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EXHIBIT 10.10
CASEWARE, INC.
INVESTORS RIGHTS AGREEMENT
MARCH 4, 1994
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TABLE OF CONTENTS
Page
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SECTION 1. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS..................................... 1.
1.1 Restrictions on Transferability................................................... 1.
1.2 Certain Definitions............................................................... 1.
1.3 Restrictive Legend................................................................ 2.
1.4 Notice of Proposed Transfers...................................................... 2.
1.5 Demand Registration Rights........................................................ 3.
1.6 Company Registration.............................................................. 5.
1.7 Form S-3 Registration Rights...................................................... 6.
1.8 Expenses of Registration.......................................................... 7.
1.9 Registration Procedures........................................................... 7.
1.10 Indemnification................................................................... 8.
1.11 Information by Holder.............................................................10.
1.12 Rule 144 Reporting................................................................10.
1.13 Transfer of Registration Rights...................................................11.
1.14 Termination of Registration Rights................................................11.
1.15 Limitations on Subsequent Registration Rights.....................................11.
1.16 Inclusion of Stock Held by Founders...............................................11.
SECTION 2. AFFIRMATIVE COVENANTS OF THE COMPANY..............................................12.
2.1 Financial Information.............................................................12.
2.2 Inspection........................................................................12.
2.3 Assignment of Rights to Financial Information.....................................13.
2.4 Termination of Covenants..........................................................13.
SECTION 3. AFFIRMATIVE COVENANTS OF SHAREHOLDERS; RIGHT OF FIRST REFUSAL.....................13.
3.1 Confidential Information, etc.....................................................13.
3.2 Right of First Refusal............................................................13.
SECTION 4. MISCELLANEOUS.....................................................................15.
4.1 Governing Law.....................................................................15.
4.2 Successors and Assigns............................................................15.
4.3 Entire Agreement..................................................................15.
4.4 Notices, etc......................................................................15.
4.5 Counterparts......................................................................15.
4.6 Severability......................................................................15.
4.7 Separability......................................................................16.
4.8 Approval of Amendments and Waivers................................................16.
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CASEWARE, INC.
INVESTORS RIGHTS AGREEMENT
This Investors Rights Agreement (the "Agreement") is entered into as of
March 4, 1994 among CaseWare, Inc., a California corporation (the "Company"),
with its principal office located at 000 Xxxxxxxx, 0xx Xxxxx, Xxxxxx, Xxxxxxxxxx
00000-0000, the Purchasers listed on the Schedule of Purchasers attached as
Exhibit A hereto (the "Shareholders") and Xxxx Xxx, Co-Trustee, and Xxx Xxxxxxx,
Trustee, (the "Founders"). This Agreement is being entered into pursuant to
Section 4.7 of that certain Stock Purchase Agreement of even date herewith (the
"Purchase Agreement") among the Company and the Purchasers listed therein.
In consideration of the mutual agreements, covenants and conditions
contained herein, the Company and the Shareholders hereby agree as follows
(unless otherwise defined herein, capitalized terms used herein shall have the
meanings assigned in the Purchase Agreement):
SECTION 1
RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS
1.1 RESTRICTIONS ON TRANSFERABILITY. Neither the Shares nor the
Registrable Securities (as defined below) shall be transferable except upon the
conditions specified in this Agreement, which conditions are intended to insure
compliance with the provisions of the Securities Act (as defined below), or upon
such other terms as are in the opinion of counsel to the Company satisfactory to
comply with the provisions of the Securities Act. Except for transfers made
pursuant to Rule 144 of the Securities Act, the Shareholders will cause any
proposed transferee of Shares or Registrable Securities held by any Shareholder
to agree to take and hold such securities subject to the provisions and upon the
conditions specified in this Agreement and it will be a condition precedent to
the effectiveness of any such transfer that the Company shall have secured a
written agreement in form and substance satisfactory to the Company to that
effect, if so requested by the Company.
1.2 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"FORM S-3" shall mean Form S-3 under the Securities Act (as defined
below) as in effect on the date of this Agreement, or any substantially similar,
equivalent or successor form under the Securities Act.
"HOLDER" shall mean a Shareholder or any transferee of registration
rights under Section 1.13 hereof who then holds any outstanding Registrable
Securities.
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The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRABLE SECURITIES" means shares of the Company's Common Stock
issued or issuable pursuant to the conversion of the Shares which have not been
sold to the public.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company
in complying with Sections 1.5, 1.6 and 1.7 hereof, including, without
limitation, all registration, qualification and filing fees, printing expenses,
escrow fees, fees and disbursements of counsel, blue sky fees and expenses, and
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 hereof or a legend
substantially similar thereto and all shares of Common Stock outstanding on the
date of this Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the applicable sale.
1.3 RESTRICTIVE LEGEND. Each certificate representing the Shares and
the Registrable Securities shall (unless otherwise permitted by the provisions
of Section 1.4 below) be stamped or otherwise imprinted with a legend in the
following form (in addition to any legend required under applicable California
or other state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT. COPIES OF THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE
HOLDER OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE
CORPORATION.
1.4 NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing the Restricted Securities, by acceptance thereof, agrees to comply
in all respects with the provisions of this Section 1.4. Prior to any proposed
transfer of any Restricted Securities, unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to the Company of such holder's intention to
effect such transfer. Each such notice shall describe the manner and
circumstances of the proposed transfer in sufficient detail, and shall be
accompanied (except in transactions in compliance with Rule 144) by either (i) a
written opinion of legal counsel who shall be reasonably satisfactory to the
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Company addressed to the Company and reasonably satisfactory in form and
substance to the Company's counsel, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act, or (ii) a "no action" letter from the Commission, a copy of any
holder's request (together with all supplements or amendments thereto) for which
shall have been provided to the Company, at or prior to the time of first
delivery to the Commission's staff, to the effect that the transfer of such
securities without registration will not result in a recommendation by such
staff that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
provided for above shall bear the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for the Company or counsel for such holder,
such legend is not required in order to establish compliance with any provisions
of the Securities Act.
Notwithstanding the provisions above, no such opinion of counsel or "no
action letter" shall be necessary for a transfer by a Shareholder which is a
partnership to a partner of such partnership or a retired partner of such
partnership who retires after the date hereof, or to the estate of any such
partner or retired partner or the transfer by gift, will or intestate succession
of any partner to his spouse or to the siblings, lineal descendants or ancestors
of such partner or his spouse, if the transferee agrees in writing to be subject
to the terms hereof to the same extent as if he were an original Shareholder
hereunder.
1.5 DEMAND REGISTRATION RIGHTS.
(a) Commencing on the earlier of (i) six months after the effective
date of the first registration statement filed by the Company covering an
underwritten offering of any of its securities to the general public and (ii)
November 1, 1996, if the Company shall receive a written request (specifying
that it is being made pursuant to this Section 1.5) from the Holders of at least
forty percent (40%) of the Registrable Securities (the "Initiating Holders")
that the Company file a registration statement or similar document under the
Securities Act covering the registration of the greater of (i) at least twenty
percent (20%) of the then outstanding Registrable Securities and (ii)
Registrable Securities the expected price to the public of which is at least
$5,000,000, then the Company shall promptly notify all other Holders of such
request and shall use its best efforts to cause all Registrable Securities that
such Holders have requested, within 15 days after receipt of such written
notice, be registered in accordance with this Section 1.5 to be registered under
the Securities Act.
Notwithstanding the foregoing, (i) the Company shall not be obligated
to effect a registration pursuant to this Section 1.5 during the period starting
with the date sixty (60) days prior to the Company's estimated date of filing
of, and ending on a date sixty (60) days following the effective date of, a
registration statement pertaining to an underwritten public offering of the
Company's securities, provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective and that the Company's estimate of the date of filing such
registration statement is made in good faith; and (ii) if the Company shall
furnish to such Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors it would be
seriously
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detrimental to the Company or its shareholders for a registration statement to
be filed in the near future, then the Company's obligation to use its best
efforts to file a registration statement shall be deferred for a period not to
exceed six (6) months; provided, however, that the Company shall not obtain such
a deferral more than once in any 12-month period.
The Company shall be obligated to effect not more than two
registrations pursuant to this Section 1.5.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their demand by means of an underwriting, they shall so
advise the Company as part of their demand made pursuant to this Section 1.5,
and the Company shall include such information in the notice referred to in
Section 1.5(a). In such event, the right of any Holder to registration pursuant
to this Section 1.5 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.
The Company shall, together with all Holders proposing to distribute
their securities through such underwriting, enter into an underwriting agreement
in customary form with the underwriter or underwriters selected by a majority of
interest of the Initiating Holders and reasonably satisfactory to the Company.
Notwithstanding any other provision of this Section 1.5, if the underwriter
shall advise the Company in writing that marketing factors (including, without
limitation, an adverse effect on the per share offering price) require a
limitation of the number of shares to be underwritten, then the Company shall so
advise all Holders of Registrable Securities that would otherwise be registered
and underwritten pursuant hereto, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated pro rata among such Holders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration.
If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the
underwriter, and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration. If by the withdrawal of such
Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5.
If the underwriter has not limited the number of Registrable Securities
to be underwritten, the Company may include securities for its own account (or
for the account of other stockholders) in such registration if the underwriter
so agrees and if the number of Registrable Securities that would otherwise have
been included in such registration and underwriting will not thereby be limited.
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1.6 COMPANY REGISTRATION.
(a) If, at any time or from time to time, the Company shall
determine to register any of its securities, either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights, other than a registration relating solely to employee
benefit plans on Form S-8 or similar forms which may be promulgated in the
future or a registration on Form S-4 or similar forms which may be promulgated
in the future relating solely to a Securities and Exchange Commission Rule 145
or similar transaction, the Company will (i) promptly give to each Holder
written notice thereof and (ii) include in such registration (and any related
qualification under Blue Sky laws or other compliance), and in any underwriting
involved therein, all Registrable Securities of such Holders as specified in a
written request or requests made within 15 days after receipt of such written
notice from the Company.
