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EXHIBIT 10.6
NOVIENT, INC.
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made as of
February 24, 2000, by and among Novient, Inc., a Georgia corporation (the
"Company"), and the Investors listed on the Schedule of Investors attached
hereto (identified as "Series C Investors," "Series B Investors" and "Series A
Investor," and collectively, as the "Investors").
WHEREAS, the Company has entered into a Series A Preferred Stock
Purchase Agreement dated September 12, 1997 with the Series A Investor whereby
the Company sold, and the Series A Investor purchased, shares of Series A
Preferred Stock of the Company; and
WHEREAS, the Company has entered into a Series B Preferred Stock
Purchase Agreement dated March 3, 1999 with the Series B Investors whereby the
Company sold, and the Series B Investors purchased, shares of Series B Preferred
Stock of the Company; and
WHEREAS, the Company and the Series C Investors are entering into a
Series C Preferred Stock Purchase Agreement of even date herewith (the "Stock
Purchase Agreement") whereby the Company will sell, and the Series C Investors
will purchase, shares of Series C Preferred Stock of the Company (the
"Financing"); and
WHEREAS, the Stock Purchase Agreement requires, as a condition to
closing the Financing, that the parties hereto enter into this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1
REGISTRATION RIGHTS
1.1 Certain Definitions. For purposes of this Agreement:
(a) The term "Form S-3" means such form under the
Securities Act as in effect on the date hereof or any successor form under the
Securities Act;
(b) The term "Holder" means any person, including the
Investors, owning or having the right to acquire Registrable Securities or any
assignee thereof in accordance with Section 1.11 of this Agreement.
(c) The terms "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended, or successor statute (the "Securities Act"), and the
declaration or ordering of effectiveness of such registration statement or
document.
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(d) The term "Registrable Securities" means (i) the
shares of common stock of the Company (the "Common Stock") issuable or issued
upon conversion of the Series C Preferred Stock, Series B Preferred Stock and
Series A Preferred Stock, (ii) any other shares of Common Stock of the Company
issued as (or issuable upon the conversion or exercise of any warrant, right or
other security which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, the shares listed in (i); provided,
however, that the foregoing definition shall exclude in all cases any
Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been (A) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale.
(e) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which shares of Common
Stock would be Registrable Securities.
(f) The term "Qualified IPO" means a firm commitment
underwritten public offering by the Company of shares of its Common Stock
pursuant to a registration statement under the Securities Act, at a minimum
price per share of $15.32 (as adjusted for stock dividends, combinations,
recapitalizations, splits and otherwise), which results in minimum aggregate
cash proceeds to the Company, net of any underwriting commissions or discounts,
of $15,000,000.
(g) The term "SEC" means the Securities and Exchange
Commission.
1.2 Demand Registration.
(a) If the Company shall receive at any time, after the
earlier of (i) February 24, 2003, or (ii) six (6) months after the effective
date of the first registration statement for a public offering of securities of
the Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan, an offering or sale of securities pursuant to a Form
S-4 (or successor form) registration statement, or an SEC Rule 145 transaction),
a written request from the Holders of at least forty percent (40%) of the
Registrable Securities then outstanding that the Company file a registration
statement under the Securities Act covering the registration of at least such
number of the Registrable Securities then outstanding as would yield an
aggregate offering price of at least $15,000,000, then the Company shall, within
ten (10) days of the receipt thereof, give written notice of such request to all
Holders and shall, subject to the limitations of subsection 1.2(b) and 1.2(d),
use its best efforts to effect as soon as practicable, the registration under
the Securities Act of all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company.
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(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by a majority in interest of
the Initiating Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the President or Chief Executive Officer of the
Company stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than ninety (90) days after
receipt of the request of the Initiating Holders; provided, however, that the
Company may not utilize this right more than once in any twelve (12) month
period.
