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EXHIBIT 4.1
EXECUTION COPY
ACCRUE SOFTWARE, INC.
INVESTOR RIGHTS AGREEMENT
SEPTEMBER 30, 1999
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TABLE OF CONTENTS
Page
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1. Amendment..........................................................................1
1.1 Procedure.....................................................................1
1.2 Rights of Holders.............................................................2
2. Registration Rights................................................................2
2.1 Definitions...................................................................2
2.2 Requested Registration........................................................3
2.3 Company Registration..........................................................4
2.4 Obligations of the Company....................................................4
2.5 Furnish Information...........................................................6
2.6 Expenses of Demand Registration...............................................6
2.7 Expenses of Company Registration..............................................6
2.8 Underwriting Requirements.....................................................6
2.9 No Delay of Registration......................................................7
2.10 Indemnification...............................................................7
2.11 Reports Under Securities Exchange Act of 1934.................................9
2.12 Form S-3 Registration........................................................10
2.13 Assignment of Registration Rights............................................11
2.14 Termination of Registration Rights...........................................12
3. Miscellaneous.....................................................................12
3.1 Assignment...................................................................12
3.2 Third Parties................................................................12
3.3 Governing Law................................................................12
3.4 Counterparts.................................................................12
3.5 Notices......................................................................12
3.6 Severability.................................................................13
3.7 Delays or Omissions..........................................................13
3.8 Consent and Waiver...........................................................13
3.9 Legal Representation.........................................................14
3.10 Assumed Option Holders.......................................................13
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INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "Agreement") is entered into as of
September 30, 1999, by and among Accrue Software, Inc., a Delaware corporation
(the "Company"), and the Marketwave Holders (as defined below).
RECITALS
A. The Company, Marketwave Corporation, a Washington corporation
("Marketwave"), and Marketwave Acquisition Corp., a Washington corporation and a
wholly owned subsidiary of the Company ("Merger Sub"), have entered into an
Agreement and Plan of Merger and Reorganization dated as of September 14, 1999
(the "Merger Agreement") providing for the merger of Merger Sub with and into
Marketwave (the "Merger") and the Merger Agreement contemplates that, upon
consummation of the Merger, (i) holders of shares of the capital stock of
Marketwave (collectively with all holders of Assumed Options that become a party
to this Agreement pursuant to Section 3.10, the "Marketwave Holders") will
receive shares of common stock of the Company ("Common Stock") in exchange for
their shares of capital stock of Marketwave and (ii) Marketwave will become a
wholly owned subsidiary of the Company;
B. The execution of this Agreement by the Company is a condition to the
obligation of Marketwave and the Marketwave Holders to consummate the
transactions contemplated by the Merger Agreement; and
C. The Company wishes to execute this Agreement and grant to the
Marketwave Holders the rights contained herein in order to fulfill such
condition.
THE PARTIES AGREE AS FOLLOWS:
1. Amendment.
1.1 Procedure. Except as expressly provided herein, neither this
Agreement nor any term hereof may be amended, waived, discharged or terminated
other than by a written instrument signed by the party against whom enforcement
of any such amendment, waiver, discharge or termination is sought.
Notwithstanding the foregoing, any provision of this Agreement may be amended,
waived, discharged or terminated upon the written consent of the Company and the
holders of at least a majority of the outstanding Registrable Securities (as
defined below); provided, however, that no such amendment shall be effective
with respect to any Holder if such amendment materially adversely affects any of
the rights granted pursuant to this Agreement to such Holder (the "Uniquely
Affected Holder") in a manner different from the manner in which such amendment
affects all other Holders, unless such amendment is consented to in writing by
the Uniquely Affected Holder. If such Holder does not so consent, then the
amendment shall be effective as to all Holders other than the Uniquely Affected
Holder.
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1.2 Rights of Holders. Each Holder (as defined below) shall have the
absolute right to exercise or refrain from exercising any right or rights that
such Holder may have by reason of this Agreement, including, without limitation,
the right to consent to the waiver or modification of any obligation under this
Agreement, and such Holder shall not incur any liability to any other Holder of
any securities of the Company as a result of exercising or refraining from
exercising any such right or rights.
2. Registration Rights.
2.1 Definitions. As used in this Agreement:
(a) The terms "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "Securities Act"),
and the subsequent declaration or ordering of the effectiveness of such
registration statement.
