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Exhibit 4.2
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
This Third Amended and Restated Rights Agreement (the "Agreement") is
entered into as of November 3, 1999 by and between Connected Corporation, a
Delaware corporation (the "Company"), and those parties listed on Schedule A
hereto. For purposes of this Agreement the following terms shall have the
following meanings: the holders of the Series D Preferred Stock (the "Series D
Shares") of the Company (the "Series D Holders"); the holders of the Series C
Preferred Shares (the "Series C Shares") of the Company (the "Series C
Holders"); the holders of the Series A Preferred Stock (the "Series A Shares")
of the Company (the "Series A Holders"); the holders of the Series B Preferred
Stock (the "Series B Shares") of the Company (the "Series B Holders," together
with the Series A Holders and Series C Holders, the "ABC Holders"); and Xxxxx X.
Cane and Xxxxxx X. Xxxxxx (the "Founders"). The ABC Holders and the Series D
Holders are sometimes collectively referred to herein as the "Preferred
Holders". The Company, the Series A, Series B, Series C and Series D Holders and
the Founders are sometimes referred to herein collectively as the "Parties" or
individually as a "Party." The Founders and the Preferred Holders are sometimes
collectively referred to herein as "Shareholders."
RECITAL
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The Company, the Founders, the Series A Holders, the Series B Holders and
the Series C Holders entered into a Second Amended and Restated Rights
Agreement, dated as of May 28, 1997 (the "1997 Rights Agreement"), which sets
forth certain registration rights and rights of first refusal. The Company, the
Founders, the Series A Holders, the Series B Holders, the Series C Holders and
certain investors and Silicon Valley Bank ("Lender") entered into a Restated
First Amendment to Second Amended and Restated Rights Agreement dated June 11,
1999. The Parties wish to amend and restate the 1997 Rights Agreement, as
amended, so that it reads in its entirety as set forth herein. Pursuant to
Section 3.4 of the Second Amended and Restated Rights Agreement, this Agreement
may be amended by the holders of a majority of the Registrable Securities and
when so amended shall be binding as to all holders of Registrable Securities.
The Parties now desire to set forth the registration rights applicable to
the Preferred Stock owned by the Holders and the Common Stock owned by the
Founders.
AGREEMENT
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In consideration of the foregoing and of the mutual promises and covenants
contained herein, the Parties agree as follows:
1. Registration Rights.
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1.1. Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
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(a) "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(b) "Conversion Stock" means the Common Stock issued or issuable upon
conversion of the Series A Shares, the Series B Shares, the Series C Shares and
Series D Shares.
(c) "Holder" means any person or persons to whom Registrable Securities
were originally issued or qualifying transferees under Section 1.11 hereof who
hold Registrable Securities.
(d) "Initiating Holders" shall mean any Holder or Holders of at least forty
percent (40%) of the Registrable Securities (excluding Registrable Securities
owned by the Founders).
(e) "Qualified Public Offering" shall mean a firmly underwritten public
offering of Common Stock resulting in gross proceeds of at least $25.0 million
at a price per share of at least $17.37 (as adjusted for stock splits, stock
dividend and recapitalizations).
(f) "Registrable Securities" means (i) the Conversion Stock; and (ii) stock
issued in respect of the stock referred to in (i) as a result of a stock split,
stock dividend, recapitalization or the like, which have not been sold to the
public.
Except for subsections 1.2, 1.4, 1.5, 1.10, 1.11 and 3.4, Registrable
Securities shall also mean shares of Common Stock owned by the Founders.
(i) 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.
(j) "Registration Expenses" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 1.2, 1.3 and
1.4 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 in the event of each registration provided for in Sections 1.2, 1.3 and
1.4 hereof.
(k) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any successor statute thereto and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
(l) "Selling Expenses" shall mean all underwriting discounts, selling
commissions, expense allowances and stock transfer taxes applicable to the
securities registered by the Holders
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and, except as set forth above, all reasonable fees and disbursements of
counsel for the selling Holders.
