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EXHIBIT 10.4(a)
STOCKHOLDERS' AGREEMENT
AMONG
INTERLAND, INC.
CREST COMMUNICATIONS PARTNERS L.P.,
CREST ENTREPRENEURS FUND L.P.
BOULDER VENTURES III, L.P.
AND
THE OTHER INVESTORS SET FORTH ON THE SIGNATURE PAGE HERETO
DATED DECEMBER 2, 1999
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TABLE OF CONTENTS
1. DEFINITIONS............................................................2
2. DIRECTORS OF THE COMPANY...............................................2
2.1. Board of Directors............................................2
2.2. Board Meetings................................................3
2.3. Board Committees..............................................3
3. TRANSFER OF EQUITY SECURITIES; PREEMPTIVE RIGHTS.......................4
3.1. Restrictions on Transfer of Shares by the Stockholders........4
3.2. Investor Stockholders Ownership...............................4
3.3. Rights of First Refusal and Tag-Along Rights..................4
3.3.1. First OfferRights.....................................4
3.3.2. Offer.................................................5
3.3.3. Company Rights........................................5
3.3.4. Stockholder Rights....................................5
3.3.5. Sale by Transferor....................................6
3.3.6. Closing...............................................7
3.3.7. Tag-Along Rights......................................7
3.4. Obligation to Sell............................................8
3.5. Preemptive Rights.............................................9
3.6. Put Rights...................................................10
4. ADDITIONAL COVENANTS OF THE COMPANY...................................10
4.1. Books and Records............................................10
4.2. Access and Examination Rights................................11
4.3. Financial and Business Information...........................11
4.4. Defaults; Litigation.........................................12
4.5. Additional Information.......................................12
5. ADDITIONAL COVENANTS AND REPRESENTATIONS OF THE
EXISTING STOCKHOLDERS.................................................12
5.1. Action by Written Consent....................................12
5.2. Special Meetings.............................................13
5.3. Stock Ownership..............................................13
5.4. Holdback Agreement...........................................13
6. MISCELLANEOUS.........................................................13
6.1. Legend.......................................................13
6.2. Specific Performance.........................................14
6.3. Termination..................................................14
6.4. Assignment...................................................14
6.5. Entire Agreement; Amendment..................................15
6.6. Waiver.......................................................15
6.7. No Third Party Beneficiaries.................................15
6.8. Binding Effect...............................................15
6.9. Governing Law................................................16
6.10. Notices......................................................16
6.11. Execution in Counterparts....................................17
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STOCKHOLDERS AGREEMENT
INTERLAND, INC.
THIS STOCKHOLDERS AGREEMENT (this "Agreement") is entered
into as of December 2, 1999 by and among Interland, Inc., a Georgia corporation
(the "Company"), Crest Communications Partners L.P., a Delaware limited
partnership and Crest Entrepreneurs Fund L.P., a Delaware limited partnership
(collectively, "Crest"), Boulder Ventures III, L.P., a Delaware limited
partnership ("Boulder") and the other investors set forth on the signature page
hereto (the "Other Investors," and together with Crest and Boulder, the
"Investor Stockholders"), and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ (the
"Existing Stockholders"). The Investor Stockholders and the Existing
Stockholders, together with other stockholders of the Company who may become
parties hereto, are referred to herein collectively as the "Stockholders" and
individually as a "Stockholder."
WHEREAS, the Existing Stockholders own 16,671,340 shares of
the issued and outstanding shares of the Company's common stock, no par value
per share (the "Common Stock"), representing 76.7% of the total issued and
outstanding equity securities of the Company immediately prior to the execution
hereof and the issuance to the Investor Stockholders of the Company's Series A
Convertible Participating Preferred Stock, no par value per share (the "Series
A Preferred Stock");
WHEREAS, immediately prior to the execution hereof, the
Company has issued to the Investor Stockholders an aggregate of 9,174,313
shares of Series A Preferred Stock pursuant to a Stock Purchase Agreement
between the Company and the Investor Stockholders dated as of the date hereof
(the "Purchase Agreement");
WHEREAS, the Company and the Stockholders desire to enter
into this Agreement in order to provide, among other things, for certain
restrictions relating to the transfer of the Equity Securities and other rights
and responsibilities as set forth herein; and
NOW, THEREFORE, for and in consideration of the foregoing and
of the mutual covenants and agreements hereinafter set forth, the parties
hereto agree as follows:
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1. DEFINITIONS
For all purposes of this Agreement, certain capitalized terms
specified in Exhibit A shall have the meanings set forth in Exhibit A, except
as otherwise expressly provided.
2. DIRECTORS OF THE COMPANY
As provided in the Articles of Incorporation, as amended, of
the Company (the "Articles") and the Bylaws, as amended, of the Company (the
"Bylaws"), all directors of the Company shall be elected by the holders of the
Common Stock and the Series A Preferred Stock voting together as a single class
(with each share of Series A Preferred Stock entitled to the number of votes
equal to the number of votes which could be cast in such vote by the number of
shares of Common Stock that would be issuable upon conversion of such share of
Series A Preferred Stock on the record date for determining eligibility to
participate in the action being taken).
