EXHIBIT 4(a)
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AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
among
FRONTSTEP, INC.,
THE SEVERAL INVESTORS NAMED IN SCHEDULE I
and
THE SHAREHOLDERS NAMED HEREIN
Dated as of March 7, 2002
TABLE OF CONTENTS
PAGE
ARTICLE 1
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DEFINITIONS
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SECTION 1.01. DEFINITIONS .....................................................................2
ARTICLE 2
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SECURITIES TRANSFER RESTRICTIONS
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SECTION 2.01. RESTRICTIVE LEGENDS .............................................................4
SECTION 2.02. NOTICE OF PROPOSED TRANSFER .....................................................5
SECTION 2.03. TERMINATION OF RESTRICTIONS......................................................5
SECTION 2.04. NON-APPLICABILITY OF RESTRICTIONS ON TRANSFER....................................6
SECTION 2.05. SHAREHOLDER SALES................................................................6
ARTICLE 3
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INFORMATION RIGHTS
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SECTION 3.01. FINANCIAL STATEMENTS, REPORTS, ETC...............................................6
SECTION 3.02. INSPECTION, CONSULTATION AND ADVICE..............................................8
SECTION 3.03. CONFIDENTIALITY AGREEMENT........................................................8
ARTICLE 4
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PRE-EMPTIVE RIGHTS AND WAIVERS
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SECTION 4.01. PRE-EMPTIVE RIGHTS...............................................................9
SECTION 4.02. WAIVERS.........................................................................10
ARTICLE 5
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REGISTRATION RIGHTS
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SECTION 5.01. REGISTRATION ON FORM S-3........................................................11
SECTION 5.02. INCIDENTAL REGISTRATION.........................................................12
SECTION 5.03. REGISTRATION PROCEDURES.........................................................12
SECTION 5.04. EXPENSES........................................................................15
SECTION 5.05. RULE 144 REQUIREMENTS...........................................................16
SECTION 5.06. INVESTORS' INFORMATION..........................................................16
SECTION 5.07. TRANSFER OF REGISTRATION RIGHTS.................................................16
SECTION 5.08. HOLD-BACK AGREEMENT.............................................................16
SECTION 5.09. OTHER SHAREHOLDERS..............................................................17
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ARTICLE 6
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INDEMNIFICATION
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SECTION 6.01. INDEMNIFICATION.................................................................17
ARTICLE 7
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TAG-ALONG RIGHTS
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SECTION 7.01. TAG-ALONG RIGHT.................................................................19
SECTION 7.02. NOTICE OF INTENT TO PARTICIPATE.................................................19
SECTION 7.03. SALE OF TAG-ALONG SHARES........................................................19
ARTICLE 8
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REPRESENTATION RIGHTS
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SECTION 8.01. BOARD OF DIRECTORS..............................................................20
SECTION 8.02. VOTING..........................................................................21
ARTICLE 9
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MISCELLANEOUS
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SECTION 9.01. TERM OF AGREEMENT...............................................................23
SECTION 9.02. SEVERABILITY; GOVERNING LAW.....................................................23
SECTION 9.03. INJUNCTIVE RELIEF...............................................................24
SECTION 9.04. BINDING EFFECT..................................................................24
SECTION 9.05. MODIFICATION OR AMENDMENT.......................................................24
SECTION 9.06. AGGREGATION.....................................................................24
SECTION 9.07. COUNTERPARTS....................................................................24
SECTION 9.08. NOTICES.........................................................................24
SECTION 9.09. ENTIRE AGREEMENT................................................................25
SCHEDULE I - Original Investors
SCHEDULE II - 2002 Investors
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AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT, dated as of March 7,
2002 among FRONTSTEP, INC. (formerly known as Symix Systems, Inc.), an Ohio
corporation (the "COMPANY"), the several investors named in the attached
Schedule I (such investors the "ORIGINAL INVESTORS"), Xxxxxxxx X. Xxx (the
"SHAREHOLDER") and Xxxxx X. Xxxxxxxxxx ("XX. XXXXXXXXXX," together with the
Shareholder, the "SHAREHOLDERS")
WHEREAS, on May 10, 2000 the Original Investors purchased an aggregate
of 566,933 shares of the authorized but unissued Series A Convertible
Participating Preferred Shares, without par value, of the Company (the
"PREFERRED SHARES"), which are convertible into common shares, without par
value, of the Company (the "COMMON SHARES ") and warrants (the "ORIGINAL
WARRANTS") to purchase an aggregate of 453,546 shares of the authorized but
unissued Common Shares and entered into with the Company and the Shareholder
that certain Investor Rights Agreement (the "ORIGINAL INVESTOR RIGHTS
AGREEMENT") providing for, inter alia, the ability of the Original Investors to
purchase and/or participate in subsequent sales of equity securities of the
Company by the Company or the Shareholder;
WHEREAS, the Company wishes to issue and sell to the several investors
named in the attached Schedule II (the "2002 INVESTORS") $1,500,000 of 10%
subordinated notes due 2004 (the "INITIAL NOTES") and warrants (the "2002
WARRANTS") to purchase an aggregate of 600,000 shares of the authorized but
unissued Common Shares pursuant to a Securities Purchase Agreement dated March
7, 2002 (the "SECURITIES PURCHASE AGREEMENT");
WHEREAS, the Company wishes to issue and sell to the 2002 Investors
$3,500,000 of 10% subordinated convertible notes due 2004 (the "CONVERTIBLE
NOTES"), which are convertible into Common Shares, pursuant to the Securities
Purchase Agreement;
WHEREAS, one of the conditions to the investment in the Company by the
2002 Investors is the execution of this Amended and Restated Investor Rights
Agreement providing for, inter alia, the ability of the 2002 Investors to
purchase and/or participate in subsequent sales of equity securities of the
Company by the Company on a pro rata basis based upon the amount of Registrable
Stock (as defined below) held by such 2002 Investor; and
WHEREAS, the Company and Original Investors holding more than
seventy-five percent (75%) of the Common Shares (as defined below) issued or
issuable upon conversion of any Restricted Securities (as defined in the
Original
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Investor Rights Agreement) have approved this Amended and Restated Investor
Rights Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and the investment by the 2002 Investors pursuant to the
Securities Purchase Agreement and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
ARTICLE 1
DEFINITIONS
Section 1.01. Definitions. (a) The following terms, as used herein,
have the following meanings:
"AFFILIATE" shall mean any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition,
"control" shall have the meaning specified for that word in Rule 405 promulgated
by the Securities and Exchange Commission under the Securities Act.
"COMMISSION" shall mean the Securities and Exchange Commission.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
prior or after the date hereof, or any federal statute or statutes which shall
have been enacted to take the place of such Act, together with all rules and
regulations promulgated thereunder.
"FAEF" means Fallen Angel Equity Fund, L.P.
"HOLDER" means the Persons who shall, from time to time, own of record
any Restricted Security.
"INVESTOR" means any Original Investor or 2002 Investor.
"MSDW INVESTOR" means any of Xxxxxx Xxxxxxx Xxxx Xxxxxx Venture
Partners IV, L.P., Xxxxxx Xxxxxxx Xxxx Xxxxxx Venture Investors IV, L.P., Xxxxxx
Xxxxxxx Xxxx Xxxxxx Venture Offshore Investors IV, L.P. or Xxxxxx Xxxxxxx Xxxx
Xxxxxx Equity Funding, Inc.
"PERSON" means an individual, a corporation, a partnership, a limited
liability company, a trust, an unincorporated organization or a government
organization or an agency or political subdivision thereof.
