INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT, dated as of the 26th day of May 1999, among
Xxxx.xxx, Inc., a Delaware corporation (the "Company"), doing business at
00 Xxxxxxxx, Xxxxx 000, Xxx Xxxx, Xxx Xxxx 00000, Xxxxxx Xxxxxx, residing at
000 Xxxxxxxxxxxxx Xxxx, Xxxxxxx, Xxx Xxxxxx, in his capacities as holder of
voting capital stock of the Company and controlling Stockholder (the
"Controlling Stockholder"), and AT&T Corp., a New York corporation and its
nominees, successors and permitted assigns (the "Warrantholder"). The
Company, the Controlling Stockholder and the Warrantholder are collectively
referred to as the "Parties."
WHEREAS, the Company has issued Warrants to the Warrantholder as
represented by the certificate of Warrants to Purchase Capital Stock dated as of
the date hereof (the "Warrant Certificate"); and
WHEREAS, in order to induce the Warrantholder to take delivery of the
Warrant Certificate and to induce the Company to issue the Warrant Certificate,
the Warrantholder, the Company and the Controlling Stockholder agree that this
Agreement shall govern the rights of the Warrantholder, the Company and the
Controlling Stockholder with respect to the subject matter set forth herein and
in connection with the terms and provisions as set forth herein;
NOW, THEREFORE, in consideration of the promises and mutual agreements
hereinafter contained, the Parties do hereby agree as follows:
ARTICLE I
DEFINITIONS AND TERMS
Section 1.1 DEFINITIONS. The following terms, as used herein, shall
have the following meanings:
"Act" means the Securities Act of 1933, as amended.
"Affiliate" means, with respect to any Person, any Person directly or
indirectly controlling, controlled by, or under common control with such Person.
"Agreement" means this Agreement, as the same may be amended or
supplemented from time to time in accordance with the terms hereof.
"Class A Common Stock" means the shares of Class A Common Stock that
the Company is authorized to issue by way of the Company's Amended and Restated
Certificate of Incorporation, and amendments thereto.
"Class B Common Stock" means the shares of Class B Common Stock that
the Company is authorized to issue by way of the Company's Amended and Restated
Certificate of Incorporation, and amendments thereto.
"Company Stock" means any shares of any class of authorized capital
stock in the Company.
"Confidential Information" means any information concerning the
businesses and affairs of the Company that is not generally available to the
public.
"Incidental Registration" has the meaning set forth in Section 2.1.1.
of this Agreement.
"Indemnified Party" and "Indemnifying Party" has the meaning set forth
in Section 2.6. of this Agreement.
"Initial Registration Date" means the Minimum Mailbox Date (as defined
in the Letter Agreement) provided that the Initial Registration Date shall occur
only if the Minimum Mailbox Date occurs prior to December 31, 2000.
"Letter Agreement" means that certain Letter Agreement executed and
delivered by the Company and the Warrantholder dated May 26, 1999.
"Party" has the meaning set forth in the preface above.
"Person" means an individual, a partnership, a limited liability
company, a corporation, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization, or a governmental entity (or any
department, agency, or political subdivision thereof).
"Registrable Securities" means (i) the Class A Common Stock issuable or
issued upon exercise of the Warrants (it being understood that if any of the
Warrants expire, in whole or in part, unexercised upon the Expiration Date as
defined in the Warrant Certificate, then the Class A Common Stock that is no
longer issuable as a result of such expiration shall not be deemed to be
Registrable Securities), (ii) any Class A Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to, or
in exchange for or in replacement of the securities referenced in clause (i) and
(ii), and (iii) any other shares of capital stock of the Company into or for
which the securities referenced in clause (i) and (ii) may be converted into or
exchanged pursuant to a recapitalization or reclassification of the Company's
capital stock.
"Third Party" means, with respect to the Warrantholder, a party other
than the Warrantholder and its wholly-owned Affiliates.
"SEC" means the Securities and Exchange Commission.
"Warrant Demand Registration" has the meaning set forth in Section
2.1.3. of this Agreement.
"Warrantholder" has the meaning set forth in the preface above.
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"Warrants" means the rights to purchase One Million (1,000,000) shares
of Class A Common Stock by the Warrantholder as represented by the Warrant
Certificate, as the same may be amended.