(b) UNDERWRITING. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so indicate in the notice given pursuant to Section 1.6(a). In
such event the right of any Holder to registration pursuant to this Section 1.6
shall be conditioned upon such Holder's agreeing to participate in such
underwriting and in the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company or by other holders
exercising any demand registration rights. Notwithstanding any other provision
of this Section 1.6, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter
may exclude some or all Registrable Securities or other securities from such
registration and underwriting (hereinafter an "Underwriter Cutback"). In the
event of an Underwriter Cutback, the Company shall so advise all Holders and the
other holders distributing their securities through such underwriting, and the
number of Registrable Securities and other securities that may be included in
the registration and underwriting shall be allocated among all holders thereof
(other than those holders who are exercising their demand registration rights)
on the basis that the holders who are not Holders shall be cut back before any
cutback of Holders. If the limitation determined by the underwriter requires a
cut-back of the Holders, the cut-back shall be in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the registration statement. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the underwriter. Any
securities excluded or withdrawn from such underwriting shall be withdrawn from
such registration.
1.7 FORM S-3 REGISTRATION RIGHTS. After the Company's initial
registered underwritten public offering, the Company shall use its best efforts
to qualify for registration on Form S-3, and to that end the Company shall use
its best efforts to comply with the reporting requirements of the Securities
Exchange Act of 1934, as amended (the "Securities Exchange Act"), within twelve
(12) months following the effective date of the first registration of any
securities of the Company for an underwritten registered public offering. After
the Company has qualified for the use of Form S-3, and subject to the provisions
of Section 1.14, each Holder shall have the right to request registrations on
Form S-3 (such requests shall be in writing and shall
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state the number of shares of Registrable Securities to be disposed of and the
intended method of disposition of such shares by each such Holder), subject only
to the following limitations:
(a) The Company shall not be obligated to cause a registration on
Form S-3 to become effective prior to one hundred eighty (180) days following
the effective date of a Company initiated registration (other than a
registration effected solely to qualify an employee benefit plan or to effect a
business combination pursuant to Rule 145);
(b) The Company shall not be required to effect a registration
pursuant to this Section 1.7 unless the Holder or Holders requesting such a
registration propose to dispose of shares of Registrable Securities having an
aggregate disposition price (before deduction of underwriting discounts and
expenses of sale) of at least $500,000;
(c) The Company shall not be required to effect a registration
pursuant to this Section 1.7 if the Company shall furnish to the requesting
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 or its shareholders for the registration
statement to be filed at the date filing would be required, in which case the
Company shall have an additional period of not more than 120 days within which
to file such registration statement; provided however, that the Company shall
not use this right more than once in any twelve (12) month period;
(d) The Company shall not be required to maintain and keep any such
registration on Form S-3 effective for a period exceeding one hundred and twenty
(120) days from the effective date thereof; and
(e) The Company shall not be obligated to cause a registration on
Form S-3 if in the prior six-month period the Company has caused a registration
on Form S-3 to become effective.
The Company shall give notice to all Holders of the receipt of a
request for registration pursuant to this Section 1.7 and shall use its best
efforts to cause all Registrable Securities that such Holders have requested,
within 15 days after receipt of such written notice, be registered in accordance
with this Section 1.7 to be registered under the Securities Act. Subject to the
foregoing, the Company will use its best efforts to effect promptly any
registration pursuant to this Section 1.7. The provisions of Section 1.5(b)
shall apply to any registration effected pursuant to this Section 1.7
1.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.5, 1.6 and 1.7 (exclusive of Selling Expenses but inclusive of the
reasonable fees and expenses of any special counsel to the selling Holders),
shall be borne by the Company. Notwithstanding anything to the contrary herein,
the Company shall not be required to pay for any expenses of any registration
proceeding under Section 1.5 if the registration request is subsequently
withdrawn at the request of the Holders of a majority of the Registrable
Securities to have been registered, unless such Holders agree to forfeit their
right to a demand registration pursuant to Section 1.5 (in which event such
right shall be forfeited by all Holders). In the absence of such an agreement to
forfeit, the
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Holders of Registrable Securities to have been registered shall bear all such
expenses pro rata on the basis of the Registrable Securities to have been
registered. Notwithstanding the foregoing, however, if at the time of the
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, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said expenses
and shall retain their rights pursuant to Section 1.5.
1.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Keep such registration, qualification or compliance effective
for a period of 120 days or until the Holder or Holders have completed the
distribution described in the registration statement relating thereto, whichever
first occurs;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement;
(c) Furnish to the Holders such 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; and
(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.
Notwithstanding any provision to the contrary in this Agreement, the
Company shall not be required in connection with any registration pursuant to
Sections 1.5, 1.6 or 1.7 to qualify
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shares in any state or jurisdiction which requires the Company to qualify to do
business or to file a general consent to service of process.
1.10 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its officers
and directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Section 1, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages and liabilities (or actions in respect thereof), including any
of the foregoing incurred in settlement of any litigation, commenced or
threatened, arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any registration statement,
prospectus, offering circular or other document, or any amendment or supplement
thereto, incident to any such registration, qualification or compliance, or
based on any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances in which they were made, not misleading, or any
violation by the Company of any rule or regulation promulgated under the
Securities Act applicable to the Company and relating to action or inaction
required of the Company in connection with any such registration, qualification
or compliance, and will reimburse each such Holder, each of its officers and
directors and partners, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder or underwriter and stated
to be specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and partners and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all expenses, claims, losses, damages
and liabilities (or actions in respect thereof) including any of the foregoing
incurred in settlement of any litigation commenced or threatened, arising out of
or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any such registration statement, prospectus, offering circular
or other document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification, or compliance,
and will reimburse the Company, such Holders, such directors,
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officers, partners, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigation,
preparing or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder and stated to be specifically for use therein; provided, however, that
the obligations of such Holders hereunder shall be limited to an amount equal to
the proceeds to each such Holder of Registrable Securities sold as contemplated
herein.
(c) Each party entitled to indemnification under this Section 1.10
(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 the Indemnified Party may participate in such defense at its own
expense, and provided further that the failure of any Indemnified Party to give
notice as provided herein shall not relieve the Indemnifying Party of its
obligations under this Section 1 unless such failure resulted in actual
detriment to the Indemnifying Party. 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 a release from all liability in respect of
such claim or litigation.
(d) If the indemnification provided for in this Section 1.10 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1 and otherwise.
1.11 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such
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Holder or Holders and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Section 1.
1.12 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to:
(a) Use its best efforts to make and keep public information
available, as those terms are understood and defined in Rule 144 under the
Securities Act at all times after the effective date of the first registration
under the Securities Act filed by the Company for an offering of its securities
to the general public;
(b) Use its best efforts to then file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Exchange Act at any time after it has become subject to such
reporting requirements;
(c) So long as the Shareholder owns any Restricted Securities, to
furnish to the Shareholder forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after 90 days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public) and of the Securities Act and the Securities Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company as a Shareholder may reasonably request in availing
itself of any rule or regulation of the Commission allowing a Shareholder to
sell any such securities without registration.
1.13 TRANSFER OF REGISTRATION RIGHTS. The rights to cause the Company
to register securities granted under Sections 1.5, 1.6 and 1.7 may be assigned
or otherwise conveyed to a transferee or assignee of Registrable Securities, who
shall be considered a "Holder" for purposes of this Section 1, provided that (a)
the Company is given written notice by such Holder at the time of or within a
reasonable time after said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
registration rights are being assigned and (b) the transferee acquires
Registrable Securities in a private transaction.
1.14 TERMINATION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to this Section 1 shall terminate (i) upon the fifth
anniversary of the effective date of the first registration statement filed by
the Company covering an underwritten offering of its securities to the general
public or (ii) as to any individual Holder, at such time after the Company's
initial registered public offering as all Registrable Securities held by such
Holder can be sold without compliance with the registration requirements of the
Securities Act pursuant to Rule 144 (including Rule 144(k)) promulgated
thereunder.
1.15 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of Holders holding more than fifty percent (50%) of the Registrable Securities,
enter into any agreement with any holder
10.
13
or prospective holder of any securities of the Company which would allow such
holder or prospective holder to (i) require the Company to effect a registration
or (ii) include any securities in any registration filed under Sections 1.5, 1.6
or 1.7 hereof unless, under the terms of such agreement, such holder or
prospective holder may include such securities in any such registration only to
the extent that the inclusion of such securities will not diminish the amount of
Registrable Securities which are included in such registration.
1.16 INCLUSION OF STOCK HELD BY FOUNDERS. In connection with any
registration effected pursuant to section 1.6 hereof, each of the Founders, with
respect to all securities of the Company held by such Founders that are not
"Registrable Securities" for purposes of this Agreement, shall be entitled to
participate in such registration, on the same terms and conditions as Holders
selling their Registrable Securities in such registration and, for purposes of
Section 1.6, (i) each such Founder shall be entitled to all of the rights and
shall be subject to all of the obligations applicable to a Holders in connection
with such registration, including without limitation the provisions of Section
1.10 of this Agreement, (ii) all such securities, and any shares of Common stock
issued in respect thereof upon any stock split, stock dividend, recapitalization
or similar event, shall be deemed to be "Registrable Securities" and (iii) all
references to "Holder" in this Agreement shall be deemed to include such Founder
for purposes of such registration; provided, however, that any Underwriter
Cutback shall apply to the Founders participating in such registration (pro rata
among the Founders based on the number of shares to be so included by the
Founders in such registration) first prior to any application thereof to the
other Holders participating in such registration.
