EXHIBIT 10.5
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AMENDED AND RESTATED
REGISTRATION AND INFORMATION RIGHTS
AGREEMENT
BY AND AMONG
INTRAWARE, INC.
AND
THE HOLDERS OF SERIES A
CONVERTIBLE PREFERRED STOCK
THE HOLDERS OF SERIES B
CONVERTIBLE PREFERRED STOCK
THE HOLDERS OF SERIES C
CONVERTIBLE PREFERRED STOCK
THE HOLDERS OF SERIES D
CONVERTIBLE PREFERRED STOCK
AND
FOUNDERS
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XXXXX XXXXXXX
XXXXXX XXXXX
XXXX XXXXXXXXXX
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DATED AS OF
APRIL 14, 1998.
TABLE OF CONTENTS
PAGE
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Section 1. Certain Definitions . . . . . . . . . . . . . . . . . . . . . . . . .1
Section 2. Restrictions on Transferability . . . . . . . . . . . . . . . . . . .3
Section 3. Restrictive Legend. . . . . . . . . . . . . . . . . . . . . . . . . .3
Section 4. Notice of Proposed Transfers. . . . . . . . . . . . . . . . . . . . .4
Section 5. Registration. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
5.1 Requested Registration. . . . . . . . . . . . . . . . . . . . . . . .4
5.2 Company Registration. . . . . . . . . . . . . . . . . . . . . . . . .7
5.3 Registration on Form S-3. . . . . . . . . . . . . . . . . . . . . . .8
5.4 Expenses of Registration. . . . . . . . . . . . . . . . . . . . . . .9
5.5 Registration Procedures . . . . . . . . . . . . . . . . . . . . . . .9
5.6 Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . 10
5.7 Information by Holders. . . . . . . . . . . . . . . . . . . . . . . 12
5.8 Rule 144 Reporting. . . . . . . . . . . . . . . . . . . . . . . . . 12
5.9 Transfer of Registration Rights . . . . . . . . . . . . . . . . . . 12
5.10 Termination of Registration Rights. . . . . . . . . . . . . . . . . 13
Section 6. Financial Information . . . . . . . . . . . . . . . . . . . . . . 13
Section 7. Standoff Agreement. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 8. Additional Parties. . . . . . . . . . . . . . . . . . . . . . . . 14
Section 9. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 10. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 11. Aggregation of Entities . . . . . . . . . . . . . . . . . . . . . 15
Section 12. Entire Agreement. . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 13. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 14. Counterparts. . . . . . . . . . . . . . . . . . . . . . . . . . . 15
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AMENDED AND RESTATED REGISTRATION
AND INFORMATION RIGHTS AGREEMENT
This Registration and Information Rights Agreement (the "Agreement") is
made as of the date of purchase of shares of Series D Preferred Stock by each
Series D Preferred Stock Purchaser indicated in Exhibit A to the Series D
Preferred Stock Purchase Agreement by and among Intraware, Inc., a Delaware
corporation (the "Company"), the holders of shares of Series A Preferred
Stock (the "Series A Purchasers"), the holders of shares of Series B
Preferred Stock (the "Series B Purchasers"), the holders of shares of Series
C Preferred Stock (the "Series C Purchasers"), the holders of shares of
Series D Preferred Stock (the "Series D Purchasers") (the Series A
Purchasers, the Series B Purchasers, the Series C Purchasers and the Series D
Purchasers, being hereinafter referred to individually as a "Purchaser" and
together, along with such additional parties as are hereafter deemed
Purchasers pursuant to Section 8 hereof, as the "Purchasers"), and Xxxxx
Xxxxxxx, Xxx Xxxxx and Xxxx Xxxxxxxxxx (individually, a "Founder" and
collectively, the "Founders"). The Founders, the Series A Purchasers, the
Series B Purchasers, the Series C Purchasers and the Series D Purchasers are
listed on EXHIBIT A hereto.
