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EXHIBIT 10.5
E.PIPHANY, INC.
FOURTH AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
JUNE 16, 1999
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TABLE OF CONTENTS
PAGE(S)
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1. Registration Rights...................................................2
1.1 Definitions....................................................2
1.2 Request for Registration.......................................3
1.3 Company Registration...........................................5
1.4 Obligations of the Company.....................................5
1.5 Furnish Information............................................6
1.6 Expenses of Demand Registration................................7
1.7 Expenses of Company Registration...............................7
1.8 Underwriting Requirements......................................7
1.9 Delay of Registration..........................................8
1.10 Indemnification................................................8
1.11 Reports Under Securities Exchange Act of 1934.................10
1.12 Form S-3 Registration.........................................11
1.13 Assignment of Registration Rights.............................12
1.14 Limitations on Subsequent Registration Rights.................12
1.15 "Market Stand-Off" Agreement..................................12
1.16 Termination of Registration Rights............................13
2. Covenants of the Company.............................................13
2.1 Delivery of Financial Statements..............................13
2.2 Inspection....................................................13
2.3 Observer Rights...............................................14
2.4 Termination Covenants.........................................14
2.5 Right of First Offer..........................................15
2.6 Employee Stock................................................16
3. Miscellaneous........................................................16
3.1 Successors and Assigns........................................16
3.2 Governing Law.................................................17
3.3 Counterparts..................................................17
3.4 Titles and Subtitles..........................................17
3.5 Notices.......................................................17
3.6 Expenses......................................................17
3.7 Amendments and Waivers........................................17
3.8 Severability..................................................17
3.9 Prior Investor Rights Agreement...............................18
3.10 Aggregation of Stock..........................................18
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This Fourth Amended and Restated Investors' Rights Agreement (the
"AGREEMENT") is made as of the 16th day of June, 1999, by and among E.piphany,
Inc., a Delaware corporation (the "COMPANY"), certain existing investors in the
Company listed on Exhibit A, Exhibit B and Exhibit C hereto (the "EXISTING
INVESTORS"), those individuals and entities listed on Exhibit D hereto (the "NEW
INVESTORS") and the entity listed on Exhibit E hereto (the "WARRANT INVESTOR").
RECITALS
WHEREAS, the Company, the Existing Investors and the Warrant Investor
are parties to that certain Third Amended and Restated Investors' Rights
Agreement dated as of September 24, 1998 (the "PRIOR RIGHTS AGREEMENT"), and
were granted pursuant thereto (i) certain rights to register shares of the
Company's Common Stock issuable upon conversion of the Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock held by the Existing
Investors and upon exercise of the Warrant (as defined below) held by the
Warrant Investor, (ii) certain rights to receive or inspect information
pertaining to the Company and (iii) a right of first offer with respect to
certain issuances by the Company of its securities (collectively, the "RIGHTS").
WHEREAS, pursuant to Section 2.5 of the Prior Rights Agreement, the
issuance and sale of the Company's Series D Preferred Stock is subject to a
Right of First Offer (as defined in the Prior Rights Agreement). To induce the
New Investors to purchase the Series D Preferred Stock certain of the Existing
Investors are willing to amend the Prior Rights Agreement in order to grant the
Rights to the New Investors.
WHEREAS, pursuant to Section 3.7 of the Prior Rights Agreement, holders
of at least 66 2/3% of the Registrable Securities (as defined in such Prior
Rights Agreement) then outstanding, not including Founders' Stock, may, with the
Company's written consent, waive, modify or amend on behalf of all holders, any
provisions of the Prior Rights Agreement so long as the effect thereof will be
that all such persons will be treated in the same manner.
WHEREAS, the holders of at least 66 2/3% of the Registrable Securities
currently outstanding, not including Founders' Stock, agree, by executing this
Agreement, to amend and restate the Prior Rights Agreement.
WHEREAS, the New Investors, in connection with their proposal to
purchase shares of the Company's Series D Preferred Stock pursuant to the Series
D Preferred Stock Purchase Agreement, of even date herewith, between the Company
and certain investors hereto (the "PURCHASE AGREEMENT"), desire to obtain the
Rights referenced above. In order to induce the New Investors to enter into the
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Purchase Agreement, the Company and the Existing Investors desire to grant such
Rights and to amend and restate the Prior Rights Agreement as provided herein.
