EXHIBIT 10.2
PHOTOWORKS, INC.
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is made as of April
25, 2001, by and among PhotoWorks, Inc., a Washington corporation (the
"Company") and the purchasers listed on Exhibit A hereto (the "Investors").
RECITALS
A. The Company and the Investors have entered into a Subordinated
Convertible Debenture Purchase Agreement for sale by the Company and purchase by
the Investors of the Company's subordinated convertible debentures
("Debentures") (the "Purchase Agreement").
B. In connection with the purchase and sale of the Company's
Debentures, the Company and each Investor desire to provide for the rights of
each Investor with respect to information about the Company and registration of
the Common Stock issued or issuable upon conversion of the Series B Preferred
Stock into which Debentures may be converted, on the terms of this Agreement.
THE PARTIES AGREE AS FOLLOWS:
1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
1.1 "Commission" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the Securities
Act.
1.2 "Exchange Act" shall mean the Securities Exchange Act of
1934, as amended.
1.3 "Form S-1" shall mean Form S-1 issued by the Commission or
any substantially similar form then in effect.
1.4 "Form S-3" shall mean Form S-3 issued by the Commission or
any substantially similar form then in effect.
1.5 "Holder" shall mean any holder of outstanding Registrable
Securities, Series B Preferred Stock and/or Debentures which have not been sold
to the public, but only if such holder is the Investor or an assignee or
transferee of registration rights as permitted by Section 8.
1.6 "Material Adverse Event" shall mean an occurrence having a
consequence that either (a) is materially adverse as to the business,
properties, prospects, or financial condition of the Company or (b) is
reasonably foreseeable, has a reasonable likelihood of occurring, and if it were
to occur might materially adversely affect the business, properties, prospects
or financial condition of the Company; provided, however, that the following
shall not be taken into account in determining a "Material Adverse Event": (i)
any adverse change, event or effect that is directly attributable to conditions
affecting the United States economy generally unless such conditions adversely
affect such party in a materially disproportionate manner, and (ii) any adverse
change, event or effect that is directly attributable to conditions affecting
the Company's industry generally, unless such conditions adversely affect the
Company in a materially disproportionate manner.
1.7 The terms "Register", "Registered" and "Registration"
refer to a registration effected by preparing and filing a registration
statement on Form S-1 or S-3 (or a successor form) in compliance with the
Securities Act and the regulations promulgated thereunder ("Registration
Statement") and the Commission's declaration or ordering of the effectiveness of
such Registration Statement.
1.8 "Registrable Securities" shall mean all Common Stock not
previously sold to the public and issued or issuable upon conversion or exercise
of any of the Company's Series B Preferred Stock purchased by or issued to the
Investor or issuable to the Investor upon conversion of any Debentures,
including Common Stock issued pursuant to stock splits, stock dividends and
similar distributions and all other Common Stock owned by any Holder at the time
of Registration hereunder.
1.9 "Registration Expenses" shall mean all expenses incurred
by the Company in complying with Section 5 of this Agreement, including, without
limitation, all federal and state registration, qualification and filing fees,
printing expenses, fees and disbursements of counsel for the Company and one
special counsel for all Holders (if different from counsel to the Company), blue
sky fees and expenses, and the expense of any special audits incident to or
required by any such registration.
1.10 "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.
1.11 "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities
pursuant to this Agreement.
1.12 "Series B Preferred Stock" shall mean the shares of
Series B Preferred Stock into which the Debentures purchased by each Investor
are convertible pursuant to the Debentures and the Purchase Agreement.
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1.13 "Shelf Registration Statement" shall mean a Registration
Statement for an offering to be made on a continuous basis pursuant to Rule 415
of the Securities Act (or such successor rule or similar provision then in
effect).
