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EXHIBIT 4.2
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "AGREEMENT") is made as of this
28th day of October, 1999, by and among (a) ▇▇▇▇▇▇▇.▇▇▇, Inc., a Delaware
corporation (the "CORPORATION"), (b) the purchasers of Class A Preferred Stock
(the "CLASS A PURCHASERS") listed on Schedule I attached hereto, (c) the
purchasers of Class B1 Preferred Stock listed on Schedule II attached hereto
(the "CLASS B1 PURCHASERS"), (d) the purchasers of Class B2 Preferred Stock
listed on Schedule III attached hereto (the "CLASS B2 PURCHASERS"); the Class A
Purchasers, the Class B1 Purchasers, the Class B2 Purchasers being collectively
referred to as the "PURCHASERS", (e) ▇▇▇▇▇▇▇ ▇▇▇▇ ("▇▇▇▇"), (f) ▇▇▇▇▇▇ ▇▇▇▇▇▇
("▇▇▇▇▇▇"), (g) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ("SHARIFF"), (h) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ("KAPOOR", and
collectively with ▇▇▇▇, ▇▇▇▇▇▇ and Shariff, the "FOUNDERS"), (i) Mercer
Management Consulting, Inc. ("MERCER"), (j) upon its subsequent execution of a
counterpart to this Agreement, Merchant Capital, Inc. ("MERCHANT"), and (k) upon
his subsequent execution of a counterpart to this Agreement, ▇▇▇▇▇▇▇ ▇▇▇▇
("▇▇▇▇").
R E C I T A L S
A. Concurrent with the execution and delivery of this Agreement, the
Class B1 Purchasers are purchasing up to 6,000,000 shares of the Corporation's
Class B1 Preferred Stock (the "CLASS B1 PREFERRED") pursuant to a Class B
Preferred Stock Purchase Agreement dated the date hereof (the "CLASS B PURCHASE
AGREEMENT") and the holders of $6,000,000 of convertible promissory notes (the
"CONVERTIBLE NOTES") are receiving 1,200,000 shares of the Corporation's Class
B2 Preferred Stock (the "CLASS B2 PREFERRED") upon conversion of the Convertible
Notes pursuant to the Class B Purchase Agreement.
B. The Corporation wishes to grant and the Class B1 Purchasers and the
Class B2 Purchasers wish to receive certain registration rights, rights of first
refusal and other rights, and the Corporation, the Class A Purchasers, the Class
B1 Purchasers, the Class B2 Purchasers desire to conform such rights of all
Purchasers in accordance with the terms and conditions of this Agreement.
C. In connection with a previous strategic agreement and the placement
of the Class B1 Preferred, the Corporation wishes to grant to Mercer and
Merchant, respectively, registration rights.
D. In connection with the proposed acquisition of Total Health
Products, Inc., the Corporation intends to issue shares of Common Stock to ▇▇▇▇
(the "▇▇▇▇ COMMON STOCK") and to grant to ▇▇▇▇ certain registration rights with
respect to the ▇▇▇▇ Common Stock.
E. The Corporation and the Purchasers contemplate additional closings
with respect to the sale of additional shares of the Class B1 Preferred which
may occur on or before November 26, 1999, and accordingly, this Agreement shall
be automatically amended so that this Agreement shall apply by its terms to the
Purchasers of such additional shares of Class B1 Preferred.
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NOW, THEREFORE, in reliance on the foregoing recitals, and in and for
the mutual covenants and consideration set forth herein, the parties hereto
agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
1.1 "AFFILIATE" and "AFFILIATED" shall refer to any person who is an
"AFFILIATE" as defined in Rule 12b-2 of the General Rules and Regulations under
the Securities Exchange Act of 1934, as amended. For purposes of this
definition, "PERSON" shall mean any individual, firm, corporation, partnership,
trust, incorporated or unincorporated association, joint venture, joint stock
corporation, governmental authority or other entity of any kind, and shall
include any successor (by merger or otherwise) of such entity.
1.2 "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
1.3 "COMMON STOCK" shall mean the Corporation's Common Stock, $0.0001
par value.
1.4 "CONVERSION STOCK" means the Common Stock issued or issuable
pursuant to conversion of the Preferred Stock.
1.5 "DEMAND HOLDERS" shall mean (i) any Holder or Holders holding Class
A Preferred, Class B1 Preferred or Class B2 Preferred and (ii) ▇▇▇▇.
1.6 "HOLDER" shall mean (i) any holder of Registrable Securities and
(ii) any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 13 hereof.
1.7 "PREFERRED STOCK" shall mean the Corporation's Class A Preferred
Stock, $.0001 par value, issued pursuant to the Investment Agreement dated as of
February 3, 1999, the Corporation's Class B1 Preferred Stock, $.0001 par value,
issued pursuant to the Class B Purchase Agreement, and the Corporation's Class
B2 Preferred Stock, $.0001 par value, issued pursuant to the Class B Purchase
Agreement.
1.8 "REGISTRABLE SECURITIES" means (i) the Conversion Stock, (ii) any
Common Stock of the Corporation issued or issuable in respect of the Conversion
Stock, upon any stock split, stock dividend, recapitalization or similar event
or otherwise issued or issuable in respect of the Conversion Stock, (iii) 50,000
shares of Common Stock held by Mercer, (iv) up to 100,000 shares of Common Stock
issuable to Merchant upon the exercise of a warrant granted to Merchant in
connection with the Corporation's sale of its Class B1 Preferred, and (v) the
▇▇▇▇ Common Stock after ▇▇▇▇'▇ execution of a counterpart to this Agreement;
provided, however, that shares of Common Stock or other securities shall only be
treated as Registrable Securities until the earlier of
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(A) such time as such securities have been sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, or
(B) such time as all securities held by a Holder may be sold under Rule 144(k)
or such securities are otherwise available for sale in the opinion of counsel to
the Corporation in a transaction exempt from the registration and prospectus
delivery requirements of the Securities Act such that all transfer restrictions
and restrictive legends with respect thereto may be removed upon the
consummation of such sale.
1.9 The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
1.10 "RESTRICTED SECURITIES" shall mean the securities of the
Corporation required to bear the legend set forth in Section 3 hereof.
1.11 "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
1.12 "SIGNIFICANT PURCHASERS" shall mean all Purchasers who hold in
excess of 150,000 shares of the Corporation's Common Stock or a number of shares
of Preferred Stock convertible into in excess of 150,000 shares of Common Stock
(as adjusted for any stock splits, stock dividends, combinations,
recapitalizations or the like).
2. RESTRICTIONS ON TRANSFERABILITY. The Preferred Stock, the Conversion
Stock and the ▇▇▇▇ Common Stock shall not be sold, assigned, transferred or
pledged except upon the conditions specified in this Agreement, which conditions
are intended to ensure compliance with the provisions of the Securities Act.
Each Holder will cause any proposed purchaser, assignee, transferee, or pledgee
of the Preferred Stock or such Common Stock held by such Holder to agree to take
and hold such securities subject to the provisions and upon the conditions
specified in this Agreement.
3. RESTRICTIVE LEGEND. Each certificate representing (i) the Preferred
Stock, (ii) the Conversion Stock, (iii) the ▇▇▇▇ Common Stock and (iv) any other
securities issued in respect of the Preferred Stock, the Conversion Stock, or
the ▇▇▇▇ Common Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event shall (unless otherwise permitted by the
provisions of Section 4 below) be stamped or otherwise imprinted with the
following legend (in addition to any legend required under applicable state
securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"). SUCH SHARES
MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE CORPORATION RECEIVES AN OPINION OF
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COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF THE ACT. COPIES OF THE AGREEMENTS
COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY
THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF
THE CORPORATION AT THE PRINCIPAL EXECUTIVE OFFICES OF THE
CORPORATION."
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO
CERTAIN MARKET STAND-OFF PROVISIONS CONTAINED IN THE
CORPORATION'S INVESTOR RIGHTS AGREEMENT DATED OCTOBER 28,
1999. A COPY OF SUCH AGREEMENT MAY BE OBTAINED WITHOUT CHARGE
UPON WRITTEN REQUEST TO THE TO THE CORPORATION AT ITS
PRINCIPAL PLACE OF BUSINESS."
Each Holder consents to the Corporation making a notation on
its records and giving instructions to any transfer agent of the Preferred Stock
or the Common Stock in order to implement the restrictions on transfer
established in this Registration.
