1
Exhibit 10.18
Execution Copy
THIS AGREEMENT CONTAINS AN ARBITRATION PROVISION
LANTE CORPORATION
STOCK OPTION AGREEMENT
THIS AGREEMENT (the "Agreement"), effective as of November 24, 1999, is
entered into by and between Lante Corporation, a Delaware corporation and
successor-in-interest to Lante Corporation, an Illinois corporation ("Lante"),
and ZixIt Corporation, a Texas corporation ("ZixIt").
WITNESSETH:
WHEREAS, ZixIt and Lante have entered into an amended and restated stock
option agreement, dated of even date herewith, pursuant to which Lante has
received from ZixIt an option to acquire 166,666 fully vested shares (the "ZixIt
Option");
WHEREAS, the parties desire to enter into this Agreement and a Registration
Rights Agreement (herein so called) relating hereto, a form of which is attached
hereto as Exhibit A;
NOW, THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements contained herein and in the ZixIt Option, the parties
hereby agree as follows:
1. Grant of Option; Expiration of Option. Effective as of the date first set
forth above (the "Award Date"), Lante hereby grants to ZixIt, upon the terms set
forth in this Agreement, a nonqualified option (the "Option"), to acquire
400,000 shares of Lante Common Stock, $.01 par value per share (the "Lante
Common Stock"). The exercise price of the Option is $7.00 per share. The Option
may be exercised from time-to-time with respect to any shares of Lante Common
Stock as to which the Option has not been exercised until the tenth anniversary
of the Award Date. On the tenth anniversary of the Award Date, the Option will
expire with respect to all shares as to which the Option has not been exercised.
2. Vesting. The Option is fully vested.
3. Exercise. To exercise the Option with respect to Lante Common Stock, ZixIt
shall provide written notice (the "Company Exercise Notice") to Lante at 000
Xxxxx Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx 00000, fax number (312)
000-0000 (or such other address as Lante may apprise ZixIt of from time-to-time)
to the attention of Lante's chief financial officer (currently Xxxxx Xxxxx). The
notice must: (i) state the number of shares of Lante Common Stock being
1
2
purchased and (ii) be signed by ZixIt. The Option may be exercised with respect
to shares of Lante Common Stock from time-to-time, i.e., there is no obligation
to exercise all shares at one time.
4. Cashless Exercise. The Option may only be exercised as a cashless exercise.
Upon exercise of the Option, ZixIt will receive "N" number of shares, where "N"
is determined according to the following formula:
N = [(then-current Lante per share stock price minus $7.00) multiplied by (the
number of shares sought to be exercised)], divided by the then-current
Lante stock price.
For purposes of this calculation the "then-current" Lante stock price inside the
brackets (i.e., for the numerator only) will be capped at $37.00. Subject to the
preceding sentence, for purposes of this calculation, the "then-current" Lante
stock price will be the average of the closing prices of the Lante stock for the
ten trading days preceding the date of exercise. If the Option is exercised in
full, ZixIt shall, upon request, surrender this Agreement to Lante for
cancellation. If the Option is exercised in part, ZixIt shall surrender this
Agreement to Lante so that Lante may make appropriate notation hereon and shall
promptly return this Agreement to ZixIt. If the Lante stock is not publicly
traded (i.e., there is no quoting closing price), the then-current price will be
its fair market value, determined as provided in Section 15 below.
Subject to Section 8, after the exercise of the Option in whole or in part,
Lante shall promptly (and no later than five business days thereafter) issue and
deliver a certificate representing the number of shares of Lante Common Stock as
to which the Option has been exercised. The shares of Lante Common Stock
issuable upon the exercise of the Option are subject to the transfer
restrictions noted in Section 8 below and, if issued prior to the lapse of the
restrictions, will bear an appropriate legend. Other than as stated in the
preceding sentence and in Section 8, Lante agrees to deliver the underlying
stock certificates, free and clear of any restrictive legends, registered as
designated by ZixIt or its designee, in time to permit normal-way settlement of
a simultaneous exercise of the Option and sale of the underlying Lante Common
Stock.
5. Accredited Investor Status. ZixIt represents and warrants that it is an
"accredited investor" as such term is defined in Regulation D under the
Securities Act of 1933, as amended.
6. Preservation of Rights. The number of shares of Lante Common Stock subject to
the Option and the exercise price therefor set forth in Section 1 and the $37.00
and the $7.00 numbers relating to the formula set forth in Section 4 shall be
subject to appropriate adjustment, reasonably satisfactory to ZixIt and Lante,
to preserve the relative rights of ZixIt and Lante under this Agreement in the
event of any change or exchange of Lante Common Stock for a different number or
kind of securities, any of which results from one or more stock splits, reverse
stock splits, or stock dividends or a transaction described in the immediately
following sentence. If a merger, consolidation, sale of shares, or similar
transaction involving Lante, on the one hand, and one or more persons, on the
other hand with respect to Lante occurs, and, as a part of such transaction,
shares of stock, other securities, cash or property shall be issuable or
deliverable in
2
3
exchange for Lante Common Stock, then ZixIt shall be entitled to purchase or
receive (in lieu of the shares of Lante Common Stock that ZixIt would otherwise
be entitled to purchase or receive hereunder), the number of shares of stock,
other securities, cash or property to which that number of shares of Lante
Common Stock would have been entitled in connection with such transaction (and,
at an aggregate exercise price equal to the aggregate exercise price hereunder
that would have been payable if that number of shares of Lante Common Stock had
been purchased on the exercise of the Option immediately before the consummation
of the transaction).
