Exhibit 10.7
RED HAT SOFTWARE, INC.
FIRST AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This First Amended and Restated Investors Rights Agreement dated as of
February 25, 1999 (the "Agreement") is entered into by and among Red Hat
Software, Inc., a Delaware corporation (the "Company"), the entities listed on
the signature pages hereto under the heading "Existing Investor" (the "Existing
Investors"), the entities listed on the signature pages hereto under the heading
"New Investor" (the "New Investors"), the entities who execute a counterpart
signature page to this Agreement (the "Additional Investors," and together with
the Existing Investors and the New Investors, the "Investors") and the persons
listed on the signature pages hereto under the heading "Founders" (the
"Founders").
Recitals
A. The Company, the Founders and certain Investors are parties to that
certain Investor Rights Agreement dated as of September 29, 1998 (the "Investor
Rights Agreement");
B. Certain Investors are purchasing, concurrently herewith, shares of
capital stock of the Company pursuant to the Series C Convertible Preferred
Stock Purchase Agreement of even date herewith (the "Purchase Agreement");
C. The execution and delivery of this Agreement is a condition to the
execution and delivery of the Purchase Agreement; and
D. The parties to the Investor Rights Agreement desire to amend and restate
the Investor Rights Agreement on the terms and conditions set forth herein.
Agreement
In consideration of the mutual covenants contained herein and the
consummation of the sale and purchase of shares of capital stock of the Company
pursuant to the Purchase Agreement, and for other valuable consideration,
receipt of which is hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the
following respective meanings:
"Xxxxxx Trust" means Xxxxx Xxxxxx, Jr., Xxxxx Xxxxxx, Xxxxx X. Xxxx,
trustees of the Xxxxx Xxxxxx, Jr., Trust under a Trust Agreement dated April 11,
1988, as amended.
"Xxxxxx XXXX" means the 1998 Xxxxx Xxxxxx, Jr. Grantor Annuity Trust.
-2-
"Xxxxxx Affiliates" means the Xxxxxx XXXX, the Xxxxxx Trust, Xxxxx
Xxxxxx, Jr., his wife and issue, any trust of which Xxxxx Xxxxxx, Jr. is the
trustee or which is created for the benefit of Xxxxx Xxxxxx, Jr., his wife or
issue, or any entity or person controlled by Xxxxx Xxxxxx, Jr.
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.0001 par value per share, of
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Founder Shares" means all shares of Common Stock held by the
Founders, whether now owned or subsequently acquired.
"Initiating Holders" means the Stockholders initiating a request for
registration pursuant to Section 2(a) or 2(b), as the case may be.
"Initial Public Offering" means the initial firm-commitment
underwritten public offering of shares of Common Stock pursuant to an effective
Registration Statement.
"Other Holders" shall have the meaning set forth in Section 2.1(d).
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 2.4.
"Registrable Shares" means (i) the shares of Common Stock issued or
issuable upon conversion of the Shares, (ii) any shares of Common Stock, and any
shares of Common Stock issued or issuable upon the conversion or exercise of any
other securities acquired by the Investors, (iii) the Founder Shares, (iv) the
shares of Common Stock acquired by certain Investors pursuant to a Common Stock
Purchase Agreement dated as of September 29, 1998, (v) the shares of Common
Stock acquired by certain Investors pursuant to a Common Stock Purchase
Agreement dated as of the date hereof and (vi) any other shares of Common Stock
-3-
issued in respect of such shares (because of stock splits, stock dividends,
reclassifications, recapitalizations, or similar events); provided, however,
that shares of Common Stock which are Registrable Shares shall cease to be
Registrable Shares upon (i) any sale pursuant to a Registration Statement or
Rule 144 under the Securities Act or (ii) any sale in any manner to a person or
entity unless, by virtue of Section 4 of this Agreement, such person or entity
is entitled to the rights provided by this Agreement. Wherever reference is made
in this Agreement to a request or consent of holders of a certain percentage of
Registrable Shares, the determination of such percentage shall include shares of
Common Stock issuable upon conversion of the Shares even if such conversion has
not been effected.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Selling Stockholder" means any Stockholder owning Registrable Shares
included in a Registration Statement.
"Shares" means (a) the 6,801,400 outstanding shares of Series A
Convertible Preferred Stock of the Company; (b) the 8,116,550 outstanding shares
of Series B Convertible Preferred Stock of the Company; and (c) the shares of
Series C Convertible Preferred Stock issued pursuant to the Purchase Agreement.
"Stockholders" means (i) the Investors (including any persons or
entities to whom the rights granted under this Agreement are transferred by the
Investors, their successors or assigns pursuant to Section 4 hereof) and (ii)
the Founders.
2. Registration Rights
2.1 Required Registrations.
(a) At any time after the earlier of (x) February 25, 2002 or (y)
six months after the closing of the Initial Public Offering, a Stockholder or
Stockholders (excluding the Founders) holding in the aggregate at least 35% of
the Registrable Shares (excluding the Registrable Shares held by the Founders)
may request, in writing, that the Company effect the registration on Form S-1 or
Form S-2 (or any successor form) of Registrable Shares owned by such Stockholder
or Stockholders having an aggregate value of at least $5,000,000 (based on the
then current market price or fair value).
(b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), a Stockholder or Stockholders (excluding the Founders) holding in
the aggregate at least 20% of the Registrable Shares (excluding the Registrable
Shares held by the Founders) may request, in writing, that the Company effect
the registration on Form S-3 (or such successor form), of Registrable Shares
having an aggregate value of at least $1,000,000 (based on the then current
public market price).
-4-
(c) Upon receipt of any request for registration pursuant to this
Section 2, the Company shall promptly give written notice of such proposed
registration to all other Stockholders (including the Founders). Such
Stockholders shall have the right, by giving written notice to the Company
within 30 days after the Company provides its notice, to elect to have included
in such registration such of their Registrable Shares as such Stockholders may
request in such notice of election, subject in the case of an underwritten
offering to the approval of the managing underwriter as provided in Section 2(d)
below. Thereupon, the Company shall, as expeditiously as possible, use its best
efforts to effect the registration on an appropriate registration form of all
Registrable Shares which the Company has been requested to so register
(provided, however, that in the case of a registration requested under Section
2.1(b), the Company will only be obligated to effect such registration on Form
S-3 (or any successor form)).
(d) If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2.1(a) or (b), as the case may be, and the Company shall include such
information in its written notice referred to in Section 2.1(c). The right of
any other Stockholder to include its Registrable Shares in such registration
pursuant to Section 2.1(a) or (b), as the case may be, shall be conditioned upon
such other Stockholder's participation in such underwriting on the terms set
forth herein.