"REGISTRABLE STOCK" shall mean (A) all Common Shares held by the
Original Investors from time to time, including all of the Common Shares into
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which the Preferred Shares, the Initial Notes or the Convertible Notes may be
converted and for which the Original Warrants or the 2002 Warrants may be
exercised and (B) any Common Shares held by the Shareholders which Common Shares
were received upon conversion of the Initial Notes, the Convertible Notes or
exercise of the 2002 Warrants; provided, however, that such Common Shares shall
only be treated as Registrable Stock if and so long as they have not been (i)
sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction, or (ii) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect to such Common Shares are removed upon the consummation of such
sale.
"REGISTRATION STATEMENT" shall mean a registration statement filed by
the Company with the Commission for a public offering and sale of securities of
the Company (other than a registration statement on Form X-0, Xxxx X-0, or
successor forms, or any registration statement covering only securities proposed
to be issued in exchange for securities or assets of another corporation).
"RESTRICTED SECURITY" means any of the Preferred Shares, Initial Notes,
Convertible Notes, Original Warrants, 2002 Warrants or the Common Shares
issuable upon conversion of the Preferred Shares, Initial Notes or Convertible
Notes or exercise of the Original Warrants or 2002 Warrants to the extent such
securities are not registered under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended prior to
or after the date hereof, or any federal statute or statutes which shall be
enacted to take the place of such Act, together with all rules and regulations
promulgated thereunder.
"TRANSFER" means any direct or indirect sale, transfer, assignment,
pledge or other disposition (whether with or without consideration and whether
voluntary or involuntary or by operation of law). Derivatives thereof will be
similarly defined.
(b) Each of the following terms is defined in the Section set forth
opposite such term:
TERM SECTION
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2002 Investors Preamble
2002 Warrants Preamble
Common Shares Preamble
Company Preamble
Original Investors Preamble
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TERM SECTION
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Original Investors Rights Agreement Preamble
Original Warrants Preamble
Preferred Shares Preamble
Securities Purchase Agreement Preamble
Shareholder Preamble
Shareholders Preamble
LLC 2.04
Board of Directors 4.01(a)(ii)
Notice Period 4.01(a)(iii)
right of overallotment 4.01(a)(iii)
FSP 5.09(c)
Mitsui Transaction 5.09(c)
Indemnified Person 6.01(a)
Company Indemnified Person 6.01(b)
indemnified party 6.01(c)
Proposed Transferee 7.01
Tag-Along Shares 7.01
Change in Control Liquidation Event 9.01(a)(ii)
ARTICLE 2
SECURITIES TRANSFER RESTRICTIONS
Each Holder agrees that Restricted Securities shall not be Transferable
except upon the conditions specified in this Article 2, which conditions are
intended to insure compliance with the provisions of the Securities Act and
state securities laws in respect of the Transfer of any Restricted Security.
Shareholder agrees that Common Shares, Convertible Notes and 2002 Warrants held
by him shall not be Transferable except upon compliance with the conditions
specified in Section 2.05 and Article 7 hereof.
Section 2.01. Restrictive Legends.
(a) Unless and until otherwise permitted by this Article 2, each
certificate for a Restricted Security issued to a Holder, or to any subsequent
transferee of such certificate shall be stamped or otherwise imprinted with a
legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE
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THEREWITH. THIS SECURITY IS ALSO SUBJECT TO ADDITIONAL RESTRICTIONS ON
TRANSFER, VOTING AND OTHER MATTERS AS SET FORTH IN THE AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT DATED AS OF MARCH 7, 2002, COPIES OF
WHICH MAY BE OBTAINED UPON REQUEST FROM THE COMPANY."
The Company may order the transfer agent for any Restricted Security to
stop the Transfer of any Restricted Security bearing the legend set forth in
subsection (a) of this Section 2.01 until the conditions of this Article 2 with
respect to the Transfer of such security have been satisfied.
Section 2.02. Notice Of Proposed Transfer. If, prior to any Transfer
of any Restricted Security, the Holder desiring to effect such Transfer delivers
to the Company a written notice describing briefly the manner of such Transfer
and a written opinion of counsel for such Holder (who may be inside counsel in
the case of an institutional holder), provided that such counsel and the form
and substance of such opinion are reasonably satisfactory to the Company, or
counsel for the Company, to the effect that such Transfer may be effected
without the registration of such securities under the Securities Act or
registration or qualification under applicable state securities laws or
regulations, the Company shall thereupon permit or cause its transfer agent (if
any) to permit such Transfer to be effected; provided, that if in such written
notice the transferring Holder represents and warrants to the Company that the
Transfer is to (i) an Affiliate of the Holder or (ii) a purchaser or transferee
whom the transferring holder knows or reasonably believes to be a "qualified
institutional buyer", as that term is defined in Rule 144A promulgated under the
Securities Act, then in each such case, no opinion shall be required.
Section 2.03. Termination Of Restrictions.
(a) Notwithstanding the foregoing provisions of this Article 2, the
restrictions imposed by this Article 2 upon the Transferability of Restricted
Securities shall terminate as to any particular Restricted Security when (i)
such Restricted Security shall have been effectively registered under the
Securities Act and sold by the Holder thereof in accordance with such
registration; (ii) a written opinion of counsel for the Holder thereof (provided
that such counsel, and the form and substance of such opinion, are reasonably
satisfactory to the Company) or counsel for the Company to the effect that such
restrictions are no longer required or necessary under any federal or state
securities law or regulation has been received by the Company; (iii) such
Restricted Security shall have been sold without registration under the
Securities Act in compliance with Rule 144 promulgated by the Commission under
the Securities Act and the Company is reasonably satisfied that the Holder of
the Restricted Security, in accordance with the terms of subsection (k) of Rule
144 promulgated by the Commission under the
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Securities Act, shall be entitled to sell such securities pursuant to such
subsection; or (iv) a letter or an order shall have been issued to the Holder
thereof by the staff of the Commission or the Commission in form and substance
reasonably satisfactory to the Company, stating that no enforcement action shall
be recommended by such staff or taken by the Commission, as the case may be, if
such Restricted Security is transferred without registration under the
Securities Act in accordance with the conditions set forth in such letter or
order and such letter or order specifies that no restrictions on Transfer are
required.
(b) Whenever the restrictions imposed by this Article 2 shall
terminate, as herein above provided, the Holder of any Restricted Securities
then outstanding as to which such restrictions shall have terminated shall be
entitled to receive from the Company, without expense to such Holder, one or
more new certificates for the Restricted Securities so held not bearing the
restrictive legend set forth in Subsection (a) of Section 2.01 hereof, as
applicable.
Section 2.04. Non-applicability Of Restrictions On Transfer.
Notwithstanding the provisions of Section 2.02 hereof, any Holder may from time
to time Transfer all or part of such Holder's Restricted Securities to (i) a
nominee identified in writing to the Company as being the nominee of or for such
Holder, and any nominee of or for a beneficial owner of Restricted Securities
identified in writing to the Company as being the nominee of or for such
beneficial owner may from time to time Transfer all or part of the Restricted
Securities registered in the name of such nominee but held as nominee on behalf
of such beneficial owner, to such beneficial owner, (ii) to an Affiliate of such
Holder, or (iii) if such Holder is a partnership, limited liability company
("LLC"), or the nominee of a partnership or an LLC, to a partner, retired
partner, or estate of a partner or retired partner, of such partnership or a
member, retired member, or estate of a member or retired member of such LLC, so
long as such Transfer is in accordance with the transferee's interest in such
partnership or LLC and is without consideration; provided, that each such
transferee referred to in clauses (i), (ii) and (iii) above shall remain subject
to all restrictions on the Transfer of the Restricted Securities herein
contained and shall agree in writing to be bound by the other terms and
conditions of this Agreement.