4. NOTICE OF PROPOSED TRANSFERS. The Holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership or (ii) in transactions
involving the distribution without consideration of Restricted Securities by any
of the Purchasers to any of its (A) constituent partners or members, or retired
constituent partners or members, or to the estate of any of such partners or
members or retired partners or members or (B) at least majority-owned
subsidiaries, so long as each such transferee agrees in writing to be bound by
the terms of this Agreement), unless there is in effect a registration statement
under the Securities Act covering the proposed transfer, the Holder thereof
shall give written notice to the Corporation of such Holder's intention to
effect such transfer, sale, assignment or pledge. Each such notice shall
describe the manner and circumstances of the proposed transfer, sale, assignment
or pledge in sufficient detail, and shall be accompanied, at such Holder's
expense by either (a) an unqualified written opinion of legal counsel who shall,
and whose legal opinion shall be, reasonably satisfactory to the Corporation
addressed to the Corporation, to the effect that the proposed transfer of the
Restricted Securities may be effected without registration under the Securities
Act, or (b) a "no action" letter from the Commission to the effect that the
transfer of such securities without registration will not result in a
recommendation by the staff of the Commission that action be taken with respect
thereto, whereupon the Holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the notice
delivered by the holder to the Corporation. Notwithstanding
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the foregoing, no such "no action" letter or opinion of counsel shall be
necessary for a transfer by a Holder, if the Holder is a partnership or limited
liability corporation, to a constituent partner or member of such entity or
retired constituent partner or member, or the transfer by gift, will or
intestate succession of any such entity partner or member to his or her spouse
or to the siblings, lineal descendants or ancestors of such partner or member or
his or her spouse. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Section 3
above, except that such certificate shall not bear such restrictive legend if in
the opinion of counsel for such Holder and the Corporation such legend is not
required in order to establish compliance with any provision of the Securities
Act.
5. PIGGYBACK REGISTRATION.
(a) Notice. If, at any time, the Corporation proposes to file
a registration statement under the Securities Act, other than a registration
relating solely to employee benefit plans, Rule 145 transactions (a
"REGISTRATION STATEMENT"), with respect to an offering for its own account or
for the account of others of any class of securities of the Corporation, then
each such time, the Corporation shall give written notice of such intention to
file a Registration Statement (a "PIGGYBACK NOTICE") to each Holder at least
forty-five (45) days before the anticipated filing date. The Piggyback Notice
shall describe the intended method of distribution and offer each Holder the
opportunity to register pursuant to such Registration Statement such Registrable
Securities as the Holder may request in writing to the Corporation within thirty
(30) days after the date the Holder first received the Piggyback Notice (a
"PIGGYBACK REGISTRATION"). The Corporation shall take all necessary steps,
subject to the provisions of the following paragraph (b), to include in the
Registration Statement all Registrable Securities which the Corporation has been
so requested to register by the Holders. The Corporation shall be entitled to
withdraw a Registration Statement (not filed pursuant to Section 6 hereof) prior
to its becoming effective.
(b) Underwritten Registrations. In a registration pursuant to
this Section 5 involving an underwritten offering, whether or not for sale for
the account of the Corporation, any request pursuant to this Section 5 may
require that all Registrable Securities be included in such offering on
identical terms and conditions. If the offering is a public offering of the
Corporation's securities, and if the managing underwriter with respect to such
an offering advises the Corporation in writing that the inclusion of all the
Registrable Securities which the Holders have requested to be included in the
Registration Statement would materially jeopardize the success of the offering,
then the Corporation shall be required to include in the underwriting only that
number, if any, of Registrable Securities which the underwriter advises the
Corporation in writing may be sold without materially jeopardizing the offering.
In the event that the number of Registrable Securities included in such
Piggyback Registration is limited as described above, then Registrable
Securities shall be included based on the following priority: (i) first, all
securities to be registered for the Corporation's account, (ii) second, up to
133,600 shares of Common Stock (as adjusted for any stock dividends,
combinations or splits with respect to such shares) if required by bridge
lenders to the Corporation
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pursuant to Registration Right Agreements between the Corporation and such
bridge lenders dated July 22, 1998 and November 3, 1998, and (iii) third,
Registrable Securities of Holders who have requested their Registrable
Securities to be so included and securities for the account of persons other
than the Corporation (having the contractual right to require registration of
such securities), but in no event shall the amount of Registrable Securities to
be included be reduced below the Holders' proportionate share of securities to
be registered for persons other than the Corporation (the Holders' proportionate
share shall be equal to the ratio of the aggregate holdings of the Corporation's
securities held by all Holders (on an as converted basis) to the aggregate
holdings of the Corporation's securities held by all security-holders requesting
registration in such offering, including the Holders (on an as converted
basis)). The right to register Registrable Securities shall be allocated among
the Holders on a pro rata basis based on the number of Registrable Securities
requested to be registered by each Holder. Any Holder disapproving of the terms
of any such underwriting may elect to withdraw from it by written notice to the
Corporation and the underwriter.
6. DEMAND REGISTRATION.
(a) Notice. A Demand Holder or Demand Holders (the "INITIATING
HOLDER") holding individually or in the aggregate fifteen percent (15%) of the
outstanding shares of Registrable Securities then held by the Demand Holders at
any time after the earlier of (i) eighteen (18) months following the date of
this Agreement or (ii) six (6) months after the registration of the
Corporation's initial public offering may propose that the Corporation file a
Registration Statement with respect to all or some of the Registrable Securities
held by the Initiating Holder (a "DEMAND REGISTRATION"), upon giving written
notice (a "DEMAND NOTICE") of such demand to the Corporation. The Corporation
shall promptly deliver to each other Holder a copy of the Demand Notice. Each
Holder other than the Initiating Holders shall have the right to participate in
such Demand Registration. The Corporation's obligation under this Section 6(a)
shall in the aggregate be limited to four (4) Demand Registrations, whether from
one or more Demand Holders. The Demand Notice shall describe the number of
shares intended to be disposed of and the intended method of disposition. If the
Initiating Holders intend to distribute the Registrable Securities by means of
an underwriting, they shall so advise the Corporation in the Demand Notice. In
such event, the Company shall have the right to select the investment banker or
bankers and managers to administer the offering, which selection shall be
reasonably acceptable to the Initiating Holders. The Corporation shall then take
all steps necessary, as expeditiously and promptly as reasonably possible, to
effect the registration of all Registrable Securities which the Corporation has
been requested to so register.
(i) If at the time the Corporation receives a Demand
Notice, neither the Common Stock nor any other class of securities of the
Corporation are traded on an exchange or reported on a consolidated reporting
system, the Corporation shall take all steps necessary to effect an initial
public offering of its Common Stock and shall otherwise comply with all the
terms of this Agreement relating to Demand Registrations.
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(ii) If at the time the Corporation receives a Demand
Notice, the Corporation (A) is in the process of preparing a Registration
Statement for filing or (B) has filed a Registration Statement and is waiting
for it to be declared effective, then the Corporation shall not be obligated to
effect any Demand Registration pursuant to this Section 6(a) for a period of one
hundred twenty (120) days from the date the Corporation received the Demand
Notice. In order to exercise its right to delay a Demand Registration for the
period set forth in the previous sentence, the Corporation shall deliver written
notice to the Initiating Holders, stating that it is a notice under this Section
6(a) and providing reasonable detail as to the offering in progress and the
expected effective date of the Registration Statement pertaining thereto.
(b) Registration Statement Form. Registrations under this
Section 6 shall be on such appropriate form of Registration Statement (i) as
shall be selected by the Corporation and as shall be reasonably acceptable to
the Initiating Holder and (ii) as shall permit the disposition of such
Registrable Securities in accordance with the intended method or methods of
disposition specified in the request for such registration.
(c) Underwritten Registrations. In a registration pursuant to
this Section 6 involving an underwritten offering, if the managing underwriter
with respect to such offering advises the Corporation in writing that the
inclusion of all of the Registrable Securities which the Holders have requested
to be included in the Registration Statement would materially jeopardize the
success of the offering, then the Corporation shall be required to include in
the underwriting only that number, if any, of Registrable Securities which the
underwriter advises the Corporation in writing may be sold without materially
jeopardizing the offering. In the event that the number of Registrable
Securities to be included in such an offering is limited as described above,
then Registrable Securities shall be included based on the following priority:
(i) first, up to 133,600 shares of Common Stock (as adjusted for any stock
dividends, combinations or splits with respect to such shares) if required by
bridge lenders to the Corporation pursuant to Registration Rights Agreements
between the Corporation and such bridge lenders dated July 22, 1998 and November
3, 1998 and (ii) second, Registrable Securities of Holders who have requested
their Registrable Securities to be so included and securities for the account of
persons having the contractual right to require registration of such securities,
but in no event shall the amount of Registrable Securities to be included be
reduced below the Holders' proportionate share of securities to be registered
for persons other than the Corporation (the Holders' proportionate share shall
be equal to the ratio of the aggregate holdings of the Corporations' securities
held by all Holders (on an as-converted basis) to the aggregate holdings of the
Corporation's securities held by all security-holders requesting registration in
such offering, including the Holders (on an as-converted basis)). The right to
register Registrable Securities shall be allocated among the Holders on a pro
rata basis based on the number of Registrable Securities requested to be
registered by each Holder. Any Holder disapproving of the terms of any such
underwriting may elect to withdraw from it by written notice to the Corporation
and the underwriter.
