness for borrowed money in excess
of One Hundred Thousand Dollars ($100,000);
(ii) the sale, conveyance, or other disposition, including a
merger, consolidation or reorganization, of all or substantially all of the
Company's property or business;
(iii) repurchase, redemption or other acquisition of
outstanding shares of the Company's capital stock (other than redemption from
employees in connection with their termination);
(iv) an acquisition by the Company of capital assets for a
consideration in excess of One Hundred Thousand Dollars ($100,000) or other
material expenditures in excess of Two Hundred Thousand Dollars ($200,000) not
included in the annual operating budget;
(v) changes in the list of Major Actions;
(vi) the approval of an annual budget;
(vii) any increase in the number of shares reserved for
issuance under the Company's stock option plans;
(viii)any option granted under the Company's stock option plan
(or shares for which options granted thereunder have been exercised) where such
grant vests at a rate in excess of 25% per annum from the date of issuance;
(ix) the entering into a new line of business not specified or
contemplated in the Business Plan dated July, 1999; and
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(x) any amendment to the Company's Third Amended and Restated
Certificate of Incorporation or Bylaws.
(b) Subject to Section 3.15, the Company shall not enter into any
transaction with any director, officer or affiliated party unless such
transaction is approved by a majority of the disinterested members of the Board
of Directors. A "disinterested" director shall mean any director who does not
have any direct or indirect financial or other interest in a transaction except
for an interest arising as a result of his or her shareholdings in the Company.
3.13 STOCK RESTRICTION AGREEMENTS. The Company will cause each person
now or hereafter employed by the Company or any subsidiary of the Company to
enter into stock restriction and market stand-off agreements substantially in
form acceptable to the Investors.
3.14 OBSERVER RIGHTS. For so long as Carlyle Venture Partners, L.P. or
its affiliates shall be a stockholder, such entities shall be entitled to the
rights specified in the Management Letter dated August 26, 1999, attached to the
Series C Stock Purchase Agreement as Exhibit H.
3.15 TERMINATION OF SECTION 3 RIGHTS. The rights granted under this
Section 3 shall terminate immediately prior to and be of no further force or
effect on or after the date of the closing of the first Qualifying Public
Offering.
SECTION 4
MISCELLANEOUS
4.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the laws of the State of Delaware without reference to conflict of laws of
principles.
4.2 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
4.3 SURVIVAL. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Investor and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or exhibit delivered by or on behalf of the Company
pursuant hereto shall be deemed to be the representations and warranties of the
Company hereunder as of such date of such certificate or exhibit.
4.4 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement and the other documents
delivered pursuant hereto constitute the full and entire understanding and
agreement among the parties with regard to the subjects hereof and thereof and
supercede any prior discussions, agreements or understandings of the parties
hereto relating to the matters contained herein, including without limitation,
the Equity Investment and Operating Agreement, dated as of July
20
24
10, 1988 (as amended by the First Amendment, dated as of October 9, 1998) by and
between the Company and Xxxxx & Xxxxxx, Inc (in particular, Article 5 thereof),
the Original Agreement and the Second Agreement. Neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided, however, that
(i) a majority of the outstanding Registrable Securities (whether or not
converted) held by the Series A Investors and B&T, (ii) a majority of the
outstanding Registrable Securities (whether or not converted) held by the Series
B Investors and (iii) a majority of the outstanding Registrable Securities
(whether or not converted) held by the Series C Investors, each group voting
separately as a class, may waive or amend, on behalf of the Investors and other
holders of Shares, any provisions hereof benefiting the Investors so long as the
effect thereof will be that the Investors and other holders of Shares will be
treated equally; provided, further, that (i) any action that would affect the
rights of Xx. Xxxx or Xx. Xxxx under this Agreement shall only be effective with
their written consent and (ii) the rights of any series of Preferred Stock, any
individual, or any entity to nominate a director under Section 2.2 shall not be
amended without the consent of such individual or a majority of the holders of
such series.
4.6 EFFECT OF AMENDMENT OR WAIVER. Each Investor and its successors and
assigns acknowledge that by the operation of Section 4.5 hereof the Company and
the holders of a majority of the outstanding Registrable Securities held by the
parties specified will have the right and power to diminish or eliminate any or
all rights or increase any or all obligations pursuant to this Agreement.
