AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT
AMENDED AND RESTATED STOCKHOLDERS' AGREEMENT, dated as of June
30, 1999, is made by and among XXXXXXXX.XXX INC., a Delaware corporation (the
"Company"), XXX X. XXXXXX ("DBL"), XXXXX X. XXXXXX, ("PAF"), XXXXXXX X. XXXXXX,
("RDF"), CAPITAL EXPRESS, L.L.C., a New Jersey limited liability company
("CapEx"), INTERNET WEB BUILDERS, L.L.C., a New Jersey limited liability company
("IWB"), PALISADE PRIVATE PARTNERSHIP, L.P., a Delaware limited partnership
("PPP"), STAPLES, INC., a Delaware corporation ("Staples;" and together with
DBL, PAF, RDF, CapEx, IWB and PPP, the "Existing Stockholders"), and the Persons
named as purchasers (the "Investors") of the Company's Series A Convertible
Preferred Stock, par value $0.0001 per share (the "Series A Preferred Stock"),
pursuant to the Series A Convertible Preferred Stock Purchase Agreement, dated
as of the date hereof.
WHEREAS, the Company and the Existing Stockholders are parties
to a Shareholders' Agreement, dated as of January 5, 1998, as amended by
Amendment No. 1 to the Shareholders' Agreement dated as of March 25, 1999 and
Amendment No. 2 to the Shareholders' Agreement, dated as of May 21, 1999 (as
amended, the "Existing Shareholders' Agreement");
WHEREAS, in connection with the sale of the Company's Series A
Convertible Preferred Stock to the Investors, the Company and the Existing
Stockholders desire to amend (and, for ease of reference, restate) the Existing
Shareholders' Agreement on the terms and conditions set forth herein; and
WHEREAS, it is a condition to sale of the Company's Series A
Preferred Stock that the Investors become parties to this Agreement;
NOW, THEREFORE, in consideration of the mutual benefits to be
derived here from and the mutual agreements hereinafter set forth, the parties
hereto agree as follows:
1. Defined Terms.
(a) For purposes of this Agreement, the following terms
shall have the meanings indicated:
"Board of Directors" shall mean the board of directors of the
Company.
"Common Stock" shall mean the Common Stock of the Company, par
value $0.0001 per share, as constituted on the date hereof, and any capital
stock into which such Common Stock may hereafter be changed, and such term shall
also include (unless the context clearly indicates otherwise) (i) capital stock
of the Company of any other class or series (regardless of how denominated)
issued to the holders of shares of Common Stock upon any reclassification
thereof which is also not preferred as to dividends or assets on liquidation
over any other class or series of capital stock of the Company and which is not
subject to redemption and (ii) shares of common stock of any successor or
acquiring corporation or any affiliate thereof which are issued or may be
issuable to any Stockholders pursuant to any consolidation, merger, binding
share exchange or reorganization to which the Company is a party and in which
the Company is not the continuing corporation and which does not give rise to
termination of this Agreement pursuant to Section 2.
"Competitor" means as of any date of determination any Person
or Entity (and any officer, director, partner, member, key employee or
beneficial owner of 10% or more of such Entity's voting equity) engaged, or
whose business is such that it is reasonably likely that such Person or Entity
could within one year as of such date of determination be engaged, in the
business of developing, marketing or distributing e-commerce services to create,
maintain and/or host web sites, or providing domain name registration services.
"DPR" means DBL, PAF and RDF.
"Entity" means any corporation, limited liability company,
general or limited partnership, joint venture, association, joint stock company,
trust, other unincorporated business or organization or other Person which is
not either a natural person or a governmental authority.
"Exempt Sale" means a sale of Shares owned by a Stockholder
pursuant to an effective registration statement under the Securities Act.
"Family Donee" means, with respect to individual Stockholders,
(i) such Stockholders' parents, spouse, adult lineal descendants and siblings,
(ii) the adult spouses of such siblings, the adult spouses of such lineal
descendants and the parents of such spouse, and (iii) trusts for the benefit of
any of such individuals or their children.
"Outstanding Shares" means, as of any date of determination,
all issued shares of Common Stock as of such date, except for such shares then
owned or held by or for the account of the Company or any subsidiary thereof,
and all shares of Common Stock issuable upon exercise, conversion or exchange of
any Rights outstanding as of such date, except for such Rights then owned or
held by or for the account of the Company and such Rights that cannot be
exercised, converted or exchanged without the occurrence of a specified date or
event or the satisfaction or happening of any other condition or contingency,
other than the payment of cash or property. "Outstanding Shares" shall not
include any shares of Common Stock issuable in payment of any dividend or other
distribution which has been declared but not actually paid. In determining the
percentage of Outstanding Shares of any Person, the numerator shall be the
number of Outstanding Shares beneficially owned by such Person and the
denominator shall be the number of Outstanding Shares beneficially owned by all
Persons.
"Person" means any individual, corporation, limited liability
company, general or limited partnership, joint venture, association, joint stock
company, trust, unincorporated business or organization, governmental authority
or other entity or legal person, whether acting in an individual, fiduciary or
other capacity.
"Prohibited Party" means any Person who has been convicted of
(or pleaded nolo contendere to) a felony or other crime, or who is or has been
the subject of any order, judgment, writ, decree, award or other determination,
decision or ruling of any court, judge, justice or magistrate, involving
self-dealing, fraud, embezzlement or acts of moral turpitude.
