EXHIBIT 4.4
TENFOLD CORPORATION
AMENDED AND RESTATED CO-SALE AGREEMENT
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This Amended and Restated Co-Sale Agreement (the "Agreement") is made and
entered into as of November 24, 1997 by and among Xxxx X. Xxxxxxx, the Xxxxxx
Children's Trust and Xxxxxxx X. Xxxxxx (the "Founders"), TenFold Corporation, a
Delaware corporation (the "Company"), and the holders of Series A Preferred
Stock and Series B Preferred Stock of the Company listed on Exhibit A hereto
(each an "Investor" and, collectively, the "Investors").
RECITALS
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1. The Company and Indus International, Inc. ("Indus") entered into a Co-
Sale Agreement dated March 4, 1997 (the "Existing Agreement"), in connection
with the purchase by Indus of certain shares of Series A Preferred Stock of the
Company.
2. The Company and Winter Harbor, L.L.C. ("Winter Harbor") have entered
into a Series B Preferred Stock Purchase Agreement (the "Purchase Agreement") of
even date herewith pursuant to which the Company desires to sell to Winter
Harbor and Winter Harbor desires to purchase from the Company shares of the
Company's Series B Preferred Stock. A condition to Winter Harbor's obligations
under the Purchase Agreement is that the Company, the Founders and the Investors
enter into this Agreement in order to provide Winter Harbor the opportunity to
purchase and/or participate, upon the terms and conditions set forth in this
Agreement, in subsequent sales by the Founders of shares of the Company's Common
Stock. The Company, Indus and the Founders each desire to induce Winter Harbor
to purchase shares of Series B Preferred Stock pursuant to the Purchase
Agreement by agreeing to the terms and conditions set forth herein.
AGREEMENT
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1. Sales by Founders.
(a) Notice of Sales.
(i) If any Founder proposes to accept one or more bona fide
offers (a "Purchase Offer") from any persons to purchase shares of the Company's
Common Stock, including any shares of Common Stock pursuant to a stock split or
a stock dividend granted with respect to such shares of Common Stock (the
"Shares"), from such Founder (other than as set forth in subsection 1 (e)
hereof), such Founder shall promptly deliver a notice (the "Notice") to the
Company and the Investors stating the terms and conditions of such Purchase
Offer including, without limitation, the number of shares of the Company's
capital stock to be sold or transferred (the "Transfer Shares"), the nature of
such sale or transfer, the consideration to be
paid (the "Offered Price"), and the name and address of each prospective
purchaser or transferee (the "Proposed Transferees").
The Company agrees that in the event that the Company declines to exercise
in full any right of first refusal that it may have with respect to the Transfer
Shares to be sold by such Founder (the "Right of First Refusal"), the Company
will provide the Investors with notice of such determination at least fifteen
(15) business days prior to the end of the period in which the Right of First
Refusal expires.
(b) Co-Sale Right. Each Investor shall have the right (the "Co-Sale
Right"), exercisable upon written notice to the Company within fifteen (15)
business days after receipt of the Notice to participate in such Founder's sale
of Transfer Shares pursuant to the specified terms and conditions of such
Purchase Offer. To the extent the Investor exercises such Co-Sale Right in
accordance with the terms and conditions set forth below, the number of Shares
which such Founder may sell pursuant to such Purchase Offer shall be
correspondingly reduced. The Co-Sale Right of the Investor shall be subject to
the following terms and conditions:
(i) Calculation of Shares. The Investor may sell all or any part
of that number of shares of Common Stock of the Company issued or issuable upon
conversion of Preferred Stock or Common Stock received in connection with any
stock dividend, stock split or other reclassification thereof (the "Conversion
Shares") equal to the product obtained by multiplying (x) the aggregate number
of shares of Common Stock covered by the Purchase Offer by (y) a fraction, the
numerator of which is the number of Conversion Shares at the time owned by the
Investor and the denominator of which is the combined number of shares of Common
Stock of the Company. The provisions of this Agreement do not confer any co-sale
rights with respect to any shares of Common Stock or other securities held by an
Investor that are not Conversion Shares.
