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Exhibit 10.23.2
AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
THIS AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (this
"Agreement") made as of this 4th day of August 1999, by and among MEDSCAPE,
INC., a Delaware corporation (the "Corporation"), having its principal office at
000 X. 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000-0000, certain existing stockholders
of the Corporation listed on Schedule I attached hereto under "Existing
Stockholders," each having an address as indicated thereon (the "Existing
Stockholders"), the persons listed on Schedule I under "Investor Stockholders,"
each having an address as indicated on Schedule I (collectively, the "Investor
Stockholders"), and any subsequent stockholder of the Corporation who becomes a
party to this Agreement pursuant to the terms and conditions hereof (the
"Additional Stockholders", and collectively, with the Existing Stockholders and
the Investor Stockholders, the "Stockholders"). This Agreement amends and
restates in its entirety the Stockholders Agreement, dated as of October 31,
1997, as amended on February 19, 1998, October 23, 1998, March 5, 1999 and May
24, 1999, by and among the Corporation and the Existing Stockholders (the
"Antecedent Agreement").
BACKGROUND
The Corporation is a corporation duly organized and existing
under the laws of the State of Delaware with a total authorized capitalization
of 62,795,011 shares of which (a) 788,200 shares are designated as Series A
Preferred Stock, par value $.01 per share, of which 788,200 shares are issued
and outstanding as of this date; (b) 1,478,359 shares are designated as Series C
Preferred Stock, par value $.01 per share, of which 1,478,359 shares are issued
and outstanding as of this date, (c) 932,401 shares are designated as Series C-1
Preferred Stock, par value $.01 per share, of which 932,401 shares are issued
and outstanding as of this date, (d) 1,757,683 shares are designated as Series D
Preferred Stock, par value $.01 per share, of which 1,757,683 shares are issued
and outstanding as of this date, (e) 400,000 shares are designated as Series E
Preferred Stock, par value $.01 per share, of which 400,000 shares shall be
issued effective upon the Closing, (f) 35,897,208 shares are designated as Class
A Common Stock, par value $.01 per share, of which 9,476,208 shares are issued
and outstanding as of this date, 1,970,500 shares are duly reserved for issuance
in connection with the conversion of Series A Preferred Stock, 3,962,963 shares
are duly reserved for issuance in connection with the conversion of Series C
Preferred Stock, 2,331,002.5 shares are duly reserved for issuance in connection
with the conversion of the Series C-1 Preferred Stock, 4,394,207.5 shares are
duly reserved for issuance in connection with conversion of Series D Preferred
Stock and 1,000,000 shares are duly reserved for issuance in connection with
conversion of Series E Preferred Stock and (g) 21,541,160 shares are
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designated as Class B Common Stock, par value $.01 per share, of which (i)
13,871,152.5 shares are issued and outstanding as of this date and (ii)
6,175,377.5 shares are duly reserved for issuance to officers, directors and
employees of the Corporation pursuant to the Corporation's stock option plan or
other arrangements approved by the Corporation's Board of Directors. This
Agreement is being entered into in connection with the Closing to amend and
restate the Antecedent Agreement in accordance with Section 12 thereof.
Each of the Stockholders owns that number of shares of
Preferred Stock and Common Stock (together with any other shares of capital
stock of the Corporation now owned or hereafter acquired by the Stockholders and
their successors or assigns from any Person by any means, including without
limitation, any acquisition by gift, purchase, dividend, conversion, stock
split, recapitalization or otherwise, collectively, the "Shares") set forth
opposite the name of each such Stockholder on Schedule II attached hereto. It is
deemed to be in the best interest of the Corporation and the Stockholders that
provision be made for the continuity and stability of the business and policies
of the Corporation and, to that end, the Corporation and the Stockholders hereby
set forth their agreement with respect to the Shares.
NOW, THEREFORE, in consideration of the premises and of the
mutual consents and obligations hereinafter set forth, the parties hereto hereby
further agree as follows:
SECTION 1. Definitions. All capitalized terms used in this
Agreement shall have the meanings assigned to them elsewhere in this Agreement
or as specified below:
"Affiliate" of any Person shall mean any Person directly or
indirectly controlling, controlled by or under common control with such Person.
"Closing" shall mean the closing of the transactions
contemplated under the Purchase Agreement which shall take place effective as of
the first date set forth above.
"Commission" shall mean the United States Securities and
Exchange Commission.
"Common Directors" shall have the meaning set forth in Section
2(b)(vii) hereof.
"Common Stock" shall mean (a) the Corporation's Class A Common
Stock, par value $.01 per share, as authorized on the date of this Agreement,
(b) the Corporation's Class B Common Stock, par value $.01 per share, as
authorized on the date of this Agreement, (c) any other capital stock of any
class or classes (however
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designated) of the Corporation, 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 under the Restated Certificate of Incorporation (as the
same may be further amended from time to time after the Closing), and (d) any
other securities into which or for which any of the securities described in
clause (a), (b) or (c) of this definition may be converted or exchanged pursuant
to a plan of recapitalization, reorganization, merger, sale of assets or
otherwise.
"Corporation Notice" shall have the meaning set forth in
Section 4(b) hereof.
"Designated Offering" shall mean a firmly underwritten public
offering registered under the Securities Act with an aggregate minimum gross
offering price to the public of $20,000,000 with a per share price equal to no
less than $7.03 per share (as adjusted for any stock split, stock dividend or
recapitalization after August 4, 1999).
"Equity Securities" shall have the meaning set forth in
Section 3(a) hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, and the rules and regulations of the Commission promulgated
thereunder, all as the same shall be in effect at the time.
"Exchange Act Registration Statement" shall mean a
registration statement filed pursuant to the Exchange Act, relating to any class
of equity securities of the Corporation.
"Excluded Form" shall mean a registration statement filed
pursuant to the Securities Act on Form X-0, X-0 or any similar or successor
forms.
"Excluded Securities" shall mean those securities described in
Section 3(g) hereof.
"Existing Registrable Securities" shall mean: (a) all the
shares of Common Stock of the Corporation, other than Investor Registrable
Securities, that are now owned or may hereafter be acquired by any Holder or its
permitted successors and assigns, and any other shares of Common Stock acquired
by such Holder pursuant to Sections 3 or 4 of this Agreement; and (b) any shares
of Common Stock of the Corporation issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
all such shares of Common Stock described in clause (a) of this definition;
excluding in all cases, however, (i) any Existing Registrable Securities sold
pursuant to registration under the Securities Act or (ii) any Existing
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Registrable Securities sold, subsequent to the Corporation's initial public
offering of securities registered under the Securities Act, pursuant to Rule 144
(or similar or successor rule) promulgated under the Securities Act.
"Form S-3" shall mean the form under the Securities Act as is
in effect on the date hereof or any successor registration form under the
Securities Act subsequently adopted by the Commission which permit inclusion or
incorporation of substantial information by reference to other documents filed
by the Corporation with the Commission.
"Holder" shall mean any holder of Common Stock owning of
record Registrable Securities that have not been sold to the public and, for
purposes of this Agreement, a record holder of the Series C Stock, Series D
Preferred Stock or Series E Preferred Stock convertible into such Registrable
Securities shall be deemed to be the Holder of such Registrable Securities;
provided, however, that the Corporation shall in no event be obligated to
register the Series C Stock, Series D Preferred Stock or Series E Preferred
Stock, and that Holders of Registrable Securities shall not be required to
convert their shares of Series C Stock, Series D Preferred Stock or Series E
Preferred Stock into Common Stock in order to exercise the registration rights
granted under Section 6 hereof, until immediately before the closing of the
offering to which the registration relates.
"Initiating Holders" shall have the meaning set forth in
Section 6(d)(ii) hereof.
"Investor Notice" shall have the meaning set forth in Section
4(c) hereof.
"Investor Registrable Securities" shall mean: (a) all the
shares of Common Stock of the Corporation issued or issuable upon the conversion
of the shares of Series C Stock, Series D Preferred Stock or Series E Preferred
Stock that are now owned or may hereafter be acquired by any Holder or its
permitted successors and assigns, all the shares of Common Stock issued pursuant
to the Purchase Agreement and any other shares of Common Stock acquired by such
Holder pursuant to Sections 3 or 4 of this Agreement; and (b) any shares of
Common Stock of the Corporation issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of
all such shares of Common Stock described in clause (a) of this definition;
excluding in all cases, however, (i) any Investor Registrable Securities sold
pursuant to registration under the Securities Act or (ii) any Investor
Registrable Securities sold, subsequent to the Corporation's initial public
offering of securities registered under the Securities Act, pursuant to Rule 144
(or similar or successor rule) promulgated under the Securities Act.
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"Investor Registrable Securities then outstanding" shall mean
the number of shares of Investor Registrable Securities that are then issued and
outstanding or are then issuable pursuant to the exercise or conversion of then
outstanding and then exercisable options, warrants or convertible securities.
"Limited Sales" shall mean, for the period of one year after
the date hereof, (a) aggregate sales of no more than 5% of the outstanding
Series A Preferred Stock and (b) aggregate sales of no more than 5% of the
outstanding Series C Stock.
"MTV Director" shall have the meaning set forth in Section
2(b)(i) hereof.
"Notice of Acceptance" shall have the meaning set forth in
Section 3(c) hereof.
"Offer" shall have the meaning set forth in Section 3(a)
hereof.
"Permitted Transfer" and "Permitted Transferee" shall have the
meanings set forth in Section 4(d) hereof.
"Person" shall mean and include an individual, a corporation,
a partnership, a trust, an unincorporated organization and a government or any
department, agency or political subdivision thereof.
"Preferred Stock" shall mean (a) the Corporation's Series A
Preferred Stock, par value $.01 per share, as authorized on the date of this
Agreement, (b) the Corporation's Series C Preferred Stock, par value $.01 per
share, as authorized on the date of this Agreement, (c) the Corporation's Series
C-1 Preferred Stock, par value $.01 per share, as authorized on the date of this
Agreement, (d) the Corporation's Series D Preferred Stock, par value $.01 per
share, as authorized on the date of this Agreement, (e) Series E Preferred
Stock, par value $.01 per share, as authorized on the date of this Agreement,
and (f) any other securities into which or for which any of the securities
described in clause (a), (b), (c), (d) or (e) of this definition may be
converted or exchanged pursuant to a plan of recapitalization, reorganization,
merger, sale of assets or otherwise.