Section 1.2 OTHER TERMS. Other terms may be defined elsewhere in the
text of this Agreement and, unless otherwise indicated, shall have such meaning
throughout this Agreement.
Section 1.3 OTHER DEFINITIONAL PROVISIONS. The words "herein,"
"hereof," "hereto" and "hereunder" and words of similar import, when used in
this Agreement, shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The terms defined in the singular shall
have a comparable meaning when used in the plural, and vice versa, and in such
gender, as the sense and circumstances require.
ARTICLE II
REGISTRATION RIGHTS
The Company and the Warrantholder covenant and agree as follows:
Section 2.1 REGISTRATION
2.1.1. INCIDENTAL REGISTRATION. If at any time after the
Initial Registration Date, the Company proposes to register any Company Stock
under the Act for its own account or for the account of any of its stockholders,
in connection with an underwritten public offering of such Company Stock, on a
form that would also permit registration of the Registrable Securities, the
Company shall, each such time, give the Warrantholder not less than twenty (20)
days written notice of such proposed registration (the "Incidental
Registration"). Upon the written request of the Warrantholder, given within
twenty (20) days after receipt of any such notice from the Company, the Company
shall, subject to Section 2.1.2., cause to be included in such registration all
of the Registrable Securities the Warrantholder requests be registered in such
registration. There shall be no restriction with respect to the number of times
the Warrantholder may request such Incidental Registration.
2.1.2. PRO RATA INCIDENTAL REGISTRATION OF COMPANY STOCK. If
the managing underwriter of any offering described in the first sentence of
Section 2.1.1. determines that the number of shares proposed to be sold by the
Company or by other stockholders of Company Stock is greater than the number of
shares that the underwriter believes feasible to sell at the time, at the price
and upon the terms approved by the Company, then the number of shares of Company
Stock that the underwriter believes may be sold shall be allocated for inclusion
in the registration statement in the following order of priority: (A) Company
Stock sold for the account of any holders of the Company's securities if the
registration was initiated by such holders pursuant to contractual demand
registration rights and Company Stock sold for the account of Lycos, Inc.
("Lycos"), pursuant to contractual incidental registration rights that permit it
to participate in such an offering on a pro rata basis with such holders, pro
rata among such holders and Lycos according to the number of shares requested to
be registered by such holders and Lycos; (B) Company Stock sold for the account
of the Company; and (C) pro rata among any
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other holders of securities of the Company exercising contractual incidental
registration rights (other than holders described in clause (A) above if
pursuant to a demand right and other than Lycos as described in clause (A)
above) and the Warrantholder according to the number of shares requested to be
registered by such other holders and the Warrantholder; provided, however, that
(1) as between the Company, on the one hand, and the Warrantholder and other
holders referred to in clause (C) above, on the other hand, at least ten percent
(10%) of the Warrantholder's Registrable Securities and of such other holders'
registrable securities requested to be included shall be included in such
underwriting (other than the initial underwriting); and (2) the right of such
other holders and the Warrantholder to participate in the offering shall have
priority over Class A Common Stock held by employees of the Company and Class B
Common Stock held by employees of the Company. If the Warrantholder disapproves
of the terms of the underwriting (including the number of Registrable Securities
to be included), it may elect to withdraw therefrom by written notice to the
Company and the managing underwriter; provided, however, the election to
withdraw occurs within ten (10) days after the Warrantholder receives notice of
the terms of the underwriting.
