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EXHIBIT 2(A)
TO THE MERGER AGREEMENT
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made and entered
into as of _____________, 1998 (the "Effective Date") by and between Xxxxxx.xxx,
Inc., a Delaware corporation ("Xxxxxx.xxx"), and the persons and entities listed
on Exhibit A hereby (collectively, the "Stockholders" and each individually a
"Stockholder"), who immediately prior to the effective time of the Merger (as
such term is defined below) represented all of the stockholders of Sage
Enterprises, Inc., a Massachusetts corporation ("Company").
RECITALS
A. Xxxxxx.xxx, Company, Pacific Acquisition, Inc. ("Purchaser") and
certain stockholders of Company have entered into an Agreement and Plan of
Merger (the "Merger Agreement") dated as of August 3, 1998, pursuant to which
Purchaser will merge with and into Company in a reverse triangular merger, with
Company to be the surviving corporation of the Merger (the "Merger").
B. As a condition precedent to the consummation of the Merger, Sections
4.17 and 5.11 of the Merger Agreement provide that Xxxxxx.xxx and each of the
Stockholders shall execute an Investor Rights Agreement pursuant to which the
Stockholders shall be granted certain registration rights with respect to the
shares of the common stock of Xxxxxx.xxx, par value $0.01 per share (the
"Xxxxxx.xxx Common Stock"), that are issued to the Stockholders in the Merger
(the "Merger Shares"), subject to the terms and conditions set forth in this
Agreement.
C. Capitalized terms used herein and not otherwise defined shall have
the meaning set forth in the Merger Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. REGISTRATION RIGHTS
1.1 DEFINITIONS
For purposes of this Section 1:
(a) Registration. The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing with the
SEC a registration statement in compliance with the Securities Act of 1933, as
amended (the "Securities Act"), and the declaration or ordering of effectiveness
of such registration statement by the SEC.
(b) Registrable Securities. The term "Registrable Securities"
means: (i) the Merger Shares and (ii) any shares of Xxxxxx.xxx Common Stock
issued as a dividend
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or other distribution with respect to, or in exchange for or in replacement of,
the Merger Shares (other than those shares of Xxxxxx.xxx Common Stock issued as
a dividend or other distribution with respect to, or in exchange for or in
replacement of, those Merger Shares subject to such right of repurchase);
excluding in all cases (x) any Registrable Securities transferred by a person in
a transaction in which rights under this Section 1 are not assigned in
accordance with Section 6 of this Agreement or (y) any Registrable Securities
sold in a public offering pursuant to a registration statement filed with the
SEC.
(c) Prospectus. The term "Prospectus" shall mean the prospectus
included in any Registration Statement filed pursuant to the provisions hereof
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance on Rule 430A promulgated under the Securities Act), as
amended or supplemented by any prospectus supplement (including, without
limitation, any prospectus supplement with respect to the terms of the offering
of any portion of the Registrable Securities covered by such Registration
Statement), and all other amendments and supplements to the Prospectus,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
(d) Holder. For purposes of this Agreement, the term "Holder"
means any person owning of record Registrable Securities that have not been sold
to the public pursuant to an effective Registration Statement or any assignee of
record of such Registrable Securities to whom rights under this Section 1 have
been duly assigned in accordance with this Agreement.
(e) SEC. The term "SEC" means the U.S. Securities and Exchange
Commission.
1.2 REGISTRATION
(a) Initial Registration. Xxxxxx.xxx shall prepare and file with the
SEC within 45 days following the Closing Date, and use its best efforts to have
declared effective as soon as practicable thereafter, a registration statement
(a "Registration Statement") providing for the resale by the Holders of all the
Registrable Securities then owned by the Holders in accordance with the manner
of sale provisions set forth in Rule 144(f) under the Securities Act or
otherwise in customary brokerage transactions on the Nasdaq National Market or
other public market on which shares of Xxxxxx.xxx Common Stock are traded.