2.1. BOARD OF DIRECTORS
The Company and each Stockholder (for so long as such
Stockholder owns any capital stock of the Company) shall take or cause to be
taken all such action within their respective power and authority (including
without limitation the voting of shares of Equity Securities held by such
Stockholder or the taking of action by consent with respect to such shares) as
may be required; provided, however, that the Investor Stockholders' rights
provided in this SECTION 2.1 shall terminate once the Investor Stockholders'
aggregate ownership of the Equity Securities is less than ten percent (10%) of
the aggregate voting power of the Equity Securities (the "10% Requirement"):
(1) to establish and maintain the authorized
size of the Board of Directors of the Company at eight (8) directors; to
maintain the quorum requirements for actions of the Board of Directors at a
majority of the entire number of directors, including the directors designated
by the Investor Stockholders as provided below; and to maintain the voting
requirements for actions of the Board of Directors at a majority of directors
present at a meeting at which there is a quorum, except in respect of such
matters as this Agreement, the Articles or the Bylaws of the Company may impose
a greater voting requirement;
(2) to cause to be elected to the Board of
Directors of the Company (A) two directors designated jointly by Crest and
Boulder or their assignees, on behalf of the Investor Stockholders, who shall
initially be ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇, (B) four directors
designated by the Company, three of whom shall initially be ▇▇▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇, and (C) two directors who are not employees of
the Company, designated by
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the Company;
(3) to remove forthwith from the Board of
Directors any director when removal is requested for any reason by the
Stockholder group designating the election of such director pursuant to SECTION
2.1(2) above (each a "Designating Group"), with or without cause;
(4) in the case of death, resignation or other
removal as herein provided of such director, to elect another person designated
by the respective Designating Group to fill the vacancy created thereby; and
(5) to use its best efforts to prevent any
action from being taken by the Board of Directors of the Company during the
pendency of any vacancy due to death, resignation or removal of a director,
unless the Designating Group shall have failed for a period of ten days after
written notice of such vacancy to designate a replacement.
The Investor Stockholders, for so long as they own shares of
Series A Preferred Stock, shall be permitted to send no more than four
representatives in the aggregate (the "Representatives"), with one
Representative designated by each of Crest, Boulder, BancBoston Ventures Inc.
and Private Equity Co-Invest Ltd., to attend, as nonvoting observers, all
meetings of the Company's Board of Directors or committees thereof and, in this
respect, the Company shall provide the Representatives copies of all notices,
minutes, consents, and other material that it provides to its Directors;
provided, however, that the Company reserves the right to exclude the
Representatives from access to any material or meeting or portion thereof if
the Company in good faith believes upon advice of counsel that such exclusion
is reasonably necessary to preserve the attorney-client privilege or to protect
highly confidential proprietary information. The Representatives may
participate in discussions of matters brought to the Board of Directors or the
committees thereof.
2.2. BOARD MEETINGS
The Company and each Stockholder agree to take, or cause the
Board of Directors to take, all such actions necessary to hold meetings of the
Board of Directors at least once each month in accordance with the Bylaws of
the Company.
2.3. BOARD COMMITTEES
The Company and each Stockholder further agree to take, or to
cause the Board of Directors to take, all such actions necessary to cause the
directors designated by the Investor Stockholders to be nominated to each
committee of the Board of Directors whether now in existence or created after
the date hereof;
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provided, however, the rights granted to the Investor Stockholders in this
SECTION 2.3 shall terminate if the Investor Stockholders fail to maintain the
10% Requirement.
3. TRANSFER OF EQUITY SECURITIES; PREEMPTIVE RIGHTS
Until the termination of this Agreement, the following
restrictions shall apply to the Transfer of Equity Securities:
3.1. RESTRICTIONS ON TRANSFER OF SHARES BY THE STOCKHOLDERS
Subject to the rights of the Investor Stockholders and the
Existing Stockholders set forth in this SECTION 3, Stockholders may only
Transfer Equity Securities in accordance with this SECTION 3. No Transfer of
Equity Securities in violation of this Agreement shall be made or recorded on
the books of the Company, and any such Transfer shall be void and of no effect.
3.2. INVESTOR STOCKHOLDERS OWNERSHIP
With the exception of increases in percentage ownership as a
result of anti-dilution and other conversion ratio adjustments set forth in the
Articles, the Investor Stockholders will not acquire additional Equity
Securities if doing so would have the effect of increasing the Investor
Stockholders' aggregate percentage ownership of the Company above that in
effect on the Effective Date without first obtaining the approval of the Board
of Directors. The Investor Stockholders hereby covenant that they will not seek
to exercise control over the management and operations of the Company other
than through their ability to designate two members of the Company's Board of
Directors. Notwithstanding the foregoing, the Investor Stockholders may acquire
additional Equity Securities and thereby increase their percentage ownership of
the Company without obtaining approval of the Board of Directors if such
acquisition occurs as a result of the exercise of rights provided for in this
SECTION 3. The Investor Stockholders may not Transfer any Equity Securities to
a Third Party unless such Transfer is approved by the Board of Directors, which
approval shall not be unreasonably withheld.