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"Public Offering" means an underwritten public offering
pursuant to an effective registration statement under the Securities Act
covering the offer and sale to the public of Common Stock and/or Rights.
"Publicly Held Date" means the date on which shares of Common
Stock having an aggregate public offering price of not less than $10 million
have been effectively registered under the Securities Act and disposed of in
accordance with the registration statement or statements covering such shares.
"Related Party" means with respect to any Person, any other
Person who is a director, officer, partner, manager, member or shareholder of
such Person.
"Rights" means any options, warrants, convertible or
exchangeable securities or other rights, however denominated, to subscribe for,
purchase or otherwise acquire Common Stock or other Rights to subscribe for
purchase or otherwise acquire Common Stock, with or without payment of
additional consideration in cash or property, either immediately or upon the
occurrence of a specified date or a specified event or the satisfaction or
happening of any other condition or contingency.
"Securities Act" means the Securities Act of 1933, as amended
from time to time, or any successor statute, and (unless the context otherwise
requires) the rules and regulations promulgated thereunder.
"Shares" means (i) any Common Stock and any Rights purchased
or otherwise acquired by any Stockholder, (ii) any Common Stock or Rights issued
or issuable directly or indirectly with respect to the Common Stock referred to
in clause (i) above by way of stock dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization, and (iii) any other Common Stock or Rights held by a
Stockholder. As to any particular securities constituting Shares, such
securities shall cease to be Shares when they have been sold to the public
through a Public Offering or other subsequent public sale unless thereafter they
are reacquired by a Stockholder.
"Stockholder" means each Person who is a party to this
Agreement other than the Company, except that such Person shall cease to be a
Stockholder as of the time such Person ceases to own any Shares subject to this
Agreement.
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(b) The following additional terms listed below shall have
the meanings ascribed thereto in the Section (or other provision hereof)
indicated next to such term:
Term Section
---- -------
CapEx Preamble
Company Preamble
DBL Preamble
Existing Shareholder Agreement Recitals
Existing Stockholders Preamble
Investors Preamble
IWB Preamble
Offer 8(a)
Offer Notice 7(a)
Offered Shares 7(a)
Offeror 7(a)
Option Period 7(d)(i)
Other Stockholders 7(a)
PAF Preamble
Participating Stockholder 7(d)(i)
PPP Preamble
RDF Preamble
Remaining Shares 7(b)(ii)
Selling Stockholder 7(a)
Series A Preferred Stock Preamble
Staples Preamble
Stockholder Offer Notice 7(b)(ii)
Stockholder Shares 5(a)
Transfer 5(a)
2. Termination of Prior Agreements; Term of Agreement.
(a) The Existing Shareholders' Agreement and any and all
other shareholder agreements heretofore made or presently in effect between or
among the parties hereto, and all amendments thereto, are hereby in all respects
canceled, terminated and superseded by this Agreement.
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(b) This Agreement shall continue from and after the date
hereof and will terminate upon the earliest to occur of the following: (i) the
sale of all or substantially all of the assets of the Company, (ii) the merger
or consolidation of the Company pursuant to which the holders of the voting
power of the Company immediately prior to such merger or consolidation are less
than 50% of the voting power immediately after such merger or consolidation,
(iii) the liquidation and dissolution of the Company, (iv) the commencement of
bankruptcy proceedings or the appointment of a receiver for the Company, or (v)
the Publicly-Held Date.
3. Legend on Certificates.
(a) Each Stockholder agrees to present the certificates
representing the Shares presently owned or hereafter acquired by him to the
Secretary of the Company and the Company agrees to cause the Secretary to stamp
on the certificate in a prominent manner the following legend:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF A CERTAIN AMENDED AND RESTATED STOCKHOLDERS'
AGREEMENT, DATED JUNE 30, 1999, BY AND AMONG THE COMPANY AND THE
STOCKHOLDERS OF THE COMPANY SPECIFIED THEREIN, A COPY OF WHICH
AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE COMPANY. THE SALE,
PLEDGE, TRANSFER OR OTHER DISPOSITION OF THE SECURITIES REPRESENTED BY
THIS CERTIFICATE OR ANY INTEREST THEREIN IS RESTRICTED BY SUCH
AGREEMENT AND ANY SUCH SALE, PLEDGE, TRANSFER OR OTHER DISPOSITION MAY
BE MADE ONLY UPON COMPLIANCE THEREWITH. SUCH AGREEMENT ALSO CONTAINS
PROVISIONS RELATING TO THE EXERCISE OF CERTAIN VOTING AND CONSENT
RIGHTS, IF ANY, OF THE HOLDERS OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE."
(b) An original copy of this Agreement, duly executed by
each of the parties hereto, shall be delivered to the Secretary of the Company
and maintained at the principal executive office of the Company and made
available for inspection by any Person requesting it.
4. Restrictions on Issuance of Stock.
(a) From and after the date hereof, the Company shall not
issue Shares to any Person, unless such Person shall first execute a written
consent to be bound by all of the provisions of, become a party to, and a
"Stockholder" under, this Agreement and shall deliver a copy of such consent to
the Company and the Stockholders; provided, however, that this Section 4 shall
not apply to any Shares issued pursuant to (i) any stock options granted to
employees of the Company who are not a party to this Agreement, which stock
options are issued pursuant to stock option plans of the Company as may be in
effect from time to time, (ii) Rights outstanding as of the date hereof held by
Persons who as of the date hereof are not a party to this Agreement, and (iii) a
Public Offering or pursuant to Rights issued and sold in a Public Offering.
