EXHIBIT 10.4
SMARTBARGAINS, INC.
SECOND AMENDED AND RESTATED
SHAREHOLDERS' AGREEMENT
SECOND AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT ("Agreement"), made as
of the 16th day of September, 2003, by and among SmartBargains, Inc., a Delaware
corporation (the "Company"), and the undersigned holders of capital stock of the
Company.
WHEREAS, the Company and the undersigned are parties to that certain
Amended and Restated Shareholders' Agreement, dated July 26, 2002 (the "Prior
Agreement");
WHEREAS, the Company and the undersigned desire to amend and restate the
Prior Agreement to clarify the rights and obligations of the parties set forth
therein and have executed and delivered this Agreement, which amends, restates
and supercedes the Prior Agreement;
WHEREAS, Schedule A hereto sets forth the names of (a) those individuals
or entities that are GBG Shareholders (as further defined in Section 1 hereof,
each individually a "GBG Shareholder" and collectively, the "GBG Shareholders"),
(b) those individuals or entities that are Common Shareholders (together with
any permitted successor or assign, each individually a "Common Shareholder" and
collectively, the "Common Shareholders"), (c) America Online, Inc. ("AOL"), (d)
Xxxx Xxxxxx (individually a "Management Shareholder"), and (e) those individuals
or entities listed as an Investor (together with any permitted successor or
assign, each individually an "Investor" and collectively, the "Investors"),
which, for the avoidance of doubt, includes AOL as an Investor hereunder (the
Investors, the GBG Shareholders and Management Shareholders, collectively, the
"Shareholders");
WHEREAS, the Company desires to grant to the Shareholders certain rights
of first refusal, rights to participate in sales, preemptive rights,
registration rights and such other rights as set forth herein, together with
such obligations and on the terms and conditions contained herein;
WHEREAS, the Company desires to grant to the Common Shareholders certain
registration rights and such other rights as set forth herein, together with
such obligations and on the terms and conditions contained herein;
WHEREAS, certain of the undersigned hold shares of the Company's Series A
Convertible Preferred Stock, par value $0.01 per share (the "Series A Preferred
Stock"), the Company's Series A-1 Convertible Preferred Stock, par value $0.01
per share (the Series A-1 Preferred Stock"), the Company's Series B Convertible
Preferred Stock, par value $0.01 per share (the "Series B Preferred Stock"), and
the Company's Series C Convertible Preferred Stock, par value $0.01 per share
(the "Series C Preferred Stock"), (collectively, the Series A Preferred Stock,
the Series A-1 Preferred Stock, the Series B Preferred Stock and the Series C
Preferred Stock, the "Preferred Stock");
WHEREAS, certain of the undersigned hold warrants to purchase shares of
Series B Preferred Stock (the "Series B Warrants") and warrants to purchase
shares of Series C Preferred Stock (the "Series C Warrants", and together with
the Series B Warrants, the "Warrants");
WHEREAS, the Preferred Stock is convertible into shares of Class A Voting
Common Stock, par value $0.01 per share of the Company (the "Common Stock");
WHEREAS, the Company and certain of the undersigned who represent a
majority of the outstanding shares of Preferred Stock desire to amend and
restate the Prior Agreement and have executed and delivered this Agreement,
which amends, restates and supercedes the Prior Agreement;
WHEREAS, the Company and certain of the undersigned who represent
two-thirds of the outstanding shares of Series A Preferred Stock, Series A-1
Preferred Stock and Series B Preferred Stock, considered together as a single
class on an as-converted basis into shares of Common Stock, desire to amend and
restate the Prior Agreement, including the amendment, modification and waiver of
the provisions of Section 6(f) of the Prior Agreement, as set forth herein, and
have executed and delivered this Agreement, which amends, restates and
supercedes the Prior Agreement, including Section 6(f) of the Prior Agreement;
WHEREAS, the Company and certain of the Shareholders who represent a
majority of the outstanding shares of Series C Preferred Stock desire to amend
and restate the Prior Agreement, including the amendment, modification and
waiver of the provisions of Section 6(f) of the Prior Agreement, as set forth
herein, and have executed and delivered this Agreement, which amends, restates
and supercedes the Prior Agreement, including Section 6(f) of the Prior
Agreement;
WHEREAS, the Company and all of the Common Shareholders desire to amend
and restate the Prior Agreement, including the amendment, modification and
waiver of the provisions of Section 6(f) of the Prior Agreement, as set forth
herein, and have executed and delivered this Agreement, which amends, restates
and supercedes the Prior Agreement, including Section 6(f) of the Prior
Agreement.
NOW, THEREFORE, in consideration of the foregoing, the agreements set
forth below, and the parties' desire to provide for continuity of ownership of
the Company to further the interests of the Company and its present and future
shareholders, the parties hereby agree with each other as follows:
1. Definitions. As used in this Agreement:
"GBG Shareholder" shall mean each of those holders of capital stock of the
Company listed as a GBG Shareholder on Schedule A hereto, which, for the
avoidance of doubt, includes Xxxxxx Xxxxxxxx Group, LLC ("Xxxxxx Xxxxxxxx") as a
GBG Shareholder hereunder. GBG Shareholder shall also include any Permitted
Transferee (as defined in Section 2 hereof) of a GBG Shareholder.
Notwithstanding anything contained in this Agreement to the contrary, a GBG
Shareholder shall remain a GBG Shareholder hereunder only for so long as such
individual or entity continues to hold any of the shares of capital stock of the
Company received by such
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individual or entity pursuant to a Permitted Transfer (as defined in Section 2
hereof) from a GBG Shareholder.
"Major Investor" shall mean a Shareholder who, together with its
affiliates, owns shares of Preferred Stock having an aggregate value of at least
$5,000,000, calculated based on the purchase price of such shares of Preferred
Stock at the time such shares were purchased from the Company.
"Shares" shall mean and include all shares of the Common Stock and shares
issued upon exercise of any vested options or warrants to purchase shares of
Common Stock and/or Preferred Stock, and other equity securities of the Company
convertible into Common Stock, including Preferred Stock, on an as converted
basis now owned or hereafter acquired by a Shareholder.
2. Prohibited Transfers and Other Matters. No GBG Shareholder,
Management Shareholder or Common Shareholder shall sell, assign, transfer,
pledge, hypothecate, mortgage, encumber or dispose of all or any of his Common
Stock except in compliance with the applicable terms of this Agreement. To the
extent any other agreement between the Company and a GBG Shareholder, Management
Shareholder or Common Shareholder provides for restrictions on the transfer of
shares of Common Stock by such GBG Shareholder, Management Shareholder or Common
Shareholder that conflict with the terms of this Agreement, the terms of this
Agreement shall govern. Notwithstanding anything to the contrary contained in
this Agreement, no transfer restriction contained in this Agreement shall apply
to any transfer (a) by any party hereto that is a partnership to its partners or
former partners in accordance with partnership interests, (b) by a limited
liability company to its members or former members in accordance with their
interests in the limited liability company, (c) by a corporation, partnership or
limited liability company to any other corporation, partnership, limited
liability company or any other entity or organization directly or indirectly
controlling, controlled by, or under common control with the transferor, (d) by
an individual to such individual's family members or a trust for the benefit of
such individual's family members, (e) from one GBG Shareholder to any other GBG
Shareholder (or to an employee of Xxxxxx Xxxxxxxx pursuant to Section 12 of the
Operating Agreement dated June 13, 2000 between the Company and Xxxxxx
Xxxxxxxx), or (f) from Xxxxxx Xxxxxxxx to any employee, consultant or affiliate
of Xxxxxx Xxxxxxxx, in a distribution or other transfer directly from Xxxxxx
Xxxxxxxx; provided that in each case the transferee will be subject to the terms
of this Agreement as if it were an original party hereto to the same extent and
subject to the provisions applicable to the transferor (any such transfer being
referred to herein as a "Permitted Transfer" and any transferee of shares in a
Permitted Transfer being referred to herein as a "Permitted Transferee").
3. Right of First Refusal on Dispositions of a Management Shareholder,
GBG Shareholder or Common Shareholder.
(a) If at any time a Management Shareholder, GBG Shareholder or
Common Shareholder desires to sell or otherwise transfer (other than a Permitted
Transfer) any shares of Common Stock (other than Common Stock directly or
indirectly issued upon conversion of the Preferred Stock or the exercise of the
Warrants) (a "Selling Shareholder") pursuant to a bona fide offer from a third
party (the "Proposed Transferee"), the Selling Shareholder shall submit a
written offer to the Company (the "Company Offer") to sell such shares of Common
Stock (the
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"Offered Shares") to the Company on terms and conditions, including price, not
less favorable than those on which the Selling Shareholder proposes to sell such
Offered Shares to the Proposed Transferee. The Company Offer shall disclose the
identity of the Proposed Transferee, the number of Offered Shares proposed to be
sold, the total number of Shares owned by the Selling Shareholder, the terms and
conditions, including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Company Offer shall further state that the
Company may acquire, in accordance with the provisions of this Agreement, all,
or any portion of the Offered Shares for the price and upon the other terms and
conditions set forth therein.
(b) The Company shall have the first option to purchase the
Offered Shares. If the Company desires to purchase some or all of the Offered
Shares, it shall communicate in writing its election to purchase the Offered
Shares to the Selling Shareholder and the other Shareholders, which such
communication shall be given within 20 days of the date the Company Offer was
made. Such communication shall, when taken in conjunction with the Company
Offer, be deemed to constitute a valid, legally binding and enforceable
agreement for the sale and purchase of such Offered Shares.
