EXHIBIT 10.15
eMachines, Inc.
RIGHTS AND RESTRICTIONS AGREEMENT
This RIGHTS AND RESTRICTIONS AGREEMENT (the "Agreement") is entered into as
of January 14, 2000, by and among eMachines, Inc., a Delaware corporation (the
"Company"), the holders of shares of Common Stock of the Company ("Common
Stock") identified as such on Schedule A attached hereto (the "Common Stock
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Holders"), the holders of shares of Series B Preferred Stock of the Company
("Series B Preferred") identified as such on Schedule A attached hereto (the
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"Series B Holders"), the holders of shares of Series C Preferred Stock of the
Company ("Series C Preferred") identified as such on Schedule A attached hereto
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(the "Series C Holders") and the holders of warrants representing the right to
purchase shares of Common Stock (the "Warrants") identified as such on Schedule
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A attached hereto (the "Warrant Holders"). The Series B Holders, the Series C
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Holders, the Common Holders and the Warrant Holders are acquiring, respectively
their shares of Series B Preferred, Series C Preferred, Common Stock and
Warrants contemporaneously herewith, or at a later date, in each case pursuant
to an Agreement and Plan of Reorganization by and among the Company, eMachines
Acquisition Corp. ("Merger Sub.") and FreePC, Inc. ("FreePC") dated as of
November 24, 1999 (the "Plan of Reorganization").
R E C I T A L S
A. The Company was incorporated on September 18, 1998 as a corporation
under the laws of the State of Delaware, United States of America. The Company,
FreePC and Merger Sub entered into the Plan of Reorganization providing for (a)
the merger (the "Merger") of Merger Sub into FreePC, with FreePC being the
surviving corporation and (b) upon the effective time (the "Effective Time") of
the Merger, the conversion of all the outstanding shares of FreePC (i) common
stock into Common Stock and Warrants, (ii) series A preferred stock into Series
B Preferred and Warrants and (iii) series B preferred stock into Series C
Preferred and Warrants.
B. Each of the Holders (as defined below) that shall enter into this
Agreement owns that number of outstanding shares of Common Stock, Series B
Preferred, or Series C Preferred (collectively, the "Equity Securities") and
that number of Warrants, in each case as is set forth opposite his, her, or its
name on Schedule A hereto.
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C. Each of the Holders acknowledges and agrees that (i) as a condition to
the Merger and the conversion of their shares of capital stock of FreePC into
Equity Securities and Warrants they are subject to certain restrictions as
enumerated herein, and (ii) their rights enumerated herein are junior and
subordinate (except as explicitly set forth herein) to the prior rights of the
Investors, Founders and Additional Rightsholders (as such terms are defined in
the Amended and Restated Rights and Restrictions Agreement (the "Amended and
Restated Rights Agreement") dated as of
August 18, 1999 by and among the Company, the Investors, the Founders and the
Additional Rightsholders, as such agreement may be amended, from time to time,
in accordance with its terms).
NOW, THEREFORE IT IS AGREED:
1. Definitions
1.1 Certain Definitions. As used in this Agreement, the following terms
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shall have the following meanings (such meanings to be equally applicable to
both singular and plural forms of the terms defined herein):
"Additional Rightsholders" has the meaning set forth in the recital of
parties set forth in the Amended and Restated Rights Agreement.
"Change in Control" shall mean the occurrence of (i) the sale of all or
substantially all the assets of the Company; or (ii) consummation of any
acquisition, consolidation or merger of the Company other than an acquisition,
consolidation or merger of the Company in which the holders of Common Stock
immediately prior to the acquisition, consolidation or merger have, directly or
indirectly, at least a majority of the total voting power in the aggregate of
all classes of capital stock of the continuing or surviving corporation
immediately after the acquisition, consolidation or merger.
"Commission" shall mean the Securities and Exchange Commission of the
United States or any other federal agency at the time administering the
Securities Act.
"Exchange Act" has the meaning set forth in Section 10(b) of this
Agreement.
"Excluded Registration Statement" shall mean a registration statement
relating to a Rule 145 transaction, an offering solely to employees or a
registration on any form which does not permit secondary sales or does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities.
"Founders" has the meaning set forth in the recital of parties set forth in
the Amended and Restated Rights Agreement.
"Founder Registrable Securities" has the meaning set forth in Section 1.3
of the Amended and Restated Rights Agreement.
"First Refusal Notice" has the meaning set forth in Section 13.1 of this
Agreement.
"First Refusal Price" has the meaning set forth in Section 13.2 of this
Agreement.
"Holders" means, collectively, the Common Stock Holders, Series B Holders,
Series C Holders, Warrant Holders and any person holding Common Stock, Series B
Preferred, Series C Preferred or Warrants to whom the rights of the Common Stock
Holders, Series B Holders, Series C
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Holders or Warrant Holders, respectively, under this Agreement have been
transferred in compliance herewith.
"Holder Registrable Securities" means (i) any shares of Common Stock owned
of record by any Holder on the date of signature of this Agreement by such
Holder, (ii) any shares of Common Stock issued upon exercise or conversion (or
consecutive exercises or conversions) of any other Equity Securities or Warrants
owned of record by any such Holder on the date of signature of this Agreement by
such Holder, (iii) any shares of Common Stock issued in respect of such
securities (or in respect of any Shares of Common Stock issued upon single or
multiple exercise or conversion of such securities) upon any stock split, stock
dividend, recapitalization, or similar event, and (iv) any other Shares of
Common Stock held by persons to whom the rights of the Holders under this
Agreement have been transferred in accordance herewith and who hold securities
described in clauses (i), (ii) and (iii) of this paragraph; provided, however,
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that Holder Registrable Securities shall not include (A) securities that have
been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, (B) securities that have been
sold or made available for sale in the opinion of counsel to the Company in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are or shall be removed upon the consummation of such sale,
or (C) any securities if such securities constitute all of the securities of a
Holder or its affiliate and all such securities may be sold by the Holder
thereof (or by such affiliate) within a three month period following the
Company's initial public offering pursuant to Rule 144 promulgated under the
Securities Act, or any successor rule. Without limiting the generality of the
foregoing, no Warrant shall constitute Holder Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 8.3 of this
Agreement.