(b) Regardless of whether a written consent is executed and
delivered, each Person to which the Company properly issues Shares pursuant to
Section 4(a) or to which a Stockholder properly sells Shares pursuant to
Sections 6 or 7, by accepting Stockholder Shares, shall be deemed to be a party
to, and a "Stockholder" under, this Agreement and to have accepted and adopted
the terms and provisions of this Agreement as if such Person executed and
delivered such written instrument. Promptly (but in any case within five days)
after a Person becomes a Stockholder, the Company agrees to give (i) to those
Persons who are then Stockholders, notice of the name and address of the Person
becoming a Stockholder and (ii) to the Person who becomes a Stockholder, a copy
of this Agreement and a list of the names and addresses of each Person who is
then a Stockholder. The Company agrees not to effect a transfer on its books of
any of the Stockholder Shares except in accordance with the foregoing terms.
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5. Restrictions on Transfer of Shares.
(a) No Transfers. No Stockholder shall sell, transfer,
assign, pledge, hypothecate, encumber or otherwise dispose of (collectively, a
"Transfer") any Shares or any interest in any Shares, beneficially owned by such
Stockholder ("Stockholder Shares") except in compliance with the provisions of
this Agreement. Any purported Transfer which is not made in compliance with this
Agreement shall be void.
(b) No Circumvention. Each Stockholder hereby agrees not to
Transfer or attempt to Transfer any Stockholder Shares indirectly in a manner
that would be inconsistent with the essential intent of this Agreement. For
purposes of this Agreement, any Transfer of an equity interest of an Entity that
was formed for the purpose of acquiring Stockholder Shares shall be deemed to be
a Transfer of such portion of the Shares, as applicable, owned by such Entity as
corresponds to the portion of the equity of such Entity that has been so
transferred.
(c) Prohibited Transferees. Each Stockholder agrees that,
notwithstanding any provision of this Agreement to the contrary, such
Stockholder will not Transfer or seek to Transfer any Stockholder Shares to any
Prohibited Party or Competitor.
6. Permitted Transfers. Any Stockholder may Transfer any
Stockholder Shares (i) to a Family Donee of such Stockholder, (ii) to any
Related Party of such Stockholder (together with a Family Donee, a "Permitted
Transferee"), (iii) to a Person pursuant to an Exempt Sale, or (iv) to another
Stockholder (unless such Stockholder, together with his affiliates, Related
Parties and Family Donee, would beneficially own more than 50% of the voting
power of the voting securities of the Company), in each case without complying
with the provisions of Section 7, provided that, in each instance of a Transfer
pursuant to clauses (i) and (ii) above, such Permitted Transferee first executes
a written consent to be bound by all of the provisions of, become a party to,
and a "Stockholder" under, this Agreement and shall deliver a copy of such
consent to the Company and the Stockholders.
7. Rights of First Refusal and Tag-Along Rights.
(a) Bona Fide Offer; Offer Notice. If any Stockholder
desires to Transfer any of his Shares, or any interest in such Shares, in any
transaction, other than pursuant to Section 6 of this Agreement, pursuant to a
bona fide written offer, such Stockholder (the "Selling Stockholder") shall
first deliver written notice of his desire to do so (the "Offer Notice") to the
Company and each of the other Stockholders (the "Other Stockholders"), in the
manner prescribed in Section 11 of this Agreement. The Offer Notice must
specify: (i) the name and address of the Selling Stockholder, (ii) the name and
address of the party to which the Selling Stockholder proposes to sell or
otherwise dispose of the Shares or an interest in the Shares (the "Offeror"),
(iii) the number and description of Shares the Selling Stockholder proposes to
sell or otherwise dispose of (the "Offered Shares"), (iv) the proposed amount
and form of the consideration per Share to be delivered to the Selling
Stockholder for the proposed sale, transfer or disposition, and the conditions
of payment, (v) all other material terms and conditions of the proposed
transaction, (vi) whether, upon consummation of the proposed sale, transfer or
disposition, the Offeror, together with the Offeror's Related Parties, would
beneficially own more than 50% of the voting power of the voting securities of
the Company, and (vii) that the Offeror has received a copy of this Agreement
and has agreed to purchase the Offered Shares in accordance with the terms and
conditions hereof. The Selling Stockholder shall include with the Offer Notice
copies any agreements or other documents related to the offer by the Offeror.
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(b) Company's Option to Purchase.
(i) Subject to Section 7(d)(i), the Company shall have
the first option to purchase all or any part of the Offered Shares for the
consideration per share and on the terms and conditions specified in the Offer
Notice. The Company must exercise such option by written notice to the Selling
Stockholder, no later than 10 days after such Offer Notice is deemed to have
been delivered to it under Section 11 hereof.
(ii) In the event the Company does not exercise its
option within such 10-day period with respect to all of the Offered Shares, the
Company shall, by the last day of such period, give written notice of that fact
to the other Stockholders and the Selling Stockholder (the "Stockholder Offer
Notice"). The Stockholder Offer Notice shall specify the number of Offered
Shares that the Company elected not to purchase (the "Remaining Shares").
