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EXHIBIT 10.1
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (the "Agreement"), dated as of
November 23, 1999, is entered into by and among Sequoia Software Corporation, a
Maryland corporation (the "COMPANY") and the investors listed on Schedule I
hereto (each an "INVESTOR" and collectively the "INVESTORS") and the
stockholders of the Company listed on Schedule II hereto.
Recitals
WHEREAS, the Company and the Investors have entered into a Series C
Convertible Preferred Stock Purchase Agreement of even date herewith (the
"PURCHASE AGREEMENT"), whereby the Company shall issue and sell, and the
Investors shall buy, shares of the Company's Series C Convertible Preferred
Stock, par value $0.001 per share (the "SERIES C PREFERRED STOCK"); and
WHEREAS, the Company, the shareholders and the executive officers of
the Company and the Investors desire to provide for certain arrangements with
respect to (i) information rights, (ii) the Investors' preemptive right with
respect to certain issuances of securities of the Company, (iii) certain
affirmative and negative covenants of the Company, and (iv) other related
matters;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
1.1 "COMMON STOCK" means the Company's common stock, par
value $0.001 per share.
1.2 "PREFERRED STOCK" means all classes and series of the
Company's preferred stock, par value $0.001 per share.
1.3 "PREFERRED STOCKHOLDER" means any holder of Preferred
Stock.
1.4 "QUALIFIED INITIAL PUBLIC OFFERING" means the first
underwritten public offering of the Common Stock pursuant to a registration
statement in which the aggregate gross proceeds to the Company are no less than
$25,000,000 and at a per share price of no less than three times the purchase
price paid per share of Series C Preferred Stock pursuant to the Purchase
Agreement (as adjusted in stock splits, stock dividends, recapitalizations and
similar events) underwritten by a reputable nationally recognized underwriting
firm.
1.5 "SECURITIES ACT" means the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of the
Securities and Exchange Commission issued thereunder, as they each may, from
time to time, be in effect.
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1.6 "SERIES A PREFERRED STOCK" means the Series A
Convertible Preferred Stock of the Company, par value $0.001 per share.
1.7 "SERIES B PREFERRED STOCK" means the Series B
Convertible Preferred Stock of the Company, par value $0.001 per share.
1.8 "SERIES C STOCKHOLDERS" means the Investors and any
persons or entities to whom the rights granted under this Agreement are
transferred by any Investors, their successors or assigns pursuant to Section 5
hereof.
1.9 "SERIES D PREFERRED STOCK" means the Series D
Convertible Preferred Stock of the Company, par value $0.01 per share.
1.10 "SERIES D WARRANTS" means the warrants to purchase
Series D Preferred Stock issued by the Company to the Investors.
1.11 "SHARES" shall mean the shares of Series C Preferred
Stock purchased by the Investors pursuant to the Purchase Agreement, and any
shares of Common Stock issued upon conversion thereof.
2. Information Rights. Each Preferred Stockholder, so long as it
is the holder of at least 5% of the outstanding Preferred Stock of the Company
(each a "5% Stockholder") shall be entitled to the following information
rights:
2.1 Inspection. The Company shall permit each 5%
Stockholder or any authorized representative thereof, to visit and inspect the
properties of the Company, including its corporate and financial records, and
to discuss its business and finances with officers of the Company, during
normal business hours following reasonable notice and as often as may be
reasonably requested.
2.2 Financial Statements and Other Information.
(a) The Company shall deliver to each 5% Stockholder, and
each of the Xxxx Xxxxxx Xxxx Trust - Xxxx Xxxxxxxxxx, the Xxxxxx Xxxxxx Xxxx
Trust Estate - Trust B and the X'Xxxxx Community Property Trust (but not the
transferees of such persons or entities unless such transferee is a 5%
Stockholder):
(i) no later than 90 days after the end of each
fiscal year of the Company, beginning with the fiscal year ending December 31,
1999, (x) an audited consolidated and unaudited consolidating balance sheet of
the Company and its subsidiaries as at the end of such year, and (y) audited
consolidated and unaudited consolidating statements of income, stockholders'
equity and cash flows of the Company and its subsidiaries for such year, all in
reasonable detail and stating in comparative form the figures as at the end of
and for the previous fiscal year and budgeted figures for the fiscal year
accompanied by an opinion of an accounting firm of nationally recognized
standing selected by the Company with respect to the audited
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consolidated statements, which opinion shall state that such accounting firm's
audit was conducted in accordance with generally accepted accounting standards
and, accordingly, included such tests of accounting records and such other
auditing procedures as were considered necessary under the circumstances and
which opinion shall not be subject to any qualification resulting from a limit
on the scope of the examination of the financial statements or the underlying
data or which could be eliminated by changes in the financial statements or the
notes thereto or by the creation of or increase in a reserve or a decreased
carrying value of assets. All such financial statements shall be complete and
correct in all material respects and prepared in reasonable detail and in
accordance with generally accepted accounting principles applied, except as
stated therein, on a consistent basis throughout the periods reflected therein
(except that such financial statements may omit footnotes and may be subject to
normal year-end adjustments which are not, in the aggregate, material);
(ii) no later than fifteen (15) days after the end
of each fiscal quarter, beginning with the quarter ending December 31, 1999,