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(d) Effective Registration Statement. A Registration Statement
requested pursuant to this Section 6 shall not be deemed to have been effected
and will not be considered a Demand Registration for purposes of the limit on
Demand Registrations which may be requested pursuant to paragraph (a) above,
unless (i) a Registration Statement with respect thereto has been declared and
remains effective for a period of at least ninety (90) consecutive days (unless
the Registrable Securities registered thereunder have been sold or disposed of
prior to the expiration of such ninety (90) day period) and is not interfered
with by any stop order, injunction or other order or requirement of the
Securities and Exchange Commission (the "COMMISSION") or any other governmental
agency or court for any reason, and (ii) if the securities to be registered were
to be sold pursuant to an underwritten offering, the conditions to closing
specified in the underwriting agreement entered into in connection with such
registration applicable to the Corporation are satisfied or waived.
(e) Piggyback Status. If the number of shares registered by
any party (including the Corporation) other than Demand Holders pursuant to this
Section 6 exceeds the number of shares registered by Demand Holders, then such
registration by the Demand Holders shall be deemed to be a Piggyback
Registration and not a Demand Registration.
7. REGISTRATION ON FORM S-3.
(a) If any Holder or Holders request that the Corporation file
a registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Corporation is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Corporation shall use its reasonable best efforts to cause
such Registrable Securities to be registered for the offering on such form and
to cause such Registrable Securities to be qualified in such jurisdictions as
the Holder or Holders may reasonably request; provided, however, that the
Corporation shall not be required to effect more than two (2) registrations
pursuant to this Section 7 in any twelve (12) month period. The substantive
provisions of Section 5 shall be applicable to each registration initiated under
this Section 7.
(b) Notwithstanding the foregoing, the Corporation shall not
be obligated to take any action pursuant to this Section 7: (i) in any
particular jurisdiction in which the Corporation would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Corporation is already subject to service
in such jurisdiction and except as may be required by the Securities Act; (ii)
if the Corporation, within fifteen (15) days of the receipt of the request of
the Holders, gives notice of its bona fide intention to effect the filing of a
registration statement with the Commission within ninety (90) days of receipt of
such request (other than with respect to a registration statement relating to a
Rule 145 transaction, an offering solely to employees or any other registration
which is not appropriate for the registration of Registrable Securities) in
which such Holders can exercise their rights pursuant to Section 5 hereof; (iii)
during the period starting with the date ninety (90) days prior to the
Corporation's estimated date
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of filing of, and ending on the date one hundred eighty (180) days immediately
following, the effective date of any registration statement pertaining to
securities of the Corporation (other than a registration of securities in a Rule
145 transaction or with respect to an employee benefit plan), provided that the
Corporation is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or (iv) if the Corporation
shall furnish to such Holder a certificate signed by the President of the
Corporation stating that in the good faith judgment of the Board of Directors it
would be seriously detrimental to the Corporation or its stockholders for
registration statements to be filed in the near future; then the Corporation's
obligation to use its reasonable best efforts to file a registration statement
shall be deferred for a period not to exceed ninety (90) days from the receipt
of the request to file such registration by such Holder, such right to delay a
request to be exercised by the Corporation not more than once in any twelve (12)
month period
8. REGISTRATION EXPENSES. All expenses incident to a registration
pursuant to Sections 5, 6, or 7, including, without limitation, all registration
and filing fees, including fees with respect to filings required to be made with
the Commission, the National Association of Securities Dealers, Inc., fees and
expenses of compliance with securities or blue sky laws (including, without
limitation, reasonable fees and disbursements of counsel for the underwriters),
printing expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel of the Corporation, counsel of the Holders (but not
more than one counsel to the Holders per registration) and of all independent
public accountants of the Corporation (including the expenses of any special
audit and "comfort" letters required by or incident to such performance),
underwriters fees (excluding discounts, commissions or fees of underwriters,
selling brokers, dealer managers or similar securities industry professionals
relating to the distribution of the Registrable Securities which shall be paid
by the selling Holders on a pro rata basis based on the number of Registrable
Securities being sold by them), securities acts liability insurance and fees and
expenses of other persons or entities retained by the Corporation will be borne
by the Corporation whether or not any of the Registration Statements become
effective.
9. HOLDBACK AGREEMENT. Each Holder of Registrable Securities (including
any transferee thereof) agrees in connection with the first two underwritten
registrations of the Corporation's equity securities with the Securities and
Exchange Commission, other than (i) a registration relating solely to employee
benefit plans or (ii) a registration relating solely to a Rule 145 transaction,
upon request of the underwriters managing such underwritten offering of the
Corporation's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any of the Corporation's
securities, including any Registrable Securities (other than those included in
the registration), without the prior written consent of such underwriters for
such period of time (not to exceed one hundred eighty (180) days in the case of
an initial public offering and ninety (90) days in the case of the second public
offering) from the effective date of such registration, as may be requested by
the underwriters. Each such Holder further agrees to execute any agreement
reflecting the above as may be requested by the underwriters at the time of the
public offering, provided, however that the executive officers and directors of
the Corporation who own stock of the
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Corporation and each other holder of five percent (5%) or more of the
Corporation's securities also agree to such restrictions.
10. REGISTRATION PROCEDURES.
(a) Subject to the last sentence of Section 5(a), in
connection with any registration under Section 5, 6 or 7, the Corporation
covenants and agrees that it shall, as expeditiously as practicable (and within
ninety (90) days with respect to clause (i) below):
(i) prepare and file with the Commission a Registration
Statement with respect to the Registrable Securities and use its reasonable best
efforts to cause such Registration Statement to become and remain effective;
(ii) notify each Holder of Registrable Securities
included in such registration promptly after it shall receive notice thereof, of
the time such Registration Statement has become effective or any supplement to
any prospectus forming a part of such Registration Statement has been filed;
(iii) notify each Holder of Registrable Securities
included in such registration promptly of any request by the Commission for the
amendment or supplement of such Registration Statement or prospectus or of a
request for additional information;
(iv) prepare and file with the Commission such
amendments and supplements to such Registration Statement and the prospectus
used in connection therewith and such other documents necessary to comply with
the Securities Act, the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), and the rules and regulations promulgated under the Securities
Act and the Exchange Act, as may be necessary to keep such Registration
Statement filed pursuant to Section 5 and 6 hereto effective for a period of not
less than ninety (90) consecutive days and comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
Registration Statement during such period in accordance with the intended
methods of disposition by the sellers thereof set forth in such Registration
Statement;
(v) furnish to each Holder of Registrable Securities
included in such registration such number of copies of such Registration
Statement, each amendment and supplement thereto, the prospectus included in
such Registration Statement (including each preliminary prospectus) and such
other documents as such Holder may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such Holder;
(vi) concurrently with the effectiveness of the
Registration Statement under the Securities Act, qualify the Registrable
Securities under such other securities or "blue sky" laws of such jurisdictions
as each Holder reasonably may request, and do any and all other acts and things
necessary to enable each Holder to consummate the sale of the Registrable
Securities owned by such Holder; provided that the Corporation shall not be
required in connection
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with this paragraph (vi) to qualify as a foreign corporation or execute a
general consent to service of process in any jurisdiction where the Corporation
is not then so qualified or subject to service of process or to subject the
Corporation to income taxation in any jurisdiction where it is not then so
subject;
(vii) notify each Holder of Registrable Securities
included in such registration, 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 any statement therein not misleading in light of the circumstances in which
such statement is made, and prepare and furnish to such Holder a reasonable
number of copies of a supplement to or amendment of such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus will not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading in light
of the circumstances in which they are made;
(viii) advise each Holder of Registrable Securities
included in such registration promptly after it shall receive notice or obtain
knowledge of the issuance of any stop order by the Commission suspending the
effectiveness of any such Registration Statement or the initiation or threat of
any proceeding for that purpose and promptly use its reasonable best efforts to
prevent the issuance of any stop order or to obtain its withdrawal if such stop
order should be issued;
(ix) cause all such Registrable Securities to be listed
on each securities exchange or reported on each consolidated reporting system on
which similar securities issued by the Corporation are then listed or reported,
as the case may be; provided, if the registration constitutes an initial public
offering of the Common Stock, then the Corporation shall cause such Registrable
Securities to be listed on such securities exchange or reported on such
consolidated reporting systems as shall be reasonably acceptable to a majority
in interest of the Holders participating in such registration;
(x) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such Registration
Statement; and
(xi) use its best efforts to furnish, at the request of
any Holder or Holders requesting registration of Registrable Securities pursuant
to Section 5, 6 or 7 of this Agreement, on the date that such Registrable
Securities are delivered to the underwriters for the sale pursuant to such
registration, an opinion, dated such date, of the independent counsel
representing the Corporation for the purposes of such registration, addressed to
the underwriters, if any, and to the Holder or Holders making such request, in
form and substance as is customarily given to underwriters in an underwritten
public offering, and a letter dated such date, from the independent certified
public accountants of the Corporation, addressed to the underwriters, if any,
and to the Holder or Holders making such request, in form and substance as is
customarily given by independent certified public accountants to underwriters in
a public offering.
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(b) The Corporation may require each Holder participating in a
registration hereunder to furnish the Corporation such information regarding
such Holder and the distribution of such Registrable Securities as the
Corporation may from time to time reasonably request in writing and as shall be
required by law to effect such registration.
(c) The Holder or Holders who include Registrable Securities
in any registration under Section 5, 6 or 7 shall distribute those Registrable
Securities in a manner consistent with the distribution described in the
relevant registration statement.