SECTION 2.
AFFIRMATIVE COVENANTS OF THE COMPANY
2.1 FINANCIAL INFORMATION. The Company will furnish the following
reports to the Shareholders for so long as the Shareholders are holders of (or
are entitled to purchase under this Agreement) any Registrable Securities:
(a) As soon as practicable after the end of each fiscal year, and
in any event within 90 days thereafter, audited consolidated balance sheets of
the Company and its subsidiaries, if any, as of the end of such fiscal year, and
consolidated statements of income and surplus and consolidated statements of
changes in financial position of the Company and its subsidiaries, if any, for
such year, prepared in accordance with generally accepted accounting principles
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail and certified by independent public
accountants of recognized national standing selected by the Company;
(b) As soon as practicable after the end of every fiscal quarter
and in any event within 45 days thereafter, an unaudited consolidated balance
sheet of the Company and its subsidiaries, if any, as of the end of each such
quarter, and consolidated statements of income and consolidated statements of
changes in financial condition of the Company and its subsidiaries for such
period, all in reasonable detail and signed, subject to changes resulting from
year-end audit adjustments, by the principal financial or accounting officer of
the Company; and
11.
14
(c) As soon as practicable after the end of every monthly
accounting period in each fiscal year of the Company and in any event within 45
days thereafter, an unaudited consolidated balance sheet of the Company and its
subsidiaries, if any, as of the end of each such monthly period, and
consolidated statements of income and consolidated statements of changes in
financial condition of the Company and its subsidiaries for such period, subject
to changes resulting from year-end audit adjustments.
2.2 INSPECTION. The Company shall permit each Shareholder to visit and
inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its officers,
all at such reasonable times as may be requested by the Shareholder provided,
however, that the Company shall not be obligated pursuant to this Section 2.2 to
provide access to any information which it reasonably considers to be a trade
secret or similar confidential information.
2.3 ASSIGNMENT OF RIGHTS TO FINANCIAL INFORMATION. The rights granted
pursuant to Section 2.1 may be assigned by the Shareholders (or by any permitted
transferee of any such rights) so long as (i) the Company is given notice of any
such assignment within a reasonable time after the date the same is effected and
(ii) the transferee shall have acquired Registrable Securities in a private
transaction.
2.4 TERMINATION OF COVENANTS. The covenants set forth in Section 2.1
shall terminate and be of no further force or effect after the earlier of (a)
the date upon which the first registration statement filed by the Company under
the Securities Act in connection with the firm commitment underwritten public
offering of its securities becomes effective, or (b) the date when none of the
Registrable Securities is outstanding.
SECTION 3
AFFIRMATIVE COVENANTS OF SHAREHOLDERS; RIGHT OF FIRST REFUSAL
3.1 CONFIDENTIAL INFORMATION, ETC. Each Shareholder agrees that all
information received by it pursuant to Section 2, and any other information
relating to the Company's technology, processes or formulas that is disclosed by
the Company to any Shareholder in writing and is marked "Confidential," shall be
considered confidential information. Each Shareholder further agrees that it
shall hold all such confidential information in confidence and shall not
disclose any such confidential information to any third party other than its
counsel or accountants nor shall such Shareholder use such confidential
information for any purpose other than evaluation of such Shareholder's
investment in the Company; provided, however, that the foregoing obligation to
hold in confidence and not to disclose confidential information shall not apply
to any such information that (a) was known to the public prior to disclosure by
the Company, (b) becomes known to the public through no fault of such
Shareholder, (c) is disclosed to such Shareholder on a non-confidential basis by
a third party having a legal right to make such disclosure or (d) is
independently developed by such Shareholder.
3.2 RIGHT OF FIRST REFUSAL. The Company hereby grants to each
Shareholder the right of first refusal to purchase its Pro Rata Share (defined
below) of all (or any part) of New Securities (defined below) that the Company
may from time to time propose to sell and issue.
12.
15
Such Shareholder's "Pro Rata Share," for purposes of this right of first
refusal, is the ratio of the number of shares of Common Stock (assuming
conversion of all shares of Preferred Stock) then held by such Shareholder to
the total number of shares of Common Stock then outstanding (assuming conversion
of all outstanding shares of shares of the Company's Preferred Stock). This
right of first refusal shall be subject to the following provisions:
(a) "New Securities" shall mean any Common Stock or Preferred Stock
of the Company, whether now authorized or not, and rights, options, or warrants
to purchase said Common Stock or Preferred Stock, and securities of any type
whatsoever that are, or may become, convertible into or exchangeable for said
Common Stock or Preferred Stock; provided, however, that "New Securities" does
not include (i) securities issuable upon conversion of or with respect to Series
A Preferred Stock or any future series of preferred stock; (ii) securities
issued pursuant to the acquisition of another corporation by the Company by
merger, purchase of substantially all of the assets, or other reorganization;
(iii) up to 1,920,000 shares of the Company's Common Stock (or related options)
issued pursuant to stock option plans or agreements as designated and approved
by the Company's Board of Directors (of which 547,375 shares subject to options
outstanding as of January 3, 1994 and an additional 1,372,625 shares remain
available for issuance after January 3, 1994, provided that shares subject to
options that expire pursuant to the terms thereof or that are repurchased by the
Company at a price equal to the cost thereof to the holder pursuant to the terms
of the agreement by which such shares were purchased from the Company shall
again become available for issuance under this clause; (iv) shares of the
Company's Common Stock or Preferred Stock issued in connection with any stock
split, stock dividend, or recapitalization by the Company; and (v) Shares issued
at the Second Closing.
(b) In the event that the Company proposes to undertake an issuance
of New Securities, it shall give each Shareholder written notice of its
intention, describing the type of New Securities, the price, and the general
terms upon which the Company proposes to issue the same. Each Shareholder shall
have twenty (20) business days from the date of receipt of any such notice to
agree to purchase his pro rata share of such New Securities for the price and
upon the general terms specified in the notice by giving written notice to the
Company and stating therein the quantity of New Securities to be purchased. Each
Shareholder shall have a right of over-allotment such that if any Shareholder
fails to exercise his right hereunder to purchase his pro rata portion of New
Securities, the other Shareholders may purchase the non-purchasing Shareholder's
portion on a pro rata basis, within fifteen (15) business days from the date
such non-purchasing Shareholder fails to exercise his right hereunder to
purchase his pro rata share of New Securities.
(c) In the event that the Shareholders fail to exercise in full the
right of first refusal within said twenty (20) plus fifteen (15) business day
period, the Company shall have one hundred twenty (120) days thereafter to sell
(or enter into an agreement pursuant to which the sale of New Securities covered
thereby shall be closed, if at all, within one hundred twenty (120) days from
the date of said agreement) the New Securities respecting which the
Shareholders' rights were not exercised, at a price and upon general terms no
more favorable to the purchasers thereof than specified in the Company's notice.
In the event the Company has not sold the New Securities within said one hundred
twenty (120) day period (or sold and issued new Securities in accordance with
the foregoing within one hundred twenty (120) days from the date of said
13.
16
agreement), the Company shall not thereafter issue or sell any New Securities,
without first offering such securities to the Shareholders in the manner
provided above.
(d) The right of first refusal granted under this Agreement shall
expire following the closing of the Company's first underwritten public offering
of Common Stock at an aggregate offering price of not less than $12,000,000 and
at a public offering price equal to or exceeding $4.25 per share (as adjusted
for any stock dividends, combinations, or splits with respect to such shares)
pursuant to a registration statement declared effective under the Securities
Act.
(e) This right of first refusal shall be assignable in whole or in
part to any transferee of any Registrable Securities in a private transaction.
SECTION 4
MISCELLANEOUS
4.1 GOVERNING LAW. This Agreement shall be governed by the laws of the
State of California as applicable to contracts entered into and performed
entirely within the State of California by California residents.
4.2 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof.
4.4 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be sent by facsimile or by
registered or certified mail, postage prepaid, or otherwise delivered by hand or
by messenger, addressed (c) if to the Shareholders, to the Shareholders
addresses set forth on the Schedule of Purchasers or to such other address as
such Shareholders shall have furnished to the Company in writing, (d) if to any
other holder of Registrable Securities, at such address as such holder shall
have furnished the Company in writing or (e) if to the Company, to its address
set forth above and addressed to the attention of the President or at such other
addresses as the Company shall have furnished to the Shareholders. All notices
and other communications mailed pursuant to the provisions of this Section 4.4
shall be deemed delivered when mailed or sent by facsimile.
4.5 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
4.6 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
14.
17
4.7 SEPARABILITY. Any invalidity, illegality, or limitation of the
enforceability with respect to any Shareholder of any one or more of the
provisions of this Agreement, or any part thereof, whether arising by reason of
the law of any such Shareholder's domicile or otherwise, shall in no way affect
or impair the validity, legality, or enforceability of this Agreement with
respect to other Shareholders. In case any provision of this Agreement shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions shall not in any way be affected or impaired.
4.8 APPROVAL OF 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 a majority of the then outstanding shares of Registrable Securities,
excluding from the determination of such a majority (both in determining the
total number of such shares outstanding and the number of such shares consenting
or not consenting) all shares previously disposed of by such holders pursuant to
one or more registration statements under the Securities Act or pursuant to Rule
144 thereunder. Any amendment, termination or waiver effected in accordance with
this section shall be binding upon the Shareholders, each of their transferees
and the Company. Each Shareholder acknowledges that by the operation of this
Section the holders of a majority of the outstanding Registrable Securities may
have the right and power to diminish or eliminate all rights of such
Shareholders under this Agreement.
The foregoing Agreement is hereby executed as of the date first above
written.
THE COMPANY:
CASEWARE, INC.
