Exhibit 4.3
XXXXXX.XXX, INC.
FOURTH AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
SEPTEMBER 30, 1999
TABLE OF CONTENTS
PAGE
1. AMENDMENT.........................................................1
1.1 Procedure................................................1
1.2 Rights of Holders........................................2
2. REGISTRATION RIGHTS...............................................2
2.1 Definitions..............................................2
2.2 Company Registration.....................................3
2.3 Obligations of the Company...............................3
2.4 Furnish Information......................................4
2.5 Expenses of Company Registration.........................4
2.6 Underwriting Requirements................................5
2.7 No Delay of Registration.................................5
2.8 Indemnification..........................................5
2.9 Reports Under Securities Exchange Act of 1934............7
2.10 Form S-3 Registration....................................8
2.11 Request for Registration.................................9
2.12 Assignment of Registration Rights.......................10
2.13 "Market Stand-Off" Agreement............................11
2.14 Termination of Registration Rights......................11
2.15 Limitations on Subsequent Registration Rights...........11
2.16 Right to Maintain Percentage Interest...................11
2.17 Board Representations...................................13
3. FINANCIAL INFORMATION............................................13
3.1 Annual and Quarterly Information........................13
3.2 Inspection..............................................14
3.3 Covenants of the Company................................14
3.4 Termination of Covenants................................14
4. MISCELLANEOUS....................................................14
4.1 Successors and Assigns..................................14
4.2 Governing Law...........................................15
4.3 Counterparts............................................15
i.
TABLE OF CONTENTS
(CONTINUED)
PAGE
4.4 Titles and Subtitles.....................................15
4.5 Notices..................................................15
4.6 Amendments and Waivers...................................16
4.7 Entire Agreement.........................................16
4.8 Severability.............................................16
4.9 Grant of Additional Rights...............................16
4.10 Waiver...................................................16
ii.
XXXXXX.XXX, INC.
FOURTH AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Third Amended and Restated Investor Rights Agreement ("AGREEMENT")
is entered into as of September 30, 1999, among Xxxxxx.xxx, Inc., a Delaware
corporation (the "COMPANY"), and the investors whose names are set forth on
EXHIBIT A hereto (individually an "INVESTOR," collectively, the "INVESTORS").
A. Certain investors (the "SERIES A INVESTORS") hold Series A Preferred
Stock (the "SERIES A SHARES") purchased from the Company pursuant to the Series
A Preferred Stock Purchase Agreement dated as of March 8, 1996, certain
investors (the "SERIES B INVESTORS") hold Series B Preferred Stock (the "SERIES
B SHARES") purchased from the Company pursuant to the Series B Preferred Stock
Purchase Agreements dated as of November 7, 1996, December 31, 1996, March 6,
1997 and August 29, 1997, certain investors (the "SERIES C INVESTORS") hold
Series C Preferred Stock (the "SERIES C SHARES") purchased from the Company
pursuant to the Series C Preferred Stock Purchase Agreements dated as of April
24, 1998 and June 30, 1998 and certain investors (the "SERIES D INVESTORS") hold
Series D Preferred Stock (the "SERIES D SHARES") purchased from the Company
pursuant to the Series D Preferred Stock Purchase Agreements dated as of May 5,
1999, May 13, 1999 and September 8, 1999. The Company, the Series A Investors,
the Series B Investors, the Series C Investors and the Series D Investors
previously entered into the Third Amended and Restated Investor Rights Agreement
(the "EXISTING AGREEMENT") dated as of May 13, 1999. The Company is proposing to
issue up to 5,000,000 shares of Series E Preferred Stock ("SERIES E SHARES") to
certain investors, and to induce such investors to purchase Series E Shares, the
Company and the holders of a majority of the outstanding Registrable Securities
(as defined in the Existing Agreement) desire to amend and restate the Existing
Agreement in certain respects.