4.7 RIGHTS OF HOLDERS. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
4.8 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
the earlier of (a) when received, (b) upon personal delivery to the party to be
notified, (c) one business day after delivery via facsimile, (d) one day after
being deposited with an overnight courier service or (e) three days after
deposit with the United States Post Office, by registered or certified mail,
postage prepaid, return receipt requested, and addressed (i) if to an Investor,
at such Investor's address set forth on Exhibit A, Exhibit B, or Exhibit C or at
such address as such Investor shall have furnished to the Company in writing, or
(ii) if to any other holder of any Shares, at such address as such holder shall
have furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Shares who has so furnished an address to the Company, or (iii) if to the
Company, at its address set forth on the first page of this Agreement addressed
to the attention of the Corporate Secretary, or at such other address as the
Company shall have furnished to the Investors. If notice is provided by mail,
notice shall be deemed to be given upon proper deposit with the United States
mail.
4.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any holder of any Shares upon any breach or default
of the Company under
21
25
this Agreement shall impair any such right, power or remedy of such holder, nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence thereof or of any similar breach or default thereafter occurring;
nor shall any waiver of any single breach or default be deemed a waiver of any
other breach or default theretofore or thereafter occurring. Any waiver, permit,
consent or approval of any kind or character on the part of any holder of any
breach or default under this Agreement, or any waiver on the part of any holder
of any provisions or conditions of this Agreement, must be in writing and shall
be effective only to the extent specifically set forth in such writing or as
provided in this Agreement. All remedies, either under this Agreement or by law
or otherwise afforded to any holder, shall be cumulative and not alternative.
4.10 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all parties hereto,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument. Upon
completion of any additional closings of the purchases of additional shares of
Series C Preferred pursuant to the Series C Stock Purchase Agreement of even
date herewith, upon execution of a signature page counterpart and without need
for an amendment hereto except to add such purchaser's name to Exhibit C hereto,
any such purchaser shall become a party to this Agreement, and shall be deemed
an "Investor" for purposes of this Agreement, and shall have the identical
rights and obligations hereunder.
4.11 SEVERABILITY OF THIS AGREEMENT. If any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement will continue in full force and effect
without said provision and the parties agree to replace such provision with a
valid and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such provisions; provided that no such
severability will be effective against a party if it materially and adversely
changes the economic benefits of this Agreement to such party.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
22
26
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Investors' Rights Agreement as of the date first above written.
XXXXXXXXXXXX.XXX INC.
By: /s/ Xxxx X. Xxxx
---------------------------
Xxxx X. Xxxx
Chief Executive Officer
23
27
PINNACLE BANCORP, INC.
c/o Stone Pine Companies
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
XXXXX PINE XXXXXXXXXXXX.XXX, LLC
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title:
------------------------------
STONE PINE XXXXXXXXXXXX.XXX II,
LLC
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
XXXXX & XXXXXX, INC.
Five Xxxx Xxxxxx Xxxxx
Xxxxx 000
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxx Xxxxxxx
------------------------------------
Name: Xxx Xxxxxxx
Title: Executive Vice President
24
28
Xxxx X. XxXxx, Xx.
0000 Xxxx Xxxxx Xxxx.
0xx Xxxxx
Xxxxxx, XX 00000
By: /s/ Xxxx X. XxXxx, Xx.
------------------------------------
Name: Xxxx X. XxXxx, Xx.
Xxxx X. Xxxxxx
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Name:
Title:
FBR TECHNOLOGY VENTURE
PARTNERS I, L.P.
Potomac Tower
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
By FBR Venture Capital Managers, Inc.
By: /s/ FBR Technology Venture Partners I, L.P.
--------------------------------------------
Name:
Title:
XXXXXXXX IX
A Delaware Limited Partnership
c/x Xxxxxxxx Fund, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
By: Xxxxxxxx IX Management, L.L.C.
A Delaware Limited Liability Company,
Its General Partner
By: /s/ Xxxxxxxx IX Management, L.L.C.
------------------------------------
Name:
-------------------------------
Title:
------------------------------
25
29
XXXXXXXX ASSOCIATES FUND IV
c/x Xxxxxxxx Fund, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
A Delaware Limited Partnership
By: Xxxxxxxx IX Management, L.L.C.
A Delaware Limited Liability Company,
Its General Partner
By: /s/ Xxxxxxxx IX Management, L.L.C.
