Exhibit 10.13
INVESTORS RIGHTS AGREEMENT
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This Agreement is made as of the 8th day of May, 1998 by and among
VerticalNet, Inc., a Pennsylvania corporation (the "Company") and each of the
persons listed on Schedule 1 attached hereto (collectively, the "Investors" and
individually, an "Investor").
BACKGROUND
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The Company currently has issued and outstanding 4,927,836 shares of
its Common Stock, 1,000,000 shares of Series A Preferred Stock (which, in
aggregate, are currently convertible into 4,761,900 shares of Common Stock),
5,030,181 shares of Series B Preferred Stock (which, in aggregate, are currently
convertible into 5,030,181 shares of Common Stock) and 301,978 shares of Series
C Preferred Stock (which, in aggregate, are currently convertible into 301,978
shares of Common Stock).
On the date of this Agreement, the Company is issuing and selling
shares of its Series D Preferred Stock ("Series D Shares") pursuant to the
Series D Preferred Stock Purchase Agreement dated as of the date hereof (the
"Series D Stock Purchase Agreement").
The purchasers of the Series D Shares have required this Agreement as
a condition to the closing of their investment under the Series D Stock Purchase
Agreement.
Certain defined terms are defined in Article IV.
AGREEMENT
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ARTICLE I
COVENANTS OF THE COMPANY
1.1 Affirmative Covenants of the Company. The Company covenants and
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agrees that, until the consummation of a Qualified Public Offering (except with
regard to Section 1.1(o)), it will perform and observe the following covenants
and provisions, and will cause each Subsidiary, if and when such Subsidiary
exists, to perform and observe such of the following covenants and provisions as
are applicable to such Subsidiary:
(a) Key Man Insurance. After May 20, 1998, maintain term life
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insurance on the lives of Xxxxxxx X. Xxxxx, Xxxxxxx X. XxXxxxx and Xxxx X.
Xxxxx, each in the amount of $1,000,000, in each case for so long as such person
remains an officer or employee of the Company, the proceeds of which are payable
to the Company.
(b) Financing. Promptly, fully and in detail, inform the Board of
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Directors of any discussions, offers or contracts relating to possible financing
of any material nature for the Company, whether initiated by the Company or any
other Person.
(c) New Developments. Cause all new technological developments,
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patentable or unpatentable inventions, discoveries or improvements by the
Company's or any Subsidiary's employees or consultants to be documented in a
reasonable manner and, where prudent and appropriate, to file and prosecute
United States and foreign patent, copyright, trademark, mask work or other
Intellectual Property Right applications relating to and protecting the
Company's inventions, discoveries or developments on behalf of the Company or
any Subsidiary.
(d) Agreements of Officers and Employees. Cause each employee of the
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Company or any Subsidiary now or hereafter employed and all consultants of the
Company or any Subsidiary involved in the design, review, evaluation or
development of products or Intellectual Property Rights to execute and deliver a
Confidentiality and Invention Assignment Agreement in form and substance
reasonably satisfactory to the Board of Directors of the Company, and the
Company shall not amend or waive any of the provisions of any such
Confidentiality and Invention Assignment Agreement in any material respect
without the approval of the Board of Directors. The form of Confidentiality and
Invention Assignment Agreement that shall be used, absent modification by the
Board, is attached as Exhibit A for employees and Exhibit B for consultants.
(e) Indemnification. The Company shall at all times maintain
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provisions in its By-laws or Articles of Incorporation exculpating and
indemnifying all Directors from and against liability to the maximum extent
permitted under the laws of the state of its incorporation.
(f) Corporate Existence. Maintain and cause each of its Subsidiaries
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to maintain their respective corporate existence, Intellectual Property Rights,
other rights and franchises in full force and effect to the extent appropriate
in accordance with good business practice.
(g) Properties, Business, Insurance. Maintain and cause each of its
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Subsidiaries to maintain as to their respective properties and business, with
financially sound and reputable insurers, insurance against such casualties and
contingencies and of such types and in such amounts as is customary for
companies of a similar size and financial condition similarly situated within
the same industry.
(h) Size of Board. Fix the number of Directors on the Board of
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Directors of the Company at seven (7) members and use its best efforts to
maintain the number of Directors on the Board of Directors of the Company at
seven (7) members, including one Director elected by the Investors as holders of
Series D Shares, one Director nominated by a majority of the then current
members of the Board of Directors and approved by the holders of at least 85% of
the Series D Shares and one Director appointed by the holders of a majority of
the shares of capital stock of the Company held by executives of the Company and
approved by the holders of a
majority of the Series A and B Preferred Stock voting together as a class and
the holders of a majority of Series D Shares.
(i) Expenses of Directors. Promptly reimburse in full each Director
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of the Company for all of his reasonable out-of-pocket expenses incurred in
attending each meeting of the Board of Directors of the Company or any committee
thereof.
(j) Compliance with Laws. Comply, and cause each subsidiary to
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comply, with all applicable laws, rules, regulations and orders, noncompliance
with which could materially adversely affect its business, assets, Intellectual
Property Rights, operations or condition, financial or otherwise.
(k) Keeping of Records and Books of Account. Keep, and cause each
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Subsidiary to keep, adequate records and books of account, in which complete
entries will be made in accordance with generally accepted accounting principles
consistently applied, reflecting all financial transactions of the Company and
such Subsidiary, and in which, for each fiscal year, all proper reserves for
depreciation, depletion, obsolescence, amortization, taxes, bad debts and other
purposes in connection with its business shall be made.
(l) Foreign Corrupt Practices Act Undertaking. Neither the Company
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nor any subsidiary of the Company shall take any action which would cause the
Company or any Subsidiary of the Company to be in violation of the Foreign
Corrupt Practices Act.
(m) Controls. The Company currently maintains and will maintain a
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system of internal accounting controls sufficient to provide reasonable
assurances that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(n) Rule 144A Information. At all times during which the Company is
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neither subject to the reporting requirements of Section 13 or 15(d) of the
Exchange Act, nor exempt from reporting pursuant to Rule 12g3-2(b) under the
Exchange Act, it will provide as promptly as practicable (in any event not later
than twenty (20) days after the initial request) in written form, upon the
request of an Investor or a prospective buyer of Shares, from any Investor, all
information required by Rule 144A(d)(4)(i) of the General Regulations
promulgated by the Commission under the Securities Act (the "Rule 144A
Information"). The Company further covenants, upon written request, as promptly
as practicable (in any event not later than twenty (20) days after the initial
request) to cooperate with and assist the Investors or any member of the NASD
system for Private Offerings Resales and Trading through Automated Linkage
("PORTAL") in applying to designate and thereafter maintain the eligibility of
the Shares for trading through PORTAL. The Company's obligations under this
Section 1.1(n) shall at all times be contingent upon the Investors obtaining
from a prospective purchaser an agreement to take all
reasonable precautions to safeguard the Rule 144A Information from disclosure to
anyone other than a person who will assist such purchaser in evaluating the
purchase of the Shares.
