EXHIBIT 10.8
PeoplePC Inc.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
April 5, 2000
TABLE OF CONTENTS
Page
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SECTION 1 GENERAL...................................................... 2
1.1 Definitions...................................................... 2
SECTION 2 REGISTRATION; RESTRICTIONS ON TRANSFER 3
2.1 Restrictions on Transfer......................................... 3
2.2 Demand Registration.............................................. 4
2.3 Piggyback Registrations.......................................... 6
2.4 Form S-3 Registration............................................ 7
2.5 Expenses of Registration......................................... 8
2.6 Obligations of the Company....................................... 9
2.7 Termination of Registration Rights............................... 10
2.8 Delay of Registration; Furnishing Information.................... 10
2.9 Indemnification.................................................. 11
2.10 Assignment of Registration Rights................................ 13
2.11 Amendment of Registration Rights................................. 13
2.12 Limitation on Subsequent Registration Rights..................... 13
2.13 "Market Stand-Off" Agreement; Agreement to Furnish Information... 13
2.14 Rule 144 Reporting............................................... 14
SECTION 3 COVENANTS OF THE COMPANY..................................... 15
3.1 Basic Financial Information and Reporting........................ 15
3.2 Inspection Rights................................................ 15
3.3 Confidentiality of Records....................................... 16
3.4 Reservation of Common Stock...................................... 16
3.5 Stock Vesting.................................................... 16
3.6 Proprietary Information and Inventions Agreement................. 16
3.7 Directors' Liability and Indemnification; Expenses............... 16
3.8 Qualified Small Business......................................... 17
3.9 Insurance........................................................ 17
3.10 Obligations of Management........................................ 17
3.11 International Joint Venture...................................... 17
3.12 Dissolution or Liquidation....................................... 17
3.13 Termination of Covenants......................................... 17
SECTION 4 RIGHTS OF FIRST REFUSAL...................................... 18
4.1 Waiver of Right.................................................. 18
4.2 Subsequent Offerings............................................. 18
4.3 Exercise of Rights............................................... 18
4.4 Sale Without Notice.............................................. 18
4.5 Termination and Waiver of Rights of First Refusal................ 19
4.6 Transfer of Rights of First Refusal.............................. 19
4.7 Excluded Securities.............................................. 00
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XXXXXXX 0 MISCELLANEOUS................................................ 20
5.1 Governing Law.................................................... 20
5.2 Survival......................................................... 20
5.3 Successors and Assigns........................................... 20
5.4 Entire Agreement................................................. 20
5.5 Severability..................................................... 20
5.6 Amendment and Waiver............................................. 21
5.7 Delays or Omissions.............................................. 21
5.8 Notices.......................................................... 21
5.9 Attorneys' Fees.................................................. 21
5.10 Titles and Subtitles............................................. 22
5.11 Additional Investors............................................. 22
5.12 Counterparts..................................................... 22
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PEOPLEPC, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amended and Restated Investor Rights Agreement (the "Agreement") is
entered into as of the ________ day of April 2000 by and among PeoplePC Inc., a
Delaware corporation (the "Company"), the holders of the Company's Series A
Preferred Stock ("Series A Stock") set forth on Exhibit A hereto, Xxxx Xxxxx,
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Xxx Xxxxxx and Xxxxx Xxxxxx (collectively, the "Stockholders" and each
individually a "Stockholder"), the holders of the Company's Series B Preferred
Stock ("Series B Stock") set forth on Exhibit B hereto and the purchasers of the
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Company's Series C Preferred Stock ("Series C Stock") pursuant to the Series C
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement") and set forth on Exhibit C hereto. The holders of the Series A
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Stock shall be referred to hereinafter as the "Series A Investors," the holders
of the Series B Stock shall be referred to hereinafter as the "Series B
Investors" and the purchasers of the Series C Stock shall be referred to
hereinafter as to "Series C Investors" (collectively as the "Investors" and each
individually as an "Investor").
Recitals
Whereas, the Company proposes to sell and issue shares of its Series C
Stock pursuant to the Purchase Agreement; and
Whereas, as a condition of entering into the Purchase Agreement, the Series
C Investors have requested that the Company extend to them registration rights,
information rights and other rights as set forth below.
