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EXHIBIT 4.10
EXECUTION COPY
SHAREHOLDER RIGHTS AGREEMENT
This Shareholder Rights Agreement (the "Agreement") is made on November
29, 2000, by YellowBrix, Inc., a Delaware corporation (the "Company"), and the
investors whose names and addresses appear on Schedule I hereto (the
"Investors").
RECITALS
A. The Investors have each agreed to purchase a convertible secured
promissory note or notes (the "Note" or "Notes") and a warrant or warrants (the
"Warrant" or "Warrants"), pursuant to a Convertible Note and Warrant Purchase
Agreement, by and among the Company and the Investors, of even date herewith
("Purchase Agreement").
B. The Company desires to extend incidental registration rights to
the Investors pursuant to this Agreement. The Company also desires to impose
certain transfer restrictions and other obligations on the Investors as set
forth in this Agreement.
NOW, THEREFORE, in consideration of the premises and mutual agreements
contained herein, the parties hereto agree as follows:
1. Registration Rights.
1.1. Definitions.
As used in this Section 1:
(a) the terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act (and any post-effective
amendments filed or required to be filed) and the declaration or ordering of
effectiveness of such registration statement;
(b) the term "Registrable Securities" means (i) the shares
of the Company's Common Stock then issued and issuable upon conversion of a Note
and/or exercise of a Warrant, (ii) the shares of the Company's Common Stock then
issued and issuable upon conversion of shares of the Company's Series A
Preferred Stock, which shares were issued to an Investor upon Investor's
exercise of a Warrant and/or the conversion of a Note, (iii) the shares of the
Company's Common Stock then issued and issuable upon conversion of shares of the
Company's preferred stock or other capital stock that may be issued in a
Qualified Financing (as defined in the Purchase Agreement), and (iv) any capital
stock of the Company issued as a dividend or other distribution with respect to,
or in exchange for or in replacement of, the shares of Common Stock referred to
in clauses (i)-(iii) hereof;
(c) the term "Other Shareholders" shall mean any other
shareholders of the Company who have registration rights with whom the Investor
would be entitled to participate in a registration under this Agreement;
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(d) "Registration Expenses" shall mean all expenses incurred
by the Company in compliance with Section 1 hereof, including, without
limitation, all registration and filing fees, listing fees, printing expenses,
fees and disbursements of counsel for the Company, fees and expenses of one
counsel for all the Investors and Other Shareholders, blue sky fees and expenses
and the expense of any special audits 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);
(e) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities;
(f) "Securities Act" shall mean the Securities Act of 1933,
as amended, or any similar law then in force; and
(g) "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended, or any similar law then in force.
1.2. Company Registration.
(a) If the Company shall determine to register any of its
equity securities, other than a registration relating solely to its initial
public offering of common stock utilizing Form S-1, any employee stock option
and benefit plans utilizing Form S-8, or a registration of shares issued in a
reclassification, merger, consolidation or transfer of assets transaction
utilizing Form S-4, or any registration form which does not permit secondary
sales, the Company will:
(i) promptly give to the Investors a 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 the Registrable
Securities specified in a written request or requests, made by
the Investors within fifteen days after receipt of the written
notice from the Company described in clause (i) above, except as
set forth in Section 1.2(b) below. Such written request may
specify all or a part of the Investor's Registrable Securities.
(b) If the registration pursuant to this Section 1.2
involves an underwritten offering of the securities being registered, whether or
not for sale for the account of the Company, to be distributed on a firm
commitment basis by or through one or more underwriters of recognized national
or regional standing under underwriting terms appropriate for such a
transaction, the Company shall so advise each of the Investors as a part of the
written notice given pursuant to Section 1.2(a)(i). In such event, the right of
each of the Investors to registration pursuant to this Section 1.2 shall be
conditioned upon such Investor's participation in such underwriting and the
inclusion of such Investor's Registrable Securities in the underwriting to the
extent provided herein. The Investors whose shares are to be included in such
registration shall (together with the Company and the Other Shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the
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representative of the underwriter or underwriters selected for underwriting by
the Company. Notwithstanding any other provision of this Section 1.2, if the
representative determines in good faith that marketing factors require a
limitation on the number of shares to be underwritten, the Company shall so
advise all holders of securities requesting registration, and the number of
shares of securities that are entitled to be included in the registration and
underwriting shall be allocated in the following manner: the number of
securities that may be included in the registration and underwriting by each of
the Investors and the Other Shareholders shall be reduced, on a pro rata basis
(based on the number of shares held by such holder), by such minimum number of
shares as is necessary to comply with such limitation. If any of the Investors
or any Other Shareholders disapproves of the terms of any such underwriting,
such person may elect to withdraw therefrom by written notice to the Company and
the underwriter. Any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
Notwithstanding the foregoing, the Investors' registration rights hereunder
shall be subject to further restrictions and limitations as set forth in the
Shareholders Agreement dated as of December 11, 1997, the Rights Agreement dated
as of April 21, 1999, the Shareholder Rights Agreement dated as of October 26,
1999, and the Shareholder Rights Agreement dated as of March 9, 2000, by and
among the Company and various other investors, and the Investors agree to be
bound by such further restrictions and limitations, which include, without
limitation, senior registration rights and cutback rights.