3.3. RIGHTS OF FIRST REFUSAL AND TAG-ALONG RIGHTS
3.3.1. FIRST OFFER RIGHTS
In the event that a Stockholder (a "Transferor"), desires to
Transfer for value (a "Sale of Shares") Equity Securities now or hereafter held
or acquired by such Transferor, before the Transferor may effect a Sale of
Shares, the Transferor first must make the offer(s) required by this SECTION
3.3 and such offer(s) must not have been accepted as provided in this SECTION
3.3.
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3.3.2. OFFER
Prior to effecting a Sale of Shares, the Transferor shall
first deliver a written notice (the "Transfer Notice") to the Company and to
each other Stockholder specifying (i) the name and address of the individual or
entity to whom the Transferor wishes to Transfer any Equity Securities, (ii)
the number and class or series of Equity Securities which the Transferor wishes
to Transfer (the "Offered Shares"), (iii) the cash or other purchase price
offered for the Equity Securities (the "Offer Price"), and (iv) any other terms
and conditions of the Transfer. The Transfer Notice shall constitute an
irrevocable offer by the Transferor to sell to the Company and to each other
Stockholder the Offered Shares at the price under the same terms and conditions
contained in the Transfer Notice and pursuant to the terms of this Section 3.3.
3.3.3. COMPANY RIGHTS
Within ten (10) Business Days following its receipt of the
Transfer Notice, the Company shall notify the Transferor and each other
Stockholder as to the number of the Offered Shares, if any, that it is electing
to purchase (the "Company Acceptance"). The election to purchase Offered Shares
shall be made on behalf of the Company and approved by those members of the
Board of Directors of the Company who are not and have not been designated by,
or are not Affiliates of, the Transferor. The Company Acceptance shall be
deemed to be an irrevocable commitment to purchase from the Transferor that
number of the Offered Shares which the Company has elected to purchase pursuant
to the Company Acceptance.
3.3.4. STOCKHOLDER RIGHTS
If the Company does not elect to purchase all of the Offered
Shares, then the Stockholders shall have the right to purchase any remaining
Offered Shares that the Company has not agreed to purchase (the "Remaining
Offered Shares"). Within five (5) Business Days following its receipt of the
Company Acceptance, each other Stockholder shall notify the Company and the
Transferor as to the number of the Remaining Offered Shares, if any, that each
such Stockholder is electing to purchase (each such notice being a "Stockholder
Acceptance"). If the number of Remaining Offered Shares is less than the total
number included in all Stockholder Acceptances (as verified by the Company),
then the number of Remaining Offered Shares shall be allocated as nearly as
practicable among the Stockholders pro-rata in proportion to the number of
shares of Common Stock (assuming conversion of the Series A Preferred Stock)
held by each such Stockholder. Each of the Stockholders shall have the right of
over-subscription such that if any of the Stockholders fails to exercise the
right to purchase its pro rata portion of the Remaining Offered Shares, the
Company shall promptly notify each of the other Stockholders and each of the
other Stockholders may purchase the non-purchasing Stockholder's portion,
within five (5) Business Days of the date of this
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subsequent notice from the Company, allocated as nearly as practicable among
the Stockholders pro-rata in proportion to the number of shares of Common Stock
(assuming conversion of the Series A Preferred Stock) held by each Stockholder.
Each Stockholder Acceptance shall be deemed to be an irrevocable commitment to
purchase from the Transferor that number of the Remaining Offered Shares which
the Stockholders have elected to purchase pursuant to their Stockholder
Acceptances.
3.3.5. SALE BY TRANSFEROR
If the Company and Stockholders do not deliver to the
Transferor a Company Acceptance and the Stockholder Acceptances to purchase all
of the Offered Shares or exercise Tag-Along Rights within the time frames set
forth in SECTIONS 3.3.3 AND 3.3.4 above, the Transferor (a) shall be under no
obligation to sell any of the Offered Shares to the Company and the
Stockholders, unless the Transferor so elects, and (b) may, within a period of
90 days from the date of the Transfer Notice, sell all, but not less than all,
of the Offered Shares to one or more Third Parties (each a "Third Party
Transferee"), for cash or other consideration substantially on the terms
specified in the Transfer Notice; provided that if there is more than one Third
Party Transferee, the Transferor in good faith must obtain binding and
definitive commitments to purchase all the Offered Shares within the 90-day
period before any sale to a Third Party Transferee of the Offered Shares may
take place. Upon any such sale, the Third Party Transferee of the Offered
Shares shall execute an agreement in form and substance satisfactory to the
Company and the Stockholders pursuant to which the Third Party Transferee
agrees that the Equity Securities it acquired from the Transferor are subject
to the provisions of this SECTION 3 and otherwise agrees to become a party to
this Agreement as a Stockholder. Any Third Party Transferee to whom Offered
Shares are Transferred pursuant to and in compliance with this SECTION 3.3
shall, upon consummation of such Transfer, be deemed a Stockholder. If the
Transferor does not complete the sale of the Offered Shares within the 90-day
period, the provisions of this SECTION 3 shall again apply, and no Transfer of
Shares held by the Transferor shall be made otherwise than in accordance with
the terms of this Agreement.