By /s/ Xxx Xxxxxxx
------------------------------------
Title Chief Executive Officer
---------------------------------
THE SHAREHOLDERS:
NORWEST EQUITY PARTNERS, IV,
A MINNESOTA LIMITED PARTNERSHIP
By: Itasca Partners, General Partner
By /s/ Xxxxxx X. Still
------------------------------------
Xxxxxx X. Still, General Partner
15.
18
BRENTWOOD ASSOCIATES VI, L.P.
By: Brentwood VI Ventures L.P.,
its General Partner
By /s/ G. Xxxxxxxx Xxxxx
------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
ADVANCED TECHNOLOGY VENTURES III
By /s/ Xxx X. Xxxxxxx
------------------------------------
Xxx X. Xxxxxxx, General Partner
/s/ X. Xxxxxxx XxXxxx
---------------------------------------
X. Xxxxxxx XxXxxx
/s/ Xxxx Xxx
---------------------------------------
Xxxx Xxx
16.
19
CONTINUUS SOFTWARE CORPORATION
FIRST AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
This First Amendment to Investors' Rights Agreement ("Amendment") is
entered into as of December 29, 1994, by and among Continuus Software
Corporation, a California corporation and formerly known as CaseWare, Inc. (the
"Company"), the undersigned parties to that certain Investors' Rights Agreement
dated as of March 4, 1994 (the "Agreement"), Capitalized terms contained herein
shall have the meanings set forth in the Agreement.
WHEREAS, the Company, the Shareholders and the Founders have entered
into that certain Stock Purchase Agreement dated December 29, 1994 (the "Stock
Purchase Agreement"); and
WHEREAS, the execution of this Amendment by the parties is a condition
to the Financing as set forth in Section 4.7 of the Stock Purchase Agreement.
NOW, THEREFORE, In consideration of the foregoing premises and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Amendment agree
as follows:
1. The definition of "Shareholders" set forth in the preamble to the
Agreement is hereby amended to mean each of the purchasers listed on the
Schedule of Purchasers attached as Exhibit A to the Stock Purchase Agreement.
2. The definition of "Registrable Securities" set forth in Section 1.2
of the Agreement is hereby amended to read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) shares of the Company's Common Stock
issued upon conversion of the Company's Series A, which have not been sold to
the public, (ii) shares of the Company's Common Stock issued upon the exercise
of those certain warrants issued to the Shareholders pursuant to that certain
Stock Purchase Agreement, dated December 29, 1993, by and among the Company and
the Shareholders (the "Warrants") and (iii) shares of the Company's Common Stock
issued in respect of shares of the Company's Common Stock issued upon conversion
of the Company's Series A Preferred Stock or upon exercise of the Warrants upon
any stock split, stock dividend, recapitalization, or similar event, which have
not been sold to the public.
3. This Amendment shall be deemed an amendment to the Agreement and
shall become effective when executed by the Company and the holders of at least
a majority of the outstanding shares of Registrable Securities as provided for
under Section 4.8 of the Agreement. Except as expressly amended pursuant to this
Amendment, the Agreement shall continue in full force and effect.
4. This Amendment shall be governed by the laws of the State of
California as applicable to contracts entered into and performed entirely within
the State of California.
5. This Amendment may be executed in counterparts, each of which shall
be enforceable against the party actually executing such counterpart, and which
together shall constitute one instrument.
1.
20
This Amendment is hereby executed as of the date first above written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By /s/ Xxxx Xxxx
------------------------------------------
Title President and Chief Executive Officer
---------------------------------------
THE SHAREHOLDERS:
NORWEST EQUITY PARTNERS, IV,
A MINNESOTA LIMITED PARTNERSHIP
By: Itasca Partners, General Partner
By /s/ Xxxxx X. Xxxx.
------------------------------------------
Xxxxx X. Xxxx, General Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: Brentwood VI Ventures L.P.,
its General Partner
By /s/ G. Xxxxxxxx Xxxxx
------------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
ADVANCED TECHNOLOGY VENTURES III
By /s/ Xxx X. Xxxxxxx
------------------------------------------
Xxx X. Xxxxxxx, General Partner
/s/ X. Xxxxxxx XxXxxx
---------------------------------------------
X. Xxxxxxx XxXxxx
/s/ Xxxx X. Xxx...
---------------------------------------------
Xxxx X. Xxx, Co-Trustee,
The Cox Living Trust dtd 5/26/88
[Signature page to First Amendment to Investors Rights Agreement]
2.
21
NEW SHAREHOLDER:
/s/ Xxx Xxxxxxx
---------------------------------------------
Xxx Xxxxxxx, Trustee,
The Zechter Family Trust
dated July 18, 1985
THE FOUNDERS:
/s/ Xxxx Xxx
---------------------------------------------
Xxxx Xxx, Co-Trustee,
The Cox Living Trust dtd 5/26/88
/s/ Xxx Xxxxxxx
---------------------------------------------
Xxx Xxxxxxx, Trustee,
The Zechter Family Trust
dated July 18, 1985
[Signature page to First Amendment to Investors Rights Agreement]
3.
22
CONTINUUS SOFTWARE CORPORATION
SECOND AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
This Second Amendment to Investors' Rights Agreement ("Second
Amendment") is entered into as of May 25, 1995, by and among Continuus Software
Corporation, a California corporation and formerly known as CaseWare, Inc. (the
"Company"), the undersigned parties (the "Existing Investors") to that certain
Investors' Rights Agreement dated as of March 4, 1994, as amended by that
certain First Amendment to Investors' Rights Agreement dated December 29, 1994
(as so amended, the "Agreement") and the undersigned parties (the "New
Investors") to that certain Stock Purchase Agreement of even date herewith
providing for the issuance and sale of shares of Series B Preferred Stock of the
Company (the "Stock Purchase Agreement"). Capitalized terms contained herein
shall have the meanings set forth in the Agreement.
WHEREAS, the Company, and the Existing Investors desire to amend the
Agreement as set forth below; and
WHEREAS, the execution of this Second Amendment by the parties is a
condition to the Financing as set forth in Section 4.7 of the Stock Purchase
Agreement.
NOW, THEREFORE, In consideration of the foregoing premises and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Second
Amendment agree as follows:
6. The definition of "Shareholders" set forth in the preamble to the
Agreement is hereby amended to mean the Existing Investors and the New Investors
listed in the attached Schedule A.
7. The definition of "Registrable Securities" set forth in Section 1.2
of the Agreement is hereby amended to read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) shares of the Company's Common Stock
issued or issuable upon conversion of the Company's Series A and Series
B Preferred Stock (hereinafter collectively referred to as the
"Preferred"), which have not been sold to the public, (ii) shares of
the Company's Common Stock issued upon the exercise of those certain
warrants dated December 29, 1994 to purchase up to an aggregate of
1,908,394 shares of Common Stock (the "Warrants") and (iii) shares of
the Company's Common Stock issued in respect of shares of the Company's
Common Stock issued upon conversion of the Preferred or upon exercise
of the Warrants upon any stock split, stock dividend, recapitalization,
or similar event, which have not been sold to the public.
8. This Second Amendment shall be deemed an amendment to the Agreement
and shall become effective when executed by the Company and the holders of at
least a majority of the outstanding shares of Registrable Securities as provided
for under Section 4.8 of the Agreement. Except as expressly amended pursuant to
this Amendment, the Agreement shall continue in full force and effect.
9. This Second Amendment shall be governed by the laws of the State of
California as applicable to contracts entered into and performed entirely within
the State of California.
1.
23
10. This Second Amendment may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
This Amendment is hereby executed as of the date first above written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By /s/ Xxxx Xxxx
------------------------------------------
Title President and Chief Executive Officer
---------------------------------------
THE EXISTING INVESTORS:
NORWEST EQUITY PARTNERS, V,
A MINNESOTA LIMITED LIABILITY PARTNERSHIP
By: Itasca Partners II
General Partner
By /s/ Xxxxx X. Xxxx
------------------------------------------
Xxxxx X. Xxxx, General Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: Brentwood VI Ventures L.P.,
its General Partner
By /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Xxxxx X. Xxxxxxxx, General Partner
ADVANCED TECHNOLOGY VENTURES III
By /s/ Xxx X. Xxxxxxx
------------------------------------------
Xxx X. Xxxxxxx, General Partner
[Signature page to Second Amendment to Investors Rights Agreement]
2.
24
/s/ X. Xxxxxxx XxXxxx
---------------------------------------------
X. Xxxxxxx XxXxxx
/s/ Xxxx Xxx......
---------------------------------------------
Xxxx Xxx, Co-Trustee,
The Xxx Living Trust dtd 5/26/88
/s/ Xxxxxxxx Xxxxx Xxx
---------------------------------------------
Xxxxxxx Xxxxx Xxx, Co-Trustee,
The Xxx Living Trust dtd 5/26/88
/s/ Xxx Xxxxxxx...
---------------------------------------------
Xxx Xxxxxxx, Trustee,
The Zechter Family Trust
dated July 18, 1995
NEW INVESTORS:
COMDISCO, INC.
By /s/ Xxxx Xxxxxx...
------------------------------------------
Xxxx Xxxxxx, Assistant V.P.
[Signature page to Second Amendment to Investors Rights Agreement]
3.
25
CONTINUUS SOFTWARE CORPORATION
THIRD AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
THIS THIRD AMENDMENT TO INVESTORS' RIGHTS AGREEMENT ("Third Amendment")
is entered into as of November 6, 1995, by and among CONTINUUS SOFTWARE
CORPORATION, a California corporation (the "Company"), the undersigned parties
(the "Existing Investors") to that certain Investors' Rights Agreement dated as
of March 4, 1994, as amended by that certain First Amendment to Investors'
Rights Agreement dated as of December 29, 1994 and that certain Second Amendment
to Investors' Rights Agreement dated as of May 25, 1995 (as so amended, the
"Agreement") and the undersigned parties (the "New Investors") to that certain
Stock Purchase Agreement of even date herewith (the "Stock Purchase Agreement")
providing for the issuance and sale of shares of Series C Preferred Stock of the
Company (the "Financing"). Capitalized terms contained herein shall have the
meanings set forth in the Agreement.
