Exhibit 10.16
EXECUTABLE COPY
STOCK TRANSFER AGREEMENT*
This Stock Transfer Agreement (the "AGREEMENT") dated as of this
fourteenth day of July, 2000 (the "Effective Date"), is entered into by and
among Vastera, Inc., a Delaware corporation ("VASTERA"), Vastera Solution
Services Corporation, a Delaware corporation and a wholly-owned subsidiary of
Vastera ("SSC") and Ford Motor Company, a Delaware corporation ("FORD").
WHEREAS, Vastera and Ford have been discussing certain arrangements
regarding Ford's and Vastera's import/export customs service operations;
WHEREAS, in connection with such discussions, SSC and Ford are, as
of the date hereof, executing the Related Agreements; and
WHEREAS, Vastera has agreed to issue to SSC certain of its shares of
common stock, par value $0.01 per share (the "COMMON STOCK") and SSC has agreed
to transfer such shares to Ford as consideration for the execution and delivery
by Ford of this Agreement and the Related Agreements;
NOW, THEREFORE, in consideration of the foregoing premises, the
mutual promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are here acknowledged, the
parties hereto agree as follows:
1. Transfer of the Common Stock.
1.1. Agreement of Transfer. (a) Subject to the terms and conditions
set forth in this Agreement and upon the basis of the representations,
warranties and covenants contained in this Agreement, Ford agrees to acquire
from SSC and SSC agrees to transfer to Ford at Closing, free and clear of any
Encumbrances whatsoever, the greater of (i) 5,333,333 shares of the Common Stock
of Vastera and (ii) 20% of the Common Stock of Vastera calculated on a fully
diluted basis as of the Closing. The shares of Common Stock to be purchased by
Ford are herein referred to as the "SHARES."
(b) In exchange for the Shares, Ford shall execute and
delivery to SSC the Related Agreements.
(c) The parties to the Additional Agreements shall execute
and deliver the Additional Agreements.
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* Portions of this document have been omitted, with the precise position of
these omissions marked with an asterisk, pursuant to a request for confidential
treatment and such omitted portions have been filed separately with the U.S.
Securities and Exchange Commission.
1.2 Closing; Delivery of Common Stock.
(a) The closing (the "CLOSING") for the acquisition and
transfer of the Shares shall take place within five (5) business days following
satisfaction of the conditions to Closing set forth in this Agreement or the
written waiver thereof by the party entitled to the benefit of such conditions.
(b) At the Closing and subject to the terms and conditions
herein, SSC shall deliver to Ford one or more certificates representing the
number of Shares of Common Stock to be received by Ford which Ford is purchasing
from SSC upon delivery to SSC of the Related Agreements, fully executed by Ford.
2. Conditions of SSC's Obligations at Closing.
The obligation of SSC to transfer the Shares to Ford is subject to the
satisfaction, on or before the Closing, of the following conditions unless any
such conditions are waived in writing by SSC:
2.1 Related Agreements and Additional Agreements. Ford shall have
delivered to SSC the Related Agreements and the Additional Agreements that have
been fully executed by Ford.
2.2. Representations and Warranties True at Closing. The representations
and warranties made by Ford in Section 7 of this Agreement shall be true,
complete and correct in all material respects on and as of the Closing with the
same effect as though such representations and warranties had been made on and
as of the date of this Agreement (except in the case of any representation or
warranty that by its terms is made solely as of a specific date, which need be
accurate only as of such date).
2.3. Covenant Compliance. Ford shall have performed or complied with in
all material respects their agreements and covenants contained in this Agreement
and the Related Agreements to be performed or complied with at or prior to the
Closing.
2.4 HSR Act. Any waiting period applicable to the purchase and sale of
the Shares under the HSR Act shall have terminated or expired.
2.5 No Adverse Change. On the Closing Date, the Business shall not have
been or then be materially adversely affected in any way as a result of any
casualty or disaster, accident, labor dispute, exercise of the power of eminent
domain or other governmental act or any other fortuitous event, act of God or
the public enemy, nor shall have there occurred any material adverse change in
the Business.
2.6 Litigation. No suit, action or other proceeding shall be pending or
threatened before any court or governmental agency seeking to restrain, prohibit
or to obtain damages or other relief in connection with this Agreement or the
Related
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Agreements or the consummation of the transactions contemplated hereby or
thereby and there shall have been no investigation or inquiry made or commenced
by any governmental agency in connection with this Agreement or the Related
Agreements or the transactions contemplated by hereby or thereby.
2.7 Business Combination Accounting Treatment. Vastera shall have
received written approval or concurrence from the SEC of its treatment of the
transaction contemplated hereby and the transactions contemplated by the Related
Agreements as a business combination applying the purchase method of accounting
under GAAP. This condition shall be deemed waived by Vastera in the event that
no such written approval or concurrence has been received by Vastera within
sixty (60) days of the Effective Date.
3. Conditions of Ford's Obligations at Closing.
The obligation of Ford to acquire the Shares is, at its option, subject to
the satisfaction, at Closing, of the following conditions unless any such
conditions are waived in writing by Ford:
3.1 Related Agreements and Additional Agreements. SSC shall have
delivered to Ford the Related Agreements and the Additional Agreements that have
been fully executed bythe parties to such Related Agreements and Additional
Agreements other than Ford.
3.2 Representations and Warranties True at Closing. The representations
and warranties made by SSC and by Vastera in Section 6 of this Agreement shall
be true, complete and correct in all material respects on and as of the Closing
with the same effect as though such representations and warranties had been made
on and as of such date (except in the case of any representation or warranty
that by its terms is made solely as of a specific date, which need be accurate
only as of such date).
3.3 Covenant Compliance. SSC and Vastera shall have performed or
complied with in all material respects their agreements and covenants contained
in this Agreement and the Related Agreements to be performed or complied with at
or prior to Closing.
3.4 Corporate Proceedings. All corporate and other proceedings required
to be taken by SSC or Vastera in connection with the transactions contemplated
by this Agreement and the Related Agreements and all documents incident thereto
shall be satisfactory in form and substance to Ford and Ford shall have received
all such counterpart originals or certified or other copies of such documents as
it shall reasonably request.
3.5 Secretary's Certificate. SSC shall have delivered to Ford copies of
each of the following, in each case certified as of the Closing Date by the
Secretary of SSC all resolutions of SSC's board of directors authorizing the
execution, delivery and
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performance of this Agreement and the Related Agreements and the transfer and
delivery of the Shares and a certification that all such resolutions are in full
force and effect.
3.6 Receipt of Certificates. SSC shall have delivered to Ford
certificates representing the Shares endorsed in blank or with accompanying
stock powers duly signed, and such other instruments or documents as Ford shall
reasonably request to transfer good and marketable title to all of the Shares in
Ford free, clear and discharged of all Encumbrances.
3.7 HSR Act. Any waiting period applicable to the purchase and sale of
the Shares under the HSR Act shall have terminated or expired.
3.8 No Adverse Change. On the Closing Date, the business and properties
of Vastera shall not have been or then be materially adversely affected in any
way as a result of any casualty or disaster, accident, labor dispute, exercise
of the power of eminent domain or other governmental act or any other fortuitous
event, act of God or the public enemy, nor shall have there occurred any
material adverse change in the business, financial position, or results of
operations of Vastera.
3.9 Litigation. No suit, action or other proceeding shall be pending or
threatened before any court or governmental agency seeking to restrain, prohibit
or to obtain damages or other relief in connection with this Agreement or the
Related Agreements or the consummation of the transactions contemplated hereby
or thereby and to the knowledge of Vastera and SSC there shall have been no
investigation or inquiry made or commenced by any governmental agency in
connection with this Agreement or Related Agreements or the transactions
contemplated hereby or thereby.
3.10 Opinion of Counsel. Ford shall have been furnished with an opinion
of counsel to Vastera and SSC dated as of the Closing Date with respect to
certain matters of Delaware law, in form and substance reasonably satisfactory
to Ford.
3.11 Business Combination Accounting Treatment. Vastera shall have
received written approval or concurrence from the SEC of its treatment of the
transaction contemplated hereby and the transactions contemplated by the Related
Agreements as a business combination applying the purchase method of accounting
under GAAP. This condition shall be deemed waived by Ford in the event that no
such written approval or concurrence has been received by Vastera within sixty
(60) days of the Effective Date.
All documents referred to in this Section 3 to be executed and delivered
to Ford shall be reasonably satisfactory in form and substance to Ford.
4. Covenants of Ford.
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4.1 Limitation on Acquiring Additional Stock. (a) Except as
otherwise provided in this Agreement, Ford agrees that from the closing date
of the IPO until July 1, 2004 (the "Market Standstill Period") under no
circumstance will it acquire additional shares of Vastera Common Stock if
such acquisition would cause the total number of shares held by Ford to
exceed twenty-seven and one half percent (27.5%) of Vastera's issued and
outstanding Common Stock (the "Market Standstill Percentage"), unless Ford
first receives the written consent of Vastera's Board of Directors; provided
that this obligation shall not apply to the acquisition by Ford of any shares
of Vastera common stock obtained pursuant to any dividend in kind
distribution or any other distribution or transaction which does not require
the payment of consideration by Ford.
(b) If Ford breaches its market standstill obligation contained
in subsection 4.1(a) and as a result of such breach, Ford's holdings of
Vastera issued and outstanding Common Stock exceeds twenty-seven and one half
percent (27.5%) of the issued and outstanding Common Stock of Vastera but
does not exceed thirty percent (30.0%) of the same, then Vastera will have the
right but not the obligation to purchase such number of shares of Vastera
Common Stock held by Ford as will reduce Ford's ownership interest to
twenty-seven and one half percent (27.5%) of the then outstanding shares of
Vastera Common Stock (taking such purchase into effect). The price per share
to be paid by Vastera any time it exercises its purchase right hereunder
shall be the lesser of (i) the price at which Vastera first sells shares to
the public in connection with its IPO, as contained in Vastera's final
prospectus or (ii) the lowest price per share paid by Ford in any open market
or private sales transaction.
(c) If Ford breaches its market standstill obligation contained
in subsection 4.1(a) and as a result of such breach, Ford's holdings of
Vastera issued and outstanding Common Stock exceeds thirty percent (30.0%) of
the issued and outstanding Common Stock of Vastera, then Vastera shall have
the right but not the obligation to purchase such number of shares of Vastera
Common Stock held by Ford as will reduce Ford's ownership interest to
twenty-five percent (25.0%) of the then outstanding shares of Vastera Common
Stock (taking such purchase into effect). The price per share to be paid by
Vastera any time it exercises its purchase right hereunder shall be the
lesser of (i) the price at which Vastera first sells shares to the public in
connection with its IPO, as contained in Vastera's final prospectus or (ii)
the lowest price per share paid by Ford in any open market or private sales
transaction.
(d) Notwithstanding the market standstill provisions contained in
subsection 4.1(a) to the contrary, Vastera acknowledges that if, during the term
of the Market Standstill Period: (i) Vastera enters into an agreement with a
third party permitting such third party to acquire an ownership percentage that
exceeds Ford's Market Standstill Percentage, Ford's Market Standstill Percentage
will immediately be adjusted upward to equal that of such third party; and (ii)
if any third party, by way of direct purchase from Vastera, open market purchase
or any combination thereof acquires an ownership percentage that exceeds Ford's
Market Standstill Percentage, the terms and conditions of subsection 4.1(a)
shall immediately terminate and be of no further force or effect. In addition,
if Vastera breaches the terms and conditions of Related Agreements, the terms
and conditions of subsection 4.1(a) shall immediately terminate and be of no
further force or effect.
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4.2 Limitation on Sale of Shares. For so long as Ford holds at
least 10% of the Common Stock on a fully diluted basis, Ford will have the
right to sell the Shares pursuant to a registration statement only in
accordance with the following schedule: (i) up to 10% of the initial number
of Shares acquired pursuant to this Agreement (the "INITIAL SHARES") on or
after six (6) months following the closing date of the IPO ; (ii) up to 20%
of the Initial Shares on or after twelve (12) months following the closing
date of the IPO; (iii) up to 70% of the Initial Shares on or after
twenty-four (24) months following closing date of the IPO; (iv) up to 85% of
the Initial Shares on or after thirty-six (36) months following closing date
of the IPO; (v) no limitation on or after forty-eight (48) months following
the closing date of the IPO. The number of Shares that can be sold shall be
adjusted for any stock splits, stock dividends or other events affecting the
capitalization of Vastera.
4.3. Termination of Market Standstill and Limitations on Ford
Sales. If either (i) Vastera postpones or otherwise delays proceeding with its
IPO beyond the period ending 90 days after the Effective Date, and the reason or
reasons underlying Vastera's decision to postpone proceeding with such IPO are
not reasonably based upon market conditions and factors, or (ii) Vastera has not
consummated the initial sale of shares of its Common Stock pursuant to its IPO
within 18 months of the Effective Date (regardless of market conditions), then
the terms and conditions contained in clauses (iv) and (v) of subsection 4.2
shall terminate and Ford shall be entitled to sell 100% of the Initial Shares at
anytime following the second anniversary of the closing date of the IPO;
provided however, that if following termination of the terms and conditions of
clauses (iv) and (v) pursuant to this section 4.3(a), Ford desires to increase
its ownership percentage in Vastera above the Market Standstill Percentage then
in effect, then any offer by Ford to purchase issued and outstanding shares of
Vastera common stock must be extended to all of Vastera's stockholders that hold
issued and outstanding shares of Vastera common stock. If Ford does not extend
such offer to all such stockholders, then Ford shall remain bound by the terms
and conditions of Section 4.1.
4.4. Survival. The covenants contained in Subsections 4.1 and 4.2
shall survive the Closing.
4.5 Breach of Representations and Warranties. Ford shall not take
any action that would breach or cause to be inaccurate any of the
representations and warranties set forth in Section 7. Promptly after becoming
aware of the occurrence of or the pending or threatened occurrence of any event
that would cause or constitute such a breach or inaccuracy, Ford shall give
detailed written notice thereof to Vastera and SSC and shall use its diligent
efforts to prevent or remedy such breach or inaccuracy promptly.
5. Covenants of SSC and Vastera.
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5.1. Observer Rights. Upon the execution of this Agreement, Ford
shall have the right to designate one representative (the "FORD OBSERVER") who
shall have the right to (i) attend each meeting of the Board of Directors of
Vastera, (ii) receive all notices of the time and place of any such meeting in
the same manner and at the same time as notice is sent to the directors or
committee members and (iii) receive copies of all notices, reports, minutes,
consents and other documents at the time and in the manner as they are provided
to the Board of Directors of Vastera; provided however, such representative
shall have no right to call a vote, prevent a vote, or vote on matters presented
or discussed at any meetings of the Board of Directors of Vastera. The right of
Ford to designate the Ford Observer shall terminate in the event that Ford's
share of Vastera Common Stock is less than * of Vastera's total equity on a
fully diluted basis.
5.2 Survival. The covenants contained in Subsection 5.1 shall
survive the Closing.
5.3 Breach of Representations and Warranties. Vastera shall not
take any action that would breach or cause to be inaccurate any of the
representations and warranties set forth in Section 6. Promptly after becoming
aware of the occurrence of or the pending or threatened occurrence of any event
that would cause or constitute such a breach or inaccuracy, Vastera shall give
detailed written notice thereof to Ford and shall use its diligent efforts to
prevent or remedy such breach or inaccuracy promptly.