Section 2.05. Shareholder Sales. Prior to March 31, 2002, Shareholder
agrees not to Transfer any Common Shares (or any derivative thereof) that he
beneficially owns.
ARTICLE 3
INFORMATION RIGHTS
Section 3.01. Financial Statements, Reports, Etc. The Company shall
furnish to each Investor:
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(a) within ninety (90) days after the end of the last quarter in each
fiscal year audited consolidated financial statements of the Company including a
balance sheet of the Company, if any, and the related statements of income,
shareholders' equity and cash flows, prepared in accordance with generally
accepted accounting principles, provided that, the Company may comply with this
provision by delivering to each Investor a copy of its annual report on Form
10-K for such fiscal year;
(b) within forty-five (45) days after the end of each quarter in each
fiscal year (other than the last quarter in each fiscal year) a balance sheet of
the Company, if any, and the related statements of income, shareholders' equity
and cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such balance sheet to be as of the end of such quarter and such
statements of income, shareholders' equity and cash flows to be for such quarter
and for the period from the beginning of the fiscal year to the end of such
quarter, in each case with comparative statements for the prior fiscal year,
provided that, the Company may comply with this provision by delivering to each
Investor a copy of its quarterly report on Form 10-Q for such quarter;
(c) within thirty (30) days after the end of each month in each fiscal
year (other than the last month in each quarter) a summary balance sheet of the
Company and the related summary statements of income, shareholder's equity and
cash flows, unaudited but prepared in accordance with generally accepted
accounting principles;
(d) at the time of delivery of each quarterly statement pursuant to
Section 3.01(b), a management narrative report explaining all significant
variances from forecasts and all significant current developments in staffing,
marketing, sales and operations;
(e) no later than thirty (30) days prior to the start of each fiscal
year, capital and operating expense budgets, cash flow projections, income and
loss projections and annual business plan for the Company in respect of such
fiscal year, all itemized in reasonable detail and prepared on a monthly basis,
and, promptly after preparation, any revisions to any of the foregoing;
(f) promptly following receipt by the Company, each audit response
letter, accountant's management letter and other written report submitted to the
Company by its independent public accountants in connection with an annual or
interim audit of the books of the Company;
(g) promptly after the commencement thereof, notice of all actions,
suits, claims, proceedings, and to the knowledge of the Company, investigations
and inquiries that could materially adversely affect the Company, if any;
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(h) promptly upon sending, making available or filing the same, all
press releases, reports and financial statements that the Company sends or makes
available to its shareholders or files with the Commission; and
(i) promptly, from time to time, such other information regarding the
business, prospects, financial condition, operations, property or affairs of the
Company as such Investor reasonably may request.
Section 3.02. Inspection, Consultation And Advice. The Company shall
permit each Investor and such persons as it may designate, at such Investor's
expense, to visit and inspect any of the properties of the Company, examine its
books and take copies and extracts therefrom, discuss the affairs, finances and
accounts of the Company with its officers, employees and public accountants (and
the Company hereby authorizes said accountants to discuss with such Investor and
such designees such affairs, finances and accounts), and consult with and advise
the management of the Company as to its affairs, finances and accounts, all at
reasonable times and upon reasonable notice to the Company.
Section 3.03. Confidentiality Agreement. Each Investor receiving
information pursuant to Section 3.01 or 3.02 shall use its best efforts to
ensure that any information which is delivered by the Company to such Investor
pursuant to Section 3.01 or 3.02 will be kept confidential, not be copied except
for internal use and for provision to attorneys, accountants and other
fiduciaries with duties to maintain confidentiality, and be used solely to
evaluate and protect such Investor's investment in the Restricted Securities,
including through the provision of routine reports to any limited partners of
the Investors; provided, that the foregoing obligation shall not prohibit any
such Investor from divulging any information, whether or not confidential, to
any regulatory authority having jurisdiction over such Investor, if such
Investor is compelled to do so by any judicial or administrative process or by
other requirements of law provided such Investor seeks a protective order with
respect to such information, or to any prospective purchaser of Restricted
Securities from such Investor so long as such prospective purchaser agrees to be
bound by the confidentiality provisions contained herein; and provided, further,
that the foregoing obligation shall remain in effect as to any confidential
information except to the extent that such information can be shown to have been
(i) previously known on a non-confidential basis by such Investor, (ii) in the
public domain through no fault of such Investor or (iii) later lawfully acquired
by such Investor from sources other than the Company other than information
known by such Investor to be acquired in violation of an existing
confidentiality agreement. The obligation of each Investor to hold any
confidential information in confidence shall be satisfied if such Investor
exercises the same care with respect to such information as it would take to
preserve the confidentiality of its own confidential and proprietary
information.
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ARTICLE 4
PRE-EMPTIVE RIGHTS AND WAIVERS
Section 4.01. Pre-Emptive Rights. (a) Each Investor shall have a
preemptive right to purchase all or any portion of an offering by the Company,
or any subsidiary of the Company, of any equity security (or any security which
is or may become convertible into or exchangeable or exercisable for an equity
security) equal to the number or amount of securities being offered, multiplied
by a fraction, the numerator of which shall be the number of Common Shares held
by such Investor which are Registrable Stock and the denominator of which shall
be the number of Common Shares held by all shareholders (including the
Investors); provided that, in the case of any such offering by a subsidiary of
the Company, if the number of equity securities that the Investors collectively
have preemptive rights to purchase from the Company is less than 20% of the
equity securities being offered by such subsidiary then the number of equity
securities that each Investor has a preemptive right to purchase shall be
increased pro rata so that, collectively, the Investors have a preemptive right
to purchase at least 20% of such equity securities; provided further that there
will be no such preemptive right in the case of (i) shares issued or issuable
pursuant to the exercise of options or warrants or the conversion of convertible
securities (including the Preferred Shares) that were issued or outstanding on
the date hereof; (ii) any shares issued or issuable to officers, directors,
employees, agents or consultants of the Company or any subsidiary of the
Company, upon exercise of any option granted or to be granted pursuant to any
stock option plan or arrangements approved by the Board of Directors of the
Company (the "BOARD OF DIRECTORS"), or the board of directors of such
subsidiary, as the case may be, or any options granted or to be granted
thereunder; or (iii) shares issued or issuable in the acquisition by the Company
or by a subsidiary of the Company of any other corporation, association,
partnership or another entity or the assets or securities thereof. Each Investor
shall have such right to purchase when the securities are issued or sold by the
Company, or any subsidiary of the Company, on the best terms and conditions as
such securities are offered to other purchasers thereof. For purposes of this
Section 4.01 it shall be assumed that all securities held by the Investors which
may be converted into or exercised for Common Shares have been so converted or
exercised. The Company shall give the Investors at least thirty (30) days prior
written notice (the "NOTICE PERIOD") of any proposed securities issuance that
would give rise to preemptive rights as contemplated in this Section 4.01
describing the amount and type of securities to be issued, and the price and
other terms upon which the Company, or any subsidiary of the Company, proposes
to issue the same. Each Investor exercising all of its preemptive rights in such
offering shall have a further pro rata right (a "RIGHT OF OVER ALLOTMENT") to
purchase the securities refused by any Investor who declines to fully exercise
its preemptive right. Each Investor desiring to exercise its preemptive right
must notify the Company in writing prior to the close of business on the last
day of the Notice Period, stating (i) its intent to
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purchase, (ii) whether or not it intends to exercise its right of over
allotment; and (iii) the maximum amount of securities it is willing to purchase.
