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EXHIBIT 4.2
EXECUTION COPY
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement") is made as of July
31, 2000 (the "Effective Date"), between Digital Impact, Inc., a Delaware
corporation (the "Parent"), and each of the Stockholders listed on Exhibit A
hereto (the "Stockholders").
RECITALS
A. Pursuant to the acquisition of MineShare, Inc., a California
corporation (the "Company"), by Parent (the "Merger") as contemplated by the
Agreement and Plan of Reorganization dated July 19, 2000 (the "Reorganization
Agreement"), the Stockholders will be issued shares of the Parent's Common Stock
(as defined below).
B. The execution of this Agreement is a condition to the closing of the
transactions contemplated by the Reorganization Agreement.
C. The Stockholders and the Parent desire that the transactions
contemplated by the Reorganization Agreement be consummated.
NOW, THEREFORE, in consideration of the foregoing and the mutual
representations, warranties, covenants and other agreements set forth herein,
and for other good and valuable consideration, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. Registration Rights. The Parent covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) "Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934,
as amended.
(c) "Closing" has the meaning ascribed to it in the
Reorganization Agreement.
(d) "Parent Common Stock" means the Parent's common stock,
$0.001 par value per share.
(e) "Capital Stock" means the Company's Capital stock, no
par value per share.
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(f) "Form S-3" means such form under the Act as in effect
on the date hereof or any registration form under the Act subsequently adopted
by the SEC which permits inclusion or incorporation of substantial information
by reference to other documents filed by the Parent with the SEC.
(g) "Holder" means any person owning or having the right to
acquire Registrable Securities, or any assignee thereof in accordance with
Section 1.11 hereof.
(h) "Register", "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act and the declaration or ordering of
effectiveness of such registration statement or document by the SEC.
(i) "Registrable Securities" means (i) any and all shares
of Parent Common Stock received by the Stockholders pursuant to the
Reorganization Agreement, including the Escrow Amount, and including shares of
Parent Common Stock issuable upon exercise of options or warrants assumed by
Parent pursuant to the Reorganization Agreement, and (ii) any other securities
issued or issuable with respect to any shares of Company Capital Stock described
in clause (i) above by way of a stock dividend or stock split or in connection
with a combination exchange, reorganization, recapitalization or
reclassification of Parent securities or pursuant to a merger, consolidation or
other similar business combination transaction involving Parent, excluding in
all cases, however, any Registrable Securities sold by a person in a transaction
in which such person's rights under this Section 1 are not duly assigned as
provided herein or any Registrable Securities after such securities have been
sold to the public or sold pursuant to Rule 144 promulgated under the Act.
(j) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Parent Common Stock
outstanding which are Registrable Securities.
(k) "SEC" shall mean the Securities and Exchange
Commission.
Capitalized terms used but not defined herein shall have the meanings
ascribed to them in the Reorganization Agreement.
1.2 Parent Registration.
(a) Registration Rights. If (but without any obligation to
do so) the Parent proposes to register (including for this purpose a
registration effected by the Parent for stockholders other than the Holders) any
of its stock or other securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
solely to the sale of securities to participants in a Parent stock plan, a
registration pursuant to a Rule 145 transaction, a registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities or a registration in which the only Parent Common Stock being
registered is common stock issuable upon conversion of debt securities which are
also being registered), the Parent shall, at such time,
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promptly give each Holder written notice of such registration. Upon the written
request of each Holder given within 15 days after mailing of such notice by the
Parent in accordance with Section 3.1, the Parent shall, subject to the
provisions of Subsection 1.2(b) below, cause to be registered under the Act all
of the Registrable Securities that each such Holder has requested to be
registered.