6. Representations and Warranties of Vastera and SSC. Vastera and SSC
each hereby represents and warrants to Ford as follows, except as set forth on
the attached disclosure schedules, that:
6.1 Organization. Vastera and each subsidiary is a corporation
duly organized, validly existing, and in good standing under the laws of the
State of Delaware. Vastera and each subsidiary is qualified and authorized to
transact business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of its business or properties requires it to be
so qualified, the failure of which must have a material adverse effect on
Vastera to constitute a breach of this representation.
6.2 Authorization. Each of Vastera and SSC has full corporate
power and authority to enter into this Agreement and the Related Agreements to
which it is a party, to perform its obligations hereunder and thereunder, and to
consummate the transactions contemplated hereby and thereby. Vastera and SSC
each has taken all necessary and appropriate corporate action with respect to
the execution and delivery of this Agreement and the Related Agreements. No
other corporate proceedings on the part of either Vastera or SSC are necessary
to authorize this Agreement or the Related Agreements or to consummate the
transactions so contemplated hereby and thereby, including approval by any
creditors of Vastera or SSC. This Agreement and each Related Agreement
constitutes valid and binding obligations of Vastera and SSC (to the
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* This portion of the document has been omitted pursuant to a request for
confidential treatment and such portion has been filed separately with the U.S.
Securities and Exchange Commission.
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extent either is a party thereto), enforceable in accordance with its respective
terms except as limited by applicable bankruptcy, insolvency, moratorium,
reorganization, or other laws affecting creditors' rights and remedies
generally.
6.3 Subsidiaries. Except as set forth in the attached Schedule
6.3, Vastera has no subsidiaries. Vastera does not (i) own of record or
beneficially, directly or indirectly, (A) any shares of capital stock or
securities convertible into capital stock of any other corporation or (B) any
participating interest in any partnership, joint venture or other non-corporate
business enterprise or (ii) control, directly or indirectly, any other entity.
6.4 Capitalization. (a) The authorized capital stock of Vastera
(immediately prior to the Closing) will consist of 29,197,589 shares of capital
stock, consisting of: (i) 20,000,000 shares of Common Stock, and (ii) 9,197,589
shares of preferred stock, $.01 par value per share (the "PREFERRED STOCK"). Of
the 20,000,000 authorized shares of Common Stock, 4,421,794 shares are issued
and outstanding. The 9,197,589 shares of Preferred Stock are designated by
series and number consisting of: (i) 807,000 shares of Series A Preferred Stock,
of which 800,000 shares are issued and outstanding and 7,000 shares are reserved
for issuance upon exercise of an outstanding warrant; (ii) 173,000 shares of
Series B Preferred Stock, of which 104,208 shares are issued and outstanding and
4,511 shares are reserved for issuance upon exercise of certain warrants; (iii)
2,329,259 shares of Series C Preferred Stock, of which 2,310,813 shares are
issued and outstanding and 18,446 shares are reserved for issuance upon exercise
of certain warrants; (iv) 405,488 shares of Series C-1 Preferred Stock, of which
357,011 shares are issued and outstanding; (v) 3,004,512 shares of Series D
Preferred Stock, of which 2,973,749 shares are issued and outstanding and 30,763
shares are reserved for issuance upon exercise of certain warrants; (vi) 631,608
shares of Series D-1 Preferred Stock, of which 196,980 shares are issued and
outstanding and 385,505 shares are reserved for issuance upon exercise of
certain warrants; and (vii) 1,846,722 shares of Series E Preferred Stock, of
which 1,569,577 shares are issued and outstanding. All of the issued and
outstanding shares of Common Stock and Preferred Stock have been duly authorized
and validly issued and are fully paid and nonassessable. Except as set forth on
Schedule 6.4 or provided in this Agreement or in the Certificate of
Incorporation, (i) no subscription, warrant, option, convertible security or
other right (contingent or otherwise) to purchase or acquire any shares of
capital stock of Vastera is authorized or outstanding, (ii) there is no
commitment of Vastera to issue any subscription, warrant, option, convertible
security or other such right or to issue or distribute to holders of any shares
of its capital stock any evidences of indebtedness or assets of Vastera, and
(iii) Vastera has no obligation (contingent or otherwise) to purchase, redeem or
otherwise acquire any shares of its capital stock or any interest therein or to
pay any dividend or make any other distribution in respect thereof. Except as
set forth on Schedule 6.4, as provided in the Second Amended and Restated
Investors' Rights Agreement dated as of November 24, 1998, as amended from time
to time (the "INVESTORS' RIGHTS AGREEMENT") attached hereto as Exhibit A or as
provided in this Agreement or in the Certificate of Incorporation, no person or
entity is entitled to (i) any preemptive or similar right with respect to the
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issuance of any capital stock of Vastera or (ii) any rights with respect to the
registration of any capital stock of Vastera under the Securities Act of 1933,
as amended (the "SECURITIES ACT"). All of the issued and outstanding shares of
Common Stock and Preferred Stock have been offered, issued and sold by Vastera
in compliance with applicable Federal and state securities laws. To the best of
Vastera's knowledge, other than as set forth in the Second Amended and Restated
Right of First Refusal and Co-Sale Agreement, dated as of November 24, 1998, as
amended from time to time (the "CO-SALE AGREEMENT") attached hereto as Exhibit B
no stockholder of Vastera has granted options or other rights to purchase any
shares of Common Stock from such stockholder.
(b) As of the Closing Date, after giving effect to the Closing,
Ford shall be the record owner of the greater of (i) 5,333,333 shares of the
Common Stock of Vastera and (ii) 20% of the Common Stock of Vastera calculated
on a fully diluted basis as of the Closing. Exhibit I sets forth those Persons
who are or shall be record owner of at least 5% of the Common Stock of Vastera
calculated on a fully diluted basis as of the Closing.
6.5 Issuance of Shares. The issuance of the Shares to SSC was duly
authorized by all necessary corporate action on the part of the Vastera, and the
Shares so issued and delivered to SSC are duly and validly issued, fully paid
and non-assessable.
6.6 Ownership of Shares. SSC is the record and beneficial owner
of, and has good and marketable title free and clear of any Encumbrances to the
Shares. Upon transfer to Ford of certificates representing the Shares, Ford will
be the absolute owner of such Shares free, clear and discharged of and from any
Encumbrances.
6.7 Governmental Consents. No consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any governmental authority is required on the part of Vastera or
SSC in connection with (i) the execution and delivery of this Agreement, (ii)
the issuance or transfer of the Shares, (iii) the other transactions to be
consummated at the Closing, as contemplated by this Agreement, provided,
however, that in connection with provision (ii) of this Section 6.7 the
following are required: (a) requisite filings with the appropriate state
securities authorities, which Vastera hereby covenants to make on a timely basis
and (b) such filings as shall have been made prior to and shall be effective on
and as of the Closing or within the prescribed time period following Closing.
Assuming the accuracy of the representations and warranties of Ford in Section 7
of this Agreement, the transfer of the Shares to Ford will be exempt from
applicable Federal and state securities registration requirements.
6.8 Financial Statements. Vastera has delivered to Ford (i) a
complete and correct copy of the audited balance sheet of Vastera and its
Subsidiaries as of December 31, 1999 and as of December 31, 1998 and the related
statements of
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operations and cash flows for the fiscal years then ended, compiled by Vastera
(the "AUDITED FINANCIAL STATEMENTS") and (ii) a complete and correct copy of the
unaudited balance sheet of Vastera (the "STUB PERIOD BALANCE SHEET") as of March
31, 2000 (the "STUB PERIOD BALANCE SHEET Date") and the related statements of
operations and cash flows for the three-month periods then ended, compiled by
Vastera (the "STUB PERIOD FINANCIAL STATEMENTS" and together with the Audited
Financial Statements, the "FINANCIAL STATEMENTS"). The Financial Statements are
complete and correct, are in accordance with the books and records of Vastera
and present fairly the financial condition and results of operations of Vastera,
as of the dates and for the periods indicated. The Audited Financial Statements
have been prepared in accordance with generally accepted accounting principles,
consistently applied. The Stub Period Financial Statements have been prepared
for the internal use of management and may not be in accordance with generally
accepted accounting principles because of the absence of footnotes normally
contained therein and are subject to normal year-end audit adjustments which in
the aggregate will not be material.
6.9 Absence of Liabilities. Except as disclosed on Schedule 6.9,
neither Vastera nor any of its Subsidiaries has any material liabilities and
material contingent liabilities which are not disclosed, or adequately provided
for, in the Financial Statements, with the exception of liabilities incurred in
the ordinary course of business subsequent to the Stub Period Balance Sheet Date
which do not have, either in any individual case or in the aggregate, a material
adverse effect on Vastera's or its Subsidiaries' assets, liabilities, financial
condition, operation or prospects. Except as disclosed on Schedule 6.9, since
the Stub Period Balance Sheet Date, there has been no material adverse change in
the condition, financial or otherwise, net worth or results of operations of
Vastera and its Subsidiaries, other than changes occurring in the ordinary
course of business which changes have not, individually or in the aggregate, had
a material adverse effect on the business, prospects, properties or condition,
financial or otherwise, of Vastera.
6.10 Agreements; Action. Except as set forth on Schedule 6.10,
there are no agreements, understandings, instruments, contracts, proposed
transactions, judgments, orders, writs or decrees to which Vastera or any of its
Subsidiaries is a party or, to its knowledge, is bound which may involve (i)
obligations (contingent or otherwise) of, or payments to, Vastera or any of its
Subsidiaries in excess of $100,000 (other than obligations of, or payments to,
Vastera or any of its Subsidiaries arising from purchase or sale agreements
entered into in the ordinary course of business), (ii) the license of any
patent, copyright, trade secret or other proprietary right to or from Vastera or
any of its Subsidiaries (other than licenses arising from the purchase of "off
the shelf" or other standard products), (iii) provisions restricting or
affecting the development, manufacture or distribution of Vastera's or any of
its Subsidiaries' products or services, or (iv) indemnification by Vastera or
any of its Subsidiaries with respect to infringements of proprietary rights
(other than indemnification obligations arising from purchase or sale agreements
entered into the ordinary course of business).
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6.11 Compliance. Each of Vastera and its Subsidiaries has, in all
material respects, complied with all laws, regulations and orders applicable to
its present and proposed business, except where the failure to be in compliance
with such laws, regulations or orders would not have a material adverse effect
on the business, operations or condition of Vastera or any of its Subsidiaries.
There is no term or provision of any material mortgage, indenture, contract,
agreement or instrument to which Vastera or any of its Subsidiaries is a party
or by which it is bound, or, to the best knowledge of Vastera, of any provision
of any state or Federal judgment, decree, order, statute, rule or regulation
applicable to or binding upon Vastera or any of its Subsidiaries, that
materially adversely affects or, so far as Vastera may now foresee, in the
future is reasonably likely to materially adversely affect, the business,
prospects, condition, affairs or operations of Vastera or any of its
Subsidiaries, properties or assets. To the best of the knowledge of Vastera, no
employee of Vastera or any of its Subsidiaries is in violation of any contract
or covenant (either with Vastera or with another entity) relating to employment,
patent, other proprietary information disclosure, non-competition, or
non-solicitation. Vastera and its Subsidiaries have all necessary permits,
licenses and other authorizations required to conduct their business as
conducted and Vastera and its Subsidiaries have been operating their business
pursuant to and in compliance with the terms of all such permits, licenses and
other authorizations, except where the failure to obtain such permit, license or
authorization or their non-compliance has not and could not reasonably be
expected to have a material adverse effect on the business operations or
conditions of Vastera and its Subsidiaries.
6.12 Books and Records. The minute books of Vastera contain
complete and accurate records of all meetings and other corporate actions of its
stockholders and its Board of Directors and committees thereof. The stock ledger
of Vastera is complete and reflects all issuances, transfers, repurchases and
cancellations of shares of capital stock of Vastera.
6.13 Litigation. Except as set forth in the attached Schedule 6.13
for all representations and warranties in this Section 6.13, there is no (i)
action, suit, claim, proceeding or investigation pending or, to the best of
Vastera's knowledge, threatened against or affecting Vastera or its
Subsidiaries, at law or in equity, or (ii) governmental inquiry pending or, to
the best of Vastera's knowledge, threatened against or affecting Vastera or its
Subsidiaries, and to the best of Vastera's knowledge there is no basis for any
of the foregoing. Neither Vastera nor any of its Subsidiaries is not in default
with respect to any order, writ, injunction or decree known to or served upon
Vastera or any of its Subsidiaries of any court or of any Federal, state,
municipal or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign. There is no action or suit by Vastera or
its Subsidiaries pending, threatened or contemplated against others.
6.14 Patents, Trademarks, Etc. Each of Vastera and its Subsidiaries
owns or possesses licenses or other rights to use all intellectual property
necessary or desirable to the conduct of its business as conducted, and no claim
is pending or threatened to the effect that the operations of Vastera or any of
its Subsidiaries infringe
11
upon or conflict with the asserted rights of any other Person under any
intellectual property, and there is no basis for any such claim (whether or not
pending or threatened). No claim is pending or, to the best of Vastera's
knowledge, threatened to the effect that any such intellectual property owned or
licensed by Vastera or its Subsidiaries, or which Vastera or its Subsidiaries
otherwise have the right to use, is invalid or unenforceable by Vastera or any
of its Subsidiaries, and, to the best of Vastera's knowledge, there is no basis
for any such claim (whether or not pending or threatened).
6.15 Taxes. Except as set forth in the attached Schedule 6.15,
Vastera and each of its Subsidiaries has filed all tax returns, Federal, state,
county and local, required to be filed by it, and each of Vastera and its
Subsidiaries has paid all taxes shown to be due by such returns as well as all
other taxes, assessments and governmental charges which have become due or
payable, including without limitation, all taxes which Vastera is obligated to
withhold from amounts owing to employees, creditors and third parties. Each of
Vastera and its Subsidiaries has established adequate reserves for all taxes
accrued but not yet payable. The Federal income tax returns of Vastera and each
of its Subsidiaries have never been audited by the Internal Revenue Service. No
deficiency assessment with respect to or proposed adjustment of Vastera's or any
of its Subsidiaries' Federal, state, county or local taxes is pending or, to the
best of Vastera's knowledge, threatened. There is no tax lien (other than for
current taxes not yet due and payable), whether imposed by any Federal, state,
county or local taxing authority, outstanding against the assets, properties or
business of Vastera or its Subsidiaries. Neither Vastera nor any of its present
or former stockholders has ever filed an election pursuant to Section 1362 of
the Internal Revenue Code of 1986, as amended, that Vastera be taxed as an S
corporation.
6.16. Assets; Real Property.
(a) Except as set forth in the attached Schedule 6.16(a) Vastera
and each of its Subsidiaries has good and marketable title to, or a valid
leasehold interest in, the properties and assets used by it, located on its
premises or shown on The Financial Statements or acquired thereafter, free and
clear of all Encumbrances, except for properties and assets disposed of in the
ordinary course of business since the date of The Financial Statements and
except for Encumbrances disclosed on The Financial Statements and liens for
current property taxes not yet due and payable. Vastera and each of its
Subsidiaries owns, or has a valid leasehold interest in, all assets and
properties necessary for the conduct of its business as conducted.
(b) Neither Vastera nor any of its Subsidiaries has and never has
had, any ownership interest, security interest or other interest of any kind in
any real property whatsoever with the exception of real property leases for
office space.
6.17. Contracts; No Defaults. Neither Vastera nor any of its
Subsidiaries is in default with respect to the performance of any of its
obligations under any agreements material to Vastera and its Subsidiaries,
including but not limited to,
12
employment agreements, agreements involving performance of services or delivery
of goods or materials to or by Vastera or its Subsidiaries, and each lease,
rental, license and conditional sale agreement affecting any real or personal
property used, owned or licensed by Vastera or its Subsidiaries, agreements
relating to intellectual property used, owned or licensed by Vastera or its
Subsidiaries, and other agreements to which Vastera or its Subsidiaries is a
party or is bound, in each case if the agreement involves the payment of
$100,000 or more in either a single payment or over a twelve-month period. Each
such agreement is in full force and effect and is valid and enforceable in
accordance with its terms.
