EXHIBIT 4
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT
among
SYMIX SYSTEMS, INC.,
THE SEVERAL INVESTORS NAMED IN SCHEDULE I
and
THE SHAREHOLDER NAMED HEREIN
Dated as of May 10, 2000
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions..................................................1
ARTICLE 2
SECURITIES TRANSFER RESTRICTIONS
SECTION 2.01. Restrictive Legends..........................................4
SECTION 2.02. Notice of Proposed Transfer..................................4
SECTION 2.03. Termination of Restrictions..................................4
SECTION 2.04. Non-Applicability of Restrictions on Transfer................5
SECTION 2.05. Shareholder Sales............................................6
ARTICLE 3
INFORMATION RIGHTS
SECTION 3.01. Financial Statements, Reports, Etc...........................6
SECTION 3.02. Inspection, Consultation and Advice..........................7
SECTION 3.03. Confidentiality Agreement....................................7
ARTICLE 4
PRE-EMPTIVE RIGHTS
SECTION 4.01. Pre-emptive Rights...........................................8
ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Registration on Form S-3....................................10
SECTION 5.02. Incidental Registration.....................................10
SECTION 5.03. Registration Procedures.....................................11
SECTION 5.04. Expenses....................................................14
SECTION 5.05. Rule 144 Requirements.......................................14
SECTION 5.06. Investors' Information......................................15
SECTION 5.07. Transfer of Registration Rights.............................15
SECTION 5.08. Hold-back Agreement.........................................15
SECTION 5.09. Other Shareholders..........................................15
PAGE
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ARTICLE 6
INDEMNIFICATION
SECTION 6.01. Indemnification.............................................16
ARTICLE 7
TAG-ALONG RIGHTS
SECTION 7.01. Tag-Along Right.............................................17
SECTION 7.02. Notice of Intent to Participate.............................18
SECTION 7.03. Sale of Tag-Along Shares....................................18
ARTICLE 8
REPRESENTATION RIGHTS
SECTION 8.01. Board of Directors..........................................18
SECTION 8.02. Voting Restriction..........................................20
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Term of Agreement...........................................20
SECTION 9.02. Severability; Governing Law.................................20
SECTION 9.03. Injunctive Relief...........................................21
SECTION 9.04. Binding Effect..............................................21
SECTION 9.05. Modification or Amendment...................................21
SECTION 9.06. Aggregation.................................................21
SECTION 9.07. Counterparts................................................21
SECTION 9.08. Notices.....................................................21
SECTION 9.09. Entire Agreement............................................22
SCHEDULE I Investors
ii
INVESTOR RIGHTS AGREEMENT
INVESTOR RIGHTS AGREEMENT, dated as of May 10, 2000 among SYMIX SYSTEMS,
INC., an Ohio corporation (the "Company"), the several investors named in the
attached Schedule I who are purchasing Series A Convertible Participating
Preferred Shares and Warrants to purchase common shares (individually, an
"Investor" and collectively, the "Investors") pursuant to a Securities Purchase
Agreement dated May 10, 2000 (the "Securities Purchase Agreement") and the
shareholder of the Company listed on the signature page hereof (the
"Shareholder").
WHEREAS, the Company wishes to issue and sell to the Investors an
aggregate of 566,933 shares (the "Preferred Shares") of the authorized but
unissued Series A Convertible Participating Preferred Shares, without par
value, of the Company (the "Series A Preferred Shares"), which are convertible
into common shares, without par value, of the Company (the "Common Shares ") as
contemplated by the Securities Purchase Agreement and warrants (the "Warrants")
to purchase an aggregate of 453,546 shares of the authorized but unissued
Common Shares; and
WHEREAS, one of the conditions to the investment in the Company by the
Investors is the execution of this Investor Rights Agreement providing for,
inter alia, the ability of the Investors to purchase and/or participate in
subsequent sales of equity securities of the Company by the Company or the
Shareholder;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and the investment by the Investors pursuant to the Securities
Purchase Agreement and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. (a) The following terms, as used herein, have
the following meanings:
"Affiliate" shall mean any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition,
"control" shall have the meaning specified for that word in Rule 405
promulgated by the Securities and Exchange Commission under the Securities Act.
"Commission" shall mean the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as amended prior
or after the date hereof, or any federal statute or statutes which shall have
been enacted to take the place of such Act, together with all rules and
regulations promulgated thereunder.
"FAEF" means Fallen Angel Equity Fund, L.P.
"Holder" means the Persons who shall, from time to time, own of record any
Restricted Security.
"MSDW Investor" means any of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Partners
IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture Investors IV, L.P., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ Venture Offshore Investors IV, L.P. or ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
Equity Funding, Inc.
"Person" means an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or a government
organization or an agency or political subdivision thereof.
"Registrable Stock" shall mean all Common Shares held by the Investors
from time to time, including all of the Common Shares into which the Preferred
Shares may be converted and for which the Warrants may be exercised; provided,
however, that such Common Shares shall only be treated as Registrable Stock if
and so long as they have not been (i) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or
(ii) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions and restrictive legends with respect to such Common
Shares are removed upon the consummation of such sale.
"Registration Statement" shall mean a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form ▇-▇, ▇▇▇▇ ▇-▇, or
successor forms, or any registration statement covering only securities
proposed to be issued in exchange for securities or assets of another
corporation).
"Restricted Security" means any of the Preferred Shares, Warrants or the
Common Shares issuable upon conversion of the Preferred Shares or exercise of
the Warrants to the extent such securities are not registered under the
Securities Act.