If the Company desires that any officers or directors of the
Company holding securities of the Company be included in any registration for an
underwritten offering requested pursuant to Section 2.1(d) or if other holders
of securities of the Company who are entitled, by contract with the Company, to
have securities included in such a registration (the "Other Holders") request
such inclusion, the Company may include the securities of such officers,
directors and Other Holders in such registration and underwriting on the terms
set forth herein. The Company shall (together with all Stockholders, officers,
directors and Other Holders proposing to distribute their securities through
such underwriting) enter into an underwriting agreement in customary form
(including, without limitation, customary indemnification and contribution
provisions on the part of the Company) with the managing underwriter; provided
that such underwriting agreement shall not provide for indemnification or
contribution obligations on the part of Stockholders materially greater than the
obligations of the Stockholders pursuant to Section 2.5. Notwithstanding any
other provision of this Section 2.1(d), if the managing underwriter advises the
Company that the inclusion of all shares requested to be registered would
adversely affect the offering, the securities of the Company held by officers or
directors of the Company (other than Registrable Shares) and the securities held
by Other Holders (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent deemed advisable by the managing
underwriter, and if a further limitation of the number of shares is required,
the number of shares that may be included in such registration and underwriting
shall be allocated among all holders of Registrable Shares requesting
registration in proportion, as nearly as practicable, to the respective number
of Registrable Shares held by them at the time of the request for registration
made by the Initiating Holders pursuant to Section 2.1(a) or (b), as the case
may be. If any holder of Registrable Shares, officer, director or Other Holder
who has requested inclusion in such registration as provided above disapproves
of the terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, and the securities so withdrawn shall also be
-5-
withdrawn from registration. If the managing underwriter has not limited the
number of Registrable Shares or other securities to be underwritten, the Company
may include securities for its own account in such registration if the managing
underwriter so agrees and if the number of Registrable Shares and other
securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
(e) The Initiating Holders shall have the right to select the
managing underwriter(s) for any underwritten offering requested pursuant to
Section 2.1(a) or (b), subject to the approval of the Company, which approval
will not be unreasonably withheld.
(f) The Company shall not be required to effect more than two
registrations pursuant to Section 2.1(a). In addition, the Company shall not be
required to effect more than three registrations pursuant to Section 2.1(b) in
any 12-month period. Moreover, the Company shall not be required to effect any
registration (other than on Form S-3 or any successor form relating to secondary
offerings) within six months after the effective date of any other Registration
Statement of the Company. For purposes of this Section 2.1(f), a Registration
Statement shall not be counted until such time as such Registration Statement
has been declared effective by the Commission (unless the Initiating Holders
withdraw their request for such registration (other than as a result of
information concerning the business or financial condition of the Company which
is made known to the Stockholders after the date on which such registration was
requested) and elect not to pay the Registration Expenses therefor pursuant to
Section 2.4).
(g) If at the time of any request to register Registrable Shares
by Initiating Holders pursuant to this Section 2.1, the Company is engaged or
has plans to engage in a registered public offering or is engaged in any other
activity which, in the good faith determination of the Company's Board of
Directors, would be adversely affected by the requested registration, then the
Company may at its option direct that such request be delayed for a period not
in excess of 90 days from the date of such request, such right to delay a
request to be exercised by the Company not more than once in any 12-month
period.
2.2 Incidental Registration.
(a) Whenever the Company proposes to file a Registration
Statement (other than a Registration Statement filed pursuant to Section 2.1) at
any time and from time to time, it will, prior to such filing, give written
notice to all Stockholders of its intention to do so; provided, that no such
notice need be given if no Registrable Shares are to be included therein as a
result of a determination of the managing underwriter pursuant to Section
2.2(b). Upon the written request of a Stockholder or Stockholders given within
20 days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Shares), the Company shall
use its best efforts to cause all Registrable Shares which the Company has been
requested by such Stockholder or Stockholders to register to be registered under
the Securities Act to the extent necessary to permit their sale or other
disposition in accordance with the intended methods of distribution specified in
the request of such Stockholder or Stockholders; provided that the Company shall
have the right to postpone or withdraw any registration effected pursuant to
this Section 2.2 without obligation to any Stockholder.
-6-
(b) If the registration for which the Company gives notice
pursuant to Section 2.2(a) is a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.2(a). In such event, the right of any
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.2 shall be conditioned upon such Stockholder's participation in such
underwriting on the terms set forth herein. All Stockholders proposing to
distribute their securities through such underwriting shall (together with the
Company, Other Holders, and any officers or directors distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for the
underwriting by the Company. Notwithstanding any other provision of this Section
2.2, if the managing underwriter determines that the inclusion of all shares
requested to be registered would adversely affect the offering, the Company may
limit the number of Registrable Shares to be included in the registration and
underwriting. The Company shall so advise all holders of Registrable Shares
requesting registration, and the number of shares that are entitled to be
included in the registration and underwriting shall be allocated in the
following manner. The securities of the Company held by officers and directors
of the Company (other than Registrable Shares) shall be excluded from such
registration and underwriting to the extent deemed advisable by the managing
underwriter; and, if a further limitation on the number of shares is required,
the Registrable Shares held by the Founders shall be excluded from such
registration and underwriting to the extent deemed advisable by the managing
underwriter; and, if a further limitation on the number of shares is required,
the number of shares that may be included in such registration and underwriting
shall be allocated among all Stockholders (other than the Founders) and Other
Holders requesting registration in proportion, as nearly as practicable, to the
respective number of shares of Common Stock (on an as-converted basis) which
they held at the time the Company gives the notice specified in Section 2.2(a).
If any Stockholder or Other Holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting Stockholders and Other Holders pro rata in the
manner described in the preceding sentence. If any holder of Registrable Shares
or any officer, director or Other Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, and any Registrable Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
(c) Notwithstanding the foregoing, the Company shall not be
required, pursuant to this Section 2.2, to include any Registrable Shares in a
Registration Statement (other than in the Initial Public Offering) if such
Registrable Shares can then be sold pursuant to Rule 144(k) under the Securities
Act and represent less than 1% of the then outstanding shares of Common Stock.