Xxxxxx.xxx shall use its best efforts to keep the Registration Statement
continuously effective, pursuant to the rules, regulations or instructions under
the Securities Act applicable to the registration statement used by Xxxxxx.xxx
for such Registration Statement, for such period (the "Effectiveness Period")
ending on the earlier of the date (i) that is one year after the date of the
Closing Date, (ii) upon which all Registrable Securities have been registered
and sold pursuant to the Registration Statement filed pursuant to this
Agreement, (iii) upon which all the Registrable Securities originally issued
pursuant to the Merger Agreement cease
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to meet the definition of Registrable Securities pursuant to Section 1.1(b) or
(iv) upon which Xxxxxx.xxx's obligations hereunder terminate.
(b) Notice and Approval. If one or more Holders shall propose to sell
Registrable Securities pursuant to the Registration Statement, such Holder or
Holders shall deliver to Xxxxxx.xxx at least three trading days prior to such
proposed sale a single written notice (a "Stockholder Sale Notice") notifying
Xxxxxx.xxx of their intent to sell (including the proposed manner and timing of
all sales), and the provision of such notice to Xxxxxx.xxx shall conclusively be
deemed to establish and confirm an agreement by such Holder or Holders to sell
such Registrable Securities in whole, or in part or not at all (without the
necessity to provide a new Stockholder Sale Notice to Xxxxxx.xxx) within a
period ending on the tenth trading day following the first such sale and to
comply with the other registration provisions set forth in this Agreement.
Unless otherwise specified in the Stockholder Sale Notice, such Stockholder Sale
Notice shall be deemed to constitute a representation that any information
previously supplied to such Holder expressly for inclusion in the Registration
Statement (as the same may have been superseded by subsequent such information)
is accurate as of the date of such Stockholder Sale Notice. At any time within
such three-trading-day period, Xxxxxx.xxx may, pursuant to Section 1.2(c),
refuse to permit the Holder to resell any Registrable Securities pursuant to the
Registration Statement. To the extent Xxxxxx.xxx shall not exercise its rights
pursuant to Section 1.2(c) hereof, Xxxxxx.xxx shall provide written notice to
each of the other Holders regarding the availability of such ten trading day
period; provided, however, that if any such Holder does not receive such written
Notice within three trading days of the Stockholder Sale Notice, such Holder may
sell his, her or its Registrable Securities pursuant to the terms hereof.
(c) Right of Suspension. Notwithstanding any other provision of this
Section 1.2, Xxxxxx.xxx shall have the right at any time to prohibit or suspend
offers and sales of Registrable Securities whenever, and for so long as, in the
reasonable judgment of Xxxxxx.xxx after consultation with counsel (i) there
exists a material development or a potential material development with respect
to or involving Xxxxxx.xxx that Xxxxxx.xxx would be obligated to disclose in the
Prospectus contained in the Registration Statement, which disclosure would in
the good faith judgment of Xxxxxx.xxx be premature or otherwise inadvisable at
such time, or (ii) an event has occurred that makes any statement made in the
Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
which requires the making of any changes in the Registration Statement or
Prospectus so that it will not contain any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that Xxxxxx.xxx shall not
be permitted to prohibit or suspend sales of Registrable Securities unless all
"affiliates" (as defined in Rule 501 promulgated under the Securities Act) of
Xxxxxx.xxx are also prohibited from selling shares during such period. To effect
such suspension or prohibition, Xxxxxx.xxx shall deliver a certificate in
writing to the Holders and, upon receipt of such certificate, the use of the
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Registration Statement and Prospectus will be deferred or suspended and will not
recommence until (x) such Holders' receipt from Xxxxxx.xxx of copies of the
supplemented or amended Prospectus or (y) such Holders are advised in writing by
Xxxxxx.xxx that the Prospectus may be used. Xxxxxx.xxx will use reasonable
efforts to ensure that the use of the Registration Statement and Prospectus may
be resumed, as soon as practicable and, in the case of a pending development
referred to in (i) above, as soon as, in the judgment of Xxxxxx.xxx, disclosure
of the material information relating to such pending development would not have
a materially adverse effect on Xxxxxx.xxx's ability to consummate the
transaction, if any, to which such development relates. Notwithstanding the
foregoing, Xxxxxx.xxx will use reasonable efforts to ensure that in any event
the Holders shall have at least ten trading days (prorated for partial fiscal
quarters) available to sell Registrable Securities during each fiscal quarter
(or portion thereof) during the Effectiveness Period.