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"Securities Act" means the Securities Act of 1933, as amended prior to or
after the date hereof, or any federal statute or statutes which shall be
enacted to take the place of such Act, together with all rules and regulations
promulgated thereunder.
"Transfer" means any direct or indirect sale, transfer, assignment, pledge
or other disposition (whether with or without consideration and whether
voluntary or involuntary or by operation of law). Derivatives thereof will be
similarly defined.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
---- -------
Company Preamble
Shareholder Preamble
LLC 2.04
Board of Directors 4.01(a)(ii)
Notice Period 4.01(a)(iii)
right of overallotment 4.01(a)(iii)
Indemnified Person 6.01(a)
Company Indemnified Person 6.01(b)
indemnified party 6.01(c)
Proposed Transferee 7.01
Tag-Along Shares 7.01
Change in Control Liquidation Event 9.01(a)(ii)
ARTICLE 2
SECURITIES TRANSFER RESTRICTIONS
Each Holder agrees that Restricted Securities shall not be Transferable
except upon the conditions specified in this Article 2, which conditions are
intended to insure compliance with the provisions of the Securities Act and
state securities laws in respect of the Transfer of any Restricted Security.
Shareholder agrees that shares of Common Stock held by him shall not be
Transferable except upon compliance with the conditions specified in Section
2.05 and Article 7 hereof.
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SECTION 2.01. Restrictive Legends.
(a) Unless and until otherwise permitted by this Article 2, each
certificate for a Restricted Security issued to a Holder, or to any subsequent
transferee of such certificate shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED OR SOLD
EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO SUBJECT TO
ADDITIONAL RESTRICTIONS ON TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH
IN THE INVESTOR RIGHTS AGREEMENT DATED AS OF MAY __, 2000, COPIES OF WHICH
MAY BE OBTAINED UPON REQUEST FROM THE COMPANY."
(b) The Company may order the transfer agent for any Restricted Security
to stop the Transfer of any Restricted Security bearing the legend set forth in
subsections (a) of this Section 2.01 until the conditions of this Article 2
with respect to the Transfer of such shares have been satisfied.
SECTION 2.02. Notice of Proposed Transfer. If, prior to any Transfer of
any Restricted Security, the Holder desiring to effect such Transfer delivers
to the Company a written notice describing briefly the manner of such Transfer
and a written opinion of counsel for such Holder (who may be inside counsel in
the case of an institutional holder), provided that such counsel and the form
and substance of such opinion are reasonably satisfactory to the Company, or
counsel for the Company, to the effect that such Transfer may be effected
without the registration of such securities under the Securities Act or
registration or qualification under applicable state securities laws or
regulations, the Company shall thereupon permit or cause its transfer agent (if
any) to permit such Transfer to be effected; provided, that if in such written
notice the transferring holder represents and warrants to the Company that the
Transfer is to (i) an Affiliate of the Holder or (ii) a purchaser or transferee
whom the transferring holder knows or reasonably believes to be a "qualified
institutional buyer", as that term is defined in Rule 144A promulgated under
the Securities Act, then in each such case, no opinion shall be required.
SECTION 2.03. Termination of Restrictions.
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(a) Notwithstanding the foregoing provisions of this Article 2, the
restrictions imposed by this Article 2 upon the Transferability of Restricted
Securities shall terminate as to any particular Restricted Security when (i)
such Restricted Security shall have been effectively registered under the
Securities Act and sold by the Holder thereof in accordance with such
registration; (ii) a written opinion of counsel for the Holder thereof
(provided that such counsel, and the form and substance of such opinion, are
reasonably satisfactory to the Company) or counsel for the Company to the
effect that such restrictions are no longer required or necessary under any
federal or state securities law or regulation has been received by the Company;
(iii) such Restricted Security shall have been sold without registration under
the Securities Act in compliance with Rule 144 promulgated by the Commission
under the Securities Act and the Company is reasonably satisfied that the
Holder of the Restricted Security, in accordance with the terms of subsection
(k) of Rule 144 promulgated by the Commission under the Securities Act, shall
be entitled to sell such securities pursuant to such subsection; or (iv) a
letter or an order shall have been issued to the Holder thereof by the staff of
the Commission or the Commission in form and substance reasonably satisfactory
to the Company, stating that no enforcement action shall be recommended by such
staff or taken by the Commission, as the case may be, if such Restricted
Security is transferred without registration under the Securities Act in
accordance with the conditions set forth in such letter or order and such
letter or order specifies that no restrictions on Transfer are required.
(b) Whenever the restrictions imposed by this Article 2 shall terminate,
as herein above provided, the Holder of any Restricted Securities then
outstanding as to which such restrictions shall have terminated shall be
entitled to receive from the Company, without expense to such Holder, one or
more new certificates for the Restricted Securities so held not bearing the
restrictive legend set forth in Subsection (a) of Section 2.01 hereof, as
applicable.
SECTION 2.04. Non-Applicability of Restrictions on Transfer.
Notwithstanding the provisions of Section 2.02 hereof, any Holder may from time
to time Transfer all or part of such Holder's Restricted Securities to (i) a
nominee identified in writing to the Company as being the nominee of or for
such Holder, and any nominee of or for a beneficial owner of Restricted
Securities identified in writing to the Company as being the nominee of or for
such beneficial owner may from time to time Transfer all or part of the
Restricted Securities registered in the name of such nominee but held as
nominee on behalf of such beneficial owner, to such beneficial owner, (ii) to
an Affiliate of such Holder, or (iii) if such Holder is a partnership, limited
liability company ("LLC"), or the nominee of a partnership or an LLC, to a
partner, retired partner, or estate of a partner or retired partner, of such
partnership or a member, retired member, or estate of a member or retired
member of such LLC, so long as such Transfer is in accordance with the
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transferee's interest in such partnership or LLC and is without consideration;
provided, that each such transferee referred to in clauses (i), (ii) and (iii)
above shall remain subject to all restrictions on the Transfer of the
Restricted Securities herein contained and shall agree in writing to be bound
by the other terms and conditions of this Agreement.