1.2 Requested Registration.
(a) Request for Registration. If the Company receives from the
Initiating Holders or the holders of a majority of the Series D Shares a
written request that the Company effect a registration covering either (i) not
less than 25% of the Registrable Securities, or (ii) Registrable Securities
having an anticipated aggregate gross offering price, of at least $5,000,000,
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 reasonable commercial 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 twenty (20) days after receipt
of such written notice from the Company; provided, however, that the Company
shall not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 1.2:
(A) Before 180 days after the closing of the initial
public offering of its Common Stock, provided that the foregoing limitation
shall terminate on the date which is four (4) years from the date of this
Agreement;
(B) 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;
(C) If the Company shall furnish to such 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 stockholders for a registration statement to be filed in the
near future, then the Company's obligation to use reasonable commercial efforts
to register, qualify or comply under this Section 1.2 shall be deferred for a
period not to exceed ninety (90) days from the date of receipt of written
request from the Initiating Holders, provided that the Company may not use this
right more than once in any twelve month period; or
(D) After the Company has effected four (4) registrations
pursuant to this Section 1.2, not more than two (2) such registrations at the
request of the Series D Holders and
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no more than two (2) such registrations at the request of the ABC Holders, and
such registrations have been declared or ordered effective.
Subject to the foregoing clauses (A) through (D), 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 or the holders of a majority of the Series D Shares.
Notwithstanding any other provision to the contrary, the Company shall not take
any action to effect any such registration, qualification or compliance
pursuant to this Section 1.2 within twelve (12) months from the date hereof,
without the consent of the holders of a majority of the Series D Shares.
(b) Underwriting. In the event that a registration pursuant to
Section 1.2 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.2(a)(i). In such event, the right of any Holder to participate in
such registration shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 1.2, 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 or the holders
of a majority of the Series D Shares, as the case may be, but subject to the
Company's reasonable approval. Notwithstanding any other provision of this
Section 1.2, if the managing underwriter advises the Initiating Holders and the
holders of a majority of the Series D Shares in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all participating Holders and the number of shares of
Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders thereof 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
however that notwithstanding any other provision of this Section 1.2, the
holders of the Series D Preferred shall be entitled to register not less than
50% of the shares to be underwritten in any registration pursuant to the first
two registrations initiated under this Section 1.2. No Registrable Securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. If the underwriter has not
limited the number of Registrable Securities to be underwritten, the Company
may include securities for its own account (or for the account of other
stockholders) in such registration if the underwriter so agrees and if the
number of Registrable Securities that would otherwise have been included in
such registration and underwriting will not thereby be limited.
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.
1.3. Company Registration.
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(a) Notice of Registration. If, at any time prior to the fifth
anniversary of the closing date of the Company's initial public offering of its
Common Stock in a firm commitment underwritten public offering pursuant to a
registration statement under the Securities Act, the Company shall determine to
register any of its 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 transaction
under Rule 145 under the Securities Act, or (iii) a registration effected
pursuant to Sections 1.2 or 1.4 hereof, 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; provided that the Holder making such request would
have been unable to sell all of its or his Registrable Securities pursuant to
Rule 144 under the Securities Act in the four-week period immediately preceding
the date of such written notice.
(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 1.3(a)(i). In such event, the right of any Holder to
register pursuant to Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 1.3, if the
managing underwriter determines that marketing factors require limitation of the
number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration. The Company shall so
advise all Holders and the number of shares of securities that may be included
in the registration and underwriting (other than on behalf of the Company) shall
be allocated among all Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders; provided,
however, in no event shall the amount of Registrable Securities of the Holders
included in the offering be reduced below twenty-five percent (25%) of the total
amount of securities included in such offering (unless such offering is the
initial public offering of the Company's securities in which case the Holders
may be excluded entirely if the underwriters make the determination described
above and provided that all other stockholders desiring to sell shares in the
offering are excluded). No securities of the Company held by parties other than
the Holders or the Company shall be included in any registration and
underwriting to which this section applies if the number of Registrable
Securities that would otherwise have been included in such registration and
underwriting will thereby be limited. If any Holder disapproves of the terms of
any such underwriting, he may elect to withdraw therefrom by written notice to
the Company and the managing underwriter.
1.4. Registration on Form S-3.
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(a) If (i) any Holder or Holders holding in the aggregate not less than
ten percent (10%) of the then outstanding Registrable Securities or (ii) the
holders of a majority of the then outstanding Series D Shares requests 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, net of
underwriting discounts and commissions, would exceed $500,000, 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 reasonable commercial 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 the Holder or Holders may reasonably request; provided,
however, that the Company shall not be required to effect more than one (1)
registration pursuant to this Section 1.4 in any six (6) month period. The
substantive provisions of Section 1.2(b) shall be applicable to each
registration initiated under this Section 1.4.
