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EXHIBIT 4.2
@PLAN. INC
AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
This AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT (the "Agreement") is
made and entered into as of the 6th day of January, 1998, by and among @PLAN.
Inc, a Tennessee corporation (the "Company") and the other persons who are
signatories hereto.
RECITALS:
Each of the Southern Venture Fund II, L.P. ("SVFII"), Richland
Ventures, L.P. ("Richland"), Mark K. Wright, Gary R. Haynes, Roger J. Thomson,
Janice Wendell, Susan Russo and Karl Spangenberg (collectively the "Series A and
B Preferred Holders"), currently own shares of the Company's Series A
Convertible Preferred Stock (the "Series A Preferred Stock") and shares of the
Company's Series B Convertible Preferred Stock (the "Series B Preferred Stock").
Mark K. Wright ("Wright") and Gary R. Haynes ("Haynes") are the founders of the
Company and each own 250,000 shares of the Company's Common Stock, which
constitutes all of the Company's outstanding Common Stock. Wright and Haynes are
sometimes referred to herein individually as a "Founder" and collectively as the
"Founders."
Pursuant to that certain Securities Purchase Agreement, dated the date
hereof (the "Purchase Agreement"), by and between the Company and SVFII,
Richland Ventures II, L.P., Blue Chip Capital Fund II Limited Partnership, Miami
Valley Venture Fund, L.P., Roger J. Thomson, Gary R. Haynes, Janice W. Wendell,
Mark K. Wright, and Karl Spangenberg (sometimes collectively referred to as the
"Series C Preferred Holders"), the Series C Preferred Holders will purchase
shares of the Company's Series C Convertible Preferred Stock (the "Series C
Preferred Stock"). Blue Chip Capital Fund II Limited Partnership and Miami
Valley Venture Fund, L.P. are sometimes collectively referred to herein as "Blue
Chip". Richland Ventures, L.P. and Richland Ventures II, L.P. are sometimes
collectively referred to as "Richland". The Series A Preferred Holders, Series B
Preferred Holders, and Series C Preferred Holders are sometimes referred to
herein individually as a "Preferred Holder" and collectively as the "Preferred
Holders"; and the Series A Preferred Stock, Series B Preferred Stock, and
Series C Preferred Stock are sometimes collectively referred to herein as the
"Preferred Stock". The Founders, the Series A and B Preferred Holders, and the
Series C Preferred Holders are sometimes referred to herein as the
"Shareholders".
WHEREAS, the Company, Series A and B Preferred Holders, and Founders
entered into that certain Shareholders' Agreement, dated July 24, 1996 (the
"Shareholders' Agreement"); and
WHEREAS, the Company, Series A and B Preferred Holders, Founders, and
Series C Preferred Holders desire (i) to amend and restate the Shareholders'
Agreement to provide that the Series C Preferred Holders shall become a party to
the Shareholders' Agreement and (ii) to amend the Shareholders' Agreement in
other material respects; and
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WHEREAS, it is a condition to the obligations of the Series C Preferred
Holders to purchase shares of the Series C Preferred Stock under the Purchase
Agreement that this Agreement be executed by the parties hereto.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the undersigned parties hereto agree as follows:
1. Covenants of the Company. The Company covenants and agrees with the Preferred
Holders (or such specific holder as may be identified in a specific covenant)
and the Founders as follows:
1.1 Financial Statements; Periodic Reports. Until such time as the
Company is subject to the reporting requirements of Sections 13 or 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), the Company
will furnish the following:
(a) To each Preferred Holder, within 30 days after the end of
each calendar month, unaudited statements of income and cash flows of the
Company for such month and for the period from the beginning of the current
fiscal year to the end of such month, and a balance sheet of the Company as at
the end of such month, each on a consolidated and consolidating basis, prepared
in accordance with generally accepted accounting principles (except for the
omission of footnotes) and setting forth in comparative form, figures for and
the end of the corresponding period in the preceding fiscal year, all in
reasonable detail and certified by an authorized financial officer of the
Company, subject to changes resulting from year-end adjustments and accruals;
and
(b) To each Preferred Holder, within 90 days after the end of
each fiscal year, statements of income, cash flows and shareholders' equity of
the Company for such year, and a balance sheet of the Company as at the end of
such year, each on a consolidated and consolidating basis, prepared in
accordance with generally accepted accounting principles and setting forth in
comparative form, corresponding financial information for the preceding fiscal
year and accompanied by the report of independent certified public accountants
of recognized standing selected by the Company;
(c) To SVFII, Richland, and Blue Chip within 30 days after the
end of each calendar month, the Portfolio Company Monthly Report substantially
in the form of Schedule 1.1(c) attached hereto;
(d) To SVFII, Richland, and Blue Chip within 30 days after any
issuance or transfer of shares of the Company's capital stock, a schedule of the
holders of all shares of the Company's capital stock; and
(e) Such information as is reasonably requested by SVFII,
Richland, or Blue Chip that the Company can provide without unreasonable effort
or expense.
Representatives of the Preferred Holders shall have the right to inspect the
books and records of the Company at any reasonable time during normal business
hours.
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1.2 Availability of Rule 144 and Rule 144A.
(a) At such time as the Company becomes subject to the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act, it
will file with the Securities and Exchange Commission (the "Commission") all
reports required to be filed by it pursuant to Section 13 or Section 15(d) of
the Exchange Act and applicable rules and regulations thereunder, and shall
maintain full compliance with the current public information requirements of
Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act"), (or any similar successor to such rule) by filing 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 thereafter.
(b) So long as a Preferred Holder owns any Restricted
Securities, the Company shall furnish to each Preferred Holder forthwith upon
written request a written statement by the Company as to its compliance with the
reporting requirements of Rule 144 (at any time from and after ninety (90) days
following 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
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 as a Preferred 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.
(c) Until the Company becomes subject to the reporting
requirements of Section 13 or Section 15(d) of the Exchange Act, the Company
shall provide, at a minimum, to the Shareholder and any prospective purchaser of
any stock in the Company owned by any Shareholder, upon their request, such
reasonably current information as is required by paragraph (d) (4) of Commission
Rule 144A, as amended, for resales of certain restricted securities to qualified
institutional investors.
1.3 Board Representation.
(a) The number of directors which constitutes the whole Board
of Directors is six (6). At the date hereof, the Company's Board of Directors
will be comprised of six (6) directors, four (4) of whom shall be designated by
the Preferred Holders (the "Preferred Directors") and one (1) shall be Wright
and one (1) shall be a person designated by Wright. The Preferred Directors
initially shall be Donald M. Johnston, W. Patrick Ortale, III, John H. Wyant,
and Cal Martin. Meetings of the Board of Directors shall be held not less
frequently than quarterly.
