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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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FORM 8-A
For Registration of Certain Classes of Securities
Pursuant to Section 12(b) or 12(g) of the
Securities Exchange Act of 1934
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GENESIS DIRECT, INC.
(Exact Name of Registrant as Specified in its Charter)
Delaware 22-3449666
(State or Other Jurisdiction (I.R.S. Employer
of Incorporation or Organization) Identification Number)
100 Plaza Drive 07094
Secaucus, New Jersey (Zip Code)
(Address of Principal Executive Offices)
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If this form relates to the registration of a class of securities pursuant
to Section 12(b) of the Exchange Act and is effective pursuant to General
Instruction A.(c), check the following box. |_|
If this form relates to the registration of a class of securities pursuant
to Section 12(g) of the Exchange Act and is effective pursuant to General
Instruction A.(d), check the following box. |X|
Securities Act registration statement file number to which this form
relates: 333-47455.
Securities to be registered pursuant to Section 12(b) of the Exchange Act: None
Securities to be registered pursuant to Section 12(g) of the Exchange Act:
Common Stock, $0.01 par value per share
(Title of class)
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Item 1. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED.
A complete description of the Common Stock, $0.01 par
value per share, of Genesis Direct, Inc. (the
"Registrant"), which is to be registered hereunder is
contained under the caption "Description of Capital
Stock" in the Registration Statement on Form S-1 (File
No. 333-47455) filed by the Registrant with the
Securities and Exchange Commission (the "Commission") on
March 6, 1998, as amended by Amendment No. 1 to the
Registration Statement on Form S-1 filed by the
Registrant with the Commission on April 17, 1998, as
amended from time to time. Such description is hereby
incorporated by reference.
Item 2. EXHIBITS.
The following exhibits are filed herewith (or
incorporated by reference as indicated below):
Exhibit
Number Description
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1 Certificate of Incorporation of the Registrant, as
amended. Reference is made to Exhibit 3.1 to the
Registration Statement on Form S-1 (File No. 333-
47455) of the Registrant, as amended.
2 Certificate of Designation of the Registrant.
Reference is made to Exhibit 3.2 to the Registration
Statement on Form S-1 (File No. 333-47455) of the
Registrant, as amended.
3 Form of Amended and Restated Certificate of
Incorporation of the Registrant. Reference is made
to Exhibit 3.3 to the Registration Statement on Form
S-1 (File No. 333-47455) of the Registrant, as
amended.
4 By-laws of the Registrant. Reference is made to
Exhibit 3.4 to the Registration Statement on Form S-
1 (File No. 333-47455) of the Registrant, as
amended.
5 Form of Amended and Restated By-laws of the
Registrant. Reference is made to Exhibit 3.5 to the
Registration Statement on Form S-1 (File No. 333-
47455) of the Registrant, as amended.
6 Specimen certificates for shares of the Registrant's
Common Stock. Reference is made to Exhibit 4.1 to
the Registration Statement on Form S-1 (File No.
333-47455) of the Registrant, as amended.
7 Stockholders Agreement.*
8 Registrant's Long-Term Incentive Plan. Reference is
made to Exhibit 10.7 to the Registration Statement
on Form S-1 (File No. 333-47455) of the Registrant,
as amended.
9 Form of the Registrant's Employee Stock Purchase
Plan.*
10 Registrant's Directed Share Program.*
*Filed herewith
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SIGNATURE
Pursuant to the requirements of Section 12 of the Securities Exchange
Act of 1934, as amended, the Registrant has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereto duly
authorized.
GENESIS DIRECT, INC.
By: /s/ Warren Struhl
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Name: Warren Struhl
Title: Chairman of the Board of Directors, President
and Chief Executive Officer
(Principal Executive Officer)
Date: May 1, 1998
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EXHIBIT 7
STOCKHOLDERS AGREEMENT
This Stockholders Agreement dated September 30, 1997 (this
"Agreement") by and among Genesis Direct, Inc., a Delaware corporation (the
"Company"), and each of the individuals or entities signatory hereto (each a
"Stockholder" and together the "Stockholders").
W I T N E S S E T H:
WHEREAS, pursuant to the terms and conditions of the Stock
Purchase Agreement (the "Stock Purchase Agreement") dated the date hereof
between the Company and the purchasers signatory thereto (the "Purchasers"), the
Company has agreed to issue and sell, and the Purchasers have severally agreed
to purchase, shares of Series A Preferred Stock of the Company (the "Purchased
Shares") in the aggregate amount of 71,358 shares for an aggregate purchase
price of $71,358,000;
WHEREAS, the Company and each of the Stockholders party to
the Existing Agreement desire to terminate, as of the date of issuance of the
Purchased Shares, certain provisions of the Existing Agreement, and establish as
of the date of such termination certain rights and obligations of such
Stockholders as set forth in this Agreement;
WHEREAS, it is a condition precedent to the obligation of the
Purchasers to purchase the Purchased Shares pursuant to the Stock Purchase
Agreement that the parties hereto enter into this Agreement;
NOW, THEREFORE, in consideration of the agreement of the
Purchasers to purchase the Purchased Shares and other good and valuable
consideration the receipt and adequacy of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
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1.1 Defined Terms. All terms capitalized but not defined
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herein shall have the meanings attributable to such terms in the Stock Purchase
Agreement, except where the context otherwise requires. The following additional
terms when used in this Agreement, including its preamble and recitals, shall,
except where the context otherwise requires, have the following meanings, such
meanings to be equally applicable to the singular and plural forms thereof:
"Affiliate" shall mean, with respect to any Person, any
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person that, directly or indirectly, controls, is controlled by or is under
common control with such Person. For the purposes of this definition, "control"
(including, with correlative meanings, the terms "controlled by" and "under
common control with"), as used with
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respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management and policies of such
Person,whether through the ownership of voting securities or by contract or
otherwise.
"Capital Stock" means all of the (i) Common Stock, (ii)
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Purchased Shares, (iii) Interest Shares, (iv) Conversion Shares and (v) other
equity securities of the Company.
"Cause" means the commission by a person as (a) admitted by
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said person or (b) determined by a court of competent jurisdiction (after all
appeals and the expiration of the time to appeal), of a felony if the acts
constituting such felony are materially injurious to the Company (including its
reputation) or the commission of such felony has a material financial injurious
effect on the Company.
"Change in Control" means (i) the failure of the GE
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Partnership, GDLP and GDLP II collectively to hold beneficially and of record,
and have the right to vote shares of securities of the Company with voting power
to elect a majority of the Company's Board of Directors; (ii) the failure of the
GE Partnership to hold beneficially and of record, until the second anniversary
of the Closing Date, all of the Notes and Common Stock held by the GE
Partnership as of the Closing Date, or acquired any time thereafter; (iii)
Warren Struhl, David Sable and Hunter Cohen cease collectively to have the power
to vote, directly or indirectly, and dispose of each class and type of Company
securities held by GDLP on the date hereof or hereafter acquired by GDLP or GDLP
II; or (iv) any of Warren Struhl, David Sable and Hunter Cohen fails to hold,
directly or indirectly, at least 80% of the amount he holds today, at the
Closing or at any time thereafter, of his rights to participate in profits of
GDLP and GDLP II in respect of each class and type of Company securities held by
GDLP or GDLP II as of the Closing Date or acquired at any time thereafter, or in
his capital account in GDLP or GDLP II; provided, that neither of the following
will be deemed to be a Change of Control pursuant to clause (ii) above: (A)
transfers of Common Stock by GE Partnership to Affiliates of the GE Partnership
who at all times remain Affiliates of the GE Partnership and who agree in
writing to be bound by the terms of this Agreement; and (B) sales of Common
Stock by the GE Partnership or its Affiliates (excluding shares issued upon
conversion of Series A Preferred Stock) that, in the aggregate (including all
such sales after the date hereof) result in gross proceeds of $20 million or
less, and, in the aggregate, include 49% or less of the GE Partnership's Common
Stock (excluding shares issued upon conversion of Series A Preferred), and
additional sales of shares of Common Stock if consummated at the $6,000 Price so
long as the weighted average price paid on all sales of Common Stock pursuant to
this clause (B) is equal to or in excess of the $6,000 Price.
"Common Stock" shall have the meaning set forth in the Stock
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Purchase Agreement.
"Conversion Shares" shall mean Common Stock previously
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issued, or unless the context otherwise requires, issuable upon conversion of
the Notes.
"Common Stock Equivalents" shall mean the number of shares of
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Common Stock issuable upon the exercise, exchange or conversion of any security.
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"Consideration Warrants" shall have the meaning set forth in
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the Stock Purchase Agreement.
"Disability" shall mean, with respect to any natural person,
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the certified incompetency as determined by a physician selected by you and
reasonably acceptable to the Company or failure of such person to render and
perform the services required of such person during any period of six
consecutive months because of physical or mental incapacity. The date on which
the Disability occurred shall be determined by Special Majority Approval.
"Existing Agreement" shall mean the Note and Stock Purchase
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Agreement.
"FUCP" shall have the meaning set forth in paragraph 2.1(c)
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hereof.
"Fully Diluted" with respect to Capital Stock or Common Stock
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shall mean: (i) all currently outstanding shares of Common Stock, (ii) 8,478
shares issuable upon the conversion of 32.5% of the GE Partnership's Notes,
subject to adjustment as provided in the Note and Stock Purchase Agreement or in
the case of a conversion of greater than 32.5% of the GE Partnership's Notes,
such number of shares issued upon such conversion, (iii) 23,786 shares of Common
Stock issuable upon the conversion of the Series A Preferred Stock, subject to
adjustment as provided in the Certificate of Designation with respect to the
Series A Preferred Stock, (iv) (a) 3,864 shares of Common Stock issued or
subject to issuance pursuant to the Genesis Direct, Inc. stock option plan and
(b) after an initial public offering, such additional amount of shares of Common
Stock of the Company as the Company may award (with the sum of (a) and (b) not
to exceed 12% of the number of shares of Common Stock outstanding immediately
after the closing of such initial public offering), (v) 1,000 shares of Common
Stock issuable upon exercise of the Consideration Warrants to the extent such
Consideration Warrants are exercisable at the time as of which the applicable
calculation is made and (vi) any Interest Shares.
"GDLP" shall mean Genesis Direct, L.P., a Delaware limited
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partnership.
"GDLP II" shall mean Genesis Direct II, L.P., a Delaware
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limited partnership.
"GE Partnership" shall have the meaning set forth in Section
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2.1 hereof.
"GE Partnership Approval" shall mean so long as the GE
-----------------------
Partnership or its Affiliates hold at least 7,000 shares of Series A Preferred
Stock, the consent of the GE Partnership or any transferee who hold all shares
of Series A Preferred Stock issued to the GE Partnership.
"Holder" shall mean any holder of Registrable Securities or
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Notes.
"Interest Shares" shall have the meaning set forth in
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paragraph 1 of the Note and Stock Purchase Agreement.
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"Liquidation" shall mean a liquidation, dissolution or
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winding up of the affairs of the Company or consolidation or merger of the
Company with or into any other corporation (unless the acquiring or surviving
corporation shall be a corporation more than 50% of the combined voting power of
which corporation's then outstanding equity securities, after such acquisition
or combination, are owned, immediately after such acquisition or combination, by
the owners of more than 50% of the voting power of the Company immediately prior
to such acquisition or combination), or a sale or transfer of all or
substantially all of the Company's assets for cash or securities or a statutory
share exchange in which stockholders of the Company may participate; provided,
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however, that a Qualifying Public Offering shall not be deemed a Liquidation.
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"Majority of Other Initiating Holders" shall mean holders of
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more than 50% of the Registrable Securities held by holders other than the GE
Partnership, GDLP or GDLP II or their respective Affiliates or partners.
"New Investor Approval" shall mean so long as not less than
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20% of the shares of New Investor Series A Preferred Stock issued under the
Stock Purchase Agreement are outstanding, (x) prior to the issuance of any
Subsequent Series A Preferred Stock, the consent of holders of a majority of the
outstanding shares of New Investor Series A Preferred Stock; provided, that if
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fewer than 14,000 shares of New Investor Series A Preferred Stock are
outstanding, regardless of the number of shares voted in favor of the matter
being voted on, New Investor Approval shall be deemed to have been obtained
unless holders of at least 7,000 shares of New Investor Series A Preferred Stock
have voted against the matter being voted on and (y) following the issuance of
any Subsequent Series A Preferred Stock, the consent of holders of a majority of
the outstanding shares of New Investor Series A Preferred Stock; provided, that
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if at least three unaffiliated New Investors holding a number of shares of New
Investor Series A Preferred Stock equal in the aggregate to more than 20% of the
number of shares of New Investor Series A Preferred Stock issued on the Initial
Closing Date and any Subsequent Closing Date and on or prior to December 31,
1997, affirmatively vote not to approve the matter being voted on, New Investor
Approval shall not have been obtained.