RECITALS
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WHEREAS, the Company, the Founders, and one or more of the Series A
Purchasers, the Series B Purchasers and the Series C Purchasers are parties
to certain Registration and Information Rights Agreements made and entered
into as of September 24, 1996, June 12, 1997, and December 3, 1997 (the
"Prior Agreements"); and
WHEREAS, the Series D Purchasers and the Company have entered into or
concurrently herewith are entering into a Series D Preferred Stock Purchase
Agreement (the "Series D Purchase Agreement"), pursuant to which the Series D
Purchasers are purchasing from the Company shares of its Series D Preferred
Stock (the "Series D Preferred"); and
WHEREAS, the obligations of the Company and the Series D Purchasers
under the Series D Purchase Agreement are conditioned, among other things,
upon the execution and delivery of this Agreement by the Company, the
Founders and the Purchasers; and
WHEREAS, in consideration of the Company's sale and the Series D
Purchasers' purchase of the Series D Preferred, the several parties hereto
wish to grant to the Series D Purchasers the several rights set forth herein,
and to observe the several obligations set forth herein, which rights and
obligations shall terminate and supersede, to the extent not already
terminated and superseded, those set forth in the Prior Agreements;
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Company, the Founders and the Purchasers agree as
follows:
SECTION 1. CERTAIN DEFINITIONS. As used in this Agreement, the
following terms shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange
Commission or any other federal agency at the time administering the
Securities Act.
"CONVERSION STOCK" means the Series A, the Series B, the
Series C and the Series D Preferred Stock, and the Common Stock issued or
issuable pursuant to conversion of the Series A, the Series B, the Series C
and the Series D Preferred Stock.
"HOLDERS" shall mean (i) the Purchasers for so long as
Purchasers hold Conversion Stock or Registrable Securities, (ii) the Founders
for so long as the Founders hold Registrable Securities, and (iii) any person
holding Registrable Securities to whom the rights under this Agreement have
been transferred in accordance with Section 5.9 hereof.
"INITIATING HOLDERS" shall mean any holder or holders of
more than 50% of the Series A Preferred, the Series B Preferred, the Series C
Preferred and the Series D Preferred (and Registrable Securities issued upon
conversion thereof) then outstanding as of the relevant date considered as a
single class; and in the case of up to one registration pursuant to Section
5.1(a), any holder or holders of no less than sixty percent (60%) of the
Series D Preferred (and the Registrable Securities issued upon conversion
thereof) then outstanding as of the relevant date considered as a single
class (such registration referred to herein as the "Series D Registration").
"SERIES A PREFERRED" shall mean the Series A Preferred Stock
of the Company issued pursuant to the Series A Preferred Stock Purchase
Agreement.
"SERIES B PREFERRED" shall mean the Series B Preferred Stock
of the Company issued pursuant to the Series B Preferred Stock Purchase
Agreement.
"SERIES C PREFERRED" shall mean the Series C Preferred Stock
of the Company issued pursuant to the Series C Preferred Stock Purchase
Agreement.
"SERIES D PREFERRED" shall mean the Series D Preferred Stock
of the Company issued pursuant to the Series D Preferred Stock Purchase
Agreement.
"REGISTRABLE SECURITIES" means (i) shares of Common Stock of
the Company issued or issuable in respect of the Conversion Stock upon any
stock split, stock dividend, recapitalization, or similar event, or any
Common Stock otherwise issuable with respect to the Conversion Stock, (ii)
shares of Common Stock which are Conversion Stock, and (iii) shares of Common
Stock which are held by the Founders; provided, however, that shares of
Conversion Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction.
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The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement
in compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Sections
5.1, 5.2 and 5.3 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, 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) and the reasonable
fees and disbursements of one counsel for all Holders as appointed by the
Holders (other than the Founders).
"RESTRICTED SECURITIES" shall mean the securities of the
Company required to bear the legend set forth in Section 3 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth under "Registration
Expenses", all reasonable fees and disbursements of counsel for any Holder.