(d) In addition and without limitation of the provisions
of Section 1.15 hereof, the Company shall not be obligated to effect, or to take
any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two (2)
registrations pursuant to Section 1.2 and such registrations have been declared
or ordered effective;
(ii) During the sixty (60) day period prior to
the Company's good faith estimate of the date of filing of a registration
subject to Section 1.3 hereof; provided that the Company (i) is actively
employing in good faith its best efforts to cause such registration statement to
become effective and (ii) provides written notice of such proposed filing to the
Holders within fifteen (15) days after receipt of the written request from the
Holders pursuant to Section 1.2(a);
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(iii) If the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on Form
S-3 (or any successor form that provides for short-form registration) pursuant
to a request made pursuant to Section 1.4 below; or
(iv) During the one hundred eighty (180) day
period after the effective date of the first registration statement for a public
offering of securities of the Company.
(e) Notwithstanding the foregoing, a registration will
not count as one of the two (2) required registrations under Section 1.2(d)(i)
unless: (a) the Holders seeking to sell shares in such registration were able to
sell a minimum of fifty percent (50%) of the shares sought to be so registered
in such registration, and (b) the Company did not include for its own account
shares to be sold in such registration (other than upon the request of Holders
of at least two-thirds (2/3) of the Registrable Securities then outstanding).
1.3 Company Registration. If the Company proposes to register
(including for this purpose a registration effected by the Company for
stockholders other than the Holders) any of its securities under the Securities
Act in connection with the public offering of such securities solely for cash
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan, an offering or sale of securities pursuant
to a Form S-4 (or successor form) registration statement or an SEC Rule 145
transaction), the Company shall, at such time, promptly give each Holder written
notice of such registration. Upon the written request of each Holder given
within twenty (20) days after mailing of such notice by the Company, the Company
shall, subject to the provisions of Section 1.8, cause to be registered under
the registration referred to in the prior sentence under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered.
1.4 Form S-3 Registration. In case the Company shall receive from
one or more of the Holders of Registrable Securities a written request or
requests that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within fifteen (15) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section 1.4
if: (i) Form S-3 is not available for such offering by the Holders; (ii) the
Holders, together with the holders of any other securities of the Company
entitled to inclusion in such registration, propose to sell Registrable
Securities and such other securities (if any) at an aggregate price to the
public (net of any underwriters' discounts or commissions) of less than
$1,500,000; (iii) the Company has, within the twelve (12) month period preceding
the date of such request, effected two registrations on Form S-3 for the Holders
pursuant to this
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Section 1.4 that have been declared or ordered effective; or (iv) the Company
shall furnish to such Holders a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith judgment of the
board of directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 registration statement to be
filed and it is therefore essential to defer the filing of such registration
statement, in which event the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Holder or Holders under this Section 1.4; provided, however, that the
Company may not utilize this right more than once in any twelve (12) month
period.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as registrations effected pursuant to Sections
1.2 or 1.3 hereof.
(d) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.4 and the Company shall include such information in the written
notice referred to in subsection 1.4(a).
1.5 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
eighty (180) days, but no later than the date that all such securities
registered under registration statement have been sold thereunder.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for up to one hundred eighty
(180) days, but no later than the date that all such securities registered under
registration statement have been sold thereunder.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
blue sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided, however, that the Company shall not be
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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, and 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, such obligation to continue until the earlier of (i) the sale of all
Registrable Securities registered pursuant to the registration statement of
which such prospectus forms a part or (ii) the withdrawal of such registration
statement.
(g) Cause all such Registrable Securities registered
pursuant to this Agreement to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Use its best 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 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.
1.6 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required under applicable securities laws to effect the registration
of such Holder's Registrable Securities. The Company shall have no obligation
with respect to any registration requested pursuant to Section 1.2 or Section
1.4 of this Agreement if, as a result of
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the application of the preceding sentence, the number of shares or the
anticipated aggregate offering price of the Registrable Securities to be
included in the registration does not equal or exceed the number of shares or
the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(a) or subsection 1.4(b)(ii), whichever is applicable.
1.7 Expenses of Registration.
(a) Expenses of Demand Registration. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one (1) counsel for the selling Holders
selected by them, shall be borne by the Company; provided, however, that the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one (1) demand registration pursuant
to Section 1.2.
