SECOND AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT (this "Agreement") is entered into this day of March 1999, but is
made effective as of the 2nd day of July, 1998 (the "Effective Date"), by and
between U.S. Interactive, Inc., a Delaware corporation (the "Company"), the
investors listed on Schedule A hereto, each of which is herein referred to as a
"DE Investor", the management stockholders (either in a custodial, trustee or
individual capacity) listed on Schedule B hereto, and Xxxx Xxxxxxx, each of
which is herein referred to as a "Management Stockholder", the investors listed
on Schedule C hereto, each of which is herein referred to as a "USI Investor,"
and the investors listed on Schedule D hereto, each of which is herein referred
to an "InVenGen Investor." The DE Investors, the Management Stockholders, the
USI Investors, and the InVenGen Investors, are sometimes collectively referred
to in this Agreement as the "Stockholders," and each, a "Stockholder."
RECITALS
WHEREAS, as of September 22, 1998, immediately following the issuance
of 2,339,628 shares of Series D Preferred Stock to Safeguard 98 Capital, L.P.,
but prior to the purchase by the Company of any shares held by certain of its
Stockholders as of September 22, 1998, the Company had issued, an aggregate
total of 9,120,796 shares of common stock, $.001 par value (the "Common Stock"),
1,573,533 shares of Series A Preferred Stock, $.001 par value (the "Series A
Preferred Stock"), 1,052,632 shares of Series B Preferred Stock, $.001 par value
(the "Series B Preferred Stock"), 595,706 shares of Series C Preferred Stock,
$.001 par value (the "Series C Preferred Stock") and 2,339,628 shares of Series
D Preferred Stock, $.001 par value (the "Series D Preferred Stock". All shares
of Preferred Stock of the Company are referred to collectively as the "Preferred
Stock".
WHEREAS, on September 22, 1998, the Company, the USI Investors, the DE
Investors, and the Management Stockholders entered into an Amended and Restated
Investors' Rights Agreement;
WHEREAS, pursuant to an Asset Purchase Agreement dated February 26,
1999, the Company has purchased certain assets of InVenGen, LLC and has agreed
to include the InVenGen Investors (which are investors in InVenGen, LLC) as
parties to the Amended and Restated Investors' Rights Agreement;
WHEREAS, the DE Investors, the USI Investors, the Management
Stockholders, the InVenGen Investors, and the Company have agreed to enter into
this Agreement governing the rights of the DE Investors, the USI Investors, the
InVenGen Investors, and the Management Stockholders to cause the Company to
register shares of the Company's Common Stock together with any other common
stock of the Company into which the Preferred Stock of the Company shall be
converted (upon conversion of the Preferred Stock), and certain other matters as
set forth herein;
NOW, THEREFORE, IN CONSIDERATION OF THE MUTUAL COVENANTS CONTAINED
HEREIN AND OTHER GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF
WHICH ARE HEREBY ACKNOWLEDGED, THE PARTIES HEREBY AGREE AS FOLLOWS
1. Registration Rights
1.1 Definitions. For purposes of this Section 1:
(a) The term "register", "registered", and "registration"
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) Except as otherwise expressly provided in the applicable
provisions of this Agreement, the term "Registrable DE Investors' Securities"
means (1) the Common Stock issuable or issued upon conversion of the Series A
Preferred Stock, (2) any Common Stock now or hereafter owned by the DE
Investors, and (3) any Common Stock issued as (or issuable upon the conversion
or exercise of any warrant, right, or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of (other than upon conversion), Series A Preferred Stock, excluding
in all cases, however, any Registrable DE Investors' Securities sold by a person
in a transaction in which such person's rights under this Section 1 are not
assigned;
(c) Except as otherwise expressly provided in the applicable
provisions of this Agreement, the term "Registrable USI Investors' Securities"
means (1) the Common Stock issuable or issued upon conversion of the Series B
Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, (2) any
Common Stock now or hereafter owned by the USI Investors, and (3) any Common
Stock issued as (or issuable upon the conversion or exercise of any warrant,
right, or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of (other than upon
conversion), Series B Preferred Stock, Series C Preferred Stock, or Series D
Preferred Stock excluding in all cases, however, any Registrable USI Investors'
Securities sold by a person in a transaction in which such person's rights under
this Section 1 are not assigned:
(d) Except as otherwise expressly provided in the applicable
provisions of this Agreement, the term "Registrable Individuals' Securities"
shall mean the Common Stock now and hereafter owned by the Management
Stockholders (individually or as custodian for their children or as a trustee of
any trust holding stock of the Company) and Xxxx Xxxxxxx.
(e) Except as otherwise expressly provided in the applicable
provisions of this Agreement, the term "Registrable InVenGen Investors'
Securities" shall mean no more than 447,206 shares of Common Stock now or
hereafter owned by the InVenGen Investors.
(f) The term "Registrable Securities" means the Registrable DE
Investors' Securities, the Registrable USI Investors' Securities, the
Registrable InVenGen Investors' Securities, and 20% of the Registrable
Individuals' Securities;
(g) A share of Registrable Securities, shall cease to be a
share of Registrable Securities, when (i) a registration statement covering such
share has been declared effective by the SEC and such share has been disposed of
by a Holder pursuant to such effective registration statement, (ii) such share
is held by the Company or one of its subsidiaries or otherwise ceases to be
outstanding, or (iii) such share may be sold pursuant to paragraph (k) of Rule
144, if applicable.
(h) The term "Registrable Investors' Securities" means the
Registrable DE Investors' Securities, and the Registrable USI Investors'
Securities, and the Registrable InVenGen Investors' Securities.