(b) Underwriting Requirements. In connection with any
offering involving an underwriting of shares of the Parent's capital stock, the
Parent shall not be required under this Section 1.2 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Parent and the underwriters selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Parent. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold that the
underwriters determine in their sole discretion is compatible with the success
of the offering, provided that such amount shall include all of the securities
that the Parent seeks to register, then the Parent shall be required to include
in the offering only that number of such securities, including Registrable
Securities, which the underwriters determine in their sole discretion will not
jeopardize the success of the offering. Allocation of securities to be sold in
any such offering shall be made on a pro-rata basis among the selling
stockholders according to the total number of securities held by each such
selling stockholder and entitled to inclusion therein on the basis of a
registration rights agreement with the Parent. For purposes of allocation of
securities to be included in any offering, for any selling stockholder which is
a partnership or corporation, the "affiliates" (as defined in Rule 405 under the
Act), partners, retired partners and stockholders of such holder (and in the
case of a partnership, any affiliated partnerships), or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
1.3 Form S-3 Registration. In case the Parent shall receive,
during the period beginning on December 1, 2000 and ending two years after the
Effective Date, from any Holder or Holders a written request or requests that
the Parent effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Parent will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of such
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written notice from the Parent; provided, however, that the Parent shall not be
obligated to effect any such registration, qualification or compliance, pursuant
to this Section 1.3: (i) if the Registrable Securities requested by all Holders
to be registered pursuant to this Section 1.3 have an anticipated aggregate
offering price to the public (before deducting any underwriter discounts,
concessions or commissions) of less than $1,000,000; (ii) if Form S-3 is not
available for such offering by the Holders; (iii) if the Parent shall furnish to
the Holders a certificate signed by the Chief Executive Officer or Chief
Financial Officer of the Parent stating that in the good faith judgment of the
Board of Directors of the Parent, such filing or the offering of any Registrable
Securities would materially impede, delay or interfere with any proposed
financing, offer or sale of securities, acquisition, corporate reorganization or
other significant transaction involving the Parent that began before the date on
which notice of the registration was given hereunder or it would be materially
detrimental to the Parent and its stockholders for such Form S-3 Registration to
be effected at such time, in which event the Parent shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than 120 days after receipt of the request of the Holder or Holders under this
Section 1.3; provided, however, that the Parent shall not utilize this right
more than once in any 12-month period; (iv) if the Parent has, within the
6-month period preceding the date of such request, already effected one
registration on Form S-3 for the Holders pursuant to this Section 1.3; and (v)
in any particular jurisdiction in which the Parent would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Parent shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders.
(d) The Parent shall not be obligated to effect, or to take
any action to effect, any registration pursuant to this Section 1.3:
(i) before December 1, 2000;
(ii) on or after December 1, 2000, with respect to
more than 30% of the Registrable Securities;
(iii) within 12 months of the Closing, with respect
to more than 40% of the Registrable Securities (in addition to the shares
described in Subsection 1.3(d)(ii)), provided, however, that at least six months
have elapsed since the effective date of the prior S-3 registration made by the
Holders of Registrable Securities;
(iv) after the Parent has effected two registrations
pursuant to this Section 1.3 and such registrations have been declared or
ordered effective;
(v) during the period starting with the date 60 days
before the Parent's good faith estimate of the date of filing of, and ending on
a date 180 days after the effective date of, (i) a previous registration subject
to this Section 1.2 or (ii) a previous registration subject to
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Section 1.3 hereof; provided, that the Parent is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective; and
(vi) if such offering is to be underwritten.
1.4 Termination of Status as Registrable Securities. As to any
particular Registrable Securities, such securities shall cease to constitute
Registrable Securities when (i) a registration statement with respect to the
sale of such Registrable Securities shall have been declared effective under the
Act and such Registrable Securities shall have been disposed of in accordance
with the methods contemplated by the registration statement; (ii) such
Registrable Securities shall have been sold in satisfaction of all applicable
conditions to the resale provisions of Rule 144 under the Act (or any successor
provision thereto), (iii) the subsequent public distribution of such Securities
shall neither require registration under the Act nor qualification (or any
similar filing) under any state securities or "blue sky" law then in effect or
(iv) such Registrable Securities shall have ceased to be issued and outstanding.