"New Investor Series A Preferred Stock" shall mean the shares
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of Series A Preferred Stock issued to the New Investors on or prior to December
31, 1997.
"New Investors" shall mean all holders of Series A Preferred
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Stock other than the GE Partnership, Genesis Direct, L.P., Genesis Direct II,
L.P. and the Affiliates or any transferees thereof.
"Note and Stock Purchase Agreement" means the Note and Stock
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Purchase Agreement dated June 25, 1996 among the Company, the GE Partnership and
with respect to certain provisions, Genesis Direct, L.P., as amended.
"Offeree Stockholder" shall have the meaning set forth in
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Section 3.2 hereof.
"Offering Stockholder" shall have the meaning set forth in
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Section 3.2 hereof.
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"Percentage in Interest" shall mean with respect to any
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holder of Capital Stock or Notes, the ratio of number of shares of Capital Stock
(on a Fully Diluted basis) beneficially owned by such holder to the total amount
of shares of Capital Stock outstanding (on a Fully Diluted basis).
"Permitted Transferees" shall have the meaning set forth in
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Section 3.5 hereof.
"Person" shall mean and include an individual, a corporation,
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a limited liability company, an association, a partnership, a trust or estate, a
government or any department or agency thereof.
"Qualifying Public Offering" shall have the meaning set forth
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in the Stock Purchase Agreement.
"Qualifying Sale" shall mean a sale of the Company (by sale
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of stock, merger, sale of assets or otherwise) to an unaffiliated third party in
which (i) the Notes are prepaid in full or in part in accordance with the terms
thereof and no Notes remain outstanding, (ii) all consideration is solely in
cash and/or freely marketable securities, payable pro rata according to holdings
of Common Stock (after payment of the Notes and conversion or redemption of the
Series A Preferred Stock outstanding), and (iii) all liabilities of each Holder
of Series A Preferred Stock being converted in connection with such sale (other
than representations as to title to its own stock) shall be several and pro rata
with all other Holders of Capital Stock, based on Fully Diluted holdings of
Common Stock and shall not in the aggregate exceed the cash proceeds received by
such Holder in such sale, (iv) the amount of proceeds paid to each Holder of
Series A Preferred Stock (where to the extent proceeds include freely marketable
securities, such securities shall be valued at their Market Price (as defined in
the Certificate of Designation with respect to the Series A Preferred Stock)),
measured net of expenses and liabilities assumed, retained or incurred in
connection with such sale (other than each Holder's liability for its own
representations as to title to its securities) are equal to or greater than the
product of the number of shares of Common Stock issuable upon conversion of all
outstanding shares of Series A Preferred Stock of such Holder multiplied by (A)
the price per share of Common Stock that would satisfy the condition described
in clause (b) of part (ii) of the definition of Qualifying Public Offering, or
(B) if lower, the $6,000 Price.
"Registrable Securities" shall mean at any time (i) the
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Common Stock held by any Stockholder, (ii) the Common Stock previously issued
or, unless the context otherwise requires, issuable upon conversion of the Notes
or Purchased Shares or the exercise of the Consideration Warrants, (iii) any
Common Stock issued subsequent to the conversion of any of the Notes or
Purchased Shares or the exercise of the Consideration Warrants as a dividend or
other distribution with respect to, or in exchange for or in replacement of, the
Common Stock issued upon such conversion or exercise, (iv) any Common Stock
issued or, unless the context otherwise requires, issuable as interest on the
Notes and (v) any Common Stock issued as a dividend or distribution with respect
to, or in exchange for or in replacement of, any Purchased Shares or Common
Stock, provided, that any Common Stock sold to the public under a registration
statement filed
5
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with the Securities and Exchange Commission or pursuant to Rule 144 shall not be
deemed Registrable Securities.
"Registration Expenses" shall mean all expenses incident to
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the Company's performance of or compliance with its obligations under Sections
5.1, 5.2 and 5.3 hereof, including without limitation, all Securities and
Exchange Commission, NASD and stock exchange or NASDAQ registration and filing
fees and expenses, fees and expenses of compliance with applicable state
securities or "blue sky" laws (including, without limitation, reasonable fees
and disbursements of counsel for the underwriters in connection with "blue sky"
qualifications of the Registrable Securities), printing expenses, messenger and
delivery expenses, the fees and expenses incurred in connection with the listing
of the securities to be registered in the Qualifying Public Offering on each
securities exchange or national market system on which such securities are to be
so listed and, following such Qualifying Public Offering, the fees and expenses
incurred in connection with the listing of such securities to be registered on
each securities exchange or national market system on which such securities are
listed, fees and disbursements of counsel for the Company and all independent
certified public accountants (including the expenses of any annual audit and
"cold comfort" letters required by or incident to such performance and
compliance), the fees and disbursements of underwriters customarily paid by
issuers or sellers of securities (including the fees and expenses of any
"qualified independent underwriter" required by the NASD), the reasonable fees
of one counsel retained in connection with each such registration by the holders
of a majority of the Registrable Securities being registered, the reasonable
fees and expenses of any special experts retained by the Company in connection
with such registration, and fees and expenses of other Persons retained by the
Company (but not including any underwriting discounts or commission or transfer
taxes, if any, attributable to the sale of Registrable Securities by holders of
such Registrable Securities other than the Company).
"Series A Preferred Stock" shall mean all shares of Series A
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Cumulative Convertible Preferred Stock issued by the Company pursuant to the
Stock Purchase Agreement, including Subsequent Series A Preferred Stock.
"Shareholder Securities" shall have the meaning set forth in
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Section 3.2 hereof.
"Shares" shall mean shares of the Series A Preferred Stock,
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Share Equivalents and the Common Stock of the Company.
"$6,000 Price" shall mean, with respect to the sale of a
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share of Common Stock, $6,000 (as hereafter adjusted for stock splits, stock
dividends, combinations of shares and other similar recapitalizations), plus,
the portion of dividends accrued and unpaid on the Series A Preferred Stock
allocable to such share of Common Stock.
"Stock Purchase Agreement" shall have the meaning set forth
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in the first WHEREAS clause.
"Stockholder" shall have the meaning set forth in the
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preamble hereto.
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"Subsequent Series A Preferred Stock" shall mean any shares
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of Series A Preferred Stock issued subsequent to the Initial Closing Date
pursuant to paragraph 1(c) of the Stock Purchase Agreement.
ARTICLE 2
VOTING AGREEMENT
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2.1 Board of Directors of the Company. (a) The Company's
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Board of Directors shall, as of the effectiveness of this Agreement, consist of
six directors. So long as the GE Partnership shall be the beneficial owner of
(i) any Notes or (ii) any Shares, Share Equivalents, Interest Shares or Common
Stock issued upon conversion of the Notes or the Purchased Shares or exercise of
the Consideration Warrants in excess of 20 percent of the Capital Stock on a
fully converted basis, the Company will not increase the size of the Board of
Directors of the Company without the consent of the general partner of the GE
Partnership. The Company will not increase the size of the Board of Directors of
the Company without New Investor Approval; provided, however, that if at least
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50% of the Notes outstanding on the date hereof are converted into Common Stock
and no Notes remain outstanding, such New Investor Approval shall not be
required to increase the size of the Board of Directors of the Company.
(b) (1)(A) So long as the GE Partnership has not sold or
otherwise disposed of more than 50% of the maximum amount of shares of Fully
Diluted Common Stock held by it at any given time, or it continues to hold in
excess of 20% of the total outstanding shares of Fully Diluted Common Stock,
each Stockholder agrees to vote all shares of Capital Stock as to which it has
voting rights for the election of two directors designated by the GE
Partnership; and (B) so long as the GE Partnership has sold or otherwise
disposed of more than 50% of the maximum amount of shares of Fully Diluted
Common Stock held by it at any given time, and it continues to hold 1 share of
Capital Stock but less than 20% of the total outstanding shares of Fully Diluted
Common Stock, each Stockholder agrees to vote all shares of Capital Stock as to
which it has voting rights for the election of one director designated by the GE
Partnership.
(2)(A) So long as GLDP and GDLP II have not sold or otherwise
disposed of more than 75% of the maximum amount of shares of Fully Diluted
Common Stock held by them in the aggregate at any given time, or they continue
to hold in the aggregate 12% or more of the total outstanding shares of Fully
Diluted Common Stock, each Stockholder agrees to vote all shares of Stock as to
which it has voting rights for the election of three directors collectively
designated by GDLP and GLDP II; (B) so long as GDLP and GDLP II have sold or
otherwise disposed of more than 75% of the maximum amount of shares of Fully
Diluted Common Stock held by them in the aggregate at any given time, and they
continue to hold in the aggregate less than 12% but 8% or more of the total
outstanding shares of Fully Diluted Common Stock, each Stockholder agrees to
vote all shares of Capital Stock as to which it has voting rights for the
election of two directors collectively designated by GDLP and GDLP II; and (C)
so long as GDLP and GDLP II in the aggregate have sold or otherwise disposed of
more than 75% of the maximum amount of shares of Fully Diluted Common Stock held
by them in the aggregate at any given time, and continue to hold 1 share of
Capital Stock but less than
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8% of the total outstanding shares of Fully Diluted Common Stock, each
Stockholder agrees to vote all shares of Capital Stock as to which it has voting
rights for the election of one director collectively designated by GDLP and GDLP
II.
(c) So long as the New Investors shall hold any shares of
Series A Preferred Stock or Share Equivalents, each Stockholder agrees to vote
all shares of Capital Stock as to which it has voting rights for the election of
one director designated by First Union Capital Partners, Inc. ("FUCP") as long
as FUCP and its Affiliates hold at least 50% of the Share Equivalents acquired
by FUCP at the Closing, and otherwise by a majority of New Investors holding
over 50% of the Share Equivalents acquired by the New Investors at the Closing;
and
(d) The Company and each of the Stockholders shall appear in
person or by proxy at any annual or special meeting of stockholders for the
purpose of obtaining a quorum and shall vote or cause the vote of the Capital
Stock owned by such Stockholder or by any affiliate of such Stockholder, either
in person or by proxy, to be cast in accordance with the provisions of this
Article 2.
(e) The officers of the Company will be selected by a
decision of the Board of Directors of the Company, provided however that the
directors designated by the GE Partnership may remove any such officer for
Cause.
(f) Each Stockholder as a shareholder of the Company further
agrees to vote all the Capital Stock with respect to which it has voting rights,
and to cause all persons designated by it to vote, in favor of removal from the
Board of Directors, upon written notice by the GE Partnership, GDLP and GDLP II
or the New Investors, of the person or persons designated to the Board of
Directors by such Person giving notice or removal, and to elect to the unexpired
term of each director so removed another person designated by such Person. Each
Stockholder further agrees to cooperate fully with the GE Partnership, GDLP or
the New Investors in connection with the voting of its shares of Capital Stock,
the execution of written consents, the calling of meetings and other stockholder
matters.
(g) If any director is unable to serve, or once having
commenced to serve, is removed or withdraws from the Board of Directors of the
Company, the replacement of such director on the Board of Directors of the
Company will be elected in accordance with the procedures described in (b), (c),
(d) and (f) above.
(h) The Company hereby agrees that the Company will pay the
(i) reasonable expenses of the Directors and Observers (as defined below) and
(ii) reasonable fees to Directors designated by GE Partnership, GDLP and GDLP II
or the New Investors that are not employees of the GE Partnership, GDLP and GDLP
II, the New Investors or the Company or any of their Affiliates.
(i) Each Stockholder agrees not to and not to permit any
Affiliate to grant any proxy or enter into or be bound by any voting trust with
respect to its Capital Stock, or enter into any stockholder arrangements of any
kind with any person with respect to its
8
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Capital Stock, in any such case in a manner that is inconsistent with the
provisions of this Agreement.
(j) The obligations of the GE Partnership set forth in this
Section 2.1 shall be null and void and of no further effect in the event that
either (x) all three of Warren Struhl, David Sable and Hunter Cohen cease to
control, directly or indirectly, the general partner of GDLP and GDLP II or (y)
all three of Warren Struhl, David Sable and Hunter Cohen, collectively, cease to
own, without any pledge of or lien thereon, directly or indirectly, at least 50%
of their beneficial economic interest in GDLP and GDLP II, as applicable, held
on June 25, 1996.
(k) Each holder of Series A Preferred Stock with an original
purchase price aggregating $10 million or more shall be entitled to designate an
observer (an "Observer") to attend meetings of the Board of Directors and
committees thereof.