(iii) In the event the Company duly exercises its
option to purchase all or part of the Offered Shares, the closing of such
purchase shall take place at the offices of the Company on the later of (i) the
date five days after the expiration of such 10-day period or (ii) the date that
the Other Stockholders consummate their purchase of Remaining Shares under
Section 7(c)(iii) hereof.
(iv) To the extent that the consideration proposed to
be paid by the Offeror for the Offered Shares consists of property other than
cash or promissory notes, the consideration required to be paid by the Company
and/or the Other Stockholders exercising their options under Sections 7(b) and
(c) hereof may consist of cash equal to the value of such property, as
determined in good faith by agreement of the Selling Stockholder and the Company
and/or the Other Stockholders acquiring such Offered Shares.
(v) At the closing of such purchase, the Selling
Stockholder shall only be required to provide representations and warranties
that he has title to the Offered Shares, free and clear of any liens, claims or
encumbrances, and that he has the power and authority to sell the Offered Shares
and to provide indemnities with respect thereto and shall only be required to
sign such stock powers and other documents as may reasonably be requested by the
Company or the Other Stockholders, as applicable, with respect to the transfer
thereof.
(vi) Notwithstanding anything to the contrary herein,
neither the Company nor any of the Other Stockholders shall have any right to
purchase any of the Offered Shares hereunder unless the Company and/or the Other
Stockholders exercise their option or options to purchase all of the Offered
Shares.
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(c) Other Stockholders' Option to Purchase.
(i) Subject to Section 7(d)(i), the Other Stockholders
shall have an option, exercisable for a period of 10 days from the date of
delivery of the Stockholder Offer Notice, to purchase, on a pro rata basis
according to the number of Shares beneficially owned by such Stockholder
(calculated on a fully diluted basis), the Remaining Shares for the
consideration per share and on the terms and conditions set forth in the Offer
Notice. Such option shall be exercised by delivery by such Stockholder of
written notice to the Selling Stockholder and the Secretary of the Company.
Alternatively, each Stockholder may within the same 10-day period, notify the
Selling Stockholder and the Secretary of the Company of its desire to
participate in the sale of the Shares on the terms set forth in the Offer
Notice, and the number of Shares it wishes to sell.
(ii) In the event options to purchase have been
exercised by the Stockholders with respect to some but not all of the Remaining
Shares, those Stockholders who have exercised their options within the 10-day
period specified in Section 7(c)(i) shall have an additional option, for a
period of five days next succeeding the expiration of such 10-day period, to
purchase all or any part of the balance of such Remaining Shares on the terms
and conditions set forth in the Offer Notice, which option shall be exercised by
the delivery of written notice to the Secretary of the Company. In the event
there are two or more such Stockholders that choose to exercise the
last-mentioned option for a total number of Remaining Shares in excess of the
number available, the Remaining Shares available for each such Stockholder's
option shall be allocated to such Stockholder pro rata based on the number of
Shares beneficially owned by the Stockholders so electing.
(iii) If the options to purchase the Remaining Shares
are exercised in full by the Stockholders, the Company shall immediately notify
all of the exercising Stockholders of that fact. The closing of the purchase of
the Remaining Shares shall take place at the offices of the Company no later
than five days after the date of such notice to the Stockholders.
(d) Failure to Fully Exercise Options; Tag-Along Right.
(i) If the Company and the Other Stockholders do not
exercise their options to purchase all of the Offered Shares within the periods
described in this Agreement (the "Option Period"), then all options of the
Company and the Other Stockholders to purchase the Offered Shares, whether
exercised or not, shall terminate; provided, however, that each Stockholder
which has, pursuant to Section 7(c)(i), expressed a desire to sell Shares in the
transaction (a "Participating Stockholder"), shall be entitled to do so pursuant
to this Section 7(d). The Company shall promptly, on expiration of the Option
Period, notify the Selling Stockholder of the aggregate number of Shares the
Participating Stockholders wish to sell. The Selling Stockholder shall use his
commercially reasonable efforts to interest the Offeror in purchasing, in
addition to the Offered Shares, the Shares the Participating Stockholders wish
to sell. If the Offeror does not wish to purchase all of the Shares made
available by the Selling Stockholder and the Participating Stockholders, then
each Participating Stockholder and the Selling Stockholder shall be entitled to
sell, at the price and on the terms and conditions set forth in the Offer
Notice, a portion of the Shares being sold to the Offeror, in the same
proportion as such Selling Stockholder or Participating Stockholder's beneficial
ownership of Shares bears to the aggregate number of Shares beneficially owned
(calculated on a fully diluted basis) by the Selling Stockholder and the
Participating Stockholders, it being agreed, however, that (i) any Participating
Stockholder shall be entitled to elect to be paid in cash in lieu of receiving
any non-cash consideration (the amount of such cash to be determined based on
the fair market value by an investment banking firm or, if an investment banking
firm is generally not qualified to render such a determination, by an appraisal
firm, in either case, of recognized national standing), and (ii) such terms and
conditions shall not include the making of any representations and warranties,
indemnities or other similar agreements other than representations and
warranties with respect to title of the Shares being sold and authority to sell
such Shares and indemnities related thereto. The transaction contemplated by the
Offer Notice shall be consummated not later than 60 days after the expiration of
the Option Period. It shall be a condition to the consummation thereof that the
Offeror execute a written consent to be bound by the provisions of, and become a
party to, and a "Stockholder" under, this Agreement in form and substance
reasonably satisfactory to the Company and deliver an original thereof to the
Secretary to the Company.