Whereas, the Series A Investors and the Series B Investors possess
registration rights, information rights and other rights pursuant to that
certain Amended and Restated Investor Rights Agreement dated as of October 25,
1999, by and among the Company, the Series A Investors, the Series B Investors
and Stockholders (the "Prior Agreement");
Whereas, the Company's and the Series C Investors' obligations under the
Purchase Agreement are conditioned upon the execution and delivery of this
Agreement by such Series C Investors, the Company and the holders of at least a
majority of the Series A Stock, Series B Stock, and Common Stock held by the
Stockholders;
Now, Therefore, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Purchase Agreement, the Series A Investors, Series B Investors and the
Stockholders who are parties to the Prior Agreement, hereby agree that the Prior
Agreement shall be superseded and replaced in its entirety by this Agreement,
and the parties hereto further agree as follows:
SECTION 1
GENERAL
1.1 Definitions. As used in this Agreement the following terms shall have
the following respective meanings:
"Change of Control" means (a) the sale, lease or other disposition of all
or substantially all of the assets of the Company or (b) an acquisition of the
Company by another corporation or entity by consolidation, merger or other
reorganization in which the holders of the Company's outstanding voting stock
immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) of the voting power of the
corporation or other entity surviving such transaction, or any transaction or
series of related transactions to which the Company is a party in which more
than fifty percent (50%) of the Company's voting power is transferred, provided
that a Change of Control shall not include a merger effected exclusively for the
purpose of changing the domicile of the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Form S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Holder" means any person owning of record Registrable Securities that have
not been sold to the public or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.
"Initial Offering" means the Company's first firm commitment underwritten
public offering of its Common Stock registered under the Securities Act.
"Register," "registered," and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (a) Common Stock of the Company issued or
issuable upon conversion of the Shares; (b) any Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such above-described securities;
(c) any Private Placement Shares of the Company purchased by Ford Motor Company
and its affiliates ("Ford") pursuant to the Letter Agreement dated of even date
herewith between the Company and Ford (the "Letter Agreement"); and (d) any
Common Stock issued or issuable upon the exercise of the warrant that may be
issued to Ford pursuant to the Letter Agreement. Notwithstanding the foregoing,
Registrable Securities shall not include any securities sold by a person to the
public pursuant to an effective registration statement or available for sale
under Rule 144(k) pursuant to the Securities Act (or any successor provision).
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"Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of shares of the Company's Common
Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Sections 2.2, 2.3, 2.4 and 2.5 hereof, including, without
limitation, all registration and filing fees, printing expenses, accounting
fees, fees and disbursements of counsel for the Company, reasonable fees and
disbursements of a single special counsel for the Holders, blue sky fees and
expenses and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale and stock transfer taxes.
"Shares" shall mean (i) the Company's Series A Stock held by the Series A
Investors listed on Exhibit A hereto and their permitted assigns, (ii) the
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Company's Series B Stock held by the Series B Investors listed on Exhibit B
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hereto and their permitted assigns, (iii) the Company's Series C Stock, issued
pursuant to the Purchase Agreement and held by the Series C Investors listed on
Exhibit C hereto and their permitted assigns, and (iv) the Company's Common
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Stock held by Xxxx Xxxxx, Xxx Xxxxxx and Xxxxx Xxxxxx listed on Exhibit D hereto
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and their permitted assigns.
SECTION 2
REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound by the
terms of this Agreement, (B) such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
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Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144.
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Holder which is (A) a partnership to its partners or former
partners in accordance with partnership interests, (B) a corporation to its
stockholders in accordance with their interest in the corporation, (C) a limited
liability company to its members or former members in accordance with their
interest in the limited liability company, (D) to the Holder's family member or
trust for the benefit of an individual Holder or (E) an affiliate (as defined in
Rule 405 pursuant to the Securities Act) or donee of a Holder or (F) as
contemplated under Section 4 of the Purchase Agreement; provided that in each
case the transferee will be subject to the terms of this Agreement to the same
extent as if he were an original Holder hereunder.
(b) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND
ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 Demand Registration
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of thirty percent (30%) of the
Registrable Securities then outstanding (the "Initiating Holders") that the
Company file a registration statement under the Securities Act covering the
registration of at least twenty percent (20%) of the Registrable Securities then
outstanding (or any lesser percent if the anticipated aggregate offering price,
net
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of underwriting discounts and commissions, would exceed $50,000,000 (a
"Qualified Public Offering")), then the Company shall, within thirty (30) days
of the receipt thereof, give written notice of such request to all Holders, and
subject to the limitations of this Section 2.2, use its best efforts to effect,
as soon as practicable, and in any event within 60 days of the receipt of such
request the registration under the Securities Act of such Registrable Securities
that the Holders request to be registered.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.4 and the Company shall include such
information in the written notice referred to in Section 2.2 (a) or Section
2.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2 or Section 2.4, if the underwriter advises the Company that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities) then the Company shall so advise all Holders
of Registrable Securities that would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders); provided, however, that the number of shares
of Registrable Securities to be included in such underwriting and registration
shall not be reduced unless all other securities of the Company are first
entirely excluded from the underwriting and registration. Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to the earlier of (A) the third anniversary of the date
of this Agreement or (B) six (6) months following the effective date of the
registration statement pertaining to the Initial Offering;
(ii) after the Company has effected three (3) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective;
(iii) during the period starting with the date of filing of, and
ending on the date one hundred eighty (180) days following the effective date of
the registration statement pertaining to the Initial Offering; provided that the
Company makes reasonable good faith efforts to cause such registration statement
to become effective;
(iv) if within thirty (30) days of receipt of a written request
from the Initiating Holders pursuant to Section 2.2 (a), the Company gives
notice to the Holders of the
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Company's intention file a registration statement relating to its Initial
Offering within ninety (90) days (and such filing is made within such ninety
(90) day period);
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2 a certificate signed by the
Chief Executive Officer of the Company stating that in the good faith judgment
of the Board of Directors of the Company, it would be seriously detrimental to
the Company and its stockholders for such registration statement to be effected
at such time, in which event the Company shall have the right to defer such
filing for a period of not more than ninety (90) days after receipt of the
request of the Initiating Holders; provided that such right to delay a request
shall be exercised by the Company not more than once in any twelve (12) month
period and provided further the Company shall not register any other capital
stock during such ninety (90) day period; or
(vi) if the Company is eligible to register the Registrable
Securities on Form S-3 under the Securities Act of 1933; or
(vii) if the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 2.4 below.