2.1.3. DEMAND REGISTRATION. On or after the Initial
Registration Date, but in no event prior to 180 days after the effective date of
a registration statement filed by the Company in connection with an initial
public offering of any Company Stock or other securities under the Act, then,
upon written request of the Warrantholder that the Company effect the
registration under the Act of all or a portion of the Registrable Securities and
specifying the intended method of disposition thereof, the Company shall, within
fifteen (15) days after the Company has received such written notice, promptly
commence and use its best efforts to consummate the registration under the Act
of the Registrable Securities, or such portion thereof, and of all other stock
or securities which the Company has been requested to register by any other
holder of the Company's securities that is entitled to include securities in
such registration (the "Warrant Demand Registration"); provided, however, that
(1) the Warrantholder shall be entitled to request only one (1) Warrant Demand
Registration, provided that either (a) the Registrable Securities requested to
be included in such Warrant Demand Registration constitute at least twenty
percent (20%) of the total number of Registrable Securities issued hereunder or
(b) the anticipated gross receipts (before underwriters discounts and
commissions and costs of such registration) from the offering exceed ten million
dollars ($10,000,000), (2) a registration will not count as the permitted
Warrant Demand Registration until it has become effective, (3) the Company may
delay the filing of a registration statement under the Act as required by this
Section 2.1.3. for a period of up to sixty (60) days after the request of the
Warrantholder if the Board of Directors of the Company determines in good faith
that such Warrant Demand Registration would be materially adverse to the
interests of the Company, and in such event, the Warrantholder will be entitled
to withdraw such request and such Warrant Demand Registration will not be
counted as the Warrant Demand Registration hereunder (provided, however, that
the Company shall not use this right more than once in any one hundred eighty
(180) day period) and (4) the Company will not be required to effect a Warrant
Demand Registration within six (6) months after the effective date of a
registration in which Registrable Securities of the Warrantholder were included
pursuant to Section 2.1.1. In the event that the Warrantholder exercises the
demand registration right hereunder, and shares requested to be registered by
Lycos in connection therewith are included in such registration on a pro rata
basis with the Warrantholder's Registrable Securities,
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pursuant to section 11 of the letter agreement between Lycos and the Company
dated March 9, 1998 or otherwise, account for thirty percent (30%) or more of
the shares offered in such registered offering, then the Warrantholder shall
have the right to one (1) additional Warrant Demand Registration hereunder. If
the managing underwriter in connection with a Warrant Demand Registration
determines prior to the effectiveness of the registration statement that the
Warrantholder will be unable to sell at least 85% of the Registrable Securities
that the Warrantholder initially requested to be included in such registration
statement, then the Warrantholder may elect to withdraw the request prior to the
effectiveness of such registration statement and such Warrant Demand
Registration will not be counted as the Warrant Demand Registration hereunder.
2.1.4. PRO RATA DEMAND REGISTRATION OF COMPANY STOCK. (a) In
the event a Warrant Demand Registration is initiated subsequent to the initial
public offering of any Company Stock or other securities under the Act and such
Demand Registration is an underwritten offering, and the managing underwriter
advises the Warrantholder and the Company in writing that in the underwriter's
opinion the number of shares requested to be included exceeds the number that
can be sold in such offering, then the number of shares of Company Stock that
the underwriter believes may be sold shall be allocated for inclusion in the
registration statement in the following order of priority: (A) shares requested
to be included by the Warrantholder, together with the shares requested to be
included by Lycos to the extent Lycos is entitled to participate in such
offering on a pro rata basis with the Warrantholder, as applicable, pursuant to
contractual incidental registration rights, that in the opinion of such
underwriter can be sold prior to the inclusion of any securities of any other
security holder of the Company; provided that, if the managing underwriter
advises the Company in writing that in its opinion the aggregate number of
shares requested for inclusion by the Warrantholder, together with such shares
of Lycos, exceeds the number of such shares that can be sold in such offering,
then the Company shall include in the registration statement only such number of
shares, pro rata among the Warrantholder and Lycos, based upon the number of
shares requested to be registered by the Warrantholder and Lycos, which in the
opinion of such underwriter can be sold; (B) shares sold for the account of the
Company; and (C) pro rata among any other holders of securities of the Company
exercising contractual incidental registration rights other than any holders
whose shares are included pursuant to clause (A) above.
(b) If the Warrantholder makes a written request to exercise
rights to a Warrant Demand Registration under Section 2.1.3. prior to any other
holder of securities making a written request to exercise contractual rights to
a demand registration, then the registration following from such request shall
be a Warrant Demand Registration. If any other holder of securities makes a
written request to exercise contractual rights to a demand registration prior to
the Warrantholder making a written request to exercise rights to a Warrant
Demand Registration under Section 2.1.3., then the registration following from
such request shall not be a Warrant Demand Registration.