(b) Notwithstanding the foregoing, the Company shall not be obligated to
take any action pursuant to this Section 1.4;
(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) within ninety (90) days of the effective date of any
registration referred to in Sections 1.2 and 1.3 above, provided that the
Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or
(iii) if the Company shall furnish to such Holder 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 stockholders for registration statements to be filed in the near future,
then the Company's obligation to use reasonable commercial efforts to file a
registration statement shall be deferred for a period not to exceed ninety (90)
days from the receipt of the request to file such registration by such Holder,
provided that the Company may not use this right more than once in any twelve
month period.
1.5. Limitations on Subsequent Registration Rights. From and after the
date hereof, without the approval of the holders of a majority of the Series D
Shares and the holders of a majority of the Registrable Securities, the Company
shall not enter into any agreement granting any holder or prospective holder of
any securities of the Company registration rights with respect to such
securities, including more favorable standoff obligations, which are senior to
or on par with the registration rights granted to the Holders hereunder or
which would have the effect of reducing the amount of Registrable Securities
included in a registration by any Holder.
1.6. Expenses of Registration. All Registration Expenses incurred in
connection with all registrations pursuant to Sections 1.2 and 1.3 and the
first four registrations pursuant to Section 1.4 shall be borne by the Company.
Unless otherwise stated, all Selling Expenses relating to securities
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registered on behalf of the Holders shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so registered.
1.7. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration 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 reasonable commercial efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the Registration
Statement has been completed;
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities;
(c) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration 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;
(d) Use reasonable commercial 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 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 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; and
(g) Use best commercial efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, 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
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securities becomes effective, (i) an opinion, dated 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 to the Holders requesting
registration of Registrable Securities and (ii) a letter dated 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, and to the Holders requesting registration of Registrable
Securities.
1.8 Indemnification.
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such person within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), 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
light of the circumstances in which they were made, not misleading, or any
violation by the Company of the Securities Act or any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Holder, each of its officers and directors, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable to
any such person 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 an
instrument duly executed by such Holder, controlling person or underwriter and
stated to be specifically for use therein or in connection with the preparation
thereof.
(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 and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus,
offering circular or other document, or any omission (or alleged omission) to
state therein a material fact
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required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company, such Holders, such directors,
officers, persons, underwriters or control persons for any legal or any other
expenses reasonably incurred in connection with investigating, preparing 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 an instrument duly executed by such Holder and stated to be
specifically for use therein or in connection with the preparation thereof.
Notwithstanding the foregoing, the liability of each Holder under this
subsection (b) shall be limited to an amount equal to the aggregate proceeds
received by such Holder from the sale of Registrable Securities in such
registration.
(c) Each party entitled to indemnification under this Section 1.8
(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 Section 1 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. 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.
1.9 Information by Holder. The Holders of securities included in any
registration shall furnish to the Company such information regarding such
Holders, the Registrable Securities held by them and the distribution proposed
by such 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 Section 1.
1.10 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 Registrable 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 reasonable commercial 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, (the "Exchange Act").
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(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements);
(c) So long as a Holder owns any Registrable Securities, to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company, as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.11. Transfer of Registration Rights. The rights to cause the Company to
register securities granted to Holders under this Agreement may be assigned to
a transferee or assignee in connection with any transfer or assignment of
Registrable Securities by a Holder, provided that: (i) such assignment or
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee agrees to be bound by the terms and
conditions of this Agreement, and (iii) either (A) such assignee or transferee
acquires at least 100,000 shares of Registrable Securities (appropriately
adjusted for stock splits, combinations, dividends, distributions and
recapitalizations) not sold to the public, or (B) such assignee or transferee
is a partner, stockholder, subsidiary, member, affiliate, affiliated
partnership managed by a Holder, family member, family trust or the estate of
the Holder.
1.12. Standoff Agreement.
(a) Standoff. Each Party hereby agrees that in connection with the
Company's initial public offering of the Company's securities that, upon
request of the Company or the underwriters managing any underwritten offering
of the Company's securities, a Holder shall not sell, make any short sale of,
loan, grant any option for the purchase of, or otherwise dispose of any
securities of the Company (other than those include in the registration)
without 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)
from the effective date of such registration as may be requested by the Company
or underwriters, as the case may be; provided, that the Company or the
underwriters have obtained similar commitments from all of the directors and
officers of the Company and all holders of more than two percent (2%) of the
Company's capital stock.