(b) The Company agrees that the Board of Directors shall not
consist of more than six (6) members unless such number of directors is
consented to by the holders of two-thirds (2/3) in interest of the Series A,
Series B, and Series C Preferred Stock, voting together as a single class. The
Company shall reimburse the Preferred Directors for all reasonable out-of-pocket
expenses incurred in the performance of their duties as directors, in addition
to the payment of directors' fees, if any, paid to other directors.
(c) SVFII, Richland, and Blue Chip shall each nominate one (1)
nominee to serve as a candidate for election as a Preferred Director
(respectively, the "SVFII Director," the "Richland Director," and the "Blue Chip
Director"). The fourth Preferred Director shall be selected
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by the holders of the Preferred Stock acting as a group. The selection of a
nominee as a Preferred Director candidate shall be made upon the written consent
of the holders of two-thirds (2/3) of the voting power of the outstanding shares
of Preferred Stock.
1.4 Right to Participate in Future Financings.
(a) The Company hereby grants to each Preferred Holder and
Founder the right of first refusal to purchase its pro rata share of any New
Securities (as hereinafter defined) which the Company may, from time to time,
propose to sell and issue. A pro rata share, for purposes of this right of first
refusal, is the ratio that the sum of the number of shares of Common Stock and
the number of shares of Common Stock issuable upon conversion of any shares of
Preferred Stock then held by such Preferred Holder or Founder bears to the sum
of the total number of shares of Common Stock and the total number of shares of
Common Stock issuable upon conversion of all shares of preferred stock then
outstanding and held by all stockholders of the Company.
(b) Except as set forth below, "New Securities" shall mean any
shares of capital stock of the Company, including Common Stock and preferred
stock, whether now authorized or not, and rights, options or warrants to
purchase shares of Common Stock or preferred stock, and securities of any type
whatsoever that are, or may become, convertible or exchangeable into shares of
Common Stock or preferred stock. Notwithstanding the foregoing, "New Securities"
does not include (i) the Series A, Series B and Series C Preferred Stock or the
Common Stock issuable upon conversion of such stock; (ii) securities issued in
the acquisition of another corporation by the Company by merger, purchase of
substantially all of the assets or other reorganization whereby the Company or
its stockholders own not less than fifty-one percent (51%) of the voting power
of the surviving or successor corporation, (iii) shares of Common Stock or
related options exercisable for capital stock of the Company issued to
employees, officers and directors of, and consultants to, the Company, pursuant
to the 1996 Option Plan, (iv) stock issued pursuant to any rights or agreements,
including, without limitation, convertible securities, options and warrants,
provided that the rights of first refusal established by this Section apply with
respect to the initial sale or grant by the Company of such rights or
agreements, (v) stock issued in connection with any stock split, stock dividend
or recapitalization by the Company, (vi) the IPO Warrants (as defined in Section
1.9), and (vii) shares issued in the Company's Initial Public Offering.
(c) In the event the Company proposes to undertake an issuance
of New Securities, it shall give each Preferred Holder and Founder written
notice of its intention, describing the type of New Securities, and the price
and terms upon which the Company proposes to issue the same. Each Preferred
Holder and Founder shall have thirty (30) days from the date of receipt of any
such notice (i) to agree, by giving written notice to the Company, to purchase
up to such Shareholder's respective pro rata share of such New Securities for
the price and upon the terms specified in the notice and (ii) to indicate
whether such Shareholder would be willing to purchase additional New Securities
not purchased by any of the other Preferred Holders or Founders pursuant to its
right of first refusal ("Additional New Securities"), stating in such notice the
quantity of New Securities to be purchased and such Additional New Securities
which such Shareholder would be willing to purchase pursuant to clause (ii)
hereof. If more than one Shareholder notifies the Company of its willingness to
purchase Additional New Securities, the Company shall allocate any New
Securities not elected to be purchased by any Shareholder or Holder
proportionately among
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such notifying Shareholders, on the basis of the amount of Additional New
Securities which all such Shareholders are willing to purchase.
(d) In the event a Preferred Holder or Founder fails to
exercise such right of first refusal within said thirty (30) day period, the
Company shall first advise each other Preferred Holder or Founder which has
notified the Company of its willingness to purchase Additional New Securities of
the number of such Additional New Securities allocated to it, and thereafter,
the Company shall have one hundred twenty (120) days thereafter to sell or enter
into an agreement (pursuant to which the sale of New Securities covered thereby
shall be closed, if at all, within thirty (30) days from the date of said
agreement) to sell the New Securities not elected to be purchased by the
Preferred Holders at the price and upon terms no more favorable to the purchaser
of such securities than specified in the Company's notice. In the event the
Company has not sold the New Securities or entered into an agreement to sell the
New Securities within such one hundred twenty (120) day period (or sold and
issued New Securities in accordance with the foregoing within thirty (30) days
from the date of such agreement), the Company shall not thereafter issue or sell
any of such New Securities without first offering such securities to the New
Investors in the manner provided above.
1.5 Annual Plan. The Company shall cause to be prepared for each fiscal
year an annual budget, including financial projections, which budget shall be
submitted to the Board of Directors no later than sixty (60) days prior to the
end of the preceding fiscal year and which shall be approved by a majority of
the Board of Directors (including at least two (2) of the Preferred Directors)
no later than thirty (30) days before the end of such fiscal year. After
approval, the budget may only be amended or modified in any material manner with
the consent of at least two (2) of the Preferred Directors, subject to such
other approvals as may be required by the rights and preferences of the
Company's Preferred Stock.
1.6 Accounts and Records. The Company will keep true records and books
of account in which full, true and correct entries will be made of all dealings
or transactions in relation to its business and affairs in accordance with
generally accepted accounting principles applied on a consistent basis.
1.7 Proprietary Information and Inventions Agreements. The Company will
cause each person now or hereafter employed by it or any subsidiary with access
to confidential information to enter into a proprietary information and
inventions agreement substantially in the form approved by the Board of
Directors.
1.8 "Key Man" Life Insurance. The Company shall use its best efforts to
obtain and maintain until the Company's Initial Public Offering "key man" life
insurance covering the life of Mark Wright in the principal amount of
$1,000,000, with the benefits from such policy payable to the Company, provided,
however, that the Company shall not be obligated to maintain such insurance upon
the delivery to the Company of the written consent of the Preferred Directors
that such insurance may be terminated. The Company will not change the insurer
of such coverage without the prior written consent of the Preferred Directors.
1.9 Initial Public Offering Warrants. Simultaneously with the closing
of the Company's Initial Public Offering (as defined in Section 2.1(a)), the
Company will grant to the Founders and the
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Preferred Holders warrants (the "IPO Warrants") to purchase the number of shares
of Common Stock which equals 8% of the number of shares sold to the public by
the Company in the Initial Public Offering, (including any shares sold pursuant
to an underwriters' over-allotment option), at an exercise price per share equal
to the initial price to public. The IPO Warrants shall be exercisable, in whole
or in part, for seven (7) years, shall contain anti-dilution adjustment rights
for stock splits, stock dividends and other events or distributions affecting
the Common Stock generally, and shall be in form reasonably satisfactory to
SVFII, Richland, and Blue Chip. The shares of Common Stock issuable upon
exercise of the IPO Warrants held by the Preferred Holders shall be entitled to
the registration rights provided in Section 2 hereof. Of the IPO Warrants, 12.5%
shall be granted to each of the Founders and 75% shall be granted to the Holders
of the Preferred Stock, in proportion to the number of shares of Preferred Stock
initially purchased by them.