"Purchase Agreement" shall mean the Stock Purchase Agreement,
dated as of July 7, 1999, between the Corporation and National Data Corporation,
as the same may be amended from time to time.
"registered" and "registration" shall refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement.
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"Registrable Securities" shall mean, collectively, Existing
Registrable Securities and Investor Registrable Securities.
"Registration Expenses" shall have the meaning set forth in
Section 6(d) hereof.
"Remaining Securities" shall have the meaning set forth in
Section 3(d) hereof.
"Restated Certificate of Incorporation" shall mean the
Corporation's Restated and Amended Certificate of Incorporation, filed in the
Office of the Secretary of State of Delaware on July 30, 1999, a copy of which
is attached hereto as Exhibit A.
"Sale Shares" shall have the meaning set forth in Section 4(a)
hereof.
"Section 4 Shares" shall mean any shares of Common Stock or
Preferred Stock issued to the Section 4 Stockholders.
"Section 4 Shares Transfer" shall have the meaning set forth
in Section 4(a) hereof.
"Section 4 Stockholders" shall mean Xxxxxxx X. Xxxxxxx,
Excelsior Fund 1, Xxxxx Xxxxxxxx, Xxxxxx Xxxxx and Xxxx Xxxxxx.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated thereunder,
all as the same shall be in effect at the time.
"Series C Director" shall have the meaning set forth in
Section 2(b)(ii) hereof.
"Series D Director" shall have the meaning set forth in
Section 2(b)(iii) hereof.
"Series A Preferred Stock" shall mean the Corporation's
authorized and outstanding shares of Series A Convertible Preferred Stock, par
value $.01 per share, having the designations, rights, preferences and
privileges and qualifications, limitations and restrictions set forth in the
Restated Certificate of Incorporation, of which 788,200 shares are outstanding
as of the date hereof.
"Series C Preferred Stock" shall mean the Corporation's
authorized and outstanding shares of Series C Convertible Preferred Stock, par
value $.01 per share, having the designations, rights, preferences and
privileges and qualifications, limitations and restrictions set forth in the
Restated Certificate of Incorporation.
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"Series C-1 Preferred Stock" shall mean the Corporation's
authorized and outstanding shares of Series C-1 Convertible Preferred Stock, par
value $.01 per share, having the designations, rights, preferences and
privileges and qualifications, limitations and restrictions set forth in the
Restated Certificate of Incorporation.
"Series C Stock" shall mean the Series C Preferred Stock and
the Series C-1 Preferred Stock taken together.
"Series D Preferred Stock" shall mean the Corporation's
authorized and outstanding shares of Series D Convertible Preferred Stock, par
value $.01 per share, having the designations, preferences and privileges and
qualifications, limitations and restrictions set forth in the Restated
Certificate of Incorporation.
"Series E Preferred Stock" shall mean the Corporation's
authorized and outstanding shares of Series E Convertible Preferred Stock, par
value $.01 per share, having the designations, preferences and privileges and
qualifications, limitations and restrictions set forth in the Restated
Certificate of Incorporation.
"transfer" shall mean any sale, assignment, transfer,
disposition, donation, pledge, bequest, hypothecation, gift, conveyance,
encumbrance or any other disposition or transfer of a Share or any interest or
rights (legal or equitable) therein by any means whatsoever, whether direct or
indirect, absolute or conditional, voluntary or involuntary, by operation of law
(including without limitation, by operation of the laws of descent and
distribution) or otherwise.
"Transferring Stockholder" shall have the meaning set forth in
Section 4(a) hereof.
"TS Notice" shall have the meaning set forth in Section 4(a)
hereof.
"Violation" shall have the meaning set forth in Section
6(j)(i) hereof.
SECTION 2. Election of Directors.
(a) The Stockholders shall take all steps necessary, acting in
their respective capacities as stockholders, directors or officers of the
Corporation, as the case may be, to perform their obligations and agreements
hereunder, to cause the Corporation to perform its obligations and agreements
hereunder and under the Purchase Agreement and to implement and cause the
Corporation to implement the provisions of this Agreement and the Purchase
Agreement, including without limitation, the calling and holding of
stockholders' meetings for the election of directors or the election of
directors by consent in writing.
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(b) The Board of Directors of the Corporation shall consist of
a maximum of nine (9) directors. At each annual meeting of the stockholders of
the Corporation, and at each special meeting of the stockholders of the
Corporation called for the purpose of electing directors of the Corporation, and
at any time at which stockholders of the Corporation shall have the right to, or
shall, vote for or consent in writing to the election of directors of the
Corporation, then, and in each such event, the Stockholders agree that they
shall vote all Shares owned by them for the election of the Board of Directors
in the following manner:
(i) Media Technology Ventures, L.P. and Media
Technology Ventures Entrepreneurs Fund, L.P (collectively,
"MTV") shall be entitled, but not obligated, so long as MTV is
the holder of record of at least five percent (5%) of a class
of voting equity securities of the Corporation then
outstanding, to elect one (1) director (the "MTV Director");
(ii) the holders of record of shares of Series C
Stock, excluding MTV, voting together as a separate class,
shall be entitled, but not obligated, so long as such holders
are the holders of record, in the aggregate, of at least five
percent (5%) of the outstanding shares of Series C Stock
constituting at least 200,000 shares, to elect one (1)
director, who shall be nominated by the holders of record of a
majority of the shares of Series C Stock, excluding MTV, then
outstanding (the "Series C Director");
(iii) the holders of record of shares of Series D
Preferred Stock, voting together as a separate class, shall be
entitled, but not obligated, to elect one (1) director, who
shall be nominated by the holders of record of a majority of
the shares of Series D Preferred Stock then outstanding (the
"Series D Director");
(iv) TBG Information Investors, LLC ("TBG") shall be
entitled, but not obligated, so long as TBG is the holder of
record of at least five percent (5%) of a class of voting
equity securities of the Corporation then outstanding, to
elect one (1) director (the "TBG Director");
(v) upon nomination by the Board of Directors and for
so long as he is employed as Chief Executive Officer of the
Corporation, the Stockholders shall elect Xxxx X. Xxxxxx as a
director of the Corporation;
(vi) upon nomination by the Board of Directors and
for so long as he is employed as Executive Vice President of
the Corporation, the Stockholders shall elect Xxxxxxx X.
Xxxxxxx, M.D., Ph.D., as a director of the Corporation; and
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(vii) the holders of record of shares of Class A
Common Stock and Series A Preferred Stock, voting together as
a single class, shall elect three (3) directors, two (2) of
whom shall be nominated by the holders of record of a majority
of the shares of Class A Common Stock and Series A Preferred
Stock then outstanding, and one (1) of whom shall be nominated
by a majority of the two directors so nominated pursuant this
Section 2(b)(vii) and the MTV Director (collectively, the
"Common Directors"); provided, however, that (1) Xx. Xxxxx
Xxxxxxxx or his designee shall hold and continue to hold one
(1) of the Common Directors seats provided for in this Section
2(b)(vii) so long as Mr. Frishauf or his nominee is the holder
of record of, in the aggregate, at least five percent (5%) of
a class of voting equity securities of the Corporation and (2)
Mr. Xxxx Xxxxxxxx or his designee shall hold and continue to
hold one (1) of the Common Directors seats provided for in
this Section 2(b)(vii) so long as The Excelsior Fund I, APA
Excelsior IV, L.P., APA Excelsior IV Offshore, L.P. or The
Patricof Private Investment Club, or their nominees, are the
holders of record of, in the aggregate, at least five percent
(5%) of a class of voting equity securities of the
Corporation.
(c) In the event that either MTV or the holders of Series C
Stock is no longer entitled to elect to the Board of Directors the MTV Director
or the Series C Director as provided in Section 2(b)(i) and 2(b)(ii) above,
respectively, then such director(s) shall be nominated by a majority vote of the
Board of Directors.
(d) At any such meeting called for the purpose of electing
directors, the presence in person or by proxy of (i) MTV or its authorized
representative, in the case of the election of the MTV Director, (ii) TBG or its
authorized representative, in the case of the election of the TBG Director,
(iii) the holders of record of a majority of the shares of Series C Stock
(excluding MTV) then outstanding, in the case of the election of the Series C
Director, (iv) the holders of record of a majority of the shares of the Series D
Preferred Stock outstanding in the case of the Series D Director, and (v) the
holders of record of a majority of the shares of the Class A Common Stock and
the Series A Preferred Stock then outstanding, in the case of the election of
the Common Directors, shall constitute a quorum for the election of directors to
be elected by such holders. The Stockholders agree to take any actions deemed
advisable by the Board to amend the Bylaws of the Corporation to reflect the
quorum conditions reflected in this Section 2(e).
(e) A vacancy in any directorship entitled to be elected by
MTV (including without limitation, a vacancy resulting from the decision during
an earlier election by MTV not to fill the directorship to be held by the MTV
Director) shall be filled only by vote or written consent of MTV, in the manner
set forth herein. A vacancy in any directorship entitled to be elected by TBG
(including without limitation, a vacancy resulting from the decision during an
earlier election by TBG not to fill the directorship to
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be held by the MTV Director) shall be filled only by vote or written consent of
MTV, in the manner set forth herein. A vacancy in any directorship entitled to
be elected by TBG (including without limitation, a vacancy resulting from the
decision during an earlier election by TBG not to fill the directorship to be
held by the TBG Director) shall be filled only by vote or written consent of
TBG, in the manner set forth herein. A vacancy in any directorship entitled to
be elected by the holders of record of shares of Series C Stock (including
without limitation, a vacancy resulting from the decision during an earlier
election by the holders of the Series C Stock not to fill the directorship to be
held by the Series C Director) shall be filled only by vote or written consent
of the holders of record of shares of Series C Stock (excluding MTV), in the
manner set forth herein. A vacancy in any directorship elected by the holders of
record of shares of Class A Common Stock and Series A Preferred Stock shall be
filled only by vote or written consent of the holders of record of shares of
Class A Common Stock and Series A Preferred Stock, in the manner set forth
herein. A vacancy in any directorship elected by the holders of record of shares
of Series D Preferred Stock shall be filled only by vote or written consent of
the holders of record of Series D Preferred Stock.
(f) Except as may otherwise be provided by law, each MTV
Director who shall have been elected as provided in this Section 2 may be
removed during his term of office, whether with or without cause, only by MTV.