(b) In the event that the Investors have not elected pursuant to this
Section 4.01(b) to purchase all of the contemplated offering, the Company shall
have ninety (90) days thereafter to sell the securities not elected to be
purchased by the Investors at the price and upon the terms no more favorable to
the purchasers of such securities than specified in the Company notice
hereunder. In the event the Company has not sold some or all of the securities
within such ninety (90) day period, the Company shall not thereafter issue or
sell any unsold securities without first offering such securities to the
Investors in the manner provided above.
(c) The rights of each Investor under this Article 4 shall be subject
to the ability of such Investor to make representations to the Company
reasonably required to comply with Rule 506 of Regulation D under the Securities
Act in connection with the purchase of any restricted securities.
Section 4.02. Waivers. (a) Each Original Investor hereby irrevocably
waives any and all pre-emptive rights and other similar rights to which such
Original Investor may have been entitled pursuant to the Original Investor
Rights Agreement, and each 2002 Investor herby irrevocably waives any and all
pre-emptive and other similar rights to which such 2002 Investor is entitled
pursuant to this Amended and Restated Investor Rights Agreements; provided
however, each such waiver is being made solely with respect to the Company's
issuance and/or sale of the Convertible Notes, the Initial Notes, the 2002
Warrants and the Mitsui Transaction, as such transaction is described on
Schedule 4.02(a), and/or the sale or issuance of any securities in connection
with the conversion, exercise or consummation thereof, as the case may be.
(b) In consideration for the Company having reduced the conversion
price of the Preferred Shares from $12.00 to $6.00, the Original Investors and
the 2002 Investors hereby irrevocably waive any and all further adjustments to
(i) the Conversion Price (as defined in the Company's Amended Articles of
Incorporation) applicable to the Preferred Shares and/or the number of Common
Shares into which the Preferred Shares are convertible, (ii) the Conversion
Price (as defined in the Convertible Notes or the Initial Notes, as the case may
be) applicable to the Convertible Notes and/or the Initial Notes and/or the
number of Common Shares into which the Convertible Notes and/or the Initial
Notes are convertible, (iii) the Exercise Price (as defined in the Original
Warrants) applicable to the Original Warrants, including, but not limited to the
anti-dilution provisions contained in paragraphs 8(b), (d) and (j) of the
Original Warrants, and (iv) any and all other anti-dilution rights and
provisions applicable to the Preferred Shares, the Convertible Notes, the
Initial Notes and the Original Warrants which such Original Investors or 2002
Investors, as the case may be,
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were or may be entitled in connection with the Company's issuance of the
Convertible Notes, the Initial Notes and/or the 2002 Warrants, or in connection
with the Mitsui Transaction and/or sale or issuance of any securities in
connection with the conversion, exercise or consummation thereof, as the case
may be; provided, however, such waiver is made solely with respect to the
aforementioned transactions, and the Original Investors and the 2002 Investors
do not waive their rights with respect to any other transactions.
ARTICLE 5
REGISTRATION RIGHTS
Section 5.01. Registration On Form S-3. The Company shall file with
the Commission a shelf Registration Statement on Form S-3 covering all of the
shares of Registrable Stock beneficially owned by the Investors and the Company
shall use its reasonable best efforts to effect the registration of the
Registrable Stock within ninety (90) days of the Convertible Closing (as defined
in the Securities Purchase Agreement) in order to permit the sale and
distribution of all of the Registrable Stock on a continuous basis under Rule
415; provided, however, that if the Convertible Closing has not occurred by June
30, 2002 the Company shall have an additional obligation to use its reasonable
best efforts to effect the registration of the Registrable Stock into which the
2002 Warrants beneficially owned by the Investors (other than the Shareholders)
may be exercised within ninety (90) days of such date in order to permit the
sale and distribution of all such Registrable Stock on a continuous basis under
Rule 415. Except as expressly provided in paragraph 5.01(b), the Company shall
use its reasonable best efforts to cause any such Registration Statement and the
Registration Statement filed by the Company pursuant to its obligations under
the Original Investor Rights Agreement to become and remain effective until such
time as each Investor can sell all of its Registrable Stock pursuant to Rule 144
promulgated by the Commission under the Securities Act within a ninety (90) day
period.
(b) Notwithstanding anything to the contrary contained herein, the
Company shall not be obligated to make any filing in any particular jurisdiction
in which the Company would be required to execute a general consent to service
of process in order to effect such registration, qualification or compliance
unless the Company is already subject to service in such jurisdiction in the
opinion of the Company's counsel. If the Company shall furnish to the Investors
a certificate signed by the Chief Executive Officer or Chief Financial Officer
of the Company stating that in the good faith judgment of the Board of Directors
it would be seriously detrimental to the Company or its shareholders for the
Investors to continue to sell or distribute Registrable Stock under the shelf
Registration Statement filed by the Company pursuant to paragraph 5.01(a), then
the Investors
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shall cease any such sale or distribution of Registrable Stock for a period not
to exceed sixty (60) days as specified by the Company. The Company may not
deliver the certificate specified in the preceding sentence more than once in
any 360-day period.
(c) The Investors, in consultation with the Company and subject to the
Company's reasonable approval, may designate the managing underwriter(s), if
any, of any underwritten distribution made under the shelf Registration
Statement filed pursuant to Section 5.01(a) hereof; provided that Xxxxxx Xxxxxxx
& Co. Incorporated or any successor entity shall be reasonably acceptable to the
Company. The Company shall cause its senior management to participate in any
"road show" as and to the extent reasonably requested by the managing
underwriters.
Section 5.02. Incidental Registration. At such time when the Company
is no longer required to maintain the effectiveness of the shelf registration
statement pursuant to Section 5.01(a), each time the Company shall determine to
file a Registration Statement in connection with the proposed offer and sale for
money of any of its securities by it or any of its securityholders, the Company
will give written notice of its determination to the Investors. Upon the written
request of the Investors given within thirty (30) days after the giving of any
such notice by the Company, the Company will use its reasonable efforts to cause
all shares of Registrable Stock which the Investors have requested to register
to be included in such Registration Statement, all to the extent requisite to
permit the sale or other disposition by the prospective seller of the
Registrable Stock to be so registered. If the Registration Statement is to cover
an underwritten distribution, the Company shall use its reasonable efforts to
cause the Registrable Stock requested for inclusion pursuant to this Section
5.02 to be included in the underwriting on the same terms and conditions as the
securities otherwise being sold through the underwriters. If, in the good faith
judgment of the managing underwriter(s) of such public offering, the inclusion
of all of the Registrable Stock requested for inclusion pursuant to this Section
5.02 would interfere with the successful marketing of the shares to be offered,
then the number of shares of Registrable Stock to be included in the offering
shall be reduced to the required level with the participation in such offering
to be pro rata among the Holders thereof requesting such registration, based
upon the number of shares of Registrable Stock owned by such Holders; provided
that commencing nine months after the date hereof, each Investor shall have a
priority right (prior to the Company and any other securityholder) to have
included pursuant to this Section 5.02 not less than 30% of the Registrable
Stock requested for inclusion by such Investor.