11. RULE 144. After an initial public offering of Common Stock, the
Corporation shall take all actions reasonably necessary to enable the Holders to
sell Registrable Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under the Securities
Act, as such Rule may be amended from time to time, or (b) any similar rule or
regulation hereafter adopted by the Commission, including, without limiting the
generality of the foregoing, filing on a timely basis all reports required to be
filed under the Exchange Act. Upon the request of any Holder, the Corporation
will deliver to such Holder a written statement as to whether it has complied
with such requirements and shall provide such Holder with such publicly filed
documents of the Corporation as are reasonably requested by such Holder in
connection with such sale.
12. INDEMNIFICATION.
(a) Indemnification by the Corporation. In the event of any
registration of any of the Registrable Securities under the Securities Act
pursuant to this Agreement, the Corporation will indemnify and hold harmless
each Holder participating in the registration, its directors, stockholders,
officers and partners and each underwriter involved in such registration and
each other person, if any, who controls each selling Holder or underwriter
within the meaning of the Securities Act or the Exchange Act against any losses,
claims, damages or liabilities (or actions in respect thereof), joint or
several, to which each selling Holder or its officers, directors, stockholders
or partners or underwriter or controlling person may become subject insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in any Registration Statement under which such
Registrable Securities were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in such Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
and will reimburse such selling Holder, its officers, directors, stockholders
and partners and such underwriter and each such controlling person for any legal
or any other expenses reasonably incurred by any of them as they are incurred in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Corporation will not be liable
to any selling Holder or its officers, directors, stockholders or partners or
controlling persons in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon any untrue statement or
omission made in such Registration Statement, preliminary prospectus or final
prospectus, or any such amendment or supplement thereto, (i) in reliance upon
and in conformity with information furnished to the Corporation, in writing, by
or on behalf of such selling Holder or its officers, directors, stockholders or
partners or controlling persons, specifically for use in the preparation of such
Registration Statement,
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preliminary prospectus or final prospectus or amendment or supplement thereto,
or (ii) where such untrue statement or omission or alleged untrue statement or
omission (A) was corrected in a subsequent final prospectus delivered in
sufficient number to the selling Holder pursuant to Section 10(a)(v) hereof and
with sufficient time to permit distribution by such selling Holder, (B) such
selling Holder failed to so distribute such subsequent final prospectus, and (C)
to the extent such distribution would have avoided the applicable loss, claim,
damage, liability or action.
(b) Indemnification by the Holder. In the event of any
registration of any of the Registrable Securities under the Securities Act
pursuant to this Agreement, each selling Holder, severally and not jointly, will
indemnify and hold harmless the Corporation, each of its directors, each of its
officers who has signed such Registration Statement, each underwriter involved
in such registration, each other selling Holder and their respective officers,
directors, stockholders and partners and each person, if any, who controls the
Corporation or any such underwriter or other selling Holder within the meaning
of the Securities Act or the Exchange Act, against any losses, claims, damages
or liabilities (or actions in respect thereof), to which the Corporation, such
directors and officers, such underwriter or other selling Holder or its
respective officers, directors, stockholders or partners or controlling person
may become subject, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in any Registration
Statement under which such Registrable Securities were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in such
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances in which they
are made, and will reimburse the Corporation, the underwriters, each other
selling Holder and their respective officers, directors, stockholders' partners
and controlling person for any legal or any other expenses reasonably incurred
by any of them in connection with investigating or defending any such loss,
claim, damage, liability or action, if the statement or omission was made in
reliance upon and in conformity with information furnished in writing to the
Corporation by or on behalf of such selling Holder or its officers, directors,
stockholders or partners or controlling persons, specifically for use in
connection with the preparation of such Registration Statement, preliminary
prospectus or final prospectus or amendment or supplement thereto; provided,
however, that the maximum obligation of each selling Holder for indemnification
shall be limited to the proceeds received by it from the sale of Registrable
Securities pursuant to such Registration Statement.
(c) Required Notices. Each party entitled to indemnification
under this Section 12 (the "INDEMNIFIED PARTY") shall give notice to the party
required to provide indemnification (the "INDEMNIFYING PARTY") promptly after
the Indemnified Party has actual
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knowledge of any claim as to which indemnity may be sought and, with respect to
third party claims, shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting from it, provided that counsel for
the Indemnifying Party who shall conduct the defense of such claim or litigation
must be approved by the Indemnified Party (whose approval shall not unreasonably
be withheld), and provided further that the failure of any Indemnified Party to
give notice as provided in this Section 12(c) shall not relieve the Indemnifying
Party of its obligations under Section 12(a) or (b), as the case may be except
to the extent such Indemnifying Party was actually prejudiced thereby. The
Indemnified Party shall have the right to employ its own counsel in any claim or
litigation, but, with respect to third party claims or litigation, the fees and
expenses of counsel shall be at the expense of such Indemnified Party, when and
as incurred, unless the Indemnified Party shall have reasonably concluded that
there may be a conflict of interest between the Indemnifying Party and the
Indemnified Party in the conduct of the defense of such claim or litigation (in
which case the Indemnifying Party shall not have the right to direct the defense
of such claim or litigation on behalf of the Indemnified Party), or the
Indemnifying Party shall fail, within a reasonable time after notice of the
claim, to have given written notice of its intention to assume such defense, and
to have employed counsel to assume the defense of such claim or litigation, or
the Indemnifying Party fails timely and actively to assume or to continue the
defense of such claim. No Indemnifying Party, in the defense of any claim or
litigation, shall, without the consent of the Indemnified Party, consent to
entry of any judgment or enter into any settlement that does not include as an
unconditional term the giving by the claimant or plaintiff to such Indemnified
Party of a release from all liability in respect of such third party claim or
litigation. In no event shall an Indemnified Party consent to any entry of any
judgment in a third party claim or litigation, or settle a third party claim or
litigation without the prior written consent of the Indemnifying Party unless
the Indemnifying Party fails to timely give notice of its intention to assume
defense or timely and actively to assume and continue such defense.
13. TRANSFER OF REGISTRATION RIGHTS. The rights to cause the
Corporation to register securities granted Holders under Sections 5, 6 and 7 may
be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Holder provided that: (i) such
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee acquires at least 250,000 shares of
Preferred Stock and/or Common Stock issued upon conversion thereof (as may be
appropriately adjusted upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event) and (iii) such assignee or transferee
agrees to be bound by the terms of this Agreement and assumes all of the
obligations of the transferring Holder hereunder. Notwithstanding the foregoing,
the rights to cause the Corporation to register securities may be assigned to
any non-individual Affiliate, constituent partner or member of a Holder
(including spouses and ancestors, lineal descendants and siblings of such
partners or members or spouses who acquire registered securities by gift, will
or intestate succession) without compliance with items (ii) or (iii) above,
provided written notice thereof is promptly given to the Corporation.
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14. TERMINATION OF REGISTRATION RIGHTS. The rights granted pursuant to
Sections 5, 6 and 7 of this Agreement shall terminate as to any Holder five (5)
years after the closing of the first firmly underwritten public offering
pursuant to an effective registration statement under the Securities Act
covering the offer and sale of Common Stock to the public resulting in net
proceeds to the Corporation of not less than $25 million at a per share offering
price of not less than $10.50 per share (as adjusted for any stock splits, stock
dividends, combinations, recapitalizations or the like) (a "QUALIFIED PUBLIC
OFFERING").
15. RIGHT OF FIRST REFUSAL. The Corporation hereby grants to each
Significant Purchaser a right of first refusal (the "RIGHT OF FIRST REFUSAL") to
purchase all (or any part) of such Significant Purchaser's pro rata portion of
any "NEW SECURITIES" (as defined in this Section 15), that the Corporation may,
from time to time propose to sell and issue. Such pro rata portion, for purposes
of this Right of First Refusal, shall be the ratio of (x) the number of shares
of Common Stock issued and issuable upon the conversion of the shares of
Preferred Stock held by such Significant Purchaser, to (y) the sum of the total
number of shares of Common Stock then held by the Significant Purchasers plus
the total number of shares of Common Stock issuable upon the conversion of the
total number of the shares of Preferred Stock then held by the Significant
Purchasers. This Right of First Refusal shall be subject to the following
provisions:
(a) "NEW SECURITIES" shall mean any Common Stock or preferred
stock of the Corporation whether or not authorized on the date hereof; rights,
options, warrants to purchase Common Stock or preferred stock, together with
securities of any type issued in conjunction with any such rights, options or
warrants and securities of any type whatsoever that are, or may become,
convertible into or exchangeable for Common Stock or preferred stock; provided
however, that New Securities does not include the following:
(i) any shares of Class B Preferred issuable pursuant
to the Class B Purchase Agreement;
(ii) shares of Common Stock issuable upon conversion of
the Corporation's Preferred Stock;
(iii) securities of the Corporation issued or deemed
issued pursuant to the acquisition of a business or product line by the
Corporation by merger, purchase of assets, or other acquisition or
reorganization approved by the Corporation's Board of Directors;
(iv) securities of the Corporation issued in connection
with equipment lease arrangements or bank financing transactions approved by the
Corporation's Board of Directors;
(v) shares of Common Stock, or options to purchase
shares of Common Stock, issued or granted to officers, directors, employees and
consultants of the Corporation pursuant to stock plans, option plans or other
arrangements approved by the
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Corporation's Board of Directors prior to the date hereof or by the Compensation
Committee of the Board of Directors following such time as the Compensation
Committee shall consist of the directors required by Section 16.8 herein;
(vi) shares of Common Stock or Preferred Stock issued
in connection with any stock split, stock dividend, or recapitalization by the
Corporation; and
(vii) shares of Common Stock issued in connection with
the Corporation's initial public offering of the Common Stock to the general
public effected pursuant to a registration statement filed with and declared
effective by the Commission under the Securities Act.