SECTION 2. RESTRICTIONS ON TRANSFERABILITY. The Conversion Stock and
any other securities issued in respect of the Conversion Stock upon any stock
split, stock dividend, recapitalization, merger, consolidation or similar
event, shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this Agreement, which conditions are intended to
ensure compliance with the provisions of the Securities Act. Each Purchaser
will cause any proposed purchaser, assignee, transferee, or pledgee of any
such shares held by such Purchaser to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Agreement.
SECTION 3. RESTRICTIVE LEGEND. Each certificate representing (i) the
Conversion Stock and (ii) any other securities issued in respect of the
Conversion Stock upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by
the provisions of Section 4 below) be stamped or otherwise imprinted with a
legend in substantially the following form (in addition to any legend
required under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED
FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE
OR DISTRIBUTION THEREOF. SUCH
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SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE
REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
Each Purchaser and each Holder consents to the Company making a notation
on its records and giving instructions to any transfer agent of the Preferred
Stock or the Common Stock in order to implement the restrictions on transfer
established in this Agreement.
SECTION 4. NOTICE OF PROPOSED TRANSFERS. The holder of each
certificate representing Restricted Securities by acceptance thereof agrees
to comply in all respects with the provisions of this Section 4. Prior to
any proposed sale, assignment, transfer or pledge of any Restricted
Securities (other than (i) a transfer not involving a change in beneficial
ownership, (ii) in transactions involving the distribution without
consideration of Restricted Securities by any Purchaser to any of its
partners, or retired partners, or to the estate of any of its partners or
retired partners, (iii) in transactions involving the transfer without
consideration of Restricted Securities by a Purchaser during his or her
lifetime by way of gift or on death by will or intestacy, or (iv) in
transactions in compliance with Rule 144), unless there is in effect a
registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense, by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company addressed to the Company, to the
effect that the proposed transfer of the Restricted Securities may be
effected without registration under the Securities Act, (ii) a "no action"
letter from the Commission to the effect that the transfer of such securities
without registration will not result in a recommendation by the staff of the
Commission that action be taken with respect thereto, or (iii) other evidence
satisfactory to the Company, whereupon the holder of such Restricted
Securities shall be entitled to transfer such Restricted Securities in
accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred
as above provided shall bear, except if such transfer is made pursuant to
Rule 144(k), the appropriate restrictive legend set forth in Section 3 above,
except that such certificate shall not bear such restrictive legend if, in
the opinion of counsel for such holder and the Company, such legend is not
required in order to establish compliance with any provision of the
Securities Act.
SECTION 5. REGISTRATION.
5.1 REQUESTED REGISTRATION.
(a) REQUEST FOR REGISTRATION. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to shares of
Registrable Securities with an anticipated aggregate offering
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price, net of underwriting discounts and commissions, in excess of ten
million dollars ($10,000,000), the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, appropriate qualification under applicable blue sky or other
state securities laws and appropriate compliance with applicable regulations
issued under the Securities Act and any other governmental requirements or
regulations) as may be so requested and as would permit or facilitate the
sale and distribution of all or such portion of such Registrable Securities
as are specified in such request, together with all or such portion of the
Registrable Securities of any Holder or Holders joining in such request as
are specified in a written request received by the Company within 20 days
after receipt of such written notice from the Company.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 5.1:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act;
(ii) prior to the earlier to occur of: (a) December
31, 2000, or (b) six months after the effective date of the Company's first
registered public offering of shares of its Common Stock;
(iii) during the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on
the date six (6) months immediately following the effective date of, any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), provided that the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective;
(iv) if the Company has effected: (A) two such
registrations pursuant to this subparagraph 5.1(a), (B) four such
registrations pursuant to this subparagraph 5.1(a) or subparagraph 5.3(a)
below or any combination thereof, or (C) one such registration pursuant to
this subparagraph 5.1(a) or subparagraph 5.3 below in the preceding six
months, and such registration(s) have been declared or ordered effective and
remained effective until the earlier to occur of (a) 90 days or (b) the sale
of all the securities offered pursuant to each such registration;
(v) if the Company shall furnish to such Initiating
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the
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Board of Directors it would be seriously detrimental to the Company or its
shareholders for a registration statement to be filed in the near future,
then the Company's obligation to use its best efforts to register, qualify or
comply under this Section 5.1 shall be deferred for a period not to exceed
150 days from the date of receipt of written request from the Initiating
Holders, provided that the Company may not exercise this deferral right for
more than once in any one year period;
(vi) if such registration, qualification or
compliance is proposed to be part of a firm commitment underwritten public
offering with underwriters not reasonably acceptable to the Company.
