Exhibit 10.10
C-BRIDGE INTERNET SOLUTIONS, INC.
INVESTOR RIGHTS AGREEMENT
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This Agreement dated as of October 7, 1999 is entered into by and among C-
bridge Internet Solutions, Inc., a Delaware corporation (the "Company"), and the
individuals and entities listed on Exhibit A attached hereto (the "Purchasers").
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Recitals
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WHEREAS, the Company and the Purchasers have entered into a Series A
Convertible Preferred Stock Purchase Agreement of even date herewith (the
"Purchase Agreement"); and
WHEREAS, the Company and the Purchasers desire to provide for certain
arrangements with respect to (i) the registration of shares of capital stock of
the Company under the Securities Act (as defined below), (ii) the Purchasers'
right of first refusal with respect to certain issuances of securities of the
Company, and (iii) certain negative covenants of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Certain Definitions.
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As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any
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other federal agency at the time administering the Securities Act (as defined
below).
"Common Stock" means the common stock, $0.01 par value per share, of
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the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Initiating Holders" means the Stockholders initiating a request for
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registration pursuant to Section 2.1(a) or 2.1(b), as the case may be.
"Initial Public Offering" means the initial underwritten public
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offering of shares of Common Stock pursuant to an effective Registration
Statement.
"Other Holders" shall have the meaning set forth in Section 2.1(d).
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"Prospectus" means the prospectus included in any Registration
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Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Registration Statement" means a registration statement filed by the
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Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 2.4.
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"Registrable Shares" means (i) the shares of Common Stock issued or
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issuable upon conversion of the Shares, (ii) any shares of Common Stock, and any
shares of Common Stock issued or issuable upon the conversion or exercise of any
other securities, acquired by the Purchasers pursuant to Section 3 of this
Agreement, (iii) any other shares of Common Stock issued in respect of such
shares (because of stock splits, stock dividends, reclassifications,
recapitalizations, or similar events), and (iv) the shares of Common Stock
purchased in connection with the Common Stock Purchase Agreement of even date
herewith by and among Xxxxxxxx Trust Company Limited, a Trustee of the
Willingdon Trust and the Purchasers; provided, however, that shares of Common
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Stock which are Registrable Shares shall cease to be Registrable Shares upon (i)
any sale pursuant to a Registration Statement or Rule 144 under the Securities
Act (as defined below) or (ii) any sale in any manner to a person or entity
which, by virtue of Section 5 of this Agreement, is not entitled to the rights
provided by this Agreement. Wherever reference is made in this Agreement to a
request or consent of holders of a certain percentage of Registrable Shares, the
determination of such percentage shall include shares of Common Stock issuable
upon conversion of the Shares even if such conversion has not been effected.
"Securities Act" means the Securities Act of 1933, as amended, or any
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successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
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"Selling Stockholder" means any Stockholder owning Registrable Shares
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included in a Registration Statement.
"Shares" shall have the meaning specified in Subsection 1.2 of the
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Purchase Agreement.
"Stockholders" means the Purchasers and any persons or entities to
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whom the rights granted under this Agreement are transferred by any Purchasers,
their successors or assigns pursuant to Section 5 hereof.
2. Registration Rights
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2.1 Required Registrations.
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(a) At any time after the six month anniversary of an Initial Public
Offering, the Purchasers may request once only, in writing, that the Company
effect the registration on Form S-1 (or such successor form), of Registrable
Shares having an aggregate value of at least $1,000,000 (based on the then
current public market price).
(b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), a Stockholder or Stockholders holding in the aggregate at least 25%
of the Registrable Shares then outstanding may request, in writing, that the
Company effect the registration (which may, at such Stockholder's request, be a
shelf registration pursuant to Rule 415 of the Securities Act) on Form S-3 (or
such successor form), of Registrable Shares having an aggregate value of at
least $1,000,000 (based on the then current public market price).
(c) Upon receipt of any request for registration pursuant to this
Section 2, the Company shall promptly give written notice of such proposed
registration to all other Stockholders. Such Stockholders shall have the right,
by giving written notice to the Company within 30 days after the Company
provides its notice, to elect to have included in such registration such of
their Registrable Shares as such Stockholders may request in such notice of
election, subject in the case of an underwritten offering to the approval of the
managing underwriter as provided in Section 2.1(d) below. Thereupon, the
Company shall, as expeditiously as possible, use its best efforts to effect the
registration on an appropriate registration form of all Registrable Shares which
the Company has been requested to so register (provided, however, that in the
case of a registration requested under Sections 2.1(a) or (b), the Company will
only be obligated to effect such registration on Form S-3 (or any successor
form).