(o) Preferential Rights. So long as Xxxx Ventures, Inc. or any of its
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Affiliates (collectively, "Xxxx") holds Common Shares or Preferred Shares, Xxxx
shall receive "most favored nations" pricing and terms on all products and
services sold or provided by the Company. For purposes of this Section 1.1(o)
"Affiliates" means with respect to any person (i) each person, that directly or
indirectly, owns or controls, whether beneficially, or as trustee, guardian or
other fiduciary, fifteen percent (15%) or more of the stock having ordinary
voting power in the election of directors of such person or (ii) each person
that controls, is controlled by or is under common control with such person or
an Affiliate of such person. For purposes of this Section 1.1(o), "most favored
nations" shall mean a price no higher than the lowest price offered to any other
customer of the Company for purchases on similar Terms. For purposes of this
Section 1.1(o), Terms shall mean the terms of any sale, including without
limitation, (i) the number of storefronts purchased in any vertical (examples of
verticals include Water Online, Pollution Online, etc.), (ii) the vertical such
storefronts are purchased in or (iii) the specified combination of storefronts
in different verticals. By way of illustration, if Xxxx purchases two
storefronts in each of four verticals, Xxxx shall be offered a total price that
is no higher than the lowest total price offered to any other customer of the
Company for the purchase of two storefronts in each of the same four verticals.
The Company will provide Xxxx upon request with sales reports indicating the
Terms, including but not limited to price, for any period in question in a form
to be agreed upon by the Company and Xxxx.
(p) Observer Rights. If Xxxx Ventures, Inc. or a representative of
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Xxxx Ventures, Inc. is not a member of the Company's Board of Directors for
whatever reason, the Company shall invite, at Xxxx Ventures, Inc.'s expense, a
representative of Xxxx Ventures, Inc., who shall be reasonably acceptable to the
Company, to attend all meetings of its Board of Directors in a nonvoting
observer capacity and, in this respect, shall give such representative copies of
all notices, minutes, consents, and other materials that it provides to its
directors. If Xxxxxxxx Partners, L.P. or Xxxxxxxx Foreign Partners, L.P.
(collectively, "Xxxxxxxx") or a representative of Xxxxxxxx is not a member of
the Company's Board of Directors for whatever reason, the Company shall invite,
at Xxxxxxxx'x, expense, a representative of Xxxxxxxx, who shall be reasonably
acceptable to the Company, to attend all meetings of its Board of Directors in a
nonvoting observer capacity and, in this respect, shall give such representative
copies of all notices, minutes, consents, and other materials that it provides
to its directors. If EnerTech Capital Partners, L.P. or a representative of
EnerTech Capital Partners, L.P. is not a member of the Company's Board of
Directors for whatever reason, the Company shall invite, at EnerTech Capital
Partners, L.P.'s expense, a representative of EnerTech Capital Partners, L.P.,
who shall be reasonably acceptable to the Company, to attend all meetings of its
Board of Directors in a nonvoting observer capacity and, in this respect, shall
give such representative copies of all notices, minutes, consents, and other
materials that it provides to its directors. Provided, however, that any such
representative invited pursuant to this Section 1.1(p) shall agree to hold in
confidence and trust all information provided pursuant to this Section 1.1(p);
and provided further, that the Company reserves the right to withhold any
information and to exclude such
representative from any meeting or portion thereof if access to such information
or attendance at such meeting could adversely affect the attorney-client
privilege between the Company and its counsel.
1.2 Reporting Requirements. Until the consummation of a Qualified Public
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Offering, the Company will furnish the following to each Investor, subject to
the confidentiality provisions of Section 5.8, unless such Investor waives in
writing its rights to receive such reports:
(a) Quarterly Reports. As soon as available and in any event within 45
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days after the end of the first three fiscal quarters of each fiscal year,
consolidated and consolidating balance sheets of the Company and its
Subsidiaries as of the end of such quarter and consolidated and consolidating
statements of income and a summary statement of quarterly cash flow of the
Company and its Subsidiaries for such quarter and for the period commencing at
the end of the previous fiscal year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, and including comparisons to
the quarterly budget or business plan and an analysis of the variances from the
budget or plan, prepared in accordance with generally accepted accounting
principles consistently applied (except for the exclusion of footnotes). All
such quarterly financial statements may be unaudited.
(b) Annual Reports. As soon as available and in any event within 120
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days after the end of each fiscal year of the Company, an unaudited statement
comparing actual operating results for such year to budgeted operations for such
year and a copy of the annual audit report for such year for the Company and its
Subsidiaries, including therein consolidated and consolidating balance sheets of
the Company and its Subsidiaries as of the end of such fiscal year and
consolidated and consolidating statements of income and of cash flow of the
Company and its Subsidiaries for such fiscal year, setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year, all
such consolidated statements to be duly certified by the chief financial officer
of the Company and a firm of independent public accountants approved by the
Board of Directors accompanied by a management control letter prepared by such
independent public accounting firm.
(c) Budgets and Business Plan. As soon as available and in any event
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at least 30 days before the beginning of each fiscal year of the Company, a
business plan and prepared on a monthly basis, operating budget for the
forthcoming fiscal year, and as soon as available, any revisions thereto.
(d) Reports and Other Information. Promptly upon receipt,
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publication, commencement or occurrence provide to each Investor copies of all
consulting reports, notices of all material actions, suits or proceedings,
copies of all accountant's reviews, and reports to management, and such other
information as the Company shall make available to its Directors or stockholders
or as the Investors shall reasonably request.
1.3 Inspection Rights. Until the consummation of a Qualified Public
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Offering, the Company will permit each Investor and such Investor's employees,
agents or representatives,
upon reasonable notice and during normal business hours, to examine and make
copies of and extracts from the records and books of account of, and visit and
inspect the properties, assets, operations and business of the Company and any
Subsidiary, and to discuss the affairs, finances and accounts of the Company and
any Subsidiary with any of its officers, consultants, directors, employees,
attorneys or independent accountants; provided, however, that any Investor,
employee, agent or representative, as the case may be, agrees to hold all
information confidential on the terms set forth in Section 5. 8 hereof. The
Company shall permit the Investors, or any one of them, and their agents and
representatives, to conduct an audit of the Company's financial statements at
the expense of such Investor(s) at any time on reasonable notice.
ARTICLE II
REGISTRATION RIGHTS
2.1 Piggy-Back Registrations. If at any time the Company shall determine
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to register for its own account or the account of others under the Securities
Act (including without limitation pursuant to the Qualified Public Offering, the
Initial Public Offering or a demand for registration of any stockholder of the
Company) any of its equity securities, other than on Form S-8 or Form S-4 or
their then equivalents (a "Piggy-Back Registration"), it shall send to each
holder of Registrable Shares, written notice of such determination and, if
within fifteen (15) days after receipt of such notice, such holder shall so
request in writing, the Company shall use its best efforts to include in such
registration statement all or any part of the Registrable Shares such holder
requests to be registered, except that if, in connection with any offering
involving an underwriting of Common Stock to be issued by the Company, the
managing underwriter determines in good faith that market or economic conditions
limit the amount of Common Stock which may reasonably be expected to be sold,
the Company may limit the number of shares of Common Stock included by persons
other than the Company, including, without limitation, the Registrable Shares to
be included in such registration (the "Piggyback Stock") and the holders of the
Piggyback Stock will be allowed to register their Piggyback Stock pro rata based
on the number of shares of Piggyback Stock held by such holders, respectively.