(d) Expenses. All expenses, other than brokers' commissions and similar
charges, and legal fees and disbursements of counsel for the selling Holders,
incurred in connection with the Registration Statement shall be borne by
Xxxxxx.xxx.
1.3 OBLIGATIONS OF XXXXXX.XXX
Whenever required to effect the registration of any Registrable
Securities under this Agreement, Xxxxxx.xxx shall, as expeditiously as
reasonably possible:
(a) Prepare promptly and file with the SEC the Registration
Statement as provided in Section 1.2(a), which Registration Statement (including
any amendments or supplements thereto and Prospectuses contained therein) shall
not contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein, or necessary to make the statements therein,
in light of the circumstances in which they were made, not misleading, and cause
such Registration Statement to become effective as soon as practicable.
(b) Prepare promptly and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
(c) Furnish to Holders such number of copies of a Prospectus,
including a preliminary Prospectus, in conformity with the requirements of the
Securities Act, and such other documents and legal opinions as reasonably
requested in order to facilitate the disposition of the Registrable Securities
owned by it that are included in such registration.
(d) 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 requested by Holders;
provided, however, that Xxxxxx.xxx shall not be
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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.
(e) Notify Holders promptly (i) of any request by the SEC or any
other federal or state governmental authority during the Effectiveness Period of
the Registration Statement for amendments or supplements to such Registration
Statement or related Prospectus or for additional information, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, and (iii) of the receipt by
Xxxxxx.xxx of any notification with respect to the suspension of the
qualification or exemption from qualification of any of the Registrable
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose.
1.4 FURNISH INFORMATION
It shall be a condition precedent to the obligations of Xxxxxx.xxx to
take any action pursuant to Section 1.2 that each Holder shall furnish to
Xxxxxx.xxx such information regarding Holder, the Registrable Securities held by
Holder and the intended method of disposition of such securities as shall be
required to timely effect the registration of Holder's Registrable Securities.
1.5 INDEMNIFICATION
(a) By Xxxxxx.xxx. To the extent permitted by law and subject to
Section 1.5(d), Xxxxxx.xxx will indemnify and hold harmless each of the Holders,
officers, directors, employees and agents of a Holder or underwriters (as
defined in the Securities Act) and each person, if any, who controls a Holder
within the meaning of the Securities Act or the Securities Exchange Act of 1934,
as amended (the "Exchange Act"), against any losses, claims, damages or
liabilities (joint or several) to which they or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based on any of the following statements, omissions
or violations (collectively a "Violation"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement filed, including any
preliminary Prospectus or final Prospectus contained therein or in any
amendments or supplements thereto;
(ii) the omission or alleged omission to state in the Registration
Statement, including any preliminary Prospectus or final Prospectus contained
therein or in any amendments or supplements thereto, a material fact required to
be stated therein, or necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading; or
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(iii) any violation or alleged violation by Xxxxxx.xxx of the
Securities Act, the Exchange Act, any federal or state securities law or any
rule or regulation promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the offering covered by such
Registration Statement.
Xxxxxx.xxx will reimburse each Holder, and each officer, director, employee or
agent, 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
indemnity agreement contained in this Section 1.5(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Xxxxxx.xxx (which consent shall
not be unreasonably withheld), nor shall Xxxxxx.xxx be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based on a Violation which occurs in reliance on and in
conformity with written information furnished expressly for use in connection
with such registration by Holder, or by such officer, director, employee, agent,
underwriter or controlling person of Holder.