(x) an unaudited consolidated and unaudited consolidating balance sheet of the
Company and its subsidiaries as at the end of such quarter, (y) unaudited
consolidated and unaudited consolidating statements of income, stockholders'
equity and cash flows of the Company and its subsidiaries for such quarter and
for the current year to date. (Each of the financial statements referred to in
the preceding clauses (x) and (y) shall be for such fiscal quarter and for the
elapsed period in such fiscal year, all in reasonable detail and shall state in
comparative form the figures as of the end of and for the comparable periods of
the preceding fiscal year and budgeted figures for the period.) All such
financial statements shall be complete and correct in all material respects,
shall be prepared in accordance with generally accepted accounting principles
applied on a consistent basis throughout the periods reflected therein (except
that such financial statements may omit footnotes and may be subject to normal
year-end adjustments which are not, in the aggregate, material), and (z) a
one-page management summary of operations for such quarter; and shall be
accompanied by a certificate of the Chief Executive Officer or Chief Financial
Officer of the Company to such effect;
(iii) as soon as available, but in any event no
less than thirty (30) days prior to the commencement of each new fiscal year, a
detailed monthly budget and strategic plan for such fiscal year;
(iv) prior to the commencement of each new fiscal
year, projected financial statements for the following two (2) years in the
same format as the financial statements described in Section 2.2(a)(ii);
(v) no later than fifteen (15) days after the end
of each month, beginning with the month ending October 31, 1999, copies of all
reports distributed to executive management with respect to key operating
statistics and other related information; provided, however, that the Company
shall not be obligated under this Section 2.2(a)(v) to provide information
which it deems in good faith to be a trade secret;
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(vi) no later than ten (10) business days after
receipt, copies of all correspondence, notices, pleadings, subpoenas, or other
forms of notification received by the Company from any governmental department,
agency, court or the National Association of Securities Dealers, Inc. (except
documents received in the ordinary course of business);
(vii) no later than ten (10) business days after
filing, copies of all responses, pleadings or documents filed with any
governmental department, agency or court (except documents filed in the
ordinary course of business);
(viii) no later than ten (10) business days after
filing, copies of all pleadings and other documents related to any material
lawsuits filed by or against the Company or, to the extent known by the
Company, written notice by the Company of the nature and extent of such action;
(ix) no later than ten (10) business days after
receipt, copies of all management letters from accountants and notifications
received by the Company relating to defaults, alleged or actual, of any
provisions of any material loans or leases or other material agreements to
which the Company is a party;
(x) promptly, but in any event within ten (10)
business days, after any distribution to its stockholders generally or to
specific stockholders by agreement, to its directors, to prospective investors
or to the financial community of an annual report, proxy statement,
registration statement or other similar report or communication, a copy of each
such report, proxy statement, registration statement or other similar report or
communication; and promptly, but in any event within five (5) business days
after release, copies of all press releases and other statements made available
generally by the Company or any of its subsidiaries to the public concerning
material developments;
(xi) within sixty (60) days after the end of each
fiscal year, a list of stockholders and other security holders of the Company,
showing the authorized and outstanding shares by class (including the common
stock equivalents of any convertible security), the holdings of each
stockholder (both before giving effect to dilution and on a fully-diluted
basis) and the holdings of each person who holds options, warrants or
convertible securities (both before giving effect to dilution and on a fully
diluted basis);
(xii) within sixty (60) days after the end of each
fiscal year, and in addition to the information deliverable pursuant to
paragraph (xi) above: copies of all stock option plans adopted in such fiscal
year, and a list detailing all options granted, issued, exercised or lapsed;
all warrants granted, issued (whether to directors, in connection with
financings or otherwise), exercised or lapsed; and all stock issued or sold
(including in each case, without limitation, all option and warrant exercise
prices, stock issuance prices, and other terms) by the Company during such
fiscal year;
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(xiii) promptly, but in any event not later than ten
(10) business days after execution (or in the case of an oral agreement, after
a definitive agreement or arrangement has been entered into), copies of any
agreement (or, in the case of an oral agreement, a summary thereof) entered
into by the Company or any of its subsidiaries, with any Related Person (as
defined below). As used herein, the term "Related Person" shall mean (i) any
stockholder, partner, director, officer or employee of the Company or any
affiliate or relative, or affiliate of a relative, of any of the foregoing, or
(ii) any affiliate of the Company; and
(xiv) with reasonable promptness, such other
information and data about the Company as such 5% Stockholder may from time to
time reasonably request; provided, however, that the Company shall not be
obligated under this Section 2.2(a)(xi) to provide information which it deems
in good faith to be a trade secret.