2.3 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements to be filed pursuant to Section 2.2 and registration
statements relating to secondary offerings of securities of the Company, but
excluding registration statements relating to employee benefit plans or with
respect to corporate reorganizations or other transactions under Rule 145 of the
Securities Act) and will afford each such Holder an opportunity to include in
such registration statement all or part of such Registrable Securities held by
such Holder. Each Holder desiring to include in any such registration statement
all or any part of the Registrable Securities held by it shall, within fifteen
(15) days after the above-described notice from the Company, so notify the
Company in writing. Such notice shall state the intended method of disposition
of the Registrable Securities by such Holder. If a Holder decides not to include
all of its Registrable Securities in any registration statement thereafter filed
by the Company, such Holder shall nevertheless continue to have the right to
include any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines
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in good faith that marketing factors require a limitation of the number of
shares to be underwritten, the number of shares that may be included in the
underwriting shall be allocated, first, to the Company; second, to the Holders
on a pro rata basis based on the total number of Registrable Securities held by
the Holders; and third, to any stockholder of the Company (other than a Holder)
on a pro rata basis. No such reduction shall (i) reduce the securities being
offered by the Company for its own account to be included in the registration
and underwriting, or (ii) reduce the amount of securities of the selling Holders
included in the registration below thirty percent (30%) of the total amount of
securities included in such registration, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
stockholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling stockholder be included in such
registration that would reduce the number of shares that may be included by
Holders without the written consent of Holders of not less than a majority of
the Registrable Securities proposed to be sold in the offering. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter,
delivered at least ten (10) business days prior to the effective date of the
registration statement. Any Registrable Securities excluded or withdrawn from
such underwriting shall be excluded and withdrawn from the registration. For any
Holder that is a partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single "Holder", and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder," as defined in this sentence.
(b) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.5 hereof.
2.4 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that
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the Company shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than five million dollars ($5,000,000), or
(iii) if within thirty (30) days of receipt of a written request
from the Initiating Holders pursuant to Section 2.2(a), the Company gives notice
to the Holders of the Company's intention to file a registration statement
within sixty (60) days and such registration statements is filed within such
sixty (60) day period;
(iv) if the Company shall furnish to the Holders a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such Form S-3 registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than ninety (90) days after receipt of the request of the Holder or Holders
under this Section 2.4; provided, that such right to delay a request shall be
exercised by the Company not more than once in any twelve (12) month period and
provided further the Company shall not register any other capital stock during
such ninety (90) day period, or
(v) if the Company has, within the six (6) month period
preceding the date of such request, already effected one (1) registration on
Form S-3 for the Holders pursuant to this Section 2.4, or
(vi) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registration or registrations
effected pursuant to Section 2.2.
2.5 Expenses of Registration. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2, Section 2.3 or Section 2.4
herein shall be borne by the Company. All Selling Expenses incurred in
connection with any registrations hereunder, shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2, or Section 2.4, the
request of which has been subsequently withdrawn by the Initiating Holders
unless (a) the withdrawal is based upon material adverse
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information concerning the Company of which the Initiating Holders were not
aware at the time of such request or (b) a majority of the Initiating Holders
agree to forfeit their right to one requested registration pursuant to Section
2.2, or Section 2.4, as applicable, in which event such right shall be forfeited
by all Holders). If the Holders are required to pay the Registration Expenses,
such expenses shall be borne by the holders of securities (including Registrable
Securities) requesting such registration in proportion to the number of shares
for which registration was requested. If the Company is required to pay the
Registration Expenses of a withdrawn offering pursuant to clause (a) above, then
the Holders shall not forfeit their rights pursuant to Section 2.2, or Section
2.4 to a demand registration.
2.6 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in paragraph (a) above.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such
9
registration statement, as then in effect, includes an untrue statement of a
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Use its best efforts to furnish, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective (i) an opinion, dated as of such date, of
the counsel representing the Company for the purposes of such registration, in
form and substance as is customarily given to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and (ii) a letter dated
as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering addressed
to the underwriters, if any.