SECTION 2.05. Shareholder Sales. Prior to the second anniversary of the
date hereof, Shareholder agrees not to Transfer any Common Shares (or any
derivative thereof) that he beneficially owns; provided that Shareholder shall
have the right to Transfer in any twelve month period up to ten percent (10%)
of the Common Shares that he beneficially owns.
ARTICLE 3
INFORMATION RIGHTS
SECTION 3.01. Financial Statements, Reports, Etc. The Company shall
furnish to each Investor:
(a) within forty-five (45) days after the end of each quarter in each
fiscal year (other than the last quarter in each fiscal year) a balance sheet
of the Company, if any, and the related statements of income, shareholders'
equity and cash flows, unaudited but prepared in accordance with generally
accepted accounting principles and certified by the Chief Financial Officer of
the Company, such balance sheet to be as of the end of such quarter and such
statements of income, shareholders' equity and cash flows to be for such
quarter and for the period from the beginning of the fiscal year to the end of
such quarter, in each case with comparative statements for the prior fiscal
year, provided that, the Company may comply with this provision by delivering
to each Investor a copy of its quarterly report on Form 10-Q for such quarter;
(b) within thirty (30) days after the end of each month in each fiscal
year (other than the last month in each quarter) a summary balance sheet of the
Company and the related summary statements of income, shareholder's equity and
cash flows, unaudited but prepared in accordance with generally accepted
accounting principles;
(c) at the time of delivery of each quarterly statement pursuant to
Section 3.01(a), a management narrative report explaining all significant
variances from forecasts and all significant current developments in staffing,
marketing, sales and operations;
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(d) prior to the start of each fiscal year, capital and operating expense
budgets, cash flow projections, income and loss projections and annual business
plan for the Company in respect of such fiscal year, all itemized in reasonable
detail and prepared on a monthly basis, and, promptly after preparation, any
revisions to any of the foregoing;
(e) promptly following receipt by the Company, each audit response letter,
accountant's management letter and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company;
(f) promptly after the commencement thereof, notice of all actions, suits,
claims, proceedings, and to the knowledge of the Company, investigations and
inquiries that could materially adversely affect the Company, if any;
(g) promptly upon sending, making available or filing the same, all press
releases, reports and financial statements that the Company sends or makes
available to its shareholders or files with the Commission; and
(h) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs of
the Company as such Investor reasonably may request.
SECTION 3.02. Inspection, Consultation and Advice. The Company shall
permit each Investor and such persons as it may designate, at such Investor's
expense, to visit and inspect any of the properties of the Company, examine its
books and take copies and extracts therefrom, discuss the affairs, finances and
accounts of the Company with its officers, employees and public accountants
(and the Company hereby authorizes said accountants to discuss with such
Investor and such designees such affairs, finances and accounts), and consult
with and advise the management of the Company as to its affairs, finances and
accounts, all at reasonable times and upon reasonable notice to the Company.
SECTION 3.03. Confidentiality Agreement. Each Investor receiving
information pursuant to Section 3.01 or 3.02 shall use its best efforts to
ensure that any information which is delivered by the Company to such Investor
pursuant to Section 3.01 or 3.02 will be kept confidential, not be copied
except for internal use and for provision to attorneys, accountants and other
fiduciaries with duties to maintain confidentiality, and be used solely to
evaluate and protect such Investor's investment in the Restricted Securities,
including through the provision of routine reports to limited partners of the
Investors; provided, that the foregoing obligation shall not prohibit any such
Investor from divulging any information, whether or not confidential, to any
regulatory authority having jurisdiction over such Investor,
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if such Investor is compelled to do so by any judicial or administrative
process or by other requirements of law provided such Investor seeks a
protective order with respect to such information, or to any prospective
purchaser of Restricted Securities from such Investor so long as such
prospective purchaser agrees to be bound by the confidentiality provisions
contained herein; and provided, further, that the foregoing obligation shall
remain in effect as to any confidential information except to the extent that
such information can be shown to have been (i) previously known on a
non-confidential basis by such Investor, (ii) in the public domain through no
fault of such Investor or (iii) later lawfully acquired by such Investor from
sources other than the Company other than information known by such Investor to
be acquired in violation of an existing confidentiality agreement. The
obligation of each Investor to hold any confidential information in confidence
shall be satisfied if such Investor exercises the same care with respect to
such information as it would take to preserve the confidentiality of its own
confidential and proprietary information.