WHEREAS, the Company and the Existing Investors desire to amend the
Agreement as set forth below;
WHEREAS, the execution of this Third Amendment by the parties is a
condition to the Financing as set forth in Section 4.7 of the Stock Purchase
Agreement; and
NOW, THEREFORE, in consideration of the foregoing premises and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Third Amendment
agree as follows:
1. The definition of "Shareholders" set forth in the preamble to the
Agreement is hereby amended to mean the parties listed on the attached Schedule
A.
2. The definition of "Registrable Securities" set forth in Section 1.2
of the Agreement is hereby amended to read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) shares of the Company's Common Stock
issued or issuable upon conversion of the Company's Series A Preferred Stock,
Series B Preferred Stock and Series C Preferred Stock (hereinafter collectively
referred to as the "Preferred"), which have not been sold to the public, (ii)
shares of the Company's Common Stock issued or issuable upon the exercise of
those certain warrants dated December 29, 1994 to purchase up to an aggregate of
1,908,394 shares of the Company's Common Stock (the "Existing Warrants"), and
(iii) shares of the Company's Common Stock issued or issuable upon conversion of
the Preferred or upon any stock split, stock dividend, recapitalization, or
similar event, which have not been sold to the public.
3. Section 1.14 of the Agreement is hereby amended to read in its
entirety as follows:
"1.14 TERMINATION OF REGISTRATION RIGHTS. The registration rights
granted pursuant to this Section 1 shall terminate (i) upon the fifth
anniversary of the effective date of the registration statement filed
by the Company covering an underwritten offering of its securities to
the general public at a per share price of not less than $5.25 per
share and for a total offering of not less than $15,000,000
1.
26
(before deduction of underwriter's commissions and expenses) (the
"Qualifying IPO") or (ii) as to any individual Holder, at such time
after Qualifying IPO as all Registrable Securities held by such Holder
can be sold without compliance with the registration requirements of
the Securities Act pursuant to Rule 144 (including Rule 144(k))
promulgated thereunder."
4. Section 3.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) "New Securities" shall mean any Common Stock or Preferred Stock of
the Company, whether now authorized or not, and rights, options, or
warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible
into or exchangeable for said Common Stock or Preferred Stock;
provided, however, that "New Securities" does not include (i)
securities issuable upon conversion of or with respect to any series of
preferred stock; (ii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially
all of the assets, or other reorganization; (iii) up to 3,400,000
shares of the Company's Common Stock (or related options) issued
pursuant to stock option plans or agreements as designated and approved
by the Company's Board of Directors (of which 2,503,462 shares are
subject to options outstanding as of October 11, 1995, and an
additional 896,538 shares remain available for issuance after October
11, 1995), provided that shares subject to options that expire pursuant
to the terms thereof or that are repurchased by the Company at a price
equal to the cost thereof to the holder pursuant to the terms of the
agreement by which such shares were purchased from the Company shall
again become available for issuance under this clause; and (iv) shares
of the Company's Common Stock or Preferred Stock issued in connection
with any stock split, stock dividend, or recapitalization by the
Company."
5. Each of the undersigned Existing Investors hereby waives his, her or
its right to receive notice of the Financing and Warrant Issuance and to
purchase a certain portion of the shares or other securities to be sold by the
Company in the Financing and Warrant Issuance as set forth in Section 3.2 of the
Agreement.
6. This Third Amendment shall be deemed an amendment to the Agreement
and shall become effective when executed by the Company and the holders of at
least a majority of the outstanding shares of Registrable Securities as provided
for under Section 4.8 of the Agreement. Except as expressly amended pursuant to
this Amendment, the Agreement shall continue in full force and effect.
7. This Third Amendment shall be governed by the laws of the State of
California as applicable to contracts entered into and performed entirely within
the State of California.
8. This Third Amendment may be executed in counterparts, each of which
shall be enforceable against the party actually executing such counterpart, and
which together shall constitute one instrument.
2.
27
[Remainder of Page Intentionally Left Blank]
28
This Amendment is hereby executed as of the date first above written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx Xxxx
------------------------------------------
Title: President and Chief Executive Officer
---------------------------------------
EXISTING INVESTORS:
NORWEST EQUITY PARTNERS, IV,
a Minnesota Limited Partnership
By: Itasca Partners
General Partner
By: /s/ Xxxxx X. Xxxx
------------------------------------------
Xxxxx X. Xxxx, Partner
ADVANCED TECHNOLOGY VENTURES III
By: /s/ Xxx X. Xxxxxxx
------------------------------------------
Xxx X. Xxxxxxx, General Partner
/s/ X. Xxxxxxx XxXxxx
----------------------------------------------
X. Xxxxxxx XxXxxx
[Signature Page to Third Amendment to Investors' Rights Agreement]
29
COMDISCO, INC.
By: /s/ Xxxx Xxxxxx
------------------------------------------
Xxxx Xxxxxx, Assistant V.P.
/s/ Xxxx X. Xxx
----------------------------------------------
Xxxx Xxx, Co-Trustee
The Xxx Living Trust dated 5/26/88
/s/ Xxxxxxx Xxxxx-Xxx
----------------------------------------------
Xxxxxxx Xxxxx-Xxx, Co-Trustee,
The Xxx Living Trust dated 5/26/88
/s/ Xxx Xxxxxxx
----------------------------------------------
Xxx Xxxxxxx, Trustee
The Zechter Family Trust
dated July 18, 1995
NEW INVESTORS:
ACCEL IV L.P.
By: Accel IV Associates L.P.
Its General Partner
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
General Partner
[Signature Page to Third Amendment to Investors' Rights Agreement]
30
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.
Its General Partners
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
Its: General Partner
-----------------------------------------
ACCEL INVESTORS `95 L.P.
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
General Partner
XXXXXXX X. XXXXXXXXX PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxx
------------------------------------------
General Partner
NORWEST EQUITY PARTNERS, V,
a Minnesota Limited Liability Partnership
By: Itasca Partners V, L.L.P.
General Partner
By: /s/ Xxxxx X. Xxxx
------------------------------------------
Xxxxx X. Xxxx, Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: Brentwood VI Ventures, L.P.
Its General Partner
By: /s/ G. Xxxxxxxx Xxxxx
------------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
[Signature Page to Third Amendment to Investors' Rights Agreement]
31
SCHEDULE A
LIST OF SHAREHOLDERS
Norwest Equity Partners, IV,
a Minnesota Limited Partnership
Brentwood Associates, VI, L.P.
Advanced Technology Ventures III
X. Xxxxxxx XxXxxx
Xxxx Xxx, Co-Trustee,
Xxxxxxx Xxxxx Xxx, Co-Trustee,
The Xxx Living Trust dated 5/26/88
Xxx Xxxxxxx, Trustee,
The Zechter Family Trust
dated July 18, 1995
Comdisco, Inc.
Accel IV L.P.
Accel Keiretsu L.P.
Accel Investors `95 X.X.
Xxxxxxx X. Xxxxxxxxx Partners
Norwest Equity Partners, V,
a Minnesota Limited Liability Partnership
32
CONTINUUS SOFTWARE CORPORATION
FOURTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
THIS FOURTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT ("Fourth
Amendment") is entered into as of May 30, 1996, by and among CONTINUUS SOFTWARE
CORPORATION, a California corporation (the "Company"), the parties (the
"Existing Investors") to that certain Investors' Rights Agreement dated as of
March 4, 1994, as amended by that certain First Amendment to Investors' Rights
Agreement dated as of December 29, 1994 and that certain Second Amendment to
Investors' Rights Agreement dated as of May 25, 1995 and that certain Fourth
Amendment to Investors' Rights Agreement dated as of November 6, 1995 (as so
amended, the "Agreement") and the undersigned parties (the "New Investors") to
that certain Stock Purchase Agreement of even date herewith (the "Stock Purchase
Agreement") providing for the issuance and sale of shares of Series D Preferred
Stock of the Company and Warrants to purchase shares of Common Stock of the
Company (the "Financing"). Capitalized terms contained herein shall have the
meanings set forth in the Agreement.
WHEREAS, the Company, the Existing Investors and the New Investors
desire to amend the Agreement as set forth below; and
WHEREAS, the execution of this Fourth Amendment by the parties is a
condition to the Financing as set forth in Section 4.7 of the Stock Purchase
Agreement.
NOW, THEREFORE, In consideration of the foregoing premises and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Fourth
Amendment agree as follows:
1. The definition of "Shareholders" set forth in the preamble to the
Agreement is hereby amended to mean the parties listed on the attached Schedule
A.
2. The definition of "Registrable Securities" set forth in Section 1.2
of the Agreement is hereby amended to read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) shares of the Company's Common Stock
issued or issuable upon conversion of the Company's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock
(hereinafter collectively referred to as the "Preferred"), which have not been
sold to the public, (ii) shares of the Company's Common Stock issued upon the
exercise of those certain warrants dated December 29, 1994 to purchase up to an
aggregate of 1,908,397 shares of the Company's Common Stock (the "Existing
Warrants"), (iii) shares of the Company's Common Stock issued upon the exercise
of those certain warrants dated May 30, 1996 to purchase up to an aggregate of
587,618 shares of the Company's Common Stock (the "New Warrants"), and (iv)
shares of the Company's Common Stock issued in respect of shares of the
Company's Common Stock issued upon conversion of the Preferred or upon exercise
of the Existing Warrants or New Warrants upon any stock split, stock dividend,
recapitalization, or similar event, which have not been sold to the public.