2.1.5. FORM S-3 DEMAND REGISTRATION RIGHTS. From and after the
Initial Registration Date, if at any time the Warrantholder holding in the
aggregate greater than fifty percent (50%) of the Registrable Securities
requests that the Company effect a Form S-3
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registration under the Act of all or a portion of the Registrable Securities,
the Company shall, within fifteen (15) days after the Company has received such
written notice, promptly commence and use its best efforts to consummate the
Form S-3 registration of the Registrable Securities under the Act; provided,
however, (A) the aggregate fair market value of the Registrable Securities
requested to be registered shall be greater than two million dollars
($2,000,000), (B) the Company shall only be required to file one Form S-3
registration every twelve (12) months, and (C) the Warrantholder who requests
that the Company effect a Form S-3 registration shall not be required to
participate in such Form S-3 registration.
2.1.6. BENEFIT OF MORE FAVORABLE RIGHTS. If at any time
registration rights are granted with respect to Company Stock or capital stock
of any Affiliate of the Company which are on terms more favorable to the holders
of such securities with respect to any material terms applicable thereto
including, without limitation, the number of times or the circumstances under
which such rights may be exercised, the expenses to be paid by the Company or
any Affiliate of the Company in connection therewith or the duration of the
availability of such rights, the Company agrees that such more favorable terms
will be exercisable by the Warrantholder automatically and without further
action by the Company. The Company covenants to give written notice to the
Warrantholder not less than ten (10) days in advance of the granting of
registration rights with respect to Company Stock or capital stock of any
Affiliate of the Company.
2.1.7. TERMINATION OF REGISTRATION RIGHTS. Upon the date which
is thirty (30) months following a firm commitment underwritten public offering
pursuant to a registration statement under the Act, with gross proceeds of not
less than twenty million dollars ($20,000,000) (a "Qualified Offering"), then
the Warrantholder shall not be entitled to exercise any right provided for in
this Section 2.1.
Section 2.2 OBLIGATIONS OF THE COMPANY. Where required under Section
2.1. to use its best efforts to effect the registration of any of the
Registrable Securities, the Company shall, as expeditiously as reasonably
possible,
2.2.1. Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective and, upon the request of the
holders of a majority of the Registrable Securities, keep such registration
statement effective for up to one hundred twenty (120) days;
2.2.2. Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to comply with the provisions of the Act with
respect to the disposition of all securities covered by such registration;
2.2.3. Furnish to the Warrantholder such numbers of copies of
such registration statement and prospectus, including any preliminary
prospectus, in conformity with the requirements of the Act, and such other
documents as the Warrantholder may reasonably request in order to facilitate the
disposition of the Registrable Securities;
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2.2.4. Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably appropriate for the
distribution of the securities covered by the registration statement; and
2.2.5. Otherwise comply with all applicable rules and
regulations of the SEC.
Section 2.3 FURNISH INFORMATION. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Section 2 that the
Warrantholder shall furnish to the Company such information regarding the
Warrantholder, the Registrable Securities held by the Warrantholder, and the
intended method of disposition thereof as the Company or its appointed agents
shall reasonably request and as shall be required in connection with the action
to be taken by the Company.
Section 2.4 REGISTRATION EXPENSES. In the case of any registration
effected pursuant to Section 2, the Company shall bear all registration and
qualification fees and expenses, and all costs and disbursements of counsel for
the Company; provided, however, that (A) each Warrantholder shall bear the fees
and costs of the Warrantholder's own counsel and all underwriting discounts and
commissions with respect to the Registrable Securities sold by it, and (B) the
Company shall not be required to pay for any expenses of any Warrant Demand
Registration begun if the registration request is subsequently withdrawn at the
request of the Warrantholder (in which case the Warrantholder shall bear such
expenses); provided that, if the Warrantholder elects to engage counsel other
than counsel for the Company in connection with a Warrant Demand Registration,
the Company shall bear the fees and expenses, and all costs and disbursements of
one firm to act as such counsel up to a maximum aggregate amount of fifteen
thousand dollars ($15,000).
Section 2.5 SELECTION OF UNDERWRITERS.
2.5.1. COMPANY SELECTION. If a registration pursuant to
Section 2.1.1. of this Agreement involves an underwritten offering, the Company
shall have the right to select the investment bankers and managers to administer
the offering. The Company shall not be required under Section 2.1.1. to register
the Warrants in such registration unless the Warrantholder accepts the terms of
the underwriting as agreed upon between the Company and the underwriter.