ARTICLE 4
PRE-EMPTIVE RIGHTS
SECTION 4.01. Pre-emptive Rights. (a) Each Investor shall have a
preemptive right to purchase all or any portion of an offering by the Company,
or any subsidiary of the Company, of any equity security (or any security which
is or may become convertible into or exchangeable or exercisable for an equity
security) equal to the number or amount of securities being offered, multiplied
by a fraction, the numerator of which shall be the number of Common Shares held
by such Investor and the denominator of which shall be the number of Common
Shares held by all shareholders (including the Investors); provided that, in
the case of any such offering by a subsidiary of the Company, if the number of
equity securities that the Investors collectively have preemptive rights to
purchase from the company is less than 20% of the equity securities being
offered by such subsidiary then the number of equity securities that each
Investor has a preemptive right to purchase shall be increased pro rata so
that, collectively, the Investors have a preemptive right to purchase at least
20% of such equity securities; provided further that there will be no such
preemptive right in the case of (i) shares issued or issuable pursuant to the
exercise of options or warrants or the conversion of convertible securities
(including the Preferred Shares) that were issued or outstanding on the date
hereof; (ii) any shares issued or issuable to officers, directors, employees,
agents or consultants of the Company or any subsidiary of the Company, upon
exercise of any option granted or to be granted pursuant to any stock option
plan or arrangements approved by the Board of Directors of the Company (the
"Board of Directors"), or the board of directors of
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such subsidiary, as the case may be, or any options granted or to be granted
thereunder; or (iii) shares issued or issuable in the acquisition by the
Company or by a subsidiary of the Company of any other corporation,
association, partnership or another entity or the assets or securities thereof.
Each Investor shall have such right to purchase when the securities are issued
or sold by the Company, or any subsidiary of the Company, on the best terms and
conditions as such securities are offered to other purchasers thereof. For
purposes of this Section 4.01 it shall be assumed that all securities held by
the Investors which may be converted into or exercised for Common Shares have
been so converted or exercised. The Company shall give the Investors at least
thirty (30) days prior written notice (the "Notice Period") of any proposed
securities issuance that would give rise to preemptive rights as contemplated
in this Section 4.01 describing the amount and type of securities to be issued,
and the price and other terms upon which the Company, or any subsidiary of the
Company, proposes to issue the same. Each Investor exercising all of its
preemptive rights in such offering shall have a further pro rata right (a
"right of over allotment") to purchase the securities refused by any Investor
who declines to fully exercise its preemptive right. Each Investor desiring to
exercise its preemptive right must notify the Company in writing prior to the
close of business on the last day of the Notice Period, stating (i) its intent
to purchase, (ii) whether or not it intends to exercise its right of over
allotment; and (iii) the maximum amount of securities it is willing to
purchase.
(b) In the event that the Investors have not elected pursuant to this
Section 4.01(b) to purchase all of the contemplated offering, the Company shall
have ninety (90) days thereafter to sell the securities not elected to be
purchased by the Investors at the price and upon the terms no more favorable to
the purchasers of such securities than specified in the Company notice
hereunder. In the event the Company has not sold some or all of the securities
within such ninety (90) day period, the Company shall not thereafter issue or
sell any unsold securities without first offering such securities to the
Investors in the manner provided above.
(c) The rights of each Investor under this Article 4 shall be subject to
the ability of such Investor to make representations to the Company reasonably
required to comply with Rule 506 of Regulation D under the Securities Act in
connection with the purchase of any restricted securities.
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ARTICLE 5
REGISTRATION RIGHTS
SECTION 5.01. Registration on Form S-3. (a) Within ninety (90) days of the
date of this Agreement, the Company shall file with the Commission a shelf
Registration Statement on Form S-3 covering all of the shares of Registrable
Stock beneficially owned by the Investors and the Company shall use its
reasonable best efforts to effect the registration of the Registrable Stock in
order to permit the sale and distribution of all of the Registrable Stock on a
continuous basis under Rule 415. Except as expressly provided in paragraph
5.01(b), the Company shall use its reasonable best efforts to cause such
Registration Statement to become and remain effective until such time as each
Investor can sell all of its Registrable Stock pursuant to Rule 144 promulgated
by the Commission under the Securities Act without volume restrictions under
subsection (k) thereof.
(b) Notwithstanding anything to the contrary contained herein, the Company
shall not be obligated to make any filing in any particular jurisdiction in
which the Company would be required to execute a general consent to service of
process in order to effect such registration, qualification or compliance
unless the Company is already subject to service in such jurisdiction in the
opinion of the Company's counsel. If the Company shall furnish to the Investors
a certificate signed by the Chief Executive Officer or Chief Financial Officer
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 the Investors to continue to sell or distribute Registrable Stock under the
shelf Registration Statement filed by the Company pursuant to paragraph
5.01(a), then the Investors shall cease any such sale or distribution of
Registrable Stock for a period not to exceed sixty (60) days as specified by
the Company. The Company may not deliver the certificate specified in the
preceding sentence more than once in any 360-day period.
(c) The Investors, in consultation with the Company and subject to the
Company's reasonable approval, may designate the managing underwriter(s), if
any, of any underwritten distribution made under the shelf Registration
Statement filed pursuant to Section 5.01(a) hereof; provided that ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated or any successor entity shall be reasonably
acceptable to the Company. The Company shall cause its senior management to
participate in any "road show" as and to the extent reasonably requested by the
managing underwriters.