(b) By Holders. To the extent permitted by law and subject to
Section 1.5(d), each Holder, severally and not jointly, will indemnify and hold
harmless Xxxxxx.xxx, each of its directors, each of its officers who have signed
the registration statement, each person, if any, who controls Xxxxxx.xxx within
the meaning of the Securities Act, any other employee or agent of Xxxxxx.xxx,
each other Holder, each person, if any, who controls such Holder within the
meaning of the Securities Act, and any other employee or agent of such Holder
against any losses, claims, damages or liabilities (joint or several) to which
Xxxxxx.xxx or any such director, officer or controlling person, employee or
agent may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based on any Violation, in each
case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and such Holder
will reimburse any legal or other expenses reasonably incurred by Xxxxxx.xxx or
any such director, officer or controlling person, employee or agent in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 1.5(b) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of such Holder, which consent shall not be unreasonably withheld;
and provided, further, that the total amounts payable in indemnity by any Holder
under this Section 1.5(b) in respect of any Violation shall not exceed the net
proceeds received by such Holder in the registered offering out of which such
Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under
this Section 1.5 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim for
indemnification in respect thereof is to be made against any indemnifying party
under this Section 1.5, deliver to the indemnifying party a
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written notice of the commencement of such an action, and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly noticed,
to assume the defense thereof with counsel mutually satisfactory to the parties;
provided, however, that an indemnified party shall have the right to retain its
own 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 conflict of
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall (to the
extent of such prejudice) relieve such indemnifying party of any liability to
the indemnified party under this Section 1.5, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 1.5.
(d) Defect Eliminated in Final Prospectus. The foregoing
indemnity agreements of Xxxxxx.xxx and the Holders are subject to the condition
that, insofar as they relate to any Violation made in a preliminary Prospectus
but eliminated or remedied in the amended Prospectus on file with the SEC at the
time the registration statement in question becomes effective or in the amended
Prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
Prospectus"), such indemnity agreements shall not inure to the benefit of any
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
(e) Contribution. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder (and/or any officer, director, employee, agent,
underwriter or controlling person who may be indemnified under Section 1.5(a))
makes a claim for indemnification pursuant to this Section 1.5 but it is
judicially determined (by the entry of a final judgment or decree by a court of
competent jurisdiction and the expiration of time to appeal or the denial of the
last right of appeal) that such indemnification may not be enforced in such case
notwithstanding the fact that this Section 1.5 provides for indemnification in
such case, or (ii) contribution under the Securities Act may be required on the
part of such Holder (and/or any officer, director, employee, agent, underwriter
or controlling person who may be indemnified under Section 1.5 (a)) in
circumstances for which indemnification is provided under this Section 1.5;
then, and in each such case, Xxxxxx.xxx and such Holder (and/or such other
person) will contribute to the aggregate losses, claims, damages or liabilities
to which they may be subject (after contribution from others) in proportion to
their relative fault as determined by a court of competent jurisdiction;
provided, however, that in no event, except in instances of fraud by Holder in
which there is no limitation, (x) shall any Holder be responsible for more than
the portion represented by the percentage that the public offering price of its
Registrable Securities offered by and sold under the Registration Statement
bears to the public offering price of all securities offered by and sold under
such Registration Statement or (y) shall a
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Holder be required to contribute any amount in excess of the public offering
price of all such securities offered and sold by such Holder pursuant to such
Registration Statement; and in any event, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of Xxxxxx.xxx and such Holder under
this Section 1.5 shall survive the completion of any offering of Registrable
Securities in a Registration Statement, and otherwise.
2. OBLIGATIONS OF THE STOCKHOLDERS
2.1 REPRESENTATIONS AND WARRANTIES OF THE STOCKHOLDERS
Each Stockholder represents with respect to himself, herself or itself
that:
(a) Good Title. (i) Such Stockholder owns, beneficially and of
record, the shares of capital stock of Company listed opposite such
Stockholder's name on Exhibit A hereto, (ii) such shares of capital stock of
Company are free and clear of any lien, encumbrance, adverse claim, mortgage,
pledge, deed of trust, security interest, charge, restriction on sale or
transfer (other than restrictions imposed by applicable securities laws),
preemptive right, option or other adverse claim or interest of any kind, (iii)
such Stockholder has all necessary power, right and authority to enter into this
Agreement and each of the agreements, certificates, instruments and documents
executed or delivered pursuant to the terms of the Merger Agreement by such
Stockholder and to consummate the transactions contemplated hereby and thereby
and (iv) this Agreement has been duly authorized, executed and delivered by
Stockholder and is a legal, valid and binding obligation of Stockholder,
enforceable in accordance with its terms.