2.5.2. WARRANTHOLDER'S SELECTION. If a registration pursuant
to Section 2.1.3. or 2.1.5. involves an underwritten offering, then the
Warrantholder shall have the right to select the investment bankers and managers
to administer the offering; provided, however, that the selection of such
investment bankers and managers shall be subject to the approval of the Company,
such approval not to be unreasonably withheld.
Section 2.6 INDEMNIFICATION. If any Registrable Securities are
included in a registration statement pursuant to this Section 2, then,
2.6.1. To the extent permitted by law, the Company shall
indemnify and hold harmless the Warrantholder, agents for the
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Warrantholder, any underwriter for the Warrantholder, and each Person, if any,
who controls such Person within the meaning of the Act, against any losses,
claims, damages or liabilities, joint or several, to which they may become
subject under the Act or otherwise, insofar as such losses, claims, damages, or
liabilities arise out of any untrue statement or alleged untrue statement of
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained in the registration
statement, or any amendments or supplements to the registration statement, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein, or necessary to make the
statements therein not misleading, and will reimburse the Warrantholder, the
agents for the Warrantholder, such underwriter, or controlling Person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission based upon and in conformity with written
information furnished to the Company by an instrument duly executed by the
Warrantholder or underwriter and stated to be specifically for use therein.
2.6.2. To the extent permitted by law, the Warrantholder shall
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed such registration statement, and any underwriter for
the Company against any losses, claims, damages or liabilities to which the
Company or any such director, officer, or underwriter may become subject, under
the Act or otherwise, insofar as such losses, claims, damages or liabilities
arise out of or are based upon any untrue or alleged untrue statement of any
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained in the registration
statement or any amendments or supplements to the registration statement, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the statement
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary prospectus, or
amendments or supplement thereto, in reliance upon and in conformity with
written information furnished by the Warrantholder duly executed and stated to
be expressly for use therein, and the Warrantholder will reimburse any legal or
other expenses reasonably incurred by the Company or any such director, officer,
controlling Person, or underwriter in connection with investigating or defending
any such loss, claim, damage, liability or action; provided, that the
Warrantholder's liability under this Section 2.6.2. shall not exceed the amount
of the gross proceeds of the offering of the Warrantholder's Registrable
Securities included therein.
2.6.3. Each party entitled to indemnification (the
"Indemnified Party") shall give notice to the party required to provide
indemnification ("Indemnifying Party") promptly after such Indemnified Party has
knowledge of any claim as to which indemnity may be sought, and shall permit the
Indemnifying Party (at its expense) to assume the defense of any such claim or
any litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be reasonably satisfactory to the Indemnified Party, and the Indemnified
Party may participate in such defense at such party's expense; provided,
further, that the failure by any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 2.6., except to
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the extent that the failure results in an omission of actual notice to the
Indemnifying Party and such Indemnifying Party is damaged solely as a result of
the failure to give notice; provided, further, that a refusal to permit the
Indemnifying Party to conduct such defenses by such counsel shall relieve such
Indemnifying Party of its obligations under this Section 2.6 to the extent that
such refusal results in such Indemnifying Party being damaged. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to the entry of any judgment or enter
into any settlement that does not include as an unconditional term the giving by
the claimant or plaintiff to such Indemnified Party of a release from all
liability with respect to such claim or litigation.
Section 2.7 REPORTS UNDER THE SECURITIES EXCHANGE ACT OF 1934. With a
view toward making available to the Warrantholder the benefits of SEC Rule 144
promulgated under the Act and any other rule or regulation of the SEC that may
at any time permit the Warrantholder to sell its Registrable Securities to the
public without registration or pursuant to a registration on Form S-3, the
Company agrees to:
(i) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration
statement filed by the Company for the offering of its shares to the
general public;
(ii) take such action, including the voluntary
registration of its common stock under Section 12 of the Securities
Exchange Act of 1934, as is necessary to enable the holders of
Registrable Securities to utilize Form S-3 for the sale of their
shares, such action to be taken as soon as practicable after the end of
the fiscal year in which the first registration statement filed by the
Company for the offering of its shares to the general public is
declared effective;
(iii) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the
Securities Exchange Act of 1934; and
(iv) furnish to any holder of the Registrable Securities,
so long as the holder of the Registrable Securities owns any shares,
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time
after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the
Securities Exchange Act of 1934 (at any time after it has become
subject to such reporting requirements), or as to its qualification
that it qualifies as a registrant whose shares may be resold pursuant
to Form S-3 (at any time after it so qualifies), (ii) a copy of the
most recent annual or quarterly report of the Company and such other
reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any holder of
Registrable Securities of any rule or regulation of the SEC which
permits the selling of any such shares without registration or pursuant
to such form.