3. Section 3.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
1.
33
"(a) "New Securities" shall mean any Common Stock or Preferred Stock of
the Company, whether now authorized or not, and rights, options, or
warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible
into or exchangeable for said Common Stock or Preferred Stock;
provided, however, that "New Securities" does not include (i)
securities issuable upon conversion of or with respect to any series of
preferred stock; (ii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially
all of the assets, or other reorganization; (iii) up to 4,150,000
shares of the Company's Common Stock (or related options) issued
pursuant to stock option plans or agreements as designated and approved
by the Company's Board of Directors (of which 3,038,938 shares are
subject to options outstanding as of May 20, 1996, and an additional
973,793 shares remain available for issuance after May 20, 1996),
provided that shares subject to options that expire pursuant to the
terms thereof or that are repurchased by the Company at a price equal
to the cost thereof to the holder pursuant to the terms of the
agreement by which such shares were purchased from the Company shall
again become available for issuance under this clause; and (iv) shares
of the Company's Common Stock or Preferred Stock issued in connection
with any stock split, stock dividend, or recapitalization by the
Company."
4. This Fourth Amendment shall be deemed an amendment to the Agreement
and shall become effective when executed by the Company and the holders of at
least a majority of the outstanding shares of Registrable Securities as provided
for under Section 4.8 of the Agreement. The rights of first refusal of each
party to the Agreement pursuant to Section 3.2 of the Agreement are hereby
waived with respect to the Financing and each issuance of Series A, B, C and D
Preferred Stock issued concurrently herewith or prior to the date hereof, as
applicable. Except as expressly amended pursuant to this Amendment, the
Agreement shall continue in full force and effect.
5. This Fourth Amendment shall be governed by the laws of the State of
California as applicable to contracts entered into and performed entirely within
the State of California.
6. This Fourth Amendment may be executed in counterparts, each of which
shall be enforceable against the party actually executing such counterpart, and
which together shall constitute one instrument.
[The Remainder of this Page is Intentionally Left Blank.]
2.
34
This Amendment is hereby executed as of the date first above written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx Xxxx
-------------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
SHAREHOLDERS:
NORWEST EQUITY PARTNERS, IV,
a Minnesota Limited Partnership
By: Itasca Partners
General Partner
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Xxxxx X. Xxxx, Partner
NORWEST EQUITY PARTNERS, V,
a Minnesota Limited Partnership
By: Itasca Partners IV, L.L.P.
General Partner
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Xxxxx X. Xxxx, Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: BRENTWOOD VI VENTURES L.P.
its General Partner
By: /s/ G. Xxxxxxxx Xxxxx
-------------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
[Signature Page to Investors' Rights Agreement]
35
ADVANCED TECHNOLOGY VENTURES III
By: /s/ Xxx X. Xxxxxxx
-------------------------------------------
Xxx X. Xxxxxxx, General Partner
/s/ X. Xxxxxxx XxXxxx
-----------------------------------------------
X. XXXXXXX XXXXXX
COMDISCO, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------------------
Xxxx Xxxxxx, Assistant Vice President
/s/ Xxxxx X. XxXxxxxxx
-----------------------------------------------
XXXXX X. XXXXXXXXX
THE XXX LIVING TRUST DATED MAY 26, 1988
By: /s/ Xxxx X. Xxx
-------------------------------------------
Xxxx Xxx, Co-Trustee
By: /s/ Xxxxxxx Xxxxx Xxx
-------------------------------------------
Xxxxxxx Xxxxx Xxx, Co-Trustee
THE ZECHTER FAMILY TRUST
DATED MARCH 6, 1996
By: /s/ Xxx Xxxxxxx
-------------------------------------------
Xxx Xxxxxxx, Trustee
[Signature Page to Investors' Rights Agreement]
36
ACCEL IV L.P.
By: Accel IV Associates L.P.
Its General Partner
By: /s/ X. Xxxxxx Sednaoui
-------------------------------------------
General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.
Its General Partners
By: /s/ X. Xxxxxx Sednaoui
-------------------------------------------
Its: General Partner
------------------------------------------
ACCEL INVESTORS `95 L.P.
By: /s/ X. Xxxxxxx Sednaoui
-------------------------------------------
General Partner
XXXXXXX X. XXXXXXXXX PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------------------
General Partner
[Signature Page to Investors' Rights Agreement]
37
SCHEDULE A
LIST OF SHAREHOLDERS
Norwest Equity Partners, IV,
a Minnesota Limited Partnership
Norwest Equity Partners, V,
a Minnesota Limited Liability Partnership
Brentwood Associates, VI, L.P.
Advanced Technology Ventures III
X. Xxxxxxx XxXxxx
The Xxx Living Trust dated May 26, 1988
Xxxx Xxx, Co-Trustee,
Xxxxxxx Xxxxx Xxx, Co-Trustee
The Zechter Family Trust
dated March 6, 1996
Xxx Xxxxxxx, Trustee
Accel IV L.P.
Accel Keiretsu L.P.
Accel Investors `95 X.X.
Xxxxxxx X. Xxxxxxxxx Partners
Comdisco, Inc.
Xxxxx X. XxXxxxxxx
38
CONTINUUS SOFTWARE CORPORATION
FIFTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
THIS FIFTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT ("Fifth Amendment")
is entered into as of May 19, 1997, by and among CONTINUUS SOFTWARE CORPORATION,
a California corporation (the "Company"), and the undersigned parties (the
"Investors") to that certain Investors' Rights Agreement dated as of March 4,
1994, as amended by that certain First Amendment to Investors' Rights Agreement
dated as of December 29, 1994, that certain Second Amendment to Investors'
Rights Agreement dated as of May 25, 1995, that certain Third Amendment to
Investors' Rights Agreement dated as of November 6, 1995 and that certain Fourth
Amendment to Investors' Rights Agreement dated as of May 30, 1996 (as so
amended, the "Agreement") in connection with that certain Stock Purchase
Agreement of even date herewith (the "Stock Purchase Agreement") providing for
the issuance and sale of shares of Series E Preferred Stock of the Company and
Warrants to purchase shares of Series E Preferred Stock of the Company (the
"Financing"). Capitalized terms contained herein shall have the meanings set
forth in the Agreement.
WHEREAS, the Company and the Investors desire to amend the Agreement as
set forth below; and
WHEREAS, the execution of this Fifth Amendment by the parties is a
condition to the Financing as set forth in Section 4.7 of the Stock Purchase
Agreement.
NOW, THEREFORE, In consideration of the foregoing premises and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Fifth Amendment
agree as follows:
7. The definition of "Shareholders" set forth in the preamble to the
Agreement is hereby amended to mean the parties listed on the attached Schedule
A.
8. The definition of "Registrable Securities" set forth in Section 1.2
of the Agreement is hereby amended to read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) shares of the Company's Common Stock
issued or issuable upon conversion of the Company's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock (hereinafter collectively referred to as the
"Preferred"), which have not been sold to the public, (ii) shares of the
Company's Common Stock issued upon the exercise of those certain warrants dated
December 29, 1994 to purchase up to an aggregate of 1,908,397 shares of the
Company's Common Stock (the "1994 Warrants"), (iii) shares of the Company's
Common Stock issued or issuable upon the exercise of those certain warrants
dated May 30, 1996 to purchase up to an aggregate of 587,618 shares of the
Company's Common Stock (the "1996 Warrants"), (iv) shares of the Company's
Common Stock issued or issuable upon conversion of the Series E Preferred Stock
issued or issuable upon exercise of warrants outstanding or issued as of the
date of this Fifth Amendment ("Preferred Warrants") and (v) shares of the
Company's Common Stock issued in respect of shares of the Company's Common Stock
issued upon conversion of
1.
39
the Preferred or upon exercise of the 1994 Warrants, the 1996 Warrants or the
Preferred Warrants upon any stock split, stock dividend, recapitalization, or
similar event, which have not been sold to the public."
9. Section 3.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) "New Securities" shall mean any Common Stock or Preferred Stock of
the Company, whether now authorized or not, and rights, options, or
warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible
into or exchangeable for said Common Stock or Preferred Stock;
provided, however, that "New Securities" does not include (i)
securities issuable upon conversion of or with respect to any series of
preferred stock; (ii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially
all of the assets, or other reorganization; (iii) up to 4,650,000
shares of the Company's Common Stock (or related options) issued
pursuant to stock option plans or agreements as designated and approved
by the Company's Board of Directors (of which 3,584,858 shares are
subject to options outstanding as of May 15, 1997, and an additional
836,142 shares remain available for issuance after May 15, 1996),
provided that shares subject to options that expire pursuant to the
terms thereof or that are repurchased by the Company at a price equal
to the cost thereof to the holder pursuant to the terms of the
agreement by which such shares were purchased from the Company shall
again become available for issuance under this clause; (iv) Preferred
Stock and/or Common Stock issued upon exercise of warrants outstanding
or issued as of the date of this Fifth Amendment; and (v) shares of the
Company's Common Stock or Preferred Stock issued in connection with any
stock split, stock dividend, or recapitalization by the Company."
10. This Fifth Amendment shall be deemed an amendment to the Agreement
and shall become effective when executed by the Company and the holders of at
least a majority of the outstanding shares of Registrable Securities as provided
for under Section 4.8 of the Agreement. The rights of first refusal of each
party to the Agreement pursuant to Section 3.2 of the Agreement are hereby
waived with respect to the Financing and each issuance of Series A, B, C, D and
E Preferred Stock and warrants to purchase Common Stock of Preferred Stock
issued concurrently herewith or prior to the date hereof, as applicable. Except
as expressly amended pursuant to this Amendment, the Agreement shall continue in
full force and effect.
