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Exhibit 4.3
INTERACTIVE PICTURES CORPORATION
RIGHTS AGREEMENT
April 9, 1998
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TABLE OF CONTENTS
PAGE
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SECTION 1
Restrictions on Transferability; Registration Rights...........................1
1.1 Certain Definitions..........................................1
1.2 Restrictions.................................................2
1.3 Restrictive Legend...........................................2
1.4 Notice of Proposed Transfers.................................3
1.5 Requested Registration.......................................3
1.6 Company Registration.........................................5
1.7 Registration on Form S-3.....................................6
1.8 Limitations on Subsequent Registration Rights................7
1.9 Expenses of Registration.....................................7
1.10 Registration Procedures......................................8
1.11 Indemnification..............................................8
1.12 Information by Holder.......................................10
1.13 Rule 144 Reporting..........................................10
1.14 Transfer of Registration Rights.............................10
1.15 Standoff Agreement..........................................11
1.16 Termination of Rights.......................................11
SECTION 2
Maintenance of Equity Position................................................11
2.1 Notice of Transactions......................................11
2.2 Right to Purchase Allotment.................................12
2.3 Purchase Price..............................................12
2.4 Purchase at Closing.........................................12
2.5 Exceptions..................................................12
2.6 Termination of Rights.......................................12
SECTION 3
Miscellaneous.................................................................13
3.1 Assignment..................................................13
3.2 Third Parties...............................................13
3.3 Governing Law...............................................13
3.4 Counterparts................................................13
3.5 Notices.....................................................13
3.6 Severability................................................13
3.7 Amendment and Waiver........................................13
3.8 Effect of Amendment or Waiver...............................14
3.9 Rights of Holders...........................................14
3.10 Delays or Omissions.........................................14
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RIGHTS AGREEMENT
This RIGHTS AGREEMENT (this "Agreement") is made as of April 9, 1998 by
and among Interactive Pictures Corporation, a Tennessee corporation (the
"Company"), U S West Interactive Services, Inc. (to be renamed MediaOne
Interactive Services, Inc.), a Colorado corporation ("ISG"), Advance
Publications, Inc., a New York corporation ("Advance"), and such other persons
that may become parties to this Agreement from time to time (such other persons,
ISG and Advance are collectively referred to herein as the "Purchasers").
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
Restrictions on Transferability;
Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Conversion Shares" shall mean the shares of Common Stock of the
Company issued or issuable upon conversion of the Preferred Shares.
"Holder" shall mean any Purchaser holding Registrable Securities and
any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.
"Initiating Holders" shall mean Holders in the aggregate of not less
than thirty percent (30%) of the Registrable Securities as defined for purposes
of that particular section.
"Preferred Shares" shall mean the Series C Preferred Stock of the
Company.
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.
"Registration Expenses" shall mean all expenses incurred by the Company
in complying with Sections 1.5, 1.6 and 1.7 of this Agreement, including,
without limitation, all registration, qualification and filing fees, printing
expenses, escrow fees, fees and disbursements of counsel for the Company, blue
sky fees and expenses, and the expense of any special audits incident to or
required by any such registration (but excluding the compensation of regular
employees of the Company which shall be paid in any event by the Company).
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"Registrable Securities" means the Preferred Shares and the Conversion
Shares.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 of this Agreement.
"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.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (except as
provided by Section 1.9).
1.2 Restrictions. The Preferred Shares 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. The Purchasers will cause any proposed purchaser, assignee,
transferee or pledgee of the Preferred Shares to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement.
1.3 Restrictive Legend. Each certificate representing the Preferred
Shares and any other securities issued in respect of the Preferred Shares, upon
any stock split, stock dividend, recapitalization, merger, consolidation or
similar event, shall (unless otherwise permitted by the provisions of Section
1.4 below) be stamped or otherwise imprinted with legends in the following form
(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. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION
OF COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE
TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
Each Purchaser and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
1.4 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 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
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transfer, the holder thereof shall give written notice to the Company 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 (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) 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
Company. The Company will not require such a legal opinion or "no action" letter
(a) in any transaction in compliance with Rule 144, (b) in any transaction in
which a Purchaser which is a corporation distributes Restricted Securities after
six (6) months after the purchase thereof solely to its majority-owned
subsidiaries or affiliates for no consideration, or (c) in any transaction in
which a Purchaser which is a partnership distributes Restricted Securities after
six (6) months after the purchase thereof solely to partners thereof for no
consideration, provided that each transferee agrees in writing to be subject to
the terms of this Section 1.4. 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 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.