1.10 Survival of Covenants of the Company. The obligations of the
Company set forth in Sections 1.1 through 1.9 above are continuing covenants of
the Company and shall survive until terminated as provided in such provisions.
2. Registration Rights.
2.1 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Initial Public Offering" shall mean the closing of an
initial public offering of the Company's equity securities for gross proceeds of
at least $12 million to the Company (excluding any proceeds from the exercise of
an underwriter's over-allotment option) at a price of at least $6.00 per share
(subject to adjustments for stock-splits and recapitalizations subsequent to the
date hereof).
(b) "Initiating Holders" shall mean holders of shares of
Preferred Stock who in the aggregate hold not less than fifty-one percent (51%)
of the outstanding shares of the Preferred Stock (or the Common Stock received
upon conversion of such Preferred Stock), as the case may be and who exercise
rights to request registration under Section 2.2.
(c) The terms "register," "registered" and "registration"
shall refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act and applicable rules and
regulations thereunder, and the declaration or ordering of the effectiveness of
such registration statement and such other action as might be required with
respect to registration, qualification or compliance under applicable state
securities laws.
(d) "Registration Expenses" shall mean all expenses incurred
in effecting any registration pursuant to this Agreement, 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, expenses of any regular or special audits incident to or required
by any such registration and fees and reasonable disbursements of one counsel
for the Preferred Holders as selling stockholders, but shall not include Selling
Expenses, and the compensation of regular employees of the Company, which shall
be paid in any event by the Company.
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(e) "Registrable Securities" shall mean (i) shares of Common
Stock issued or issuable pursuant to the conversion of the Series A, Series B
and Series C Preferred Stock, (ii) any Common Stock issued as a dividend or
other distribution with respect to or in exchange for or in replacement of the
Series A, Series B, and Series C Preferred Stock, (iii) shares of Common Stock
issued or issuable with respect to any New Securities acquired by a Preferred
Holder pursuant to the provisions of Section 1.4 above, and (iv) shares of
Common Stock issued upon exercise of the IPO Warrants; provided, however, that
Registrable Securities shall not include any shares of Common Stock which have
previously been registered or which have been sold to the public, or which have
been sold in a private transaction in which the transferor's rights under this
Agreement were not assigned.
(f) "Rule 144" shall mean Rule 144 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the Commission.
(g) "Rule 145" shall mean Rule 145 as promulgated by the
Commission under the Securities Act, as such Rule may be amended from time to
time, or any similar successor rule that may be promulgated by the Commission.
(h) "Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the sale of
Registrable Securities and fees and disbursements of counsel for any stockholder
(other than the fees and disbursements of counsel for the Preferred Holders
included in Registration Expenses).
(i) "Underwriter's Cutback" shall mean a reduction in the
number of shares to be included in any underwritten offering as the result of
receipt of written notice from the representative of the underwriters to the
effect that marketing factors require a limitation on the number of shares to be
underwritten.
2.2 Requested Registration.
(a) Request for Registration. If the Company shall receive
from Initiating Holders at any time or times (but in no event earlier than six
(6) months after the Company's initial public offering of the Common Stock, a
written request that the Company effect any registration with respect to
Registrable Securities, in an offering to be firmly underwritten by underwriters
selected by the Initiating Holders (subject to the consent of the Company, which
consent will not be unreasonably withheld) in which the reasonably anticipated
aggregate offering price to the public exceeds $7.5 million, the Company will:
(i) promptly give written notice of the proposed
registration to all other Preferred Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or other state
securities laws, and appropriate compliance with the Securities Act) and as
would permit or facilitate the sale and distribution of all or such portion of
such
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Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Preferred Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after such written notice from the Company is mailed or
delivered.
Notwithstanding the foregoing, the Company shall only be required to effect,
pursuant to this Section 2.2., one (1) registration of Registrable Securities of
holders of the Preferred Stock.
(b) Proviso. The Company shall not be obligated to effect, or
to take any action to effect, any such registration pursuant to this Section
2.2:
(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, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) During the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred eighty (180) days after the effective date of,
a Company-initiated registration, provided that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective; or
(iii) If the Initiating Holders propose to dispose of
shares of Registrable Securities which may be immediately registered on Form S-3
pursuant to a request made under Section 2.5 hereof.
(c) Deferral of Registration. 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 or requests of
the Initiating Holders; provided, however, that if (i) in the good faith
judgment of the Board of Directors of the Company, such registration would be
materially detrimental to the Company and the Board of Directors of the Company
concludes, as a result, that it is essential to defer the filing of such
registration statement at such time, and (ii) the Company shall furnish to the
Preferred 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 be materially detrimental to the Company for such registration statement
to be filed in the near future and that it is, therefore, essential to defer the
filing of such registration statement, then the Company shall have the right to
defer such filing (except as provided in subsection (b)(ii) above) for a period
of not more than one hundred eighty (180) days after receipt of the request of
the Initiating Holders, and, provided further, that the Company shall not defer
its obligation in this manner more than once in any twelve-month period.
The registration statement filed pursuant to the request of
the Initiating Holders may, subject to the provisions of the Sections 2.2(b) and
2.12 hereof, include other securities of the Company, with respect to which
registration rights have been granted, and may include securities of the Company
being sold for the account of the Company, provided that all the Registrable
Shares for
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which the Initiating Holders have requested registration shall be covered by
such registration statement before any other securities are included.
(d) Underwriting. The right of any Preferred Holders joining
in a request for registration as provided in Subsection (a)(ii) above to
registration pursuant to this Section 2.2 shall be conditioned upon such
Preferred Holder's participation in such underwriting and the inclusion of such
Preferred Holder's Registrable Securities in the underwriting on the same terms
as those of the Initiating Holders (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder with respect to
such participation and inclusion). A Preferred Holder may elect to include in
such underwriting all or a part of the Registrable Securities it holds.