(ii) Delivery of Certificates. The Investor may effect its
participation in the sale by delivering to the selling Founder for transfer to
the purchase offeror one or more certificates, properly endorsed for transfer,
which represent the number of shares of Preferred Stock, or Common Stock issued
upon conversion thereof, which the Investor elects to sell.
(c) Transfer. The stock certificate or certificates which the Investor
delivers to the selling Founder pursuant to Section 1 (b) shall be delivered by
such Founder to the purchase offeror in consummation of the sale pursuant to the
terms and conditions specified in the Notice, and such Founder shall promptly
thereafter remit to the Investor that portion of the sale proceeds to which the
Investor is entitled by reason of its participation in such sale. To the extent
that any prospective purchaser or purchasers prohibits such assignment or
otherwise refuses to purchase shares of capital stock of the Company from an
Investor exercising its Co-Sale Right hereunder, the selling Founder or Founders
shall not sell to such prospective purchaser or purchasers any shares of Company
stock unless and until, simultaneously with such sale, the selling Founder or
Founders shall purchase such shares from the Investor for the same consideration
and on the same terms and conditions as the proposed transfer described in the
Notice (which terms and
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conditions shall be no less favorable than those governing the sale to the
purchaser by the Founder or Founders).
(d) No Adverse Effect. The exercise or non-exercise of the rights of
the Investor hereunder to participate in one or more sales of Shares made by a
Founder shall not adversely affect their rights to participate in subsequent
sales of Common Stock by a Founder.
(e) Permitted Transactions. The provisions of Section 1 of this
Agreement shall not pertain or apply to:
(i) Any pledge of the Company's Common Stock made by a Founder
pursuant to a bona fide loan transaction which creates a mere security interest;
provided, that (x) the Founder(s) shall inform the Investor of such pledge,
prior to effecting it, and (y) the pledgee or transferee (collectively, the
"Permitted Transferees") shall furnish the Investor with a written agreement to
be bound by and comply with all provisions of this Agreement as applicable to
the Founders;
(ii) Any repurchase of Common Stock by the Company;
(iii) Any sale or transfer of shares of Common Stock among the
Founders; or
(iv) Any sale or transfer to the extent such sale or transfer
does not result in the Founders collectively holding less than 50% of the
outstanding Common Stock of the Company (calculated assuming the conversion into
Common Stock of all outstanding shares of Preferred Stock).
2. Prohibited Transfers. Any attempt by a Founder to transfer shares of
the Company in violation of Section 1 hereof shall be void and the Company
agrees it will not effect such a transfer nor will it treat any alleged
transferee as the holder of such shares without the written consent of the
holders of a majority of the Conversion Shares.
3. Legended Certificates. Each certificate representing shares of the
Common Stock of the Company now or hereafter owned by the Founders or issued to
any Permitted Transferee pursuant to Section 1 (e) shall be endorsed with the
following legend:
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES REPRESENTED
BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN CO-
SALE AGREEMENT BY AND BETWEEN THE STOCKHOLDER, THE CORPORATION AND CERTAIN
HOLDERS OF COMMON AND PREFERRED STOCK OF THE CORPORATION. COPIES OF SUCH
AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION."
The foregoing legend shall be removed upon termination of this Agreement in
accordance with the provisions of Section 4(a).
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4. Miscellaneous Provisions.
(a) Termination. This Agreement shall terminate upon the earliest to
occur of any one of the following events (and shall not apply to any transfer by
a Founder in connection with any such event):
(i) The liquidation, dissolution or indefinite cessation of
the business operations of the Company;
(ii) The execution by the Company of a general assignment for
the benefit of creditors or the appointment of a receiver or trustee to take
possession of the property and assets of the Company;
(iii) The closing of the Company's initial public offering of
securities; provided that all shares of the Company's Preferred Stock are
converted into shares of Common Stock prior to or in connection with such
offering; or
(iv) The closing of any acquisition, merger, reorganization or
other transaction which results in the stockholders of the Company immediately
prior to such transaction owning less than 50% of the Company's voting stock
immediately after such transaction.
