EXHIBIT 10.11
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (this
"Agreement") is made as of this 11th day of December, 1998, by and among RoweCom
Inc., a corporation incorporated under the laws of Delaware (together with any
successor corporation thereto, the "Company"), ▇▇▇▇ Communications Ltd., a
corporation incorporated under the laws of Ontario ("RoweCan"), each of the
persons listed on Schedule I (the "Class B Investors," and each a "Class B
Investor") and each of the persons listed on Schedule II (the "Class C
Investors," and each a "Class C Investor," and, together with the Class B
Investors, the "Investors," and each an "Investor").
PRELIMINARY STATEMENTS
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A. The Class B Investors have purchased an aggregate of 5,140,371
shares of the Class B Preferred Stock, $.01 par value of the Company ("Class B
Preferred Shares"), pursuant to the terms of that certain Stock Purchase
Agreement, dated May 4, 1998, among the Company, RoweCan and the Class B
Investors (the "Class B Stock Purchase Agreement").
B. Working Ventures Canadian Fund ("WV") has purchased 1,186,240 of
the Class B Preferred Shares of RoweCan (the "RoweCan Class B Preferred Shares")
pursuant to the terms of the Class B Stock Purchase Agreement and WV has
purchased 1,611,568 of the Class A Preferred Shares of RoweCan (the "RoweCan
Class A Preferred Shares") pursuant to the terms of that certain Share Purchase
Agreement, dated April 1, 1997 among RoweCan, the Company and WV.
C. Pursuant to the terms of the Stock Purchase Agreement dated the
date hereof among the Class C Investors, the Company and RoweCan (the "Class C
Stock Purchase Agreement"), the Class C Investors have purchased an aggregate of
4,586,598 shares of the Class C Preferred Stock, $.01 par value of the Company
("Class C Preferred Shares").
D. The Company, RoweCan and the Class B Investors entered into a
Registration Rights Agreement, dated as of May 4, 1998 (the "Amended and
Restated Registration Rights Agreement") which shall be amended and restated by
this Agreement.
E. Pursuant to the Second Amended and Restated Stockholders'
Agreement dated the date hereof among the Company, RoweCan, the Investors and
the Company's stockholders, WV has certain rights to exchange the RoweCan Class
A Preferred Shares and the RoweCan Class B Preferred Shares for securities of
the Company (the "Exchange Options").
F. It is a condition precedent to the consummation by the Class C
Investors of all of their respective obligations under the Class C Stock
Purchase Agreement that RoweCan, the Company and the Investors enter into this
Agreement.
NOW THEREFORE, the parties agree as follows:
1. DEFINITIONS. As used in this Agreement, the following terms have
the following meanings:
"Amended and Restated Registration Rights Agreement" shall have the
meaning ascribed to such term in the preliminary statements.
"Class B Preferred Shares" shall have the meaning ascribed to such
term in the preliminary statements.
"Class C Preferred Shares" shall have the meaning ascribed to such
term in the preliminary statements.
"Commission" shall mean the United States Securities and Exchange
Commission.
"Common Stock" shall mean the common stock, $.01 par value, of the
Company (or capital stock of any successor corporation to the Company).
"Designated Preferred Shares" shall mean, collectively, shares of
Class B Preferred Shares and Class C Preferred Shares.
"Exchange Act" shall mean the United States Securities Exchange Act of
1934, as amended.
"Exchange Options" shall have the meaning ascribed to such term in the
preliminary statements.
"IPO" shall mean the initial public offering of securities of the
Company.
"Long-Form Registration" shall have the meaning ascribed to such term
in Section 2.1.
"Person" shall mean an individual, partnership, corporation,
association, trust, joint venture, unincorporated organization, and any
government, governmental department or agency or political subdivision thereof.
"Registrable Shares" shall mean any or all securities of the Company
issued to the Investors or issuable to WV upon exercise of the Exchange Options;
provided, however, that such securities shall be converted into Common Stock
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prior to any registration.
"RoweCan A Preferred Shares" shall have the meaning ascribed to such
term in the preliminary statements.
"RoweCan B Preferred Shares" shall have the meaning ascribed to such
term in the preliminary statements.