6.18. Employees. To the best knowledge of Vastera or SSC, no
executive or key employee of Vastera or any of its Subsidiaries or any group of
employees of Vastera or any of its Subsidiaries has any plans to terminate
employment with Vastera or any of its Subsidiaries. Neither Vastera or any of
its Subsidiaries, nor to the best of Vastera's knowledge, any of its employees
is subject to any noncompete, nondisclosure, confidentiality, employment,
consulting or similar agreements relating to, affecting or in conflict with the
present business activities of Vastera or any of its Subsidiaries. Neither
Vastera nor any of its Subsidiaries is a party to or bound by any collective
bargaining agreement, nor has it experienced any strikes, grievances, claims of
unfair labor practices or other collective bargaining disputes and no activity
or claims have been threatened.
6.19. ERISA. Vastera's plans or trusts and the plans or trusts of
its Subsidiaries are all in compliance with ERISA and the Internal Revenue Code
of 1986.
6.20. Offering. Subject to the truth of the representations and
warranties of Ford contained in Section 7 hereof, the transfer of the Shares is
exempt from the registration requirements of the Securities Act of 1933, as
amended.
6.21. Related Party Transactions. Except as set forth in the
attached Schedule 6.21, no employee, officer or director of Vastera or any of
its Subsidiaries, or member of the immediate family of any of them, is indebted
to Vastera or any of its Subsidiaries, nor is Vastera or any of its Subsidiaries
indebted (or committed to make loans or extend or guarantee credit) to any of
them. No employee, officer or director of Vastera or any of its Subsidiaries, or
member of the immediate family of any of them, has any direct or indirect
ownership interest in any Person with which Vastera or any of its Subsidiaries
is affiliated or with which Vastera has a business relationship, or any Person
that competes with Vastera or any of its Subsidiaries. No employee, officer or
director of Vastera or any of its Subsidiaries, or member of the immediate
family of any of them, is, directly or indirectly, interested in any material
agreement with Vastera or any of its Subsidiaries.
6.22 Disclosures. Neither this Agreement nor any exhibit hereto,
nor any report, certificate or instrument furnished to Ford in connection with
the transactions contemplated by this Agreement, when read together, contains or
will contain any material misstatement of fact or omits or will omit to state a
material fact necessary to
13
make the statements contained herein or therein not misleading. Vastera knows of
no information or fact that has or would have a material adverse effect on the
business, prospects or condition (financial or otherwise) of Vastera that has
not been disclosed to Ford in writing.
7. Representations and Warranties of Ford. Ford represents and warrants
to Vastera as follows, except as set forth on the attached disclosure schedules,
that:
7.1 Organization; Good Standing; Power. Ford is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
7.2 Authorization of Ford. Ford has full power and authority to
enter into this Agreement and the Related Agreements to which it is a party, to
perform its obligations hereunder and thereunder, and to consummate the
transactions contemplated hereby and thereby. Ford has taken all necessary and
appropriate corporate action with respect to the execution and delivery of this
Agreement and the Related Agreements. No other corporate proceedings on the part
of Ford are necessary to authorize this Agreement or to consummate the
transactions so contemplated hereby including approval by any creditors of Ford.
This Agreement and each Related Agreement constitutes valid and binding
obligations of Ford, enforceable in accordance with their terms except as
limited by applicable bankruptcy, insolvency, moratorium, reorganization, or
other laws affecting creditors' rights and remedies generally.
7.3 Investment Intent. Ford is acquiring the Shares for its own
account for investment and not with a view to, or for sale or other disposition
in connection with, any distribution thereof, nor with any present intention of
selling or otherwise disposing of the same.
7.4. Investment Experience; Accredited Investor Status. Ford is an
informed and sophisticated investor, and has sufficient knowledge and experience
in business and financial matters to permit it to evaluate the merits and risks
of an investment in Vastera. Ford is an "accredited investor" as defined in
Regulation D promulgated under the Securities Act. Ford acknowledges that the
Shares are being issued and sold under exemptions from registration provided in
the Securities Act and under applicable state securities laws and, therefore,
cannot be sold unless subsequently registered under the Securities Act or
applicable state securities laws or an exemption from such registrations is
available. Accordingly, Ford represents and warrants that it is able to bear the
economic risk of any investment in the Shares.
7.5. Information. Ford represents that it has had the opportunity
to ask questions and receive answers concerning the Shares and to obtain
whatever information concerning Vastera as has been requested by Ford in order
to make its investment decision.
14
7.6 Conduct of Business. At all times, Ford has conducted the
Business diligently in the ordinary course thereof.
7.7 Undisclosed Liabilities, Releases and Waivers. There are no
debts, liabilities or obligations with respect to which the assets of the
Business that are being acquired by SSC are subject, whether liquidated,
unliquidated, accrued, absolute, contingent, or otherwise other than in the
ordinary course of business.
7.8 Compliance with Laws. To Ford's knowledge, Ford has complied
and is in compliance with all applicable foreign, federal, state, and local
laws, statutes, licensing requirements, rules, and regulations, and judicial or
administrative decisions applicable to the Business where the failure to so
comply could have a material adverse effect on the results of operations or
financial condition of the Business.
7.9 Consents. Except for the requirements of the HSR Act or as set
forth on Schedule 7.9, no consent, approval, order or authorization of, or
registration, qualification, designation, declaration or filing with, any
governmental authority is required on the part of Ford in connection with (i)
the execution and delivery of this Agreement or (ii) the transactions to be
consummated at the Closing, as contemplated by this Agreement.
7.10 Restrictive Documents or Orders. Ford is not a party to or
bound under any agreement, contract, order, judgment, writ, rule regulation or
decree, or any similar restriction not of general application which reasonably
could be expected to materially adversely affect, (i) the continued operation by
SSC of the Business after the Closing on substantially the same basis as the
Business was theretofore operated (assuming that SSC and Vastera have received
all requisite consents and are qualified and authorized to operate the Business
in each jurisdiction in which the nature of the Business requires it to be so
qualified), or (ii) the consummation of the transactions contemplated by this
Agreement.
7.11 Absence of Change. Since March 31, 2000, there has been no
material adverse change in the condition of the Business, financial or
otherwise, other than changes occurring in the ordinary course of business which
changes have not, individually or in the aggregate, had a materially adverse
effect on the Business.
7.12 Litigation. Except as set forth on Schedule 7.12, there is no
(i) action, suit, claim, proceeding or investigation pending or, to Ford's
knowledge, threatened against or affecting the operation of the Business by
Ford, at law or in equity, or (ii) governmental inquiry pending or, to Ford's
knowledge, threatened against or affecting the operation of the Business by
Ford. Ford is not in default with respect to any order, writ, injunction or
decree known to or served upon Ford relating to the Business of any court or of
any Federal, state, municipal or other governmental department, commission,
board, bureau, agency or instrumentality, domestic or foreign.
15
7.13 No Conflict or Default. Neither the execution and delivery of
this Agreement, nor compliance with the terms and provisions hereof and thereof,
including without limitation, the consummation of the transactions contemplated
hereby and thereby, will violate any statute, regulation, or ordinance of any
governmental authority, or conflict with or result in the breach of any term,
condition, or provision of its Articles of Incorporation or Bylaws, as presently
in effect, or of any agreement, deed, contract, mortgage, indenture, writ,
order, decree, legal obligation, or instrument to which Ford is a party or by
which it is or may be bound, or constitute a default (or an event which, with
the lapse of time or the giving of notice, or both, would constitute a default)
thereunder.
8. Survival of Representations and Warranties. Except as expressly
provided elsewhere herein, all representations and warranties contained herein
shall survive the execution and delivery of this Agreement and the closing of
the transactions contemplated hereby for a period of two years.
9. Financial Statements. The audited financial statements of the
Business are attached hereto as Exhibit X. Xxxx makes no representations as to
the accuracy of such financial statements.
10. Dispute Resolution. If a material breach occurs or a dispute arises
between the parties relating to this Agreement, the following procedure shall be
implemented in lieu of litigation, except that either party may seek injunctive
relief from a court where appropriate in order to maintain the status quo while
this procedure is being followed:
(a) The parties shall hold a meeting promptly, attended by persons with
decision-making authority regarding the dispute, to attempt in good
faith to negotiate a resolution of the dispute; provided, however,
that no such meeting shall be deemed to vitiate or reduce the
obligations and liabilities of the parties hereunder or be deemed a
waiver by a party hereto of any remedies to which such party would
otherwise be entitled hereunder.
(b) If within thirty (30) days after such meeting the parties have not
succeeded in negotiating a resolution of the dispute, they agree to
submit the dispute to mediation in accordance with the then current
Model Procedure for Mediation of Business Disputes of the Center for
Public Resources and to bear equally the costs of the mediation.
(c) The parties will jointly appoint a mutually acceptable mediator,
seeking assistance in such regard from the Center for Public
Resources if they have been unable to agree upon such appointment
within twenty (20) days from the conclusion of the negotiation
period.
(d) The parties agree to participate in good faith in the mediation and
negotiations related thereto for a period of thirty (30) days. If
the parties are not successful in resolving the dispute through the
mediation, then the
16
parties agree to submit the matter to binding arbitration or a
private adjudicator.
(e) Mediation or arbitration shall take place in Pittsburgh,
Pennsylvania unless otherwise agreed by the parties. Equitable
remedies shall be available in any arbitration. Punitive damages
shall not be awarded. This Section is subject to the Federal
Arbitration Act, 9 U.S.C.A. Section 1 et seq.
(f) In the event of arbitration, the parties agree that the award of the
arbitrator shall be (1) the sole and exclusive remedy between them
regarding any claims, counterclaims, or issues presented to the
arbitrator; (2) final and subject to no judicial review; and (3)
made and shall promptly be payable in U.S. dollars free of any tax,
deduction, or offset. The parties further agree that any costs,
fees, or taxes incident to enforcing the award shall, to the maximum
extent permitted by law, be charged against the party resisting such
enforcement. The parties hereto agree that judgment on the
arbitration award may be entered and enforced in any court of
competent jurisdiction. Each party shall, except as otherwise
provided herein, be responsible for its own costs, including legal
fees, incurred in the course of any arbitration proceedings. The
fees of the arbitrator shall be divided evenly between the parties.
11. Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand, by
recognized overnight courier service or mailed by first class certified or
registered mail, return receipt requested, postage prepaid:
If to Vastera, at Vastera, Inc., 00000 Xxxxxxxx Xxxxx, Xxxxx 000,
Xxxxxx, XX 00000, Attention: President, or at such other address or addresses as
may have been furnished in writing by Vastera to Ford, with a copy to Xxxxx X.
Xxxxxxxxx, Esq., Xxxxxxx, Phleger & Xxxxxxxx LLP, 000 Xxxxxxxxxxxx Xxxxxx, X.X.,
Xxxxxxxxxx, X.X. 00000;
If to Ford, at Xxx Xxxxxxxx Xxxx, Xxxxxxxx, Xxxxxxxx 00000,
Attention: Secretary, or at such other address or addresses as may have been
furnished to Vastera in writing by Ford, with a copy to Ford Motor Company,
Office of the General Counsel, Xxx Xxxxxxxx Xxxx, XXX Xxxxx 000, Xxxxxxxx,
Xxxxxxxx 00000, Attention: Assistant General Counsel --Transactions.
Notices provided in accordance with this Section 10 shall be deemed
delivered upon personal delivery, one business day after delivery to a
recognized overnight courier service or two business days after deposit in the
mail.
12. Miscellaneous.
17
12.1 Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto with respect to the subject matter
hereof and supersedes all prior agreements and understandings relating to such
subject matter.
12.2 Amendments and Waivers. Except as otherwise expressly set
forth in this Agreement, any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of Vastera and Ford. Any amendment or waiver effected in accordance with
this Section 12 shall be binding upon each of Ford and Vastera. No waivers of or
exceptions to any term, condition or provision of this Agreement, in any one or
more instances, shall be deemed to be, or construed as, a further or continuing
waiver of any such term, condition or provision.
12.3. Counterparts. This Agreement may be executed in two
counterparts, each of which shall be deemed an original, but all of which, when
taken together, shall constitute one and the same instrument.
12.4. Headings. The headings of the sections, subsections, and
paragraphs of this Agreement have been added for convenience only and shall not
be deemed to be a part of this Agreement.
12.5. Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision.
12.6. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
12.7. In connection with this Agreement, Ford and Vastera have
executed a Parent Guaranty, attached hereto as Exhibit H.
12.8. Definitions. The following terms as used in this Agreement
shall have the meanings specified below:
"ADDITIONAL AGREEMENTS" means the Registration Rights Agreement and the
New Co-Sale Agreement.
"BUSINESS" means the assets and rights transferred by Ford to Vastera
pursuant to the Related Agreements and all liabilities arising from or
associated with the Related Agreements, but specifically excluding any earnings
deficit associated with the Business prior to the date hereof.
"ENCUMBRANCE" means any claim, charge, lease, covenant, easement,
encumbrance, security interest, lien, option, pledge, right of others, mortgage,
hypothecation, conditional sale, or restriction (whether on voting, sale,
transfer, disposition, or otherwise), whether imposed by agreement,
understanding, law, equity,
18
or otherwise, except for any restrictions on transfer generally arising under
any applicable federal or state securities law.
"GAAP" means U.S. generally accepted accounting principals.
"HSR ACT" means the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976,
as amended, and the related regulations and published interpretations.
"IPO" means the initial underwritten public offering of shares of
Vastera's Common Stock, with an aggregate offering price of no less than
$20,000,000.
"NEW CO-SALE AGREEMENT" means the Co-Sale Agreement, as amended only to
include Ford as an "Investor" (as such term is defined in the Co-Sale Agreement)
that will be executed by the Parties as of the date of Closing.
"RELATED AGREEMENTS" means
(a) The License Agreement, dated as of the date hereof, and
attached hereto as Exhibit C.
(b) The Employee Transfer Agreement, dated as of the date hereof,
and attached hereto as Exhibit D.
(c) The Employee Secondment Agreement, dated as of the date
hereof, and attached hereto as Exhibit E.
"REGISTRATION RIGHTS AGREEMENT" means the agreement in the form of the
Third Amended and Restated Investors' Rights Agreement, that is (attached hereto
as Exhibit F) that will be executed by the Parties as of the date of Closing.
"SEC" means the United States Securities and Exchange Commission.
"TO FORD'S KNOWLEDGE" means the actual knowledge of Xxxx Xxxxx, Manager,
Global Customs and the knowledge that he should have had acting as a reasonably
prudent manager in his capacity as Manager, Global Customs.
12.8 Successors and Assigns. The provisions of this Agreement shall
be binding upon, and inure to the benefit of, the respective successors,
assigns, heirs, executors and administrators of the parties hereto.
[SIGNATURE PAGE TO FOLLOW]
19
IN WITNESS WHEREOF, the undersigned have hereunto set their hands to this
Stock Issuance Agreement as of the day and year first above written.
VASTERA, INC.
By: /s/ Arjun Rishi
--------------------------------
VASTERA SOLUTION SERVICES CORPORATION
By: /s/ Arjun Rishi
--------------------------------
FORD MOTOR COMPANY
By: /s/ Xxxxx Xxxxxx
--------------------------------
20
EXHIBIT A - INVESTORS RIGHTS AGREEMENT
[PLEASE SEE EXHIBIT 4.2 OF THE COMPANY'S REGISTRATION STATEMENT FILED THEREIN.]