(b) The term "Registrable Securities" means:
(i) The shares of Common Stock issued or issuable to the
Marketwave Holders pursuant to the terms of the Merger Agreement; provided,
however, that the Registrable Securities shall not include the Holdback Shares
(as defined in the Merger Agreement) until and unless such shares are released
from the Escrow Agreement (as defined in the Merger Agreement) and provided
further that the Registrable Securities shall not include shares of Common Stock
issued to Marketwave Holders upon the exercise of Assumed Options if such shares
are registered under a registration statement on Form S-8 (the shares of Common
Stock referred to in this clause (i) are collectively referred to hereafter as
the "Stock"); and
(ii) Any other shares of Common Stock issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, the Stock, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned; provided, however, that Common
Stock or other securities shall only be treated as Registrable Securities if and
so long as they have not been (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or (B)
sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale.
(c) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock or
other securities outstanding which are, and the number of shares of Common Stock
or other securities issuable pursuant to then exercisable or convertible
securities which are, Registrable Securities.
(d) The term "Holder" means any holder of outstanding
Registrable Securities who, subject to the limitations set forth in Section 2.13
below, acquired such
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Registrable Securities in a transaction or series of transactions not involving
any registered public offering.
(e) The term "Form S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the Securities and Exchange Commission (the "SEC")
which permits inclusion or incorporation of substantial information by reference
to other documents filed by the Company with the SEC.
2.2 Requested Registration.
(a) If, at any time after December 1, 1999, the Company shall
receive a written request from any Holder that the Company file a registration
statement under the Securities Act covering the registration of that number of
shares of Registrable Securities whose anticipated aggregate offering price, net
of underwriting discounts and commissions, would equal at least $10,000,000,
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 2.2(b), effect as soon as practicable, and in any
event within ninety (90) days of the receipt of such request, or, with respect
to any request received by the Company between December 1, 1999 and December 15,
1999, on or prior to February 1, 2000, the registration under the Securities Act
of all Registrable Securities which the Holders request to be registered within
twenty (20) days of the mailing of such notice by the Company in accordance with
Section 3.5.
(b) If the Holder or Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 2.2 and the
Company shall include such information in the written notice referred to in
subsection 2.2(a). The underwriter will be selected by the Company and shall be
reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 2.4(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 2.2, 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
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underwriting shall not be reduced unless all other securities proposed to be
sold by persons other than the Holders are first entirely excluded from the
underwriting.
(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 2.2.
(d) Notwithstanding the foregoing, if the Company shall furnish
to Holders requesting a registration statement pursuant to this Section 2.2 a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company it would be seriously
detrimental to the Company and its stockholders for such registration statement
to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve month period.
2.3 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
Common Stock or other securities under the Securities Act in connection with the
public offering of such securities solely for cash (other than a registration
relating either to the sale of securities to participants in a Company stock
option, stock purchase or similar plan or to an SEC Rule 145 transaction, or a
registration on any form which does not include substantially similar
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within fifteen (15) days from receipt of
such notice by the Company in accordance with Section 3.5, the Company shall,
subject to the provisions of Section 2.8, cause to be registered under the
Securities Act all of the Registrable Securities that each such Holder has
requested to be registered.
2.4 Obligations of the Company. Whenever required under this Section
2 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and keep such registration statement
effective for one hundred twenty (120) days, or until the distribution
contemplated in the Registration Statement has been completed; provided,
however, that (i) such 120-day period shall be extended for a period of time
equal to the period the Holder refrains from selling any securities included in
such registration at the request of an underwriter of Common Stock (or other
securities) of the Company; and (ii) in the case of any registration of
Registrable Securities on Form S-3 which are intended to be offered on a
continuous or delayed basis, such 120-day period shall be extended, if
necessary, to keep the registration statement effective until all such
Registrable Securities are sold, provided that Rule 415, or any successor rule
under the Securities Act, permits an offering on a continuous or delayed basis,
and provided further that applicable rules under the Securities Act governing
the
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obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (i) includes any prospectus required by Section
10(a)(3) of the Securities Act or (ii) reflects facts or events representing a
material or fundamental change in the information set forth in the registration
statement, the incorporation by reference of information required to be included
in (i) and (ii) above to be contained in periodic reports filed pursuant to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), in the registration statement.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such reasonable numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act 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.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 2, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 2, if such securities
are being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) an opinion, dated such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated such date, from
the independent public accountants of the Company, in form and substance as is
customarily given
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by independent certified public accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
(h) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange or automated quotation system
on which similar securities issued by the Company are then listed.
2.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
2.6 Expenses of Demand Registration. All expenses other than stock
transfer taxes, the fees and disbursements of special counsel for individual
Holders, underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 2.2, including
(without limitation), all registration, filing and qualification fees, printers
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders (not to
exceed $15,000) 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 2.2 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 2.2; provided further, however, that if at the time of such withdrawal,
the Holders have learned of a material adverse change in the condition,
business, or prospects of the Company from that known to the Holders at the time
of their request, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 2.2.