2.3 Registration Procedures.
(a) If and whenever the Company is required by the provisions of
this Agreement to use its best efforts to effect the registration of any
Registrable Shares under the Securities Act, the Company shall:
-7-
(i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become and remain effective for 120 days from the
effective date or such lesser period until all such Registrable Shares are sold;
(ii) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to comply
with the provisions of the Securities Act (including the anti-fraud provisions
thereof) and to keep the Registration Statement effective for 120 days from the
effective date or such lesser period until all such Registrable Shares are sold;
(iii) as expeditiously as possible furnish to each Selling
Stockholder such reasonable numbers of copies of the Prospectus, including any
preliminary Prospectus, in conformity with the requirements of the Securities
Act, and such other documents as such Selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by such Selling Stockholder;
(iv) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the Selling Stockholders
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the Selling Stockholders to consummate the
public sale or other disposition in such states of the Registrable Shares owned
by the Selling Stockholder; provided, however, that the Company shall not be
required in connection with this paragraph (iv) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction;
(v) as expeditiously as possible, cause all such Registrable
Shares to be listed on each securities exchange or automated quotation system on
which similar securities issued by the Company are then listed;
(vi) promptly provide a transfer agent and registrar for all
such Registrable Shares not later than the effective date of such registration
statement;
(vii) promptly make available for inspection by the Selling
Stockholders, any managing underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant or other agent
retained by any such underwriter or selected by the Selling Stockholders, all
financial and other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such Registration
Statement;
(viii) as expeditiously as possible, notify each Selling
Stockholder, promptly after it shall receive notice thereof, of the time when
such Registration Statement has become effective or a supplement to any
Prospectus forming a part of such
-8-
Registration Statement has been filed; and
(ix) furnish, at the request of any Selling Stockholder, on
the date that such Registrable Shares are delivered to the underwriter(s) for
sale, 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, (A) an
opinion, dated as of 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 and reasonably satisfactory to a
majority in interest of the Selling Stockholders, addressed to the underwriters,
if any, and to the Selling Stockholders and (B) a "comfort" letter dated as of
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 and reasonably
satisfactory to a majority in interest of the Selling Stockholders, addressed to
the underwriters, if any, and to the Selling Stockholders.
(b) If the Company has delivered a Prospectus to the Selling
Stockholders and after having done so the Prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders and, if requested, the Selling Stockholders shall
immediately cease making offers of Registrable Shares and return all
Prospectuses to the Company. The Company shall promptly provide the Selling
Stockholders with revised Prospectuses and, following receipt of the revised
Prospectuses, the Selling Stockholders shall be free to resume making offers of
the Registrable Shares.
(c) In the event that, in the judgment of the Company, it is
advisable to suspend use of a Prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all Selling Stockholders
to such effect, and, upon receipt of such notice, each such Selling Stockholder
shall immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Stockholder has received copies of a
supplemented or amended Prospectus or until such Selling Stockholder is advised
in writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Notwithstanding anything
to the contrary herein, the Company shall not exercise its rights under this
Section 2.3(c) to suspend sales of Registrable Shares for a period in excess of
90 days in any 365-day period.
-9-
2.4 Allocation of Expenses. The Company will pay all Registration
Expenses for all registrations under this Agreement; provided, however, that if
a registration under Section 2.1(a) is withdrawn at the request of the
Initiating Holders (other than as a result of information concerning the
business or financial condition of the Company which is made known to the
Stockholders after the date on which such registration was requested) and if the
Initiating Holders elect not to have such registration counted as a registration
requested under Section 2.1, the requesting Stockholders shall pay the
Registration Expenses of such registration pro rata in accordance with the
number of their Registrable Shares included in such registration. For purposes
of this Section, the term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with this Agreement, including, without
limitation, all registration and filing fees, exchange listing fees, printing
expenses, fees and expenses of counsel for the Company and the fees and expenses
of one counsel selected by the Selling Stockholders to represent the Selling
Stockholders (not to exceed $10,000 in the aggregate), state Blue Sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration, but excluding underwriting discounts, selling commissions and
the fees and expenses of Selling Stockholders' own counsel (other than the
counsel selected to represent all Selling Stockholders).
2.5 Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or omission made in such
Registration Statement, preliminary prospectus or prospectus, or any such
amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by or on behalf of such seller,
underwriter or controlling person specifically for use in the preparation
thereof.
-10-
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; provided, however, that the obligations of a Stockholder hereunder
shall be limited to an amount equal to the net proceeds to such Stockholder of
Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld); and, provided, further, that the failure of any Indemnified Party to
give notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section except to the extent that the Indemnifying Party
is adversely affected by such failure. The Indemnified Party may participate in
such defense at such party's expense; provided, however, that the Indemnifying
Party shall pay such expense 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 the Indemnified Party and any other
party represented by such counsel in such proceeding; provided further that in
no event shall the Indemnifying Party be required to pay the expenses of more
than one law firm per jurisdiction as counsel for the Indemnified Party. The
Indemnifying Party also shall be responsible for the expenses of such defense if
the Indemnifying Party does not elect to assume such defense. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld.
-11-
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 2.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to any losses, claims, damages and liabilities
referred to herein, then the Indemnifying Party shall, in lieu of indemnifying
such Indemnified Party, contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities to
which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Stockholders on the
other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company and the Stockholders shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact related to information supplied by the Company
or the Stockholders and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Stockholders agree that it would not be just and equitable
if contribution pursuant to this Section 2.5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to above. Notwithstanding the provisions
of this paragraph of Section 2.5, (i) in no case shall any one Stockholder be
liable or responsible for any amount in excess of the net proceeds received by
such Stockholder from the offering of Registrable Shares and (ii) the Company
shall be liable and responsible for any amount in excess of such proceeds;
provided, however, that no person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against another
party or parties under this Section, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve such party from any other
obligation it or they may have thereunder or otherwise under this Section. No
party shall be liable for contribution with respect to any action, suit,
proceeding or claim settled without its prior written consent, which consent
shall not be unreasonably withheld.
2.6 Other Matters with Respect to Underwritten Offerings. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2.1, the Company agrees to (a) enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use its best efforts to cause
its legal counsel to render customary opinions to the underwriters with respect
to the Registration Statement; and (c) use its best efforts to cause its
independent public accounting firm to issue customary "cold comfort letters" to
the underwriters with respect to the Registration Statement.
-12-
2.7 Information by Holder. Each holder of Registrable Shares included
in any registration shall furnish to the Company such information regarding such
holder and the distribution proposed by such holder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
2.8 "Stand-Off" Agreement; Confidentiality of Notices. Each
Stockholder, except Intel, if requested by the Company and the managing
underwriter of an offering by the Company of Common Stock or other securities of
the Company, agrees not to sell or otherwise transfer or dispose of any
Registrable Shares or other securities of the Company held by such Stockholder
for a period of 180 days following the effective date of a Registration
Statement; provided, that:
(a) such agreement shall only apply to the initial public
offering of Common Stock of the Company sold in an underwritten offering; and
(b) all stockholders of the Company then holding at least 1% of
the outstanding Common Stock (on an as-converted basis) and all officers and
directors of the Company enter into similar agreements or are otherwise bound by
similar provisions.