7. Who May Exercise. Without Lante's consent, except as provided in the
immediately following sentence, the Option shall be exercisable only by ZixIt
and ZixIt shall not, directly or indirectly, sell, transfer, or assign
("Transfer") the Option or the rights and privileges pertaining thereto. It is
understood and agreed by the parties that any sale, transfer, or assignment of
this Agreement, the Option, or the rights and privileges pertaining thereto
resulting from (i) a merger, consolidation, or share exchange involving ZixIt,
or (ii) any sale of substantially all of ZixIt's assets, or (iii) any
liquidation or dissolution of ZixIt in connection with an event stated in clause
(i) or (ii) is not a "Transfer" of the Option or the rights and privileges
pertaining thereto for purposes of this Agreement if the successor, surviving,
acquiring, or recipient entity, as applicable, receives the entire Option and is
obligated to perform the obligations under the ZixIt Option. It is understood
and agreed that ZixIt is entitled to pledge, encumber, or hypothecate the Option
and the rights and privileges pertaining thereto, provided that the transferee
is bound by the transfer restrictions set forth in this Section and in
Subsection 8(b). The Option is not liable for or subject to, in whole or in
part, the debts, contracts, liabilities or torts of ZixIt, nor shall it be
subject to garnishment, attachment, execution, levy or other legal or equitable
process.
8. Certain Legal Restrictions. (a) Except as provided in the Registration Rights
Agreement, Lante shall not have any obligation to ZixIt, express or implied, to
list, register or otherwise qualify any of ZixIt's shares of Lante Common Stock.
Lante shall not be obligated to sell or issue any shares of Lante Common Stock
upon the exercise of the Option unless, in the opinion of counsel for Lante or
counsel otherwise reasonably acceptable to Lante, the issuance and delivery of
such shares shall comply with all relevant provisions of law and other legal
requirements including, without limitation, any applicable federal or state
securities laws and the requirements of any stock exchange or inter-dealer
quotation system on which shares of Lante Common Stock may then be listed or
quoted. The shares of Lante Common Stock issued upon the exercise of the Option
may not be transferred except in accordance with applicable federal or state
securities laws. At Lante's election, if the shares of stock issuable upon the
exercise of the Option have not been registered under the Securities Act of
1933, as amended, and applicable state securities laws, the certificate
evidencing shares of Lante Common Stock issued to ZixIt may be legended as
follows:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR UNDER THE APPLICABLE
SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION AND MAY NOT BE
OFFERED FOR SALE, SOLD, ASSIGNED, TRANSFERRED, PLEDGED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE REQUIREMENTS OF
3
4
SUCH ACT AND THE APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER
JURISDICTION.
(b) Except as provided in this Subsection 8(b), the shares of Lante
Common Stock issued under the Option may not be directly or indirectly
Transferred unless and until (i) (A) Lante has undergone an IPO (defined below)
and the Lock-up Period has expired, (B) the class of securities issueable under
the ZixIt Option is registered under Section 12 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") and is either listed and qualified for
trading on a national securities exchange or is listed for quotation and
qualified for trading on NASDAQ, and (C) ZixIt is, at the time of the
contemplated Transfer of the shares of Common Stock, current in its reporting
obligations under the Exchange Act, or (ii) Lante has experienced a Change of
Control (as defined in the ZixIt Option), or (iii) upon Lante's exercise of its
Redemption Right (as hereinafter defined) hereunder and tendered payment for the
option shares, or (iv) ZixIt has exercised its redemption right under the ZixIt
Option and tendered payment for the option shares thereunder, or (v) ZixIt has
experienced a Liquidity Event (as defined in the ZixIt Option). In order to
enforce the foregoing covenant, Lante may impose stop-transfer instructions with
respect to the shares issued under the Option, which instructions will be
promptly lifted when the above Transfer restrictions are no longer applicable.
The Lock-up Period will be a period of time no longer than the shortest lock-up
period imposed by the managing underwriters, if any, of Lante's initial public
offering ("IPO"), if any, on any other persons; provided that, the Lock-up
Period will expire if any other persons are released from their lock-up
obligation before the stated expiration of ZixIt's lock-up obligation. It is
understood and agreed that ZixIt is permitted to pledge, encumber, or
hypothecate the shares issued under the Option, provided that the transferee is
bound by the transfer restrictions imposed by this Subsection 8(b).
9. Termination. The Option shall automatically terminate if ZixIt (i)
voluntarily seeks, consents to, or acquiesces in the benefit or benefits of the
Bankruptcy Code of the United States of America or any other applicable
liquidation, conservatorship, bankruptcy, moratorium, rearrangement,
receivership, insolvency, reorganization, suspension of payments, or similar
debtor relief law from time-to-time in effect affecting the rights of creditors
generally ("Debtor Relief Law"); or (ii) becomes a party to (or is made the
subject of) any proceeding provided for by any Debtor Relief Law, other than as
a creditor or claimant (unless, in the event such proceeding is involuntary, the
petition instituting same is dismissed within 60 days of the filing of same).
10. Registration Rights. ZixIt shall have the registration rights set forth in
the Registration Rights Agreement attached as Exhibit A hereto.