2. Financial Statements and Reports. As long as any Investor holds
Debentures or Series B Preferred Stock, the Company will deliver to such
Investor:
(i) as soon as practicable after the end of each
fiscal year of the Company, and in any event within 90 days thereafter, an
audited balance sheet of the Company as of the end of such year and audited
statements of income, shareholders' equity and cash flow for such year, which
year-end financial reports shall be in reasonable detail and shall be prepared
in accordance with generally accepted accounting principles and accompanied by
the opinion of the Company's independent public accountants;
(ii) as soon as practicable after the end of each of
the first three quarters of any fiscal year, and in any event within 45 days
thereafter, an unaudited balance sheet of the Company as of the end of such
quarter, and unaudited statements of income and cash flow for such quarter and
for the current fiscal year to date, prepared in accordance with generally
accepted accounting principles (other than for accompanying notes);
(iii) promptly upon receipt, copies of all audit
letters delivered by the Company's independent public accountants to management;
and
(iv) promptly upon filing, all other documents filed
with or delivered to the Commission.
3. Company Registration.
3.1 Registration on Form S-3 or Form S-1 . The Company shall
use its best efforts to cause the Registrable Securities to be Registered for an
offering on a Registration Statement on Form S-3 (or any successor form to Form
S-3) or S-1 (or any successor form to Form S-1) or such other registration form
as may be available to the Company, and to cause such Registrable Securities to
be qualified in such jurisdictions as the Holder may reasonably request, no
later than March 31, 2002, and shall use its best efforts to keep such
Registration Statement effective for a period ending at the later of (i) 48
months, or (ii) the date where all Registrable Securities can be sold under Rule
144(k).
Notwithstanding the foregoing, the Company shall not be obligated to
cause the Registrable Securities to be qualified 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, unless
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the Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act.
3.2 Registration of Other Securities in Company Registration.
Any Registration Statement filed under this Section 3 may, subject to the
provisions of this Section 3.2, include securities of the Company other than
Registrable Securities, but only if and to the extent this does not adversely
affect the plan of distribution of the Holders or the market price at which
Common Stock can be sold. Except in the case of an underwritten public offering
of the Company's securities, the inclusion of any securities other than the
Registrable Securities in a Registration shall not limit the number of
Registrable Securities to be included in such Registration.
(a) Inclusion of Other Holders in Underwritten
Company Registration. If the Holders determine that Registration is for a
Registered public offering involving an underwriting, the right of any holder of
securities other than Registrable Securities to have such securities included in
the Registration shall be conditioned upon the inclusion of such securities in
the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
other holders distributing their securities through such underwriting) enter
into an underwriting agreement with the Underwriter's Representative for such
offering. The Underwriter's Representative shall be selected by the Holders,
subject to the approval of the Company, which shall not be unreasonably
withheld.
(b) Marketing Limitation in Company Registration. In
the event the Underwriter's Representative advises the Holders and the Company
in writing that market factors (including, without limitation, the aggregate
number of shares of Common Stock requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
shares to be underwritten, then (i) first, the securities other than Registrable
Securities or this Company's Series A Preferred Stock (or shares of Common Stock
issuable upon conversion of the Series A Preferred Stock) and securities held by
Sam Rubinstein, and (ii) second, the Registrable Securities, shall be excluded
from such Registration to the extent required by such limitation. No Registrable
Securities or other securities excluded from the underwriting by reason of this
Section 3.2(b) shall be included in such Registration Statement.
(c) Right of Withdrawal in Company Registration. If
any Holder of Registrable Securities, or a holder of other securities entitled
(upon request) to be included in such Registration, disapproves of the terms of
the underwriting, such person may elect to withdraw therefrom by written notice
to the Company and the Underwriter's Representative delivered at least seven
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days prior to the effective date of the Registration Statement. The securities
so withdrawn shall also be withdrawn from the Registration Statement.
3.3 Blue Sky in Company Registration. In the event of any
Registration pursuant to Section 3, the Company will exercise its best efforts
to Register and qualify the securities covered by the Registration Statement
under such other securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of such securities; provided,
however, that the Company shall not be required to do business or to file a
general consent to service of process in any such states or jurisdictions.
4. Expenses of Registration. All Registration Expenses incurred in
connection with Registrations pursuant to Section 3.1 shall be borne by the
Company. Notwithstanding the above, if any Registration begun pursuant to
Section 3 is subsequently withdrawn at the request of the Holders of a majority
of the Registrable Securities to be registered, the Company shall have no
further obligation to register the Registrable Securities; provided, however,
that if at the time of such withdrawal, the Holders have learned of a Material
Adverse Event with respect to the condition, business, or prospects of the
Company not known to the Holders at the time of the commencement of the
Registration process, then the Holders shall retain their rights pursuant to
Section 3. All Selling Expenses, if any, shall be borne by the holders of the
securities Registered pro rata on the basis of the number of shares Registered.