Section 2.8 RESTRICTIONS ON TRANSFER; LOCK-UP PERIOD. The
Warrantholder agrees that it shall not sell or otherwise transfer any Warrants
or Registrable Securities to a Third Party until
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after the earlier of (i) the Initial Registration Date, and (ii) May 26, 2004.
Notwithstanding the foregoing, the Warrantholder agrees that it shall not sell
or otherwise transfer any Warrants or Registrable Securities or any securities
of the same or similar class as securities being registered by the Company prior
to the date which is immediately following the one hundred eighty (180) day
period (the "Registration Lock-Up Period") after the effective date of a
registration statement filed by the Company; provided, however, that, (A) such
Registration Lock-Up Period shall be applicable only to the first registration
statement of the Company that covers shares of the Company to be sold to the
public in an underwritten offering, (B) the holders of Class B Common Stock and
the holders of at least ninety percent (90%) of Class A Common Stock are subject
to identical or substantially similar lock-up periods and (C) all officers and
directors of the Company and all other persons with registration rights are
subject to substantially similar lock-up periods. Notwithstanding the foregoing
sentence, the Warrants and the Registrable Securities may be transferred to a
wholly-owned Affiliate of AT&T Corp. provided that any such transfer shall not
be deemed to be a permitted transfer if at any time after such transfer and
during the period in which the restrictions contained in the foregoing sentence
are still in effect such Affiliate or the AT&T IP Value Added Services Division
is no longer a wholly-owned Affiliate of AT&T Corp. As a condition to any
transfer to an Affiliate, such Affiliate shall become a party to this Agreement
and shall agree in writing to be bound by the terms and conditions hereof
(including this Section 2.8). Notwithstanding anything to the contrary set forth
herein, the terms of this Section 2.8 (other than the first sentence of this
Section 2.8) may not be amended or modified, directly or indirectly, without the
express written consent of each holder of Registrable Securities detrimentally
affected by such amendment or modification and any such amendment or
modification made without such holder's consent shall not be applicable to that
holder.
Section 2.9 TRANSFER OF REGISTRATION RIGHTS. The registration rights
of the Warrantholder under this Section 2 may be assigned and transferred (i) by
the Warrantholder to any Affiliate of the Warrantholder to whom any of the
shares owned by the Warrantholder are transferred, and (ii) by the Warrantholder
to any permitted transferee who acquires at least five thousand (5,000)
Registrable Securities (adjusted to reflect subsequent stock splits,
combinations, stock dividends and recapitalizations); provided, however, that
the Company is given written notice by the Warrantholder at the time of such
assignment and transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under this Section 2
are being assigned and transferred. For the purposes of this Section 2.9, a
change in control of an Affiliate of the Warrantholder holding shares entitling
such Affiliate to the registration rights hereunder, such that such Affiliate is
subsequent to such change of control no longer an Affiliate of the
Warrantholder, shall be deemed an attempted transfer of the Warrants and the
Registrable Securities and the registration rights hereunder and such former
Affiliate of the Warrantholder shall not be entitled to such registration rights
except to the extent such transfer would be permitted under clause (ii) above.