1.5 Requested Registration.
(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any qualification,
compliance or registration, the Company shall:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) use its best efforts to effect such registration,
qualification or compliance (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 1.5:
(1) In any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance
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unless the Company is already subject to service in such jurisdiction and except
as may be required by the Securities Act;
(2) Prior to the earlier of (i) six (6) months following the
Company's initial public offering or (ii) March 1, 2001;
(3) During the period ending on the date three (3) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan);
(4) After the Company has effected two (2) such registrations
pursuant to this subparagraph 1.5(a), such registrations have been declared or
ordered effective and the securities offered pursuant to such registrations have
been sold; or
(5) If the Company shall furnish to such Holders a certificate,
signed by the President of the Company, stating that in the good faith judgment
of the Board of Directors it would be seriously detrimental to the Company or
its shareholders for a registration statement to be filed in the near future,
then the Company's obligation to use its best efforts to register, qualify or
comply under this Section 1.5 shall be deferred for a single period not to
exceed one hundred-twenty (120) days from the date of receipt of written request
from the Initiating Holders.
Subject to the foregoing clauses (1) through (5), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Initiating Holders, and in any case, not later than seventy-five (75)
days thereafter.
(b) Underwriting. In the event that a registration pursuant to Section
1.5 is for a registered public offering involving an underwriting, the Company
shall so advise the Holders as part of the notice given pursuant to Section
1.5(a)(i). The right of any Holder to registration pursuant to Section 1.5 shall
be conditioned upon such Holder's participation in the underwriting arrangements
required by this Section 1.5 and the inclusion of such Holder's Registrable
Securities in the underwriting, to the extent requested, to the extent provided
in this Agreement.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders (which managing underwriter
shall be reasonably acceptable to the Company). Notwithstanding any other
provision of this Section 1.5, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
Holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders at the
time of filing the registration statement. No Registrable Securities excluded
from the underwriting by reason of the underwriter's marketing limitation shall
be included in such registration. To facilitate the allocation of shares in
accordance with the above provisions, the
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Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration.
1.6 Company Registration.
(a) Notice of Registration. If at any time or from time to time, the
Company shall determine to register any of its securities, either for its own
account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof, and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved in
such registration, all the Registrable Securities specified in a written request
or requests received within twenty (20) days after receipt of such written
notice from the Company by any Holder, but only to the extent that such
inclusion will not diminish the number of securities included by the Company or
by holders of the Company's securities who have demanded such registration.
(b) Underwriting. If the registration of which the Company gives notice
is for a registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to Section
1.6(a)(i). In such event, the right of any Holder to registration pursuant to
Section 1.6 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the managing underwriter selected
for such underwriting by the Company (or by the holders who have demanded such
registration). Notwithstanding any other provision of this Section 1.6, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration to a minimum of 30%
of the total shares to be included in such underwriting or exclude them entirely
in the case of the Company's initial public offering. The Company shall so
advise all Holders and the other holders distributing their securities through
such underwriting pursuant to piggyback registration rights similar to this
Section 1.6, and the number of shares of Registrable Securities and other
securities that may be included in the registration and underwriting shall be
first allocated among all Purchasers in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Purchasers at the
time of filing the registration statement, and after satisfaction of the
requirements of the Purchasers, the remaining shares that may be included in the
registration and underwriting shall
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be allocated among the remaining Holders in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing of the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder or other
holder to the nearest 100 shares. If any Holder or other holder disapproves of
the terms of any such underwriting, he or she may elect to withdraw therefrom by
written notice to the Company and the managing underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution prior to one
hundred eighty (180) days after the effective date of the registration statement
relating thereto (the "Lock-Up Period"); provided, however, that if such
registration is not the Company's initial public offering such Lock-Up Period
shall be one hundred twenty (120) days unless the managing underwriter
determines that marketing factors require a longer period in which case the
Lock-Up period shall be specified by the managing underwriter but shall not
exceed one hundred eighty (180) days.