(b) In the event that the Corporation proposes to undertake an
issuance of New Securities, it shall give each Significant Purchaser written
notice of its intention, describing the type of New Securities, the aggregate
number of such shares, the price, and the general terms upon which the
Corporation proposes to issue the same. Each Significant Purchaser shall have
twenty (20) business days after receipt of such notice to agree to purchase its
pro rata share (or a portion thereof) (calculated pursuant to the first
paragraph of Section 15) of such New Securities at the price and upon the terms
specified in the notice by giving written notice to the Corporation and stating
therein the quantity of New Securities to be purchased. If any Significant
Purchaser fails to agree to purchase its full pro rata share (calculated
pursuant to the first paragraph of Section 15) within such twenty (20) business
day period, the Corporation will give the Significant Purchasers who did so
agree (the "ELECTING PURCHASERS") notice of the number of shares which were not
subscribed for. Such notice may be by telephone if followed by written
confirmation within two (2) days. The Electing Purchasers shall have ten (10)
business days from the date of such written notice (or telephonic notification
confirmed in writing) to agree to purchase the New Securities not purchased by
such non-purchasing Significant Purchasers.
(c) In the event that all of the Significant Purchasers fail
to exercise in full the Right of First Refusal within the twenty (20) business
day and ten (10) business day period specified above, the Corporation shall have
ninety (90) days thereafter to sell (or enter into an agreement pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of said agreement) the New Securities
respecting which the rights of the Purchasers were not exercised at a price and
upon terms no more favorable to the purchasers thereof than specified in the
Corporation's notice. In the event the Corporation has not sold the New
Securities within such ninety (90) day period (or sold and issued New Securities
in accordance with the foregoing within sixty (60) days from the date of such
agreement) the Corporation shall not thereafter issue or sell any New
Securities, without first offering such New Securities to the Purchasers in the
manner provided above.
(d) The Right of First Refusal hereunder is not assignable, in
whole or in part, except (i) by a Significant Purchaser that is a partnership to
any of its partners, (ii) by a Significant Purchaser that is any venture capital
group, private equity group or fund to an Affiliated entity or
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person or (iii) by a Significant Purchaser that is a corporation to any of its
shareholders or its controlled subsidiaries.
(e) The Right of First Refusal granted under this Agreement
shall expire upon the first to occur of the following: (i) the closing of a
Qualified Public Offering of the Common Stock of the Corporation to the general
public which is effected pursuant to a registration statement filed with, and
declared effective by, the Commission under the Securities Act or a Change of
Control (as defined in Section 17.1) and (ii) as to a specific Significant
Purchaser when such Significant Purchaser holds less than 250,000 shares of
Registrable Securities.
16. AFFIRMATIVE COVENANTS. The Corporation and each Purchaser hereby
covenants and agrees as follows:
16.1 Financial Information. For so long as any of the Purchasers
own any Preferred Stock (or securities issued upon conversion or exchange
thereof other than Common Stock), the Corporation shall prepare and furnish to
each Purchaser the following:
(a) within ninety (90) days after the end of each fiscal year,
a copy of the consolidated balance sheet as of the end of such year, statements
of income, retained earnings and cash flows of the Corporation for such year as
prepared and certified by a nationally recognized independent public accounting
firm reasonably acceptable to the Purchasers;
(b) as soon as practicable after the end of each quarter, and,
in any event, within forty-five (45) days after the end of each quarter, a copy
of the consolidated balance sheet of the Corporation as of the end of such
quarter and a statement of income, retained earnings and cash flows of the
Corporation for such quarter and the portion of the fiscal year ending on the
last day of such quarter, prepared in reasonable detail and certified as to
accuracy, subject to year-end audit adjustments, by the principal financial
officer of the Corporation;
(c) and not later than the forty-fifth (45th) day prior to the
first day of each fiscal year of the Corporation (commencing with the fiscal
year beginning on January 1, 2000), an annual plan containing projections
(including detailed assumptions) of the balance sheets of the Corporation and
income statements and statements of cash flows of the Corporation and, in each
case as of the end of each month in such fiscal year and as of the end of each
of the four following fiscal years, all in such reasonable detail as the
Purchasers may require; and
(d) as applicable, furnish to the Purchasers the following:
(i) Copies of all financial statements and reports that
the Corporation sends to its stockholders, lenders or directors, or files with
the Securities and Exchange Commission or any stock exchange or quotation bureau
on which any securities of the Corporation may be listed or quoted; and
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(ii) Promptly upon receipt thereof, copies of any
reports submitted to the Corporation by independent certified public
accountants, including, without limitation, in connection with examination of
the financial statements of the Corporation made by such accountants.
16.2 Access. For as long as any of the Purchasers own any Preferred
Shares, or any securities issued upon conversion or exchange thereof (other than
Common Stock), the Corporation will give to the Purchasers and to their counsel,
accountants and other consultants and representatives (collectively,
"ADVISORS"), reasonable access to material documents of the Corporation and
reasonable rights to examine without undue disruption the facilities and offices
of the Corporation during normal business hours, upon at least five (5) days
notice in advance of such visit, and will furnish to the Purchasers and their
Advisors such information concerning the affairs of the Corporation as such
persons may reasonably request and will make available to the Purchasers and
their Advisors, any of the officers, directors, employees, counsel, accountants,
or other consultants of the Corporation as the Purchasers may reasonably
request.
16.3 Confidential Information. Each Purchaser agrees that any
information obtained by such Purchaser pursuant to Section 16.1 or Section 16.2
which is marked or identified as proprietary to the Corporation or otherwise
confidential will not be disclosed without the prior written consent of the
Corporation. Notwithstanding the foregoing, each Purchaser may disclose such
information, on a need to know basis, to its employees, accountants or
attorneys, or to the employees, accountants or attorneys of its general partner
or investment manager (so long as each such person to whom confidential
information is disclosed agrees to keep such information confidential), in
compliance with a court order or when otherwise necessary to enforce any of the
Purchaser's rights hereunder. Such information may also be disclosed to a
Purchaser's constituent partners, members or shareholders (so long as each such
person to whom confidential information is disclosed agrees to keep such
information confidential). Each Purchaser further acknowledges and understands
that any information will not be utilized by such Purchaser in connection with
purchases and/or sales of the Corporation's securities except in compliance with
applicable state and federal antifraud statutes.
16.4 Assignment of Rights to Financial Information. The rights and
obligations pursuant to Sections 16.1 and 16.2 may be assigned or otherwise
conveyed by any Purchaser, as the case may be, or by any subsequent transferee
of any such rights to a transferee, upon prior written notice to the
Corporation, upon the transfer by such Holder of at least 250,000 shares, of
Registrable Securities to any transferee other than a competitor or customer of
the Corporation (including any of its direct or indirect subsidiaries);
provided, however, that the Corporation shall not be obligated under Section
16.1 or 16.2 to provide information to any transferee that the Board of
Directors of the Corporation determines in good faith to be an actual or
potential competitor, customer or vendor of the Corporation.
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16.5 Notice of Material Adverse Change and Other Matters. The
Corporation will promptly deliver to each of the Class A Directors and Class B
Directors (each as defined in the Corporation's Second Amended and Restated
Certificate of Incorporation) written notice of:
(a) Any material adverse change in the business, operations,
properties, assets or financial condition of the Corporation;
(b) Any litigation, administrative or other similar proceeding
commenced or, to its knowledge, threatened against the Corporation which could
reasonably be expected to have a material adverse effect on the Corporation's
business or financial condition;
(c) Any notice of investigation or request for information
from any federal, state or local government authority or agency which could
reasonably be expected to have a material adverse effect on the Corporation's
business or financial condition; and
(d) Any notice received by the Corporation from any financial
institution, lender or other third party relating to any claimed or actual
breach or default by the Corporation with respect to any obligation arising
under any loan agreement or guaranty, or any other arrangement or agreement the
breach of or default in respect of which could reasonably be expected to have a
material adverse effect on the Corporation's business or financial condition.
16.6 Availability of Stock for Issuance on Conversion. The
Corporation will at all times keep reserved for issuance an appropriate number
of shares of Common Stock to permit the conversion of all outstanding shares of
Class A Preferred Stock, Class B1 Preferred Stock and Class B2 Preferred Stock
into Common Stock in accordance with the Corporation's Second Amended and
Restated Certificate of Incorporation and any amendments thereto.