2.3 Material Changes and Litigation. The Company will
promptly notify Xxxxx of any material adverse change in the business,
properties, assets, condition or prospects (financial or otherwise) of the
Company and of any event or litigation or governmental proceeding or
investigation pending or, to the best knowledge of the Company, threatened
against the Company, or against any officer, director, key employee or
principal stockholder of the Company materially affecting or that, if adversely
determined, could materially adversely affect, the Company's present or then
proposed business, properties, assets, condition or prospects (financial or
otherwise), and management's proposed response thereto (such proposed response
to be delivered to the 5% Stockholders at least seven days prior to the
delivery of such response to its actual intended recipient if such delivery
does not cause the Company to fail to meet any deadline for such delivery to
the intended recipient in which case it shall be delivered as soon as
possible).
2.4 Insurance. The Company shall maintain insurance
adequate for the needs of the Company and commensurate with insurance carried
by similar companies in the same industry.
3. Preemptive Rights.
3.1 The Company shall not issue, sell or exchange, agree
to issue, sell or exchange, or reserve or set aside for issuance, sale or
exchange, (a) any shares of its Common Stock, (b) any other equity securities
of the Company, including, without limitation, shares of preferred stock, (c)
any option, warrant or other right to subscribe for, purchase or otherwise
acquire any equity securities of the Company, (d) any debt securities
convertible into equity securities of the Company, or (e) any other equity
linked security other than pursuant to Section 3.7 hereof (collectively, the
"OFFERED SECURITIES"), unless, in each such case, the Company shall have first
complied with this Section 3. The Company shall, as soon as reasonably
practicable, deliver to each holder of Preferred Stock a written notice of any
proposed or intended issuance, sale or exchange of Offered Securities (the
"OFFER"), which Offer shall (a) identify and describe the Offered Securities,
(b) describe the price and other terms upon which the Offered Securities are to
be issued, sold or exchanged, and the number or amount of the Offered
Securities to be
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issued, sold or exchanged, (c) identify the persons or entities (if known) to
which or with which the Offered Securities are to be offered, issued, sold or
exchanged and (d) include an offer to issue and sell to or exchange with such
holder of Preferred Stock (i) a pro rata portion of the Offered Securities
determined by dividing the aggregate number of shares of Common Stock then held
by such holder of Preferred Stock (giving effect to the conversion of all
shares of Preferred Stock then held by such holder of Preferred Stock) by the
total number of shares of Common Stock then outstanding (giving effect to the
conversion of all outstanding shares of Preferred Stock including Preferred
Stock issuable upon exercise of all outstanding warrants for the purchase
thereof) (the "BASIC AMOUNT"), and (ii) any additional portion of the Offered
Securities attributable to the Basic Amounts of other holders of Preferred
Stock as such holder shall indicate it will purchase or acquire should one or
more of the other holders of Preferred Stock subscribe for less than their
Basic Amounts (the "UNDERSUBSCRIPTION AMOUNT").
3.2 To accept an Offer, in whole or in part, a holder of
Preferred Stock must deliver a written notice to the Company prior to the 20th
day following the date of delivery of the Offer, setting forth the portion of
such holder's Basic Amount that such holder elects to purchase and, if such
holder shall elect to purchase all of its Basic Amount, the Undersubscription
Amount (if any) that such holder elects to purchase (the "NOTICE OF
ACCEPTANCE"). If the Basic Amounts subscribed for by all holders of Preferred
Stock are less than the total of all of the Basic Amounts, then each holder of
Preferred Stock who has set forth an Undersubscription Amount in its Notice of
Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided,
however, that if the Undersubscription Amounts subscribed for exceed the
difference between the total of all of the Basic Amounts and the Basic Amounts
subscribed for (the "AVAILABLE UNDERSUBSCRIPTION AMOUNT"), each holder of
Preferred Stock who has subscribed for any Undersubscription Amount shall be
entitled to purchase only that portion of the Available Undersubscription
Amount as the Undersubscription Amount subscribed for by such holder bears to
the total Undersubscription Amounts subscribed for by all holders of Preferred
Stock, subject to rounding by the Board of Directors to the extent it deems
reasonably necessary.
3.3 The Company shall have ninety (90) days from the
expiration of the period set forth in Section 3.2 above to issue, sell or
exchange all or any part of such Offered Securities as to which a Notice of
Acceptance has not been given by the holders of Preferred Stock (the "REFUSED
SECURITIES"), but only upon terms and conditions (including, without
limitation, unit prices and interest rates) that are not more favorable, to the
acquiring person or persons or less favorable to the Company than those set
forth in the Offer.
3.4 In the event the Company shall propose to sell less
than all the Refused Securities (any such sale to be in the manner and on the
terms specified in Section 3.3 above), then each holder of Preferred Stock may,
at its sole option and in its sole discretion, reduce the number or amount of
the Offered Securities specified in its Notice of Acceptance to an amount that
shall be not less than the number or amount of the Offered Securities that such
holder elected to purchase pursuant to Section 3.2 above multiplied by a
fraction, (a) the numerator of which shall be the number or amount of Offered
Securities the Company actually proposes to issue, sell
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or exchange (including Offered Securities to be issued or sold to holders of
Preferred Stock pursuant to Section 3.2 above prior to such reduction) and (b)
the denominator of which shall be the original amount of the Offered Securities.