(b) Expenses of Company Registration. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications of Registrable Securities pursuant to
Section 1.3 for each Holder, including (without limitation) all registration,
filing, and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and the reasonable fees and
disbursements of one (1) counsel for the selling Holders selected by them, shall
be borne by the Company.
(c) Expenses of Registration on Form S-3. All expenses
other than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications of Registrable Securities requested
pursuant to Section 1.4, including (without limitation) all registration,
filing, qualification, printers' and accounting fees and the reasonable fees and
disbursements of one (1) counsel for the selling Holders selected by them, shall
be borne by the Company.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of
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securities entitled to be included therein (without regard to the number of
securities actually requested to be included therein) owned by each selling
stockholder or in such other proportions as shall mutually be agreed to by such
selling stockholders) but in no event shall (i) the amount of Registrable
Securities of the selling 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 if the underwriters make
the determination described above and no other stockholder's securities are
included), and (ii) any party sell securities in such registration other than
the Company and the Holders. For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a Holder of
Registrable Securities and which is a partnership or corporation, the partners,
retired partners and stockholders of such holder, or the estates and family
members of any such partners and retired partners and any trusts for the benefit
of any of the foregoing persons shall be deemed to be a single "selling
stockholder" and any pro rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any "underwriter" (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained in
such registration statement or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading,
(iii) the omission or alleged omission to state in any preliminary prospectus or
final prospectus a material fact necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or (iv) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law; and the
Company will pay to each such Holder, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor
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shall the Company be liable to any Holder, underwriter or controlling person for
any such loss, claim, damage, liability, or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, any underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with such
registration; and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 1.10(b), in connection with investigating or defending any
such loss, claim, damage, liability, or action; provided, however, that the
indemnity agreement contained in this subsection 1.10(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder (which consent
shall not be unreasonably withheld); provided further, that in no event shall
any indemnity under this subsection 1.10(b) exceed the net proceeds from the
offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one (1) separate
counsel, with the reasonable fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.10 only to the extent that such failure
to deliver was prejudicial to its ability to defend such action, but the
omission so to deliver written notice to the indemnifying party will not relieve
it of any liability that it may have to any indemnified party otherwise than
under this Section 1.10.
(d) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage or expense
referred to therein, then the indemnifying party, in lieu of
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indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss, liability,
claim, damage, or expense in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations; provided, that in no event shall any contribution by a Holder
under this subsection 1.10(d) exceed the net proceeds from the offering received
by such Holder. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1 and shall survive
the termination of this Agreement and otherwise. No indemnifying party, in the
defense of any such loss, claim, change, liability or action, 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 a provision thereof, the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect to such loss, claim, damage, liability or action.
1.11 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to (i) any
"affiliate" of such Holder (as defined under the Securities Act), (ii) such
Holder's spouse, parents, siblings, children or grandchildren, or other members
of such Holder's immediate or extended family (including relatives by marriage),
or to a custodian, trustee or other fiduciary for the account of such Holder or
members of such Holder's immediate or extended family in connection with an
estate planning transaction, or (iii) a transferee or assignee of at least
twenty-five percent (25%) of such Holder's Registrable Securities, provided the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned and such
transferee or assignee becomes a party to this Agreement. For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a business entity who
are affiliates, retired affiliates of such entity (including spouses and
ancestors, lineal descendants and siblings of such affiliates or affiliates who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the business entity; provided that all assignees
and transferees who would not qualify individually for assignment of
registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under Section 1.
1.12 Limitations on Subsequent Registration Rights. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of the Holders of at least a majority of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2, 1.3 or
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1.4 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of its securities will not reduce the amount of the
Registrable Securities of the Holders which is included, or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within one hundred eighty (180) days of the effective date of any
registration effected pursuant to Section 1.2 or 1.4 hereof.