1.3. Expenses of Registration.
All Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to this Agreement shall be
borne by the Company, and all Selling Expenses shall be borne by the Investors
whose Registrable Securities are so registered pro rata on the basis of the
number of their shares so registered; provided, however, that the Company shall
not be required to pay any Registration Expenses if, as a result of the
withdrawal of a request for registration by any of the Investors, the
registration statement does not become effective, in which case each of the
Investors and Other Shareholders requesting registration, including such
holder(s) so withdrawing, shall bear such Registration Expenses pro rata on the
basis of the number of their shares so included in the registration request.
1.4. Registration Procedures.
In the case of each registration effected by the Company
pursuant to this Agreement, the Company will keep the Investors advised in
writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will:
(i) keep such registration effective for a period of 180
days or until the Investors have completed the distribution
described in the registration statement relating thereto,
whichever first occurs; provided, however, that such 180-day
period shall be extended for a period of time equal to the
period during which the Investors refrain from selling any
securities included in such registration in accordance with
provisions in Section 1.8 hereof; provided that Rule 415, or any
successor rule under the Securities Act, permits an offering on
a continuous or delayed basis, and provided further that
applicable rules under the Securities Act governing the
obligation to file a post-effective amendment permit, in lieu of
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filing a post-effective amendment which (y) includes any
prospectus required by Section 10(a) of the Securities Act or
(z) reflects facts or events representing a material or
fundamental change in the information set forth in the
registration statement, the incorporation by reference of
information required to be included in (y) and (z) above to be
contained in periodic reports filed pursuant to Section 12 or
15(d) of the Exchange Act in the registration statement; and
(ii) furnish such number of prospectuses and other documents
incident thereto as each of the Investors from time to time may
reasonably request.
1.5. Indemnification.
(a) The Company will indemnify the Investor, each of their
respective officers, directors, shareholders, members and partners, and each
person controlling the Investor, as the case may be, with respect to each
registration which has been effected pursuant to this Agreement, and each
underwriter (including any officers, directors and partners), if any, and each
person who controls any underwriter within the meaning of the Securities Act,
against all claims, losses, damages, expenses 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 prospectus, offering
circular or other document (including any 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, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification or compliance,
and will reimburse the Investors, each of their respective officers, directors
and partners, and each person controlling the Investor, each such underwriter
and each person who controls any such underwriter, for any legal and any other
expenses 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
omission based upon written information furnished to the Company by any
Investors or underwriter and stated to be specifically for use therein.
(b) Each Investor will, if Registrable Securities held by it
are included in the securities as to which such registration, qualification or
compliance is being effected, 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, each Other Shareholder and each of their officers, directors, and
partners, and each person controlling such Other Shareholder 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 made by the Investor, or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements by the Investor, as the case may be, therein not misleading, and
will reimburse the Company and such Other Shareholders, directors, officers,
partners, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating or defending
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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 the Investor, as
the case may be, and stated to be specifically for use therein; provided,
however, that the obligations of any Investor hereunder and under Section 1.5(d)
shall be limited to an amount equal to the net proceeds to the Investor of
securities sold pursuant to such registration statement or prospectus.
(c) Each party entitled to indemnification under this
Section 1.5 (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 timely approval shall not unreasonably be withheld) and the Indemnified
Party may participate in such defense at such party's expense (unless the
Indemnified Party shall have reasonably concluded that there may be a conflict
of interest between the Indemnifying Party and the Indemnified Party in such
action, in which case the fees and expenses of counsel shall be 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 the
Indemnifying Party is materially prejudiced thereby. 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 the defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section 1.5
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 (or alleged 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.
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(e) The foregoing indemnity agreement of the Company and the
Investors is subject to the condition that, insofar as they relate to any loss,
claim, liability or damage made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Securities and Exchange
Commission ("SEC") at the time the registration statement in question becomes
effective or the amended prospectus filed with the SEC pursuant to SEC Rule
424(b) (the "Final Prospectus"), such indemnity agreement shall not inure to the
benefit of any underwriter if a copy of the Final Prospectus was furnished to
the underwriter and was not furnished to the person asserting the loss,
liability, claim or damage at or prior to the time such action is required by
the Securities Act.
1.6. Information by the Investor.
Each Investor holding securities included in any registration
shall furnish to the Company such information regarding the Investor and the
distribution proposed by the Investor 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.