(c) To the extent that the Company does not elect to purchase all
or any portion of the Offered Shares, the Shareholders that are holders of
Preferred Stock (the "Preferred Shareholders") other than the Selling
Shareholder shall have a second option to purchase any Offered Shares that are
not purchased by the Company (the "Remaining Shares"). The Selling Shareholder
shall submit a written offer to such Preferred Shareholders (the "Shareholder
Offer") to sell the Remaining Shares to such Preferred Shareholders on terms and
conditions, including price, not less favorable than those on which the Selling
Shareholder proposes to sell the Offered Shares to the Proposed Transferee. The
Shareholder Offer shall disclose the identity of the Proposed Transferee, the
number of Offered Shares proposed to be sold to the Proposed Transferee, the
total number of Shares purchased by the Company, the total number of Shares
owned by the Selling Shareholder, the terms and conditions, including price, of
the proposed sale, and any other material facts relating to the proposed sale.
The Shareholder Offer shall further state that such Preferred Shareholders may
acquire, in accordance with the provisions of this Agreement, all, or any
portion of the Remaining Shares for the price and upon the other terms and
conditions set forth therein.
(d) Upon receipt of the Shareholder Offer, Preferred Shareholders
(other than the Selling Shareholder) shall have the right to purchase that
number of Remaining Shares as shall be equal to the number of such Remaining
Shares multiplied by a fraction, the numerator of which shall be the number of
shares of Preferred Stock, on an as converted basis into shares of Common Stock,
then owned by such Preferred Shareholder and the denominator of which shall be
the aggregate number of shares of Preferred Stock, on an as converted basis into
shares of Common Stock, then owned by all of the Preferred Shareholders who
elect to purchase the Remaining Shares. The amount of such Remaining Shares that
each Preferred Shareholder is entitled to purchase under this Section 3(d) shall
be referred to as its "Pro Rata Fraction." A Preferred Shareholder may
designate, at any time prior to actual purchase, any affiliate of such Preferred
Shareholder as the entity entitled to purchase all or a portion of such
Preferred Shareholder's Pro Rata Fraction of the Remaining Shares (and/or any
over-subscription pursuant to Section 3(e)), provided that (i) such designee
agrees to be bound by the terms of this Agreement in the same capacity as the
Preferred Shareholder hereunder and (ii) the purchase of
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such Remaining Shares by such designee does not violate the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act") or
any applicable state securities laws.
(e) Each Preferred Shareholder shall have a right of
oversubscription such that if any Preferred Shareholder fails to accept the
Shareholder Offer as to its full Pro Rata Fraction, the remaining Preferred
Shareholders shall, among them, have the right to purchase up to the balance of
the Remaining Shares not so purchased. The Preferred Shareholders may exercise
such right of oversubscription by accepting the Shareholder Offer for the
Remaining Shares as to more than their Pro Rata Fraction. If, as a result
thereof, such oversubscriptions exceed the total number of Remaining Shares
available in respect of such oversubscription privilege, the oversubscribing
Preferred Shareholders shall be cut back with respect to oversubscriptions on a
pro rata basis in accordance with their respective Pro Rata Fractions or as they
may otherwise agree among themselves.
(f) Those Preferred Shareholders who desire to purchase all or any
part of the Remaining Shares shall communicate in writing their election to
purchase such Remaining Shares to the Selling Shareholder and the Company, which
communication shall state the number of Remaining Shares said Preferred
Shareholder desires to purchase and shall be provided within ten (10) business
days of the date the Shareholder Offer was made. The Company shall forward such
communication to the other Shareholders. Such communication shall, when taken in
conjunction with the Shareholder Offer, be deemed to constitute a valid, legally
binding and enforceable agreement for the sale and purchase of such Remaining
Shares (subject to the aforesaid limitations as to the right of the Preferred
Shareholders to purchase more than their Pro Rata Fraction).
(g) Sales of such Offered Shares to be sold to the Company or
sales of such Remaining Shares to be sold to the Preferred Shareholders pursuant
to this Section 3 shall be made at the offices of the Company within sixty (60)
days following the date the Company Offer or the Shareholder Offer, as the case
may be, was made.
(h) If the Company and/or the Preferred Shareholders do not
purchase all of the Offered Shares and Remaining Shares, as applicable, then
all, but not fewer than all, of the remaining Offered Shares and Remaining
Shares, as the case may be, may be sold by the Selling Shareholder at any time
within 120 days after the date the Offer was made, subject to the provisions of
Section 4 hereof. Any such sale shall be to the Proposed Transferee, at not less
than the price and upon other terms and conditions, if any, not more favorable
to the Proposed Transferee than those specified in the Company Offer and/or the
Shareholder Offer. If the Offered Shares and Remaining Shares, as the case may
be, are not sold within such 120-day period, they shall continue to be subject
to the requirements of a prior offer pursuant to this Section 3, and may not be
transferred except in compliance with the provisions of this Section 3. If
Offered Shares and Remaining Shares, as the case may be, are sold pursuant to
this Section 3 to any purchaser who is not a party to this Agreement, the
purchaser of such Offered Shares or Remaining Shares, as applicable, shall
execute a counterpart of this Agreement as a precondition of the purchase of
such Offered Shares or Remaining Shares, as applicable, and any Offered Shares
or Remaining Shares, as applicable, sold to such purchaser shall continue to be
subject to the provisions of this Agreement.
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(i) Notwithstanding anything contained herein to the contrary, the
provisions of this Section 3 shall not apply to any Permitted Transfer.
Notwithstanding anything contained herein to the contrary, no Management
Shareholder shall be entitled to participate in any purchase of shares pursuant
to this Section 3 unless at the time such Management Shareholder participates
therein such Management Shareholder is an employee of the Company.
4. Participation in Sales.
(a) If, following the Selling Shareholder's compliance with the
provisions of Section 3 hereof, there are any Offered Shares that remain to be
sold to a Proposed Transferee, then, prior to and as a condition of such sale by
the Selling Shareholder (the "`Section 4 Selling Shareholder") to the Proposed
Transferee, each other Shareholder shall have the right to sell to the Proposed
Transferee, at the same effective price per share on an as-converted basis into
shares of Common Stock and on the same terms and conditions as involved in such
sale by the Section 4 Selling Shareholder, a pro rata portion of the amount of
Shares proposed to be sold to the Proposed Transferee by the Section 4 Selling
Shareholder. The "pro rata portion" of Shares which each Shareholder shall be
entitled to sell to the Proposed Transferee shall be that number of Shares as
shall equal the number of Shares proposed to be sold to the Proposed Transferee
by the Section 4 Selling Shareholder multiplied by a fraction, the numerator of
which shall be the number of Shares then owned by such Shareholder wishing to
participate in the sale, and the denominator of which shall be the aggregate
number of Shares then owned by the Section 4 Selling Shareholder and all other
Shareholders wishing to participate in any sale under this Section 4.
(b) If the Section 4 Selling Shareholder wishes to make a sale to
a Proposed Transferee which is subject to this Section 4, the Section 4 Selling
Shareholder shall, after complying with the provisions of Section 3 hereof, give
to each other Shareholder notice of such proposed sale. Such notice shall state
that all Shares were not purchased pursuant to the Company Offer and the
Shareholder Offer as set forth in Section 3 hereof. Such notice shall be given
at least twenty (20) days prior to the date of the proposed sale to the Proposed
Transferee. Each other Shareholder wishing to so participate in any sale under
this Section 4 shall notify the Section 4 Selling Shareholder in writing of such
intention within fifteen (15) days after such other Shareholder's receipt of the
notice described in the preceding sentence.
(c) The Section 4 Selling Shareholder and each Shareholder wishing
to participate in such sale shall sell to the Proposed Transferee all, or at the
option of the Proposed Transferee, any part of the Shares proposed to be sold by
them 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
the Section 4 Selling Shareholder under subparagraph (b) above; provided,
however, that any purchase of less than all of such Shares by the Proposed
Transferee shall be made from the Section 4 Selling Shareholder and each
participating Shareholder pro rata based upon the "pro rata portion" of the
Shares that the Section 4 Selling Shareholder and each participating Shareholder
is otherwise entitled to sell pursuant to Section 4(a) hereof.
(d) If any Shares are sold pursuant to this Section 4 to any
purchaser who is not a party to this Agreement, the purchaser of such Shares
shall execute a counterpart of this Agreement as a precondition to the purchase
of such Shares and such Shares shall continue to be
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subject to the provisions of this Agreement to the same extent that such Shares
would have been subject to this Agreement had the Section 4 Selling Shareholder
continued to hold such Shares.
(e) The rights granted to the Shareholders under Sections 3 and 4
hereof shall expire immediately prior to, and shall not apply in connection
with, the consummation of the first Qualified Public Offering (as defined in
Section 9 hereof). Notwithstanding anything contained herein to the contrary,
the provisions of this Section 4 shall not apply to any Permitted Transfer.
(f) Notwithstanding anything contained herein to the contrary, no
Management Shareholder shall have any rights to participate in sales pursuant to
this Section 4 unless, at the time such Management Shareholder exercises such
right, such Management Shareholder is an employee of the Company. Nothing herein
shall relieve any Management Shareholder from its obligation to comply with this
Section 4 as a Section 4 Selling Shareholder.