(e) Procedures. In any registration pursuant to Section 2.2,
if the Company shall request inclusion of securities to be sold for its own
account, or if other persons entitled to incidental registrations shall request
inclusion in such registration pursuant to Section 2.2, the Initiating Holders
shall, on behalf of all Preferred Holders, offer to include such securities in
the underwriting and may condition such offer on the acceptance by the Company
or such other persons of the further applicable provisions of this Section
(including Section 2.11). The Company shall (together with all Preferred Holders
and other persons proposing to distribute their securities through such
underwriting) enter into an underwriting agreement in customary form with the
representative of the underwriter or underwriters selected for such underwriting
by a majority in interest of the Initiating Holders, which underwriters are
reasonably acceptable to the Company. Notwithstanding any other provision of
this Section, if the representative of the underwriters advises the Initiating
Holders of the need for an Underwriter's Cutback, the number of shares to be
included in the underwriting or registration shall be allocated as set forth in
Section 2.12 hereof. If a person who has requested inclusion in such
registration as provided in this Subsection (e) does not agree to the terms of
any such underwriting, such person shall be excluded therefrom by written notice
from the Company, the underwriter or the Initiating Holders, and the securities
owned by such person(s) shall be withdrawn from registration (the "Withdrawn
Securities"). If there are any Withdrawn Securities and if there was an
Underwriter's Cutback, then the Company shall offer to all holders who have
retained rights to include securities in the registration the right to include
additional securities in the registration in an aggregate amount equal to the
number of Withdrawn Securities that would have been included in the registration
after giving effect to the Underwriter's Cutback had such securities not been
withdrawn, with such shares to be allocated among such Holders requesting
additional inclusion in accordance with Section 2.12.
2.3 Company Registration.
(a) Notice and Procedures. If the Company shall determine to
register any of its Common Stock either for its own account or the account of a
security holder or holders exercising their respective demand registration
rights (other than pursuant to Section 2.2 or 2.5 hereof), other than a
registration relating solely to employee benefit plans (as defined under Rule
405 of the Securities Act), or a registration relating solely to a Rule 145
transaction, or a registration on any registration form that does not permit
secondary sales, the Company will:
(i) promptly give to each Preferred Holder written
notice thereof; and
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(ii) use its best efforts to include in such
registration (and any related qualification under blue sky laws or other
compliance), except as set forth in Section 2.3(b) below, and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made by any Preferred Holder and received by the
Company within ten (10) days after the written notice from the Company described
in clause (i) above is mailed or delivered by the Company. Such written request
may specify all or a part of a Preferred Holder's Registrable Securities.
Notwithstanding the foregoing, the Company shall not be required to register
stock of the Preferred Holders more than three (3) times in the aggregate
pursuant to this Section 2.3.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Preferred Holders as a part of the written notice
given pursuant to Section 2.3(a)(i). In such event, the right of any Preferred
Holders to registration pursuant to this Section shall be conditioned upon such
Preferred Holder's participation in such underwriting and the inclusion of such
Preferred Holder's Registrable Securities in the underwriting to the extent
provided herein. All Preferred Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
of securities of the Company with registration rights to participate therein
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the representative of the
underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section, if the
representative of the underwriters advises the Company of the need for an
Underwriter's Cutback, the representative may (subject to the limitations set
forth below) limit the number of Registrable Securities to be included in the
registration and underwriting; provided, however, that Registrable Securities
shall be included in any over-allotment option granted to the underwriters
before inclusion of any shares from the Company. The Company shall advise all
holders of securities requesting registration of the Underwriter's Cutback, and
the number of shares of securities that are entitled to be included in the
registration and underwriting shall be allocated first to the Company for
securities being sold for its own account and thereafter as set forth in Section
2.12. If any person does not agree to the terms of any such underwriting, he
shall be excluded therefrom by written notice from the Company or the
underwriter and any Registrable Securities or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration (the
"Withdrawn Securities").
If there are Withdrawn Securities and if there was an
Underwriter's Cutback, the Company shall then offer to all persons who have
retained the right to include securities in the registration the right to
include additional securities in the registration in an aggregate amount equal
to the number of shares of Withdrawn Securities that would have been included in
the registration after giving effect to the Underwriter's Cutback had such
securities not been withdrawn, with such shares to be allocated among the
persons requesting additional inclusion in accordance with Section 2.12 hereof.
2.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 2.2, 2.3 and 2.5 hereof, shall be borne by the Company; provided,
however, that a Preferred Holder shall bear the Registration Expenses for
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any registration proceeding begun pursuant to Section 2.2 and subsequently
withdrawn by that Preferred Holder registering shares therein, unless such
withdrawal is based upon (a) material adverse information relating to the
Company that is different from the information known or available (upon request
from the Company or otherwise) to the Preferred Holders requesting registration
at the time of their request for registration under Section 2.2, or (b) material
adverse changes in the financial markets which result in a decline in the public
market price for the Company's Common Stock of at least twenty percent (20%)
from the date such registration proceeding is begun to the date of such
withdrawal. All Selling Expenses relating to securities so registered shall be
borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.
2.5 Registration on Form S-3.
(a) After its initial public offering, the Company shall use
its best efforts to qualify for registration on Form S-3 or any comparable or
successor form or forms. After the Company has qualified for the use of Form
S-3, in addition to the rights contained in the foregoing provisions of this
Section, the Preferred Holders shall have the right to request registrations on
Form S-3 (such requests shall be in writing and shall state the number of shares
of Registrable Securities to be disposed of and the intended methods of
disposition of such shares by such Preferred Holder or Holders, provided,
however, that the Company shall not be obligated to effect any such registration
if (i) the Preferred Holder, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other shares of Common Stock (if any) on Form
S-3 at an aggregate price to the public of less than $1,000,000, or (ii) in the
event that the Company shall furnish the certification described in paragraph
2.2(b)(ii) or 2.2(c) (but subject to the limitations set forth therein), or
(iii) the Company will be required to obtain an audit (other than for its normal
year-end audit) for such registration to become effective. The Company shall
only be required to effect two (2) registrations of Registrable Securities
pursuant to this Section 2.5 in each calendar year, provided, however, that if
the offering is to be effected on a continuous or delayed basis pursuant to Rule
415, or any successor rule, and the registration statement is kept effective for
a period in excess of 120-days, then the Company shall not be required to effect
another registration in that calendar year.
(b) If a request complying with the requirements of Section
2.5 hereof is delivered to the Company, the provisions of Sections 2.2(a)(i) and
(ii) and Section 2.2(b) hereof shall apply to such registration. If the
registration is for an underwritten offering, the provisions of Sections 2.2(c)
and 2.2 (d) hereof shall also apply to such registration.
2.6 Registration Procedures. In the case of each registration effected
by the Company pursuant to Section 2, the Company will keep each Preferred
Holder advised in writing as to the initiation of each registration and as to
the completion thereof. At its expense, the Company will use its best efforts
to:
(a) Keep such registration effective for a period of ninety
(90) days or until the Preferred Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs; provided, however, that (i) such 90-day period shall be extended
for a period of time equal to the period the Preferred Holder refrains from
selling any
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securities included in such registration at the request of an underwriter of
Common Stock (or other securities) of the Company; and (ii) in the case of any
registration of Registrable Securities on Form S-3 which are intended to be
offered on a continuous or delayed basis, such 90-day period shall be extended,
if necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment that (I) includes any prospectus required by Section
10(a)(3) of the Securities Act or (II) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (I) and (II) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Exchange Act 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 Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish such number of prospectuses and other documents
incident thereto, including any amendment of or supplement to the prospectus, as
a Preferred Holder from time to time may reasonably request;
(d) Notify each seller 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 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 or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed;
(f) 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;
(g) Otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months, but not more than eighteen (18)
months, beginning with the first month after the effective date of the
Registration
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Statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act; and
(h) In connection with any underwritten offering pursuant to a
registration statement filed pursuant to Section 2.2 hereof, the Company will
enter into an underwriting agreement reasonably necessary to effect the offer
and sale of Common Stock, provided such underwriting agreement contains
customary underwriting provisions and provided further that if the underwriter
so requests the underwriting agreement will contain customary contribution
provisions.