B. This Agreement shall become effective upon the execution hereof by
the (a) Company and (b) holders of a majority of the outstanding Registrable
Securities.
AGREEMENT
The Existing Agreement is hereby amended and restated to read in its
entirety as follows:
1. AMENDMENT.
1.1 PROCEDURE. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or
terminated other than by a written instrument signed by the party against
whom enforcement of any such amendment, waiver, discharge or termination is
sought. Notwithstanding the foregoing, any provision of this Agreement may be
amended, waived, discharged or terminated upon the written consent of the
Company and the Holders of a majority of the outstanding Registrable
Securities (as defined below), determined on the basis of assumed conversion
of all Series A Shares, Series B Shares, Series C Shares, Series D and Series
E Shares into Registrable Securities. Each Holder of Registrable Securities
acknowledges that the holders of a majority of the outstanding Registrable
1.
Securities will thereby have the right and power to diminish or eliminate all
rights of the Investors pursuant to this Agreement, without liability to any
Investor.
1.2 RIGHTS OF HOLDERS. Each Holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such Holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
2. REGISTRATION RIGHTS.
2.1 DEFINITIONS. As used in this Agreement:
(a) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "SECURITIES ACT")
and the subsequent declaration or ordering of the effectiveness of such
registration statement.
(b) The term "REGISTRABLE SECURITIES" means:
(i) The shares of Common Stock issuable or issued upon
conversion of the Series A Shares, Series B Shares, Series C Shares, Series D
Shares, Series E Shares and the Shares of Common Stock issuable or issued upon
conversion of the Series D Preferred Stock issuable or issued upon exercise of
the warrants to purchase Series D Preferred Stock between the Company and Doll
Technologies Affiliates Fund, L.P. and, with respect only to Section 2.2, the
shares of Common Stock issuable or issued upon conversion of the Series C
Preferred Stock issuable or issued upon exercise of the Warrant to purchase
Series C Preferred Stock between the Company and Phoenix Leasing Incorporated
dated October 1, 1998 (such shares of Common Stock are collectively referred to
hereinafter as the "STOCK"); and
(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 Stock, excluding in all cases,
however, any Registrable Securities sold by a person in a transaction in which
his, her or its rights under this Agreement are not assigned; PROVIDED, HOWEVER,
that 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.
(c) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock or
other securities outstanding which are, and the number of shares of Common Stock
or other securities issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities.
2.
(d) The term "HOLDER" means (1) any holder of outstanding Registrable
Securities who, subject to the limitations set forth in Section 2.12 below,
acquired such Registrable Securities in a transaction or series of transactions
not involving any registered public offering and (2) Phoenix Leasing
Incorporated with respect only to Section 2.2.
(e) The term "FORM S-3" means such form under the Securities Act as
in effect on the date hereof or any registration form under the Securities Act
subsequently adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
2.2 COMPANY REGISTRATION. If (but without any obligation to do so), at
any time after the initial public offering the Company' securities ("Initial
Public Offering") proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its Common Stock or other securities under the Securities Act in
connection with the public offering of such securities solely for cash (other
than a registration relating either to the sale of securities to participants in
a Company stock option, stock purchase or similar plan or to an SEC Rule 145
transaction, or a registration on any form which does not include substantially
similar information as would be required to be included in a registration
statement covering the sale of the Registrable Securities), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within fifteen (15) days from
receipt of such notice by the Company in accordance with Section 4.5, the
Company shall, subject to the provisions of Section 2.6, cause to be registered
under the Securities Act all of the Registrable Securities that each such Holder
has requested to be registered.
2.3 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 2
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 one hundred twenty (120) days, or such
shorter period ending when all shares covered thereby have been sold.
(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.
(c) Furnish to the Holders such reasonable 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.
3.
(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 that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act or 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.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities pursuant to this Section 2, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 2, 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 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.
(h) Cause all such Registrable Securities registered pursuant to the
terms hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(i) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to the terms hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
2.4 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 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 to effect the registration of such Holder's Registrable
Securities.