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(ii) If the Participating Stockholders do not elect to
sell the full number of Shares which they are entitled to sell pursuant to
Section 7(d)(i), the Selling Stockholder shall be entitled to sell to the
Offeror, according to the terms set forth in the Offer Notice, that number of
his own Shares which equals the difference between the number of Shares desired
to be purchased by the Offeror and the number of Shares the Participating
Stockholders are entitled to sell pursuant to Section 7(d). If the Selling
Stockholder wishes to Transfer any such Shares at a price per Share which
differs from that set forth in the Offer Notice, upon terms different from those
previously offered to the Company and the Stockholders, or more than 60 days
after the expiration of the Option Period, then, as a condition precedent to
such transaction, such Shares must first be offered to the Company and the
Stockholders on the same terms and conditions as given the Offeror, and in
accordance with the procedures and time periods set forth above.
(iii) The proceeds of any sale made by the Selling
Stockholder without compliance with the provisions of this Section 7(d) shall be
deemed to be held in constructive trust in such amount as would have been due
the Participating Stockholders if the Selling Stockholder had complied with this
Agreement.
8. Drag-Along.
(a) Notwithstanding anything to the contrary contained in
this Agreement, if at any time the Company or DPR receives a bona fide offer
that DPR desires to accept (an "Offer") from a third party (i.e., a Person other
than a Related Party or Family Donee of DPR), to purchase, in a single or a
series of related arms' length transactions (the "Sale"), all or any part of the
outstanding shares of Common Stock (the "Subject Shares"), then, if requested by
DPR, each other Stockholder shall sell his shares of Common Stock in such
transaction, on the same terms and conditions, and for the same consideration,
as set forth in such Offer and in the same proportion as DPR's beneficial
ownership of the shares of Common Stock (calculated on a fully diluted basis) to
be sold in such sale bears to the aggregate number of shares of Common Stock
beneficially owned by DPR (calculated on a fully diluted basis). DPR shall give
each Stockholder written notice (the "Sale Notice"), in the manner prescribed by
Section 11 of this Agreement, of any such Offer at least twenty (20) days prior
to the date on which such transaction shall be consummated, including the terms
and conditions thereof, and each shall have the obligation to sell its
proportionate amount of shares of Common Stock in accordance with the
instruction set forth in the Sale Notice.
(b) Following receipt of the Sale Notice, each such
Stockholder shall vote for, consent to and raise no objections to, nor bring a
claim against any of DPR, any of their Related Parties, the Company, its
affiliates or any of their respective officers, directors or stockholders or
contest or seek to enjoin the Sale, or seek appraisal, dissenter or other
similar such rights. Without limiting the generality of the foregoing, if such
Sale is structured as: (i) a merger or consolidation, each other Stockholder
shall waive any dissenter rights, appraisal rights or similar rights in
connection with such merger or consolidation; or (ii) a sale of securities, each
other Stockholder shall (A) agree to sell the proportionate amount of their
shares of Common Stock on the terms and conditions of a Sale approved in
accordance with Section 8(c) and (B) only be required to provide representations
and warranties that he has title to the shares of Common Stock owned by him and
subject to the Sale, free and clear of any liens, claims or encumbrances, and
that he has the power and authority to sell such shares of Common Stock, and
only be required to sign such stock powers and other documents as may reasonably
be requested by DPR and/or the Company or the purchaser, as applicable, with
respect to the transfer thereof. The Company may, at its option, deposit the
consideration payable for the shares of Common Stock with depository designated
by it and thereafter each share of Common Stock certificate shall represent only
the right to receive the consideration payable in the transaction. The
Stockholders shall take such other necessary or desirable actions in connection
with the consummation or such Sale as reasonably requested by DPR or the
Company.
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(c) The rights granted to DPR under this Section 8 shall
apply only to a Sale that is approved by the holders of a majority of the Common
Stock. For purposes of this Section 8, if the holder of a majority of the shares
of Common Stock constituting the shares of Common Stock beneficially owned by
DPR agree to take any action hereunder, each of the Stockholders constituting
DPR shall be bound thereby and shall be deemed to have agreed to such action,
provided each of them was first consulted with respect thereto.
(d) Staples shall not be bound by the provisions of Section
8(a) and (b) for (i) so long as Staples owns greater than five percent (5%) of
the outstanding Shares (calculated on a fully diluted basis) and (ii) in the
event that the per share purchase price of the Common Stock pursuant to the
Offer is less than $12.00 (as adjusted for stock splits, dividends,
recapitalizations or similar events).