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, all parties hereto agree (i) the Prior Rights Agreement
is hereby amended and restated in its entirety as set forth herein; (ii) the
Company hereby grants to the Existing Investors, the New Investors, and the
Warrant Investor the rights set forth below; (iii) the Company and the Existing
Investors, to induce the New Investors to invest, accept and agree to the
termination of all prior rights in their entirety and accept and agree to be
bound by the terms of this Agreement; and (iv) as follows:
1. REGISTRATION RIGHTS. The Company, the Existing Investors, the
New Investors and the Warrant Investor covenant and agree as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Securities Act
of 1933, as amended (the "ACT"), and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "REGISTRABLE SECURITIES" means (i) the
shares of Common Stock issuable or issued upon conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock (such shares of Common Stock are collectively referred to
hereinafter as the "STOCK"), (ii) any other shares of Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, the Stock, (iii) the
shares of Common Stock issued by the Company to the Founders (the "FOUNDERS'
STOCK"), (iv) Common Stock issued to Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx ("KPCB")
or to funds affiliated with KPCB, and (v) the shares of Common Stock issued or
issuable upon conversion of the Series B Preferred Stock issued or issuable
pursuant to that certain Warrant dated as of January 9, 1998 issued in
connection with that certain Loan and Security Agreement dated as of January 9,
1998 and currently held by the Warrant Investor; provided, however, that for the
purposes of Section 1.2, 1.12, 1.14 or 2.5, the Founders' Stock shall not be
deemed Registrable Securities and the Founders shall not be deemed Holders; and
provided, further, that the foregoing definition shall exclude in all cases any
Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been (A) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus delivery
requirements of the 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;
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(c) The number of shares of "REGISTRABLE SECURITIES
THEN OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(d) The term "PREFERRED STOCK" means: (i) all
outstanding shares of Series A Preferred Stock of the Company, (ii) the Series B
Preferred Stock of the Company issued pursuant to the Series B Preferred Stock
Purchase Agreement dated January 16, 1998, (iii) the shares of Series C
Preferred Stock of the Company issued pursuant to (1) the Series C Stock
Purchase Agreement dated September 24, 1998 and (2) Addendum No. 1 to the Series
C Stock Purchase Agreement dated October 30, 1998, (iv) the shares of Series D
Preferred Stock of the Company issued pursuant to the Purchase Agreement.
(e) The term "PREFERRED STOCKHOLDERS" means the
holders of the Preferred Stock.
(f) The term "CONVERSION STOCK" means the Common
Stock issued or issuable pursuant to conversion of the Preferred Stock.
(g) The term "FOUNDERS" means Xxxxx X. Xxxxxxxx,
Xxxxxx X. Xxxxx, Xxxx Xxxxx, Xxxx X. XxXxxxxx and Xxxxx Xxxxxx.
(h) The term "HOLDER" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof;
(i) The term "FORM S-3" means such form under the
Act as in effect on the date hereof or any successor form under the Act; and
(j) The term "SEC" means the Securities and Exchange
Commission.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after
the earlier of (i) March 1, 2002, or (ii) six (6) months after the effective
date of the first registration statement for a public offering of securities of
the Company (other than a registration statement relating either to the sale of
securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request from
the Holders of at least fifty percent (50%) of the Registrable Securities then
outstanding that the Company file a registration statement under the Act
covering the registration of at least thirty percent (30%) of the Registrable
Securities then outstanding having an aggregate offering price, net of
underwriting discounts and commissions, in excess of $6,000,000, then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to all Holders and shall, subject to the limitations of
subsection 1.2(b), use its best efforts to effect as soon as practicable, and in
any event within 60 days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be registered
within
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twenty (20) days of the mailing of such notice by the Company in accordance with
Section 3.5; provided, however, that the Company shall not be obligated to
effect any such registration prior to March 18, 2000.
(b) If the Holders initiating the registration
request hereunder ("INITIATING HOLDERS") intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 1.2
and the Company shall include such information in the written notice referred to
in subsection 1.2(a). The underwriter will be selected by a majority in interest
of the Initiating Holders and shall be reasonably acceptable to the Company. In
such event, the right of any Holder to include its Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by a majority in interest of the Initiating
Holders. Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Initiating Holders shall so advise all Holders of Registrable Securities which
would otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from the
underwriting.
(c) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.2, a certificate signed by the Chief Executive Officer of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer such filing for a period of not more than 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-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 1.2:
(i) After the Company has effected two (2)
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
(ii) During the period (A) starting upon the
earlier of (I) the Company's delivery of notice to the Holders not later than
twenty (20) days following any registration request pursuant to this Section 1.2
of the Company's intent to file within sixty (60) days a registration statement
subject to Section 1.3 or (II) the effective date of a registration statement,
and (B) ending on a date one
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hundred eighty (180) days after the effective date of a registration subject to
Section 1.3 hereof; 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 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 1.12 below.
(iv) 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.
1.3 COMPANY REGISTRATION. If (but without any obligation to
do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its stock under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Act, a registration in which the only stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered, or any registration on any form that does not include
substantially the same 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 twenty (20)
days after mailing of such notice by the Company in accordance with Section 3.5,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one hundred
twenty (120) days. The Company shall not be required to file, cause to become
effective or maintain the effectiveness of any registration statement that
contemplates a distribution of securities on a delayed or continuous basis
pursuant to Rule 415 under the Act.
