ELECTRONIC SUBMISSION PUBLISHING SYSTEM, INC.
RIGHTS AGREEMENT
This Rights Agreement (the "Agreement") is entered into as of July 5 1994
by and among Electronic Submission Publishing Systems, Inc., a Delaware
corporation (the "Company"), the undersigned holders of the Series A Preferred
Stock (the "Series A Shares") of the Company (the "Series A Holders") and Xxxxx
X. Xxxxxxx, Xxxxxx X. Xxxxxx and Xxxx Xxxxx (the "Founders"). The Company, the
Holders and the Founders are sometimes referred to herein collectively as the
"Parties" or individually as a "Party."
RECITAL
The Parties now desire to set forth the registration rights applicable to
the Common Stock owned by the Founders and the Series A Shares.
AGREEMENT
In consideration of the foregoing and of the mutual promises and covenants
contained herein, the Parties agree as follows:
1. Registration Rights.
--------------------
1.1. Certain Definitions. As used in this Agreement, the following terms
-------------------
shall have the following respective meanings:
(a) "Commission". Shall mean the Securities and Exchange Commission
----------
or any other federal agency at the time administering the Securities Act.
(b) "Conversion Stock" means the Common Stock issued or issuable
----------------
upon conversion of the Series A Shares.
(c) "Holder" means any person or persons to whom Registrable
------
Securities were originally issued or qualifying transferees under Section 1.11
hereof who hold Registrable Securities.
(d) "Initiating Holders" shall mean any Holder or Holders of at
------------------
least forty percent (40%) of the Registrable Securities (excluding Registrable
Securities owned by the Founders).
(e) "Registrable Securities" means (i) the Conversion Stock; and
----------------------
(ii) stock issued in respect of the stock referred to in (i) as a result of a
stock split, stock dividend, recapitalization or the like, which have not been
sold to the public. Except for subsections 1.2, 1.4, 1.5, 1.10, 1.11 and 4.4,
Registrable Securities shall also mean shares of Common Stock owned by the
Founders.
1
(f) The terms "register," "registered" and "registration" refer to a
-------- ---------- ------------
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
(g) "Registration Expenses" shall mean all expenses, except as
---------------------
otherwise stated below, incurred by the Company in complying with Sections 1.2,
1.3 and 1.4 hereof, including, without limitation, all registration,
qualification and filing fees, printing -expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses, the
expense of any special audits incident to or required by any such registration
(but excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company) and the reasonable fees and disbursements
of one counsel for all Holders in the event of each registration provided for in
Sections 1.2, 1.3 and 1.4 hereof.
(h) "Securities Act" shall mean the Securities Act of 1933, as
--------------
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the- time.
(i) "Selling Expenses" shall mean all underwriting discounts,
----------------
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and, except as set forth above, all reasonable fees
and disbursements of counsel for the selling Holders.
1.2. Requested Registration
-----------------------
(a) Request for Registration. If the Company receives from
------------------------
Initiating Holders written request that the Company effect a registration
covering either (i) not less than 25% of the Registrable Securities, or (ii)
Registrable Securities having an anticipated aggregate offering price, net of
underwriting discounts and commissions, of at least $5,000,000, the Company
will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
any action to effect any such registration, qualification or compliance pursuant
to this Section 1.2:
2
(A) Before the earlier of May 1, 1997 or 180 days after
the closing of its initial public offering of its Common Stock;
(B) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(C) After the Company has effected two such
registrations pursuant to this Section 1.2(a), and such registrations have been
declared or ordered effective; and
(D) If the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.2 shall be deferred for a period not to
exceed s@ (60) days from the date of receipt of written request from the
Initiating Holders, provided that the Company may not use this right more than
once in any twelve month period.
Subject to the foregoing clauses (A) through (D), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
------------
Section 1.2 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.2(a)(i). In such event, the right of any Holder to participate in such
registration shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 1.2, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders, but subject to the Company's
reasonable approval. Notwithstanding any other provision of this Section 1.2,
if the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all participating Holders and the
number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason
of the underwriter's marketing limitation shall be included in such
registration. If the underwriter has not limited the number of Registrable
Securities to be underwritten, the Company may include securities for its own
account (or for the account of other shareholders) in such registration if the
underwriter so agrees
3
and of the number of Registrable Securities that would otherwise have been
included in such registration and underwriting will not thereby be limited.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders.