The Company may impose stop-transfer instructions with respect to the
Registrable Shares, other than those held by Intel, or other securities subject
to the foregoing restriction until the end of such 180-day period.
Intel agrees that, if requested by the Company and the managing
underwriter of an offering by the Company of Common Stock or other securities of
the Company, it will enter into a customary market "Stand Off" agreement for a
period of 180 days following the effective date of a Registration Statement.
Any Stockholder receiving any written notice from the Company
regarding the Company's plans to file a Registration Statement shall treat such
notice confidentially and shall not disclose such information to any person
other than as necessary to exercise its rights under this Agreement.
2.9 Limitations on Subsequent Registration Rights. The Company shall
not, without the prior written consent of the Founders holding at least 66-2/3%
of the Registrable Shares then held by all Founders and Stockholders (excluding
the Founders) holding at least 66-2/3% of the Registrable Shares then held by
all Stockholders (excluding the Registrable Shares held by the Founders), enter
into any agreement (other than this Agreement) with any holder or prospective
holder of any securities of the Company which grant such holder or prospective
holder rights to include securities of the Company in any Registration
Statement, unless (a) such rights to include securities in a registration
initiated by the Company or by Stockholders are not more favorable than the
rights granted to Other Holders under Sections 2.1 and 2.2 of this Agreement,
and (b) any such rights to initiate a registration provide that Stockholders are
entitled to include Registrable Shares on a pro rata basis with such holders
based on the number of shares of Common Stock (on an as-converted basis) owned
by Stockholders and such holders.
-13-
2.10 Rule 144 Requirements. After the earliest of (i) the closing of
the sale of securities of the Company pursuant to a Registration Statement, (ii)
the registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
(a) make and keep current public information about the Company
available, as those terms are understood and defined in Rule 144;
(b) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(c) furnish to any holder of Registrable Shares upon request (i)
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the Commission allowing it to
sell any such securities without registration.
2.11 Termination. All of the Company's obligations to register
Registrable Shares under Sections 2.1 and 2.2 of this Agreement shall terminate
three years after the closing of the Initial Public Offering.
3. Right Of First Refusal
3.1 Rights of Investors
(a) The Company shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance, sale or exchange,
(i) any shares of its Common Stock, (ii) any other equity securities of the
Company, including, without limitation, shares of preferred stock, (iii) any
option, warrant or other right to subscribe for, purchase or otherwise acquire
any equity securities of the Company, or (iv) any debt securities convertible
into capital stock of the Company (collectively, the "Offered Securities"),
unless in each such case the Company shall have first complied with this Section
3.1. The Company shall deliver to each Investor a written notice of any proposed
or intended issuance, sale or exchange of Offered Securities (the "Offer"),
which Offer shall (i) identify and describe the Offered Securities, (ii)
describe the price and other terms upon which they are to be issued, sold or
exchanged, and the number or amount of the Offered Securities to be issued, sold
or exchanged, (iii) identify the persons or entities (if known) to which or with
which the Offered Securities are to be offered, issued, sold or exchanged and
(iv) offer to issue and sell to or exchange with such Investor (A) a pro rata
portion of the Offered Securities determined by dividing the aggregate number of
shares of Common Stock then held by such Investor (giving effect to the
conversion of all shares of convertible preferred stock then held) by the total
number of shares of Common Stock then
-14-
outstanding (giving effect to the conversion of all outstanding shares of
convertible preferred stock and the exercise of all vested options) (the "Basic
Amount"), and (B) any additional portion of the Offered Securities attributable
to the Basic Amounts of other Investors as such Investor shall indicate it will
purchase or acquire should the other Investors subscribe for less than their
Basic Amounts (the "Undersubscription Amount"). For purposes of the foregoing
paragraph, the number of shares of Common Stock (on an as-converted basis) held
by the Xxxxxx Trust and the Xxxxxx XXXX shall be aggregated with each other and
all shares held by the other Xxxxxx Affiliates, and the Xxxxxx Affiliates may
assign, inter se, the purchase rights provided under this section.
(b) To accept an Offer, in whole or in part, an Investor must
deliver a written notice to the Company prior to the end of the 30-day period of
the Offer, setting forth the portion of the Investor's Basic Amount that such
Investor elects to purchase and, if such Investor shall elect to purchase all of
its Basic Amount, the Undersubscription Amount (if any) that such Investor
elects to purchase (the "Notice of Acceptance"). If the Basic Amounts subscribed
for by all Investors are less than the total of all of the Basic Amounts
available for purchase, then each Investor who has set forth an
Undersubscription Amount in its Notice of Acceptance shall be entitled to
purchase, in addition to the Basic Amounts subscribed for, the Undersubscription
Amount it has subscribed for; provided, however, that if the Undersubscription
Amounts subscribed for exceed the difference between the total of all of the
Basic Amounts available for purchase and the Basic Amounts subscribed for (the
"Available Undersubscription Amount"), each Investor who has subscribed for any
Undersubscription Amount shall be entitled to purchase only that portion of the
Available Undersubscription Amount as the Undersubscription Amount subscribed
for by such Investor bears to the total Undersubscription Amounts subscribed for
by all Investors, subject to rounding by the Board of Directors to the extent it
deems reasonably necessary.
(c) The Company shall have 90 days from the expiration of the
period set forth in Section 3.1(b) above to issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been
given by the Investors (the "Refused Securities"), but only to the offerees or
purchasers described in the Offer (if so described therein) and only upon terms
and conditions (including, without limitation, unit prices and interest rates)
which are not more favorable, in the aggregate, to the acquiring person or
persons or less favorable to the Company than those set forth in the Offer.
(d) In the event the Company shall propose to sell less than all
the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 3.1(c) above), then each Investor may, at its sole option
and in its sole discretion, reduce the number or amount of the Offered
Securities specified in its Notice of Acceptance to an amount that shall be not
less than the number or amount of the Offered Securities that the Investor
elected to purchase pursuant to Section 3.1(b) above multiplied by a fraction,
(i) the numerator of which shall be the number or amount of Offered Securities
the Company actually proposes to issue, sell or exchange (including Offered
Securities to be issued or sold to Investors pursuant to Section 3.1(b) above
prior to such reduction) and (ii) the denominator of which shall be the original
amount of the Offered Securities. In the event that any Investor so elects to
reduce the number or amount of Offered Securities specified in its Notice of
Acceptance, the Company may not issue,
-15-
sell or exchange more than the reduced number or amount of the Offered
Securities unless and until such securities have again been offered to the
Investors in accordance with Section 3.1(a) above.