In the event that any holder of Preferred Stock elects to reduce the number or
amount of Offered Securities specified in its Notice of Acceptance, the Company
may not issue, sell or exchange more than the resulting reduced number or amount
of the Offered Securities unless and until such securities have again been
offered to the holders of Preferred Stock in accordance with Section 3.1 above.
3.5 Upon the closing of the issuance, sale or exchange of
all or less than all of the Refused Securities, the holders of Preferred Stock
shall acquire from the Company, and the Company shall issue to such holders,
the number or amount of Offered Securities specified in the Notices of
Acceptance, as reduced pursuant to Section 3.4 above if the holders of
Preferred Stock have so elected, upon the terms and conditions specified in the
Offer. The purchase by holders of Preferred Stock of any Offered Securities is
subject in all cases to the preparation, execution and delivery by the Company
and such holders of a purchase agreement relating to such Offered Securities
reasonably satisfactory in form and substance to such holders and their
respective counsel.
3.6 Any Offered Securities not acquired by the holders of
Preferred Stock in accordance with Section 3.5 above or other persons in
accordance with Section 3.3 above may not be issued, sold or exchanged until
they are again offered to the holders of Preferred Stock under the procedures
specified in this Section 3.
3.7 The term "Offered Securities" shall not include:
(a) Common Stock issued as a stock dividend to
holders of Common Stock or upon any subdivision or combination of shares of
Common Stock;
(b) the issuance of any shares of Common Stock
upon conversion of shares of Preferred Stock;
(c) the issuance of any shares of Common Stock
(including Common Stock issued upon exercise of options or warrants) or options
or warrants to purchase Common Stock approved by the Board of Directors and
issued in connection with grants to employees, directors or consultants of the
Corporation pursuant to a stock option plan or compensation arrangement adopted
by the Board of Directors (the "RESERVED OPTION SHARES");
(d) Common Stock (including Common Stock issued
upon exercise of options or warrants) or options or warrants to purchase Common
Stock approved by the Board of Directors and issued in connection with grants
to consultants, vendors, lenders, equipment lessors, independent board members,
or customers;
(e) the issuance of any shares of Preferred Stock
upon the exercise of outstanding warrants therefor;
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(f) securities issued solely in consideration for
the acquisition (whether by merger or otherwise) by the Company of all or
substantially all of the stock, assets or business of any other entity; or
(g) shares of Common Stock sold by the Company in
a Qualified Initial Public Offering.
4. Affirmative Covenants of the Company.
4.1 Nondisclosure, Development and Assignment of
Invention Agreements. The Company shall require all persons now and hereafter
employed by the Company to enter into nondisclosure, development and assignment
of invention agreements in form and substance reasonably acceptable to the
Investors.
4.2 Expenses of Directors. The Company shall promptly
reimburse in full each Director who is not an employee of the Company for (a)
all of his or her reasonable travel and out-of-pocket expenses incurred in
attending each meeting of the Board of Directors of the Company or any
committee thereof (limited to reasonable levels consistent with travel policies
of the Company), and (b) for conducting business on behalf of the Company,
including, but not limited to, reasonable travel and out-of-pocket expenses for
attending meetings, trade shows or the like, as requested by the Board of
Directors, the Chief Executive Officer or the President of the Company.
4.3 Reservation of Common Stock. At all times, the
Company shall reserve and maintain a sufficient number of shares of Common
Stock for issuance upon conversion of all of the outstanding Series C Preferred
Stock and Series D Preferred Stock. At all times, the Company shall reserve
and maintain a sufficient number of shares of Series D Preferred Stock for
issuance upon conversion of the Series D Warrants.
4.4 VCOC Management Rights. The Company hereby agrees
that Xxxxx and Divine shall have the following rights so long as it owns an
interest in the Company; provided, that Xxxxx and Divine shall not disclose to
third parties any information obtained in connection herewith without the prior
consent of the Company:
(a) Xxxxx and Divine shall be entitled to consult
with and advise management of the Company on significant business issues,
including management's proposed annual business, strategic and operating
budgets and plans, and management will meet with Xxxxx and Divine regularly
during each year at the Company's facilities at mutually agreeable times for
such consultations and advice and to review progress in achieving such budgets
and plans.
(b) Xxxxx and Divine may examine the books and
records of the Company and inspect its facilities and may request information
at reasonable times and intervals concerning the general status of the
Company's financial condition and operations, provided that
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such examination and inspection shall not unreasonably interfere with the
operations of the Company, and provided, further, however, that the Company
reserves the right to exclude from access to any material if the Company
believes upon advice of counsel that such exclusion is reasonably necessary to
preserve the attorney-client privilege.