(h) Cause all such Registration Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
2.7 Termination of Registration Rights. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect five
(5) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if (x) (i) the Company has completed
its Initial Offering and is subject to the provisions of the Exchange Act, (ii)
such Holder (together with its affiliates, partners and former partners) holds
less than 1% of the Company's outstanding Common Stock (treating all shares of
convertible Preferred Stock on an as converted basis) and (iii) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners,
former partners, members and former members) may be sold under Rule 144 during
any ninety (90) day period or (y) upon the effective date of a Change of Control
of the Company.
2.8 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Sections 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
(c) The Company shall have no obligation with respect to any
registration requested pursuant to Sections 2.2 or 2.4, if, due to the operation
of subsection 2.2(b), the number of shares or the anticipated aggregate offering
price of the Registrable Securities to be included in the registration does not
equal or exceed the number of shares or the anticipated
10
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in Sections 2.2 or 2.4 whichever is
applicable.
2.9 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, the partners, officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder and each person,
if any, who controls such Holder or underwriter within the meaning of the
Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify and hold
harmless the Company, each of its directors, its officers and each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter and any other Holder selling securities under such registration
statement or any of such other Holder's partners, directors or officers or any
person who controls such Holder, against any losses, claims, damages or
liabilities (joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder, or partner,
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the Exchange Act or other federal or state law,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such
11
registration; and each such Holder will pay as incurred any legal or other
expenses reasonably incurred by the Company or any such director, officer,
controlling person, underwriter or other Holder, or partner, officer, director
or controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the indemnified party; provided, however, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, as well as any other relevant equitable considerations. The relative
fault of the indemnifying party and of the indemnified party shall be determined
by a court of law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to state a material
fact relates to information supplied by the indemnifying party or by the
indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission;
provided, that in no event shall any contribution by a Holder hereunder exceed
the net proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities in a
registration statement and the
12
termination of this Agreement. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation.
2.10 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or
retired member of a Holder, or is an affiliate or donee of such Holder,
including without limitations, any partnership or other entity of which any
affiliate of such Holder is a general partner or over which such Holder has
investment discretion, or any employee of any of the foregoing, (b) is a
Holder's family member or trust for the benefit of an individual Holder, or (c)
acquires at least ten percent (10%) of the Registrable Securities (as adjusted
for stock splits and combinations); provided, however, (i) the transferor shall,
within ten (10) days after such transfer, furnish to the Company written notice
of the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned and (ii) such
transferee shall agree to be subject to all restrictions set forth in this
Agreement.
2.11 Amendment of Registration Rights. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority in
interest of the Registrable Securities then outstanding; provided, however, that
if such amendment adversely affects the Registrable Securities held by a non-
consenting Holder in a manner different than that of a consenting Holder, then
such amendment or waiver shall require the consent of such adversely affected
non-consenting party; provided, further, that any waiver or amendment of this
Section 2.11 shall require the consent of all parties to this Agreement. Any
amendment or waiver effected in accordance with this Section 2.11 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Section 2, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
2.12 Limitation on Subsequent Registration Rights. From and after the date
of this Agreement, the Company shall not, without the prior written consent of
the Holders of a majority of the Registrable Securities then outstanding, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights pari passu or
senior to those granted to the Holders hereunder.
2.13 "Market Stand-Off" Agreement; Agreement to Furnish Information. Each
Holder hereby agrees (the "Lockup Agreement") that such Holder shall not sell,
transfer, make any short sale of, grant any option for the purchase of, or enter
into any hedging or similar transaction with the same economic effect as a sale,
any Common Stock (or other securities) of the Company held by such Holder (other
than those included in the registration) for a period specified by the
representative of the underwriters of Common Stock (or other securities) of the
Company not to exceed one hundred eighty (180) days following the effective date
of the Initial Offering registration statement of the Company filed under the
Securities Act (the "Lockup
13
Period"); provided that all officers and directors of the Company and all
holders of at least one percent (1%) of the Company's voting securities are
subject to similar restrictions or enter into similar agreements and such
agreements shall be applicable only to the Initial Offering. Notwithstanding the
foregoing, during the Lockup Period, a Holder may sell or transfer Common Stock
(or other securities) of the Company held by such Holder to affiliates and
donees; provided that such affiliates and donees shall agree to be subject to
all restrictions set forth in this agreement, including entering into a Lockup
Agreement as specified by the representatives of the underwriters of Common
Stock (or other securities).