3.3.6. CLOSING
The closing of purchases of Offered Shares by the Company and
the Stockholders (or their designees) pursuant to this SECTION 3.3. shall take
place within 90 days after the date of the Transfer Notice at 11:00 A.M. local
time at the principal offices of the Company, or at such other date, time or
place as the parties to the sale may agree. At least five (5) Business Days
prior to the closing, the Company shall notify the Transferor in writing of the
name and number of purchasers and the portion of the Offered Shares to be
purchased by the Company and the Stockholders. At the closing, the Transferor
shall sell, transfer and deliver to the Company and each of the Stockholders
participating in the purchase, full
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right, title and interest in and to the Offered Shares so purchased, free and
clear of all liens, security interests or adverse claims of any kind and nature
(except as otherwise set forth in the Articles and this Agreement and
applicable securities laws) and shall deliver to the Company and all
participating Stockholders a certificate or certificates representing the
Offered Shares sold, in each case duly endorsed for transfer or accompanied by
appropriate stock transfer powers duly endorsed with signatures guaranteed by a
commercial bank, trust company or registered broker dealer. Simultaneously with
delivery of the certificates, the Company and each of the participating
Stockholders shall deliver to the Transferor, in full payment of the purchase
price of the Offered Shares purchased, (a) any cash consideration for the
shares by wire transfer of immediately available funds to the bank and the
account designated by the Transferor and/or (b) any non-cash consideration for
the shares in person to the Transferor at Closing.
3.3.7. TAG-ALONG RIGHTS
To the extent any rights of first refusal are not exercised
under this SECTION 3.3 as to all the Offered Shares or the consideration in any
proposed sale is other than cash or promissory notes, the Transferor proposing
to effect a Sale of Shares shall afford the Investor Stockholders the
opportunity to participate in the sale with the Transferor (the "Tag-Along
Right") with each such Stockholder (including the Transferor) participating in
the sale pro-rata in proportion to the ownership of the Equity Securities by
each of the Stockholders (on an as-converted basis, with respect to all
then-outstanding convertible securities), and for the same consideration and
otherwise on the same terms as specified in the Transfer Notice. In the event
that any Stockholder shall propose a Sale of Shares, the Transferor shall
provide written notice to the Company and the Investor Stockholders in
accordance with SECTION 3.3, and if the Investor Stockholders intend to
participate in the proposed sale, they shall state their intention to
participate in the Stockholder Acceptance, as the case may be, delivered to the
Transferor in accordance with SECTION 3.3.
3.4. OBLIGATION TO SELL
(1) If the Board of Directors recommends a transaction
in which all of the Equity Securities would be sold or exchanged (in a business
combination or otherwise) in a bona fide arms length transaction to a Third
Party (other than a public offering under the Act) (the "Recommended
Transaction"), the Investor Stockholders of the Company and the Existing
Stockholders shall be obligated to, and shall, (a) Transfer to such Third
Party, all Equity Securities (on an as-converted basis, with respect to the
Series A Preferred Stock) owned by such Stockholder and (b) if stockholder
approval of the transaction is required, vote its Equity Securities in favor
thereof. The requirements of this SECTION 3.4 shall apply only in the event
that (a) the per share consideration to be received in the Recommended
Transaction is in excess of the applicable Threshold Price and (b) the
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consideration offered in the Recommended Transaction consists of (i) cash, (ii)
securities listed on an established national securities exchange or automated
quotation system and registered under the Act or (iii) a combination thereof.
(2) The obligations of the Stockholders pursuant to this
SECTION 3.4 are subject to the satisfaction of the following conditions:
(a) if any Stockholders of a class or series are given
an option as to the form and amount of consideration to be received, all
holders of such class or series will be given the same option;
(b) no Stockholder shall be obligated to make any
out-of-pocket expenditure prior to the consummation of the Recommended
Transaction and no Stockholder shall be obligated to pay more than his pro rata
share (based upon the amount of consideration received) of reasonable expenses
incurred in connection with a consummated Recommended Transaction to the extent
such costs are incurred for the benefit of all Stockholders and are not
otherwise paid by the Company or the acquiring party (costs incurred by or on
behalf of a Stockholder for his sole benefit will not be considered costs of
the transaction hereunder), provided that a Stockholder's liability for such
expenses shall be capped at the total purchase price received by such
Stockholder for his shares of the capital stock of the Company; and
(c) in the event that the Stockholders are required to
provide any representations in connection with the Recommended Transaction, the
Stockholders shall provide representations only concerning each Stockholder's
valid ownership of his capital stock in the Company, free of all liens and
encumbrances (other than those arising under applicable securities laws), and
each Stockholder's authority, power, and right to enter into and consummate
such purchase or merger agreement without violating any other agreement.