11. Arbitration. The parties agree to the resolution by binding arbitration of
all claims, demands, causes of action, disputes, controversies, or other matters
in question ("claims") arising under this Agreement or the Registration Rights
Agreement, whether sounding in contract, tort, or otherwise and whether provided
by statute or common law, except for claims where the relief sought is an
injunction, specific performance, or other equitable relief. The claims shall be
submitted to arbitration and finally settled under the applicable rules of the
American Arbitration Association ("AAA") in effect at the time the written
notice of the claim is received. An arbitrator
4
5
shall be selected in the manner provided for in such rules of the AAA, except
that the parties agree that the arbitrator shall be an attorney licensed in the
state where the arbitration is being conducted. If any party refuses to honor
its obligations under this agreement to arbitrate the other party may compel
arbitration in either federal or state court. The arbitrator will have exclusive
authority to resolve any dispute relating to the interpretation, applicability,
enforceability, or formation of this agreement to arbitrate, including, but not
limited to, any claim that all or part of this Agreement or the Registration
Rights Agreement is void or voidable and any claim that an issue is not subject
to arbitration. The arbitrator shall have the authority to award injunctive and
other equitable relief. The arbitration will be held in Xxxx County, Illinois.
The arbitrator shall issue a written decision that identifies the factual
findings and principles of law upon which any award is based. The award and
findings of such arbitrator shall be conclusive and binding upon the parties,
and judgment upon such award may be entered in any court of competent
jurisdiction. Any and all of the arbitrator's orders, decisions, and awards may
be enforceable in, and judgment upon any award rendered by the arbitrator may be
confirmed and entered by, any federal or state court having jurisdiction. Each
party shall pay all costs and expenses of its advisors. The costs and expenses
of the arbitration proceedings will be paid by the non-prevailing party or as
the arbitrator otherwise determines. Discovery will be permitted to the extent
directed by the arbitrator. Except as otherwise provided in the first sentence
of this Section 11, EACH PARTY UNDERSTANDS THAT BY AGREEING TO SUBMIT CLAIMS TO
ARBITRATION IT GIVES UP THE RIGHT TO SEEK A TRIAL BY COURT OR JURY AND THE RIGHT
TO AN APPEAL FROM ANY ERRORS OF THE COURT AND FORGOES ANY AND ALL RELATED RIGHTS
IT MAY OTHERWISE HAVE UNDER FEDERAL AND STATE LAWS.
12. Notices of Certain Transactions. In case:
(a) Lante shall take a record of the holders of the Lante Common Stock
(or other stock or securities at the time deliverable upon the exercise of this
Option) for the purpose of entitling or enabling them to receive any dividend or
other distribution, or to receive any right to subscribe for or purchase any
shares of stock of any class or any other securities, or to receive any other
right, to subscribe for or purchase any shares of stock of any class or any
other securities, or to receive any other right, or
(b) of any capital reorganization of Lante, any reclassification of the
capital stock of Lante, any consolidation or merger of Lante, any consolidation
or merger of Lante with or into another corporation pursuant to which the
securities of Lante are converted into the right to receive cash or other
property, or any transfer of all or substantially all of the assets of Lante, or
(c) of the voluntary or involuntary dissolution, liquidation or
winding-up of Lante,then, and in each such case, Lante will mail or cause to be
mailed to ZixIt a notice specifying, as the case may be, (i) the date on which a
record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the effective date on which such reorganization, reclassification,
consolidation, merger, transfer, dissolution, liquidation or winding-up is to
take place, and the time, if any is to be fixed, as of which the holders of
record of Lante Common Stock (or such
5
6
other stock or securities at the time deliverable upon such reorganization,
reclassification, consolidation, merger, transfer, dissolution, liquidation or
winding-up) are to be determined. Such notice shall be mailed at least ten (10)
days prior to the record date or effective date for the event specified in such
notice.
13. Reservation of Stock. Lante will at all times reserve and keep available,
solely for the issuance and delivery upon the exercise of the Option, such
shares of Lante Common Stock and other stock, securities and property, as from
time to time shall be issuable upon the exercise of the Option.
14. No Impairment. Lante will not, by amendment of its charter or through
reorganization, consolidation, merger, dissolution, sale of assets or any other
voluntary action, avoid or seek to avoid the observance or performance of any of
the terms of the Option, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of such action as may be
necessary or appropriate in order to protect the rights of the holder of the
Option against impairment.
15. Redemption Right. If by the 30th day prior to the 10th anniversary of the
Award Date, the transfer restrictions set forth in Subsection 8(b) of the ZixIt
Option have not lapsed by reason of the requirements of clauses (i) or (ii)
thereof having been met, then Lante shall have the right, exercised by giving
written notice within such 30 day period, to cause ZixIt to exercise the Option
and to sell to Lante the resulting securities issued upon exercise at the "fair
market value" thereof (the "Redemption Right"). The fair market value shall be
determined by an Appraiser (as defined below) taking into account relevant
factors pursuant to the following process:
(a) Lante shall retain an Appraiser to conduct an appraisal of Lante and
of the fair market value of the securities as of the relevant
determination date (the "First Appraisal"). Lante shall pay the cost
of the First Appraisal.
(b) Within 10 days after receipt of the First Appraisal, ZixIt shall
notify Lante in writing whether it accepts or rejects the First
Appraisal. If the First Appraisal is accepted, the First Appraisal
shall determine the fair market value. If the First Appraisal is
rejected, ZixIt shall select an Appraiser who shall perform a second
appraisal of the fair market value (the "Second Appraisal") and ZixIt
shall deliver the Second Appraisal to Lante within 20 days of the
written notice of rejection of the First Appraisal. The cost of the
Second Appraisal shall be borne by ZixIt.