1.3. Company Registration.
--------------------
(a) Notice of Registration. If, at any time prior to the fifth
----------------------
anniversary of the closing date of the Company's initial public offering of its
Common Stock in a firm commitment underwritten public offering pursuant to a
registration statement on Form S- 1 under the Securities Act, the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders, other than (i) a registration relating
solely to employee benefit plans, (ii) a registration relating solely to a
transaction under Rule 145 under the Securities Act, or (iii) a registration
effected pursuant to Sections 1.2 or 1.4 hereof, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within twenty (20) days after receipt of such written notice from
the Company, by any Holder; provided that the Holder making such request would
have been unable to sell all of its or his Registrable Securities pursuant to
Rule 144 under the Securities Act in the four-week period immediately preceding
the date of such written notice.
(b) Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.3(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company, but subject to the reasonable approval of Holders holding more than a
majority of the Registrable Securities to be included in such registration.
Notwithstanding any other provision of this Section 1.3, if the managing
underwriter determines that marketing factors require limitation of the number
of shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration. The Company shall so advise all
Holders an-d-the number of shares of securities that may be included in the
registration and underwriting (other than in behalf of the Company) shall be
allocated among all Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders; provided,
however, in no event shall the amount of Registrable Securities of the Holders
included in the offering be reduced below twenty percent (20%) of the total
amount of
4
securities included in such offering, unless such offering is the initial public
offering of the Company's securities in which case the Holders may be excluded
entirely if the underwriters make the determination described above. No
securities of the Company held by parties other than the Holders or the Company
shall be included in any registration and underwriting to which this section
applies if the number of Registrable Securities that would otherwise have been
included in such registration and underwriting will thereby be limited. If any
Holder disapproves of the terms of any such underwriting, he may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter.
1.4. Registration on Form S-3.
------------------------
(a) If any Holder or Holders holding in the aggregate not less than
ten percent (10%) of the then outstanding Registrable Securities request that
the Company file a registration statement on Form S-3 (or any successor form to
Form S-3) for a public offering of shares of the Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $500,000, and the Company
is a registrant entitled to use Form S-3 to register the Registrable Securities
for such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as the
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one (1) registration pursuant to this
Section 1.4 in any six (6) month period. The substantive provisions of Section
1.2(b) shall be applicable to each registration initiated under this Section
1.4.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.4:
(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) within one hundred eighty (180) days of the effective
date of any registration referred to in Sections 1.2 and 1.3 above provided that
the Company is actively employing in good faith all reasonable efforts to cause
such registration statement to become effective; or
(iii) if the Company shall furnish to such Holder a
certificate signed by the President of the Company stating that in good faith
judgment of the Board of Directors it would be seriously detrimental to the
Company or its shareholders for registration statements to be filed in the near
future, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed say (60)
days from the receipt of the request to file such registration by such Holder,
provided that the Company may not use this right more than once in any twelve
month period.
5
1.5. Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date hereof, without the approval of the holders of a majority of the
Registrable Securities the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such new registration rights,
including standoff obligations, are subordinate to the registration rights
granted to Series A Holders hereunder.
1.6. Expenses of Registration. All Registration Expenses incurred in
------------------------
connection with all registrations pursuant to Sections 1.2 and 1.3 shall be
borne by the Company. All Registration Expenses incurred in connection with all
registrations pursuant to Sections 1.4 shall be borne by the stockholders
participating in that registration pro rata, on the basis of number of shares so
registered. Unless otherwise stated, all Selling Expenses relating to securities
registered on behalf of the Holders shall be borne by the Holders of such
securities pro rata on the basis of the number of shares so registered.
1.7. Registration Procedures. In the case of each registration,
-----------------------
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration and as to the completion thereof. At its expense the Company
will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the Registration
Statement has been completed;
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.
(c) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(d) Use 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.
6
(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
e3dsting.
(g) 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.