(g) Notwithstanding anything contained herein to the contrary, the
rights of any GBG Shareholder to participate in sales pursuant to this Section 4
shall, if exercised, be exercised by Xxxxxx Xxxxxxxx, as the designated
representative for all of the GBG Shareholders. Any notice to a GBG Shareholder
required by this Section 4 shall be deemed effective if given in accordance with
this Section 4 to Xxxxxx Xxxxxxxx, on behalf of the GBG Shareholders. Xxxxxx
Xxxxxxxx shall have the right on behalf of itself and the other GBG Shareholders
to participate in sales pursuant to this Section 4. For purposes of Section 4(a)
hereof, the "pro rata portion" of Shares that Xxxxxx Xxxxxxxx, on behalf of all
of the GBG Shareholders, shall be entitled to sell to the Proposed Transferee
shall equal the number of Shares proposed to be sold to the Proposed Transferee
by the Section 4 Selling Shareholder multiplied by a fraction, the numerator of
which shall be the number of Shares then owned in the aggregate by Xxxxxx
Xxxxxxxx and all of the other GBG Shareholders, and the denominator of which
shall be the aggregate number of Shares then owned by the Section 4 Selling
Shareholder, the Shares owned by Xxxxxx Xxxxxxxx and all of the other GBG
Shareholders and all other Shareholders wishing to participate in any sale under
this Section 4.
5. Drag Along Rights.
(a) If at any time following the date hereof, the Company's Board
of Directors and holders of a majority of the Preferred Stock then outstanding
(voting as a single class on an as-converted basis into shares of Common Stock)
(the "Majority Shareholders") shall vote or otherwise enter into an agreement to
(A) sell in a bona fide arms' length transaction at least 75% of the Shares
owned by such Majority Shareholders to any independent third party, person or
group of persons who are not affiliated with the Majority Shareholders, or (B)
enter into a bona fide arms' length transaction pursuant to which the Company
agrees to merge with or into another entity or agrees to sell all or
substantially all of the assets of the Company to, another independent, third
party entity that is not affiliated with the Majority Shareholders (in each case
a "Corporate Transaction"), then the Majority Shareholders may require that each
Shareholder and each Common Shareholder sell a number of Shares owned by such
Shareholder or Common Shareholder (equal to the number of Shares owned by such
Shareholder or Common Shareholder multiplied by a fraction, the numerator of
which is the number of Shares to be sold by the Majority Shareholders in such
transaction and the denominator of which is all of the
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Shares owned by the Majority Shareholders), to such independent third party,
person or group of persons at the same price per share and on the same terms and
conditions as are applicable to the proposed sale by such Majority Shareholders
and/or vote such securities in favor of the Corporate Transaction. Each
Shareholder and Common Shareholder hereby grants to the President of the Company
an irrevocable proxy, coupled with an interest, to vote all shares of capital
stock owned by such Shareholder or Common Shareholder and to take such other
actions to the extent necessary to carry out the provisions of this Section 5 in
the event of any breach by such Shareholder or Common Shareholder of its
obligations hereunder.
(b) In order to exercise the rights under this Section 5, the
Majority Shareholders must give notice to each Shareholder and Common
Shareholder (other than the Majority Shareholders) not less than thirty (30)
days prior to the proposed date upon which the contemplated Corporate
Transaction is to be consummated.
(c) The obligations of the Shareholders and Common Shareholders
pursuant to this Section 5 are subject to the satisfaction of the following
conditions:
(i) upon the consummation of the Corporate Transaction, each
of the Shareholders and Common Shareholders shall receive the same proportion of
the aggregate consideration from such Corporate Transaction that such
Shareholder or Common Shareholder would have received if such aggregate
consideration had been distributed by the Company in complete liquidation
pursuant to the rights and preferences set forth in the Company's Certificate of
Incorporation as in effect immediately prior to the entrance into the first
agreement entered into in connection with, and prior to, such Corporate
Transaction (giving effect to applicable orders of priority);
(ii) if any holders of a class or series of capital stock are
given an option as to the form and of consideration to be received, each other
holder of such class or series shall be given the same option;
(iii) the Corporate Transaction must be a bona fide, arms'
length transaction;
(iv) the purchaser, acquirer or similar counterparty in the
Corporate Transaction must not be affiliated with any of the Majority
Shareholders, including, without limitation, that the purchaser, acquirer or
similar counterparty must not, directly or indirectly, be a stockholder,
officer, director, partner, member or manager of any of the Majority
Shareholders;
(v) prior to the Corporate Transaction, the purchaser,
acquirer or similar counterparty in the Corporate Transaction must not, directly
or indirectly, control, be controlled by, or be under common control with, any
of the Majority Shareholders;
(vi) if any Shareholder obtains in connection with the
Corporate Transaction any contractual rights, such as registration rights,
rights of co-sale, preemptive rights, and the like, each other Shareholder shall
receive substantially commensurate contractual rights in connection with such
Corporate Transaction;
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(vii) no options, warrants or similar rights to acquire equity
in the purchaser or acquirer (or its parent) in the Corporate Transaction may be
granted, issued or sold to any Shareholder unless granted, or issued to each
Shareholder on a pro rata basis (except for options granted to Shareholders who
are employees of the Company), based on the proportion of outstanding Common
Stock held by each Shareholder as of immediately prior to the consummation of
the Corporate Transaction (assuming conversion of all then outstanding Preferred
Stock of the Company);
(viii) each holder of then currently exercisable rights to
acquire capital stock of the Company (whether by exercise of a security,
conversion of a security or otherwise) shall be given adequate opportunity to
exercise such rights prior to consummation of the Corporate Transaction;
(ix) no Shareholder or Common Shareholder shall be obligated
to make any out-of-pocket expenditure prior to the consummation of the Corporate
Transaction and no Shareholder or Common Shareholder shall be obliged to pay
more than such Shareholder's or Common Shareholder's pro rata share (based upon
the amount of consideration received) of reasonable expenses incurred in
connection with a consummated Corporate Transaction to the extent such costs are
incurred for the benefit of all Shareholders and Common Shareholders and are not
otherwise paid by the Company or the acquiring party (costs incurred by or on
behalf of a Shareholder or Common Shareholder for such Shareholder's or Common
Shareholder's sole benefit will not be considered costs of the transaction
hereunder), provided that a Shareholder's or Common Shareholder's liability for
such expenses shall be capped at the total purchase price received by such
Shareholder or Common Shareholder in such Corporate Transaction for such
Shareholder's or Common Shareholder's Shares;
(x) in the event that the Shareholders and Common
Shareholders are required to provide any representations or indemnities in
connection with the Corporate Transaction, each Shareholder and Common
Shareholder shall not be liable for more than such Shareholder's or Common
Shareholder's pro rata share (based upon the amount of consideration received)
of any liability for misrepresentation or indemnity and such liability shall not
exceed the total purchase price or consideration received by such Shareholder or
Common Shareholder for such Shareholder's or Common Shareholder's Shares in such
Corporate Transaction; and
(xi) each Shareholder and Common Shareholder shall only be
obligated to make representations or warranties in any such Corporate
Transaction as to such Shareholder's or Common Shareholder's (A) title and
ownership of the Shares to be sold by such Shareholder or Common Shareholder,
(B) authorization, execution and delivery of relevant documents by such
Shareholder or Common Shareholder, and (C) the enforceability of relevant
documents against such Shareholder or Common Shareholder.
6. Preemptive Rights.
(a) Right of Purchase. The Company hereby grants to each Preferred
Shareholder the right to purchase all or part of its pro rata share of New
Securities (as defined in Section 6(b) below) which the Company, from time to
time, proposes to sell and issue. Such Preferred Shareholder's pro rata share,
for purposes of this preemptive right, is the ratio of the
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number of shares of Preferred Stock, on an as converted basis into shares of
Common Stock, then owned by such Preferred Shareholder to the total number of
shares of Preferred Stock, on an as converted basis into shares of Common Stock,
then owned by all Preferred Shareholders. Each Preferred Shareholder shall have
a right of over-allotment pursuant to this Section 6 such that, to the extent a
Preferred Shareholder does not exercise its preemptive right in full hereunder,
such additional portion of New Securities which such Preferred Shareholder did
not purchase may be purchased by other Preferred Shareholders in proportion to
the total number of shares of Preferred Stock, on an as converted basis into
shares of Common Stock, which each such other Preferred Shareholder owns
compared to the total number of shares of Preferred Stock, on an as-converted
basis into shares of Common Stock, which all such Preferred Shareholders own. A
Preferred Shareholder may designate, at any time prior to actual purchase, any
affiliate of such Preferred Shareholder as the entity entitled to purchase all
or a portion of such Preferred Shareholder's pro rata shares of New Securities
(and/or any over-allotment right), provided that (i) such designee agrees to be
bound by the terms of this Agreement in the same capacity as the Preferred
Shareholder hereunder and (ii) the purchase of such New Securities by such
designee does not violate the registration requirements of the Securities Act or
any applicable state securities laws.