2.7 Expenses of Company Registration. All expenses, other than stock
transfer taxes, the fees and disbursements of special counsel of individual
Holders, underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 2.3, 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 special counsel for all of the
participating Holders (not to exceed $15,000) shall be paid by the Company.
2.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 2.3 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, and then
only in such quantity as will not, in the opinion of the underwriters, adversely
affect the success of the offering by the Company. If the total amount of
securities,
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including Registrable Securities, requested by Holders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters reasonably believe would not adversely affect the success of
the offering, then the Company shall be required to include in the offering only
that number of such securities, including Registrable Securities, which the
underwriters believe will not adversely affect the success of the offering (the
securities so included to be apportioned first to the Company, then pro rata
among the selling Holders and the selling holders participating in such
registration pursuant to the terms of the Second Amended and Restated
Registration Rights Agreement dated as of August 13, 1998 (the "Existing Rights
Agreement") among the Company and the parties listed on the signature pages
thereto according to the total amount of Registrable Securities (including
Registrable Securities as defined in the Existing Rights Agreement) entitled to
be included therein owned by each selling Holder and then to all other selling
stockholders, or in such other proportions as shall mutually be agreed to by
such selling stockholders); it being understood that with respect to any
offering, no exclusion may reduce the total number of Registrable Securities
plus Registrable Securities under the Existing Rights Agreement to less than
twenty-five percent (25%) of the total number of securities subject to the
registration. For purposes of the first parenthetical in the preceding sentence
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.
2.9 No Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 2.
2.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the 1934 Act, against
any losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the 1934 Act or other federal or state
law, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "Violation"): (i) any untrue statement
or alleged untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus contained
therein or any amendments or supplements thereto, (ii) the omission or alleged
omission to state therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or (iii) any violation
or alleged violation by the Company of the Securities Act, the 1934 Act, any
state securities law or any rule or regulation
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promulgated under the Securities Act, the 1934 Act or any state securities law;
and the Company will pay, as incurred, to each such Holder, underwriter or
controlling person, any legal or other expenses reasonably incurred by them in
connection with defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
2.10(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 (such consent not to 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.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such registration; and each such
Holder will pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 2.10(b) in
connection with defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
2.10(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 (such consent not to be unreasonably withheld); provided further,
that in no event shall any indemnity under this Section 2.10(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 2.10 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 2.10, 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 shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. 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
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defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.10 (to the extent of such prejudicial
effect), but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 2.10.
(d) No indemnifying party, in the defense of any claim arising
out of a Violation, shall, except with the consent of each indemnified party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such indemnified party of a release from all liability in respect to such
claim or litigation and, in the event the terms of such judgment or settlement
include any term other than the payment by the indemnifying party of money
damages, the indemnifying party shall not so consent or enter into such a
settlement without the consent of each indemnified party (which will not be
unreasonably withheld) whether or not the terms thereof include such a release.
(e) The obligations of the Company and Holders under this
Section 2.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 2, and otherwise.
(f) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
2.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the public;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) File with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and
(d) Furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied
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with the reporting requirements of SEC Rule 144 (at any time after ninety (90)
days after the effective date of the first registration statement filed by the
Company), the Securities Act and the 1934 Act (at any time after it has become
subject to such reporting requirements), or that it qualifies as a registrant
whose securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in availing any Holder of
any rule or regulation of the SEC which permits the selling of any such
securities without registration.
2.12 Form S-3 Registration. In case the Company shall receive from
any Holder or Holders (the "S-3 Initiating Holders") 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 fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.12 (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 $1,500,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company it would be seriously detrimental to the Company 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 sixty (60) days after
receipt of the request of the Holder or Holders under this Section 2.12;
provided, however, that the Company shall not utilize this right more than once
in any twelve month period; (4) at any time during the twelve (12) month period
following the Company's July 30, 1999 initial public offering; (5) if the
Company has, within the twelve (12) month period preceding the date of such
request, already effected one registration on Form S-3 for the Holders pursuant
to this Section 2.12; or (6) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
Notwithstanding any other provision of this Section 2.12, if the Company or an
underwriter advising the Company advises the S-3 Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
included in any registration on Form S-3, then the S-3 Initiating Holders shall
so advise all Holders of Registrable Securities which would otherwise be
included in such registration on
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Form S-3 hereunder, and the number of shares of Registrable Securities that may
be included in the registration shall be allocated among all Holders thereof,
including the S-3 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 registration shall not be reduced unless all other securities
proposed to be sold by persons other than the Holders are first entirely
excluded from the registration.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses other than stock transfer
taxes, the fees and disbursements of special counsel for individual Holders,
underwriting discounts and commissions incurred in connection with a
registration requested pursuant to Section 2.12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
(not to exceed $15,000) and counsel for the Company, 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 this Section 2.12
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); provided further,
however, that if at the time of such withdrawal, the Holders have learned of a
material adverse change in the condition, business, or prospects of the Company
from that known to the Holders at the time of their request, then the Holders
shall not be required to pay any of such expenses and shall retain their rights
pursuant to this Section 2.12. Registrations effected pursuant to this Section
2.12 shall not be counted as demands for registration or registrations effected
pursuant to Section 2.2 or 2.3.