(i) The term "Holder" means any person owning or having the
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof; and
(j) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission ("SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier
of: (i) two (2) years from the Effective Date; (ii) one hundred eighty (180)
days after the first underwritten public offering of Common Stock of the Company
for the account of the Company and offered on a firm commitment or best efforts
basis pursuant to an offering registered under the Securities Act with the SEC
on Form S-1, Form SB-2 or their then equivalents (an "Initial Public Offering");
or (iii) one hundred eighty (180) days after the closing of (A) an underwritten
firm commitment offering pursuant to an effective registration under the
Securities Act of 1933, as amended, covering the offer and sale by the Company
of its Common Stock in which the aggregate gross proceeds to the Company exceed
$15,000,000 and in which the price per share to the public of such Common Stock
equals or exceeds $5.00 (subject to equitable adjustment in the event of any
stock split, stock dividend, combination, reorganization, reclassification or
other similar event, involving the Common Stock which occurs after the date
hereof and prior to such underwritten, firm commitment offering); or (B) an
offering to the holders of the common stock of Safeguard Scientific, Inc.
("SSI"), pursuant to a registration statement, of rights to purchase from the
Company such number of shares of the Common Stock which equals up to 30% (as
determined by SSI) of the sum of (i) all issued shares of Common Stock; (ii) all
shares of Common Stock reserved for issuance, and (iii) all shares of Common
Stock subject to, but not reserved for, issuance pursuant to options, warrants
or other agreements, instruments or understandings, all as of the effective date
of the registration statement (a "Qualified Public Offering") (other than a
registration statement relating either to the sale of securities to employees of
the Company pursuant to a stock option, stock purchase or other employee benefit
plan or an SEC Rule 145 transaction), a written request from (A) the holders of
at least forty percent (40%) of the Registrable Investors' Securities then
outstanding that the Company file a registration statement under the Act
covering the registration of at least twenty percent (20%) of the Registrable
Investors' Securities then outstanding provided however that the aggregate
offering price to the public would equal or exceed $5,000,000 (or such
proportionately lesser number of shares of Common Stock if the aggregate
offering price to the public would equal or exceed $10,000,000), or (B) the
holders of at least twenty percent (20%) of the Registrable Individuals'
Securities then outstanding that the Company file a registration statement under
the Act covering the registration of at least twenty percent (20%) of the
Registrable Individuals' Securities held by the Management Stockholders provided
however that the aggregate offering price to the public would equal or exceed
$5,000,000 (or such proportionately lesser number of shares of Common Stock if
the aggregate offering price to the public would equal or exceed $10,000,000),
then the Company shall use its best efforts to, within ten (10) business days of
the receipt thereof, give written notice of such request to all Holders and
shall, subject to the limitations of Section 1.2(b), effect as soon as
practicable, and in any event within one hundred eighty (180) days after receipt
of such request, the registration under the Act of all Registrable Securities
which the Holders request to be registered within twenty (20) days of the
mailing of such notice by the Company in accordance with Section 3.6.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in
Section 1.2(a). The underwriter will be selected by the Company and be
reasonably acceptable to the Initiating Holders. In such event, the right of any
Holder to include such Holder's Registrable Securities in such registration
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company as provided in Section 1.4(e)) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected by the Company and
reasonably acceptable to the Initiating Holders. Notwithstanding any other
provision of this Section 1.2, if the underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
if the Initiating Holders are holders of Registrable Individuals' Securities, at
the election of forty percent (40%) of the Registrable Investors' Securities
requesting such registration a different allocation among all Holders requesting
registration will occur (such new allocation to include up to 80% of their
Registrable Investors' Securities with the balance of the Registrable Securities
to be registered to be allocated on a pro rata basis among the Registrable
Individuals' Securities), in which event the registration shall be deemed to be
a demand registration of the holders of the Registrable Investors' Securities
for purposes of Section 1.2(c) below; provided, however, that the number of
shares of Registrable Securities to be included in such underwriting shall not
be reduced unless all securities other than the Registrable Securities are first
entirely excluded from the underwriting.
(c) The Company is obligated to effect two (2) such
registrations for the holders of the Registrable Investors' Securities and two
(2) such registrations for the holders of the Registrable Individuals'
Securities, with a minimum time period of twelve (12) months between the
demanded registration and any prior registration of the Company's securities.
Notwithstanding the foregoing, the Company shall not be obligated to effect such
registration in any jurisdiction in which the Company would be required to
qualify to do business or execute a general consent to service of process and
any related qualification or compliance in effecting such registration.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration pursuant to this Section 1.2 a
certificate signed by the President of the Company stating that (i) in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its shareholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, or (ii) the Company intends to file a registration
statement in connection with a public offering of securities for the Company's
account within one hundred eighty (180) days thereafter, then the Company shall
have the right to defer taking action with respect to such filing for a period
of not more than one hundred eighty (180) days after receipt of the request of
the Initiating Holders; provided, however, that the Company may not utilize this
right more than one (1) time in any twelve (12) month period.
1.3 Piggyback Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for shareholders other than the Holders) any of its
stock or other equity securities under the Act in connection with the public
offering of such securities solely for cash (other than a registration relating
either to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or other employee benefit plan or an SEC Rule 145
transaction), the Company shall, at such time, promptly give each Holder of
Registrable Securities written notice of such registration. Upon the written
request of each Holder of Registrable Securities given within twenty (20) days
after mailing of such notice by the Company in accordance with Section 3.5, the
Company shall, subject to the provisions of Section 1.8 hereof, use its diligent
best efforts to cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered. The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 1.3 prior to the effectiveness of such registration whether
or not any Holder has elected to include securities in such registration
1.4 Obligations of the Company. Whenever required under this Section 1
to effect the registration of any Registrable Securities, the Company shall use
its diligent best efforts to, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement
with respect to such Registrable Securities and use its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders (i) such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them
and (ii) all material correspondence with the Securities and Exchange Commission
relating to such registration.