------------------------------------
Name:
-------------------------------
Title:
------------------------------
Xxxxxxx Xxxxx
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Xxxxxx X. Xxxxxxx
8 Coach and Xxxx Xxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxx
26
30
XXXXXXX MANAGEMENT TRADING, INC.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
By: /s/ Xxxxxxx Management Trading, Inc.
-------------------------------------
Name:
Title
XXXX IRREVOCABLE TRUST DATED
7/30/98
Xxxxxx Xxxxx, Esq. Trustee
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx, Esq.
Title: Trustee
Xxxxxx and Blossom Xxxxxxxxx, JTWRS
0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxx
By: /s/ Blossom Xxxxxxxxx
------------------------------------
Name: Blossom Xxxxxxxxx
Xxxxxxx X. Xxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Xxxx X. Xxxx
0000 Xxxxxx Xxxxxx, X.X., Xxx. 0000
Xxxxxxxxxx, X.X. 00000
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
27
31
Xxxxx and Xxxxx Xxxx, JTWRS
0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Xxxxx Xxxx
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Xxxxxxx X. Xxxx
0000 Xxxxxx Xxxxxx, X.X., Xxx. 000
Xxxxxxxxxx, X.X. 00000
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Xxxxx Xxxxxxx
0000 Xxxx Xxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxx
Xxxxx Xxxxxxxxx
0000 XX 000xx Xxxxxx
Xxxxx Xxxxx, XX 00000
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxx Xxxxxxxxx
28
32
Xxxxx X. Xxxxxxxxxxxxx &
Xxxxxx X. Xxxxxxxxxxxxx
0000 00xx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
By: /s/ Xxxxx X. Xxxxxxxxxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxxxxxxxxx
By: /s/ Xxxxxx X. Xxxxxxxxxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxxx
Xxxxxxx X. Xxxx
000 Xxx Xxxxx
Xxxxxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
Xxxxx X. Xxxx
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
By: /s/ Xxxxx X. Xxxx
------------------------------------
Name: Xxxxx X. Xxxx
Xxxx X. Xxxx
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
Xxxxxxx X. Xxxx
000 Xxxxxxx Xxxx Xxxx, #0X
Xxx Xxxx, XX 00000
By: /s/ Xxxxxxx X. Xxxx
------------------------------------
Name: Xxxxxxx X. Xxxx
29
33
Xxxxxx Xxxx
0000 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
By: /s/ Xxxxxx Xxxx
------------------------------------
Name: Xxxxxx Xxxx
Xxxxxx Xxxxx
0000 00xx Xxxxxx, X.X. # 0000
Xxxxxxxxxx, X.X.
By: /s/ Xxxxxx Xxxxx
------------------------------------
Name: Xxxxxx Xxxxx
Xxxxxx Xxxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
XXXXX FAMILY TRUST U/D/T
DATED JANUARY 13, 1998
1950 TASSO
Xxxx Xxxx, XX 00000
Lawrence, NY
By: /s/ Xxxxx Family Trust U/D/T
------------------------------------
Name:
Title: Trustee
30
34
WS INVESTMENT COMPANY 98B
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
By: /s/ WS Investment Company 98B
------------------------------------
Name:
Title
SDJ CAPITAL, INC.
c/o Xxx Xxxxxxxx
0000 Xxxxxxxx, Xxx. 00X
Xxx Xxxx, XX 00000
By: /s/ Xxx Xxxxxxxx
------------------------------------
Name: Xxx Xxxxxxxx
THE TRIBUNE COMPANY
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
By: /s/ The Tribune Company
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
31
35
CARLYLE VENTURES PARTNERS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
By: /s/ J. Xxxxxxxx Xxxxx
-----------------------------
J. Xxxxxxxx Xxxxx
Attorney-In-Fact
C/S VENTURE INVESTORS, L.P.
By: Its General Partner, TCG Ventures, Ltd.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
By: /s/ J. Xxxxxxxx Xxxxx
-----------------------------
J. Xxxxxxxx Xxxxx
Attorney-In-Fact
CARLYLE U.S. VENTURE PARTNERS, L.P.
By: Its General Partner, TCG Ventures, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
By: /s/ J. Xxxxxxxx Xxxxx
-----------------------------
J. Xxxxxxxx Xxxxx
Attorney-In-Fact
CARLYLE VENTURE COINVESTMENT L.L.C.