(c) If at any time Xxxxx or Divine is not
represented on the Company's Board of Directors, the Company shall invite a
representative of Xxxxx or Divine, as the case may be, to attend all meetings
of the Board of Directors (and all committees thereof) in a nonvoting observer
capacity and in this respect, shall give such representative copies of all
notices, minutes, consents and other material that is provided to its
directors; provided, however, that the Company reserves the right to exclude
such representative from access to any material, meeting or portion thereof if
the Company believes upon advice of counsel that such exclusion is reasonably
necessary to preserve the attorney-client privilege. Such representative may
participate in discussion of matters brought to the Board of Directors and may
address the Board of Directors.
(d) Xxxxx and Divine shall be entitled to submit
proposals or suggestions to the management of the Company from time to time,
and the management of the Company will discuss such proposals or suggestions
with Xxxxx or Divine, as the case may be, within a reasonable time after
submission.
The above-mentioned rights are intended to satisfy the
requirement of management rights for purposes of qualifying Xxxxx'x and
Divine's ownership of an interest in the Company as a venture capital
investment for purposes of the Department of Labor "plan asset" regulations, 29
C.F.R. Section 2510.3-101, and in the event such rights are not satisfactory
for such purpose, the Company and Xxxxx and Divine shall reasonably cooperate
in good faith to agree upon mutually satisfactory management rights which
satisfy such regulations.
5. Negative Covenants. Until the earlier of such time as less
than 10% of the shares of Series C Preferred Stock purchased pursuant to the
Purchase Agreement are outstanding or until such time as the Company has
completed a Qualified Initial Public Offering, the Company shall not, without
the prior written consent of all members of the Board of Directors of the
Company designated by Xxxxx pursuant to clause (iii) of Section B.4(b) of
Article Fifth of the Amended and Restated Certificate of Incorporation of the
Company:
5.1 declare or effect any stock split, reverse stock
split or similar transaction;
5.2 create any direct or indirect subsidiaries or acquire
equity or equity related securities in other entities, other than Sequoia
Software N.V., a Belgium corporation;
5.3 enter into any agreement with any stockholder,
officer or director of the Company, any member of the immediate family of such
persons or any "affiliate" or "associate" of such persons (as such terms are
defined in the rules and regulations promulgated under the Securities Act),
including without limitation any agreement or other arrangement providing for
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the furnishing of services by, rental of real or personal property from, or
otherwise requiring payments to, any such person or entity other than (i) any
agreement required by the Purchase Agreement, (ii) any agreement relating to
employment, nondisclosure of confidential information or non-competition that
does not create obligations for the Company equal to or greater than $125,000
per year or (iii) any agreement entered into on an arms-length basis approved
by a majority of the non-interested Directors;
5.4 make any compensation decision involving an increase
in aggregate consideration per employee of more than $30,000 per year as long
as such employee's salary is based on a salary structure that has been approved
by the Board of Directors;
5.5 enter into any line of business that is not
substantially similar or related to the existing business of the Company as of
the date hereof, or invest any funds in any concern not strictly related to
such existing business;
5.6 make any loan or advance to any person, including,
without limitation, any employee or director of the Company or any subsidiary,
except advances and similar expenditures in the ordinary course of business or
under the terms of an employee stock or option plan approved by the Board of
Directors;
5.7 expend funds in excess of $300,000 per year for
capital improvements or other Company infrastructure;
5.8 enter into any agreements, including but not limited
to leases, other than in the ordinary course of business, that obligate the
Company to make aggregate annual payments in excess of $200,000; or
5.9 grant any registration rights.
6. Transfers of Rights. This Agreement, and the rights and
obligations of each Investor hereunder, may be assigned by such Investor to (i)
any person or entity to which at least 25% of the Shares originally purchased
by such Investor are transferred, (ii) to any partner, stockholder, member,
affiliate (including X.X. Xxxxxxx) or immediate family member (or trust for the
benefit of such immediate family member) of such Investor, or (iii) any
beneficiary or trustee as of the date hereof (or any trustee that is an
immediate family member of such beneficiary) of such Investor, and such
transferee shall be deemed an "Investor" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company promptly after such transfer. For purposes of this Section 6, the term
"Investor" shall be deemed to include any person or entity who succeeds to the
rights and obligations of this Agreement as the result of a transfer meeting
the requirements of clause (i) or (ii) hereof. Subject to the restrictions
contained in this Section 6, all representations, warranties, covenants and
other agreements contained in this Agreement shall bind and inure to the
benefit of the parties hereto and their respective successors and assigns.
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7. Each holder of the Company's Series A Preferred Stock and
Series B Preferred Stock set forth on Schedule II attached hereto, which the
Company hereby represents and warrants are all of the holders of such stock and
the only holders of securities of the Company who have rights of first refusal,
hereby agrees as follows:
(a) the terms and conditions set forth in Section
3 of this Agreement shall amend, supersede and replace in their entirety the
terms and conditions contained in Sections 7.4 and 7.8 of the Series B
Convertible Preferred Stock Purchase Agreement by and among the Company and the
other parties named therein, dated July 28, 1998, as amended (the "SERIES B
PURCHASE AGREEMENT") and that the terms and conditions contained in Sections
7.3 and 7.8 of the Series B Purchase Agreement shall be of no further force or
effect; and
(b) the right of first refusal set forth in
Section 4(d) of the Exempt Employee Stock Restriction Agreements by and among
the Company and the other parties named therein shall be of no further force or
effect.