Each Holder, affiliate and donee agrees to execute and deliver such other
agreements as may be reasonably requested by the Company or the underwriter
which are consistent with the foregoing and which are necessary to give further
effect thereto. In addition, if requested by the Company or the representative
of the underwriters of Common Stock (or other securities) of the Company, each
Holder, affiliate and donee shall provide, within ten business (10) days of such
request, such information as may be required by the Company or such
representative in connection with the completion of any public offering of the
Company's securities pursuant to a registration statement filed under the
Securities Act. The obligations described in this Section 2.13 shall not apply
to a registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose stop-
transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period;
2.14 Rule 144 Reporting. With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
14
SECTION 3
COVENANTS OF THE COMPANY
3.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, to the extent
requested by an Investor the Company will furnish each Investor a balance sheet
of the Company, as at the end of such fiscal year, and a statement of income and
a statement of cash flows of the Company, for such year, all prepared in
accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants of
national standing selected by the Company's Board of Directors.
(c) The Company will furnish each Investor, as soon as practicable
after the end of the first, second and third quarterly accounting periods in
each fiscal year of the Company, and in any event within forty-five (45) days
thereafter, to the extent requested by such Investor a balance sheet of the
Company as of the end of each such quarterly period, and a statement of income
and a statement of cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.
(d) So long as an Investor (with its affiliates) shall own not less
than fifty percent (50%) of the Registrable Securities originally purchased
(subject to a minimum of 1,900,000 shares) (as adjusted for stock splits and
combinations) (a "Major Investor"), to the extent requested by such Major
Investor the Company will furnish each such Major Investor (i) at least thirty
(30) days prior to the beginning of each fiscal year an annual budget and
operating plans for such fiscal year (and as soon as available, any subsequent
revisions thereto); and (ii) as soon as practicable after the end of each month,
and in any event within twenty (20) days thereafter, a balance sheet of the
Company as of the end of each such month, and a statement of income and a
statement of cash flows of the Company for such month and for the current fiscal
year to date, including a comparison to plan figures for such period, prepared
in accordance with generally accepted accounting principles consistently
applied, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.
3.2 Inspection Rights. Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries, and
to discuss the affairs,
15
finances and accounts of the Company or any of its subsidiaries with its
officers, and to review and request copies of such information as is reasonably
requested all at such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under this
Section 3.2 with respect to information which the Board of Directors determines
in good faith is confidential and should not, therefore, be disclosed.
3.3 Confidentiality of Records. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives use, the same
degree of care as such Investor uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such Investor for the purpose of evaluating its investment in the Company as
long as such partner, subsidiary or parent is advised of the confidentiality
provisions of this Section 3.3.
3.4 Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock (as defined in the Company's Amended and Restated Certificate of
Incorporation), all Common Stock issuable from time to time upon such
conversion.
3.5 Stock Vesting. Unless otherwise approved by a majority of the
directors (including therein at least one of the two directors appointed by the
Investors), all stock options and other stock equivalents issued after the date
of this Agreement to employees, directors, consultants and other service
providers shall be subject to vesting as follows: (a) twenty-five percent (25%)
of such stock shall vest at the end of the first year following the earlier of
the date of issuance or such person's services commencement date with the
Company and (b) seventy-five percent (75%) of such stock shall vest monthly over
the remaining three (3) years; provided, however, that upon a Change in Control,
an additional six (6) months of service shall be credited to each optionee and
the number of vested stock options for such optionee shall be calculated based
on the aggregate months of service of such optionee (including such additional 6
months, and irrespective of any cliff vesting not yet achieved), and vesting
shall continue on a monthly basis thereafter. With respect to any shares of
stock purchased by any such person, the Company's repurchase option shall
provide that upon such person's termination of employment or service with the
Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person.
3.6 Proprietary Information and Inventions Agreement. The Company shall
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement in substantially the form attached to the
Purchase Agreement, unless otherwise agreed by a majority of the Board of
Directors, including at least one of the two directors appointed by the
Investors.
3.7 Directors' Liability and Indemnification; Expenses. The Company's
Amended and Restated Certificate of Incorporation and Bylaws shall provide (a)
for elimination of the liability of directors to the maximum extent permitted by
law and (b) for indemnification of directors for acts on behalf of the Company
to the maximum extent permitted by law. The
16
Company shall reimburse expenses of members of the Board of Directors, and their
affiliates and employees, incurred in connection with meetings of the Board of
Directors any committee thereof and any other Company meeting.
3.8 Qualified Small Business. The Company will use reasonable efforts to
comply with the reporting and recordkeeping requirements of Section 1202 of the
Code, any regulations promulgated thereunder and any similar state laws and
regulations, and agrees not to repurchase any stock of the Company if such
repurchase would cause the Shares not to so qualify as "Qualified Small Business
Stock," so long as the Company's Board of Directors determines that it is in the
best interests of and not unduly burdensome to the Company to comply with the
provisions of Section 1202 of the Code. The Company further covenants to submit
to its stockholders and to state and federal taxation authorities such form and
filings as may be required to document such compliance, including the California
Franchise Tax Board Form 3565, Small Business Stock Questionnaire, with its
franchise or income tax return for the current income year.