Except as may otherwise be provided by law, each TBG Director who shall have
been elected as provided in this Section 2 may be removed during his term of
office, whether with or without cause, only by TBG. Except as may otherwise be
provided by law, each Series C Director who shall have been elected as provided
in this Section 2 may be removed during his term of office, whether with or
without cause, only by the holders of record of a majority of the shares of
Series C Stock (excluding MTV) then outstanding. Except as may otherwise be
provided by law, each Common Director who shall have been elected as provided in
this Section 2 may be removed during his term of office, whether with or without
cause, only by the holders of record of a majority of the shares of Class A
Common Stock and Series A Preferred Stock then outstanding. Except as may
otherwise be provided by law, each Series D Director who shall have been elected
in this Section 2 may be removed during his term of office, whether with or
without cause, only by the holders of record of a majority of the Series D
Preferred Stock then outstanding.
(g) Each MTV Director, Series C Director, Series D Director
and Common Director shall be entitled to one (1) vote on all matters which
directors are entitled to vote on. In addition to the rights granted to all
directors as contained in the Corporation's By-laws, the MTV Director, the
Series C Director and the Series D Director shall each have the right to call
meetings of the Board of Directors and management of the Corporation, upon no
less than five (5) days' prior written notice; provided, that any such meetings
are called no more frequently than once per fiscal quarter.
(h) Highland Capital Partners ("Highland") shall be entitled
to have one observer (the "Highland Observer") selected by Highland present at
all meetings of the Board and at all meetings of any committee of the Board and
such observer shall be
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notified of any such meetings, including such meetings' time and place, in the
same manner as the directors of the Corporation and the members of the
respective committee of the Board, as applicable. The Highland Observer shall
have the same access to information concerning the business and operations of
the Corporation and at the same time as the directors of the Corporation, and
shall be entitled to participate in discussions and consult with, and make
proposals and furnish advice to, the Board and the committees of the Board, but
shall not have the right to vote.
(i) Unless otherwise agreed by the respective Series D
Director or the Highland Observer, the Corporation shall pay all reasonable
travel expenses and other out-of-pocket reasonable disbursements incurred by the
Series D Director and the Highland Observer, as the case may be, in connection
with their attending meetings of the Board or of any committee thereof.
(j) The rights and obligations of the Corporation and the
Stockholders set forth in this Section 2 shall terminate upon the consummation
of a Designated Offering.
SECTION 3. Right of First Offer. So long as a Stockholder is a
holder of at least 50,000 shares of Common Stock (as presently constituted and
subject to subsequent adjustments for stock splits, stock dividends, reverse
stock splits, and the like), or at least 50,000 shares Series C Stock, Series D
Preferred Stock or Series E Preferred Stock convertible into shares of Common
Stock, or any combination thereof (as presently constituted and subject to
subsequent adjustments for stock splits, stock dividends, reverse stock splits,
and the like), such Stockholder shall be entitled to the following right of
first offer:
(a) Except in the case of Excluded Securities, the Corporation
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 Common Stock,
(ii) any other equity security of the Corporation, (iii) any debt security of
the Corporation which by its terms is convertible into or exchangeable for, with
or without consideration, any equity security of the Corporation, or (iv) any
option, warrant or other right to subscribe for, purchase or otherwise acquire
any equity security of the Corporation (collectively, the "Equity Securities"),
unless in each case the Corporation shall have first offered to sell to such
Stockholder the Equity Securities, at a price and on such other terms as shall
have been specified by the Corporation in writing delivered to the Stockholder
(the "Offer"), which Offer by its terms shall remain open and irrevocable for a
period of thirty (30) days from the date the Offer is received by such
Stockholder.
(b) Each such Stockholder shall have the right to purchase up
to its pro rata share of the Equity Securities. As used in this Section 3, each
such Stockholder's "pro rata share" shall be that amount of the Equity
Securities which would result in the Stockholder's owning the same percentage of
the Corporation's issued and
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outstanding Common Stock after the issuance of Equity Securities as the
Stockholder owned immediately prior to the issuance (assuming in each case the
issuance of all shares issuable upon the conversion or exercise, as the case may
be, of (i) the shares of Series A Preferred Stock, Series C Stock, Series D
Preferred Stock and Series E Preferred Stock held by such Stockholder, if any,
and (ii) the Equity Securities).
(c) Notice of a Stockholder's intention to accept, in whole or
in part, an Offer shall be evidenced by a writing signed by such Stockholder and
delivered to the Corporation at or prior to the end of the 30-day period
commencing with the date the Offer is received by such Stockholder (or, if
later, within 10 days after the giving of any written notice of a material
change in such Offer), setting forth such portion (specifying number of shares,
principal amount or the like) of the Equity Securities as such Stockholder
elects to purchase (the "Notice of Acceptance").
(d) The Corporation shall have 90 days from the expiration of
the foregoing 30-day period to sell all or any part of such Equity Securities as
to which a Notice of Acceptance has not been given by the Stockholders (the
"Remaining Securities") to any other Person or Persons, but only upon terms and
conditions in all material respects, including without limitation, unit price
and interest rates (but excluding payment of legal fees of counsel of the
purchaser), which are no more favorable, in the aggregate, to such other Person
or Persons or less favorable to Corporation than those set forth in the Offer.
Upon the closing of the sale to such other Person or Persons of all the
Remaining Securities, which shall include payment of the purchase price to the
Corporation in accordance with the terms of the Offer, if a Stockholder has
timely submitted a Notice of Acceptance, it shall purchase from the Corporation,
and the Corporation shall sell to such Stockholder, the Equity Securities in
respect of which a Notice of Acceptance was delivered to the Corporation by the
Stockholder at the terms specified in the Offer. The purchase by a Stockholder
of any Equity Securities is subject in all cases to the preparation, execution
and delivery by the Corporation and such Stockholder of a purchase agreement and
other customary documentation relating to such Equity Securities as is
satisfactory in form and substance to such Stockholder and its counsel.
(e) In each case, any Equity Securities not purchased by
eligible Stockholders or by a Person or Persons in accordance with Section 3(d)
may not be sold or otherwise disposed of until they are again offered to the
Stockholders under the procedures specified in Sections 3(a), (b), (c) and (d)
hereof.
(f) The Corporation agrees that on or before the issuance to
any Person of any Equity Securities not purchased by the Stockholders, it shall
cause such Person to agree in writing to be bound by the obligations imposed
upon Stockholders under this Agreement as if such Person were originally a
signatory to this Agreement.
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(g) The rights of the eligible Stockholders under this Section
3 shall not apply to the following securities (the "Excluded Securities"):
(i) up to 8,250,000 shares (or such higher
number of shares as may be approved from time to time by (w) a majority
in interest of the outstanding voting stock of the Corporation, (x) a
majority in interest of the Series C Stock voting separately as a
single class, (y) 66 2/3 in interest of the Series D Preferred Stock
voting separately as a single class and (z) 66 2/3 in interest of the
Series E Preferred Stock voting separately as a single class) of Common
Stock or options to purchase shares of Common Stock, issued or to be
issued to officers, employees or directors of, or consultants to, the
Corporation, pursuant to any agreement, plan or arrangement approved by
the Board of Directors of the Corporation and the Stockholders;
(ii) Common Stock issued as a stock dividend
or upon any stock split or other subdivision or combination of shares
of Common Stock;
(iii) Common Stock issued upon conversion of
any shares of Preferred Stock;
(iv) any securities issued for consideration
other than cash pursuant to a merger, consolidation, acquisition or
similar business combination;
(v) Common Stock issued or to be issued by the
Corporation pursuant to equipment lease financing with equipment
lessors, or Common Stock reissued after the repurchase thereof by the
Corporation as a result of any termination of a restricted stock
purchase agreement or other employee equity plan or arrangement to
which the Corporation is a party, which are approved by the Board of
Directors;
(vi) Common Stock issued pursuant to
transactions or agreements which have been approved by (w) a majority
in interest of the outstanding voting stock of the Corporation, (x) a
majority in interest of the Series C Stock voting separately as a
single class, (y) 66 2/3 in interest of the Series D Preferred Stock
voting separately as a single class and (z) 66 2/3 in interest of the
Series E Preferred Stock voting separately as a single class; and
(vii) warrants to purchase up to 22,500 shares
of Class A Common Stock (and the Common Stock issuable upon exercise
thereof).
(h) Notwithstanding the foregoing provisions of this Section
3, the rights of the Stockholders and the obligations of the Corporation under
this Section 3 shall be inapplicable to a Designated Offering and the provisions
of this Section 3 shall terminate upon the consummation of such Designated
Offering.
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SECTION 4. Right of First Refusal. The Corporation and the
Investor Stockholders shall be entitled to the following right of first refusal:
(a) Transfer of Shares. The Section 4 Stockholders shall not
transfer (each, a "Transferring Stockholder"), either in a single transaction or
in a series of transactions, in the aggregate, in excess of ten percent (10%) of
the Section 4 Shares or any right or interest therein then owned by him or it
except by a transfer that meets the requirements of this Section 4 and of this
Agreement generally. In the event that a Transferring Stockholder proposes to
transfer any portion of the Section 4 Shares in excess of ten percent (10%)
thereof (each, a "Section 4 Shares Transfer"), whether voluntarily or
involuntarily, other than a Permitted Transfer, then at least ninety (90) days
prior to any Section 4 Shares Transfer, such Transferring Stockholder shall give
notice (the "TS Notice") to the Corporation and the Investor Stockholders of his
or its intention to effect the Section 4 Shares Transfer. The TS Notice shall
set forth (i) the class, series and number of Section 4 Shares in excess of ten
percent (10%) thereof to be sold by the Transferring Stockholder (the "Sale
Shares"), (ii) the date or proposed date of the Section 4 Shares Transfer and
the name and address of the proposed transferee, (iii) the principal terms of
the Section 4 Shares Transfer, including the cash or other property or
consideration to be received upon such Section 4 Shares Transfer, and (iv) the
percentage which the number of Sale Shares constitutes with respect to the
aggregate number of Section 4 Shares then held by the Transferring Stockholder.
In the case of a proposed transfer by way of gift or if the nature of the
transfer is such that no readily determinable consideration is to be paid for
the transfer of the Sale Shares, then a bona fide transfer price for purposes of
this Section 4(a) shall be determined by the Board of Directors of the
Corporation promptly upon the Corporation's receipt of, and as of the date of,
the TS Notice.