(b) Company Obligation. The Company will enter into a standoff
agreement essentially similar to the standoff agreement contained in subsection
1.12(a) above with each holder of equity securities of the Company or
securities convertible into or exercisable for equity securities of the
Company.
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1.13 Qualified Public Offering. In the event of any Qualified Public
Offering of Common Stock, the Series D Holders shall have the right to purchase
up to an aggregate of 10% of the registrable shares offered for sale pursuant
to such offering.
2. Right of First Refusal Upon Issuance of Securities by the Company.
2.1. Right of First Refusal. The Company hereby grants to each Series A,
Series B, Series C and Series D Holder (the "Rights Holders") the right of
first refusal to purchase, pro rata, in order to maintain the Rights Holder's
percentage ownership interest in the Company, all or any part of New Securities
(as defined in Section 2.3 below) which the Company may, from time to time,
propose to sell and issue. A pro rata share, for purposes of this right of
first refusal, is the ratio that the number of shares of Common Stock issued or
issuable to each Rights Holder bears to the sum of the total number of shares
of Common Stock then outstanding (assuming conversion of all preferred stock of
the Company into Common Stock and the exercise of all outstanding options,
warrants and other rights to acquire Common Stock).
2.2. "Equity Securities" shall mean any securities having voting rights in
the election of the Board of Directors not contingent upon default, or any
securities evidencing an ownership interest in the Company, or any securities
convertible into or exercisable for any shares of the foregoing, or any
securities issuable pursuant to any agreement or commitment to issue any of the
foregoing.
2.3. Except as set forth below, "New Securities" shall mean any Equity
Securities, whether or not now authorized, and rights, options or warrants to
purchase said Equity Securities. Notwithstanding the foregoing, "New Securities"
does not include (i) Common Stock issued to employees, officers, consultants or
directors of the Company pursuant to sales or options granted or awards made at
any time after the date of incorporation of the Company; (ii) securities offered
to the public generally pursuant to a registration statement trader the
Securities Act; (iii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets or other reorganization whereby the Company or its stockholders own not
less than fifty-one (51%) percent of the voting power of the surviving or
successor corporation; (iv) the Conversion Stock; or (v) stock issued in
connection with any stock split, stock dividend or recapitalization by the
Company.
2.4. In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Rights Holder written notice of its intention,
describing the type of New Securities, and the price and terms upon which the
Company proposes to issue the same. Each Rights Holder shall have twenty (20)
days from the date of receipt of any such notice to agree to purchase up to its
respective pro rata share of such New Securities for the price and upon the
applicable terms specified in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased.
2.5. In the event a Rights Holder fails to exercise the right of first
refusal within said twenty (20) day period (a "Non-Electing Rights Holder"),
the Company shall give each of the remaining Rights Holders written notice of
the number of shares of New Securities that remain available for purchase. Each
remaining Rights Holder shall then have five (5) days from the date of receipt
of any such notice to agree to purchase up to its respective pro rata share of
such New
11
12
Securities (determined without reference to the number of shares of Common
Stock issued or issuable to the Non-Electing Rights Holder) for the price and
upon the applicable terms specified in the notice referred to in Section 2.4
above, by giving written notice to the Company and stating therein the quantity
of New Securities to be purchased.
2.6. In the event less than all of the New Securities are purchased by the
Rights Holders, the Company shall have ninety (90) days thereafter to sell or
enter into an agreement (pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within sixty (60) days from the date of
said agreement) to sell the New Securities not elected to be purchased by
Rights Holders at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities within said ninety (90) day
period (or sold and issued New Securities in accordance with the foregoing
within sixty (60) days from the date of said agreement), the Company shall not
thereafter issue or sell any New Securities, without first offering such
securities in the manner provided above.
2.7. The right of first refusal granted under this Agreement shall expire
on the effective date of the Company's Qualified Public Offering pursuant to a
registration statement under the Securities Act.