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 1.6
prior to the effectiveness of such registration, whether or not any Holder has
elected to include securities in such registration.
1.7 Registration on Form S-3.
(a) If a Purchaser requests in writing that the Company 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 Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form; provided,
however, that the Company shall not be required to effect more than two (2)
registrations pursuant to this Section 1.7 in any twelve (12) month period. The
Company will (i) promptly give written notice of the proposed registration to
all other Holders, and (ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the Company.
The substantive provisions of Section 1.5(b) shall be applicable to each
registration initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date three (3) months following
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the effective date of, a registration statement (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), or (iii) if the Company shall furnish
to such Holder a certificate signed by the President of the Company stating
that, in the good faith judgment of the Board of Directors, it would be
seriously detrimental to the Company or its shareholders for registration
statements to be filed in the near future, then the Company's obligation to use
its best efforts to file a registration statement shall be deferred for a single
period not to exceed one hundred twenty (120) days from the receipt of the
request to file such registration by such Holder or Holders.
1.8 Limitations on Subsequent Registration Rights.
(a) From and after the date of this Agreement, the Company shall not
enter into any agreement granting any holder or prospective holder of any
securities of the Company registration rights with respect to such securities
without the prior written consent of a majority of the Registrable Securities
then outstanding (on a Common Stock equivalent basis) unless (1) such new
registration rights, including standoff obligations, are on a pari passu basis
with those rights of the Holders hereunder, or (2) such new registration rights,
including standoff obligations, are subordi nate to the registration rights
granted the Holders hereunder; provided, that the inclusion of such holder's
securities shall not reduce the amount of Registrable Securities which are
included in any registration for which the Holders hold registration rights
pursuant to this Agreement.
(b) Where the Company determines to grant any holder or prospective
holder of any securities of the Company registration rights that are on a pari
passu basis with those rights of the Holders hereunder and determines that the
grant of such rights shall be made pursuant to this Agreement, then such grant
shall be evidenced by the execution of an additional signature page to this
Agreement by the Company and such holder, without any requirement on the part of
the Company to seek the consent or approval of the Holders.
1.9 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Sections 1.5, 1.6 or 1.7 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company, provided that
the Company shall not be required to pay the Registration Expenses of any
registration proceeding begun pursuant to Section 1.5, the request of which has
been subsequently withdrawn by the Initiating Holders. In such case, the Holders
of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered unless the Holders of a majority of the Registrable Securities agree
to forfeit their right to one demand registration pursuant to Section 1.5.
Notwithstanding the foregoing, however, if at the time of the withdrawal, the
Holders have learned of a material adverse change in the condition, business or
prospects of the Company from that known to the Holders at the time of their
request, of which the Company had knowledge at the time of the request, then the
Holders shall not be required to pay any of said Registration Expenses or to
forfeit the right to one demand registration.
1.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in
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writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for at least ninety (90) days or until
the distribution described in the registration statement has been completed; and
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.
1.11 Indemnification.
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or underwriter and
stated to be specifically for use therein; and provided, further, that the
Company will not be liable to any such person or entity with respect to any such
untrue statement or omission or alleged untrue statement or omission made in any
preliminary prospectus that is corrected in the final prospectus filed with the
Commission pursu ant to Rule 424(b) promulgated under the Securities Act (or any
amendment or supplement to such prospectus) if the person asserting any such
loss, claim, damage or liability purchased securities but was not sent or given
a copy of the prospectus (as amended or supplemented) at or prior to the written
confirmation of the sale of such securities to such person in any case where
such delivery of the prospectus (as amended or supplemented) is required by the
Securities Act, unless such failure to deliver the prospectus (as amended or
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supplemented) was a result of the Company's failure to provide such prospectus
(as amended or supplemented).
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that the liability
of a Holder for indemnification under this Section 1.11(b) shall not exceed the
gross proceeds from the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 1.11 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation.
1.12 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
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1.13 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) So long as a Purchaser owns any Restricted Securities, to furnish
to the Purchaser forth with upon request a written statement by the Company as
to its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Purchaser may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Purchaser to sell
any such securities without registration.