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ARTICLE III
MISCELLANEOUS
Section 3.1 DESIGNATION OF OBSERVER. The Board of Directors of the
Company shall, by way of written consent in lieu of a meeting or otherwise,
resolve to permit and the Controlling Stockholder shall take any action
necessary to permit the Warrantholder to designate one observer to attend all
meetings of the Company's Board of Directors in a nonvoting observer capacity
commencing on the date the definitive agreements are executed and delivered
pursuant to the Letter Agreement until the expiration of such rights as set
forth below; provided, however, that (i) such representative shall agree to hold
in confidence all Confidential Information concerning the Company furnished to
such representative in connection with any such meeting of the Board of
Directors and (ii) the Company reserves the right to withhold any information
and to exclude such representative from any meeting or portion thereof if access
to such information or attendance at such meeting would reasonably be expected
to adversely affect the attorney-client privilege between the Company and its
counsel or would result in disclosure of trade secrets to such observer. The
Company's obligations and the Warrantholder's rights under this Section 3.1
shall terminate upon the earlier of (i) the termination of the term of the
definitive agreements executed and delivered pursuant to the Letter Agreement,
(ii) the sale by the Warrantholder of at least 50% of the shares of Class A
Common Stock issuable upon exercise of the Warrants, (iii) such date as the
Initial Warrantholder discontinues promoting the Company's managed messaging
outsourcing services, and (iv) such date as the IP Value Added Services Division
of the Initial Warrantholder enters into a managed messaging agreement with, or
acquires a majority interest in, a direct competitor of the Company.
Section 3.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and permitted assigns of the
Parties (including permitted transferees of any shares of Registrable
Securities); provided that the Warrantholder's rights to sell or transfer the
Warrants or the Registrable Securities or any securities of the same or similar
class as the securities being registered by the Company is subject to the
restrictions contained in Section 2.8 and the Warrantholder's rights to assign
it registration rights hereunder are subject to the restrictions contained in
Section 2.9. Nothing in this Agreement is intended to confer upon any party
other than the parties hereto or their respective successors and assigns any
rights, remedies, obligations or liability under or by reason of this Agreement,
except as expressly provided in this Agreement.
Section 3.3 NOTICES. All notices and other communications under this
Agreement shall (a) be in writing (which shall include communications by
telecopy), (b) be (i) sent by registered or certified mail, postage prepaid,
return receipt requested, (ii) sent by telecopier, or (iii) delivered by hand,
(c) be given at the following respective addresses and telecopier numbers and to
the attention of the following persons:
(i) If to the Company, to it at:
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Xxxx.xxx, Inc.
00 Xxxxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
Attention: Xxxx Xxxxxx, President
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
Winthrop, Stimson, Xxxxxx & Xxxxxxx
Xxx Xxxxxxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx Xxxxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
(ii) if to the Warrantholder, to it at:
AT&T Corp.
00 Xxxxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxx
Telephone No.: (000) 000-0000
Telecopier No.: (000) 000-0000
with a copy to:
AT&T Corp.
000 Xxxxx Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Vice President-Law and Secretary
Telephone No.: 000-000-0000
Telecopier No.: 000-000-0000
or at such other address or telecopier number or to the attention of such other
person as the party to whom such information pertains may hereafter specify for
the purpose in a notice to the other, and (d) be effective or deemed delivered
or furnished (i) if given by mail, on the fifth business day after such
communication is deposited in the mail, addressed as above provided, (ii) if
given by telecopier, when such communication is transmitted to the appropriate
number determined as above provided in this Section 3.3 and the appropriate
answer back is received or receipt is
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otherwise acknowledged, and (iii) if given by hand delivery, when left at the
address of the addressee addressed as above provided. The foregoing addresses
may be changed by notices given in the manner set forth in this section.
Section 3.4 GOVERNING LAW; FORUM AND CONSENT TO JURISDICTION.
(a) GOVERNING LAW. This Agreement shall be construed and enforced in
accordance with, and governed by, the laws of the State of New York without
giving effect to the principles of the conflict of laws thereof.