1.13 Reports under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public pursuant to a
registration on Form S-3 or without registration, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after the
effective date of the first registration statement filed by the Company for the
offering of its securities to the general public so long as the Company remains
subject to the periodic reporting requirements under Sections 13 or 15(d) of the
Exchange Act;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 (or any successor form that
provides for short-form registration) for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act; and
(d) furnish to any Holder, so long as accurate and so
long as the Holder owns any Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of SEC Rule 144 (at any time after ninety (90) days after the
effective date of the first registration statement filed by the Company), the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (or any successor form that
provides for short-form registration) (at any time after it so qualifies), (ii)
a copy of the most recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii) such other
information as may be reasonably requested in availing any Holder of any rule or
regulation of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.14 "Market Stand-Off" Agreement.
(a) Each Holder hereby agrees that, during the period of
duration (up to, but not exceeding, one hundred eighty (180) days) specified by
the Company and an underwriter of Common Stock or other securities of the
Company, following the effective date of a registration statement of the Company
filed under the Securities Act, it shall not, to the extent requested by
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the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration;
provided, however, (i) such agreement shall be applicable only with respect to
an underwritten initial public offering of Common Stock (whether such offer was
initiated by the Company or the Initiating Holders), and (ii) that all officers
and directors of the Company, all one percent (1%) security holders, and all
other persons with registration rights (whether or not pursuant to this
Agreement) enter into similar agreements.
(b) In order to enforce the foregoing covenant, the
Company may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period, and each
Holder agrees that, if so requested, such Holder will execute an agreement in
the form provided by the underwriter containing terms which are essentially
consistent with the provisions of this Section 1.14.
1.15 Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to Section 1.2,
1.3 or 1.4 hereof shall terminate on the closing of the first Company-initiated
registered public offering of Common Stock of the Company, if all shares of
Registrable Securities held or entitled to be held upon conversion by such
Holder may immediately be sold under Rule 144 during any 90-day period, or on
such date after the closing of the first Company-initiated registered public
offering of Common Stock of the Company as all shares of Registrable Securities
held or entitled to be held upon conversion by such Holder may immediately be
sold under Rule 144 during any 90-day period.
SECTION 2
INFORMATION RIGHTS
2.1 Delivery of Financial Statements. The Company shall deliver to
each of the Series C Investors and Series B Investors (so long as such Investors
and their affiliates holds Registrable Securities):
(a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by an independent public accounting firm of national
reputation selected by the Company and acceptable to a majority in interest of
the Series C and Series B Investors;
(b) as soon as practicable, but in any event within
thirty (30) days after the end of each month and within thirty (30) days after
the end of each of the first three (3) quarters of each fiscal year of the
Company, an unaudited profit or loss statement, a statement of cash
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flows and summary of bookings for such month and quarter, respectively, and an
unaudited balance sheet as of the end of such month and quarter, respectively;
(c) as soon as practicable, but in any event within
thirty (30) days prior to the end of each fiscal year, a budget for the next
fiscal year, including balance sheets and sources of applications of funds
statements for such months and, as soon as prepared, any other budgets or
revised budgets prepared by the Company;
(d) as soon as practicable, but in any event within
thirty (30) days after the end of each month and within thirty (30) days after
the end of each quarter, a comparison between the actual financial figures for
such month or quarter, as applicable, and the comparable figures included in the
budget, with an explanation of any material differences between them;
(e) with respect to the financial statements called for
in subsections (b) and (d) of this Section 2.1, an instrument executed by the
Chief Financial Officer or President or Chief Executive Officer of the Company
certifying that such financials were prepared in accordance with GAAP
consistently applied with prior practice for earlier periods (with the exception
of footnotes that may be required by GAAP) and fairly present the financial
condition of the Company and its results of operation for the period specified
in all material respects, subject to year-end audit adjustment, provided that
the foregoing shall not restrict the right of the Company to change its
accounting principles consistent with GAAP, if the board of directors determines
that it is in the best interest of the Company to do so; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as a Series C
Investor or Series B Investor that owns Registrable Securities or any assignee
of such Investor that has been transferred more than 25% of such transferor's
Registrable Securities may from time to time reasonably request; provided,
however, that the Company shall not be obligated under this subsection 2.1(f) or
any other subsection of Section 2 to provide information which it deems in good
faith to be a trade secret or similar confidential information.