(b) Definition of New Securities. "New Securities" shall mean any
capital stock of the Company whether now authorized or not, and rights, options
or warrants to purchase capital stock, and securities of any type whatsoever
that are, or may become convertible into or exchangeable for capital stock, and
any debt securities of the Company issued on or after the date hereof; provided
that the term "New Securities" shall not include (i) shares of Common Stock
issued upon conversion of the Preferred Stock, (ii) an aggregate of 14,498,300
shares of Common Stock and/or options, warrants or other Common Stock purchase
rights, and the Common Stock issued pursuant to such options, warrants or other
rights issued or issuable to employees, directors and consultants of the
Corporation, in their capacity as such, pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors
of the Corporation, as such number of shares of Common Stock and/or options,
warrants or other rights may be increased from time to time with at least a
majority of those members of the Board of Directors who are (x) Preferred
Directors (as defined in Section 7) and (y) are designated by a Major Investor
pursuant to Section 7 hereof (the "Specified Directors"), (iii) securities
issued in connection with any senior debt bank financing or equipment lease
financing if (x) such issuance has been approved by at least a majority of the
Specified Directors and (y) such Specified Directors have expressly provided in
writing that the terms of this Section 6(b) shall not apply to such issuance,
provided, however, in the event that any other equity securities or securities
exchangeable or exercisable for, or convertible into equity securities of the
Corporation are issued at an effective purchase price per share of Common Stock
greater than the Original Series A Conversion Value, Series A-1 Conversion Value
or Series B Conversion Value (as such terms are defined in the Company's
Certificate of Incorporation, as amended from time to time) but less than the
Series C Conversion Value (as such term is defined in the Company's Certificate
of Incorporation, as amended from time to time), then such approval and waiver
shall not be effective unless it includes the approval of the Series C Designee
(as defined herein), (iv) any securities issued in connection with the
acquisition of any other corporation or business concern, whether by acquisition
of assets or stock if such issuance has been approved by at least a majority of
the Specified Directors, (v) securities issued in connection with any joint
venture or strategic partnership, if such issuance has been approved by at least
a majority of the
- 10 -
Specified Directors, (vi) shares of Series A-1 Preferred Stock issued upon
conversion of Original Series A Preferred Stock, as defined in and contemplated
by that certain Series B Convertible Preferred Stock Purchase Agreement, dated
as of April 17, 2002, as amended from time to time, by and between the Company
and the other parties thereto (the "Series B Purchase Agreement"), (vii) up to
1,100,082 shares of Series B Preferred Stock or other securities issued upon
exercise of the Series B Warrants, or (viii) up to 3,958,334 shares of Series C
Preferred Stock issued or issuable upon exercise of the Series C Warrants.
(c) Notice from the Company. In the event the Company proposes to
undertake an issuance of New Securities, it shall give each Preferred
Shareholder written notice (the "Preemptive Rights Notice") of its intention,
describing the type of New Securities and the price and the terms upon which the
Company proposes to issue the same. Each Preferred Shareholder shall have twenty
(20) business days from the date of receipt of any such notice to agree to
purchase up to the Preferred Shareholder's pro rata share of such New Securities
(and any over-allotment amount pursuant to the operation of Section 6(a) hereof)
for the price and upon the terms specified in the Preemptive Rights Notice by
giving written notice to the Company and stating therein the quantity of New
Securities that such Preferred Shareholder desires to purchase. The closing of
the purchase of the New Securities shall be at the Company's principal place of
business within fifteen (15) days following the expiration of the 20-day period,
or at such other time or place as the Company and such Preferred Shareholders
may determine.
(d) Sale by the Company. In the event any Preferred Shareholder
fails to exercise in full its preemptive right (after giving effect to the
over-allotment provision of Section 6(a) hereof), the Company shall have ninety
(90) days thereafter to sell the New Securities with respect to which the
preemptive right under this Section 6 was not exercised by the Preferred
Shareholders, at a price and upon terms no more favorable to the purchasers
thereof than specified in the Preemptive Rights Notice. To the extent the
Company does not sell all the New Securities offered within said 120-day period,
the Company shall not thereafter issue or sell such New Securities without first
again offering such securities to the Preferred Shareholders in the manner
provided above.
(e) Termination of Rights. The rights granted to the Preferred
Shareholders under this Section 6 shall expire immediately prior to, and shall
not apply in connection with, the consummation of the first Qualified Public
Offering. Notwithstanding anything contained herein to the contrary, no
Management Shareholder shall be entitled to participate in any purchase of
shares pursuant to this Section 6 unless at the time such Management Shareholder
participates therein such Management Shareholder is an employee of the Company.
(f) Amendments and Waivers. The rights of any Preferred
Shareholder contained in this Section 6 may be waived with the written consent
of such Preferred Shareholder. The rights of, or provisions in any manner
affecting, all holders of Series A Preferred Stock, Series A-1 Preferred Stock
and Series B Preferred Stock contained in this Section 6 may be amended,
modified and waived with the written consent of Preferred Shareholders who then
own at least two-thirds of the outstanding shares of Series A Preferred Stock,
Series A-1 Preferred Stock and Series B Preferred Stock, considered together as
a single class, on an as-converted basis into shares of Common Stock. The rights
of, or provisions in any manner affecting, all holders of Series C Preferred
Stock contained in this Section 6 may be
- 11 -
amended, modified and waived with the written consent of Preferred Shareholders
who then own at least a majority of the outstanding shares of Series C
Preferred Stock. Notwithstanding the foregoing, in the event that such amendment
adversely affects the obligations and/or rights of one group of Preferred
Shareholders in a manner that is different from and more adverse than the effect
on the obligations and/or rights of the Preferred Shareholders who approved such
waiver, such amendment or waiver shall also require the written consent of a
majority of Shares held by such more adversely affected group.
7. Board of Directors. The directors designated in subsections (a)(i)
through (a)(iii) and (a)(vii) and (a)(viii) of this Section 7 shall be the sole
directors deemed designated by the holders of Preferred Stock (the "Preferred
Directors"), irrespective of whether any other party who is entitled to
designate a director under this Section 7 holds shares of Preferred Stock.
(a) At each annual meeting of the shareholders of the Company, and
at each special meeting of the shareholders of the Company called for the
purpose of electing directors of the Company, and at any time at which
shareholders of the Company shall have the fight to, or shall, vote for or
consent to the election of directors of the Company, then, and in each event,
the Shareholders shall vote or give consent with respect to all Shares owned by
them for the election of a Board of Directors consisting of nine (9) directors,
designated in the manner designated below:
(i) one director shall be designated by Highland Capital
Partners V, Limited Partnership (which designee shall initially be Xxxxxx
Xxxxxxx);
(ii) one director shall be designated by General Catalyst
Group, LLC (which designee shall initially be Xxxxx Xxxxxxx);
(iii) one director shall be designated by Dorset Capital
Management, LLC;
(iv) two directors shall be designated by Xxxxxx Xxxxxxxx
Group, LLC (one of which designees shall initially be Xxxxxxx Xxxxxx);
(v) one director shall be the Company's Chief Executive
Officer (which shall initially be Xxxx Xxxxxxxxx);
(vi) one director shall be designated by the mutual agreement
of the other members of the Board of Directors (which designee shall initially
be Xxxxxx Xxxxxxxx);
(vii) one director shall be designated by New England
Development (which designee shall initially be Xxxxxxx Xxxx); and
(viii) one director shall be designated by Maveron Equity
Partners 2000, L.P., so long as Maveron Equity Partners 2000, L.P., Maveron
Equity Partners 2000-B, L.P. and MEP 2000 Associates, LLC, continue to own in
the aggregate at least 1,650,000 shares of Series C Preferred Stock or warrants
to purchase Series C Preferred Stock (as adjusted to reflect stock splits, stock
dividends or the like) (which designee shall initially be Xxxxx Xxxxxxx) (the
"Series C Designee")).
- 12 -
(b) Notwithstanding anything to the contrary contained in Section
7(a) above, the parties hereto acknowledge that AOL has the right pursuant to
that certain Interactive Marketing Agreement, dated June 1, 2000, between the
Company and AOL, as amended to date, to designate one director to the Board of
Directors at any time and the parties further agree to take such action as is
necessary to permit AOL to designate such director should AOL provide written
notice to the Company of its desire to designate such a director.
(c) Any director of the Company may be removed from the Company's
Board of Directors in the manner allowed by law and the Company's Certificate of
Incorporation and Bylaws; provided that no Shareholder shall vote for the
removal of a director designated by a party or group pursuant to Section 7(a)
above, and no such vote shall be effective, unless the party or group that
designated such director, voting separately among themselves in accordance with
Section 7(a) above, shall specify. If such party or group specifies the removal
of such director, the Shareholders agree to vote their respective shares of
capital stock of the Company owned by them or as to which they have voting power
for the removal of such director. If a vacancy occurs on the Board of Directors
as a result, the successor to such director shall be designated and elected in
accordance with Section 7(a) above.
(d) The Board of Directors shall maintain an Audit Committee and a
Compensation Committee. The Audit Committee shall be composed of the directors
designated pursuant to each of Sections 7(a)(i), 7(a)(vi) and 7(a)(viii). The
Compensation Committee shall be composed of the directors designated pursuant to
each of Sections 7(a)(i), 7(a)(ii) and Section 7(a)(viii).
(e) The Company shall reimburse all of the directors for their
reasonable out-of-pocket costs and expenses incurred as a result of serving on
the Company's Board of Directors or any committee thereof.
8. Registration Rights.
(a) Certain Definitions. As used in this Section 8, the following
terms shall have the following respective meanings:
(i) "Holder" shall mean the person who is then the record
owner of Registrable Securities or Subordinate Registrable Securities which have
not been sold to the public; provided, however, that any person who was at any
time an employee of the Company shall be a Holder only during such time as such
person is an employee of the Company.
(ii) "Initiating Holders" shall mean one or more Investors or
their assignees who in the aggregate are holders of at least fifty percent (50%)
of the Shares held by all Investors and their assignees.
(iii) "Registrable Securities" shall mean (i) all of the
shares of Common Stock issued or issuable upon conversion of the Preferred Stock
now owned or hereafter acquired by the Investors, (ii) all shares of Common
Stock issuable with respect to any securities of the Company acquired after the
date hereof by any Investor that are convertible into or exercisable for shares
of Common Stock and (iii) any Common Stock issued in respect of the shares
- 13 -
described in clauses (i) and (ii) upon any stock split, stock dividend,
recapitalization or other similar event.