3.9 Insurance. The Company will obtain promptly following the Closing and
maintain fire, casualty and other liability insurance policies with coverage
customary for companies similarly situated to the Company.
3.10 Obligations of Management. Except as approved by vote of a majority
of the Board of Directors, each officer shall devote one hundred percent (100%)
of his or her business time to the conduct of the business of the Company.
3.11 International Joint Venture. SOFTBANK Corp., a Series B Investor,
shall have a right of first refusal, directly or through one or more of its
affiliates, to participate in any joint venture relating to the Company's
operations outside the United States (excepting Japan), on substantially the
same terms and conditions as the Company offers or intends to offer to any
third-party. It is agreed that the Company shall receive an equity interest in
an entity formed or to be formed by SOFTBANK Corp. to operate a business in
Japan with a substantially similar business model to that of the Company, on
terms to be mutually agreed.
3.12 Dissolution or Liquidation. For so long as Ford holds at least
500,000 shares of Registrable Securities (as adjusted for any stock splits,
combinations, recapitalizations and the like occurring after the date hereof)
and has a contractual relationship with the Company, the Company may not undergo
any voluntary dissolution or liquidation without the prior written consent of
Ford. This provision may not be amended without the prior written consent of
Ford.
3.13 Termination of Covenants. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor upon
the earlier of (i) the effective date of the registration statement pertaining
to the Initial Offering, which results in the Preferred Stock being converted
into Common Stock or (ii) upon the effective date of a Change of Control of the
Company.
17
SECTION 4
RIGHTS OF FIRST REFUSAL
4.1 Waiver of Right. The Major Investors and Stockholders under the Prior
Agreement waive their Right of First Refusal, including any notice rights
pertaining thereto, under the Prior Agreement to purchase the shares of Series C
Preferred Stock being issued and sold under the Purchase Agreement. Such waiver
shall be effective upon the execution of this Agreement by (i) the Company, (ii)
the Major Investors who hold at least a majority of the Registrable Securities
held by all Major Investors and (iii) the Stockholders who hold at least a
majority of the Registrable Securities held by all Stockholders.
4.2 Subsequent Offerings. Each Major Investor and Stockholder shall have
a right of first refusal to purchase its pro rata share of all Equity Securities
(as defined below) that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 4.6 hereof. Each such Investor's or Stockholder's pro rata
share is equal to the ratio of (a) the number of shares of the Company's Common
Stock (including all shares of Common Stock issued or issuable upon conversion
of the Shares) which such Investor or Stockholder is deemed to be a holder
immediately prior to the issuance of such Equity Securities to (b) the total
number of shares of the Company's outstanding Common Stock (including all shares
of Common Stock issued or issuable upon conversion of the Shares or upon the
exercise of any outstanding warrants or options) immediately prior to the
issuance of the Equity Securities. The term "Equity Securities" shall mean (i)
any Common Stock, Preferred Stock or other security of the Company, (ii) any
security convertible, with or without consideration, into any Common Stock,
Preferred Stock or other security (including any option to purchase such a
convertible security), (iii) any security carrying any warrant or right to
subscribe to or purchase any Common Stock, Preferred Stock or other security or
(iv) any such warrant or right. To the extent Ford Motor Company ("Ford") has
the right to purchase shares of the Company pursuant to the Purchase Agreement,
such rights may not be amended nor waived without Ford's consent.
4.3 Exercise of Rights. If the Company proposes to issue any Equity
Securities, it shall give each Major Investor and Stockholder written notice of
its intention, describing the Equity Securities, the price and the terms and
conditions upon which the Company proposes to issue the same. Each Major
Investor and Stockholder shall have fifteen (15) days from the giving of such
notice to agree to purchase its pro rata share of the Equity Securities for the
price and upon the terms and conditions specified in the notice by giving
written notice to the Company and stating therein the quantity of Equity
Securities to be purchased. Notwithstanding the foregoing, the Company shall not
be required to offer or sell such Equity Securities to any Major Investor or
Stockholder who would cause the Company to be in violation of applicable federal
securities laws by virtue of such offer or sale.
4.4 Sale Without Notice. In lieu of giving notice to the Major Investors
and Stockholders prior to the issuance of Equity Securities as provided in
Section 4.2, the Company may elect to give notice to the Major Investors and
Stockholders within thirty (30) days after the issuance of Equity Securities.
Such notice shall describe the type, price and terms of the Equity Securities.
Each Major Investor and Stockholder shall have twenty (20) days from the date of
18
receipt of such notice to elect to purchase its pro rata share of Equity
Securities (as defined in Section 4.1, and calculated before giving effect to
the sale of the Equity Securities to the purchasers thereof at the price and
terms being offered). The closing of such sale shall occur within sixty (60)
days of the date of notice to the Major Investors and Stockholders.