2.2 New Investor Approval. Without New Investor Approval, the
---------------------
Company shall not: (1) cause a Liquidation to occur, other than a Qualifying
Sale, (2) declare any dividend or authorize any purchase or repurchase of stock,
(3) authorize or issue any options to purchase Common Stock except for options
authorized or issued with the approval of the Company's Board of Directors, (4)
authorize or issue shares of stock of any class which would be senior or
superior to the Series A Preferred Stock as to dividends or liquidation or any
bonds, debentures, notes or other obligations convertible into or exchangeable
for, or having rights to purchase, any shares of stock of the Company provided,
that the Company may issue as consideration for acquisitions bonds, debentures,
notes or other debt obligations convertible into or exchangeable for, or having
rights to purchase (A) Common Stock upon an initial public offering at the
public offering price and (B) up to 5,000 additional shares of Common Stock in
any 12-month period at a conversion price equal to or higher than the Conversion
Price of the Series A Preferred Stock then in effect pursuant to the Certificate
of Designation or (5) amend or repeal the Certificate of Designation with
respect to the Series A Preferred Stock other than in connection with the
issuance of New Series A Preferred Stock as and to the extent permitted pursuant
to Section 1 of the Stock Purchase Agreement.
2.3 GE Partnership Approval. Without GE Partnership Approval,
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the Company shall not: (1) cause a Liquidation to occur, other than a Qualifying
Sale, (2) declare any dividend or authorize any purchase or repurchase of stock,
(3) authorize or issue any options to purchase Common Stock except for options
authorized or issued with the approval of the Company's Board of Directors, (4)
authorize or issue shares of stock of any class which would be senior or
superior to the Series A Preferred Stock as to dividends or liquidation or any
bonds, debentures, notes or other obligations convertible into or exchangeable
for, or having rights to purchase, any shares of stock of the Company provided,
that the Company may issue as consideration for acquisitions bonds, debentures,
notes or other debt obligations convertible into or exchangeable for, or having
rights to purchase (A) Common Stock upon an initial public offering at the
public offering price and (B) up to 5,000 additional shares of Common Stock in
any 12-month period at a conversion price equal to or higher than the Conversion
Price of the Series A Preferred Stock then in effect pursuant to the Certificate
of Designation or (5) amend or repeal the Certificate of Designation with
respect to the Series A Preferred Stock other
9
<PAGE>
than in connection with the issuance of New Series A Preferred Stock as and to
the extent permitted pursuant to Section 1 of the Stock Purchase Agreement.
2.4 Actions Consistent with Agreement. The Company shall not
---------------------------------
take any action inconsistent with the provisions of this Agreement.
ARTICLE 3
RESTRICTIONS ON TRANSFERS BY THE STOCKHOLDERS
---------------------------------------------
3.1 Restrictions on Transfers Generally. Subject to the
-----------------------------------
provisions of Section 3.8 hereof, each Stockholder hereby agrees that such
Stockholder shall not, and shall not permit any Affiliate to, directly or
indirectly, (i)transfer, sell or otherwise dispose of any shares of Capital
Stock or Notes that would result in a Change of Control, except in a Qualifying
Sale or a Qualifying Public Offering or (ii) transfer, sell or otherwise dispose
of any shares of Capital Stock or Notes other than pursuant to Sections 3.2,
3.3, 3.4 or 3.5, provided, that Section 3.3 shall not restrict the sale of any
Notes. Subject to the provisions of Section 3.8 hereof, each party hereto agrees
not to pledge, mortgage, hypothecate or otherwise encumber any shares of Capital
Stock.
3.2 Right of First Offer. (a) At any time prior to a
--------------------
Qualifying Public Offering, if a Stockholder, Noteholder or holder of
Consideration Warrants (the "Offering Stockholder") desires to transfer or sell
any Capital Stock, Notes or Consideration Warrants held by it (the "Shareholder
Securities") to a third party that is not its Permitted Transferee (a "Third
Party Buyer"), the Offering Stockholder shall give written notice (the "Transfer
Notice") to all the other Stockholders, Noteholders and holders of Consideration
Warrants ("Offeree Stockholder(s)") and the Company, which Transfer Notice shall
state the number of Shareholder Securities such Offering Stockholder proposes to
transfer and the name and notice address of each Person (i.e., each Offeree
Stockholder and the Company) to whom such notice is being sent.
(b) The Offeree Stockholder(s) shall have the first
irrevocable and exclusive option, but not the obligation, to purchase the
Shareholder Securities. The option to purchase the offered Shareholder
Securities shall be exercisable by the Offeree Stockholders collectively
(pro-rata in accordance with the number of Shareholder Securities held by each
Offeree Stockholder providing Exercise Notice) with respect to all but not less
than all of such Shareholder Securities by delivery of a written notice of
exercise (the "Exercise Notice") to the Offering Stockholder within 15 days
after receipt of the Transfer Notice. Such Exercise Notice shall set forth the
price and the terms and conditions on which such Offeree Stockholder(s) would be
willing to purchase all but not less than all such Shareholder Securities. In
the event that the Offering Stockholder accepts the price set forth in the
Exercise Notice, then such Offeree Stockholder(s) shall be required to purchase
all such Shareholder Securities. In the event that the Offering Stockholder does
not accept the price set forth in the Exercise Notice then such Offering
Stockholder shall be permitted to sell all, but not less than all, the
Shareholder Securities to a Third Party Buyer for a purchase price not lower
than that set forth in the Exercise Notice and on terms and conditions taken as
a whole no more favorable to such Third Party Buyer than those set forth in the
Exercise Notice. In the event that the Offeree
10
<PAGE>
Stockholder(s) shall fail to deliver an Exercise Notice within 15 days after
receipt of the Transfer Notice, the Offering Stockholder may sell the
Shareholder Securities to a Third Party Buyer at any price and on any terms and
conditions.
(c) The closing of any purchase of Shareholder Securities by
Offeree Stockholder(s) under this Section 3.2 shall be held at such place as the
Offering Stockholder and the Offeree Stockholder(s) shall agree upon on the 30th
day following delivery of the Exercise Notice or such other date as shall be
mutually agreeable to the parties (or such later time as may be necessary to
comply with the Hart-Scott-Rodino Antitrust Improvements Act, as amended ("HSR"
Act), and other applicable laws).
(d) If the Offeree Stockholder(s) do not collectively wish to
purchase all of the offered Shareholder Securities, fail to consummate such
purchase within such period, or fail to deliver an Exercise Notice within the
period specified in Section 3.2(b) hereof, the Offering Stockholder may transfer
to the Third Party Buyer, subject to the provisions of this Agreement, all but
not less than all, of the offered Shareholder Securities; provided, however,
that (x) such transfer is bona fide and made before the later of 120 days from
the date of the Transfer Notice and the date which is five days after the
expiration or waiver of any applicable waiting period to such transfer pursuant
to the HSR Act and (y) prior to such transfer the Third Party Buyer shall agree
in writing, in a form reasonably satisfactory to the Company, to be bound by the
terms of this Agreement (as a Stockholder) and that the Shareholder Securities
held by it shall be subject to the terms of this Agreement. If such sale is not
consummated within the period described in clause (x) of the proviso in the
preceding sentence, the restrictions provided for in this Section 3.2(d) shall
again become effective, and no transfer of such Shareholder Securities may be
made thereafter without again offering the same to the Other Stockholders in
accordance with the terms and conditions of this Agreement.
3.3 Tag Along. (a) If at any time prior to a Qualifying
---------
Public Offering, any Offering Stockholder (other than a Noteholder with respect
to the Notes) desires to transfer to any Third Party Buyer (other than pursuant
to a registered public offering or pursuant to Rule 144) all or any portion of
its Shareholder Securities (other than any Notes) in accordance with Section 3.2
above, such Offering Stockholder shall afford each other Stockholder the
opportunity to sell, in the same transaction contemplated between such Offering
Stockholder and the Third Party, at the same price and on the same terms and in
such proportion of the total number of shares of Shareholder Securities being
sold to the Third Party Buyer as the total number of shares of Capital Stock
owned by each such Stockholder (including Share Equivalents) bears to the total
number of shares of Fully Diluted Common Stock on such date (the "Tag-Along
Offer").
(b) Written notice (the "Sale Notice") of the Tag-Along Offer
shall be sent to each Stockholder. Such Sale Notice shall state (i) such
Offering Stockholder's intention to transfer all the Shareholder Securities to
the Third Party Buyer, (ii) the name and address of the proposed Third Party
Buyer and (iii) the offered purchase price per share of Common Stock to be
transferred, expressed solely as a dollar amount, the manner of payment thereof
and a statement that the price will be payable wholly in cash and/or marketable
securities. Each other Stockholder desiring to participate in such Tag-
11
<PAGE>
Along sale shall, within 15 days of the date of delivery of the Sale Notice,
notify the Offering Stockholder of its election to sell shares of Common Stock
pursuant to the provisions of this Section 3.3. The failure by any Stockholder
to deliver a notice pursuant to this section shall be deemed an election by such
holder not to sell any shares of Common Stock owned by it and the Offering
Stockholder may transfer its Capital Stock to the Third Party Buyer in
accordance with the terms of the Sale Notice so long as such transfer occurs
prior to 120 days after the date the Sale Notice was received by the other
Stockholders.
3.4 Drag Along. If at any time the Company receives from a
----------
Third Party Buyer an offer to purchase all of the issued and outstanding Capital
Stock of the Company in a transaction that satisfies the definition of a
Qualifying Sale, then the Company shall notify in writing each Stockholder. Upon
the affirmative approval or consent of 66-2/3% of the shares of Fully Diluted
Common Stock and provided that such offer would result in a Qualifying Sale, the
Company shall have the option to require each such Stockholder to sell all of
the shares of Capital Stock held by each such Stockholder to the Third Party
Buyer at the same price and on the same terms and conditions as apply to such
other shares of stock of the Company being purchased by the Third Party Buyer
and shall state whether such option is being exercised in a notice provided to
each Stockholder in writing at least twenty (20) Business Days prior to the date
set for consummation of such sale.
3.5 Transfer to Affiliates. Notwithstanding anything to the
----------------------
contrary contained in Section 3.1 and subject to the provisions of Section 3.7,
a Stockholder or Noteholder may transfer its shares of Capital Stock or Notes or
Consideration Warrants to an Affiliate of such Stockholder ("Permitted
Transferee") provided that such Stockholder shall not transfer control of any
such Affiliate to a person which is not an Affiliate of such Stockholder without
first reacquiring such shares of Capital Stock or Notes or Consideration
Warrants; and provided further, that the Permitted Transferee of a Stockholder
may only transfer its shares of Capital Stock or Notes or Consideration Warrants
to the transferor Stockholder from whom such Permitted Transferee received such
shares of Capital Stock or Notes or Consideration Warrants or any of such
transferor's Permitted Transferees or otherwise in accordance with the terms
hereof.
3.6 Restrictive Legends. Each share of Capital Stock, each
-------------------
Note and each Consideration Warrant shall bear a legend in substantially the
following form:
The securities represented by this certificate have not been
registered under the Securities Act of 1933, as amended, and
neither the securities nor any interest therein may be sold,
transferred, pledged or disposed of in the absence of such
registration or an exemption under such Act and the rules and
regulations thereunder. The transfer of such securities is
subject to the restrictions set forth in that certain
Stockholders Agreement, dated September 30, 1997 among
Genesis Direct, Inc. and certain Stockholders, copies of
which are available for inspection at the offices of Genesis
Direct, Inc., and such securities may be transferred only in
compliance with the terms and conditions of said Stockholders
Agreement.
12
<PAGE>
3.7 Transferees Subject to Agreement. Any transferee of any
--------------------------------
shares of Series A Preferred Stock shall, as a condition of the consummation of
such transfer, agree to be subject to the terms of Article 2 of this Agreement.
3.8 Expiration of Restrictions. All restrictions imposed by
--------------------------
Section 3 hereof upon the transferability of Capital Stock, Notes or
Consideration Warrants shall cease and terminate (a) as to any particular share
of Capital Stock, when such share has been sold pursuant to Rule 144 or shall
have been effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering such share or (b) upon the
consummation of a Qualifying Public Offering. Whenever such restrictions shall
terminate as to any Capital Stock, Notes or Consideration Warrants, the holder
thereof shall be entitled to receive from the Company without expense a new
certificate or certificates representing such securities not bearing the legend
set forth in Section 3.6 hereof.