(d) Use its best efforts to (i) register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions, and (ii) insure the
obtaining of all necessary approvals from the National Association of Securities
Dealers, Inc. in connection with such registration.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 1, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 1: (i) an opinion, dated
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and to
the Holders requesting registration of Registrable Securities; and (ii) a letter
dated such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering, addressed
to the underwriters, if any, and to the Holders requesting registration of
Registrable Securities.
1.5 Furnish Information; No Company Obligation
(a) It shall be a condition precedent to the obligations of
the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of Section 1.5(a) or 1.8, the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in Section 1.2(a) or Section
1.12(a)(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses, other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing, and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one (1) counsel for the selling Holders
(which counsel shall be reasonably acceptable to the Company), shall be borne by
the Company; provided, however, that the Company shall not be required to pay
for any expenses of any registration proceeding begun pursuant to Section 1.2 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless one (1) demand
registration is still available to such Holders of Registrable Securities and
the Holders of a majority of the Registrable Securities agree to forfeit their
right to such demand registrations pursuant to Section 1.2; provided, further,
that if at the time of such withdrawal, the Holders have learned of a material
adverse change in the financial condition, business or prospects of the Company
(other than a material adverse change resulting from general economic or
industry conditions) from that known to the Holders at the time of their request
and have withdrawn the request with reasonable promptness following disclosure
by the Company of such material adverse change, or if the registration is not
effected due to a request of the Company or any underwriter to which a majority
of the Holders of the Registrable Securities agree, then the Company shall bear
such expenses and the Holders shall not be required to pay any of such expenses
and shall retain their rights pursuant to Section 1.2.
1.7 Expenses of Piggyback Registration. The Company shall bear and pay
all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder, including (without limitation) all
registration, filing and qualification fees, printers and accounting fees
relating or apportionable thereto and the reasonable fees and disbursements of
one (1) counsel for the selling Holders selected by them (which counsel shall be
reasonably acceptable to the Company), but excluding underwriting discounts and
commissions relating to the Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion would not be
reasonably likely to jeopardize the success of the offering by the Company. If
the total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, which the underwriters determine
in their sole discretion would not be reasonably likely to jeopardize the
success of the offering (the securities so included to be apportioned, at the
option of a majority of the holders of Registrable Investors' Securities
requesting registration, 80% to the holders of the Registrable Investors'
Securities and 20% to the holders of the Registrable Individuals' Securities, or
in the absence of exercise of such option, pro rata among the selling
shareholders according to the total amount of securities entitled to be included
therein owned by each selling stockholder or in such other proportions as shall
mutually be agreed to by such selling shareholders), but in no event shall (i)
the amount of securities of the selling Holders included in the offering be
reduced below 20% of the total amount of the securities included in such
offering, unless such offering is the Company's Initial Public Offering in which
case the selling stockholders may be excluded if the underwriters make the
determination described above or (ii) notwithstanding(i) above, any shares being
sold by a shareholder exercising a demand registration right similar to that
granted in Section 1.2 shall be excluded from such offering. For purposes of the
preceding parenthetical concerning apportionment, for any selling shareholder
which is a holder of Registrable Securities and which is a partnership or
corporation, the partners, retired partners, and shareholders of such holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing persons shall be deemed to be a
single "selling shareholder," and any pro-rata reduction with respect to such
"selling shareholder" shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included in
such "selling shareholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of Section 15 of the Securities Act, against any losses, claims,
damages or liabilities (joint or several) to which they may become subject under
the Act, or the 1934 Act, or other federal or state law, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations by the
Company (collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, or the 1934 Act or any state securities
law; and the Company will pay to each such Holder, underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the indemnity agreement contained
in this Section 1.10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company, which consent shall not be unreasonably
withheld, nor shall the Company be liable in any such case for any such loss,
claim, damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, or the 1934 Act, or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will pay, as
incurred, any legal or other expenses reasonably incurred by any person intended
to be indemnified pursuant to this Section 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this Section
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided,
further, that, in no event shall any indemnity under this Section 1.10(b) exceed
the net proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one (1) counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 1.10, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable (by entry of a
final decree and expiration of the time to appeal or denial of the last appeal
permitted) to an indemnified party with respect to any loss, liability, claim,
damage or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or omissions that resulted
in such loss, liability, claim, damage or expense as well as any other relevant
equitable considerations; provided, however, that in no event shall the
contribution by any selling Holder exceed the net proceeds from the offering
received by such Holder. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) use its best efforts to file with the SEC in a timely
manner all reports and other documents required of the Company under the Act and
Section 13(a) or 15(d) of the 1934 Act;
(b) take such action (to the extent the Company is then
eligible to take such action), including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective.