4.5 Termination and Waiver of Rights of First Refusal. The rights of
first refusal established by this Section 4 shall not apply to, and shall
terminate upon the earlier of (i) effective date of the registration statement
pertaining to the Company's Initial Offering or (ii) the effective date of a
Change in Control of the Company. Notwithstanding Section 4.6 or anything else
herein to the contrary, the rights of first refusal established by this Section
4 may be amended, or any provision waived only with the written consent of the
(i) Major Investors holding a majority of the Registrable Securities held by all
Major Investors and (ii) in the event such proposed amendment or waiver
adversely impacts the Stockholders, Stockholders holding a majority of the
Registrable Securities held by all Stockholders; provided, however that Ford's
rights contained in this Section 4 may only be amended with the prior written
consent of Ford.
4.6 Transfer of Rights of First Refusal. The rights of first refusal of
each Major Investor and Stockholder under this Section 4 may be transferred to
the same parties, subject to the same restrictions as any transfer of
registration rights pursuant to Section 2.10.
4.7 Excluded Securities. The rights of first refusal established by this
Section 4 shall have no application to any of the following Equity Securities:
(a) Shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights issued pursuant to such options, warrants or other rights)
as adjusted for any stock dividends, combinations, splits, recapitalizations and
the like issued or to be issued after the Original Issue Date (as defined in the
Company's Amended and Restated Certificate of Incorporation), to employees,
officers or directors of, or consultants or advisors to the Company or any
subsidiary, pursuant to stock purchase or stock option plans or other
arrangements that are approved by the Board of Directors);
(b) stock issued pursuant to any rights or agreements outstanding as
of the date of this Agreement, options and warrants outstanding as of the date
of this Agreement; and stock issued pursuant to any such rights or agreements
granted after the date of this Agreement; provided that the rights of first
refusal established by this Section 4 applied with respect to the initial sale
or grant by the Company of such rights or agreements;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business combination
approved by the Board of Directors;
(d) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares;
19
(f) any Equity Securities issued pursuant to any equipment leasing or
loan arrangement, or debt financing from a bank or similar financial or lending
institution approved by the Board of Directors;
(g) any Equity Securities that are issued by the Company pursuant to a
registration statement filed under the Securities Act; and
(h) shares of the Company's Common Stock or Preferred Stock issued in
connection with strategic transactions involving the Company and other entities,
including (i) joint ventures, manufacturing, marketing or distribution
arrangements or (ii) technology transfer or development arrangements; provided
that such strategic transactions and the issuance of shares therein, has been
approved by a majority of the Company's Board of Directors.
SECTION 5
MISCELLANEOUS
5.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
5.2 Survival. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
5.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
5.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
5.5 Severability. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement,
20
and this Agreement shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein.
5.6 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least a majority of the Registrable Securities; provided, however, that if
any amendment or modification has the effect of adversely affecting the
interests of a non-consenting party in a manner different than the interests of
the consenting parties, then such amendment or modification shall also require
the consent of the adversely affected non-consenting party.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least a majority of the
Registrable Securities; provided, however, that if any amendment or modification
has the effect of adversely affecting the interests of a non-consenting party in
a manner different than the interests of the consenting parties, then such
amendment or modification shall also require the consent of the adversely
affected non-consenting party.
5.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or
Exhibits A, B, C and D hereto or at such other address as such party may
----------- -- - -
designate by ten (10) days advance written notice to the other parties hereto.
5.9 Attorneys' Fees. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
21
5.10 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 Additional Investors. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Series C
Preferred Stock pursuant to the Purchase Agreement, any purchaser of such shares
of Series C Preferred Stock may become a party to this Agreement by executing
and delivering an additional counterpart signature page to this Agreement and
shall be deemed an "Investor" hereunder.
5.12 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
22
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Company:
PeoplePC Inc.
By: /s/ XXXXXXXX XXXXX
--------------------------------------
Xxxxxxxx Xxxxx
Title: Chief Executive Officer
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Stockholder:
/s/ XXXX XXXXX
--------------------------------------
XXXX XXXXX
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Access Technology Partners Brokers Fund, L.P.
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX XXXXXXXXX
------------------------------------------
(Signature)
Name: Xxxxxx Xxxxxxxxx
----------------------------------------
(Print Name)
Title: Attorney-in-Fact
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Access Technology Partners, L.P.
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX XXXXXXXXX
------------------------------------------
(Signature)
Name: Xxxxxx Xxxxxxxxx
----------------------------------------
(Print Name)
Title: Attorney-in-Fact
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxx XX
-------------------------------------
(Print Name of Purchaser)
By: /s/ XXXX XXXXXXXX
-------------------------------------
(Signature)
Name: Xxxx Xxxxxxxx
-------------------------------------
(Print Name)
Title: General Partner
-------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxxxx Xxxxxx
-------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXXXX XXXXXX
-------------------------------------
(Signature)
Name:
-------------------------------------
(Print Name)
Title:
-------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Ford Motor Company
-------------------------------------
By: Xxxxxxx X. Xxxxxxx
-------------------------------------
Title: Assistant Secretary
-------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxx Xxxxx
-------------------------------------
(Print Name of Purchaser)
By: /s/ XXX XXXXX
-------------------------------------
(Signature)
Name:
-------------------------------------
(Print Name)
Title:
-------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
H & Q PeoplePC Investors, L.P.