2.2 Inspection. The Company shall permit each Series C Investor
and Series B Investor that owns Registrable Securities, at such Investor's
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by such
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 2.2 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information.
2.3 Termination of Information Rights. The covenants set forth in
Section 2 shall terminate and be of no further force or effect (i) immediately
prior to the consummation of a Qualified IPO, or (ii) after the Company shall
sell, convey, or otherwise dispose of or encumber all or substantially all of
its property or business or merge into or consolidate with any other corporation
(other than a wholly-owned subsidiary corporation) or effect any other
transaction or series of related transactions in which more than fifty percent
(50%) of the voting power of the Company is transferred, provided that this
subsection 2.3 shall not apply to a merger effected exclusively for the purpose
of changing the domicile of the Company.
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SECTION 3
RIGHT OF FIRST OFFER
3.1 General. Subject to the terms and conditions specified in this
Section 3, the Company hereby grants to each Series B Investor and Series C
Investor a right of first offer with respect to future sales by the Company of
its "Shares" (as hereinafter defined). For purposes of this Section 3, an
Investor includes any of its general or limited partners, members and
affiliates. A Series B Investor or Series C Investor who chooses to exercise the
right of first offer may designate as purchasers under such right itself or its
partners, members or affiliates in such proportions as it deems appropriate.
3.2 Mechanics. Each time the Company proposes to offer any shares
of, or securities convertible into or exercisable for any shares of, any class
of its capital stock ("Shares"), the Company shall first make an offering of
such Shares to each Series B Investor and Series C Investor in accordance with
the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Investors stating (i) its bona fide intention to offer such
Shares, (ii) the number of such Shares to be offered, and (iii) the price and
terms, if any, upon which it proposes to offer such Shares.
(b) Within twenty (20) calendar days after delivery of
the Notice, the Investor may elect by sending an a notice ("Election Notice") to
the Company to purchase or obtain, at the price and on the terms specified in
the Notice, up to that portion of such Shares which equals a fraction, the
numerator of which shall be the number of shares of Common Stock then held by
the Series B Investor or Series C Investor (assuming full conversion and
exercise of all securities then convertible or exercisable), and the denominator
of which shall be the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion and exercise of all securities then
convertible or exercisable into or for Common Stock).
(c) Within five (5) days after the expiration of the
foregoing 20 day period, the Company shall give to each Series B Investor and
Series C Investor who has elected to purchase his or its pro rata share (a
"Fully Participating Holder") written notice indicating the number of remaining
New Securities not elected for purchase by the other Series B Investors and
Series C Investors (the "Second Notice"). Each Fully Participating Holder shall
have the option, exercisable by so specifying in a subsequent written notice to
the Company (the "Second Election Notice"), given to the Company within five (5)
days after receiving the Second Notice, to purchase such Fully Participating
Holder's pro rata portion of any remaining New Securities not purchased by other
Series B Investors and Series C Investors pursuant to this Subsection 3.2(c).
(d) The Company may, during the ninety (90) day period
following the expiration of the period provided in subsection 3.2(c) hereof,
offer the remaining unsubscribed portion of the Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than,
those specified in the Notice. If the Company does not consummate the sale of
the Shares within such 90-day period, the right provided hereunder shall
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be deemed to be revived and such Shares shall not be offered unless first
reoffered to the Investors in accordance herewith.
3.3 Inapplicable Issuance of Securities. The right of first offer
in this Section 3 shall not apply (i) to the issuance or sale of up to 1,156,469
shares of Common Stock (or options therefor) to employees, directors and
officers pursuant to plans or agreements approved by the board of directors for
the primary purpose of soliciting or retaining their services, (ii) to or after
the consummation of a Qualified IPO, (iii) the issuance of securities pursuant
to the conversion or exercise of convertible or exercisable securities issued on
or prior to the date hereof or including the exercise of employee options and
the conversion of shares of Series C Preferred Stock, Series B Preferred Stock
or Series A Preferred Stock, (iv) the issuance of securities in connection with
a bona fide business acquisition by the Company of another business entity,
products or technologies or pursuant to a strategic partnership, provided that
any such transaction is approved by the board of directors of the Company with
the consent of the directors designated by the holders of Series C Preferred
Stock and Series B Preferred Stock, (v) the issuance of shares of Common Stock
to financial institutions in connection with bona fide commercial credit
arrangements approved by the Board of Directors of the Company with the consent
of the directors designated by the holders of the Series C Preferred Stock and
Series B Preferred Stock, and (vi) the issuance of securities in connection with
any stock split or stock divided by the Company.