(c) if the Company shall cease to be required to file reports
under Section 13(a) or 15(d) of the 1934 Act, the Company shall make publicly
available the information specified in Rule 144(c)(2) under the Act;
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement declared effective by the Company), the Act, and the 1934
Act (at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
1.12 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will use its best efforts to:
(a) promptly give written notice of the proposed registration
and any related qualification or compliance, to all other Holders and, as soon
as practicable, effect such registration and all such qualifications and
compliances as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder's of Holders' Registrable
Securities as are specified in such request, together with all or such portion
of the Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.12: (1) if Form S-3 is
not then available for such offering by Holders; (2) if the Holders, together
with the holders of any other securities of the Company entitled to inclusion in
such registration, propose to sell Registrable Securities and such other
securities (if any) at an aggregate price to the public of less than $2 million;
(3) if the Company shall furnish to the Holders a certificate signed by the
Chief Executive Officer of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its shareholders for such Form S-3 Registration to be effected
at such time, in which event the Company shall have the right to defer the
filing of the Form S-3 registration statement for a period of not more than
sixty (60) days after receipt of the request of the Holder or Holders under this
Section 1.12; provided, however, that the Company shall not utilize this right
more than two (2) times in any twelve (12) month period; (4) if the Company has,
within the twelve (12) month period preceding the date of such request, already
effected one (1) registration on Form S-3 for the Holders pursuant to this
Section 1.12; (5) if the Company has already effected four (4) such
registrations pursuant to this Section 1.12; or (6) in any particular
jurisdiction in which the Company would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
1.13 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities, to the extent granted by the applicable
provisions of this Section 1, may be assigned (but only with all related
obligations) by an original Holder to (i) any transferee or assignee of such
securities who is a member of such Holder's immediate family, (ii) if such
Holder is a partnership, any partner thereof, (iii) any entity (as determined as
of this date) controlling, controlled by or under common control with, any DE
Investor or USI Investor; or (iv) any transferee or assignee of the Registrable
Securities who or which acquires at least 25% of the Registrable Securities held
by such Holder as of the date of this Agreement; provided, however, in no event
shall any right to cause the Company to register Registrable Securities be
transferred to a competitor of the Company, and any permitted transfer of such
rights shall be effective only if, contemporaneous with such transfer, the
Company is furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; provided, further, that such assignment
shall be effective only if such transferee, prior to the transfer of the
Registrable Securities, executes and delivers to the Company an agreement
satisfactory to the Company that such transferee shall thereafter be a Holder
for purposes of this Agreement and if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants, and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership. For purposes of this Section 1.13, a transfer by an original Holder
of Registrable Securities to a custodial account or trust whereby such original
Holder retains the sole voting rights of such Registrable Securities shall not
affect the rights to registration for such Registrable Securities.
1.14 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the holders of more than fifty percent (50%) of the outstanding Registrable
Investors' Securities, enter into any agreement with any holder or prospective
holder of any securities of the Company giving such holder or prospective holder
any registration rights, including without limitation "piggyback" registration
rights, the terms of which are the same or more favorable than the registration
rights granted to either the holders of Registrable Investors' Securities or the
holders of the Registrable Individuals' Securities hereunder.
1.15 "Market Stand-Off" Agreement. Each Holder hereby agrees
that, during the period of duration (not to exceed one hundred eighty (180)
days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the effective date of a registration
statement for the Company's initial offering of securities to the public
generally, he, she or it shall not, to the extent requested by the Company and
such underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by him, her or it at any time during
such period except Common Stock included in such registration; provided,
however, that all officers and directors of the Company, and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 Termination of Registration Rights. No Holder shall be entitled to
exercise any rights provided for in this Section 1:
(a) after five (5) years following the Company's Qualified
Public Offering for demand registration rights under Section 1.2 and five (5)
years following the Company's Qualified Public Offering for Piggyback
Registration Rights under Section 1.3 or
(b) if such Holder owns less than one percent (1 %) of the
issued and outstanding Registrable Securities.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall
furnish the following information to each Holder (as of the date of
determination) of an aggregate of at least one hundred thousand (100,000) shares
of Registrable Securities (as presently constituted):
(a) as soon as practicable, but in any event within one
hundred twenty (120) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of shareholder's equity as of the end of such year, and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited by independent public accountants of nationally recognized
standing selected by the Company;
(b) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited profit or loss statement, unaudited statement
of cash flows for such fiscal quarter and an unaudited balance sheet as of the
end of such fiscal quarter;
(c) within forty-five (45) days of the end of each quarter, an
unaudited quarterly income statement and statement of cash flows and balance
sheet for and as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and business plan for the next
fiscal year, prepared on a monthly basis, including balance sheets, sources and
applications of funds statements for such months, projected backlog schedule and
updates of significant contracts and/or accounts and, as soon as prepared, any
other budgets or revised budgets prepared by the Company;
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the
Treasurer or other senior officer of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment; and
(f) such other information relating to the financial condition
or business of the Company as the Holder or any assignee of the Holder may from
time to time request; provided, however, that the Company shall not be obligated
under this subsection (f) or any other subsection of Section 2.1 to provide
information which it deems in good faith to be a trade secret or other
confidential information.
2.2 Affirmative Covenants. The Company covenants and agrees as follows:
(a) Maintenance of Key Man Insurance. Maintain term life
insurance on the lives of such executives of the Company in such amounts as the
Board of Directors of the Company shall determine to be in the best interest of
the Company and the Stockholders, in each case for so long as such person
remains an officer or employee of the Company, the proceeds of which are payable
to the Company.
(b) Inspection Rights. Permit during normal business hours,
upon reasonable request and notice, each of the Holders or any employees, agents
or representatives thereof, at the Holder's expense, to examine and make copies
of and extracts from the records and books of account of, and visit and inspect
the properties, assets, operations and business of the Company, and to discuss
the affairs, finances and accounts of the Company with those officers,
consultants, directors, key employees, attorneys or independent accountants
selected by the Company; provided, however, that any Holder, employee, agent or
representative, as the case may be, agrees in writing to hold all information
confidential.
(c) Budgets Approval. As soon as practicable after submission
of the business plan and budget required by 2.1(d) and obtain in respect thereof
the approval of the members of the Board of Directors.
(d) Financing. Promptly, fully and in detail, inform the Board
of Directors of any discussions, offers or contracts relating to possible
financing of any material nature for the Company, whether initiated by the
Company or any other person.
(e) New Developments. Cause all technological developments,
patentable or unpatentable inventions, discoveries or improvements by the
Company's employees or consultants to be documented in accordance with industry
practice and, where possible and appropriate, to file and prosecute United
States and foreign patent, copyright, trademark, mask work or other intellectual
property right applications relating to and protecting the Company's inventions,
discoveries or developments on behalf of the Company.