8. General.
8.1 Severability. The invalidity or unenforceability of
any provision of this Agreement shall not affect the validity or enforceability
of any other provision of this Agreement.
8.2 Specific Performance. In addition to any and all
other remedies that may be available at law in the event of any breach of this
Agreement, each Investor shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other
injunctive or other equitable relief as may be granted by a court of competent
jurisdiction
8.3 Governing Law. This Agreement shall be governed by
and construed in accordance with the internal laws of the State of New York
(without reference to the choice of law or conflicts of law provisions
thereof).
8.4 Termination. This Agreement shall automatically
terminate and be of no further force or effect upon the consummation of a
Qualified Initial Public Offering.
8.5 Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be delivered
personally or by telecopy, or by courier, or by certified or registered mail,
return receipt requested or by first class mail, postage prepaid and shall be
addressed to the Company and the Investors at their respective addresses as set
forth below:
If to the Company:
Sequoia Software Corporation
Overlook Center
0000 Xxxx Xxxxxx Xxxx
00
Xxxxxxxx, Xxxxxxxx 00000
Attention: Xxxxxxx X. Faint, Jr.
or at such other address or addresses as may have been
furnished in writing to the Investors by the Company, with a copy to:
Xxxxx Xxxxxxx Xxxxxxx & Xxxxx LLP
Commerce Executive Park III
Suite 610
0000 Xxxxxxxxxx Xxxx Xxxxx
Xxxxxx, Xxxxxxxx 00000-0000
Telecopy: 000-000-0000
Attention: Xxxxx X. Xxxxxxxx, Esquire
If to an Investor, at his or its address set forth in Schedule
I, or at such other address or addresses as may have been furnished to the
Company in writing by the Investor, with a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Telecopy: 000-000-0000
Attention: Xxxx X. Xxxxxxx, Esquire
Notices provided in accordance with this Section 8.4 shall be deemed
delivered upon personal delivery or upon facsimile delivery, receipt confirmed,
one day after placement with a reputable overnight delivery service or two
business days after deposit in the U.S. mail, postage prepaid.
8.6 Complete Agreement. This Agreement together with the
other agreements contemplated by the Purchase Agreement embody the entire
agreement and understanding between the parties hereto with respect to the
subject matter hereof and supersede all prior agreements and understandings
relating to such subject matter.
8.7 Amendments and Waivers. Except as otherwise
expressly set forth in this Agreement, any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders in
interest of no less than a majority in interest of the Shares taken together;
provided, that the terms and conditions set forth in Section 3 and this Section
8 may only be amended or waived with the consent of the holders in interest of
(a) 66.67% of the then outstanding Series A Preferred Stock and Series B
Preferred Stock, voting together as a single class, and (b) at least a majority
of the
13
then outstanding Series C Preferred Stock. Section 4.4 hereof shall only be
amended or waived with the written consent of Xxxxx. Any amendment or waiver
effected in accordance with this Section 8.7 shall be binding upon each holder
of any Preferred Stock or Shares, as applicable, each future holder of all such
securities and the Company. No waivers of or exceptions to any term, condition
or provision of this Agreement, in any one or more instances, shall be deemed
to be, or construed as, a further or continuing waiver of any such term,
condition or provision.
8.8 Counterparts; Facsimile Signatures. This Agreement
may be executed in any number of counterparts, each of which shall be deemed to
be an original, and all of which together shall constitute one and the same
document. This Agreement may be executed by facsimile signatures.
8.9 Section Headings. The headings of the sections,
subsections, and paragraphs of this Agreement are for the convenience of the
parties and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
{Signatures on following page}
* * *
14
IN WITNESS WHEREOF, the parties have executed this Investor Rights Agreement as
of the date first written above.
COMPANY:
SEQUOIA SOFTWARE CORPORATION
By: /s/ Xxxx Wesker
----------------------------
Xxxx Wesker, President
INVESTORS:
XXXXX COMMUNICATIONS FUND, L.P.
By: Xxxxx Capital Partners, LLC
General Partner
By: /s/ Xxxxxxxx Xxxxxxx
----------------------------
Xxxxxxxx Xxxxxxx, Manager
DIVINE INTERVENTURES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
----------------------------
Xxxxxx X. Xxxxxxxxxx,
ANTHEM CAPITAL, L.P.
By: Anthem Capital Partners, L.P.,
General Partner
By: Anthem Capital Partners, Inc.
General Partner
By: /s/ Xxxxxxx X. Xxxx, XX
----------------------------
Xxxxxxx X. Xxxx, XX, President
{Signatures Continued on Next Page}
14
15
NEPA VENTURE FUND II, L.P.