2.8. The right of first refusal hereunder may be assigned to a transferee
or assignee in connection with any transfer or assignment of the Series A
Shares, the Series B Shares, the Series C Shares or the Series D Shares or the
Conversion Stock by a Rights Holder provided that: (i) such assignment or
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee agrees to be bound by the terms and
conditions of this Agreement, and (iii) either (A) such assignee or transferee
acquires at least 100,000 shares of Registrable Securities (appropriately
adjusted for stock splits, combinations, dividends, distributions and
recapitalizations) not sold to the public, or (B) such assignee or transferee
is a partner, stockholder, subsidiary, or affiliate of, or an affiliated
partnership managed by, a Rights Holder, family member, family trust or the
estate of the Rights Holder.
3. Miscellaneous.
3.1. Governing Law. This Agreement shall be governed in all respects by
the laws of the State of Delaware as applied to transactions taking place
between Delaware residents and wholly within the State of Delaware.
3.2. Survival. The representations, warranties, covenants and agreements
made herein shall survive any investigation made by any Series A, Series B,
Series C or Series D Holder and the closing of the transactions contemplated
hereby.
3.3. Successors and Assigns. Except as otherwise 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.
12
13
3.4 Entire Agreement; Amendment. This Agreement constitutes the full and
entire understanding and agreement between parties with regard to the subjects
hereof, and no party shall be liable or bound to any other party in any manner
by any warranties, representations or covenants except as specifically set
forth herein. With the written consent of the record or beneficial Holders of a
majority of the Registrable Securities (excluding Registrable Securities held
by the Founders), the obligations of the Company and the rights of the Holders
of the Registrable Securities under this Agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely), and with the same
consent the Company, when authorized by resolution of its Board of Directors,
may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement; provided, however, that no such modification, amendment or
waiver shall reduce the aforesaid percentage of Registrable Securities without
the consent of all of the Holders of the Registrable Securities and none of the
rights of the Founders under this Agreement may be waived or modified without
their written consent; and provided, further, that such modification,
amendment, waiver or other action shall affect the Holders of each class or
series of stock, as well as all shares of stock within any given class or
series, in the same manner. Upon the effectuation of each such waiver, consent,
agreement of amendment or modification, the Company shall promptly give written
notice thereof to the record holders of the Registrable Securities who have not
previously consented thereto in writing. This Agreement or any provision hereof
may be changed, waived, discharged of terminated only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, except to the extent provided in this Section 3.4.
This Section 3.4 may be amended, waived or terminated only with the written
consent of all of the Holders of the Registrable Securities.
3.5. Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be delivered personally,
mailed by first class mail, postage prepaid, or delivered by courier or
overnight delivery, addressed (a) if to a Holder, at such Holder's address set
forth on the signature pages hereof, or at such other address as such Holder
shall have furnished to the Company in writing or (b) if the Company, at 00
Xxxxxxxx xxxxxx, Xxxxxxxxxx, XX 00000, or at such other address as the Company
shall have furnished to each Purchaser in writing. Notices that are mailed
shall be deemed received five (5) days after deposit in the United States mail.
3.6. Delays or Omissions. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any holder of
any Registrable Securities, upon any breach or default of the Company under
this Agreement, shall impair any such right, power or remedy of such holder
nor shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or a waiver of or acquiescence in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any holder of any breach or default under this
Agreement, or any waiver on the part of any holder 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 or by law or otherwise afforded to any holder shall be
cumulative and not alternative.
13
14
3.7. 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.
3.8. Severability. If any provision of this Agreement, or the application
thereof, shall for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to persons or
circumstances shall be interpreted so as best to reasonably effect the intent of
the parties hereto, the parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
which will achieve to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
[SIGNATURE PAGE FOLLOWS]
14
15
SCHEDULE A
HOLDERS OF SERIES A PREFERRED STOCK
H&Q Connected Investors L.P.
Technologies for Information and Entertainment III, L.P.
1995 Xxxxxx Family Trust UTA 10/10/95, Xxxx X. Xxxxxxxxx, Trustee
Xxxxxx Xxxxxxxxxxx
HOLDERS OF SERIES B PREFERRED STOCK
Softbank Ventures, Inc.
H&Q Connected Investors L.P.
Technologies for Information and Entertainment III, L.P.
Xxxxxx Xxxxxxx
The Xxxx Xxxxxxx Trust, Xxxx Xxxxxxx, Trustee
Solstice Capital L.P.