Section 5.03. Registration Procedures. If and whenever the Company is
required by the provisions of Section 5.01 or 5.02 hereof to effect the
registration of shares of Registrable Stock under the Securities Act, the
Company will, at its expense, as expeditiously as reasonably possible:
12
(a) In accordance with the Securities Act and the rules and regulations
of the Commission, prepare and file with the Commission a Registration Statement
with respect to such securities and use its reasonable efforts to cause such
Registration Statement to become and remain effective;
(b) (i) Prepare and file with the Commission such amendments and
supplements to such Registration Statement and prospectus used in connection
therewith as may be necessary to keep such Registration Statement effective (x)
until the time specified in Section 5.01(a) or (y) in the case of any
Registration Statements filed under Section 5.02 for at least one hundred twenty
(120) days after the effective date of such Registration Statement; and comply
with the provisions of the Securities Act with respect to the sale or other
disposition of all securities covered by such Registration Statement during such
periods in accordance with the intended method or methods of disposition by the
sellers thereof set forth in such Registration Statement;
(c) If the offering is to be underwritten in whole or in part, enter
into a written underwriting agreement in form and substance reasonably
satisfactory to the managing underwriter of the public offering and the
Investors;
(d) Furnish to the Investors and to the underwriters such reasonable
number of copies of the Registration Statement, preliminary prospectus, final
prospectus and such other documents as such underwriters and Investors may
reasonably request in order to facilitate the public offering of such
securities;
(e) Use its reasonable efforts to register or qualify the securities
covered by such Registration Statement under such state securities or blue sky
laws of such jurisdictions (i) as shall be reasonably appropriate for the
distribution of the securities covered by such Registration Statement or (ii) as
the Investors and the underwriters may reasonably request within twenty (20)
days following the original filing of such Registration Statement, except that
the Company shall not for any purpose be required to execute a general consent
to service of process, to qualify to do business as a foreign corporation in any
jurisdiction where it is not so qualified or to subject itself to taxation in
such jurisdiction;
(f) Notify the Investors promptly after it shall receive notice thereof
of the date and time when such Registration Statement and each post-effective
amendment thereto has become effective or a supplement to any prospectus forming
a part of such Registration Statement has been filed;
(g) Notify the Investors promptly of any request by the Commission or
any state securities commission or agency for the amending or supplementing of
such Registration Statement or prospectus or for additional information;
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(h) Prepare and file with the Commission, promptly upon the request of
the Investors, any amendments or supplements to such Registration Statement or
prospectus which, in the opinion of counsel representing the Company in such
Registration (and which counsel is Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP or
another nationally recognized law firm reasonably acceptable to the Investors),
is required under the Securities Act or the rules and regulations thereunder in
connection with the distribution of the Registrable Stock by the Investors;
(i) Prepare and promptly file with the Commission, and promptly notify
the Investors of the filing of, such amendments or supplements to such
Registration Statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to such
securities is required to be delivered under the Securities Act, any event has
occurred as the result of which any such prospectus or any other prospectus as
then in effect would include an untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary to make the
statements therein not misleading;
(j) During the time period during which the Company is required,
pursuant to Section 5.03(a), to cause a Registration Statement to be effective,
in case the Investors or any underwriter for the Investors is required to
deliver a prospectus at a time when the prospectus then in circulation is not in
compliance with the Securities Act or the rules and regulations of the
Commission, prepare promptly upon request such amendments or supplements to such
Registration Statement and such prospectus as may be necessary in order for such
prospectus to comply with the requirements of the Securities Act and such rules
and regulations;
(k) Advise the Investors, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission or
any state securities commission or agency suspending the effectiveness of such
Registration Statement or the initiation or threatening of any proceeding for
that purpose and promptly use its reasonable best efforts to prevent the
issuance of any stop order or to obtain its withdrawal if such stop order should
be issued;
(l) Not file any amendment or supplement to such Registration Statement
or prospectus to which counsel for the Investors has reasonably objected on the
grounds that such amendment or supplement does not comply in all material
respects with the requirements of the Securities Act or the rules and
regulations thereunder, after having been furnished with a copy thereof at least
three (3) business days prior to the filing thereof (which advance furnishing of
copies the Company hereby agrees to);
(m) At the request of the Investors (i) furnish to the Investors on the
effective date of the Registration Statement or, if such registration includes
an
14
underwritten public offering, at the closing provided for in the underwriting
agreement, an opinion, dated such date, of the counsel representing the Company
for the purposes of such registration, addressed to the underwriters, if any,
and to the Investors, covering such matters with respect to the Registration
Statement, the prospectus and each amendment or supplement thereto, proceedings
under state and Federal securities laws, other matters relating to the Company,
the securities being registered and the offer and sale of such securities as are
customarily the subject of opinions of issuer's counsel provided to underwriters
in underwritten public offerings, and (ii) use its best efforts to furnish to
the Investors letters dated each such effective date and such closing date, from
the independent certified public accountants of the Company, addressed to the
underwriters, if any, and to the Investors, stating that they are independent
certified public accountants within the meaning of the Securities Act and
dealing with such matters as the underwriters may request, or, if the offering
is not underwritten, that in the opinion of such accountants the financial
statements and other financial data of the Company included in the Registration
Statement or the prospectus or any amendment or supplement thereto comply in all
material respects with the applicable accounting requirements of the Securities
Act, and additionally covering such other financial matters, including
information as to the period ending not more than three (3) business days prior
to the date of such letter with respect to the Registration Statement and
prospectus, as the Investors may reasonably request;
(n) With respect to any public offering made by any Investor under a
Registration Statement filed pursuant to Section 5.02, refrain from making any
sale or distribution of its securities except pursuant to any stock option plan
or other employee benefit plan, any pre-existing agreement for the sale of such
securities or the issuance of securities in connection with future acquisitions
or a private placement for at least one hundred twenty (120) days after the
closing of the public offering pursuant to such Registration Statement; and
(o) Use its reasonable best efforts to ensure the obtaining of all
necessary approvals from the applicable stock exchange or electronic quotation
system.
Section 5.04. Expenses. (a) With respect to each registration effected
pursuant to Section 5.01 or 5.02 hereof, all fees, costs and expenses of and
incidental to such registration and the public offering in connection therewith
shall be borne by the Company; provided that the Investors shall bear their pro
rata share of the underwriting discounts and selling commissions.
(b) The fees, costs and expenses of registration to be borne as
provided in paragraph (a) above, shall include, without limitation, all
registration, filing and stock exchange fees, printing expenses, fees and
disbursements of counsel and accountants for the Company, all legal fees and
disbursements and other expenses
15
of complying with state securities laws in states where the securities are to be
registered or qualified and the costs and expenses of the Company relating to
investor presentations on any "road-show" undertaken in connection with the
marketing of the offering of the securities.
Section 5.05. Rule 144 Requirements. The Company agrees to:
(a) comply with the requirements of Rule 144(c) under the Securities
Act with respect to current public information about the Company;
(b) use its reasonable best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) furnish to any Holder of Registrable Stock upon written request (x)
a written statement by the Company as to its compliance with the requirements of
said Rule 144(c) and the reporting requirements of the Securities Act or the
Exchange Act (at any time after it has become subject to such reporting
requirements), (y) a copy of the most recent annual or quarterly report of the
Company and (z) such other reports and documents of the Company as such Holder
may reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
Section 5.06. Investors' Information. Each Investor agrees to furnish
in writing to the Company in a timely manner such information with respect to
itself and the distribution of such Registrable Stock as the Company may from
time to time reasonably request in writing and as shall be required by law or by
the Commission in connection therewith.