(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 Act with respect to the disposition of all securities
covered by such registration statement for up to one hundred twenty (120) days.
(c) Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as
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they may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided 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 Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing, such obligation to continue for one hundred twenty (120) days.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Use its best efforts to furnish, at the request
of any Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.5 FURNISH INFORMATION. It shall be a condition precedent
to the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
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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. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(a) or subsection 1.12(b)(2), whichever is applicable.
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all participating Holders shall bear such expenses),
unless the Holders of a majority of the Registrable Securities agree to forfeit
their right to one demand registration pursuant to Section 1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear
and pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of one counsel for the selling
Holders selected by them with the approval of the Company, which approval shall
not be unreasonably withheld, but excluding underwriting discounts and
commissions relating to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares of the Company's capital stock, the
Company shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering is determined by the underwriters, in their sole
discretion, to be incompatible 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, that 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 (i) the amount
of securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) of the total amount of securities included in such
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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, or (ii) any shares being sold by a stockholder
exercising a demand registration right similar to that granted in Section 1.2 be
excluded from such offering or (iii) any Founder's Stock be included if any
shares of Stock held by any selling Holder are excluded. For purposes of the
preceding parenthetical clause concerning apportionment, for any selling
stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "SELLING STOCKHOLDER," and any pro-rata reduction with
respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities
are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT"), against any losses, claims, damages, or liabilities (joint
or several) to which they may become subject under the Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"VIOLATION"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained 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 Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor 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.
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(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 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 Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages, or liabilities (or actions
in respect thereto) arise out of or are based upon any Violation, in each case
to the extent (and only to the extent) that such Violation occurs in reliance
upon and in conformity with written information furnished by such Holder
expressly for use in connection with such registration; and each such Holder
will pay, as incurred, any legal or other expenses reasonably incurred by any
person intended to be indemnified pursuant to this subsection 1.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of the Holder, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this subsection
1.10(b) exceed the net proceeds from the offering received by such Holder,
except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.10 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.10,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission to so deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this
Section 1.10 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any loss, liability, claim, damage, or
expense referred to therein, then the indemnifying party, in lieu of
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 omissions that resulted
in such loss, liability, claim, damage, or expense as well as any other relevant
equitable considerations; provided, that, in no event shall any
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contribution by a Holder under this Subsection 1.10(d) exceed the net proceeds
from the offering received by such Holder, except in the case of willful fraud
by such Holder. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) 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.
(f) The obligations of the Company and Holders under
this Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the 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 general public so
long as the Company remains subject to the periodic reporting requirements under
Sections 13 or 15(d) of the Exchange Act;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 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 Act and the Exchange 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 Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(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
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(iii) such other information as may be reasonably requested in availing any
Holder of any rule or regulation of the SEC which permits the selling of any
such securities without registration or pursuant to such form.
1.12 FORM S-3 REGISTRATION. In case the Company shall receive
from any Holder or Holders 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) as soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 1.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) 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 and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $2,000,000; (3) if the
Company shall furnish to the Holders a certificate signed by the Chief Executive
Officer of the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be detrimental to the Company and its
stockholders 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 120 days after receipt of
the request of the Holder or Holders under this Section 1.12, provided, however,
that the Company shall not utilize this right more than once in any twelve (12)
month period; (4) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two registrations on Form
S-3 for the Holders pursuant to this Section 1.12; or (5) 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.
(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. The Company shall bear and pay all
expenses incurred in connection with the first four (4) registrations requested
pursuant to Section 1.12, including (without limitation) all registration,
filing, qualification, printers' and accounting fees and the reasonable fees and
disbursements of one counsel for the selling Holder or Holders selected by them
with the approval of the Company, and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable Securities.
All of such expenses with respect to all subsequent registrations requested
pursuant to Section 1.12 shall be borne pro rata by the Holder or Holders
participating in the Form S-3 Registration. Registrations effected pursuant to
this Section 1.12
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shall not be counted as demands for registration or registrations effected
pursuant to Sections 1.2 or 1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause
the Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee who holds of at least 1,000,000 shares of such securities upon such
transfer, provided, that (a) the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned, (b) 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 Act and (c) the
assignee or transferee enters into a written agreement with the Company whereby
the assignee or transferee agrees to be bound by the terms of this Agreement
including, but not limited to, the terms of Section 1.15 of this Agreement. For
the purposes of determining the number of shares of Registrable Securities held
by a transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership; provided that
all assignees and transferees who would not qualify individually for assignment
of registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under Section 1.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and
after the date of this Agreement, 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 holder derives
its rights as an additional Holder hereunder, or such shares or securities are
entitled to be included in registrations only to the extent that the inclusion
of such securities will not diminish the amount of Registrable Securities that
are included.