(c) If the Second Appraisal is at least equal to 90% of, but not more than
110% of, the First Appraisal, then the two Appraisals shall be
averaged and such average shall determine the fair market value.
(d) If the Second Appraisal is less than 90% of the First Appraisal or
more than 110% of the First Appraisal, and if Lante and ZixIt are
unable to agree upon the
6
7
fair market value within 10 days after receipt of the Second
Appraisal, then the Appraisers who performed the First Appraisal and
the Second Appraisal shall select a third Appraiser (the "Third
Appraiser"), who shall perform a third appraisal of the fair market
value (the "Third Appraisal"), and the Third Appraiser shall deliver
the Third Appraisal, within 25 days after delivery of the Second
Appraisal, to each of ZixIt and Lante. The cost of the Third Appraisal
shall be paid equally by Lante and ZixIt.
(e) After the Third Appraisal has been received, the highest and lowest of
the three Appraisals shall be ignored and the middle Appraisal shall
determine the fair market value.
"Appraiser" means either (i) a certified public accounting firm that is not
at such time performing regular accounting services for the person in question,
(ii) a reputable investment banking firm that is not at such time performing
regular investment banking services for the person is question, or (iii) a
nationally recognized independent appraisal firm, provided that such
organization defined in (i), (ii) or (iii) above shall be engaged full time
(either exclusively or as a substantial part of its regular business activities)
in the appraisal of businesses and business interests.
16. Release. (a) ZixIt, on behalf of itself and any and all majority-owned
subsidiaries, and any person claiming by, through, or under any of them, and
their respective successors and assigns, confirming that all work product
delivered by Lante to ZixIt under or pursuant to the Engagement Letter (as
defined in the ZixIt Option) is acceptable, hereby generally releases, forever
discharges and covenants not-to-xxx Xxxxx and its majority-owned subsidiaries
and their directors, officers, employees, subcontractors, and attorneys (in
their capacities as such), and their respective predecessors, successors and
assigns from and for any and all causes of action, claims of any type, defenses,
suits, sums of money, liabilities, losses and damages, both known and unknown,
contingent or actual, in law or in equity, including but not limited to
attorneys' fees and costs, which ZixIt now has, has had or may hereafter have,
for, upon or by reason of any matter, cause, or thing occurring prior to the
date hereof, including, without limiting the generality of the foregoing, claims
or causes of action in contract, tort, warranty or arising out of the Engagement
Letter or any business relationship between Lante and ZixIt. Moreover, ZixIt
hereby releases Lante from any obligation to indemnify ZixIt under item "2)" of
the section of Exhibit E of the Engagement Letter entitled "Indemnification."
ZixIt further agrees that any additional work performed by Lante after the date
hereof will be performed on an AS IS basis, without express or implied warranty
of any kind, and that no claim with respect to such additional work may be made
against Lante except in the case of willful misconduct. Notwithstanding the
foregoing, the provisions of this Subsection shall not be construed to waive any
claim that ZixIt might have (either arising prior to the date hereof or
hereafter) (a) regarding a breach of the section of Exhibit E of the Engagement
Letter entitled "Confidentiality," (b) under clause 1) of the section of Exhibit
E of the Engagement Letter entitled "Indemnification," or (c) relating to
enforcement of this Agreement or the ZixIt Option, or (d) for a prepayment in
the amount of $400,000 previously delivered to Lante, or (e) the second sentence
of the section of Exhibit E of the Engagement Letter entitled
7
8
"Ownership of Work Product"; ZixIt hereby acknowledges that it currently has no
actual knowledge of any facts likely to lead to a claim falling within (a) or
(b). Furthermore, the provisions of this Subsection shall not be construed to
waive any claim that ZixIt might have against Lante if any Lante employees,
contractors, subcontractors, or other agents were to assert an ownership or
moral rights interest in, or royalty or license right or other claim with
respect to, the work product delivered under or pursuant to the Engagement
Letter; ZixIt acknowledges that it has not received notice of any such claim
to-date. In the event of conflict between the foregoing provisions of this
Subsection and the terms of the Engagement Letter, this Subsection shall take
precedence and control.
(b) Lante, on behalf if itself and any and all majority-owned
subsidiaries, and any person claiming by, through, or under any of them, and
their respective successors and assigns hereby generally releases, forever
discharges and covenants not-to-xxx ZixIt and its majority-owned subsidiaries
and their directors, officers, employees, subcontractors, and attorneys (in
their capacities as such), and their respective predecessors, successors and
assigns from and for any and all causes of action, claims of any type, defenses,
suits, sums of money, liabilities, losses and damages, both known and unknown,
contingent or actual, in law or in equity, including but not limited to
attorneys' fees and costs, which Lante now has, has had or may hereafter have,
for, upon or by reason of any matter, cause, or thing occurring prior to the
date hereof, including, without limiting the generality of the foregoing, claims
or causes of action in contract, tort, warranty or arising out of the Engagement
Letter or any business relationship between Lante and ZixIt. Moreover, Lante
hereby releases ZixIt from any obligation to indemnify Lante under item "2)" of
the section of Exhibit E of the Engagement Letter entitled "Indemnification."