(b) Notices. Any notice required or permitted by this Agreement shall
be in writing and shall be deemed sufficient on the date of delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified
at such party's address as set forth below or on Exhibit A hereto, or as
subsequently modified by written notice.
(c) Successors and Assigns. This Agreement and the rights and
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
The rights of the Investors hereunder shall be assignable only (i) by each of
the Investors to any other Investor or (ii) an assignee or transferee who
acquires not less than 1,000,000 shares of the Company's Common Stock (as
adjusted for stock splits, stock dividends and the like, and assuming conversion
of all Preferred Stock held by the Investor); provided that such limitation
shall not apply to transfers by an Investor to constituent shareholders,
constituent partners or retired constituent partners (including any constituent
of a constituent) of the Investor (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire the Preferred
Stock or Common Stock issued upon conversion thereof) if all such transferees or
assignees irrevocably agree in writing to appoint a single representative as
their attorney in fact for the purpose of receiving any notices and exercising
their rights under this Agreement.
(d) Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith.
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In the event that the parties cannot reach a mutually agreeable and enforceable
replacement for such provision, then (i) such provision shall be excluded from
this Agreement, (ii) the balance of the Agreement shall be interpreted as if
such provision were so excluded and (iii) the balance of the Agreement shall be
enforceable in accordance with its terms.
(e) Modifications and Amendments. Any term hereof may be amended or
waived with the written consent of the Company, holders of a majority of the
Series A Preferred Stock, holders of a majority of the Series B Preferred Stock
and holders of a majority of the Founders' shares (or their respective
successors and assigns) each voting as a separate class. Any amendment or waiver
effected in accordance with this Section 4(e) shall be binding upon the Company,
the holders of Series A Preferred Stock, the holders of the Series B Preferred
Stock and any holder of Founders' Shares, and each of their respective
successors and assigns. This Agreement supersedes and replaces in its entirety
the Existing Agreement.
(f) Attorney's Fees. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
(g) Governing Law. This Agreement and all acts and transactions
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(h) Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
[SIGNATURE PAGE FOLLOWS]
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The parties have executed this Agreement as of the date first written above.
COMPANY:
TENFOLD CORPORATION
By:
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Xxxx X. Xxxxxxx
President
Address: 000 Xxxx Xxxxxxxx Xxxx, Xxx 000
Xxxxxx, XX 00000
SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT
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INVESTORS:
INDUS INTERNATIONAL, INC.
By:
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Name: Xxxxxx X. Xxxxxx
Title: Chairman & CEO
Address: 00 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
WINTER HARBOR, L.L.C.
By: First Media, L.P., Manager
By: First Media Corporation
its sole general partner
By: /s/ Xxxxx X. Xxxxx Xx.
Name: Xxxxx X. Xxxxx Xx.
Title: Secretary
Address: 00000 Xxxxxxxx Xxxx
Xxxxxxx, Xxxxxxxx 00000
SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT
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FOUNDERS:
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Xxxx X. Xxxxxxx
Address: 0000 Xxxxx Xxxxxxxxxxxx Xxxxx
Xxxxx, XX 00000
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Xxxxxxx X. Xxxxxx
Address: 00 Xxxx Xxxx
Xxxx, XX 00000
SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT
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FOUNDERS:
THE XXXXXX CHILDREN'S TRUST
By:
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Name:
Title: Trustee
Address: 00 Xxxx Xxxx
Xxxx, XX 00000
SIGNATURE PAGE TO AMENDED AND RESTATED CO-SALE AGREEMENT
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EXHIBIT A
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INVESTOR
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NAME/ADDRESS NO. OF SHARES
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Indus International, Inc. 2,920,779
Winter Harbor, L.L.C. 3,340,330
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