Provided, that in connection with the preceding sentence, the Company shall
first exclude all shares which are not Piggyback Stock and second, Piggyback
Stock which is requested to be included. If any holder of Piggyback Stock
disapproves of the terms of any such underwriting, he may elect to withdraw
therefrom by written notice to the Company and the managing underwriter. If, by
the withdrawal of such Piggyback Stock, a greater number of Piggyback Stock held
by other holders of Piggyback Stock may be included in such registration (up to
the limit imposed by the underwriters), the Company shall offer to all holders
of Piggyback Stock who have included Piggyback Stock in the registration the
right to include additional Piggyback Stock, pro rata. Any Piggyback Stock
excluded or withdrawn from such underwriting shall be withdrawn from such
registration. No right under this Section 2. 1 shall be construed to limit any
registration required under Section 2.2.
2.2 Demand Registration. If on any occasion any Investor shall notify the
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Company in writing that it or they intend to offer or cause to be offered for
public sale at least 35% of the
Registrable Shares (or any lesser percentage if the aggregate market value of
the shares to be registered, is greater than $10,000,000), the Company will so
notify all Investors. Upon written request of any Investor given within fifteen
(15) days after the receipt by such Investor from the Company of such
notification, the Company will use its best efforts to cause such of the
Registrable Shares as may be requested by any Investor (including the Investor
giving the initial notice of intent to offer) to be registered under the
Securities Act as expeditiously as possible (a "Demand Registration"). The
Company shall not be required to effect more than two Demand Registrations. If
(i) in the good faith judgment of the Board of Directors of the Company, a
Demand Registration would be materially detrimental to the Company and the Board
of Directors of the Company concludes, as a result, that it is essential to
defer the filing of such registration statement at such time, and (ii) the
Company shall furnish to each Investor 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 materially detrimental to the Company for such
registration statement to be filed in the near future, then the Company shall
have the right to defer such filing for the period during which such Demand
Registration is materially detrimental, provided that the Company may not defer
the filing for a period of more than 120 days after receipt of the request for a
Demand Registration, or more than once in any 12-month period. If the Company
determines to include shares to be sold by it in any registration requested
pursuant to this Section 2.2, such registration shall be deemed to have been a
"Piggy-Back" Registration under Section 2.1, and not a Demand Registration under
this Section 2.2, if the Investors are unable to include in any such
registration statement all of the Registrable Shares initially requested by them
for inclusion in such registration statement. The Investors may not exercise
their rights under this Section 2.2 until the earlier to occur of (i) twenty-
four (24) months following the date of this Agreement or (ii) ninety (90) days
after the effectiveness of any registration statement covering the Initial
Public Offering.
2.3 Registrations on Form S-3. In addition to the rights provided the
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holders of Registrable Shares in Sections 2.1 and 2.2 above, if the registration
of Registrable Shares under the Securities Act can be effected on Form S-3 (or
any equivalent successor form promulgated by the Commission), then the Company
shall provide the holders of Registrable Shares with the following rights:
(a) For the Investors. Upon the written request of one or more
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Investors, the Company will so notify each Investor, and then will, as
expeditiously as possible, use its best efforts to effect qualification and
registration under the Securities Act on Form S-3 of all or such portion of the
Registrable Shares as the Investors shall specify; provided, however, the
Company shall not be required to effect a registration pursuant to this Section
2.3(a) unless the market value of the Registrable Shares to be sold by the
Investor in any such registration shall be at least $500,000 at the time of
filing such registration statement, and further provided that the Company shall
not be required to effect more than one registration during any 12 month period
pursuant to this Section 2.3(a).
(b) Conflicts. In the event that, in a registration under this
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Section 2.3 which is effected through an underwriter, the underwriter imposes a
limitation on the number of
Registrable Shares which may be included in the registration statement in order
to effect an orderly public distribution, then the Company shall exclude from
such registration statement, first, all shares which are not Registrable Shares,
and second, Registrable Shares which are requested to be included pursuant to
Section 2.3. If holders of Registrable Shares are required to exclude
Registrable Shares requested to be included, such exclusion shall be on a pro
rata basis based on the number of Registrable Shares requested to be included
held by each holder.
2.4 Effectiveness. The Company will use its best efforts to maintain the
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effectiveness for up to ninety (90) days (or such shorter period of time as the
underwriters need to complete the distribution of the registered offering, or
one year in the case of a "shelf' registration statement on Form S-3) of any
registration statement pursuant to which any of the Registrable Shares are being
offered, and from time to time will amend or supplement such registration
statement and the prospectus contained therein to the extent necessary to comply
with the Securities Act and any applicable state securities statute or
regulation. The Company will also provide each holder of Registrable Shares
with as many copies of the prospectus contained in any such registration
statement as it may reasonably request.
2.5 Indemnification of Holders of Registrable Shares. In the event that
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the Company registers any of the Registrable Shares under the Securities Act,
the Company will indemnify and hold harmless each holder and each underwriter of
the Registrable Shares (including their officers, directors, affiliates and
partners) so registered (including any broker or dealer through whom such shares
may be sold) and each Person, if any, who controls such holder or any such
underwriter within the meaning of Section 15 of the Securities Act from and
against any and all losses, claims, damages, expenses or liabilities, joint or
several, to which they or any of them become subject under the Securities Act,
applicable state securities laws or under any other statute or at common law or
otherwise, as incurred, and, except as hereinafter provided, will reimburse each
such holder, each such underwriter and each such controlling Person, if any, for
any legal or other expenses reasonably incurred by them or any of them in
connection with investigating or defending any actions whether or not resulting
in any liability, as incurred, insofar as such losses, claims, damages,
expenses, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in the
registration statement, in any preliminary or amended preliminary prospectus or
in the final prospectus (or the registration statement or prospectus as from
time to time amended or supplemented by the Company) or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading, or any violation by the Company of any rule or
regulation promulgated under the Securities Act or any state securities laws
applicable to the Company and relating to action or inaction required of the
Company in connection with such registration, unless (i) such untrue statement
or alleged untrue statement or omission or alleged omission was made in such
registration statement, preliminary or amended preliminary prospectus or final
prospectus in reliance upon and in conformity with information furnished in
writing to the Company in connection therewith by any such holder of Registrable
Shares or its controlling person (in the case of indemnification of such holder
or its controlling person), or any such underwriter or its controlling person
(in the case of indemnification of such underwriter or its controlling person)
expressly for use therein, or unless
(ii) in the case of a sale directly by such holder of Registrable Shares
(including a sale of such Registrable Shares through any underwriter retained by
such holder of Registrable Shares to engage in a distribution on behalf of such
holder of Registrable Shares), such untrue statement or alleged untrue statement
or omission or alleged omission was contained in a preliminary prospectus and
corrected in a final or amended prospectus copies of which were delivered to
such holder of Registrable Shares or such underwriter on a timely basis, and
such holder of Registrable Shares failed to deliver a copy of the final or
amended prospectus at or prior to the confirmation for the sale of the
Registrable Shares to the person asserting any such loss, claim, damage or
liability in any case where such delivery is required by the Securities Act.