1.8. Indemnification.
---------------
(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such person within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter, for any
legal and any other expenses reasonably incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action, provided that the Company will not be liable to any such person in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission (or alleged untrue
statement or omission), made in reliance upon and in conformity with written
information furnished to the Company by an
7
instrument duly executed by such Holder, controlling person or underwriter and
stated -to be specifically for use therein or the preparation thereby.
(b) Each Holder will, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15. of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of any untrue statement (or alleged untrue statement) of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and Will reimburse the Company, such Holders,
such directors, officers, persons, underwriters or control persons for any legal
or any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein or the preparation thereby. Notwithstanding the
foregoing, the liability of each Holder under this subsection (b) shall be
limited to an amount equal to the aggregate proceeds received by such Holder
from the sale of Registrable Securities in such registration.
(c) Each party entitled to indemnification under this Section 1.8 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.9. Information by Holder. The Holders of securities included in any
---------------------
registration shall furnish to the Company such information regarding such
Holders, the Registrable Securities held by them and the distribution proposed
by such Holders as the Company may request in
8
writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.10. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 0000 (xxx
"Xxxxxxxx Xxx").
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
(c) So long as a Holder owns any Registrable Securities to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become Subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.11. Transfer of Registration Rights. The rights to cause the Company to
-------------------------------
register securities granted to Holders under this Agreement may be assigned to a
transferee or assignee in connection with any transfer or assignment of
Registrable Securities by a Holder provided that: (i) such assignment or
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee agrees to be bound by the terms and
conditions of this Agreement, and (iii) either (A) such assignee or transferee
acquires at least 100,000 shares of Registrable Securities (appropriately
adjusted for stock splits, combinations, dividends, distributions and
recapitalizations) not sold to the public, or (B) such assignee or transferee is
a partner, shareholder, subsidiary, affiliate, family member, family trust or
the estate of the Holder.
1.12. Standoff Agreement. Each Party hereby agrees that in connection
------------------
with the Company's initial public offering of the Company's securities that,
upon request of the Company or the underwriters managing any underwritten
offering of the Company's securities, a Holder shall not sell, make any short
sale of loan, grant any option for the purchase of or otherwise dispose of any
securities of the Company (other than those included in the registration)
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the effective date of such registration as may be requested by the
underwriters; provided, that the officers, directors of the
9
Company who own stock of the Company and any stockholder holding more than five
percent (5%) of the outstanding voting securities of the Company also agree to
such restrictions.
2. Right of First Refusal Upon Issuance of Securities by the Company.
------------------------------------------------------------------
2.1. Right of First Refusal. The Company hereby grants to each Series A
----------------------
Holder (the "Rights Holders") the right of first refusal to purchase, pro rata,
in order to maintain the Rights Holder's percentage ownership interest in the
Company, all or any part of New Securities (as defined in Section 2.3 below)
which the Company may, from time to time, propose to sell and issue. A pro rata
share, for purposes of this right of first refusal, is the ratio that the number
of shares of Common Stock issued or issuable to each Rights Holder bears to the
sum of the total number of shares of Common Stock then outstanding (assuming
conversion of all preferred stock of the Company into Common Stock).
2.2. "Equity Securities" shall mean any securities having voting rights in
the election of the Board of Directors not contingent upon default, or any
securities evidencing an ownership interest in the Company, or any securities
convertible into or exercisable for any shares of the foregoing, or any
securities issuable pursuant to any agreement or commitment to issue any of the
foregoing.
2.3. Except as set forth below, "New Securities" shall mean any Equity
Securities, whether now authorized or not, and rights, options or warrants to
purchase said Equity Securities. Notwithstanding the foregoing, "New
Securities" does not include (i) Common Stock issued to the Founders or
employees, officers, consultants or directors of the Company pursuant to sales
or options granted at any time after the date of incorporation of the Company up
to a total of 2,000,000 shares (as adjusted for stock splits, combinations,
dividends, distributions or recapitalizations); (ii) securities offered to the
public generally pursuant to a registration statement under the Securities Act;
(iii) securities issued pursuant to the acquisition of another corporation by
the Company by merger, purchase of substantially all of the assets or other
reorganization whereby the Company or its shareholders own not less than fifty-
one (51%) percent of the voting power of the surviving or successor corporation;
(iv) the Conversion Stock; (v) warrant or warrants for the purchase of shares of
capital stock of the Company (and stock issued upon exercise of such warrant or
warrants) which have been unanimously approved by the Board of Directors of the
Company and issued in connection with an equipment lease, equipment financing or
bank line financing; or (vi) stock issued in connection with any stock split,
stock dividend or recapitalization by the Company.