(iv) The term "register" shall mean to register under the
Securities Act and applicable state securities laws for the purpose of effecting
a public sale of securities.
(v) "Registration Expenses" shall mean all expenses incurred
by the Company in compliance with subsections (b), (c) or (e) of this Section 8,
including, without limitation, all registration and filing fees, printing
expenses, transfer taxes, fees and disbursements of counsel for the Company,
blue sky fees and expenses, reasonable fees and disbursements of one counsel for
all the selling Holders and other security holders, and the expense of any
special audits incident to or required by any such registration.
(vi) "Selling Expenses" shall mean all underwriting discounts
and selling commissions applicable to the sale of Registrable Securities.
(vii) "Subordinate Registrable Shares" shall mean shares of
Common Stock (other than Registrable Securities) held as of the date hereof by
the Shareholders and the Common Shareholders, or that are issued or issuable
with respect thereto pursuant to any stock split or stock dividend or other such
event.
(b) Requested Registrations.
(i) If at any time after the earlier of (i) one (1) year
after the effective date of the first firmly underwritten registration statement
effected by the Company or (ii) eighteen (18) months after the date hereof, the
Company shall receive from one or more of the Initiating Holders a written
request that the Company effect the registration of Registrable Securities that
have an anticipated aggregate public offering price (before any underwriting
discounts and commissions) of not less than $5,000,000 (or $15,000,000 if such
requested registration is in connection with the Company's initial public
offering), the Company will:
(A) promptly give written notice of the proposed
registration to all other Holders holding Registrable Securities; and
(B) use best efforts to file such registration as soon
as practicable but in any event within 45 days and cause such registration to
become effective as soon as practicable but in any event within 120 days of the
initial request as would permit or facilitate the sale and distribution of such
portion of such Registrable Securities as are specified in such request,
together with such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request given
within thirty (30) days after receipt of such written notice from the Company.
If the underwriter managing the offering advises the Holders who have requested
inclusion of their Registrable Securities in such registration that marketing
considerations require a limitation on the number of shares offered, such
limitation shall be pro rata among such Holders (including the Initiating
Holders) who requested inclusion of Registrable Securities in such registration
according to the number of Registrable Securities each such Holder requested to
be included in such registration. No shares other than Registrable Securities
shall be included in a registration effected under this subsection (b) without
the consent of the Holders holding a majority of the Registrable Securities
sought to
- 14 -
be included in such registration. No registration initiated by Initiating
Holders hereunder shall count as a registration under this subsection (b) unless
and until it shall have been declared effective, unless such registration is
later withdrawn at the request of the Initiating Holders and such request is not
due to an adverse change in the Company's business or operations.
(ii) Selection of Underwriter. The underwriter of any
underwriting requested under this subsection (b) shall be selected by the
Holders holding a majority of the Registrable Securities included therein and be
reasonably acceptable to the Company.
(iii) Limitation. The Investors shall not be permitted to
require more than two registrations under this subsection (b); provided,
however, that any underwriting requested under this subsection (b) in which
fewer than 50%of the Registrable Securities sought to be included in such
underwriting by the Holders are actually sold in the underwriting shall not
count towards such limitation.
(iv) Deferral Rights. Notwithstanding the foregoing, if the
Company shall furnish to the Holders requesting a registration statement
pursuant to this subsection (b), a certificate signed by the President of the
Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its Shareholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than 90 days after receipt
of the request of the Initiating Holders; provided, however, that the Company
may not utilize this right more than once in a six-month period and twice in the
aggregate.
(c) "Piggy Back" Registrations.
(i) If the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
holders exercising their registration rights, other than a registration relating
solely to employee benefit plans or relating to securities issued in connection
with the acquisition of another Company or other business entity, or a
registration on any registration form which does not permit secondary sales or
does not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable Securities
or Subordinate Registrable Securities (together, the "Eligible Shares"), the
Company will:
(A) Promptly give to each Holder of Eligible Shares
written notice thereof (which shall include the number of shares the Company or
other security holder proposes to register and, if known, the name of the
proposed underwriter); and
(B) Use its best efforts to include in such
registration all the Eligible Shares specified in a written request or requests,
made by any Holder within twenty (20) days after the date of delivery of the
written notice from the Company described in clause (i) above (such request a
"Piggyback Request"). If, in connection with any Piggyback Request or S-3
Request (as defined below) hereunder, the underwriter managing the applicable
offering determines that, because of marketing factors, all of the Eligible
Shares requested to be registered may not be included in the offering, the
Eligible Shares shall be eliminated from such
- 15 -
offering pro rata based upon the number of Eligible Shares requested to be
so registered; provided, however, all of the Subordinated Registrable Securities
and other securities included in such offering (other than shares sold by the
Company and the Registrable Securities) shall be eliminated from the offering
before any Registrable Securities are eliminated. If any Registrable Securities
are to be eliminated from the offering, they shall be eliminated from such
offering pro rata based upon the number of Registrable Securities requested to
be so registered.
(ii) The Company shall select the underwriter for an offering
made pursuant to this subsection (c).
(d) Expenses of Registration. All Registration Expenses incurred
in connection with any registration, qualification or compliance pursuant to
subsections (b), (c) or (e) of this Section 8 shall be paid by the Company. All
Selling Expenses incurred in connection with any such registration,
qualification or compliance shall be borne by the holders of the securities
registered, pro rata on the basis of the number of their shares so registered.
(e) Registration on Form S-3. The Company shall use its reasonable
best efforts to qualify for registration on Form S-3 or any comparable or
successor form; and to that end the Company shall register (whether or not
required by law to do so) the Common Stock under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), in accordance with the provisions of the
Exchange Act on or following the effective date of the first registration of any
securities of the Company on Form S-1 or any comparable or successor form. After
the Company has qualified for the use of Form S-3, in addition to the rights
contained in the foregoing provisions of this Section 8, the Holders of Eligible
Shares shall have the right to request registrations on Form S-3 (such request
an "S-3 Request," which shall be in writing and shall state the number of shares
of Eligible Shares to be disposed of and the intended methods of disposition of
such shares by the holders thereof). Upon receipt of an S-3 Request, the Company
shall use all commercially reasonable efforts to file such registration as soon
as practicable but in any event within 30 days and cause such registration to
become effective as soon as practicable but in any event within 90 days of the
S-3 Request. In no event shall the Company be required to register shares
pursuant to this Section 8(e) more than one time in any twelve (12) month period
or with an aggregate market value of less than $2,000,000.
(f) Registration Procedures. In the ease of each registration
effected by the Company pursuant to this Section 8, the Company will keep each
Holder of Eligible Shares included in such registration (each individually a
"Participating Holder", and collectively the "Participating Holders") advised in
writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will do the following for the benefit of
such Holders:
(i) Keep such registration effective for a period of one
hundred twenty (120) days or until the Participating Holder or Participating
Holders have completed the distribution described in the registration statement
relating thereto, whichever first occurs, and amend or supplement such
registration statement and the prospectus contained therein from time to time to
the extent necessary to comply with the Securities Act and applicable state
securities laws;
- 16 -
(ii) Use its reasonable best efforts to register or qualify
the Eligible Shares covered by such registration under the applicable securities
or "blue sky" laws of such jurisdictions as the selling shareholders may
reasonably request; provided, that the Company shall not be obligated to qualify
to do business in any jurisdiction where it is not then so qualified or
otherwise required to be so qualified or to take any action which would subject
it to the service of process in suits other than those arising out of such
registration;
(iii) Furnish such number of prospectuses and other documents
incident thereto as a Participating Holder from time to time may reasonably
request;
(iv) In connection with any underwritten offering pursuant to
a registration statement filed pursuant to subsection (b) of this Section 8, the
Company will enter into any underwriting agreement reasonably necessary to
effect the offer and sale of Common Stock, provided such underwriting agreement
contains customary underwriting provisions and is entered into by all of the
Participating Holders included in such registration;
(v) To the extent then permitted under applicable
professional guidelines and standards, obtain a comfort letter from the
Company's independent public accountants in customary form and covering such
matters of the type customarily covered by comfort letters and an opinion from
the Company's counsel in customary form and covering such matters of the type
customarily covered in a public issuance of securities, in each case addressed
to the Participating Holders, and provide copies thereof to the Participating
Holders;
(vi) Permit the counsel to the selling shareholders whose
expenses are being paid pursuant to subsection (d) of this Section 8 to inspect
and copy such corporate documents as he may reasonably request;
(vii) Prepare and file with the Securities and Exchange
Commission (the "Commission") such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(viii) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(ix) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant to this Agreement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration.
(g) Indemnification.
(i) The Company will, and hereby does, indemnify each
Participating Holder, each of its officers, directors, partners, members and
managers, legal counsel and
- 17 -
accountants and each person controlling such Participating Holder within the
meaning of the Securities Act and each underwriter (as defined in the Securities
Act), if any, and each person who controls such underwriter within the meaning
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 preliminary or
final prospectus, offering circular or other document (including any related
registration statement, notification or the like) 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 not misleading, or any violation by the
Company of the Securities Act or the Exchange Act or securities act of any state
or any rule or regulation thereunder applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and will reimburse each Participating
Holder, each of its officers, directors, partners, members, managers, legal
counsel and accountants, and each person controlling such Participating 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 and defending any such claim, loss, damage, liability or action,
whether or not resulting in any liability, provided that the Company will not be
liable in any such case to any holder that furnishes information to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement (or alleged untrue statement) or omission (or
alleged omission) based upon written information furnished to the Company by
such holder of Eligible Shares or underwriter and stated to be specifically for
use with respect to such registration.