"Indemnifying Party" has the meaning set forth in Section 8.3 of this
Agreement.
"Initiating Holders" shall mean any Holder or Holders (other than Common
Stock Holders, Warrant Holders or transferees of the rights of either in
accordance herewith) of not less than fifty percent (50%) of the then
outstanding Holder Registrable Securities.
"Investors" has the meaning set forth in the recital of parties set forth
in the Amended and Restated Rights Agreement.
"Investor Registrable Securities" has the meaning set forth in Section 1.3
of the Amended and Restated Rights Agreement.
"IPO" shall mean the declaration of the Commission of the effectiveness of
a registration statement filed by the Company in connection with a firmly
underwritten public offering with an aggregate price to the public exceeding
$30,000,000.
"Other Shareholders" has the meaning set forth in Section 3.2 of this
Agreement.
"Proposed Transferee" has the meaning set forth in Section 13.1 of this
Agreement.
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"Registrable Securities" shall mean, collectively, the Investor Registrable
Securities, the Rightsholder Registrable Securities, the Founder Registrable
Securities and the Holder Registrable Securities.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Sections 3 and 4 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and Selling Expenses).
"Restricted Securities" shall mean the securities of the Company required
to bear the legend set forth in Section 2 hereof.
"Right of First Refusal" has the meaning set forth in Section 13 of this
Agreement.
"Rightsholder Registrable Securities" has the meaning set forth in Section
1.3 of the Amended and Restated Rights Agreement.
"Securities" has the meaning set forth in Section 2.1 of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders in accordance herewith and all reasonable fees and disbursements of
counsel for any Holder.
"Shareholders" has the meaning set forth in Section 3.1(a) of this
Agreement.
"Small Holder" has the meaning set forth in Section 12 of this Agreement.
Certain other defined terms used herein have the meanings set forth in the
recitals and the recital of parties to this Agreement.
2. Restrictions on Transferability; Restrictive Legend; Notice of Proposed
Transfers.
2.1 No Equity Securities, Warrants, shares of Common Stock issuable upon
conversion or exercise of the Warrants, or other warrants, options or other
rights with respect to Equity Securities (collectively, the "Securities") shall
be sold, assigned, transferred or pledged
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except upon satisfaction of the conditions specified in this Agreement, which
conditions are intended to ensure compliance with the provisions of the
Securities Act. Each Holder will cause any proposed purchaser, assignee,
transferee, or pledgee of any Securities held by such Holder to agree to take
and hold such Securities subject to the provisions and upon the conditions
specified in this Agreement.
2.2 Each certificate representing (i) the Securities and (ii) any other
securities issued in respect of the Securities upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event shall (unless
otherwise permitted by the provisions of Section 2.3 below) be stamped or
otherwise imprinted with the following legend (in addition to any legend
required by any other agreement or under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "ACT") OR ANY STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE
SOLD OR OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN OPINION
OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED UNDER THE ACT. COPIES OF THE AGREEMENTS
COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE
OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE PRINCIPAL EXECUTIVE
OFFICE OF THE CORPORATION.
Each Holder consents to the Company making a notation on its records and
giving instructions to any transfer agent of the Securities in order to
implement the restrictions on transfer established in this Agreement.
2.3 The holder of each certificate representing Securities by acceptance
thereof agrees to comply in all respects with the provisions of this Agreement,
including, without limitation, Section 13 hereof. Prior to any proposed sale,
assignment, transfer or pledge of any Securities (other than a transfer not
involving a change in beneficial ownership or occurring after the IPO or the
dissolution of the Company), the holder thereof shall give written notice to the
Company of such holder's intention to effect such transfer, sale, assignment or
pledge. Each such notice shall describe the manner and circumstances of the
proposed transfer, sale, assignment or pledge in sufficient detail, including
the information required by Section 13.1 to the extent the provisions of Section
13 are still in effect, and shall be accompanied, at such holder's expense by
either (i) an unqualified written opinion of legal counsel who shall, and whose
legal opinion shall be, reasonably satisfactory to the Company addressed to the
Company, to the effect that the proposed transfer of the Restricted Securities
may be effected without registration under the Securities Act, or (ii) a "no
action" letter from the Commission to the effect that the transfer of such
securities without registration will not result in a recommendation by the staff
of the Commission that action be taken with respect thereto, whereupon the
holder of such Restricted Securities shall be entitled to transfer such
Restricted Securities in accordance with the terms of this Agreement and of the
notice delivered by the holder
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to the Company. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144 under the Securities Act or pursuant to an effective
registration statement, the appropriate restrictive legend set forth in Section
2.2 above, except that such certificate shall not bear such restrictive legend
if in the opinion of counsel for such holder that is acceptable to the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act.
3. Requested Registration.
3.1 Notice of Registration; Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance (other than a registration on Form S-3
or any successor form) that would result in an aggregate offering of at least
$15,000,000, the Company will:
(a) promptly give written notice of the proposed registration to all
other Holders (other than Warrant Holders) the Investors, the Founders and the
Additional Rightsholders (collectively, the "Shareholders"); and
(b) subject to Section 3.3, use its reasonable efforts to effect, as
soon as practicable, such registration, qualification or compliance (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Registrable
Securities as are specified in such request, together with (i) all or such
portion of the Registrable Securities of any Shareholder joining in such request
as are specified in a written request given within ten (10) business days after
receipt of such written notice from the Company, and (ii) such additional
securities as the Company may desire to register, including, but not limited to,
securities of the Company which are held by officers or directors of the Company
or which are held by persons who, by virtue of agreements with the Company, are
entitled to include their securities in any such registration; provided that the
Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 3:
(i) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration, qualification or compliance or subject the Company to taxation in
such jurisdiction unless the Company is already subject to service in such
jurisdiction or taxation in such jurisdiction, respectively, and except as may
be required by the Securities Act;
(ii) After the Company has effected one (1) registration
pursuant to this Section 3 and such registration has been declared or ordered
effective;
(iii) After the Company has effected one (1) registration
pursuant to Section 5 of the Amended and Restated Rights Agreement, if the
Holders have been afforded the
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opportunity to register their Registrable Securities pursuant to the terms
thereof and such registration has been declared or ordered effective;
(iv) If at the time of the request to register Registrable Securities
the Company gives notice within thirty (30) days of such request that it is
engaged or has fixed plans to engage within thirty (30) days of the time of the
request in a firmly underwritten registered public offering as to which the
Holders (other than Warrant Holders) may include Registrable Securities pursuant
to Section 4 or 5 hereof or Section 5 of the Amended and Restated Rights
Agreement; or
(v) Prior to twelve (12) months following the closing of the IPO.