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(d) If the Initiating Holders intend to distribute the Registrable
Shares covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to Sections 2.1(a)
or (b), and the Company shall include such information in its written notice
referred to in Section 2.1(c). The right of any other Stockholder to include
its Registrable Shares in such registration pursuant to Sections 2.1(a) or (b)
shall be conditioned upon such other Stockholder's participation in such
underwriting on the terms set forth herein.
If the Company desires that any officers or directors of the Company
holding securities of the Company be included in any registration for an
underwritten offering requested pursuant to Section 2.1(d) or if other holders
of securities of the Company who are entitled, by contract with the Company, to
have securities included in such a registration (the "Other Holders") request
such inclusion, the Company may include the securities of such officers,
directors and Other Holders in such registration and underwriting on the terms
set forth herein. The Company shall (together with all Stockholders, officers,
directors and Other Holders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form
(including, without limitation, customary indemnification and contribution
provisions on the part of the Company) with the managing underwriter; provided,
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however, that such underwriting agreement shall not provide for indemnification
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or contribution obligations on the part of Stockholders materially greater than
the obligations of the Stockholders pursuant to Section 2.5. Notwithstanding any
other provision of this Section 2.1(d), if the managing underwriter advises the
Company that the inclusion of all shares requested to be registered would
adversely affect the offering, the securities of the Company held by any
stockholder other than the Purchasers shall be excluded from such registration
and underwriting to the extent deemed advisable by the managing underwriter, and
if a further limitation of the number of shares is required, the number of
shares that may be included in such registration and underwriting shall be
allocated among all holders of Registrable Shares requesting registration in
proportion, as nearly as practicable, to the respective number of Registrable
Shares held by them at the time of the request for registration made by the
Initiating Holders pursuant to Sections 2.1(a) or (b). If any holder of
Registrable Shares, officer, director or Other Holder who has requested
inclusion in such registration as provided above disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, and the securities so withdrawn shall also be withdrawn from
registration. If the managing underwriter has not limited the number of
Registrable Shares or other securities to be underwritten, the Company may
include securities for its own account in such registration if the managing
underwriter so agrees and if the number of Registrable Shares and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
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(e) The Initiating Holders shall have the right to select the managing
underwriter(s) for any underwritten offering requested pursuant to Sections
2.1(a) or (b), subject to the approval of the Company, which approval will not
be unreasonably withheld or delayed.
(f) The Company shall not be required to effect more than three (3)
registrations pursuant to Section 2.1(a) or (b). In addition, the Company shall
not be required to effect any registration (other than on Form S-3 or any
successor form relating to secondary offerings) within six months after the
effective date of any other Registration Statement of the Company. For purposes
of this Section 2.1(f), a Registration Statement shall not be counted until such
time as such Registration Statement has been declared effective by the
Commission (unless the Initiating Holders withdraw their request for such
registration (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Stockholders after
the date on which such registration was requested) and elect not to pay the
Registration Expenses therefor pursuant to Section 2.4).
(g) If at the time of any request to register Registrable Shares by
Initiating Holders pursuant to this Section 2.1, the Company is engaged or has
plans to engage in a registered public offering or is engaged in any other
activity which, in the good faith determination of the Company's Board of
Directors, would be adversely affected by the requested registration, then the
Company may at its option direct that such request be delayed for a period not
in excess of 90 days from the date of such request, such right to delay a
request to be exercised by the Company not more than once in any 12-month
period.
2.2 Incidental Registration.
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(a) Whenever the Company proposes to file a Registration Statement
(other than a Registration Statement filed pursuant to Section 2.1 and a
Registration Statement covering shares to be sold solely for the account of
Other Holders) at any time and from time to time, it will, prior to such filing,
give written notice to all Stockholders of its intention to do so. Upon the
written request of a Stockholder or Stockholders given within 20 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Registrable Shares), the Company shall use its best efforts
to cause all Registrable Shares which the Company has been requested by such
Stockholder or Stockholders to register to be registered under the Securities
Act to the extent necessary to permit their sale or other disposition in
accordance with the intended methods of distribution specified in the request of
such Stockholder or Stockholders; provided that the Company shall have the right
to postpone or withdraw any registration effected pursuant to this Section 2.2
without obligation to any Stockholder.