2.4. In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Rights Holder written notice of its intention,
describing the type of New Securities, and the price and terms upon which the
Company proposes to issue the same. Each Rights Holder shall have fifteen (15)
days from the date of receipt of any such notice to agree to purchase up to its
respective pro rata share of such New Securities for the price and upon the
applicable terms specified in the notice by giving written notice to the Company
and stating therein the quantity of New Securities to be purchased.
10
2.5. In the event a Rights Holder fails to exercise the right of first
refusal within said fifteen (15) day period, the Company shall have ninety (90)
days thereafter to sell or enter into an agreement (pursuant to which the sale
of New Securities covered thereby shall be closed, if at all, within s@ (60)
days from the date of said agreement) to sell the New Securities not-elected to
be purchased by Rights Holders at the price and upon the terms no more favorable
to the purchasers of such securities than specified in the Company's notice. In
the event the Company has not sold the New Securities within said ninety (90)
day period (or sold and issued New Securities in accordance with the foregoing
within sixty (60) days from the date of said agreement), the Company shall not
thereafter issue or sell any New Securities, without first offering such
securities in the manner provided above.
2.6. The right of first refusal granted under this Agreement shall expire
on the effective date of the Company's initial public offering pursuant to an
effective registration statement under the Securities Act.
2.7. The right of first refusal hereunder may be assigned to a transferee
or assignee in connection with any transfer or assignment of the Series A Shares
or the Conversion Stock by a Rights Holder provided that: (i) such assignment or
transfer may otherwise be effected in accordance with applicable securities
laws, (ii) such assignee or transferee agrees to be bound by the terms and
conditions of this Agreement, and (iii) either (A) such assignee or transferee
acquires at least 100,000 shares of Registrable Securities (appropriately
adjusted for stock splits, combinations, dividends, distributions and
recapitalizations) not sold to the public, or (B) such assignee or transferee is
a partner, shareholder, subsidiary, affiliate, family member, family trust or
the estate of the Rights Holder.
3. Right of First Refusal. Before any equity securities of the Company
----------------------
registered in the name of a Series A Holder or a Founder may be sold or
transferred (including transfer by operation of law) other than to a partner,
shareholder, subsidiary, affiliate, family member, family trust or the estate of
the Series A Holder or Founder (provided that such permitted transferees shall
agree, as a condition of the transfer, to be bound by the provisions of this
Section 3), such shares shall first be offered to the Company and to the Series
A Holders and Founders in the following manner:
3.1. Notice. That Series A Holder or Founder ("Selling Party") shall
------
first deliver a written notice ("Notice") to the Company and the other Series A
Holders and Founders stating (i) the Selling Party desires to sell or transfer
such equity securities, (H) the number of equity securities proposed to be sold
or transferred, and (iii) the price and other terms of the proposed sale or
transfer.
3.2. Company Right. Within ten (10) days after receipt of the Notice, the
-------------
Company may elect to purchase all (but not less than all) of the equity
securities to ,which the Notice refers, on the same terms and conditions
specified in the Notice, by delivering to the Selling Party a written notice of
such election.
3.3. Series A Holder and Founder Right. In the event the Company does not
---------------------------------
elect to purchase the equity securities to which the Notice refers within the
ten (10) day period, then the
11
Company shall notify each Series A Holder and Founder (other than the Selling
Party) of this fact within fifteen (15) days after receipt of the Notice and
each such Series A Holder and Founder may elect within twenty-five (25) days
after receipt of the Notice to purchase its pro rata share (but not less than
its pro rata share) of such equity securities, on the same terms and conditions
specified in the Notice, by delivering to the Company written notice of such
election. Each Series A Holder's and Founder's pro rata share of these equity
securities shall be a fraction calculated by dividing (i) the number of shares
of Common Stock issued and issuable upon exercise, conversion or exchange of all
outstanding equity securities held by the Series A Holder or Founder as of the
date of delivery of the Notice by (ii) the total number of shares of Common
Stock issued and issuable upon exercise, conversion or exchange of all
outstanding equity securities held by the Series A Holders and the Founders
(other than the Selling Party) as of that date.