Subject to the foregoing clauses (i) through (vi), the Company shall
file a registration statement covering the Registrable Securities so
requested to be registered as soon as practicable after receipt of the
request or requests of the Initiating Holders.
(c) UNDERWRITING. In the event of a registration pursuant
to Section 5.1, the Company shall advise the Holders as part of the notice
given pursuant to Section 5.1(a)(i) that the right of any Holder to
registration pursuant to Section 5.1 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by this Section 5.1,
and the inclusion of such Holder's Registrable Securities in the underwriting
to the extent requested shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting
agreement in customary form with the managing underwriter selected for such
underwriting by a majority in interest of the Initiating Holders, but subject
to the Company's reasonable approval. Notwithstanding any other provision of
this Section 5.1, if the managing underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of
shares to be underwritten, then the Company shall so advise all holders of
Registrable Securities and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among all Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing
the registration statement; provided, that no shares held by any Holder other
than a Founder shall be so excluded from such registration until all shares
held by the Founders are excluded from such registration. Notwithstanding
the foregoing, in the event of a Series D Registration, the number of shares
of Registrable Securities that may be included in the registration and the
underwriting shall be allocated among all Holders in proportion, as nearly as
practicable, to the respective aggregate dollar amount of such Holder's
investment in the capital stock of the Company at the time of the filing of
the registration statement; provided that no shares held by any Holder other
than a Founder shall be so excluded from such registration until all shares
held by the Founders are excluded from such registration. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate
the allocation of shares in accordance with the above provisions, the Company
or the underwriters may round the number of shares allocated to any Holder to
the nearest 100 shares.
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If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice
to the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 180 days after the effective
date of such registration, or such other shorter period of time as the
underwriters may require.
5.2 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time
to time the Company shall determine to register any of its equity securities,
either for its own account or the account of a security holder or holders,
other than (i) a registration relating solely to employee benefit plans, (ii)
a registration relating solely to a Rule 145 transaction, or (iii) a
registration in which the only equity security being registered is capital
stock issuable upon conversion of convertible (or exchange of exchangeable)
debt securities which are also being registered, the Company will:
(i) promptly give to each Holder written notice
thereof; and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any
underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after receipt of
such written notice from the Company, by any Holder.
(b) UNDERWRITING. If the registration of which the
Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the
written notice given pursuant to Section 5.2(a)(i). In such event, the right
of any Holder to registration pursuant to Section 5.2 shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
Registrable Securities in the underwriting shall be limited to the extent
provided herein.
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Section 5.2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration (i) in the case of
the Company's initial public offering, to zero, and (ii) in the case of any
other offering, to an amount no less than 25% of the offering; provided that in
each such case, no shares held by any Holder other than a Founder shall be so
excluded from such registration until all shares held by the Founders are
excluded from such registration. The Company shall so advise all Holders and
other holders distributing their securities through such underwriting and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all the Holders in
proportion, as nearly as practicable, to the
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respective amounts of Registrable Securities held by such Holders at the time
of filing the Registration Statement. To facilitate the allocation of shares
in accordance with the above provisions, the Company may round the number of
shares allocated to any Holder or holder to the nearest 100 shares.
If any of the Holders disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the managing underwriter. Any securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall
have the right to terminate or withdraw any registration initiated by it
under this Section 5.2 prior to the effectiveness of such registration
whether or not any Holder has elected to include securities in such
registration.