4.
2.5 EXPENSES OF COMPANY REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 2.2, including
(without limitation), all registration, filing and qualification fees, printers
and accounting fees, shall be borne by the Company.
2.6 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 2.2 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 securities entitled 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 the amount of securities of
the selling Holders of Series C Preferred Stock, Series D Preferred Stock or
Series E Preferred Stock included in the offering be reduced below thirty
percent (30%) 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 selling stockholders may be excluded if the underwriters make
the determination described above and no other stockholder's securities are
included. 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 ("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.
2.7 NO 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 2.
2.8 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(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 "1934 Act"), against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under
5.
the Securities Act, the 1934 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 therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the 1934 Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any state securities law; and the Company will pay, as incurred,
to each such Holder, underwriter or controlling person, any legal or other
expenses reasonably incurred by any person intended to be indemnified pursuant
to this subsection 2.8(a) in connection with investigating or defending any such
loss, claim, damage, liability, or action; PROVIDED, HOWEVER, that the indemnity
agreement contained in this subsection 2.8(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, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability, or
action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by 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, 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 1934 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 2.8(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 2.8(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 2.8(b) exceed the gross proceeds from the offering received by such
Holder. Nothing contained in this subsection 2.8(b) is intended to preclude the
underwriters in any offering from requiring broader indemnities from the Holders
participating in such offering.
(c) Promptly after receipt by an indemnified party under this
Section 2.8 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.8, 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
6.
assume the defense thereof with counsel mutually satisfactory to the parties;
PROVIDED, HOWEVER, that an indemnified party shall have the right to retain
separate counsel of its own, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to actual or
potential differing interests between such indemnified party and any other party
represented by such counsel in such proceeding; and PROVIDED, FURTHER, that the
indemnifying party shall not be responsible for the fees and expenses of more
than one separate counsel for all indemnified parties. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8 (to the extent of such prejudicial
effect), but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.8.
(d) No indemnifying party, in the defense of any claim arising out
of a Violation shall, except with the consent of each indemnified party, consent
to entry of any judgment or enter into any settlement which does not include as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation and, in the event the terms of such judgment or settlement include
any term other than the payment by the indemnifying party of money damages, the
indemnifying party shall not so consent or enter into such a settlement without
the consent of each indemnified party (which will not be unreasonably withheld)
whether or not the terms thereof include such a release.
(e) If the indemnification provided for in this Section 2.8 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
herein, then the indemnifying party, in lieu of 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 statements or omission that resulted in such loss,
liability, claim, damage or expense, as well as any other relevant equitable
considerations. 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.
(f) Notwithstanding the foregoing, to the extent that the provisions
on indemnification and contribution contained in the underwriting agreement
entered into in connection with the underwritten public offering are in conflict
with the foregoing provisions, the provisions in the underwriting agreement
shall control.
(g) The obligations of the Company and Holders under this Section
2.8 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 2, and otherwise.
7.
2.9 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 without
registration or pursuant to a registration on Form S-3, 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 ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the public;
(b) Take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 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 1934 Act; and
(d) Furnish to any Holder, 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 1934
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 (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.
2.10 FORM S-3 REGISTRATION. In case the Company shall receive, from
any Holder or Holders owning in the aggregate at least 30% of the 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 Holder or Holders, the Company
will:
(a) Promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) Use best efforts to effect, as soon as practicable, 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 in accordance with Section 4.5; PROVIDED, HOWEVER, that
the Company shall not be obligated to
8.