3.9 Regulatory Compliance Cooperation. In the event that FUCP
---------------------------------
determines that it has a Regulatory Problem (as defined below), FUCP shall have
the right to transfer its shares of Series A Preferred Stock without regard to
any restriction on transfer set forth in Section 3.3 of the this Agreement
(provided that the transferee agrees to become a party to this Agreement and the
Stock Purchase Agreement), and the Company shall take all such actions as are
reasonably requested in writing by FUCP in order to (a) effectuate and
facilitate any transfer by FUCP of any securities of the Company then held by
FUCP to any Person designated by FUCP, provided that such transfer shall not
result in the acquisition by any "person" (as that term is used in Sections 13
(d) and 14 (d) (2) of the Securities Exchange Act of 1934, as amended) of
beneficial ownership, direct or indirect, of securities of the Company
representing more than 50% of the combined voting power of the Company's then
outstanding securities, (b) permit FUCP to exchange all or any portion of any
voting security then held by it on a share-for-share basis for shares of a
nonvoting security of the Company, which nonvoting security shall be identical
in all respects to the voting security exchanged for it, except that it shall be
nonvoting and shall be convertible back into the voting security from which it
was converted, having the same terms and conditions as the voting security from
which it was converted, on such terms as are requested by FUCP in light of
regulatory considerations then prevailing and (c) to amend this Agreement, the
Articles of Incorporation, the Bylaws and related agreements and instruments to
effectuate and reflect the foregoing. For purposes of this Agreement and the
Stockholders Agreement, a "Regulatory Problem" means any set of facts or
circumstances wherein it has been asserted by any governmental regulatory agency
that FUCP is not entitled to hold, or exercise any significant right with
respect to, the Company's securities then held by it.
ARTICLE 4
RIGHT TO ACQUIRE SECURITIES
---------------------------
4.1 Right to Acquire Securities. If at any time the Company
---------------------------
proposes to issue in any offering other than a public offering registered with
the Securities and Exchange Commission equity securities of any kind (the term
"equity securities" including for these purposes any common stock, warrants,
options or other rights to
13
<PAGE>
acquire equity securities and debt securities convertible into equity
securities) of the Company, the Company shall:
(a) give written notice setting forth in reasonable detail
(i) the designation and all of the terms and provisions of the equity securities
proposed to be issued (the "Proposed Securities"), including, where applicable,
the voting powers, preferences and relative participating, optional or other
special rights, and the qualification, limitations or restrictions thereof and
interest or dividend rate and maturity; (ii) the price and other terms of the
proposed sale of such securities; (iii) the amount of such securities proposed
to be issued; and (iv) such other information as may be reasonably required or
requested by any such Stockholder in order to evaluate the proposed issuance;
and
(b) offer to issue to each such Stockholder its pro rata
share of the Proposed Securities based on its Percentage in Interest.
provided, however, that no such right shall apply, and the Company shall have no
- -------- -------
obligation to comply with clauses (a) and (b) above, in connection with (i) the
issuance of any shares of Common Stock upon the exercise of options granted
under the existing option plan and included in the definition of Fully Diluted
at an exercise price of not less than the greater of (A) $3,000 per share (as
hereafter adjusted for stock splits, stock dividends, combinations of shares and
other similar recapitalizations) or (B) the then prevailing fair market value
per share of Common Stock, (ii) the issuance of any shares of Common Stock
issued by the Company in connection with the acquisition of any business, (iii)
the issuance of any shares of Common Stock in connection with or at any time
after the consummation of a Qualifying Public Offering or (iv) the conversion of
the Notes or the Series A Preferred Stock or the exercise of the Consideration
Warrants.
Each such Stockholder that wishes to exercise its purchase
rights hereunder shall deliver a written notice to that effect to the Company
within fifteen (15) days after its receipt of the notice specified in Section
4.1(a) from the Company.
Upon the expiration of such fifteen day period, the Company
will be free to sell Proposed Securities that such Stockholders have not elected
to purchase during the ninety (90) days following such expiration on terms and
conditions (considered as a whole) no more favorable to the purchasers thereof
than those offered to such Stockholders. Any Proposed Securities offered or sold
by the Company after such 90-day period must be re-offered to such Stockholders
pursuant to this Section 4.1. The election by any such Stockholder not to
exercise its subscription rights under this Section 4.1 in any one instance
shall not affect its right (other than in respect of a reduction in its
percentage holdings) as to any subsequent proposed issuance. Any sale of such
securities by the Company without first giving such Stockholders the rights
described in this Section 4.1 shall be void and of no force and effect, and the
Company shall cause any correction required to be effected.
For purposes of this Article 4, the pro rata share of the
Proposed Securities (as defined above) offered to and not purchased by the GE
Partnership may be purchased by any limited partner thereof or an Affiliate of
the partnership or the general partner of the GE Partnership.
14
<PAGE>
ARTICLE 5
REGISTRATION RIGHTS
-------------------
5.1 Demand Registration. (a) At any time (i) after the
-------------------
lock-up period established at the time of an initial public offering of
securities of the Company and for a period of one year thereafter, upon the
written request of the GE Partnership (the "Exclusive Demand Right"), and (ii)
following the earlier of the expiration of such one year period and the
consummation of a registration of Registrable Securities following the Exclusive
Demand Right, upon the written request of the GE Partnership, GDLP, GDLP II or a
Majority of Other Initiating Holders (the GE Partnership, GDLP and GDLP II
collectively and a Majority of Other Initiating Holders, each, an "Initiating
Holder"), the Company shall use its best efforts to effect the registration of
all or part of such holder's Registrable Securities under the Securities Act as
described below. Such request shall state the intended method of disposition by
such holder of the Registrable Securities and the Company will promptly give
written notice of such requested registration to all holders of Registrable
Securities and the Notes. The Company will use its best efforts to effect such
registration of (i) the Registrable Securities which the Company has been so
requested to register for disposition in accordance with the intended method of
disposition stated in such request, and (ii) all other Registrable Securities
the holders of which shall have, within 30 days after the receipt of such
written notice from the Company, made written request (stating the intended
method of disposition of such securities by such holders) to the Company for
registration thereof, all to the extent required to permit the disposition (in
accordance with the intended method thereof as aforesaid) by all such holders of
the Registrable Securities so to be registered; provided, however, that the
Company shall not be obligated to effect any such registration pursuant to this
Section 5.1, (w) pursuant to a request by the GE Partnership at any time
subsequent to (i) the third such registration made pursuant to a request by the
GE Partnership following exercise by the GE Partnership of its Exclusive Demand
Right or (ii) the fourth such registration made pursuant to a request by the GE
Partnership if the Exclusive Demand Right was not exercised by the GE
Partnership or (x) pursuant to a request by GDLP or GDLP II at any time
subsequent to the fourth such registration made pursuant to a request by GDLP or
GDLP II collectively or (y) pursuant to a request of any Initiating Holder other
than the GE Partnership or GDLP or GDLP II at any time subsequent to the second
such registration made pursuant to a request by such Initiating Holder or (z)
where all shares requested to be included therein do not exceed in the
aggregate, 5% of the fully diluted shares of Common Stock; provided, however
that a demand right shall not be deemed to have been exercised pursuant to this
Section 5.1 unless a registration statement shall have become effective with
respect to at least 85% of all shares requested to be included therein by the
party requesting such demand and not have been interfered with by any order or
requirement of the Securities and Exchange Commission or any other governmental
agency or any court. The Company, after consultation with the holders requesting
any registration pursuant to this paragraph, shall select the underwriter or
underwriters of recognized standing to be used in connection with any public
offering of securities registered pursuant to this paragraph; provided, however,
-------- -------
that so long as the GE Partnership or FUCP shall hold any Registrable
Securities, each shall have the right, in its sole discretion, to approve of any
underwriter
15
<PAGE>
in which General Electric Company or First Union Corporation, as applicable, has
a direct or indirect interest of 5% or more.
(b) If a requested registration pursuant to this Section 5.1
involves an underwritten offering, and the managing underwriter shall advise the
Company in writing (with a copy to each holder of Registrable Securities
requesting registration) that, in its opinion, the number of securities
requested to be included in such registration exceeds the number which can be
sold in such offering within a price range acceptable to such holders, the
Company will exclude from such registration, to the extent of the number of
securities which the Company is so advised cannot be sold in such offering,
first, the Registrable Securities requested to be registered for the account of
any Person (including the Company), other than the holders of Priority
Registrable Securities (as defined below) and second, on a pro rata basis in
accordance with the Fully Diluted Common Stock held, the securities requested to
be registered by any holder of Common Stock (i) issued or issuable upon the
conversion of Series A Preferred Stock or the exercise of the Consideration
Warrants, (ii) issued upon the conversion of the Notes or issuable upon the
conversion of the Notes notwithstanding any right of the Company to redeem the
Notes pursuant to the Notes and Stock Purchase Agreement or (iii) held by the GE
Partnership (collectively, the "Priority Registrable Securities") pursuant to
this Section 5.1. Any holder of Registrable Securities to be included in any
registration pursuant to Section 5.1 by written notice to the Company within 20
days after its receipt of a copy of a notice from the managing underwriter
delivered pursuant to this Section 5.1(b) may rescind its request for
registration of any Registrable Securities held by it with respect to all or any
part of such Registrable Securities. In addition to such underwriter cut backs,
any such registration will be subject to any conditions that might be imposed by
the managing underwriter of the underwritten offering.
(c) Notwithstanding anything in this Section 5.1 to the
contrary, if after the Initiating Holders have given a written request under
this section and prior to the effective date of the registration statement filed
in connection with such registration, the Board of Directors of the Company
shall determine, in its good faith judgment, that the filing of such
registration statement would interfere with any material financing, investment,
acquisition or merger transaction then under consideration or would reasonably
in the judgment of the Board of Directors of the Company adversely affect the
interests of the Company and its stockholders, the Company may decide to delay
the registration of such Registrable Securities as defined below) and if the
Board of Directors makes such determination, the Company shall give written
notice of such determination to each holder of Registrable Securities and Notes
that has requested registration of its securities; provided that the Company may
not delay registration as permitted in this paragraph more than once in any
twelve month period. Such delay shall be for the period the Company determines
on the basis provided above as is in good faith necessary or desirable, but in
no event greater than six months. The Company shall notify the Initiating
Holders of the period of delay. Following such delay, the Company shall promptly
cause the Registrable Securities to be registered unless, within 15 days of
receipt of notice from the Company, the Initiating Holders withdraw their
written request made pursuant to Section 5.1, in which case such written request
will not be considered a request for the purposes of Section 5.1.
16
<PAGE>
(d) A registration statement requested pursuant to this Section 5.1
shall not be deemed to have been effected if (i) the registration does not
remain effective for a period of at least 120 days or such earlier time as the
underwriter allows and all the Registrable Securities requested to be registered
in connection therewith were not sold, (ii) the Initiating Holders withdraw
their request for registration in its entirety pursuant to Section 5.1, (iii) a
registration with respect therewith has not become effective, provided that if
such registration statement does not become effective following its filing by
the Company solely by reason of the refusal to proceed of the Initiating
Holders, it shall be deemed to have been effected unless the Initiating Holders
shall have elected to pay all registration expenses in connection with such
registration or (iv) if within 120 days after it has become effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the Commission or other governmental agency or court for any
reason .
5.2 Piggy-Back Registration. (a) If the Company at any time
-----------------------
proposes to register any of its equity securities (other than securities issued
with respect to any acquisition or any employee stock option, stock purchase, or
similar plan or any other securities to be registered pursuant to a special
purpose registration) under the Securities Act on Form S-1, Form S-2, Form S-3
or any other form of general application for sale of securities to the public in
an underwritten offering upon which may be registered securities similar to the
Registrable Securities, it will each such time at least 30 days prior to the
anticipated filing date of such proposed registration statement give written
notice to all holders of all Notes or Registrable Securities of its intention so
to do and, upon the written request of any such holder made within 15 days after
the receipt of any such notice (which request shall specify the Registrable
Securities intended to be disposed of by such holder and state the intended
method of disposition thereof), the Company will use its best efforts to effect
the registration under the Securities Act of Registrable Securities which the
Company has been so requested to register, to the extent requisite to permit the
disposition (in accordance with the intended methods thereof as aforesaid) by
such holders of the Registrable Securities to be so registered, subject to the
discretion of the managing underwriter to limit or exclude any of such equity
securities from the offering (subject to the same priorities as set forth in
Section 5.2(b) hereof) if it determines that the inclusion thereof would
adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that if any Registrable Securities are to be
distributed pursuant to this paragraph through a firm of underwriters to the
public and the GE Partnership or FUCP shall be participating in such offering it
shall have the right, after consultation with the Company, to approve of any
underwriter in which General Electric Company or First Union Corporation, as
applicable, has a direct or indirect interest of 5% or more. No registration
effected pursuant to this Section 5.2 shall relieve the Company from its
obligation to effect any registration upon request pursuant to Section 5.1
hereof.
(b) If a requested registration pursuant to this Section 5.2
involves an underwritten offering, and the managing underwriter shall advise the
Company in writing (with a copy to each holder of Registrable Securities
requesting registration) that in its opinion, the number of securities requested
to be included in such registration exceeds the number which can be sold in such
offering within a price range acceptable to the holders of a majority of the
Registrable Securities requested to be registered therein, the
17
<PAGE>
Company will exclude from such registration, to the extent of the number of
securities which the Company is so advised cannot be sold in such offering,
first the Registrable Securities requested to be registered for the account of
any Person (including the Company), other than holders of Priority Registrable
Securities and second, on a pro rata basis in accordance with Fully Diluted
Common Stock held, the Priority Registrable Securities pursuant to this Section
5.2. Any holder of Registrable Securities to be included in any registration
pursuant to Section 5.2 by written notice to the Company within 20 days after
its receipt of a copy of a notice from the managing underwriter delivered
pursuant to this Section 5.2(b), may rescind its request for registration of any
Registrable Securities held by it with respect to all or any of such Registrable
Securities. In addition to such underwriter cutbacks, any such registration will
be subject to any commercially reasonable conditions that might be imposed by
the managing underwriter of the Underwritten Offering.