"Securities Act" shall mean the United States Securities Act of 1933,
as amended.
2. DEMAND REGISTRATION RIGHTS.
2.1. Registration Upon Request. Subject to the provisions of Section
2.4 below, at any time, and from time to time after, the earlier of (a) January
31, 2003 or (b) the date that is six months after the IPO, if the holders of (x)
at least a majority of the Registrable Shares, (y) at least 60% of the Class B
Preferred Shares or (z) at least 60% of the Class C Preferred Shares provide the
Company with a written request for registration under the Securities Act of any
of their Registrable Shares on Form S-1 or any similar long-form registration
("Long-Form Registration"), which request specifies the approximate number of
Registrable Shares requested to be registered and the anticipated per share
price range for such offering and must result in aggregate proceeds of at least
$10,000,000, then within 10 days after receipt of any such request, the Company
shall give written notice of such requested registration to all other Investors
and shall include in the registration all Registrable Shares with respect to
which the Company has received written requests for inclusion therein within 15
days after the receipt of the Company's notice. Thereafter, subject to the
conditions, limitations and provisions set forth below in Sections 2.3, 2.4 and
5, the Company shall promptly prepare and file, and use its best efforts to
prosecute to effectiveness, an appropriate filing with the Commission of a
registration statement covering all of those Registrable Shares with respect to
which registration under the Securities Act has been requested by the Investors
as provided herein. Subject to the provisions of Section 2.3 below, the Company
may include in any registration pursuant to this Section 2.1 additional shares
of Common Stock for sale for its own account or for the account of any other
Person.
2.2. Selection of Underwriters. If the holders initiating a
registration pursuant to Section 2.1 intend to distribute the Registrable Shares
by means of an underwriting, they shall so advise the Company in their request.
In such event, the right of other holders to participate shall be conditioned on
such holder's participation in such underwriting. If a registration pursuant to
Section 2.1 involves an underwritten offering, the underwriter or underwriters
thereof shall be selected, after consultation with the Company, by Investors
holding a majority of the Registrable Securities requested by the Investors to
be registered, provided that such underwriter
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or underwriters shall be acceptable to the Company. The Company covenants that
it shall not unreasonably withhold its acceptance of any such underwriter or
underwriters.
2.3. Priority of Demand Registration. If a registration pursuant to
Section 2.1 involves an underwritten offering, and the managing underwriter
shall advise the Company in writing that, in its opinion, the number of shares
of Common Stock requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall include in such
registration, to the extent of the number of shares of Common Stock that the
Company is so advised can be sold in such offering, (i) first, the number of
Registrable Shares requested to be included in such registration by the
Investors whose Designated Preferred Shares shall have been converted into
Common Shares, (ii) second, the number of Registrable Shares requested to be
included in such registration by the Investors whose Class A-1 Preferred Shares
shall have been converted into Common Shares and (iii) third, the other shares
of Common Stock of the Company proposed to be included in such registration, in
accordance with the priorities, if any, then existing among the Company and the
holders of such other securities.
2.4. Limitation on Requests. Notwithstanding anything in this
Section 2 to the contrary, the Investors may not request a registration pursuant
to Section 2.1 during the 180-day period following (i) the closing of the IPO,
(ii) the effective date of any registration statement filed in connection with a
registration pursuant to Section 2.1 or 4.1 or (iii) the effective date of any
registration statement filed in connection with a registration pursuant to
Section 3. The Investors shall be entitled to request no more than four demand
registrations pursuant to Section 2; provided that (i) at least one of such
registrations must be requested by the holders of at least 60% of the Class B
Preferred Shares (a "Required Class B Interest"); (ii) at least one of such
registrations must be requested by the holders of at least 60% of the Class C
Preferred Shares (a "Required Class C Interest"); and (iii) each of a Required
Class B Interest and a Required Class C Interest may request no more than two
such registrations that are not requested by the other of them. A registration
shall not count as one of the permitted registrations pursuant to Section 2
until it has become effective. For purposes of this Agreement, a registration
shall be deemed to have been effected by the Company if the registration
statement relating thereto has been declared effective by the Commission or if
such registration statement, after having been filed with the Commission, is
subsequently withdrawn at the request of the Investors and such request is not
due to a material change in the Company's business or prospects.