Subject to the foregoing clauses (i) through (v) and to Section 3.3, the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable after receipt of the
request of the Initiating Holders.
3.2 Underwriting. If the Initiating Holders intend to distribute the
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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
Section 3 and the Company shall include such information in the written notice
referred to in Section 3.1. The right of any Shareholder to registration
pursuant to Section 3 shall be conditioned upon such Shareholder's participation
in such underwriting and the inclusion of such Shareholder's Registrable
Securities in the underwriting to the extent requested (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Shareholder) to the extent provided herein. If officers or directors of the
Company shall request inclusion of securities of the Company other than
Registrable Securities in any registration pursuant to Section 3.1, or if
holders of securities of the Company who are entitled by contract with the
Company (other than this Agreement or the Amended and Restated Rights Agreement)
to have securities included in such a registration (such officers, directors,
and other shareholders being collectively referred to as the "Other
Shareholders") request such inclusion, such securities of the Other Shareholders
may be included in the underwriting, provided that such Other Shareholders
accept the further applicable provisions of this Agreement.
The Company shall (together with all Shareholders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders and consented
to by the Company, which consent shall not be unreasonably denied.
Notwithstanding any other provision of this Section 3, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten and so advises the Initiating Holders in writing, then the
Company shall so advise all Shareholders and Other Shareholders who have
indicated to the Company their decision to distribute any of their Registrable
Securities through such underwriting and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Shareholders and Other Shareholders as follows: first, an
equal aggregate number of shares of Registrable Securities of each of the
Investors (as a group), the Founders (as a group) and the Holders (as a group)
other than the Warrant Holders; second, an equal aggregate number of shares of
the Founders (as a group) and whichever of the Investors (as a group) or Holders
(as a group) other than the Warrant Holders holds Registrable
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Securities after application of the immediately preceding clause; third, any
remaining Registrable Securities of the Founders; fourth, among the Additional
Rightsholders (as a group); and fifth, among the Other Shareholders (as a
group). Registrable Securities are to be allocated within each group as
aforesaid in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by the Investors, the Founders, the Additional
Rightsholders, the Holders or the Other Shareholders, as applicable, at the time
of filing the registration statement. To facilitate the allocation of shares in
accordance with the above provisions, the Company may round the number of shares
allocated to any Shareholder or Other Shareholder to the nearest 100 shares. No
Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration.
If any Shareholder disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable
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Securities a greater number of Registrable Securities held by other Shareholders
may be included in such registration (up to the maximum of any limitation
imposed by the underwriters), then the Company shall offer to all Shareholders
who have included Registrable Securities in the registration the right to
include additional Registrable Securities in the same proportions used above in
determining the underwriter limitation.
If the underwriter has not limited the number of Registrable Securities to be
underwritten, the Company may include securities for its own account or the
account of others in such registration if the underwriter so agrees and if the
number of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited.
3.3 Delay of Registration. If the Company shall furnish to the Initiating
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Holders a certificate signed by the President of the Company stating that, in
the good faith judgment of the Board of Directors of the Company, it would not
be in the best interests of the Company and its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore appropriate to defer the filing of such
registration statement, then the Company may direct that such request for
registration be delayed for a period not in excess of one hundred eighty (180)
days, such right to delay a request to be exercised by the Company not more than
once in any twelve month period.
4. Company Registration.
4.1 Notice of Registration. If at any time or from time to time the Company
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shall determine to register any of its Common Stock on Form S-1 or Form S-3 (or
any successor form under the Securities Act) (other than with respect to a shelf
registration statement), for its own account or for the account of the
Investors, Founders or Additional Rightsholders, in connection with the public
offering of such securities solely for cash, the Company will:
(a) promptly give to each Shareholder written notice thereof; and
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(b) include in such registration(and any related qualification under
blue sky laws or other compliance), and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests, made
within ten (10) business days after receipt of such written notice from the
Company, by any Shareholder.
Notwithstanding the foregoing, no registrations of securities by the
Company on an Excluded Registration Statement shall give rise to the rights of
the Shareholders set forth in this Section.
4.2 Underwriting. If the registration of which the Company gives notice is
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for a registered public offering involving an underwriting, the Company shall so
advise the Shareholder as a part of the written notice given pursuant to Section
4.1(a). In such event the right of any Shareholder to registration pursuant to
this Section 4 shall be conditioned upon such Shareholder's participation in
such underwriting and the inclusion of Registrable Securities in the
underwriting to the extent provided herein. All Shareholders proposing to
distribute their securities through such underwriting shall (together with the
Company and the Other Shareholders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 4, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit all or any
portion of the Registrable Securities to be included in such registration. The
Company shall so advise all Shareholders and Other Shareholders distributing
their securities through such underwriting and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated as follows: first, an equal aggregate number of shares of
Registrable Securities of each of the Investors (as a group), the Founders (as a
group) and the Holders (as a group) other than the Warrant Holders; second, an
equal aggregate number of shares of the Founders (as a group) and whichever of
the Investors (as a group) or Holders (as a group) other than the Warrant
Holders holds Registrable Securities after application of the immediately
preceding clause; third, any remaining Registrable Securities of the Founders;
fourth, among the Additional Rightsholders (as a group), and fifth, among the
Other Shareholders (as a group). Registrable Securities are to be allocated
within each group as aforesaid in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by the Shareholders or the
Other Shareholders, as applicable, at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any
Shareholder or Other Shareholder to the nearest 100 shares. If any Shareholder
or Other Shareholder disapproves of the terms of any such underwriting, he or
she may elect to withdraw therefrom by written notice to the Company and the
managing underwriter.