EXHIBIT B - CO-SALE AGREEMENT
Exhibit B
VASTERA, INC.
SECOND AMENDED AND RESTATED RIGHT OF FIRST REFUSAL
AND CO-SALE AGREEMENT
THIS SECOND AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE
AGREEMENT (the "Agreement") is made as of this 24th day of November, 1998, by
and among the following parties: VASTERA, INC., a Delaware corporation
formerly known as Export Software International. Inc. (the "COMPANY"); the
investors identified on the signature pages hereto (collectively, the
"INVESTORS" and each, an "INVESTOR"; and certain stockholders of the Company
listed on Exhibit A hereto (the "KEY STOCKHOLDERS").
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and is the Series D Convertible Preferred Stock and Warrant
Purchase Agreement of even date herewith, the Amended and Restated Right of
First Refusal and Co-Sale Agreement (the "Prior Agreement") is hereby amended
and restated, and the parties agree, as follows:
1. DEFINITIONS.
(a) "CO-SALE STOCK" shall mean shares of the Company's Common Stock
or Preferred Stock now owned or subsequently acquired by the Key
Stockholders. The number of shares of Co-Sale Stock owned by each Key
Stockholder is set forth on Exhibit A, which Exhibit shall automatically be
amended from time to time to reflect changes is the number of shares owned by
each Key Stockholder.
(b) "COMMON STOCK" shall mean the Company's Common Stock, $0.01 par
value per share, and shall be deemed to include all shares of Common Stock
issued or issuable upon conversion of the Preferred Stock (including but not
limited to conversion of the Option Shares).
(c) "MAJORITY INVESTORS" shall mean Investors holding a majority of
the shares of Common Stock held by all Investors.
(d) "OPTION SHARES" means, collectively, (i) shares of the
Company's Series B Convertible Preferred Stock issuable upon the exercise of
the option granted pursuant to the Option Agreement dated as of July 31, 1996
between Battery Ventures III, L.P. and the Company, (ii) shares of the
Company's Series C-1 Convertible Preferred Stock issuable upon the exercise
of the options granted pursuant to the Option Agreements between the Company
and terrain of the Investors, respectively; and (iii) shares of the Company's
Series D-1 Convertible Preferred Stock issuable upon the exercise of the
Warrant sold to certain of the Investors by the Company.
(e) "PREFERRED STOCK" shall mean collectively, the Company's Series
A Convertible Preferred Stock, $0.01 par value per share, the Company's
Series B Convertible Preferred Stock, $0.01 par value per share, the
Company's Series C Convertible Preferred Stock $0.01 par value
per share the Company's Series C-1 Convertible Preferred Stock $0.01 par
value per share, the Company's Series D Convertible Preferred Stock, $0.01
par value per share and the Company's Series D-1 Convertible Preferred Stock
$0.01 par value per share.
2. SALES BY KEY STOCKHOLDERS.
2.1 NOTICE REQUIREMENT.
If any Key Stockholder proposes to sell or transfer any shares of
Co-Sale Stock (a "Selling Stockholder Selling Stockholder shall, prior to and
as a condition precedent to any such proposed transfer or sale, promptly give
written notice (the "Stockholder Notice") simultaneously to the Company and
to the Investors. The Stockholder Notice shall describe in reasonable detail
the proposed sale or transfer including, without limitation, the number of
shares of Co-Sale Stock to be sold or transferred, the nature of such sale or
transfer, the name of and address of the proposed transferee and the purchase
price and other terms of such sale or transfer. If the sale or transfer is
being made pursuant to the provisions of Sections 3(a) and 3(b) hereof, the
Stockholder Notice shall state under which section the sale or transfer is
being made.
2.2 COMPANY'S RIGHT TO PURCHASE.
For a period of twenty (20) days following receipt of any Stockholder
Notice described in Section 2.1, the Company shall have the right to purchase
all or a portion of the shares of Co-Sale Stock subject to such Stockholder
Notice on the same terms and conditions as set forth therein. The Company's
purchase right shall be exercised by written notice signed by an officer of
the Company (the "Company Notice") and delivered to the Selling Stockholder
and to Investors designating a date for closing at the offices of the Company
on the first business day at least five (5) days but not more than thirty
(30) days after the date of the Company Notice. At the closing, the Company
will deliver m the Selling Stockholder a certified or bank check or by wire
transfer for the amount of payment for the Co-Sale Stock being purchased
against receipt of certificates representing such Co-Sale Stock duly endorsed
to transfer good and marketable title to the Company free and clear of all
liens and encumbrances.
2.3 INVESTORS' RIGHT TO PURCHASE.
(a) If the Company does not purchase all of the Co-Sale Stock
available pursuant to its rights under Section 2.2 within the period set
forth therein, the Investors shall then have the right, exercisable upon
written notice to the Selling Stockholder within thirty (30) days of the date
of the Stockholder Notice described in Section 2.1 (the "Investors' Notice")
to purchase all but not less than all of the shares of Co-Sale Stock not
purchased by the Company pursuant to Section 2.2 subject to the Stockholder
Notice on the same terms and conditions. The Selling Stockholder and the
Investors shall mutually agree upon a date for closing at the offices of the
Company on the first business day at least ten (10) days and no more than
thirty (30) days after the date the Investors shall deliver the Investors'
Notice to the Selling Stockholder. At the closing, the Investors will
deliver to the Selling Stockholder a certified or bank check or wire transfer
for the amount of payment for the shares of Co-Sale Stock being purchased
against receipt of certificates representing such Co-Sale Stock duly endorsed
to transfer good and marketable title to the Investor(s) free and clear of
all liens or encumbrances.
2
(b) If one or more of the Investors intends to exercise their
rights hereunder to purchase the shares of Co-Sale Stock not purchased by the
Company pursuant to Section 2,2, then each Investor intending to exercise
such option shall be entitled to purchase a portion of such shares of Co-Sale
Stock equal to a fraction, the numerator of which equals the number of shares
of Common Stuck held by such Investor and the denominator of which equals the
number of shares of Common Stock held by all of the Investors.
(c) If one or more of the Investors fails to exercise their rights
hereunder to purchase the share of Co-Sale Stock not purchased by the Company
pursuant to Section 2.2, the Selling Stockholder shall give prompt notice of
such failure to the Investors who did so elect (the "Electing Investors").
Such notice may be made by telephone if confirmed in writing within two (2)
business days. Each of the Electing Investors may elect to purchase up to
the entire unsold portion of the Co-Sale Stock by giving written notice to
the Selling Stockholder within five (5) business days from the date that they
received notice under this Section 2.3(c); provided, however, that if more
than one Electing Investor desires to purchase such unsold portion, such
Electing Investors shall be limited to their PRO RATA share of the unsold
portion. For purposes of this Section 2.3(c), each Electing Investor's PRO
RATA share shall be the ratio of the number of shares of Common Stock held by
such Electing Investor to (y) the total number of shares of Common Stack held
by all such Electing Investors.
2.4 INVESTORS' RIGHT TO PARTICIPATE IN THE SALE OF CO-SALE STOCK.
(a) Should the Investors fail to exercise their rights to purchase
all of the shares of Co-Sale Stock not purchased by the Company described in
the Stockholder Notice issued pursuant to Section 2.1 following the exercise
or expiration of the rights of purchase described in Sections 2.2 and 2.3,
then each Investor shall have the right, exercisable upon written notice to
the Selling Stockholder, and to the Other Investors, within forty-five (45)
days of the date of the Stockholder Notice described in Section 2.1, to
participate in such sale of Co-Sale Stock to the third parry purchases on the
same terms and conditions as are applicable to the Selling Stockholder. Such
notice shall indicate the number of shares of Common Stock such Investor
wishes to sell under its right to participate in accordance with this Section.
(b) Each Investor exercising its rights under this Section 2.4 may
sell all or any part of that number of shares equal to the product obtained
by multiplying (x) the aggregate number of shares of Co-Sale Stock covered by
the Stockholder Notice (as reduced by any purchases pursuant to Sections 22
or 2.3) by (y) a fraction the numerator of which is the number of shares of
Common Stock held by such co-selling Investor at the time of the sale or
transfer and the denominator of which is the total number of shares of Common
Stack held by the Selling Stockholder and all such selling Investors at the
time of the sale or transfer.
(c) Each co-selling investor shall effect its participation is the
sale pursuant to this Section 2.4 by delivering at the closing of the sale to
the prospective purchaser for transfer to the prospective purchaser against
receipt by the Investor of the consideration therefore one or morn
certificates, properly endorsed for transfer, which represent:
(i) the type and number of shares of Common Stock which the
Investor elects to sell; or
3
(ii) that number of shares of Preferred Stock that is at such
time convertible into the number of shares of Common Stock that the Investor
elects to sell; PROVIDED, HOWEVER, that if the prospective purchaser objects
to the delivery of Preferred Stock in lieu of Common Stock, such Investor
shall convert such Preferred Stock into Common Stock and deliver Common Stock
as provided above. The Company agrees to make any such conversion concurrent
with the actual transfer of such shares to the purchaser and to promptly
execute nerd deliver any and all stock certificates necessary to enable the
Investors to comply with this Section 2.4.
(d) The stock certificate or certificates that an Investor delivers
at such closing pursuant to this Section 2.4 shall be transferred to the
prospective purchaser is consummation of the sale of the Common Stock
pursuant to the terms and conditions specified is the Stockholder Notice, and
at such closing there shall be paid to such Investor that portion of the sale
proceeds to which the Investor is entitled by reason of its participation is
such sale. To the extent that any prospective purchaser or purchasers
prohibits such assignment of otherwise refuses to purchase shares or other
securities from as Investor exercising its rights of Co-Sale hereunder, the
Selling Stockholder shall not sell to such prospective purchaser or
purchasers nay Co-Sale Stock unless and until, simultaneously with such sale,
the Selling Stockholder shall purchase such share or other securities from
such Investor on the same temps and conditions specified in the Stockholder
Notice, including, without limitation, payment in full therefor.
2.5 SALES FREE OF RESTRICTIONS.
If no Investor elects to participate in the sale of the Co-Sale Stock
subject to the Stockholder Notice, the Selling Stockholder may, not sooner
than forty-five (45) or later than one hundred twenty (120) days following
delivery of the Stockholder Notice, enter into as agreement providing for the
closing of the transfer of the Co-Sale Stock covered by the Stockholder
Notice within thirty (30) days of the date such agreement is entered into on
terms and conditions not more materially favorable to the transferor than
those described in the Stockholder Notice. Any proposed transfer on terms
and conditions materially more favorable than those described in the
Stockholder Notice, as well as nay subsequent proposed transfer of any of the
Co-Sale Stock by the Selling stockholder shall again be subject to the right
of first refusal and Co-Sale rights of the Investors and shall require
compliance by the Selling Stockholder with the procedures described in this
Section 2.
3. EXEMPT TRANSFERS/PERMITTED TRANSFERS.
(a) Notwithstanding anything to the contrary contained in the
foregoing.
(i) the right of first refusal rights and Co-Sale rights of the
Investors shall not apply to
(A) a transfer of the shares of Co-Sale Stock, either
during the Selling Stockholder's lifetime or on his or her death
by will or intestacy, to a member of such Selling Stockholder's
immediate family, the immediate family of such Selling
4
Stockholder's spouse or to a trust, the beneficiaries of which are
exclusively the Selling Stockholder and/or one or more members of
such Selling Stockholder's immediately family or the immediate
family of such Selling Stockholder's spouse (for purposes hereof,
a person's "immediately family" shall include such person's
spouse, lineal descendants, father, mother, grandfather,
grandmother, brother(s) or sister(s)) or to a charitable trust;
(B) a bona fide pledge or mortgage of the shares of
Co-Sale Stock to a commercial leading institution, provided that
any subsequent transfer of any such shares of Co-Sale Stock by
such institution shall be subject to the terms and conditions of
this Agreement;
(C) a transfer between any person and a guardian or
conservator for such person;
(D) a transfer by way of bequest or inheritance upon
death; and
(E) a sale of such Selling Stockholder's shares of
Co-Sale Stock by an estate solely for the purpose of paying estate
taxes;
(ii) The Co-Sale rights of the Investors shall not apply to
the sale of up to 30,000 shares of the Co-Sale Stock (subject to appropriate
adjustment in the event of any stock dividend, stock split, combination or
other recapitalization affecting such shares) in any twelve-month period:
(iii) The restrictions contained in this Agreement shall
continue to be applicable to the shares of Co-Sale Stock after any transfer
described in clauses (i)(A) through (E) above (a "PERMITTED TRANSFER") and
the transferees of shares of Co-Sale Stock in a Permitted Transfer
("PERMITTED TRANSFEREES") shall have agreed in writing to be bound by the
provisions of this Agreement affecting the shares of Co-Sale Stock so
transferred. Such transferred Co-Sale Stock shall remain "Co-Sale Stock"
hereunder, and such pledgee, transferee or donee shall b treated as "Key
Stockholders" for purposes of this Agreement.
(b) Notwithstanding anything to the contrary contained is the
foregoing, the provisions of Section 2 shall not apply w the sale of any
Co-Sale Stock 'to the public pursuant to a registration statement filed with
and declared effective by, the Securities and Exchange Commission under the
Securities Act of 1933, as amended, (the "SECURITIES ACT").
(c) This Agreement is subject to, and shall in no manner limit the
right which the Company may have to repurchase securities from the Key
Stockholders provided that any repurchases by the Company shall remain
subject to any limitations in the Company's Certificate of Incorporation (the
"CERTIFICATE").
4. PROHIBITED TRANSFERS.
(a) In the event that a Selling Stockholder should sell nay Co-Sale
Stock in contravention of the purchase rights of the Company and the
Investors and the Co-Sale rights of the Investors under this Agreement (a
"Prohibited Transfer"), the Investors, in addition to such other remedies as
may be available at law, in equity or hereunder shall have the option
provided below, and such Selling Stockholder shall be bound by the applicable
provisions of such option.
5
(b) In the event of a Prohibited Transfer, each Investor shall have
the right to sell to such Selling Stockholder the type and number of shares
of Common Stock equal to the number of shares such Investor would have been
entitled to transfer to the purchaser under Section 2.4 hereof had the
Prohibited Transfer been affected pursuant to and is compliance with the
terms hereof. Such sale shall be made on the following terms and conditions:
(i) The price per share at which the shares are to be sold
to such Selling Stockholder shall be equal to the price per share paid by the
purchaser to the Selling Stockholder in such Prohibited Transfer. The
Selling Stockholder shall also reimburse each Investor for any and all fees
and expanses, including legal fees and expenses, incurred pursuant to the
exorcise or the attempted exercise of the Investors rights under Section 2.
(ii) Within ninety (90) days after the later of the dates on
which the Investors (a) received notice of the Prohibited Transfer or (b)
otherwise became aware of the Prohibited Transfer, each Investor shall, if
exercising the option created hereby, deliver to the Selling Stockholder the
certificate or certificates representing stock to be sold against receipt of
payment therefore, each such certificate to be properly endorsed for transfer
so as to convey good and marketable title to the Selling Stockholder free of
all liens and encumbrances.
(iii) The Selling Stockholder, against receipt of the
certificate or certificates of the stock to be sold by the Investors,
pursuant to this Section 4(b), shall pay the aggregate purchase price
therefor and the amount of reimbursable fees and expenses, as specified in
Section 4(b)(i), in cash or by other means acceptable m the Investors. In
such case, each side shall execute cross receipts to the other.