5. Registration Procedures and Obligations. Whenever required under
this Agreement to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a Registration
Statement with respect to such Registrable Securities and use all reasonable
efforts to cause such Registration Statement to become effective, and, upon the
request of any of the Holders of the Registrable Securities registered
thereunder, keep such Registration Statement effective for the longer of 48
months or the date on which all unsold Registrable Securities can be sold under
Rule 144(k).
(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 Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus and such amendments and
supplements, all, in conformity with the requirements of the Securities Act, and
such other documents as they may reasonably request in order to facilitate the
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disposition of Registrable Securities owned by them.
(d) Use all reasonable efforts to 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.
(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) Promptly 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 Securities Act (i) 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, (ii) of any request by the SEC or any state
securities authority for amendments and supplements to a Registration Statement
and prospectus or for additional information after the Registration Statement
has become effective and (iii) of the issuance by the SEC or any state
securities authority of any stop order suspending the effectiveness of a
Registration Statement or the initiation of any proceedings for that purpose. In
the case of a Shelf Registration Statement, the Company agrees that, upon the
happening of any event described in subsections (i), (ii) and (iii) of this
Section 5(f), the Company shall use its best efforts to file and have declared
effective (if an amendment) as soon as practicable an amendment or supplement to
the Shelf Registration Statement and shall extend the period during which such
Shelf Registration Statement shall be maintained effective by the number of days
in the period from and including the date of the giving of notice of such event
to and including the date when the Company gives notice that the amendment or
supplement has been filed and declared effective (if an amendment).
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such Registration Statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration.
(h) Furnish, at the request of any Holder, on the date that
such Registrable Securities are delivered for sale in connection with a
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registration pursuant to this Agreement, (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, 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.
6. Information Furnished by Holder. Each Holder of Registrable
Securities to be included in any Registration shall furnish to the Company such
information regarding such Holder as the Company may reasonably request for
inclusion in such Registration Statement.
7. Indemnification.
7.1 Company's Indemnification of Holders. To the extent
permitted by law, the Company will indemnify each Holder and Zesiger Capital
Group LLC ("ZCG") and their respective officers, directors, trustees, members,
employees, partners, legal counsel for the Holders, and each person controlling
such Holder, with respect to which Registration, qualification, or compliance of
Registrable Securities has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls any underwriter against all
claims, losses, damages, liabilities, or actions in respect thereof
(collectively, "Damages") to the extent such Damages arise out of or are based
upon any untrue statement (or alleged untrue statement) of a material fact
contained in any prospectus or other document (including any related
Registration Statement or amendment or supplement thereto) incident to any such
Registration, qualification, or compliance, or are 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 not misleading, or any violation by
the Company of the Securities Act, the Exchange Act, any state securities law or
any rule or regulation promulgated under the Securities Act, the Exchange Act or
any state securities law applicable to the Company in connection with any such
Registration, qualification, or compliance; and the Company will reimburse each
such Holder, each such underwriter, ZCG and each person who controls any such
Holder or underwriter, and their respective officers, directors, trustees,
members, partners, employees and legal counsel for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action; provided, however, that the
indemnity contained in this Section 7.1 shall not apply to amounts paid in
settlement of any such Damages if settlement is effected without the consent of
the Company (which consent shall not unreasonably be withheld); and provided,
further, that the Company will not be liable in any such case to the extent that
any such Damages arise out of or are based upon any untrue statement or omission
based upon written information furnished to the Company by such Holder,
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underwriter, or controlling person and stated to be for use in the Registration
Statement in connection with the offering of securities of the Company.