5.3 REGISTRATION ON FORM S-3.
(a) If any of the Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which would exceed $1,000,000,
and the Company is a registrant entitled to use Form S-3 to register the
Registrable Securities for such an offering, the Company shall use its best
efforts to cause such Registrable Securities to be registered for the
offering on such form and to cause such Registrable Securities to be
qualified in such jurisdictions as such Holder or Holders may reasonably
request. The Company shall inform other Holders of the proposed registration
and offer them the opportunity to participate. In the event the registration
is proposed to be part of a firm commitment underwritten public offering, the
substantive provisions of Section 5.1(c) shall be applicable to each such
registration initiated under this Section 5.3.
(b) Notwithstanding the foregoing, the Company shall not
be obligated to take any action pursuant to this Section 5.3:
(i) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process
in effecting such registration, qualification or compliance, unless the
Company is already subject to service in such jurisdiction and except as may
be required by the Securities Act;
(ii) if the Company has effected four such
registrations pursuant to this subparagraph 5.3(a) or subparagraph 5.1(a)
above or any combination thereof, or one such registration pursuant to
subparagraph 5.3(a) above, or subparagraph 5.1(a) above in the preceding six
months, such registration(s) having been declared or ordered effective and
remained effective until the earlier to occur of (a) 90 days or (b) the sale
of all the securities offered pursuant to each such registration;
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(iii) if the Company, within ten (10) days of the
receipt of the request of the Initiating Holders, gives notice of its BONA
FIDE intention to effect the filing of a registration statement with the
Commission within ninety (90) days of receipt of such request (other than
with respect to a registration statement relating to a Rule 145 transaction,
an offering solely to employees, or any other registration which is not
appropriate for the registration of Registrable Securities);
(iv) during the period starting with the date sixty
(60) days prior to the Company's estimated date of filing of, and ending on
the date six (6) months immediately following, the effective date of any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
offering solely to employees, or any other registration which is not
appropriate for the registration of Registrable Securities), provided that
the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective; or
(v) if the Company shall furnish to such Holder or
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for registration statements to
be filed in the near future, then the Company's obligation to use its best
efforts to file a registration statement shall be deferred for a period not
to exceed 150 days from the receipt of the request to file such registration
by such Holder or Holders, provided that the Company may not exercise this
deferral right more than once in any one year period.
5.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred
in connection with (i) three registrations pursuant to Section 5.1 hereof
(including the Series D Registration), (ii) a total of three (3)
registrations pursuant to Section 5.3 if no registrations pursuant to Section
5.1 have been requested, or four (4) registrations pursuant to Section 5.3 if
no registrations pursuant to Section 5.1 have been paid for by the Company,
and (iii) all registrations pursuant to Section 5.2, shall be borne by the
Company.
Unless otherwise stated, all Selling Expenses relating to securities
registered on behalf of the Holders and all other registration expenses shall
be borne by the Holders of such securities PRO RATA on the basis of the
number of shares so registered.
5.5 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this
Agreement, the Company will keep each of the Holders advised in writing as to
the initiation of each registration, qualification and compliance and as to
the completion thereof. At its expense the Company will:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for at least one
hundred twenty (120) days or until the distribution described in the
registration statement has been completed, whichever first occurs;
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(b) furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably
request in order to facilitate the public offering of such securities.