(b) Ability to Bear Risk. Such Stockholder is in a financial
position to hold the Xxxxxx.xxx Common Stock for an indefinite period of time
and is able to bear the economic risk and withstand a complete loss of his, her
or its investment in the Xxxxxx.xxx Common Stock.
(c) SEC Documents. Such Stockholder acknowledges that he, she or
it has received and had the opportunity to review to such Stockholder's
satisfaction the materials disseminated by Company in connection with the
written consent or special meeting of Stockholders to approve the Merger and the
transactions contemplated thereby, including those filings and reports of
Xxxxxx.xxx filed with the SEC since the completion of Xxxxxx.xxx's most recent
fiscal year, consisting of Xxxxxx.xxx's Annual Report on Form 10-K for the
fiscal year ending December 31, 1997 (the "Form 10-K"), its Quarterly Report on
Form 10-Q for the fiscal quarter ending March 31, 1998, all Form 8-Ks filed
after the date of the Form 10-K, and its Proxy Statement relating to its 1998
Annual Meeting of Stockholders on May 28, 1998.
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(d) Professional Advice. Such Stockholder has obtained, to the
extent that he, she or it deems necessary, professional advice with respect to
the risks inherent in acquiring the Xxxxxx.xxx Common Stock, the financial
condition of Xxxxxx.xxx and the suitability of an investment in the Xxxxxx.xxx
Common Stock in light of such Stockholder's financial condition and investment
needs.
(e) Sophistication. Such Stockholder, either alone or with the
assistance of his, her or its professional advisors, is a sophisticated
investor, is able to fend for himself, herself or itself in the transactions
contemplated by this Agreement relating to the Xxxxxx.xxx Common Stock and has
such knowledge and experience in financial and business matters that he, she or
it is capable of evaluating the merits and risks of the prospective investment
in the Xxxxxx.xxx Common Stock.
(f) Accredited Investor. Except as set forth on Schedule A
hereto, such Stockholder is an "accredited investor" as defined in Rule 501(a)
of Regulation D under the Securities Act (an "Accredited Investor").
(g) Investment for Own Account. The Xxxxxx.xxx Common Stock is
being acquired by such Stockholder for investment for his, her or its account,
not as a nominee or agent, and not with a view to the distribution of any part
thereof; such Stockholder has no present intention of selling, granting any
participation in or otherwise distributing any of the Xxxxxx.xxx Common Stock in
a manner contrary to the Securities Act or to any applicable state securities or
Blue Sky law, nor does Stockholder have any contract, undertaking, agreement or
arrangement with any person or entity to sell, transfer or grant a participation
to such person or entity with respect to any of the Xxxxxx.xxx Common Stock.
(h) Restricted Securities. Such Stockholder acknowledges that the
Xxxxxx.xxx Common Stock has not been and will not prior to issuance be
registered under the Securities Act and that the Xxxxxx.xxx Common Stock is
characterized under the Securities Act as "restricted securities" and,
therefore, cannot be sold or transferred until such sale or transfer is
registered under the Securities Act as provided in this Agreement or an
exemption from such registration is available.
(i) Exemption Reliance. Such Stockholder has been advised that
the Xxxxxx.xxx Common Stock is being issued under this Agreement pursuant to
exemptions from applicable federal and state securities laws, and that
Xxxxxx.xxx's reliance on such exemptions is predicated in part on such
Stockholder's representations contained herein.
(j) Residence. For purposes of the application of state
securities laws, each Stockholder is a resident of the state as set forth on the
signature page hereto.