By: NEPA II Management Corporation
General Partner
By: /s/ Xxxx Xxxxxx
----------------------------
Xxxx Xxxxxx, Vice President
/s/ Xxxxxxx X. Faint, Jr.
----------------------------
XXXXXXX X. FAINT, JR.
/s/ Xxxxxxx X. Xxxx
----------------------------
XXXXXXX X. XXXX
APPROVED XXXXXX XXXXXX XXXX TRUST ESTATE
- TRUST B
By: /s/ Miro Vranac, Jr. By: /s/ X.X. Xxxxxxx
-------------------- ----------------------------
Miro Vranac, Jr., X.X. Xxxxxxx, Trustee
Member Advisory Board
XXXX XXXXXX XXXX TRUST -
XXXX XXXXXXXXXX
By: /s/ Xxxx Xxxx Xxxxxxxxxx, Trustee By: /s/ Miro Vranac, Jr., Trustee
-------------------- ----------------------------
Xxxx Xxxx Xxxxxxxxxx, Xxxx Vranac, Jr., Trustee
Trustee
/s/ Xxxx Xxxx Xxxxxxxxxx
----------------------------
XXXX XXXX XXXXXXXXXX
FLANDERS LANGUAGE VALLEY
FUND, C.V.A.
By: /s/ Xxxxxx Xxxxxxxxx
----------------------------
Name: Xxxxxx Xxxxxxxxx
----------------------------
Title: CEO FLV Management NV
----------------------------
{Signatures Continue on Next Page}
16
LAMBRO'S L.P.
By: CJ Capital Management LLC
By: /s/ Xxxxxx Xxxxxx
--------------------------
Xxxxxx Xxxxxx
Investment Advisor
SMART TECHNOLOGY VENTURES 2, LLC
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Name: Xxxxx Xxxxxxxx
----------------------
Title: Chief Investment Officer
----------------------
/s/ Xxxxxx Xxxxxx
----------------------------
XXXXXX XXXXXX
/s/ Xxxxxxxxxx Xxxxx Many
----------------------------
XXXXXXXXXX XXXXX MANY
/s/ Xxxxxx X. Xxxxxxxxxx
----------------------------
XXXXXX X. XXXXXXXXXX
ODYSSEY CAPITAL, LP
By: /s/ Xxxxxx X. Xxxxxxxx
----------------------------
Name:Xxxxxx X. Xxxxxxxx
----------------------
Title: Partner
----------------------
/s/ Xxxx Xxxxxxxx
----------------------------
XXXX XXXXXXXX
{Signatures Continue on Next Page}
17
JODA ENTERPRISES LTD.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
Title: President
{Signatures Continue on Next Page}
18
SEQ CAPITAL INVESTMENTS
By: /s/ Xx. Xxxxxxx Xxxxxxx
----------------------------
Name: Xx. Xxxxxxx Xxxxxxx
Title: General Partner
---------------------
X. XXXXXXX FAMILY TRUST DATED 8/15/93
By: /s/ Xxxxxxx Xxxxxxx
----------------------------
Name: Xxxxxxx Xxxxxxx
---------------------
Title: Trustee
---------------------
W. XXXXXXX XXXXX AND XXXX X. XXXXX
AS JOINT TENANTS WITH RIGHT OF SURVIORSHIP
By: /s/ W. Xxxxxxx Xxxxx
----------------------------
W. Xxxxxxx Xxxxx
By: /s/ Xxxx X. Xxxxx
----------------------------
Xxxx X. Xxxxx
/s/ Xxxxxx Xxxxx
----------------------------
XXXXXX XXXXX
/s/ Cillian S. O'Bradaigh
----------------------------
CILLIAN S. O'BRADAIGH
/s/ Xxxx Xxxxxxxx Xxxxx
----------------------------
XXXX XXXXXXXX XXXXX
/s/ Xxxxx Xxxx
----------------------------
XXXXX XXXX
/s/ Xxxxxx Xxxxxx
----------------------------
XXXXXX XXXXXX
{Signatures Continue on Next Page}
19
/s/ Xxxxx Xxxxxxxxxx
----------------------------
XXXXX XXXXXXXXXX
X'XXXXX COMMUNITY PROPERTY TRUST
By: /s/ Xxxxx X' Xxxxx, Trustee
----------------------------
Xxxxx X' Xxxxx, Trustee
20
SCHEDULE I
---------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF INVESTOR AGGREGATE PURCHASE TYPE OF CONSIDERATION SHARES OF SERIES C
---------------------------- ------------------ --------------------- ------------------
PRICE PREFERRED
----- ---------
---------------------------------------------------------------------------------------------------------------------
Xxxxx Communications Fund, L.P. $15,000,000 Cash 14,585,197
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx X. Xxxxxx
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
divine interVentures, inc. $5,000,000 Cash 4,861,732
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxxxxx
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Anthem Capital, L.P. $448,600.13 Convertible Note 436,195
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000-0000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
NEPA Venture Fund II, L.P. $174,310.89 Convertible Note 169,491
c/o Mid-Atlantic Venture Funds
0000 Xxxxxx Xxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. Faint, Jr. $419,377.78 Convertible Note 407,781
Sequoia Software Corporation
Overlook Center
0000 Xxxx Xxxxxx Xxxx
Xxxxxxxx, Xxxxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxx $182,661.11 Convertible Note 177,610
0000 Xxxxx Xxxxxx Xxxx
Xxxxx Xxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx Xxxx Trust Estate - Trust B $249,386.67 Convertible Note 242,490
Attn: X.X. Xxxxxxx, Trustee
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
21
---------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF INVESTOR AGGREGATE PURCHASE TYPE OF CONSIDERATION SHARES OF SERIES C
---------------------------- ------------------ --------------------- ------------------
PRICE PREFERRED
----- ---------
---------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxx Xxxx Trust - Xxxx Xxxxxxxxxx Convertible Note 80,830