(e) Upon the closing of the issuance, sale or exchange of all or
less than all of the Refused Securities, the Investors shall acquire from the
Company, and the Company shall issue to the Investors, the number or amount of
Offered Securities specified in the Notices of Acceptance, as reduced pursuant
to Section 3.1(d) above if the Investors have so elected, upon the terms and
conditions specified in the Offer. The purchase by the Investors of any Offered
Securities is subject in all cases to the preparation, execution and delivery by
the Company and the Investors of a purchase agreement relating to such Offered
Securities reasonably satisfactory in form and substance to the Investors and
their respective counsel.
(f) Any Offered Securities not acquired by the Investors or other
persons in accordance with Section 3.1(c) above may not be issued, sold or
exchanged until they are again offered to the Investors under the procedures
specified in this Agreement.
(g) The rights of the Investors under this Section 3 shall not
apply to:
(i) any shares of the Company's Series C Convertible
Preferred Stock issued pursuant to the Purchase Agreement;
(ii) Common Stock issued as a stock dividend to holders of
Common Stock or upon any subdivision or combination of shares of Common Stock;
(iii) the issuance of any shares of Common Stock upon
conversion of shares of convertible preferred stock;
(iv) the issuance of up to 3,717,400 shares of Common Stock,
or such greater number as is approved by vote of not less than a majority of the
non-employee directors of the Company, or the grant of options therefor,
including shares issued upon exercise of options outstanding on the date of this
Agreement (such number to be proportionately adjusted in the event of any stock
splits, stock dividends, recapitalizations or similar events occurring on or
after the date of this Agreement) issuable to officers, directors, consultants
and employees of the Company or any subsidiary pursuant to any plan, agreement
or arrangement approved by a vote of not less than a majority of the Board of
Directors of the Company (it being understood that any shares subject to options
that expire or terminate unexercised shall not count towards the maximum number
set forth in this clause (iii));
(v) securities issued solely in consideration for the
acquisition (whether by merger or otherwise) by the Company or any of its
subsidiaries of all or substantially all of the stock or assets of any other
entity;
(vi) shares of Common Stock sold by the Company in an
underwritten public offering pursuant to an effective registration statement
under the Securities Act;
-16-
(vii) securities issued pursuant to any equipment leasing
arrangement, or debt financing from a bank or similar financial institution, in
each case approved by a vote of not less than a majority of the non-employee
members of the Board of Directors of the Company; or
(viii) securities issued in connection with strategic
transactions involving the Company and other entities, including (A) joint
ventures, manufacturing, marketing or distribution arrangements or (B)
technology transfer or development arrangements, in each case approved by a vote
of not less than a majority of the non-employee members of the Board of
Directors of the Company.
3.2 Termination. This Section 3 shall terminate upon the earlier of
the following events:
(a) The sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise; or
(b) The closing of the Initial Public Offering.
4. Transfers of Rights. This Agreement, and the rights and obligations of
each Investor, may be assigned by such Investor to any person or entity to which
at least 25% of the Shares owned by such Investor as of the date hereof are
transferred, and such transferee shall be deemed an "Investor" for purposes of
this Agreement; provided that the transferee provides written notice of such
assignment to the Company and agrees in writing to be bound by the terms hereof.
No such transfer shall be permitted by any Investor pursuant to this Section 4
to any person or entity that a majority of the non-employee members of the Board
of Directors deem to be a competitor of the Company. The foregoing
notwithstanding, the rights and obligations of a Xxxxxx Affiliates hereunder may
be assigned to any Xxxxxx Affiliate without regard to the number of Shares
transferred.
5. General.
5.1 Severability. The invalidity or unenforceability of any provision
of this Agreement shall not affect the validity or enforceability of any other
provision of this Agreement.
5.2 Specific Performance. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, each
Investor shall be entitled to specific performance of the agreements and
obligations of the Company hereunder and to such other injunctive or other
equitable relief as may be granted by a court of competent jurisdiction.
-17-
5.3 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the Commonwealth of Massachusetts
(without reference to the conflicts of law provisions thereof).
5.4 Notices. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be deemed delivered (a) two
business days after being sent by registered or certified mail, return receipt
requested, postage prepaid or (b) one business day after being sent via a
reputable nationwide overnight courier service guaranteeing next business day
delivery, in each case to the intended recipient as set forth below:
If to the Company, by mail to: P. O. Xxx 00000, Xxxxxxxx Xxxxxxxx
Xxxx, XX 00000, Attention: President, or by overnight courier to: 0000 Xxxxxxxx
Xxxxxxx, Xxxxxx, XX 00000, Attention: President, or at such other address or
addresses as may have been furnished in writing by the Company to the
Purchasers, with a copy to Xxxxx, Xxxxxxx & Xxxxxxxxx LLP, 000 Xxxx Xxxxxx,
Xxxxxx, XX 00000, Attn: Xxxxxxx X. Xxxxxxx, Xx., Esq.;
If to an Investor, at the address set forth on the signature page
hereto, or at such other address or addresses as may have been furnished to the
Company in writing by such Investor; or
If to a Founder, at the address set forth below such Founder's
signature to this Agreement.
Any party may give any notice, request, consent or other communication under
this Agreement using any other means (including, without limitation, personal
delivery, messenger service, telecopy, first class mail or electronic mail), but
no such notice, request, consent or other communication shall be deemed to have
been duly given unless and until it is actually received by the party for whom
it is intended. Any party may change the address to which notices, requests,
consents or other communications hereunder are to be delivered by giving the
other parties notice in the manner set forth in this Section.
5.5 Complete Agreement.
(a) This Agreement constitutes the entire agreement and
understanding of the parties hereto with respect to the subject matter hereof
and supersedes all prior agreements and understandings relating to such subject
matter.
(b) The Investor Rights Agreement dated September 29, 1998 by and
among the Company, the Founders certain Investors is hereby terminated and is
superseded in all respects by this Agreement. Each party to such terminated
agreement hereby waives any right it may have had under such agreement with
respect to the issuance and sale by the Company of the shares of Series C
Convertible Preferred Stock pursuant to the Purchase Agreement.
