Exhibit 10.1
ONSITE ACCESS, INC.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "AGREEMENT") is entered into as
of April 16, 1999, by and among OnSite Access, Inc., a Delaware corporation
(the "COMPANY"), the individuals and entities listed on Exhibit A attached
hereto (collectively, the "INVESTORS") and the individuals listed on Exhibit B
attached hereto (collectively, "MANAGEMENT").
AGREEMENT
In consideration of the mutual promises and covenants hereinafter set
forth, the parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the terms
defined in the preamble to this Agreement shall have the meanings given therein
and the following terms shall have the following respective meanings:
"AFFILIATE" shall mean as to any person or entity, a person or entity
that directly or indirectly though one or more intermediaries, controls, or is
controlled by, or is under common control with, such person or entity.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"COMMON HOLDER" shall mean any person (x) who holds of record
Registrable Common Securities and (y) to whom the registration rights conferred
by this Agreement have been granted herein or transferred thereto in compliance
with Section 11 hereof.
"COMMON STOCK" shall mean all shares of Common Stock of the Company.
"DISQUALIFIED PREFERRED SECURITIES" means shares of Preferred Stock
with respect to which there shall then exist a loss of rights as described in
clause (ii) of the first sentence of Section 2.4(a) of the Preferred Stock
Purchase Agreement or with respect to which there shall then exist a Rights
Forfeiture as defined in Section 2.4(c) of the Preferred Stock Purchase
Agreement.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor Federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
"HOLDER" shall mean any Common Holder or Preferred Holder.
"INITIATING COMMON HOLDERS" shall mean any Common Holder or Common
Holders of twelve percent (12%) or more of the then outstanding Registrable
Common Securities assuming full conversion into Common Stock of all then
outstanding Series A Preferred.
"INITIATING PREFERRED HOLDERS" shall mean any Preferred Holder or
Preferred Holders of twenty percent (20%) or more of the then outstanding
Registrable Preferred Securities (assuming full conversion of the Series C
Preferred and Series D Preferred into Common Stock) excluding Disqualified
Preferred Securities.
"IPO" shall mean an underwritten public offering pursuant to an
effective registration statement under the Securities Act, covering the initial
offer and sale of Common Stock for the account of the Company to the public (i)
based upon a Company valuation exceeding Three Hundred Million Dollars
($300,000,000) prior to the offering, (ii) resulting in gross proceeds to the
Company of at least Thirty Million Dollars ($30,000,000), and (iii) managed by
a nationally recognized underwriter reasonably acceptable to the Investors.
"PREFERRED HOLDER" shall mean any person (x) who holds of record
Registrable Preferred Securities or holds shares of Series C Preferred and (y)
to whom the registration rights conferred by this Agreement have been granted
herein or transferred thereto in compliance with Section 11 hereof.
"PREFERRED STOCK" shall mean the Series A Preferred, Series B
Preferred, Series C Preferred and Series D Preferred.
"REGISTRABLE COMMON SECURITIES" shall mean (i) all shares of Common
Stock held by parties to this Agreement on the First Closing Date (as defined
in the Stock Purchase Agreement), excluding shares of Common Stock held by
Management, (ii) all shares of Common Stock of the Company issued or issuable
upon conversion of the Series A Preferred and (iii) all shares of Common Stock
issued as a dividend or other distribution, or issuable upon exercise of a
warrant, option or other right issued as a dividend or distribution, or upon
conversion of any convertible security issued as a dividend or other
distribution, in each case with respect to or in exchange for or in replacement
of the shares of Common Stock described in the foregoing clauses (i) and (ii).
"REGISTRABLE PREFERRED SECURITIES" shall mean (i) all shares of Common
Stock issued or issuable upon conversion of the Series C Preferred and Series D
Preferred and (ii) all shares of Common Stock issued as a dividend or other
distribution, or issuable upon exercise of a warrant, option or other right
issued as a dividend or distribution, or upon conversion of any convertible
security issued as a dividend or other distribution, in each case with respect
to or in exchange for or in replacement of the Series B Preferred, the Series C
Preferred or Series D Preferred.
"REGISTRABLE SECURITIES" shall mean Registrable Common Securities or
Registrable Preferred Securities.
The terms "REGISTER", "REGISTERED" and "REGISTRATION" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in compliance with Sections 3, 4 and 6 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company which shall include any fees and
disbursements for legal services provided by counsel for the Company on behalf
of the Holders, blue sky fees and expenses for state qualifications or
registrations, and the expense of any audit of the Company's fiscal year-end
financial statements incident to or required by any such registration (but
excluding the compensation of regular employees of the Company, which shall be
paid in any event by the Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and expense allowances applicable to the sale of Registrable
Securities and all fees and disbursements of counsel for any Holder (other than
the fees and disbursements of the Company's counsel included in Registration
Expenses, and the fees of one special counsel to the Common Holders and one
special counsel to the Preferred Holders, which shall be borne by the Company).
"SERIES A PREFERRED" shall mean shares of Series A Convertible
Preferred Stock of the Company.
"SERIES B PREFERRED" shall mean shares of Series B Redeemable
Preferred Stock of the Company.
"SERIES C PREFERRED" shall mean shares of Series C Convertible
Redeemable Preferred Stock of the Company.
"SERIES D PREFERRED" shall mean shares of Series D Convertible
Redeemable Preferred Stock of the Company.
"SHARES" shall mean all Registrable Securities.
"STOCK OPTION PLAN" shall mean the Company's 1999 Stock Option Plan to
be approved and adopted by the Company's Board of Directors providing for the
grant of options to purchase not more than 9,096,309 shares of Common Stock in
substantially the form attached hereto as Exhibit C or any subsequent stock
option plan approved by Holders of a majority of the outstanding Series C
Preferred.
2. Restrictive Legend. Each certificate representing the Common Stock
or the Preferred Stock held by any Investor Holder and any other securities
issued in respect of the foregoing upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event, shall be stamped or
otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under applicable law or other agreement):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO, AND MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH, THAT CERTAIN INVESTOR RIGHTS
AGREEMENT AMONG THE COMPANY, THE HOLDER OF THESE
SECURITIES AND CERTAIN OTHER HOLDERS OF THE
COMPANY'S STOCK, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF THE COMPANY.
3. Requested Registrations.
(a) Request for Registration. If at any time beginning at the
earlier of (i) six months after the closing of a public offering by the Company
of its Common Stock pursuant to a registration statement under the Securities
Act (excluding a registration relating to warrants, or to securities issuable
in respect of warrants, which warrants are sold in connection with an offering
of debt securities) and (ii) the third anniversary of the date of this
Agreement, the Company shall receive from Initiating Common Holders or
Initiating Preferred Holders a written request that the Company file a
registration statement under the Securities Act to effect a registration of
some or all of the Registrable Common Securities or Registrable Preferred
Securities held by such Initiating Common Holders or Initiating Preferred
Holders, the Company will:
(i) promptly give written notice of the proposed registration
to all other Holders; and
(ii) diligently use its commercially reasonable efforts to
effect, as soon as practicable, such registration, and in any event use its
commercially reasonable efforts to effect such registration within 90 days of
the receipt of the request from Initiating Common Holders or Initiating
Preferred Holders, as the case may be, as may be so requested and as would
permit or facilitate the sale and distribution of the Registrable Common
Securities or Registrable Preferred Securities requested to be registered by
the Initiating Common Holders or Initiating Preferred Holders and by any Common
Holder or Preferred Holder joining with the Initiating Common Holder or
Initiating Preferred Holder, respectively, in such request as are specified in
a written request given within 30 days after receipt of such written notice
from the Company. In the event that holders of a majority of the outstanding
Registrable Common Securities or Registrable Preferred Securities (assuming
full conversion into Common Stock of all Series C Preferred and Series D
Preferred) requesting registration elect to limit the number of Registrable
Common Securities or Registrable Preferred Securities to be registered, the
number of Registrable Common Securities or Registrable Preferred Securities
that are included in the registration shall be allocated among all Holders of
Registrable Common Securities or Registrable Preferred Securities requesting
registration in proportion, as nearly as practicable, to the respective amounts
of Registrable Common Securities or Registrable Preferred Securities held by
each such Holder at the time of the filing of the registration statement.