3.5. PREEMPTIVE RIGHTS
(1) The Company hereby grants to each Investor
Stockholder the right (but not the obligation) to purchase the Investor
Stockholder's pro rata share of all (or any part) of New Securities (as
hereinafter defined) that the Company may, from time to time, propose to sell
and issue. A pro rata share, for purposes of this preemptive right, is the
portion of the New Securities obtained by multiplying the total New Securities
by a fraction, the numerator of which is the sum of the number of shares of
Common Stock then held by an Investor Stockholder and the number of shares of
Common Stock into which shares of Series A Preferred Stock or other convertible
securities then held by an Investor Stockholder may then be converted, and the
denominator of which is the total number of shares of Common Stock plus the
total number of shares of Common Stock issuable upon conversion of all
then-outstanding convertible securities. For purposes of this SECTION 3.5, "New
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Securities" shall mean any common stock or preferred stock of the Company,
whether now authorized or not, and rights, options or warrants to purchase such
common stock or preferred stock, and securities of any type whatsoever that
are, or may become, convertible into or exchangeable for common stock or
preferred stock of the Company, but shall not include: (a) shares of Common
Stock to be issued upon conversion of the Series A Preferred Stock; (b) shares
of Common Stock issued to officers, directors, consultants or employees of the
Company upon the exercise of options issued to such persons, under any stock
option, other equity incentive plan, or pursuant to agreements entered into
prior to the date of this Agreement, in all cases, approved by the Board of
Directors or a committee thereof; (c) securities offered in an underwritten
public offering; or (d) securities issued in consideration of the acquisition
of one or more businesses by the Company.
In the event the Company issues New Securities, it shall give
the Investor Stockholders written notice of such issuance within sixty (60)
days thereof, describing the type of New Securities, the price and the general
terms upon which the Company issued the same. The Investor Stockholders shall
have ten (10) Business Days from the date of receipt of any such notice to
purchase all or a portion of its pro rata share of the New Securities for the
price and upon the general terms specified in the notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased.
(2) In the case of an issuance and sale of New
Securities to a Strategic Investor, the rights granted under this SECTION 3.5
shall be exercisable only in the following circumstances:
(a) if the issuance or series of related
issuances of New Securities to a Strategic Investor takes place within sixty
(60) days of the date of this Agreement and (i) the aggregate purchase price of
the New Securities is equal to or greater than $5 million and (ii) the price
per share for such New Securities is less than the per share purchase price
paid for the Series A Preferred Stock under the Purchase Agreement; or
(b) if the issuance or series of related
issuances of New Securities to a Strategic Investor takes place more than sixty
(60) days from the date of this Agreement, and (i) the aggregate purchase price
of the New Securities is equal to or greater than $20 million and (ii) the
price per share for such New Securities is less than one and one-half times the
per share purchase price paid for the Series A Preferred Stock under the
Purchase Agreement.
The right to purchase New Securities set forth in this
SECTION 3.5(2) shall be offered to the Investor Stockholders within sixty (60)
days following the issuance of the New Securities.
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3.6. PUT RIGHTS
In the event that the Company has not initiated and kept open
for thirty days a rescission offer to those holders of its Common Stock who (i)
reside in the states of Delaware, Florida, Georgia, Idaho, New Jersey, New York
and Virginia and (ii) purchased the Common Stock between November 1, 1998 and
November 1, 1999 by January 31, 2000, which rescission offer satisfies the
requirements of those states in which the rescission offer was made, the
Investor Stockholders shall have the right to require that the Company
repurchase their shares of Series A Preferred and any Common Stock into which
the Series A Preferred shall have been converted. The Investor Stockholders
shall have until March 31, 2000 to exercise the rights granted pursuant to this
SECTION 3.6 and may exercise these rights with regard to all or a part of the
Series A Preferred or Common Stock by sending written notice to the Company
requesting that the Company repurchase their shares. The purchase price per
share of Series A Preferred or Common Stock shall be the Stated Value Per
Share, as defined in the Company's Articles of Incorporation, plus any accrued
but unpaid dividends thereon.
4. ADDITIONAL COVENANTS OF THE COMPANY
The Company hereby covenants with each Stockholder as follows:
4.1. BOOKS AND RECORDS
The Company shall keep and maintain adequate and proper books
and records of account, in which complete entries are made in accordance with
generally accepted accounting principles consistently applied and in accordance
with all applicable laws, rules, and regulations, reflecting all financial and
other transactions of the Company normally or customarily included in books and
records of account of companies engaged in the same or similar businesses and
activities as the Company.
4.2. ACCESS AND EXAMINATION RIGHTS
The Company shall permit each Investor Stockholder and any
agents or representatives thereof to visit and inspect the properties of the
Company, to examine and make abstracts from any of the Company's books and
records (including agreements, licenses, and similar documents) at any
reasonable time and as often as such Investor Stockholder or such agents or
representatives may reasonably request, and to discuss the business,
operations, prospects, assets, properties, and condition (financial or
otherwise) of the Company with any of the officers, directors, employees,
agents, or representatives of the Company; provided, however, that such rights
of access and examination shall be subject to such security or safety rules and
regulations as the Company may have in effect from time to time
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that are applicable to all visitors to its facilities and to applicable laws
and regulations, including those applying to classified material and
facilities.