(b) Corporation's Option. The Corporation shall have the
option, but not the obligation, to purchase any or all of the Sale Shares on the
same terms as specified in the TS Notice. Within thirty (30) days after the
receipt of the TS Notice, the Corporation shall give written notice to the
Transferring Stockholder and the Investor Stockholders (the "Corporation
Notice") stating whether or not it elects to exercise its option to purchase,
the number of Sales Shares, if any, it elects to purchase, and a date and time
for consummation of the purchase not more than ninety (90) days after the
receipt of the Corporation Notice by the Transferring Stockholder. The
Transferring Stockholder shall not be entitled to vote, either as a stockholder
or a director (if applicable), in connection with the decision of the
Corporation whether to exercise its option to purchase the Sale Shares,
provided, that, if his or its vote is required for valid corporate action, then
he or it shall vote, insofar as legally permissible, in accordance with the
decision of the majority of the other directors or stockholders, as the case may
be. Failure by the Corporation to give such notice within such time period shall
be deemed an election by it not to exercise its option.
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(c) Investor Stockholders' Option. If the Corporation fails to
exercise its right to purchase under subparagraph (b) hereof, or exercises its
right to purchase for less than all of the Sale Shares, then the Investor
Stockholders shall have the option, but not the obligation, to purchase, pro
rata to their ownership interest in the shares of Common Stock issued or
issuable to such stockholder upon the conversion of shares of Series C Stock,
Series D Preferred Stock and Series E Preferred Stock, any or all of the
remaining Sale Shares on the same terms as specified in the TS Notice. Not later
than thirty (30) days after the Investor Stockholders receive the Corporation
Notice, each Investor Stockholder shall give written notice to the Transferring
Stockholder and the Corporation (the "Investor Notice") stating whether or not
it elects to exercise its option to purchase, the number of the remaining Sales
Shares, if any, it elects to purchase, and a date and time for consummation of
the purchase not more than sixty (60) days after the receipt of the Investor
Notice by the Transferring Stockholder. Failure by an Investor Stockholder to
give such notice within such time period shall be deemed an election by it not
to exercise its option. If the Corporation and Investor Stockholders exercise
their respective rights to purchase for less than all the Sale Shares, then the
Transferring Stockholder shall thereafter be free to transfer the remaining Sale
Shares on the terms provided in the TS Notice (subject to the provisions of
Section 5); provided, however, that the Sale Shares shall continue to be subject
to the terms of this Agreement and any such transferee shall agree in writing to
be bound by the obligations imposed upon Stockholders under this Agreement as if
such transferee were originally a signatory to this Agreement.
(d) Definitions. For purposes of this Agreement, the term
"Permitted Transfer" shall mean a Section 4 Shares Transfer to a spouse (other
than pursuant to any divorce or separation proceedings or settlement), parents,
children (natural or adopted), stepchildren or grandchildren or a trust for any
of their benefit in the case of a Transferring Stockholder that is an individual
(each recipient being a "Permitted Transferee"); provided, however, that prior
to such Section 4 Shares Transfer, such Permitted Transferee shall agree in
writing to be bound by the obligations imposed upon Stockholders under this
Agreement as if such transferee were originally a signatory to this Agreement.
(e) Application of Provisions. In each case, any Sale Shares
not purchased by the proposed transferee in accordance with Section 4(c) hereof
may not be sold or otherwise disposed of until they are again offered to the
Corporation and the Investor Stockholders under the procedures specified in
Sections 4(a), (b) and (c) hereof.
(f) Transfers Void. Any attempted Section 4 Shares Transfer by
the Section 4 Stockholders in violation of the terms of this Section 4 shall be
ineffective to vest in any transferee any interest held by the Transferring
Stockholder in the Section 4 Shares. Without limiting the foregoing, any
purported Section 4 Shares Transfer in violation hereof shall be ineffective as
against the Investor Stockholders and the
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Corporation, and the Corporation and the Investor Stockholders shall have a
continuing right and option (but not an obligation), until the restrictions
contained in this Section 4 terminate, to purchase the shares purported to be
transferred by the Transferring Stockholders for a price and on terms the same
as those at which the purported Section 4 Shares Transfer was effected.
(g) Termination of Restrictions. The restrictions in this
Section 4 shall terminate upon the consummation of a Designated Offering, except
that the restrictions in this Section 4 may terminate earlier with respect to
The Excelsior Fund I in the event that all of the Section 4 Shares owned by The
Excelsior Fund I are distributed to its partners.
SECTION 5. Rights to Participate in Transfer.
(a) Transfers by Transferring Stockholder. In the event the
Transferring Stockholder desires to effect a Section 4 Shares Transfer, other
than a Permitted Transfer, and all the Sale Shares have not been purchased by
the Investor Stockholders or the Corporation in the exercise of their respective
rights of first refusal in accordance with the terms of Section 4, then, upon
receipt of the TS Notice specified in Section 4(a), each Investor Stockholder
shall have the right (by written notice to the Transferring Stockholder and the
Corporation to be sent within sixty (60) days after the Investor Stockholder
receives the TS Notice) to require the Transferring Stockholder to cause to be
purchased from such Investor Stockholder the number of shares of Common Stock
issued or issuable upon conversion of shares of Series C Stock, Series D
Preferred Stock and Series E Preferred Stock then held by such Investor
Stockholder that equals (x) the number of remaining Sale Shares that the
Transferring Stockholder proposes to transfer, multiplied by (y) the percentage
determined by dividing (i) the number of shares of Series C Stock, Series D
Preferred Stock or Series E Preferred Stock (or Class A Common Stock, as the
case may be) then held by the Investor Stockholder by (ii) the sum of the number
of shares of Series C Stock, Series D Preferred Stock and Series E Preferred
Stock (or Class A Common Stock, as the case may be) then held by all of the
Investor Stockholders plus the number of Section 4 Shares then held by the
Transferring Stockholder. For purposes of this Section 5, the Series C Stock,
Series D Preferred Stock and Series E Preferred Stock shall be treated as if it
had been converted into the number of shares of Class A Common Stock then
issuable upon such conversion.
(b) Terms of Purchase. The purchase from the Investor
Stockholders pursuant to this Section 5 shall be on the same terms and
conditions, including per Share price (which shall in all events be paid by bank
cashier's or certified check) and date of Section 4 Shares Transfer, as are
received by the Transferring Stockholder and stated in the TS Notice provided to
the Investor Stockholders.
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(c) Termination of Restrictions. The restrictions in this
Section 5 shall terminate upon the consummation of a Designated Offering, except
that the restrictions in this Section 5 may terminate earlier with respect to
The Excelsior Fund I in the event that all of the Section 4 Shares owned by The
Excelsior Fund I are distributed to its partners.
SECTION 6. Transfer of Securities; Registration Rights.
(a) Restriction on Transfer. The Shares shall not be
transferable except upon the conditions specified in this Section 6, which
conditions are intended to ensure compliance with the provisions of the
Securities Act and applicable state securities laws in respect of the transfer
thereof.
(b) Restrictive Legend. Each certificate for the Shares issued
after the date hereof and each certificate for any such securities issued to
subsequent transferees of any such certificate or any Shares issued prior to the
date hereof shall (unless otherwise permitted by the provisions of Section 6(c))
be stamped or otherwise imprinted with the following legend:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY APPLICABLE STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN
EXEMPTION THEREFROM UNDER SAID ACT AND ANY APPLICABLE STATE
SECURITIES LAW. ADDITIONALLY, THE TRANSFER OF THESE SECURITIES
IS SUBJECT TO THE CONDITIONS SPECIFIED IN THE AMENDED AND
RESTATED STOCKHOLDERS' AGREEMENT DATED AUGUST 4, 1999, AMONG
MEDSCAPE, INC. AND CERTAIN OTHER SIGNATORIES THERETO
(AS THE SAME MAY BE AMENDED AND/OR RESTATED FROM TIME TO
TIME), AND NO TRANSFER OF THESE SECURITIES SHALL BE VALID OR
EFFECTIVE UNTIL SUCH CONDITIONS HAVE BEEN FULFILLED. UPON THE
FULFILLMENT OF CERTAIN OF SUCH CONDITIONS, MEDSCAPE, INC. HAS
AGREED TO DELIVER TO THE HOLDER HEREOF A NEW CERTIFICATE, NOT
BEARING THIS LEGEND, FOR THE SECURITIES REPRESENTED HEREBY
REGISTERED IN THE NAME OF THE HOLDER HEREOF. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE
BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY
OF MEDSCAPE, INC."
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(c) Notice of Transfer. The holder of any Shares, by
acceptance thereof agrees, prior to any transfer thereof, to give written notice
to the Corporation of such holder's intention to effect such transfer and to
comply in all other respects with the provisions of this Section 6(c) and the
other applicable provisions of this Agreement. Each such notice shall describe
the manner and circumstances of the proposed transfer and shall be accompanied
by (i) the written opinion, addressed to the Corporation, of counsel for the
holder of such Shares, as to whether in the opinion of such counsel (which
counsel shall be reasonably satisfactory to counsel to the Corporation) such
proposed transfer involves a transaction requiring registration of such shares
under the Securities Act, and (ii) in the case of Registrable Securities, if in
the opinion of such counsel such registration is required, a written request
addressed to the Corporation by the Holder of Registrable Securities, describing
in detail the proposed method of disposition and requesting the Corporation to
effect the registration of such Registrable Securities pursuant to the terms and
conditions of Sections 6(d), 6(e) or 6(f), as the case may be; provided,
however, that no such opinion shall be required in the case of a transfer by any
Holder of Registrable Securities (A) which is a (1) partnership to a partner of
such Holder, or a retired partner of such Holder who retires after the date
hereof, or the estate of any such partner or retired partner, if the transferee
agrees in writing to be subject to the terms of this Section 6 to the same
extent as if such transferee were originally a signatory to this Agreement, or
(2) corporation to any Affiliate of such corporation, including without
limitation, any officer, director or stockholder of such corporation, or (B) in
connection with a transaction complying with the requirements of Rule 144 (as
amended from time to time) promulgated under the Securities Act (or successor
rule thereto). If in such opinion of counsel the proposed transfer may be
effected without registration under the Securities Act, the holder shall
thereupon be entitled to transfer the Shares in accordance with the terms of the
notice delivered by it to the Corporation, subject to the other requirements of
this Agreement. Each certificate or other instrument evidencing the securities
issued upon the transfer of any Shares (and each certificate or other instrument
evidencing any untransferred balance of such securities) shall bear the legend
set forth in Section 6(b) unless (x) in such opinion of counsel registration of
future transfer is not required by the applicable provisions of the Securities
Act or (y) the Corporation shall have waived the requirement of such legend;
provided, however, that such legend shall not be required (1) on any certificate
or other instrument evidencing the securities issued upon such transfer in the
event such transfer shall be made in compliance with the requirements of Rule
144 (as amended from time to time) promulgated under the Securities Act (or
successor rule thereto) or (2) on any certificate or other instrument which is
immediately resalable (whether or not such resale is proposed) under Rule 144(k)
or successor thereto. The Corporation agrees, upon the request of a Stockholder,
to make available to such Stockholder and to any prospective transferee of its
Shares or Registrable Securities the information concerning the Corporation
described in Rule 144A(d)(4) under the Securities Act.