1.15 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees
that, during the period of duration (up to, but not exceeding, 180 days)
specified by the Company and an underwriter of Common Stock or other securities
of the Company, following the date of the final prospectus distributed in
connection with a registration statement of the Company filed under the Act, it
shall not, to the extent requested by the Company and such underwriter, directly
or indirectly sell, offer to sell, contract to sell (including, without
limitation, any short sale), grant any option to purchase or otherwise transfer
or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during such period except
Common Stock included in such registration; provided, however, that all
officers, directors, Founders and one-percent (1%) security holders of the
Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the Registrable Securities
of each Holder (and the shares or securities of every other person subject to
the foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.15.
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Notwithstanding the foregoing, the obligations described
in this Section 1.15 shall not apply to a registration relating solely to
employee benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to an SEC Rule 145
transaction on Form S-4 or similar forms which may be promulgated in the future.
1.16 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be
entitled to exercise any right provided for in this Section 1 after the earlier
of (i) five (5) years following the consummation of the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the initial firm commitment underwritten offering of its
securities to the general public, or (ii) such time as Rule 144 or another
similar exemption under the Act is available for the sale of all of such
Holder's shares during a three (3) month period without registration.
2. COVENANTS OF THE COMPANY.
2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall
deliver to each Preferred Stockholder holding, and to transferees of, at least
1,000,000 shares of Registrable Securities (as adjusted for stock splits, stock
dividends, recapitalizations and the like) and to the Warrant Investor:
(a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by an independent public accounting firm of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within
thirty (30) days after the end of each of the first three (3) quarters of each
fiscal year of the Company, an unaudited profit or loss statement, a statement
of cash flows for such fiscal quarter and an unaudited balance sheet as of the
end of such fiscal quarter;
(c) as soon as practicable, but in any event thirty
(30) days prior to the end of each fiscal year, a budget and business plan for
the next fiscal year, prepared on a monthly basis, including balance sheets and
sources and applications of funds statements for such months and, as soon as
prepared, any other budgets or revised budgets prepared by the Company; and
(d) with respect to the financial statements called
for in subsection (b) of this Section 2.1, an instrument executed by the Chief
Financial Officer or Chief Executive Officer of the Company and certifying that
such financials were prepared in accordance with GAAP consistently applied with
prior practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors determines that it is in the best interest of the Company to do so.
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2.2 INSPECTION. (a) The Company shall permit each Preferred
Stockholder who holds not less than 1,000,000 shares of Registrable Securities
(as adjusted for stock splits, stock dividends, recapitalizations and the like)
and the Warrant Investor, at such Preferred Stock Holder's or Warrant Investor's
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Preferred Stock Holder or the Warrant Investor; provided, however, that the
Company shall not be obligated pursuant to this Section 2.2 to provide access to
any information which it reasonably considers to be a trade secret or
confidential information.
(b) The covenants set forth in Section 2.1 and
Section 2.2(a) above shall survive any distribution or transfer of Registrable
Securities by such Preferred Stockholder or the Warrant Investor to any of its
constituent partners.
2.3 OBSERVER RIGHTS. To the extent that he is not on the
Board of Directors but continues to serve as an officer or consultant of the
Company, Xxxxx X. Xxxxxxxx or Xxxxxx X. Xxxxx, (each, an "OBSERVER") shall have
the right to attend, at Observer's own expense, all meetings of the Board of
Directors in a nonvoting observer capacity and to receive copies of all notices,
minutes, consents, and other materials that it provides to its directors;
provided, however, that the Observer shall agree to hold in confidence and trust
and to act in a fiduciary manner with respect to all information provided to him
in connection with this Section 2.3; and, provided further, that the Company
reserves the right to withhold any information and to exclude the Observer from
any meeting or portion thereof if the Company believes access to such
information or attendance at such meeting or portion thereof could adversely
affect the attorney-client privilege between the Company and its counsel. The
obligations of an Observer under this Section 2.3 will survive any termination
of this Section 2.3 or this Agreement. The rights of an Observer under this
Section 2.3 shall not be assignable, and shall terminate as set forth in Section
2.4 below.
2.4 TERMINATION COVENANTS. (a) The covenants set forth in
Sections 2.1, 2.2 and 2.3 shall terminate as to Preferred Stockholders, the
Warrant Investor, and as to any Observer, and be of no further force or effect,
upon the date upon which the Company or a parent of the Company consummates a
sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the firm commitment underwritten offering of
its securities to the general public or the date upon which the company first
becomes subject to the periodic reporting requirements of Sections 13 or 15(d)
of the 1934 Act, whichever event shall first occur.