4.3. FINANCIAL AND BUSINESS INFORMATION
The Company shall furnish to the Investor Stockholders:
(1) as soon as available and in any event within 90 days
after the end of each fiscal year of the Company, a copy of the audited balance
sheet of the Company as of the end of such fiscal year and the related audited
statements of income and cash flows for the fiscal year, all prepared in
reasonable detail, and certified by independent certified public accountants of
recognized national standing as presenting fairly the financial position of the
Company and approved by the Board of Directors of the Company, including
footnotes and setting forth in comparative form the corresponding figures for
the corresponding period of the preceding fiscal year. The Company shall also
provide the figures for such period set forth in the operating plan and budget
delivered by the Company pursuant to subsection (4) hereof;
(2) as soon as available and in any event within 45 days
after the end of each fiscal quarter of the Company (other than the last
quarter of each fiscal year) in the case of quarterly statements and within 30
days after the close of each month of each fiscal year in the case of monthly
statements, a copy of the unaudited balance sheet of the Company as of the end
of the quarter or month and the related unaudited statements of income and cash
flows of the Company for the periods commencing at the end of the previous
quarter or month and ending at the end of the quarter or month and commencing
at the beginning of the fiscal year and ending at the end of the quarter or
month, in each case (a) setting forth in comparative form the corresponding
figures for the corresponding period of the preceding fiscal year and the
figures for the period set forth in the operating plan and budget delivered by
the Company pursuant to subsection (4) hereof and (b) in the case of quarterly
financial statements, accompanied by a report from the Company's Chief
Financial Officer (or other member of management acting in such capacity)
summarizing the Company's financial condition and results of operations during
such period and in comparison to the periods set forth in (a) immediately
preceding;
(3) promptly after the sending or filing thereof, copies
of all financial statements and reports that the Company sends to its
stockholders and copies of all regular, periodic, and special reports which the
Company files with any governmental authority, including, without limitation
the United States Securities and Exchange Commission; and
(4) as soon as available and in any event no later than
30 days prior
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to the first day of each fiscal year of the Company beginning after the date
hereof, an annual operating plan and budget (including cash flow data) for the
Company for the upcoming fiscal year, each prepared in reasonable detail, as
each operating plan and budget has been approved by the Board of Directors of
the Company.
4.4. DEFAULTS; LITIGATION
The Company shall furnish to the Investor Stockholders
notifications of any material defaults under any of its contracts or agreements
and copies of any litigation brought against the Company, including in each
case, a detailed description thereof.
4.5. ADDITIONAL INFORMATION
The Company shall furnish to the Investor Stockholders such
additional information as the Investor Stockholders may reasonably request.
5. ADDITIONAL COVENANTS AND REPRESENTATIONS OF THE
EXISTING STOCKHOLDERS
5.1. ACTION BY WRITTEN CONSENT
The Existing Stockholders agree that they will not take any
action by written consent, which may otherwise be permitted by the Company's
Articles of Incorporation or Bylaws, without first obtaining the consent to
such action by the holders of a majority of the Series A Preferred.
5.2. SPECIAL MEETINGS
The Existing Stockholders agree that, upon a request by the
Investor Stockholders that a special meeting of the Company's stockholders be
called, the Existing Stockholders will request the Company to call such a
special meeting.
5.3. STOCK OWNERSHIP
Each Existing Stockholder hereby represents that as of the
date of this Agreement, he owns (free and clear of any liens) 8,335,670 shares
of the Company's Common Stock.
5.4. HOLDBACK AGREEMENT
In the event that the Company effects a registration of any
securities under the Act, in an underwritten public offering, each Existing
Stockholder agrees
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not to effect any sale, transfer, disposition or distribution, including any
sale pursuant to Rule 144 under the Act, of any Equity Securities (except as
part of such offering) during (i) the 180-day period commencing with the
effective date of the registration statement for the IPO and, (ii) for so long
as each Existing Stockholder owns 5% or more of the Company's outstanding
voting securities, the 90-day period commencing with the effective date of the
registration statement for any subsequent public offering, provided, in the
case of both (i) and (ii) above, that all officers, directors and holders of 5%
or more of the Company's outstanding voting securities enter into agreements
providing for similar restrictions on sales.
6. MISCELLANEOUS
6.1. LEGEND
The certificates or other evidence representing the Equity
Securities held by the Stockholders shall bear a legend (the "Legend") in
substantially the following form:
The shares represented by this certificate have not been
registered under the Securities Act of 1933 (the "Act") or
state securities laws and cannot be offered, sold or
otherwise transferred in the absence of registration or the
availability of an exemption from registration under the Act
and regulations promulgated thereunder and applicable state
securities laws. The voting rights with respect to, and sale
or other disposition of, the securities represented by this
certificate are restricted by and subject to the provisions
of a Stockholders' Agreement dated as of December 2, 1999, a
copy of which is available for inspection at the offices of
the Company.