16.7 Board of Directors.
(a) Directors. The holders of Class A Preferred Stock and
Class B Preferred Stock agree to notify the Corporation of their selection of
the Class A Directors and Class B Directors (each as defined in the
Corporation's Second Amended and Restated Certificate of Incorporation) and such
directors shall be reasonably satisfactory to the Corporation. In the event
that, and so long as, the Board of Directors of the Corporation consists of six
(6) or less members (including as a result of any vacancy created by the
resignation of any non-Class A Director or non-Class B Director), the holders of
Class A Preferred and Class B Preferred shall take all actions necessary to
effect the respective resignation of one (1) of the Class A Directors and one
(1) of the Class B Directors in accordance with Article IV(B)(5)(b) of the
Corporation's Second Amended and Restated Certificate of Incorporation. Without
the consent of the holders of a majority of the outstanding shares of Class A
Preferred and Class B Preferred, voting as a single class, the Board of
Directors may not be increased to greater than nine (9) members.
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(b) Voting Agreement. For so long as Reuters Holdings
Switzerland S.A. or its Affiliate ("Reuters") holds not less than an aggregate
of 750,000 shares of Class B Preferred Stock (as adjusted for any stock splits,
dividends, combinations, recapitalizations or the like)(or Common Stock issuable
upon the conversion thereof), each of the Class B1 Purchasers and Class B2
Purchasers party hereto (and their transferees hereunder) shall take such
actions as are necessary to cause the election to the Board of Directors as a
Class B Director such person as designated by Reuters (the "Reuters Director"),
including, but not limited to voting or causing to be voted all shares of Class
B Preferred now or hereafter beneficially owned by such Class B1 Purchasers and
Class B2 Purchasers in favor of the election of the Reuters Director and against
the removal of the Reuters Director, or upon Reuters' written request, vote in
favor of the removal and replacement of the Reuters Director.
(c) Observers' Rights. In the event that representatives of
Brookside Capital Partners Fund, L.P. ("Brookside"), CB Capital LP, Mednut LLC,
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ and/or Reuters are not elected by the holders of Class B
Preferred to serve as Class B Directors, the Corporation shall permit
representatives of Brookside, CB Capital LP, ▇▇▇▇ ▇▇▇▇▇▇▇▇ on behalf of Mednut,
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ and/or Reuters (the "REPRESENTATIVES"), as the case may be,
to attend all meetings of the Board of Directors (whether in person, telephonic
or other) in a nonvoting fully participating observer capacity, and shall
provide to such Representatives notice and other information with respect to
such meetings as are delivered to the directors of the Corporation; provided
however that the Corporation reserves the right to withhold any information or
to exclude the Representatives from any meeting or portion thereof if delivery
of such information or attendance by such Representatives could, in the sole
opinion of the Corporation and its counsel, conflict with the Board of
Directors' fiduciary obligations to the Corporation's stockholders, adversely
affect the attorney-client privilege between the Corporation and its counsel or
pose an actual or potential conflict of interest for Brookside, CB Capital LP,
Mednut LLC, ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇ or Reuters, as the case may be. The rights
granted hereunder shall terminate upon the earlier of (i) a Qualified Public
Offering of the Common Stock of the Corporation, (ii) a Change of Control or
(iii) such time as the number of shares of Preferred Stock (or securities issued
upon conversion thereof) held by Brookside, CB Capital LP, Reuters or ▇▇▇▇▇ ▇▇▇▇
& ▇▇▇▇▇ as the case may be, falls below 400,000 (or 200,000 shares with respect
to Mednut LLC)(as adjusted for any stock splits, stock dividends, combinations,
recapitalizations or the like).
16.8 Committees of Board of Directors. The Corporation, the
Founders and the Purchasers will take all reasonable necessary actions to ensure
that the Board of Directors establishes a Compensation Committee, the majority
of the members of which shall be non-employee directors. A Class A Director and
a Class B Director shall each serve on the Compensation Committee. The
Compensation Committee shall make all decisions with respect to the salaries,
benefits option grants and other compensation of senior management. A Class A
Director and a Class B Director shall each be entitled to serve on any other
committee of the Board of Directors, including but not limited to an audit
committee.
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16.9 Key Man Life Insurance. Within thirty (30) days after the
date of this Agreement, the Company shall obtain a term life insurance policy
for ▇▇▇▇ (the "KEY MAN POLICY"), such policy to designate the Corporation as
beneficiary and to provide coverage in the amount of $10,000,000. The
Corporation shall thereafter maintain the Key Man Policy, including, but not
limited to, paying the cost of any premiums therefor, for so long as the
Purchasers own any Preferred Stock or any securities issued upon conversion or
exchange thereof (other than Common Stock). ▇▇▇▇ shall submit to all medical
examinations in connection with the Key Man Policy and shall cooperate in
compliance with all other reasonable requirements in connection with such
policies of any company with which a Key Man Policy is sought.
16.10 Rule 144 Transfers. The Class A Purchasers party hereto
hereby agree that such Class A Purchasers shall not sell pursuant to Rule 144
any securities of the Corporation held by them until the first anniversary of
the initial closing of the sale of Class B1 Preferred or, if earlier, such time
as any Class B1 Purchaser party hereto is eligible to sell any securities of the
Corporation held by such Class B1 Purchaser pursuant to Rule 144.
17. RESTRICTIONS ON FOUNDER TRANSFERS; PURCHASERS' RIGHTS OF FIRST
REFUSAL AND CO-SALE.
17.1 Definitions. For purposes of this Section 17 only, the
following definitions shall apply:
(a) "CHANGE OF CONTROL" shall mean (i) a sale of all or
substantially all of the assets of the Corporation or (ii) any merger or
consolidation of the Corporation unless the Corporation's stockholders of record
as constituted immediately prior to such merger or consolidation will,
immediately after such merger or consolidation, hold at least fifty percent
(50%) of the voting power of the surviving or successor entity to the business
of the Corporation.
(b) "COMMON STOCK EQUIVALENTS" shall mean the Corporation's
Common Stock then outstanding plus the shares of Common Stock then issuable upon
conversion of the outstanding shares of Preferred Stock.
(c) "TRANSFER" shall mean any transfer of shares of Common
Stock whether in one or more related transactions, including any sale,
assignment, conveyance, donation or pledge or any other manner of encumbering or
disposing of shares, which require the giving of notice by a Founder in
accordance with this Section 17.
17.2 Consent to Transfer. Without the written consent of a
majority of the then outstanding shares of Common Stock Equivalents held by the
Purchasers, no Founder shall, directly or indirectly, during the term of this
Agreement, Transfer shares of Common Stock held by him or any of his relatives
or affiliates having an aggregate value in excess of $1,000,000 (based on the
most recent price per share of Common Stock paid in a sale of the Corporation's
Common Stock (not including the purchase of Common Stock pursuant to an exercise
of an option grant)) (such
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$1,000,000 threshhold to be calculated by aggregating all Transfers during the
term of this Agreement), except for:
(a) Transfers among the Founders;
(b) Transfers by disposition pursuant to the last will and
testament of a Founder or laws of intestate succession;
(c) Transfers to the spouse, parents or lineal descendents of
a Founder or to a trust solely for the benefit of any such Founder and/or his
spouse, parents or lineal descendents (provided that such spouse, parent or
lineal descendents or trustee on behalf of such trust agrees in writing to be
bound by the restriction set forth in this Section 17.2), or
(d) Transfers to the estate of any Founder, on such Founder's
death.
17.3 Notice of Proposed Transfer. In the event that a Founder
(the "SELLING HOLDER") proposes to make any Transfer of more than $1,000,000 of
Common Stock (or its equivalent) otherwise permitted pursuant to this Agreement,
then prior to effecting such Transfer the Selling Holder shall deliver to the
Corporation and to each Purchaser a written notice (the "TRANSFER NOTICE")
stating: (i) the Selling Holder's bona fide intention to Transfer such Common
Stock; (ii) the name of each proposed purchaser or other transferee ("PROPOSED
TRANSFEREE"); (iii) the number of shares of Common Stock to be transferred to
each Proposed Transferee; (iv) the bona fide cash price or other consideration
for which the Selling Holder proposes to transfer the Common Stock (the "OFFERED
PRICE"), and (v) a copy of any applicable term sheets.
17.4 Purchasers' Right of First Refusal.
(a) Each Significant Purchaser shall have a right of first
refusal, exercisable upon written notice to the Selling Holder within thirty
(30) days (the "EXERCISE PERIOD") after receipt of the Transfer Notice by the
Purchasers, to purchase up to its Pro Rata Share (as defined in Section 17.4(b)
below) of the shares specified in the Transfer Notice at the Offered Price and
upon the terms indicated in the Transfer Notice. Such right shall be exercisable
by written notice (the "EXERCISE NOTICE") to the Selling Holder prior to the
expiration of the Exercise Period. If such rights are exercised, then the
Significant Purchasers shall effect the purchase of the shares specified in the
Transfer Notice, including payment of the purchase price, not more than fifteen
(15) days after the date of the Exercise Notice. At such time, the Selling
Holder shall deliver to the Significant Purchasers the certificates representing
the shares to be purchased by the Significant Purchasers, each certificate to be
properly endorsed for transfer.
