Investor Rights Agreement - eLoyalty Corp. and Technology Crossover Ventures
INVESTOR RIGHTS AGREEMENT
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THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of
May 26, 2000, by and among eLoyalty Corporation, a Delaware corporation (the
"Company"), and the persons set forth on the Schedule of Investors attached
hereto as Exhibit A (the "Investors").
RECITALS
1. The Company is entering into a Common Stock Purchase Agreement of
even date hereof (the "Common Purchase Agreement") with each of the Investors
identified therein pursuant to which the Company has sold or desires to sell to
the Investors and the Investors have purchased or desire to purchase from the
Company shares of the Company's Common Stock.
2. As a condition to each of the Investors' obligations under the
Common Purchase Agreement, the Company and the Investors will enter into this
Agreement for the purpose of granting certain registration and other rights to
the Investors.
NOW, THEREFORE, in consideration of the covenants and promises set
forth herein, and for other good and valuable consideration, intending to be
legally bound hereby the parties agree as follows:
SECTION 1 Certain Definitions. As used in this Agreement, the capitalized terms
identified in the Preamble and the Recitals shall have the meanings identified
therein and the following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, par value $0.01
per share, of the Company.
"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar successor federal statute, and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
"Holder" shall mean (i) any Investor holding Registrable Securities
and (ii) any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 13 hereof.
The terms "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 the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 5 and 6 hereof, including, without
limitation, all registration, qualification, listing and filing fees, printing
expenses, escrow fees, fees and disbursements of
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counsel for the Company, blue sky fees and expenses, and the expense of any
special audits 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).
"Registrable Securities" shall mean (i) the Shares and any
Common Stock of the Company issued or issuable in respect of the Shares or other
securities issued or issuable with respect to the Shares upon any stock split,
stock dividend, recapitalization, or similar event, or any Common Stock
otherwise issued or issuable with respect to the Shares; provided, however, that
shares of Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they (A) have not been sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, (B) have not been transferred in a transaction pursuant to which
the registration rights are not also assigned in accordance with Section 13
hereof, or (C) are not eligible for public sale pursuant to Rule 144(k).
"Restricted Securities" shall mean the Shares required to bear
the legend set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as
amended, and the rules and regulations promulgated thereunder or any similar
federal statute and the rules and regulations of the Commission thereunder, all
as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders.
"Shares" shall mean all shares of Common Stock purchased by
the Investors pursuant to the Common Purchase Agreement.
SECTION 2 Restrictions. The Shares shall not be sold, assigned, transferred
or pledged except upon the conditions specified in Section 4, which conditions
are intended to ensure compliance with the provisions of the Securities Act.
SECTION 3 Restrictive Legend. Each certificate representing the Shares
(unless otherwise permitted by the provisions of Section 4 below) shall be
stamped or otherwise imprinted with a legend in the following form (in addition
to any legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED
IN THE ABSENCE OF SUCH REGISTRATION OR AN EXEMPTION FROM SUCH
REGISTRATION."
Each Investor consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
Section 4.
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SECTION 4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such Holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall, be
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, or (iii) any other evidence
satisfactory to counsel to the Company, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the Company.
The Company will not require such a notice or legal opinion or "no action"
letter (a) in any customary transaction in compliance with Rule 144, (b) in any
transaction in which a Holder which is a corporation distributes Restricted
Securities solely to its majority owned subsidiaries or affiliates for no
consideration, or (c) in any transaction in which a Holder which is a
partnership or limited liability company distributes Restricted Securities
solely to its affiliates (including affiliated fund partnerships), partners or
members thereof for no consideration. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear the appropriate restrictive
legend set forth in Section 3 above, except that such certificate shall not bear
such restrictive legend if, in the opinion of counsel for such holder and the
Company, such legend is not required in order to establish compliance with any
provisions of the Securities Act.
SECTION 5 Requested Registration.