5.3 Form S-3 Registration. At any time when the Company is
---------------------
eligible to register securities on Form S-3 and the holders of Registrable
Securities are eligible to make demand for registration of Registrable
Securities pursuant to Section 5.1, if the Company shall receive from any Holder
or Holders of Registrable Securities holding 5% or more of the maximum shares of
Fully Diluted Common Stock or $5 million or more in equity securities a written
request or requests that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders of the Registrable
Securities the Company will: (i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders
of Registrable Securities; (ii) as soon as practicable effect such registration
and all such qualifications and compliance's as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of written notice from the Company; provided,
--------
however, that the Company shall not be obligated to effect any such
- -------
registration, qualification or compliance, pursuant to this Section 5.3 (A) if
Form S-3 is not available for such offering by the Holders; (B) more than two
times in any twelve-month period; or (C) if the Company shall furnish to the
Holders a certificate signed by the President or Chief Executive Officer of the
Company to the effect that, in the good faith judgment of the Board of
Directors, the filing, the offering or the disclosure required thereby would
adversely affect a pending or contemplated acquisition, financing or other
material transaction of the Company and it is therefore in the best interests of
the Company to defer the filing of such registration statement, then the Company
shall have the right to defer such filing or to block the sale of shares
thereunder for a period of not more than 90 days after the date of furnishing
such certificate; provided, however, that the Company may not exercise such
-------- -------
right more than once in any twelve-month period; and (iii) subject to the
foregoing, the Company shall file a registration statement covering the
Registrable Securities and other securities so requested to be registered as
soon as practicable after receipt of the request or requests of the Holders. No
registration effected pursuant to this Section 5.3 shall relieve the Company
from its obligation to effect any registration pursuant to Section 5.1 or 5.2.
18
<PAGE>
5.4 Registration Expenses. The Registration Expenses in
---------------------
connection with any registration in which Registrable Securities shall be
included pursuant to Section 5.1 or Section 5.2 (including any registration
withdrawn or determined to be ineffective in accordance with Section 5.1(c) or
5.1(d), other than as set forth in clause (iii) of Section 5.1(d)) shall be
borne by the Company.
5.5 Registration Procedures. If and whenever the Company is
-----------------------
required to use its best efforts to effect the registration of any Registrable
Securities under the Securities Act as provided in this Agreement, the Company
will as promptly as possible:
(i) prepare and (in any event within 120 days after the end of
the period within which requests for registration may be given to the
Company) file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to
cause such registration statement to become effective; provided,
however, that before filing with the Commission a registration
statement or prospectus or any amendments or supplements thereto, the
Company will furnish to each Holder of Registrable Securities included
in such registration statement copies of such documents proposed to be
filed for such Holder's review;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective and to comply with the provisions of the
Securities Act with respect to the disposition of all such Registrable
Securities and other securities covered by such registration statement
until such time as all of such Registrable Securities and other
securities have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in
such registration statement, but in no event for a period of less than
120 days after such registration statement becomes effective;
(iii) furnish to each seller of such Registrable Securities such
number of copies of such registration statement and of each such
amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus included in such
registration statement (including each preliminary prospectus), in
conformity with the requirements of the Securities Act, and such other
documents, as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such
seller;
(iv) use its best efforts to register or qualify such
Registrable Securities covered by such registration statement under
such other applicable securities or Blue Sky laws of such
jurisdictions within the United States of America (including
territories and commonwealths thereof) as each seller shall reasonably
request, except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign corporation
in any jurisdiction wherein it is not so qualified, to subject itself
to taxation in any such jurisdiction, or to consent to general service
of process in any jurisdiction;
19
<PAGE>
(v) notify each seller of any such Registrable Securities
covered by such registration statement, at any time when a prospectus
relating thereto is required to be delivered under the Securities Act
within the period mentioned in subdivision (ii) of this Section 5.5,
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 any material
fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances under which they
were made (and upon receipt of such notice and until a supplemented or
amended prospectus as set forth below is available, each such seller
shall not offer or sell any securities covered by such registration
statement and shall return all copies of such prospectus to the
Company if requested to do so by it), and at the request of any such
seller prepare 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 purchasers of such
Registrable Securities, 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 in light of the circumstances under which they were made;
and
(vi) furnish to each holder for which Registrable Securities
are registered or are to be registered at the time of the disposition
of such Registrable Securities by such holder, a signed copy of an
opinion of counsel dated the effective date of such registration
statement reasonably satisfactory in form and substance to the three
largest such holders (based on their percentage in interest of the
Registrable Securities or the largest such holder if such holder's
percentage in interest of the Registrable Securities is equal to or
greater than 50%) covering substantially the matters with respect to
such registration statement (and the prospectus, included therein) as
are customarily covered in opinions of issuers counsel delivered to
underwriters in underwritten public offerings of securities; it being
understood that such opinion may contain such qualifications and
assumptions as are customary in the rendering of similar opinions.
The Company may require each seller of any Registrable Securities as to which
any registration is being effected to furnish the Company such information
regarding such seller and the distribution of such Registrable Securities as the
Company may from time to time request in writing and as shall be required by law
to effect such registration.
5.6 Indemnification. (a) In the event of any registration of
---------------
any Registrable Securities under the Securities Act pursuant to this Agreement,
the Company will indemnify and hold harmless the seller of such securities and
its directors and officers and each underwriter of such securities and each
other person, if any, who controls such seller or underwriter within the meaning
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, director or officer or underwriter or controlling
person may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions or proceedings in respect
thereof) arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary
20
<PAGE>
prospectus or final prospectus contained therein, or any amendment
or supplement thereto, or (ii) 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 the Company will reimburse such seller,
each such director and officer, each such underwriter and each such controlling
person for any legal or any other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, action or proceeding; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company through an instrument duly executed by such seller, officer or director,
underwriter or controlling person specifically for use in the preparation
thereof. Such indemnity shall remain in full force and effect irrespective of
any investigation by any person indemnified above.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating each holder shall indemnify to
the extent permitted by law in the same manner and to the same extent as set
forth in subdivision (a) of this Section 5.6, but only to an amount, with
respect to such prospective seller, not in excess of the gross proceeds realized
by such seller from the sale of Registrable Securities registered pursuant to
such registration statement) the Company, each director of the Company, each
officer of the Company who shall sign such registration statement and any person
who controls the Company within the meaning of the Securities Act, with respect
to any statement in or omission from such registration statement, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereto, if such statement or omission was made in reliance upon
and in conformity with written information furnished to the Company through an
instrument duly executed by such seller or underwriter, specifically for use in
the preparation of such registration statement, preliminary prospectus, final
prospectus, amendment or supplement.
(c) Promptly after receipt by an indemnified party of notice
of the commencement of any action involving a claim referred to in the preceding
paragraphs of this Section 5.6, such indemnified party shall, if a claim in
respect thereof is to be made against an indemnifying party, give written notice
to the latter of the commencement of such action; provided, however, that the
failure of any indemnified party to give notice as provided herein shall not
relieve the indemnifying party of its obligations under the preceding paragraphs
of this Section 5.5, except to the extent that the indemnifying party is
actually prejudiced by such failure to give notice. In case any such action is
brought against an indemnified party, unless in the written opinion of counsel
for such indemnified party a conflict of interest between such indemnified and
indemnifying parties may exist in respect of such claim, the indemnifying party
shall be entitled to participate in and to assume the defense thereof, jointly
with any other indemnifying party similarly notified to the extent that it may
wish, with counsel reasonably satisfactory to such indemnified party, and after
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof, the indemnifying party shall not be liable to
such indemnified party for any legal or other expense subsequently incurred by
the latter in connection with the defense thereof. No
21
<PAGE>
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. An
indemnifying party shall not be subject to any liability for any settlement made
without its consent which shall not be unreasonably withheld.
If for any reason, the foregoing indemnity is unavailable,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such losses, claims, damages, liabilities
or expenses in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party on the one hand and the indemnified
party on the other hand.
5.7 Information by the Holders. Each of the Holders
--------------------------
included in registration shall furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder as the
Company may reasonably request in writing and as shall be reasonably required in
connection with any registration, qualification or compliance referred to in
this Article 5.
5.8 "Market Stand-Off" Agreement. Any Holder, if required by
----------------------------
the Company and any underwriter of Registrable Securities of the Company, shall
agree not to sell or otherwise transfer or dispose of any Registrable Securities
of the Company held by such holder during the period not to exceed one hundred
and eighty (180) days as requested by the managing underwriter following the
effective date of the first registration statement of the Company filed under
the Securities Act, provided that all officers and directors of the Company
enter into similar agreements. Such agreement shall be in writing in the form
satisfactory to the Company and such underwriter. The Company may impose a
stop-transfer instruction with respect to the shares or other securities)
subject to the foregoing restriction until the end of such period.
5.9 Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use all commercially reasonable efforts to:
(i) make and keep public information available as those
terms are understood and defined in Rule 144, at all times from and
after the effective date of the first registration statement under the
Securities Act filed by the Company for an offering of its securities
to the general public;
(ii) file with the Commission in a timely manner all
reports and other documents required of the Company under the
Securities Act and the Exchange Act at any time after it has become
subject to such reporting requirements; and
(iii) so long as any Holder owns any Registrable
Securities, furnish to such Holder upon request a written statement by
the Company as to its compliance with the reporting requirements of
Rule 144 (at any time from and after the effective date of the first
registration statement filed by the Company for an
22
<PAGE>
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 so filed as any Holder may reasonably request in availing
itself of any rule or regulation of the Commission allowing such
Holder to sell any such securities without registration.
5.10 Assignability. The registration rights set forth in
-------------
this Article 5 shall be assignable by any Holder, in whole or in part, to any
transferee of Registrable Securities provided such transferee agrees to be bound
by all provisions of this Agreement. Any such assignee of a Purchaser shall be
deemed to be a Purchaser for purposes of this Article 5.
ARTICLE 6
CERTAIN REPRESENTATIONS AND COVENANTS
-------------------------------------
6.1 Stockholder Representation. Each Stockholder
--------------------------
represents and warrants as to itself that as of the Closing Date (after giving
effect to all transactions occurring on or as of the Closing Date) such
Stockholder is not a party with any other Person to any other agreement with
respect to the holding, voting, acquisition or disposition of shares of Capital
Stock, other than the Stock Purchase Agreement, this Agreement or the Existing
Agreement.
6.2 Company Representation. The Company represents and
----------------------
warrants that except as set forth on Schedule 4F to the Stock Purchase
Agreement, as of the Closing Date (i) it is not a party with any other Person to
any other agreement with respect to the holding, voting, acquisition or
disposition of shares of Capital Stock other than this Agreement, the Stock
Purchase Agreement or the Existing Agreement and (ii) it has not granted to any
other Person any other registration rights with respect to capital stock of the
Company, and no holder of any capital stock of the Company shall have as of the
date hereof any right to require registration of any capital stock of the
Company under the Securities Act or to include any security in any registration
statement filed by the Company under the Securities Act except pursuant hereto.
6.3 Company Covenants. Subsequent to the Qualifying Public
-----------------
Offering, the Company will comply with the reporting requirements of Sections 13
and 15(d) of the Exchange Act applicable to it and shall use its best efforts to
comply with all other public information reporting requirements of the
Commission (including reporting requirements which serve as a condition to
utilization of Rule 144 promulgated by the Commission under the Securities Act)
applicable to it from time to time in effect and relating to the availability of
an exemption from the Securities Act for the sale of any Notes or Registrable
Securities. The Company will also cooperate with each holder of any Notes or
Registrable Securities in supplying such information and documentation as may be
necessary for such holder to complete and file any information reporting forms
presently or hereafter required by the Commission as a condition to the
availability of an exemption from the Securities Act for the sale of any Notes
or Registrable Securities.
23
<PAGE>
ARTICLE 7
MISCELLANEOUS
-------------
7.1 Injunctive Relief. It is acknowledged that it will be
-----------------
impossible to measure in money the damages that would be suffered if the parties
fail to comply with certain of the obligations imposed on them by this
Agreement, including without limitation those obligations set forth in Article
2, Article 3 and Article 4, and that in the event of any such failure, an
aggrieved Person will be irreparably damaged and will not have an adequate
remedy at law. Any such Person shall, therefore, be entitled to injunctive
relief and/or specific performance to enforce such obligations, and if any
action should be brought in equity to enforce any of such provisions of this
Agreement, none of the parties hereto shall raise the defense that there is an
adequate remedy at law.