3.4. Over-allotment. If, within twenty-five (25) days after receipt of
--------------
the Notice, a Series A Holder or Founder does not notify the Company that it
desires to purchase its pro-rata share (or any part thereof) of the equity
securities, those Founding Partners and Founders who have elected to purchase
equity securities during the twenty-five (25) day period (the "Over-allotment
Purchasers") may elect to purchase those equity securities not so purchased. The
Company shall provide written notice to the Over-allotment Purchasers not later
than thirty (30) days after receipt of the Notice of the number of shares of
equity securities of the Selling Party available for purchase pursuant to this
over-allotment right. Each of these Over-allotment Purchasers shall have until
forty (40) days after receipt of the Notice to notify the Company in writing
that it elects to purchase at least its pro rata share (but not less than its
pro rata share) of the equity securities so offered. Each Over-allotment
Purchaser's pro rata share of the equity securities shall be a fraction
calculated by dividing (i) the number of shares of Common Stock issued and
issuable upon exercise, conversion or exchange of all outstanding equity
securities of the Company held by the Over-allotment Purchaser as of the date of
the Notice by (ii) the total number of shares of Common Stock issued and
issuable upon exercise, conversion or exchange of all outstanding equity
securities of the Company held I by all Over-allotment Purchasers as of the date
of the Notice.
3.5. Company Purchase. In the event the Company elects to acquire all of
----------------
the equity securities pursuant to Section 3, the Company and the Selling Party
shall complete the sale and purchase of such equity securities shares within
thirty (30) days after the Company receives the Notice.
3.6. Series A Holder and Founder Purchases. In the event the Series A
-------------------------------------
Holders and the Founders elect to acquire all of the equity securities offered
pursuant to Section 3, the Series A Holders and Founders and the Selling Party
shall complete the -sale and purchase of such equity securities within sixty
(60) days after the Company receives the Notice.
3.7. Selling Party Right. If all of the equity securities to which the
-------------------
Notice refers are not elected to be purchased by the Company or the Series A
Holders and the Founders, the Selling Party may sell all such shares at the
price and on the terms specified in the Notice, provided that (i) such sale or
transfer is consummated within one hundred twenty (120) days of the date of the
Notice, and (ii) that prior to the transfer, the transferee of such equity
securities
12
agrees in writing (in a form satisfactory to the Company) that such transferee
shall receive and hold such securities subject to the provisions of this Section
3.
3.8. Termination. The rights and obligations of the Company, the Series A
-----------
Holders and the Founders under this Section 3 shall terminate upon the earlier
to occur of (i) the closing of the Company's first firmly underwritten public
offering registered under the Act, or (ii) upon shareholder approval of any
merger or consolidation of the Company with any other corporation in which more
than 50% of the voting control of the Company is transferred to a party or
parties not affiliated with the Company or any shareholder of the Company,
provided that, if such merger or consolidation is not consummated, the rights
and obligations of this Section 3 shall be deemed restored and reinstated to
full force and effect.
4. Miscellaneous
-------------
4.1. Governing Law. This Agreement shall be governed in all respects by
-------------
the laws of the State of Delaware as applied to transactions taking place
between Delaware residents and wholly within the State of Delaware.
4.2. Survival. The representations, warranties, covenants and agreements
--------
made herein shall survive any investigation made by any Series A Holder and the
closing of the transactions contemplated hereby.