(iv) Notwithstanding the foregoing, any attempt by the
Selling Stockholder to transfer Co-Sale Stock is violation of Section 2
hereof shall be voidable at the option of the Majority Investors, unless the
Majority Investors elect to exercise the option set forth in this Section 4.
The Company agrees it will not effect such a transfer (or any proposed sale
by any Key Stockholder pursuant to Section 4(a) above) nor will it treat any
alleged transferee as the holder of such stock without the written consent of
the Majority Investors.
5. LEGEND.
(a) Each certificate representing shares of Co-Sale Stock now or
hereafter owned by the Key Stockholders or issued to any person in connection
with a transfer pursuant to Section 3(a) hereof shall be endorsed with the
following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE
SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY AND
AMONG THE STOCKHOLDER, THE COMPANY AND CERTAIN
HOLDERS OF STOCK OF THE COMPANY. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE COMPANY."
6
(b) The Key Stockholders agree that the Company may instruct its
transfer agent to impose transfer restrictions on the shares represented by
certificates bearing the legend referred to in Section 5(a) above to enforce
the provisions of this Agreement and the Company agrees to promptly do so.
The legend shall be removed upon termination of this Agreement.
6. MISCELLANEOUS.
6.1 CONDITIONS TO EXERCISE OF RIGHTS.
Exercise of the Investors' rights under this Agreement shall be
subject to and conditioned upon, and the Key Stockholders and the Company
shall use their best efforts to assist each Investor in complying with
applicable laws.
6.2 GOVERNING LAW.
This Agreement shall be construed and enforced in accordance with. and
the tights of the parties shall be governed by, the laws of the State of
Delaware (without giving effect to say conflicts or choice of law provisions
that would cause the application of the domestic substantive laws of any
other jurisdiction).
6.3 AMENDMENT.
Any provision of this Agreement may be amended and the observance
thereof may be waived (either generally or is a particular instance and
either retroactively or prospectively) only by the written consent of the
following: (i) as it applies to the Company, only by the Company. (ii) as it
applies to the Investors or the holders of the Preferred Stock, only by each
such Investor and its successors and assigns; pursuant to Section 6.4 hereof,
and (iii) a it applies to the Key Stockholders, only by the Key Stockholders.
Any amendment or waiver effected is accordance with clauses (i), (ii) or
(iii) of this Section 6.3 shall be binding upon the Investors, the Company
and the Key Stockholders, and their respective successors and assigns, as the
case may be.
6.4 ASSIGNMENT OF RIGHTS.
This Agreement and the rights and obligations of the parties hereunder
shall inure to the benefit of, and be binding upon, their respective
successors, assigns and legal representatives.
6.5 TERM.
This Agreement shall terminate on the date of a closing of a sale to
the public of Common Stock for the account of the Company pursuant to as
underwritten registration statement filed with, and declared effective by,
the Securities and Exchange Commission under the Securities Act of 1933, as
amended, in which (i) the per share price is at least $14.80 (subject to
adjustment for any stock dividends, combination, splits, recapitalizations
and the like) and (ii) the net proceeds to the Company (after underwriting
discounts, commissions and fees) are at least $15,000,000.
6.6 ENTIRE AGREEMENT.
7
This Agreement constitutes the entire agreement between the parties
relative to the specific subject matter hereof Any previous agreement among
the parties relative to the specific subject matter hereof is superseded by
this Agreement This Agreement amends. restates and supersedes Prior Agreement
and all previously executed Right of First Refusal and Co-Sale Agreements,
and the Prior Agreement and all previously executed Right of First Refusal
and Co-Sale Agreements shall be of no further force or effect.
6.7 OWNERSHIP.
Each Key Stockholder represents and warrants that he is the sole legal
and beneficial owner of those shares of Co-Sale Stock he currently holds
subject to the Agreement, that such shares constitute the Key Shareholder's
entire equity ownership interest in the Company and that no other person has
any interest (other than a community property interest) in such shares.
6.8 NOTICES.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon persona) delivery to the party to
be notified, (ii) when seat by confirmed telex or facsimile if sent during
normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) days after having been seat by registered or certified
mail, return receipt requested, postage prepaid, or iv) one (1) day after
deposit with a nationally recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be
seat to the parry to be notified at the address a set forth on the signature
page hereof or at such other address as such party may designate by ten (10)
days advance written notice to the other parties hereto.
6.9 SEVERABILITY.
In the event one or more of the provisions of this Agreement should,
for any reason be held to be invalid, illegal or unenforceable in any aspect,
such invalidity, illegality, or unenforceability shall not affect any other
provisions of this Agreement, and this Agreement shall be construed as if
such invalid, illegal or unenforceable provision had never been contained
herein.
6.10 ATTORNEYS' FEES.
In the event that any dispute among the pasties to this Agreement
should result in litigation or arbitration, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing parry under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
6.11 COUNTERPARTS.
This Agreement may be executed in two or more counterparts, each of
which shall be deemed as original, but all of which together shall constitute
one and the same instrument.
8
6.12 TITLES AND SUBTITLES.
The titles of the sections and subsections of the Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
6.13 PRONOUNS.
All pronouns contained herein ad any variations thereof shall be
deemed to refer to the masculine, feminine or neuter, singular or plural as
the identity of the parties hereto may require.
6.14 DELAYS OR OMISSIONS.
It is agreed that no delay or omission to exercise any right, power or
remedy accruing to any parry, upon any breach, default or noncompliance by
another party under this Agreement, or any ocher agreements entered into in
connection herewith (collectively, the "Related Agreements"), shall impair
any such right, power or remedy, nor shall it be construed to be a waiver of
any such breach default or noncompliance, or any acquiescence therein. or any
similar default or noncompliance thereafter occurring. It is further agreed
that any waiver. permit, consent or approval of any kind or character of any
breach, default or noncompliance under this Agreement of the Related
Agreements must be in writing and shall be effective only to the extent
specifically set forth is such writing. All dies, either undo this Agreement
or the Related Agreements, or otherwise afforded to any parry, shall be
cumulative and not alternative.
[THIS SPACE INTENTIONALLY LEFT BLANK]
9
The foregoing SECOND AMENDED AND RESTATED RIGHT OF FIRST REFUSAL AND CO-SALE
AGREEMENT is hereby executed as of the date first above written.
VASTERA, INC.
By: /s/ Arjun Rishi
-----------------------------
Arjun Rishi, President
INVESTORS:
BATTERY VENTURES III, L.P.
BY: Battery Partners III, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
-----------------------------
Xxxxxx X. Xxxxxxx, General
Partner
TCV II, V.O.F.
A Netherlands Antilles General
Partnership
BY: Technology Crossover
Management II, L.L.C.
ITS: Investment General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, Chief
Financial Officer
TECHNOLOGY CROSSOVER
VENTURES II, L.P.
A Delaware Limited Partnership
BY: Technology Crossover
Management II, L.L.C.
ITS: General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, Chief
Financial Officer
[SIGNATURES CONTINUED ON NEXT PAGE]
10
TCV II (Q), L.P.
A Delaware Limited Partnership
BY: Technology Crossover
Management II, L.L.C.
ITS: General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, Chief
Financial Officer
TCV II STRATEGIC PARTNERS, L.P.
A Delaware Limited Partnership
BY: Technology Crossover
Management II, L.L.C.
ITS: General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, Chief
Financial Officer
TECHNOLOGY CROSSOVER
VENTURES II, C.V.
A Netherlands Antilles Limited
Partnership
BY: Technology Crossover
Management II, L.L.C.
ITS: Investment General Partner
By: /s/ Xxxxxx X. Xxxxxx
-----------------------------
Xxxxxx X. Xxxxxx, Chief
Financial Officer
[SIGNATURES CONTINUED ON NEXT PAGE]
11
/s/ Xxxxxxxx X. Xxxxxx
------------------------------
Xxxxxxxx X. Xxxxxx
XXXXX X. XXXXXXXX TRUST
By:/s/ Xxxxx X. Xxxxxxxx
---------------------------
Xxxxx X. Xxxxxxxx, Trustee
VERTEX TECHNOLOGY FUND PTE. LTD.
By:/s/
---------------------------
Name:
-------------------------
Title:
-------------------------
DELHI & DUBLIN VENTURES, L.L.C.
By:/s/
---------------------------
Name:
-------------------------
Title:
-------------------------
By:
---------------------------
Name:
-------------------------
Title:
-------------------------
[SIGNATURES CONTINUED ON NEXT PAGE]
12
RRE INVESTORS, L.P.
By:/s/ Xxxxxx X. Xxxxxxx
---------------------------
Member, General Partner
RRE INVESTORS FUND, L.P.
By:/s/ Xxxxxx X. Xxxxxxx
---------------------------
Member, General Partner
MSD PORTFOLIO CAPITAL, L.P.
PRIVATE NEW EQUITY
By:/s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Its:
---------------------------
RPKS INVESTMENTS, L.L.C.
By:/s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Its:
---------------------------
TRIPLE XXXXXX INVESTMENTS,
L.L.C.
By:/s/ Xxxx Xxxxxx
---------------------------
Xxxx Xxxxxx
Its:
---------------------------
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By:/s/ Xxxxx Xxxxxx
---------------------------
Xxxxx Xxxxxx
Its:
---------------------------
13
KEY STOCKHOLDERS:
/s/ Arjun Rishi
------------------------------
Arjun Rishi
/s/ Xxxxxx Rishi
------------------------------
Xxxxxx Rishi
/s/ Xxxxxx X. Xxxxxx
------------------------------
Xxxxxx X. Xxxxxx
/s/ Xxx X. Xxxxxxxx
------------------------------
Xxx X. Xxxxxxxx
/s/ Chandai Rishi
------------------------------
Chandai Rishi
/s/ Xxxxxx Rishi
------------------------------
Xxxxxx Rishi
14
EXHIBIT A
KEY STOCKHOLDERS
NUMBER OF SHARES
Name and Address Common Stock
------------------------------ ---------------
1. Arjun Rishi 767,400
0000 Xxxxxxx Xxxxx Xxxxxx
Xxx 000
Xxxxxxx, XX 00000
2. Xxxxxx Rishi 1,147,200
00000 Xxxxxx Xxxxx Xxxx
XXX XX 00000
3. Xxxxxx X Xxxxxxx 368,000
00000 Xxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
4. Xxx X. Xxxxxxxx 384,000
00000 xxxxxx Xxxxx
Xxxxxxxx, XX 00000
5. Xxxxx Rishi 126,000
0000 Xxxxxxxxxx Xxxxx. Xxx X
Xxxxxx. XX 00000
6. Xxxxxx Rishi 767,400
00000 Xxxxxxxx Xxxxx Xx
Xxxx Xxxxx, XX 00000
EXHIBIT C - LICENSE AGREEMENT
[PLEASE SEE EXHIBIT 10.17 OF THE COMPANY'S REGISTRATION
STATEMENT FILED HEREWITH.]
EXHIBIT D - EMPLOYEE TRANSFER AGREEMENT
[PLEASE SEE EXHIBIT 10.19 OF THE COMPANY'S REGISTRATION
STATEMENT FILED HEREWITH.]
EXHIBIT E - EMPLOYEE SECONDMENT AGREEMENT
[PLEASE SEE EXHIBIT 10.18 OF THE COMPANY'S REGISTRATION
STATEMENT FILED HEREWITH.]
EXHIBIT F - REGISTRATION RIGHTS AGREEMENT
VASTERA
THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This THIRD AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (the
"Agreement") is entered into as of the __ day of _______, 2000, by and among
the following parties: Vastera a Delaware corporation (the "COMPANY"); Ford
Motor Company ("FORD"), TCV IV, L.P. and TCV IV Strategic Partners, L.P.
(together the "NEW INVESTORS") and those entities designated on the signature
pages hereof and SCHEDULE I hereto as "ORIGINAL PARTIES" (Ford, the New
Investors and the Original Parties collectively the "INVESTORS") and any
entity that may become a party hereto as an "INVESTOR" by executing a
counterpart hereof.
WHEREAS, the Company and the Original Parties have previously executed
that certain Second Amended and Restated Investors' Rights Agreement dated as
of November 24, 1998, (the "Second Amended and Restated Investors' Rights
Agreement") in connection with the investment in the Company made by the
Original Parties, which agreement was subsequently amended by Amendment No. 1
dated February 26, 1999 and Amendment No. 2 dated February 4, 2000, each of
which permitted subsequent investors in the Company to become parties to the
Second Amended and Restated Investor's Rights Agreement;
WHEREAS, concurrently with the execution of this Agreement the Company
and Ford are entering into a strategic relationship whereby Ford is
transferring certain assets to the Company and receiving shares of Common
Stock in the Company (the "Ford Stock") pursuant to a Stock Transfer
Agreement dated ______ __, 2000 between Ford and the Company;
WHEREAS, in connection with the issuance by the Company to Ford of the
Ford Stock, the Company, the Original Parties and Ford desire that Ford
become a party to this Agreement;
WHEREAS, prior to the date hereof, FedEx Corporation has entered into a
certain Stock and Warrant Purchase Agreement to sell shares of the Company's
Series D Preferred Stock and a warrant to purchase shares of the Company's
Series D-1 Convertible Preferred Stock to the New Investors; and
WHEREAS, the Company, the Original Parties and the New Investors desire
that the New Investors be granted registration and other rights with respect
to such shares of Series D Preferred Stock and Series D-1 Convertible
Preferred Stock having the same terms and conditions as the registration and
other rights granted to the existing holders of Series D Preferred Stock and
Series D-1 Convertible Preferred Stock.
NOW, THEREFORE, in consideration of the premises and the mutual
promises, representations, warranties, covenants and conditions set forth in
this Agreement, the Second Amended and Restated Investors' Rights Agreement
is hereby amended and restated in its entirety as follows:
1
SECTION 1 GENERAL
1.1 Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
"COMMON STOCK" means the Common Stock of the Company, $0.01 par value
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any registration form under the Securities Act subsequently
adopted by the SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
"HOLDER" means any person of record owning Shares or Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Section 2.11 hereof.
"INITIAL OFFERING" means the date of the closing of the first sale to
the public of Common Stock for the account of the Company in a firm
commitment underwritten offering pursuant to a registration statement filed
with, and declared effective by, the Securities and Exchange Commission under
the Securities Act in which (a) the price per share is at least $14.80
(subject to adjustments for any stock dividends, combinations, splits,
recapitalizations and the like) and (b) the net proceeds to the Company
(after Selling Expenses) are greater than $15,000,000.
"OPTION(s)" mean the options to purchase shares of Series B Convertible
Preferred Stock held by Battery Ventures III, L. P., the options to purchase
shares of Series C-1 Convertible Preferred Stock held by certain of the
Investors, the Warrants to purchase shares of Series D-1 Convertible
Preferred Stock held by certain of the Investors; and certain bridge warrants
held by Battery Ventures III, L.P. and Lighthouse Capital Partners, II, L.P.,
each issued August 7, 1997.
"PRIOR HOLDERS" means collectively the Original Parties and the New
Investors.
"REGISTER," "REGISTERED" and "REGISTRATION" 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 or document.
"REGISTRABLE SECURITIES" means (a) Common Stock issued or issuable upon
conversion of the Shares, including, without limitation, Common Stock issued
upon conversion of any Shares issued upon exercise of any of the Options, (b)
the Ford Stock and (c) any Common Stock 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, such above-described securities. Notwithstanding
anything to the contrary contained in the foregoing, Registrable Securities
shall not include any securities that are (i) sold pursuant to a registration
statement or Rule 144 under the Securities Act, or (ii) sold
2
in any manner to a person or entity that, by virtue of the provisions of this
Agreement, is not entitled to the rights provided by this Agreement.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
of Common Stock that are both Registrable Securities and either (a) then
issued and outstanding or (b) then issuable upon the conversion, exchange or
exercise of any then outstanding securities that are convertible into,
exercisable for or exchangeable for shares of Common Stock.