3. PIGGYBACK REGISTRATION RIGHTS.
3.1. Registration. If at any time after the IPO, the Company
proposes to register any of its Common Stock under the Securities Act, whether
for its own account or for the account of any stockholder of the Company or
pursuant to registration rights granted to holders of other securities of the
Company (but excluding in all cases any registrations pursuant to Sections 2 or
4 hereof or any registrations to be effected on Forms S-4 or S-8 or any
applicable successor Forms), the Company shall, each such time, give to the
Investors written notice of its intent to do so. Within 20 days of the receipt
of such notice, the Investors shall have the right to give notice pursuant to
Section 2.1 or 4.1 in which event, the notice given pursuant to this
Section 3.1 shall be null and void and the notice pursuant to Section 2.1 or 4.1
as the case may be shall be proceeded with. Upon the written request of an
Investor to register its Registrable Shares pursuant to this Section 3.1 given
within 20 days after the giving of any such notice by the Company, the Company
shall use its best efforts to cause to be included in such registration the
Registrable Shares of such Investor, to the extent requested to be registered,
subject to Section 3.2; provided that such Investor agrees to sell those of its
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Registrable Shares to be included in such registration in the same manner and on
the same terms and conditions as the other shares of Common Stock which the
Company purposes to register.
3.2. Priority of the Company Shares. In connection with any offering
involving an underwriting of shares being issued by the Company or being sold
pursuant to any demand registration rights of any stockholder of the Company,
the Company shall not be required under Section 3.1 to include the Registrable
Shares of any Investor therein unless such Investor accepts and agrees to the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by the Company, and then only in such quantity as will
not, in the opinion of the underwriters, jeopardize the success of the offering
by the Company. If the total number of shares of Common Stock which all selling
stockholders of the Company (including, without limitation, the Investors)
request to be included in any offering exceeds the number of shares which the
underwriters believe to be compatible with the success of the offering, then (A)
if the offering is the IPO, the Company shall include in such registration, to
the extent of the number of shares of Common Stock that the Company is so
advised can be sold in such offering, (i) first, the number of shares of Common
Stock the Company proposes to include in such offering, (ii) second, the number
of Registrable Shares requested to be included in such registration by the
Investors whose Designated Preferred Shares shall have been converted into
Common Shares, (iii) third, the number of Registrable Shares requested to be
included in such registration by the Investors whose Class A-1 Preferred Shares
shall have been converted into Common Shares and (iv) fourth, the other shares
of Common Stock of the Company proposed to be included in such registration by
the holders of such other securities; and (B) if the offering is an offering
other than the IPO, the Company shall include in such registration, to the
extent of the number of shares of Common Stock that the Company is so advised
can be sold in such offering, (i) first, 20% of the number of Registrable Shares
requested to be included in such registration by the Investors whose Designated
Preferred Shares shall have been converted into Common Shares, (ii) second, 20%
of the number of Registrable Shares requested to be included in such
registration by the Investors whose Class A-1 Preferred Shares shall have been
converted into Common Shares, (iii) third, the number of shares of Common Stock
the Company proposed to include in such offering, (iv) fourth, the remaining 80%
of the number of Registrable Shares requested to be included in such
registration by the Investors whose Designated Preferred Shares shall have been
converted into Common Shares, (v) fifth, the remaining 80% of the number of
Registrable Shares requested to be included in such registration by the
Investors whose Class A-1 Preferred Shares shall have been converted into Common
Shares and (vi) sixth, the other shares of Common Stock of the Company proposed
to be included in such registration by the holders of such other securities.