Notwithstanding the foregoing, the provisions of this Subsection shall not be
construed to waive any claim that Lante might have (either arising prior to the
date hereof or hereafter) (a) under clause 1) of the section of Exhibit E of the
Engagement Letter entitled "Indemnification," or (b) relating to enforcement of
this Agreement or the ZixIt Option, or to otherwise release ZixIt from its
obligations to pay any invoices issued by Lante prior to the date hereof. Lante
hereby acknowledges that it currently has no actual knowledge of any facts
likely to lead to a claim falling within (a). In the event of conflict between
the foregoing provisions of this Subsection and the terms of the Engagement
Letter, this Subsection shall take precedence and control.
17. Miscellaneous.
(a) The granting of the Option herein shall impose no obligation upon
ZixIt to exercise the Option or any part thereof.
(b) Neither ZixIt nor any person claiming under or through ZixIt shall
be or shall have any of the rights or privileges of a shareholder of Lante in
respect of any of the shares issuable upon the exercise of the Option until
validly exercised.
(c) Any notice to be given to Lante under the terms of this Agreement
or any delivery of the Option herein to Lante shall be in writing, addressed to
Lante at the address set forth in Section 3, Attn: Chief Financial Officer; and
any notice to be given to ZixIt shall be addressed to
8
9
ZixIt at the address setforth in the ZixIt Option. A party may specify a
different address for receiving notice by giving written notice thereof to the
other parties. Any such notice shall be deemed to have been duly given upon
personal delivery, one business day after deposit with a nationally recognized
overnight courier delivery service, or three business days after deposit in the
U.S. mail, first class, return receipt requested.
(d) Subject to Section 7, this Agreement shall be binding upon and
inure to the benefit of the assignees, representatives, executors, successors or
beneficiaries of the parties hereto.
(e) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS AND THE UNITED STATES, AS
APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
(f) If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, in whole or in part, then the parties shall be
relieved of all obligations arising under such provision, but only to the extent
that it is illegal, unenforceable or void, it being the intent and agreement of
the parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives.
(g) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions of
this Agreement.
(h) The parties shall execute all documents, provide all information,
and take or refrain from taking all actions as may be necessary or appropriate
to achieve the purposes of this Agreement.
(i) This Agreement and the Registration Rights Agreement constitute
the entire agreement among the parties hereto pertaining to the subject matter
hereof and thereof and supersede all prior written and prior or contemporaneous
oral agreements and understandings pertaining hereto and thereto.
(j) No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute a waiver of
any such breach or any other covenant, duty, agreement or condition.
(k) This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
9
10
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the dates set forth below, to be effective as of the date first above written.
LANTE CORPORATION
By: /s/ X.X. Xxxxxxx
-----------------------------
Its: President & CEO
-----------------------------
Date: 11/24/99
-----------------------------
ZIXIT CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------------
Its: V.P.
-----------------------------
Date: 11/24/99
-----------------------------
10
11
EXHIBIT A
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "Agreement"), effective as of
November 24, 1999, is made by and between Lante Corporation, an Illinois
corporation ("Lante"), and ZixIt Corporation, a Texas corporation ("ZixIt").
Terms used herein with their initial letter capitalized but not defined herein
will have the meaning given such terms in the Option (as defined below), unless
the context otherwise requires.
WITNESSETH:
WHEREAS, Lante and ZixIt have entered into a Stock Option Agreement as of
the date hereof whereby Lante has granted ZixIt an option (the "Option") to
acquire up to 400,000 shares of Lante's common stock, $.01 par value per share
(the "Common Stock");
WHEREAS, Lante desires to grant ZixIt certain registration rights with
respect to the shares of Common Stock issuable under the Option in accordance
with the terms and conditions set forth herein;
NOW, THEREFORE, Lante and ZixIt agree as follows:
1. Shares. As used herein, the term "Shares" shall mean the shares of
Common Stock issuable upon the exercise of the Option.
2. Registration.
A. Demand Registrations. Subject to the immediately following sentence,
upon its receipt of a written notice from ZixIt, Lante shall promptly prepare
and file with the Securities and Exchange Commission (the "SEC") a registration
statement on the applicable form under the Securities Act of 1933, as amended
(the "Securities Act") covering the Shares that are the subject of the request.
The notice from ZixIt may be delivered at any time after the following
conditions are met (or within a reasonable period prior to the date when the
conditions are anticipated to be met): (i) the Transfer restrictions pertaining
to the Shares (as set forth in Subsection 8(b) of the Option) have lapsed and
(ii) Lante is permitted to use a Form other than Form S-1 to register the sale
of the Shares. Lante shall use its commercially reasonable efforts to cause such
registration statement to become effective as promptly as practicable following
the later to occur of (a) both conditions set forth above are met and (b) the
receipt of the written notice. Lante shall also file such post-effective
amendments to such registration statement in order for it to remain effective
without lapse until the earlier of (i) 90 days following the date the
registration statement is declared effective or (ii) all the Shares so
registered have been sold, subject to the three immediately following sentences.
Upon request of ZixIt and subject to the consent of Lante (which consent is not
to be unreasonably withheld), the effectiveness of the registration statement
A-1
12
will be extended for up to an additional 30 days. If, during the effectiveness
of the registration statement, ZixIt determines that it no longer desires to
sell any (or further) Shares at that time, ZixIt will so advise Lante so that
Lante can withdraw the registration statement. The running of the periods of
time shall be extended to account for any stop order suspending the
effectiveness of a registration statement is in effect. ZixIt shall be entitled
to make three registration requests under this paragraph 2.A. Lante will not be
required to effect a registration pursuant to this paragraph 2.A. more
frequently than once during any period of 12 consecutive months. The parties
acknowledge and agree that any registration effected under this paragraph 2.A.
shall not be an underwritten offering.