(b) The covenants set forth in Section 2.3 shall
terminate as to any Observer and be of no further force or effect, upon the
earlier to occur of subsection (a) of this Section 2.4, or the date upon which
the Company consummates (i) a consolidation or merger of the Company or any
affiliated corporation with or into any other corporation or corporations (other
than a consolidation or merger of this Company with or into a wholly owned
subsidiary of this Company), (ii) a sale of all or substantially all of the
assets or business of the Company in one or more related transactions, (iii) a
transaction or series of related transactions (other than a public offering of
the Company's securities) in which the stockholders of the Company immediately
prior to such transaction(s) own, as a result of such transaction(s), less than
a majority of the voting securities of the successor or surviving corporation,
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which shall not be the Company in the event of a consolidation or merger,
immediately thereafter, or (iv) a transaction or series of related transactions
(other than a public offering of the Company's securities) in which the Company
issues shares representing more than 50% of the voting power of the Company
immediately after giving effect to such transaction.
2.5 RIGHT OF FIRST OFFER. Subject to the terms and
conditions specified in this Section 2.5, the Company hereby grants to each
Major Investor (as hereinafter defined) a right of first offer with respect to
future sales by the Company of its Shares (as hereinafter defined). For purposes
of this Section 2.5, a "MAJOR INVESTOR" shall mean any person who holds at least
1,000,000 shares of Preferred Stock or Conversion Stock (as adjusted for stock
splits, stock dividends, recapitalizations and the like). For purposes of this
Section 2.5, Major Investor includes any general partners and affiliates of a
Major Investor. A Major Investor who chooses to exercise the right of first
offer may designate as purchasers under such right itself or its partners or
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 ("SHARES"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified
mail ("NOTICE") to the Major Investors stating (i) its bona fide intention to
offer such Shares, (ii) the number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Shares.
(b) Within 10 calendar days after delivery of the
Notice, the Major Investor may elect to purchase or obtain, at the price and on
the terms specified in the Notice, up to that portion of such Shares which
equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Major Investor bears to the total number of shares
of Common Stock then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities, including securities authorized for
issuance under stock plans authorized by the Company's Board of Directors).
(c) The Company may, during the 45 day period
following the expiration of the period provided in subsection 2.5(b) hereof,
offer the remaining unsubscribed portion of the Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within 60 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2.5
shall not be applicable: (i) to the issuance or sale of shares of Common Stock
(or options 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; or (ii) after consummation of a firmly
underwritten public offering of shares of Common Stock, registered under the Act
pursuant to a registration statement registered under the Act; provided that if,
with respect to the Company's first such firmly underwritten
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public offering, the underwriter advises the Major Investor(s) exercising the
right of first offer in writing that marketing factors require a limitation on
the number of shares as to which such Major Investor(s) may exercise the right
of first offer (including, if appropriate, a complete limitation) then the
number of shares to be purchased pursuant to the right of first offer shall be
reduced in accordance with the underwriter's advice and such shares shall be
allocated among all exercising Major Investor(s) in proportion (as nearly as
practicable) to the amount of shares each such Major Investor would otherwise be
entitled to purchase under Section 2.5(b); provided further that the right of
first offer with respect to the Company's first firmly underwritten public
offering of shares of Common Stock shall not be foregone by virtue of the fact
that the shares held by such Major Investor(s) convert as a result of such
firmly underwritten public offering; or (iii) to the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable securities;
or (iv) to 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; or (v) to the issuance of
securities to financial institutions or lessors in connection with commercial
credit arrangements, equipment financings, or similar transactions approved by
the Board of Directors; or (vi) to the issuance or sale of the Series D
Preferred Stock; or (vii) to the issuance of securities that, with unanimous
approval of the Board of Directors of the Company, are not offered to any
existing stockholder of the Company.
(e) The Major Investors acknowledge and agree that
their ability to exercise their right of first offer in connection with the
Company's first firmly underwritten public offering shall be subject to
applicable securities laws and NASD rules.
2.6 EMPLOYEE STOCK. With respect to any shares issued or
options or rights granted (including all shares issued or options or rights
granted prior to the date hereof except that the commencement of vesting for
such shares shall be such dates as agreed upon by the Company and the Preferred
Stockholders), unless a majority of the Board of Directors of the Company (such
a majority including the affirmative vote of the directors elected by the
holders of Preferred Stock) approves otherwise, the Company shall cause each
officer, director, employee and consultant of the Company to enter into an
agreement (i) providing for vesting of such shares of options or rights over
forty-eight (48) months, with no shares or options or rights being vested for
twelve (12) months from the date of issuance or grant, as the case may be, at
which time 12/48ths of the shares or options or rights shall be vested; (ii)
providing for the repurchase price to be the lesser of the original purchase
price or fair market value in the event the holder's employment with or service
to the Company terminates; (iii) under which the holder agrees to a market
standoff requested by the Company or the underwriters of any public offering of
the Company's securities, substantially as set forth in Section 1.15; and (iv)
providing for a right of first refusal in favor of the Company with respect to
both vested and unvested shares.