Promptly after receipt by any holder of Registrable Shares, any
underwriter or any controlling Person of notice of the commencement of any
action in respect of which indemnity may be sought against the Company, such
holder of Registrable Shares, or such underwriter or such controlling person, as
the case may be, will notify the Company in writing of the commencement thereof
(provided, that failure to so notify the Company shall not relieve the Company
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from any liability it may have hereunder) and, subject to the provisions
hereinafter stated, the Company shall be entitled to assume the defense of such
action (including the employment of counsel, who shall be counsel reasonably
satisfactory to such holder of Registrable Shares, such underwriter or such
controlling Person, as the case may be), and the payment of expenses insofar as
such action shall relate to any alleged liability in respect of which indemnity
may be sought against the Company.
Such holder of Registrable Shares, any such underwriter or any such
controlling Person shall have the right to employ separate counsel in any such
action and to participate in the defense thereof but the fees and expenses of
such counsel subsequent to any assumption of the defense by the Company shall
not be at the expense of the Company unless the employment of such counsel has
been specifically authorized in writing by the Company. The Company shall not
be liable to indemnify any Person for any settlement of any such action effected
without the Company's written consent. The Company shall not, except with the
approval of each party being indemnified under this Section 2.5, 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 the
parties being so indemnified of a release from all liability in respect to such
claim or litigation.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which any holder of
Registrable Shares exercising rights under this Article II, or any controlling
Person of any such holder, makes a claim for indemnification pursuant to this
Section 2.5 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.5 provides
for indemnification in such case, then, the Company and such holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion as is
appropriate to reflect the relative fault of the Company on the one hand and of
the holder of Registrable Shares
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 on the one hand and
of the holder of Registrable Shares on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or by the holder
of Registrable Shares on the other, and each party's relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided, however, that, in any such case, (A) no such holder will be
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required to contribute any amount in excess of the public offering price of all
such Registrable Shares offered by such holder pursuant to such registration
statement; and (B) no person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any person or entity who was not guilty of such fraudulent
misrepresentation.
2.6 Indemnification of Company. In the event that the Company registers
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any of the Registrable Shares under the Securities Act, each holder of the
Registrable Shares so registered will indemnify and hold harmless the Company,
each of its directors, each of its officers who have signed or otherwise
participated in the preparation of the registration statement, each underwriter
of the Registrable Shares so registered (including any broker or dealer through
whom such of the shares may be sold) and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act from and against
any and all losses, claims, damages, expenses or liabilities, joint or several,
to which they or any of them may become subject under the Securities Act,
applicable state securities laws or under any other statute or at common law or
otherwise, and, except as hereinafter provided, will reimburse the Company and
each such director, officer, underwriter or controlling Person for any legal or
other expenses reasonably incurred by them or any of them in connection with
investigating or defending any actions whether or not resulting in any
liability, insofar as such losses, claims, damages, expenses, liabilities or
actions arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the registration statement, in any
preliminary or amended preliminary prospectus or in the final prospectus (or in
the registration statement or prospectus as from time to time amended or
supplemented) or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary in
order to make the statements therein not misleading, but only insofar as any
such statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company in connection therewith by such
holder of Registrable Shares expressly for use therein; provided, however, that
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such holder's obligations hereunder shall be limited to an amount equal to the
proceeds received by such holder of Registrable Shares sold in such registration
Promptly after receipt of notice of the commencement of any action in
respect of which indemnity may be sought against such holder of Registrable
Shares, the Company will notify such holder of Registrable Shares in writing of
the commencement thereof (provided, that failure to so notify such holder shall
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not relieve such holder from any liability it may have hereunder), and such
holder of Registrable Shares shall, subject to the provisions hereinafter
stated, be entitled to assume the defense of such action (including the
employment of counsel,
who shall be counsel reasonably satisfactory to the Company) and the payment of
expenses insofar as such action shall relate to the alleged liability in respect
of which indemnity may be sought against such holder of Registrable Shares. The
Company and each such director, officer, underwriter or controlling Person shall
have the right to employ separate counsel in any such action and to participate
in the defense thereof, but the fees and expenses of such counsel subsequent to
any assumption of the defense by such holder of Registrable Shares shall not be
at the expense of such holder of Registrable Shares unless employment of such
counsel has been specifically authorized in writing by such holder of
Registrable Shares. Such holder of Registrable Shares shall not be liable to
indemnify any Person for any settlement of any such action effected without such
holder's written consent.
In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which the Company exercising
its rights under this Article II makes a claim for indemnification pursuant to
this Section 2.6, but it is judicially determined (by the entry of a final
judgment or decree by a court of competent jurisdiction and the expiration of
time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding that this
Section 2.6 provides for indemnification, in such case, then, the Company and
such holder will contribute to the aggregate losses, claims, damages or
liabilities to which they may be subject (after contribution from others) in
such proportion as is appropriate to reflect the relative fault of the Company
on the one hand and of the holder of Registrable Shares 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 on the one hand and of the
holder of Registrable Shares on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact relates to
information supplied by the Company on the one hand or by the holder of
Registrable Shares on the other, and each party's relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission; provided, however, that, in any such case, (A) no such holder will be
-------- -------
required to contribute any amount in excess of the public offering price of all
such Registrable Shares offered by it pursuant to such registration statement;
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
2.7 Exchange Act Registration. If the Company at any time shall list any
-------------------------
class of equity securities of the type which may be issued upon the conversion
of the Preferred Stock on any national securities exchange and shall register
such class of equity securities under the Exchange Act, the Company will, at its
expense, simultaneously list on such exchange and maintain such listing of, the
Common Stock. If the Company becomes subject to the reporting requirements of
either Section 13 or Section 15(d) of the Exchange Act, the Company will use its
best efforts to timely file with the Commission such information as the
Commission may require under either of said Sections; and in such event, the
Company shall use its best efforts to take all action as may be required as a
condition to the availability of Rule 144 or Rule 144A under the Securities Act
(or any successor exemptive rule hereinafter in effect) with respect to such
Common Stock. The Company shall furnish to any holder of Registrable Shares
forthwith upon request (i) a written statement by the Company as to its
compliance with the reporting requirements of Rule 144, (ii) a copy of the most
recent annual or quarterly report of the Company as filed with the Commission,
and (iii) such other reports and documents as a holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a holder to
sell any such Registrable Securities without registration. After the occurrence
of the Initial Public Offering, the Company agrees to use its best efforts to
facilitate and expedite transfers of the Shares pursuant to Rule 144 under the
Securities Act, which efforts shall include timely notice to its transfer agent
to expedite such transfers of Shares.
2.8 Damages. The Company recognizes and agrees that the holders of
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Registrable Shares will not have an adequate remedy if the Company fails to
comply with this Article II and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by any holder of Registrable Shares or any other
Person entitled to the benefits of this Article II requiring specific
performance of any and all provisions hereof or enjoining the Company from
continuing to commit any such breach of this Article II.