11. This Fifth Amendment shall be governed by the laws of the State of
California as applicable to contracts entered into and performed entirely within
the State of California.
12. This Fifth Amendment may be executed in counterparts, each of which
shall be enforceable against the party actually executing such counterpart, and
which together shall constitute one instrument.
[The Remainder of this Page is Intentionally Left Blank.]
2.
40
This Fifth Amendment is hereby executed as of the date first above
written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx Xxxxxx
----------------------------------------
Title: Vice President, Finance
-------------------------------------
SHAREHOLDERS:
NORWEST EQUITY PARTNERS, IV,
a Minnesota Limited Partnership
By: Itasca Partners
General Partner
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx, Partner
NORWEST EQUITY PARTNERS, V,
a Minnesota Limited Partnership
By: Itasca Partners IV, L.L.P.
General Partner
By: /s/ Xxxxx X. Xxxx
----------------------------------------
Xxxxx X. Xxxx, Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: BRENTWOOD VI VENTURES L.P.
its General Partner
By: /s/ G. Xxxxxxxx Xxxxx
----------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
41
ADVANCED TECHNOLOGY VENTURES III
By: /s/ Xxx X. Xxxxxxx
----------------------------------------
Xxx X. Xxxxxxx, General Partner
/s/ X. Xxxxxxx XxXxxx
--------------------------------------------
X. XXXXXXX XXXXXX
COMDISCO, INC.
By: /s/ Xxxx X. Xxxxxx
----------------------------------------
Xxxx Xxxxxx, Assistant Vice President
/s/ Xxxxx X. XxXxxxxxx
--------------------------------------------
XXXXX X. XXXXXXXXX
THE XXX LIVING TRUST DATED MAY 26, 1988
By: /s/ Xxxx X. Xxx
----------------------------------------
Xxxx Xxx, Co-Trustee
By: /s/ Xxxxxxx Xxxxx Xxx
----------------------------------------
Xxxxxxx Xxxxx Xxx, Co-Trustee
THE ZECHTER FAMILY TRUST
DATED MARCH 6, 1996
By: /s/ Xxx Xxxxxxx
----------------------------------------
Xxx Xxxxxxx, Trustee
ACCEL IV L.P.
By: Accel IV Associates L.P.
Its General Partner
[Signature Page to Fifth Amendment to Investors' Rights Agreement]
42
By: /s/ X. Xxxxxx Sednaoui
----------------------------------------
General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.
Its General Partners
By: /s/ X. Xxxxxx Sednaoui
----------------------------------------
Its: Chief Financial Officer
---------------------------------------
ACCEL INVESTORS `95 L.P.
By: /s/ X. Xxxxxx Sednaoui
----------------------------------------
General Partner
XXXXXXX X. XXXXXXXXX PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxx
----------------------------------------
General Partner
[Signature Page to Fifth Amendment to Investors' Rights Agreement]
43
/s/ Xxx Xxxxxxx
--------------------------------------------
THE XXXXXX XXXXXX XXXXXXX ANNUITY TRUST
XXX XXXXXXX, AS TRUSTEE
/s/ Xxx Xxxxxxx
--------------------------------------------
THE XXX XXXXXXX ANNUITY TRUST
XXX XXXXXXX, AS TRUSTEE
[Signature Page to Fifth Amendment to Investors' Rights Agreement]
44
SCHEDULE A
LIST OF SHAREHOLDERS
Norwest Equity Partners, IV,
a Minnesota Limited Partnership
Norwest Equity Partners, V,
a Minnesota Limited Liability Partnership
Brentwood Associates, VI, L.P.
Advanced Technology Ventures III
X. Xxxxxxx XxXxxx
The Xxx Living Trust dated May 26, 1988
Xxxx Xxx, Co-Trustee,
Xxxxxxx Xxxxx Xxx, Co-Trustee
The Xxxxxx Xxxxxx Xxxxxxx Annuity Trust
Xxx Xxxxxxx, Trustee
The Xxx Xxxxxxx Annuity Trust
Xxx Xxxxxxx, Trustee
Accel IV L.P.
Accel Keiretsu L.P.
Accel Investors `95 X.X.
Xxxxxxx X. Xxxxxxxxx Partners
Comdisco, Inc.
Xxxxx X. XxXxxxxxx
[Signature Page to Fifth Amendment to Investors' Rights Agreement]
45
CONTINUUS SOFTWARE CORPORATION
SIXTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
THIS SIXTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT ("Sixth Amendment")
is entered into as of September 23, 1997, by and among CONTINUUS SOFTWARE
CORPORATION, a California corporation (the "Company"), and the undersigned
parties (the "Investors") to that certain Investors' Rights Agreement dated as
of March 4, 1994, as amended by that certain First Amendment to Investors'
Rights Agreement dated as of December 29, 1994, that certain Second Amendment to
Investors' Rights Agreement dated as of May 25, 1995, that certain Third
Amendment to Investors' Rights Agreement dated as of November 6, 1995, that
certain Fourth Amendment to Investors' Rights Agreement dated as of May 30, 1996
and that certain Fifth Amendment to Investors' Rights Agreement dated as of May
19, 1997 (as so amended, the "Agreement") in connection with that certain Senior
Secured Convertible Debenture Purchase Agreement of even date herewith (the
"Debenture Purchase Agreement") providing for the issuance and sale of a Senior
Secured Convertible Debenture (the "Debenture") convertible into shares of
Common Stock of the Company (the "Financing"). Capitalized terms contained
herein shall have the meanings set forth in the Agreement.
WHEREAS, the Company and the Investors desire to amend the Agreement as
set forth below; and
WHEREAS, the execution of this Sixth Amendment by the parties is a
condition to the Financing as set forth in Section 4.8 of the Senior Secured
Convertible Agreement.
NOW, THEREFORE, In consideration of the foregoing premises and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Sixth Amendment
agree as follows:
13. The definition of "Shareholders" set forth in the preamble to the
Agreement is hereby amended to mean the parties listed on the attached Schedule
A, except that for purposes of Section 3.2 of the Agreement, London Pacific Life
& Annuity Company shall not be included in the definition of "Shareholders,
until such time, and to the extent of, the conversion of the Debenture into
Common Stock."
14. The definition of "Registrable Securities" set forth in Section 1.2
of the Agreement is hereby amended to read in its entirety as follows:
"REGISTRABLE SECURITIES" means (i) shares of the Company's Common Stock
issued or issuable upon conversion of the Company's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock (hereinafter collectively referred to as the
"Preferred"), which have not been sold to the public, (ii) shares of the
Company's Common Stock issued upon the exercise of those certain warrants dated
December 29, 1994 to purchase up to an aggregate of 1,908,397 shares of the
Company's Common Stock (the "1994 Warrants"), (iii) shares of the Company's
Common Stock issued or issuable upon the exercise of those certain warrants
dated May 30, 1996 to purchase up to an aggregate of 587,618 shares of the
Company's Common Stock (the "1996 Warrants"), (iv)
1.
46
shares of the Company's Common Stock issued or issuable upon conversion of the
Series E Preferred Stock issued or issuable upon exercise of warrants
outstanding or issued as of May 19, 1997 ("Preferred Warrants"), (v) shares of
the Company's Common Stock issued or issuable upon the conversion of the
Debenture and (vi) shares of the Company's Common Stock issued in respect of
shares of the Company's Common Stock issued upon conversion of the Preferred or
upon exercise of the 1994 Warrants, the 1996 Warrants or the Preferred Warrants
or upon conversion of the Debenture upon any stock split, stock dividend,
recapitalization, or similar event, which have not been sold to the public."
15. Section 3.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) "New Securities" shall mean any Common Stock or Preferred Stock of
the Company, whether now authorized or not, and rights, options, or
warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible
into or exchangeable for said Common Stock or Preferred Stock;
provided, however, that "New Securities" does not include (i)
securities issuable upon conversion of or with respect to any series of
preferred stock; (ii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially
all of the assets, or other reorganization; (iii) up to 4,650,000
shares of the Company's Common Stock (or related options) issued
pursuant to stock option plans or agreements as designated and approved
by the Company's Board of Directors (of which 3,547,595 shares are
subject to options outstanding as of September 2, 1997, and an
additional 301,064 shares remain available for issuance after September
2, 1996), provided that shares subject to options that expire pursuant
to the terms thereof or that are repurchased by the Company at a price
equal to the cost thereof to the holder pursuant to the terms of the
agreement by which such shares were purchased from the Company shall
again become available for issuance under this clause; (iv) Preferred
Stock and/or Common Stock issued upon exercise of warrants outstanding
or issued as of the date of May 19, 1997; (v) the Debenture or Common
Stock issuable upon conversion of the Debenture; and (vi) shares of the
Company's Common Stock or Preferred Stock issued in connection with any
stock split, stock dividend, or recapitalization by the Company."
16. This Sixth Amendment shall be deemed an amendment to the Agreement
and shall become effective when executed by the Company and the holders of at
least a majority of the outstanding shares of Registrable Securities as provided
for under Section 4.8 of the Agreement. The rights of first refusal of each
party to the Agreement pursuant to Section 3.2 of the Agreement are hereby
waived with respect to the Financing. Except as expressly amended pursuant to
this Amendment, the Agreement shall continue in full force and effect.
17. This Sixth Amendment shall be governed by the laws of the State of
California as applicable to contracts entered into and performed entirely within
the State of California by residents of California.
2.
47
18. This Sixth Amendment may be executed in counterparts, each of which
shall be enforceable against the party actually executing such counterpart, and
which together shall constitute one instrument.
[The Remainder of this Page is Intentionally Left Blank.]
3.