-18-
5.6 Amendments and Waivers. Any term of this Agreement may be amended
or terminated and the observance of any term of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), with the written consent of the Company and the holders of at
least 66-2/3% of the Registrable Shares held by all of the Stockholders;
provided, that Section 3 hereof may be amended or waived with the written
consent of the Stockholders (excluding the Founders) holding at least 66-2/3% of
the Registrable Shares held by the Stockholders (excluding the Registrable
Shares held by the Founders); provided further that this Agreement may be
amended with the consent of the holders of less than all Registrable Shares only
in a manner which affects all such holders in the same fashion. Any such
amendment, termination or waiver effected in accordance with this Section 5.6
shall be binding on all parties hereto, even if they do not execute such
consent. No waivers of or exceptions to any term, condition or provision of this
Agreement, in any one or more instances, shall be deemed to be, or construed as,
a further or continuing waiver of any such term, condition or provision.
5.7 Pronouns. Whenever the context may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
5.8 Counterparts; Facsimile Signatures. This Agreement may be executed
in any number of counterparts, each of which shall be deemed to be an original,
and all of which together shall constitute one and the same document. This
Agreement may be executed by facsimile signatures. Each purchaser of shares of
the Company's Series C Convertible Preferred Stock shall become a party to this
Agreement upon the closing of its purchase of such shares and its execution of a
counterpart signature page to this Agreement.
5.9 Section Headings. The section headings are for the convenience of
the parties and in no way alter, modify, amend, limit or restrict the
contractual obligations of the parties.
5.10 Board Observer.
(a) So long as Intel Corporation ("Intel"), together with its
majority owned subsidiaries, holds twenty-five percent (25%) of the Registrable
Shares purchased by Intel on September 29, 1998 (such number to be
proportionately adjusted for stock splits, stock dividends, and similar events),
the Company will permit a representative of Intel (the "Observer"), to attend
all meetings of the Company's Board of Directors and all committees thereof
(whether in person, telephonic or other) in a non-voting, observer capacity and
shall provide to Intel or the Observer, concurrently with the members of the
Board of Directors and in the same manner, notice of such meeting and a copy of
all materials provided to such members, except for Intel Restricted Information,
as defined in Section 5(j)(iii) below.
The Company acknowledges that Intel will likely have, from time
to time, information that may be of interest to the Company ("Information")
regarding a wide variety of matters including, by way of example only, (i)
Intel's technologies, plans and services, and plans
-19-
and strategies relating thereto, (ii) current and future investments Intel has
made, may make, may consider or may become aware of with respect to other
companies and other technologies, products and services, including, without
limitation, technologies, products and services that may be competitive with the
Company's, and (iii) developments with respect to the technologies, products and
services, and plans and strategies relating thereto, of other companies,
including, without limitation, companies that may be competitive with the
Company. The Company recognizes that a portion of such Information may be of
interest to the Company. Such Information may or may not be known by the
Observer. The Company, as a material part of the consideration for this
Agreement, agrees that Intel and its Observer shall have no duty to disclose any
Information to the Company or permit the Company to participate in any projects
or investment based on any Information, or to otherwise take advantage of any
opportunity that may be of interest to the Company if it were aware of such
Information, and hereby waives, to the extent permitted by law, any claim based
on the corporate opportunity doctrine or otherwise that could limit Intel's
ability to pursue opportunities based on such Information or that would require
Intel or Observer to disclose any such Information to the Company or offer any
opportunity relating thereto to the Company.
(b) Notwithstanding anything to the contrary in the foregoing,
the right to attend Board of Directors meetings and receive the information
described herein shall not apply to any portion of any such meeting or
information involving: (i) the presentation or discussion at Board of Director
meetings of Intel Restricted Information and (ii) the presentation of
information or discussion at Board of Directors meetings involving material
matters which, if provided to or attended by Intel, would, in the reasonable
opinion of the Company's Board of Directors, jeopardize the attorney client
privilege that would otherwise be afforded to such information or meeting.
(c) Intel Restricted Information as used herein shall be defined
as information or analysis involving any topic with respect to which, in the
reasonable judgment of a majority of the members of the Company's Board of
Directors, present and acting throughout, the presence of the Observer or the
provision of any such information or analysis to the Observer would inhibit
deliberations by the Company's Board of Directors on a material matter or would
otherwise be materially injurious to the Company in such circumstances.
(d) Exchanges of confidential and proprietary information between
the Company and the Intel Board Observer shall be governed by the terms of the
Corporate Non-Disclosure Agreement No. 72897, dated April 27, 1998, executed by
the Company and Intel, and a blanket Confidential Information Transmittal Record
(the "CITR") in the form attached hereto as Exhibit A, which CITR need only be
executed once, and shall govern all such exchanges of confidential and
proprietary information.
5.11 Confidentiality. The parties hereto agree to be bound by the
confidentiality and non-disclosure provisions set forth in Section 7 of the
Purchase Agreement.
-20-
5.12 Effectiveness. This Agreement shall become effective upon its
execution by the Company, the New Investors and the holders of 66-2/3% of the
Registrable Shares held, immediately prior to the execution of the Purchase
Agreement, by the Founders and the Existing Investors. Upon the effectiveness of
this Agreement, any Existing Investor who has not executed this Agreement shall
be entitled to all benefits conferred upon the Investors hereunder as an
intended third party beneficiary.
[The remainder of this page intentionally left blank]
-First Amended and Restated Investors Rights Agreement-
IN WITNESS WHEREOF, this Agreement has been executed by the parties
hereto as of the date first written above.
COMPANY:
RED HAT SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------
Title: Chief Executive Officer
---------------------------------
-First Amended and Restated Investors Rights Agreement-
EXISTING INVESTOR:
GREYLOCK IX LIMITED PARTNERSHIP
Xxx Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
By: Greylock IX GP Limited Partnership
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Title: General Partner
with copies of notices to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxx & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
-First Amended and Restated Investors Rights Agreement-
EXISTING INVESTOR:
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners, II, L.P.
Benchmark Founders' Fund II, L.P.
Benchmark Founders' Fund II-A, L.P.
Benchmark Members' Fund II, L.P.
0000 Xxxx Xxxx Xxxx, Xxxxx 0000
Xxxxx Xxxx, XX 00000
By: Benchmark Capital Management
Co. II, L.L.C., its general partner
By: /s/ Xxxxx Xxxxxx
------------------------------------
Title: Managing Member
with copies of notices to:
Xxxxxxx X. Xxxxxxx, Esq.