9. Voting Agreements.
(a) Designation of Directors. Each of the Stockholders
severally covenants and agrees that, such Stockholder shall vote all shares of
the voting stock owned or controlled by each Stockholder, as of the record date
of any action of the stockholders of the Company, whether by consent or at a
meeting, at which members of the Board of Directors are to be elected or to
establish the number of directors of the Company, in favor of a Board of
Directors comprised of seven directors on the terms and conditions set forth in
this Section 9 as follows:
(i) Three (3) directors of the Company designated by
DPR for so long as DBL, PAF and RDF continue to beneficially own, in the
aggregate, at least 7.5% of the Outstanding Shares; provided, however, that, (A)
for so long as the Investors have a right to designate a director pursuant to
Section 9(a)(v), one of the directors for which DPR has the right to designate
shall be an industry representative designated by DPR, (B) as to the identity of
an industry representative, DPR shall consult and cooperate with the Investors
holding a majority of the issued and outstanding shares of Series A Preferred
Stock, provided, however, that the selection of such designee shall be made by
DPR, and (c) the obligation to consult and cooperate with such Investors shall
exist for so long as the issued and outstanding shares of Series A Preferred
Stock represent at least 6% of the Outstanding Shares. Upon the initial
designation by DPR of such industry representative, one of the directors for
which DPR has the right to designate, selected by DPR in its sole discretion,
shall resign and the vacancy created thereby shall be filled by such industry
representative pursuant to section 9(c).
(ii) One (1) director of the Company designated by
CapEx for so long as CapEx continues to beneficially own at least 5% of the
Outstanding Shares;
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(iii) One (1) director of the Company designated by IWB
for so long as IWB continues to beneficially own at least 5% of the Outstanding
Shares;
(iv) One (1) director of the Company designated by PPP
for so long as PPP continues to beneficially own at least 5% of the Outstanding
Shares; and
(v) One (1) director of the Company designated by the
Investors holding at least 50% of the issued and outstanding shares of Series A
Preferred Stock for so long as the issued and outstanding shares of Series A
Preferred Stock represent at least 6% of the Outstanding Shares; provided,
however, that such director shall be subject to RDF's approval.
(b) Term of Appointment. Subject to the earlier death,
resignation or removal of any director designated hereunder, each director
elected or appointed at any time as provided herein shall serve until the next
annual meeting of the Company's stockholders and his or her successor shall have
been elected as provided herein.
(c) Filling of Vacancy without Forfeiture. In the event of
any vacancy in the position of any director occurring for any reason, the
Stockholder (DPR, in the case of directors designated by DPR pursuant to Section
9(a)(i), subject to the provisos in the first sentence of Section 9(a)(i); or
the holders of at least 50% of the issued and outstanding shares of the Series A
Preferred Stock in the case of the director designated by such holders pursuant
to Section 9(a)(v), subject to the proviso in Section 9(a)(v), provided,
however, that, for so long as Sandler owns any shares of Series A Preferred
Stock, Sandler, with the consent of the holders of at least 50% of the issued
and outstanding shares of the Series A Preferred Stock, which consent shall not
be unreasonably withheld or delayed) who originally designated the director
whose position became vacant shall designate a successor to the other
Stockholders. All Stockholders shall use their commercially reasonable efforts
to cause the Board of Directors to appoint such designated successsor and will
vote all of their shares of voting stock in favor of the election of such
designated successor. If necessary, the Stockholder (or Stockholders, as
aforesaid) who originally designated the director whose position became vacant
shall have the right to request the Board of Directors to call a special meeting
of stockholders, to be held as soon as practicable after the occurrence of the
vacancy. Without limiting the generality of the foregoing, in the event that, at
any time, any of DPR, CapEx, IWB, PPP or the holders of at least 50% of the
issued and outstanding shares of the Series A Preferred Stock (collectively, the
"Replacing Stockholders"; each, a "Replacing Stockholder") determines to replace
or remove any or all of their respective designees to the Board of Directors of
the Company, the Replacing Stockholder(s) shall, as promptly as practicable,
provide written notice of such replacement or removal to each Stockholder as
then set forth in the Company's records. Following the giving of such notice,
each of the Stockholders severally agrees to vote all of the voting Shares owned
or controlled by such Stockholder for such replacement or removal and for the
replacement designee designated by the Replacing Stockholder in accordance with
the terms of this Section 9. Failure by a Replacing Stockholder to provide the
removal notice described above shall not prejudice the Replacing Stockholder's
right to replace removed directors with new designees of their choosing
provided; however, that the other members of the Board of Directors may treat
such Replacing Stockholder's former designee as a director and take all actions
with such former designee until such notice is received. The Company hereby
agrees to use its best efforts to cause such designated candidates and
replacements to be elected to the Board of Directors of the Company.
11
(d) Filling a Vacancy upon Forefeiture. In the event any of
DPR, CapEx, IWB, PPP or at least 50% of the issued and outstanding shares of the
Series A Preferred Stock (each, a "Forfeiting Investor") forfeits the right to
designate one or more directors, as applicable (each such forfeiture event, a
"Forfeiture Date"), such director or directors, as designated by the Forfeiting
Investor (if applicable), shall be deemed to have resigned from the Board of
Directors of the Company as of the Forfeiture Date. Any vacancy created as a
result of any such resignation shall be filled by an individual designated by
the remaining members of the Board of Directors.
(e) Initial Designated Directors. The parties hereto agree
that as of the date hereof, the Board of Directors of the Company shall consist
of seven directors as set forth on Schedule I.
(f) Board Observer Rights. At any time prior to the
Publicly-Held Date, the Company shall invite a representative of PPP to attend
all meetings of its Board of Directors in a nonvoting-observer capacity and, in
this respect, shall give such representative copies of all notices, minutes,
consents and other materials it provides to its directors; provided, however,
that such representative shall agree to execute a confidentiality agreement in
favor of, and satisfactory, the Company and, provided further, that the Company
reserves the right to withhold any information and to exclude such
representative from any meeting or portion thereof if access to such information
or attendance at such meeting could adversely affect the attorney-client
privilege between the Company and its counsel.