2.9 Further Obligations of the Company. Whenever under the preceding
----------------------------------
Sections of this Article II, the Company is required hereunder to register
Registrable Shares, it agrees that it shall also do the following:
(a) Furnish to each selling holder such copies of each preliminary and
final prospectus and such other documents as said holder may reasonably request
to facilitate the public offering of its Registrable Shares;
(b) Use its best efforts to register or qualify the Registrable Shares
covered by said registration statement under the applicable securities or "blue
sky" laws of such jurisdictions as any selling holder may reasonably request;
provided, however, that the Company shall not be obligated to qualify to do
business in any jurisdictions where it is not then so qualified or to take any
action which would subject it to the service of process in suits other than
those arising out of the offer or sale of the securities covered by the
registration statement in any jurisdiction where it is not then so subject;
(c) Furnish to each selling holder a signed counterpart, addressed to
the selling holders, of
(i) an opinion of counsel for the Company, dated the
effective date of the registration statement, and
(ii) "comfort" letters signed by the Company's independent
public accountants who have examined and reported on the Company's financial
statements included in the registration statement, to the extent permitted by
the standards of the American Institute of Certified Public Accountants,
covering substantially the same matters with respect to the registration
statement (and the prospectus included therein) and (in the case of the
accountants'
"comfort" letters) with respect to events subsequent to the date of the
financial statements, as are customarily covered in opinions of issuer's counsel
and in accountants' "comfort" letters delivered to the underwriters in
underwritten public offerings of securities;
(d) Permit each selling holder of Registrable Shares or his or its
counsel or other representatives to inspect and copy such corporate documents
and records as may reasonably be requested by them;
(e) Furnish to each selling holder of Registrable Shares a copy of all
documents filed with and all correspondence from or to the Commission in
connection with any such offering of securities;
(f) Cooperate to the extent reasonably requested to obtain all
necessary approvals from the NASD; and
(g) Otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission, and make available to its security holders,
as soon as reasonably practicable, an earning statement covering the period of
at least twelve months, but not more than eighteen months, beginning with the
first month after the effective date of the registration statement covering the
Initial Public Offering, which earning statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder.
Whenever under the preceding Sections of this Article II the holders
of Registrable Shares are registering such shares pursuant to any registration
statement, each such holder agrees to (i) timely provide to the Company, at its
request, such information and materials as it may reasonably request in order to
effect the registration of such Registrable Shares and (ii) convert all shares
of Preferred Stock included in any registration statement to shares of Common
Stock, such conversion to be effective at the closing of such offering pursuant
to such registration statement.
2.10 Expenses. In the case of all Piggy-Back Registrations effected under
--------
Section 2.1, two Demand Registrations effected under Section 2.2, and one
registration per 12-month period effected under Section 2.3, the Company shall
bear all reasonable costs and expenses of each such registration, including, but
not limited to, the Company's printing, legal and accounting fees and expenses,
Commission and NASD filing fees and "Blue Sky" fees and expenses, or the fees
and expenses of one counsel for the selling holders of Registrable Shares (such
fees and expenses of such counsel not to exceed $30,000) in connection with the
registration of the Registrable Shares; provided, however, that the Company
shall have no obligation to pay or otherwise bear any portion of the
underwriters' commissions or discounts attributable to the Registrable Shares
being offered and sold by the holders of the Registrable Shares. The Company
shall pay all expenses in connection with any registration initiated pursuant to
this Article II which is withdrawn, delayed or abandoned at the request of the
Company, except if such withdrawal, delay or abandonment is caused by the fraud,
material misstatement or omission of a material fact by a holder of Registrable
Shares to be included in such registration.
2.11 "Lock-Up" Agreement.
-------------------
(a) Initial Public Offering. Each holder of Registrable Shares
-----------------------
agrees, if so requested by the Company and an underwriter of Common Stock or
other securities of the Company, not to sell, transfer or dispose of any Common
Stock or other securities of the Company held by it during a period of up to 180
days following the effective date of a registration statement filed pursuant to
the Initial Public Offering, provided that:
(i) Such agreement shall apply only to the Initial Public
Offering; and
(ii) Any other security holders whose securities are included in
such registration statement and all executive officers and directors of the
Company shall also enter into similar agreements.
Such "lock-up" agreement shall be in writing and in form and substance
satisfactory to the Company and such underwriter. The Company may impose stop-
transfer instructions with respect to the shares subject to the foregoing
restrictions until the end of said "lock-up" period.
(b) Lock-Up after Initial Public Offering. Each holder of Registrable
-------------------------------------
Shares agrees, (1) if such holder of Registrable Shares is an "affiliate" of the
Company or otherwise holds beneficially or of record ten percent (10%) or more
of the outstanding equity securities of the Company, (2) if so requested by the
Company and an underwriter of Common Stock or other securities of the Company,
and (3) if all other "affiliates" and such 10% stockholders similarly situated
and any other security holders whose securities are included in such
registration statement are requested by the Company and such underwriter to
sign, and actually do sign, any "lock-up agreement" (as described herein), that
it will not sell, transfer or dispose of any Common Stock or other securities of
the Company held by it during a period of up to 90 days following the effective
date of a registration statement filed pursuant to the first underwritten public
offering after the Initial Public Offering.
Such "lock-up" agreement shall be in writing and in form and substance
satisfactory to the Company and such underwriter. The Company may impose stop-
transfer instructions with respect to the shares subject to the foregoing
restrictions until the end of said "lock-up" period.
2.12 Mergers, Etc. The Company shall not, directly or indirectly, enter
------------
into any merger, consolidation or reorganization in which the Company shall not
be the surviving corporation unless the proposed surviving corporation shall,
prior to such merger, consolidation or reorganization, agree in writing to
assume the obligations of the Company under Article II of this Agreement, and
for that purpose references hereunder to Registrable Shares shall be deemed to
be references to the securities which the holders of Registrable Shares would be
entitled to receive in exchange for Registrable Shares under any such merger,
consolidation or reorganization; provided, however, that the provisions of this
Section 2.12 shall not apply in the event of any merger, consolidation, or
reorganization in which the Company is not the surviving corporation if all
stockholders are entitled to receive, in exchange for their Registrable Shares
consideration
consisting solely of (i) cash, and/or (ii) securities of the acquiring
corporation which may be immediately sold to the public without registration
under the Securities Act.
2.13 Other Registration Rights. The Company represents and warrants to the
-------------------------
Investors that, except as set forth in the Series D Purchase Agreement or the
schedules thereto, there are no other registration rights outstanding with
respect to capital stock of the Company pursuant to any other agreement or
commitment by which the Company is bound. The Company shall not grant any
registration rights to any other Person which registration rights are senior to
the registration rights of the Investors, unless the Company shall first obtain
the written consent of the Investors holding more than 75% of the Series D
Shares.
2.14 S-8 Registration. Reasonably promptly after completion of the Initial
----------------
Public Offering, the Company shall use its reasonable best efforts to file with
the Commission a registration statement on Form S-8 (or its equivalent successor
form) to register all shares of Common Stock issuable pursuant to options
granted under the Company's stock option plans adopted by the Company's Board of
Directors and approved by the Company's stockholders.