The Company shall not be obligated to effect, or to take any action to
effect, any registration of Registrable Preferred Securities pursuant to this
Section 3 after the Company has effected three such registrations pursuant to
this Section 3 and such registrations have been declared or ordered effective
by the Commission and have remained effective for the periods required under
Section 7(a) without giving effect to the provisos of such Section.
The Company shall not effect or take any action to effect, any
registration of Registrable Common Securities pursuant to this Section 3 until
(x) the Company has effected three registrations of Registrable Preferred
Securities pursuant to this Section 3 and such registrations have been declared
or ordered effective by the Commission and have remained effective for the
periods required under Section 7(a) without giving effect to the provisos of
such Section or (y) all Registrable Preferred Securities held by all Preferred
Holders, if converted into Common Stock, would constitute less than two percent
(2%) of the Company's outstanding Common Stock. The Company shall not be
obligated to effect, or to take any action to effect, any registration of
Registrable Common Securities pursuant to this Section 3 after the Company has
effected two such registrations pursuant to this Section 3 and such
registrations have been declared or ordered effective by the Commission and
have remained effective for the periods required under Section 7(a) without
giving effect to the provisos of such Section.
(b) Underwriting. If the Initiating Common Holders or Initiating
Preferred Holders intend to distribute the Registrable Common Securities or
Registrable Preferred Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to Section 3(a) and the Company shall include such information in the
written notice referred to in Section 3(a)(i) above. The Company, together with
all Holders of Registrable Common Securities or Registrable Preferred
Securities proposing to distribute their securities through such underwriting,
shall enter into an underwriting agreement in customary form with the managing
underwriter(s) selected for such underwriting by a majority in interest of the
Initiating Common Holders or Initiating Preferred Holders, as the case may be,
which underwriter(s) shall be reasonably acceptable to the Company; PROVIDED,
HOWEVER, that no Holder shall be required to make any representations,
warranties or indemnities except as they relate to such Holder's ownership of
shares and authority to enter into the underwriting agreement and to such
Holder's intended method of distribution, and the liability of such Holder
shall be limited to an amount equal to the net proceeds from the offering
received by such Holder.
Notwithstanding any other provision of this Section 3, if the managing
underwriter(s) have informed the Initiating Common Holders or Initiating
Preferred Holders in writing that in such underwriter's or underwriters' good
faith opinion the total number of Registrable Common Securities or Registrable
Preferred Securities which the Holders intend to include in such offering is
such as to affect adversely the success of such offering, including the price
at which such securities can be sold, then the Initiating Common Holders or
Initiating Preferred Holders shall so advise all Holders intending to include
Registrable Common Securities or Registrable Preferred Securities in the
underwritten offering and the number of shares of Registrable Common Securities
or Registrable Preferred Securities that may be included in the underwritten
offering shall be allocated among all Holders requesting registration thereof
in proportion (as nearly as practicable) to the amount of Registrable Common
Securities or Registrable Preferred Securities, as the case may be, owned by
each such Holder, PROVIDED, HOWEVER, that the number of shares of Registrable
Common Securities or Registrable Preferred Securities to be included in the
underwritten offering by the Initiating Common Holders or the Initiating
Preferred Holders, as the case may be, shall not be reduced unless all other
securities are excluded entirely from the offering.
If the Company, any Holder or any other person registering securities
in the registration in its sole discretion disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the underwriter and the Initiating Common Holders or the Initiating Preferred
Holders, as the case may be. The securities so withdrawn shall also be
withdrawn from registration.
4. Piggyback Registration.
(a) If, at any time, the Company shall determine to register any of
its equity securities either for its own account or the account of a security
holder or holders (other than Holders of Registrable Preferred Securities),
other than (i) a registration relating solely to employee benefit plans, or
(ii) a registration relating solely to a Commission Rule 145 transaction
involving the acquisition of a business (but not a Rule 145 transaction
designed solely to exchange restricted securities for registered securities in
a manner that is the functional equivalent of registration rights), or (iii) a
registration relating to warrants, or to securities issuable in respect of
warrants, which warrants are sold in connection with an offering of debt
securities (each, an "EXCEPTED REGISTRATION"), the Company will:
(i) promptly give to each Holder written notice thereof (which
shall include a list of the jurisdictions in which the Company intends to
attempt to qualify such securities under the applicable blue sky or other state
securities laws); and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all of the Registrable Securities specified in a written
request or requests made by any Holder within 30 days after receipt of the
written notice from the Company described in clause (i) above, except as set
forth in Section 4(b) below. Such written request may specify all or a part of
a Holder's Registrable Securities.
(b) If a registration statement under which the Company gives
notice under Section 4(a)(i) is for an underwritten offering, and if the
managing underwriter or underwriters of such underwritten offering have
informed the Company and the Holders of Registrable Securities requesting
inclusion in such offering, in writing, that in such underwriter's or
underwriters' good faith opinion the total number of securities which the
Company, such Holders and any other persons desiring to participate in such
registration intend to include in such offering is such as to adversely affect
the success of such offering, including the price at which such securities can
be sold, then the Company will be required to include in such registration only
the number of securities which it is so advised should be included in such
registration which shall be allocated as follows: (x) in cases involving the
registration for sale of securities for the Company's own account only,
securities shall be registered in such offering in the following order of
priority: (i) first, the securities which the Company proposes to register
(subject to reduction if applicable, as provided in the following clause
second), (ii) second, the Registrable Preferred Securities which have been
requested to be included in such registration by the Holders of Registrable
Preferred Securities pro rata based upon the aggregate amount of Registrable
Preferred Securities then held by such Holder (PROVIDED, HOWEVER, that other
than in connection with the registration of Common Stock in an IPO, the number
of Registrable Preferred Securities included in such registration shall not be
reduced to less than 30% of the total number of securities included in such
registration and the number of securities which the Company proposes to
register in such offering shall be reduced to the extent necessary to assure
that the number of Registrable Preferred Securities included in such
registration shall not be reduced to less than that amount), (iii) third,
provided that no securities sought to be included by the Company and the
Holders of Registrable Preferred Securities have been excluded from such
registration, the securities of other persons entitled to exercise "piggyback"
registration rights pursuant to contractual commitments of the Company,
including Holders of Registrable Common Securities (pro rata based on the
respective numbers of securities sought to be registered by such persons); (y)
in cases involving the registration for sale of securities for the account of a
Holder of Registrable Preferred Securities pursuant to Section 3 hereof,
securities shall be registered in such offering in the following order of
priority: (i) first, the Registrable Preferred Securities which have been
requested to be included in such registration by the Holders of Registrable
Preferred Securities pro rata based upon the aggregate amount of Registrable
Preferred Securities then held by such Holder, (ii) second, provided that no
securities sought to be included by the Holders of Registrable Preferred
Securities have been excluded from such registration, the securities of other
persons entitled to exercise "piggyback" registration rights pursuant to
contractual commitments of the Company, including Holders of Registrable Common
Securities (pro rata based on the respective numbers of securities sought to be
registered by such persons); and (z) in cases not involving the registration
for sale of securities for the Company's own account only or for the account of
any Holder of Registrable Preferred Securities, which may include the
registration for sale of securities by Holders of Registrable Common
Securities, securities shall be registered in such offering in the following
order of priority: (i) first, the securities of any person whose exercise of a
"demand" registration right pursuant to a contractual commitment of the Company
is the basis for the registration, (ii) second, provided that no securities of
such person referred to in the immediately preceding clause (i) have been
excluded from such registration, the securities which have been requested to be
included in such registration by the Holders of Registrable Preferred
Securities pro rata based upon the aggregate amount of Registrable Preferred
Securities held by such Holder, (iii) third, provided that no securities of
such persons referred to in the immediately preceding clauses (i) or (ii) have
been excluded from such registration, the securities which have been requested
to be included in such registration by the Holders of Registrable Common
Securities, pro rata based upon the aggregate amount of Registrable Common
Securities held by such Holder, (iv) fourth, provided that no securities of
such person referred to in the immediately preceding clauses (i), (ii) or (iii)
or of the Holders of Registrable Securities have been excluded from such
registration, securities of other persons entitled to exercise "piggyback"
registration rights pursuant to contractual commitments (pro rata based on the
respective numbers of securities sought to be registered by such persons) and
(v) fifth, provided that no securities of any other person have been excluded
from such registration, the securities which the Company proposes to register.