10. Other Restrictions.
For so long as Staples owns Shares, the Company agrees that it
shall not agree to sell the Company by a merger or consolidation, or by a sale
of all or substantially all of the assets of the Company without the prior
written consent of Staples unless the consideration for such merger,
consolidation or sale of all or substantially all of the assets of the Company
is equal to a per share valuation of Common Stock of at least $12.00 (as
adjusted for stock splits, dividends, recapitalizations or similar events).
11. Notices.
All notices and other communications provided for or permitted
hereunder shall be made in writing by hand-delivery, registered first-class
mail, telecopier, or air courier guaranteeing overnight delivery:
(a) if to a Stockholder initially at its address set
forth on the signature page hereof and thereafter at such other address, notice
of which is given by such holder to the Company in accordance with the
provisions of this Section 11; and
12
(b) if to the Company, initially at its address set
forth on the signature page hereof and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 11, with a
copy to Loeb & Loeb LLP, 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Xxxxx
X. Xxxxxxxx, Esq.
All such notices and communications shall be deemed to have
been duly given at the time delivered by hand, if personally delivered during
regular business hours on a business day (otherwise, on the next business day);
when received if deposited in the mail, postage prepaid, if mailed; when receipt
of confirmation of delivery occurs, if telecopied during regular business hours
on a business day (otherwise, on the next business day); and on the next
business day, if timely delivered to an air courier guaranteeing overnight
delivery.
12. Specific Performance.
Due to the fact that the Shares cannot be readily purchased or
sold in the open market, and for other reasons, the parties will be irreparably
damaged in the event that this Agreement is not specifically enforced. In the
event of a breach or threatened breach of the terms, covenants and/or conditions
of this Agreement by any of the parties hereto, the other parties shall, in
addition to all other remedies, be entitled to a temporary or permanent
injunction, without showing any actual damage, and/or a decree for specific
performance, in accordance with the provisions hereof.
13. Jurisdiction; Venue.
Each of the Company and each Stockholder irrevocably (i)
agrees that any suit, action or proceeding arising out of or relating to this
Agreement may be brought in the State or Federal courts located in The City of
New York, County of New York; (ii) consents to the jurisdiction of each such
court in any suit, action or proceeding relating to or arising out of this
Agreement; (iii) waives any objection which it may have to the laying of venue
in any such suit, action or proceeding in any of such court; and (iv) agrees
that service of any court paper may be made in such manner as may be provided
under applicable laws or court rules governing service of process, including,
without limitation, by the mailing of copies thereof by registered or certified
mail, postage pre-paid, to the other party at its address set forth in Section
11 hereof, such service to become effective five (5) business days after such
mailing.
14. Miscellaneous.
(a) This writing constitutes the entire agreement of
the parties with respect to the subject matter hereof and no provision may be
modified, amended, terminated or waived except by a writing signed by the
holders of not less than 51% of the outstanding Stockholder Shares (determined
on a fully diluted basis) subject to this Agreement; provided, however, that the
addition of any Stockholder to this Agreement shall not be deemed an amendment
hereof; provided, further, however, that no such writing shall be effective
against (i) any of DPR with respect to their respective rights under Sections 8
and 9 unless signed by them, (ii) CapEx with respect to its rights under Section
9 unless signed by it, (iii) IWB with respect to its rights under Section 9
unless signed by it, (iv) PPP with respect to its rights under Section 9 unless
signed by it, (v) Staples with respect to its rights under Sections 8(d) and 10
unless signed by it, and (vi) the Investors with respect to their rights under
Section 9 unless signed by the holders of a majority of the outstanding shares
of Series A Preferred Stock; provided, further, however that the consent of a
party shall not be required for any amendment, modification or termination of,
or waiver under, any provision of this Agreement if such party is not adversely
affected thereby.
13
(b) No action taken pursuant to this Agreement,
including, without limitation, any investigation by or on behalf of any party or
beneficiary, shall be deemed to constitute a waiver by the party or beneficiary
taking such action of compliance with any agreements, covenants, obligations or
commitments contained herein or made pursuant hereto. The waiver by any party of
a breach or beneficiary of any provision of this Agreement shall not operate or
be construed as a waiver of any preceding or succeeding breach and no failure by
any party or beneficiary to exercise any right, privilege or remedy hereunder
shall be deemed a waiver of such party's or beneficiary's rights, privileges or
remedies hereunder or shall be deemed a waiver of such party's or beneficiary's
rights to exercise the same at any subsequent time or times hereunder.
(c) If any provision of this Agreement shall be held
invalid or unenforceable, such invalidity or unenforceability shall attach only
to such provision and shall not in any manner affect or render invalid or
unenforceable any other severable provision of this Agreement, and this
Agreement shall be carried out as if any such invalid or unenforceable provision
were not contained herein.