(b) The "PRO RATA SHARE" of each Significant Purchaser shall
be that number of shares of Common Stock Equivalents owned by such Significant
Purchaser equal to the product obtained by multiplying (x) the aggregate number
of shares of Common Stock Equivalents proposed to be sold in the Transaction by
the Selling Holder by (y) a fraction, the numerator of which is
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the number of shares of Common Stock Equivalents owned by the Significant
Purchaser immediately prior to the Transaction, and the denominator of which is
the number of shares of Common Stock Equivalents owned by all Significant
Purchasers who desire to exercise their right of first refusal with respect to
the Transaction.
17.5 Significant Purchasers' Right of Co-Sale.
(a) To the extent that a Significant Purchaser does not
exercise the right of first refusal pursuant to Section 17.4, a Significant
Purchaser shall have the right, exercisable upon written notice to the Selling
Holder within fifteen (15) days after receipt of the Transfer Notice by the
Significant Purchasers, to participate in the Selling Holder's sale of Common
Stock pursuant to the specified terms and conditions of such Transaction. To the
extent that one or more of the Significant Purchasers exercise such right of
participation in accordance with the terms and conditions set forth below, the
number of shares of Common Stock which the Selling Holder may sell in the
Transaction shall be correspondingly reduced. The right of participation of each
of the Significant Purchasers shall be subject to the following terms and
conditions:
(i) Each of the Significant Purchasers may sell all or any
part of that number of shares of Common Stock Equivalents owned by such
Significant Purchasers equal to the product obtained by multiplying (x) the
aggregate number of shares of Common Stock Equivalents proposed to be sold in
the Transaction by the Selling Holder (after deduction of any Common Stock
Equivalents purchased by Significant Purchasers pursuant to Section 17.4) by (y)
a fraction, the numerator of which is the number of shares of Common Stock
Equivalents owned by the Significant Purchaser immediately prior to the
Transaction, and the denominator of which is the number of shares of Common
Stock Equivalents owned by all Significant Purchasers who desire to participate
in the Transaction, plus the number of shares of Common Stock Equivalents held
by the Selling Holder immediately prior to the Transaction.
(ii) Each of the Significant Purchasers shall effect its
participation in the sale by delivering to the Selling Holder for transfer to
the Proposed Transferee one or more certificates, properly endorsed for
transfer, which represent the number of shares of Common Stock Equivalents which
the Significant Purchaser elects to sell pursuant to this Section 17.5.
(b) The certificates which the Significant Purchasers deliver
to the Selling Holder pursuant to Section 17.5(a) shall be transferred by the
Selling Holder to the Proposed Transferee upon consummation of the sale in the
Transaction pursuant to the terms and conditions specified in the Transfer
Notice, and the Selling Holder shall promptly, and in any event no later than
five (5) days thereafter, remit to each Purchaser that portion of the sale
proceeds to which the Purchaser is entitled by reason of its participation in
such sale.
(c) The exercise or non-exercise of the rights of the
Significant Purchasers hereunder to participate in one or more Transactions
shall not adversely affect their rights to participate in subsequent
Transactions. In the event that a Transaction does not occur, the Selling
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Holder shall have no obligation to any Purchaser other than to return any stock
certificates delivered to the Selling Holder pursuant to Section 17.5(a)(ii) in
anticipation of such Transaction.
17.6 Prohibited Transfer. Any attempt by a Selling Holder to
transfer Common Stock in violation of Section 17 of this Agreement shall be void
and the Corporation agrees that it will not effect such a transfer nor will it
treat any alleged transferee as the holder of such shares without the written
consent of the Purchasers that hold at least 50% of the Common Stock Equivalents
held by the Purchasers.
17.7 Future Stock Subject. All shares of capital stock of the
Corporation acquired by the Founders in the future shall be subject to the
provisions of this Section 17.
17.8 Termination of Rights. The provisions of this Section 17,
including the restrictions on transfers by Founders and the rights of first
refusal and co-sale granted under this Agreement, shall expire immediately prior
to the occurrence of a Qualified Public Offering or Change of Control of the
Corporation.
17.9 Legends. All certificates representing any Common Stock held
by a Founder shall have endorsed thereon the following legend, in addition to
any legends required by applicable state securities laws or otherwise:
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AND
TRANSFERABLE ONLY UPON COMPLIANCE WITH THE TERMS AND
CONDITIONS OF THE RIGHT OF FIRST REFUSAL AND CO-SALE
PROVISIONS OF A RIGHTS AGREEMENT AMONG THE CORPORATION, THE
HOLDER AND CERTAIN OTHER STOCKHOLDERS OF THE CORPORATION, A
COPY OF WHICH IS ON FILE AT THE PRINCIPAL OFFICE OF THIS
CORPORATION AND MAY BE OBTAINED BY WRITTEN REQUEST TO THE
SECRETARY OF THE CORPORATION."
18. MISCELLANEOUS.
18.1 Governing Law. This Agreement shall be governed in all
respects by the internal laws of the State of New York.
18.2 Survival. The representations, warranties, covenants and
agreements made herein shall survive any investigation made by any Purchaser and
the closing of the transactions contemplated hereby.
18.3 Successors and Assigns. Except as otherwise provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
Nothing in this Agreement, express or implied, is intended to
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confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
18.4 Entire Agreement; Amendment. This Agreement and the other
documents delivered pursuant hereto constitute the full and entire understanding
and agreement between the Parties hereto with regard to the subjects hereof and
thereof, and no such party shall be liable or bound to any other Party in any
manner by any warranties, representations or covenants except as specifically
set forth herein or therein. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the Party against whom enforcement
of any such amendment, waiver, discharge or termination is sought; provided,
however, that, subject to Section 18.5, any provision of this Agreement may be
amended, waived or modified with the written consent of the Corporation and the
holders of at least a majority of the outstanding Registrable Securities or, for
so long as Argentum Capital Partners II, L.P. and its affiliates own a majority
of the Registrable Securities, by at least 66 2/3 of the outstanding Registrable
Securities; provided, that any such amendment, waiver or modification shall
apply by its terms to all Holders; provided, further, that any Holder or
assignee hereunder may waive any of such Holder's rights or the Corporation's
obligations hereunder without obtaining the consent of any other Holder or
assignee.
18.5 Effect of Amendment or Waiver. Each Holder acknowledges that
by the operation of Section 18.4 hereof the holders of a majority of the
outstanding shares of Registrable Securities will have the right and power to
diminish or eliminate all rights of the Holders under this Agreement; provided,
however, that (a) the provisions of Sections 15, 16 and 17 of this Agreement and
this clause (a) may be amended, waived or modified only with the written consent
of the Corporation, the holders of at least a majority of the outstanding
Registrable Securities held by the Purchasers and, with respect to Section 17,
the consent of a Founder, as to such Founder; (b) the provisions of Section 6
and this clause (b) may be amended, waived or modified only with the written
consent of the Corporation and the holders of at least a majority of the
outstanding Registrable Securities held by the Demand Holders; (c) the
provisions of Section 16.10 and this clause (c) may be amended, waived or
modified only with the written consent of the Corporation and the holders of at
least a majority of the Class B1 Preferred; and (d) the provisions of Section
16.7(b) and this clause (d) may be amended, waived or modified only with the
written consent of the beneficiaries of those provisions.
18.6 Termination of Prior Rights. The Class A Purchasers party
hereto hereby terminate all rights set forth in the Investment Agreement dated
as of February 3, 1999 by and among the Corporation, the Founders and the Class
A Purchasers (the "INVESTMENT AGREEMENT"), including but not limited to the
rights of the Class A Purchasers pursuant to covenants of the Corporation set
forth in Articles 5 and 6 of the Investment Agreement and the rights of the
Class A Purchasers pursuant to the indemnification provisions of Article 7 of
the Investment Agreement.
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Rights Agreement
The Class A Purchasers shall have no obligation to increase the Class A
Conversion Price under any circumstances.
18.7 Notices, etc. All notices and other communications required
or permitted hereunder shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (a) for
delivery in the United States, five (5) days after deposit with the U.S. Postal
Service or other applicable postal service, if delivered by first class mail,
postage prepaid, (b) upon delivery, if delivered by hand, (c) for delivery in
the United States, one (1) business day after the business day of deposit with
Federal Express or similar overnight courier, freight prepaid, (d) for delivery
outside the United States three (3) business days after the business day of
deposit with an international express carrier if sent freight prepaid or ten
(10) days if sent by air mail or (e) one (1)business day after the business day
of facsimile transmission, if delivered by facsimile transmission with copy by
first class mail, postage prepaid, and shall be addressed (i) if to a Holder,
such Holder's address as set forth beneath his signature to this Agreement, and
(ii) if to the Corporation, at the address of its principal corporate offices
(attention: Secretary), or at such other address as a party may designate by ten
days' advance written notice to the other party pursuant to the provisions
above.