4.3. Successors and Assigns. Except as otherwise provided herein, the
----------------------
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.4. Entire Agreement: Amendment. This Agreement constitutes 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 party in any
manner by any warranties, representations or covenants except as specifically
set forth herein. With the written consent of the record or beneficial holders
of at least two-thirds (2/3) of the Registrable Securities (excluding
Registrable Securities held by the Founders), the obligations of the Company and
the rights of the Holders of the Registrable Securities under this Agreement may
be waived (either generally or in a particular instance, either under this
Agreement may be waived (either generally or in a particular instance, either
retroactively or prospectively, and either for a specified period of time or
indefinitely), and with the same consent the Company, when authorized by
resolution of its Board of Directors, may enter into a supplementary agreement
for the purpose of adding any provision to or changing in any manner or
eliminating any of the provisions of this Agreement; provided, however, that no
such modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of all of the Holders of the
Registrable Securities and none of the rights of the Founders under this
Agreement may be waived or modified without their written consent. Upon the
effectuation of each such wavier, consent, agreement of amendment or
modification, the Company shall promptly given written notice thereof to the
record holders of the Registrable Securities who have not previously consented
thereto in writing. This Agreement or any provision hereof may be changed,
waived, discharged of terminated only by a statement in writing signed by the
party against which enforcement of
13
the change, waiver, discharge or termination is sought, except to the extent
provided in this Section 4.4.
4.5. Notices, etc. All notice and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by first class mail,
postage prepaid, certified or registered mail, return receipt requested,
addressed (a) if to any Holder, at such Holder's address as set forth in the
Company's records, or at such other address as such Holder shall have furnished
to the Company in writing, or (b) if to the Company, at 0000 Xxxxxxxxxx Xxxxxx,
Xxxxx Xxxx, XX 00000, or at such other address as the Company shall have
furnished to the Holders in writing.
4.6. Delays or Omissions. Except as expressly provided herein, no delay
-------------------
or omission to exercise any right, power or remedy accruing to any holder of any
Shares, upon any breach or default of the Company under this Agreement, shall
impair any such right, power or remedy of such holder nor shall it be construed
to be a waiver of any such breach or default, or an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this agreement, must be in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
4.7. Counterparts. This Agreement may be executed in any manner of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
4.8. Severability. If any provision of this Agreement, or the application
------------
thereof, shall for any reason and to any extent be invalid or unenforceable the
remainder of this Agreement and application of such provision to persons or
circumstances shall be interpreted so as best to reasonably effect the intent of
the parties hereto, the parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
which will achieve to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
14
The foregoing agreement is hereby executed as of the date first above
written.
ELECTRONIC SUBMISSION PUBLISHING
SYSTEMS, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Its: President
---------------------------------------
ADOBE VENTURES .L.P.
By: Its General Partner
Xxxxxxxxx & Xxxxx Group
By:_____________________________
Title:__________________________
/s/ Xxxx Xxxxx
________________________________
Xxxx Xxxxx
/s/ Xxxxxx X. Xxxxxx
________________________________
Xxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
________________________________
Xxxxx X. Xxxxxxx
15
4.9. Severability. If any provision of this Agreement, or the application
------------
thereof, shall for any reason and to any extent be invalid or unenforceable the
remainder of this Agreement and application of such provision to persons or
circumstances shall be interpreted so as best to reasonably effect the intent of
the parties hereto, the parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
which will achieve to the extent possible, the economic, business and other
purposes of the void or unenforceable provision.
The foregoing agreement is hereby executed as of the date first above
written.
ELECTRONIC SUBMISSION PUBLISHING
SYSTEMS, INC.
By:___________________________________
Its:___________________________________
ADOBE VENTURES .L.P.
By: Its General Partner
H&Q Adobe Ventures Management L.P.
By: Its general partner,
H&Q Adobe Ventures Management Corp.
By: /s/ Xxxxxxxx X'Xxxxx
_____________________________
Title: President
__________________________
________________________________
Xxxx Xxxxx
________________________________
Xxxxxx X. Xxxxxx
________________________________
Xxxxx X. Xxxxxxx
ELECTRONIC SUBMISSION PUBLISHING SYSTEM, INC.