If, as a result of the provisions of this Section 4(b), any
Holder of Registrable Securities shall not be entitled to include all
Registrable Securities in a "piggyback" registration that such Holder of
Registrable Securities has requested to be included, such Holder of Registrable
Securities may elect to withdraw his request to include Registrable Securities
in such registration.
5. Expenses of Registration. The Company shall bear all Registration
Expenses incurred in connection with any registration, qualification or
compliance pursuant to this Agreement and all underwriting discounts, selling
commissions and expense allowances applicable to the sale of any securities by
the Company for its own account in any registration. All Selling Expenses shall
be borne by the Holders, if any, whose securities are included in such
registration pro rata on the basis of the number of their Registrable
Securities so registered, PROVIDED, HOWEVER, that if in such registration, the
Company pays any expenses included in the defined term "Selling Expenses" for
other security holders, the Company will pay such expenses for the Holders.
6. Registration on Form S-3.
(a) The Company shall use its commercially reasonable efforts to
qualify for registration on Form S-3 or any comparable or successor form or
forms and remain so qualified following the closing of the first registration
of any securities of the Company under the Securities Act. So long as the
Company is qualified for the use of Form S-3, in addition to the rights
contained in the foregoing provisions of this Agreement, the Holders of
Registrable Preferred Securities and, after the Company has effected three
registrations of Registrable Preferred Securities pursuant to Section 3 hereof
and such registrations have been declared or ordered effective by the
Commission and have remained effective for the periods required under Section
7(a) (without giving effect to the provisos of such Section), or all
Registrable Preferred Securities held by all Preferred Holders, if converted
into Common Stock, would constitute less than two percent (2%) of the Company's
outstanding Common Stock, the Holders of Registrable Common Securities, shall
have unlimited rights to request from time to time registrations on Form S-3
(such requests shall be in writing and shall state the number of shares of
Registrable Preferred Securities to be disposed of and the intended methods of
disposition of such shares by such Holder or Holders) PROVIDED, HOWEVER, that
in each case the required registration (1) is reasonably expected to have
aggregate gross proceeds exceeding $2,000,000 or (ii) includes all shares held
by the Holder or Holders requesting registration.
7. Registration Procedures. In the case of each registration effected
by the Company pursuant to this Agreement, the Company will keep each Holder
who is entitled to registration rights hereunder advised in writing as to the
initiation of each registration and as to the completion thereof. At its
expense, the Company will:
(a) Except as otherwise provided herein, keep such registration
effective for a period of six months (which period shall be extended by any
periods during which effectiveness may be suspended as provided in Section 7(m)
below) or until Holders including shares in such registration, if any, have
completed the distribution described in the registration statement relating
thereto, whichever first occurs; PROVIDED, HOWEVER, that in the case of any
registration of Registrable Preferred Securities on Form S-3 that are intended
to be offered on a continuous or delayed basis, such six-month period shall be
extended, if necessary, to keep the registration statement effective until all
such Registrable Securities are sold; PROVIDED, FURTHER, that after such six
month period in case of a Registration Statement on Form S-3, the Company may
suspend the use of such registration statement from time to time if the Company
furnishes to such Holders a certificate signed by the President or Chief
Executive Officer of the Company stating that the negotiation or consummation
of a transaction by the Company is pending or an event has occurred, which
negotiation, consummation or event in the reasonable judgment of the Company
would require additional disclosure by the Company in a registration statement
of material information which the Company (in the good faith judgment of its
Board of Directors) has a bona fide business purpose for keeping confidential
and the nondisclosure of which in the registration statement would cause the
registration statement to fail to comply with applicable disclosure
requirements;
(b) Prepare and file with the Commission such amendments and
supplements, including, without limitation, post-effective amendments, 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 securities covered by such
registration statement and, subject to Section 7(m)(i), prepare and file with
all necessary documents in order to qualify the sale of such Registrable
Securities under the blue sky law or other state securities laws for each state
in the United States requested by such Holders or the underwriter;
(c) Furnish such reasonable number of prospectuses and other
documents incident thereto, including supplements and amendments, as a Holder
may reasonably request;
(d) Notify each seller 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 fact required to be stated therein or necessary to make the statements
therein not misleading or incomplete in the light of the circumstances then
existing (in which case each person who can sell under such registration
statement will immediately suspend use of such registration statement until it
is supplemented or amended as provided herein), and at the request of any such
seller, prepare and furnish to such seller a reasonable number of copies of a
supplement to or an amendment of such prospectus as may be necessary so that,
as thereafter delivered to the purchaser of such shares, such prospectus shall
not include an 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
not misleading or incomplete in the light of the circumstances then existing;
(e) Use its commercially reasonable efforts to cause all such
Registrable Securities to be listed on each securities exchange or interdealer
quotation system on which the same securities issued by the Company are then
listed;
(f) Provide a transfer agent and registrar for all such Registrable
Securities and a CUSIP number for all such Registrable Securities not later
than the effective date of such registration;
(g) Make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney or accountant retained by any such
seller or underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's officers and
directors to supply all information reasonably requested by any such seller,
underwriter, attorney or accountant in connection with such registration
statement; PROVIDED, HOWEVER, that such seller, underwriter, attorney or
accountant shall agree to hold in confidence and trust all information so
provided;
(h) Furnish to each selling Holder a signed counterpart, addressed
to the selling Holder, of (1) an opinion of counsel for the Company, dated the
effective date of the registration statement, and (2) "comfort" letters signed
by the Company's independent public accountants who have examined and reported
on the Company's financial statements included in the registration statement,
to the extent permitted by the standards of the AICPA or other relevant
authorities, covering substantially the same matters with respect to the
registration statement (and the prospectus included therein) and (in the case
of the accountants' "comfort" letters, with respect to events subsequent to the
date of the financial statements), in each case as are customarily covered in
opinions of issuer's counsel and in accountants' "comfort" letters delivered to
the underwriters in underwritten public offerings of securities;
(i) Furnish to each selling Holder a copy of all documents filed
with and all correspondence from or to the Commission in connection with any
such offering other than nonsubstantive cover letters and the like;
(j) Otherwise use its commercially reasonable efforts to comply
with all applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, an earnings
statement covering the period of at least twelve months, but not more than
eighteen months, beginning with the first month after the effective date of the
registration statement, which earnings statement shall satisfy the provisions
of Section 11(a) of the Securities Act;
(k) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Sections 3 or 4 hereof, the Company
will enter into any underwriting agreement reasonably necessary to effect the
offer and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and provided further that if the underwriter
so requests the underwriting agreement will contain customary indemnification
and contribution provisions;
(l) From and after the date of this Agreement, the Company shall
not, without the prior written consent of a majority in interest of the Holders
(assuming full conversion into Common Stock of all Series C Preferred and
Series D Preferred), enter into any agreement with any holder or prospective
holder of any securities of the Company giving such holder or prospective
holder rights that are superior to, or which adversely affect or are
inconsistent with, the rights given to the holders of Registrable Securities
hereunder to require the Company to initiate registration of any securities of
the Company or to require the Company, upon any registration of any of its
securities, to include, among the securities that the Company is then
registering, securities owned by such holder; and
(m) Notwithstanding the foregoing, the Company shall not be
obligated to take any action:
(i) pursuant to Sections 3, 4 or 6 of this Agreement (A) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act, (B) in
any non-U.S. jurisdiction in which the Company would be required to qualify as
a foreign corporation eligible to do business in such jurisdiction, if the
Company shall not then be so qualified in that jurisdiction or (C) in any
non-U.S. jurisdiction that would subject the Company to taxation where it would
not otherwise be subject to tax;
(ii) pursuant to Section 3 or 6 of this Agreement if the
Company, within ten (10) days of the receipt of the request of the Initiating
Common Holders or Initiating Preferred Holders, gives notice of its bona fide
intention to file a registration statement with the Commission within sixty
(60) days of receipt of such request (other than an Excepted Registration);
(iii) pursuant to Section 3 or 6 of this Agreement with respect
to any request for registration made by Initiating Common Holders or Initiating
Preferred Holders during the period starting with the date of filing of, and
ending on the date 90 days immediately following the effective date of, any
registration statement pertaining to equity securities of the Company (other
than an Excepted Registration), provided that the Company is actively employing
in good faith all reasonable efforts to cause such registration statement to
become effective; or
(iv) pursuant to Section 3 or 6 of this Agreement if the
Company shall furnish to such Holder or Holders a certificate signed by the
President or Chief Executive Officer of the Company stating that the
negotiation or consummation of a transaction by the Company is pending or an
event has occurred, which negotiation, consummation or event would require
additional disclosure by the Company in the registration statement of material
information which the Company (in the good faith judgment of its Board of
Directors) has a bona fide business purpose for keeping confidential and the
nondisclosure of which in the registration statement in the reasonable judgment
of the Company would cause the registration statement to fail to comply with
applicable disclosure requirements, in which case the Company's obligation
hereunder to file a registration statement, pursue its effectiveness or
maintain its effectiveness, shall be deferred for a period or periods not to
exceed ninety (90) consecutive days or a total of one hundred and twenty (120)
days in any 12-month period, PROVIDED, HOWEVER, that the Company may not
exercise this deferral right more than twice in any 12-month period, AND
PROVIDED, FURTHER, that the Company may suspend the use of any effective
registration statement filed pursuant to Section 3, 4 or 6 of this Agreement
during any period the Company's obligation to file a registration statement or
to pursue or maintain its effectiveness is deferred as provided herein; or
(v) pursuant to Section 3 or 6 of this Agreement if the Holder
requires an audit of the Company's financial statements in connection with the
registration of the Registrable Securities other than any audit required by the
Securities Act or any rules or regulations thereunder.
8. Indemnification.
(a) The Company will indemnify each Holder, each of its officers,
directors, agents, employees and partners, and each person controlling such
Holder, with respect to each registration, qualification or compliance effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter, against all claims, losses, damages and liabilities
(or actions, proceedings or settlements in respect thereof) arising out of or
based on any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus, offering circular or other document prepared by
the Company (including any related registration statement, notification or the
like) incident to any such registration, qualification or compliance, or based
on any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, and will reimburse each such Holder, each of its officers,
directors, agents, employees and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such
underwriter, for any legal and any other expenses as they are reasonably
incurred in connection with investigating and defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in
any such case to the extent that any such claim, loss, damage, liability or
expense arises out of or is based on any untrue statement (or alleged untrue
statement) or omission (or alleged omissions) based upon written information
furnished to the Company by such Holder or underwriter and stated to be
specifically for use therein.
(b) Each Holder whose Registrable Securities are included in any
registration, qualification or compliance effected pursuant to this Agreement
will indemnify the Company, each of its directors and officers and each
underwriter, if any, of the Company's securities covered by such a registration
statement, each person who controls the Company or such underwriter within the
meaning of the Securities Act and the rules and regulations thereunder, each
other such Holder and each of their officers, directors and partners, and each
person controlling such Holder, 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 and such Holders, directors,
officers, partners, persons, underwriters or control persons for any legal or
any other expenses as they are reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
in each case to the extent, but only to the extent, that such untrue statement
(or alleged untrue 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 such Holder and stated to be specifically for use therein; PROVIDED,
HOWEVER, that the obligations of a Holder hereunder shall be limited to an
amount equal to the net proceeds to such Holder from shares sold under such
registration statement, prospectus, offering circular or other document as
contemplated herein.
(c) Each party entitled to indemnification under this Section 8
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified
Party has actual knowledge of any claim as to which indemnity may be sought,
and shall permit the Indemnifying Party to assume the defense of any such claim
or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not unreasonably be withheld), and the Indemnified Party
may participate in such defense at the Indemnifying Party's expense; and
provided further that if any Indemnified Party reasonably concludes that there
may be one or more legal defenses available to it that are not available to the
Indemnifying Party, or that such claim or litigation involves or could have an
effect on matters beyond the scope of this Agreement, then the Indemnified
Party may retain its own counsel at the expense of the Indemnifying Party; and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Agreement unless and only to the extent that such failure to give
notice results in material prejudice to the Indemnifying Party. In no event
shall an Indemnifying Party be liable for fees and expenses of more than one
counsel (in addition to one local counsel for each relevant jurisdiction)
separate from their own counsel for all Indemnified Parties in connection with
any one action or separate but similar or related actions. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. Each Indemnified Party
shall furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section 8 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any loss, liability, claim, damage or expense referred to
herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions which resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. Notwithstanding anything to the contrary in this
Section 8, no Indemnifying Party shall be required, pursuant to this Section 8,
to contribute any amount in excess of the net proceeds received by such
Indemnifying Party from the sale of securities in the offering to which the
losses, claims, damages, liabilities or expenses of the Indemnified Party
relate.
9. Information by Holder. Each Holder of Registrable Securities to be
included in a registration referred to in this agreement shall furnish in
writing to the Company such information regarding such Holder, the securities
to be offered and sold and the intended plan of distribution of the securities
by such Holder as the Company may reasonably request in writing and as shall be
reasonably required in connection with any registration, qualification or
compliance referred to in this Agreement and shall promptly advise the Company
in writing of any material changes to such information while the registration
is in effect. If any registration statement or comparable statement under the
Securities Act refers to a Preferred Holder or any of its affiliates, by name
or otherwise, as the holder of any securities of the Company then, unless
counsel to the Company advises the Company that the Securities Act requires
that such reference be included in any such statement, each such Preferred
Holder shall have the right to require the deletion of such reference to itself
and its affiliates.
10. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may permit the sale of
the Registrable Securities to the public without registration, the Company
agrees to:
(a) Use commercially reasonable efforts to make and keep public
information available, as those terms are understood and defined in Rule 144
under the Securities Act, at all times from and after the effective date of the
first registration under the Securities Act filed by the Company for an
offering of its securities to the general public;
(b) Use its commercially reasonable efforts to 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 a Holder owns any Registrable Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of Rule 144 (at any time from and
after ninety (90) days following the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
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.