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or
seventy-two (72) hours after the same has been deposited in a regularly
maintained receptacle for the deposit of the United States mail, addressed and
mailed as aforesaid.
18.8 Delays or Omissions. Except as expressly provided herein, no
delay or omission to exercise any right, power or remedy accruing to any holder
of any Preferred Stock, Conversion Stock, upon any breach or default of the
Corporation under this Agreement, shall impair any such right, power or remedy
of such holder nor shall it be construed to be a waiver of any such breach or
default, or an acquiescence therein, or of or in any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. Any waiver, permit, consent or approval of any kind or character on
the part of any such holder of any breach or default under this Agreement, or
any waiver on the part of any such holder of any provisions or conditions of
this agreement, must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement or by law or otherwise afforded to any such holder, shall be
cumulative and not alternative.
18.9 Expenses. Except as otherwise provided in Section 7 in the
Class B Preferred Stock Purchase Agreement or in the acquisition agreement
proposed to be executed by and among the Corporation, ▇▇▇▇ and a wholly-owned
subsidiary of the Corporation, and except for the payment by the Corporation,
upon receipt of an invoice in reasonable detail, of an amount not to exceed
$10,000 for fees of counsel of each Class A Purchaser in connection with the
negotiation, execution and delivery of this Agreement, the Corporation and each
Holder shall bear its own
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Rights Agreement
expenses incurred on its behalf with respect to this Agreement and the
transactions contemplated hereby.
18.10 Counterparts. This Agreement may be executed in any number
of counterparts, each of which may be executed by less than all of the
Purchasers, each of which shall be enforceable against the signers actually
executing such counterparts, and all of which together shall constitute one
instrument.
18.11 Severability. In the event that any provision of this
Agreement becomes or is declared by a court of competent jurisdiction to be
illegal, unenforceable or void, this Agreement shall continue in full force and
effect without said provision; provided that no such severability shall be
effective if it materially changes the economic benefit of this Agreement to any
party.
18.12 Aggregation of Stock. All shares of Preferred Stock held or
acquired (or Common Stock issued upon conversion thereof) by affiliated entities
or persons shall be aggregated for the purpose of determining the availability
or discharge of any rights under this Agreement.
18.13 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
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The foregoing agreement is hereby executed as of the date first above
written.
"CORPORATION"
▇▇▇▇▇▇▇.▇▇▇, INC.
By:
-------------------------------------
Title:
-------------------------------------
"CLASS A PURCHASERS"
ARGENTUM CAPITAL PARTNERS II, L.P.
By: Argentum Partners II, L.L.C.,
its general partner
By: Argentum Investments, L.L.C., its
managing member
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Managing Member
MEDSITE ACPII LIMITED PARTNERS, L.P.
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, General Partner
"CLASS B1 PURCHASERS"
REUTERS HOLDINGS SWITZERLAND S.A.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
29
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
CB CAPITAL INVESTORS, L.P.
By: Chase Capital Partners, Its
General Partner
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
BROOKSIDE CAPITAL PARTNERS FUND, L.P.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
TCW/ICICI INDIA PRIVATE EQUITY FUND
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
TCW/ICICI INDIA PRIVATE EQUITY AMP FUND
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WPG NETWORKING FUND, LP
By its General Partner ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
30
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
WPG INSTITUTIONAL NETWORKING
FUND, LP
By its General Partner ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WPG SOFTWARE FUND, LP
By its General Partner ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WPG INSTITUTIONAL SOFTWARE FUND, LP
By its General Partner ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
WPG RAYTHEON NETWORKING FUND, LP
By its attorney-in-fact ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
31
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
WPG RAYTHEON SOFTWARE FUND, LP
By its attorney-in-fact ▇▇▇▇▇, ▇▇▇▇ &
▇▇▇▇▇, LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
▇▇▇ ▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇ BUSINESS LTD
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
HIKARI TSUSHIN, INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
ARGENTUM CAPITAL PARTNERS II, L.P.
By Argentum Partners II, L.L.C.,
its general partner
By Argentum Investments, L.L.C.,
its managing member
By:
-------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, Managing Member
32
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
METCHEM ENGINEERING SA
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
▇▇▇▇▇ HEALTHCARE CORPORATION
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
MERCHANT CAPITAL INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
EVEREST VENTURE PARTNERS II
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
DR. P. ▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
33
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
WS INVESTMENTS 99B
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ BUILDER
------------------------------------------
SIG ▇▇▇▇▇▇
------------------------------------------
34
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
DEFINED BENEFIT ▇▇▇▇▇
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
▇▇. ▇. ▇. ▇▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------------------
SELIM DAY
------------------------------------------
35
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------------
36
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
"CLASS B2 PURCHASERS"
------------------------------------------
MEDNUT LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
INVESTCARE PARTNERS LIMITED PARTNERSHIP
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
JORDEX RESOURCES INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
ASPEN ASSOCIATES LLC
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
37
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
"FOUNDERS"
▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------------
"MERCER"
MERCER MANAGEMENT CONSULTING, INC.
------------------------------------------
"CSFB"
CREDIT SUISSE FIRST BOSTON CORPORATION
------------------------------------------
"▇▇▇▇"
▇▇▇▇▇▇▇ ▇▇▇▇
------------------------------------------
38
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
SCHEDULE I
Schedule of Class A Purchasers
▇▇▇▇▇▇▇.▇▇▇, Inc.
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- --------------
Argentum Capital Partners II, L.P. 1,500 $ 1,500,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Medsite ACPII Limited Partners, L.P. 1,500 1,500,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----- --------------
TOTAL 3,000 $ 3,000,000
39
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
SCHEDULE II
Schedule of Class B1 Purchasers
▇▇▇▇▇▇▇.▇▇▇, Inc.
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- ----------
Reuters Holdings Switzerland S.A 909,091 $5,000,000
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
CB Capital LP 727,273 4,000,000
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Brookside Capital Partners Fund, L.P. 727,273 4,000,000
▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TCW/ICICI India Private Equity Fund 510,848 2,809,664
c/o Trust Company of the West
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
TCW/ICICI India Private Equity AMP Fund 216,424 1,190,332
c/o Trust Company of the West
Attn: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, #▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
WPG Networking Fund, LP 51,200 281,600
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
40
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- ----------
WPG Institutional Networking Fund, LP 4,436 24,400
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WPG Software Fund, LP 144,145 792,800
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WPG Institutional Software Fund, LP 306,182 1,684,000
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WPG Raytheon Networking Fund, LP 103,273 568,000
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WPG Raytheon Software Fund, LP 118,036 649,200
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ 2,727 15,000
▇/▇ ▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
2
41
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- ----------
▇▇▇▇▇▇ Business LTD 545,455 3,000,000
Exelfid Societe Fiduciaire SA
Attn M. ▇▇▇▇-▇▇▇▇ Jorand
Case Postale 3319
1211 Geneve 3
Hikari Tsushin, Inc. 363,636 2,000,000
Ohtemachi Nomura
▇▇▇▇. ▇-▇-▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇-▇▇, ▇▇▇▇▇, ▇▇▇-▇▇▇▇ ▇▇▇▇▇
Argentum Capital Partners II, L.P. 181,818 1,000,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Metchem Engineering SA 181,818 1,000,000
▇/▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇-▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ Healthcare Corporation 181,818 1,000,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Merchant Capital Inc. 59,091 325,000
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Everest Venture Partners II 45,455 250,000
c/o ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇, ▇▇ ▇▇▇▇▇
3
42
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- ----------
Dr. P. ▇▇▇ ▇▇▇▇▇▇▇ 45,455 250,000
▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 18,182 100,000
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ #▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ 18,182 100,000
▇▇▇▇ ▇▇-▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 9,091 50,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 9,091 50,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
WS Investments 99B 9,091 50,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 4,545 25,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ Builder 4,545 25,000
Builder Investment Group
▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
4
43
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- ----------
Sig ▇▇▇▇▇▇ 4,545 25,000
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ 4,545 25,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ 4,545 25,000
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇ 4,545 25,000
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Defined Benefit ▇▇▇▇▇ 4,545 25,000
▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇. ▇. ▇. ▇▇▇▇▇▇▇▇▇ 4,545 25,000
▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇ 4,545 25,000
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ 2,909 16,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
5
44
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- -------------
Selim Day 2,909 16,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 1,364 7,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 909 5,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ 364 2,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇ 364 2,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 273 1,500
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇▇
--------- -----------
TOTAL CLASS B1 PREFERRED 5,539,088 $30,464,996
6
45
▇▇▇▇▇▇▇.▇▇▇, INC.
RIGHTS AGREEMENT
SCHEDULE III
CLASS B2 PREFERRED STOCK
Name and Address of Purchaser Number of Shares Amount
----------------------------- ---------------- ------
Mednut LLC 400,000 $2,000,000
c/o Walnut Capital Partners
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Investcare Partners Limited Partnership LLC 400,000 2,000,000
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Jordex Resources Inc. 200,000 1,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Aspen Associates LLC 200,000 1,000,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
--------- ----------
TOTAL CLASS B2 PREFERRED 1,200,000 $6,000,000