ARTICLE III
RIGHT OF FIRST OFFER
3.1 Right of First Offer. Subject to Section 3.6, before the Company
--------------------
shall issue, sell or exchange, agree or obligate itself to issue, sell or
exchange, or reserve or set aside for issuance, sale or exchange, any (i) shares
of Common Stock, (ii) any other equity security of the Company, including
without limitation, shares of Preferred Stock, (iii) any debt security of the
Company which by its terms is convertible into or exchangeable for any equity
security of the Company, (iv) any security of the Company that is a combination
of debt and equity, or (v) any option, warrant or other right to subscribe for,
purchase or otherwise acquire any such equity security or any such debt security
of the Company, the Company shall, in each case, first offer to sell such
securities (the "Offered Securities") to the Investors, as follows: The Company
shall offer to sell to each Investor (a) that portion of the Offered Securities
as the number of Common Shares which such Investor then holds or has the right
to acquire bears to the sum of the total number of issued and outstanding Common
Shares plus the number of Common Shares reserved for issuance upon conversion of
outstanding shares of convertible securities of the Company (including the
Preferred Stock) and upon exercise of warrants, options and rights outstanding,
at a pace and on such other terms as shall have been specified by the Company in
writing delivered to the Investors (the "Offer"), which Offer by its terms shall
remain open and irrevocable for a period of thirty (30) days from the receipt of
the Offer.
3.2 Notice of Acceptance. Notice of each Investor's intention to accept,
--------------------
in whole or in part, any Offer made pursuant to Section 3.1 shall be evidenced
by a writing signed by such Investor and delivered to the Company prior to the
end of the 30-day period of such Offer, setting forth the number of shares or
securities such Investor elects to purchase (the "Notice of
Acceptance"). Failure of any Investor to deliver a Notice of Acceptance within
said 30 days will be deemed to be a rejection of the Offer.
3.3 Conditions to Acceptances and Purchase.
--------------------------------------
(a) Permitted Sales of Refused Securities. The Company shall have
-------------------------------------
ninety (90) days from the end of said 30-day period to sell any such Offered
Securities as to which a Notice of Acceptance has not been given (the "Refused
Securities") to any Person or Persons, but only for cash and otherwise in all
respects upon terms and conditions, including, without limitation, unit price
and interest rates, which are no more favorable, in the aggregate, to such other
Person or Persons or less favorable to the Company than those set forth in the
Offer.
(b) Reduction in Amount of Offered Securities. In the event the
-----------------------------------------
Company shall propose to sell less than all of the Refused Securities (any such
sale to be in the manner and on the terms specified in Section 3.3(a) above),
then each Investor may reduce the number of shares or other units of the Offered
Securities specified in its respective Notice of Acceptance to an amount which
shall be not less than the amount of the Offered Securities which the Investor
elected to purchase pursuant to Section 3.2 multiplied by a fraction, (i) the
numerator of which shall be the amount of Offered Securities which the Company
actually proposes to sell, and (ii) the denominator of which shall be the amount
of all Offered Securities. In the event that any Investor so elects to reduce
the number or amount of Offered Securities specified in its respective Notice of
Acceptance, the Company may not sell or otherwise dispose of more than the
reduced amount of the Offered Securities until such securities have again been
offered to the Investors in accordance with Section 3.1.
(c) Closing. Upon the closing, which shall include full payment to
-------
the Company, of the sale to such other Person or Persons of all or less than all
the Refused Securities, the Investors shall purchase from the Company, and the
Company shall sell to the Investors, the number of Offered Securities specified
in the Notices of Acceptance, as reduced pursuant to Section 3.3(b) if the
Investors have so elected, upon the terms and conditions specified in the Offer.
The purchase by the Investors of any Offered Securities is subject in all cases
to the preparation, execution and delivery by the Company and the Investors of a
purchase agreement relating to such Offered Securities reasonably satisfactory
in form and substance to the Investors and their respective counsel.
3.4 Further Sale. In each case, any Offered Securities not purchased by
------------
the Investors or other Person or Persons in accordance with Section 3.3 may not
be sold or otherwise disposed of until they are again offered to the Investors
under the procedures specified in Section 3.1, 3.2 and 3.3.
3.5 Termination and Waiver of Right of First Offer. The rights of the
----------------------------------------------
Investors under this Article III may only be waived upon the prior written
consent of the holders of more than 75% of the Series D Shares, and shall
terminate immediately prior to the effectiveness of the registration statement
with respect to the Initial Public Offering (except as provided in Section
3.1(b)), but expressly conditioned on the consummation of the Initial Public
Offering; provided
--------
that any waiver affecting the rights of a holder(s) of the Series D Shares in a
disproportionate manner as to the other holders of Series D Shares shall only be
effective upon the consent of such holder(s) so disadvantaged.
3.6 Exception. The rights of the Investors under this Article III shall
---------
not apply to:
(a) Common Stock issued as a stock dividend to holders of Common Stock
or Series D Shares or upon any subdivision or combination of shares of Common
Stock;
(b) Preferred Stock issued as a dividend to holders of Preferred Stock
or upon any subdivision or combination of shares of Preferred Stock;
(c) the issuance of any Conversion Shares;
(d) Common Stock issued upon exercise of options, warrants and rights
outstanding as of the date of this Agreement;
(e) options for Common Stock of the Company issued after the date
hereof to directors, officers, employees or consultants of the Company and any
Subsidiary pursuant to any qualified or non-qualified stock option plan,
employee stock ownership plan, employee benefit plan, stock plan, or such other
options, arrangements, agreements or plans intended principally as a means of
providing compensation or incentive compensation for employment or services,
approved by the Board of Directors of the Company;
(f) shares of capital stock issued in a merger or consolidation or as
consideration for the acquisition by the Company of any other corporation or
other business entity or of the assets and business thereof.
ARTICLE IV
DEFINITIONS AND ACCOUNTING TERMS
4.1 Certain Defined Terms. As used in this Agreement, the following terms
shall have the following meanings (such meanings to be equally applicable to
both the singular and plural forms of the terms defined):
"Agreement" means this Investor Rights Agreement as from time to time
amended and in effect between the parties, including all Exhibits hereto.
"Board" or "Board of Directors" means the board of directors of the
Company as constituted from time to time.
"Commission" shall mean the Securities and Exchange Commission or any
other federal agency then administering the Securities Act or Exchange Act.
"Common Stock" includes (a) the Company's Common Stock, (b) any other
capital stock of any class or classes (however designated) of the Company
authorized on or after the date hereof, the holders of which shall have the
right, without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating distributions after the payment of
dividends and distributions on any shares entitled to preference, and (c) any
other securities into which or for which any of the securities described in (a)
or (b) may be converted or exchanged pursuant to a plan of recapitalization,
reorganization, merger, sale of assets or otherwise.
"Common Shares" means shares of the Company's Common Stock.
"Company" means VerticalNet, Inc., a Pennsylvania corporation, and its
successors and assigns.
"Consolidated" and "consolidating" when used with reference to any
term defined herein mean that term as applied to the accounts of the Company and
its Subsidiaries consolidated in accordance with generally accepted accounting
principles consistently applied throughout reporting periods.