The Company shall register the sale or distribution by the Holders,
on a delayed or continuous basis, of all of the Registrable Securities on a Form
S-3 registration statement (or any successor form to Form S-3) (the "Shelf
Registration") by February 15, 2001 (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations). Once declared
effective, the Company shall cause (x) the Shelf Registration to be effective
until the later of (i) one year from the effectiveness of such registration
statement, or (ii) the second anniversary of the purchase of the Shares by the
Investors, and (y) the Shelf Registration to be useable by the Holders during
such entire period, except that the Shelf Registration may be unuseable
(including by way of notice sent pursuant to Section 10(d)) for an aggregate of
90 days less the number of days the effectiveness of the Shelf Registration was
delayed pursuant to clause (2) below of this Section. The Company shall not be
obligated to take any action to effect the Shelf Registration; (1) in any
particular jurisdiction in which the Company would be required to execute a
general consent to service of process in effecting such registration,
qualification or compliance unless the Company is already subject to
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service in such jurisdiction and except as may be required by the Securities
Act; or (2) if the Company shall furnish to such Holders a certificate, signed
by the President or Chief Executive Officer of the Company, stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company for a registration statement to be declared effective in the near
future, then the date by which the Company shall have the Shelf Registration
effective may be extended from February 15, 2001 by up to 90 days.
SECTION 6 Company Registration.
(a) Notice of Registration. If at any time or from time to time,
the Company shall determine to register any of its equity securities, either for
its own account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, (ii) a registration
relating solely to a Commission Rule 145 transaction, or (iii) a registration on
any registration form that does not permit secondary sales (such as a "universal
shelf" Form S-3), the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) subject to Section 6(b) below, include in such
registration (and any related qualification under blue sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests made within 15 days after
receipt of such written notice from the Company by any Holder.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into and perform its obligations under an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by the Company (or by the holders who have demanded such
registration). Notwithstanding any other provision of this Section 6, if the
managing underwriter provides written notice to the Holders that it has
determined that the inclusion of all of the shares requested to be included in
the offering would adversely effect the price at which the shares can be sold,
the managing underwriter shall include in the offering the maximum number of
shares that may be included in the offering without such adverse effect as
follows (i) first, the shares requested to be sold by the Company or the holder
of securities initiating the registration, (ii) second, the shares requested to
be included in the offering by the Holders, and (iiii) third, any other shares
requested to be included. To facilitate the allocation of shares in accordance
with the above provisions, the Company or the underwriters may round the number
of shares allocated to any Holder or other holder to the nearest 100 shares. If
any Holder or other holder disapproves of the terms of any such underwriting, he
or she may elect to withdraw therefrom by written notice to the Company and
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the managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
SECTION 7 [Intentionally Omitted].
SECTION 8 Limitations on Subsequent Registration Rights. From and after the
date hereof, the Company shall not enter into any agreement granting any holder
or prospective holder of any securities of the Company registration rights with
respect to such securities that are inconsistent with the rights granted to the
Holders herein, without the consent of Holders of at least a majority of the
Registrable Securities.
SECTION 9 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Sections 5 and 6 and the reasonable
cost of one special legal counsel to represent all of the Holders together in
any such registration (not to exceed $10,000) shall be borne by the Company. All
Selling Expenses relating to securities registered on behalf of the Holders
shall be borne by the Holders of the registered securities included in such
registration pro rata on the basis of the number of shares so registered.
SECTION 10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to Section 5 and 6,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion thereof
and, at its expense, the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities;
(b) Furnish to the Holders participating in such registration and
to the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(c) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statements 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;
(d) Notify each seller of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not
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misleading or incomplete in the light of the circumstances then existing, and at
the request of any such seller, prepare promptly and furnish to such seller a
reasonable number of copies of a supplement to or an amendment of such
prospectus as may be necessary so that, as thereafter delivered to the purchaser
of such shares, such prospectus shall not include an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or incomplete in the
light of the circumstances then existing;
(e) Use reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the 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;
(f) Make available for inspection by any Holder participating
in such registration, any underwriter participating in any disposition pursuant
to such registration, and any attorney or accountant retained by any such Holder
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers and directors to
supply all information reasonably requested by any such Holder, underwriter,
attorney or accountant in connection with such registration statement; provided,
however, that such Holder, underwriter, attorney or accountant shall agree to
hold in confidence and trust all information so provided; and
(g) Use reasonable efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, 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, addressed to the underwriters.
SECTION 11 Indemnification.