"REGISTRATION EXPENSES" mean all expenses incurred by the Company in
complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements
of a single special counsel for the Holders, blue sky fees and expenses and
the expense of any special audits or comfort letters incident to or required
by any such registration (but excluding the compensation of regular employees
of the Company which shall be paid in any event by the Company).
"RELATED AGREEMENTS" mean the Preferred Stock Purchase Agreement and the
related Option Agreement, both dated as of July 31, 1996, the Series C and
Series D Preferred Stock Purchase Agreement dated as of August 7, 1997, as
amended, the Series D Convertible Preferred Stock and Warrant Purchase
Agreement dated as of November 24, 1998, as amended, the Series E Convertible
Preferred Stock Purchase Agreement dated as of February 4, 2000, the Stock
Issuance Agreement dated as of the date hereof and the Second Amended and
Restated Right of First Refusal and Co-Sale Agreement dated as of November
24, 1998, as amended, (the "Restated Co-Sale Agreement").
"SEC" or "COMMISSION" means the United States Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of 1933 as amended.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions and fees applicable to the sale.
"SERIES A CONVERTIBLE PREFERRED STOCK" means the Company's Series A
Convertible Preferred Stock, par value $0.01 per share.
"SERIES B CONVERTIBLE PREFERRED STOCK" means the Company's Series B
Convertible Preferred Stock, par value $0.01 per share.
"SERIES C CONVERTIBLE PREFERRED STOCK" means the Company's Series C
Convertible Preferred Stock, par value $0.01 per share.
"SERIES C-1 CONVERTIBLE PREFERRED STOCK" means the Company's Series C-1
Convertible Preferred Stock, par value $0.01 per share.
"SERIES D CONVERTIBLE PREFERRED STOCK" means the Company's Series D
Convertible Preferred Stock, par value $0.01 per share.
3
"SERIES D-1 CONVERTIBLE PREFERRED STOCK" means the Company's Series D-1
Convertible Preferred Stock, par value $0.01 per share.
"SERIES E CONVERTIBLE PREFERRED STOCK" means the Company's Series E
Convertible Preferred Stock, par value $0.01 per share.
"SHARES" mean shares of any of the Company's Series A Convertible
Preferred Stock, shares of the Company's Series B Convertible Preferred
Stock, shares of the Company's Series C Convertible Preferred stock, shares
of the Company's Series C-1 Convertible Preferred Stock, shares of the
Company's Series D Convertible Preferred Stock, shares of the Company's
Series D-1 Convertible Preferred Stock and shares of the Company's Series E
Convertible Preferred Stock.
SECTION 2 REGISTRATION; RESTRICTIONS ON TRANSFER.
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii)(A) The transferee has agreed in writing to be bound by this
Section 2.1, (B) such Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (C) if such
disposition is being effected other than pursuant to Rule 144 and if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company,
that such disposition will not require registration of such shares under the
Securities Act.
Notwithstanding the provisions of paragraphs (i) and (ii) above, no such
registration statement or opinion of counsel shall be necessary for a
transfer which does not require registration under the Securities Act by a
Holder which is (A) a partnership to its partners or former partners in
accordance with their interests in such partnership, (B) a corporation to its
shareholders in accordance with their interests in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interests in the limited liability company, (D) to the Holder's family
members or into a trust for the benefit of such persons; provided in each
case the transferee will be subject to the terms of this Section 2.1 to the
same extent as if he were an original Holder hereunder, or (E) pursuant to
Rule 144 of the Securities Act.
(b) In addition to any legend required under applicable state
securities laws or as provided elsewhere in this Agreement, each certificate
representing Shares or Registrable Securities shall (unless otherwise
permitted by the provisions of this Agreement) be stamped or otherwise
imprinted with a legend substantially similar to the following:
4
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT, UNLESS THE COMPANY HAS RECEIVED AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED OR SUCH SALE IS EFFECTED PURSUANT TO RULE
144.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the
holder shall have obtained an opinion of counsel (which counsel may be
counsel to the Company) reasonably acceptable to the Company to the
effect that the securities proposed to be disposed of may lawfully be so
disposed of without registration, qualification or legend; provided
however, any legend required to remain by any other agreement shall not
be removed.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to
such securities shall be removed upon receipt by the Company of an order
from the appropriate blue sky authority authorizing such removal.
2.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company
receives a written request from the holders of at least 50% of the shares of
Common Stock originally issued to Ford (the "Initiating Ford Holders") that
the Company file a registration statement, on Form S-1, under the Securities
Act covering the registration of such number shares of Registrable Securities
anticipated to have an aggregate offering price of not less than $5,000,000,
then within thirty (30) days of the receipt thereof, the Company shall give
written notice of such request all holders of the shares of Common Stock
originally issued to Ford (the "Ford Holders"), and subject to the
limitations of this Section 2.2, the Company shall use its best efforts to
effect, the registration under the Securities Act of all Registrable
Securities that the Ford Holders request to be registered as soon as
practicable.
(b) If the Initiating Ford Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as part of their request made pursuant to this Section
2.2 and with respect to requests made by the Initiating Ford Holders the
Company shall include such information in the written notice referred to in
Section 2.2(a). In such event, the right of any Ford Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Ford Holder's participation in such underwriting and the inclusion of such
Ford Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Initiating Ford Holders and
such Ford Holder) to the extent provided herein. All Ford Holders proposing
to distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority of the Initiating Ford Holders
(which underwriter or underwriters shall be reasonably acceptable to the
Company). Notwithstanding any other provision of this Section 2.2, if the
underwriter advises
5
the Company that marketing forces require a limitation of the number of
securities to be underwritten, then the Company shall advise all Ford Holders
of Registrable Securities which would otherwise be underwritten pursuant
hereto that the number of shares that may be included in the underwriting
shall be allocated to the Ford Holders of such Registrable Securities on a
pro rata basis based on the number of Registrable Securities requested by
each such Ford Holder, and the Ford Holders to be included in the
registration (including the Initiating Ford Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn
from the registration.
(c) Subject to the conditions of this Section 2.2, if the Company
receives a written request from the Prior Holders of 40% of the Shares (or
any Common Stock issued upon conversion thereof) (the "Initiating Holders")
that the Company file a registration statement, on Form S-1, under the
Securities Act covering the registration of at least 25% of the aggregate
Registrable Securities held by the Prior Holders or such number of shares of
Registrable Securities anticipated to have an aggregate offering price of not
less than $10,000,000, then within thirty (30) days of the receipt thereof,
the Company shall give written notice of such request to all Prior Holders,
and subject to the limitations of this Section 2.2, the Company shall use its
best efforts to effect the registration under the Securities Act of all
Registrable Securities that the Prior Holders request to be registered as
soon as practicable.
(d) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as part of their request made pursuant to this Section
2.2 and with respect to requests made by the Initiating Holders the Company
shall include such information in the written notice referred to in Sections
2.2(c). In such event, the right of any Prior Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Prior Holder's participation in such underwriting and the inclusion of such
Prior Holder's Registrable Securities in the underwriting (unless otherwise
mutually agreed by a majority in interest of the Initiating Holders and such
Prior Holder) to the extent provided herein. All Prior Holders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority of the Initiating Holders (which
underwriter or underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 2.2, if the underwriter
advises the Company that marketing forces require a limitation of the number
of securities to be underwritten, then the Company shall advise all Prior
Holders of Registrable Securities which would otherwise be underwritten
pursuant hereto that the number of shares that may be included in the
underwriting shall be allocated to the Prior Holders of such Registrable
Securities on a pro rata basis based on the number of Registrable Securities
requested by each such Prior Holder, and the Prior Holders to be included in
the registration (including the Initiating Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn
from the registration.
(e) The Company shall not be required to effect a registration pursuant
to Section 2.2:
(i) with respect to Section 2.2(a) after the Company has effected
two (2) registrations pursuant to Section 2.2(a) and other than in accordance
with the exceptions set
6
forth in Section 2.6 such registrations have been declared or ordered
effective or withdrawn by the Ford Holders, and with respect to Section
2.2(c) after the Company has effected two (2) registrations pursuant to
Section 2.2(c), and such registrations have been declared or ordered
effective or withdrawn by the Prior Holders;
(ii) during the period starting with the date of filing of, and
ending on the date ninety (90) days following the effective date of, any
registration statement on Form S-1;
(iii) if within thirty (30) days of receipt of a written
request from the Initiating Ford Holders pursuant to Section 2.2(a) or the
Initiating Holders pursuant to Section 2.2(c), as the case may be, the
Company gives notice to the Ford Holders or the Prior Holders of the
Company's intention to make its Initial Offering within ninety (90) days;
(iv) if (A) at the time the Company receives a request for
registration in accordance with Sections 2.2(a) or (c) the Company shall then
be engaged in any material transaction (such as, by way of example only,
negotiating a merger, acquisition, joint-venture or introduction of a major
new product) the disclosure of which in a Registration Statement, in the
reasonable judgment of a majority of the Board of Directors, exercised in
good faith, would be adverse to the Company's best interests, or (B) if the
Company shall furnish to the Ford Holders requesting a registration pursuant
to Section 2.2(a) or the Prior Holders requesting a registration pursuant to
Section 2.2(c), as the case may be, a certificate signed by a majority of the
Board of Directors stating that in the Board of Director's reasonable
judgment, exercised in good faith, the Company's earnings or the occurrence
of some other material event are not at such time appropriate for disclosure,
or, that it would be seriously detrimental to the Company and its
stockholders for such registration statement to be effected at such time,
then, in either of such events, the Company shall have the right to defer
such filing for a period of not more than ninety (90) days after receipt of
the request of the Initiating Ford Holders or the Initiating Holders;
provided that such rights to delay a request shall be exercised by the
Company in the aggregate not more than once in any twelve (12) month period;
or
(v) prior to the earlier to occur of (a) one year from the date
hereof or (b) six months after the Closing of the Initial Offering.
2.3 Piggyback Registration.
(a) The Company shall notify all Holders in writing at least ninety
(90) days prior to the filing of any registration statement under the
Securities Act for purposes of a public offering of securities of the Company
(including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding registration statements
relating to employee benefit plans or with respect to corporate
reorganizations or other transactions under Rule 145 of the Securities Act)
and will afford an opportunity to include in such registration statement all
or part of such Registrable Securities held by such Holder. Each Holder
desiring to include in any such registration statement all or any part of the
Registrable Securities held by it shall, within fifteen (15) days after the
above-described notice from the Company, so notify the Company in writing.
Such notice shall state the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to include all of its
Registrable Securities in any registration statement thereafter filed by the
7
Company, 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 Company with respect to
offerings of its securities, all upon the terms and conditions set forth
herein.
(b) If the registration statement under which the Company gives notice
under this Section 2.3 is for an underwritten offering, the Company shall so
advise the Holders of Registrable Securities. In such event, the right of
any such Holder to be included in a registration pursuant to this Section 2.3
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 (and, if applicable, any and all other selling
shareholders who may be permitted to register shares) through such
underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision of the Agreement to the
contrary, if the underwriter determines in good faith that marketing factors
require a limitation of the number of shares to be underwritten, the number
of shares that may be included in the underwriting shall be allocated: (A) if
such registration is initiated by the Company with respect to the issuance
and sale of new shares by the Company then, first, to the Company; second, to
the Holders on a PRO RATA basis based on the total number of Registrable
Securities requested by each Holder to be registered; third, to any
stockholder of the Company (other than a Holder) on a PRO RATA basis and (B)
if such registration is initiated by any person other than the Company, then
first to the person initiating such registration; second, to the Company;
third, to the Holders on a PRO RATA basis based on the total number of
Registrable Securities requested by each Holder to be registered. No such
reduction shall reduce the securities being offered by the initiating persons
to be included in the registration and underwriting; PROVIDED, HOWEVER, that
in no event shall the amount of securities of the selling Holders included in
the registration be reduced below thirty percent (30%) of the total amount of
securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
stockholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding
sentence. In no event shall shares of any other selling stockholder be
included in such registration which would reduce the number of shares which
may be included by Holders without the written consent of Holders of not less
than two-thirds of the Registrable Securities proposed to be sold in the
offering.
(c) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section
2.3 prior to the effectiveness of such registration whether or not any Holder
has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.6 hereof.
2.4 Form S-3 Registration
In case the Company shall receive from (i) any Holder or Holders of (A)
a majority of the Registrable Securities relating to the Company's Series A
Convertible Preferred Stock (the "Series A Registrable Securities"), (B) a
majority of the Registrable Securities relating to the Company's Series C
Convertible Preferred Stock (the "Series C Registrable Securities"),
8
(C) a majority of the Registrable Securities relating to the Company's Series
D Convertible Preferred Stock (the "Series D Registrable Securities"), (D) a
majority of the Registrable Securities relating to the Company's Series E
Convertible Preferred Stock (the "Series E Registrable Securities") or (ii)
the Ford Holders holding in interest a majority of the Registrable Securities
relating to the Company's Common Stock originally issued to Ford (the "Ford
Registrable Securities") (such Holders under (i) and (ii) being referred to
as the "Initiating S-3 Holders") a written request or requests that the
Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration statement and any related qualification
or compliance with respect to all or a part of the Registrable Securities
owned by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's
or 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
with fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holder;
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose
to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than $500,000;
(iii) if (A) at the time the Company receives a request for
registration in accordance with this Section 2.4 the Company shall then be
engaged in any material transaction (such as, by way of example only,
negotiating a merger, acquisition, joint-venture or introduction of a major
new product) the disclosure of which in a Registration Statement, in the
reasonable judgment of a majority of the Board of Directors, exercised in
good faith, would be adverse to the Company's best interests, or (B) if the
Company shall furnish to the Holders requesting a registration pursuant to
this Section 2.4 a certificate signed by a majority of the Board of Directors
of the Company stating in the Board of Directors' reasonable judgment,
exercised in good faith, the Company's earnings or the occurrence of some
other material event are not at such time appropriate for disclosure, or that
it would be seriously detrimental to the Company and its stockholders for
such Form S-3 Registration to be effected at such time, then, in either of
such events, the Company shall have the right to defer the filing of the Form
S-3 registration statement for a period of not more than ninety (90) days
after receipt of the request of the Holder or Holders under this Section 2.4;
provided that such rights to delay a request shall be exercised by the
Company in the aggregate not more than once in any twelve (12) month period;
or
9
(iv) in any particular jurisdiction in which the Company 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.
(c) Subject to the foregoing, the Company will file a Form S-3
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders.