2.7 Indemnification.
(a) The Company will indemnify each Preferred Holder, each of
its officers, directors and partners, and each person controlling such Preferred
Holder within the meaning of Section 15 of the Securities Act, with respect to
which registration has been effected pursuant to this Section 2, and each
underwriter, if any, and each person who controls within the meaning of Section
15 of the Securities Act any underwriter, against all expenses, claims, losses,
damages, and liabilities (or actions, proceedings, or settlements in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus (including any related
registration statement, notification, or the like) incident to any registration
under this Section 2, 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 not misleading, or any violation by the Company of the
Securities Act or any rule or regulation thereunder applicable to the Company
and relating to action or inaction required of the Company in connection with
any such registration, and will reimburse each such Preferred Holder, each of
its officers, directors, partners, and each person controlling such Preferred
Holder, each such underwriter, and each person who controls any such
underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling 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 based upon
written information furnished to the Company by such Preferred Holder or
underwriter and stated to be specifically for use therein. It is agreed that the
indemnity agreement contained in this Section shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld).
(b) Each Preferred Holder will, if Registrable Securities held
by it are included in the securities as to which such registration is being
effected under this Section 2, indemnify the Company, each of its directors,
officers, partners, and 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, each
other such Preferred Holder and each of their officers, directors, and partners,
and each person controlling such other Preferred Holder 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 or prospectus, 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 and such other Preferred Holder, directors, officers,
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partners, underwriters, or control person 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 or
prospectus, in reliance upon and in conformity with written information
furnished to the Company by such Preferred Holder holding the Registrable
Securities, and stated to be specifically for use therein; provided, however,
that the obligations of such Preferred Holder hereunder shall not apply to
amounts paid in settlement of any such claims, losses, damages, or liabilities
(or actions in respect thereof (if such settlement is effected without the
consent of such Preferred Holder (which consent shall not be unreasonably
withheld); and provided that in no event shall any indemnity under this Section
exceed the gross proceeds from the offering received by such Preferred Holder.
(c) Each party entitled to indemnification under this Section
(the "Indemnified Party") shall give notice to the party or parties 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 such
claim or any litigation resulting therefrom, provided that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably 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 Section,
to the extent such failure is not prejudicial. 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
that does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation. Each Indemnified Party shall furnish
such information regarding itself or the claim in question as an Indemnifying
Party may reasonably request in writing and as shall be reasonably required in
connection with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection
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with the underwritten public offering are in conflict with the foregoing
provisions, the provisions in the underwriting agreement shall control.
2.8 Information by Holder. Each holder of Registrable Securities shall
furnish to the Company in writing such information regarding such Preferred
Holder and the distribution proposed by such Preferred Holder as the Company or
underwriters may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification, or compliance
referred to in this Section.
2.9 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the holders of two-thirds (2/3) in interest of the Series A, Series B, and
Series C Preferred Stock, voting together as a single class, enter into any
agreement with any holder or prospective holder of any securities of the Company
giving such holder or prospective holder any registration rights (other than
rights to registration on Form S-8) the terms of which are on a parity with or
more favorable than the registration rights granted to the Preferred Holders
hereunder.
2.10 Transfer or Assignment of Registration Rights. The rights to cause
the Company to register securities granted to a Preferred Holder by the Company
under this Section may not be transferred or assigned by a Preferred Holder
except that any Preferred Holder which is an investment fund may transfer or
assign such rights upon the distribution to its investors of Registrable
Securities then held by such Preferred Holder, provided that the Company is
given written notice at the time of or within a reasonable time after said
transfer or assignment, stating the name and address of the transferee or
assignee and identifying the securities with respect to which such registration
rights are being transferred or assigned, and, provided further, that the
transferee or assignee of such rights assumes the obligations of such Preferred
Holder under this Section, and except that a Preferred Holder may transfer or
assign such rights to another Preferred Holder without regard to the number of
shares of Registrable Securities assigned or transferred. No transferee or
assignee of rights transferred or assigned hereunder may further transfer or
assign such rights.
2.11 "Market Stand-Off" Agreement. If requested in writing by the
Company and an underwriter of Common Stock (or other securities) of the Company,
a Shareholder shall not sell or otherwise transfer or dispose of any Common
Stock (or other securities) of the Company held by such Shareholder (other than
those included in the registration) during a period not to exceed one hundred
eighty (180) day period following the effective date of a registration statement
of the Company filed under the Securities Act, provided that:
(a) such agreement shall only apply to the first such
registration statement of the Company, including securities to be sold on its
behalf to the public in an underwritten offering; and
(b) all Preferred Holders, Founders and officers and directors
of the Company enter into similar agreements.
The obligations described in this Section shall not apply to a
registration relating solely to employee benefit plans (as defined in Rule 405
under the Securities Act) on Form S-1 or Form S-8 or similar forms that may be
promulgated in the future, or a registration relating solely to a
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Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares (or securities) subject to the foregoing restriction
until the end of said one hundred eighty (180) day or shorter period.
2.12 Allocation of Registration Opportunities. In any circumstance in
which all of the Registrable Securities and other shares Common Stock of the
Company (including shares of Common Stock issued or issuable upon conversion of
shares of any currently unissued series of Preferred Stock of the Company) with
registration rights (the "Other Shares") requested to be included in a
registration on behalf of the Preferred Holders or other selling stockholders
cannot be so included as a result of limitations of the aggregate number of
shares of Registrable Securities and Other Shares that may be so included, the
number of shares of Registrable Securities and Other Shares that may be so
included shall be allocated among the Preferred Holders and other selling
stockholders requesting inclusion of shares pro rata on the basis of the number
of shares of Registrable Securities and Other Shares that would be held by such
Preferred Holders and other selling stockholders, assuming conversion. If any
Preferred Holder or other selling stockholder does not request inclusion of the
maximum number of shares of Registrable Securities and Other Shares allocated to
him pursuant to this procedure, the remaining portion of his allocation shall be
reallocated among those requesting Preferred Holders and other selling
stockholders whose allocations did not satisfy their requests pro rata on the
basis of the number of shares of Registrable Securities and Other Shares which
would be held by such Preferred Holders and other selling stockholders, assuming
conversion, and this procedure shall be repeated until all of the shares of
Registrable Securities and Other Shares which may be included in the
registration on behalf of the Preferred Holders and other selling stockholders
have been so allocated. The Company shall not limit the number of Registrable
Securities to be included in a registration pursuant to this Agreement in order
to include shares held by stockholders with no registration rights or to include
in that registration shares of stock issued to employees, officers, directors,
or consultants pursuant to the Company's Stock Option Plan, or with respect to
registrations under Section 2.5 hereof, in order to include in such registration
securities registered for the Company's own account.