Lante may defer the filing (but not the preparation) of the registration
statement under this paragraph 2.A. for a period of up to 90 days if (a) at the
time Lante or any of its subsidiaries is engaged in material confidential
negotiations or other material confidential business activities, disclosure of
which would be required in such registration statement (but would not be
required if such registration statement were not filed), and the Board of
Directors of Lante determines, reasonably and in good faith that such disclosure
would be materially detrimental to Lante and its shareholders or would have a
material adverse effect on any such confidential negotiations or other
confidential business activities; or (b) at the time Lante is engaged in
business activities pertaining to an underwritten public offering of Lante's
securities and the underwriters have advised Lante in writing that the filing of
the registration statement would have a material adverse effect on its ability
to consummate such offering; or (c) pursuant to an underwriting agreement in
connection with an underwritten offering, Lante has agreed not to file any
registration statement pursuant to which the Shares may be registered. A
deferral of the filing of the registration statement will be lifted, and the
registration statement shall be filed as soon as practicable thereafter
forthwith, if the negotiations or other activities are completed, disclosed or
terminated or the underwritten public offering is completed, terminated or
postponed. In order to defer the filing of a registration statement, Lante will
deliver to ZixIt a certificate signed by a senior executive officer of Lante
setting forth a statement of the reason for such deferral and an approximation
of the anticipated delay, which information ZixIt shall treat as confidential.
Moreover, Lante may not defer the filing or effectiveness of a registration
statement pursuant to this paragraph more than once in any 12 month period.
Lante represents and warrants that any shareholder of Lante who has
piggyback registration rights also has demand registration rights.
B. Piggyback Registrations. (1) If Lante proposes to register the sale or
issuance of any of its securities under the Securities Act (other than pursuant
to a demand registration pursuant to paragraph 2.A. or registration solely in
connection with an employee benefit or stock ownership plan, and other than its
IPO) and the registration form to be used may be used for the registration of
the sale of Shares (a "Piggyback Registration"), Lante will give prompt written
notice to ZixIt of its intention to effect such a registration (each, a
"Piggyback Notice"). Subject to paragraphs 2.B.(2), 2.B.(3), and 2.B.(4) below,
and subject to the consent of persons having a contractual right of approval of
the inclusion of securities in the registration, Lante will include in such
registration all the Shares that ZixIt requests Lante to include in such
registration by written notice given to Lante within fifteen days after the date
Lante sent the Piggyback Notice.
X-0
00
XxxXx may request that Shares be included in the registration prior to the
expiration of the Transfer restrictions set forth in Subsection 8(b) of the
Option, with the understanding that Shares may not actually be sold under the
registration statement until the Transfer restrictions have lapsed.
(2) If a Piggyback Registration relates to an underwritten public offering
of equity securities by Lante and the managing underwriters advise Lante in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number that can be sold in an orderly manner in
such offering within a price range acceptable to Lante, Lante will include in
such registration (i) first, the securities proposed to be sold by Lante, (ii)
second, the securities requested to be included in such registration statement
by persons having a contractual right to priority with respect to such
registration, (iii) third, the Shares requested to be included in such
registration by ZixIt, and (iv) fourth, other securities requested to be
included in such registration.
(3) If a Piggyback Registration relates to an underwritten public offering
of equity securities by holders of Lante's securities and the managing
underwriters advise Lante in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number that
can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, Lante will
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration (including securities held
by those exercising piggyback rights with contractual rights to priority over
ZixIt), (ii) second, the Shares requested to be included in such registration by
ZixIt, and (iii) third, other securities requested to be included in such
registration.
(4) ZixIt may not participate in any registration hereunder which is
underwritten unless it (i) agrees to sell its Shares on the basis provided in
any underwriting arrangements approved by persons entitled to approve such
arrangements and (ii) completes and executes all questionnaires, power of
attorney, indemnities, underwriting agreements, and other documents reasonably
required under the terms of such underwriting arrangements.
ZixIt acknowledges that Lante has informed it that there are holders of
Lante securities that have a contractual piggyback right to priority in
registration over the Shares. Lante shall have no obligation to register any
Shares under this Section 2 if ZixIt is, at the time of the request, permitted
to sell all Shares sought by it to be registered without restriction within 90
days pursuant to Rule 144 under the Act.