(b) FORUM AND CONSENT TO JURISDICTION. Each party hereto submits to
the nonexclusive jurisdiction of the courts of the State of New York and the
federal courts of the United States of America located in such state solely
in respect of the interpretation and enforcement of the provisions of this
Agreement, and the other instruments, agreements and documents to be
delivered pursuant hereto, and hereby waives, and agrees not to assert, as a
defense in any action, suit or proceeding for the interpretation or
enforcement of this Agreement or any of such instruments, agreements and
documents, that it is not subject thereto or that such action, suit or
proceeding may not be brought or is not maintainable in said courts or that
this Agreement or any of such other instruments, agreements and documents may
not be enforced in or by said courts or that its property is exempt or immune
from execution, that the suit, action or proceeding is brought in an
inconvenient forum, or that the venue of the suit, action or proceeding is
improper. Each party hereto agrees that service of process may be made upon
it by service upon CT Corporation System ("CT") at its office in New York
City in any such action, suit or proceeding against such party with respect
to this Agreement or any other agreements relating hereto, and hereby
irrevocably designates and appoints CT as its authorized agent upon which
process may be served in any such action, suit or proceeding, it being
understood that such appointment and designation shall become effective
without any further action on the part of any party. Service of process upon
such authorized agent shall be deemed, in every respect, effective service of
process upon the applicable party. If CT ceases to maintain an office in New
York City, then each party shall appoint another agent for service of process
in the State of New York acceptable to the others. A copy of any complaint or
other item served pursuant to this Section shall also be sent at the same
time to the party or parties designated for notice at the addresses and in
the manner specified in Section 3.3. Each party hereto agrees that final
judgment (with all right of appeal having expired or been waived) against it
in any such action, suit or proceeding shall be conclusive and that each
party is entitled to enforce such judgment in any other jurisdiction by suit
on the judgment, a certified or exemplified copy of which shall be conclusive
evidence of the fact and amount of indebtedness arising from such judgment.
Section 3.5 WAIVERS; AMENDMENTS. The waiver by the undersigned of any
of the provisions of this Agreement or the Warrant Certificate shall not operate
or be construed as a waiver of any subsequent breach. This Agreement or the
Warrant Certificate may be amended, and any provision of this Agreement may be
waived, only by a written amendment executed by (i) the Company and (ii) in the
case of any amendment affecting the rights or obligations of the Warrantholder,
the holders of a majority in interest of the outstanding Warrants issued to the
Warrantholder or stock issuable upon exercise of such Warrants. Notwithstanding
the foregoing,
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the Company will provide the Warrantholder with written notice and sufficient
information, sufficiently far in advance of a date a decision is required, to
enable the Warrantholder to make an informed and considered decision with
respect to any proposed amendment, waiver or consent in respect of any of the
provisions hereof. The Company will not, directly or indirectly, pay or cause to
be paid any remuneration, whether by way of supplemental or additional interest,
fee or otherwise, to any holder of capital stock of the Company as consideration
for or as an inducement to the entering into by any such holder of any waiver or
amendment to any of the terms and provisions of this Agreement, unless prior to
the payment of any remuneration to any holder of capital stock of the Company,
the Warrantholder shall, ratably, have been offered the opportunity to provide
any such waiver or amendment upon the same financial terms and conditions
(including but not limited to the time specified by which a consent to such
waiver or amendment must be given) as any holder of capital stock who has
consented to the waiver or amendment of any of the terms of this Agreement. No
waiver or amendment of the provisions in the preceding sentence shall be
effective with respect to any Warrantholder unless consented to in writing by
such Warrantholder.
Section 3.6 HEADINGS. The section headings contained in this
Agreement are for reference purposes only and shall not affect the construction
and interpretation of this Agreement
Section 3.7 SEVERABILITY. The invalidity of all or any part of any
section of this Agreement shall not render invalid the remainder of such
section. If any provision of this Agreement is so broad as to be unenforceable,
such provision shall be interpreted to be only so broad as is enforceable.
Section 3.8 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of which
shall constitute one and the same instrument. This Agreement may contain more
than one counterpart of the signature page and may be executed by the affixing
of the signatures of each of the Parties to one of these counterpart signature
pages. All of the counterpart signature pages shall be read as though one, and
they shall have the same force and effect as though all of the signers had
signed a single signature page.
Section 3.9 AGGREGATION OF STOCK. All shares of Registrable Securities
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
Section 3.10 ENTIRE AGREEMENT. This Agreement and the Warrant
Certificate contain the entire agreement of the Parties. The Parties are not
bound by any oral statements that are made outside of this Agreement.
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WHEREAS, the Parties have executed this Agreement as of the date first
above written:
XXXX.XXX, INC.
/s/ Xxxx Xxxxxx
---------------------------------------
By: Xxxx Xxxxxx
Title: President
AT&T CORP., as Warrantholder
/s/ Xxxxxxx X. Xxxxx
---------------------------------------
By: Xxxxxxx X. Xxxxx
Title: V.P. IP Value Added Services
/s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx, as Controlling
Stockholder