AMENDMENT NO. 1 TO
RIGHTS AGREEMENT
This Amendment No. 1 to Rights Agreement is entered into as of February 24,
1997 by and among Electronic Submission Publishing Systems, Inc., a Delaware
corporation (the "Company") and the undersigned holders of the Series A
Preferred Stock of the Company (the "Series A Holders"). Unless defined herein,
capitalized terms shall have the meanings given them in that certain Rights
Agreement dated July 5, 1994 between the Company and the Series A Holders (the
"Rights Agreements").
RECITAL
1. Section 4.4 of the Rights Agreement provides that the Company and the
Series A Holders can amend the Rights Agreement.
2. The Company and the Series A Holders now wish to amend the Rights Agreement
to increase the number of shares of the Company's Common Stock issuable by the
Company to employees and consultants that are excluded from the definition of
New Securities for purposes of Section 2 of the Rights Agreement.
AGREEMENT
1. Section 2.3 of the Rights Agreement is amended and restated to read in full
as follows:
2.3 Except as set forth below, "New Securities" shall mean any Equity
Securities, whether now authorized or not, and rights, options or warrants to
purchase said Equity Securities. Notwithstanding the foregoing, "New Securities"
does not include (i) Common Stock (or options, warrants or other rights to
purchase the same) issued to the Founders or employees, officers, consultants or
directors of the Company at any time after July 5, 1994 up to a total of
3,000,000 shares (as adjusted for stock splits, combinations, dividends,
distributions or recapitalizations); (ii) securities offered to the public
generally pursuant to a registration statement under the Securities Act; (iii)
securities issued pursuant to the acquisition of another corporation by the
Company by merger, purchase of substantially all of the assets or other
reorganization whereby the Company or its shareholders own not less than fifty-
one (51%) percent of the voting power of the surviving or successor corporation;
(iv) the Conversion Stock; (v) warrant or warrants for the purchase of shares of
capital stock of the Company (and stock issued upon exercise of such warrant or
warrants) which have been unanimously approved by the Board of Directors of the
Company and issued in connection with an equipment lease, equipment financing or
bank line financing; or (vi) stock issued in connection with any stock split,
stock dividend or recapitalization by the Company.
2. Except as amended hereby, the Rights Agreement shall remain in full force
and effect.
The foregoing agreement is hereby executed as of the date first above
written.
ELECTRONIC SUBMISSION PUBLISHING
SYSTEMS, INC.
By: [signature]
-----------------------------------
ADOBE VENTURES L.P.
By: Its General Partner,
H&Q Adobe Ventures Management L.P.
By: Its General Partner,
H&Q Adobe Ventures Management Corp.
By: [signature]
-----------------------------
Title:
--------------------------
H&Q ESPS INVENTORS, L.P.
By: [signature]
-----------------------------
Title:
--------------------------
ELECTRONIC SUBMISSION PUBLISHING SYSTEMS, INC.
AGREEMENT
WHEREAS, Adobe Ventures L.P. is a holder of certain shares of Series A
Preferred Stock of Electronic Submission Publishing Systems, Inc. (the
"Preferred Stock"), and is a party to a Rights Agreement dated July 5, 1994, as
amended February 24, 1997 (the "Rights Agreement") and attached hereto, which
sets forth the registration rights of such shares of Preferred Stock; and
WHEREAS, Adobe Ventures L.P. seeks to distribute certain of its shares
of Preferred Stock to its partners as permitted in the Rights Agreement.
In consideration of the proposed transfer of certain shares of
Preferred Stock from Adobe Ventures L.P. to its partners Adobe Incentive
Partners L.P. and H&Q Adobe Ventures Management, L.P., the undersigned parties
hereby agree, pursuant to Section 1.11 of the Rights Agreement, to be bound by
the terms and conditions of the Rights Agreement, as amended.
This agreement has been executed the 31st of March, 1999.
ADOBE INCENTIVE PARTNERS L.P.
By: /s/ Xxxxxxx Xxxxxxx, Adobe Systems Incorporated, General Partner
_________________________________________________________________
Name: Xxxxxxx Xxxxxxx
Title Sr. V.P. & General Counsel
H&Q ADOBE VENTURES MANAGEMENT, L.P.
By: /s/ Xxxxxx Xxxxxxxxxxxx
_____________________________
Name: Xxxxxx Xxxxxxxxxxxx
Title Attorney-in-Fact