effect any such registration, qualification or compliance, pursuant to this
Section 2.10, (i) if Form S-3 is not available for such offering by the Holders;
(ii) if the Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell Registrable
Securities at an aggregate price to the public (net of any underwriters'
discounts and commissions) of less than $2,000,000; (iii) if the Company shall
furnish to the Holders a certificate signed by the president 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 for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than one hundred twenty (120) days after receipt of the
request of the Holder or Holders under this Section 2.10; PROVIDED, HOWEVER,
that the Company shall not utilize this right more than once in any twelve (12)
month period; (iv) if the Company has completed its Initial Public Offering
within one hundred eighty (180) days of the Company's receipt of the request for
the Form S-3 registration; or (v) in any particular jurisdiction in which the
Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance. Notwithstanding anything to the contrary herein, the Company shall
not be obligated to effect more than two (2) Form S-3 Registrations pursuant to
this Section 2.10 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. All expenses incurred in connection with a registration
requested pursuant to this Section 2.10, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of one counsel for the selling Holder or
Holders and counsel for the Company, shall be borne by the Company.
Registrations effected pursuant to this Section 2.10 shall not be counted as a
registration effected pursuant to Section 2.2.
2.11 REQUEST FOR REGISTRATION.
(a) If the Company shall receive (i) at any time after the date six
(6) months from the date hereof, a written request from Holders of forty percent
(40%) of the Series E Preferred Stock, or (ii) at any time after the earlier of
(a) the third anniversary of the date of this Agreement, or (b) 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 or an SEC Rule 145
transaction), a written request from the Holders of thirty percent (30%) of the
Registrable Securities Then Outstanding that the Company file a registration
statement under the Securities Act for such shares with an anticipated aggregate
offering price, net of underwriting discounts and commissions, in excess of
$7,500,000, 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 2.11(b), use its best efforts to effect as soon as
practicable, and in any event within ninety (90) days of the receipt of such
request, 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 in accordance with Section 4.5.
9.
(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 2.11 and the Company
shall include such information in the written notice referred to in subsection
2.11(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 his 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 2.3) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 2.11, 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 2.11 a
certificate signed by the President 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 one hundred twenty (120) 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, the Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 2.11:
(i) After the Company has effected one (1) registration pursuant
to this Section 2.11 and such registrations have been declared or ordered
effective;
(ii) During the period starting with the date sixty (60) days
prior to the Company's good faith estimate of the date of filing of, and ending
on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 2.2 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
10.
(iii) If the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 2.10.
2.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may only
be assigned by a Holder to a transferee who acquires at least 20% of the
Investor's original shares of Registrable Securities (subject to appropriate
adjustment for any stock split, reverse stock split, stock dividend,
recapitalization or similar transaction) or all of such Holder's shares, if
less, PROVIDED the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee; and
PROVIDED, FURTHER, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act. The foregoing
limitation shall not apply, however, to transfers by a Holder to constituent
affiliates, or constituent partners (including any constituent of a constituent)
of the Holder (including spouses and ancestors, lineal descendants and siblings
of such partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) if all such transferees or assignees agree in writing to
be bound by the terms of this Agreement and appoint a single representative as
their attorney-in-fact for the purpose of receiving any notices and exercising
their rights under this Section 2.
2.13 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that during the one hundred eighty (180) day period following the effective date
of a registration statement of the Company filed under the Securities Act in
connection with the Initial Public Offering, it shall not, to the extent
requested by the Company and the Company's underwriter, sell, offer to sell, or
otherwise transfer or dispose of any Common Stock of the Company held by it at
any time during such period except Common Stock included in such registration,
provided that all officers and directors and one percent (1%) stockholders are
similarly bound. To enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period. Each Holder agrees to
execute the form of such market stand-off agreement as may be reasonably
requested by the underwriters.
2.14 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be
entitled to exercise any right provided for in this Agreement (a) after six (6)
years following the closing of the Initial Public Offering (other than an
offering relating either to the sale of securities to employees of the Company
pursuant to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction) or (b) at such time following the Company's Initial Public Offering
and for so long as such Holder may sell all of such Holder's Registrable
Securities in any single three (3) month period pursuant to Rule 144 (or such
successor rule as may be adopted).