Attn: Miro Vranac, Jr., Trustee $83,128.89
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxx Xxxx Xxxxxxxxxx $8,312.89 Convertible Note 8,083
0000 Xxxxxx Xxxx, Xxxxx 0000
Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Flanders Language Valley Fund, C.V.A. $519,555.56 Convertible Note 505,188
Flanders Language Valley 63
B-8900 IEPER
Belgium
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Lambro's L.P. $1,133,466.66 Convertible Note 1,100,178
c/o Xxxxxx Xxxxxx
CJ Capital Management LLC
000 Xxxxx Xxxxxxxx,
Xxxxx 0000
Xx Xxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Smart Technology Ventures 2 $515,222.22 Convertible Note 500,975
YDS Investments
0000 Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx $103,044.44 Convertible Note 100,195
0000 Xxxxxx Xxxx
Xxxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxxxxxx Xxxxx Many $103,044.44 Convertible Note 100,195
Xxx Xxxx-Xxxx 00
X-0000 Xxxxxxxxxx
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Joda Enterprises Ltd. $81,191.11 Convertible Note 84,780
00000 Xxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxx X. Xxxxxxxxxx $455,400.00 Convertible Note 442,807
divine interVentures, inc.
0000 Xxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
22
---------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF INVESTOR AGGREGATE PURCHASE TYPE OF CONSIDERATION SHARES OF SERIES C
---------------------------- ------------------ --------------------- ------------------
PRICE PREFERRED
----- ---------
---------------------------------------------------------------------------------------------------------------------
Odyssey Capital, LP $102,022.22 Convertible Note 98,229
0 Xxxx Xxxxx Xxxx
Xxxxx 000
Xxxx Xxxxxx, XX 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx $151,533.33 Convertible Note 147,343
Inland Homes
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
SEQ Capital Investments $176,788.89 Convertible Note 171,900
0000 Xxxxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attn: Xx. Xxxxxxx Xxxxxxx
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxxx Revocable Trust Dated 8/15/93 $176,788.89 Convertible Note 171,900
C/o Task International
000 Xxxxx Xxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000-0000
Attn: Xxxxxxx Xxxxxxx
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
W. Xxxxxxx Xxxxx and Xxxx X. Xxxxx as $7,071.56 Convertible Note 6,876
JTWROS
000 Xxxx 00xx Xxxxxx
Xxx 00X
Xxx Xxxx, Xxx Xxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxx $7,071.56 Convertible Note 6,876
000 Xxxxxx Xxxxxx, Xxx 000
Xxx Xxxx, Xxx Xxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Cillian S. O'Bradaigh $8,081.78 Convertible Note 7,858
00 Xxxxxx Xxxxx
Xxxxxxxxxx
Xx. Xxxxxx
Xxxxxxx
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
23
---------------------------------------------------------------------------------------------------------------------
NAME AND ADDRESS OF INVESTOR AGGREGATE PURCHASE TYPE OF CONSIDERATION SHARES OF SERIES C
---------------------------- ------------------ --------------------- ------------------
PRICE PREFERRED
----- ---------
---------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxx $15,153.33 Convertible Note 14,734
Three World Financial Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxx Xxxxxxxx Xxxxx $5,051.11 Convertible Note 4,911
Xxx Xxxxx Xxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
---------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx $20,204.44 Convertible Note 19,646
Three World Financial Xxxxxx
00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
---------------------------------------------------------------------------------------------------------------------
24
SCHEDULE II
------------------------------------------------------------------------------------------------
STOCKHOLDER NAME SERIES OF PREFERRED STOCK
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Series A Convertible Preferred Stock
Anthem Capital, L.P. Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Series A Convertible Preferred Stock
NEPA Venture Fund II, L.P. Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Xxxxxxx X. Faint, Jr. Series A Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Xxxxxxx Xxxx Series A Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxxxxx Series A Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Xxxxxx Xxxxxx Xxxx Trust Estate - Trust B Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Xxxx Xxxxxx Xxxx Trust - Xxxx Xxxxxxxxxx Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Xxxx Xxxx Xxxxxxxxxx Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
Flanders Language Valley Fund, C.V.A. Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
X'Xxxxx Community Property Trust Series B Convertible Preferred Stock
------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------