By: Its Manager TCG Ventures, L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
By: /s/ J. Xxxxxxxx Xxxxx
-----------------------------
J. Xxxxxxxx Xxxxx
Attorney-In-Fact
32
36
THE BOOK TRUST
c/x Xxxxxxxx Fund
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
By: /s/ The Book Trust
------------------------------
Name:
----------------------------
Authorized Signatory
Xxxxx Xxxxxx
c/x Xxxxxxxx Fund
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
/s/ Xxxxx Xxxxxx
--------------------------------
Xxxxx Xxxxxx
SOUTHEASTERN TECHNOLOGY FUND, L.P.
By: Southeastern Capital Company, L.L.C.,
Its General Partner
Attn: Xxxxxxx Xxxx
0000 Xxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxx 00000
By: /s/ Xxxxx X. Xxxxxx
------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Member
THE AFFILIATED COMPANIES, INC.
0000 Xxxxxx Xxxxxx #000
Xxxxx, XX 00000
By: /s/ Xxxxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxxxx X. Xxxxxx
Title:
------------------------
33
37
ROLLINGWOOD CAPITAL PARTNERS, L.L.C.
By: /s/ Xxxx Xxx
---------------------------------
Xxxx Xxx
Address: 0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxx Xxxxxx, XX 00000
XXXXXX.XXX INVESTMENTS I, L.P.
By: Its General Partner, Xxxxxx.xxx
By: /s/ Xxxxxxx X. Xxxxxxxx
---------------------------------
Xxxxxxx X. Xxxxxxxx
President, Xxxxxx.xxx
Address: 000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000
/s/ Xxxxxxx Xxxxx
---------------------------------------
Xxxxxxx Xxxxx
Address: 000 Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
34
38
Xxxxx X. Xxxx and Xxxxx Xxxx JTWROS
By: /s/ Xxxxx X. Xxxx
-----------------------------------
Name: Xxxxx X. Xxxx
By: /s/ Xxxxx Xxxx
-----------------------------------
Name: Xxxxx Xxxx
Address: 0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
/s/ Xxxxx Xxxx
--------------------------------------
Xxxxx Xxxx
Address: 0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
35
39
/s/ Xxxxx Xxxxxxxx
------------------------------------
Xxxxx Xxxxxxxx
Address: 0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxxx
------------------------------------
Xxxxxx X. Xxxxx
Address: 0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
EAGLE ROCK VENTURES, L.P.
By: /s/ Eagle Rock Ventures, L.P.
------------------------------------
Name:
----------------------------
Title:
---------------------------
Address: c/o xxxX.xxx
0 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
/s/ Xxxxxx X. Xxxx
--------------------------------------
Xxxxxx X. Xxxx
Address: c/o xxxX.xxx
0 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
36
40
/s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------
Xxxxxx X. Xxxxxxxxx
Address: c/o xxxX.xxx
0 Xxxxxxxxx Xxxxxxx
Xxxxx 000
Xxxxxxx, XX 00000
ESHER LIMITED
By: /s/ Esher Limited
------------------------------------
Name:
----------------------------
Title:
---------------------------
Address: X.X. Xxx 000
Hemisphere House
00 Xxxxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxx XX0 0XX
Channel Islands
United Kingdom
37
41
/s/ Xxxxx X. Xxxxxxxx
-----------------------------------
Xxxxx X. Xxxxxxxx
Address: Staubach Companies
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
38
42
EXHIBIT A
SERIES A PREFERRED INVESTOR SCHEDULE
NUMBER OF SHARES OF
NAME AND ADDRESS SERIES A PREFERRED STOCK
---------------- ------------------------
StonePine XxxxxxxXxxxx.xxx LLC 714,285
0000 Xxxxxx #000
Xxxxx, XX 00000
Pinnacle Bancorp, Inc. 214,285
c/o Stone Pine Companies
0000 Xxxxxx #000
Xxxxx, XX 00000
Xxxxxxx Xxxxx 142,857
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxx Management & Trading, Inc. 142,857
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 71,428