(f) Meetings of Directors, Committees and Observer Rights. The
Company shall hold meetings of the Company's Board of Directors not less than
every three (3) months. At all times hereafter up to the time of effectiveness
of the Company's Qualified Public Offering, each Significant Holder at its own
expense shall have the right to have one representative attend all such meetings
of the Board of Directors in a nonvoting observer capacity and to receive notice
of such meetings; provided, however, the Company may require as a condition
precedent to the exercise of any Holder's rights under this Section 2.2(f) that
each person proposing to attend any meeting of the Board of Directors and having
access to any of the information provided by the Company to the Board of
Directors shall agree to hold in confidence and trust and to act in a fiduciary
manner with respect to all information so received during such meetings or
otherwise; and, provided further, that the Company reserves the right not to
provide information and to exclude such Significant Holder (and its
representative) from any meeting or portion thereof if (i) delivery of such
information to, or attendance at such meeting by, such Significant Holder (or
its representative) would result in disclosure of trade secrets to such Holder
(or its representative); (ii) in the opinion of the majority of the Board of
Directors such attendance and/or delivery of such information would be contrary
to the best interests of the Company; (iii) such attendance and/or delivery of
such information would adversely affect the attorney-client privilege between
the Company and its counsel; or (iv) if such Significant Holder (or its
representative) is a competitor of the Company, as determined by the Board of
Directors of the Company. "Significant Holder" shall mean each of Information
Associates, L.P., Information Associates, C.V., Vulcan Ventures, Inc., Internet
Capital Group, L.L.C., Technology Leaders, II, L.P., Technology Leaders II
Offshore C.V., RAF Ventures VIII, L.P., and Safeguard 98 Capital, L.P.
(g) Agreements of Officers and Employees. As determined by the
Board of Directors, cause each employee of the Company now or hereafter employed
and all consultants of the Company involved in the design, review, evaluation or
development of products or intellectual property rights to execute and deliver a
Nondisclosure Agreement as approved by the Board of Directors of the Company
except that no employees other than the management shall be required to agree to
any restriction on competing with the Company after termination of their
employment unless specifically determined by the Board of Directors or the Chief
Executive Officer or President of the Company.
(h) By-laws; Meetings and Indemnification. The Company shall
use its best efforts at all times while any Preferred Stock remain outstanding
to cause its Bylaws to provide that, (A) unless otherwise required by the laws
of the state of its incorporation, (i) any three (3) directors or (ii) any
holder or holders of at least 25% of all of the then outstanding shares of
Preferred Stock of the Company, voting as a separate class, shall have the right
to call a meeting of the Stockholders, and (B) a quorum for a meeting of the
Board of Directors or any committee thereof of which a Preferred Director is a
member shall require the attendance of at least one director elected by the
holders of Preferred Stock in accordance with terms of the Second Amended and
Restated Stockholders' Agreement dated as of this date (a "Preferred Director"),
except that if any properly called Board of Directors meeting is adjourned for
lack of a Preferred Director, and such meeting is reconvened with proper notice
as required for a new special meeting, a quorum at the reconvened meeting shall
require a simple majority of the directors then holding office. The Company
shall at all times maintain provisions in its By-laws or Certificate of
Incorporation indemnifying all directors against liability and exculpating all
directors from liability to the maximum extent permitted under the laws of the
state of its incorporation.
(i) Corporate Existence. Maintain its corporate existence,
intellectual property rights, other rights and franchises in full force and
effect to the extent appropriate in accordance with good business practice.
(j) Properties. Business. Insurance. Maintain as to its
respective properties and business, with financially sound and reputable
insurers, insurance against such casualties and contingencies and of such types
and in such amounts as is customary for companies of a similar size and
financial condition similarly situated within the same industry.
(k) Expenses of Directors. Promptly reimburse in full each
non-management director of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors of the
Company or any committee thereof.
(1) Compliance with Laws. Comply with all applicable laws,
rules, regulations and orders, noncompliance with which could materially
adversely affect its business, assets, intellectual property rights, operations
or condition, financial or otherwise.
(m) Keeping of Records and Books of Account. Keep adequate
records and books of account, in which complete entries will be made in
accordance with generally accepted accounting principles consistently applied,
reflecting all financial transactions of the Company, and in which, for each
fiscal year, all proper reserves for depreciation, depletion, obsolescence,
amortization, taxes, bad debts and other purposes in connection with its
business shall be made.
(n) Rule 144A Information. At all times during which the
Company is not subject to the reporting requirements of Section 13 or 15(d) of
the Exchange Act, it will provide as promptly as practicable (in any event not
later than twenty (20) days after initial request) in written form, upon the
written request of any Holder or a prospective buyer of shares of the Company
from any Holder, all information required by Rule 144A(d)(4)(i) of the General
Regulations promulgated by the Commission under the Securities Act ("Rule 144A
Information"). The Company further covenants, upon written request, as promptly
as practicable (in any event not later than twenty (20) days after initial
request), but only to the extent necessary and customary in connection with the
resale through the National Association of Securities Dealers, Inc. system for
Private Offerings Resales and Trading through Automated Linkage ("PORTAL") of
securities of a nature similar to the shares of the Company and which have been
issued under circumstances similar to the issuance of the shares of the Company,
to cooperate with and assist any Holder or any member of PORTAL in applying to
designate and thereafter maintain the eligibility of such shares for trading
through PORTAL. The Company's obligations under this Section 2.2(n) shall at all
times be contingent upon the relevant Holder's obtaining from a prospective
purchaser an agreement to take all reasonable precautions to safeguard the Rule
144A Information from disclosure to anyone other than a person who will assist
such purchaser in evaluating the purchase of the shares of the Company.