3. MISCELLANEOUS.
3.1 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 of the Preferred Stock or Conversion Stock).
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties
16
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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.
3.2 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of California, without giving effect to
principles of conflicts of laws.
3.3 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.
3.4 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.
3.5 NOTICES. Unless otherwise provided, any notice required
or permitted by this Agreement shall be in writing and shall be deemed
sufficient upon delivery, when delivered personally or by overnight courier or
sent by telegram or fax, or forty-eight (48) hours after being deposited in the
U.S. mail, as certified or registered mail, with postage prepaid, and addressed
to the party to be notified at such party's address as set forth below on
Exhibit A, Exhibit B, Exhibit C, Exhibit D or Exhibit E hereto or as
subsequently modified by written notice.
3.6 EXPENSES. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 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
662/3% of the Registrable Securities then outstanding, not including the
Founders' Stock; provided that if such amendment has the effect of affecting the
Founders' Stock (i) in a manner different than securities issued to the
Preferred Stockholders, (ii) in a manner different than securities issued or
issuable to the Warrant Investor, and (iii) in a manner adverse to the interests
of the holders of the Founders' Stock, then such amendment shall require the
consent of the holder or holders of a majority of the Founders' Stock. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities then outstanding, each future
holder of all such Registrable Securities, and the Company. Notwithstanding the
foregoing, purchasers of shares of the Company's Series D Preferred Stock under
the Purchase Agreement or an addendum thereto after the date of the Purchase
Agreement may be subsequently added as a party to this Agreement as a Holder and
shall be bound by and entitled to the terms, benefits and conditions herein by
the execution of this Agreement on a signature page to this Agreement and by
attaching an addendum to Exhibit D.
3.8 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties agree
to renegotiate such provision in good faith. In the event that the parties
cannot reach a mutually agreeable and enforceable replacement for such
provision,
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then (a) such provision shall be excluded from this Agreement, (b) the balance
of the Agreement shall be interpreted as if such provision were so excluded and
(c) the balance of the Agreement shall be enforceable in accordance with its
terms.
3.9 PRIOR INVESTOR RIGHTS AGREEMENT. Upon both (i) the
execution of this Agreement by Existing Investors holding a majority of the
Registrable Securities outstanding or deemed to be outstanding immediately prior
to the Closing under the Purchase Agreement and (ii) the initial sale by the
Company of any shares of Series D Preferred Stock, this Agreement shall
supersede and replace the Prior Rights Agreement, which shall be terminated and
cease to have any further force or effect.
3.10 AGGREGATION OF STOCK. All shares of the Preferred Stock
held or acquired by affiliated entities or persons shall be aggregated together
for the purpose of determining the availability of any rights under this
Agreement.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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The parties have executed this Fourth Amended and Restated Investors'
Rights Agreement as of the date first written above.
COMPANY:
E.PIPHANY, INC.
By: /s/ XXXXX XXXXXX
-------------------------------------------
Xxxxx Xxxxxx, Chief Executive Officer
FOUNDERS:
TOTAL OUTSTANDING FOUNDER SHARES -- 14,400,000
/s/ XXXXX X. XXXXXXXX /s/ XXXXXX X. XXXXX
--------------------------------------------- ----------------------------------------------
Xxxxx X. Xxxxxxxx Xxxxxx X. Xxxxx
REPRESENTING 4,200,000 SHARES OF COMMON STOCK REPRESENTING 4,200,000 SHARES OF COMMON STOCK
/s/ XXXX XXXXX /s/ XXXX X. XXXXXXXX
--------------------------------------------- -----------------------------------------------
Xxxx Xxxxx Xxxx X. XxXxxxxx
REPRESENTING 1,400,000 SHARES OF COMMON STOCK REPRESENTING 1,400,000 SHARES OF COMMON STOCK
/s/ XXXXX XXXXXX
---------------------------------------------
Xxxxx Xxxxxx
REPRESENTING 3,200,000 SHARES OF COMMON STOCK
SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT
S-1
22
---------------------------------------------------------------------------------------------------
NEW INVESTORS:
---------------------------------------------------------------------------------------------------
Integral Capital Partners IV, L.P. Integral Capital Partners IV MS Side Fund, L.P.