8 Coach and Xxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxx Irrevocable Trust dated 7/30/98 71,428
Xxxxxx Xxxxx, Esq. Trustee
000 X. Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Xxxxxx and Blossom Xxxxxxxxx, JTWRS 71,428
0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxx 35,714
0000 Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxx X. Xxxx 35,714
0000 Xxxxxx Xxxxxx, X.X., Xxx. 000
Xxxxxxxxxx, X.X. 00000
Xxxx X. Xxxx 35,714
0000 Xxxxxx Xxxxxx, XX, #0000
Xxxxxxxxxx, XX 00000
Xxxxx Xxxx 35,714
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
43
Xxxxx Xxxxxxx 35,714
0000 Xxxx Xxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Xxxxx Xxxxxxxxx 35,714
0000 XX 000xx Xxxxxx
Xxxxx Xxxxx Xxxxx, XX 00000
Xxxxx X. Xxxx 35,714
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Xxxxx X. Xxxxxxxxxxxxx & 35,714
Xxxxxx X. Xxxxxxxxxxxxx
0000 00xx Xxxxxx, XX
Xxxxxxxxxx, XX 00000
Xxxx X. Xxxx 21,428
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Xxxxx and Xxxxx Xxxx, JTWRS 17,857
0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
Xxxxxxx X. Xxxx 17,857
000 Xxx Xxxxx
Xxxxxxx, XX 00000
Xxxxxxx X. Xxxx 14,285
000 Xxxxxxx Xxxx Xxxx, #0X
Xxx Xxxx, XX 00000
Xxxxxx Xxxxx 178,571
0000 00xx Xxxxxx, X.X. #0000
Xxxxxxxxxx, X.X.
Xxxxxx Xxxxxxxx 35,714
000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX
Xxxxx Family Trust u/d/t dated January 13, 1998 7,142
1950 Tasso
Xxxx Xxxx, XX 00000
WS Investment Company 98B 28,572
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
SDJ Capital, Inc. 35,714
c/o Xxx Xxxxxxxx
0000 Xxxxxxxx, Xxx. 00X
Xxx Xxxx, Xxx Xxxx 00000
44
EXHIBIT B
SERIES B PREFERRED INVESTOR SCHEDULE
NUMBER OF SHARES OF
NAME AND ADDRESS SERIES B PREFERRED STOCK
---------------- ------------------------
FBR Technology Venture Partners I, L.P. 1,388,889
Potomac Tower
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Pinnacle Bancorp, Inc. 138,889
c/o Stone Pine Companies
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
Pinnacle Bancorp, Inc. 118,056
c/o Stone Pine Companies
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
Stone Pine XxxxxxxXxxxx.xxx, LLC 347,222
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
Stone Pine XxxxxxxXxxxx.xxx II, LLC 506,944
0000 Xxxxxx Xxxxxx, #000
Xxxxx, XX 00000
Xxxxx & Xxxxxx, Inc. 000,000
Xxxx Xxxxxx Xxxxx
Xxxxx 000
0000 Xxxxx Xxxxx Xxxxxxx
Xxxxxxxxx, XX 00000
Xxxx X. XxXxx, Xx 69,445
[as Bridge Loan Holder]
0000 Xxxx Xxxxx Xxxx.
0xx Xxxxx
Xxxxxx, XX 00000
45
EXHIBIT B
SERIES B PREFERRED INVESTOR SCHEDULE
NUMBER OF SHARES OF
NAME AND ADDRESS SERIES B PREFERRED STOCK
---------------- ------------------------
Xxxx X. Xxxxxx 34,722
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxxxx IX 2,854,027
x/x Xxxxxxxx Xxxx, X.X.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxxxxxx Associates Fund IV 150,212
c/x Xxxxxxxx Fund, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxxxx Xxxx 694,445
0000 Xxxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, X.X. 00000
Xxxxxxx Xxxxx 78,460
000 Xxxxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxx X. Xxxxxxx 69,444
8 Coach and Xxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxx X. Xxxx 19,615
0000 Xxxxxx Xxxxxx, X.X., Xxx. 0000
Xxxxxxxxxx, X.X. 00000
Xxxxx and Xxxxx Xxxx 8,681
0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
Xxxxx Xxxx 19,615
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
46
EXHIBIT B
SERIES B PREFERRED INVESTOR SCHEDULE
NAME AND ADDRESS NUMBER OF SHARES OF
---------------- SERIES B PREFERRED STOCK
------------------------
SDJ Capital, Inc 19,615
Attn: Xxx Xxxxxxxx
0000 Xxxxxxxx, Xxx. 00X
Xxx Xxxx, XX 00000
AND
SDJ Capital, Inc.