(k) Legend. Each holder understands that prior to the
effectiveness of the Registration Statement certificates or other instruments
representing any of the Registrable
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Securities acquired by Holder will bear legends substantially similar to the
following, in addition to any other legends required by federal or state laws:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR ANY APPLICABLE
STATE LAW, AND NO INTEREST THEREIN MAY BE SOLD, DISTRIBUTED,
ASSIGNED, OFFERED, PLEDGED OR OTHERWISE TRANSFERRED UNLESS (a)
THERE IS AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT
COVERING ANY SUCH TRANSACTION INVOLVING THESE SECURITIES OR (b)
THE COMPANY RECEIVES AN OPINION OF LEGAL COUNSEL FOR THE HOLDER
OF THESE SECURITIES (CONCURRED IN BY LEGAL COUNSEL FOR THE
COMPANY) STATING THAT SUCH TRANSACTION IS EXEMPT FROM
REGISTRATION, OR THE COMPANY OTHERWISE SATISFIES ITSELF THAT SUCH
TRANSACTION IS EXEMPT FROM REGISTRATION.
Each holder agrees that, in order to ensure and enforce compliance with the
restrictions imposed by applicable law and those referred to in the foregoing
legends, or elsewhere herein, Xxxxxx.xxx may, prior to the effectiveness of the
Registration Statement, issue appropriate "stop transfer" instructions to its
transfer agent, if any, with respect to any certificate or other instrument
representing Registrable Securities, or if Xxxxxx.xxx transfers its own
securities, that it may make appropriate notations to the same effect in
Xxxxxx.xxx's records.
2.2 INVESTOR QUESTIONNAIRE
Each Stockholder who is not an Accredited Investor shall complete and
execute an Investor Questionnaire in the form attached hereto as Exhibit B.
3. STOCKHOLDER REPRESENTATIVE
(a) Each undersigned Stockholder hereby irrevocably authorizes and
appoints Xxxxxx Xxxxx, Xxx Xxxxxxx and Xxxxxx Xxxxx (the "Stockholder
Representatives"), with full power of substitution and resubstitution, as his,
her or its representative and true and lawful attorney-in-fact and agent to act
in his, her or its name, place and stead and to execute in the name and on
behalf of such Stockholder the Escrow Agreement, dated as of the date hereof,
between Xxxxxx.xxx, the Stockholder Representative and ChaseMellon Shareholder
Services L.L.C. (the "Escrow Agreement") and any other agreement, certificate,
instrument or document to be delivered by the Stockholders in connection with
the Merger. The Stockholder Representatives shall in all instances act by
majority vote.
(b) Each of the undersigned Stockholders agrees that the Stockholder
Representatives shall have the full power, authority and right to perform, do
and take any and
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all actions they deem necessary or advisable to carry out the purposes of the
Merger Agreement and each Operative Document all without liability to such
Stockholder (except as expressly stated herein or therein), so long as same are
carried out by the Stockholder Representatives in good faith. Such actions
include the power to amend, modify or waive any agreement in the name of each
Stockholder as if such Stockholder had himself, herself or itself amended,
modified or waived such agreement; provided, however, that the Stockholder
Representatives shall have no power to alter any term of the Merger Agreement
which would change the consideration to be received by any Stockholder in
respect of the Merger unless a majority of the Stockholders of each class of
securities of Company (or such other number, if any, as is otherwise required by
Company's Articles of Organization, as amended, or other contractual
arrangement) shall so agree. In particular, but not by way of limitation, the
Stockholder Representatives shall have the power to make and carry out decisions
under the Merger Agreement, the Escrow Agreement and this Agreement on behalf of
each Stockholder and to sign documents and make filings on behalf of each
Stockholder as if such Stockholder had himself, herself or itself signed or
filed such document.
(c) Each Stockholder understands that this appointment is irrevocable.
(d) Each Stockholder agrees to pay a pro rata portion of the reasonable
costs and expenses of such Stockholder Representatives, all or a portion of
which amount may be paid out of the Escrow Shares in accordance with the terms
of the Escrow Agreement.
(e) Any one of the Stockholder Representatives may resign at any time.