By: Integral Capital Management IV, LLC By: Integral Capital Partners NBT, LLC
its General Partner its General Partner
By: /s/ XXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXXX
--------------------------------------- ---------------------------------------------
Xxxxxx X. Xxxxxxx Xxxxxx X. Xxxxxxx
a Manager a Manager
---------------------------------------------------------------------------------------------------
KPMG
By: /s/ XXXXXX XXXX XXXX
------------------------------------
Name: Xxxxxx Xxxx Xxxx
----------------------------------
Title: Head of Finance & Infrastructure
---------------------------------
---------------------------------------------------------------------------------------------------
SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT
S-2
23
EXISTING INVESTORS:
TOTAL OUTSTANDING SHARES OF PREFERRED STOCK -- 21,244,967
INFORMATION TECHNOLOGY VENTURES, ITV AFFILIATES FUND, L.P.,
L.P., A California limited partnership
A California limited partnership
By: ITV MANAGEMENT, L.L.C.
By: ITV MANAGEMENT, L.L.C. A California limited liability company
A California limited liability company Title: General Partner
Title: General Partner
By: /s/ XXX X. XXX
By: /s/ XXX X. XXX -------------------------------------------
--------------------------------------- Xxx X. Xxx, Principal Member
Xxx X. Xxx, Principal Member REPRESENTING 205,054 SHARES OF PREFERRED STOCK
REPRESENTING 7,689,535 SHARES OF PREFERRED STOCK
XXXXXXX XXXXXXX XXXXXXXX & XXXXX VIII, KPCB INFORMATION SCIENCES ZAIBATSU
By: KPCB VIII Associates, L.P., its General FUND II, L.P.
Partner By: KPCB VII Associates, L.P., its General Partner
Name: /s/ SIGNATURE ILLEGIBLE
------------------------------------- By: /s/ SIGNATURE ILLEGIBLE
a General Partner -------------------------------------------
a General Partner
Title:
------------------------------------
REPRESENTING 6,836,963 SHARES OF PREFERRED Title:
STOCK ----------------------------------------
REPRESENTING 185,465 SHARES OF PREFERRED STOCK
KPCB VIII FOUNDERS FUND, L.P. VISA INTERNATIONAL
By: KPCB VIII Associates, L.P., its General By: /s/ XXXXXXX XXXXXXXXX
Partner -------------------------------------------
Name: Xxxxxxx Xxxxxxxxx
-----------------------------------------
By: /s/ SIGNATURE ILLEGIBLE (print)
---------------------------------------
a General Partner
REPRESENTING 396,152 SHARES OF PREFERRED STOCK Title: Vice President
----------------------------------------
REPRESENTING 1,005,918 SHARES OF PREFERRED
STOCK
SIGNATURE PAGE TO FOURTH AMENDED AND RESTATED INVESTORS' RIGHTS
AGREEMENT
S-3
24
EXHIBIT A
SERIES A PREFERRED STOCKHOLDERS
NAME/ADDRESS NO. OF SHARES
-------------------------------------------- ---------------------------
Information Technology Ventures, L.P. 4,221,294
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
ITV Affiliates Fund, L.P. 112,568
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Discovery Ventures, LLC II 884,956
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Xxxxxxxx X. Xxxxxx 176,992
00 Xxxxxxxxx Xxxxx
Xxxxx, XX 00000
Xxxxx X. Xxxxxxxx as Trustee of the 176,992
Xxxxx X. Xxxxxxxx Trust dtd 7/14/88
c/o PeopleSoft, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx 0
Xxxxxxxxxx, XX 00000-0000
Xxxxxx X. Xxxxxx and Xxxxxx X. Xxxxxx as 132,744
Trustees of PSERD Trust dtd 3/11/86
00000 Xxxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
Xxxxx X. Xxxxxxxx as Trustee of 149,140
Wegbreit Trust
c/o Epiphany Marketing Software, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
A-1
25
NAME/ADDRESS NO. OF SHARES
--------------------------------------------- ---------------------------
Xxxxxx X. Xxxxx as Trustee of 62,125
Elliot-Blank Revocable Trust
c/o Epiphany Marketing Software, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx Xxxx, XX 00000
Xxxxxxxx X. Xxxxxx 88,496
x/x Xxxxxxxxx & Xxxxx
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxx X. Xxxxxx 26,548
000 Xxxxxxxxx Xxx
Xxxxxxxxx, XX 00000
Xxxxx del Xxxxx and Xxxxxx Xxxxxxx 26,548
c/o Pillsbury, Madison & Sutro
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
VLG Investments 1997 35,398
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
X.X. Xxxxxx, X.X. Xxxxxxxx & X.X. Xxxxxx 12,390
TTEES Venture Law Group 401(k)
Retirement Savings Plan and Trust U/A DTD
4/1/93 FBO Xxxxx Xxxx
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Xxxxxx Xxxx 88,500
000 Xxx Xxx Xxxxx
Xxx Xxxxx, XX 00000
Xxxxx Xxxxxxx and Xxxxx Xxxxxxx, Trustees 84,071
or Successor Trustee, Under the Xxxxxxx
Living Trust U/A/D 6/13/96
00000 Xxxxxxx 0, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
A-2
26
NAME/ADDRESS NO. OF SHARES
--------------------------------------------- ---------------------------
Xxxxxx Xxxxxxxxxx as Trustee 88,495
of the Xxxxxxxxxx Family Trust
0000 Xxxxxxxx Xxx
Xxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxxx and Xxxxx X. Xxxxxxxx 88,495
000 Xxxxxx Xxxxxx
Xxxxxxxx, XX 00000
A-3
27
EXHIBIT B
SERIES B PREFERRED STOCKHOLDERS
PURCHASER NO. OF SHARES
-------------------------------------------- ----------------------------
Information Technology Ventures, L.P. 1,162,854
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
ITV Affiliates Fund, L.P. 31,009
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Discovery Ventures, LLC II 243,782
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx VIII, L.P. 4,110,336
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
KPCB VIII Founders Fund, L.P. 238,164
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
KPCB Information Sciences Zaibatsu Fund 111,500
II, L.P.