5.6 INDEMNIFICATION.
(a) The Company will indemnify each Holder of securities,
each of its officers, directors and partners, and each person controlling
such Holder within the meaning of Section 15 of the Securities Act, with
respect to which registration, qualification or compliance has been effected
pursuant to this Agreement, and each underwriter, if any, and each person who
controls any underwriter within the meaning of Section 15 of the Securities
Act, against all expenses, claims, losses, damages and liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, (commenced or threatened), arising out of or
based on any untrue statement (or alleged untrue statement) of a material
fact contained in any registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse
each such Holder, each of its officers, directors, and partners, and each
person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses
reasonably incurred, as such expenses are incurred, in connection with
investigating, preparing or defending any such claim, loss, damage, liability
or action, provided that the Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by such Holder, controlling person or
underwriter specifically for use therein; provided, however, that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement, alleged untrue statement, omission or
alleged omission made in a preliminary prospectus on file with the Commission
at the time the registration statement becomes effective or the amended
prospectus filed with the Commission pursuant to Rule 424(b) (the "Final
Prospectus"), such indemnity agreement shall not inure to the benefit of:
(1) any Holder, (i) if there is no underwriter, and a copy of the Final
Prospectus was not furnished to the person asserting the loss, liability,
claim or damage at or prior to the time such action is required by the
Securities Act and the Final Prospectus would have cured the defect giving
rise to the loss, liability, claim or damage (to the extent that such Holder
was obligated by law to provide a copy of the Final Prospectus to such
person), or (ii) to the extent that such untrue statement, alleged untrue
statement, omission or alleged omission is made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
or (2) any underwriter, (i) if a copy of the Final Prospectus was not
furnished to the person asserting the loss, liability, claim or damage at or
prior to the time such action is required by the Securities Act and the Final
Prospectus would have cured the defect giving rise to the loss, liability,
claim or damage, or (ii) to the extent that such untrue statement, alleged
untrue statement, omission or alleged omission is made in reliance on and in
conformity with written
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information furnished to the Company by an instrument duly executed by such
underwriter and stated to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers, directors,
and partners, and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof), including any of the
foregoing incurred in settlement of any litigation (commenced or threatened),
arising out of or based on any untrue statement (or alleged untrue statement)
of a material fact contained in any such registration statement, prospectus,
offering circular or other document, or any amendment or supplement thereto,
incident to such registration, qualification or compliance, or any omission
(or alleged omission) to state therein a material fact required to be stated
therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal and any other expenses reasonably incurred, as
such expenses are incurred, in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon
and in conformity with written information furnished to the Company by such
Holder specifically for use therein. Notwithstanding the foregoing, the
liability of each Holder under this subsection 5.6(b) shall be limited in an
amount equal to the gross proceeds received by such Holder from the sale of
shares in such registration, unless such liability arises out of or is based
on willful misconduct by such Holder.
(c) Each party entitled to indemnification under this Section
5.6 (the "Indemnified Party") shall give notice to the party required to
provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Agreement, unless the
failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action, and provided further that the
Indemnifying Party shall not assume the defense for matters as to which there
is a conflict of interest or separate and different defenses, and provided
further that the failure of the Indemnifying Party to assume the defense for
matters as to which there are no conflicts of interest, and to which notice
had adequately been provided, shall not relieve the Indemnifying Party from
its obligations pursuant to Section 5.6 hereof. No Indemnifying Party, in
the defense of any such claim or litigation, shall, except with the
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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.
5.7 INFORMATION BY HOLDERS. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held
by them and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Agreement.
5.8 RULE 144 REPORTING. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Securities to the public without
registration, after such time as a public market exists for the Common Stock
of the Company, the Company agrees to use all reasonable efforts to:
(a) Make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act, at all
times after the effective date that the Company becomes subject to the
reporting requirements of the Securities Act or the Securities Exchange Act
of 1934, as amended;
(b) File with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the
Securities Exchange Act of 1934, as amended (at any time after it has become
subject to such reporting requirements); and
(c) So long as any of the Holders owns any Restricted
Securities, to furnish to such Holders forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements
of said Rule 144 (at any time after 90 days after the effective date of the
first registration statement filed by the Company for an offering of its
securities to the general public), and of the Securities Act and the
Securities Exchange Act of 1934 (at any time after it has become subject to
such reporting requirements), a copy of the most recent annual or quarterly
report of the Company, and such other reports and documents of the Company
and other information in the possession of or reasonably obtainable by the
Company as such Holders may reasonably request in availing themselves of any
rule or regulation of the Commission allowing the Holders to sell any such
securities without registration.