4. FORM S-3 REGISTRATION.
4.1. Registration Upon Request. The Company shall use its best
efforts to qualify and remain qualified for the use of Form S-3 (or any
applicable successor form) for the registration of its securities under the
Securities Act. At any time that the Company is so qualified, in the event that
the Company shall receive from the Investors holding (a) at least 20% of the
Registrable Shares (b) at least 35% of the shares of Common Stock converted from
the Class B Preferred Shares or (c) at least 35% of the shares of Common Stock
converted from the Class C Preferred Shares a written request that the Company
effect a registration on Form S-3 (or any applicable successor Form), which
request specifies the approximate number of Registrable Shares requested to be
registered and the anticipated per share price range for such offering, which
offering shall provide an aggregate offering price of at least $1,000,000, then
within 10 days after receipt of any such request, the Company shall give written
notice of such requested registration to all other Investors and shall include
in the registration all Registrable Shares with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice. Thereafter, subject to the conditions, limitations and
provisions set forth below in Section 4.2, 4.3 and 5, the Company shall promptly
prepare and file, and use its best efforts to prosecute to effectiveness,
appropriate filing with the Commission of a registration statement covering all
of those Registrable Shares with respect to which registration under the
Securities Act has been requested by the Investors as provided herein. Subject
to Section 4.3, the Company may include in any registration pursuant to this
Section 4.1 additional shares of Common Stock for sale for its own account or
for the account of any other Person.
4.2. Selection of Underwriters. If the holders initiating a
registration pursuant to Section 4.1 intend to distribute the Registrable Shares
by means of an underwriting, they shall so advise the Company in their request.
In such event, the right of other holders to participate shall be conditioned on
such holder's participation in such underwriting. If a registration pursuant to
Section 4.1 involves an underwritten offering, the underwriter or underwriters
thereof shall be selected, after consultation with the Company, by Investors
holding a majority of the Registrable Securities requested by the Investors to
be registered, provided that such underwriter or underwriters shall be
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acceptable to the Company. The Company covenants that it shall not unreasonably
withhold its acceptance of any such underwriter or underwriters.
4.3. Priority of Demand Registrations. If a registration pursuant to
Section 4.1 involves an underwritten offering, and the managing underwriter
shall advise the Company in writing that, in its opinion, the number of shares
of Common Stock requested to be included in such registration exceeds the number
which can be sold in such offering, the Company shall include in such
registration, to the extent of the number of shares of Common Stock that the
Company is so advised can be sold in such offering, (i) first, the number of
Registrable Shares requested to be included in such registration by the
Investors whose Designated Preferred Shares were converted into Common Shares,
(ii) second, the number of Registrable Shares requested to be included in such
registration by the Investors whose Class A-1 Preferred Shares were converted
into Common Shares and (iii) third, the other shares of Common Stock of the
Company proposed to be included in such registration, in accordance with the
priorities, if any, then existing among the Company and the holders of such
other securities.
4.4. Limitation on Requests. Notwithstanding anything in this
Section 4 to the contrary, the Investors may not request (a) more than one
registration pursuant to Section 4.1 in any six month period or (b) a
registration pursuant to Section 4.1 during the 180-day period following (i) the
closing of the IPO, (ii) the effective date of any registration statement filed
in connection with a registration pursuant to Section 2.1 or 4.1 or (iii) the
effective date of any registration statement filed in connection with a
registration pursuant to Section 3.
5. DEFERRAL. Notwithstanding anything to the contrary contained in
this Agreement, the Company's obligation to file a registration statement
pursuant to ▇▇▇▇▇▇▇ ▇, ▇ ▇▇ ▇ ▇▇▇▇▇ ▇▇ deferred for a period not to exceed 90
days in any 12-month period if the Company, in the good faith judgment of its
Board of Directors, reasonably believes that the filing thereof at the time
requested would materially adversely affect a pending or proposed public
offering of Common Stock, or an acquisition, merger, recapitalization,
consolidation, reorganization or similar transaction, or any negotiations,
discussions or pending proposals with respect thereto.