Xxxx & Xxxx LLP
00 Xxxxx Xxxxxx
Xxxxxx, XX 00000
-First Amended and Restated Investors Rights Agreement-
EXISTING INVESTOR:
INTEL CORPORATION
Attn: M&A Portfolio Manager
0000 Xxxxxxx Xxxxxxx Xxxx., XX0-000
Xxxxx Xxxxx, XX 00000
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------------
Title: Vice President and Treasurer
---------------------------------
with copies of notices to:
Intel Corporation
Attn: General Counsel
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
-First Amended and Restated Investors Rights Agreement-
EXISTING INVESTOR:
NETSCAPE COMMUNICATIONS
CORPORATION
000 X. Xxxxxxxxxxx Xxxx
Xxxxxxxx Xxxx, XX 00000
By: /s/ Xxxxx X.X. Xxxxxx
------------------------------------
Name: Xxxxx X.X. Xxxxxx
----------------------------------
Title: EVP and CAO
---------------------------------
-First Amended and Restated Investors Rights Agreement-
EXISTING INVESTOR:
THE 1998 XXXXX XXXXXX, JR.,
GRANTOR ANNUITY TRUST
c/o Xxxxx Xxxxxx, Jr.
Landmark Communications
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
By: /s/ Xxxxx Xxxxxx, Jr.
------------------------------------
Title: Trustee
with copies of notices to:
Xxx X. Xxxxxxxx, III, Esq.
Xxxxxxx & Xxxxxx, P.C.
0000 Xxxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
XXXXX XXXXXX, JR., XXXXX XXXXXX,
XXXXX X. XXXX, TRUSTEES OF THE XXXXX
XXXXXX, JR. TRUST UNDER A TRUST
AGREEMENT DATED APRIL 11, 1988,
AS AMENDED
x/x Xxxxx Xxxxxx, Xx.
Landmark Communications
000 Xxxxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
By: /s/ Xxxxx Xxxxxx, Jr.
------------------------------------
Title: Trustee
with copies of notices to:
Xxx X. Xxxxxxxx, III, Esq.
Xxxxxxx & Xxxxxx, P.C.
1800 Nationsbank Center
Xxx Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000-0000
-First Amended and Restated Investors Rights Agreement-
NEW INVESTOR:
INTERNATIONAL BUSINESS MACHINES
CORPORATION
Attn: Mr. Xxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------
Name: Xxxxxx X. Xxxxxx
----------------------------------
Title: General Manager, NCSD
---------------------------------
with copies of notices to:
Xxxx Xxxxxx, Esq.
Attn: IBM
Associate General Counsel
Xxxxx 000
Xxxxxx, XX 00000
-First Amended and Restated Investors Rights Agreement-
FOUNDERS:
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 2615
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
000 Xxxxxxx Xxxxx
Xxxxxxx, XX 2615
/s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx
000 Xxxx Xxxxxxx Xxxx
Xxxxxx Xxxx, XX 00000
XXXXX XXX XXXXX TRUST DATED
SEPTEMBER 11, 1998 c/o Xxx
Xxxxx 000 XX 00xx Xxxxxx
Xxxxxxxx, XX 00000
By: /s/ Xxx Xxxxx
------------------------------------
Title: Trustee
XXXXX CHILDREN'S TRUST
DATED SEPTEMBER 11, 1998
c/o Xxx Xxxxx 000 XX 00xx
Xxxxxx Xxxxxxxx, XX 00000
By: /s/ Xxx Xxxxx
------------------------------------
Title: Trustee
-First Amended and Restated Investors Rights Agreement-
XXX X. XXXXX TRUST
DATED SEPTEMBER 11, 1998
c/o Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Trustee
MARGAUX X. X. XXXXX TRUST
DATED SEPTEMBER 11, 1998
c/o Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Trustee
VICTORIA X. X. XXXXX TRUST
DATED SEPTEMBER 11, 1998
c/o Xxxxxxx X. Xxxxxx
000 Xxxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Trustee
-First Amended and Restated Investors Rights Agreement-
ADDITIONAL INVESTOR COUNTERPART SIGNATURE PAGE
The undersigned hereby executes this First Amended and Restated Investor
Rights Agreement, authorizes that this signature page be attached as a
counterpart to said Agreement and agrees to be bound as an Investor to said
Agreement.
NOVELL INC.
Attn: Xx. Xxxxx Xxxxxxxxxxx
0000 X. Xxxxxxxxxx Xxx
Xxxx, XX 00000
By: /s/ Xxxxxxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxxxxxx Xxxxx
----------------------------------
Title: SVP
---------------------------------
Date: March 19,1999
----------------------------------
-First Amended and Restated Investors Rights Agreement-
ADDITIONAL INVESTOR COUNTERPART SIGNATURE PAGE
The undersigned hereby executes this First Amended and Restated Investor
Rights Agreement, authorizes that this signature page be attached as a
counterpart to said Agreement and agrees to be bound as an Investor to said
Agreement.
ORACLE CORPORATION
Attn: Xx. Xxxx Xxxxxx
000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx, XX 00000
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: EVP
---------------------------------
with copies of notices to:
Oracle Corporation
Attn: General Counsel
000 Xxxxxx Xxxxxxx
Xxxxxxx Xxxxxx, XX 00000
-First Amended and Restated Investors Rights Agreement-
ADDITIONAL INVESTOR COUNTERPART SIGNATURE PAGE
The undersigned hereby executes this First Amended and Restated Investor
Rights Agreement, authorizes that this signature page be attached as a
counterpart to said Agreement and agrees to be bound as an Investor to said
Agreement.
CPQ HOLDINGS, INC.
Attn: Office of the General Counsel
Compaq Computer Corporation
00000 Xxxxx Xxxxxxx 000
Xxxxxxx, XX 00000
By: /s/ Xxxx X. Xxxx
------------------------------------
Name: Xxxx X. Xxxx
----------------------------------
Title: Vice President
---------------------------------
Date: 3/11/99
----------------------------------
with copies of notices to:
Compaq Computer Corporation
Attn: Xx. Xxx Xxxxxx
000 Xxxx Xxxxx Xxxx
XX ZK03-3W20
Xxxxxx, XX 00000
-First Amended and Restated Investors Rights Agreement-
ADDITIONAL INVESTOR COUNTERPART SIGNATURE PAGE
The undersigned hereby executes this First Amended and Restated Investor
Rights Agreement, authorizes that this signature page be attached as a
counterpart to said Agreement and agrees to be bound as an Investor to said
Agreement.
SAP AMERICA, INC.
Attn: Legal Dept./Venture Investments
0000 Xxxx Xxxxxxx Xxxx
Xxx Xxxx Xxxxxx, XX 00000
By: /s/ Xxxxx X. XxXxx
------------------------------------
Name: Xxxxx X. XxXxx
----------------------------------
Title: President and CEO
---------------------------------
Date: 3/26/99
----------------------------------
with copies of notices to:
SAP LABS, INC.