5.9 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted to the Holders under Sections 5.1, 5.2 and 5.3
may be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Purchaser or Founder only if such
transferee or assignee, as appropriate, acquires at least 250,000 shares (as
adjusted for stock splits, stock dividends, recapitalizations and the like) of
the Company's Common Stock or Conversion Stock, provided written notice thereof
is promptly given to the Company and the transferee agrees to be bound by the
provisions of this Agreement. Notwithstanding the foregoing, the rights to
cause the Company to register securities may be assigned to any constituent
partner or retired partner of a Holder which is a partnership, or an affiliate
of a Holder which is a
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corporation, or a family member or trust for the benefit of a Holder who is
an individual, provided written notice thereof is promptly given to the
Company and the transferee agrees to be bound by the provisions of this
Agreement.
5.10 TERMINATION OF REGISTRATION RIGHTS. The rights granted
pursuant to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate on
the four (4) year anniversary of the Company's initial public offering
pursuant to an effective registration statement under the Securities Act, or
as to any Holder at such time as the Company has registered its shares of
Common Stock under the Securities Exchange Act of 1934, as amended, and such
Holder is able to sell all such Registrable Securities as are held by such
Holder under Rule 144 promulgated under the Securities Act within a 90-day
period.
SECTION 6. FINANCIAL INFORMATION.
(a) The Company will provide the following reports to each
Purchaser for so long as such Purchaser continues to hold at least 250,000
shares of Conversion Stock (as adjusted for stock splits, stock dividends,
recapitalizations and the like):
(i) As soon as practicable after the end of each
fiscal year, and in any event within 120 days thereafter, consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such fiscal year, and consolidated statements of operations and consolidated
statements of cash flows and stockholders' equity of the Company and its
subsidiaries, if any, for such year, prepared in accordance with generally
accepted accounting principles and setting forth in each case in comparative
form the figures for the previous fiscal year, all in reasonable detail and
audited by independent public accountants of national standing selected by
the Company, and a capitalization table in reasonable detail for such fiscal
year;
(ii) As soon as practicable after the end of each
calendar month, and in any event within 30 days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as of the end of
each such month, and consolidated statements of operations, consolidated
statements of cash flows of the Company and its subsidiaries for such period
and for the current fiscal year to date, including a comparison between the
actual financial statements and the projected figures according to the
operating budget referenced in clause (iii) below; and
(iii) As soon as practicable following the submission
to and approval by the Board of Directors of the Company and in any event at
least 60 days prior to the end of a given fiscal year, an annual operating
budget and plan for the succeeding fiscal year for the Company in the form
approved by the Board of Directors.
(b) The rights granted pursuant to Section 6 may be
assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Purchaser only if such transferee
or assignee, as appropriate, acquires at least 250,000 shares (as adjusted
for stock splits, stock dividends, recapitalizations and the like) of the
Company's Conversion Stock, provided written notice thereof is promptly given
to the Company.
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Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned to any constituent partner or retired partner of a
Holder which is a partnership, or an affiliate of a Holder which is a
corporation, or a family member or trust for the benefit of a Holder who is
an individual, provided written notice thereof is promptly given to the
Company.
(c) Each of the Purchasers acknowledge and agree that any
information obtained pursuant to this Section 6 which may be considered
"inside" non-public information will not be utilized by any Purchaser in
connection with purchases or sales of the Company's securities except in
compliance with applicable state and federal securities laws.
(d) The covenants set forth in this Section 6 shall
terminate and be of no further force or effect upon the consummation of a
firm commitment underwritten public offering or at such time as the Company
is required to file reports pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended, whichever shall occur first.