11. Transfer of Rights; Termination of Rights. The rights to cause the
Company to register a Holder's securities granted by the Company under this
Agreement may only be transferred or assigned by a Holder to a transferee of
some or all of such Holder's Registrable Securities, provided that the Company
is given written notice prior to the time that such right is exercised, stating
the name and address of said transferee or assignee and identifying the
Registrable Securities with respect to which such registration rights are being
transferred or assigned, and provided further that the transferee or assignee
of such rights assumes in an agreement reasonably acceptable to the Company the
obligations of the Holder under this Agreement.
12. "Lock-Up" Agreement. Each Holder agrees, if requested by the
Company and an underwriter of Common Stock of the Company in connection with
the initial underwritten public offering of the Company's Common Stock, not to
sell or otherwise transfer or dispose of any Common Stock (or other securities)
of the Company or request registration thereof held by such Holder during a
period of time determined by the Company and its underwriters (not to exceed
180 days) following the date the related registration statement under the
Securities Act relating to such initial public offering becomes effective,
provided that all officers and directors of the Company (other than designees
of such Holders) who then hold Common Stock (or other securities) of the
Company enter into similar agreements, and provided further that, in no event,
shall a Holder be prohibited from transferring or selling Common Stock or other
securities of the Company to an affiliate of such Holder.
Such agreement shall be in writing in a form reasonably satisfactory
to the Company and such underwriter. The Company may impose stop-transfer
instructions with respect to the Shares (or securities) subject to the
foregoing restriction until the end of said period. The Company agrees that any
release of shares subject to the foregoing lock-up agreement shall be made on a
pro rata basis among all Holders based upon their percentage ownership of the
outstanding shares of Common Stock of the Company.
13. Preemptive Rights.
(a) New Issuances. The Company hereby agrees not to issue or sell
any "NEW SECURITIES" (as defined in this Section 13) in a transaction in which
the Company receives any consideration other than cash without the prior
written consent of holders of a majority of the outstanding shares of Series C
Preferred. The Company hereby grants to the Investors a right (the "PREEMPTIVE
RIGHT") to purchase all or any part of their pro rata share of any New
Securities that the Company may, from time to time, propose to sell and issue
solely for cash. Such pro rata share, for purposes of this Preemptive Right, is
the ratio of (x) the number of shares of Common Stock then held by such
Investor immediately prior to the issuance of the New Securities, assuming the
full conversion of any Series C Preferred held by such Investor (but not
including options or warrants to acquire Common Stock or Preferred Stock) to
(y) the total number of shares of Common Stock then outstanding immediately
prior to the issuance of the New Securities, assuming the full conversion of
outstanding Preferred Stock (but not including options or warrants to acquire
Common Stock or Preferred Stock). This Preemptive Right shall be subject to the
following provisions:
(i) "NEW SECURITIES" shall mean any Common Stock or Preferred
Stock of the Company, whether or not authorized on the date hereof, and rights,
options or warrants to purchase Common Stock or Preferred Stock and securities
of any type whatsoever that are, or may become, convertible into Common Stock
or Preferred Stock; PROVIDED, HOWEVER, that "NEW SECURITIES" does not include
the following:
(A) shares of capital stock of the Company issuable upon
conversion or exercise of any outstanding securities as of the date hereof or
any New Securities issued in accordance with this Agreement;
(B) shares or options granted pursuant to the Stock Option
Plan;
(C) shares of Common Stock or Preferred Stock issued in
connection with any pro rata stock split, stock dividend or recapitalization by
the Company (in which case, all numbers of shares and per share amounts
referenced in this Section 13(a)(i) will be adjusted accordingly);
(D) shares of Common Stock or Preferred Stock issued by the
Company in consideration for the acquisition of another company, partnership or
other business entity; or
(E) shares of Common Stock and warrants or options therefor
issued to brokers, owners or operators of buildings that contract for services
from the Company if and to the extent such issuance or a plan providing for
such issuance is approved by the holders of at least a majority of the Series C
Preferred.
(ii) In the event that the Company proposes to undertake an
issuance of New Securities for cash, it shall give each Investor written notice
(the "Notice") of its intention, describing the type of New Securities, the
price, and the general terms upon which the Company proposes to issue the same.
Each Investor shall have twenty (20) business days after receipt of such notice
to agree to purchase all or any portion of its pro rata share of such New
Securities at 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 share within such twenty (20) business day period, the Company will
give each Investor who did so agree (the "Electing Investors") notice of the
number of shares that were not subscribed for. Such notice may be provided by
telephone if followed by written confirmation within two days. The Electing
Investors shall have twenty (20) business days from the date of receipt of such
notice to agree to purchase all or any share of any Investor's pro rata share
of the New Securities not purchased in response to the Notice.
(iii) In the event that any New Securities subject to the
Preemptive Right are not purchased by the Investors within the twenty (20)
business day plus twenty (20) business day period specified above, the Company
shall have one hundred and twenty (120) days thereafter to sell (or enter into
an agreement pursuant to which the sale of New Securities that had been subject
to the Preemptive Right shall be closed, if at all, within ninety (90) days
from the date of said agreement) the New Securities with respect to which the
rights of the Investors were not exercised at a price and upon terms, including
manner of payment, no more favorable to the purchasers thereof than specified
in the Notice. In the event the Company has not sold all offered New Securities
within such one hundred and twenty (120) day period (or sold and issued New
Securities in accordance with the foregoing within ninety (90) days from the
date of such agreement) the Company shall not thereafter issue or sell any New
Securities, without first again offering such New Securities to the Investors
in the manner provided above.
(iv) This Preemptive Right is nonassignable except to any
transferee to whom rights under Section 14 may be transferred under Section
14(g) of this Agreement.
(v) This Preemptive Right shall terminate on the earlier of (i)
immediately prior to the closing of the Company's IPO; or (ii) as to any
Investor at such time as such Investor holds less than 2.5% of the number of
shares of Common Stock held by all Investors (after giving effect to the
conversion of all shares of Series C Preferred and Series D Preferred held by
all Investors). Notwithstanding the foregoing, the Preemptive Right granted
hereby shall not apply with respect to an IPO by the Company.
14. Rights of First Offer and Co-Sale Respecting Shares.
(a) Rights of First Offer and Co-Sale.
(i) In the event that any one or more of the Company's
directors, officers or managers listed on Exhibit B hereto (collectively,
"MANAGEMENT") proposes to sell or otherwise transfer any shares of stock of the
Company, or any interest in such shares ("TRANSFER SHARES"), now held by or
hereafter acquired by Management to any person or entity, the Investors shall
have a right of first offer on the terms described below to purchase the
Transfer Shares proposed to be transferred, and each of the Investors shall
have a right of co-sale on the terms described below. Before effecting any sale
or transfer of Transfer Shares, the member of Management desiring to sell or
transfer such Transfer Shares shall give a written notice (the "TRANSFER
NOTICE") to each of the Investors at such Investors' respective addresses as
shown on the Company's records. The Transfer Notice shall describe the number
of Transfer Shares proposed to be transferred and the proposed transfer price
in cash.