Upon such resignation, each Stockholder hereby authorizes the remaining
Stockholder Representatives to appoint a new Stockholder Representative to
replace such resigning Stockholder Representative with the same powers and
duties as such resigning Stockholder Representative, provided, however, that
such newly appointed Stockholder Representative shall have been a member of the
Board of Directors of Company immediately prior to the Closing Date and, if the
Survival Period (as defined in the Escrow Agreement) has not yet expired, the
Escrow Agent shall be notified of such appointment forthwith.
(f) If any one of the Stockholder Representatives or any successor shall
die, or become unable to act as the Stockholder Representative, a replacement
shall promptly be appointed by the remaining Stockholder Representatives;
provided, however, that such newly appointed Stockholder Representative shall
have been a member of the Board of Directors of Company immediately prior to the
Closing Date and, if the Survival Period has not yet expired, the Escrow Agent
shall be notified of such appointment forthwith.
(g) Unless and until Xxxxxx.xxx, and if the Survival Period has not yet
expired, the Escrow Agent, shall have received written notice of the appointment
of a successor Stockholder Representative for the Stockholders, Xxxxxx.xxx and
the Escrow Agent shall be entitled to rely on, and shall be fully protected in
relying on, the power and authority of the remaining Stockholder Representatives
to act on behalf of the Stockholders.
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(h) The Stockholder Representatives shall not be liable for any error of
judgment, or any action taken or omitted to be taken hereunder in good faith
except in the case of their bad faith, gross negligence or willful misconduct.
The Stockholder Representatives shall be entitled to consult with counsel of
their choosing which is competent in matters governed by this Agreement and
shall not be liable for any acts suffered or omitted by them in good fair in
accordance with the advice of such counsel.
4. ESTABLISHMENT AND ENFORCEMENT OF INDEMNIFICATION OBLIGATION
Each Stockholder, by his, her or its signature below, represents that
he, she or it has read Article VIII of the Merger Agreement as well as Section
1.5 of this Agreement with respect to the indemnification rights and obligations
of the Stockholders stated therein and herein and agrees for the benefit of
Company and the surviving corporation pursuant to the Merger Agreement to abide
by such provisions (as well as those with respect to specific performance),
including with respect to the potential loss of the benefit of the shares of
Xxxxxx.xxx Common Stock to be received as a result of the Merger.
5. ASSIGNMENT
Notwithstanding anything herein to the contrary, the registration rights
of a Holder under Section 1 hereof may be assigned only to a party who acquires
from Holder at least 50,000 shares of Xxxxxx.xxx Common Stock that constitute
the original number of Registrable Securities (as such number may be adjusted to
reflect subdivisions, combinations and stock dividends of Xxxxxx.xxx Common
Stock) or as a distribution made by a Holder which is a partnership or limited
liability company to the partners or members of such Holder of Registrable
Securities; provided, however, that no party may be assigned any of the
foregoing rights until Xxxxxx.xxx is given written notice by the assigning party
at the time of such assignment stating the name and address of the assignee and
identifying the securities of Xxxxxx.xxx as to which the rights in question are
being assigned; provided, further, that any such assignee shall receive such
assigned rights subject to all the terms and conditions of this Agreement,
including without limitation the provisions of this Section 5.
6. GENERAL PROVISIONS
6.1 NOTICES
Any notice or demand desired or required to be given hereunder shall be
in writing given by personal delivery, certified or registered mail, confirmed
facsimile transmission, or overnight courier service, in each case addressed as
respectively set forth below or to such other address as any party shall have
previously designated by such a notice. The effective date of any notice or
request shall be the date of personal delivery, four days after the date of
mailing by certified or registered mail, the date on which successful facsimile
transmission is
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confirmed, or the date undertaken for delivery by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided herein
and with all charges prepaid.
If to Xxxxxx.xxx:
Xxxxxx.xxx, Inc.