1.5 Obligations of the Parent. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Parent
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, provided that the Parent shall
have no obligation to keep such registration statement effective for more than
60 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Parent shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
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(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act or the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Parent are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) In the event of any underwritten public offering,
cooperate with the selling Holders, the underwriters participating in the
offering and their counsel in any due diligence investigation reasonably
requested by the selling Holders or the underwriters in connection therewith,
and participate, to the extent reasonably requested by the managing underwriter
for the offering or the selling Holder, in efforts to sell the Registrable
Securities under the offering (including, without limitation, participating in
"roadshow" meetings with prospective investors) that would be customary for
underwritten primary offerings of a comparable amount of equity securities by
the Parent.
1.6 Furnish Information.
(a) It shall be a condition precedent to the obligations of
the Parent to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Parent such information regarding itself, the Registrable Securities held by
it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities. If
a Holder does not provide all such information within seven days following the
Parent's receipt of the request from the Initiating Holders, the Parent shall
have no obligation to register the Registrable Securities held by such holder,
and such Holder's rights hereunder shall terminate.
(b) The Parent shall have no obligation with respect to any
registration requested pursuant to Section 1.3 if, due to the operation of
Subsection 1.3(b), the number of shares or the anticipated aggregate offering
price of the Registrable Securities to be included in the registration does not
equal or exceed the number of shares or the anticipated aggregate offering price
required to originally trigger the Parent's obligation to initiate such
registration as specified in Subsection 1.3(b).
1.7 Expenses of Parent or S-3 Registration. All expenses
(exclusive of underwriting discounts and commissions and stock transfer taxes)
incurred in connection with registrations, filings or qualifications pursuant to
this Section 1 including (without limitation) all registration, filing and
qualification fees; printing and accounting fees; fees and disbursements of
counsel for the Parent;
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reasonable fees and disbursements of one counsel for all selling Holders of
Registrable Securities; fees and expenses of compliance with state securities or
blue sky laws; transfer taxes; fees of transfer agents and registrars and costs
of insurance shall be borne by the Parent; provided, however, that the Parent
will not be required to pay the fees of more than one counsel to all holders of
the Registrable Securities. Each Holder participating in a registration shall
bear such Holder's proportionate share (based on the total number of shares sold
in such registration other than for the account of the Parent) of all
underwriting discounts, commissions or other amounts payable to underwriters.
1.8 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Parent will
indemnify and hold harmless each Holder, the constituent partners and members,
or officers and directors of each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Parent of the Act, any rule or regulation promulgated under the
Act, the 1934 Act or any state securities law; and the Parent will pay to each
such Holder, underwriter or controlling person any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability, or action, as such expenses are incurred;
provided, however, that the indemnity agreement contained in this Subsection
1.9(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Parent (which consent shall not be unreasonably withheld), nor shall the
Parent be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Parent, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Parent within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, severally but not jointly,
against any losses, claims,
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damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this Subsection 1.9(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this Subsection 1.9(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided, that in no
event shall Holder's cumulative, aggregate liability under this Subsection
1.9(b), exceed the net proceeds received by such Holder from the offering out of
which such Violation arises.
(c) Promptly after receipt by an indemnified party under
this Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with one counsel mutually
satisfactory to the indemnifying party; provided, however, that an indemnified
party (together with all other indemnified parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action shall relieve such indemnifying party of liability to the indemnified
party under this Section 1.9 only to the extent the indemnifying party is
prejudiced as a result thereof. Any omission to so deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9
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 that 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
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the indemnified party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Parent and Holders under this
Section 1.9 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.10 Reports under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Parent to the public without registration or
pursuant to a registration on Form S-3, the Parent agrees to:
(a) Make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times;
(b) File with the SEC in a timely manner all reports and
other documents required of the Parent under the Act and the 1934 Act; and
(c) Furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Parent that it has complied with the reporting requirements of SEC Rule 144, the
Act and the 1934 Act, or that it qualifies as a registrant whose securities may
be resold pursuant to Form S-3 (at any time after it so qualifies), (ii) a copy
of the most recent annual or quarterly report of the Parent and such other
reports and documents so filed by the Parent, and (iii) such other information
as may be reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without registration
or pursuant to such form.