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(b) If the registration for which the Company gives notice pursuant to
Section 2.2(a) is a registered public offering involving an underwriting, the
Company shall so advise the Stockholders as a part of the written notice given
pursuant to Section 2.2(a) or (b). In such event, the right of any Stockholder
to include its Registrable Shares in such registration pursuant to Section 2.2
shall be conditioned upon such Stockholder's participation in such underwriting
on the terms set forth herein. All Stockholders proposing to distribute their
securities through such underwriting shall enter into an underwriting agreement
in customary form with the underwriter or underwriters selected for the
underwriting by the Company. Notwithstanding any other provision of this Section
2.2, if the managing underwriter determines that the inclusion of all shares
requested to be registered would adversely affect the offering, the Company may
limit the number of Registrable Shares to be included in the registration and
underwriting. The Company shall so advise all holders of Registrable Shares
requesting registration, and the number of shares that are entitled to be
included in the registration and underwriting shall be allocated in the
following manner. The securities of the Company held by holders other than
Stockholders and Other Holders shall be excluded from such registration and
underwriting to the extent deemed advisable by the managing underwriter, and, if
a further limitation on the number of shares is required, the number of shares
that may be included in such registration and underwriting shall be allocated
among all Stockholders and Other Holders requesting registration in proportion,
as nearly as practicable, to the respective number of shares of Common Stock (on
an as-converted basis) which they held at the time the Company gives the notice
specified in Section 2.2(a). If any Stockholder or Other Holder would thus be
entitled to include more securities than such holder requested to be registered,
the excess shall be allocated among other requesting Stockholders and Other
Holders pro rata in the manner described in the preceding sentence. If any
holder of Registrable Shares or any officer, director or Other Holder
disapproves of the terms of any such underwriting, such person may elect to
withdraw therefrom by written notice to the Company, and any Registrable Shares
or other securities excluded or withdrawn from such underwriting shall be
withdrawn from such registration.
(c) Notwithstanding the foregoing, the Company shall not be
required, pursuant to this Section 2.2, to include any Registrable Shares in a
Registration Statement if such Registrable Shares can then be sold pursuant to
Rule 144(k) under the Securities Act.
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2.3 Registration Procedures.
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(a) If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect the registration of any Registrable
Shares under the Securities Act, the Company shall:
(i) file with the Commission a Registration Statement with respect to
such Registrable Shares and use its best efforts to cause that Registration
Statement to become effective as soon as possible;
(ii) as expeditiously as possible prepare and file with the Commission
any amendments and supplements to the Registration Statement and the prospectus
included in the Registration Statement as may be necessary to comply with the
provisions of the Securities Act (including the anti-fraud provisions thereof)
and to keep the Registration Statement effective for 24 months from the
effective date or such lesser period until all such Registrable Shares are sold;
(iii) as expeditiously as possible furnish to each Selling Stockholder
such reasonable numbers of copies of the Prospectus, including any preliminary
Prospectus, in conformity with the requirements of the Securities Act, and such
other documents as such Selling Stockholder may reasonably request in order to
facilitate the public sale or other disposition of the Registrable Shares owned
by such Selling Stockholder;
(iv) as expeditiously as possible use its best efforts to register or
qualify the Registrable Shares covered by the Registration Statement under the
securities or Blue Sky laws of such states as the Selling Stockholders shall
reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the Selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the Selling Stockholder; provided, however, that the Company shall not be
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required in connection with this paragraph (iv) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction;
(v) as expeditiously as possible, cause all such Registrable Shares to
be listed on each securities exchange or automated quotation system on which
similar securities issued by the Company are then listed;
(vi) promptly provide a transfer agent and registrar for all such
Registrable Shares not later than the effective date of such registration
statement;
(vii) promptly make available for inspection by the Selling
Stockholders, any managing underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant or other agent
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retained by any such underwriter or selected by the Selling Stockholders, all
financial and other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such Registration
Statement;
(viii) as expeditiously as possible, notify each Selling Stockholder,
promptly after it shall receive notice thereof, of the time when such
Registration Statement has become effective or a supplement to any Prospectus
forming a part of such Registration Statement has been filed; and
(ix) as expeditiously as possible following the effectiveness of such
Registration Statement, notify each seller of such Registrable Shares of any
request by the Commission for the amending or supplementing of such Registration
Statement or Prospectus.
(b) If the Company has delivered a Prospectus to the Selling
Stockholders and after having done so the Prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders and, if requested, the Selling Stockholders shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.