Attention: Exec. Vice President, Venture
Fund
0000 Xxxx Xxxxx Xxxx
Xxxx Xxxx, XX
-First Amended and Restated Investors Rights Agreement-
ADDITIONAL INVESTOR COUNTERPART SIGNATURE PAGE
The undersigned hereby executes this First Amended and Restated Investor
Rights Agreement, authorizes that this signature page be attached as a
counterpart to said Agreement and agrees to be bound as an Investor to said
Agreement.
DELL USA L.P.
Attn: Business Development
Xxx Xxxx Xxx
Xxxxx Xxxx Xxxxx 00000
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: Xxxx X. Xxxxx
------------------------------------
Date: 4/1/99
----------------------------------
with copies of notices to:
Dell Computer Corporation
Attn: General Corporate Counsel
Xxx Xxxx Xxx
Xxxxx Xxxx, Xxxxx 00000
AMENDMENT NO. 1 TO
FIRST AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amendment No. 1 to First Amended and Restated Investor Rights
Agreement is entered into as of April 1, 1999 by and among Red Hat Software,
Inc., a Delaware corporation (the "Company"), the several investors (each an
"Investor" and collectively, the "Investors") named in that certain First
Amended and Restated Investor Rights Agreement dated as of February 25, 1999
(the "Rights Agreement") and the several founders (each a "Founder" and
collectively, the "Founders") named in the Rights Agreement. Capitalized terms
used herein, unless otherwise defined herein, shall have the meanings assigned
to them in the Rights Agreement.
Recitals
A. The Company and certain of the Investors are parties to that certain
Series C Convertible Preferred Stock Purchase Agreement dated as of February 25,
1999 (the "Purchase Agreement").
B. The Company and certain of the Investors are amending, as of the date
hereof, the Purchase Agreement in order to increase the number of shares of the
Company's Series C Convertible Preferred Stock ("Series C Preferred") that may
be sold pursuant to the Purchase Agreement.
C. The Company, the Investors and the Founders desire to amend the Rights
Agreement in order to allow the proposed purchaser of such additional Series C
Preferred to receive the benefit of the rights granted to the Investors in the
Rights Agreement.
D. Pursuant to Section 5.6 thereof, the Rights Agreement may be amended
with the written consent of the Company and the holders of at least 66-2/3% of
the Registrable Shares held by all Stockholders.
Agreement
1. Amendments. The Rights Agreement shall be amended as follows:
1.1 Recital B. shall be amended and restated in its entirety as
follows:
"B. Certain Investors are purchasing, concurrently herewith, shares of
capital stock of the Company pursuant to the Series C Convertible Preferred
Stock Purchase Agreement of even date herewith, as amended from time to time
(the "Purchase Agreement").
2. Amendment Limited. Except as provided herein, each of the provisions of
the Rights Agreement shall remain in full force and effect following the
consummation of the transactions contemplated hereby and this Amendment No. 1
shall not constitute a
modification, acceptance or waiver of any other provision of the Rights
Agreement. Each of the parties hereto hereby confirms and ratifies all of its
obligations under the Rights Agreement, as amended by this Amendment No. 1. This
Amendment No. 1 shall be governed and construed in accordance with the terms of
the Rights Agreement.
3. Counterparts. This Amendment No. 1 may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
IN WITNESS WHEREOF, the Company, the Investors and the Founders have
executed and delivered this Amendment No. 1 as of the date first above written.
COMPANY:
RED HAT SOFTWARE, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
Title: CEO
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
GREYLOCK IX LIMITED PARTNERSHIP
By: Greylock IX GP Limited Partnership
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: General Partner
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners, II, L.P.
Benchmark Founders' Fund II, L.P.
Benchmark Founders' Fund II-A, L.P.
Benchmark Members' Fund II, L.P.
By: Benchmark Capital Management
Co. II, L.L.C., its general partner
By: /s/ Xxxxx Xxxxxx
------------------------------------
Title: Managing Member
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
XXXXX XXXXXX, JR., XXXXX XXXXXX,
XXXXX X. XXXX, TRUSTEES OF THE XXXXX
XXXXXX, JR. TRUST UNDER A TRUST
AGREEMENT DATED APRIL 11, 1988, AS
AMENDED
By: /s/ Xxxxx Xxxxxx, Jr.
------------------------------------
Title: Trustee
INVESTOR:
1998 XXXXX XXXXXX, JR.
GRANTOR ANNUITY TRUST
By: /s/ Xxxxx Xxxxxx, Jr.
------------------------------------
Title: Trustee
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
INTEL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxx
----------------------------------
Title: Vice President and Treasurer
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
SAP AMERICA, INC.
By: /s/ Xxxx Xxxxxxxx
------------------------------------
Name: Xxxx Xxxxxxxx
----------------------------------
Title: Vice President
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
NOVELL INC.
By: /s/ Xxxxxxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxxxxxx Xxxxx
----------------------------------
Title: SVP
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
ORACLE CORPORATION
By: /s/ Xxxxxx Xxxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxxx
----------------------------------
Title: Senior VP, Gen. Counsel
and Secretary
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
INTERNATIONAL BUSINESS MACHINES
CORPORATION
By: /s/ X.X. Xxxxxx
------------------------------------
Name: X.X. Xxxxxx
----------------------------------
Title: VP Business Development
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
Dell USA L.P.
By: Dell Gen. P. Corp, General Partner
By: /s/ Xxxx X. Xxxxx
------------------------------------
Name: Xxxx X. Xxxxx
----------------------------------
Title: Vice Presicent
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
INVESTOR:
NETSCAPE COMMUNICATIONS
CORPORATION
By: /s/ Xxxx Xxxxxx
------------------------------------
Name: Xxxx Xxxxxx
----------------------------------
Title: Assistant Secretary
---------------------------------
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
FOUNDERS:
/s/ Xxxxxx X. Xxxxx
----------------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
----------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxx Xxxxx
----------------------------------------
Xxxx Xxxxx
XXXXX XXX XXXXX TRUST
DATED SEPTEMBER 11, 1998
By: /s/ Xxx Xxxxx
------------------------------------
Title: Trustee
XXXXX CHILDREN'S TRUST
DATED SEPTEMBER 11, 1998
By: /s/ Xxx Xxxxx
------------------------------------
Title: Trustee
XXX X. XXXXX TRUST
DATED SEPTEMBER 11, 1998
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Trustee
- Amendment No. 1 to First Amended and Restated Investor Rights Agreement -
MARGAUX X. X. XXXXX TRUST
DATED SEPTEMBER 11, 1998
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Trustee
VICTORIA X. X. XXXXX TRUST
DATED SEPTEMBER 11, 1998
By: /s/ Xxxxxxx Xxxxxx
------------------------------------
Title: Trustee