4.3 Right to Terminate Registration. The Company shall have the right to
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terminate or withdraw any registration initiated by it under this Section 4
prior to the effectiveness of such registration whether or not any Shareholder
has elected to include securities in such registration.
4.4 Termination of Rights. The rights to cause the Company to register
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Registrable Securities pursuant to this Section 4 shall terminate three (3)
years after the IPO.
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5. Registration on Form S-3.
5.1 If any Holder or Holders holding in the aggregate not less than 25% of
the then outstanding Registrable Securities request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of Registrable Securities the reasonably anticipated
aggregate price to the public of which, net of underwriting discounts and
commissions, would exceed $2,500,000, and the Company is at the time of such
request a registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, the Company shall use its reasonable efforts to
cause such Registrable Securities to be registered for the offering on such form
and to cause such Registrable Securities to be qualified in such jurisdictions
as the Holder or Holders may reasonably request; provided, however, that the
Company shall not be required to effect more than two such registrations
pursuant to this Section 5 or pursuant to Section 7 of the Amended and Restated
Rights Agreement in any twelve (12) month period or more than a total of three
registrations under this Section 5 or pursuant to Section 7 of the Amended and
Restated Rights Agreement. The substantive provisions of Section 3.2 shall be
applicable to each registration initiated under this Section 5.
5.2 Notwithstanding the foregoing, the Company shall not be obligated to
take any action pursuant to this Section 5: (i) in any particular jurisdiction
in which the Company would be required to execute a general consent to service
of process in effecting such registration, qualification or compliance or
subject the Company to taxation in such jurisdiction unless the Company is
already subject to service in such jurisdiction or taxation in such
jurisdiction, respectively, and except as may be required by the Securities Act;
(ii) if the Company, within ten (10) days of the receipt of the request of the
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement (other than an Excluded Registration Statement) with the
Commission within ninety (90) days of receipt of such request; (iii) during the
period starting with the date sixty (60) days prior to the Company's estimated
date of filing of, and ending on the date six (6) months immediately following,
the effective date of any registration statement pertaining to securities of the
Company (other than an Excluded Registration Statement), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iv) if the Company shall furnish
to such Holder a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for registration statements to be
filed in the near future, then the Company's obligation to use its reasonable
efforts to file a registration statement shall be deferred for a period not to
exceed one hundred twenty (120) days from the receipt of the request to file
such registration by such Holder; provided, however, that such right to delay a
filing may not be exercised by the Company more than once in any twelve month
period.
6. Expenses of Registration.
6.1 All Registration Expenses and Selling Expenses incurred in connection
with a registration pursuant to Section 5 shall be borne pro rata by the Holder
or Holders requesting the registration according to the number of Registrable
Securities included in such registration.
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6.2 All Registration Expenses incurred in connection with all registrations
pursuant to Sections 3 or 4 shall be borne by the Company.
6.3 Except as set forth in the Amended and Restated Rights Agreement, all
Selling Expenses relating to securities registered on behalf of the Shareholders
shall be borne by such participating Shareholders, pro rata on the basis of the
number of shares so registered.
7. Registration Procedures. In the case of each registration, qualification
or compliance effected by the Company pursuant to this Agreement, the Company
will keep each Shareholder advised in writing as to the initiation of each
registration, qualification and compliance and as to the completion thereof. At
its expense the Company will:
(a) Prepare and file with the Commission a registration statement with
respect to such securities and use all reasonable efforts to cause such
registration statement to become and remain effective until the earlier of the
expiration of one hundred eighty (180) days or completion of the distribution
described in the Registration Statement;
(b) Prepare and file with the Commission 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 1933 Act with respect to the disposition of all Registrable
Securities covered by such registration statement
(c) Furnish to the Shareholders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.
8. Indemnification.
8.1 The Company will indemnify each Shareholder, each of its officers and
directors and partners, and each person controlling such Shareholder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such
Shareholder, each of its officers and directors, and each person controlling
such Shareholder, each such underwriter and each person who
-11-
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Shareholder, controlling person or underwriter and stated
to be for use therein.
8.2 Each Shareholder will, if Registrable Securities held by such
Shareholder are included in the securities as to which such registration,
qualification or compliance is being effected (as a condition to such
Shareholder's right to include securities in any such registration,
qualification or compliance), indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Shareholder, each of its officers and directors and each person
controlling such Shareholder within the meaning of Section 15 of the Securities
Act, against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Shareholders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Shareholder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
maximum liability of each Shareholder under this Section 8.2 shall be limited in
an amount equal to the net proceeds received by such Shareholder in such
offering, unless such liability arises out of or is based solely on willful
misconduct by such Shareholder.
8.3 Each party entitled to indemnification under this Section 8 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does
-12-
not include the giving by the claimant or plaintiff to such Indemnified Party of
an unconditional release from all liability in respect to such claim or
litigation.
9. Information by Shareholder. The Shareholders holding Registrable
Securities included in any registration shall, as a condition to such
Shareholder's right to include securities in any such registration, furnish to
the Company such information regarding such Shareholder, the Registrable
Securities held by them and the distribution proposed by such Shareholder as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement. At any
time during the effectiveness of any registration statement covering Registrable
Securities offered by a Shareholder, if such Shareholder becomes aware of any
change materially affecting the accuracy of the information contained in such
registration statement or the prospectus (as then amended or supplemented)
relating to such Shareholder, it shall immediately notify the Company of such
change.
10. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its reasonable efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the date that the Company becomes subject to the reporting requirements of the
Securities Act or the Securities Exchange Act of 1934, as amended (the "Exchange
Act").
(b) Use its reasonable efforts to file with the commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) So long as a Holder owns any Restricted Securities, to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company with the Commission on a non- confidential basis as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration; provided, however, that no such copies shall need to be provided
-------- -------
by the Company if such reports or documents are available from the Commission's
internet XXXXX database.