(c) In the event that, in the reasonable judgment of the Company, it
is advisable to suspend use of a Prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all Selling Stockholders
to such effect, and, upon receipt of such notice, each such Selling Stockholder
shall immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Stockholder has received copies of a
supplemented or amended Prospectus or until such Selling Stockholder is advised
in writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Notwithstanding
anything to the contrary herein, the Company shall not exercise its rights under
this Section 2.3(c) to suspend sales of Registrable Shares for a period in
excess of 90 days in any 365-day period.
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2.4 Allocation of Expenses. The Company will pay all Registration
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Expenses for all registrations under this Agreement; provided, however, that if
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a registration under Section 2.1 is withdrawn at the request of the Initiating
Holders (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Stockholders after
the date on which such registration was requested) and if the Initiating Holders
elect not to have such registration counted as a registration requested under
Section 2.1, the requesting Stockholders shall pay the Registration Expenses of
such registration pro rata in accordance with the number of their Registrable
Shares included in such registration. For purposes of this Section, the term
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with this Agreement, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company and the fees and expenses of one counsel selected by the
Selling Stockholders to represent the Selling Stockholders, state Blue Sky fees
and expenses, and the expense of any special audits incident to or required by
any such registration, but excluding underwriting discounts, selling commissions
and the fees and expenses of Selling Stockholders' own counsel (other than the
counsel selected to represent all Selling Stockholders).
2.5 Indemnification and Contribution.
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(a) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, the Company will indemnify
and hold harmless each Selling Stockholder, each underwriter of such Registrable
Shares, and each other person, if any, who controls such Selling Stockholder or
underwriter within the meaning of the Securities Act or the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which such
Selling Stockholder, underwriter or controlling person may become subject under
the Securities Act, the Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to such Registration Statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such Selling Stockholder,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such Selling Stockholder, underwriter or controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the Company will not be
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liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based
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upon any untrue statement or omission made in such Registration Statement,
preliminary prospectus or prospectus, or any such amendment or supplement, in
reliance upon and in conformity with information furnished to the Company, in
writing, by or on behalf of such Selling Stockholder, underwriter or controlling
person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable Shares
under the Securities Act pursuant to this Agreement, each Selling Stockholder,
severally and not jointly, will indemnify and hold harmless the Company, each of
its directors and officers and each underwriter (if any) and each person, if
any, who controls the Company or any such underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages or
liabilities, joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement under which
such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such Selling Stockholder
furnished in writing to the Company by or on behalf of such Selling Stockholder
specifically for use in connection with the preparation of such Registration
Statement, prospectus, amendment or supplement; provided, however, that the
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obligations of a Selling Stockholder hereunder shall be limited to an amount
equal to the net proceeds to such Selling Stockholder of Registrable Shares sold
in connection with such registration.
(c) Each party entitled to indemnification under this Section (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
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Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
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Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section except to the extent
that the Indemnifying Party is adversely affected by such failure. The
Indemnified Party may participate in such defense at such party's expense;
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provided, however, that the Indemnifying Party shall pay such expense if
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representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between the Indemnified Party and any other party represented by such
counsel in such proceeding; provided further that in no event shall the
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Indemnifying Party be required to pay the expenses of more than one law firm per
jurisdiction as counsel for the Indemnified Party. The Indemnifying Party also
shall be responsible for the expenses of such defense if the Indemnifying Party
does not elect to assume such defense. 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
of such claim or litigation, and no Indemnified Party shall consent to entry of
any judgment or settle such claim or litigation without the prior written
consent of the Indemnifying Party, which consent shall not be unreasonably
withheld.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 2.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to any losses, claims, damages and liabilities
referred to herein, then the Indemnifying Party shall, in lieu of indemnifying
such Indemnified Party, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities to
which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Selling Stockholders
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company and the Selling
Stockholders shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of material fact related to information
supplied by the Company or the Selling Stockholders and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Selling Stockholders agree that
it would not be just and equitable if contribution pursuant to this Section 2.5
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph of Section 2.5, (a) in no case
shall any one Selling Stockholder be liable or responsible for any amount in
excess of the net proceeds received by such Selling Stockholder from the
offering of Registrable Shares and (b) the Company shall be liable and
responsible for any amount in excess of such proceeds; provided, however, that
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no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any party entitled to
contribution will,
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promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties under this Section, notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties from whom contribution may be sought shall not relieve
such party from any other obligation it or they may have thereunder or otherwise
under this Section. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its prior written consent,
which consent shall not be unreasonably withheld.