2.3 Negative Covenants of the Company. The Company covenants and agrees
that it will not without the consent or waiver of (i) the holders of at least 66
2/3% of the outstanding shares of the Preferred Stock, or (ii) two of the
Preferred Directors:
(a) Dealings with Affiliates. Enter into any transaction,
including, without limitation, any loans or extensions of credit or royalty
agreements with any employee, consultant, officer or director of the Company or
holder of five percent (5%) of any class of capital stock of the Company, or any
member of their respective immediate families or any corporation or other entity
directly or indirectly controlled by one or more of such employees, consultants,
officers, directors or 5% stockholders or members of their immediate families,
(i) on terms less favorable to the Company than it would obtain in a transaction
between unrelated parties or (ii) except in the case of any transaction or
series of transactions entered into in the ordinary course of business and
involving less than $5,000 in the aggregate, without the approval of the Board
of Directors (excluding any interested director);
(b) Transfer of Technology. Transfer, sell dispose of, assign,
license, or donate any ownership or interest in, or material rights relating to,
any of its technology, or other Intellectual Property Rights to any person or
entity which is not a member of the "consolidated group" of the Company and its
Subsidiaries; provided, however, that this Section shall not apply to transfers
or licenses of technology or Intellectual Property Rights accomplished in the
ordinary course of business as presently conducted or proposed to be conducted.
For purposes of this Agreement, "Intellectual Property Rights"
means any and all, whether domestic or foreign, patents, patent applications,
patent right, trade secrets, confidential business information, formula,
processes, laboratory notebooks, algorithms, copyrights, mask works, claims of
infringement against third parties, licenses, permits, license rights, contract
rights with employees, consultants and third parties, trademarks, trademark
rights, inventions and discoveries, and other such rights generally classified
as intangible, intellectual property assets in accordance with GAAP.
For purposes of this Agreement, "Subsidiary" or "Subsidiary"
means any entity of which the Company and/or any of its other Subsidiaries (as
herein defined) directly or indirectly owns at the time of determination at
least fifty percent (50%) of the outstanding voting shares of every class of
such corporation or trust other than directors' qualifying shares.
(c) Restriction on Indebtedness. Incur, create, or assume any
Indebtedness other than the following:
(i) Indebtedness existing on the date hereof
(including the maximum borrowing capacity under the existing indebtedness to
Progress Bank) and renewals, replacements and refinancing thereof that do not
increase the aggregate amount of Indebtedness of the Company and its
Subsidiaries taken as a whole; and Indebtedness contemplated by the Business
Plan or in a budget or projection approved by a majority of the Board of
Directors, including at least one Preferred Director;
(ii) Indebtedness of a Subsidiary owing to the
Company or to another Subsidiary.
For purposes of this Agreement, "Indebtedness" means (i) any liability
for borrowed money or evidenced by a note or similar obligation given in
connection with the acquisition of any property or other assets (other than
trade accounts payable incurred in the ordinary course of business); (ii) all
guaranties, endorsements and other contingent obligations, in respect of
Indebtedness of others, whether or not the same are or should be reflected in
the Company's balance sheet (or the notes thereto), except guaranties by
endorsement of negotiable instruments for deposit or collection or similar
transactions in the ordinary course of business, and (iii) the present value of
any lease payments due under leases required to be capitalized in accordance
with applicable Statements of Financial Accounting Standards, determined by
discounting all such payments at the interest rate determined in accordance with
applicable Statements of Financial Accounting Standards.
(d) Conduct of Business. Engage in any business other than the
business engaged in by the Company and its Subsidiaries on the date hereof and
any businesses or activities substantially similar or related thereto other than
as contemplated by any business plan approved by the Board of Directors.
(e) Investments in Other Corporations or Entities. Make any
loan or advance to any person or entity, or purchase or otherwise acquire, the
capital stock, assets comprising the business of, obligations of, or any
interest in, any other corporation or entity which will not be operated as a
wholly-owned Subsidiary, except as set forth in any business plan approved by
the Board of Directors and except:
(i) investments by the Company or a Subsidiary in
evidences of indebtedness issued or fully guaranteed by the United States of
America and having a maturity of not more than one year from the date of
acquisition;
(ii) investments by the Company or a Subsidiary in
certificates of deposit, notes, acceptances and repurchase agreements having a
maturity of not more than one year from the date of acquisition issued by
Progress Bank and any other bank organized in the United States having capital,
surplus and undivided profits of at least $50,000,000;
(iii) investments by the Company or a Subsidiary in
the highest-rated commercial paper having a maturity of not more than one year
from the date of acquisition;
(iv) investments by the Company or a Subsidiary in
"Money Market" fund shares, or in money market accounts fully insured by the
Federal Deposit Insurance Corporation and sponsored by banks and other financial
institutions, provided that the investments consist principally of the types of
investments described in clauses (i), (ii) or (iii) of this subsection (e); or
(v) loans or advances from a Subsidiary to the
Company or from the Company to a Subsidiary.
2.4 Termination of Covenants. The covenants set forth in
Section 2.1, Section 2.2, and Section 2.3 hereof shall terminate and be of no
further force or effect following a Qualified Public Offering or when the
Company first becomes subject to the periodic reporting requirements of Sections
12(g) or 15(d) of the 1934 Act, whichever event shall first occur.
3. Miscellaneous.
3.1 Prior Agreements. This Agreement amends and restates the
Amended and Restated Investors' Rights Agreement and constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof and supersedes all prior or contemporaneous oral or written agreements
with respect thereto. Without limiting the generality of the foregoing, the
obligations of the Company and Digital Evolution, Inc. set forth in the
agreements listed on Schedule 3.1 hereto are hereby terminated and are not
binding upon the Company.