11. Transfer of Rights. The rights to cause the Company to register
securities granted to the respective Shareholders under Sections 3, 4 and 5 may
be assigned to any affiliate of a Shareholder granted such rights (including
without limitation any former partner in any such Shareholder that is a
partnership or former member in such a Shareholder that is a limited liability
company) or to a transferee or assignee reasonably acceptable to the Company in
connection in each
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case with any transfer or assignment of Registrable Securities by such a
Shareholder (but may not be otherwise assigned or transferred) provided that:
(i) such transfer complies with Section 2 hereof and otherwise with applicable
securities laws; (ii) in the case of an assignment of the rights granted under
Sections 3, 4 and 5 hereof, such assignee or transferee acquires an aggregate of
at least 150,000 Common Shares (as may be appropriately adjusted upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar event)
or shares of other Equity Securities (counted on an as-converted into Common
Stock basis); and (iii) such assignee or transferee becomes a party to this
Agreement and assumes all of the obligations of the transferring Shareholder
hereunder.
12. Standoff Agreement. Each Holder agrees and each Other Shareholder shall
agree (as a condition to such Holder or Other Shareholder's right to include
securities in any registration, qualification or compliance pursuant to this
Agreement), upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the date of the IPO or for such period of time (not to exceed ninety (90) days)
from the effective date of any subsequent registration statement after the IPO
(other than an Excluded Registration Statement) as may be requested by the
underwriters, and if so requested by the Company or such underwriters, to enter
into a lockup agreement to the foregoing effect and in a form satisfactory to
the Company and such underwriters provided however, that Holders shall not be so
-------- -------
obligated not to dispose of their Registrable Securities, and shall not be
required to enter into such a lock-up agreement with respect thereto, unless:
(A) in the case of the IPO, (i) all executive officers and 1% shareholders of
the Company agree to the same lock-up and (ii) such agreement shall provide that
any discretionary waiver or termination of the restrictions of any such lock-up
agreements by the Company or representatives of the underwriters shall apply to
all persons subject to such agreements pro rata based on the number of shares
subject to such agreements; and (B) in the case of a registration statement
subsequent to the IPO, (i) all executive officers agree to the same lock-up and
(ii) the Holders have the ability to sell not less than 25% of the Shares
registered in any such subsequent offering; and provided further that any Holder
-------- -------
who together with its affiliates shall hold less than 1% of the Registrable
Securities (any such Holder, a "Small Holder") shall only be locked up as
aforesaid after one offering completed subsequent to the IPO.
13. Right of First Refusal. Before any Equity Securities, Warrants or other
securities of the Company held by a Holder or any transferee of any of them (any
thereof, a "Selling Shareholder") may be sold or otherwise transferred
(including transfer by gift or operation of law), the Company shall have a right
of first refusal to purchase such securities on the terms and conditions set
forth in this Section 13 (the "Right of First Refusal").
13.1 First Refusal Notice. If a Selling Shareholder desires to transfer
--------------------
any Equity Securities, Warrants or other securities of the Company owned by it
(collectively, "Sale Shares"), then at least 60 days (10 days in the case of a
Small Holder) prior to such transfer, other than a transfer exempt pursuant to
Section 13.6, such Selling Shareholder must give notice (the "First Refusal
Notice") to the Company of its intention to effect such transfer. The First
Refusal Notice must set forth (a) the number and class of Sale Shares to be sold
by the Selling Shareholder, (b) the
-14-
date or proposed date of such transfer and the name and address of the
transferee (the "Proposed Transferee"), and (c) the principal terms of such
transfer, including the cash or other property or consideration to be received
upon such transfer.
13.2 Purchase Price. The purchase price for the Sale Shares purchased by
--------------
the Company under this Section 13 ("First Refusal Price") shall be the bona fide
cash price or other consideration for which the Selling Shareholder proposes to
transfer the Sale Shares as set forth in the First Refusal Notice. If the First
Refusal Price includes consideration other than cash, the cash equivalent value
of the non-cash consideration shall be determined in good faith by the Board of
Directors of the Company.
13.3 Company's Option. The Company shall have the option, but not the
----------------
obligation, to purchase all, but not less than all, of the Sale Shares at the
First Refusal Price. Within 20 days (10 days in the case of a Small Holder)
after the date the First Refusal Notice is given, the Company shall give written
notice to the Selling Shareholder stating its intention to exercise such option,
and a date and time for consummation of the purchase not less than 60 days (10
days in the case of a Small Holder) nor more than 90 days (20 days in the case
of a Small Holder) after the date the First Refusal Notice was given. Failure by
the Company to give such notice within such time period shall be deemed an
election by it not to exercise its option.
13.4 Payment. Payment of the First Refusal Price shall be made in cash, by
-------
check, or, in the case of a sale to the Company, by cancellation of all or a
portion of any outstanding indebtedness of the Selling Shareholder to the
Company, or by any appropriate combination thereof.
13.5 Selling Shareholder's Right to Transfer. If all of the Sale Shares
---------------------------------------
proposed in the First Refusal Notice to be transferred to a given Proposed
Transferee are not purchased by the Company, then the Selling Shareholder may
sell or otherwise transfer such Sale Shares to that Proposed Transferee at the
First Refusal Price or at a higher price, provided that such sale or other
transfer is consummated within 120 days after the date of the First Refusal
Notice and provided further that any such sale or other transfer is effected in
accordance with any applicable securities laws and the Proposed Transferee
agrees in writing that the provisions of this Agreement shall continue to apply
to the Sale Shares if applicable in the hands of such Proposed Transferee. If
the Sale Shares described in the First Refusal Notice are not transferred to the
Proposed Transferee within such period, a new First Refusal Notice shall be
given to the Company, and the Company shall again be offered the Right of First
Refusal in accordance with this Section 13 before any Shares held by the Selling
Shareholder may be sold or otherwise transferred.
13.6 Exception for Certain Transfers. Anything to the contrary contained in
-------------------------------
this Section 16 notwithstanding, (i) in the case of a Selling Shareholder that
is an individual, the transfer of any or all of the Sale Shares during the
Selling Shareholder's lifetime or on the Selling Shareholder's death by will or
intestacy to the Selling Shareholder's immediate family or a trust for the
benefit of the Selling Shareholder's immediate family shall be exempt from the
provisions of this Section 13 and (ii) in the case of a Selling Shareholder that
is a corporation, partnership or other business entity, the transfer of any or
all of the Sale Shares to any controlled or controlling corporate, partnership
or other business entity of such Selling Shareholder (or any corporate,
-15-
partnership or other business entity under common control with such Selling
Shareholder) shall be exempt from the provisions of this Section 10. "Immediate
Family" as used herein shall mean spouse, lineal descendant or antecedent,
father, mother, brother or sister. In such case, the transferee or other
recipient shall receive and hold the Sale Shares so transferred subject to the
provisions of this Section 13, and there shall be no further transfer of such
Sale Shares except in accordance with the terms of this Section 13.