2.6 Other Matters with Respect to Underwritten Offerings. In the
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event that Registrable Shares are sold pursuant to a Registration Statement in
an underwritten offering pursuant to Section 2.1, the Company agrees to (a)
enter into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use its best efforts to cause
its legal counsel to render customary opinions to the underwriters with respect
to the Registration Statement; and (c) use its best efforts to cause its
independent public accounting firm to issue customary "cold comfort letters" to
the underwriters with respect to the Registration Statement.
2.7 Information by Holder. Each holder of Registrable Shares
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included in any registration shall furnish to the Company such information
regarding such holder and the distribution proposed by such holder as the
Company may reasonably request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement.
2.8 "Stand-Off" Agreement; Confidentiality of Notices. Each
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Stockholder, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Common Stock, shall not sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by such Stockholder for a period of 180 days following the
effective date of a Registration Statement; provided, however, that:
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(a) such agreement shall only apply to the Initial Public
Offering; and
(b) all stockholders of the Company then holding at least 1% of the
outstanding Common Stock (on an as-converted basis) and all officers and
directors of the Company enter into similar agreements.
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The Company may impose stop-transfer instructions with respect to the
Registrable Shares or other securities subject to the foregoing restriction
until the end of such 180-day period. This section is binding on any future
holders of the Shares regardless of whether such future holders are transferred
the benefits of the registration rights provisions of this section.
Any Stockholder receiving any written notice from the Company regarding the
Company's plans to file a Registration Statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.
2.9 Limitations on Subsequent Registration Rights. The Company shall
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not, without the prior written consent of Stockholders holding at least 50% of
the Registrable Shares then held by all Stockholders, enter into any agreement
(other than this Agreement) with any holder or prospective holder of any
securities of the Company which grant such holder or prospective holder rights
to include securities of the Company in any Registration Statement, unless (a)
such rights to include securities in a registration initiated by the Company or
by Stockholders are not as favorable or more favorable than the rights granted
to Other Holders under Sections 2.1 and 2.2 of this Agreement, and (b) no rights
are granted to initiate a registration, other than registration pursuant to a
registration statement on Form S-3 (or its successor) in which Stockholders are
entitled to include Registrable Shares on a pro rata basis with such holders
based on the number of shares of Common Stock (on an as-converted basis) owned
by Stockholders and such holders.
2.10 As previously disclosed to the Purchasers, the Company has
granted rights to Xxxxxxxx Trust Company Limited, as Trustee of the Willingdon
Trust, Xxxxxxxxxxx Trust (Bermuda) Limited, as Trustee of the Xxxxxx Trust and
Cambridge Technology Enterprises Limited (the "Founders"), pursuant to a letter
from the Company to the Founders of even date herewith, that if, after its
Initial Public Offering and until the third anniversary thereof, the Company
proposes to file a registration statement with the Securities and Exchange
Commission for a public offering and sale of the Common Stock, or a security
which is convertible into Common Stock (other than a registration statement on
Form S-8 or Form S-4, or their successors) at any time and from time to time,
the Company will, prior to such filing, give written notice to each of the
Founders of its intention to do so and, upon the written request of any or all
of the Founders, respectively, given within 20 days after the Company provides
such notice, the Company shall register on their behalf up to 20 percent of the
aggregate number of shares of Common Stock held by the Founders provided that
(i) their right to sell shares shall be subject to inclusion at the discretion
of the underwriters on a one-for-one basis (treating the Founders as a single
Person and the Purchasers as a single Person for such purposes), and (ii) the
Company shall have the
-14-
right to postpone or withdraw any proposed registration at any time without
obligation to any of the Founders.
2.1 Rule 144 Requirements. After the earliest of (i) the closing of
---------------------
the sale of securities of the Company pursuant to a Registration Statement, (ii)
the registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
(a) make and keep current public information about the Company
available, as those terms are understood and defined in Rule 144;
(b) 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
(c) furnish to any holder of Registrable Shares upon request (i) a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the Commission allowing it to
sell any such securities without registration.
2.1 Termination. All of the Company's obligations to register
-----------
Registrable Shares under Sections 2.1 and 2.2 of this Agreement shall terminate
five years after the consummation of the Initial Public Offering.