2.15 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 a majority of the outstanding Registrable
Securities issuable upon conversion of Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock, voting together as a single class,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder any
registration rights, unless such rights are subordinate to the rights of the
Holders of the Registered Securities.
11.
2.16 RIGHT TO MAINTAIN PERCENTAGE INTEREST. Subject to the terms
and conditions specified in this Section 2.16, the Company hereby grants to each
Holder a right to participate in certain future sales by the Company of its New
Securities (as hereinafter defined). Each Holder shall be entitled to apportion
the right of first offer hereby granted among itself and its partners,
stockholders and affiliates in such proportions as it deems appropriate.
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 ("NEW SECURITIES"), the Company shall, no later than twenty (20) days
prior to the closing of such sale of New Securities, make an offering of
such New Securities to each Holder in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("NOTICE") to the Holders stating (i) the number of such New Securities to be
offered, and (ii) the price and terms, if any, upon which it has or proposes to
offer such New Securities.
(b) Within fifteen (15) calendar days after receipt of the
Notice, the Holder may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to that portion of such New Securities which
equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion of the Series A Shares, Series B Share, Series C
Shares, Series D Shares and Series E Shares then held, by such Holder bears to
the total number of shares of Common Stock of the Company then outstanding
(assuming for such purposes full conversion of all Series A, Series B, Series C,
Series D and Series E Preferred Stock and the exercise or conversion of all
warrants, options and convertible securities then outstanding).
(c) The Company may, during the one hundred twenty (120) day
period following the expiration of the period provided in subsection 2.16(b)
hereof, offer the remaining unsubscribed portion of the New Securities 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 enter
into an agreement for the sale of the New Securities within such period, or if
such agreement is not consummated within forty-five (45) days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such New
Securities shall not be offered unless first reoffered to the Holders in
accordance herewith.
(d) The right to maintain percentage interest in this paragraph
2.16 shall not be applicable to: (i) the issuance or sale of Common Stock (or
options or warrants therefor) to employees, consultants and directors, pursuant
to plans or agreements approved by the Board of Directors for the primary
purpose of soliciting or retaining their services (provided that such issuance
following the date of this Agreement do not exceed two million five hundred
thousand (2,500,000) shares except as approved by the holders of sixty six and
two-thirds percent (66-2/3%) of the Series C Preferred Stock, Series D Preferred
Stock and Series E Preferred Stock, voting together as a single class, (ii) the
issuance of securities pursuant to a bona fide, firmly underwritten public
offering of shares of Common Stock (as appropriately adjusted for any stock
split, dividend, combination or other recapitalization), registered under the
Securities Act pursuant to a registration statement, (iii) the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities outstanding as of the date hereof or issued upon exercise or
conversion of securities previously offered to the Holder pursuant to
12.
this Section 2.16(d) or otherwise exempt from this Section 2.16(d), (iv) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (v) the issuance of securities to financial
institutions or lessors in connection with commercial credit arrangements,
equipment financings, or similar transactions (provided that such issuances do
not exceed one percent (1%) of the outstanding shares of Common Stock in any
twelve (12) month period, assuming the conversion of all shares of Preferred
Stock into Common Stock), (vi) the issuance or sale of the Series E Shares and
Series E-1 Shares, pursuant to the Series E Stock Purchase Agreement, (vii) any
issuance of securities unanimously approved by the Board of Directors of the
Company, (viii) the issuance of securities pursuant to currently outstanding
options, warrants, notes or other rights to acquire securities of the Company,
or (vix) any issuance as to which Holders of a majority of the Registrable
Securities have agreed in writing shall be exempt from this Section 2.16(d).
(e) The right to maintain percentage interest in this paragraph
2.16 shall terminate immediately prior to consummation of a bona fide, firmly
underwritten public offering of shares of Common Stock, registered under the
Securities Act pursuant to a registration statement.