(ii) Each Participating Holder will severally but not jointly
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 the
Securities Act and the rules and regulations thereunder, each other
Participating Holder and each of their officers, directors, partners, members
and managers, legal counsel and accountants, and each person controlling a
Participating Holder, 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 and such Participating Holder's directors, officers, partners,
persons, members and managers, legal counsel and accountants and 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, whether or not resulting in liability, 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 such
Participating Holder and stated to be specifically for use therein; provided,
however, that the indemnity agreement contained in this subsection 8(g)(ii)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Participating Holder from whom indemnification is sought; and provided further,
that the total amounts payable by a Participating
- 18 -
Holder under this subsection 8(g)(ii) shall not exceed the net proceeds received
by such Participating Holder in the applicable registered offering.
(iii) Each party entitled to indemnification under this
subsection (g) (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, but the failure of any Indemnified Party to give such notice shall not
relieve the Indemnifying Party of its obligations under this subsection (g)
(except and to the extent the Indemnifying Party has been materially prejudiced
as a consequence thereof). The Indemnifying Party will be entitled to
participate in, and to the extent that it may elect by written notice delivered
to the Indemnified Party promptly after receiving the aforesaid notice from such
Indemnified Party, at its expense to assume, the defense of any such claim or
any litigation resulting therefrom, with counsel reasonably satisfactory to such
Indemnified Party, provided that the Indemnified Party may participate in such
defense at its expense, notwithstanding the assumption of such defense by the
Indemnifying Party, and provided, further, that if the defendants in any such
action shall include both the Indemnified Party and the Indemnifying Party and
the Indemnified Party shall have reasonably concluded that there may be legal
defenses available to it and/or other Indemnified Parties which are different
from or additional to those available to the Indemnifying Party, the Indemnified
Party or Parties shall have the right to select separate counsel to assert such
legal defenses and to otherwise participate in the defense of such action on
behalf of such Indemnified Party or Parties and the reasonable fees and expenses
of such counsel shall be paid by the Indemnifying Party. 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. Each Indemnified Party shall
(i) furnish such information regarding itself or the claim in question as an
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom and (ii) shall reasonably assist the Indemnifying Party in any such
defense, provided that the Indemnified Party shall be entitled to be reimbursed
by this Indemnifying Party for its out-of-pocket expenses paid in connection
with such assistance.
(iv) No holder of Eligible Shares shall be required to
participate in a registration pursuant to which it would be required to execute
an underwriting agreement in connection with a registration effected under
subsections (b) or (e) of this Section 8 which imposes indemnification or
contribution obligations on such holder more onerous than those imposed
hereunder; provided, however, that the Company shall not be deemed to breach the
provisions of subsections (b) or (c) of this Section 8 if a holder of Eligible
Shares is not permitted to participate in a registration on account of his
refusal to execute an underwriting agreement on the basis of this subparagraph
(iv).
(h) Information by Holder. Each Participating Holder shall furnish
to the Company such information regarding such Participating Holder and the
distribution proposed by such Participating Holder as the Company may reasonably
request in writing and as shall be reasonably required in connection with any
registration, qualification or compliance referred to in this Section 8 or
otherwise required by applicable state or federal securities laws.
- 19 -
(i) Limitations on Registration Rights. From and after the date of
this Agreement, the Company shall not enter into any agreement with any holder
or prospective holder of any securities of the Company giving such holder or
prospective holder any registration rights.
(j) Exception to Registration. The Company shall not be required
to effect a registration under this Section 8 if (i) in the written opinion of
counsel for the Company, which counsel and the opinion so rendered shall be
reasonably acceptable to the Holders, such Holders may sell without registration
under the Securities Act the Registrable Securities for which they requested
registration under the provisions of the Securities Act and in the manner and in
the quantity in which the Registrable Securities were proposed to be sold, or
(ii) the Company shall have obtained from the Commission a "no-action" letter to
that effect; provided that this subsection (j) shall not apply to sales made
under Rule 144(k) or any successor rule promulgated by the Commission until
after the effective date of the Company's initial registration of shares under
the Securities Act. Notwithstanding the foregoing, in no event shall the
provisions of this subsection (j) be construed to preclude a Holder from
exercising rights under this Section 8 for a period of six (6) years after the
effective date of the Company's initial registration of shares under the
Securities Act.
(k) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may permit the
sale of restricted securities (as that term is used in Rule 144 under the
Securities Act) to the public without registration, the Company agrees to:
(i) make and keep public information available as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times from and after ninety (90) days following the effective date of the first
registration under the Securities Act filed by the Company for an offering of
its securities to the general public;
(ii) use its 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
(iii) so long as a Shareholder owns any restricted securities,
furnish to the Shareholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at any
time from and after ninety days following 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 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 so filed as a Shareholder may reasonably request in availing itself of
any rule or regulation of the Commission allowing a Shareholder to sell any such
securities without registration.
(l) Listing Application. If shares of any class of stock of the
Company shall be listed on a national securities exchange, the Company shall, at
its expense, include in its listing application all of the shares of the listed
class then owned by any Shareholder.
- 20 -
(m) Damages. The Company recognizes and agrees that the Holders
shall not have an adequate remedy if the Company fails to comply with the
provisions of this Section 8, and that damages will not be readily
ascertainable, and the Company expressly agrees that in the event of such
failure any Holder shall be entitled to seek specific performance of the
Company's obligations hereunder.
(n) "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period of duration (up to, but not exceeding, 180 days) specified by
the Company and the managing underwriter of Common Stock or other securities of
the Company, following the effective date of a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration;
provided, however, that such agreement shall be applicable only:
(i) to the first such registration statement of the Company
which covers Common Stock (or other securities) to be sold on its behalf to the
public in an underwritten offering; and
(ii) if all officers and directors of the Company, all
securityholders holding one-percent or more of the Company's Shares, and all
other persons with registration rights (whether or not pursuant to this
Agreement) enter into and are not subsequently released from similar agreements.
(o) This Section 8 supercedes, replaces and terminates all prior
registration rights granted to the Investors, including, but not limited to
pursuant to Article VI of that certain Series A Convertible Preferred Stock
Purchase Agreement dated as of June 13, 2000, by and between the Company and the
parties thereto (the "Series A Purchase Agreement"), Article VI of the Series B
Purchase Agreement, and Section 8 of the Prior Agreement, and the undersigned
waive all rights they may have with respect thereto. The provisions set forth in
Article VI of the Series A Purchase Agreement, Article VI of the Series B
Purchase Agreement and Section 8 of the Prior Agreement shall have no further
force and effect.
9. Term. This Agreement (other than Section 8 hereof) shall terminate
on the earlier to occur of (a) immediately prior to consummation of the first
Qualified Public Offering (as defined below), (b) such date as all Shares owned
by the Investors and their transferees have been repurchased or redeemed by the
Company, or (c) September 16, 2013. A "Qualified Public Offering" means a firmly
underwritten public offering by the Company of its Common Stock pursuant to a
registration statement filed and declared effective under the Securities Act, at
a per share price not less than $4.00 (as adjusted for stock splits, dividends
and the like) and in which the reasonably anticipated gross proceeds to the
Company from such offering would not be less than $40,000,000.
10. Failure to Deliver Shares. If any Shareholder or Common Shareholder
becomes obligated to sell any Shares to another Shareholder or Common
Shareholder under this
- 21 -
Agreement and fails to deliver such Shares in accordance with the terms of this
Agreement, such other Shareholder or Common Shareholder may, at its option, in
addition to all other remedies it may have, send to the defaulting Shareholder
or Common Shareholder the purchase price for such Shares as is herein specified.
Thereupon, the Company, upon written notice to the defaulting Shareholder or
Common Shareholder, (a) shall cancel on its books the certificate or
certificates representing the Shares to be sold and (b) shall issue, in lieu
thereof, in the name of the Company, a new certificate or certificates
representing such Shares, and thereupon all of the defaulting Shareholder's or
Common Shareholder's rights in and to such Shares shall terminate.
11. Specific Enforcement. Each Shareholder and Common Shareholder
expressly agrees that the other Shareholders, Common Shareholders and the
Company may be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by any Shareholder or Common Shareholder, the other
Shareholders, Common Shareholders and the Company shall, in addition to all
other remedies, each be entitled to apply for a temporary or permanent
injunction, and/or a decree for specific performance, in accordance with the
provisions hereof.
12. Legend. Each certificate evidencing any of the Shares now owned or
hereafter acquired by the Shareholders and Common Shareholders shall bear in
addition to any other legends required by other agreements or by law a legend
substantially as follows:
"Any sale, assignment, transfer or other disposition of the shares
represented by this certificate is restricted by, and subject to,
the terms and provisions of a certain Amended and Restated
Shareholders' Agreement dated as of July 26, 2002, as amended from
time to time. A copy of said Agreement is on file with the Secretary
of the Corporation."
13. Notices. Notices given hereunder shall be deemed to have been duly
given (i) on the date of personal delivery, (ii) one day after deposit with
federal express or other overnight courier, or (iii) on the date of postmark if
mailed by certified or registered mail, return receipt requested, to the party
being notified at his or its address specified on Schedule A hereto, and if not
so indicated on Schedule A, at the address as set forth on the Company's stock
ledger records or such other address as the addressee may subsequently notify
the other parties of in writing.