SECTION 5.02. Incidental Registration. At such time when the Company is no
longer required to maintain the effectiveness of the shelf registration
statement pursuant to Section 5.01(a), each time the Company shall determine to
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file a Registration Statement in connection with the proposed offer and sale
for money of any of its securities by it or any of its securityholders, the
Company will give written notice of its determination to the Investors. Upon
the written request of the Investors given within thirty (30) days after the
giving of any such notice by the Company, the Company will use its reasonable
efforts to cause all shares of Registrable Stock which the Investors have
requested to register to be included in such Registration Statement, all to the
extent requisite to permit the sale or other disposition by the prospective
seller of the Registrable Stock to be so registered. If the Registration
Statement is to cover an underwritten distribution, the Company shall use its
reasonable efforts to cause the Registrable Stock requested for inclusion
pursuant to this Section 5.02 to be included in the underwriting on the same
terms and conditions as the securities otherwise being sold through the
underwriters. If, in the good faith judgment of the managing underwriter(s) of
such public offering, the inclusion of all of the Registrable Stock requested
for inclusion pursuant to this Section 5.02 would interfere with the successful
marketing of the shares to be offered, then the number of shares of Registrable
Stock to be included in the offering shall be reduced to the required level
with the participation in such offering to be pro rata among the Holders
thereof requesting such registration, based upon the number of shares of
Registrable Stock owned by such Holders; provided that commencing nine months
after the date hereof, each Investor shall have a priority right (prior to the
Company and any other securityholder) to have included pursuant to this Section
5.02 not less 30% of the Registrable Stock requested for inclusion by such
Investor.
SECTION 5.03. Registration Procedures. If and whenever the Company is
required by the provisions of Section 5.01 or 5.02 hereof to effect the
registration of shares of Registrable Stock under the Securities Act, the
Company will, at its expense, as expeditiously as reasonably possible:
(a) In accordance with the Securities Act and the rules and regulations of
the Commission, prepare and file with the Commission a Registration Statement
with respect to such securities and use its reasonable efforts to cause such
Registration Statement to become and remain effective;
(b) (i) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective (x)
until the time specified in Section 5.01(a) or (y) in the case of any
Registration Statements filed under Section 5.02 for at least one hundred
twenty (120) days after the effective date of such Registration Statement; and
comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such Registration Statement
during such periods in
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accordance with the intended method or methods of disposition by the sellers
thereof set forth in such Registration Statement;
(c) If the offering is to be underwritten in whole or in part, enter into
a written underwriting agreement in form and substance reasonably satisfactory
to the managing underwriter of the public offering and the Investors;
(d) Furnish to the Investors and to the underwriters such reasonable
number of copies of the Registration Statement, preliminary prospectus, final
prospectus and such other documents as such underwriters and Investors may
reasonably request in order to facilitate the public offering of such
securities;
(e) Use its reasonable efforts to register or qualify the securities
covered by such Registration Statement under such state securities or blue sky
laws of such jurisdictions (i) as shall be reasonably appropriate for the
distribution of the securities covered by such Registration Statement or (ii)
as the Investors and the underwriters may reasonably request within twenty (20)
days following the original filing of such Registration Statement, except that
the Company shall not for any purpose be required to execute a general consent
to service of process, to qualify to do business as a foreign corporation in
any jurisdiction where it is not so qualified or to subject itself to taxation
in such jurisdiction;
(f) Notify the Investors promptly after it shall receive notice thereof of
the date and time when such Registration Statement and each post-effective
amendment thereto has become effective or a supplement to any prospectus
forming a part of such Registration Statement has been filed;
(g) Notify the Investors promptly of any request by the Commission or any
state securities commission or agency for the amending or supplementing of such
Registration Statement or prospectus or for additional information;
(h) Prepare and file with the Commission, promptly upon the request of the
Investors, any amendments or supplements to such Registration Statement or
prospectus which, in the opinion of counsel representing the Company in such
Registration (and which counsel is Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP or
another nationally recognized law firm reasonably acceptable to the Investors),
is required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Stock by the Investors;
(i) Prepare and promptly file with the Commission, and promptly notify the
Investors of the filing of, such amendments or supplements to such Registration
Statement or prospectus as may be necessary to correct any statements or
omissions if, at the time when a prospectus relating to such
12
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(j) During the time period during which the Company is required, pursuant
to Section 5.03(a), to cause a Registration Statement to be effective, in case
the Investors or any underwriter for the Investors is required to deliver a
prospectus at a time when the prospectus then in circulation is not in
compliance with the Securities Act or the rules and regulations of the
Commission, prepare promptly upon request such amendments or supplements to
such Registration Statement and such prospectus as may be necessary in order
for such prospectus to comply with the requirements of the Securities Act and
such rules and regulations;
(k) Advise the Investors, promptly after it shall receive notice or obtain
knowledge thereof, of the issuance of any stop order by the Commission or any
state securities commission or agency suspending the effectiveness of such
Registration Statement or the initiation or threatening 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;
(l) Not file any amendment or supplement to such Registration Statement or
prospectus to which counsel for the Investors has reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a copy thereof at
least three (3) business days prior to the filing thereof (which advance
furnishing of copies the Company hereby agrees to);
(m) At the request of the Investors (i) furnish to the Investors on the
effective date of the Registration Statement or, if such registration includes
an underwritten public offering, at the closing provided for in the
underwriting agreement, an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, addressed to
the underwriters, if any, and to the Investors, covering such matters with
respect to the Registration Statement, the prospectus and each amendment or
supplement thereto, proceedings under state and Federal securities laws, other
matters relating to the Company, the securities being registered and the offer
and sale of such securities as are customarily the subject of opinions of
issuer's counsel provided to underwriters in underwritten public offerings, and
(ii) use its best efforts to furnish to the Investors letters dated each such
effective date and such closing date, from the
13
independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the Investors, stating that they are independent
certified public accountants within the meaning of the Securities Act and
dealing with such matters as the underwriters may request, or, if the offering
is not underwritten, that in the opinion of such accountants the financial
statements and other financial data of the Company included in the Registration
Statement or the prospectus or any amendment or supplement thereto comply in
all material respects with the applicable accounting requirements of the
Securities Act, and additionally covering such other financial matters,
including information as to the period ending not more than three (3) business
days prior to the date of such letter with respect to the Registration
Statement and prospectus, as the Investors may reasonably request;
(n) With respect to any public offering made by any Investor under a
Registration Statement filed pursuant to Section 5.02, refrain from making any
sale or distribution of its securities except pursuant to any stock option plan
or other employee benefit plan, any pre-existing agreement for the sale of such
securities or the issuance of securities in connection with future acquisitions
or a private placement for at least one hundred twenty (120) days after the
closing of the public offering pursuant to such Registration Statement; and
(o) Use its best efforts to ensure the obtaining of all necessary
approvals from the applicable stock exchange or electronic quotation system.