7.2 Holder's Indemnification of Company. To the extent
permitted by law, each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such Registration,
qualification or, compliance is being effected pursuant to this Agreement,
indemnify the Company, each of its directors and officers, each legal counsel
and independent accountant of the Company, 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 the Securities
Act, and each other such Holder, ZCG and their respective officers, directors,
trustees, members, employees and partners, and each person controlling such
other Holder, against all Damages arising out of or based upon any untrue
statement (or alleged untrue statement) of a material fact contained in any such
Registration Statement or amendment or supplement thereto, 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, or any violation by such Holder of the
Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law applicable to such Holder in connection with any such
Registration, qualification, or compliance, and will reimburse the Company, such
Holders, ZCG, such directors, officers, trustees, members, employees and
partners, persons, law and accounting firms, underwriters or control persons for
any legal and 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 such Holder and stated to be specifically for use in connection with
the offering of securities of the Company, provided, however, that the indemnity
contained in this Section 7.2 shall not apply to amounts paid in settlement of
any such Damages if settlement is effected without the consent of such Holder
(which consent shall not be unreasonably withheld) and provided, further, that
each Holder's liability under this Section 7.2 shall not exceed such Holder's
gross proceeds from the offering of securities made in connection with such
Registration.
7.3 Indemnification Procedure. Promptly after receipt by an
indemnified party under this Section 7 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 7, notify the indemnifying
party in writing of the commencement thereof and generally summarize such
action. The indemnifying party shall have the right to participate in and to
assume the defense of such claim; provided, however, that the indemnifying party
shall be entitled to select counsel for the defense of such claim with the
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approval of any parties entitled to indemnification, which approval shall not be
unreasonably withheld; provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
Company and the indemnified party in conducting the defense of such action,
suit, or proceeding by reason of recognized claims for indemnity under this
Section 7, then counsel for such party shall be entitled to conduct the defense
to the extent reasonably determined by such counsel to be necessary to protect
the interest of such party and the fees and expenses of counsel for such party
shall be paid by the Company. The failure to notify an indemnifying party
promptly of the commencement of any such action, if and to the extent materially
prejudicial to the ability of the indemnifying party to defend such action,
shall relieve such indemnifying party, to the extent so prejudiced, of any
liability to the indemnified party under this Section 7, but the omission so to
notify the indemnifying party will not relieve such party of any liability that
such party may have to any indemnified party otherwise other than under this
Section 7.
7.4 Contribution. If the indemnification provided for in this
Section 7 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any Damages 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 Damages 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 Damages as well as any other relevant equitable considerations. The
relative fault of the indemnifying party and of the indemnified party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission 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; provided, however,
that in no event shall any contribution by a Holder exceed the gross proceeds
from the offering of securities made in connection with such Registration
received by such Holder.
7.5 Conflicts. 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.
7.6 Survival of Obligations. The obligations of the Company
and Holders under this Section 7 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Agreement or
otherwise.
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8. Transfer of Rights. The Registration rights and rights to
information under this Agreement may be assigned in whole or in part by any
Holder to a transferee or assignee of any Debentures or Series B Preferred
Stock.
9. Reports Under the Exchange Act. With a view to making available to
the Holders the benefits of Rule 144 promulgated under the Securities Act and
any other rule or regulation of the Commission 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) 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; and
(b) furnish to any Holder, so long as the Holder owns any
Registrable Securities, promptly upon request (i) a written statement by the
Company that it has complied with the reporting requirements of Rule 144, the
Securities Act and the Exchange Act, or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3, (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 Commission
which permits the selling of any such securities without Registration or
pursuant to such form.
10. Miscellaneous.
10.1 Governing Law. This Agreement shall be governed by, and
construed in accordance with, the laws of the State of Washington excluding
those laws that direct the application of the laws of another jurisdiction.
10.2 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
10.3 Headings. The headings of the Sections of this Agreement
are for convenience and shall not by themselves determine the interpretation of
this Agreement.
10.4 Notices. Any notice required or permitted hereunder shall
be given in writing and shall be deemed effectively given upon personal delivery
or delivery by courier, or on the first business day after transmission if sent
by confirmed facsimile transmission or electronic mail transmission, or five
days after deposit in the United States mail, by registered or certified mail,
postage prepaid, addressed (i) if to the Company, as set forth below the
Company's name on the signature page of this Agreement, and (ii) if to an
Investor, at such Investor's address as set forth on Exhibit A to this
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Agreement, or at such other address as the Company or such Investor may
designate by 10 days' advance written notice to the other parties hereto.