3.4 Termination of Right of First Offer. The covenants set forth
in Section 3 shall terminate as to each Series B Investor and Series C Investor
and be of no further force or effect (i) immediately prior to the consummation
of a Qualified IPO or (ii) after the Company shall sell, convey, or otherwise
dispose of or encumber all or substantially all of its property or business or
merge into or consolidate with any other corporation (other than a wholly-owned
subsidiary corporation) or effect any other transaction or series of related
transactions in which more than fifty percent (50%) of the voting power of the
Company is transferred, provided that this subsection 3.4 shall not apply to a
merger effected exclusively for the purpose of changing the domicile of the
Company.
SECTION 4
MISCELLANEOUS
4.1 Enforceability/Severability. The parties hereto agree that
each provision of this Agreement shall be interpreted in such a manner as to be
effective and valid under applicable law. If any provision of this Agreement
shall nonetheless be held to be prohibited by or invalid under applicable law,
such provision shall be effective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement.
4.2 Remedies. Each party hereto will be entitled to enforce its
rights under this Agreement specifically, to recover damages by reason of any
breach of any provision hereof, and to exercise all other rights existing in its
favor. Each party hereto agrees and acknowledges that money damages may not be
an adequate remedy for any breach of the provisions of this
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Agreement and that each holder may, in its sole discretion, apply for specific
performance and injunctive relief in order to enforce or prevent any violations
of the provisions of this Agreement.
4.3 Entire Agreement; Successors and Assigns. The Registration
Rights Agreement, dated as of March 3, 1999, by and among the Company,
Noro-Xxxxxxx Partners IV, L.P., Hummer Winblad Venture Partners III, L.P.,
Hummer Winblad Technology Fund III, L.P., and Intelligent Systems Corporation is
hereby terminated and is of no force or effect. This agreement constitutes the
entire agreement between the parties hereto relative to the subject matter
hereof and supersedes any previous agreement among the parties. Subject to the
exceptions specifically set forth in this Agreement, the terms and conditions of
this Agreement shall inure to the benefit of and be binding upon the respective
executors, administrators, heirs, successors and assigns of the parties.
4.4 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of Georgia.
4.5 Counterparts. This Agreement may be executed in counterparts,
each of which shall be an original, but all of which together shall constitute
one and the same instrument.
4.6 Headings. The section headings of this Agreement are for
convenience and shall not by themselves determine the interpretation of this
Agreement.
4.7 Notices. Any notice required or permitted hereunder shall be
given in writing and shall be conclusively deemed effectively given upon
personal delivery, or delivery by overnight courier, or five (5) days after
deposit in the United States mail, by registered or certified mail, postage
prepaid, addressed (i) if to the Company, as set forth below the Company's name
on the signature page of this Agreement, and (ii) if to an Investor, to such
Investor's address as set forth on the Schedule of Investors, or at such other
address as the parties may designate by ten (10) days' advance written notice to
the other parties.
4.8 Amendment of Agreement. Any provision of this Agreement may be
amended by a written instrument signed by the Company and by the Investors
holding a majority of the Registrable Securities then outstanding then held by
the Investors.
[Signatures on Following Pages]
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IN WITNESS WHEREOF, the parties hereto have executed this Investor
Rights Agreement as of the date above set forth.
"COMPANY"
NOVIENT , INC.
0000 Xxxxxxxx Xxxx
Seven Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
Fax: 000-000-0000
By: /s/ X. Xxxxxx Xxxx
--------------------------------------------
Name: X. Xxxxxx Wise
-----------------------------------
Title: President
-----------------------------------
"INVESTORS"
SERIES C INVESTORS:
MELLONVENTURES, L.P.