2.17 BOARD REPRESENTATIONS. As long as Doll Capital Management
("Doll Capital") or any affiliate thereof owns not less than fifty percent (50%)
of the shares of Series C Preferred Stock it holds immediately after the Closing
(as defined in the Series C Stock Purchase Agreement) (or an equivalent amount
of Common Stock issued upon conversion thereof) (both as adjusted for any stock
split, reverse stock split, stock dividend, recapitalization or similar
transaction), it shall be entitled to designate one (1) representative to the
Company's Board of Directors ("Board") pursuant to the Company's Amended and
Restated Certificate of Incorporation ("Restated Certificate"). As long as the
holders of Series C Preferred Stock other than Doll Capital or any affiliate of
such other holders ("Other Investors") own not less than fifty percent (50%) of
the shares of Series C Preferred Stock they hold immediately after the Closing
(as defined in the Series C Stock Purchase Agreement) (or an equivalent amount
of Common Stock issued upon conversion thereof) (both as adjusted for any stock
split, reverse stock split, stock dividend, recapitalization or similar
transaction), they shall be entitled to designate one (1) representative to the
Board pursuant to the Restated Certificate by any method of designation approved
by holders of a majority of the Series C Preferred Stock (or an equivalent
amount of Common Stock issued upon conversion thereof) then held by Other
Investors. As long as Norwest Venture Partners or any affiliate thereof owns not
less than fifty percent (50%) of the shares of Series D Preferred Stock it holds
immediately after the Closing (as defined in Series D Stock Purchase Agreement)
(or an equivalent amount of Common Stock issued upon conversion thereof) (both
as adjusted for any stock split, reverse stock split, stock dividend,
recapitalization or similar transaction), it shall be entitled to designate one
(1) representative to the Company's Board of Directors ("Board") pursuant to the
Company's Restated Certificate.
3. FINANCIAL INFORMATION.
3.1 ANNUAL AND QUARTERLY INFORMATION. The Company will mail the
following reports to each Holder for so long as such Holder is a holder of
Series A Shares, Series
13.
B Shares, Series C Shares, Series D Shares or Series E Shares purchased by such
person pursuant to the relevant purchase agreement or Common Stock issued upon
conversion of such shares:
(a) As soon as practicable after the end of each fiscal year,
and in any event within 90 days thereafter, audited consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income, consolidated statements of changes in
financial position and consolidated statements of STOCKHOLDERS equity of the
Company and its subsidiaries, if any, for such year, prepared substantially in
accordance with generally accepted accounting principles ("GAAP") and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail.
(b) As soon as practicable after the end of the first, second
and third quarterly accounting periods in each fiscal year of the Company and in
any event within 45 days thereafter, an unaudited consolidated balance sheet of
the Company and its subsidiaries, if any, as of the end of each such quarterly
period, and unaudited consolidated statements of income, unaudited consolidated
statements of cash flow and unaudited consolidated statements of STOCKHOLDERS'
equity of the Company and its subsidiaries, if any, for such period and for the
current fiscal year to date, prepared substantially in accordance with GAAP
(other than for accompanying notes and subject to normal year-end audit
adjustments), all in reasonable detail.
(c) As soon as practicable after the end of each calendar month,
and in any event within 30 days thereafter, unaudited consolidated financial
reports of the Company and its subsidiaries, if any, as of the end of such
calendar month, prepared substantially in accordance with GAAP.
(d) As soon as practicable after the end of each fiscal year,
and in any event within 90 days thereafter, a budget and business plan for the
next fiscal year, prepared on a monthly basis.
3.2 INSPECTION. The Company shall permit each Holder, at such
Holder'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 and with reasonable
notice as may be requested by the Holder; PROVIDED, HOWEVER, that the Company
shall not be obligated pursuant to this Section 3.2 to provide access to any
information which it reasonably considers to be a trade secret or similar
confidential information.
3.3 COVENANTS OF THE COMPANY.
(a) ARBITRATION AGREEMENT. The Company shall secure, with all
individuals owning and/or controlling five percent (5%) or more of the existing
Common Stock in the Company, an agreement by which all disputes between such
individuals and the Company shall be resolved through binding arbitration.