3. Right Of First Refusal
----------------------
3.1 Rights of Purchasers
--------------------
(a) The Company shall not issue, sell or exchange, agree to issue,
sell or exchange, or reserve or set aside for issuance, sale or exchange, (i)
any shares of its Common Stock, (ii) any other equity securities of the Company,
including, without limitation, shares of preferred stock, (iii) any option,
warrant or other right to subscribe for, purchase or otherwise acquire any
equity securities of the Company, or (iv) any debt securities convertible into
capital stock of the Company (collectively, the "Offered Securities"), unless in
each such case the Company shall have first complied with this Section 3.1. The
Company shall deliver to each Purchaser a written notice of
-15-
any proposed or intended issuance, sale or exchange of Offered Securities (the
"Offer"), which Offer shall (i) identify and describe the Offered Securities,
(ii) describe the price and other terms upon which they are to be issued, sold
or exchanged, and the number or amount of the Offered Securities to be issued,
sold or exchanged, (iii) identify the persons or entities (if known) to which or
with which the Offered Securities are to be offered, issued, sold or exchanged
and (iv) offer to issue and sell to or exchange with such Purchaser (A) a pro
rata portion of the Offered Securities determined by dividing the aggregate
number of shares of Common Stock then held by such Purchaser (giving effect to
the conversion of all shares of convertible preferred stock then held) by the
total number of shares of Common Stock then outstanding (giving effect to the
conversion of all outstanding shares of convertible preferred stock) (the "Basic
Amount"), and (B) any additional portion of the Offered Securities attributable
to the Basic Amounts of other Purchasers as such Purchaser shall indicate it
will purchase or acquire should the other Purchasers subscribe for less than
their Basic Amounts (the "Undersubscription Amount").
(b) To accept an Offer, in whole or in part, a Purchaser must deliver
a written notice to the Company prior to 30 days after the date of delivery of
the Offer, setting forth the portion of the Purchaser's Basic Amount that such
Purchaser elects to purchase and, if such Purchaser shall elect to purchase all
of its Basic Amount, the Undersubscription Amount (if any) that such Purchaser
elects to purchase (the "Notice of Acceptance"). If the Basic Amounts
subscribed for by all Purchasers are less than the total of all of the Basic
Amounts available for purchase, then each Purchaser who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, that if the Undersubscription
-------- -------
Amounts subscribed for exceed the difference between the total of all of the
Basic Amounts available for purchase and the Basic Amounts subscribed for (the
"Available Undersubscription Amount"), each Purchaser who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Purchaser bears to the total Undersubscription Amounts subscribed
for by all Purchasers, subject to rounding by the Board of Directors to the
extent it deems reasonably necessary.
(c) The Company shall have 90 days from the expiration of the period
set forth in Section 3.1(b) above to issue, sell or exchange all or any part of
such Offered Securities as to which a Notice of Acceptance has not been given by
the Purchasers (the "Refused Securities"), but only to the offerees or
purchasers described in the Offer (if so described therein) and only upon terms
and conditions (including, without limitation, unit prices and interest rates)
which are not more favorable, in the
-16-
aggregate, to the acquiring person or persons or less favorable to the Company
than those set forth in the Offer.
(d) In the event the Company shall propose to sell less than all the
Refused Securities (any such sale to be in the manner and on the terms specified
in Section 3.1(c) above), then each Purchaser may, at its sole option and in its
sole discretion, reduce the number or amount of the Offered Securities specified
in its Notice of Acceptance to an amount that shall be not less than the number
or amount of the Offered Securities that the Purchaser elected to purchase
pursuant to Section 3.1(b) above multiplied by a fraction, (i) the numerator of
which shall be the number or amount of Offered Securities the Company actually
proposes to issue, sell or exchange (including Offered Securities to be issued
or sold to Purchasers pursuant to Section 3.1(b) above prior to such reduction)
and (ii) the denominator of which shall be the original amount of the Offered
Securities. In the event that any Purchaser so elects to reduce the number or
amount of Offered Securities specified in its Notice of Acceptance, the Company
may not issue, sell or exchange more than the reduced number or amount of the
Offered Securities unless and until such securities have again been offered to
the Purchasers in accordance with Section 3.1(a) above.
(e) Upon the closing of the issuance, sale or exchange of all or less
than all of the Refused Securities, the Purchasers shall acquire from the
Company, and the Company shall issue to the Purchasers, the number or amount of
Offered Securities specified in the Notices of Acceptance, as reduced pursuant
to Section 3.1(d) above if the Purchasers have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Purchasers of any
Offered Securities is subject in all cases to the preparation, execution and
delivery by the Company and the Purchasers of a purchase agreement relating to
such Offered Securities reasonably satisfactory in form and substance to the
Purchasers and their respective counsel.