1.11 Assignment of Registration Rights. The rights to cause the
Parent to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to, (i) in the case
of any Holder that is a partnership, limited liability company or corporation,
any current and former constituent partners, members, stockholders, affiliate
funds and affiliates of that Holder; or (ii) in the case of any Holder, (x) a
transferee or assignee of such securities who, after such assignment or
transfer, holds at least 100,000 of the Parent's shares (as appropriately
adjusted for all stock splits, dividends, combinations, reclassifications and
other like transactions); (y) a transferee or assignee who is a spouse, lineal
descendant, father, mother, brother or sister (each, a "Family Member") of
Holder; or (z) or to a trust, the beneficiaries of which are exclusively the
Holder and/or Family Members, provided, in each case, that: (a) the Parent is,
within a reasonable time after such transfer, furnished with written notice of
the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound
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by and subject to the terms and conditions of this Agreement; and (c) such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee of a holder of
Registrable Securities, the holdings of "affiliates" (as defined in Rule 405
under the Act) of such holder, affiliated partnerships, constituent or retired
partners of such partnerships (as well as Family Members of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with such partnership and its
affiliated partnerships and other entities; provided, that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under this Section 1.
1.12 Termination of Registration Rights. The right of any Holder
to request registration or to include Registrable Securities in any registration
pursuant to this Section 1 shall terminate upon the date that all shares of
Registrable Securities beneficially owned and subject to Rule 144 aggregation by
such Holder may immediately be sold under Rule 144 during any 90-day period,
provided that such Holder is not then an "affiliate" of the Parent within the
meaning of Rule 144 and such Holder owns less than 1% of the then outstanding
shares of capital stock.
2. Covenants.
2.1 Restrictive Legend. Each certificate representing (i) the
Parent Common Stock and (ii) any other securities issued in respect of the
Parent Common Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted or
unless the securities evidenced by such certificate shall have been registered
under the Act) be stamped or otherwise imprinted with a legend substantially in
the following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAWS.
SUCH SHARES MAY NOT BE SOLD OR OFFERED FOR SALE IN THE ABSENCE OF
SUCH REGISTRATION OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED
UNDER THE ACT. COPIES OF THE AGREEMENT COVERING THE PURCHASE OF
THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL
EXECUTIVE OFFICE OF THE CORPORATION.
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Upon request of a holder of such a certificate, the Parent shall
remove the foregoing legend from the certificate or issue to such holder a new
certificate therefor free of any transfer legend, if, with such request, the
Parent shall have received either the opinion referred to in Subsection 3.1(i)
or the "no-action" letter referred to in Subsection 3.1(ii) to the effect that
any transfer by such holder of the securities evidenced by such certificate will
not violate the Act and applicable state securities laws, unless any such
transfer legend may be removed pursuant to Rule 144(k), in which case no such
opinion or "no-action" letter shall be required.
2.2 Restrictions on Transferability.
The Parent Common Stock shall not be transferred except upon the
conditions specified in this Agreement, which conditions are intended to insure
compliance with the provisions of the Act. Each Stockholder will cause any
proposed transferee of Parent Common Stock held by that Stockholder to agree to
take and hold those securities subject to the provisions and upon the conditions
specified in this Agreement.
3. Miscellaneous.
3.1 Notice of Proposed Transfers.
(a) The holder of each certificate representing Parent
Common Stock by acceptance thereof agrees to comply in all respects with the
provisions of this Section 3.1. Before any proposed transfer of any Parent
Common Stock (other than under circumstances described in Section 1.3 hereof),
the holder thereof shall give written notice to the Parent of such holder's
intention to effect such transfer. Each such notice shall describe the manner
and circumstances of the proposed transfer in sufficient detail, and shall be
accompanied by either (i) a written opinion of legal counsel to the holder who
shall be reasonably satisfactory to the Parent, addressed to the Parent and
reasonably satisfactory in form and substance to the Parent's counsel, to the
effect that the proposed transfer of the Parent Common Stock may be effected
without registration under the Act or (ii) a "no-action" letter from the SEC to
the effect that the distribution of such securities without registration will
not result in a recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon the holder of such Parent Common Stock shall be
entitled to transfer such Parent Common Stock in accordance with the terms of
the notice delivered by such holder to the Parent. Each certificate evidencing
the Parent Common Stock transferred as above provided shall bear the restrictive
legend set forth in Subsection 2.1 above.