"Conversion Shares" means shares of Common Stock issuable upon
conversion of the Preferred Shares.
"Directors" means the members from time to time of the Board of
Directors.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute, and the rules and regulations of the Commission
(or of any other Federal agency then administering the Exchange Act) thereunder,
all as the same shall be in effect at the time.
"Initial Public Offering" means the first underwritten public offering
of Common Stock of the Company for the account of the Company and offered on a
"firm commitment" basis pursuant to an offering registered under the Securities
Act with the Commission on Form S-1, Form SB-1, Form SB-2 or their then
equivalents.
"Intellectual Property Rights" means any and all, whether domestic or
foreign, patents, patent applications, patent rights, trade secrets,
confidential business information, formulae, processes, laboratory notebooks,
algorithms, copyrights, mask works, claims of infringement against third
parties, licenses, permits, license rights, contract rights with employees,
consultants; and third parties, trademarks, trade names, service marks,
inventions and discoveries, and other such rights generally classified as
intangible property assets in accordance with generally accepted accounting
principles.
"Investors" means the Persons who are listed as Investors on the
signature pages hereof, or any Person to whom any of them shall sell or transfer
its shares, provided that such Person agrees to be bound by this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"Notice of Acceptance" shall have the meaning assigned to that term in
Section 3.2.
"Offer" shall have the meaning assigned to that term in Section 3.1.
"Offered Securities" shall have the meaning assigned to that term in
Section 3.1.
"Person" means an individual, corporation, partnership, joint venture,
trust, university, or unincorporated organization, or a government, or any
agency or political subdivision thereof.
"Preferred Shares" means the shares of preferred stock of the Company
now held or hereafter acquired by any Investor, other than shares of the
Company's Series A, Series B or Series C Preferred Stock.
"Qualified Public Offering" means (i) an underwritten public offering
on a firm commitment basis pursuant to an effective registration statement filed
pursuant to the Securities Act covering the offer and sale of Common Stock of
the Company in which the gross proceeds of the offering to the Company equal or
exceed $15,000,000, and in which the price per share of the Common Stock equals
or exceeds $3.60 (subject to appropriate adjustment for stock splits, stock
dividends, stock recapitalizations and the like).
"Refused Securities" shall have the meaning assigned to that term in
Section 3.3.
"Registrable Shares" shall mean and include (i) the Conversion Shares
and (ii) all shares of Common Stock issued or issuable upon the exercise or
conversion of any warrant, right or convertible security issued as a dividend or
distribution with respect to, or shares of Common Stock issued as a dividend to
the Preferred Shares, or in exchange or replacement for, Preferred Shares or
Conversion Shares; provided, however, that (i) shares of Common Stock which are
-------- -------
Registrable Shares shall cease to be Registrable Shares upon the consummation of
any sale of such shares pursuant to a registration statement or Rule 144 under
the Securities Act; (ii) Registrable Shares shall not include capital stock
acquired primarily as, or acquired pursuant to exercise of options or rights
granted to any employee, officer, director or consultant primarily as,
compensation for employment or services, and (iii) shares of Common Stock which
are eligible to be sold by the holder thereof under Rule 144(k) under the
Securities Act without volume limitation shall cease to be Registrable Shares,
unless the holder of such Shares owns 5% or more of the then outstanding capital
stock of the Company. Wherever reference is made in this Agreement to holders
of Registrable Shares or to a request or consent of holders of a certain
percentage of Registrable Shares, each holder of Preferred Shares shall be
deemed to hold the Conversion Shares issuable upon conversion of the Preferred
Shares, even if such conversion has not yet been effected.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission (or of
any other Federal agency then administering the Securities Act) thereunder, all
as the same shall be in effect at the time.
"Shares" means, collectively, the Preferred Shares and the Conversion
Shares.
"Subsidiary" or "Subsidiaries" means any Person of which the Company
and/or any of its other Subsidiaries (as herein defined) directly or indirectly
owns at the time at least fifty percent (50%) of the outstanding voting
securities.
4.2 Accounting Terms. All accounting terms not specifically defined
----------------
herein shall be construed in accordance with generally accepted accounting
principles consistently applied, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
ARTICLE V
MISCELLANEOUS
5.1 No Waiver; Cumulative Remedies. No failure or delay on the part of
------------------------------
any party to this Agreement in exercising any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise of
any such right, power or remedy preclude any other or further exercise thereof
or the exercise of any other right, power or remedy hereunder. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law.
5.2 Amendments, Waivers and Consents. Any provision in the Agreement to
--------------------------------
the contrary notwithstanding, and except as hereinafter provided, changes in,
termination or amendments of or additions to this Agreement may be made, and
compliance with any covenant or provision set forth herein may be omitted or
waived, if the Company (i) shall obtain consent thereto in writing from the
holder or holders of at least a majority of the Registrable Shares, (ii) shall
obtain consent thereto in writing from the holder or holders of more than 75% of
the Series D Shares and (iii) shall deliver copies of such consent in writing to
any Investors who did not execute such consent; provided that no consents shall
be effective to reduce the percentage of the Registrable Shares the consent of
the holders of which is required under this Section 5.2; provided that any
--------
changes, termination, amendments, additions, or waivers affecting the rights of
a holder(s) of the Series D Shares in a disproportionate manner as to the other
holders of Series D Shares shall only be effective upon the consent of such
holder(s) so disadvantaged. Any waiver or consent may be given subject to
satisfaction of conditions stated therein and any waiver or consent shall be
effective only in the specific instance and for the specific purpose for which
given.
5.3 Addresses for Notices. All notices, requests, demands and other
---------------------
communications provided for hereunder shall be in writing (including telegraphic
communication) and mailed, telegraphed or delivered to each applicable party at
the address set forth in the records of the
Company or at such other address as to which such party may inform the other
parties in writing in compliance with the terms of this Section.
If to an Investor: at such Investor's address set forth on Schedule 1
hereto, or at such other address as shall be designated by such Person in a
written notice to the other parties complying as to delivery with the terms of
this Section.
If to the Company: at 0 Xxxxxx Xxxxx Xxxxx, Xxxxx 000, Xxxxxxx, XX
00000, or at such other address as shall be designated by the Company in a
written notice to the other parties complying as to delivery with the terms of
this Section.
All such notices, requests, demands and other communications shall,
shall be deemed delivered: three days after mailed (which mailing must be
accomplished by certified mail, return receipt requested and postage prepaid);
when transmitted by successful facsimile transmission; one business day after
deposited with a guaranteed overnight courier service (charged to sender); or
when delivered in hand or dispatched by telegraph.
5.4 Binding Effect; Assignment. This Agreement shall be binding upon and
--------------------------
inure to the benefit of the Company and the Series D Investors and their
respective heirs, successors and permitted assigns except that, with regard to
Section 1.1(o), Xxxx Ventures, Inc. shall not have the right to assign its
interest except as set forth therein, and, except that the Company shall not
have the right to delegate its obligations hereunder or to assign its rights
hereunder or any interest herein without the prior written consent of the
holders of at least a majority of the Shares.
5.5 Survival of Representations and Warranties. All representations and
------------------------------------------
warranties made in this Agreement, the Shares or any other instrument or
document delivered in connection herewith or therewith, shall survive the
execution and delivery hereof or thereof.