(d) The Company is obligated to effect only five (5) such
registrations on Form S-3 pursuant to this Section 2.12.
2.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may only
be assigned by a Holder to a transferee who acquires at least 250,000 shares of
Registrable Securities (subject to appropriate adjustment for any stock split,
reverse stock split, stock dividend, recapitalization or similar transaction),
provided the Company is, prior to such transfer, furnished with written notice
of the name and address of such transferee; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Securities Act. The foregoing 250,000 share requirement
shall not apply, however, to any transferee which is a partner, retired partner
or affiliated or constituent partnership of any Holder which is a partnership,
(including spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) or which is a family member (including a spouse, ancestor,
lineal descendant or sibling) or a trust for the benefit of any individual
Holder, if all such transferees or assignees agree in writing to be bound by the
terms of this Agreement and appoint a single representative as their attorney in
fact for the purpose of receiving any notices and exercising their rights under
this Section 2.
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2.14 Termination of Registration Rights. No Holder shall be entitled
to exercise any right provided for in this Agreement (a) after August 4, 2004 or
(b) at such time as such Holder may sell all of such Holder's Registrable
Securities in any single three (3) month period pursuant to Rule 144 (or such
successor rule as may be adopted).
3. Miscellaneous.
3.1 Assignment. Subject to the provisions of Section 2.13 hereof,
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 hereto.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties hereto, and their
respective successors and assigns, any rights, remedies, obligations or
liabilities under this Agreement, except as expressly provided herein.
3.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
3.4 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.
3.5 Notices.
(a) All notices, requests, demands and other communications
under this Agreement or in connection herewith shall be given to or made upon
the respective parties as follows:
To the Company: Accrue Software, Inc.
00000 Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: President
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with a copy (not constituting notice) to:
Venture Law Group
A Professional Corporation
0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxxxx
To a Holder: At such Holder's address as set forth on the
signature page hereto.
(b) All notices, requests, demands and other communications
given or made in accordance with the provisions of this Agreement shall be in
writing, and shall be sent by airmail, return receipt requested, or by telex or
telecopy (facsimile) with confirmation of receipt, and shall be deemed to be
given or made when receipt is so confirmed.
(c) Any party may, by written notice (in accordance with this
Section 3.5) to the other, alter its address or respondent.
3.6 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, portions of such provisions, or
such provisions in their entirety, to the extent necessary, shall be severed
from this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
3.7 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party 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 party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made 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.
3.8 Consent and Waiver. In connection with the issuance and sale of
the shares of Common Stock by the Company to the shareholders of Marketwave
pursuant to the terms of the Merger Agreement, the Existing Rights Holders,
severally, hereby consent to amend the Prior Rights Agreement in the manner set
forth herein.
3.9 Legal Representation. The Company and the Holders acknowledge
that: (a) they have read this Agreement; (b) they have been represented in the
preparation, negotiation, and execution of this Agreement by legal counsel of
their own choice or have voluntarily
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declined to seek such counsel; and (c) they understand the terms and
consequences of this Agreement and are fully aware of its legal and binding
effect.
3.10 Assumed Option Holders. Any holder of an Assumed Option that
exercises such option on or prior to the date of a request for registration of
Registrable Securities held by the Marketwave Holders (the "Request Date")
pursuant to Section 2.2 (the "Marketwave Demand Registration") may elect by
delivering a written notice to the Company within thirty (30) days after the
Request Date to become a party to this Agreement by execution of a counterpart
signature page hereto and to include shares of Common Stock issued upon exercise
of such Assumed Option in the Marketwave Demand Registration and,
notwithstanding anything to the contrary in Section 1 of this Agreement, each
Holder hereby consents to the inclusion of such holders of Assumed Options as
parties to this Agreement, provided, however, that, notwithstanding the
foregoing, the right of holders to include shares of Common Stock issued upon
exercise of Assumed Options in the Marketwave Demand Registration shall
terminate once such shares are registered by the Company pursuant to the filing
of a registration statement on Form S-8.
[SIGNATURE PAGES FOLLOW]
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IN WITNESS WHEREOF, the parties have executed this Investor
Rights Agreement as of the date first written above.
ACCRUE SOFTWARE, INC. MARKETWAVE HOLDERS:
By: Name:
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Title: Title:
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Address:
