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EXHIBIT 10.26
SYNQUEST, INC.
SHAREHOLDERS' AGREEMENT
THIS SHAREHOLDERS' AGREEMENT is made as of March 3, 1999 by and between
SynQuest, Inc., a Georgia corporation (the "COMPANY"), each of the persons or
entities listed on the Schedule of Investors (the "INVESTORS") attached hereto
as Exhibit A, and Warburg, Xxxxxx Investors, L.P., a Delaware limited
partnership, and one of the Investors (the "MAJORITY SHAREHOLDER").
BACKGROUND
The Company, the Investors and the Majority Shareholder wish to make
certain agreements with respect to the shares of the Company's stock held by the
Investors.
The parties agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
"ACCEPTANCE NOTICE" has the meaning set forth in Section 2.2.
"AFFILIATE" means any Person who, indirectly or directly, is controlled
by, controls, or is under common control with another Person.
"BOARD" means the Board of Directors of the Company.
"BONA FIDE THIRD PARTY" means any Person who is not an Affiliate of the
Majority Shareholder.
"BUSINESS DAY" means a day of the year on which banks are not required
or authorized to close in the State of Georgia.
"COMPANY" has the meaning set forth in the preamble.
"COMPANY OFFER" has the meaning set forth in Section 2.1.
"COMPANY OFFERED SECURITIES" has the meaning set forth in Section 2.1.
"EQUITY SECURITIES" means all capital stock of the Company, whether now
or hereafter authorized and any Right.
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"EXEMPT ISSUANCE" means (i) the sale or issuance of Equity Securities
in connection with the acquisition of another business, (ii) the sale or
issuance of shares of Equity Securities to officers, directors and employees of,
and consultants to, the Company pursuant to stock grants, option plans, purchase
plans or other employee stock incentive programs or arrangements approved by the
Board of Directors or the stock option or compensation committee of the Board of
Directors, including upon exercise of options or warrants granted pursuant to
any such plan or arrangement, (iii) shares of Common Stock sold or issued upon
conversion of shares of the Series G Preferred, and (iv) Equity Securities
issued upon conversion, exchange or exercise of any outstanding Equity
Securities.
"INVESTORS" has the meaning set forth in the preamble.
"MAJORITY SHAREHOLDER" has the meaning set forth in the preamble.
"PERSON" means any individual, firm, company, corporation, limited
liability company or partnership, unincorporated association, partnership,
trust, joint venture or other entity, and will include any successor (by merger
or otherwise) of such entity.
"PREFERRED STOCK PURCHASE AGREEMENT" means that certain Preferred Stock
Purchase Agreement, dated as of March 3, 1999, among the Company and the
Investors, as it may be amended, modified or supplemented from time to time.
"QUALIFIED CHANGE OF CONTROL TRANSACTION" has the meaning set forth in
Section 3.1.
"RIGHT" means any option, warrant or security (including notes, bonds
or debentures) convertible into, exercisable or exchangeable for common stock of
the Company.
"SERIES G PREFERRED" means shares of the Company's Series G Convertible
Preferred Stock, par value $.01 per share.
"SERIES G SHAREHOLDER" has the meaning set forth in Section 3.1.
"SHARES" held by any Person means shares of capital stock of the
Company and shares of capital stock issuable upon exercise, exchange or
conversion of any Right, whether or not such Right is then exercisable,
exchangeable or convertible.
"TRANSFER" means any transfer, sale, assignment, conveyance, pledge,
mortgage, change of legal, record or beneficial ownership, issuance or other
disposal or delivery.
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ARTICLE II
PREEMPTIVE RIGHT ON COMPANY ISSUES
SECTION 2.1. The Company will give each Investor written notice (the
"COMPANY OFFER"), of the Company's intention to sell or issue any Equity
Securities (the "COMPANY OFFERED SECURITIES"), other than an Exempt Issuance,
stating the material proposed terms of such sale or issuance and each Investor's
pro rata portion, as described below. Each Investor's pro rata portion will be
that number of Company Offered Securities equal to the product of the number of
Company Offered Securities multiplied by a fraction, the numerator of which is
the number of Shares held by such Investor (on an as converted basis) and the
denominator of which is the total number of outstanding Shares (on an as
converted basis). Such notice will include a representation to each Investor
that, to the Company's knowledge, a Person has made a bona fide offer to
consummate such Company Offer and the Company has a good faith intention to sell
such Equity Securities to such Person on the terms specified.
SECTION 2.2. Within fifteen (15) Business Days after receipt of a
Company Offer, each Investor will give an irrevocable written notice to the
Company (an "ACCEPTANCE NOTICE") that (i) such Investor has elected to purchase
all or a specified portion of the Company Offered Securities without regard to
the other Investors' elections at the price and upon the terms specified in the
notice, or (ii) such Investor does not wish to purchase any of the Company
Offered Securities. If any Investor fails to give an Acceptance Notice by the
end of such fifteen (15) Business Day period, such Investor will be deemed to
have elected not to purchase any of the Company Offered Securities.
SECTION 2.3. If the Investors elect to purchase, in the aggregate,
either the total or more than the total amount of Company Offered Securities,
the Company Offered Securities will be allocated as follows:
(a) If any Investor elects to purchase less than its pro
rata portion (calculated in accordance with Section 2.1) of the Company
Offered Securities, then such Investor will be allocated the amount of
Company Offered Securities it elected to purchase and the other
Investors will be allocated pro rata based on their respective pro rata
portions of the Company Offered Securities (calculated in accordance
with Section 2.1) and will be notified of this allocation and deemed to
have elected to purchase the balance of the Company Offered Securities
unless any such Investor notifies the Company that it does not wish to
purchase any Company Offered Securities allocated to it pursuant to
this Section 2.3(a); provided, however, that no Investor will be
obligated to purchase an amount of Company Offered Securities in excess
of the amount set forth in its Acceptance Notice; and
(b) if no Investor elects to purchase less than its pro
rata portion (calculated in accordance with Section 2.1) of the Company
Offered Securities, each Investor will be allocated and be deemed to
have elected to purchase its respective portion (calculated in
accordance with Section 2.1) of the Company Offered Securities.
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SECTION 2.4. If the Investors do not elect to purchase all of the
Company Offered Securities, the Company will have the right, exercisable not
later than ninety (90) days after expiration of the notice period set forth in
Section 2.2, to issue the Company Offered Securities not purchased by the
Investors on terms and conditions no more favorable than those set forth in the
Company Offer; provided, however, that the purchaser of the Company Offered
Securities must agree in writing to be bound by the terms of this Agreement. Any
Company Offered Securities not sold within the 90-day period must be reoffered
to the Investors pursuant to this Article II.
SECTION 2.5. The closing of any sale or issue of Company Offered
Securities to an Investor pursuant to this Article II will take place on such
date, within a reasonable time after the date of the Acceptance Notice (subject
to extension to comply with any applicable law), as will be agreed by the
Company and such Investor. At any such closing, the Company will deliver to each
purchasing Investor certificates representing the Company Offered Securities
being issued, registered in the name of such purchasing Investor or its nominee,
against payment of the applicable purchase price.
ARTICLE III
DRAG-ALONG RIGHT & TAG-ALONG RIGHT
SECTION 3.1. DRAG-ALONG PROCEDURE. If the Board and the Majority
Shareholder approve a Qualified Change of Control Transaction, then the Company
or the Majority Shareholder will have the right, upon delivering written notice
describing the transaction and the material terms and conditions thereof in
reasonable detail (the "DRAG-ALONG NOTICE") to the holders of the Series G
Preferred ("SERIES G SHAREHOLDERS") to require each Series G Shareholder to
approve the Qualified Change of Control Transaction in that Series G
Shareholder's capacity as a shareholder of the Company and, if applicable, to
include in the Qualified Change of Control Transaction up to the same percentage
of that Series G Shareholder's holdings of each class of capital stock of the
Company as the percentage of the Majority Shareholder's total holdings being
sold. Any such participation by the Series G Shareholders will be on the same
terms and subject to the same conditions as are applicable to the Majority
Shareholder. As of the date that the Drag-Along Notice is delivered to each
Series G Shareholder, the Majority Shareholder's election to require that Series
G Shareholder to participate in the Qualified Change of Control Transaction will
be irrevocable and will be deemed to constitute a binding agreement of the
Majority Shareholder to include in the Qualified Change of Control Transaction
the capital stock owned by the Series G Shareholders specified in the Drag-Along
Notice. A "QUALIFIED CHANGE OF CONTROL TRANSACTION" is a transaction in which a
proposed transferee would acquire (i) Equity Securities of the Company
possessing ordinary voting power to elect a majority of the Company's Board
pursuant to merger or consolidation or recapitalization involving the Company,
or (ii) all or substantially all of the assets of the Company, either of which
in an arm's-length transaction in which the consideration per share of Series G
Preferred is at least $8.07 (as equitably adjusted to reflect stock splits,
stock dividends and similar occurrences).
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SECTION 3.2. COOPERATION. In furtherance of the covenants in Section
3.1, each Series G Shareholder will cooperate fully with the Majority
Shareholder and the proposed transferee in any transfer of capital stock
pursuant to this Article III and will execute and deliver all documents and
instruments as the Majority Shareholder and the proposed transferee reasonably
request to effect such transfer, including appropriate and customary
representations, warranties, and indemnification provisions; provided, however,
that nothing in this Section 3.2 will operate to suspend, interfere with or
otherwise limit any rights to which such Series G Shareholders will be entitled
to pursuant to this Agreement. Each Series G Shareholder will deliver to the
proposed transferee one or more certificates, properly endorsed for transfer,
that represent the number of shares such Series G Shareholder must sell pursuant
to this Article III. The stock certificate or certificates that each Series G
Shareholder delivers will be timely delivered free and clear of any and all
liens and encumbrances; and the Majority Shareholder will instruct the proposed
transferee to remit to the Series G Shareholders that portion of the sale
proceeds to which each Series G Shareholder is entitled by reason of its
transfer of capital stock.
SECTION 3.3. TAG-ALONG RIGHT. The Majority Shareholder may not Transfer
any of its Shares to a Bona Fide Third Party unless each other Series G
Shareholder is offered a pro rata right to participate in any such Transfer on
terms and conditions not less favorable than those applicable to the Majority
Shareholder. Each Series G Shareholder's pro rata right to participate in any
such Transfer is that Series G Shareholder's right to include in such Transfer
the same percentage of that Series G Shareholder's Shares as the percentage of
the Majority Shareholder's total holdings that the Majority Shareholder proposes
to Transfer. The provisions of this Section 3.3 will not apply to any Transfer
by the Majority Shareholder (or an Affiliate of the Majority Shareholder) to an
Affiliate of the Majority Shareholder or to any bona fide gift.
SECTION 3.4. TAG-ALONG PROCEDURE. The Majority Shareholder will give
each Series G Shareholder written notice of the Majority Shareholder's intention
to Transfer any of its Shares to a Bona Fide Third Party stating the material
proposed terms of such Transfer. Within fifteen (15) Business Days after receipt
of the written notice described in this Section 3.4, each Series G Shareholder
will give an irrevocable written notice to the Majority Shareholder whether such
Series G Shareholder elects to participate in such Transfer at the price and
upon the terms specified in the notice. If any Series G Shareholder fails to
give written notice of its election by the end of such fifteen (15) Business Day
period, such Series G Shareholder will be deemed to have elected not to
participate.
SECTION 3.5. COOPERATION. Each Series G Shareholder electing to
participate in a proposed Transfer by the Majority Shareholder as described in
Section 3.4 will cooperate fully with the Majority Shareholder and the proposed
transferee and will execute and deliver all documents and instruments as the
Majority Shareholder and the proposed transferee reasonably request to effect
such transfer, including appropriate and customary representations, warranties,
and indemnification provisions. Each Series G Shareholder will deliver to the
proposed transferee one or more certificates, properly endorsed for transfer,
that represent the number of shares such Series G Shareholder will Transfer
pursuant to this Article III. The stock certificate or certificates that each
Series G Shareholder delivers will be timely delivered free and clear of
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any and all liens and encumbrances; and the Majority Shareholder will instruct
the proposed transferee to remit to the Series G Shareholders that portion of
the sale proceeds to which each Series G Shareholder is entitled by reason of
its Transfer.
ARTICLE IV
ADDITIONAL PROVISIONS
SECTION 4.1. TERMINATION. Unless a specific Section or Article provides
otherwise for that Section or Article, this Agreement will terminate as to each
Series G Shareholder, when that Series G Shareholder no longer holds shares of
Series G Preferred or shares of Common Stock acquired upon conversion of Series
G Preferred and, as to all Series G Shareholders, upon the closing of the
initial public offering of shares of Common Stock to the public.
SECTION 4.2. LEGENDS. Each certificate representing any Series G
Preferred or Common Stock acquired upon conversion of Series G Preferred will be
endorsed with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO,
OR IN CONNECTION WITH, THE SALE OR DISTRIBUTION
THEREOF. NO SUCH SALE OR DISPOSITION MAY BE EFFECTED
WITHOUT AN EFFECTIVE REGISTRATION STATEMENT RELATED
THERETO OR AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO CERTAIN RIGHTS AND RESTRICTIONS CONTAINED
IN A PREFERRED STOCK PURCHASE AGREEMENT AND A
SHAREHOLDERS' AGREEMENT, EACH DATED AS OF MARCH 3,
1999, COPIES OF WHICH ARE ON FILE AT THE PRINCIPAL
OFFICE OF THE CORPORATION.
SECTION 4.3. PROHIBITED TRANSFERS. Any attempt by an Investor to
Transfer shares in violation of this Agreement will be void, and the Company
will not effect such a Transfer nor will it treat any alleged transferee as the
holder of such shares.
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ARTICLE V
MISCELLANEOUS
SECTION 5.1. ENTIRE AGREEMENT. This Agreement, the Preferred Stock
Purchase Agreement and the other documents delivered pursuant thereto constitute
the full and entire understanding and agreement between the parties with regard
to the subjects hereof and thereof.
SECTION 5.2. NOTICE. All notices, requests, consents and other
communications hereunder will be in writing and will be delivered personally or
mailed by first class, registered or certified mail, postage prepaid or sent by
commercial courier guaranteeing next Business Day delivery, in any such case
addressed as follows: (a) if to an Investor, as provided in the Preferred Stock
Purchase Agreement or at such other address as such Investor will have furnished
to the Company in writing or (b) if to any other holder of any Shares, at such
address as such holder will have furnished the Company in writing or, until any
such holder so furnishes an address to the Company, then to and at the address
of the last holder of such Shares who has so furnished an address to the Company
or (c) if to the Company, as provided in the Preferred Stock Purchase Agreement
or at such other address as the Company will have furnished to the Investors.
Each such notice or other communication will for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid, or, if by telex or telecopy pursuant to the above, when
received.
SECTION 5.3. SUCCESSORS AND ASSIGNS. This Agreement and the rights and
obligations of the parties hereunder will inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
SECTION 5.4. AMENDMENTS OR WAIVERS. Neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought.
SECTION 5.5. RULES OF CONSTRUCTION. Definitions will apply equally to
both the singular and plural forms of the terms defined, unless otherwise
specified. Definitions will equally apply to any tenses of the terms defined.
Whenever the context may require. any pronoun will include the corresponding
masculine, feminine and neuter forms. The words "include," includes" and
"including" will be deemed to be followed by the phrase "without limitation."
The headings of sections or other subdivisions have been inserted for
convenience of reference only and are not intended to be a part of or to affect
the meaning of or interpretation of such agreement or instrument.
SECTION 5.6. FACSIMILE SIGNATURES. Any signature page delivered by a
fax machine or telecopy machine will be binding to the same extent as an
original signature page, with regard to
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any agreement subject to the terms hereof or any amendment thereto. Any party
who delivers such a signature page agrees to later deliver an original
counterpart to any party that requests it.
SECTION 5.7. COUNTERPARTS. This Agreement may be executed in two or
more counterparts, each of which will be deemed an original, but all of which
together will constitute one and the same instrument, and each of which may be
executed by less than all of the parties to this Agreement.
SECTION 5.8. SEVERABILITY. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement will continue in full force and
effect without said provision. In such event, the parties will negotiate, in
good faith, a valid, legal and enforceable substitute provision that most nearly
effects the intent of the parties in entering into this Agreement.
SECTION 5.9. GOVERNING LAW. All questions concerning the construction,
validity and interpretation of this Agreement will be governed by the laws of
the State of Georgia without regard to its conflicts of laws provisions.
SECTION 5.10. REMEDIES. The parties hereto agree that money damages or
other remedies at law would not be a sufficient or adequate remedy for any
breach or violation of, or a default under, this Agreement by a party and that,
in addition to all other remedies available, the other parties hereto will be
entitled to an injunction restraining such breach, violation or default or
threatened breach, violation or default by such party and to any other equitable
relief against such party, including without limitation specific performance.
SECTION 5.11. MUTUAL COOPERATION. To the extent the exercise of any
right or the performance of any obligation by any Investor would result in a
violation of law, such Investor and the other parties hereto agree to cooperate
in good faith to enable the Investor not to be in violation of law and will
enable the Investor or the other parties as the case may be, to obtain the
intended benefits (economic or otherwise) contemplated by this Agreement from
the exercise of such right or performance of such obligation.
[Signatures Commence on Next Page]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
SYNQUEST, INC.
By: /s/ Xxxxxx Xxxxx
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Name:
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Title:
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WARBURG, XXXXXX INVESTORS, L.P.,
a Delaware limited partnership
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Partner
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INVESTORS
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