(a) The Company will indemnify each Holder, each of its current
and former officers and directors and partners, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, with respect to
which registration, qualification or compliance has been effected pursuant to
this Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect thereof)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or
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necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act, Exchange Act or state
securities laws applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse each
such Holder, each of its current and former officers and directors, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, as such expenses are incurred,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by such Holder, controlling person or underwriter and stated to be
specifically for use therein. The indemnity agreement contained in this section
shall not apply to amounts paid in settlement of any loss, claim, 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 to a Holder in any such case for any such loss, claim, damage,
liability or action (1) to the extent that it arises our of or is based upon a
violation of any state or federal law which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by or on behalf of such Holder, or (2) in the case of a
sale directly by a Holder of Registrable Securities (including a sale of such
Registrable Securities through any underwriter retained by such Holder engaging
in a distribution solely on behalf of such Holder), such untrue statement or
alleged untrue statement or omission or alleged omission was contained in a
preliminary prospectus and corrected in a final or amended prospectus, and such
Holder failed to deliver a copy of the final or amended prospectus at or prior
to the confirmation of the sale of the Registrable Securities to the person
asserting any such loss, claim, damage or liability in any case in which such
delivery is required by the Securities Act.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors, officers and partners, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, as such expenses are incurred, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
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conformity with written information furnished to the Company by such Holder and
stated to be specifically for use therein; provided that in no event shall any
indemnity under this subparagraph 11(b) exceed the net proceeds received by such
Holder from the sale of Registrable Securities included in such registration.
(c) Each party entitled to indemnification under this Section 11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense; provided, however, that an Indemnified Party (together with all
other Indemnified Parties which may be represented without conflict by one
counsel) shall have the right to retain one separate 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 of any Indemnified Party to give notice as provided
herein shall relieve the Indemnifying Party of its obligations under this
Section 11 only to the extent that the failure to give such notice is materially
prejudicial to an Indemnifying Party's ability to defend such action. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. The
indemnity agreements contained in this Section 11 shall not apply to amounts
paid in settlement of any loss, claim, damage, liability or action if such
settlement is effected without the consent of the Indemnifying Party, which
consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 11 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party, other than pursuant to its terms, with respect to any claim, loss,
damage, liability or action referred to therein, then the Indemnifying Party, in
lieu of indemnifying such Indemnified Party hereunder, shall contribute to the
amount paid or payable by such Indemnified Party as a result of such claim,
loss, damage, liability or action in such proportion as is appropriate to
reflect the relative fault of the Indemnifying Party on the one hand and the
Indemnified Party on the other in connection with the actions that resulted in
such claims, loss, damage, liability or action, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined 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 related 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. The Company and the Holders agree that it would not be
just and equitable if contribution pursuant to this Section 11(d) were based
solely upon the number of
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entities from whom contribution was requested or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this Section 11(d). In no event shall any Holder's contribution
obligation under this subparagraph 11(d) exceed the net proceeds received by
such Holder from the sale of Registrable Securities included in such
registration.
(e) The amount paid or payable by an Indemnified Party as a result
of the losses, claims, damages and liabilities referred to above in this Section
11 shall be deemed to include any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending any such
action or claim, subject to the provisions of Section 11 hereof. Notwithstanding
the provisions of this Section 11, no Holder shall be required to contribute any
amount or make any other payments under this Agreement which in the aggregate
exceed the net proceeds (after selling expenses) received by such Holder. No
person guilty of fraudulent misrepresentation (within the meaning of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
SECTION 12 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration, shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
12.1. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) 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) So long as a Holder owns any Restricted Securities, to
furnish to the Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
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SECTION 13 Transfer of Registration Rights. The rights to cause the Company to
register securities granted to any party hereto under this Agreement may be
assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by such party; provided that (a) such
transfer may otherwise be effected in accordance with applicable securities
laws, (b) notice of such assignment is given to the Company, and (c) such
transferee or assignee (i) is a subsidiary, affiliated partnership, affiliate or
partner or limited liability company member (including limited partners, retired
partners, spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) of such party, or (ii) acquires from such party at least
250,000 Registrable Securities.
SECTION 14 Termination of Rights. The rights of any particular Holder to cause
the Company to register securities under Section 6 shall terminate with respect
to such Holder after the earlier of (a) the three year anniversary of this
Agreement, or (b) such time as Rule 144 or another similar exemption under the
Securities Act is available for the sale of all such Holder's shares to the
public in any and all three-month periods (other than pursuant to Rule 144(k)).