5.6 Other Agreement. This Agreement and the Series D Stock Purchase
---------------
Agreement, the Company's Second Amended and Restated Articles of Incorporation,
and the other agreements executed and delivered herewith and therewith (the
"Concurrent Agreements") constitute the entire agreement between the parties and
supersedes any prior understandings or agreements concerning the subject matter
hereof.
5.7 Severability. The provisions of this Agreement and the Concurrent
------------
Agreements are severable and, in the event that any court of competent
jurisdiction one or more of the provisions or part of a provision contained in
this Agreement or in any Concurrent Agreement, shall, for any reason, be held to
be invalid, illegal or unenforceable in any respect, such invalidity, illegality
or unenforceability shall not affect any other provision or part of a provision
of this Agreement, but this Agreement shall be reformed and construed as if such
invalid or illegal or unenforceable provision, or part of a provision, had never
been contained herein, and such provisions or part reformed so that it would be
valid, legal and enforceable to the maximum extent possible.
5.8 Confidentiality. Each Investor agrees that it will keep confidential
---------------
and will not disclose or divulge any confidential, proprietary, secret or non-
public information which such Investor may obtain from the Company pursuant to
financial statements, reports and other materials submitted by the Company to
such Investor pursuant to this Agreement, or pursuant to visitation or
inspection rights granted hereunder, unless such information is known, or until
such information becomes known, to the public; provided, however, that a
Investor may disclose such information (i) on a confidential basis to its
attorneys, accountants, consultants and other professionals to the extent
necessary to obtain their services in connection with its investment in the
Company, (ii) to any prospective purchaser of any Preferred Shares or Conversion
Shares from such Investor as long as such prospective purchaser agrees in
writing to be bound by the provisions of this Section 5.8, (iii) on a
confidential basis to any affiliate or partner of such Investor and (iv) as
required by applicable law.
5.9 Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with the internal laws of the Commonwealth of Pennsylvania without
giving effect to choice of laws provisions.
5.10 Headings. Article, section and subsection headings in this Agreement
--------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
5.11 Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
5.12 Further Assurances. From and after the date of this Agreement, upon
------------------
the request of any Investor or the Company, the Company and the Investor shall
execute and deliver such instruments, documents and other writings as may be
reasonably necessary or desirable to confirm and carry out and to effectuate
fully the intent and purposes of this Agreement.
5.13 Attorney's Fees. In the event that any dispute among the parties to
---------------
this Agreement should result in a legal proceeding, the prevailing party shall
be entitled to recover from the other party(ies) to such dispute, all fees,
costs and expenses of enforcing any right under or with respect to this
Agreement, including without limitation, such fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
5.14 Subsequent Closings. Any shares of Series D Shares sold pursuant to
-------------------
Section 2.3 of the Series D Stock Purchase Agreement shall be deemed to be
Series D Shares hereunder, and purchasers thereof shall be deemed to be
"Investors" for all purposes under this Agreement. The new purchasers shall
become parties to this Agreement by signing a counterpart signature page hereto.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first above written.
THE COMPANY:
VERTICALNET, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxx
--------------------------------------
Title: Senior V.P. / Founder
--------------------------------------
INVESTORS:
XXXX VENTURES, INC.
By: /s/ Xxxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxxx X .Xxxxx
--------------------------------------
Title: Vice President
--------------------------------------
INTERNET CAPITAL GROUP, LLC
By: /s/ Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxxxxx
--------------------------------------
Title: Managing Director
--------------------------------------
ENERTECH CAPITAL PARTNERS, L. P.
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxx
--------------------------------------
Title: Managing Director
--------------------------------------
(INVESTORS CONT.)
XXXXXXXX PARTNERS, L. P.
By: Xxxxxxxx Partners, LLC,
General Partner
By: /s/ Xxxxxxx Xxxxx
--------------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------------
Title: Vice President
--------------------------------------
XXXXXXXX FOREIGN PARTNERS, L. P.
By: Xxxxxxxx Partners, LLC,
General Partner
By: /s/ Xxxxxxx Xxxxx
--------------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------------
Title: Vice President
--------------------------------------
(INVESTORS CONT.)
XXXXXXX X. X.
By: /s/ C. Xxxxxx Xxxxxx
--------------------------------------
Name: C. Xxxxxx Xxxxxx
--------------------------------------
Title: Sr. V.P., Mercantile Trust Agent
--------------------------------------
SMART TECHNOLOGY VENTURES I, LLC
By: /s/ Xxxxx Xxxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxxx
--------------------------------------
Title: CEO
--------------------------------------
(INVESTORS CONT.)
XXXXXXX EQUITIES
By: /s/ Xxxxx Xxxxxxx
--------------------------------------
Name: Xxxxx Xxxxxxx
--------------------------------------
Title: General Partner
--------------------------------------
SOUTH FERRY BUILDING COMPANY
By: /s/ Xxxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxxx Xxxxxxx
--------------------------------------
Title: General Partner
--------------------------------------
XXXXX XXXXXXX
/s/ Xxxxx Xxxxxxx
--------------------------------------------
Xxxxx Xxxxxxx
CHANA SASHA FOUNDATION
By: /s/ Xxxxxx Xxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxx
--------------------------------------
Title: President
--------------------------------------
XXX XXXXXXX
/s/ Xxx Xxxxxxx
--------------------------------------------
Xxx Xxxxxxx
(INVESTORS CONT.)
XXXXXX BROTHERS VENTURE CAPTIAL PARTNERS I, L.P.
By: LBI Group Inc., as General Partner
By: /s/ Xxxxxx Xxxxxxxxxx
--------------------------------------
Name: Xxxxxx Xxxxxxxxxx
--------------------------------------
Title: Vice President
--------------------------------------
SCHEDULE 1
REVISED SCHEDULE OF INVESTORS
Name and Address
----------------
Xxxx Ventures, Inc.
0000 Xxxx 00/xx/ Xxxxxx Xxxxx
Xxxxxxx, Xxxxxx 00000
Internet Capital Group, LLC
000 Xxxxx Xxxx Xxxxx
Xxxxx, Xxxxxxxxxxxx 00000
EnerTech Capital Partners, L. P.
000 Xxxxx Xxxx Xxxxx, Xxxxx 000
Xxxxx, Xxxxxxxxxxxx 00000
Xxxxxxxx Partners, L. P.
c/o Wheatley Partners, LLC
00 Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, Xxx Xxxx 00000
Wheatley Foreign Partners, L .P.
c/o Wheatley Partners, LLC
00 Xxxxxx Xxxx Xxxx, Xxxxx 000
Great Neck, New York 11021
Xxxxxxx X. X.
c/o Mercantile Trust
0 Xxxxxxxxxx Xxxxxx
Xxxxxxx & Xxxxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Smart Technology Ventures I, LLC
0000 Xxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Xxxxxxx Equities
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
South Ferry Building Company
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxx Xxxxxxx
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Chana Sasha Foundation
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxxxxx
0 Xxxxx Xxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxxxxx Brothers Venture Capital
Partners I, L.P.
Three World Financial Center
Xxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000