48
This Sixth Amendment is hereby executed as of the date first above
written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx Xxxx
--------------------------------------------
Title: President and Chief Executive Officer
-----------------------------------------
SHAREHOLDERS:
NORWEST EQUITY PARTNERS, IV,
a Minnesota Limited Partnership
By: Itasca Partners
General Partner
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Xxxxx X. Xxxx, Partner
NORWEST EQUITY PARTNERS, V,
a Minnesota Limited Partnership
By: Itasca Partners IV, L.L.P.
General Partner
By: /s/ Xxxxx X. Xxxx
--------------------------------------------
Xxxxx X. Xxxx, Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: BRENTWOOD VI VENTURES L.P.
its General Partner
By: /s/ G. Xxxxxxxx Xxxxx
--------------------------------------------
G. Xxxxxxxx Xxxxx, General Partner
ADVANCED TECHNOLOGY VENTURES III
[Signature Page to Sixth Amendment to Investors' Rights Agreement]
49
By: /s/ Xxx X. Xxxxxxx
--------------------------------------------
Xxx X. Xxxxxxx, General Partner
/s/ X. Xxxxxxx XxXxxx
------------------------------------------------
X. XXXXXXX XXXXXX
COMDISCO, INC.
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Xxxx Xxxxxx, Assistant Vice President
/s/ Xxxxx X. XxXxxxxxx
------------------------------------------------
XXXXX X. XXXXXXXXX
THE XXX LIVING TRUST DATED MAY 26, 1988
By: /s/ Xxxx X. Xxx
--------------------------------------------
Xxxx Xxx, Co-Trustee
By: /s/ Xxxxxxx Xxxxx Xxx
--------------------------------------------
Xxxxxxx Xxxxx Xxx, Co-Trustee
THE ZECHTER FAMILY TRUST
DATED MARCH 6, 1996
By: /s/ Xxx Xxxxxxx
--------------------------------------------
Xxx Xxxxxxx, Trustee
[Signature Page to Sixth Amendment to Investors' Rights Agreement]
50
ACCEL IV L.P.
By: Accel IV Associates L.P.
Its General Partner
By: /s/ X. Xxxxxx Sednaoui
--------------------------------------------
General Partner
ACCEL KEIRETSU L.P.
By: Accel Partners & Co., Inc.
Its General Partners
By: /s/ X. Xxxxxx Sednaoui
--------------------------------------------
Its: Chief Financial Officer
------------------------------------------
ACCEL INVESTORS `95 L.P.
By: /s/ X. Xxxxxx Sednaoui
--------------------------------------------
General Partner
XXXXXXX X. XXXXXXXXX PARTNERS
By: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------------------
General Partner
[Signature Page to Sixth Amendment to Investors' Rights Agreement]
51
/s/ Xxx Xxxxxxx
------------------------------------------------
THE XXXXXX XXXXXX XXXXXXX ANNUITY TRUST
XXX XXXXXXX, AS TRUSTEE
/s/ Xxx Xxxxxxx
------------------------------------------------
THE XXX XXXXXXX ANNUITY TRUST
XXX XXXXXXX, AS TRUSTEE
LONDON PACIFIC LIFE & ANNUITY COMPANY
By: /s/ Xxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxxx
------------------------------------------
Its: Vice President and Treasurer
------------------------------------------
[Signature Page to Sixth Amendment to Investors' Rights Agreement]
52
SCHEDULE A
LIST OF SHAREHOLDERS
Norwest Equity Partners, IV,
a Minnesota Limited Partnership
Norwest Equity Partners, V,
a Minnesota Limited Liability Partnership
Brentwood Associates, VI, L.P.
Advanced Technology Ventures III
X. Xxxxxxx XxXxxx
The Xxx Living Trust dated May 26, 1988
Xxxx Xxx, Co-Trustee,
Xxxxxxx Xxxxx Xxx, Co-Trustee
The Xxxxxx Xxxxxx Xxxxxxx Annuity Trust
Xxx Xxxxxxx, Trustee
The Xxx Xxxxxxx Annuity Trust
Xxx Xxxxxxx, Trustee
Accel IV L.P.
Accel Keiretsu L.P.
Accel Investors `95 X.X.
Xxxxxxx X. Xxxxxxxxx Partners
Comdisco, Inc.
Xxxxx X. XxXxxxxxx
London Pacific Life & Annuity Company
53
CONTINUUS SOFTWARE CORPORATION
SEVENTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT
THIS SEVENTH AMENDMENT TO INVESTORS' RIGHTS AGREEMENT ("Seventh
Amendment") is entered into as of December 30, 1997, by and among CONTINUUS
SOFTWARE CORPORATION, a California corporation (the "Company"), and the
undersigned parties (the "Investors") to that certain Investors' Rights
Agreement dated as of March 4, 1994, as amended by that certain First Amendment
to Investors' Rights Agreement dated as of December 29, 1994, that certain
Second Amendment to Investors' Rights Agreement dated as of May 25, 1995, that
certain Third Amendment to Investors' Rights Agreement dated as of November 6,
1995, that certain Fourth Amendment to Investors' Rights Agreement dated as of
May 30, 1996, that certain Fifth Amendment to Investors' Rights Agreement dated
as of May 19, 1997, and that certain Sixth Amendment to Investors' Rights
Agreement dated as of September 23, 1997 (as so amended, the "Agreement") in
connection with the adoption of the Company's 1997 Equity Incentive Plan (the
"1997 Plan"). Capitalized terms contained herein shall have the meanings set
forth in the Agreement.
WHEREAS, the Company and the Investors desire to amend the Agreement as
set forth below.
NOW, THEREFORE, In consideration of the foregoing premise and the
mutual promises set forth below, and for other good and valuable consideration,
the receipt of which is hereby acknowledged, the parties to this Seventh
Amendment agree as follows:
19. Section 3.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) "New Securities" shall mean any Common Stock or Preferred Stock of
the Company, whether now authorized or not, and rights, options, or
warrants to purchase said Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible
into or exchangeable for said Common Stock or Preferred Stock;
provided, however, that "New Securities" does not include (i)
securities issuable upon conversion of or with respect to any series of
preferred stock; (ii) securities issued pursuant to the acquisition of
another corporation by the Company by merger, purchase of substantially
all of the assets, or other reorganization; (iii) up to 7,650,000
shares of the Company's Common Stock (or related options) issued
pursuant to stock option plans or agreements as designated and approved
by the Company's Board of Directors (of which 4,237,563 shares are
subject to options outstanding as of December 30, 1997, and an
additional 3,412,437 shares remain available for issuance after
December 30, 1997), provided that shares subject to options that expire
pursuant to the terms thereof or that are repurchased by the Company at
a price equal to the cost thereof to the holder pursuant to the terms
of the agreement by which such shares were purchased from the Company
shall again become available for issuance under this clause; (iv)
Preferred Stock and/or Common Stock issued upon exercise of warrants
outstanding or issued as of the date of May 19, 1997; (v) the Senior
Secured Convertible Debenture issued on September 23, 1997 (the
1.
54
"Debenture") or Common Stock issuable upon conversion of the
Debenture; and (vi) shares of the Company's Common Stock or Preferred
Stock issued in connection with any stock split, stock dividend, or
recapitalization by the Company."
20. This Seventh Amendment shall be deemed an amendment to the
Agreement and shall become effective when executed by the Company and the
holders of at least a majority of the outstanding shares of Registrable
Securities as provided for under Section 4.8 of the Agreement. The rights of
first refusal of each party to the Agreement pursuant to Section 3.2 of the
Agreement are hereby waived with respect to the issuance of 3,000,000 shares of
Common Stock pursuant to the 1997 Plan. Except as expressly amended pursuant to
this Amendment, the Agreement shall continue in full force and effect.
21. This Seventh Amendment shall be governed by the laws of the State
of California as applicable to contracts entered into and performed entirely
within the State of California by residents of California.
22. This Seventh Amendment may be executed in counterparts, each of
which shall be enforceable against the party actually executing such
counterpart, and which together shall constitute one instrument.
[The Remainder of this Page is Intentionally Left Blank.]
2.
55
This Seventh Amendment is hereby executed as of the date first above
written.
THE COMPANY:
CONTINUUS SOFTWARE CORPORATION
By: /s/ Xxxx Xxxx
-------------------------------------------
Title: President and Chief Executive Officer
----------------------------------------
SHAREHOLDERS:
NORWEST EQUITY PARTNERS, IV,
a Minnesota Limited Partnership
By: Itasca Partners
-------------------------------------------
General Partner
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Xxxxx X. Xxxx, Partner
NORWEST EQUITY PARTNERS, V,
a Minnesota Limited Partnership
By: Itasca Partners IV, L.L.P.
-------------------------------------------
General Partner
By: /s/ Xxxxx X. Xxxx
-------------------------------------------
Xxxxx X. Xxxx, Partner
BRENTWOOD ASSOCIATES VI, L.P.
By: BRENTWOOD VI VENTURES L.P.
-------------------------------------------
its General Partner
By: /s/ Xxxxxxx Xxxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxxx, Special Limited Partner
THE XXX LIVING TRUST DATED MAY 26, 1988
56
By: /s/ Xxxx X. Xxx
-------------------------------------------
Xxxx Xxx, Co-Trustee
By: /s/ Xxxxxxx Xxxxx Xxx
-------------------------------------------
Xxxxxxx Xxxxx Xxx, Co-Trustee
THE ZECHTER FAMILY TRUST
DATED MARCH 6, 1996
By: /s/ Xxx Xxxxxxx
-------------------------------------------
Xxx Xxxxxxx, Trustee
/s/ Xxx Xxxxxxx
-------------------------------------------
THE XXXXXX XXXXXX XXXXXXX ANNUITY TRUST
XXX XXXXXXX, AS TRUSTEE
/s/ Xxx Xxxxxxx
-------------------------------------------
THE XXX XXXXXXX ANNUITY TRUST
XXX XXXXXXX, AS TRUSTEE
4.