(f) Any Offered Securities not acquired by the Purchasers or other
persons in accordance with Section 3.1(c) above may not be issued, sold or
exchanged until they are again offered to the Purchasers under the procedures
specified in this Agreement.
(g) The rights of the Purchasers under this Section 3 shall not apply
to:
(1) Common Stock issued as a stock dividend to holders of Common Stock
or upon any subdivision or combination of shares of Common Stock;
(2) the issuance of any shares of Common Stock upon shares of
convertible preferred stock;
-17-
(3) the issuance of up to 9,727,081 shares of Common Stock or such
greater number as is approved by vote of not less than a majority of the non-
employee directors of the Company, or the grant of options or warrants therefor,
including shares issued upon exercise of options outstanding on the date of this
Agreement (such number to be proportionately adjusted in the event of any stock
splits, stock dividends, recapitalizations or similar events occurring on or
after the date of this Agreement) to officers, directors, consultants and
employees of the Company or any subsidiary pursuant to any plan, agreement or
arrangement approved by a vote of not less than a majority of the Board of
Directors of the Company (it being understood that any shares subject to options
that expire or terminate unexercised shall not count towards the maximum number
set forth in this clause (3));
(4) securities issued solely in consideration for the acquisition
(whether by merger or otherwise) by the Company or any of its subsidiaries of
all or substantially all of the stock or assets of any other entity; or
(5) shares of Common Stock sold by the Company in an underwritten
public offering pursuant to an effective registration statement under the
Securities Act.
3.2 Termination. This Section 3 shall terminate upon the earlier of
-----------
the following events:
(a) The sale of all or substantially all of the assets or business of
the Company, by merger, sale of assets or otherwise; or
(b) The consummation of the Initial Public Offering.
4. Negative Covenants. So long as at least 500,000 Shares (such number
------------------
to be proportionately adjusted in the event of any stock splits, stock
dividends, recapitalizations or similar events occurring on or after the date of
this Agreement) are outstanding the Company shall not, without the prior written
consent of the holders of not less than 50% of the then outstanding Shares:
(a) amend the Certificate of Incorporation of the Company to authorize
any additional shares of Common Stock or Series A Preferred or to authorize or
designate any other class or series of stock or senior to, or on a parity with,
the Series A Preferred as to dividends, rights upon liquidation or redemption;
(b) declare or pay any dividends or distributions on Common Stock
other than dividends payable solely in Common Stock;
-18-
(c) make (or permit any corporation, a majority of the voting stock of
which is owned or controlled by the Company to make) any loan or advance to, or
own any stock or other securities of, any subsidiary or other corporation,
partnership, or other entity unless it is wholly owned by the Company;
(d) make any loan or advance to any person, including, without
limitation, any employee or director of the Company or any subsidiary, except
advances and similar expenditures in the ordinary course of business or under
the terms of an employee stock or option plan approved by the Board of
Directors;
(e) incur any indebtedness for borrowed money (except for operating
credit facilities as approved by the Board of Directors, including, but not
limited to equipment financing not exceeding $5,000,000 in the aggregate);
(f) guarantee directly or indirectly, any indebtedness or obligations
except for trade accounts of any subsidiary arising in the ordinary course of
business;
(g) merge with or into or consolidate with any other corporation;
(h) sell, lease, license or otherwise dispose of all or substantially
all of its properties or assets;
(i) acquire all or substantially all of the properties, assets or
stock of any other corporation or entity (except for a consideration of less
than 10% of the Company's consolidated net worth as of the end of the prior
fiscal quarter);
(j) voluntarily liquidate or dissolve;
(k) amend any provision of, or add any provision to, the Company's
Certificate of Incorporation or By-Laws, which such amendment or provisions
would adversely affect the Series A Preferred; or
(l) apply any of its assets to the redemption, retirement, purchase or
acquisition, directly or indirectly, of any shares of its Common Stock (other
than purchases of Common Stock from employees, directors or consultants, at
cost, upon termination of their employment or services).
(m) make any material change to the Company's business or operations.
-19-
5. Transfers of Rights. This Agreement, and the rights and obligations
-------------------
of each Purchaser hereunder, may be assigned by such Purchaser to (i) any person
or entity to which at least 100,000 Shares are transferred by such Purchaser or
(ii) to any affiliate, limited partner or general partner of such Purchaser,
and such transferee shall be deemed a "Purchaser" for purposes of this
Agreement; provided that the transferee provides written notice of such
assignment to the Company and agrees in writing to be bound hereby.