SECTION 7. STANDOFF AGREEMENT. In connection with any initial public
offering of the Company's securities in connection with an effective
registration statement under the Securities Act, each Holder agrees, upon the
request of the Company or the underwriters managing any underwritten offering
of the Company's securities, not to sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise dispose of any Registrable
Securities of the Company (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time, not to exceed one hundred eighty (180)
days (or such lesser period(s) as officers, directors or holders of one
percent (1%) or more of the Company's outstanding capital stock are so
restricted with respect to the transfer of shares of capital stock of the
Company held by them) after the effective date of the registration statement
relating thereto. Each of the Purchasers and each Holder agrees that the
Company may instruct its transfer agent to place stop-transfer notations in
its records to enforce the provisions of this Section 7. Notwithstanding the
foregoing, any waiver, amendment, or termination of such lock-up arrangements
in respect of officers, directors or 1% holders by the Company or the
underwriters which results in lock-up arrangements on such persons that are
less restrictive than those imposed upon the Holders shall result in an
equivalent pro rata (based on the number of shares held) waiver, amendment
or termination of the lock-up arrangements applicable to the Holders
hereunder.
SECTION 8. ADDITIONAL PARTIES. The parties hereto agree that
additional holders of securities of the Company may, with the consent only of
the Company, be added as parties to this Agreement with respect to any or all
securities of the Company held by them, and shall thereupon be deemed for all
purposes "Purchasers" hereunder; provided, however, that from and after the
date of this Agreement, the Company shall not: (i) without the prior written
consent of each Purchaser, enter into any agreement with any holder or
prospective holder of any securities of the Company providing for the grant
to such holder of rights superior to those granted herein or (ii) without the
prior written consent of sixty percent (60%) of the Registrable Securities
held by the Series D Purchasers, amend or otherwise impinge upon the right of
the Series D Purchasers to trigger a Series D Registration. Any such
additional party shall execute a counter-part of this Agreement, and upon
execution by
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such additional party and by the Company, shall be considered a Purchaser for
purposes of this Agreement.
SECTION 9. AMENDMENT. Any provision of this Agreement may be amended
or 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 sixty percent (60%) of the
Registrable Securities held by the Series D Purchasers and a majority of all
other Registrable Securities not held by the Founders; provided that, (i)
subject to the provisions of Section 8 hereof, no such amendment shall
impose or increase any liability or obligation or impair any right of a
Holder without the consent of such Holder; and (ii) subject to the provisions
of Section 8 hereof, no such amendment shall impose or increase any liability
or adversely affect any rights, preferences or privileges of the Founders
without the consent of a majority in interest of the Founders. Any amendment
or waiver effected in accordance with this Section 9 shall be binding upon
each Holder of Registrable Securities at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
SECTION 10. GOVERNING LAW. This Agreement and the legal relations
between the parties arising hereunder shall be governed by and interpreted in
accordance with the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
SECTION 11. AGGREGATION OF ENTITIES. All shares of the Company's stock
held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.
SECTION 12. ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties regarding the matters
set forth herein and terminates and supersedes, to the extent not already
terminated and superseded, in its entirety the Prior Agreements. 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.
SECTION 13. NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or three
(3) days after deposit with the United States mail, by registered or
certified mail, postage prepaid, addressed (a) if to a Purchaser, at the
address or addresses of such Purchaser set forth on Exhibit A hereto, as it
may be amended from time to time, or at such other address as the Purchaser
shall have furnished to the Company in writing in accordance with this
Section 13, (b) if to a Founder, at the address of such Founder as it appears
on the books and records of the Company, (c) if to any other holder of
Conversion Stock, at such address as such holder shall have furnished the
Company in writing in accordance with this Section 13, or, until any such
holder so furnishes an address to the Company, then to and at the address of
the last holder thereof who has so furnished an address to the Company, or
(d) if to the Company, at its principal office, with a copy
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addressed to Wilson, Sonsini, Xxxxxxxx & Xxxxxx, Professional Corporation,
000 Xxxx Xxxx Xxxx, Xxxx Xxxx, Xxxxxxxxxx, 00000-0000, to the attention of
Xxxxx X. Xxxxx or Xxxxxx X. Xxxxxxx.
SECTION 14. 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.
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