SECTION 5.04. Expenses. (a) With respect to each registration effected
pursuant to Sections 5.01 or 5.02 hereof, all fees, costs and expenses of and
incidental to such registration and the public offering in connection therewith
shall be borne by the Company; provided that the Investors shall bear their pro
rata share of the underwriting discounts and selling commissions.
(b) The fees, costs and expenses of registration to be borne as provided
in paragraph (a) above, shall include, without limitation, all registration,
filing and stock exchange fees, printing expenses, fees and disbursements of
counsel and accountants for the Company, all legal fees and disbursements and
other expenses of complying with state securities laws in states where the
securities are to be registered or qualified and the costs and expenses of the
Company relating to investor presentations on any "road-show" undertaken in
connection with the marketing of the offering of the securities.
SECTION 5.05. Rule 144 Requirements. The Company agrees to:
(a) comply with the requirements of Rule 144(c) under the Securities Act
with respect to current public information about the Company;
14
(b) use its reasonable best efforts to 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) furnish to any Holder of Registrable Stock upon written request (x) a
written statement by the Company as to its compliance with the requirements of
said Rule 144(c) and the reporting requirements of the Securities Act or the
Exchange Act (at any time after it has become subject to such reporting
requirements), (y) a copy of the most recent annual or quarterly report of the
Company and (z) such other reports and documents of the Company as such Holder
may reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
SECTION 5.06. Investors' Information. Each Investor agrees to furnish in
writing to the Company in a timely manner such information with respect to
itself and the distribution of such Registrable Stock as the Company may from
time to time reasonably request in writing and as shall be required by law or
by the Commission in connection therewith.
SECTION 5.07. Transfer of Registration Rights. Each Investor may at any
time Transfer to any Person that acquires at least fifty one percent (51%) of
the then outstanding Common Share equivalents then held by such Investor the
registration rights set forth in Sections 5.01 and 5.02 hereof. Such Transfer
shall be subject to the transferee agreeing in writing to be bound by the terms
of this Agreement.
SECTION 5.08. Hold-back Agreement. If requested by the underwriter, each
Investor will agree not to offer, sell, contract to sell or Transfer any
Registrable Stock, during the fourteen (14) days prior to, and during the
ninety (90) day period beginning on, the effective date of any Registration
Statement filed pursuant to Section 5.02 other than the Registrable Stock to be
sold pursuant to such Registration Statement.
SECTION 5.09. Other Shareholders. The Company may grant to any Person
other than the Investors the right to request a registration of securities of
the Company under the Securities Act and the right to be included as a selling
shareholder in connection with any registration of Registrable Stock; provided,
however, that without the consent of Investors holding a majority of the
Registrable Stock, the granting of any such rights shall not conflict with or
otherwise alter any rights granted under Section 5.01 above and, in all cases,
the rights of the Investors to include shares in any Registration Statement
shall be
15
given priority over any registration rights granted to other Persons as
permitted by this Section 5.09.
ARTICLE 6
INDEMNIFICATION
SECTION 6.01. Indemnification. (a) To the fullest extent permitted by law,
the Company will indemnify and hold harmless the Investors and their respective
directors, officers, employees, partners, members and Affiliates (each such
person, an "Indemnified Person"), whether or not their shares have been sold in
the offering, and any underwriter (as defined in the Securities Act) for the
Investors, and any person who controls any such underwriter within the meaning
of the Securities Act, from and against, and will reimburse the Indemnified
Persons and each such underwriter and controlling person with respect to, any
and all claims, actions, demands, losses, damages, liabilities, costs and
expenses to which any Indemnified Persons or any such underwriter or
controlling person may become subject under the Securities Act or otherwise,
insofar as such claims, actions, demands, losses, damages, liabilities, costs
or expenses arise out of or are based upon any untrue statement or alleged
untrue statement or omission of any material fact contained in a Registration
Statement, any prospectus contained therein or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading; provided, however, that the Company will not be
liable in any such case to the extent that any such claim, action, demand,
loss, damage, liability, cost or expense is caused by an untrue statement or
alleged untrue statement or omission or alleged omission so made in reliance
upon information furnished in writing by one or more of the Investors, any such
underwriter or any such controlling person for use in the preparation of such
Registration Statement, prospectus or any amendment or supplement thereto.
(b) Each Indemnified Person severally (not jointly), will indemnify and
hold harmless the Company, its directors, officers, employees and Affiliates
(each such person, a "Company Indemnified Person") from and against, and will
reimburse the Company Indemnified Persons with respect to, any and all claims,
actions, demands, losses, damages, liabilities, costs or expenses to which any
Company Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement or omission of any material
fact contained in a Registration Statement, any prospectus contained therein or
any amendment or supplement thereto, or are caused by the omission or alleged
16
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, in each case to the extent that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon information furnished in writing by the Indemnified
Person for use in the preparation of such Registration Statement, prospectus or
any amendment or supplement thereto.