Section 5.07. Transfer Of Registration Rights. Each Investor may at
any time Transfer to any Person that acquires at least fifty one percent (51%)
of the then outstanding Common Share equivalents then held by such Investor the
registration rights set forth in Section 5.01 or 5.02 hereof. Such Transfer
shall be subject to the transferee agreeing in writing to be bound by the terms
of this Agreement.
Section 5.08. Hold-back Agreement. If requested by the underwriter,
each Investor will agree not to offer, sell, contract to sell or Transfer any
Registrable Stock, during the fourteen (14) days prior to, and during the ninety
(90) day period beginning on, the effective date of any Registration Statement
filed pursuant to Section 5.02 other than the Registrable Stock to be sold
pursuant to such Registration Statement.
16
Section 5.09. Other Shareholders. (a) The Company may grant to any
Person other than the Investors the right to request a registration of
securities of the Company under the Securities Act and the right to be included
as a selling shareholder in connection with any registration of Registrable
Stock; provided, however, that without the consent of Investors holding a
majority of the Registrable Stock, the granting of any such rights shall not
conflict with or otherwise alter any rights granted under Section 5.01 above
and, in all cases, the rights of the Investors to include shares in any
Registration Statement shall be given priority over any registration rights
granted to other Persons as permitted by this Section 5.09.
(b) Each Investor hereby irrevocably consents to the Company's grant of
registration rights to the minority shareholders of Frontstep (Singapore) Pte
Ltd ("FSP") in connection with the repurchase by the Company of the FSP shares
held by such minority shareholders (the "MITSUI TRANSACTION") as described in
Schedule 5.09(b).
ARTICLE 6
INDEMNIFICATION
Section 6.01. Indemnification. To the fullest extent permitted by law,
the Company will indemnify and hold harmless the Investors and their respective
directors, officers, employees, partners, members and Affiliates (each such
person, an "INDEMNIFIED PERSON"), whether or not their shares have been sold in
the offering, and any underwriter (as defined in the Securities Act) for the
Investors, and any person who controls any such underwriter within the meaning
of the Securities Act, from and against, and will reimburse the Indemnified
Persons and each such underwriter and controlling person with respect to, any
and all claims, actions, demands, losses, damages, liabilities, costs and
expenses to which any Indemnified Persons or any such underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
claims, actions, demands, losses, damages, liabilities, costs or expenses arise
out of or are based upon any untrue statement or alleged untrue statement or
omission of any material fact contained in a Registration Statement, any
prospectus contained therein or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that the Company will not be liable in any such
case to the extent that any such claim, action, demand, loss, damage, liability,
cost or expense is caused by an untrue statement or alleged untrue statement or
omission or alleged omission so made in reliance upon information furnished in
writing by one or more of the Investors, any such underwriter or any such
controlling person for use in the
17
preparation of such Registration Statement, prospectus or any amendment or
supplement thereto.
(b) Each Indemnified Person severally (not jointly), will indemnify and
hold harmless the Company, its directors, officers, employees and Affiliates
(each such person, a "COMPANY INDEMNIFIED PERSON") from and against, and will
reimburse the Company Indemnified Persons with respect to, any and all claims,
actions, demands, losses, damages, liabilities, costs or expenses to which any
Company Indemnified Person may become subject under the Securities Act or
otherwise, insofar as such losses, damages, liabilities, costs or expenses are
caused by any untrue or alleged untrue statement or omission of any material
fact contained in a Registration Statement, any prospectus contained therein or
any amendment or supplement thereto, or are caused by the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they are made, not misleading, in each case to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon information furnished in writing by the Indemnified Person for
use in the preparation of such Registration Statement, prospectus or any
amendment or supplement thereto.
(c) Promptly after receipt by a party to be indemnified pursuant to the
provisions of paragraph (a) or (b) of this Section 6.01 (an "INDEMNIFIED PARTY")
of notice of the commencement of any action involving the subject matter of the
foregoing indemnity provisions, such indemnified party will, if a claim thereof
is to be made against the indemnifying party pursuant to the provisions of
paragraph (a) or (b), notify the indemnifying party of the commencement thereof.
In case such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party shall
have the right to participate in, and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party pursuant to the provisions of such
paragraph (a) or (b) for any legal or other expense subsequently incurred by
such indemnified party in connection with the defense thereof. No indemnifying
party shall be liable to an indemnified party for any settlement of any action
or claim without the consent of the indemnifying party. No indemnifying party
will consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in respect
to such claim or litigation.
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ARTICLE 7
TAG-ALONG RIGHTS
Section 7.01. Tag-along Right. If Shareholder desires to sell in any
twelve month period ten percent (10%) or more of his shares of capital stock of
the Company (the "TAG-ALONG SHARES") to a third-party purchaser (a "PROPOSED
TRANSFEREE"), Shareholder shall provide to the Original Investors notice of such
intention to sell and of the terms and conditions, including price, of such
proposed sale; provided, however, for the avoidance of doubt the Shareholder
shall not be required to provide any notice with respect to sales in the open
market. Each Original Investor shall have the right to sell to the Proposed
Transferee, at the same price per share and on the same terms and conditions as
involved in such sale by Shareholder, up to that number of Common Shares then
held by such Original Investor (calculated on a fully diluted basis) that equals
a portion of the Tag-Along Shares equal to the product of (i) the Tag-Along
Shares multiplied by (ii) a fraction, the numerator of which is the aggregate
number of Common Shares then owned by such Original Investor (calculated on a
fully diluted basis) and the denominator of which is the aggregate number of
Common Shares then owned by all of the Original Investors and the Shareholder
(calculated on a fully diluted basis). For the avoidance of doubt, for purposes
of this Section 7.01 it shall be assumed that all securities held by the
Original Investors which may be converted into or exercised for Common Shares
have been so converted or exercised.
Section 7.02. Notice Of Intent To Participate. If an Original Investor
wishes to participate in any sale under this Article 7, such Original Investor
shall notify Shareholder and the Company in writing of such intention as soon as
practicable after the Original Investor's receipt of the notice made pursuant to
Section 7.01, and in any event within twenty (20) days after the date of receipt
of the notice.
Section 7.03. Sale Of Tag-along Shares. Any purchase of less than all
of the Tag-Along Shares and the Common Shares (calculated on a fully diluted
basis) that the Original Investors are entitled to and elect to sell to the
Proposed Transferee pursuant to Section 7.01 and 7.02 hereof, considered
collectively, by the Proposed Transferee shall be made from Shareholder and the
Original Investors who elect to participate pro rata based upon the relative
amount of the shares that Shareholder and the Original Investors who elect to
participate are otherwise entitled to sell pursuant to Section 7.01. If the
Original Investors do not wish to participate in any sale under this Article 7,
Shareholder shall sell to the Proposed Transferee all, or at the option of the
Proposed Transferee, any part of the shares proposed to be sold at not less than
the price and upon other terms and conditions, if any, not more favorable to the
Proposed Transferee than those in the notice provided by Shareholder pursuant to
7.01. If the Tag-Along Shares and the shares of the Original Investors are sold
under this Article 7 to any purchaser who is not a party to this Agreement, the
Tag-Along Shares and the share of the
19
Original Investors so sold shall no longer be subject to any of the restrictions
imposed by this Agreement, except for any restrictions imposed by Article 2,
which shall continue in force until such time as they lapse pursuant to the
terms of such Article 2 or Article 7 hereof.