6. ADDITIONAL OBLIGATIONS OF THE COMPANY.
Whenever the Company is required under Section 2, 3 or 4 to use its
best efforts to effect the registration of any of the Registrable Shares, the
Company shall promptly:
(a) Prepare and file with the Commission a registration statement with
respect to such Registrable Shares and use its best efforts to cause such
registration statement to become and remain effective; provided, however
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that the Company shall in no event be obligated to cause any such
registration to remain effective for more than 180 days;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep the registration statement
effective for the period referred to in Section 6(a) and to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Investors such number of copies of the registration
statement, each amendment and supplement thereto, the prospectus included
in the registration statement (including each preliminary prospectus), each
in conformity with the requirements of the Securities Act, and such other
documents as the Investor may reasonably request in order to facilitate the
disposition of such Registrable Shares;
(d) Use its best efforts to register and qualify such Registrable
Shares under such other securities or blue sky laws of such jurisdictions
as shall be reasonably appropriate in the opinion of the Company and the
managing underwriters and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Investor to consummate the
disposition in such jurisdictions of the Registrable Shares owned by such
Investor, provided that the Company shall not be required in connection
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therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions,
and provided further that (anything in Section 8 to the contrary
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notwithstanding with respect to the bearing of expenses) if any
jurisdiction in which the securities shall be qualified shall require that
expenses incurred in connection with the qualification therein of the
securities be borne by selling stockholders, then the Investors shall, to
the extent required by such jurisdiction, pay its pro rata share of selling
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expenses;
(e) Notify each holder of Registrable Shares, 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 contains an untrue
statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and, at the request of any such holder,
the Company shall prepare a supplement or amendment to the prospectus so
that, as thereafter delivered to the purchasers of such Registrable Shares,
such prospectus shall not contain an untrue statement of a material fact or
omit to state any fact necessary to make the statements therein not
misleading;
(f) Promptly notify the holders of Registrable Shares and the
underwriters, if any, of the following events and (if requested by any such
Persons) confirm such notification in writing: (i) the filing of the
prospectus or any prospectus supplement and the registration statement and
any amendment or post-effective amendment thereto and, with respect to the
registration statement or any post-effective amendment thereto, the
declaration of the effectiveness of such document; (ii) any requests by the
Commission for amendments or supplements to the registration statement or
the prospectus or for additional information; (iii) the issuance or threat
of issuance by the Commission of any stop order suspending the
effectiveness of the registration statement or the initiation of any
proceedings for that purpose; and (iv) the receipt by the Company of any
notification with respect to the suspension of the qualification of the
Registrable Shares for sale in any jurisdiction or the initiation or threat
of initiation of any proceeding for such purpose;
(g) Use its best efforts to cause all such Registrable Shares to be
listed on each securities exchange on which similar securities issued by
the Company are then listed and, if not so listed, to be listed on the NASD
automated quotation system and, if listed on the NASD automated quotation
system, used its best efforts to secure designation of all such Registrable
Shares covered by the registration statement as a NASDAQ "national market
system security" within the meaning of Rule 11Aa2-1 of the Commission or,
failing that, to secure NASDAQ authorization for such Registrable Shares
and, without limiting the generality of the foregoing, to arrange by its
best efforts for at least two market makers to register as such with
respect to such Registrable Shares with the NASD;
(h) Provide a transfer agent and registrar for all such Registrable
Shares not later than the effective date of such registration statement;
(i) Enter into such customary agreements (including, without
limitation, underwriting agreements in customary form) and take all such
other actions as the holders of a majority of the Registrable Shares being
sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of such Registrable Shares (including,
without limitation, effecting a stock split or a combination of shares);
(j) Make available, subject to an applicable non-disclosure or
confidentiality agreement, for inspection by any holder of Registrable
Shares, any underwriter participating in any disposition pursuant to the
registration statement and any attorney, accountant or other agent retained
by any such holder or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such holder,
underwriter, attorney, accountant or agent in connection with the
registration statement;
(k) Otherwise endeavor 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 12 months beginning with the first day of the Company's
first full calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder;
(l) Permit any holder of Registrable Shares to participate in the
preparation of such registration or comparable statement and to require the
insertion therein of material furnished to the Company in writing, which in
the reasonable judgment of the holder and its counsel should be included;
(m) Make every reasonable effort to prevent the entry of any order
suspending the effectiveness of the registration statement and, in the