2.13 Delay of Registration. No Preferred Holder shall have any right to
take any action to restrain, enjoin, or otherwise delay any registration as the
result of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
2.14 Termination of Registration Rights. The right of any Preferred
Holder to request registration or inclusion in any registration pursuant to this
Section 2 shall terminate on such date after the Company's Initial Public
Offering as all shares of Registrable Securities held or entitled to be held
upon conversion by such Preferred Holder may immediately be sold under Rule 144
during any 90-day period.
3. Covenants of Certain Shareholders.
3.1 Co-Sale Rights. In order to induce the Preferred Holders to
purchase the Preferred Stock and for the Preferred Holders to enter into this
Agreement, each Founder covenants and agrees with the Preferred Holders as
follows:
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(a) Until the Company's Initial Public Offering, all shares of
capital stock and other securities (including, without limitation, Common Stock,
preferred stock, and other equity securities of the Company, including warrants,
rights, and options and securities convertible into any of the foregoing) owned
beneficially by such Founder, directly or indirectly, shall be subject to the
terms and conditions of this Section. All certificates representing the
securities subject to this Section (the "Co-Sale Securities") shall bear an
appropriate legend setting forth notice of this Agreement.
(b) a Founder (as such, a "Selling Founder"), may sell or
otherwise dispose of any of the Co-Sale Securities only after notifying each of
the Preferred Holders in writing of such intended sale or disposition (a "sale")
at least fifteen (15) days prior to the date thereof, which notice shall
identify the prospective purchaser (the "Co-Sale Purchaser") and shall state the
full terms, including, without limitation, the consideration to be paid, and
other terms and conditions of payment, the date on or about which the sale is to
be made, the number or amount of the Co-Sale Securities to be sold or disposed
of, and such other information as may be relevant to the transaction.
(c) Within fifteen (15) days after the date of such notice
provided in paragraph (b) of this Section:
(i) each of the Preferred Holders may notify the
Selling Founder that such Holder will sell to either the Co-Sale Purchaser, or
to the Selling Founder, such Preferred Holder's pro rata portion (as defined
below), of the Eligible Shares (as defined below) on the same terms as the
Selling Founder sets forth in his notice to the Preferred Holders. Upon receipt
of such a notice from the Preferred Holder(s), (A) the Selling Founder shall
assign (if such agreement of sale is assignable) to the Preferred Holders so
much of his interest in the agreement of sale as the Preferred Holders shall be
entitled to and shall request hereunder (such assignment shall be in form and
substance reasonably satisfactory to each Preferred Holder), or (B) at the
Selling Founder's option and demand, the Selling Founder shall buy, under the
same terms and conditions as set forth in the notice from the Selling Founder
under paragraph (b) above, all or any part of the Eligible Shares which the
Preferred Holders would have been authorized to sell under the preceding
provisions of this subparagraph (i); provided, however, that the Selling Founder
shall not be required to purchase any Eligible Shares from the Preferred Holders
if his proposed sale fails to be consummated without fault on his part. A
Preferred Holder's "pro rata portion" is the percentage obtained by dividing the
number of shares of the Company's Common Stock owned by such Preferred Holder or
which such Preferred Holder has the right to acquire, by the number of such
shares owned by all Preferred Holders. "Eligible Shares" means the number of
shares to be sold by the Selling Founder as set forth in his notice multiplied
by a fraction the numerator of which is the number of shares of Common Stock
owned by the Preferred Holders or which the Preferred Holders have the right to
acquire upon conversion of the Preferred Stock, and the denominator of which is
the sum of (X) such number of shares constituting the numerator and (Y) the
number of shares of Common Stock owned by the Selling Founder or which the
Selling Founder has the right to acquire. For example, if in a transaction to
which these co-sale rights apply (i) the Selling Founder proposes to sell 50,000
shares of Common Stock and owns a total of 100,000 shares of Common Stock, (ii)
all Preferred Holders own an aggregate of 25,000 shares of Common Stock or
rights to acquire Common Stock and (iii) a Preferred Holder owns 2,500 shares of
Common Stock; then there would be 10,000 Eligible Shares and the Preferred
Holder would be entitled to sell 1,000 shares; or
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(ii) a Preferred Holder may notify the Selling
Founder that the Preferred Holder desires to purchase from the Selling Founder
all of the shares of the Selling Founder's stock which the Selling Founder
intends to sell on the same terms and conditions as those set forth in the
Selling Founder's notice of sale; provided that if more than one Preferred
Holder gives such notice, each such Preferred Holder shall purchase its
proportionate share of the shares to be sold by the Selling Founder, determined
by dividing the number of shares of the Company's Common Stock owned by the
Preferred Holder or which such Preferred Holders have the right to acquire, by
the total number of shares of the Company's Common Stock owned by all Preferred
Holders giving such notice or which such Preferred Holder has the right to
acquire; or
(iii) if none of the Preferred Holders send notice to
the Selling Founder pursuant to subparagraph (i) or (ii) above, then the Selling
Founder may, for a period of ninety (90) days following the expiration of the
fifteen (15) day response period provided in this subsection (c), sell to the
Co-Sale Purchaser, that number of shares, at the price and on the same terms and
conditions, as those described in the notice sent to the Preferred Holders under
subsection (b).
If any material or economic terms of the initial
proposed sale are modified, the Selling Founder shall follow the same procedures
with respect to the modified proposal as are provided above with respect to the
original proposed sale.
Any notice given by the Preferred Holders pursuant to
subparagraph (i) or (ii) above shall, when taken together with the notice given
by the Selling Founder to the Preferred Holders, constitute a binding legal
agreement on the terms and conditions therein set forth, it being understood
that any modification or amendment by the Preferred Holders of the terms and
conditions set forth in said notice given by the Selling Founder other than as
provided herein shall be of no force and effect unless consented to in writing
by the Selling Founder.
The Selling Shareholder shall be entitled to rely
conclusively upon any notice received, or the failure to receive any notice,
from the Preferred Holders pursuant to subparagraph (i) or (ii) above with
respect to his rights and obligations under this Section. Each Preferred
Holder's rights under this Section are several, and if a Preferred Holder elects
not to sell shares pursuant to this Section, the Selling Founder may proceed to
sell such shares without being required to offer the right to sell that
Preferred Holder's pro rata share to other Preferred Holders.