7.2 Further Assurances. Each party hereto shall do and
------------------
perform or cause to be done and performed all such further acts and things and
shall execute and deliver all such other agreements, certificates, instruments
and documents as any other party hereto reasonably may request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
7.3 Governing Law. This Agreement shall be construed and
-------------
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York.
7.4 Entire Agreement; Amendment; Waiver. This Agreement (a)
-----------------------------------
together with the Stock Purchase Agreement and the Existing Agreement contains
the entire agreement among the parties hereto with respect to the subject matter
hereof, (b) may not be amended or supplemented except (i) by an instrument or
counterparts thereof in writing signed by the Company and the Stockholders
holding at least 66-2/3% of the shares of Fully Diluted Common Stock, (ii) with
New Investor Approval, provided that New Investor Approval will not be required
for any amendment which (1) adds new parties to this Agreement, (2) amends
Sections 3.2 and 3.3 to give pro rata rights of first offer and pro rata tag
along rights to stock issued by the Company after the date hereof, (3) changes
the "66-2/3%" in Section 3.4 to another percentage, or (4) amends Article 5 in a
manner that is not disproportionately adverse to the registration rights of any
Holder of Registrable Securities relatively to other such Holders and (c) may
not be discharged except by such written instrument or by performance. Any such
amendment so approved shall be binding on all Stockholders. No waiver of any
term or provision shall be effective unless in writing signed by the party to be
charged.
7.5 Binding Effect. This Agreement shall be binding on and
--------------
inure to the benefit of the parties hereto and, subject to the terms and
provisions hereof, their respective legal representatives, successors and
assigns.
7.6 Invalidity of Provision. The invalidity or
-----------------------
unenforceability of any provision of this Agreement in any jurisdiction shall
not affect the validity or
24
<PAGE>
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction.
7.7 Counterparts. This Agreement may be executed
------------
simultaneously in two or more counterparts, all of which shall be deemed but one
and the same instrument and each of which shall be deemed an original, and it
shall not be necessary in making proof of this Agreement to produce or account
for more than one such counterpart.
7.8 Notices. All notices and other communications provided
for or given or made hereunder shall be in writing (including delivery by
facsimile transmission) and, unless otherwise provided herein, shall be deemed
to have been given when received by the party to whom such notice is to be given
at its address set forth in the Stock Purchase Agreement, or such other address
for the party as shall be specified by notice given pursuant hereto.
7.9 Headings. The descriptive headings of the several
paragraphs of this Agreement are inserted for convenience only and do not
constitute part of this Agreement.
7.10 Expiration of Rights. Notwithstanding any other
provision in this Agreement, the parties hereto agree that the rights and
obligations set forth in this Agreement, other than those contained in Article 5
hereof and any provision necessary to effect the rights and obligations under
such Article 5, shall expire and be of no further force and effect as of the
date on which the Company shall consummate a Qualifying Public Offering. In
order to satisfy provisions under the Employee Retirement Income Security Act of
1974, as amended and, notwithstanding the above, following the termination of
this Agreement, so long as the GE Partnership shall hold Common Stock, the
Company shall nominate a designee of the GE Partnership to the Board of
Directors of the Company so long as the GE Partnership has requested such
nominee to be designated.
25
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed by or on
behalf of each of the parties hereto as of the date first above written.
GENESIS DIRECT, INC.
By /s/ Barry Curtis
---------------------------------
Name: Barry Curtis
Title: CFO
STOCKHOLDERS:
GE INVESTMENT PRIVATE PLACEMENT PARTNERS II,
a LIMITED PARTNERSHIP
By: GE Investment Management Incorporated
Its: General Partner
By: /s/ Michael Pastore
-----------------------------------
Name: Michael Pastore
Title: Vice President
GENESIS DIRECT, L.P.
By: Genesis Direct Management L.L.C.
By: /s/ Warren Struhl
-----------------------------------
Name: Warren Struhl
Title: Member
GENESIS DIRECT II, L.P.
By: Genesis Direct Management L.L.C.
By: /s/ Warren Struhl
--------------------------------
Name: Warren Struhl
Title: Member
26
<PAGE>
FIRST UNION CAPITAL PARTNERS, INC.
By: /s/ Kevin Roche
--------------------------------------
Name: Kevin J. Roche
Title: Senior Vice President
THE CIT GROUP/EQUITY INVESTMENTS, INC.
By: /s/ Kenneth Walters
--------------------------------------
Name: Kenneth L. Walters Jr.
Title: Vice President
SSM VENTURE PARTNERS, L.P.
SSM I, L.P.
General Partner of SSM Venture Partners, L.P.
By: SSM Corporation General Partner
By: /s/ R. Wilson Orr, III
------------------------------------
Name: R. Wilson Orr, III
Title: Vice-President
INVEMED ASSOCIATES, INC.
By: /s/ Cristina H. Kepner
----------------------------------------
Name: Cristina H. Kepner
Title: Executive Vice President
/s/ Cristina H. Kepner
- -------------------------------------------
Cristina H. Kepner
/s/ Kenneth G. Langone
- -------------------------------------------
Kenneth G. Langone
/s/ G. Allen Mebane
- -------------------------------------------
G. Allen Mebane
/s/ Thomas Teague
- -------------------------------------------
Thomas L. Teague
/s/ Baldwin Smith, Jr.
- -------------------------------------------
Baldwin Smith, JR.
27
<PAGE>
/s/ Carlisle Jones
- -------------------------------------------
Carlisle Jones
/s/ Harris Berenholz
- -------------------------------------------
Harris Berenholz
/s/ Andrew Taussig
- -------------------------------------------
Andrew R. Taussig
WERCO - GENESIS DIRECT L.L.C.
By: /s/ Joseph Wekselblatt
----------------------------------------
Name: Joseph R. Wekselblatt
Title: Manager
NATC HOLDING COMPANY, LTD.
By: /s/ Mark Graham
----------------------------------------
Name: Mark R. Graham
Title: Vice President
28
<PAGE>
STRATEGIC INVESTMENT PARTNERS LTD.
By: /s/ Michael Neus
------------------------------------
Name: Michael C. Neus
Title: Attorney-in-Fact
/s/ Stan Druckenmiller
- ---------------------------------------
Stan Druckenmiller
/s/ Arminio Fraga
- ---------------------------------------
Arminio Fraga
/s/ Gerald Kerner
- ---------------------------------------
Gerald Kerner
/s/ Paul McNulty
- ---------------------------------------
Paul McNulty
/s/ Sean Warren
- ---------------------------------------
Sean Warren
29
<PAGE>
EXHIBIT 9
GENESIS DIRECT, INC.
1998 EMPLOYEE STOCK PURCHASE PLAN
---------------------------------
The following constitute the provisions of the 1998 Employee Stock
Purchase Plan of Genesis Direct, Inc.
1. Purpose. The purpose of the Plan is to provide employees of the
-------
Company and its Designated Parents or Subsidiaries with an opportunity to
purchase Common Stock of the Company through accumulated payroll deductions. It
is the intention of the Company to have the Plan qualify as an "Employee Stock
Purchase Plan" under Section 423 of the Code. The provisions of the Plan,
accordingly, shall be construed so as to extend and limit participation in a
manner consistent with the requirements of that section of the Code.
2. Definitions. As used herein, the following definitions shall
-----------
apply:
(a) "Board" means the Board of Directors of the Company.
-----
(b) "Change in Control" means a change in ownership or control of the
-----------------
Company effected through the direct or indirect acquisition by any person or
related group of persons (other than an acquisition from or by the Company or by
a Company-sponsored employee benefit plan or by a person that directly or
indirectly controls, is controlled by, or is under common control with, the
Company) of beneficial ownership (within the meaning of Rule 13d-3 of the
Exchange Act) of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities.
(c) "Code" means the Internal Revenue Code of 1986, as amended.
----
(d) "Common Stock" means the common stock of the Company.
------------
(e) "Company" means Genesis Direct, Inc., a Delaware corporation.
-------
(f) "Compensation" means an Employee's base salary from the Company or
------------
one or more Designated Parents or Subsidiaries, including such amounts of base
salary as are deferred by the Employee (i) under a qualified cash or deferred
arrangement described in Section 401(k) of the Code, or (ii) to a plan qualified
under Section 125 of the Code. Compensation does not include overtime, bonuses,
annual awards, other incentive payments, reimbursements or other expense
allowances, fringe benefits (cash or noncash), moving expenses, deferred
compensation, contributions (other than contributions described in the first
sentence) made on the Employee's behalf by the Company or one or more Designated
Parents or Subsidiaries under any employee benefit or welfare plan now or
hereafter established, and any other payments not specifically referenced in the
first sentence.
(g) "Corporate Transaction" means any of the following transactions:
---------------------
1
<PAGE>
(1) a merger or consolidation in which the Company is not the
surviving entity, except for a transaction the principal purpose of
which is to change the state in which the Company is incorporated;
(2) the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital
stock of the Company's subsidiary corporations) in connection with
complete liquidation or dissolution of the Company;
(3) any reverse merger in which the Company is the surviving
entity but in which securities possessing more than 50% of the total
combined voting power of the Company's outstanding securities are
transferred to a person or persons different from those who held such
securities immediately prior to such merger; or
(4) any person or related group of persons (other than the
Company or by a Company-sponsored employee benefit plan) who becomes
the beneficial owner (within the meaning of Rule 13d-3 of the Exchange
Act) of securities possessing more than 50% of the total combined
voting power of the Company's outstanding securities (whether or not
in a transaction also constituting a Change in Control), but excluding
any such transaction that the Plan Administrator determines shall not
be a Corporate Transaction
(h) "Designated Parents or Subsidiaries" means the Parents or
----------------------------------
Subsidiaries which have been designated by the Plan Administrator from time to
time as eligible to participate in the Plan.
(i) "Effective Date" means a date designated as such by the Plan
--------------
Administrator, which shall be not earlier than the effective date of the
Registration Statement relating to the Company's initial public offering of its
Common Stock and not later than July 1, 1998. However, should any Designated
Parent or Subsidiary become a participating company in the Plan after such date,
then such entity shall designate a separate Effective Date with respect to its
employee-participants.
(j) "Employee" means any individual, including an officer or director,
--------
who is an employee of the Company or a Designated Parent or Subsidiary for
purposes of Section 423 of the Code. For purposes of the Plan, the employment
relationship shall be treated as continuing intact while the individual is on
sick leave or other leave of absence approved by the individual's employer.
Where the period of leave exceeds ninety (90) days and the individual's right to
reemployment is not guaranteed either by statute or by contract, the employment
relationship shall be deemed to have terminated on the ninety-first (91st) day
of such leave, for purposes of determining eligibility to participate in the
Plan.
(k) "Enrollment Date" means the first day of each Offer Period.
---------------
(l) "Exchange Act" means the Securities Exchange Act of 1934, as
------------
amended.
2
<PAGE>
(m) "Exercise Date" means the last day of each Purchase Period.
-------------
(n) "Fair Market Value" means, as of any date, the value of Common
-----------------
Stock determined as follows:
(1) Where there exists a public market for the Common Stock, the
Fair Market Value shall be (A) the closing price for a share of Common
Stock for the last market trading day prior to the time of the
determination (or, if no closing price was reported on that date, on
the last trading date on which a closing price was reported) on the
stock exchange determined by the Plan Administrator to be the primary
market for the Common Stock or the Nasdaq National Market, whichever
is applicable or (B) if the Common Stock is not traded on any such
exchange or national market system, the average of the closing bid and
asked prices of a share of Common Stock on the Nasdaq Small Cap Market
for the day prior to the time of the determination (or, if no such
prices were reported on that date, on the last date on which such
prices were reported), in each case, as reported in The Wall Street
Journal or such other source as the Plan Administrator deems reliable;
(2) In the absence of an established market of the type described
in (1), above, for the Common Stock, and subject to (3), below, the
Fair Market Value thereof shall be determined by the Plan
Administrator in good faith; or
(3) On the Effective Date, the Fair Market Value shall be the
price at which the Board, or if applicable, the Pricing Committee of
the Board, and the underwriters agree to offer the Common Stock to the
public in the initial public offering of the Common Stock, net of
discounts and underwriting commissions.
(o) "Offer Period" means a Offer Period established pursuant to
------------
Section 4 hereof.
(p) "Parent" means a "parent corporation," whether now or hereafter
------
existing, as defined in Section 424(e) of the Code.
(q) "Participant" means an Employee of the Company or Designated
-----------
Parent or Subsidiary who is actively participating in the Plan.
(r) "Plan" means this Employee Stock Purchase Plan.
----
(s) "Plan Administrator" means either the Board or a committee of the
------------------
Board that is responsible for the administration of the Plan as is designated
from time to time by resolution of the Board.