6. General.
-------
(a) Severability. The invalidity or unenforceability of any provision
------------
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
(b) Specific Performance. In addition to any and all other remedies
--------------------
that may be available at law in the event of any breach of this Agreement, each
Purchaser shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
(c) Governing Law. This Agreement shall be governed by and construed
-------------
in accordance with the internal laws of the State of Delaware (without reference
to the conflicts of law provisions thereof).
(d) Notices. All notices, requests, consents, and other
-------
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at C-bridge Internet Solutions, Inc., 000 Xxxxxx Xxxxxx,
Xxxxx 0, Xxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: President, or at such other
address or addresses as may have been furnished in writing by the Company to the
Purchasers, with a copy to Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx,
Xxxxxxxxxxxxx 00000, Attention: Xxxx X. Xxxxxxx, Esq.; or
If to a Purchaser, at his or its address set forth on Exhibit A, or at such
---------
other address or addresses as may have been furnished to the Company in writing
by such Purchaser, with a copy to X'Xxxxxxxx Graev & Karabell, LLP, 00
Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx X. Nissan, Esq.
-20-
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(e) Complete Agreement. This Agreement constitutes the entire
------------------
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
(f) Amendments and Waivers. Any term of this Agreement may be amended
----------------------
or terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 50% of the Registrable Shares held by all of the Stockholders; provided,
--------
however, that this Agreement may be amended with the consent of the holders of
-------
less than all Registrable Shares only in a manner which applies to all such
holders in the same fashion. Any such amendment, termination or waiver effected
in accordance with this Section 6(f) shall be binding on all parties hereto,
even if they do not execute such consent. No waivers of or exceptions to any
term, condition or provision of this Agreement, in any one or more instances,
shall be deemed to be, or construed as, a further or continuing waiver of any
such term, condition or provision.
(g) Pronouns. Whenever the context may require, any pronouns used in
--------
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(h) Counterparts; Facsimile Signatures. This Agreement may be
----------------------------------
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
(i) Section Headings. The section headings are for the convenience of
----------------
the parties and in no way alter, modify, amend, limit or restrict the
contractual obligations of the parties.
-21-
(j) Additional Purchasers. Persons or entities that, after the date
---------------------
hereof, purchase Shares pursuant to the Purchase Agreement and become
"Additional Purchasers" thereunder may, with the prior written approval of the
Company (but without the need for approval by any other party to this
Agreement), become parties to this Agreement by executing and delivering a
counterpart signature page hereto, whereupon they shall be deemed "Purchasers"
for all purposes of this Agreement.
-22-
Executed as of the date first written above.
COMPANY:
C-BRIDGE INTERNET SOLUTIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
PURCHASERS:
INSIGHT CAPITAL PARTNERS III, L.P.
By: InSight Venture Associates III, L.L.C.,
its General Partner
By: /s/ Xxxx Xxxxxx
----------------------------------
Name:
Title:
INSIGHT CAPITAL PARTNERS (CAYMAN)
III, L.P.
By: InSight Venture Associates III, L.L.C.,
its General Partner
By: /s/ Xxxx Xxxxxx
----------------------------------
Name:
Title:
INSIGHT CAPITAL PARTNERS III -
CO-INVESTORS, L.P.
By: InSight Venture Associates III, L.L.C.,
its General Partner
By: /s/ Xxxx Xxxxxx
----------------------------------
Name:
Title:
-23-
H&D INVESTMENTS 97
By: /s/ Xxxx X. Xxxxxxxx, Xx.
--------------------------------------------
Name: Xxxx X. Xxxxxxxx, Xx.
Title: General Partner
-24-
ORACLE CORPORATION
By: /s/ Xxxx Xxxxxx
------------------------
Name: Xxxx Xxxxxx
Title: Vice President, Corporate Development
EXHIBIT A
List of Purchasers
------------------
Name and Address
of Purchaser
---------------------
Insight Capital Partners III, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
InSight Capital Partners
(Cayman)III, L.P.
c/o X.X. Xxxxxx & Company
Xxxxxx Xxxxx
X.X. Xxx 000XX
Xxxx Xxxxxx
Xxxxxx Xxxx
Grand Cayman, Cayman Islands
InSight Capital Partners III -
Co-Investors, L.P.
000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
H&D Investments 97
Attn: Xxxx X. Xxxxxxxx, Esq.
Xxxx and Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Oracle Corporation
000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx, Xxxxxxxxxx
00000