(d) Demand Registration.
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(i) If the Corporation receives at any time
after six (6) months after the closing of the Corporation's first
underwritten public offering of shares pursuant to a registration
statement, a written request from (A) the Holders of at least fifty
percent (50%) of shares of the Investor Registrable Securities then
outstanding excluding Holders described in clause (B) or (C) hereof,
(B) any Holder who purchased more than 650,000 shares of Series D
Preferred Stock (a "Series D Holder") or (C) any Holder who purchased
more than 260,000 shares of Series E Preferred Stock issued pursuant to
the Purchase Agreement (a "Series E Holder"), that the Corporation file
a registration statement on Form S-1 (or similar successor forms) under
the Securities Act covering the registration of the Investor
Registrable Securities having an aggregate offering price, before
deduction of underwriter discounts and commissions, of at least
$5,000,000, then the Corporation shall, within ten (10) business days
after the receipt thereof, give written notice of such request to all
Holders, and use its best efforts to effect, as soon as practicable,
the registration under the Securities Act of all Investor Registrable
Securities which the Holders request to be registered and included in
such registration, subject only to the limitations of this Section
6(d).
(ii) If the Holders initiating the
registration request under this Section 6(d) ("Initiating Holders")
intend to distribute the Investor Registrable Securities covered by
their request by means of an underwriting, they shall so advise the
Corporation as a part of their request made pursuant to this Section
6(d) and the Corporation shall include such information in the written
notice referred to in Section 6(d)(i) hereof. In such event, the right
of any Holder to include such Holder's Investor Registrable Securities
in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Investor Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and
such Holder) to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter into
an underwriting agreement in customary form with the managing
underwriter or underwriters selected for such underwriting by the
Investor Stockholders and reasonably acceptable to the Corporation.
(iii) The Corporation shall not be obligated
to effect, or take any action to effect, any such registration pursuant
to this Section 6(d):
(A) In any particular jurisdiction in
which the Corporation would be required to qualify to do business or to
execute a general consent to service of process in effecting such
registration, qualification or compliance except as may be required by
the Securities Act;
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(B) After the Corporation has initiated
five (5) such registrations pursuant to this Section 6(d), two of which
may only be initiated by a Series D Holder, one of which may only be
initiated by a Series E Holder and two of which may only be initiated
by Holders of Registrable Securities who are not Series D Holders or
Series E Holders;
(C) During the period starting with the
date sixty (60) days prior to the Corporation's good faith estimate of
the date of filing of, and ending on a date one hundred eighty (180)
days after the effective date of, a Corporation-initiated registration;
provided that the Corporation is actively employing in good faith all
reasonable efforts to cause such registration statement to become
effective;
(D) If the Initiating Holders propose to
dispose of shares of Investor Registrable Securities which may be
immediately registered on Form S-3 pursuant to a request made under
Section 6(f) hereof;
(E) If, (1) in the good faith judgement
of the Board of Directors of the Corporation such registration would be
seriously detrimental to the Corporation and the Board of Directors of
the Corporation concludes, as a result, that it is essential to defer
the filing of such registration statement at such time, and (2) the
Corporation shall furnish to the Holders a certificate signed by the
President of the Corporation stating that in the good faith judgement
of the Board of Directors of the Corporation, it would be seriously
detrimental to the Corporation for such registration statement to be
filed in the near future and that it is, therefore, essential to defer
the filing of such registration statement, then the Corporation shall
have the right to defer such filing (except as provided in clause (C)
above) for a period of not more than one hundred twenty (120) days
after receipt of the request of the Initiating Holders, and, provided
further, that the Corporation shall not defer its obligation in this
manner more than once in any twelve-month period.
(iv) All expenses incurred in connection with
any demand registration effected pursuant to this Section 6(d),
including without limitation all federal and "blue sky" registration
and qualification fees, printers' and accounting fees, and fees and
disbursements of counsel for the Corporation (but excluding
underwriters' discounts and commissions and expenses of special counsel
of selling Holders)(the "Registration Expenses") shall be borne by the
Corporation. In addition, each Holder participating in a registration
pursuant to this Section 6(d) shall bear its proportionate share of all
discounts, commissions or other amounts payable to underwriters in
connection with such offering.
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(e) Piggyback Registrations.
(i) The Corporation shall notify all Holders
of Existing Registrable Securities and Investor Registrable Securities
in writing at least thirty (30) days prior to filing any registration
statement under the Securities Act for purposes of effecting a public
offering of securities of the Corporation (including, but not limited
to, registration statements initiated upon the request of Holders of
Investor Registrable Securities and registration statements relating to
secondary offerings of securities of the Corporation, but excluding
registration statements on an Excluded Form or relating to any employee
benefit plan or a corporate reorganization) and shall afford each such
Holder an opportunity to include in such registration statement all or
any part of the Registrable Securities then held by such Holder. Each
Holder desiring to include in any such registration statement all or
any part of the Registrable Securities held by such Holder shall,
within twenty (20) days after receipt of the above-described notice
from the Corporation, so notify the Corporation in writing, and in such
notice shall inform the Corporation of the number of Registrable
Securities such Holder wishes to include in such registration
statement. If a Holder decides not to include all of its Registrable
Securities in any registration statement thereafter filed by the
Corporation, such Holder shall nevertheless continue to have the right
to include any Registrable Securities in any subsequent registration
statement or registration statements as may be filed by the Corporation
with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(ii) If the registration statement under which
the Corporation gives notice under this Section 6(e) is for an
underwritten offering, the Corporation shall so advise the Holders of
Registrable Securities. In such event, the right of any such Holder's
Registrable Securities to be included in a registration pursuant to
this Section 6(e) shall be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in such
customary form with the managing underwriter or underwriters selected
for such underwriting. If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by
written notice to the Corporation and the underwriter, delivered at
least five (5) business days prior to the effective date of the
registration statement. Any Registrable Securities withdrawn from such
underwriting shall be withdrawn from the registration.
(iii) Notwithstanding any other provision of
Section 6(e)(ii), if the registration is the first registered offering
of the Corporation's securities to the general public, the Corporation
may limit, to the extent so advised by the underwriters, the amount of
securities (including the Registrable Shares) to be
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included in the registration by the Corporation's stockholders
(including the Holders), or may exclude, to the extent so advised by
the underwriters, such underwritten securities entirely from such
registration. If the registration is the second or any subsequent
registered offering of the Corporation's securities to the general
public, the Corporation may limit, to the extent so advised by the
underwriters, the amount of securities to be included in the
registration by the Corporation's stockholders (including the Holders);
provided, however, that the aggregate value of securities (including
Registrable Securities) to be included in such registration by the
Holders may not be so reduced to less than thirty percent (30%) of the
total value of all securities included in such registration. The
Corporation shall so advise all Holders of securities requesting
registration, and the number of shares of securities that are entitled
to be included in the registration and underwriting shall be allocated
first to the Corporation for securities being sold for its own account,
second to Holders of Investor Registrable Securities pro rata based
upon the number of Registrable Securities held by any such Holder, and
thereafter as set forth in this Section 6(e). Any Registrable
Securities excluded from such underwriting shall be excluded from the
registration.
(iv) If any shares are withdrawn from the
registration or if the number of shares of Registrable Securities to be
included in such registration was previously reduced as a result of
marketing factors as provided in this Section 6(e), the Corporation
shall then offer to all persons who have retained the right to include
securities in the registration the right to include additional
securities in a subsequent registration in the aggregate amount equal
to the number of shares so withdrawn, with such shares to be allocated
among the persons requested additional inclusion in accordance with
this Section 6(e).
(v) All Registration Expenses incurred in
connection with a registration pursuant to this Section 6(e) shall be
borne by the Corporation.
(f) Form S-3 Registration. In the event that the Corporation
receives from (A) the Holders of at least thirty percent (30%) of the
Registrable Securities held by all Holders other than Series D Holders or Series
E Holders, (B) a Series D Holder or (C) a Series E Holder, a written request or
requests that the Corporation effect a registration on Form S-3, and any related
qualification or compliance with respect to all or part of the Registrable
Securities owned by such Holders, then the Corporation shall:
(i) Promptly give written notice of the
proposed registration and the Holders' request therefor, and any
related qualification or compliance, to all Holders of Registrable
Securities; and
(ii) As soon as practicable, effect such
registration and all such qualifications and compliances as may be so
requested and as would
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permit or facilitate the sale and distribution of all or such portion
of such Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request as
are specified in a written request given within twenty (20) days after
receipt of such written notice from the Corporation; provided, however,
that the Corporation shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section
6(f): (A) if S-3 is not available for such offering by the Holders; (B)
if the Holders propose to sell Registrable Securities at an aggregate
gross offering price to the public of less than $1,000,000.00; (C) if
the Corporation has, within the six (6)-month period preceding the date
of such request, already effected one registration for the Holders
pursuant to Section 6(e) or 6(f); or (D) in any particular jurisdiction
in which the Corporation would be required to qualify to do business or
to execute a general consent to service of process in effecting such
registration, qualification or compliance.
(iii) The Corporation is obligated to effect
that number of registrations on Form S-3 requested by the Holders
pursuant to this Section 6(f), but shall not be obligated to effect
more than two (2) such registrations per year.
(iv) Subject to the foregoing, the Corporation
shall file a Form S-3 registration statement, as the case may be,
covering the Registrable Securities to be registered pursuant to this
Section 6(f) as soon as practicable after receipt of the request or
requests of the Holders for such registration. The Corporation shall
pay all Registration Expenses in connection with each demand for
registration pursuant to this Section 6(f).
(v) Form S-3 registrations shall not be deemed
registrations as described in Section 6(d) above.
(g) Additional Registration Rights. If the Corporation grants
registration rights to holders of any security of the Corporation which are more
favorable to such holders than the registration rights granted hereunder, then
such more favorable registration rights shall also be deemed to be granted to
the Holders of the Registrable Securities hereunder, and the Corporation
covenants and agrees to take any and all steps necessary to modify the terms of
this Agreement to so provide.