1.14 Transfer of Registration Rights. The rights to cause the Company
to register securities granted Purchasers under Sections 1.5, 1.6 and 1.7 may be
assigned to a transferee or assignee reasonably acceptable to the Company in
connection with any transfer or assignment of Registrable Securities by a
Purchaser (together with any affiliate); provided that (a) such transfer may
otherwise be effected in accordance with applicable securities laws, (b) notice
of such assignment is given to the Company, and (c) such transferee or assignee
(i) is a wholly-owned subsidiary or constituent partner (including limited
partners) of such Purchaser, or (ii) acquires from such Purchaser the lesser of
(a) 500,000 or more shares of Registrable Securities (as appropriately adjusted
for stock splits and the like) or (b) one-half (1/2) of the Registrable
Securities then owned by such Purchaser.
1.15 Standoff Agreement. Each Holder agrees in connection with the
initial registration of the Company's securities that, upon request of the
Company or the underwriters managing any underwritten initial public offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days from the effective date of
such registration) as may be requested by the Company or such managing
underwriters; provided, however, that the officers and directors of the Company
who own stock of the Company also agree to such restrictions.
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1.16 Termination of Rights. No Holder shall be entitled to exercise any
right provided for in this Section 1:
(a) after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten offering of its
securities to the general public, or
(b) on or after the closing of a public offering of the Common Stock of
the Company, initiated by the Company, when all shares of the Holder's
Registrable Securities may be sold under Rule 144 during any 90-day period;
provided, however, that the provisions of this subsection (b) shall not apply
where the Holder owns more than one percent (1%) of the Company's outstanding
stock until such time as such Holder owns less than one percent (1%) of the
outstanding stock.
SECTION 2
Maintenance of Equity Position
It is the intent of the Company to provide each Purchaser with an
ongoing right to maintain each Purchaser's initial equity interest in the
Company as follows:
2.1 Notice of Transactions. The Company shall notify Purchaser of (i)
the commencement of bona fide negotiations regarding any agreement providing for
the issuance (contingent or otherwise) of (A) any equity securities or (B) any
notes or debt securities containing equity features (including, without
limitation, any notes or debt securities convertible into or exchangeable or
exercisable for equity securities, issued in connection with the issuance of
such features), or any securities convertible into, or exchangeable or
exercisable for, any equity securities (including, without limitation, employee
stock options and warrants) (collectively, "Convertible Securities"), or (ii)
the issuance of shares upon the exercise of any Convertible Securities. Upon the
execution of definitive agreements regarding such issuances, or, in the case of
Convertible Securities upon issuance of securities related thereto, the Company
shall deliver written notice (the "Equity Notice") of such agreement or
issuance, as the case may be, promptly, but in any event, not less than thirty
(30) days prior to the closing of any such transaction or, if later, the
issuance of any securities related thereto (the "Issued Securities"). The Equity
Notice shall set forth the terms and conditions of such agreement and will be
deemed to be an offer to Purchaser to purchase its Allotment (as defined in
Section 2.2) of the securities described in the Equity Notice (the "Offer"), at
the purchase price set forth in subparagraph (c) below and with the same rights,
privileges and preferences as the Issued Securities, and on the same terms and
conditions as those set forth or referenced, as the case may be, in the Equity
Notice.
2.2 Right to Purchase Allotment. Purchaser shall be entitled to
purchase up to the amount of the securities described in the Equity Notice which
shall be equal to the product of (i) the number that results from dividing the
number of shares of Preferred Stock and Conversion Shares held by Purchaser
immediately prior to the issuance of the Issued Securities by the number of
shares of the Company's Common Stock outstanding on a fully-diluted basis
immediately prior to such issuance, and (ii) the number of Issued Securities
(its "Allotment").
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2.3 Purchase Price. The Purchase Price of securities described in an
Equity Notice shall be the agreed upon price set forth in the Equity Notice.
2.4 Purchase at Closing. Purchaser may purchase its Allotment
contemporaneously with the closing of the transaction giving rise to the right
to acquire the Allotment; provided that Purchaser has notified the Company, in
writing, of its intent to make such a purchase, not less than fifteen (15) days
prior to date of closing set forth in the Equity Notice.