(d) Except as expressly provided in this Agreement,
nothing in this Agreement, express or implied, is intended or shall be construed
to confer upon or give any Person (including creditors, stockholders and
affiliates of the Company) other than the parties hereto and the Persons who
from time to time are Stockholders any remedy or claim under or by reason of
this Agreement or any term, covenant or condition hereof, all of which shall be
for the sole and exclusive benefit of the parties and such Persons who from time
to time are Stockholders. This Agreement and all of the provisions hereof shall
be binding upon and inure to the benefit of the Company and the Persons who from
time to time are Stockholders and the respective successors and permitted
assigns of the corporate parties hereto and, unless otherwise provided herein,
the respective assigns, heirs, and personal representatives of the individual
parties hereto. This Agreement constitutes the entire agreement of the parties
and supersedes all prior agreements and undertakings, both written and oral,
among the parties, or any of them, with respect to the specific subject matter
hereof.
(e) The section headings contained herein are for the
purposes of convenience only and are not intended to define or limit the
contents of said sections.
(f) Whenever the pronouns "he", or "his" are used
herein they shall also be deemed to mean "she" or "hers" or "it" or "its"
whenever applicable. Words in the singular shall be read and construed as though
in the plural and words in the plural shall be read and construed as though in
the singular in all cases where they would so apply.
14
(g) This Agreement may be executed in two or more
counterparts, all of which taken together shall be deemed one original.
(h) This Agreement shall be deemed to be a contract
under the laws of the State of New York and for all purposes shall be construed
and enforced in accordance with the internal laws of said state without regard
to the principles of conflicts of law.
(i) The number of Shares subject to the provisions of
this Agreement and all references herein to numbers of Shares and purchase
prices per share shall be appropriately adjusted in the case of any subdivision
or combination of the outstanding Shares into a greater or smaller number of
Shares, recapitalization, reorganization, reclassification of shares, stock
dividend, or like event.
(j) No Stockholder of the Company shall be entitled to
employment with the Company by virtue of his or its ownership of any Shares.
(k) Each party hereto will execute and deliver all such
further documents and instruments (including consents of stockholders and/or
directors) and will do all such further acts and things (including casting any
required stockholder votes, and approving any required amendments to the
Company's Certificate of Incorporation and/or By-Laws) as any other party hereto
shall reasonably request to give full effect to the purposes and intent of this
Agreement.
15
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above written.
XXXXXXXX.XXX INC.
By:___________________________
Name:
Title:
000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 212-627-6477
Stockholders:
___________________________________
Xxx X. Xxxxxx
X.X. Xxx 000
Xxx Xxxxxxxx, Xxx Xxxx 00000
Facsimile: 000-000-0000
___________________________________
Xxxxx X. Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxxx, XX
Facsimile: 000-000-0000
___________________________________
Xxxxxxx X. Xxxxxx
c/o Xxxxxxxx.xxx, Inc.
000 Xxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: 212-627-6477
CAPITAL EXPRESS, L.L.C.
By:__________________________________________
Name: Xxxxx X Xxxxx
Title: Managing Member
000 Xxxxx Xxxxx
Xxxxxxxx, Xxx Xxxxxx 00000
Facsimile: 000-000-0000
INTERNET WEB BUILDERS, LLC
By:__________________________________________
Name: Xxxxxxx Xxxxxxx
Title: Managing Member
00-00 Xxxx Xxxxxx Xxxxxxxx
Xxx Xxxxxx 00000
Facsimile: 212-280-4035
PALISADE PRIVATE PARTNERSHIP, L.P.
By:__________________________________________
Name:
Title:
Xxx Xxxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Facsimile: (000) 000-0000
STAPLES, INC.
By:__________________________________________
Name:
Title:
000 Xxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000
Facsimile: (000) 000-0000
SANDLER CAPITAL IV PARTNERS, L.P.
By: Sandler Investment Partners, L.P., a General Partner
By: Sandler Capital Management, a General Partner
By: MJDM Corp., General Partner
By:____________________________________
Xxxxxx Xxxxxxxxx
President
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile:
SANDLER CAPITAL MANAGEMENT
By: MJDM Corp., General Partner
By:________________________________
Xxxxxx Xxxxxxxxx
President
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile:
SANDLER CAPITAL IV FTE PARTNERS , L.P.
By: Sandler Investment Partners, L.P., a General Partner
By: Sandler Capital Management, a General Partner
By: MJDM Corp., General Partner
By:___________________________________
Xxxxxx Xxxxxxxxx
President
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile:
BESSEMER VENTURE PARTNERS IV L.P.
By: Deer IV & Co., LLC, General Partner
By:______________________________________
Xxxxxx X. Xxxxxxxx
Manager
0000 Xxx Xxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Facsimile: (000) 000-0000
BESSEC VENTURES IV L.P.
By: Deer IV & Co. LLC, General Partner
By:_____________________________________
Xxxxxx X. Xxxxxxxx
Manager
000 Xxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
HIKARI TSUSHIN, INC.
By:____________________________________
Name:
Title:
Address:
Facsimile:
CONCENTRIC NETWORK CORPORATION
By:___________________________________
Name:
Title:
0000 Xxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Facsimile: (000) 000-0000
BAYVIEW INVESTORS LTD.
By:__________________________________
Name:
Title:
000 Xxxxxxxxxx Xxxxxx, 0000
Xxx Xxxxxxxxx, XX 00000
Facsimile: (000) 000-0000
Schedule I
----------
Initial Directors
DPR: Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxx Xxxxxx
CapEx: Xxxxx X Xxxxx
IWB: Xxxxxxx Xxxxxxx
PPP: Xxxx Xxxxxxx
Investors: Xxxxxxxx XxXxxx