By: /s/ Xxx Xxxx
--------------------------------------------
Name: Xxx Xxxx
-----------------------------------
Title: Associate
-----------------------------------
XXXXXX XXXXXX VENTURE FUND II,
LIMITED PARTNERSHIP
By: Xxxxxx Xxxxxx Venture Partners II, LLC
its General Partner
By: /s/ W. Xxxxx Xxxxxx
--------------------------------------------
Name: W. Xxxxx Xxxxxx
-----------------------------------
Title: Managing Director
-----------------------------------
SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
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FIRST UNION CAPITAL PARTNERS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
-----------------------------------
Title: Vice President
-----------------------------------
R-H CAPITAL PARTNERS, L.P.
By: R-H/Travelers, L.P., its general partner
By: R-H Capital, Inc., its general partner
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------------
Title: Managing Director
-----------------------------------
NORO-XXXXXXX PARTNERS IV, L.P.
By: MKFJ IV, LLC, its general partner
By: A Member
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Member
-----------------------------------
NORO-XXXXXXX PARTNERS IV-B, L.P.
By: MKFJ IV, LLC, its general partner
By: A Member
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Member
-----------------------------------
SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
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HUMMER WINBLAD VENTURE PARTNERS FUND IV,
L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------
Title: Partner
-----------------------------------
HUMMER WINBLAD TECHNOLOGY FUND IV, L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------
Title: Partner
-----------------------------------
SERIES B INVESTORS:
NORO-XXXXXXX PARTNERS IV, L.P.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
-----------------------------------
Title: Member
-----------------------------------
HUMMER WINBLAD VENTURE PARTNERS III, L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------
Title: Partner
-----------------------------------
HUMMER WINBLAD TECHNOLOGY FUND III, L.P.
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------------
Title: Partner
-----------------------------------
SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
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SERIES A INVESTOR:
INTELLIGENT SYSTEMS CORPORATION
By: /s/ Xxxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------------
Title: Vice President and CFO
-----------------------------------
SIGNATURE PAGE TO INVESTOR RIGHTS AGREEMENT
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SCHEDULE OF INVESTORS
INVESTOR ADDRESS
-------- -------
SERIES C INVESTORS:
-------------------
MellonVentures, L.P. Xxx Xxxxxxxx Xxxxx
Xxxxx 000
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attn: Xxx Xxxx
Fax: 000-000-0000
Xxxxxx Xxxxxx Venture Fund II, 000 Xxxxx Xxxxx Xxxxxx
Limited Partnership Suite 2675
Xxxxx, Xxxxxxx 00000
Attn: Xxxxx Xxxxxx
Fax: 000-000-0000
First Union Capital Partners, Inc. Xxx Xxxxx Xxxxx Xxxxxx, XX-0
Xxxxx Xxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attn: Art Roselle
Fax: 000-000-0000
R-H Capital Partners, L.P. 0000 Xxxxxxxxx Xxxx
00xx Xxxxx
Xxxxxxx, Xxxxxxx 00000
Attn: Xxx Xxxxxx & Xxxxxx Xxxxx
Fax: 000-000-0000
Noro-Xxxxxxx Partners IV, L.P. 0 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
Noro-Xxxxxxx Partners IV-B, L.P. 0 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
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SCHEDULE OF INVESTORS
Hummer Winblad Venture Partners Fund IV, L.P. 0 Xxxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
Hummer Winblad Technology Fund IV, L.P. 0 Xxxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
SERIES B INVESTORS:
Noro-Xxxxxxx Partners IV, L.P. 0 Xxxxx Xxxxxxx Xxxxxx
0000 Xxxxxxxxx Xxxxxxx, X.X.
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxx X. Xxxxxx
Fax: (000) 000-0000
Hummer Winblad Venture Partners III, L.P. 0 Xxxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
Hummer Winblad Technology Fund III, L.P. 0 Xxxxx Xxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxx
Fax: (000) 000-0000
SERIES A INVESTOR:
Intelligent Systems Corporation 0000 Xxxxxxxxxxx Xxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: President
Fax: 000-000-0000
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