event of the issuance of any such stop order, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any security included in such registration statement for
sale in any jurisdiction, the Company shall use its best efforts promptly
to obtain the withdrawal of such order;
(n) Endeavor to cause such Registrable Shares covered by the
registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
holders thereof to consummate the disposition of such Registrable Shares;
(o) Cooperate with the selling holders of Registrable Shares and the
underwriters, if any, to facilitate the timely preparation and delivery of
certificates representing Registrable Shares to be sold and not bearing any
restrictive legends, and enable such Registrable Shares to be in such lots
and registered in such names as the
underwriters may request at least two business days prior to any delivery
of Registrable Shares to the underwriters;
(p) Provide a CUSIP number for all Registrable Shares not later than
the effective date of the registration statement; and
(q) Prior to the effectiveness of the registration statement and any
post- effective amendment thereto and at each closing of an underwritten
offering, (i) make such representations and warranties to the selling
holders of such Registrable Shares and the underwriters, if any, with
respect to the Registrable Shares and the registration statement as are
customarily made by issuers to underwriters in primary underwritten
offerings, (ii) obtain opinions of counsel to the Company and updates
thereof (which counsel and which opinions shall be reasonably satisfactory
to the underwriters, if any, and to the holders of a majority of the
Registrable Shares being sold) addressed to each selling holder and the
underwriters, if any, covering the matters customarily covered in opinions
requested in underwritten offerings and such other matters as may be
reasonably requested by such holders and underwriters or their counsel,
(iii) obtain "cold comfort" letters and updates thereof from the Company's
independent certified public accountants addressed to the selling holders
of Registrable Shares and the underwriters, if any, such letters to be in
customary form and covering matters of the type customarily covered in
"cold comfort" letters by underwriters in connection with primary
underwritten offerings, and (iv) deliver such documents and certificates as
may be reasonably requested by the holders of a majority of the Registrable
Shares being sold and by the underwriters, if any, to evidence compliance
with clause (i) above and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
7. FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 7 that
the Investors shall furnish to the Company such information regarding the
Investors and the shares of Common Stock held by the Investors as the Company
shall reasonably request and as shall be reasonably required in order to effect
any such registration by the Company.
8. EXPENSES. The Company shall pay all expenses related to the first
four registration statements filed by the Company on a Long-Form Registration
pursuant to Section 2.1, the first eight registrations filed pursuant to Section
4 and all registrations filed pursuant to Section 3, including, without
limitation, all registration and filing fees (including all expenses incident to
filing with the Commission and any applicable national securities exchange or
the National Association of Securities Dealers, Inc.), fees and expenses of
complying with securities and blue sky laws, printing expenses, fees and
disbursements of the Company's certified independent accounting firm and fees
and disbursements of counsel, including the reasonable fees and disbursements
(in no event in excess of $10,000) of one legal counsel selected by the
Investors holding a majority of the Registrable Shares requested by the
Investors to be registered to represent the Investors as selling stockholder(s)
thereunder (all, collectively, "Registration
Expenses"); provided, however, that all other expenses of counsel to the sellers
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as selling stockholders and underwriting discounts and selling commissions
applicable to the Registrable Shares covered by registrations effected pursuant
to Section 2.1, 3.1 or 4.1 shall be borne by the seller or sellers thereof, in
proportion to the number of Registrable Shares sold by such seller or sellers.
Notwithstanding anything in this Section 8 to the contrary, the Investors
requesting registration shall be required to pay all Registration Expenses
relating to or arising out of the Company being required to effect more than
four registrations on Form S-1 or eight registrations on Form S-3 (or any
applicable successor Forms) pursuant to the provisions of Section 2.1 or 4.1, as
applicable.
9. INDEMNIFICATION. In the event that any Registrable Share of any
Investor is included in a registration statement pursuant to this Agreement:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless such Investor, its affiliates and their respective officers,
directors, employees and agents, as the case may be, and each Person, if
any, who controls the Investor within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several, to
which they may become subject under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue or alleged
untrue statement of any material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the
statements therein not misleading; and will reimburse such Investor, its
affiliates and their respective officers, directors, employees and agents
or controlling Person for any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
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agreement contained in this Section 9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, damage, liability or action to the extent that
it arises out of or is based upon an untrue statement or alleged untrue
statement or omission made in connection with such registration statement,
preliminary prospectus, final prospectus, or amendments or supplements
thereto, in reliance upon and in conformity with written information
furnished to the Company in an instrument duly executed by the Investor or
its officer, director, partner or controlling Person and stated to be
specifically for use in the registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto.