The closing date of the purchase and sale of any
securities under subparagraph (i) or (ii) above shall be either (A)
simultaneously with the closing of the sale of the Co-Sale Securities by the
Selling Founder to the Co-Sale Purchaser or (B) the date agreed upon between the
Selling Founder and the Co-Sale Purchaser as the anticipated closing date for
sale of such Co-Sale Securities as set forth in the notice by the Selling
Founder under paragraph (b).
(iv) Notwithstanding anything to the contrary in the
foregoing provisions, (X) Preferred Holders shall have no right of co-sale
pursuant to this Section if a Founder sells equity securities as a part of an
underwritten public offering by the Company in which the Preferred Holders are
entitled to include shares pursuant to Section 2 hereof; (Y) transfers of equity
securities of the Company by a Founder shall not be subject to this Section if
such transfers are made to donees
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or "affiliates" (as such term is defined in Rule 405 under the Securities Act)
or members of his "immediate family" (as such term is defined in Rule 16a-1
under the Exchange Act) and which transferee agrees in writing to comply with
this Section as to the transfer of such securities, or if such transfers are
made pursuant to a bona fide pledge of securities to a financial institution;
and (Z) exercise of options or conversion rights, if any, held by a Founder
shall not be a transaction to which this Section applies; provided that the
provisions of this Section 3.1 shall terminate with respect to a particular
Founder at such time that all equity securities then owned, or which such
Founder has the right to acquire, or which are otherwise subject to this Section
3.1, do not exceed 2% of the Company's Common Stock then outstanding, on a fully
diluted basis.
3.2 Voting Agreements.
(a) Until the Company's Initial Public Offering, the Founders
and the Preferred Holders shall vote all voting securities of the Company
beneficially owned by them for the election to the Company's Board of Directors
pursuant to Section 1.3 hereof, of (i) Mark Wright, (ii) a person designated by
Mark Wright, and (iii) the nominees of the holders of Preferred Stock. In
addition, subject to applicable fiduciary duties, in the event that any nominee
of the holders of Preferred Stock reasonably believes that Mark Wright and
another candidate for Chairman of the Board of Directors are equally qualified
to serve in such capacity, such nominee shall vote to elect Mark Wright as
Chairman of the Board of Directors, such agreement to continue until the earlier
of Mark Wright's death, resignation, removal for "cause" (as defined in the 1996
Option Plan or the Company's Initial Public Offering).
(b) All certificates representing voting securities subject to
this Section 3.2 shall bear a legend substantially similar to that set forth in
Section 3.4(b) setting forth notice of this voting agreement. All transferees of
voting securities from the Preferred Holders and/or the Founders shall agree in
writing to comply with this Section 3.2 as to the voting of such securities
pursuant to this Agreement.
3.3 Ownership. Each Founder represents and warrants that he is the sole
legal and beneficial owner of the shares of Common Stock and/or rights to
acquire Common Stock subject to this Shareholders Agreement and that no other
person has any interest in such shares and/or warrants, including the power to
vote such shares of Common Stock (whether by proxy, contract or otherwise).
3.4 Legend. The Founders and/or the Preferred Holders, as applicable
and severally, represent and warrant as follows:
(a) Each certificate representing shares of capital stock now
or hereafter owned by a Founder or issued to any person in connection with a
transfer pursuant to Section 3.1 hereof shall be endorsed with the following
legend:
THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN CO-SALE AGREEMENT BY AND BETWEEN THE SHAREHOLDER, THE
CORPORATION AND CERTAIN
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HOLDERS OF STOCK OF THE CORPORATION, SET FORTH IN A SHAREHOLDERS
AGREEMENT DATED AS OF JULY 24, 1996, AS AMENDED AND RESTATED ON
DECEMBER 31, 1997. COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON
WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.
(b) Each certificate representing shares of capital stock now
or hereafter owned by a Founder or any Preferred Holder or issued to a
transferee of any such stockholder shall be endorsed with the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF A VOTING AGREEMENT BY AND BETWEEN THE SHAREHOLDER, THE
CORPORATION AND CERTAIN HOLDERS OF STOCK OF THE CORPORATION, SET FORTH
IN A SHAREHOLDERS AGREEMENT DATED AS OF JULY 24, 1996, AS AMENDED AND
RESTATED ON DECEMBER 31, 1997. COPIES OF THIS AGREEMENT MAY BE OBTAINED
UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION.
(c) Each Founder and each Preferred Holder agrees that the
Company may instruct its transfer agent to impose transfer restrictions on the
shares represented by certificates bearing the legends referred to in this
Section to enforce the provisions of this Agreement and the Company agrees to
promptly do so. The legend shall be removed upon termination of this Agreement.
4. Notices. All notices, requests, consents and other communications hereunder
(except as stated in the last sentence of this Section) shall be in writing and
shall be personally delivered or mailed by first-class registered or certified
mail, postage prepaid (return receipt requested):
if to the Shareholder: at his address as set forth in Schedule 4 to
this Agreement, marked for attention as there indicated, or at such
other address as may have been furnished to the Company by him in
writing
with a copy to: Sherrard & Roe, PLC
424 Church Street, Suite 2000
Nashville, Tennessee 37219
Attention: Donald I. N. McKenzie
if to the Company: @Plan. Inc
Three Landmark Square
Suite 400
Stamford, Connecticut 06901
Attention: President
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with a copy to: Bass, Berry & Sims PLC
2700 First American Center
Nashville, TN 37238-2700
Attention: J. Page Davidson
The financial statements and other reports required by Section 1.1 may be mailed
by first-class regular mail.
5. Integration; Amendment and Waiver. This Agreement embodies the entire
agreement and understanding between the Founders, the Preferred Holders and the
Company and supersedes all prior agreements and understandings relating to the
subject matter hereof. Neither this Agreement nor any term hereof may be
changed, waived, discharged, or terminated orally or in writing, except that any
term of this Agreement may be amended and the observance of any such term may be
waived (either generally or in a particular instance and either retroactively or
prospectively) with (but only with) the written consent of the Company,
Preferred Holders holding in the aggregate, at least two-thirds (2/3) in
interest of the outstanding Preferred Stock (voting together as a single class)
and at least one of the Founders, provided, however, that no such amendment or
waiver shall be effective against a Founder unless such Founder has consented in
writing to such amendment or waiver.
6. Reorganization, Reclassification, Merger, and Consolidation. The Company will
not effect any consolidation, merger, exchange of shares of capital stock, or
sale of its assets, unless prior to the consummation thereof the successor
corporation (if other than the Company) resulting from such consolidation,
merger, or exchange, or the company purchasing such assets shall assume, by
written instrument executed and mailed or delivered to the Preferred Holders, an
express assumption of the terms, conditions and obligations of this Agreement as
if it has been a party hereto.
7. Severability. Should any one or more of the provisions of this Agreement or
any agreement entered into pursuant hereto be determined to be illegal or
unenforceable, all other provisions of this Agreement and such other agreements
shall be given effect separately from the provision or provisions determined to
be illegal or unenforceable and shall not be affected thereby.