3.2 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities as set forth in
Section 1.13). Nothing in this Agreement, express or implied, is intended to
confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
3.3 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Incorporation of the Company as of the
date of determination, without reference to conflict of laws principles.
3.4 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.5 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.6 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed to
have been given (a) if mailed with the United States Postal Service by prepaid,
first class, certified mail, return receipt requested, at the time of receipt by
the intended recipient, (b) if sent by facsimile transmission, when so sent and
receipt acknowledged by telephone or facsimile verification or (c) one day after
being deposited with an overnight courier, charges prepaid, at the address
indicated for such party on the records of the Company, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
3.7 Expenses. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs, and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.8 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only if evidenced by the written consent of the Company and a
written instrument executed by duly authorized representatives of the parties
hereto or their assigns holding not less than fifty percent (50 %) of the
Registrable Securities then outstanding (voting together as a single class). In
the event any proposed amendment or waiver of any term or provision to this
Agreement would not adversely effect the rights and obligations of all Holders
of Registrable Securities on an equal basis, then such amendment or waiver may
only be effected with the written consent executed by duly authorized
representatives of the parties hereto or their assigns holding not less than
fifty percent (50%) of (i) each series of Preferred Stock that is to be
adversely effected by such amendment or waiver and (ii) the Common Stock. Each
Holder acknowledges and agrees that any amendment or waiver effected in
accordance with this Section 3.8 shall be binding upon all holders of any
Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company, whether or not such holder in fact
consented to such amendment or waiver.
3.9 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.10 Entire Agreement: Amendment: Waiver. This Agreement
constitutes the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
3.11 (a) The term "Holder" (as such term is defined herein)
shall be deemed to include Progress Capital, Inc. ("Progress") and the term
"Registrable Investors' Securities" (as such term is defined herein) shall be
deemed to include shares of Common Stock in the Company held by Progress, in
each case from and after (i) the date of any exercise (the "Exercise") by
Progress of a warrant or warrants to purchase Common Stock of the Company, with
respect to the shares of Common Stock so purchased; and (ii) compliance by
Progress upon the first such Exercise with the terms and conditions set forth in
Subparagraph (b) below.
(b) To evidence Progress' joinder in and agreement to
be bound by all of the terms and conditions of this Agreement, Progress shall
execute a Joinder in the following form:
"Joinder" - The undersigned in its capacity as a Holder of
Registrable Investors' Securities hereby joins in and agrees to be bound by all
of the terms and conditions of that certain Second Amended and Restated
Investors' Rights Agreement as same may be amended from time to time, with
respect to any and all shares of Common Stock of the Company in which the
undersigned now or may ever have any interest.
IN WITNESS WHEREOF, the parties hereto have executed this Second
Amended and Restated Investors' Rights Agreement as of the day and year first
above written.
U.S. INTERACTIVE, INC.
By:
Xxxxxxx Xxxxxxxxx, President
Xxxx Xxxxxx
Xxxxxxxxx MegaSOFT, a California
general partnership
By:
Name:
Title:
Xxxx Xxxxxxx
Vulcan Ventures, Inc.
By:
Name:
Title:
Information Associates, L.P.
By: Trident Capital Management, LLC.
By:
Name:
Title:
Information Associates, C.V.
By: Trident Capital Management, LLC.
By:
Name:
Title:
Xxxxx Xxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxxx, as Custodian for Connor Xxxxxxxxx under
the New Jersey Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxxx, as Custodian for Xxxxxxxx Xxxxxxxxx under
the New Jersey Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxxxx, as Custodian for Xxxxxxxxxxx Xxxxxxxx
under the Pennsylvania Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxx, as Custodian for Xxxxxxx Xxxxxxxx under
the Pennsylvania Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxx, as Custodian for Xxxxxxx Xxxxxxxx under
the Pennsylvania Uniform Transfers to Minors Act
Xxxxxxx Xxxxxx
Xxxxxx and Xxxxx Xxxx
Xxxxxx Xxxx, as Custodian for Xxxxxxx Xxxx under the
Pennsylvania Uniform Transfers to Minors Act
Xxxxxx Xxxx, as Custodian for Xxxxx Xxxx under the
Pennsylvania Uniform Transfers to Minors Act
Xxxxxx Xxxx
Xxxxxx Xxxx, as Custodian for Xxxxx Xxxx under the New York
Uniform Transfers to Minors Act
Xxxxxx Xxxx, as Custodian for Xxxxxx Xxxx under the New York
Uniform Transfers to Minors Act
Internet Capital Group, L.L.C.
By:
Name:
Title:
Technology Leaders II, L.P.
By: Technology Leaders II Management L.P.,
Its general Partner
By: Technology Leaders Management, Inc.,
a General Partner
By:
Managing Director
Technology Leaders II Offshore C.V.
By: Technology Leaders II Management L.P.,
Its General Partner
By: Technology Leaders Management, Inc.,
a General Partner
By:
Managing Director
RAF Ventures VIII, L.P.
By: RAF Ventures, Inc., General Partner
By:
Name:
Title:
TL Ventures Third Corp.
By:
Name:
Title:
Xxxxxxxxx 00 Xxxxxxx, X.X.
By:
Name:
Title:
Xxxxxxx Xxxxxxxxx, Voting Trustee Under Voting Trust dated
September 21, 1998
Xxxxx Xxxxx, Voting Trustee Under Voting Trust dated
September 21, 1998
Xxxxxx Xxxx, Voting Trustee Under Voting Trust dated
September 21, 1998
Xxxxxxx Xxxxxxxx, Voting Trustee Under Voting Trust (Xxxx
Xxxxxx Trust) dated September 21, 1998
Xxxxxxx Xxxxxx, Voting Trustee Under Voting Trust dated
September 21, 1998
Deloitte & Touche USA LLP
By:
Name:
Title: General Partner
Xxxxxxxx Interests LLC
By:
Name:
Title:
Xxxxxxxx Bridge Fund, L.P.