10.5 Amendment or Waiver. This Agreement may be amended or modified,
and the obligations of the Company under the Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only upon the written consent of the Company and holders of more
than a two-thirds majority of the Common Stock constituting Registrable
Securities represented by all outstanding Debentures, Series B Preferred Stock
and Common Stock issued or issuable on conversion of such Series B Preferred
Stock, all on an "as converted" basis. Any amendment, modification or waiver
pursuant to, and in accordance with, this Section 10.5 shall be binding on the
Company, all holders of Registrable Securities at the time outstanding and each
future holder of any such securities. The foregoing notwithstanding, this
Agreement and any term thereof may be amended, waived, discharged or terminated
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
10.6 Severability. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired thereby.
10.7 Entire Agreement; Successors and Assigns. This Agreement
constitutes the entire contract among the Company and the Investor relative to
the subject matter hereof. Any previous agreement between the Company and any
Investor concerning Registration Rights is superseded by this Agreement. The
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective executors, administrators, heirs, successor, and
permitted assigns of the parties.
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{SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT}
IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the day and year first above written.
Company: PHOTOWORKS, INC., a Washington
corporation
By: /s/ Howard Lee
---------------------------
Howard Lee, Chief Executive
Officer and President
Address: 1260 16th Avenue West
Seattle, Washington 98119
Fax No. (206) 284-5357
Investor: THE PURCHASERS, LISTED ON
EXHIBIT A
BY: ZESIGER CAPITAL GROUP LLC,
AGENT AND ATTORNEY IN FACT
By: /s/ Albert Zesiger
---------------------------
Albert Zesiger
Title:
--------------------------
[SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT]
Exhibit A
SCHEDULE OF PURCHASERS
Name of Purchaser* Nominee for Purchaser Principal Amount of Debenture
------------------ --------------------- -----------------------------
Purchased
1. NFIB Serp Assets Huland & Co $ 39,750
2. Public Employee Retirement Mellon Bank NA custodian for $ 639,750
System of Idaho PERSI-Zesiger Capital
3. City of Stamford Firemen's Pension Fund City of Stamford Firemen's Pension Fund $ 189,750
4. The Jenifer Altman Foundation Batrus & Co. $ 99,750
5. Asphalt Green, Inc. Cudd & Co. $ 30,000
6. Dean Witter Foundation Tice & Co. $ 129,750
7. Lazar Foundation Hare & Co. $ 45,000
8. HBL Charitable Unitrust HBL Charitable Unitrust $ 45,000
9. Helen Hunt Cudd & Co. $ 65,250
10. Peter Looram Peter Looram $ 35,250
11. Mary C. Anderson Mary C. Anderson $ 65,250
12. Murray Capital, LLC Murray Capital, LLC $ 50,250
13. Meehan Foundation Meehan Foundation $ 35,250
14. Domenic J. Mizio Domenic J. Mizio $ 90,000
15. Morgan Trust Co. of the Morgan Trust Co. of the $ 165,000
Bahamas Ltd. as Trustee U/A/D Bahamas Ltd. as Trustee U/A/D
11/30/93 11/30/93
16. Susan Uris Halpern Hare & Co. $ 99,750
17. Theeuwes Family Trust, Felix Theeuwes Family Trust, Felix $ 50,250
Theeuwes Trustee Theeuwes Trustee
18. Wells Family LLC Atwell & Co. $ 300,000
19. Albert L. Zesiger Albert L. Zesiger $ 150,000
20. Barrie Ramsay Zesiger Barrie Ramsay Zesiger $ 99,750
21. Wolfson Investment Partners LP Wolfson Investment Partners LP $ 75,000
Total $2,499,750
----- ----------
*Address for each Purchaser:
c/o Zesiger Capital Group LLC
320 Park Avenue, 30th Floor
New York, NY 10022
Attention: Albert L. Zesiger
========================================================================
PHOTOWORKS, INC.
INVESTOR RIGHTS AGREEMENT
========================================================================
April 25, 2001