The Xxxx Xxxxxxx 1996 Revocable Living Trust, Xxxx Xxxxxxx, Trustee
Xxxxxx Xxx Xxxxxx
Xxxxxx Ventures
Xxxxx Xxxxxxxxx
1995 Xxxxxx Family Trust UTA 10/10/95, Xxxx X. Xxxxxxxxx, Trustee
HOLDERS OF SERIES C PREFERRED STOCK
Intel Corporation
Technologies for Information and Entertainment III, L.P.
H&Q Connected Investors L.P.
Solstice Capital L.P.
Xxxxx Xxxxxxxxx
Xxxxxx Ventures
East river Ventures, L.P.
Xxxxxxx X. Xxxx
Xxxxxx Xxxxxxx
Xxxxxx River Capital, LLC
GKH Partners, L.P.
GKH Investments, L.P.
HOLDERS OF SERIES D PREFERRED STOCK
Silicon Valley Bank
Xxxxx Xxxxxxxxx
Xxxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxxx Xxxxxxx
Xxxxx Xxxxxx
Xxxxx Xxxx
Technologies for Information and Entertainment III, L.P.
Softbank America, Inc.
Middlefield Ventures
16
Xxxxxxx Xxxxxxx
Xxxxxxx Xxxxxxx
Xxxxx Xxxxxx Xxxxxx and Xxxxx Xxxx Xxxxxx TTE Xxxxxx
Family Revocable Trust u/a dated 8/20/87
Xxxxxx Xxxxxxx
Xxxxxxx Xxxxx
Solstice Capital, L.P.
H&Q Connected Investors X.X.
Xxxxxxxxx and Xxxxx Employee Venture Fund, L.P.
J3D Family Limited Partnership
The TIE Mezzanine Fund, L.P.
17
The foregoing agreement is hereby executed as of the date first above written.
CONNECTED CORPORATION
By: /s/ Xxxxx X. Cane
-------------------
Xxxxx X. Cane, President
[COUNTERPART SIGNATURE PAGES FOLLOW]
Third Amended and Restated Rights Agreement
18
PURCHASERS: XXXXX COMMUNICATIONS FUND, L.P.
By: Xxxxx Capital Partners, LLC.
-----------------------------
Its General Partner
By: /s/ Xxxxxx Xxxxx
-----------------------------
Xxxxxx Xxxxx, Manager
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Xxxxx Xxxxxxx, Manager
[COUNTERPART SIGNATURE PAGES FOLLOW]
Third Amended and Restated Rights Agreement
19
PURCHASERS: FIDELITY VENTURES TELECOM AND
TECHNOLOGY II LIMITED
PARTNERSHIP
By: Fidelity Investors Management, LLC
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
__________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
FIDELITY INVESTORS II LIMITED
PARTNERSHIP
By: Fidelity Investors Management, LLC,
Its General Partner
By: /s/ Xxxxxx X. Xxxxxx
__________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
FTT VENTURES LIMITED
By: /s/ Xxxxxx X. Xxxxxx
__________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President
[COUNTERPART SIGNATURE PAGES FOLLOW]
Third Amended and Restated Rights Agreement
20
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
COMMON HOLDERS:
By: /s/ Xxxxx X. Cane
-----------------
Name: Xxxxx X. Cane
Title:
Address: 00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
21
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
EAST RIVER VENTURES L.P.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------
Name: Xxxxxx X. Xxxxxxx
Title: Manager of General Partner
Address: 000 Xxxxxxx Xxxxxx
00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxx Xxxxxxxx
22
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
GKH INVESTMENTS, L.P.
By:
-----------------------
Name:
Title:
Address: 000 Xxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
23
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
GKH PARTNERS, L.P.
By:
--------------------------
Name:
Title:
Address: 000 Xxxx Xxxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000
24
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
THE XXXX X. XXXXXXX TRUST
By: /s/ Xxxx X. Xxxxxxx
--------------------------
Name: Xxxx X. Xxxxxxx, Trustee
Title:
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Common Stockholder and Preferred Stockholder
25
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
H&Q CONNECTED INVESTORS, L.P.