(t) "Pricing Date" means, with respect to each Offer Period, the date
------------
designated as such by the Plan Administrator, which date shall be either the
Enrollment Date or the Exercise Date, or both, with respect to that Offer
Period.
3
<PAGE>
(u) "Purchase Period" means a period of approximately six months,
---------------
commencing on January 1 and July 1 of each year and terminating on the next
following June 30 or December 31, respectively; provided, however, that the
first Purchase Period shall commence on the Effective Date and shall end on
December 31, 1998.
(v) "Purchase Price" shall mean an amount equal to the Purchase Price
--------------
Percentage multiplied by the Fair Market Value of a share of Common Stock on the
Enrollment Date or on the Exercise Date, whichever is designated as the Pricing
Date, or the lesser of the Fair Market Value on both such dates if both are
designated as the Pricing Date.
(w) "Purchase Price Percentage" shall mean, with respect to each Offer
-------------------------
Period, a percentage, not less than 85% nor more than 100%, as established by
the Plan Administrator with respect to that Offer Period.
(x) "Reserves" means the sum of the number of shares of Common Stock
--------
covered by each option under the Plan which have not yet been exercised and the
number of shares of Common Stock which have been authorized for issuance under
the Plan but not yet placed under option.
(y) "Subsidiary" means a "subsidiary corporation," whether now or
----------
hereafter existing, as defined in Section 424(f) of the Code.
3. Eligibility.
-----------
(a) General. Any individual who is an Employee on an Enrollment Date
-------
shall be eligible to participate in the Plan for the Offer Period commencing
with that Enrollment Date.
(b) Limitations on Grant and Accrual. Any provisions of the Plan to
--------------------------------
the contrary notwithstanding, no Employee shall be granted an option under the
Plan (i) if, immediately after the grant, such Employee (taking into account
stock owned by any other person whose stock would be attributed to such Employee
pursuant to Section 424(d) of the Code) would own stock or hold outstanding
options to purchase stock, or both, which in aggregate possess five percent (5%)
or more of the total combined voting power or value of all classes of stock of
the Company or of any Parent or Subsidiary, or (ii) which permits the Employee's
rights to purchase stock under all employee stock purchase plans of the Company
and its Parents or Subsidiaries to accrue at a rate which exceeds $25,000 worth
of stock (determined at the Fair Market Value of the shares at the time such
option is granted) for each calendar year in which such option is outstanding at
any time. The determination of the accrual of the right to purchase stock shall
be made in accordance with Section 423(b)(8) of the Code and the regulations
thereunder.
(c) Other Limits on Eligibility. Notwithstanding Subsection (a),
---------------------------
above, the following Employees shall not be eligible to participate in the Plan
for any relevant Offer Period: (i) Employees whose customary employment is 20
hours or less per week; (ii) Employees whose customary employment is for not
more than 5 months in any calendar year; (iii) Employees who have been employed
for fewer than six months; and (iv) Employees who are subject to rules or
4
<PAGE>
laws of a foreign jurisdiction that prohibit or make impractical the
participation of such Employees in the Plan.
4. Offer Periods.
-------------
(a) The Plan shall be implemented through overlapping or consecutive
Offer Periods until such time as (i) the maximum number of shares of Common
Stock available for issuance under the Plan shall have been purchased or (ii)
the Plan shall have been sooner terminated in accordance with Section 19 hereof.
The maximum duration of a Offer Period shall be twenty-seven (27) months.
Initially, the Plan shall be implemented through an Offer Period of six (6)
months' duration commencing each January 1 and July 1 following the Effective
Date (except that the initial Offer Period shall commence on the Effective Date
and shall end on December 31, 1998). The Plan Administrator shall have the
authority to change the length of any Offer Period and the length of Purchase
Periods within any such Offer Period subsequent to the initial Offer Period by
announcement at least thirty (30) days prior to the commencement of the Offer
Period and to determine whether subsequent Offer Periods shall be consecutive or
overlapping. In addition, the Plan Administrator shall have the authority to
shorten any Offer Period to the extent provided elsewhere herein.
(b) A Participant shall be granted a separate option for each Offer
Period in which the Participant participates. The option shall be granted on
the Enrollment Date and shall be automatically exercised on the last day of the
Offer Period. However, with respect to any Offer Period, the Plan Administrator
may specify shorter Purchase Periods within a Offer Period, in which case the
option granted on the Enrollment Date shall be automatically exercised in
successive installments on the last day of each Purchase Period ending within
the Offer Period.
(c) If on the first day of any Purchase Period in a Offer Period in
which a Participant is participating, the Fair Market Value of the Common Stock
is less than the Fair Market Value of the Common Stock on the Enrollment Date of
the Offer Period (after taking into account any adjustment during the Offer
Period pursuant to Section 18(a)), the Offer Period that had earlier commenced
shall be terminated automatically and the Participant shall be enrolled
automatically in the new Offer Period which has its first Purchase Period
commencing on that date, provided the Participant is eligible to participate in
the Plan on that date and has not elected to terminate participation in the
Plan.
(d) Except as specifically provided herein, the acquisition of Common
Stock through participation in the Plan for any Offer Period shall neither limit
nor require the acquisition of Common Stock by a Participant in any subsequent
Offer Period.
5. Participation.
-------------
(a) An eligible Employee may become a Participant in the Plan by
completing a subscription agreement authorizing payroll deductions in the form
of Exhibit A to this Plan and filing it with the designated payroll office of
the Company at least ten (10) business days prior to the Enrollment Date for the
Offer Period in which such participation will commence, unless a
5
<PAGE>
later time for filing the subscription agreement is set by the Plan
Administrator for all eligible Employees with respect to a given Offer Period.
(b) Payroll deductions for a Participant shall commence with the first
partial or full payroll period beginning on the Enrollment Date and shall end on
the last complete payroll period during the Offer Period, unless sooner
terminated by the Participant as provided in Section 10.
6. Payroll Deductions.
------------------
(a) In the subscription agreement by which a Participant elects to
participate, the Participant shall elect to have payroll deductions made during
the Offer Period in an amount not less than 1% nor more than 10%, in whole
percentages only, of the Compensation which the Participant is to receive during
the Offer Period.
(b) All payroll deductions made for a Participant shall be credited to
an account under the Plan. A Participant may not make any additional payments
into the account.
(c) A Participant may discontinue participation in the Plan as
provided in Section 10, or may change the rate of payroll deductions during the
Offer Period by completing and filing with the Company a new subscription
agreement authorizing a decrease in the payroll deduction rate. A change in
rate shall be effective on the first day of the first Purchase Period commencing
at least 10 business days after the Company's receipt of the new subscription
agreement unless the Company elects to process a requested change in
participation more quickly. Any increase in the rate of payroll deductions shall
be deemed to the extent of the increase, an enrollment in the next available
Offer Period. The portion of payroll deductions that accumulate at the rate
previously in effect, however, shall be deemed accumulated in the ongoing Offer
Period, except to the extent otherwise provided in Section 4(c). A Participant
may not increase the rate of payroll deductions for an existing Offer Period. A
Participant's subscription agreement shall remain in effect for successive Offer
Periods unless terminated as provided in Section 10.
7. Grant of Option. On the Enrollment Date, each Participant in such
---------------
Offer Period shall be granted an option to purchase on each Exercise Date of
such Offer Period (at the applicable Purchase Price) up to a number of shares of
the Common Stock determined by dividing such Participant's payroll deductions
accumulated prior to such Exercise Date and retained in the Participant's
account as of the Exercise Date by the applicable Purchase Price; provided (i)
that such purchase shall be subject to the limitations set forth in Sections
3(b) and 12 hereof, and (ii) the maximum number of shares of Common Stock a
Participant shall be permitted to purchase in any Purchase Period shall be 1,000
shares, subject to adjustment as provided in Section 18 hereof. Exercise of the
option shall occur as provided in Section 8, unless the Participant has
withdrawn pursuant to Section 10, and the option, to the extent not exercised,
shall expire on the last day of the Offer Period.
8. Exercise of Option. Unless a Participant withdraws from the Plan
------------------
as provided in Section 10, below, the Participant's option for the purchase of
shares shall be
6
<PAGE>
exercised automatically on each Exercise Date, and the maximum number of full
shares subject to the option shall be purchased for such Participant at the
applicable Purchase Price with the accumulated payroll deductions in the
Participant's account. No fractional shares shall be purchased; any payroll
deductions accumulated in a Participant's account which are not sufficient to
purchase a full share shall be carried over to the next Purchase Period or Offer
Period, whichever applies, or returned to the Participant, if the Participant
withdraws from the Plan. Notwithstanding the foregoing, any amount remaining in
a Participant's account following the purchase of shares on an Exercise Date due
to the application of Section 423(b)(8) of the Code or Section 7, above, shall
be returned to the Participant and shall not be carried over to the next Offer
Period. During a Participant's lifetime, a Participant's option to purchase
shares hereunder is exercisable only by the Participant.
9. Delivery. Upon receipt of a request from a Participant after each
--------
Exercise Date on which a purchase of shares occurs, the Company shall arrange
the delivery to the Participant, as promptly as practicable, of a certificate
representing the shares purchased upon exercise of the Participant's option.
10. Withdrawal; Termination of Employment.
-------------------------------------
(a) A Participant may withdraw all but not less than all the payroll
deductions credited to the Participant's account and not yet used to exercise an
option under the Plan at any time by giving written notice to the Company in the
form of Exhibit B to this Plan. All of the Participant's payroll deductions
credited to the Participant's account shall be paid to the Participant as
promptly as practicable after receipt of notice of withdrawal, the Participant's
option for the Offer Period shall be automatically terminated, and no further
payroll deductions for the purchase of shares shall be made during the Offer
Period. If a Participant withdraws from a Offer Period, payroll deductions
shall not resume at the beginning of the succeeding Offer Period unless the
Participant delivers to the Company a new subscription agreement.
(b) Upon a Participant's ceasing to be an Employee for any reason or
upon termination of a Participant's employment relationship (as described in
Section 2(j)), the payroll deductions credited to such Participant's account
during the Offer Period but not yet used to exercise an option shall be returned
to such Participant or, in the case of the Participant's death, to the person or
persons entitled thereto under Section 14, and such Participant's option shall
be automatically terminated.
11. Interest. No interest shall accrue on the payroll deductions
--------
credited to a Participant's account under the Plan.
12. Stock.
-----
(a) The maximum number of shares of Common Stock which shall be made
available for sale under the Plan shall be 250,000 shares, subject to adjustment
upon changes in capitalization of the Company as provided in Section 18. If on
a given Exercise Date the number of shares with respect to which options are to
be exercised exceeds the number of shares then available under the Plan, the
Plan Administrator shall make a pro rata allocation of the shares
7
<PAGE>
remaining available for purchase in as uniform a manner as shall be practicable
and as it shall determine to be equitable.
(b) A Participant shall have no interest or voting right in shares
covered by the Participant's option until such shares are actually purchased on
the Participant's behalf in accordance with the applicable provisions of the
Plan. Except as provided in Section 18, no adjustment shall be made for
dividends, distributions or other rights for which the record date is prior to
the date of such purchase.
(c) Shares to be delivered to a Participant under the Plan shall be
registered in the name of the Participant or in the name of the Participant and
the Participant's spouse.
13. Administration. The Plan shall be administered by the Board or a
--------------
committee of members of the Board appointed by the Board. The Board or its
committee shall have full and exclusive discretionary authority to construe,
interpret and apply the terms of the Plan, to determine eligibility and to
adjudicate all disputed claims filed under the Plan. Every finding, decision
and determination made by the Board or its committee shall, to the full extent
permitted by law, be final and binding upon all persons.
14. Designation of Beneficiary.
--------------------------
(a) A Participant may file with the Company a written designation of a
beneficiary who is to receive any shares and cash, if any, from the
Participant's account under the Plan in the event of such Participant's death.
If a Participant is married and the designated beneficiary is not the spouse,
spousal consent shall be required for such designation to be effective.
(b) The designation of beneficiary may be changed by the Participant
(and the Participant's spouse, if any) at any time by filing a new designation
of beneficiary with the Company. In the event of the death of a Participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such Participant's death, the Company shall deliver such shares
or cash to the executor or administrator of the estate of the Participant, or if
no such executor or administrator has been appointed (to the knowledge of the
Plan Administrator), the Plan Administrator, in its discretion, may deliver such
shares or cash to the spouse or to any one or more dependents or relatives of
the Participant, or if no spouse, dependent or relative is known to the Plan
Administrator, then to such other person as the Plan Administrator may
designate.
15. Transferability. Neither payroll deductions credited to a
---------------
Participant's account nor any rights with regard to the exercise of an option or
to receive shares under the Plan may be assigned, transferred, pledged or
otherwise disposed of in any way (other than by shall, the laws of descent and
distribution or as provided in Section 14 hereof) by the Participant. Any such
attempt at assignment, transfer, pledge or other disposition shall be without
effect, except that the Plan Administrator may treat such act as an election to
withdraw funds from a Offer Period in accordance with Section 10.