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
APV Technology Partners, L.P. 320,000
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
APV Technology Partners U.S., L.P. 80,000
000 Xxxxxxxxxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
WS Investments 40,000
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
B-1
28
PURCHASER NO. OF SHARES
----------------------------------------- ----------------------------
Xxxx X. Xxxxxx 20,000
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Trustee, WSGR Retirement Plan FBO Xxxxx 6,668
J. Alter
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Trustee, WSGR Retirement Plan FBO Xxxxx 6,666
X. Xxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Xxxxxxx X. Xxxxxx 6,666
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Xxx Xxxxxxx 34,000
00 Xxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Xxx Xxxx 34,000
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Xxxxx Xxxxxxxx 12,000
00 Xxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
B-2
29
EXHIBIT C
SERIES C PREFERRED STOCKHOLDERS
PURCHASER NO. OF SHARES
------------------------------------------- ---------------------------
Information Technology Ventures, L.P. 2,305,387
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
ITV Affiliates Fund, L.P. 61,477
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Discovery Ventures, LLC II 118,344
0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx VIII, L.P. 2,726,627
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
KPCB VIII Founders Fund, L.P. 157,988
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
KPCB Information Sciences Zaibatsu Fund II, L.P. 73,965
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Cambridge Technology Capital Fund I, L.P. 591,716
000 Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
KPMG Peat Marwick LLP 887,574
Three Xxxxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxxxxx & Xxxxx California 63,117
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
C-1
30
PURCHASER NO. OF SHARES
--------------------------------------------- ----------------------------
H&Q Employee Venture Fund, L.P. 31,559
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxxxxx X. Xxxxxx 5,917
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxxxxx X. Case III 5,917
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
X.X. Xxxxxxx & Sons C-F Couglas P. Xxxxx XXX 5,917
Account
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Xxx Xxxxxxx 5,917
Xxx Xxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
WS Investments 29,586
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Xxxx X. Xxxxxx 14,793
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Xxxxx X. Xxxxx 8,876
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Trustee, WSGR Retirement Plan FBO Xxxxx X. 8,876
Segre
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
C-2
31
PURCHASER NO. OF SHARES
-------------------------------------------- ---------------------------
Trustee, WSGR Retirement Plan FBO Xxxxxxx X. 8,876
Xxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
N. Xxxxxxx Xxxxxxxx 2,958
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
2,958
Xxxxxxx X. Xxxxxxxxxxx
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000-0000
Xxxxxx Xxxxxx 17,752
000 Xxxxx Xxxxxx
Xxxxxxxx, XX 00000
Visa International 1,005,918
000 Xxxxx Xxxxxx Xxxx.
Mail Stop M-1, 11-G
Xxxxxx Xxxx, XX 00000
EMS Investment Partners 177,515
0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
--------------------------------------------------------------------------------
TOTAL 8,319,530
C-3
32
EXHIBIT D
SERIES D PREFERRED STOCKHOLDERS
PURCHASER NO. OF SHARES
----------------------------------------------- ---------------------------
Integral Capital Partners IV, L.P. 1,553,964
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Fax: 000-000-0000
Integral Capital Partners IV MS Side Fund, L.P. 8,536
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Fax: 000-000-0000
KPMG 312,500
0 Xxxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxx
XX00 0XX
-------------------------------------------------------------------------------
TOTAL 1,875,000
D-1
33
EXHIBIT E
WARRANT INVESTOR
Silicon Valley Bank
0000 Xxxxxxxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
E-1