By:
Name:
Title:
SCHEDULE A
DE INVESTORS
------------
Xxxxxxxxx MegaSOFT, Inc., a California general partnership
Vulcan Ventures, Inc.
Information Associates, L.P.
Information Associates, C.V.
SCHEDULE B
MANAGEMENT STOCKHOLDERS
-----------------------
Xxxx Xxxxxx
Xxxxx Xxxxx
Xxxxxxx Xxxxxxxxx
Xxxxxxx Xxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxx and Xxxxx Xxxx
Xxxxxx Xxxx
Xxxx Xxxxxxx
Xxxxxxx Xxxxxxxxx, as Custodian for Connor Xxxxxxxxx under the New Jersey
Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxxx, as Custodian for Xxxxxxxx Xxxxxxxxx under the New Jersey
Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxx, as Custodian for Xxxxxxxxxxx Xxxxxxxx under the
Pennsylvania Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxx, as Custodian for Xxxxxxx Xxxxxxxx under the Pennsylvania
Uniform Transfers to Minors Act
Xxxxxxx Xxxxxxxx, as Custodian for Xxxxxxx Xxxxxxxx under the Pennsylvania
Uniform Transfers to Minors Act
Xxxxxx Xxxx, as Custodian for Xxxxxxx Xxxx under the Pennsylvania Uniform
Transfers to Minors Act
Xxxxxx Xxxx as Custodian for Xxxxx Xxxx, under the Pennsylvania Uniform
Transfers to Minors Act
Xxxxxx Xxxx, as Custodian for Xxxxx Xxxx under the New York Uniform
Transfers to Minors Act
Xxxxxx Xxxx, as Custodian for Xxxxxx Xxxx under the New York Uniform Transfers
to Minors Act
Xxxxxxx Xxxxxxxxx, Voting Trustee Under Voting Trust Dated September 21, 1998
Xxxxx Xxxxx, Voting Trustee Under Voting Trust Dated September 21, 1998
Xxxxxx Xxxx, Voting Trustee Under Voting Trust Dated September 21, 1998
Xxxxxxx Xxxxxx, Voting Trustee Under Voting Trust Dated September 21, 1998
Xxxxxxx Xxxxxxxx, Voting Trustee Under Voting Trust (Xxxx Xxxxxx Trust) Dated
September 21, 1998
SCHEDULE C
USI INVESTORS
-------------
Internet Capital Group, LLC
Technology Leaders II, L.P.
Technology Leaders II Offshore, C.V.
TL Ventures Third Corp.
RAF Ventures VIII, L.P.
Safeguard 98 Capital, L.P.
SCHEDULE D
INVENGEN INVESTORS
------------------
1 Deloitte & Touche USA LLP
2 Xxxxxxxx Interests LLC
3 Xxxxxxxx Bridge Fund, L.P.
SCHEDULE 3.1
TERMINATED AGREEMENTS
---------------------
The Following Agreements, as amended:
A. Series A Preferred Stock Purchase Agreement, dated November 8, 1996, by and
among Digital Evolution, Inc., Xxxx Xxxxxx, Xxxxxxxxx MegaSOFT, Inc., Xxxx X.
Xxxxxxx, Information Associates, L.P., Information Associates, C.V., and Vulcan
Ventures, Inc.;
B. Co-Sale Agreement, dated November 14, 1996, by and among Digital Evolution,
Inc., Xxxx Xxxxxx, Xxxxxxxxx MegaSOFT, Inc., Xxxx X. Xxxxxxx, Information
Associates, L.P., Information Associates, C.V. and Vulcan Ventures, Inc.;
C. "Amended and Restated Investors' Rights Agreement", dated November 14, 1996,
by and among Digital Evolution, Inc., Xxxx Xxxxxx, Xxxxxxxxx MegaSOFT, Inc.,
Xxxx X. Xxxxxxx, Information Associates, L.P., Information Associates, C.V., and
Vulcan Ventures, Inc.;
D. Shareholders' Agreement, dated November 14, 1996, by and among Digital
Evolution, Inc., Xxxx Xxxxxx, Xxxxxxxxx MegaSOFT, Inc., Xxxx X. Xxxxxxx,
Information Associates, L.P., Information Associates, C.V. and Vulcan Ventures,
Inc.;
E. Letter of Agreement, dated January 10, 1997, by and among Digital Evolution,
Inc., Information Associates, L.P., Information Associates, C.V. and Vulcan
Ventures, Inc.;
F. Shareholders Agreement, dated July 25, 1996, by and among U.S. Interactive,
Inc., Xxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx, Xxxxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxxx and Xxxxx Xxxx, Xxxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxx;
G. Series A Preferred Stock Purchase Agreement, dated June 28, 1996, by and
among U.S. Interactive, Inc., Internet Capital Group, LLC, Technology Leaders
II, L.P., Technology Leaders II, Offshore C.V. and TL Ventures;
H. Voting, Stock Restriction and Co-Sale Agreement, dated June 28, 1996, by and
among U.S Interactive, Inc., Xxxxx Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxxxxx Xxxxxxxx,
Xxxxxxx Xxxxxx and Xxxxxx Xxxx; and
I. Series B Preferred Stock Purchase Agreement and Amendment, dated July 3, 1997
and November 10, 1997, respectively, by and among U.S. Interactive, Inc.,
Internet Capital Group, LLC, Technology Leaders II, L.P., and Technology Leaders
II, and Offshore C.V.