(h) Obligations of the Corporation. Whenever required to
effect the registration of any Registrable Securities under this Agreement, the
Corporation shall, as expeditiously as reasonably possible:
(i) Prepare and file with the Commission a
registration statement with respect to such Registrable Securities and
use its best efforts to cause such registration statement to become and
remain effective;
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(ii) Prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection with such registration statement as may
be necessary to comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such
registration statement and to keep such registration statement
effective, in the case of a firm commitment underwriting, until each
underwriter has completed the distribution of all securities purchased
by it and, in the case of any other offering, until the earlier of the
sale of all Registrable Securities covered thereby or one hundred
eighty (180) days after the effective date thereof; provided, however,
that such 180-day period shall be extended for a period of time equal
to the period the Holder refrains from selling any Registrable
Securities included in such registration at the request of an
underwriter of the Common Stock or if the Corporation has provided the
notice described in subparagraph (vii) below;
(iii) Furnish to the Holders such number of
copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by them that are
included in such registration;
(iv) Use its best efforts to register and
qualify the securities covered by such registration statement under
such other securities or blue sky laws of such jurisdictions as shall
be reasonably requested by the Holders, provided, that the Corporation
shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions;
(v) Use its best efforts to list the
securities covered by such registration statement with any securities
exchange, if any, on which the Common Stock of the Corporation is then
listed;
(vi) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under
such an agreement;
(vii) Notify each Holder of Registrable
Securities and each underwriter under such registration statement at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act of the happening of any event as a result of
which the prospectus included in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or
-24-
25
necessary to make the statements therein not misleading in the light of
the circumstances then existing;
(viii) Furnish, at the request of any Holder
requesting registration of Registrable Securities, on the date that
such Registrable Securities are delivered to the underwriters for sale,
if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes
effective, a "comfort" letter dated as of such date, from the
independent certified public accountants of the Corporation, in form
and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to
the Holders requesting registration of the Registrable Securities; and
(ix) Make available for inspection by each
seller of Registrable Securities, any underwriter participating in any
distribution pursuant to such registration statement, and any attorney,
accountant or other agent retained by such seller or underwriter, all
financial and other records, pertinent corporate documents and
properties of the Corporation, and cause the Corporation's officers,
directors and employees to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
(i) Furnish Information. It shall be a condition precedent to
the obligations of the Corporation to take any action pursuant to Sections 6(d),
6(e) and 6(f) that the selling Holders shall furnish to the Corporation such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
effect the registration of their Registrable Securities.
(j) Indemnification. In the event any Registrable Securities
are included in a registration statement under Sections 6(d), 6(e) or 6(f):
(i) To the extent permitted by law, the
Corporation shall indemnify and hold harmless each Holder, the
partners, officers and directors of each Holder, any underwriter (as
defined in the Securities Act) for such Holder and each Person, if any,
who controls such Holder 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 they may become
subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise
-25-
26
out of or are based upon any of the following statements, omissions or
violations (collectively, a "Violation"):
(A) any untrue statement or alleged
untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus
or final prospectus contained therein or any amendments or
supplements thereto,
(B) the omission or alleged omission to
state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or
(C) any violation or alleged violation by
the Corporation of the Securities Act, the Exchange Act, any
federal or state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any
federal or state securities law in connection with the
offering covered by such registration statement,
and the Corporation shall reimburse each such Holder, or a partner,
officer or director, underwriter or controlling Person of such Holder
for any legal or other expenses reasonably incurred by them, as
incurred, in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the
indemnity agreement contained in this Section 6(j) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the consent of the
Corporation (which consent shall not be unreasonably withheld), nor
shall the Corporation be liable in any case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with
such registration by such Holder, or a partner, officer, director,
underwriter or controlling Person of such Holder.
(ii) To the extent permitted by law, each
selling Holder shall indemnify and hold harmless the Corporation, each
of its directors and officers who have signed the registration
statement, each Person, if any, who controls the Corporation within the
meaning of the Securities Act, any underwriter and any other Holder
selling securities under such registration statement or any of such
other Holder's partners, directors or officers or any Person who
controls such Holder within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint
or several) to which the Corporation or any such director, officer,
controlling Person, underwriter or other such Holder, or a partner,
director, officer or controlling Person of such other Holder may become
subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or
-26-
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actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that
such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection
with such registration; and each such Holder shall reimburse any legal
or other expenses reasonably incurred by the Corporation or any such
director, officer, controlling Person, underwriter or other Holder,
partner, officer, director or controlling Person of such other Holder
in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 6(j) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which
consent shall not be unreasonably withheld; and provided, further, that
the total amounts payable in indemnity by a Holder under this Section
6(j)(ii) in respect of any Violation shall not exceed the net proceeds
received by such Holder in the registered offering out of which such
Violation arises.
(iii) Promptly after receipt by an indemnified
party under this Section 6(j) of notice of the commencement of any
action (including any governmental action), such indemnified party
shall, if a claim in respect thereof is to be made against any
indemnifying party under this Section 6(j), deliver to the indemnifying
party a written notice of the commencement thereof and the indemnifying
party shall have the right to participate in, and, to the extent the
indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 6(j), but the
omission so to deliver written notice to the indemnifying party shall
not relieve it of any liability that it may have to any indemnified
party otherwise than under this Section 6(j).
(iv) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in
which either (A) any Holder exercising rights under this Agreement, or
any controlling Person of any such Holder, makes a claim for
indemnification pursuant to this Section 6(j) 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
-27-
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last right of appeal) that such indemnification may not be enforced in
such case notwithstanding the fact that this Section 6(j) provides for
indemnification in such case, or (B) contribution under the Securities
Act may be required on the part of any such selling Holder or any such
controlling Person in circumstances for which indemnification is
provided under this Section 6(j), then, and in each such case, the
Corporation or such Holder shall contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after
contribution from others) in such proportion so that such Holder is
responsible for the portion represented by the percentage that the
public offering price of its Registrable Securities offered by and sold
under such registration statement bears to the public offering price of
all securities offered by and sold under such registration statement,
and the Corporation and other selling Holders are responsible for the
remaining portion; provided, however, that, in any such case, (1) no
such Holder shall be required to contribute any amount in excess of the
public offering price of all such Registrable Securities offered and
sold by such Holder pursuant to such registration statement; and (2) 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.
(v) The obligations of the Corporation and
Holders under this Section 6(j) shall survive the completion of any
offering of Registrable Securities in a registration statement, and the
termination of this Agreement.
(k) "Market Stand-Off" Agreement and Coordination of Certain
Sales. Each Holder hereby agrees that it shall not, to the extent requested by
the Corporation and an underwriter of Common Stock of the Corporation, sell or
otherwise transfer or dispose of any Registrable Securities (other than
Registrable Securities being registered in such offering) for up to that period
of time following the effective date of a registration statement of the
Corporation filed under the Securities Act as is requested by the managing
underwriter(s) of such offering, not to exceed 90 days; provided, however, that
all officers, directors and ten percent (10%) or greater stockholders of the
Corporation then holding Common Stock of the Corporation shall enter into
similar agreements. Each Holder further agrees that, except for the Limited
Sales, it shall not sell or otherwise transfer or dispose of any securities of
the Corporation for a period beginning on the date hereof and ending on March 5,
2000 unless such securities are sold pursuant to an underwritten public offering
in which all Holders of Investor Registrable Securities are offered the
opportunity to participate in the registration pro rata based on the total
number of securities held by them. All Holders agree that they shall be solely
responsible for the coordination of any Limited Sales among themselves.
In order to enforce the foregoing covenant, the Corporation may impose stop
transfer instructions with respect to the then-remaining Registrable Securities
of each Holder
-28-
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(and the shares or securities of every other Person subject to the foregoing
restriction) until the end of such period.
(l) Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Corporation, the Corporation agrees to:
(i) Make and keep public information available,
as those terms are understood and defined in Rule 144 under the
Securities Act, at all times after the effective date of the first
registration under the Securities Act filed by the Corporation for an
offering of its securities to the general public;
(ii) File with the Commission in a timely
manner all reports and other documents required of the Corporation
under the Securities Act and the Exchange Act (at any time after it has
become subject to such reporting requirements); and
(iii) So long as a Holder owns any Registrable
Securities, furnish to the Holder forthwith upon request a written
statement by the Corporation as to its compliance with the reporting
requirements of said Rule 144 (at any time after 90 days after the
effective date of the first registration statement filed by the
Corporation for an offering of its securities to the general public),
and of the Securities Act and the Exchange Act (at any time after it
has become subject to the requirements of the Exchange Act), a copy of
the most recent annual or quarterly report of the Corporation, and such
other reports and documents of the Corporation as a Holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing a Holder to sell any such securities without
registration (at any time after the Corporation has become subject to
the reporting requirements of the Exchange Act).
(m) Removal of Legends, Etc. Notwithstanding the foregoing
provisions of this Section 6, the restrictions imposed by this Section 6 upon
the transferability of any Registrable Securities shall cease and terminate when
any such Registrable Securities are sold or otherwise disposed of in accordance
with the intended method of disposition by the seller or sellers thereof set
forth in the registration statement or as otherwise contemplated by Section 6(c)
which does not require that the securities transferred bear the legend set forth
in Section 6(b). Whenever the restrictions imposed by this Section 6 shall
terminate as herein provided, the Holder of any Registrable Securities as to
which such restrictions have terminated shall be entitled to receive from the
Corporation, without expense, one or more new certificates not bearing the
restrictive legend set forth in Section 6(b) and not containing any other
reference to the restrictions imposed by this Section 6.
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(n) Filing of Reports Under the Exchange Act. The Corporation
shall give prompt notice to the Stockholders of:
(i) the filing of an Exchange Act Registration
Statement; and
(ii) the effectiveness of such Exchange Act
Registration Statement and the number of shares of such class of equity
securities outstanding as reported in such Exchange Act Registration
Statement, in order to enable the Stockholders to comply with any
reporting requirements under the Exchange Act or the Securities Act.