(b) To the extent permitted by law, the Investor will indemnify and
hold harmless the Company, each of its directors, each of its officers who
have signed such registration statement and each Person, if any, who
controls the Company within the meaning of the Securities Act against any
losses, claims, damages or liabilities to which the Company or any such
director, officer or controlling Person may become subject to,
under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereto) arise out of or are
based upon any untrue or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary
prospectus contained therein or any amendments or supplements thereto, or
arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, in each case to the extent that such
untrue statement or alleged untrue statement or omission or alleged
omission was made in such registration statement, preliminary prospectus or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished to the Company in an instrument duly executed
by such Investor and stated to be specifically for use in such registration
statement, preliminary prospectus, final prospectus, or amendments or
supplements thereto; and the Investor will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer
or controlling Person in connection with investigating or defending any
such loss, claim, damage, liability or action; provided, however, that the
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indemnity agreement contained in this Section 9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or
action if such settlement is effected without the consent of such Investor
against which the request for indemnity is being made (which consent shall
not be unreasonably withheld); and provided, further, that the obligation
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to indemnify shall be individual to such Investor and shall be limited to
the net amount of proceeds received by such Investor from the sale of
Registrable Shares pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party pursuant to this
Section 9 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against any
indemnifying party pursuant to this Section 9, (i) notify the indemnifying
party in writing of the commencement thereof and (ii) unless, in such
indemnified party's reasonable judgement, a conflict of interest between
such indemnified and indemnifying parties exists or is reasonably likely to
arise with respect to such claim, give the indemnifying party the right to
participate in and, to the extent the indemnifying party desires, jointly
with any other indemnifying party similarly noticed, to assume at its
expense the defense thereof with counsel mutually satisfactory to the
parties.
10. LOCKUP. Each Investor hereby agrees that, at the written request
of the Company or any managing underwriter of the initial underwritten public
offering of securities of the Company, if at the time of such initial
underwritten public offering such Investor owns at least 1% of the outstanding
Common Stock of the Company (on an as-if converted basis), such Investor shall
not, without the prior written consent of the Company or such managing
underwriter, sell, make any short sale of, loan, grant any option for the
purchase of, pledge, encumber, or otherwise dispose of or exercise any
registration rights with respect to, any Common Stock (other than publicly
traded shares of Common Stock issued in such initial underwritten public
offering or otherwise) during the period (not to exceed 180 days) requested by
the managing underwriter; provided, that each officer or director of the Company
and each holder of at least one percent of its Common Stock (for this purpose,
calculated on a fully diluted
basis assuming full exercise of all outstanding options, warrants, and other
rights to acquire shares of Common Stock and full conversion or exchange of all
securities that are convertible into or exchangeable for shares of Common Stock)
shall have entered into a similar agreement.
11. GENERAL.
11.1. Remedies. In case that any one or more of the covenants and/or
agreements set forth in this Agreement shall have been breached by any party
hereto, the party or parties entitled to the benefit of such covenants or
agreements may proceed to protect and enforce its or their rights, either by
suit in equity and/or action at law, including, but not limited to, an action
for damages as a result of any such breach and/or an action for specific
performance of any such covenant or agreement contained in this Agreement. The
rights, powers and remedies of the parties to this Agreement are cumulative and
not exclusive of any other right, power or remedy which such parties may have
under any other agreement or law. No single or partial assertion or exercise of
any right, power or remedy of a party hereunder shall preclude any other or
further assertion or exercise thereof.
11.2. Assignment. All covenants and agreements in this Agreement by
or on behalf of any of the parties hereto shall bind and inure to the benefit of
the respective successors and assigns of the parties hereto, whether so
expressed or not. In addition, whether or not any express assignment has been
made, the provisions of this Agreement which are for the benefit of each
Investor are also for the benefit of, and enforceable by, any subsequent holder
of such Investor's Registrable Shares who consents in writing to be bound by
this Agreement.
11.3. Survival. The rights and obligations of the parties hereto set
forth herein shall survive indefinitely, unless and until, by their respective
terms, they are no longer applicable.
11.4. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the subject matter hereof and supersedes all
prior and contemporaneous arrangements or understandings with respect thereto;
including, without limitation, the Amended and Restated Registration Rights
Agreement which is hereby terminated.