2.5 IPO Allocation.
In the event of a bona fide, underwritten initial public offering of the
capital stock of the Company (the "IPO"), the Company shall use commercially
reasonable efforts to require that the managing underwriters of the IPO
establish a directed share program (the "PROGRAM") in connection with the
IPO. The Program shall consist of that number of shares of capital stock (the
"PROGRAM SHARES") determined by dividing $3,000,000 by the initial price to
the public set forth on the cover page of the final prospectus distributed in
connection with the IPO (the "IPO PRICE"), provided that, if necessary to
complete the IPO, the number of Program Shares may be reduced to the maximum
number permitted under the rules and requirements of the NASD. The Company
shall cause the managing underwriters (subject to the consent of the
underwriters) to give priority to the holders of the Company's Series C
Convertible Preferred Stock (or Common Stock issuable upon conversion
thereof) (the "SERIES C HOLDERS"), PRO RATA in accordance with their relative
holdings of Series C Convertible Preferred Stock (or Common Stock issued upon
conversion thereof) with respect to the Program Shares in allocating the
shares available for purchase in the Program. The Series C Holders, PRO RATA
as aforesaid, shall have the option, but not the obligation, to purchase all
or any portion of the Program Shares at the IPO Price. Notwithstanding the
foregoing, in no event shall the Investors designated on the signature pages
hereto as the "TCV Investors" have the rights under this Section 2.5 with
respect to less than such number of Program Shares that, when multiplied by
the IPO Price, equals $1,500,000, (such product being referred to as the
"Program Value"), and if the Program Value shall be less than $1,500,000 then
the TCV Investors shall have the rights under this Section 2.5 with respect
to all of the Program Shares (the number of Program Shares as to which the
TCV Investors are to have the rights under this Section 2.5 in accordance
with this sentence are referred to as the "TCV Minimum Shares"). If, in
order to give effect to the operation of the preceding sentence, the
Investors other than the TCV Investors obtain rights under this Section 2.5
with respect to less than their respective PRO RATA share of the Program
Shares, then (i) such other Investors shall have the rights under this
Section 2.5 with respect to all of the Program Shares other than the TCV
Minimum Shares, if there shall be any Program Shares in addition to the TCV
Minimum Shares, and (ii) such other Investors shall share such rights PRO
RATA in accordance with their relative holdings of Series C Convertible
Preferred Stock (or Common Stock issued upon the conversion thereof.
2.6 Expenses of Registration.
Except as specifically provided herein, all Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to Section 2.2 or any registration under Section 2.3 or Section 2.4
herein shall be borne by the Company. All Selling Expenses incurred in
connection with any registrations hereunder shall be borne by the holders
10
of the securities so registered pro rata on the basis of the number of shares
so registered. The Company shall not, however, be required to pay for
expenses of any registration proceeding begun pursuant to Section 2.2 or 2.4,
the request of which has been subsequently withdrawn by the Initiating Ford
Holders, with respect only to a request made pursuant to Section 2.2(a), the
Initiating Holders or the Initiating S-3 Holders, as the case may be, unless
(a) the withdrawal is based upon material adverse information concerning the
Company of which the Initiating Ford Holders, the Initiating Holders or the
Initiating S-3 Holders, as the case may be were not aware at the time of such
request, (b) the Ford Holders agree to forfeit its right to one requested
registration pursuant to Section 2.2(a) or (c) the Prior Holders of a
majority of Registrable Securities agree to forfeit their right to one
requested registration pursuant to Section 2.2(c), in which event such right
shall be forfeited by all Prior Holders. If the Holders are required to pay
the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested. If
the Company is required to pay the Registration Expenses of withdrawn
offering pursuant to clause (a) above, then the Holders shall not forfeit
their rights pursuant to Section 2.2 or Section 2.4 to a demand registration.
2.7 Obligations of the Company.
Whenever required to effect the registration of any Registrable
Securities, the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective, and upon the request of Ford with
respect to registrations pursuant to Section 2.2(a), the Initiating Holders
or the Initiating S-3 Holders, as the case may be, keep such registration
statement effective for up to one hundred and eighty (180) days or, if
earlier, until the Holder or Holders have completed the distribution related
thereto.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and 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.
(c) Furnish to the Holders such number of copies of the 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.
(d) Use all reasonable efforts to register and qualify the securities
covered by such registration under such other securities laws and Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company 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.
(e) 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
11
underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such an
agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement that a prospectus relating thereto is required to be
delivered under the Securities Act of any event that would cause the
prospectus included in such registration statement, as then in effect, to
include an untrue statement of a material fact or to omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Furnish, at the request of Ford with respect to offerings made
pursuant to Section 2.2(a), the Initiating Holders holding a majority of the
shares participating in the offering or the Initiating S-3 Holders holding a
majority of the shares participating in the offering, as the case may be, 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, (i)
an opinion, dated as of such date, from the counsel representing the Company
for the purposes of such registration, in the form and substance as is
customarily given to underwriters in an underwritten public offering and
reasonably satisfactory to a majority of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders requesting the
registration of their Registrable Securities and (ii) a letter dated as of
such date, from the independent certified public accountants of the Company,
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 of the Holders requesting registration,
addressed to the underwriters, if any, and if permitted by applicable
accounting standards, to the Holders requesting the registration of their
Registrable Securities.
2.8 Termination of Registration Rights.
All registration rights granted to a Holder under this Article II (other
than under Section 2.3 with respect to underwritten offerings) shall
terminate and be of no further force and effect upon the earlier of (i) the
fifth anniversary of the consummation of the Initial Offering and (ii) such
date as all Registrable Securities held by and issuable to such Holder may be
sold in the manner described in Rule 144 during any ninety (90) day period.
2.9 Delay of Registration; Furnishing Information.
(a) No holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the Company
to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company 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.
12
2.10 Indemnification.
In the event any Registrable Securities are included in a registration
statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company shall indemnify and
hold harmless each Holder, the partners, officers, directors and legal
counsel 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 out of or are based upon
any of the following statements, omissions or violations (collectively a
"Violation") by the Company: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospects or final prospectus contained therein and
any amendments or supplements thereto, (ii) the omission or alleged omission
to state a material fact required to be stated therein, or necessary to make
the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities laws or any rule or regulation promulgated under the Securities
Act, the Exchange Act, any state securities laws in connection with the
offering covered by such registration statement; and the Company shall
reimburse each such Holder, partner, officer or director, underwriter or
controlling person on a current basis for any legal or other expense
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this Section 2.10(a) shall not apply to
amounts paid in settlement of any such loss, claims, damage, liability or
action if such settlement is effected without the consent of the Company,
which consent shall not be unreasonably withheld, nor shall the Company be
liable in any such 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,
partner, officer, director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder shall, if Registrable
Securities held by such Holder are included in the securities as to which
such registration qualifications or compliance is being effected, indemnify
and hold harmless the Company, each of its directors, its officers, and legal
counsel and each person, if any, who controls the Company 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 officer or any person who controls such Holder,
against any losses, claims, damages or liabilities (joint or several) to
which the Company or any such director, officer, controlling person,
underwriter or other such Holder, or 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 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 due to the Company's reliance
upon written information furnished by such Holder under an instrument duly
executed by such Holder and stated to be specifically for use in connection
with such registration; and each such Holder shall reimburse any legal or
other expenses
13
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, or partner, officer, director or
controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is
judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.10(b) 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; provided further,
that in no event shall any indemnity under this Section 2.10 exceed the net
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.10 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 2.10, 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 indemnifying party
similarly notified, 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 and own separate local
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 materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.10 to the extent prejudiced, but
the omission so to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.10.
(d) If the indemnification provided for in this Section 2.10 is held by
a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to
herein, the Indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law contribute
to the amount paid or payable by such indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the Violation(s) that
resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided, that
in no event shall any contribution by a Holder hereunder exceed the net
proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 2.10
shall survive completion of any offering of Registrable Securities in a
registration statement and the
14
termination of this Agreement. No indemnifying party, in the defense of any
such claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the claimant
or plaintiff to such indemnified party a release from all liability in
respect to such claim or litigation.
2.11 Assignment of Registration Rights.
The rights to cause the Company to register Registrable Securities
pursuant to this Article II may be assigned by a Holder to a transferee or
assignee of Shares or Registrable Securities, provided such transferee or
assignee (i) is a subsidiary, parent, general partner, limited partner or
retired partner of a Holder, (ii) is a Holder's family member or trust for
the benefit of an individual Holder, or (iii) acquires at least one hundred
thousand (100,000 Shares or Registrable Securities (as adjusted for stock
splits and combinations) and is not a competitor of the Company (as
reasonably determined by the Board of Directors); provided, however, (A) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (B) such transferee shall agree to be subject to all
restrictions set forth in this Agreement and the Restated Co-Sale Agreement.
2.12 Amendment of Registration Rights.
Any provision of this Section 2 may be amended and the observance
thereof may be waived (either generally or in a particular instance and
either retroactively or prospectively), only with the written consent of the
holders of a majority of the Series A Registrable Securities, voting or
acting separately as a class, a majority of the Series C Registrable
Securities, voting or acting separately as a class, and a majority of the
Series D Registrable Securities, voting or acting separately as a class, and
a majority of the Series E Registrable Securities, voting or acting
separately as a class, and the Ford Holders holding in interest a majority of
the Ford Registrable Securities, voting as a separate class, provided that
all Holders are affected by such amendment or waiver in a substantially
similar fashion. If any amendment treats any class of holders differently
than any other class, the affected class must approve or waive the amendment
or modification by a majority vote of the affected class. Any amendment or
waiver effected in accordance with this Section 2.12 shall be binding upon
each Holder and the Company. By acceptance of any benefits under this
Section 2, Holders hereby agree to be bound by the provisions hereunder.
2.13 Limitation on Subsequent Registration Rights
After the date of this Agreement, the Company shall not, without the
prior written consent of the holders of a majority of the Series A
Registrable Securities, voting or acting separately as a class, a majority of
the Series C Registrable Securities, voting or acting separately as a class,
a majority of the Series D Registrable Securities, voting or acting
separately as a class, and a majority of the Series E Registrable Securities,
voting or acting separately as a class, and the Ford Holders holding in
interest a majority of the Ford Registrable Securities, voting as a separate
class, enter into any agreement with any holder or prospective holder of any
securities
15
of the Company that would grant such holder any registration rights with
respect to such securities.
2.14 "Market Stand-Off" Agreement.
If requested by the Company or the representative of the underwriters of
the Common Stock (or other securities), each Holder and a transferee of a
Holder, regardless of whether such transferee has registration rights
hereunder, shall not sell or otherwise transfer or dispose of any Registrable
Securities held by such Holder (other than those included in the
registration) for a period specified by the representative of the
underwriters not to exceed one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the
Securities Act, provided that:
(a) such agreement shall apply only to the Initial Offering;
(b) all officers and directors of the Company and holders of at least
one percent (1%) of the Company's voting securities enter into similar
agreement; and
(c) such agreement shall provide that any discretionary waiver or
termination of the restrictions of such agreements by the Company or the
representatives of the underwriters shall apply to all persons subject to
such agreements pro rata based on the number of Registrable Securities held.
The obligations described in this Section 2.14 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the shares of Common Stock (or
other securities) subject to the foregoing restriction until the end of said
one hundred eighty (180) day period.
2.15 Rule 144 Reporting.
With a view to making available to the Holders the benefits of certain
rules and regulations of the SEC which may permit the sale of the Registrable
Securities to the public without registration, the Company agrees to use its
best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times that the Company is
subject to the reporting requirements of the Exchange Act, as amended;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Shares or Registrable Securities,
furnish to such Holder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
of the Securities Act, and of the Exchange Act (at any time after it has
become subject to such reporting requirements), a copy of the most
16
recent annual or quarterly report of the Company, and such other reports and
documents as a Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing it to sell any such securities without
registration.
SECTION 3 COVENANTS OF THE COMPANY.
3.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will
set aside on its books all such proper accruals and reserves as shall be
required under generally accepted accounting principles consistently applied.
In addition to the information described in Section 3.1(b), (c) and (d), the
Company shall provide in a timely manner any other information concerning the
Company and its business and affairs as any of the Investors may from time to
time reasonably request.
(b) As soon as practicable after the end of each fiscal year of the
Company and so long as any of the Shares are outstanding, and in any event
within one hundred twenty (12) days thereafter, the Company will furnish to
each Investor a consolidated balance sheet of the Company, as at the end of
such fiscal year, and an audited consolidated income statement and an audited
consolidated cash flow statement of the Company, for such year, all prepared
in accordance with generally accepted accounting principles consistently
applied and setting forth in each case in comparative form the figures from
the previous fiscal year, with an explanation of any material differences
between them, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants
of national standing selected by the Company's Board of Directors and a
report by management with a discussion of the Company's business, including
any changes in the Company's financial condition and any significant business
developments.
(c) As long as any of the Shares are outstanding, the Company will
furnish each Investor, as soon as practicable after the end of the first,
second and third quarterly accounting periods in each fiscal year of the
Company, and in any event within forty-five (45) days thereafter, a
consolidated balance sheet of the Company as of the end of each such
quarterly period, and a consolidated income statement and a consolidated cash
flow statement of the Company for such period and for the current fiscal year
to date, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need to be attached to such
statements and year-end audit adjustments may not have been made, and setting
forth in each case in comparative form the figures from the previous fiscal
year, with an explanation of any material differences between them. Such
financial statements shall be accompanied by a report by management with a
discussion of the Company's business, including any changes in the Company's
financial condition and any significant business developments.
(d) As long as any of the Shares are outstanding, the Company will
furnish each Investor (i) at least thirty (30) days prior to the beginning of
each fiscal year an annual budget and operating plans for such fiscal year
(and, as soon as available, any subsequent revisions thereto); and (ii) as
soon as practicable after the end of each month, and in any event
17
within thirty (30) days thereafter, a consolidated balance sheet of the
Company as of the end of each such month, and a consolidated income statement
and a consolidated cash flow statement of the Company for such month and for
the current fiscal year to date, including a comparison to plan figures for
such period, prepared in accordance with generally accepted accounting
principles consistently applied, with the exception that no notes need be
attached to such statements and year-end audit adjustments may have been made.
3.2 Inspection Rights.
Each Investor or its authorized representatives shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, including its corporate and financial records, and to discuss
the affairs, finances and accounts of the Company or any of its subsidiaries
with its officers, and to review such information as it may reasonably
request all at such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under
this Section 3.2 with respect to a competitor of the Company or with respect
to information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
3.3 Confidentiality of Records.
Each Investor agrees to use, and to use its diligent efforts to ensure
that its authorized representatives use, the same degree of care as such
Investor uses to protect its own confidential information to keep
confidential any information furnished to it which the Company identifies as
being confidential or proprietary (so long as such information is not in the
public domain), except that such Investor may disclose such proprietary or
confidential information to any partner, subsidiary or parent of such
Investor for the purpose of evaluating its investment in the Company as long
as such partner, subsidiary or parent agrees to be bound by the
confidentiality provisions of this Section 3.3. Notwithstanding the
foregoing, each Investor shall be free to distribute to its partners or
shareholders summary information describing the Company's performance.
3.4 Reservation of Common Stock.
The Company will at all times reserve and keep available, solely for
issuance and delivery upon the conversion of Shares, all Common Stock
issuable from time to time upon conversion of all the Shares.
3.5 Stock Vesting.
Unless otherwise approved by the Board of Directors, all stock options
and other stock equivalents issued after the date of this Agreement to
employees, directors, consultants and other service providers shall be
subject to vesting over a minimum of four year period and with respect to any
shares of stock purchased by any such person, the Company's repurchase option
shall provide that upon such person's termination of employment or service
with the Company, with or without cause, the Company or its assignee (to the
extent permissible under applicable securities laws and other laws) shall
have the option to purchase at cost any unvested shares of stock held by such
person.
18
3.6 Termination of Covenants.
The provisions of 3.1, 3.2, 3.3 and 3.4 of this Agreement shall expire,
terminate and be of no further force of effect on the date the Initial
Offering is consummated.
SECTION 4 RIGHTS OF FIRST REFUSAL.