The Corporation shall, at any time after the Corporation shall register
any shares of Common Stock under the Securities Act and upon the
written request of a Stockholder, file an Exchange Act Registration
Statement relating to any class of Equity Securities of the Corporation
then held by such Stockholder, whether or not the class of equity
securities with respect to which such request is made shall be held by
at least the number of Persons which would require the filing of a
registration statement under Section 12(g)(1) of the Exchange Act. If
the Corporation shall have filed an Exchange Act Registration Statement
or a registration statement (including an offering circular under
Regulation A promulgated under the Securities Act) pursuant to the
requirements of the Securities Act (and in any event, at all times
following the initial public offering of any of the securities of the
Corporation), the Corporation shall comply with all the reporting
requirements of the Exchange Act (whether or not it shall be required
to do so), and shall comply with all other public information reporting
requirements of the Commission as a condition to the availability of an
exemption from the Securities Act (under Rule 144 thereof, as amended
from time to time, or successor rule thereto or otherwise) for the sale
of Common Stock by the Stockholders. The Corporation shall cooperate
with the Stockholders in supplying such information as may be necessary
for the Stockholders to complete and file any information reporting
forms presently or hereafter required by the Commission as a condition
to the availability of an exemption from the Securities Act (under Rule
144 thereof or otherwise) for the sale of Common Stock by the
Stockholders.
(o) Transfer or Assignment of Registration Rights. The rights
to cause the Corporation to register securities granted to a Holder by the
Corporation pursuant to this Section 6 may be transferred or assigned by a
Holder only to a transferee or assignee of not less than 50,000 shares of
Registrable Securities (as presently constituted and subject to subsequent
adjustments for stock splits, stock dividends, reverse stock splits, and the
like), provided that the Corporation is given written notice at the time of or
within a reasonable time after said transfer and assignment, stating the name
and address of the transferee or assignee and identifying the securities with
respect to which such registration rights are being transferred or assigned,
and, provided further, that the transferee or assignee of such rights assumes in
writing the obligations of such Holder under this Section 6.
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31
(p) Termination of Registration Rights. The right of any
Holder to request registration or inclusion in any registration pursuant to
Section 6(d), 6(e) or 6(f) shall terminate on the earlier of (i) ten (10) years
after the closing of the first registered public offering of Common Stock of the
Corporation, or (ii) on such date as all shares of Registrable Securities held
or entitled to be held upon conversion or exercise by such Holder may
immediately be sold under Rule 144 during any 90-day period.
(q) Information Rights. Until the closing of the Designated
Offering, the Corporation shall either deliver to each Investor Stockholder who
owns directly or indirectly at least 85,000 shares of Series C Stock, Series D
Preferred Stock or Series E Preferred Stock (or Class A Common Stock issued upon
conversion thereof).
(i) as soon as practicable, but in any event
within one hundred twenty (120) days after the end of each fiscal year of the
Corporation, an income statement for such fiscal year, a balance sheet of the
Corporation and a statement of stockholder's equity as of the end of such year,
and a schedule as to the sources and applications of funds for such year, such
year-end financial reports to be in reasonable detail, prepared in accordance
with generally accepted accounting principles, and audited and certified by
independent public accountants approved by the Board of Directors of the
Corporation;
(ii) as soon as practicable, but in any
event within thirty (30) days of the end of each month, an unaudited income
statement (showing actual, budget and prior month) and schedule as to the
sources and application of funds and balance sheet for and as of the end of such
month, in reasonable detail;
(iii) as soon as practicable, but in any
event within forty-five (45) days of the end of each fiscal quarter, an
unaudited income statement, schedule as to the sources and applications of funds
and balance sheet for and as of the end of each such quarter, in reasonable
detail; and
(iv) as soon as practicable, but in any
event thirty (30) days prior to the end of each fiscal year, a budget for the
next fiscal year, prepared on a monthly basis, including income statements,
balance sheets and applications of funds statements for such months and, as soon
as practicable after the adoption thereof, any revisions to such annual budget.
SECTION 7. Duration of Agreement. Except for those provisions
that, by their terms, terminate sooner, all rights and obligations of each
Stockholder under this Agreement shall terminate as to such Stockholder upon the
earlier of (a) the transfer in accordance with this Agreement of all Shares held
by such Stockholder, or (b) upon written consent of (i) the Stockholders holding
a majority of the shares of Series C Stock (or the Class A Common Stock issued
upon conversion thereof), (ii) the Stockholders holding at least 66 2/3 of the
shares of Series D Preferred Stock, (iii) the
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Stockholders holding at least 66 2/3 of the shares of Series E Preferred Stock
and (iv) the Stockholders holding a majority of the shares of Class A Common
Stock (other than those shares specified in subparagraph (i) above).
SECTION 8. Severability; Governing Law. If any provisions of
this Agreement shall be determined to be illegal and unenforceable by any court
of law, the remaining provisions shall be severable and enforceable in
accordance with their terms. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
the conflict of laws principles thereof; provided, however, in the event that
any provision of this Agreement is unenforceable under the laws of the State of
New York and is enforceable under the laws of the State of Delaware, then such
provision shall be construed in accordance with the laws of the State of
Delaware to permit the enforceability of this Agreement to the fullest extent.
SECTION 9. Conflicting Agreements. This Agreement supersedes
all other existing agreements or understandings between the stockholders of the
Corporation.
SECTION 10. Benefits of Agreement. This Agreement shall be
binding upon and inure to the benefit of the parties and their respective
successors and assigns, legal representatives and heirs. Subject to the terms of
this Agreement, the Stockholders may transfer any or all of its rights hereunder
to any purchaser or transferee of all or a portion of its shares of Preferred
Stock or Common Stock, including any right or interest therein, without the
prior written consent of the Corporation or any Stockholder. In the event of
such transfer, such transferee shall be deemed to be the "Stockholder " and a
"Holder", as appropriate, for purposes of this Agreement, and may again transfer
such rights in accordance with, and subject to, the terms of this Agreement.
SECTION 11. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or duly sent by first
class registered or certified mail, return receipt requested, postage prepaid,
addressed to such party at the address set forth below or such other address as
may hereafter be designated in writing by the addressee to the addressor listing
all parties:
(a) If to the Corporation, to:
Medscape, Inc.
000 X. 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Fax (000) 000-0000
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33
Attention: President & CEO
with a copy to:
Patterson, Belknap, Xxxx & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Xxxx X. Xxxxxxx, Esq.
(b) If to the Stockholders, at the addresses specified on
Schedule I attached hereto.
All such notices, advises and communications shall be deemed to have been
received (a) in the case of personal delivery, on the date of such delivery and
(b) in the case of mailing, on the third day after the posting thereof.
SECTION 12. Changes. The terms and provisions of this
Agreement may not be modified or amended, or any of the provisions hereof
waived, temporarily or permanently, except pursuant to the written consent of
(a) the Corporation, (b) the Stockholders holding a majority of the shares of
Series C Stock, (c) the Stockholders holding at least 66 2/3 of the shares of
Series D Preferred Stock (or the Class A Common Stock issued upon conversion
thereof), (d) the Stockholders holding at least 66 2/3 of the shares of Series E
Preferred Stock (or the Class A Common Stock issued upon conversion thereof) and
(e) the Stockholders holding a majority of the shares of Class A Common Stock
(other than those shares specified in subparagraph (b) above). Any rights
applicable to a Stockholder may be waived by such Stockholder without the
consent of the Corporation or the other Stockholders. Any modification or
amendment pursuant to this Section may terminate any right or obligation
provided for herein whether or not deemed vested or accrued. Upon approval of
modifications or amendments by the requisite percentages of the Stockholders
hereunder, the Corporation shall not be required to independently give its
consent.
SECTION 13. Rights of Xx. Xxxxxxx as a Stockholder. Xx.
Xxxxxxx X. Xxxxxxx ("Xx. Xxxxxxx") shall (a) have all the rights of an Investor
Stockholder as are set forth in Sections 4, 5 and Subsection 6(e) of this
Agreement (including under Subsection 6(e) as it relates to the piggyback rights
to be included within a demand registration initiated pursuant to Subsection
6(d), and, for such purposes, it is understood that the last sentence of
Subsection 6(d)(i) shall be read as if it were amended to include at its end:
"and Section 6(e)(iii)"), (b) have the right to vote in connection with a
modification to the Stockholder Agreement in accordance with Section 12 thereof,
(c) have the rights of an Additional Stockholder with respect to all other
provisions of this Agreement, and (d) be bound by the other terms and conditions
-33-
34
of this Stockholders' Agreement. It is understood and agreed that, in regard to
restricted shares issued pursuant to the Employment and Restricted Stock
Purchase Agreement, dated October 27, 1998, by and between the Corporation and
Xx. Xxxxxxx, Xx. Xxxxxxx shall only have rights under this Agreement for such
restricted shares after they have vested in accordance with the terms thereof
(such vested shares, along with the 642,553 shares issued to Xx. Xxxxxxx
pursuant to the Purchase Agreement, dated October 27, 1998, by and among the
Corporation, Xx. Xxxxxxx and certain other parties thereto, or to be acquired by
Xx. Xxxxxxx upon realization of the pledge of 36,509 shares by Xxxxx Xxxxxxxxx
to Xx. Xxxxxxx, the "Vested Shares"). For purposes of effectuating Dr. Drezner's
rights as an Investor Stockholder pursuant to Sections 4 and 5 of this
Agreement, to the extent that Xx. Xxxxxxx exercises his rights pursuant to
Subsections 4(c) or 5(a) thereof, (x) the Vested Shares held by Xx. Xxxxxxx
shall be counted as shares of Class A Common Stock issuable upon conversion of
the Series C Stock for purposes of the formulas set forth therein; and (y) each
of the Corporation and Xx. Xxxxxxx agrees to exchange any Vested Shares for
which Xx. Xxxxxxx seeks to require the Transferring Stockholder to cause to be
purchased in accordance with such Subsection 5(a) for a like number of shares of
Class A Common Stock, such exchange to be effective immediately prior to such
purchase (without any additional consideration) with the intent that the
purchaser receive Class A Common Stock pursuant to such transaction. In
connection with any vote pursuant to Section 12 of this Agreement, Xx. Xxxxxxx
shall vote with the holders of Series C Stock as a single class, with each
Vested Share held by Xx. Xxxxxxx having the rights to the number of votes as
each share of Class A Common Stock has under the Corporation's Amended and
Restated Certificate of Incorporation (the "Certificate"), and each share of
Series C Stock having the rights to the number of votes for such series as is
set forth in the Certificate.
SECTION 14. Captions. The captions herein are inserted for
convenience only and shall not define, limit, extend or describe the scope of
this Agreement or affect the construction hereof.