11.5. Notices. Any notice, request, consent or other communication
hereunder to any party will be in writing and will be either personally
delivered, or sent by certified mail, return receipt requested, or sent by
facsimile, confirmation of receipt requested, or sent by reputable overnight
courier service (charges prepaid) to the address set forth below such party's
signature on the signature pages hereto. Notices will be deemed to have been
given hereunder when delivered personally; five business days after deposit in
the mail; when confirmation of receipt is received; and one day after deposit
with a reputable overnight courier service.
11.6. Amendments and Waivers. Any provision of this Agreement may be
amended, modified or terminated, and the observance of any provision of this
Agreement may be waived (either generally or in a particular instance and either
retrospectively or prospectively), with, but only with, the written consent of
the Company and the Investors holding at least 80% of
the Registrable Shares held by all Investors; provided that any such amendment
or waiver shall affect all Investors in the same manner.
11.7. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11.8. No Waiver of Future Breach. No failure or delay on the part of
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof. No assent, express or implied, by any party
hereto to any breach in or default of any agreement or condition herein
contained on the part of any other party hereto shall constitute a waiver of or
assent to any succeeding breach in or default of the same or any other agreement
or condition hereof by such other party.
11.9. No Implied Rights or Remedies; Third Party Beneficiaries.
Except as otherwise expressly provided in this Agreement, nothing herein
expressed or implied is intended or shall be construed to confer upon or to give
any Person, firm or corporation, other than the parties hereto and their
respective successor and assigns, any rights or remedies under or by reason of
this Agreement. Except as otherwise expressly provided in this Agreement, there
are no intended third party beneficiaries under or by reason of this Agreement.
11.10. Headings. The headings of the various sections of this
Agreement have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
11.11. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice-versa.
11.12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts,
excluding choice of law rules thereof.
11.13. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
[Signature pages follow.]
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first above written.
ROWECOM INC.
By:______________________________________
Name:
Title:
By:______________________________________
Name:
Title:
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▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Dr. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇ COMMUNICATIONS LTD.
By:_______________________________________
Name:
Title:
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▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇
Attn: Dr. ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
WORKING VENTURES CANADIAN FUND INC.
By:_______________________________
Name:
Title:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
CRYSTAL INTERNET VENTURE FUND, L.P.
By: Crystal Venture, Ltd.
Title: General Partner
By:_______________________________________
Name:
Title: Vice President
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
PAI, WEI ▇▇▇▇ ▇▇▇▇▇
By: CIVF Management, Ltd.,
attorney in fact pursuant to Power
of Attorney dated _________, 1998
By:_______________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
2 FL, ▇▇. ▇▇▇
▇▇-▇▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ROC
Facsimile: 011-886-22-517-6418
FU KUAN INVESTMENT CORP.
By: CIVF Management, Ltd.,
attorney in fact pursuant to Power
of Attorney dated _________, 1998
By:_______________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
14FL, ▇▇. ▇▇
▇▇ ▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ROC
Facsimile: 011-886-22-397-2106
Attn: ▇▇▇▇▇ ▇▇
PURETECH PROFITS LIMITED (BVI)
By: CIVF Management, Ltd.,
attorney in fact pursuant to Power
of Attorney dated _________, 1998
By:_______________________________________
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
c/o Mr. Y.L. Shen
Suite 2613
26FL
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇. ▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ROC
Facsimile: 011-886-22-757-6931
HIGHLAND CAPITAL PARTNERS III
LIMITED PARTNERSHIP
By: Highland Management Partners III
Limited Partnership
Title: General Partner
By:_______________________________________
Name:
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn:
HIGHLAND ENTREPRENEURS' FUND III
LIMITED PARTNERSHIP
By: HEF III LLC
Title: General Partner
By:_______________________________________
Name:
Title:
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn:
AXIOM VENTURE PARTNERS II
LIMITED PARTNERSHIP
By Axiom Venture Associates II Limited Liability
Company, its General Partner
By:______________________________________
Name:
Title:
CityPlace II - 17th Floor
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇
ZERO STAGE CAPITAL VI, L.P.
By Zero Stage Capital Associates VI, LLC, its
General Partner
By:______________________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇
Title: Managing Member
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Facsimile: ▇▇▇-▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
[ADDITIONAL INVESTORS]