(c) Promptly after receipt by a party to be indemnified pursuant to the
provisions of paragraph (a) or (b) of this Section 6.01 (an "indemnified
party") of notice of the commencement of any action involving the subject
matter of the foregoing indemnity provisions, such indemnified party will, if a
claim thereof is to be made against the indemnifying party pursuant to the
provisions of paragraph (a) or (b), notify the indemnifying party of the
commencement thereof. In case such action is brought against any indemnified
party and it notifies the indemnifying party of the commencement thereof, the
indemnifying party shall have the right to participate in, and, to the extent
that it may wish, jointly with any other indemnifying party similarly notified,
to assume the defense thereof, and after notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party pursuant to the
provisions of such paragraph (a) or (b) for any legal or other expense
subsequently incurred by such indemnified party in connection with the defense
thereof. No indemnifying party shall be liable to an indemnified party for any
settlement of any action or claim without the consent of the indemnifying
party. No indemnifying party will 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.
ARTICLE 7
TAG-ALONG RIGHTS
SECTION 7.01. Tag-Along Right. Except as permitted under Section 2.05
hereof, if Shareholder desires to sell all or any part of his shares of capital
stock of the Company (the "Tag-Along Shares") to a third-party purchaser (a
"Proposed Transferee"), Shareholder shall provide to the Investors notice of
such intention to sell and of the terms and conditions, including price, of
such proposed sale. Each Investor shall have the right to sell to the Proposed
Transferee, at the same price per share and on the same terms and conditions as
involved in such sale by Shareholder, up to that number of Common Shares then
held by such Investor (calculated on a fully diluted basis) that equals a
portion of the Tag-Along Shares
17
equal to the product of (i) the Tag-Along Shares multiplied by (ii) a fraction,
the numerator of which is the aggregate number of Common Shares then owned by
such Investor (calculated on a fully diluted basis) and the denominator of
which is the aggregate number of Common Shares then owned by all of the
Investors and the Shareholder (calculated on a fully diluted basis).
SECTION 7.02. Notice of Intent to Participate. If an Investor wishes to
participate in any sale under this Article 7, such Investor shall notify
Shareholder and the Company in writing of such intention as soon as practicable
after the Investor's receipt of the notice made pursuant to Section 7.01, and
in any event within twenty (20) days after the date of receipt of the notice.
SECTION 7.03. Sale of Tag-Along Shares. Any purchase of less than all of
the Tag-Along Shares and the Common Shares (calculated on a fully diluted
basis) that the Investors are entitled to and elect to sell to the Proposed
Transferee pursuant to Sections 7.01 and 7.02 hereof, considered collectively,
by the Proposed Transferee shall be made from Shareholder and the Investors who
elect to participate pro rata based upon the relative amount of the shares that
Shareholder and the Investors who elect to participate are otherwise entitled
to sell pursuant to Section 7.01. If the Investors do not wish to participate
in any sale under this Article 7, Shareholder shall sell to the Proposed
Transferee all, or at the option of the Proposed Transferee, any part of the
shares proposed to be sold at not less than the price and upon other terms and
conditions, if any, not more favorable to the Proposed Transferee than those in
the notice provided by Shareholder pursuant to 7.01. If the Tag-Along Shares
and the shares of the Investors are sold under this Article 7 to any purchaser
who is not a party to this Agreement, the Tag-Along Shares and the share of the
Investors so sold shall no longer be subject to any of the restrictions imposed
by this Agreement, except for any restrictions imposed by Article 2, which
shall continue in force until such time as they lapse pursuant to the terms of
such Article 2 or Article 7 hereof.
ARTICLE 8
REPRESENTATION RIGHTS
SECTION 8.01. Board of Directors. (a) Each Holder (other than the MSDW
Investors) shall vote such Holder's voting securities and shall take all other
reasonably necessary or desirable actions within its control (whether in such
Holder's capacity as a shareholder, director, member of a Board of Directors
committee or officer of the Company or otherwise and including, without
limitation, attendance at meetings in person or by proxy for purposes of
obtaining a quorum and execution of written consents in lieu of meetings), and
the
18
Company shall take all reasonably necessary or desirable legal actions within
its control, including in preparation of proxy materials, the recommendation of
a management slate of directors in elections for directors, and in proposing
and effecting amendments to the articles of incorporation and code of
regulations of the Company, so that:
(i) At Closing, the authorized number of directors on the board of
directors of the Company shall be increased from six (6) to nine (9)
directors;
(ii) FAEF shall have the right to have one representative, currently
expected to be ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, to be nominated as a Director of the
Company;
(iii) the management slate of directors, including the representative
of FAEF, shall be elected to the Board of Directors;
(iv) at least one of the representatives of the Investors, if at
least one such representative is elected to the Board of Directors, shall
be designated a member of every committee of the Board of Directors
existing now or in the future;
(v) if a representative of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Venture
Partners IV, L.P. is not a Director of the Company, a representative of
such Investor, which representative shall not be a member of the Board of
Directors, shall have the right to attend all meetings of the Board of
Directors as a non-voting observer and to receive all notices and other
written information sent to Directors by the Company;
(vi) the required quorum for Board of Directors action shall be the
presence at a Board of Directors meeting of at least a majority of
directors, except that a majority of the directors in office shall
constitute a quorum for filling a vacancy in the Board of Directors;
(vii) all action of the Board of Directors shall require (a) the
affirmative vote of at least a majority of the directors at a duly
convened meeting of the Board of Directors at which a quorum is present or
(b) the unanimous written consent of the Board of Directors; provided that
in the event there is a vacancy on the Board of Directors and an
individual has been nominated to fill such vacancy, the first order of
business shall be to fill such vacancy; and
19
(viii) in the event any director nominated by FAEF ceases to serve as
a member of the Board of Directors during his or her term of office, FAEF
shall be entitled to nominate a designee to fill such vacancy, and the
Board of Directors as constituted immediately prior to such time shall
designate a replacement director, nominated by FAEF and reasonably
satisfactory to the Board of Directors, to fill the remainder of the term
of the director who has ceased to be a member of the Board of Directors.