-------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX BERTERRECHE
-------------------------------------
(Signature)
Name: Xxxxxx Berterreche
-------------------------------------
(Print Name)
Title: Attorney in Fact
-------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxxxxx & Xxxxx California
-------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX XXXXXXXXX
-------------------------------------
(Signature)
Name: Xxxxxx Xxxxxxxxx
-------------------------------------
(Print Name)
Title: Attorney-in-Fact
-------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
H & Q Employee Venture Fund 2000, L.P.
--------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX XXXXXXXXX
--------------------------------------
(Signature)
Name: Xxxxxx Xxxxxxxxx
--------------------------------------
(Print Name)
Title: Attorney-in-Fact
--------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxx Xxx Xxxxxxxx/Xxxx Xxxxxxx Xxxxxxxxx
--------------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX XXX XXXXXXXX/XXXX XXXXXXX XXXXXXXXX
----------------------------------------------
(Signature)
Name:
---------------------------------------------
(Print Name)
Title:
------------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxx X. Xxxxxxx, Xx.
--------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX X. XXXXXXX, XX.
--------------------------------------
(Signature)
Name: Xxxxxx X. Xxxxxxx, Xx.
--------------------------------------
(Print Name)
Title:
--------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Maveron Equity Partners, L.P.
--------------------------------------
(Print Name of Purchaser)
By: /s/ XXX XXXXXXX
--------------------------------------
(Signature)
Name: Xxx Xxxxxxx
--------------------------------------
(Print Name)
Title: Managing Partner
--------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxx Xxxxxxxx
--------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXX XXXXXXXX
--------------------------------------
(Signature)
Name:
--------------------------------------
(Print Name)
Title:
--------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
NEXUS CAPITAL PARTNERS II, L.P.
---------------------------------------------------
(Print Name of Purchaser)
By: /s/ WILL XXXXXXXXXX
-----------------------------------------------
(Signature)
Name: Will Xxxxxxxxxx
---------------------------------------------
(Print Name)
Title: Principal, Nexus Group, LLC - General Partner
---------------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
PPC Holdings, LLC
---------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXXX X. XXXXX
---------------------------------------
(Signature)
Name: Xxxxxxx X. Xxxxx
---------------------------------------
(Print Name)
Title: General Partner - Class A Member
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
ROSEWOOD CAPITAL III, L.P.
By: Rosewood Capital Associates, LLC,
Its General partner
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Xxxxxx X. Xxxxxx, Managing Member
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
RVG IV, L.P.
By: Rosewood Venture Associates IV, LLC,
Its General partner
By: /s/ XXXXXX X. XXXXXX
----------------------------------
Xxxxxx X. Xxxxxx, Managing Member
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
RWD PARTNERS FUND, LLC
By: /s/ XXXXX XXXXXX
-------------------------------------
Xxxxx Xxxxxx, Chief Financial Officer
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxxx Brothers LLC
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX X. XXXXXXX
------------------------------------------
(Signature)
Name: Xxxxxx X. Xxxxxxx
----------------------------------------
(Print Name)
Title: Manager
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Softbank Venture Capital
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXXX XXXX
------------------------------------------
(Signature)
Name: Xxxxxxx Xxxx
----------------------------------------
(Print Name)
Title: Managing Member
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Softbank Capital Partners LP
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX X. XXXXXX
------------------------------------------
(Signature)
Name: Xxxxxx X. Xxxxxx
----------------------------------------
(Print Name)
Title: Admin Member
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Softbank Capital Advisors Fund LP
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXX X. XXXXXX
------------------------------------------
(Signature)
Name: Xxxxxx X. Xxxxxx
----------------------------------------
(Print Name)
Title: Admin Member
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxxxx Xxxxxxxxxx
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXXXX XXXXXXXXXX
------------------------------------------
(Signature)
Name: Xxxxxxx Xxxxxxxxxx
----------------------------------------
(Print Name)
Title:
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
WS Investment Company 2000A
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXX XXXXX
------------------------------------------
(Signature)
Name: Xxxx Xxxxx
----------------------------------------
(Print Name)
Title: Partner
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
In Witness Whereof, the parties hereto have executed this Investor Rights
Agreement as of the date set forth in the first paragraph hereof.
Investor:
Xxxxx Xxxxxxx
---------------------------------------------
(Print Name of Purchaser)
By: /s/ XXXXX XXXXXXX
------------------------------------------
(Signature)
Name:
----------------------------------------
(Print Name)
Title:
---------------------------------------
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