2.5 Exceptions. The provisions of this Section 2 shall not apply with
respect to (i) the sale of additional shares of Series C Preferred Stock and
Warrants to purchase Series C Preferred Stock pursuant to, and in accordance
with, the Series C Preferred Stock Purchase Agreement dated April 9, 1998
between the Company and the purchasers listed therein, or (ii) the issuance of
shares of Common Stock (as proportionally adjusted for any split, stock dividend
or recapitalization affecting the Common Stock), including options or warrants
to acquire Common Stock, in connection with conversion of any shares of Series A
Preferred Stock, Series B Preferred Stock, or Series C Preferred Stock
outstanding as of the date hereof or any employee stock option or stock
ownership plan, any consulting agreement or arrangement or any restricted stock
agreement providing for the issuance of Common Stock to an employee or employees
of the Company, in existence as of the date hereof or entered into following the
date of this Agreement.
2.6 Termination of Rights. The rights provided in this Section 2 shall
terminate upon the consummation of the Company's sale of its Common Stock in an
underwritten public offering pursuant to an effective registration statement
filed under the Securities Act.
SECTION 3
Miscellaneous
3.1 Assignment. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties to this
Agreement.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this Agreement, and
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.
3.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Tennessee in the United States of America without
giving effect to the conflicts of laws principles thereof.
3.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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3.5 Notices. All notices and other communications required or permitted
under this Agree ment shall be mailed by registered or certified mail, postage
prepaid, or otherwise delivered by hand or by messenger, addressed (a) if to a
Purchaser, at such Purchaser's address set forth on Exhibit A, or, at such other
address as such Purchaser shall have furnished to the Company in writing, or (b)
if to any other holder of any Shares, at such address as such holder shall have
furnished the Company in writing, or, until any such holder so furnishes an
address to the Company, then to and at the address of the last holder of such
Shares who has so furnished an address to the Company, or (c) if to the Company,
one copy should be sent to its offices and addressed to the attention of the
President, or at such other address as the Company shall have furnished to the
Purchaser.
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 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and postage prepaid as
aforesaid.
3.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
3.7 Amendment and Waiver. Any provision of this Agreement may be
amended or waived with the written consent of the Company and the Holders of at
least a majority of the outstanding shares of the Registrable Securities, so
long as the effect is to treat all Holders equally, provided, however, that the
consent of both ISG and Advance is required for any such amendment or waiver,
which consent shall not be unreasonably withheld. Any amendment or waiver of
this Agreement shall require the written consent of any Holder who is
disproportionately adversely affected by such amendment or waiver. Any amendment
or waiver effected in accordance with this paragraph shall be binding upon each
Holder of Registrable Securities and the Company. In addition, the Company may
waive performance of any obligation owing to it, as to some or all of the
Holders of Registrable Securities, or agree to accept alternatives to such
performance, without obtaining the consent of any Holder of Registrable
Securities. In the event that an underwriting agreement is entered into between
the Company and any Holder, and such underwriting agreement contains terms
differing from this Agreement, as to any such Holder the terms of such
underwriting agreement shall govern.
3.8 Effect of Amendment or Waiver. The Purchasers and their successors
and assigns acknowledge that by the operation of Section 3.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
3.9 Rights of Holders. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of
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any securities of the Company as a result of exercising or refraining from
exercising any such right or rights.
3.10 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party 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 party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made 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 holder, shall be
cumulative and not alternative.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY:
INTERACTIVE PICTURES CORPORATION,
a Tennessee corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------
Title: CEO & President
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PURCHASERS:
ADVANCE PUBLICATIONS, INC.,
a New York corporation
By: /s/ ▇.▇. ▇▇▇▇▇▇▇▇, Jr.
----------------------------------
Name: ▇.▇. ▇▇▇▇▇▇▇▇, Jr.
--------------------------------
Title: Chairman/Vice President
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U S WEST INTERACTIVE SERVICES, INC.,
(to be renamed MediaOne Group Interactive
Services, Inc.)
a Colorado corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Title: President
-------------------------------
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/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
BANNER & WITCOFF, LTD.
a Illinois professional service corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Its: President
-------------------------------------
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇.
/s/ ▇▇▇ ▇▇▇▇▇▇
-----------------------------------------
▇▇▇ ▇▇▇▇▇▇
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EXHIBIT A
US WEST Interactive Services, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Advance Publications, Inc.
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