By:
--------------------------
Name:
Title: Attorney-in-fact
Address: H&Q Connected Investors, L.P.
x/x Xxxxxxxxx & Xxxxx Ventures
Xxx Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Preferred Stockholder and Noteholder
26
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxx Xxxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxxx
Title:
Address: 0 Xxxxx Xxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Common Stockholder and Preferred Stockholder
27
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
J3D FAMILY LIMITED PARTNERSHIP
By: /s/ Xxxx X. Xxxxxxx
----------------------------
Name: Xxxx X. Xxxxxxx, Trustee
Title:
Address: 0000 Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, XX 00000
28
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxx Xxxxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxxxx
Title:
Address: 0000 Xxxxx Xxxx Xxxx
Xxxxxxxx, XX 00000
Preferred Stockholder
29
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxxx Xxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxx
Title:
Address: 00000 Xxxxx Xxxx Xxxxx
Xxxxxxxx, XX 00000
Noteholder
30
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Name: Xxxxxx X. Xxxxxxx
Title:
Address: 0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxxx 00000
31
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxxx Xxxx
----------------------------
Name: Xxxxxxx Xxxx
Title:
Address: 000 Xxxx Xxxxxx
Xxx Xxxxx, Xxxxxxxxxx 00000
Preferred Stockholder
32
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
THE XXXX XXXXXXX 1996
REVOCABLE LIVING TRUST
By: /s/ Xxxx Xxxxxxx
-----------------------
Name: Xxxx Xxxxxxx, Trustee
Title:
Address: c/o Connected Corporation
00 Xxxxxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxxxxxx
00000
33
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxx Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx
Title:
Address: 000 Xxxxxxxx Xxxxxx
Xxxx Xxxxxx, XX 00000
Noteholder
34
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Name: Xxxxxx Xxxxxxx
Title:
Address: 00 Xxxxxxx Xxxxxxx
Xxxxxx, XX 00000
35
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxx Xxx Xxxxxx
--------------------------
Name: Xxxxxx Xxx Xxxxxx
Title:
Address: 000 Xx. Xxxx Xxxx
Xxxxxxxxx, Xxxxxxxxxxxx 00000
36
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
XXXXXX VENTURES
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Managing G.P.
37
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
XXXXX XXXXXX XXXXXX AND
XXXXX XXXXXX XXXXXX TTEE
XXXXXX FAMILY REVOCABLE
TRUST U/A DATED 8/20/87
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx Xxxxxx
Title:
Address: 00000 Xxxxxxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Noteholder
38
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title:
Address: 000 Xxxxxx Xxxxx
Xxxxxxxxx, XX 00000
39
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxx X. Xxxxxxx
Title:
Address: 00 Xxxxxx Xxxxxx
Xxxxxx, XX 00000
Common Stockholders and Noteholder
40
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
THE XXXXXX FAMILY 1995 TRUST
U/T/A 10/10/95 WITH XXXXXX X.
XXXXXX AS DONOR
By: /s/ Xxxx X. Xxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxx, Trustee
Title:
Address: Xxxxxx Xxxxxx
00 Xxxxxxxxx Xxxx
Xxxxxx, XX 00000
Preferred Stockholder
41
CONNECTED CORPORATION
SECOND AMENDED AND RESTATED CO-SALE AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
SOFTBANK VENTURES, INC.
By: /s/ Yoshitaka Kitao
----------------------------
Name: Yoshitaka Kitao
Title: President and CEO
Address: 0-00 Xxxxx-Xxxxxxxxxx
Xxxxxxx-xx Xxxxx 000-0000
XXXXX
Second Amended and Restated Co-Sale Agreement
42
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
SOLSTICE CAPITAL, L.P.
BY: SOLSTICE CAPITAL G.P.L.P.
By: /s/ Xxxxx Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
Title: General Partner
Address: 00 Xxxxx Xxxxxx
0xx Xxxxx
Xxxxxx, XX 00000
Preferred Stockholder
43
CONNECTED CORPORATION
THIRD AMENDED AND RESTATED
RIGHTS AGREEMENT
November 3, 1999
COUNTERPART SIGNATURE PAGE
TECHNOLOGIES FOR
INFORMATION AND
ENTERTAINMENT III, L.P.
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: General Partner
THE TIE MEZZANINE FUND, L.P.
By: /s/ Xxxx Xxxxxx
-------------------------------
Name: Xxxx Xxxxxx
Title: General Partner
Address: TIE III, L.P.
c/o Applied Technology
Xxx Xxxxxxxxx Xxxx
Xxxxxxxxx, XX 00000
Preferred Stockholder and Noteholder