6.2. SPECIFIC PERFORMANCE
With respect to the terms of this Agreement, in addition to
any other remedies which the Stockholders and the Company may have at law or in
equity, the Company and the Stockholders hereby acknowledge that the harm which
might result to the Stockholders or the Company from breaches by the Company or
Stockholders, as appropriate, of their respective obligations to take all
necessary actions with respect to the rights and obligations set forth in this
Agreement cannot be adequately compensated by damages. Accordingly, the Company
and the Stockholders agree that the parties to this Agreement shall have the
right to have all obligations and undertakings set forth in this Agreement
specifically performed by each other party to this Agreement and that any
Stockholder or the Company, as appropriate, shall have the right to obtain an
order or decree of such specific performance in any of the courts of the United
States of America or of any state or
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other political subdivision thereof.
6.3. TERMINATION
This Agreement shall terminate, and all agreements, covenants
and obligations of the parties hereunder shall become wholly void and of no
effect, upon the closing date of a Qualified Public Offering.
6.4. ASSIGNMENT
Except for assignments by the Investor Stockholder of the
rights existing under this Agreement to any transferee of any shares held by an
Investor Stockholder, neither the Company nor any other Stockholder shall
assign this Agreement, in whole or in part, whether by operation of law or
otherwise, unless (a) such person shall have obtained the prior written consent
of all the other parties, or (b) such assignment is in connection with a
Transfer of Equity Securities pursuant to SECTION 3 hereof. Any purported
assignment of this Agreement contrary to the terms hereof shall be null and
void and of no force and effect.
6.5. ENTIRE AGREEMENT; AMENDMENT
This Agreement, including the Exhibits hereto, constitutes
the entire agreement among the parties hereto with respect to the matters
provided for herein, and it supersedes all prior oral or written agreements,
commitments or understandings with respect to the matters provided for herein.
This Agreement may only be amended with the written consent of the Company and
the holders of at least a majority of the Series A Preferred Stock, provided,
however, that no such amendment may be effected which has the effect of
altering the restrictions or obligations of the Existing Stockholders without
the consent of both Existing Stockholders.
6.6. WAIVER
No delay or failure on the part of any party hereto in
exercising any right, power or privilege under this Agreement or under any
other instruments given in connection with or pursuant to this Agreement shall
impair any such right, power or privilege or be construed as a waiver of any
default or any acquiescence therein. No single or partial exercise of any such
right, power or privilege shall preclude the further exercise of such right,
power or privilege, or the exercise of any other right, power or privilege. No
waiver shall be valid against any party hereto unless made in writing and
signed by the party against whom enforcement of such waiver is sought and then
only to the extent expressly specified therein.
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6.7. NO THIRD PARTY BENEFICIARIES
It is the explicit intention of the parties hereto that no
person or entity other than the parties hereto is or shall be entitled to bring
any action to enforce any provision of this Agreement against any of the
parties hereto, and the covenants, undertakings and agreements set forth in
this Agreement shall be solely for the benefit of, and shall be enforceable
only by, the parties hereto or their respective successors, heirs, executors,
administrators, legal representatives and permitted assigns.
6.8. BINDING EFFECT
This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors, heirs,
executors, administrators, legal representatives and permitted assigns.
6.9. GOVERNING LAW
This Agreement, the rights and obligations of the parties
hereto, and any claims or disputes relating thereto, shall be governed by and
construed in accordance with the laws of Georgia (excluding the choice of law
rules thereof).
6.10. NOTICES
All notices, demands, requests, or other communications which
may be or are required to be given, served, or sent by any party to any other
party pursuant to this Agreement shall be in writing and shall be
hand-delivered or mailed by first-class, registered or certified mail, return
receipt requested, postage prepaid, or transmitted by telecopy as follows:
(i) If to the Company:
Interland, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
with a copy (which shall not constitute notice) to:
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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(ii) If to Crest:
Crest Communications Holdings LLC
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.:
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
If to Boulder:
Boulder Ventures Ltd.
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
If to any other Investor Stockholder, then to the
names and address set forth on the books and records
of the Company.
with a copy (which shall not constitute notice) to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇ L.L.P.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
(iii) If to any other Stockholder:
To such Stockholder's address shown on the signature
pages hereof.
Each party may designate by notice in writing a new address to which any
notice, demand, request or communication may thereafter be so given, served or
sent. Each notice, demand, request, or communication which shall be
hand-delivered, mailed, transmitted or telecopied in the manner described
above, shall be deemed sufficiently given, served, sent, received or delivered
for all purposes at such time as it is delivered to the addressee (with the
return receipt, the delivery receipt, or the answerback being deemed
conclusive, but not exclusive, evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
6.11. EXECUTION IN COUNTERPARTS
To facilitate execution, this Agreement may be executed in as
many
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counterparts as may be required; and it shall not be necessary that the
signatures of, or on behalf of, each party, or that the signatures of all
persons required to bind any party, appear on each counterpart; but it shall be
sufficient that the signature of, or on behalf of, each party, or that the
signatures of the persons required to bind any party, appear on one or more of
the counterparts. All counterparts shall collectively constitute a single
agreement. It shall not be necessary in making proof of this Agreement to
produce or account for more than a number of counterparts containing the
respective signatures of, or on behalf of, all of the parties hereto.