8
<PAGE>
16. Use of Funds. All payroll deductions received or held by the
------------
Company under the Plan may be used by the Company for any corporate purpose, and
the Company shall not be obligated to segregate such payroll deductions.
17. Reports. The Company shall maintain an individual account for
-------
each Participant in the Plan. The Company shall provide, or cause to be
provided, to each Participant at least annually a statements setting forth the
amounts of payroll deductions, the Purchase Price, the number of shares
purchased and the remaining cash balance, if any.
18. Adjustments upon Changes in Capitalization; Corporate
-----------------------------------------------------
Transactions.
- ------------
(a) Adjustments upon Changes in Capitalization. Subject to any
------------------------------------------
required action by the stockholders of the Company, the Reserves, as well as the
Purchase Price, shall be proportionately adjusted for any increase or decrease
in the number of issued shares of Common Stock resulting from a stock split,
reverse stock split, stock dividend, combination or reclassification of the
Common Stock, or any other similar event resulting in an increase or decrease in
the number of issued shares of Common Stock. The adjustment shall be made by
the Plan Administrator, whose determination in that respect shall be final,
binding and conclusive. Except as expressly provided herein, no issue by the
Company of shares of stock of any class, or securities convertible into shares
of stock of any class, shall affect, and no adjustment by reason thereof shall
be made with respect to, the number or price of shares of Common Stock subject
to an option. The Plan Administrator may, if it so determines in the exercise
of its sole discretion, make provision for adjusting the Reserves, as well as
the Purchase Price, in the event the Company effects one or more
reorganizations, recapitalizations, rights offerings or other increases or
reductions of shares of its outstanding Common Stock.
(b) Corporate Transactions. In the event of a proposed Corporate
----------------------
Transaction, each option under the Plan shall be assumed or an equivalent option
shall be substituted by such successor corporation or a parent or subsidiary of
such successor corporation, unless the Plan Administrator determines, in the
exercise of its sole discretion and in lieu of such assumption or substitution,
to shorten the Offer Period then in progress by setting a new Exercise Date (the
"New Exercise Date"). If the Plan Administrator shortens the Offer Period then
in progress in lieu of assumption or substitution in the event of a Corporate
Transaction, the Plan Administrator shall notify each Participant in writing, at
least ten days prior to the New Exercise Date, that the Exercise Date for the
Participant's option has been changed to the New Exercise Date and that the
Participant's option shall be exercised automatically on the New Exercise Date,
unless prior to such date the Participant has withdrawn from the Offer Period as
provided in Section 10. For purposes of this Subsection, an option granted
under the Plan shall be deemed to be assumed if, following the Corporate
Transaction, the option confers the right to purchase with substantially
equivalent terms as the original option, for each share of Common Stock subject
to the option immediately prior to the Corporate Transaction, the consideration
(whether stock, cash or other securities or property) received in the Corporate
Transaction by holders of Common Stock for each share of Common Stock held on
the effective date of the Corporate Transaction (and if such holders were
offered a choice of consideration, the type of consideration chosen by the
holders of a majority of the outstanding shares of Common Stock); provided,
however, that if such consideration received in the Corporate Transaction was
not solely common stock of the
9
<PAGE>
successor corporation or its Parent, the Plan Administrator may, with the
consent of the successor corporation and the Participant, provide for the
consideration to be received upon exercise of the option to be solely common
stock of the successor corporation or its Parent equal in fair market value to
the per share consideration received by holders of Common Stock in the Corporate
Transaction.
19. Amendment or Termination.
------------------------
(a) The Plan Administrator may at any time and for any reason
terminate or amend the Plan. Except as provided in Section 18, no such
termination can affect options previously granted, provided that a Offer Period
may be terminated by the Plan Administrator on any Exercise Date if the Plan
Administrator determines that the termination of the Offer Period is in the best
interests of the Company and its stockholders. Except as provided in Section
18, no amendment may make any change in any option theretofore granted which
adversely affects the rights of any Participant. To the extent necessary to
comply with Section 423 of the Code (or any successor rule or provision or any
other applicable law or regulation), the Company shall obtain stockholder
approval in such a manner and to such a degree as required.
(b) Without stockholder consent and without regard to whether any
Participant rights may be considered to have been "adversely affected," the Plan
Administrator shall be entitled to limit the frequency or number of reductions
in the amount withheld during Offer Periods, establish the exchange ratio
applicable to amounts withheld in a currency other than U.S. dollars, establish
additional terms, conditions, rules or procedures to accommodate the rules or
laws of applicable foreign jurisdictions, permit payroll withholding in excess
of the amount designated by a Participant in order to adjust for delays or
mistakes in the Company's processing of properly completed withholding
elections, establish reasonable waiting and adjustment periods or accounting and
crediting procedures to ensure that amounts applied toward the purchase of
Common Stock for each Participant properly correspond with amounts withheld from
the Participant's Compensation, and establish such other limitations or
procedures as the Plan Administrator determines in its sole discretion advisable
and which are consistent with the Plan.
20. Notices. All notices or other communications by a Participant to
-------
the Company under or in connection with the Plan shall be deemed to have been
duly given when received in the form specified by the Plan Administrator at the
location, or by the person, designated by the Plan Administrator for the receipt
thereof.
21. Conditions upon Issuance of Shares. Shares shall not be issued
----------------------------------
with respect to an option unless the exercise of such option and the issuance
and delivery of such shares pursuant thereto shall comply with all applicable
provisions of law, domestic or foreign, including, without limitation, the
Securities Act of 1933, as amended, the Exchange Act, the rules and regulations
promulgated thereunder, and the requirements of any stock exchange upon which
the shares may then be listed, and shall be further subject to the approval of
counsel for the Company with respect to such compliance. As a condition to the
exercise of an option, the Company may require the Participant to represent and
warrant at the time of any such exercise that the shares are being purchased
only for investment and without any present intention to sell
10
<PAGE>
or distribute such shares if, in the opinion of counsel for the Company, such a
representation is required by any of the aforementioned applicable provisions of
law. In addition, no options shall be exercised or shares issued hereunder
before the Plan shall have been approved by stockholders of the Company as
provided in Section 23.
22. Term of Plan. The Plan shall become effective upon the earlier
------------
to occur of its adoption by the Board or its approval by the stockholders of the
Company. It shall continue in effect for a term of ten years unless sooner
terminated under Section 19.
23. Stockholder Approval. Continuance of the Plan shall be subject
--------------------
to approval by the stockholders of the Company within twelve months before or
after the date the Plan is adopted. If such stockholder approval is obtained at
a duly held stockholders' meeting, the Plan must be approved by a majority of
the votes cast at such stockholders' meeting at which a quorum representing a
majority of all outstanding voting stock of the Company is, either in person or
by proxy, present and voting on the Plan. If such stockholder approval is
obtained by written consent, it must be obtained by the written consent of the
holders of a majority of all outstanding voting stock of the Company. However,
approval at a meeting or by written consent may be obtained by a lesser degree
of stockholder approval if the Plan Administrator determines, after consultation
with the Company's legal counsel if the Plan Administrator deems such
consultation advisable, that such a lesser degree of stockholder approval shall
comply with all applicable laws and shall not adversely affect the qualification
of the Plan under Section 423 of the Code.
24. No Employment Rights. The Plan does not, directly or indirectly,
--------------------
create any right for the benefit of any employee or class of employees to
purchase any shares under the Plan, or create in any employee or class of
employees any right with respect to continuation of employment by the Company or
a Designated Parent or Subsidiary, and it shall not be deemed to interfere in
any way with such employer's right to terminate, or otherwise modify, an
employee's employment at any time.
25. Effect of Plan. The provisions of the Plan shall, in accordance
--------------
with its terms, be binding upon, and inure to the benefit of, all successors of
each Participant, including, without limitation, such Participant's estate and
the executors, administrators or trustees thereof, heirs and legatees, and any
receiver, trustee in bankruptcy or representative of creditors of such
Participant.
26. Applicable Law. The laws of the State of New Jersey (excluding
--------------
that body of law pertaining to its conflicts of law) shall govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.
11
<PAGE>
EXHIBIT 10
DIRECTED SHARE PROGRAM
APRIL 21, 1998
To: [Vice Presidents, Directors and Managers] [All Employees]
From: Office of the President
As you know, Genesis Direct, Inc. has recently filed with the Securities and
Exchange Commission ("SEC") a registration related to a proposed offering of
approximately 10 million shares of its common stock. We are pleased to enclose a
copy of the preliminary prospectus included in the registration statement.
The Company has instructed the underwriter to reserve up to 5% of the total
amount of shares being sold in the offering for purchase by employees, their
friends and family and other non employee friends of the Company at the initial
offering price (the "Directed Share Program") and has asked Bear Stearns & Co.,
Inc. to administer this Directed Share Program.
If you are interested in participating in the Directed Share Program, please so
indicate on the attached Indication of Interest Form and return the form by fax
to Tom DeLuca at 201.583.3607 or hand deliver no later than this Friday, April
24, 1998. Your order will then be sent to Bear Stearns & Co., Inc. who will have
a broker contact you directly regarding account set up and other details.
Please be aware if you wish to participate, the minimum purchase is 100 shares.
As indicated on the cover page of the preliminary prospectus, it is currently
anticipated that the initial offering price of the shares will be between
($13.00) and ($15.00) per share; however the price range may be changed prior to
the offering. It is also currently anticipated that the offering will commence
on or about May 7, 1998, and the payment for the shares will be due within three
to four business days (settlement date) of the offering.
There is no obligation to participate in this Directed Share Program; however,
should you wish to do so, please carefully read the enclosed preliminary
prospectus relating to the offering.
Please note that the securities laws restrict the ability of insiders to buy and
sell stock in certain circumstances and Genesis Direct, Inc. intends to
implement a policy regarding trading of stocks by insiders. Accordingly, there
will be limitations on your ability to sell your stock.
If you have any questions regarding the Directed Share Program, please contact
Tom DeLuca at 201.867.2800 ext. 3701.
A REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SEC BUT HAS NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS LETTER SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION
OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE
IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO
REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
Very Truly Yours,
Warren, David and Hunter
<PAGE>
DIRECTED SHARE PROGRAM
INDICATION OF INTEREST FORM
- ---------------------------
PLEASE RETURN THIS FORM DULY COMPLETED BY FAX TO TOM DELUCA AT 201.583.3607 NO
LATER THAN FRIDAY, APRIL 24, 1998.
BEAR STEARNS & CO., INC.
DEAR SIR:
I AM INTERESTED IN PURCHASING _______________________SHARES OF COMMON STOCK (THE
"SHARES") (MINIMUM 100) OF GENESIS DIRECT, INC. (THE "COMPANY") AND WOULD LIKE
SUCH NUMBER TO BE RESERVED FOR ME.
I ACKNOWLEDGE THAT:
1. I have received and read a copy of the preliminary prospectus for the
Company's offering dated April 17, 1998.
2. I understand that, I am not assured of obtaining any or all of the number of
Shares requested by me, and I will be notified of the number of Shares
available for purchase by me; if any.
3. No offer to buy any of the Shares can be accepted and no part of the
purchase price can be received by the Company or Bear Stearns & Co., Inc.
until the registration statement covering the proposed offering (the
"Registration Statement") has been declared effective by the United States
Securities and Exchange Commission and any such offer may be withdrawn or
revoked, without obligation or commitment of any kind, at any time prior to
notice of your acceptance given after the effective date of the Registration
Statement.
4. This indication of interest involves no obligation or commitment of any
kind, and by completing this form, I am not binding myself to purchase any
Shares. I understand that the purpose of this form is to provide some
indication of how many Shares may be requested by employees of the Company
and that I will be notified of the number of Shares which are available for
purchase by me. I am also aware that full payment, in United States dollars,
for the purchase price of the Shares allotted to me will be required within
three to four business days after the commencement of the offering.
5. I understand that after the Registration Statement covering the proposed
offering becomes effective, copies of the prospectus in final form (the
"Final Prospectus") will be available, which Final Prospectus will contain
the price and other information which cannot be determined at this time.
6. I understand that an arrangement has been made with Bear Stearns & Co., Inc.
to act as administering agent for the Directed Share Program, and that when
the Registration Statement covering the proposed offering becomes effective,
I will be contacted by a Bear Stearns & Co., Inc. representative to arrange
for the purchase of the number of Shares requested by me or such lesser
number of Shares as may be allocated to me.
Date: ___________________________________________________________________
Signature: ______________________________________________________________
Print Name: _____________________________________________________________
Home Address: ___________________________________________________________
___________________________________________________________
Home Telephone No. ______________________________________________________
Business Telephone No.____________________________________________________