0000 Xxxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Xxxxx X. Xxxxxxx, Treasurer
Facsimile: 000-000-0000
with a copy to:
Xxxxxxx Coie LLP
0000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: 206/583-8500
If to the Stockholders:
At their respective addresses set forth on the signature
pages attached hereto.
with a copy to:
Xxxxxxxx, Xxxxxxx & Xxxxxxx
000 Xxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Facsimile: (000) 000-0000
6.2 SEVERABILITY
If any term or other provision of this Agreement is invalid, illegal or
incapable of being enforced by any rule of law, or public policy, all other
conditions and provisions of this Agreement shall nevertheless remain in full
force and effect so long as the economic or legal substance of the transactions
contemplated hereby is not affected in any manner adverse to any party. Upon
such determination that any term or other provision is invalid, illegal or
incapable of being enforced, the parties hereto shall negotiate in good faith to
modify this Agreement so as to effect the original intent of the parties as
closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
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6.3 ENTIRE AGREEMENT
This Agreement, the Merger Agreement and each of the agreements,
certificates, instruments and documents to be executed or delivered pursuant to
the terms of the Merger Agreement constitute the entire agreement among the
parties with respect to the subject matter hereof and thereof and supersede all
prior agreements and undertakings, both written and oral, among the parties, or
any of them, with respect to the subject matter hereof and thereof.
6.4 SUCCESSORS AND ASSIGNS
Subject to the provisions of Section 5, the provisions of this Agreement
shall inure to the benefit of, and shall be binding upon, the successors and
permitted assigns of the parties hereto.
6.5 GOVERNING LAW
This Agreement shall be governed by, and construed in accordance with,
the laws of the State of Delaware applicable to contracts executed in and to be
performed in that State. All actions and proceedings arising out of or relating
to this Agreement shall be heard and determined in any Delaware state or federal
court thereof.
6.6 THIRD PARTIES
This Agreement shall be binding upon and inure solely to the benefit of
each party hereto, and nothing in this Agreement, express or implied, is
intended to or shall confer upon any other person any right, benefit or remedy
of any nature whatsoever under or by reason of this Agreement.
6.7 HEADINGS
The descriptive headings contained in this Agreement are included for
convenience of reference only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.8 SPECIFIC PERFORMANCE
Each of the parties acknowledges and agrees that the other parties
hereto would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their specific terms or otherwise
are breached. Accordingly, each of the parties hereto agrees the other parties
hereto will be entitled to an injunction to prevent breaches of the provisions
of this Agreement and to enforce specifically this Agreement and the terms and
provisions of this Agreement (including the indemnification provisions hereof)
in any competent court having jurisdiction over the parties, in addition to any
other remedy to which they might be entitled at law or in equity.
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6.9 COUNTERPARTS
This Agreement may be executed and delivered in one or more
counterparts, and by the different parties hereto in separate counterparts, each
of which when executed and delivered shall be deemed to be an original but all
of which taken together shall constitute one and the same agreement. To expedite
the process of entering into this Agreement, the parties acknowledge that
Transmitted Copies of this Agreement will be equivalent to original documents
until such time as original documents are completely executed and delivered.
"Transmitted Copies" will mean copies that are reproduced or transmitted via
photocopy, facsimile or other process of complete and accurate reproduction and
transmission.
6.10 ABANDONMENT OF MERGER
In the event that the Merger Agreement is terminated and the Merger
abandoned pursuant to Article VII of the Merger Agreement, no party hereto not
in breach of its obligations hereunder shall have any liability to any other
party, including, but not limited to, liability for expenses incurred by any
such other party in connection with this Agreement.
6.11 AMENDMENT OF RIGHTS
This Agreement may not be amended except by an instrument signed by
Xxxxxx.xxx and the Stockholder Representative and each undersigned Stockholder
hereby grants expressly to the Stockholder Representative the authority and
discretion, so long as such authority and discretion are exercised in good
faith, to enter into such amendments as he, she or it chooses in the exercise of
such authority and discretion.
IN WITNESS WHEREOF, the parties hereto have entered into and signed this
Agreement as of the date and year first above written.
XXXXXX.XXX, INC.
By:
-------------------------------------
Name:
-----------------------------------
Its:
------------------------------------
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SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
STOCKHOLDER
By:
-------------------------------------
Name:
-----------------------------------
Address:
--------------------------------
----------------------------------------
----------------------------------------
Number of Shares:
-----------------------
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