13.7 Transfers Void. Any attempted transfer in violation of the terms of
--------------
this Section 13 shall be ineffective to vest in any Proposed Transferee any
interest held by the transferring Selling Shareholder in any Sale Shares.
Without limiting the foregoing, any purported transfer in violation hereof shall
be ineffective as against the Company, and the Company shall have a continuing
right and option (but not an obligation), until the restrictions contained in
this Section 13 terminate, to purchase the securities purported to be
transferred by the Selling Shareholder in violation of this Section 13 for a
price and on terms provided for herein.
13.8 Termination or Waiver of Right of First Refusal. The Right of First
-----------------------------------------------
Refusal shall terminate upon the earlier of (i) the IPO, (ii) the dissolution of
the Company, or (iii) the effective date of a Change in Control.
14. Board of Directors: Voting Agreement.
14.1 Agreement to Vote. Subject to Section 14.6 below, the Holders agree to
-----------------
vote the shares of Equity Securities then held by them at any regular or special
meeting of shareholders of the Company, or, in lieu of any such meeting, to give
their written consent, as provided in Section 14.2 below. Notwithstanding
anything to the contrary contained herein, no Warrant Holder shall have any
right to vote as a Shareholder of the Company unless and until the Warrants held
by such Warrant Holder shall have been exercised for shares of Common Stock, and
shall only have the right to vote thereafter with respect to the Warrants so
exercised for shares of Common Stock.
14.2 (a) Board of Directors. As is more fully elaborated in the Amended and
---------------
Restated Certificate of Incorporation of the Company, the Board of Directors
shall consist of eight (8) members, elected as set forth therein. During the
respective periods set forth in the Restated Certificate, two of the Directors
shall be elected by TriGem Corporation ("TriGem"), two shall be elected by Korea
Data Systems America, Inc. ("KDS"), one shall be elected by Xxxxxxx X. Xxxxxx,
one shall be elected by the holders of shares of Series A Preferred, one shall
be elected by the holders of the outstanding shares of Series A Preferred and
Shares of Common Stock, voting together as a class and one shall be elected by
the Series B Holders and Series C Holders, voting together as a class. A
director may be removed from the Board of Directors, and any vacancy in the
Board of Directors shall be filled, in each case as set forth in the Restated
Certificate. With respect to any proposal concerning the election of either
director who is to be elected by TriGem, the Holders hereby covenant and agree
that each Holder shall vote its shares of Equity Securities to nominate, appoint
and elect as such director the nominee of TriGem. With respect to any proposal
concerning the election of either director who is to be elected by KDS, the
Holders hereby covenant and agree that each Holder shall vote its shares of
Equity Securities to nominate, appoint and elect as such director the nominee of
KDS. With respect to any proposal concerning the election of the director
-16-
who is to be Xxxxxxx X. Xxxxxx, the Holders and Common Holders hereby covenant
and agree that each Holder shall vote its shares of Equity Securities to
nominate, appoint and elect as such initial director Xxxxxxx X. Xxxxxx. With
respect to any proposal concerning the election of the director who is to be
elected by the holders of a majority of the outstanding shares of the Series A
Preferred and Shares of Common Stock, voting together as a class, the Holders
hereby covenant and agree that each Holder shall vote its shares of Equity
Securities to nominate, appoint and elect as the initial such director Xxxxxx
Xxxxxx. With respect to any proposal concerning the election of the director who
is to be elected by the holders of a majority of the outstanding shares of the
Series A Preferred, voting together as a class, the Holders hereby covenant and
agree that each Holder shall vote its shares of Equity Securities to nominate,
appoint and elect as such director the nominee of Technology Crossover
Management III, L.L.C., or its affiliates, and as such initial director to
nominate, appoint and elect X. Xxxx Xxxxx III. With respect to any proposal
concerning the election of the director who is to be elected by the Series B
Holders and Series C Holders, the Holders hereby covenant and agree that each
Holder shall vote its shares of Equity Securities to nominate, appoint and elect
as such director, the nominee of Idealab!, and as such initial director to
nominate, appoint and elect Xxxx Xxxxx.
(b) Significant Transactions. The Holders hereby covenant and agree
------------------------
that to the greatest extent permitted by applicable Delaware General Corporate
Law, and notwithstanding anything to the contrary contained herein, no vote of
any class or series of Holder Registrable Securities shall be required in
connection with respect to any proposed (i) merger or consolidation of the
Company with or into another corporation, or (ii) sale, lease or exchange of all
or substantially all of the property or assets of the Company.
14.3 No Revocation. The voting agreements contained herein are coupled with
-------------
an interest and may not be revoked during the term of this Section 14.
14.4 Stock Splits, Stock Dividends, etc. In the event of any stock split,
----------------------------------
stock dividend, recapitalization, reorganization, or the like, any securities
issued as a result thereof with respect to the Holders' Equity Securities shall
become Holders' Equity Securities for purposes of this Section 14 and shall be
endorsed with the legend set forth in Section 2 hereof.
14.5 Waivers. Any term hereof may be amended and the observance of any term
-------
hereof may be waived either generally or in a particular instance and either
retroactively or prospectively only with the written consent of the Company or
(with respect to provisions affecting the Holders) of a majority of the Holders
other than the Warrant Holders.
14.6 Board Observer Rights. Nothing in this Agreement shall be deemed to
---------------------
amend Section 18.6 of the Amended and Restated Rights Agreement, and the parties
hereto acknowledge the provisions thereof.
14.7 Termination. All parties' rights under this Section 14 will terminate
-----------
upon the earliest to occur of (i) the IPO, (ii) the dissolution of the Company,
or (iii) the effective date of a Change of Control.