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IN WITNESS WHEREOF, the undersigned have duly executed this
Agreement, or have caused this Stockholders Agreement to be duly executed on
their behalf, as of the day and year first hereinabove set forth.
INTERLAND, INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer
INVESTOR STOCKHOLDERS
CREST COMMUNICATIONS
PARTNERS L.P.
By: Crest Communications Holdings LLC
Its: Authorized Representative
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title:Managing Director
CREST ENTREPRENEURS FUND
L.P.
By: Crest Communications Holdings LLC
Its: Authorized Representative
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Title:Managing Director
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BOULDER VENTURES III, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
BANCBOSTON VENTURES INC.
By: /s/ M. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
Name: M. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Vice President
PRIVATE EQUITY CO-INVEST LTD.
By: VBTC Management, Ltd.
Its:Sole Director
By /s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇
Title: Chairman
BOULDER VENTURES III (ANNEX),
L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
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EXISTING STOCKHOLDERS:
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇ ▇▇▇▇▇▇▇▇▇▇
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EXHIBIT A
TO STOCKHOLDERS' AGREEMENT
DATED AS OF DECEMBER 2, 1999
DEFINITIONS
"Act" shall mean the Securities Act of 1933, as amended.
"Agreement" shall mean this Stockholders' Agreement.
"Business Day" shall mean Monday through Friday and shall
exclude any federal or banking holidays observed in New York City.
"Common Stock" shall mean any class of common stock of the
Company.
"Company" shall mean Interland, Inc., a Georgia corporation,
or any successor thereto.
"Effective Date" shall mean the date on which the Agreement
is effective.
"Equity Securities" shall mean the Common Stock, the Series A
Preferred Stock and any warrants or other rights to subscribe for or to
purchase, or any options for the purchase of, Common Stock, any stock or
security convertible into or exchangeable for Common Stock or any other stock,
security or interest in the Company whether or not convertible into or
exchangeable for Common Stock.
"Qualified Public Offering" shall mean the public sale of any
equity securities of the Company under the Act through a nationally recognized
underwriter in which the Company's aggregate net proceeds realized from the
offering are at least $30 million, at an offering price per share equal to or
greater than (i) three times the Stated Value Per Share if the offering takes
place prior to December 2, 2002 or (ii) four times the Stated Value Per Share
if the offering takes place on or after December 2, 2002.
"Stated Value Per Share" shall have the meaning in the
Company's Articles of Incorporation defining the rights, terms and preferences
of the Series A Preferred.
"Stockholder" shall mean an Existing Stockholder or an
Investor Stockholder.
"Strategic Investor" shall mean an investor in the Company's
securities which (i) is engaged in the same or a related business as the
Company, (ii) in the
24
opinion of a majority of the Board of Directors, is making the investment
primarily for strategic business reasons rather than as a passive investment
and (iii) has a public market capitalization (based on the fair market value of
its outstanding publicly-traded securities) of at least $2 billion.
"Third Party" shall mean any person or entity excluding each
of the following: (a) the Company and any affiliate or associate of the
Company; (b) each of the Investor Stockholders and any of their respective
successors, officers, directors, affiliates or associates, and partners
(limited and general); or (c) each of the Existing Stockholders that are a
party to this Agreement as of December 2, 1999.
"Threshold Price" shall mean (i) three times the Stated Value
Per Share if the Recommended Transaction is recommended before December 2, 2002
or (ii) four times the Stated Value Per Share if the Recommended Transaction is
recommended on or after December 2, 2002.
"Transfer" means the sale, gift, mortgage, pledge, exchange,
assignment or other disposition or transfer, including a disposition under
judicial order, legal process, execution, attachment or enforcement of an
encumbrance, but shall not include: (a) a transfer by any Stockholder pursuant
to the terms of a merger or acquisition agreement to which the Company is a
party and which involves all of the Company's Equity Securities; (b) a transfer
by a Stockholder to such Stockholder's parents, spouse, children or
grandchildren, or to trustees or custodians for their benefit or any entity
controlled by any of such persons solely for estate planning purposes, provided
that the transferees shall hold the Equity Securities subject to the terms of
this Agreement and, as a condition precedent to such transfers, shall be
required to execute and deliver this Agreement; (c) a transfer by a Stockholder
in a public offering registered under the Act; (d) a transfer by an Investor
Stockholder to any director, officer, employee, partner, holder of a limited
liability company interest, stockholder or affiliate of the Investor
Stockholder; (e) a transfer by an Investor Stockholder of amounts not greater
than 2% of the then-outstanding Equity Securities (calculated on a
fully-diluted basis); or (f) any transfer for consideration other than cash or
promissory notes.