4.1 Subsequent Offerings.
The Prior Holders and the Ford Holders shall have a right of first
refusal to purchase their PRO RATA portion of the Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 4.6 hereof. The term "Equity Securities" shall mean (i)
any Common Stock, Preferred Stock or other security of the Company (other
than debt securities which are not convertible into and do not carry rights
to acquire any capital stock of the Company), (ii) any security convertible,
with or without consideration, into any Common Stock, Preferred Stock or
other security (including any option to purchase such a convertible
security), (iii) any security carrying any warrant or right to subscribe to
or purchase any Common Stock, Preferred Stock or other security or (iv) any
such warrant or right. Notwithstanding anything to the contrary contained
elsewhere in this subsection 4.1, Ford's initial pro-rata portion shall be
deemed to be 27.5% of any such issuance. At such time as Ford's actual
ownership percentage of Vastera's issued and outstanding capital stock
declines below 27.5%, Ford's pro-rata portion of any issuance of Equity
Securities shall be such actual percentage ownership of the issued and
outstanding capital stock of Vastera, and thereafter if Ford's ownership
percentage of Vastera's issued and outstanding capital stock increases above
27.5%, Ford's pro-rata portion of any issuance of Equity Securities shall be
such actual percentage ownership of the issued and outstanding capital stock
of Vastera.
4.2 Exercise of Rights.
If the Company proposes to issue any Equity Securities, it shall give
the Prior Holders and the Ford Holders written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. The Prior Holders and the Ford
Holders shall have fifteen (15) days from the giving of such notice to agree
to purchase the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company
and stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any such Prior Holder or Ford Holder if it
would cause the Company to be in violation of applicable federal securities
laws by virtue of such offer or sale.
4.3 Issuance of Equity Securities to Other Persons.
If any Prior Holder or Ford Holder fails to exercise in full the rights
of first refusal, the Company shall have ninety (90) days thereafter to sell
the Equity Securities in respect of which the Prior Holder's rights or Ford
Holder's rights were not exercised, at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than
specified in the Company's notice to the Prior Holder or Ford Holder pursuant
to Section 4.2 hereof. If the Company has not sold such Equity Securities
within 90 days of the notice
19
provided pursuant to Section 4.2, the Company shall not thereafter issue or
sell such Equity Securities, without first offering such securities to the
Prior Holder or the Ford Holder in the manner provided above.
4.4 Termination of Rights of First Refusal.
The rights of first refusal established by this Section 4 shall
terminate upon either (a) the date of the Initial Offering or (b) with
respect to Prior Holders holding Series A Convertible Preferred Stock or
Series B Convertible Preferred Stock, if fewer than 30% of the number of such
Shares that are outstanding (or in the case of Series B Convertible Preferred
Stock, that are issuable upon the exercise of an option therefor that is
outstanding) as of the date of this Agreement remain outstanding or (c) with
respect to Prior Holders holding Series C Convertible Preferred Stock or
Series C-1 Convertible Preferred Stock, if fewer than 20% of the number of
such shares that are outstanding (or, in the case of Series C-1 Convertible
Preferred Stock, that are issuable upon the exercise of options therefor that
are outstanding) as of the date of this Agreement remain outstanding or (d)
with respect to Prior Holders holding Series D Convertible Preferred Stock or
Series D-1 Convertible Preferred Stock, if fewer than 30% of the number of
such shares that are outstanding (or, in the case of Series D-1 Convertible
Preferred Stock that are issuable upon the exercise of Warrants therefor that
are outstanding) as of the date of this Agreement remain outstanding or (e)
with respect to Prior Holders holding Series E Convertible Preferred Stock,
if fewer than 30% of the number of such shares that are outstanding as of the
date of this Agreement remain outstanding or (f) with respect to Ford Holders
holding shares of Common Stock originally issued to Ford, if fewer than 30%
of the number of such shares that are outstanding as of the date of this
Agreement remain outstanding.
4.5 Transfer of Rights of First Refusal.
The rights of first refusal of the Prior Holders and the Ford Holders
under this Section 4 may be transferred to the same parties, subject to the
same restrictions as any transfer of registration rights pursuant to Section
2.11.
4.6 Excluded Securities
The rights of first refusal established by this Section 4 shall have no
application to any of the following Equity Securities:
(a) up to an aggregate amount of 5,500,000 shares of Common Stock
(and/or options, warrants or other Common Stock purchase rights issued
pursuant to such options, warrants or other rights) issued or to be issued to
employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary, pursuant to stock purchase or stock option plans
or other similar arrangements that are approved by the Board of Directors.
(b) Stock issued pursuant to any rights or agreements outstanding as of
the date of this Agreement, options and warrants outstanding as of the date
of this Agreement, and stock issued pursuant to any such rights or agreements
granted after the date of this Agreement, provided that the rights of first
refusal established by this Article IV applied with respect to the initial
sale or grant by the Company of such rights or agreements;
20
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(d) shares of Common stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares;
(f) any Equity Securities issued pursuant to a public offering; or
(g) any Equity Securities issued by the Company to an operating company
with compatible or complimentary products to effect a strategic alliance with
that company which is anticipated to provide to the Company a well-defined
economic benefit, provided that in no event shall the number of shares of
such Equity Securities so issued exceed in the aggregate fifteen percent
(15%) of the number of shares of Equity Securities outstanding at the time of
such issuance.
SECTION 5 MISCELLANEOUS
5.1 Governing Law.
This Agreement shall be construed and governed in accordance with, and
the rights of the parties shall be governed by, the laws of the State of
Delaware (without giving effect to any conflicts or choice of law provisions
that would cause the application of the domestic substantive laws of any
other jurisdiction).
5.2 Survival.
The covenants and agreements made herein shall survive any investigation
made by any Holder and the closing of the transactions contemplated hereby.
All statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of the Company pursuant hereto in
connection with the transactions contemplated hereby shall be deemed to be
representations and warranties by the Company hereunder solely as of the date
of such certificate or instrument.
5.3 Successors and Assigns; Binding Nature.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors, assigns,
heirs, executors, and administrators of the parties hereto and shall inure to
the benefit of and be enforceable by each person who shall be a holder of
Registrable Securities from time to time; provided, however, that prior to
the receipt by the Company of adequate written notice of the transfer of any
Registrable Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such Registrable Securities in its records as the absolute owner and holder
thereof for all purposes, including the payment of dividends or any
redemption price.
21
5.4 Severability.
In case any provision of the Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
5.5 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company, the holders
of a majority of the Series A Registrable Securities, voting as a separate
class, the holders of a majority of the Series C Registrable Securities,
voting as a separate class, the holders of two-thirds of the Series D
Registrable Securities, voting as a separate class, and the holders of
two-thirds of the Series E Registrable Securities, voting as a separate
class, and the Ford Holders holding in interest a majority of the Ford
Registrable Securities, voting as a separate class, provided in such case,
that all such Holders are affected by such amendment in a substantially
similar fashion.
(b) Except as otherwise expressly provided herein, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of at least a majority of the
Series A Registrable Securities , voting as a separate class, the holders of
a majority of the Series C Registrable Securities, voting as a separate
class, the holders of two-thirds of the Series D Registrable Securities,
voting as a separate class and the holders of two-thirds of the Series E
Registrable Securities, voting as a separate class, provided in such case,
that all such Holders are affected by such waiver in a substantially similar
fashion.
(c) Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.
5.6 Delays or Omissions.
It is agreed that no delay or omission to exercise any right, power, or
remedy occurring to any Holder, upon any breach, default or noncompliance of
the Company under this Agreement shall impair any such right, power or
remedy, nor shall it be construed to be a waiver of any such breach, default
or noncompliance, or any acquiescence therein, or of any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent or approval of any kind or character on any Holder's
part of any breach, default or noncompliance under the Agreement or any
waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and
not alternative.
5.7 Notices.
All notices required or permitted hereunder shall be in writing and
shall be deemed effectively given: (i) upon personal delivery to the party to
be notified, (ii) when sent by confirmed telex or facsimile if sent during
normal business hours of the recipient; if not, then on
22
the next business day. (iii) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(iv) one (1) day after deposit with a nationally recognized overnight
courier, specifying next day delivery with written verification of receipt.
All communications shall be sent to the party to be notified at the address
as set forth on the signature pages hereof or EXHIBIT A hereto or at such
other address as such party may designate by ten (10) days advance written
notice to the other parties hereto.
5.8 Attorneys' Fees.
In the event that any dispute among the parties to this Agreement should
result in litigation, the prevailing party in such dispute shall be entitled
to recover from the losing party all fees, costs and expenses of enforcing
any right of such prevailing party under or with respect to this Agreement,
including without limitation, such reasonable fees, and expenses of attorneys
and accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
5.9 Titles and Subtitles.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in construing this
Agreement.
5.10 Pronouns.
All pronouns contained herein and any variations thereof shall be deemed
to refer to the masculine, feminine or neuter, singular or plural, as the
identity of the parties hereto may require.
5.11 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall constitute one
instrument.
5.12 Entire Agreement.
(a) This Agreement, the Exhibits and Schedules hereto, the Related
Agreements and the other documents delivered pursuant hereto constitute the
full and entire understanding and agreement between the parties with regard
to the subject matter hereof and neither party shall be liable or bound to
the other party except as specifically set forth herein and therein.
(b) This Agreement amends, restates and supersedes in its entirety the
terms and conditions set forth in the Second Amended and Restated Investors'
Rights Agreement, dated as of November 24, 1998, as amended and such
agreement shall be of no further force or effect.
[SIGNATURES ON FOLLOWING PAGES.]
23
In witness Whereof, the parties hereto have executed this Third Amended
and Restated Investors' Rights Agreement as of the date set forth in the
first paragraph hereof.
VASTERA, INC.
By:
---------------------------------
Arjun Rishi
President
FORD MOTOR COMPANY
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
24
NEW INVESTORS:
TCV IV, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TCV IV STRATEGIC PARTNERS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
25
ORIGINAL PARTIES:
TCV II, V.O.F.
a Netherlands Antilles General
Partnership
By: Technology Crossover
Management II, L.L.C.
Its: Investment General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TECHNOLOGY CROSSOVER VENTURES II,
L.P.
a Delaware Limited Partnership
By: Technology Crossover
Management II, L.L.C.
Its: General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TCV II (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover
Management II, L.L.C.
Its: General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
26
TCV II STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover
Management II, L.L.C.
Its: General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TECHNOLOGY CROSSOVER VENTURES II,
C.V.
a Netherlands Antilles Limited
Partnership
By: Technology Crossover
Management II, L.L.C.
Its: Investment General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
27
RRE INVESTORS, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
RRE INVESTORS FUND, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
MSD PORTFOLIO CAPITAL, L.P.
PRIVATE NEW EQUITY
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
RPKS INVESTMENTS, L.L.C.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
TRIPLE XXXXXX INVESTMENTS, L.L.C.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
28
TEACHERS INSURANCE AND ANNUITY
ASSOCIATION OF AMERICA
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
XXXXX X XXXXXXXX TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
VERTEX TECHNOLOGY FUND PTE, LTD.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
00
XXXXX & XXXXXX XXXXXXXX, X.X.X.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
BATTERY VENTURES III, L.P.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
XXXXXXXX X. XXXXXX
---------------------------------
Title:
-------------------------------
XXXXXX & ABAD REVOCABLE TRUST
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
30
REVOCABLE TRUST OF TODRY CANNIFFE
AND XXXXXXXXXX XXXXXXXX
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
XXXXXXXXX & XXXXX CALIFORNIA
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
H&Q EMPLOYEE VENTURE FUND 2000,
L.P.
By: H&Q VENTURE MANAGEMENT ,
L.L.C.
Its: General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
ACCESS TECHNOLOGY PARTNERS, L.P.
By: ACCESS TECHNOLOGY
MANAGEMENT, L.L.C.
Its: General Partner
By: H&Q VENTURE MANAGEMENT,
L.L.C.
Its: Managing Member
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
31
Title:
-------------------------------
ACCESS TECHNOLOGY PARTNERS BROKERS
FUND, L.P.
By: H&Q VENTURE MANAGEMENT,
L.L.C.
Its: General Partner
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
BT INVESTMENT PARTNERS, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
-------------------------------
32
EXHIBIT G - FINANCIAL STATEMENTS OF THE BUSINESS
TO BE PROVIDED BY JULY 31, 2000
EXHIBIT H - PARENT GUARANTY
July 14, 2000
Ford Motor Company
Xxx Xxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxx Xxxxxx
Re: CERTAIN ARRANGEMENTS AND OBLIGATIONS BETWEEN VASTERA, INC. AND FORD MOTOR
COMPANY
Dear Xx. Xxxxxx:
This letter agreement (the "Guaranty") memorializes the implementation
of certain agreements between Vastera, Inc. ("Guarantor") and Ford Motor
Company ("Ford") in connection with the execution and delivery of the
following agreements:
(i) The Stock Issuance Agreement, dated as of July 14, 2000, between Ford and
Vastera Solution Services Corporation ("VSSC"), a wholly-owned subsidiary
of Guarantor;
(ii) the License Agreement, dated as of July 14, 2000, between Ford and VSSC;
(iii) the Salaried Employee Secondment Agreement, dated as of July 14, 2000,
between Ford and VSSC; and
(iv) the Employee Transfer Agreement, dated as of July 14, 2000, between Ford
and VSSC.
The foregoing four agreements are collectively referred to as the "Agreements".
Ford and Guarantor agree to the following:
1. GUARANTY
In consideration of the execution of the Agreements, Guarantor hereby
absolutely, irrevocably, and unconditionally guarantees to Ford Motor Company
the full performance by VSSC of all covenants and obligations assumed by VSSC
under the Agreements.
2. GOVERNING LAW
This Guaranty shall be construed under the laws of the State of Michigan.
If the foregoing accurately sets forth our agreement regarding the issues
addressed herein, please sign the enclosed copy of this Guaranty and return it
to me at your earliest convenience.
Sincerely,
VASTERA, INC.
By:
----------------------------------
Arjun Rishi, President
Acknowledged and agreed to this
fourteenth day of July, 2000:
FORD MOTOR COMPANY
By:
-------------------------------
Xxxxx Xxxxxx, Vice President, MP&L
EXHIBIT I - SIGNIFICANT SHAREHOLDERS
5% or Greater Stockholders
SHARES OWNED
NAME OF BENEFICIAL OWNER (FULLY DILUTED BASIS)
------------------------ ---------------------
Battery Ventures III, L.P. . . . . . . . . . . . . . . 2,736,592
000 Xxxxxxx'x Xxxxxx Xxxx., Xxxxx 000
Xxx Xxxxx, XX 00000
MSD Portfolio Capital, L.P.
Triple Xxxxxx Investments, L.L.C.
RPKS Investments, L.L.C. . . . . . . . . . . . . . . . 1,010,032
000 Xxxxxxxxx Xxx., Xxxxx 0000
Xxx Xxxx, XX 00000
RRE Investors, L.P.
RRE Investors Fund, L.P. . . . . . . . . . . . . . . . 720,681
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Technology Crossover Ventures II, L.P.
Technology Crossover Ventures II, C.V.
TCV II Strategic Partners, L.P.
TCV II (Q), L.P.
TCV II, V.O.F.
TCV IV, L.P.
TCV Strategic Partners, L.P. . . . . . . . . . . . . . 2,458,272
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Teachers Insurance and Annuity Association of America . 1,415,473
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000-0000
Vertex Technology Fund Pte. Ltd.
by Vertex Technology Fund II Ltd. . . . . . . . . . . . 000,000
Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxx, XX 00000
Arjun Rishi . . . . . . . . . . . . . . . . . . . . . . 692,493
Xxxxxx Rishi . . . . . . . . . . . . . . . . . . . . . 1,089,790
Xxxxxx Rishi . . . . . . . . . . . . . . . . . . . . . 715,101
SCHEDULES FROM VASTERA
6.3
6.4
6.9
6.10
6.13
6.15
6.16(a)
6.21
SCHEDULE 7.9
NONE
SCHEDULE 7.12
NONE
2