(b) BOARD REPRESENTATION. The Company shall use its best efforts
to cause and maintain the election to the Board of Directors the representatives
of the holders of
14.
Series C Preferred Stock and the representative of the holders of the Series D
Preferred Stock as described in Section 2.17 above.
3.4 TERMINATION OF COVENANTS. The covenants set forth in this
Section 3 shall terminate upon the earlier of (i) the consummation of the
Company's Initial Public Offering, or (ii) the registration by the Company of a
class of its equity securities under Section 12(b) or 12(g) of the Exchange Act.
4. MISCELLANEOUS.
4.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any Registrable Securities). Nothing in this Agreement, express
or implied, is intended to confer upon any party other than the parties hereto
or their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
4.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
4.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
4.4 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
4.5 NOTICES.
(a) All notices, requests, demands and other communications under
this Agreement or in connection herewith shall be given to or made upon the
respective parties as follows:
To the Company: Xxxxxx.xxx, Inc.
000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxx Xxxxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President
with a copy to:
Xxxxxx Godward LLP
5 Palo Alto Square
0000 Xx Xxxxxx Xxxx
Xxxx Xxxx, XX 00000
15.
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxxxxx
To an Investor: At such Investor's address as set forth on the
signature page hereto.
(b) All notices, requests, demands and other communications given or
made in accordance with the provisions of this Agreement shall be in writing,
and shall be sent by airmail, return receipt requested, or by telex or telecopy
(facsimile) with confirmation of receipt, and shall be deemed to be given or
made when receipt is so confirmed.
(c) Any party may, by written notice (in accordance with this
Section 4.5) to the other, alter its address or respondent.
4.6 AMENDMENTS AND WAIVERS. 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), only with the written consent of the Company and the Holders of
a majority of the outstanding Registrable Securities. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder of
any securities purchased under this Agreement at the time outstanding (including
securities into which such securities are convertible), each future holder of
all such securities, and the Company.
4.7 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules
hereto, the Third Amended and Restated Co-Sale Agreement dated as of the date
hereof, the Purchase Agreement and the other documents delivered pursuant
thereto constitute the full and entire understanding and agreement between the
parties with regard to the subjects hereof and no party shall be liable or bound
to any other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.
4.8 SEVERABILITY. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
4.9 GRANT OF ADDITIONAL RIGHTS. Each holder of Registrable
Securities acknowledges and agrees that the Company may, in its discretion and
without approval of the holders of Registrable Securities, amend this Agreement
to include shares held by any other securityholder of the Company as
"Registrable Securities," so as to grant such securityholder any of the rights
and benefits set forth herein, but only on a pari passu basis.
4.10 WAIVER. Each Investor further understands that the Company is
considering the sale of its Common Stock to the public through a firm commitment
underwritten initial public offering under the Securities Act of 1933, as
amended, (the "Offering") by filing a registration statement on Form S-1 (the
"Registration Statement"). Each Investor hereby waives any registration rights
such Investor may have in connection with the Offering, including, without
limitation, any right to include any Registrable Securities in the Offering and
understands that the Company will proceed with the Offering in reliance on this
Agreement and
16.
waiver. The Company agrees that this waiver shall apply only with
respect to the Offering if the Offering is commenced by the filing of the
Registration Statement with the SEC prior to February 1, 2000 and shall not have
any other effect upon any Investor's rights hereunder.
17.
IN WITNESS WHEREOF, the parties hereto have executed this FOURTH
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the
first paragraph hereof.
COMPANY INVESTORS:
By: /s/ Young X. Xxxx By:
-------------------------------- ---------------------------
Young X. Xxxx
Chief Executive Officer Print Name:
--------------------
Title:
-------------------------
SIGNATURE PAGE FOR THE XXXXXX.XXX
FOURTH AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