14. Entire Agreement and Amendments. This Agreement amends, restates and
supercedes the Prior Agreement in its entirety and constitutes the entire
agreement of the parties with respect to the subject matter hereof. Neither this
Agreement nor any provision hereof may be waived, modified, amended or
terminated except by a written agreement signed by the Company and Preferred
Shareholders holding a majority of the outstanding shares of Preferred Stock
held by all Preferred Shareholders, voting together as a single class on an
as-converted basis into shares of Common Stock. Any such waiver, modification,
amendment, or termination agreement shall be effective and binding on all
Shareholders and Common Shareholders, whether or not such Shareholders or Common
Shareholders consented to such waiver, modification, amendment, or termination
agreement; provided, however, that no such waiver, modification, amendment, or
termination which adversely affects the rights of one group of Shareholders
hereunder in a manner that is different from and more adverse than the affect of
such waiver, modification, amendment or termination on the rights of the
Shareholders who
- 22 -
approved such waiver, modification, amendment or termination shall be effective
against such adversely affected group of Shareholders unless also approved by
holders of a majority of Shares held by such adversely affected group; provided
further, however, that no amendment shall be made to the rights of any party
hereto to nominate or designate a director pursuant to Section 7 without the
written consent of such party and that no amendment shall be made to Section 5
without the written consent of the holders of a majority of the outstanding
shares of Series C Preferred Stock. Each of the Shareholders and Common
Shareholders represents that he, she or it is not a party to any other agreement
which would prevent him, her or it from performing his, her or its obligations
hereunder. No waiver of any breach or default hereunder shall be considered
valid unless in writing, and no such waiver shall be deemed a waiver of any
subsequent breach or default of the same or similar nature. Notwithstanding
anything to the contrary in this Section 14, the amendment, modification or
waiver of any provision of Section 6 of this Agreement shall be governed by
Section 6(f) of this Agreement and not Section 14 of this Agreement.
Notwithstanding anything contained in this Agreement to the contrary, the
waiver, modification, amendment, or termination of this Agreement or any
provision of this Agreement, including Section 6 of this Agreement, shall not
require the consent of any Common Shareholder.
15. Authorization of Additional Shares of Series C Preferred Stock For
Issuance upon Exercise of Warrants. The Company, the Common Shareholders and the
Shareholders agree to take or cause to occur any an all such actions, including,
without limitation, execution of documents, execution of consents, calling of
one or more special stockholders' meetings, casting of votes at such special
stockholders' meetings, amendment of the Certificate of Incorporation of the
Company to increase the number of authorized shares of Preferred Stock and
authorized or designated number of shares of Series C Preferred Stock or
otherwise, and amendment of the by-laws of the Company, as may be necessary to
create and authorize for issuance any such number of additional shares of Series
C Preferred Stock as may be required so that sufficient shares of Series C
Preferred Stock are authorized and available for issuance upon exercise of the
Series C Warrants.
16. Governing Law; Successors and Assigns. This Agreement shall be
governed by the internal laws of the State of Delaware without giving effect to
the conflicts of laws principles thereof and, except as otherwise provided
herein, shall be binding upon and inure to the benefit of the heirs, personal
representatives, executors, administrators, successors and assigns of the
parties.
17. Severability. If any provision of this Agreement shall be held to be
illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carded out as if any such illegal,
invalid or unenforceable provision were not contained herein.
18. Captions. Captions are for convenience only and are not deemed to be
part of this Agreement.
- 23 -
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
***
- 24 -
SECOND AMENDED AND RESTATED SHAREHOLDERS' AGREEMENT
Counterpart Signature Page
IN WITNESS WHEREOF, this Agreement has been executed as an instrument
under SEAL as of the date and year first above written.
SMARTBARGAINS, INC.
By: /s/ Xxxx Xxxxxxxxx
____________________________________________
Name: Xxxx Xxxxxxxxx
Title: President and Chief Executive Officer
XXXXXX XXXXXXXX GROUP, LLC
By: /s/ Xxxx X. Xxxxxxxxx
____________________________________________
Name: Xxxx X. Xxxxxxxxx
Title: CFO and Manager
GBG HOLDING, INC.
By: /s/ Xxxx X. Xxxxxxxxx
____________________________________________
Name: Xxxx X. Xxxxxxxxx
Title: Treas.
/s/ Xxxxx X. Xxxxxxxxxx
_______________________________________________
Xxxxx X. Xxxxxxxxxx
/s/ Xxxxx X. Xxxxxxxx
_______________________________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxx Xxxx Xxxxxxx
_______________________________________________
Xxxxx Xxxx Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx
_______________________________________________
Xxxxxxx X. Xxxxxxxx
_______________________________________________
Xxxxxxx X. Xxxxx
Signature Page to Second Amended and Restated Shareholders' Agreement
S-1
/s/ Xxxxxxxx X. Xxxxx
-----------------------------------------------
Xxxxxxxx X. Xxxxx
/s/ Xxx X. Xxxx
-----------------------------------------------
Xxx X. Xxxx
DJM Asset Management, Inc.
By:/s/ Xxxxxx Xxxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxxx
Title: President
DJM Realty Services, Inc.
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxx
Title: Co-President
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxxxxxx Trustee of the Xxxxxxx X.
Xxxxxxxxxx 1974 Revocable Trust
Signature page to Second Amended and Restated Shareholders' Agreement
S-2
/s/ Xxxx X. Xxxxxxxxx
-----------------------------------------------
Xxxx X. Xxxxxxxxx
/s/ Xxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxxx Xxxxxxxxx
-----------------------------------------------
Xxxxxx Xxxxxxxxx
/s/ Xxxxx X. Xxxxx
-----------------------------------------------
Xxxxx X. Xxxxx
-----------------------------------------------
Xxxxx Xxxxx
/s/ Xxxxxxx X. Xxxx
-----------------------------------------------
Xxxxxxx X. Xxxx
-----------------------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxxxxxx, as
Trustees under the Koplow Par B Generation
-Skipping Trust f/b/o Xxxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxxxxxx, as
Trustees under the Koplow Par B Generation-
Skipping Trust f/b/o Xxxxxx X. Xxxxxx
/s/ Xxxxxxx X. Xxxxxx
-----------------------------------------------
Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxxxxxx, as
Trustees under the Koplow Par B Generation-
Skipping Trust f/b/o Xxxxxxx X. Xxxxxx
Signature Page to Second Amended and Restated Shareholders' Agreement
S-3
/s/ Xxxxx Xxxxxxxxxx
_______________________________________________
Xxxxx Xxxxxxxxxx
/s/ Xxxx X. Xxxx
_______________________________________________
Xxxx X. Xxxx
/s/ Xxxxxx X. Xxxxxxxxxx
_______________________________________________
Xxxxxx X. Xxxxxxxxxx
/s/ Xxxxxx X. Xxxxxxxx
_______________________________________________
Xxxxxx X. Xxxxxxxx
/s/ Xxxxx X. Xxxxx
_______________________________________________
Xxxxx X. Xxxxx
/s/ Xxx X. Xxxxxxx
_______________________________________________
Xxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxx
_______________________________________________
Xxxxxxx X. Xxxxxx, Esq.
/s/ Xxxxxxxx X. Parent
_______________________________________________
Xxxxxxxx X. Parent
/s/ Xxxxxxx Xxxxxxx
_______________________________________________
Xxxxxxx Xxxxxxx
/s/ Xxxxxx X. Xxxxx
_______________________________________________
Xxxxxx X. Xxxxx
/s/ Xxxxxx X. Xxxxx
_______________________________________________
Xxxxxx X. Xxxxx, Custodian for Xxxxx Xxxxx
/s/ Xxxxxx X. Xxxxx
_______________________________________________
Xxxxxx X. Xxxxx, Custodian for Xxxx Xxxxx
Signature Page to Second Amended and Restated Shareholders' Agreement
S-4
/s/ Xxxxxxx X. Xxxxxxx
_______________________________________________
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxxx Xxxx
_______________________________________________
Xxxxxxxx Xxxx
/s/ Xxxxxxx X. Xxxxxx
_______________________________________________
Xxxxxxx X. Xxxxxx
/s/ Xxxxxx X. Xxxxxx
_______________________________________________
Xxxxxx X. Xxxxxx
XXXXX & XXXXXXX, INC.
By: /s/ M.D. Xxxxx
____________________________________________
Name: M.D. Xxxxx
Title: President
XXXXX & XXXXXXX, INC. c/o Xxxxxx X. Xxxxx
By: /s/ M.D. Xxxxx
____________________________________________
Name: M.D. Xxxxx
Title: President
/s/ Xxxx Xxxxxxxx
_______________________________________________
Xxxx Xxxxxxxx
Signature Page to Second Amended and Restated Shareholders' Agreement
S-5
/s/ Xxxxxxx X. Xxxxxxxx
_______________________________________________
Xxxxxxx X. Xxxxxxxx
/s/ Xxxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx
_______________________________________________
Xxxxxxxx X. Xxxxxx and Xxxxx X. Xxxxxx, JTROS
/s/ Xxxxxxx Xxxxx
_______________________________________________
Xxxxxxx Xxxxx and Xxxxxxxxxxx Xxxxxxx Xxxxx, as
joint tenants with right of survivorship
/s/ Xxxxxx Xxxxxxx
_______________________________________________
Xxxxxx Xxxxxxx
/s/ Xxx Xxxxxxxx
_______________________________________________
Xxx Xxxxxxxx
/s/ Xxxxxx X. Xxxxxx, Executrix
_______________________________________________
Xxxxxx X. Xxxxxx
/s/ Xxxx XxxXxxxxxxxx
_______________________________________________
Xxxx XxxXxxxxxxxx
/s/ Xxxxxx X. XxxXxxxxx
_______________________________________________
Xxxxxx X. XxxXxxxxx
/s/ Xxxx Xxxxxxxxx
_______________________________________________
Xxxx Xxxxxxxxx
/s/ Xxxxx X. Xxxxxxxx, 09/09/2003
_______________________________________________
Xxxxx X. Xxxxxxxx
/s/ Xxxxxxxx Xxxx
_______________________________________________
Xxxxxxxx Xxxx
/s/ Xxxx Xxxxxx
_______________________________________________
Xxxx Xxxxxx
Signature Page to Second Amended and Restated Shareholders' Agreement
S-6
AMERICA ONLINE, INC.