1.7. Rule 144 Reporting.
With a view to making available the benefits of certain rules
and regulations of the SEC which may permit the sale of restricted securities to
the public without registration, the Company agrees to:
(i) make and keep public information available as those
terms are understood and defined in Rule 144, at all times from
and after ninety (90) days following 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;
(ii) use its best efforts to file with the SEC 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
(iii) so long as the Investor owns any Registrable Securities,
furnish to the Investor, 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 so
filed as the Investor may reasonably request in availing itself
of any rule or regulation of the SEC allowing the Investor to
sell any such securities without registration.
1.8. "Market Stand-off" Agreement.
If requested by the Company and an underwriter of Common Stock
(or other securities of the Company), the Investor shall not sell or otherwise
transfer or dispose of any
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Common Stock or Series A Preferred Stock (or other securities) of the Company
held by such Investor during the 180 days following the effective date of the
initial registration statement of the Company filed under the Securities Act.
The Company may impose stop-transfer instructions with respect to the Common
Stock or Series A Preferred Stock (or other securities) subject to the foregoing
restrictions until the end of said period. The provisions of this Section 1.8
shall be binding upon any transferee who acquires Registrable Securities.
1.9. Assignment.
The rights set forth in this Section 1 may be assigned, in whole
or in part, to any transferee of Registrable Securities (who shall be considered
thereafter to be a Investor, and shall be bound by all obligations and
limitations of this Agreement).
2. Interpretation Of This Agreement.
(a) Directly or Indirectly. Where any provision in this
Agreement refers to action to be taken by any person, or which such person is
prohibited from taking, such provision shall be applicable whether such action
is taken directly or indirectly by such person.
(b) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
contracts made and to be performed entirely within such State.
(c) Section Headings. The headings of the sections and
subsections of this Agreement are inserted for convenience only and shall not be
deemed to constitute a part thereof.
3. Miscellaneous.
(a) Subsequent Shareholders. This Agreement shall be fully
applicable to (i) all Registrable Securities owned by the Investors, and all
other securities of the Company, whether now owned or hereafter acquired by any
Investor, (ii) all who subsequently acquire a community property or any other
interest in any such securities subject to this Agreement and (iii) any of the
securities of the Company subject to this Agreement transferred by a party
hereto to any other person in accordance with this Agreement. Any person
acquiring an interest in any securities of the Company subject to this Agreement
shall execute and deliver to the Company a separate Shareholder Rights Agreement
in the form of this Agreement pursuant to which such person acknowledges that it
is bound by all of the terms and provisions of this Agreement; provided,
however, that the failure to execute and deliver such a Shareholder Rights
Agreement shall not be deemed to relieve such person of the restrictions imposed
by this Agreement. Any attempted dispositions in breach of this Agreement shall
be void.
(b) Notices. (i) All communications under this Agreement
shall be in writing and shall be delivered by hand or mailed by overnight
courier or by registered or certified mail, postage prepaid:
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(1) if to the Investors or to any Investor, to the last known
address of such Investor on the books of the Company, or at such other
address as any Investor may have furnished the Company in writing.
(2) if to the Company, to:
Yellow Brix, Inc.
00 Xxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
Fax: (000) 000-0000
with a copy to:
Mintz, Levin, Cohn, Ferris, Glovsky & Popeo, P.C.
00000 Xxxxxxx Xxxxx
Xxxxx 000
Xxxxxx, Xxxxxxxx 00000
Attention: Xxxxx X. Xxxx, Esq.
Fax: (000) 000-0000
(e) Successors and Assigns. This Agreement shall inure to
the benefit of and be binding upon the successors and assigns of each of the
parties.
(f) Entire Agreement; Amendment and Waiver. This Agreement
constitutes the entire understanding of the parties hereto relating to the
subject matter hereof and supersedes all prior agreements or understandings with
respect to the subject matter hereof among such parties. This Agreement may be
amended, and the observance of any term of this Agreement may be waived, with
(and only with) the written consent of the Company and Investors who hold more
than fifty percent (50%) of the number of issued and outstanding Registrable
Securities.
(g) Counterparts; Fax Execution. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original
and all of which together shall be considered one and the same agreement. This
Shareholder Rights Agreement may be executed by fax delivery of a signed
signature page to the other parties and such fax execution will be effective for
all purposes.
[SIGNATURES ON FOLLOWING PAGES]
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IN WITNESS WHEREOF, the duly authorized representatives of the
undersigned have executed this Agreement as of the date first written above.
YELLOWBRIX, INC.
By: /s/ XXXXX X. XXXXXXXX
--------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: CEO
[SIGNATURES CONTINUE ON FOLLOWING PAGE]
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ABN AMRO CAPITAL (USA), INC.
By:
-------------------------------------
Name:
Title:
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EXECUTION COPY
SCHEDULE I
NAMES AND ADDRESSES OF INVESTORS
ABN AMRO CAPITAL (USA), INC.
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