SECTION 8.02. Voting Restriction. Each MSDW Investor hereby irrevocably
agrees with the Company to vote all Common Shares and Series A Preferred Shares
beneficially owned by the MSDW Investors in excess of 9.9% of the total voting
power of the outstanding Common Shares and Series A Preferred Shares in
proportion to all votes cast by the other holders of Common Shares and Series A
Preferred Shares (as determined by the Company and excluding for these purposes
all Common Shares and Series A Preferred Shares beneficially owned by the MSDW
Investors).
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Term of Agreement. Except as otherwise provided herein, the
provisions of this Agreement shall terminate upon the earliest to occur of any
one of the following events:
(i) the voluntary or involuntary liquidation or dissolution of the
Company;
(ii) the occurrence of a Change-in-Control Liquidation Event (as such
term is defined in the amendment to the Company's Amended Articles of
Incorporation, as amended, as set forth in Exhibit A to the Securities
Purchase Agreement);
(iii) the Investors beneficially own in aggregate less than twenty
percent (20%) of the Common Shares equivalents initially purchased by the
Investors pursuant to the Securities Purchase Agreement.
SECTION 9.02. Severability; Governing Law. If any provisions of this
Agreement shall be determined to be illegal or unenforceable by any court of
law, the remaining provisions shall be severable and enforceable in accordance
with their terms. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Ohio.
20
SECTION 9.03. Injunctive Relief. It is acknowledged that it will be
impossible to measure the damages that would be suffered by the parties if any
party fails to comply with the provisions of this Agreement. Accordingly, the
parties shall be entitled to obtain specific performance of this Agreement and
to obtain immediate injunctive relief.
SECTION 9.04. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns, legal representatives and heirs.
SECTION 9.05. Modification or Amendment. This Agreement or any term hereof
may be amended or waived, only with the written consent of the Company and
Investors holding more than seventy-five percent (75%) of the Common Shares
issued or issuable upon conversion of any Restricted Securities; additionally,
Section 2.05 and Article 7 hereof may not be amended or waived without the
written consent of Shareholder.
SECTION 9.06. Aggregation. All Restricted Securities held or acquired by
affiliated Persons shall be aggregated for the purpose of determining the
availability of any rights under this Agreement.
SECTION 9.07. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
SECTION 9.08. Notices. All notices to be given or otherwise made to any
party to this Agreement shall be deemed to be sufficient if contained in a
written instrument, delivered by hand in person, or by express overnight
courier service, or by electronic facsimile transmission, or by registered or
certified mail, return receipt requested, postage prepaid, addressed to such
party at the address set forth below or at such other address as may hereafter
be designated in writing by the addressee to the Company:
If to the Company to:
Symix Systems, Inc..
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: President and Chief Executive Officer
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
21
with a copy to:
Vorys, ▇▇▇▇▇, ▇▇▇▇▇▇▇ and ▇▇▇▇▇ LLP
▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
If to Shareholder:
to his address set forth on the signature pages hereto
If to any Investor:
to its address set forth on the signature pages hereto
with a copy to:
▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇, Esq.
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
and, if not an addressee of any notice to an Investor, with a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Venture Partners IV, L.P., at its address set forth on
the signature pages hereto
All such notices shall, when mailed or telegraphed, be effective when
received or when attempted delivery is refused.
SECTION 9.09. Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersedes all prior oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Agreement shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
22
IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be executed as of the date first above written.
SYMIX SYSTEMS, INC.,
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President and Chief Executive Officer
SHAREHOLDER:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇, in his individual capacity
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇
-----------------------------------------
Address:
------------------------------------
------------------------------------
23
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ VENTURE PARTNERS IV, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ VENTURE INVESTORS IV, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ VENTURE OFFSHORE
INVESTORS IV, L.P.
By: MSDW Venture Partners IV, LLC,
as General Partner of each of the limited partnerships
By: MSDW Venture Partners IV, Inc.,
as Member
By: /s/ ▇▇▇ ▇▇ ▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇ ▇▇ ▇▇▇▇▇▇
Title: Managing Director
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Controller
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
EQUITY FUNDING, INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Attention: Controller
24
FALLEN ANGEL EQUITY FUND, L.P.
By: Fallen Angel Capital, L.L.C.
as its General Partner
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
as Member
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Member
Address: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
25
SCHEDULE 1
The following is a full and complete list of the Investors who are
purchasing Series A Convertible Participating Preferred Shares and Warrants of
the Company:
Number of Number
Inventor Preferred Shares of Warrants %
-------- ---------------- ----------- -------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 271,650 217,320 47.92
Venture Partners IV, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 31,516 25,212 5.56
Venture Investors IV, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 10,598 8,478 1.87
Venture Offshore
Investors IV, ▇.▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ 86,502 69,202 15.26
Equity Funding, Inc.
Fallen Angel Equity 166,667 133,334 29.40
Fund, L.P.
Total: 566,933 453,546 100.00
26