By: /s/ Xxxxxx X. Xxxx
____________________________________________
Name: Xxxxxx X. Xxxx
Title: Vice-Chairman
BERKSHIRE FUND IV, LIMITED PARTNERSHIP
By: Fourth Berkshire Associates LLC,
its General Partner
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
BERKSHIRE FUND V, LIMITED PARTNERSHIP
By: Fifth Berkshire Associates LLC,
its General Partner
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
BERKSHIRE INVESTORS, LLC
By: /s/ Xxxxxxx X. Xxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
DORSET CAPITAL, L.P.
By: /s/ Xxxx X. Xxxx
____________________________________________
Name:
Title:
Signature Page to Second Amended and Restated Shareholders' Agreement
S-7
GENERAL CATALYST GROUP, LLC
By: General Catalyst Group, LLC,
its Managing Member
By: /s/ Xxxxxxx X. Xxxxxxxxxx
____________________________________________
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Member & CFO
XXXXXX XXXXXXXX GROUP, LLC
By: /s/ Xxxx X. Xxxxxxxxx
____________________________________________
Name: Xxxx X. Xxxxxxxxx
Title: CFO & Manager
INNOVATIVE PROMOTIONS, LLC
By: /s/ Xxxxxxx X. Xxxx
____________________________________________
Name: Xxxxxxx X. Xxxx
Title:
INTERACTIVE CAPITAL PARTNERS
By: /s/ J. Xxxxxxx Xxxxx
____________________________________________
Name: J. Xxxxxxx Xxxxx
Title: Managing Partner
/s/ J. Xxxxxxx Xxxxx
_______________________________________________
J. Xxxxxxx Xxxxx
Signature Page to Second Amended and Restated Shareholders' Agreement
S-8
HIGHLAND CAPITALPARTNERS V, LIMITED PARTNERSHIP
By: Highland Management Partners V Limited
Partnership, Inc., its General Partner
By: Highland Management Partners V, Inc.,
its General Partner
By: /s/ Xxxxxx Xxxxxxx
____________________________________________
Name: Xxxxxx Xxxxxxx
Title:
HIGHLAND CAPITAL PARTNERS V-B, LIMITED
PARTNERSHIP
By: Highland Management Partners V Limited
Partnership, Inc., its General Partner
By: Highland Management Partners V, Inc.,
its General Partner
By: /s/ Xxxxxx Xxxxxxx
____________________________________________
Name: Xxxxxx Xxxxxxx
Title:
HIGHLAND ENTREPRENEURS' FUND V, LIMITED
PARTNERSHIP
By: HEF V Limited Partnership, its
General Partner
By: Highland Management Partners V, Inc.,its
General Partner
By: /s/ Xxxxxx Xxxxxxx
____________________________________________
Name: Xxxxxx Xxxxxxx
Title:
Signature Page to Second Amended and Restated Shareholders' Agreement
S-9
MADISON DEARBORN CAPITAL
PARTNERS III, L.P.
By: Madison Dearborn Partners III, L.P.,
its General Partner
By: Madison Dearborn Partners LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxx
____________________________________________
Name: Xxxxx X. Xxxxxx
Title: Managing Director
MADISON DEARBORN SPECIAL EQUITY III, L.P.
By: Madison Dearborn Partners III, L.P.,
its General Partner
By: Madison Dearborn Partners LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxx
____________________________________________
Name: Xxxxx X. Xxxxxx
Title: Managing Director
SPECIAL ADVISORS FUND I, LLC
By: Madison Dearborn Partners III, L.P.,
its General Partner
By: Madison Dearborn Partners LLC,
its General Partner
By: /s/ Xxxxx X. Xxxxxx
____________________________________________
Name: Xxxxx X. Xxxxxx
Title: Managing Director
MAVERON EQUITY PARTNERS 2000, L.P.
By: Maveron General Partner 2000, LLC
/s/ Xxx Xxxxxxx
_______________________________________________
By: Xxx Xxxxxxx
Title:
MAVERON EQUITY PARTNERS 2000-B, L.P.
By: Maveron General Partner 2000, LLC
/s/ Xxx Xxxxxxx
_______________________________________________
By: Xxx Xxxxxxx
Title:
MEP 2000 ASSOCIATES, LLC
/s/ Xxx Xxxxxxx
_______________________________________________
By: Xxx Xxxxxxx
Title:
Signature Page to Second Amended and Restated Shareholders' Agreement
S-10
MONITOR CLIPPER EQUITY PARTNERS
(FOREIGN), L.P.
By: Monitor Clipper Partners, L.P.,
its General Partner
By: MCP GP, Inc., its General Partner
By: /s/ Xxxxxx X. Xxxx
____________________________________________
Name: Xxxxxx X. Xxxx
Title: Authorized Signatory
MONITOR CLIPPER EQUITY PARTNERS, L.P.
By: Monitor Clipper Partners, L.P.,
its General Partner
By: MCP GP, Inc.
By: /s/ Xxxxxx X. Xxxx
____________________________________________
Name: Xxxxxx X. Xxxx
Title: Authorized Signatory
RB INVESTMENT PARTNERS II, LLC
By:____________________________________________
Name:
Title:
Signature Page to Second Amended and Restated Shareholders' Agreement
S-11
SCHEDULE A
GBG SHAREHOLDERS:
Xxxxxx Xxxxxxxx Group, LLC Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxxxxxx, as
GBG Holding, Inc. trustees under the Koplow Part B Generation-
Xxxxxxxxx, Xxxxx X. Skipping Trust f/b/o Xxxxxxx X. Xxxxxx
Xxxxxxxx, Xxxxx X. Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxxxxxx, as
Xxxxxxx, Xxxxx Xxxx trustees under the Koplow Part B Generation-
Xxxxxxxx, Xxxxxxx X. Skipping Trust f/b/o Xxxxxxx X. Xxxxxx
Xxxxx, Xxxxxxx X. Xxxxxxx X. Xxxxxx and Xxxxx Xxxxxxxxxx, as
Xxxxx, Xxxxxxxx X. trustees under the Koplow Part B Generation-
Xxxx, Xxx X. Skipping Trust f/b/o Xxxxxx X. Xxxxxx
DJM Asset Management, Inc. Xxxxxxxxxx, Xxxxx
DJM Realty Services, Inc. Xxxx, Xxxx X.
Xxxxxxx, Xxxxxxx X. Xxxxxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxx X. Xxxxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxx, Xxxxx X.
Xxxxxx, Xxxxxxx X. Xxxxxxx, Xxx X.
Xxxxxx, Xxxxxxx X. Xxxxxx, Xxxxxxx X. Esq.
Xxxxxxxx, Xxxxxxx X., Trustee of the Xxxxxxx Parent, Xxxxxxxx X.
X. Xxxxxxxxxx 1974 Revocable Trust Xxxxxxx, Xxxxxxx
Xxxxxxxxx, Xxxx X. Xxxxx, Xxxxxx X., Custodian for Xxxxx Xxxxx
Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X., Custodian for Xxxx Xxxxx
Xxxxxx, Xxxxxx X. Xxxxx, Xxxxxx X.
Xxxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx X.
Xxxxx, Xxxxx X. Xxxx, Xxxxxxxx
Xxxxx, Xxxxx Xxxxxx, Xxxxxxx X.
Xxxx, Xxxxxxx X. Xxxxxx, Xxxxxx X.
Xxxxxx, Xxxxxx X. Xxxxx & Xxxxxxx, Inc.
Xxxxx & Xxxxxxx, Inc. c/o Xxxxxx X. Xxxxx
Xxxxxxxx, Xxxx
XXXXXX SHAREHOLDERS:
Xxxxxxxx, Xxxxxxx XxxXxxxxxxxx,Xxxx
Xxxxxx, Xxxxxxxx X. and Xxxxx X. JTROS MacGregor, Xxxxxx
Xxxxx, Xxxxxxx Xxxxxxxxx, Xxxx
Xxxxxxx, Xxxxxx Xxxxxxxx, Xxxxx
Xxxxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx
Xxxxxx, Xxxxxx X.
MANAGEMENT SHAREHOLDER:
Xxxxxx, Xxxx
INVESTORS:
America Online, Inc. Highland Capital Partners V-B, LP
Berkshire Fund IV, LP Highland Entrepreneurs' Fund V, LP
Berkshire Fund V, LP Madison Dearborn Capital Partners III, LP
Berkshire Investors, LLC Madison Dearborn Special Equity III, LP
Dorset Capital, LP Special Advisors Fund I, LLC
General Catalyst Group, LLC Maveron Equity Partners 2000, XX
Xxxxxx Brothers Group, LLC Maveron Equity Partners 2000-B, LP
Innovative Promotions, LLC MEP 2000 Associates, LLC
Interactive Capital Partners Monitor Clipper Equity Partners, LP
J. Xxxxxxx Xxxxx Monitor Clipper Equity Partners (Foreign), LP
Highland Capital Partners V, LP RB Investment Partners II, LLC