(ii) The Investors shall have twenty (20) business days
following receipt of the Transfer Notice to agree to purchase all or any
portion of their respective First Offer Pro Rata Shares (as hereinafter
defined) of such Transfer Shares by giving written notice to Management and the
Company and stating the number of shares to be purchased. Any Transfer Shares
not purchased by the Investors pursuant to this Section 14(a)(ii) are
hereinafter referred to as the "UNSOLD TRANSFER SHARES." Thereafter, for a
period of eighty (80) days, the member of management proposing such sale or
transfer shall have the right to sell or transfer such shares to any person all
or any part of the Unsold Transfer Shares, subject to Section 14(a)(iii), in
cash at a price equal to or greater than the price set forth in the Transfer
Notice. If such member desires to sell or transfer Unsold Transfer Shares
during this eighty (80) day period, such member shall give twenty (20) business
days prior written notice (the "SECOND TRANSFER NOTICE") to the Company and to
each of the Investors at such Investors' respective addresses as shown on the
Company's records identifying the proposed transferees (the "TRANSFEREE") and
the number of Unsold Transfer Shares to be sold.
(iii) Each Investor shall have the right to sell to the
Transferee (or, upon the unwillingness of any Transferee to purchase directly
from such Investor, to the member of Management proposing such sale) not more
than its Co-Sale Pro Rata Share (as hereinafter defined) of the Unsold Transfer
Shares to be sold subject to the Second Transfer Notice on the terms set forth
in the Second Transfer Notice. To the extent that any prospective Transferee
prohibits such assignment or otherwise refuses to purchase shares or other
securities from an Investor exercising its right of co-sale hereunder, such
member of Management whose proposed sale gave rise to a right of co-sale shall
not sell such prospective purchaser or purchasers any Transfer Shares to be
sold unless and until, simultaneously with such sale, such member of Management
shall purchase such shares or other securities from such Investor for the same
consideration and on the same terms and conditions as the proposed transfer
described in the Second Transfer Notice. An Investor may exercise his right of
co-sale by delivering a notice to Management, with a copy to the Company,
within twenty (20) business days after receipt by such Investor of the Second
Transfer Notice.
(iv) Each Investor's "FIRST OFFER PRO RATA SHARE" is the ratio
of (i) the number of shares of Common Stock held by such Investor as of the
date of the Transfer Notice (after giving effect to the conversion of all
shares of Series C Preferred and Series D Preferred held by such Investor) to
(ii) the number of shares of Common Stock held by Management and all other
Investors as of such date (after giving effect to the conversion of all shares
of Series C Preferred and Series D Preferred held by all Investors).
(v) Each Investor's "CO-SALE PRO RATA SHARE" is the ratio of
(i) the number of shares of Common Stock held by such Investor as of the date
of the Transfer Notice (after giving effect to the conversion of all shares of
Series C Preferred and Series D Preferred held by such Investor) to (ii) the
number of shares of Common Stock held by Management and all other Investors as
of such date (after giving effect to the conversion of all shares of Series C
Preferred and Series D Preferred held by all Investors).
(b) Transfer of Shares Upon Failure to Exercise Right of First
Offer or Co-Sale. Any proposed transfer for a price lower than that stated in
the Transfer Notice or for a greater number of shares, as well as any
subsequent proposed transfer, including after expiration of the ninety (90) day
period in Section 14(a)(ii) above, of any of the Transfer Shares by Management,
shall again be subject to the rights of first refusal and rights of co-sale
provided in Section 14(a) hereof and shall require compliance with the
procedures described in this Section.
(c) Binding Effect of Right of Co-Sale. The rights of first offer
and co-sale provided in Section 14(a) hereof shall be binding upon any
transferee of Transfer Shares other than a transferee acquiring Transfer Shares
in a transaction which complies with this Section.
(d) Termination of Right of Co-Sale. Notwithstanding anything in
this Section to the contrary, the rights of first offer and of co-sale provided
in Section 14(a) hereof shall terminate on the earlier of (i) immediately prior
to the closing of the Company's IPO; or (ii) as to any Investor at such time as
such Investor holds less than 2.5% of the number of shares of Common Stock held
by all Investors (after giving effect to the conversion of all shares of Series
C Preferred and Series D Preferred held by all Investors).
(e) Exceptions. Without regard and not subject to the provisions of
this Section, a member of Management may transfer all or part of his or her
Shares (i) to such member's spouse, ancestors, descendants, siblings or their
descendants or a trust for any of their benefit or (ii) in transactions
involving the distribution without consideration of Shares by such member to
any of his or her partners or retired partners or to the estate of any of his
or her partners or retired partners (each an "EXEMPT TRANSACTION" and
collectively, "EXEMPT TRANSACTIONS"); PROVIDED, HOWEVER, that this Agreement
shall be binding upon each transferee in any such Exempt Transaction and, prior
to the completion of such transfer, each transferee or his or her legal
representative shall have executed documents in form and substance satisfactory
to the Company and to a majority in interest of the Investors evidenced by
their written acknowledgment of such satisfaction, assuming the obligations of
the member of Management under this Agreement with respect to the Transfer
Shares. Such Transfer Shares shall remain subject to this Section hereunder,
and references to "Management" hereunder shall be deemed thereafter to apply to
and include the transferor or transferees of any such shares.
(f) Conditions to Exercise of Rights. Exercise of the Investor's
rights under this Section shall be subject to and conditioned upon, and
Management and the Company shall use commercially reasonable efforts to assist
the Investors in, compliance with applicable laws.
(g) Transferability. The rights of first offer and co-sale rights
granted to the Investors pursuant to this Section shall be transferable only to
a transferee to whom registration rights may be transferred hereunder and who
following such transfer will hold no less than 2.5% of the total number of
shares of Common Stock held by all Investors (after giving effect to the
conversion of all shares of Series C Preferred and Series D Preferred held by
all Investors).
(h) Rights of First Refusal and Co-Sale Among the Investors with
Respect to Preferred Stock. In the event that any Investor proposes to sell or
otherwise transfer any shares of Series B Preferred, Series C Preferred or
Series D Preferred, or any interest in such shares, now held by or hereafter
acquired by such Investor, each of the other Investors shall have (a) a right
of first offer to purchase the shares proposed to be sold or transferred, and
(b) a right of co-sale, in each case exercisable in the same manner and on the
same terms described in this Section 14 with respect to the first offer and
co-sale rights granted by Management to the Investors; PROVIDED, HOWEVER, that
this Section 14(h) shall not apply to sales or transfers between an Investor
and any of such Investor's partners or Affiliates.
15. Put Right.
(a) Put Right. At any time during the one-year period after the
sixth anniversary of the date hereof, in the event the Common Stock is not then
traded on any national securities exchange or the Nasdaq National Market (or
any successor thereof), each Preferred Holder, with the consent of Preferred
Holders holding at least a majority of the Registrable Preferred Securities
(assuming full conversion into Common Stock of all Series C Preferred and
Series D Preferred) then outstanding (the "MAJORITY HOLDERS"), shall have the
right (the "PUT RIGHT") to sell to the Company, and upon the exercise of the
Put Right the Company shall have the obligation to purchase, all (and not less
than all) of the shares of Registrable Preferred Securities, Series C Preferred
and Series D Preferred then held by the Preferred Holders exercising the Put
Right on the terms and conditions hereafter provided in this section. Any
Preferred Holders intending to exercise a Put Right shall deliver written
notice thereof to the Company (the "PUT NOTICE"), which Put Notice shall be
effective only if consented to or joined in by the Majority Holders (which may
include for such purpose the Preferred Holder(s) intending to exercise its Put
Right).
(b) Participation by Other Holders. The Company shall within 10
days of its receipt of the Put Notice deliver to each Preferred Holder (other
than the Preferred Holder initially delivering the Put Notice) written notice
of its receipt of such Put Notice (the "COMPANY NOTICES"). Each Preferred
Holder shall have the right to participate in the exercise of the Put Right by
delivering notice thereof (a "PARTICIPATION NOTICE") to the Company on or
before the 30th day following the Company's delivery of the Company Notice
(such 30th day being referred to as the "DETERMINATION DATE"). Each Preferred
Holder electing to exercise its Put Right hereunder (each a "PARTICIPATING
HOLDER") shall exercise its rights with respect to all (and not less than all)
of its Registrable Preferred Securities, Series C Preferred and Series D
Preferred. Each Preferred Holder that does not elect to participate in the
exercise of the Put Right by delivering a Participation Notice shall thereafter
be precluded from exercising its Put Right until the earlier of (i) 180 days
after the Determination Date and (ii) the 30th day following the determination
of the Put Price with respect to the then pending exercise of the Put Rights.
No Participating Holder may rescind its election to exercise its Put Rights,
and each Participating Holder shall be obligated to sell its Registrable
Preferred Securities in accordance with this section unless (i) such rescission
is consented to by the Majority Holders (which may include for such purpose the
Preferred Holder intending to rescind its exercise of its Put Right) or (ii)
the Company fails to purchase such Participating Holder's Registrable Preferred
Securities in accordance with this section on the date of the Put Closing
(defined below).
(c) Put Price. The purchase price to be paid by the Company for the
Registrable Securities shall be the "fair market value" thereof as of the
Determination Date determined in accordance with Sections 15(d) and (e) hereof.
(d) Fair Market Value. The "fair market value" of the Registrable
Securities means the product of (i) the total consideration that would be
received by a holder of one share of Common Stock (assuming full conversion
into Common Stock of all Series C Preferred and Series D Preferred) upon the
sale of all of the Company's issued and outstanding equity securities in a
single transaction or series of related transactions to a buyer willing to pay
the highest purchase price that would be received in an auction conducted by a
nationally recognized investment banking firm that has experience valuing
businesses of the type then engaged in by the Company, which buyer is under no
compulsion to buy and the holders of such equity securities are under no
compulsion to sell, all parties having reasonable knowledge of all relevant
facts, with no discount being applied for any other reason and (ii) the
percentage equity ownership of the Company represented by the Registrable
Securities (assuming full conversion into Common Stock of all Series C
Preferred and Series D Preferred), calculated on a fully diluted basis.
(e) Determination of Fair Market Value. The fair market value of
the Registrable Securities (assuming full conversion into Common Stock of all
Series C Preferred and Series D Preferred) shall be that which is agreed upon
by the Company and a majority in interest of the Participating Holders
(assuming full conversion into Common Stock of all Series C Preferred and
Series D Preferred) (the "MAJORITY PARTICIPATING HOLDERS"). If the Company and
the Majority Participating Holders fail to agree on the fair market value
within 30 days of the Determination Date, then, at the election of the Majority
Participating Holders, either (i) the Majority Participating Holders shall then
have the right to require a sale of the Company by asset sale, merger or
otherwise (a "SALE OF THE COMPANY") in accordance with the provisions of
Section 15(g) and (h) hereof by delivering to the Company an Exit Instruction
Notice or (ii) the Company and the Majority Participating Holders shall attempt
to agree upon an appraiser to determine the fair market value, which appraiser
shall be a nationally recognized investment banking firm that has experience
valuing businesses of the type then engaged in by the Company (the firm or
firms engaged to determine the fair market value hereunder having such
qualifications being referred to as an "APPRAISER"). If, within the 10-day
period after the expiration of such 30-day period, the Company and the Majority
Participating Holders agree upon an Appraiser to determine the fair market
value in accordance with Section 15(d) above, then such Appraiser shall make
such determination within 30 days after the date of such Appraiser's
engagement, and such determination shall govern. If the Company and the
Majority Participating Holders do not, within such 10-day period, agree as to a
single Appraiser, or if the Appraiser appointed as provided above fails to
determine such fair market value within 30 days of the date of such Appraiser's
engagement, then each of the Company and the Majority Participating Holders, by
notice to the other, shall appoint one Appraiser. If either the Company or the
Majority Participating Holders shall fail to appoint such an Appraiser within
10 days after the lapse of such 10 or 30 day period, as applicable, then the
Appraiser appointed by the party that does so appoint an Appraiser shall make
the determination of such fair market value and such determination shall
govern. If two Appraisers are appointed and they agree upon such fair market
value, their joint determination shall govern. If said two Appraisers cannot
reach an agreement within 30 days after the appointment of the last Appraiser
to be appointed, the two Appraisers selected shall promptly select a third
Appraiser who shall within 15 days following such Appraiser's appointment,
select one of the two other appraisals as constituting fair market value. All
decisions of the Appraiser(s) shall be rendered in writing and shall be signed
by the Appraiser(s). The fair market value determined as herein provided shall
be conclusive, final and binding on the parties and shall be enforceable in any
court having jurisdiction over a proceeding brought to seek such enforcement.
The cost of the fair market value determination shall not be taken into account
in determining fair market value and shall be borne by the Company and the
Participating Holders, with the Participating Holders bearing such portion of
such cost as equals their percentage equity ownership of the Company on a fully
diluted basis.
(f) Put Closing. The Company shall purchase from the Participating
Holders, and each Participating Holder shall sell to the Company (the "PUT
CLOSING"), all of each Participating Holder's Registrable Preferred Securities,
Series C Preferred and Series D Preferred at such time and place as may be
agreed upon by the Company and the Majority Participating Holders, but in no
event shall the Put Closing occur more than 120 days after the determination of
the fair market value in accordance herewith. In the absence of an agreement,
the Put Closing shall occur at the offices of the Company's principal outside
counsel. At the Put Closing, each Participating Holder shall deliver to the
Company certificates representing such Holder's Registrable Securities, Series
C Preferred and Series D Preferred (free and clear of all liens and
encumbrances other than those granted in favor of and held by the Company's
creditors), and the Company shall pay to each Participating Holder the purchase
price therefor as provided herein by wire transfer of immediately available
funds. Upon the consummation of the Put Closing as contemplated hereby, the
Company's obligations under this Section 15 shall terminate with respect to
such Participating Holders.
(g) Remedies. If, for any reason, the Company fails to purchase all
of the Registrable Preferred Securities, Series C Preferred and Series D
Preferred of the Participating Holders as provided in this section, then, in
addition to whatever rights and remedies that may arise at law or in equity as
a result thereof, (i) the Company shall pay each Participating Holder on demand
interest on the unpaid balance of the amount due under clause (c) above (the
"PUT PRICE") at the rate of 15% per annum (or the highest rate permitted under
applicable law, if lower), until the unpaid balance of the Put Price is paid in
full and (ii) the Majority Holders shall have the right, exercisable by giving
notice hereof to the Company (such notice being referred to as an "EXIT
INSTRUCTION NOTICE"), to require a Sale of the Company yielding consideration
to the Company or the stockholders consisting of at least 90% cash or readily
marketable securities, whereupon the primary mandate and duty of the Company's
Board of Directors and stockholders shall be to effect a sale of the Company,
subject to Section 15(i). No Holder or any director or officer of the Company
may participate as a buyer (whether directly or indirectly as the holder of any
existing or prospective equity interest) in any such transaction without the
consent of the Majority Holders. If the Company fails to enter into one or more
definitive agreements with one or more third parties that are not affiliates of
the Company or any Holder contemplating a Sale of the Company on or before the
180th day following the delivery of the Exit Instruction Notice or if such
definitive agreements shall have been terminated, then, subject to obtaining
any required governmental consent with respect thereto, the Majority Holders
shall have all requisite right, power and authority, as the Company's agent, to
bind the Company and effect a Sale of the Company.
(h) Exit Transaction. In exercising its rights, as the Company's
agent, to effect a Sale of the Company, the Majority Holders shall have full
and plenary power and authority, as the agent of the Company, to cause the
Company to enter into a transaction providing for a Sale of the Company (an
"EXIT TRANSACTION") and to take any and all such further action in connection
therewith as the Majority Holders may deem necessary or appropriate in order to
consummate any such Exit Transaction. The Major Holders, in exercising their
rights under this section shall have complete discretion over the terms and
conditions of any Exit Transactions effected thereby, including, without
limitation, price, payment terms, conditions to closing, representations,
warranties, affirmative covenants, negative covenants, indemnification,
holdbacks and escrows. Without limitation of the foregoing, the Majority
Holders may execute on behalf of the Company such agreements, documents,
applications, authorizations and instruments (collectively, "EXIT DOCUMENTS")
as they shall deem necessary or appropriate in connection with any Exit
Transaction, and each third party with whom the Majority Holders contracts on
behalf of the Company or any Subsidiary may rely on the authority vested in the
Majority Holders under this section for all purposes.
(i) Business Judgment Rule. In conducting an Exit Transaction, the
Majority Holders shall be guided by corporate law principles and decisions
governing the sale of a Delaware corporation or its assets with a goal of
maximizing such corporation's value at a sale or liquidation for its
stockholders' benefit. Without limitation of the foregoing, the Majority
Holders shall enjoy the benefit of the "business judgment rule" and other
protections afforded directors under Delaware law with respect to all of their
decisions and actions in connection with any Exit Transaction to the maximum
extent permitted by law.
16. Visitation. The Company shall permit each Investor (or a
representative thereof), so long as such Investor owns no less than five
percent (5%) of the total number of shares of Series C Preferred Stock
outstanding, during such periods as no designee of such Investor is a member of
the Company's Board of Directors, to attend all meetings of the Board of
Directors and committees thereof and will provide to such Investor copies of
written materials provided to all members of the Board of Directors or
committees thereof at the same time and in the same manner that such materials
are provided to the members of the Board of Directors.
17. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of New York, without giving effect to the conflicts of
laws principles thereof.
18. Entire Agreement. This Agreement, the Preferred Stock Purchase
Agreement, the Certificate of Designation and the Voting Agreement delivered
pursuant hereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
19. 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.
20. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon delivery to the party to be notified in person or by courier service or
five days after deposit with the United States mail, by First Class mail,
postage prepaid, addressed (a) if to an Investor, at the Investor's address as
set forth on Exhibit A hereto, or (b) if to any other holder of any securities,
at such address as such holder shall have furnished the other parties hereto 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 (c) if to the Company, to OnSite Access, Inc., 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and addressed to the attention of the
President, or at such other address as the Company shall have furnished to the
Investors.
21. Amendments or Waivers. This Agreement may not be amended, waived,
discharged or terminated other than by written instrument signed by the Company
and (a) holders of more than a majority of the outstanding Registrable
Securities (on an as-converted to Common Stock basis).
22. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by fewer than all of parties
hereto, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
23. Confidentiality. Each party hereto agrees that, except with the
prior written permission of the other parties, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone (other than
its Affiliates, partners, shareholders, employees, counsel, agents and
representatives who have been advised of the confidentiality obligations
hereunder) any confidential information, knowledge or data concerning or
relating to the business or financial affairs of the other parties to which
such party has been or shall become privy by reason of this Agreement, except
as required by law or under applicable rules of any self regulatory
organization under the Exchange Act. The parties hereto further agree that
there shall be no press release or other public statement issued by either
party relating to this Agreement or the transactions contemplated hereby,
unless the parties otherwise agree in writing and except as required by law, or
by applicable rules of any self regulatory organization under the Exchange Act.
24. General Conditions to a Transaction. Notwithstanding the terms and
conditions of this Agreement, no Holder shall transfer any of its Shares or any
voting rights associated with such Shares unless in each case the Company shall
have first received all required approvals, licenses or permits of, or shall
have provided all required notifications to, any federal or state regulatory
authority which are required to validly effect such transfer, and such
approvals, licenses or permits are in full force and effect at the time of such
transfer. Any attempt by a Holder to transfer its Shares in violation of the
terms of this Section 24 shall be void AB INITIO.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
ONSITE ACCESS, INC.
By:_______________________________________
Name:
Title:
SPECTRUM EQUITY INVESTORS III, L.P.
By: Spectrum Equity Associates III, L.P.,
its General Partner
By:_______________________________________
Name:
Title:
XX XXXXXX INVESTMENT CORPORATION
By:_______________________________________
Name:
Title:
SIXTY WALL STREET SBIC FUND, L.P.
By: Sixty Wall Street SBIC Corporation,
its General Partner
By:_______________________________________
Name:
Title:
CROSSPOINT VENTURE PARTNERS
By:_______________________________________
Name:
Title:
RSI-ONSITE HOLDINGS LLC
By: Reckson Service Industries, Inc.,
its sole member
By:_______________________________________
Name:
Title:
VERITECH VENTURES LLC
By:_______________________________________
AT&T VENTURE FUND II, LP
0000 Xxxx Xxxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
By: Venture Management, LLC
its General Partner
___________________________________________
Xxxx X. Xxxxxxx
Manager
MANAGEMENT:
XXXXX XXXXX
By:_______________________________________
XXXXXXX XXXXXXX
By:_______________________________________
XXX XXXXXXXX
By:_______________________________________
XXXXX XXXX
By:_______________________________________
XXXXX XXXXXX
By:_______________________________________
COMMON STOCK AND SERIES A PREFERRED:
RSI-OSA HOLDINGS, INC.
By:_______________________________________
VERITECH VENTURES LLC
By:_______________________________________
XXXXXX XXXXXXXXXX
By:_______________________________________
Xxxxxx Xxxxxxxxxx
XXXXXX XXXXX
By:_______________________________________
Xxxxxx Xxxxx
[INVESTOR RIGHTS AGREEMENT SIGNATURE PAGE]
XXXX XXXX
By:_______________________________________
Xxxx Xxxx, as Investor
[Investor Rights Agreement Signature Page]
EXHIBIT A
SCHEDULE OF INVESTORS
Holders of Series B Preferred Stock Number of Shares
----------------------------------- ----------------
Spectrum Equity Investors III, L.P. 12,416,667
XX Xxxxxx Investment Corporation 7,000,000
Sixty Wall Street SBIC Fund, L.P. 1,750,000
Crosspoint Venture Partners 8,750,000
RSI-OnSite Holdings LLC 13,125,000
Veritech Ventures LLC 3,541,667
AT&T Venture Fund II, LP 3,333,333
Xxxx Xxxx 83,333
Holders of Series C Preferred Stock Number of Shares
----------------------------------- ----------------
Spectrum Equity Investors III, L.P. 5,930,889
XX Xxxxxx Investment Corporation 3,564,644
Sixty Wall Street SBIC Fund, L.P. 891,161
Crosspoint Venture Partners 4,455,806
RSI-OnSite Holdings LLC 6,683,708
Veritech Ventures LLC 1,803,540
AT&T Venture Fund II, LP 1,697,450
Xxxx Xxxx 42,436
Holders of Series D Preferred Stock Number of Shares
----------------------------------- ----------------
Spectrum Equity Investors III, L.P. 392,111
EXHIBIT B
MANAGEMENT
Xxxxx Xxxxx
Xxxxxxx Xxxxxxx
Xxx Xxxxxxxx
Xxxxx Xxxx
Xxxxx Xxxxxx
EXHIBIT C
STOCK OPTION PLAN