(b) Except as otherwise provided herein, all notices and
other communications required or permitted hereunder shall be in writing, shall
be effective when given, and shall in any event be deemed to be given upon
receipt or, if earlier, (i) five days after deposit with the U.S. Postal Service
or other applicable postal service, if delivered by first class mail, postage
prepaid, (ii) upon delivery, if delivered by hand, (iii) one business day after
the business day of deposit with Federal Express or similar overnight courier,
freight prepaid or (iv) one business day after the business day of confirmed
facsimile transmission, if delivered by facsimile transmission with copy by
first class mail, postage prepaid. All such notices and communications shall be
addressed (i) if to a Holder, at such Holder's address as set forth on Exhibit A
hereto and (ii) if to the Parent, at the address of its
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principal corporate offices (attention: Secretary) or at such other address as a
party may designate by ten days' advance written notice to the other party
pursuant to the provisions above.
3.2 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.3 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without regard
to conflicts of law provisions of the State of California or any other state.
3.4 Arbitration. Any controversy, dispute or claim arising out of
or relating to this Agreement or the breach hereof that cannot be settled by
mutual agreement shall be finally settled by arbitration as follows:
(a) Any party that is aggrieved shall deliver a notice to
the other party setting forth the specific points in dispute. Any points
remaining in dispute 20 days after the giving of such notice shall be submitted
for arbitration to the American Arbitration Association in San Mateo County,
California, before a single arbitrator (who shall be an attorney expert in the
federal securities laws) appointed in accordance with the American Arbitration
Association's Arbitration Rules, modified only as herein expressly provided.
(b) The arbitrator may enter a default decision against any
party that fails to participate in the arbitration proceedings.
(c) The decision of the arbitrator on the points in dispute
will be final, unappealable and binding, and judgment on the award may be
entered in any court having jurisdiction thereof.
(d) The arbitrator will be authorized to apportion his or
her fees and expenses and the reasonable attorney's fees and expenses of Parent
and the Stockholder(s) as the arbitrator deems appropriate. In the absence of
any such apportionment, the fees and expenses of the arbitrator will be borne
equally by each party, and each party will bear the fees and expenses of its own
attorney.
(e) The parties agree that this Subsection has been
included to rapidly and inexpensively resolve any disputes between them with
respect to this Agreement and that this Subsection shall be grounds for
dismissal of any court action commenced by any party with respect to this
Agreement, other than post-arbitration actions seeking to enforce an arbitration
award.
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(f) The parties shall keep confidential and shall not
disclose to any person, except as may be required by law, the existence of any
controversy hereunder, the referral of any such controversy to arbitration or
the status or resolution thereof.
3.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
3.6 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.7 Expenses. Except as otherwise provided herein, if any action
at law or in equity is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorneys' fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
3.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Parent and the holders of a
majority of the Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Subsection shall be binding upon each holder of
any Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Parent. Notwithstanding anything in this
Subsection 3.8 to the contrary, any amendment which adversely effects the rights
of any series of Stock in a manner differently then the other holders of
Registrable Securities shall be effected only upon written consent of the
holders of a majority of shares of such series of Stock.
3.9 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
3.10 Entire Agreement. This Agreement (including the Exhibit)
constitutes the full and entire understanding and Agreement between the parties
with regard to the subjects hereof and thereof.
3.11 Specific Performance; Proxies. The parties hereto agree that
irreparable damage would occur if any of the provisions of this Agreement were
not performed in accordance with these specific terms or were otherwise
breached. It is accordingly agreed that the parties shall be entitled to seek an
injunction or injunctions to prevent breaches of this Agreement and to enforce
specifically the terms and provisions hereof in any court of the United States
or any state having jurisdiction, this being in addition to any other remedy to
which they are entitled at law or in equity. In addition, if any provision in
this Agreement shall constitute the granting of a proxy, the parties hereto
agree that such proxy shall be deemed to be coupled with an interest.