ARTICLE 8
REPRESENTATION RIGHTS
Section 8.01. Board Of Directors. (a) Each Investor shall vote such
Investor's voting securities and shall take all other reasonably necessary or
desirable legal actions within its control (whether in such Investor's capacity
as a shareholder, director, member of a Board of Directors committee or officer
of the Company or otherwise and including, without limitation, attendance at
meetings in person or by proxy for purposes of obtaining a quorum and execution
of written consents in lieu of meetings), and the Company shall take all
reasonably necessary or desirable legal actions within its control, including in
preparation of proxy materials, the recommendation of a management slate of
directors in elections for directors, and in proposing and effecting amendments
to the articles of incorporation and code of regulations of the Company, so that
from the date hereof until May 10, 2004:
(i) the authorized number of directors on the Board of
Directors of the Company shall be eight (8) directors;
(ii) one Director shall be the designee of FAEF, currently
expected to be Xx. Xxxxx Xxxxxxxxx, for so long as any of the Preferred
Shares, Convertible Notes or Initial Notes (or any Common Shares
underlying such securities) held by FAEF are outstanding and held by
FAEF;
(iii) one Director shall be the designee of the MSDW
Investors, currently expected to be Xx. Xxx xx Xxxxxx, for so long as
any of the Preferred Shares, Convertible Notes or Initial Notes (or any
Common Shares underlying such securities) held by the MSDW Investors
are outstanding and held by any MSDW Investor;
(iv) one Director shall be Xxxxxxxx X. Xxx, provided that (A)
the Convertible Note or Initial Note (or any Common Shares underlying
such securities) held by Xx. Xxx is outstanding, or (B) Xx. Xxx
continues to own at least 1,000,000 Common Shares owned by him as of
the date hereof;
20
(v) the management slate of directors, including the designees
of FAEF, MSDW Investors and Xx. Xxx, shall be elected to the Board of
Directors;
(vi) at least one of the designees of FAEF or MSDW Investors
shall be designated a member of every committee of the Board of
Directors existing now or in the future (other than the Corporate
Development Committee);
(vii) the required quorum for Board of Directors action shall
be the presence at a Board of Directors meeting of at least a majority
of directors, except that a majority of the Directors in office shall
constitute a quorum for filling a vacancy in the Board of Directors;
(viii) all action of the Board of Directors shall require (a)
the affirmative vote of at least a majority of the directors at a duly
convened meeting of the Board of Directors at which a quorum is present
or (b) the unanimous written consent of the Board of Directors;
provided that in the event there is a vacancy on the Board of Directors
and an individual has been nominated to fill such vacancy, the first
order of business shall be to fill such vacancy; and provided further
that any transaction required to be approved under Section 1701.60 of
the Ohio Revised Code (or any provision substituted therefor under Ohio
Law) shall be approved in accordance with such provision; and
(ix) in the event any Director nominated by FAEF or MSDW
Investors ceases to serve as a member of the Board of Directors during
his or her term of office, FAEF or MSDW Investors, as the case may be,
shall be entitled to nominate a designee to fill such vacancy, and the
Board of Directors as constituted immediately prior to such time shall
designate a replacement director, nominated by FAEF or MSDW Investors,
as the case may be, and reasonably satisfactory to the Board of
Directors, to fill the remainder of the term of the director who has
ceased to be a member of the Board of Directors.
Section 8.02. Voting. Each Investor hereby agrees to vote all Subject
Shares (as defined below) that such Investor is entitled to vote at any meeting
of the shareholders of the Company, and any adjournment thereof, at which any
such transaction is submitted for the consideration and vote of the shareholders
(the "SHAREHOLDER MEETING") to approve (i) any merger, consolidation, share
exchange or other business combination recommended or approved by a majority of
the Directors of the Board of Directors, as currently constituted, provided that
such transaction has been approved by a majority of the members of the Corporate
Development Committee of the Board of Directors, as currently constituted,
except as otherwise provided pursuant to Section 8.02(b) below; and
21
(ii) any issuance of debt or equity securities issued in connection
with any of the transactions contemplated by the 2002 Securities
Purchase Agreement or this Amended and Restated Investor Rights
Agreement and which are approved by a majority of the Directors of the
Board of Directors, as currently constituted.
(b) Notwithstanding the foregoing, if any transaction
contemplated by clause 8.02(a)(i) above has not been approved by a
majority of the members of the Corporate Development Committee, as
currently constituted, each Investor hereby agrees to vote all Subject
Shares (as defined below) that such Investor is entitled to vote at the
Shareholder Meeting to approve such transaction recommended or approved
by at least two-thirds of the Directors of the Board of Directors, as
currently constituted.
(c) For purposes of determining whether a majority or at least
two-thirds of the Directors of the Board of Directors recommended or
approved any transaction contemplated by Section 8.02(a) or Section
8.02(b), respectively, the calculation of the vote shall be based upon
the following principles:
(i) The Board of Directors shall use its reasonable
best efforts and act in good faith to schedule any meeting at
which approval of a transaction contemplated by Section
8.02(a) or Section 8.02(b) is being considered at a time when
all Directors can attend either in person or telephonically;
(ii) If a Director abstains from voting, or in good
faith is unable to vote, the percentage vote shall be
calculated by dividing the total number of Directors voting to
recommend or approve such transaction (excluding abstentions
and absences) by the total number of Directors voting
(excluding abstentions and absences); and
(iii) If a vacancy on the Board of Directors occurs
for any reason between the date hereof and the date of any
such vote, such vacancy shall be filled as soon as is
reasonably practicable by a majority vote of the remaining
Directors on the Board of Directors; provided, that other than
in cases where a Director has been appointed by the MSDW
Investors or FAEF, such Director must be approved by the
Shareholder, whose approval shall not be unreasonably
withheld. Until the relevant vacancy can be filled pursuant to
the procedure set forth in the immediately preceding sentence,
the percentage vote shall be calculated by dividing the number
of Directors voting to recommend or approve such transaction
(excluding abstentions and absences and resignations) by the
total number of Directors voting (excluding abstentions and
absences and resignations).
22
For purposes of applying the foregoing principles to Section 8.02(a) and Section
8.02(b), the word "Directors" shall include only those Directors (x) who are on
the Board of Directors as of the date hereof and (y) who are replacements to
those Directors who are replaced in accordance with Section 8.02(c)(iii).
(d) In furtherance and not in limitation of the foregoing, each
Investor hereby agrees to validly tender and sell and not withdraw, all of such
Investor's Subject Shares pursuant to and in accordance with the terms of any
tender offer made in connection with any transaction that satisfies Section
8.02(a)(i) or Section 8.02(b).
(e) Notwithstanding Section 8.02(a) or Section 8.02(b), neither the
MSDW Investors nor FAEF shall be obligated to vote in favor of any transaction
that adversely affects the rights and preferences of the Preferred Shares, the
Initial Notes or the Convertible Notes, and the Shareholders shall not be
obligated to vote in favor of any transaction that adversely affects the rights
and preferences of the Initial Notes or the Convertible Notes.
(f) "SUBJECT SHARES" means any Common Shares or Preferred Shares
beneficially owned, directly or indirectly, by the relevant Investor.
ARTICLE 9
MISCELLANEOUS
Section 9.01. Term Of Agreement. Except as otherwise provided herein,
the provisions of this Agreement shall terminate upon the earliest to occur of
any one of the following events:
(i) the voluntary or involuntary liquidation or dissolution of
the Company;
(ii) the occurrence of a Change-in-Control Liquidation Event
(as such term is defined in the Company's Amended Articles of
Incorporation);
(iii) the Investors beneficially own in aggregate less than
twenty percent (20%) of the Common Share equivalents purchased by the
Investors pursuant to the 2000 Securities Purchase Agreement and the
2002 Securities Purchase Agreement.
Section 9.02. Severability; Governing Law. If any provisions of this
Agreement shall be determined to be illegal or unenforceable by any court of
law, the remaining provisions shall be severable and enforceable in accordance
with
23
their terms. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Ohio.