SECTION 15. Nouns and Pronouns. Whenever the context may
require, any pronouns used herein shall include the corresponding masculine,
feminine or neuter forms and the singular form of names and pronouns shall
include the plural and vice-versa.
SECTION 16. Merger Provision. This Agreement (as the same may
be amended from time to time) and the Purchase Agreement constitute the entire
agreement among the parties pertaining to the subject matter hereof and
supersede all prior and contemporaneous agreements therewith.
SECTION 17. Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be deemed to be an original, but
all of which taken together shall constitute one and the same instrument.
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35
IN WITNESS WHEREOF, the parties hereto have caused this
Amended and Restated Stockholders Agreement to be executed as of the date and
year first written above.
MEDSCAPE, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------
Xxxx X. Xxxxxx
President and Chief Executive Officer
[Signature page to
Stockholders Agreement - 1]
36
(STOCKHOLDER WITH RIGHTS UNDER SECTION 13)
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------
Xxxxxxx X. Xxxxxxx, M.D., Ph.D.
/s/ Xxxxxxx Xxxxx
-------------------------------------
/s/ Xxxxxx Xxxx
-------------------------------------
/s/ Xxxxx Xxxxxxxxx
-------------------------------------
[Signature page to
Stockholders Agreement - 2]
37
INVESTOR STOCKHOLDERS
(EXISTING SERIES C CONVERTIBLE PREFERRED STOCK)
/s/ Xxxxxx Xxxxx
-----------------------------------
XXXXXX XXXXX
APA EXCELSIOR IV, L.P.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title:
XXXXXX & CO. (CAYMAN) LTD.,
c/o APA EXCELSIOR IV/OFFSHORE,
L.P.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title:
PATRICOF PRIVATE
INVESTMENT CLUB, L.P.
By: /s/ Xxxx Xxxxxxxx
------------------------------
Name: Xxxx Xxxxxxxx
Title:
CSK VENTURE CAPITAL CO., LTD.,
as investment manager for CSK-1(A)
Investment Fund
By: /s/ Xxxxx Xxxxxxxx
------------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
CSK VENTURE CAPITAL CO., LTD.,
as investment manager for CSK-1(B)
Investment Fund
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
CSK VENTURE CAPITAL CO., LTD.,
as investment manager for CSK-2
Investment Fund
By: /s/ Xxxxx Xxxxxxxx
-----------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
MEDIA TECHNOLOGY VENTURES, L.P.
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member of the General
Partner
MEDIA TECHNOLOGY VENTURES
ENTREPRENEURS FUND, L.P.
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member of the General
Partner
[Signature page to
Stockholders Agreement - 3]
38
XXXXXX X. XXXXXXXX, XXXXXXX X.
XXXXXXXX, XXXXX X. XXXX, AND
XXXXXXXX X. XXXXXXXXXXXX,
TRUSTEES U/A DATED 9/3/64 F/B/O
XXXXXX X. XXXXXXXX FAMILY
By: /s/ Xxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Trustee
XXXXXX X. XXXXXXXX, XXXXXXX X.
XXXXXXXX, XXXX X. XXXX, AND
XXXXXXXX X. XXXXXXXXXXXX,
TRUSTEES U/W/D XXXXXXX X.
XXXXXXXX F/B/O XXXXXX X.
XXXXXXXX ARTICLE 9TH
By: /s/ Xxxxxx Xxxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Trustee
XXXXXXX FRERES
By: /s/ Xxxxxx Xxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxx
Title: Administrateur
Xxxxxxx Freres, Paris
CIBC WORLD MARKETS CORP.
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
/s/ Xxxxx Xxxxxxxxx
-----------------------------------
XXXXX XXXXXXXXX
/s/ Xxxx Xxxxxxxxx
-----------------------------------
XXXX XXXXXXXXX
RHL VENTURES LLC
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Manager
TOLEDOT INVESTMENTS, L.P.
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------
XXXXXXX XXXXXXX, GENERAL
PARTNER
/s/ Xxxxxxx Xxxxxxx
-------------------------------
XXXXXXX XXXXXXX
/s/ Xxxxxx Xxxxxxxxxx
-------------------------------
XXXXXX XXXXXXXXXX
BE PARTNERS
By: /s/ Xxxxxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: Partner
/s/ Xxxx Xxxxxxxxxx
-------------------------------
XXXX XXXXXXXXXX, M.D.
TBG INFORMATION INVESTORS, L.L.C.
By: /s/ Xxxx Xxxxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxxxx
Title: President
EXISTING STOCKHOLDERS
[Signature page to
Stockholders Agreement - 4]
39
(SERIES A PREFERRED STOCKHOLDER)
APA EXCELSIOR FUND I
By: /s/ Xxxx Xxxxxxxx
--------------------------
Name: Xxxx Xxxxxxxx
Title:
(CLASS A COMMON STOCKHOLDER)
/s/ Xxxxx X. Xxxxxxxx
------------------------------
XXXXX X. XXXXXXXX
[Signature page to
Stockholders Agreement - 5]
40
INVESTOR STOCKHOLDERS
SERIES D CONVERTIBLE PREFERRED STOCK
CSK VENTURE CAPITAL CO., LTD.
AS INVESTMENT MANAGER FOR
CSK-1(B) INVESTMENT FUND
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
Address: Kenchikukaikan, 7F
0-00-00 Xxxxx, Xxxxxx-xx
Xxxxx 000-0000 Xxxxx
CSK VENTURE CAPITAL CO., LTD.
AS INVESTMENT MANAGER FOR
CSK-2 INVESTMENT FUND
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
Address: Kenchikukaikan, 7F
0-00-00 Xxxxx, Xxxxxx-xx
Xxxxx 000-0000 Xxxxx
CSK VENTURE CAPITAL CO., LTD. AS
INVESTMENT MANAGER FOR
CSK-1(A) INVESTMENT FUND
By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Managing Director
Address: Kenchikukaikan, 7F
0-00-00 Xxxxx, Xxxxxx-xx
Xxxxx 000-0000 Xxxxx
HEARST COMMUNICATIONS, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: Senior Vice President
Address: 000 0xx Xxxxxx, Xxxxx 000
Xxx Xxxx, XX 00000
[Signature page to
Stockholders Agreement - 6]
41
XXXXXXX FRERES
By: /s/ Xxxxxx Xxxxxxx
---------------------------------
Name: Xxxxxx Xxxxxxx
Title: Administrateur, Xxxxxxx Freres, Paris
Address: Banque D'Escompte
13 Blvd. Haussmann
00000 Xxxxx Xxxxxx
[Signature page to
Stockholders Agreement - 7]
42
MEDIA TECHNOLOGY VENTURES,
L.P.
By: /s/ Xxxxx Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member of the General Partner
MEDIA TECHNOLOGY VENTURES
ENTREPRENEURS FUND, L.P.
By: /s/ Xxxxx Xxxxxxx
------------------------
Name: Xxxxx X. Xxxxxxx
Title: Managing Member of the General Partner
[Signature page to
Stockholders Agreement - 8]
43
APA EXCELSIOR IV, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.,
its General Partner
By: PATRICOF & CO. MANAGERS, INC.,
its General Partner
By: /s/ Xxxx Xxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman
XXXXXX & CO. (CAYMAN) LTD.,
c/o APA EXCELSIOR IV/OFFSHORE, L.P.
By: PATRICOF & CO. VENTURES, INC.,
its Investment Advisor
By: /s/ Xxxx Xxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman
PATRICOF PRIVATE INVESTMENT CLUB, L.P.
By: APA EXCELSIOR IV PARTNERS, L.P.,
its General Partner
By: PATRICOF & CO. MANAGERS, INC.,
its General Partner
By: /s/ Xxxx Xxxxxxxx
----------------------
Name: Xxxx X. Xxxxxxxx
Title: Chairman
[Signature page to
Stockholders Agreement - 9]
00
XXXXXX XXXXXXXX XXXXXXX XX, X.X.
By: Weston Presidio Capital Management II,
LP, its General Partner
By: /s/ Xxxxx xxx Xxxxxxxxx
-----------------------
Xxxxx xxx Xxxxxxxxx
WESTON PRESIDIO CAPITAL III, L.P.
By: Weston Presidio Capital Management III,
LLC, its General Partner
By: /s/ Xxxxx xxx Xxxxxxxxx
-----------------------
Xxxxx xxx Xxxxxxxxx
WPC ENTREPRENEUR FUND, L.P.
By: Weston Presidio Capital Management III,
LLC, its General Partner
By: /s/ Xxxxx xxx Xxxxxxxxx
-----------------------
Xxxxx xxx Xxxxxxxxx
HIGHLAND CAPITAL PARTNERS IV
LIMITED PARTNERSHIP
By: Highland Management Partners IV LLC, its
General Partner
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------
Member
HIGHLAND ENTREPRENEURS' FUNDS IV,
LIMITED PARTNERSHIP
By: Highland Entrepreneurs' Fund IV LLC, its
General Partner
By: /s/ Xxxxxxxx Xxxxxxxxx
-----------------------
Member
[Signature page to
Stockholders Agreement - 10]
45
(SECTION 4 STOCKHOLDERS NOT
SIGNING IN ANOTHER CAPACITY)
/s/ Xxxxxx Xxxxx
-----------------------
Xxxxxx Xxxxx
/s/ Xxxx X. Xxxxxx
-----------------------
Xxxx Xxxxxx
[Signature page to
Stockholders Agreement - 11]
46
INVESTOR STOCKHOLDERS
SERIES E CONVERTIBLE PREFERRED STOCK
AND CLASS A COMMON STOCK
NATIONAL DATA CORPORATION
By:__________________________
Name:
Title:
LAZARD FRERES & CO. LLC
By:__________________________
Name:
Title:
[Signature page to
Stockholders Agreement - 12]
47
SCHEDULE I
- Refer to Signature Page 5 for Existing Stockholders
- Refer to Signature Pages 3-4 for Series C and Series C-1 Investor
Stockholders
- Refer to Signature Pages 6-10 for Series D Investor Stockholders
- Refer to Signature Page 2 for Xxxxxxx X. Xxxxxxx, M.D., Ph.D. who has
certain rights as an Investor Stockholder
- Refer to Signature Page 11 for Section 4 Stockholders Not Signing in
Another Capacity
- Refer to Signature Page 12 for Series E Investor Stockholders
- The Addresses for all the Stockholders are maintained with the
Corporation's Stock Ledger
48
SCHEDULE II
List of All Stockholders
- See attached capitalization table.