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IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first above written.
DIGITAL IMPACT, INC.
By:
-------------------------------------
Xxxxx Xxxxxxxxxxx
Chief Financial Officer
SHAREHOLDERS
----------------------------------------
Xxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxxxxxxx
----------------------------------------
Xxxx Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxx X'Xxxxx
----------------------------------------
Xxx Xxxxxxxx
----------------------------------------
Xxx Xxxxxxx
15
----------------------------------------
Xxxx Xxxxxxx
----------------------------------------
Xxxxx Lines
----------------------------------------
Xxxxxx Xxxxxxxxxxxx
----------------------------------------
Xxxxx Xxxx
----------------------------------------
Xxxxxx Xxxxxxxxx
----------------------------------------
Xxxx Xxxxxxxx
----------------------------------------
Xxxxxx Xxxxxx
----------------------------------------
Xxxx Xxxxxxxxxxxxxx
----------------------------------------
Xxxxxx McKesic
----------------------------------------
Xxxxxxx Xxxxx
----------------------------------------
Xxxx Xxxxxxxx
16
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Xxxxxx Xxxx
----------------------------------------
Xxxx Xxxxxxxx
----------------------------------------
Xxxxxx Link
----------------------------------------
X. Xxxx
----------------------------------------
X. Xx
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______________ Xxxxxxx
----------------------------------------
______________ Swee
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Xxxx Xxxx
----------------------------------------
______________ Xxxxxxxxxx
17
MELLON VENTURES, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
18
ENTERPRISE PARTNERS III, ASSOCIATES, LLP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
ENTERPRISE PARTNERS III, LLP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
19
CHARTER GROWTH CAPITAL, LP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CHARTER GROWTH CAPITAL CO-INVESTMENT
FUND LP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CGC INVESTORS, LP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
20
BRENTWOOD AFFILIATES FUND II, LLP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
BRENTWOOD ASSOCIATES VIII, LLP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
21
BIG VALLEY VENTURE
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
22
SBIC PARTNERS II, LP
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
23
WINDY CITY INVESTMENTS, LLC
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
24
SMART TECHNOLOGY VENTURES II, LLC
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
25
OASIS DIRECT VENTURE #9
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
26
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Xxxx Xxxxxxxx
27
REGISTRATION RIGHTS AGREEMENT
EXHIBIT A
SCHEDULE OF SHAREHOLDERS
Xxxx X. Xxxx
Xxxxx X. Xxxxxxxxx
Xxxx Xxxxxxx
Xxxxxx X. Xxxxxxx
Xxxxx X'Xxxxx
Xxxxxxx Xxxxxxxx
Xxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxx Lines
Xxxxxx Xxxxxxxxxxxx
Xxxxx Xxxx
Xxxxxx Xxxxxxxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxxxx
Xxxx Xxxxxxxxxxxxxx
Xxxxxx McKesic
Xxxxxxx Xxxxx
Xxxx Xxxxxxxx
Xxxxxx Xxxx
Xxxx Xxxxxxxx
Xxxxxx Link
X. Xxxx
X. Xx
Xxxxxx Xxxxxxx
Xxxx Xxxxxx
Xxxx Xxxx
Xxxxxxx Xxxxxxxxxx
Xxxxxx Ventures, Inc.
Enterprise Partners III, Associates, LLP
Enterprise Partners III, LLP
Charter Growth Capital, LP
Charter Growth Capital Co-Investment Fund LP
CGC Investors, LP
Brentwood Affiliates Fund II, LLP
Brentwood Associates VIII, LLP
Big Valley Venture
SBIC Partners II, LP
Windy City Investments, LLC
Smart Technology Ventures II, LLC
Oasis Direct Venture #9
Xxxx Xxxxxxxx