Section 9.03. Injunctive Relief. It is acknowledged that it will be
impossible to measure the damages that would be suffered by the parties if any
party fails to comply with the provisions of this Agreement. Accordingly, the
parties shall be entitled to obtain specific performance of this Agreement and
to obtain immediate injunctive relief.
Section 9.04. Binding Effect. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective permitted
successors and assigns, legal representatives and heirs.
Section 9.05. Modification Or Amendment. This Agreement or any term
hereof may be amended or waived, only with the written consent of the Company
and Original Investors holding more than seventy-five percent (75%) of the
Common Shares issued or issuable upon conversion of any Restricted Securities;
additionally, Section 2.05, Section 8.01(a)(iv) and Article 7 hereof may not be
amended or waived without the written consent of Shareholder and Articles 4, 5
and 6 and Section 8.02 may not be amended or waived without the additional
written consent of the Shareholders.
Section 9.06. Aggregation. All Restricted Securities held or acquired
by affiliated Persons shall be aggregated for the purpose of determining the
availability of any rights under this Agreement.
Section 9.07. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same instrument.
Section 9.08. Notices. All notices to be given or otherwise made to
any party to this Agreement shall be deemed to be sufficient if contained in a
written instrument, delivered by hand in person, or by express overnight courier
service, or by electronic facsimile transmission, or by registered or certified
mail, return receipt requested, postage prepaid, addressed to such party at the
address set forth below or at such other address as may hereafter be designated
in writing by the addressee to the Company:
If to the Company to:
Frontstep, Inc.
0000 Xxxxxxxxx Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxx 00000
Attn: President and Chief Executive Officer
Fax No.: (000) 000-0000
24
with a copy to:
Vorys, Xxxxx, Xxxxxxx and Xxxxx LLP
00 Xxxx Xxx Xxxxxx
Xxxxxxxx, Xxxx 00000
Attn: Xxxxx X. Xxxxxxx, Esq.
Fax No.: 000-000-0000
If to Shareholder:
to his address set forth on the signature pages
hereto
If to any Investor:
to its address set forth on the signature pages
hereto
with a copy to:
Xxxxx Xxxx & Xxxxxxxx
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxx, Esq.
Fax No.: 000-000-0000
and, if not an addressee of any notice to an Investor, with a copy to:
Xxxxxx Xxxxxxx Xxxx Xxxxxx Venture Partners IV, L.P.,
at its address set forth on the signature pages
hereto
All such notices shall, when mailed or telegraphed, be effective when
received or when attempted delivery is refused.
Section 9.09. 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 oral or written agreements and
understandings relating to the subject matter hereof. No statement,
representation, warranty, covenant or agreement of any kind not expressly set
forth in this Agreement shall affect, or be used to interpret, change or
restrict, the express terms and provisions of this Agreement.
25
IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights
Agreement to be executed as of the date first above written.
FRONTSTEP, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President and
Chief Financial Officer
SHAREHOLDER
XXXXXXXX X. XXX, in his individual capacity
/s/ Xxxxxxxx X. Xxx
--------------------------------------------
Address: 00000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxx, Xxxx 00000
Fax: 000-000-0000
XXXXXX XXXXXXX XXXX XXXXXX
VENTURE PARTNERS IV, X.X.
XXXXXX XXXXXXX XXXX XXXXXX
VENTURE INVESTORS IV, X.X.
XXXXXX XXXXXXX XXXX XXXXXX
VENTURE OFFSHORE INVESTORS IV, L.P.
By: MSDW Venture Partners IV, L.L.C.
as General Partner of the above limited
partnerships
By: MSDW Venture Partners IV, Inc.,
as Member
By: /s/ Xxx xx Xxxxxx
-------------------------------------------
Name: Xxx xx Xxxxxx
Title: Managing Director
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
XXXXXX XXXXXXX XXXX XXXXXX EQUITY FUNDING, INC.
By: /s/ Xxxxx X. Xxxxx
------------------------------------------
Name: Xxxxx X. Xxxxx
Title: Vice President
Address: 0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Fax: 000-000-0000
Attention: Controller
FALLEN ANGEL EQUITY FUND, L.P.,
By: Fallen Angel Capital, L.L.C.,
as its General Partner
By: Xxxxx Xxxxxxxxx, as Member
By: /s/ Xxxxx Xxxxxxxxx
----------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Member
Address: 000 Xxxx Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Fax: 000-000-0000
XXXXX X. XXXXXXXXXX, in his individual capacity
/s/ Xxxxx X. Xxxxxxxxxx
--------------------------------------------------
Address: 00 Xxxxx Xxxx Xxxxxx
Xxx Xxxxxx, Xxxx 00000
Fax: 000-000-0000
SCHEDULE I
The following is a full and complete list of the Original Investors who
purchased Series A Convertible Participating Preferred Shares and Original
Warrants of the Company on May 10, 2000:
NUMBER OF
INVESTOR PREFERRED SHARES NUMBER OF WARRANTS %
----------------------------------------------------------------------------------------------
(a) Xxxxxx Xxxxxxx Xxxx Xxxxxx
Venture Partners IV, L.P...... 271,650 217,320 47.92
(b) Xxxxxx Xxxxxxx Xxxx Xxxxxx
Venture Investors IV, L.P..... 31,516 25,212 5.56
(c) Xxxxxx Xxxxxxx Xxxx Xxxxxx
Venture Offshore Investors, L.P. 10,598 8,478 1.87
(d) Xxxxxx Xxxxxxx Xxxx Xxxxxx
Equity Funding, Inc. ......... 86,502 69,202 15.25
(e) Fallen Angel Equity Fund, L.P. 166,667 133,334 29.40
-----------------------------------------------
Totals.................. 566,933 453,546 100.00
===============================================
SCHEDULE II
2002 INVESTORS
PURCHASE PURCHASE
PRINCIPAL PRICE PRINCIPAL PRICE PAID
AMOUNT OF PAID FOR AMOUNT OF FOR
INITIAL NUMBER OF INITIAL CONVERTIBLE CONVERTIBLE
NOTES WARRANTS NOTES AND NOTES TO BE NOTES
NAME OF INVESTOR PURCHASED PURCHASED WARRANTS PURCHASED
---------------------------------- --------- --------- -------- ----------- -----------
(a) XXXXXX XXXXXXX XXXX XXXXXX VENTURE $550,131 220,052 $550,131 $1,283,639 $1,283,639
PARTNERS IV, L.P..........................
(b) XXXXXX XXXXXXX XXXX XXXXXX VENTURE $63,824 25,530 $63,824 $148,923 $148,923
INVESTORS IV, L.P.........................
(c) XXXXXX XXXXXXX XXXX XXXXXX VENTURE $21,463 8,585 $21,463 $50,080 $50,080
OFFSHORE INVESTORS IV, L.P................
(d) FALLEN ANGEL EQUITY FUND, L.P..........$264,582 105,833 $264,582 $617,358 $617,358
(e) XXXXXXXX X. XXX........................$450,000 180,000 $450,000 $1,050,000 $1,050,000
(f) XXXXX X. XXXXXXXXXX....................$150,000 60,000 $150,000 $350,000 $350,000