-17-
15. Miscellaneous.
15.1 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH, AND GOVERNED IN ALL RESPECTS BY, THE LAWS OF THE STATE OF CALIFORNIA, AS
APPLIED TO AGREEMENTS ENTERED INTO, AND TO BE PERFORMED ENTIRELY IN SUCH STATE,
BETWEEN RESIDENTS OF SUCH STATE. THE PARTIES HERETO (I) AGREE TO SUBMIT TO THE
JURISDICTION OF THE FEDERAL AND STATE COURTS SITTING IN THE COUNTIES OF ORANGE,
SANTA XXXXX OR SAN FRANCISCO OF THE STATE OF CALIFORNIA WITH RESPECT TO THE
BREACH OR INTERPRETATION OF THIS AGREEMENT OR THE ENFORCEMENT OF ANY AND ALL
RIGHTS, DUTIES, LIABILITIES, OBLIGATIONS, POWERS, AND OTHER RELATIONS BETWEEN
THE PARTIES ARISING UNDER THIS AGREEMENT, (II) WAIVE, TO THE FULLEST EXTENT EACH
MAY EFFECTIVELY DO SO, ANY OBJECTION EACH PARTY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH PROCEEDING AND (III) SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES
HERETO IRREVOCABLY WAIVE ANY IMMUNITY TO JURISDICTION TO WHICH THEY MAY
OTHERWISE BE ENTITLED OR BECOME ENTITLED (INCLUDING SOVEREIGN IMMUNITY, IMMUNITY
TO PRE-JUDGMENT ATTACHMENT, POST-JUDGMENT ATTACHMENT AND EXECUTION) IN ANY LEGAL
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED ON THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY WHICH IS INSTITUTED IN ANY CALIFORNIA COURT.
15.2 Non-Disclosure. No Holder by reason of this Agreement or its
--------------
ownership of Equity Securities or Warrants shall have access to any trade
secrets or classified information of the Company. Each Holder hereby agrees to
hold in confidence and trust and not to misuse or disclose any confidential or
proprietary information provided to such Holder pursuant to this Agreement or by
reason of its ownership of Equity Securities or Warrants. Each Holder further
acknowledges and understands that any information so obtained which may be
considered "inside" non-public information will not be utilized by such Holder
in connection with purchases and/or sales of the Company's securities except in
compliance with applicable state and federal anti-fraud statutes. The Company
shall not be required to comply with any statute or common law requirement in
respect of disclosure to any Holder whom the Company reasonably determines to be
a competitor of the Company or an officer, employee, director or greater than
ten percent (10%) stockholder of such competitor.
15.3 Successors and Assigns. Except as otherwise provided herein,
----------------------
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
15.4 Entire Agreement. This Agreement and the other agreements
----------------
referenced herein constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and thereof.
-18-
15.5 Amendment. Except as expressly provided herein, neither this
---------
Agreement nor any provision hereof may be amended, waived, discharged or
terminated other than by written consent of the Company, or (with respect to
provisions affecting the Holders) of a majority in interest of the Holders other
than the Warrant Holders (voting on an as if converted basis). Notwithstanding
the foregoing: (i) any amendment hereto that under applicable Delaware law would
adversely affect the holders of a specific class or series of the Company's
capital stock in a manner different than the holders of other shares of capital
stock shall also require the consent of the holders of a majority of the shares
of such class or series so affected to the extent that Delaware General
Corporate Law so requires. Any amendment or waiver effected in accordance with
this paragraph shall be binding upon each party hereto or upon each Holder of
shares of the consenting class or series of capital stock, as the case may be.
15.6 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (a) if to a Holder, at such person's address as set forth on Schedule
--------
A, or at such other address as such person shall have furnished to the Company
-
in writing, or (b) if to the Company, one copy should be sent to its address set
forth below and addressed to the attention of the Corporate Secretary, or at
such other address as the Company shall have furnished to the Shareholders.
Each such notice or other communication shall for all purposes of
this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
15.7 Delays or Omissions. Except as expressly provided herein, no
-------------------
delay or omission to exercise any right, power or remedy accruing to any Holder
upon any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any Holder of any breach or default under
this Agreement, or any waiver on the part of any Holder of any provisions or
conditions of this agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any Holder shall be cumulative
and not alternative.
15.8 Expenses. Except as otherwise set forth herein, the Company
--------
and each Holder shall bear their own respective expenses incurred on their
behalf with respect to this Agreement and the transactions contemplated hereby.
15.9 Termination of Prior Rights. Execution of this Agreement by a
---------------------------
Series B Holder or a Series C Holder shall constitute the consent of such Holder
to the termination of the Amended and Restated Investor Rights Agreement, dated
March 31, 1999, by and among FreePC, the Series B Holders and the Series C
Holders (the "FreePC Rights Agreement"), as required
-19-
pursuant to Section 13 of the FreePC Rights Agreement. Upon execution of this
Agreement by a majority of the Series B Holders and a majority of the Series C
Holders, the FreePC Rights Agreement shall be terminated in its entirety and
shall be of no further force or effect.
15.10 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the Holders,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
15.11 Severability. In the event that any provision of this
------------
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
15.12 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
-20-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first set forth above.
eMachines, Inc.
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Chief Financial
Officer
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
COMMON STOCK HOLDERS:
--------------------
IDEALAB! HOLDINGS, L.L.C.
/s/ Xxxxxx Xxxxxxxxx
--------------------
By: Xxxxxx Xxxxxxxxx, Secretary
IDEALAB! CAPITAL PARTNERS, I-A, L.P.
/s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx,
Managing member, idealab! Capital Management, I, LLC,
General Partner of idealab! Capital Partners I-A, L.P.
IDEALAB! CAPITAL PARTNERS, I-B, L.P.
/s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx,
Managing member, idealab! Capital Management, I, LLC,
General Partner of idealab! Capital Partners I-B, L.P.