3. Registration Procedures. If, and whenever, Lante is required by Section
2 to effect the registration of Shares under the Securities Act, Lante will as
expeditiously as possible:
(a) prepare and file with the SEC a registration statement with
respect to such securities, and use its commercially reasonable efforts to cause
such registration statement to become and remain effective for the period set
forth in Section 2 (the "Effective Period"); provided that, before filing, Lante
will furnish to ZixIt's counsel copies of such documents to be filed, which
documents will be subject to such counsel's review;
A-3
14
(b) prepare and file with the SEC such amendments to such registration
statement and supplements to the prospectus contained therein as may be
necessary to keep such registration statement effective for the Effective Period
as may be reasonably necessary to effect the sale of such securities;
(c) furnish to ZixIt and to the underwriters of the securities being
registered, such reasonable number of copies of the registration statement,
preliminary prospectus, final prospectus and such other documents as ZixIt and
such underwriters may reasonably request in order to facilitate the public
offering of such securities;
(d) use commercially reasonable efforts to register or qualify the
Shares covered by such registration statement under such state securities or
blue sky laws of such jurisdictions as ZixIt may reasonably request in writing,
except that Lante shall not for any purpose be required to execute a general
consent to service of process or to qualify to do business as a foreign
corporation in any jurisdiction wherein it is not so qualified or subject itself
to taxation in a jurisdiction where it had not previously been subject to
taxation, or take any other action that would subject Lante to service of
process in a lawsuit other than one arising out of the registration of the
Shares;
(e) notify ZixIt, promptly after it shall receive notice thereof, of
the time when such registration statement has become effective or a supplement
to any prospectus forming a part of such registration statement has been filed;
(f) notify ZixIt promptly of any request by the SEC for the amending
or supplementing of such registration statement or prospectus or for additional
information;
(g) prepare and file with the SEC, promptly upon the request of ZixIt,
any amendments or supplements to such registration statement or prospectus
which, in the opinion of counsel for ZixIt (and concurred in by counsel for
Lante), is required under the Securities Act or the rules and regulations
thereunder in connection with the distribution of Shares by ZixIt;
(h) prepare and promptly file with the SEC and promptly notify ZixIt
of the filing of such amendment or supplement to such registration statement or
prospectus as may be necessary to correct any statements or omissions if, at any
time when a prospectus relating to such securities is required to be delivered
under the Securities Act, any event shall have occurred as the result of which
any such prospectus or any other prospectus as then in effect would include an
untrue statement of a material fact or omit to state any material fact necessary
to make the statements therein, in the light of the circumstances in which they
were made, not misleading;
(i) advise ZixIt, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the SEC suspending the
effectiveness of such registration statement or the initiation or threatening of
any proceeding for that purpose and promptly use its best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued;
A-4
15
(j) cause all such Shares to be listed on each securities exchange or
automated dealer quotation system on which similar securities issued by Lante
are then listed and to be qualified for trading on each exchange or system on
which similar securities issued by Lante are from time to time qualified;
(k) provide a transfer agent and registrar for all such Shares not
later than the effective date of such registration statement and thereafter
maintain such a transfer agent and registrar;
(l) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earnings statement covering the period of
at least twelve months beginning with the first day of Lante's first full
calendar quarter after the effective date of the registration statement, which
earnings statement must satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 promulgated by the Commission thereunder; and
(m) upon the issuance of any stop order suspending the effectiveness
of a registration statement, or of any order suspending or preventing the use of
any related prospectus or suspending the qualification of any Shares included in
such registration statement for sale in any jurisdiction, Lante will use its
reasonable best efforts promptly to obtain the withdrawal of such order.
4. Expenses. Subject to the limitation stated in the next sentence, all
fees, costs, and expenses of and incidental to a registration effected pursuant
to paragraph 2.A. and public offering of the Shares in connection therewith
shall be borne by ZixIt, including any commissions and transfer taxes in respect
of the sale of its Shares. ZixIt's liability for the fees and expenses of
Lante's professional advisors in connection with a registration effected
pursuant to paragraph 2.A. and the public offering of the Shares in connection
therewith shall be limited to $12,500 (in 1999 dollars). If the registration
statement is effected pursuant to paragraph 2.B and relates to an underwritten
public offering of equity securities by Lante, the fees, costs, and expenses of
and incidental to a registration effected pursuant thereto and public offering
of the Shares in connection therewith shall be borne by Lante, excluding any
commissions and transfer taxes in respect of the sale of the Shares. If the
registration statement is effected pursuant to paragraph 2.B and relates to an
underwritten public offering of equity securities by holders of Lante's
securities, ZixIt shall be responsible for its pro-rata share of any fees,
costs, and expenses of and incidental to a registration effected pursuant
thereto and public offering of the Shares in connection therewith for which the
selling holders are responsible and shall be fully responsible for any
commissions and transfer taxes in respect of the sale of the Shares.
5. Indemnification.
(a) Lante will indemnify and hold harmless ZixIt, its directors,
officers, employees, and agents, any underwriter (as defined in the Securities
Act) for ZixIt and any person controlling ZixIt or such underwriter from and
against, and will reimburse such persons with respect to, any and all loss,
damage, liability, cost and expense to which such persons may
A-5
16
become subject under the Securities Act or otherwise, insofar as such losses,
damages, liabilities, costs or expenses are caused by any untrue statement or
alleged untrue statement of any material fact contained in such registration
statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the 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; provided, however, that Lante will not be liable in any such
case to the extent that any such loss, damage, liability, cost or expense arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission so made in conformity with information furnished by
or on behalf of ZixIt in writing specifically for use in the preparation
thereof. Lante will not be subject to any liability for any settlement made
without its consent, which consent shall not be unreasonably withheld.
(b) ZixIt will indemnify and hold harmless Lante, its directors,
officers, employees, and agents, any underwriter for Lante and any person
controlling Lante or such underwriter from and against, and will reimburse such
persons with respect to, any and all loss, damage, liability, cost and expense
to which such persons may become subject under the Securities Act or otherwise,
insofar as such losses, damages, liabilities, costs or expenses are caused by
any untrue statement or alleged untrue statement of any material fact contained
in such registration statement, any prospectus contained therein or any
amendment or supplement thereto, or arise out of or are based upon the 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, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was so made in reliance upon and in
conformity with written information furnished by or on behalf of ZixIt
specifically for use in the preparation thereof. ZixIt will not be subject to
any liability for any settlement made without its consent, which consent shall
not be unreasonably withheld; provided, that the obligation to indemnify will be
limited to the net proceeds received by ZixIt with respect to the sale of the
Shares.