SECTION 15 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
herein.
SECTION 16 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Illinois without regard to choice of laws or
conflict of laws' provisions thereof.
SECTION 17 Counterparts. This Agreement may be executed in two or more
counterparts and signature pages may be delivered by facsimile, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
SECTION 18 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be (A) mailed by registered or certified
mail, postage prepaid, return receipt requested, (B) delivered by a nationally
recognized overnight courier, (C) sent by confirmed telecopy or (D) otherwise
delivered by hand or by messenger, addressed (i) if to an Investor, at such
Investor's address set forth on Exhibit A, or at such other address as such
Investor shall have furnished to the Company in writing; or (ii) if to the
Company, at its address set forth on the signature page of this Agreement
addressed to the attention of the Corporate Secretary, or at such other address
as the Company shall have furnished to the Investors. If notice is provided by
mail, notice shall be deemed to be given 48 hours after proper deposit in a
mailbox; if by overnight courier, notice shall be deemed to be given 24 hours
after deposit; if by facsimile, upon completion of such facsimile transmission
as conclusively evidenced by the transmission receipt; and if by hand or
messenger, upon receipt by the addressee.
SECTION 19 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
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SECTION 20 Amendment and Waiver. Any provision of this Agreement may be
amended or waived with the written consent of the Company and the holders of at
least a majority of the outstanding Registrable Securities provided that (i) no
such amendment shall impose or increase any liability or obligation on a holder
without the consent of such Holder and (ii) no such amendment having a
disproportionately adverse effect on any Holder in relation to the other holders
may be made without consent of such Holder. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder and the
Company. In addition, the Company may waive performance of any obligation owing
to it, as to some or all of the holders, or agree to accept alternatives to such
performance, without obtaining the consent of any holder. In the event that an
underwriting agreement is entered into between the Company and any Holder, and
such underwriting agreement contains terms differing from this Agreement, as to
any such Holder the terms of such underwriting agreement shall govern.
SECTION 21 Rights of Holders. Each party to this Agreement shall have the
absolute right to exercise or refrain from exercising any right or rights that
such party may have by reason of this Agreement, including, without limitation,
the right to consent to the waiver or modification of any obligation under this
Agreement, and such party shall not incur any liability to any other party or
other Holder of any securities of the Company as a result of exercising or
refraining from exercising any such right or rights.
SECTION 22 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofor or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
SECTION 23 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
SECTION 24 Legal Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorneys' fees, costs and
necessary disbursements, including on appeal, in addition to any other relief to
which such party may be entitled.
11
<PAGE> 12
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
ELOYALTY CORPORATION
By: /s/ Timothy J. Cunningham
----------------------------------------
Name: Timothy J. Cunningham
Title: SVP & CFO
Address: 205 North Michigan Avenue
Suite 1500
Chicago, Illinois 60601
<PAGE> 13
THE INVESTORS:
TCV IV, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management IV, L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
-----------------------------------------------
Name: Robert C. Bensky
Title: Attorney in Fact
TCV IV STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management IV, L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
-----------------------------------------------
Name: Robert C. Bensky
Title: Attorney in Fact
TCV III (GP)
a Delaware General Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
-----------------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV III, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
-----------------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV III (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
-----------------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
TCV III STRATEGIC PARTNERS, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Robert C. Bensky
-----------------------------------------------
Name: Robert C. Bensky
Title: Chief Financial Officer
<PAGE> 14
EXHIBIT A
---------
SCHEDULE OF INVESTORS
TCV IV, L.P.
TCV IV STRATEGIC PARTNERS, L.P.
TCV III (GP)
TCV III, L.P.
TCV III (Q), L.P.
TCV III STRATEGIC PARTNERS, L.P.
Mailing Address:
Technology Crossover Ventures
575 High Street, Suite 400
Palo Alto, CA 94301
Attention: Jay C. Hoag
Phone: (650) 614-8210
Fax: (650) 614-8222
with a copy to:
Technology Crossover Ventures
56 Main Street, Suite 210
Millburn, NJ 07041
Attention: Robert C. Bensky
Phone: (973) 467-5320
Fax: (973) 467-5323