Attn: Xxxx Xxxxx
000 Xxxx Xxxx Xxxxx, #0000
Xxxxx Xxxxx, XX 00000
Xxxxxxx X. Xxxx 19,615
0000 Xxxxxx Xxxxxx, X.X., Xxx. 000
Xxxxxxxxxx, X.X. 00000
Xxxxxxx X. Xxxx 17,361
000 Xxx Xxxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxx 17,361
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Xxxx Xxxx 6,944
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
47
EXHIBIT C
SERIES C PREFERRED INVESTOR SCHEDULE
NUMBER OF SERIES C
NAME AND ADDRESS PREFERRED STOCK SHARES
---------------- ----------------------
TRIBUNE COMPANY 2,976,191
000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
CARLYLE VENTURES PARTNERS, L.P. 1,490,967
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
C/S VENTURE INVESTORS, L.P. 311,250
0000 Xxxxxxxxxxxx Xxxxxx, X.X.
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
CARLYLE U.S. VENTURE PARTNERS, L.P. 000,000
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
CARLYLE VENTURE COINVESTMENT L.L.C.
0000 Xxxxxxxxxxxx Xxxxxx, X.X. 000,000
Xxxxx 000 Xxxxx
Xxxxxxxxxx, XX 00000
XXXXXXXX IX
c/x Xxxxxxxx Fund, L.P. 1,130,953
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
XXXXXXXX ASSOCIATES FUND IV
c/x Xxxxxxxx Fund, L.P. 59,524
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
VARSITY BOOKTRUST
c/x Xxxxxxxx Fund, L.P. 491,074
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
48
THE AFFILIATED COMPANIES, INC. 297,620
0000 Xxxxxx Xxxxxx #000
Xxxxx, XX 00000
FBR TECHNOLOGY VENTURE 595,239
PARTNERS I, L.P.
Potomac Tower
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
SOUTHEASTERN TECHNOLOGY FUND, 297,620
L.P.
Attn: Xxxxxxx Xxxx
0000 Xxxxx Xxxxx, Xxxxx X
Xxxxxxxxxx, Xxxxxxx 00000
Xxxxxx Xxxx 357,143
0000 Xxxxxxxxxxxxx Xxxxxx, X.X.
Xxxxxxxxxx, X.X. 00000
Xxxxx Xxxxxx 14,881
c/x Xxxxxxxx Fund, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxx Xxxx 7,441
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
Xxxxx X. Xxxx 7,441
00 Xxxxxxxxx Xxxxxx
Xxxxxxxxxxxxx, XX 00000
ROLLINGWOOD CAPITAL PARTNERS, L.L.C. 148,810
0000 Xxxxxx Xxxxxxxxx
Xxxxx 000
XxXxxx XX 00000
XXXXXX.XXX INVESTMENTS I, L.P. 44,643
000 Xxxxxxxx Xxxxxx
Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxxx X. Xxxx and Xxxxx Xxxx JTWROS 37,203
0000 Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxxx Xxxx 7,441
0000 Xxxxxxxx Xx Xxxxx
Xxxxx, XX 00000
49
Xxxxx Xxxxxxxx 14,881
0000 Xxxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Xxxx X. Xxxx 29,750
0000 Xxxxxx Xxxxxx, XX
Xxxxxxxxx 0000
Xxxxxxxxxx, XX 00000
Xxxxxxx Xxxxx 29,762
000 Xxxxx Xxxxxx Xxxxx
Xxxxx Xxxxx, XX 00000
Xxxxxx Xxxxx 59,524
0000 00xx Xxxxxx, X.X. #0000
Xxxxxxxxxx, XX
Xxxxxx X. Xxxxx 14,881
0000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
EAGLE ROCK VENTURES, L.P. 14,881
c/o xxxX.xxx
0 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxx 7,441
c/o xxxX.xxx
0 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx 7,441
c/o xxxX.xxx
0 Xxxxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, XX 00000
ESHER LIMITED 14,881
X.X. Xxx 000
Hemisphere House
00 Xxxxxxxx Xxxxxx
Xx. Xxxxxx, Xxxxxx XX0 0XX
Channel Islands
United Kingdom
Xxxxx X. Xxxxxxxx 29,762
Staubach Companies
0000 XXX Xxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