(c) Promptly after receipt by an indemnified party pursuant to the
provisions of Subsection (a) or (b) of this Section 5 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
Subsection (a) or (b), promptly notify the indemnifying party of the
commencement thereof; but the omission to so notify the indemnifying party will
not relieve it from any liability that it may have to any indemnified party,
except to the extent that such omission materially and adversely affects the
indemnifying party's ability to defend against or compromise such claim. In case
such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if the defendants in any action include both the
indemnified party and the indemnifying party and there is a conflict of interest
that would prevent counsel for the indemnifying party from also representing the
indemnified party, the indemnified party or parties
A-6
17
shall have the right to select separate counsel to participate in the defense of
such action on behalf of such indemnified party or parties. After notice from
the indemnifying party to an indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party pursuant to the provisions of said Subsection (a) or (b) for any legal or
other expense subsequently incurred by such indemnified party in connection with
the defense thereof other than out-of-pocket costs of investigation, unless (i)
the indemnified party shall have employed counsel in accordance with the
provisions of the preceding sentence, (ii) the indemnifying party shall not have
employed counsel reasonably satisfactory to the indemnified party to represent
the indemnified party within a reasonable time after the notice of the
commencement of the action or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party.
(d) If the indemnification provided for herein 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,
will 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 will be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The obligation to contribute
will be individual to ZixIt and will be limited to the amount by which the net
amount of proceeds received by ZixIt from the sale of the Shares exceeds the
amount of losses, liabilities, damages and expenses that ZixIt has otherwise
been required to pay by reason of such statements or omissions.
(e) The indemnification and contribution provided for under this
Agreement will remain in full force and effect regardless of any investigation
made by or on behalf of the indemnified party or any officer, director or
controlling person of such indemnified party and will survive the transfer of
securities and the termination or expiration of this Agreement.
6. Miscellaneous.
(a) Any notice to be given to Lante under the terms of this Agreement
shall be in writing, addressed to Lante at the address set forth in Section 3 of
the Option, Attn: Chief Financial Officer; and any notice to be given to ZixIt
shall be addressed to ZixIt at its address set forth in the ZixIt Option. A
party may specify a different address for receiving notice by giving written
notice thereof to the other parties. Any such notice shall be deemed to have
been duly given upon personal delivery, one business day after deposit with a
nationally recognized overnight courier delivery service, or three business days
after deposit in the U.S. mail, first class, return receipt requested.
A-7
18
(b) ZixIt may not Transfer this Agreement or its rights and privileges
hereunder, except in connection with a permitted Transfer of the Option. Subject
to the preceding sentence, this Agreement shall be binding upon and inure to the
benefit of the assignees, representatives, executors, successors or
beneficiaries of the parties hereto.
(c) THE INTERPRETATION, PERFORMANCE AND ENFORCEMENT OF THIS AGREEMENT
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF ILLINOIS AND THE UNITED STATES, AS
APPLICABLE, WITHOUT REFERENCE TO THE CONFLICT OF LAWS PROVISIONS THEREOF.
(d) If any provision of this Agreement is declared or found to be
illegal, unenforceable or void, in whole or in part, then the parties shall be
relieved of all obligations arising under such provision, but only to the extent
that it is illegal, unenforceable or void, it being the intent and agreement of
the parties that this Agreement shall be deemed amended by modifying such
provision to the extent necessary to make it legal and enforceable while
preserving its intent or, if that is not possible, by substituting therefor
another provision that is legal and enforceable and achieves the same
objectives.
(e) All section titles and captions in this Agreement are for
convenience only, shall not be deemed part of this Agreement, and in no way
shall define, limit, extend or describe the scope or intent of any provisions of
this Agreement.
(f) The parties shall execute all documents, provide all information,
and take or refrain from taking all actions as may be necessary or appropriate
to achieve the purposes of this Agreement.
(g) This Agreement constitutes the entire agreement among the parties
hereto pertaining to the subject matter hereof and supersedes all prior written
and prior or contemporaneous oral agreements and understandings pertaining
hereto.
(h) No failure by any party to insist upon the strict performance of
any covenant, duty, agreement or condition of this Agreement or to exercise any
right or remedy consequent upon a breach thereof shall constitute a waiver of
any such breach or any other covenant, duty, agreement or condition.
(i) This Agreement may be executed in counterparts, all of which
together shall constitute one agreement binding on the parties hereto,
notwithstanding that all such parties are not signatories to the original or the
same counterpart.
(j) This Agreement shall continue in effect until the earlier of (a)
all of the Shares are publicly sold pursuant to a Section 2 registration
statement or (b) ZixIt is permitted to sell all the Shares then held by it
without restriction within 90 days pursuant to Rule 144 under the Securities
Act.
A-8
19
IN WITNESS WHEREOF, the parties have executed this Agreement on the dates
set forth below, to be effective as of the date first above written.
ZIXIT CORPORATION
By:
-----------------------------------------
Its:
-----------------------------------------
Date:
-----------------------------------------
LANTE CORPORATION
By:
-----------------------------------------
Its:
-----------------------------------------
Date:
-----------------------------------------
A-9