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
CUISINE TO YOU
a __________________ corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
DINE-IN DELIVERY, CA
a Sole Proprietor
By: /s/ Xxxxx Xxxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxxx
----------------------------
Title: Owner
THE MEDIA EDGE
a __________________ corporation
By:
------------------------------
Name:
----------------------------
Title:
---------------------------
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
MIGHTY TIKKI MEDIA, INC.
a __________________ corporation
By: /s/ Xxxxxx XxXxxxxxx
----------------------------
Name: Xxxxxx XxXxxxxxx
--------------------------
Title: Secretary
-------------------------
WEBQUEST, INC.
a __________________ corporation
By: ----------------------------
Name: -------------------------
Title: -------------------------
/s/ Xxxxxx X. Xx Xxxxx
--------------------------------
XXXXXX X. XX XXXXX
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
/s/ Xxxxx Xxxxxxx
-----------------
XXXXX XXXXXXX
-----------------
XXX XXXXXX
-----------------
XXXXX XXXXX
/s/ Xxxxx Xxxxxx
------------------
XXXXX XXXXXX
/s/ Xxx Xxxxxxxxx
-------------------
XXX XXXXXXXXX
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
/s/ Xxxx Xxxxxxxxx
-------------------
XXXX XXXXXXXXX
/s/ Xxxx Xxxxxxxxx
-------------------
XXXX XXXXXXXXX
/s/ Xxxxxxx Xxxx
-------------------
XXXXXXX XXXX
/s/ Xxxxxxx Xxxx
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XXXXXXX XXXX
/s/ XX Xxxx
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XX XXXX
/s/ Xxxxxxx Xxxxxx
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XXXXXXX XXXXXX
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
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XXXXXXX XXXXX
/s/ Xxxx Xxx
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XXXX XXX
/s/ Xxxxxx Xxxxxxxxx
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XXXXXX XXXXXXXXX
/s/ Khan Xxxx
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KHAN XXXX
/s/ Xxxxx Xxxxxxx
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XXXXX XXXXXXX
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
/s/ Xxxxxxx & Xxxxx XxXxxxxxx
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XXXXXXX & XXXXX XXXXXXXXX
/s/ Xxxx Xxxxxxx
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XXXX XXXXXXX
/s/ Xxx Xxxxxxx
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XXX XXXXXXX
/s/ Xxxxxx Xxxxxxx
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XXXXXX XXXXXXX
/s/ Xxxxxxx Xxxxxxx
--------------------------------------
XXXXXXX XXXXXXX
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XXXXXX XXXXX
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
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XXXXX XXXXX
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XXXXX XXXXX
/s/ Xxxxxxx Xxxxxxxxx
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XXXXXXX XXXXXXXXX
/s/ Xxxxxxx Xxxxxxxx
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XXXXXXX XXXXXXXX
/s/ Xxxxxx Xx
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XXXXXX XX
XXXXX XXXXXXXXX
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[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
/s/ Xxxxxx XxXxxxxxx
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XXXXXX XXXXXXXXX
XXXX XXX AND XXXXXX XXX REVOCABLE TRUST
AGREEMENT DATED MARCH 4, 1991
By: /s/ Xxxx Xxx and /s/ Xxxxxx Xxx
--------------------------------------
Title: Trustees
A LA CARTE EXPRESS
By: /s/ Xxxxxxx Xxxxxx
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Title: President
/s/ Xxxx Xxxxxxxx, Xx.
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XXXX XXXXXXXX, XX.
GLOBAL INTERACTIVE MEDIA, LLC
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
/s/ Xxxxx Xxxxxxxxxxx
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By:Xxxxx Xxxxxxxxxxx
Title:Managing Member
SERIES B HOLDERS:
-----------------
IDEALAB! HOLDINGS, L.L.C.
/s/ Xxxxxx Xxxxxxxxx
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By: Xxxxxx Xxxxxxxxx, Secretary
SERIES C HOLDERS:
-----------------
IDEALAB! HOLDINGS, L.L.C.
/s/ Xxxxxx Xxxxxxxxx
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By: Xxxxxx Xxxxxxxxx, Secretary
IDEALAB! CAPITAL PARTNERS, I-A, L.P.
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx,
Managing member, idealab! Capital Management, I, LLC,
General Partner of idealab! Capital Partners I-A, L.P.
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
IDEALAB! CAPITAL PARTNERS, I-B, L.P.
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx,
Managing member, idealab! Capital Management, I, LLC,
General Partner of idealab! Capital Partners I-B, L.P.
USA NETWORKS, INC.
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
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Title:
--------------------------------------
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
XXXXX GLOBAL INVESTMENTS, LTD.
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxx Capital Management, Inc., its trading adviser,
By Xxxxxx Xxxxxxxxxx, Director of Operations
MULTI-STRATEGIES FUND, LTD.
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxx Capital Management, Inc., its trading adviser,
By Xxxxxx Xxxxxxxxxx, Director of Operations
MULTI-STRATEGIES FUND, L.P.
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxx Capital Management, Inc., its trading adviser,
By Xxxxxx Xxxxxxxxxx, Director of Operations
REMINGTON INVESTMENT STRATEGIES, L.P.
/s/ Xxxxxx Xxxxxxxxxx
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Xxxxx Capital Management, Inc., its trading adviser,
By Xxxxxx Xxxxxxxxxx, Director of Operations
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
DBV INVESTMENTS LLC
By: /s/ Xxxxx Xxxxxxx
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Name: Xxxxx Xxxxxxx
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Title: Manager
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ALTA VISTA COMPANY
By: /s/ Xxxxxxxxx Lucie
--------------------------------------
Name: /s/ Xxxxxxxxx Lucie
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Title:
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WS INVESTMENT COMPANY 99A
By:
--------------------------------------
Name:
--------------------------------------
Title:
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[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
THE XXXXXXX XXXXX GROUP, L.P.
By: The Xxxxxxx Sachs Corporation,
its general partner
By: /s/ Xxxxxx Xxxxxxxxx, V.P.
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Name: Xxxxxx Xxxxxxxxx, V.P.
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Title:
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STONE XXXXXX XXXX 0000, X.X.
By: Stone Street 1999 Corp.,
its general partner
By: /s/ Xxxxxxxxx X. Xxxxxxxxxx
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Name: Xxxxxxxxx X. Xxxxxxxxxx
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Title: Vice President
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/s/ Xxxxxx X. Xxxxxx
--------------------
XXXXXX X. XXXXXX
--------------------------------------
XXXXX XXXXXXX
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XXXXXX X. XXXXXX
[SIGNATURE PAGE TO RIGHTS AND RESTRICTIONS AGREEMENT]