8. Miscellaneous.
8.1 This Agreement shall be constructed and enforced in accordance with
the laws of the State of Tennessee without regard to its principles of conflicts
of laws.
8.2 This Agreement shall terminate upon the closing of the Company's
Initial Public Offering, except that the provisions of Sections 1.2, 1.9, and 2
shall survive and continue in full force and effect in accordance with their
terms.
8.3 All of the terms of this Agreement, whether so expressed or not,
shall be binding upon the respective personal representatives, successors and
assigns of the parties hereto and shall inure to the benefit of and be
enforceable by the respective personal representative, successors and assigns of
the parties hereto; provided, however, that, subject to the provisions of
Section 2.10
21
22
hereof, this Agreement may not be assigned by any party hereto without the prior
written consent of the Company.
8.4 Each Exhibit and Schedule to this Agreement is made a part of this
Agreement as though set forth in full herein. The headings in this Agreement are
for convenience of reference only, and shall not limit or otherwise affect the
meaning hereof.
8.5 Whenever the masculine gender is used herein, it shall be deemed to
include the feminine and the neuter.
8.6 This Agreement may be executed in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
(Remainder of Page Intentionally Left Blank)
22
23
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Shareholders' Agreement effective as of the day and year first above
written.
@PLAN. INC
By: /s/ Mark Wright
----------------------------------------
Mark Wright, Chairman
SHAREHOLDERS:
COMMON SHAREHOLDERS:
Number of
Shares
---------
/s/ Mark Wright
- ---------------------------------------- 250,000
Mark Wright
/s/ Gary Haynes
- ---------------------------------------- 250,000
Gary Haynes
24
PREFERRED SHAREHOLDERS:
Number of Shares
---------------------------------------------
Series A Series B Series C
Preferred Preferred Preferred
--------- --------- ---------
The Southern Venture Fund II, L.P. 200,000 900,000 166,667
By: Its General Partner
SV Partners II, L.P.
By: /s/ Donald M. Johnston
----------------------------------------
A General Partner
Richland Ventures, L.P. 200,000 900,000 0
By: Its General Partner
By: /s/ W. Patrick Ortale, III
----------------------------------------
A General Partner
Blue Chip Capital Fund II Limited Partnership 0 0 425,000
By: Blue Chip Venture Company, Ltd.
Its General Partner
By: /s/ John H. Wyant
----------------------------------------
A Manager
Miami Valley Venture Fund, L.P. 0 0 75,000
By: Blue Chip Venture Company of Dayton,
Ltd., Its Special Limited Partner
By: /s/ John H. Wyant
----------------------------------------
A Manager
/s/ Mark Wright 5,000 22,500 3,000
- -----------------------------------------------------
Mark Wright
/s/ Gary Haynes 20,000 40,000 30,000
- -----------------------------------------------------
Gary Haynes
25
Gary R. Haynes 1994 Charitable Remainder 0 50,000 0
Unitrust
By: /s/ Gary Haynes
-------------------------------------------------
Title: Trustee
/s/ Roger J. Thomson 10,000 45,000 14,000
- -----------------------------------------------------
Roger J. Thomson
/s/ Janice Wendell 10,000 45,000 10,000
- -----------------------------------------------------
Janice Wendell
/s/ Susan Russo 25,000 11,250 0
- -----------------------------------------------------
Susan Russo
/s/ Karl Spangenberg 500 2,250 2,000
- -----------------------------------------------------
Karl Spangenberg
Richland Ventures II, L.P. 0 0 1,000,000
By: Its General Partner
By: /s/ W. Patrick Ortale, III
------------------------------------------
A General Partner
26
SCHEDULE 4 TO SHAREHOLDERS' AGREEMENT
Addresses for Notice Purposes:
The Southern Venture Fund II, L.P.
c/o Massey Burch Capital Corp.
310 25th Avenue North, Suite 105
Nashville, TN 37203
Attn: Mr. Donald M. Johnston
Richland Ventures, L.P.
Richland Ventures II, L.P.
200 31st Avenue N., Suite 200
Nashville, TN 37203
Attn: Mr. Jack Tyrrell
Mr. W. Patrick Ortale, III
Blue Chip Capital Fund II Limited Partnership
Miami Valley Venture Fund, L.P.
2000 PNC Center, 201 E. 5th Street
Cincinnati, Ohio 45202
Attn: John H. Wyant
Mark K. Wright
@Plan. Inc.
Three Landmark Square, Suite 400
Stamford, CT 06901
Phone: (203) 961-0340
Fax: (203) 964-0136
Mr. Roger J. Thomson
c/o Donaldson, Lufkin & Jennette Securities Corporation
277 Park Avenue, 8th floor
New York, NY 10172
Phone: (212) 892-2677
Fax: (212) 892-8244
Ms. Janice Wendell
15 Inverarary Drive
Nashville, TN 37215
Phone: (615) 665-2852
Fax: (615) 665-2855
27
Ms. Susan Russo
@Plan. Inc.
Three Landmark Square, Suite 400
Stamford, CT 06901
Phone: (203) 961-0340
Fax: (203) 964-0136
Mr. Karl Spangenberg
@Plan. Inc.
Three Landmark Square, Suite 400
Stamford, CT 06901
Phone: (203) 961-0340
Fax: (203) 964-0136
Mr. Gary Haynes
c/o Ericson Marketing Communications
1130 8th Avenue South
Nashville, TN 37203
Phone: (615) 242-1050
Fax: (615) 242-2276
28
EXHIBIT 1
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE POLICY
29
@PLAN.INC
AMENDMENT NO. 1 TO THE AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
The Amended and Restated Shareholders' Agreement entered into as of the
31st day of December, 1997, by and among @plan.inc, a Tennessee corporation (the
"Company") and the other persons signatories thereto is hereby amended as
follows:
Sections 1.3(a) and (b) shall be replaced in their entirety by the following:
1.3 Board Representation.
(a) The number of directors which constitutes the whole Board
of Directors is seven (7). At the date hereof, the Company's
Board of Directors will be comprised of seven (7) directors,
four (4) of whom shall be designated by the Preferred Holders
(the "Preferred Directors") and one (1) shall be Mark K.
Wright. The Preferred Directors initially shall be Donald M.
Johnston, W. Patrick Ortale, III, John H. Wyant and Cal
Martin. Meetings of the Board of Directors shall be held not
less frequently than quarterly.
(b) The Company agrees that the Board of Directors shall not
consist of more than seven (7) members unless such number of
directors is consented to by the holders of two-thirds (2/3)
in interest of the Series A, Series B and Series C Preferred
Stock, voting together as a single class. The Company shall
reimburse the Preferred Directors for all reasonable
out-of-pocket expenses incurred in the performance of their
duties as directors, in addition to the payment of directors'
fees, if any, paid to other directors.
Section 1.3 (c) shall not be amended.