IPRINT, INC.
SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED RIGHTS AGREEMENT is entered into as of
September 30, 1999, by and among iPrint, Inc., a California corporation (the
"Company"), the undersigned purchasers of Series C Preferred Stock of the
Company (the "Purchasers"), the undersigned purchasers of Series A Preferred
Stock and the undersigned purchasers of Series B Preferred Stock (collectively,
the "Prior Purchasers") (Prior Purchasers and Purchasers may be collectively
referred to as "Preferred Purchasers") and Royal X. Xxxxxx (the "Common
Holder").
RECITALS:
A. The Prior Purchasers and the Common Holder are parties to that
certain Amended and Restated Rights Agreement dated February 25, 1999 among the
Company and such Series A Purchasers, Series B Purchasers and the Common Holder
(the "Prior Agreement").
B. Concurrently herewith, the Purchasers and the Company are entering
into a Series C Preferred Stock Purchase Agreement, dated as of the date hereof,
(the "Series C Agreement") pursuant to which the Purchasers are purchasing from
the Company shares of the Company's Series C Preferred Stock.
C. The Prior Purchasers, beneficially owning at least a majority of
the Company's outstanding shares held by all Prior Purchasers, which are subject
to the Prior Agreement wish to amend the Prior Agreement to grant registration,
information, co-sale rights and other rights to the Purchasers identical to the
registration, information, co-sale rights and other rights of the Prior
Purchasers.
D. The Purchasers desire to become a party to the Prior Agreement as
amended and restated hereby.
E. By this Agreement, the Company, the Preferred Purchasers and the
Common Holder desire to set forth certain registration and other rights of the
parties as set forth below.
AGREEMENT:
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. As used in this Agreement, the following
terms shall have the following respective meanings:
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(a) The terms "register," "registered" and
"registration" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "Securities Act"), and the declaration or ordering of the effectiveness of
such registration statement.
(b) The term "Conversion Shares" means the
Common Stock issued or issuable upon conversion of the Series A, Series A-1,
Series B, Series B-1, Series C and Series C-1 Preferred Stock issued and sold by
the Company pursuant to the Series A Preferred Stock Purchase Agreement dated
October 17, 1997 among the Company and the undersigned purchasers of Series A
Preferred Stock (the "Series A Agreement"), the Series B Preferred Stock
Purchase Agreement dated February 25, 1999 among the Company and the undersigned
purchasers of Series B Preferred Stock (which shares of Series A, Series A-1,
Series B and Series B-1 Preferred Stock are referred to herein as the "Preferred
Shares"), the Series C Agreement, and securities issuable upon exercise of
Warrants issued to Intel Corporation and Silicon Valley Bank.
(c) The term "Registrable Securities" means (i)
the Conversion Shares and for purposes of Section 1.3 any and all shares of
Common Stock held by the Common Holder then employed by the Company; (ii) stock
issued in lieu of the stock referred to in subsection (i) above in any
reorganization which has not been sold to the public; or (iii) stock issued in
respect of the stock referred to in subsections (i) and (ii) above as a result
of a stock split, stock dividend, recapitalization or the like, which has not
been sold to the public.
(d) The terms "Holder" or "Holders" means any
person or persons to whom Registrable Securities were originally issued or
qualifying transferees under subsection 1.10 hereof who hold Registrable
Securities.
(e) The term "Initiating Holders" means any
Holder or Holders of 40% or greater of the aggregate of the Preferred Shares
then outstanding.
(f) The term "SEC" means the Securities and
Exchange Commission.
(g) The term "Registration Expenses" shall mean
all expenses incurred by the Company in complying with subsections 1.2, 1.3 and
1.4 hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company and counsel for the Holders, 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.)
(h) The term "Common Shares" shall mean all
shares of Common Stock of the Company owned or subsequently acquired by the
Common Holder and all shares of Common Stock issuable upon exercise or
conversion of any derivative securities held or subsequently acquired by the
Common Holder other than shares of Common Stock issued upon conversion of
Preferred Stock and shares held by such persons which are eligible for sale on a
registration statement on Form S-8 or S-3.
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1.2 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION. If the Company
shall receive from the Initiating Holders a written request that the Company
effect any registration, qualification or compliance with respect to Registrable
Securities with an anticipated aggregate offering price before deduction of
underwriting discounts and commissions, in excess of $5,000,000, the Company
will:
(i) promptly give written notice of the
proposed registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best
efforts to effect all such registrations, qualifications and compliances
(including, without limitation, the execution of an undertaking to file
post-effective amendments, appropriate qualifications under the applicable blue
sky or other state securities laws and appropriate compliance with exemptive
regulations issued under the Securities Act and any other governmental
requirements or regulations) as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Initiating
Holder's or Initiating Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
Holder or Holders joining in such request as are specified in a written request
given within thirty (30) days after receipt of such written notice from the
Company; provided that the Company shall not be obligated to take any action to
effect such registration, qualification or compliance pursuant to this
subsection 1.2:
(A) at any time prior to the
earlier of October 15, 2002 or six (6) months following the effective date of
the registration statement under the Securities Act for the Company's initial
registered underwritten public offering (the "IPO") of its securities to the
general public (other than a registration statement relating either to the sale
of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a SEC Rule 145 transaction);
(B) in any particular
jurisdiction in which the Company would be required to execute a general
qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as required by the Securities Act; or
(C) after the Company has
effected two (2) such registrations pursuant to this subsection 1.2(a) and such
registrations have been declared or ordered effective.
Subject to the foregoing clauses (A) through (C), the Company shall
file a registration statement covering the Registrable Securities so requested
to be registered as soon as practical, but in any event within ninety (90) days,
after receipt of the request or requests of the Initiating Holders; provided,
however, that 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 detrimental to the Company and its
shareholders for such registration
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statement to be filed at the date filing would be required and it is therefore
essential to defer the filing of such registration statement, the Company shall
have an additional period of not more than ninety (90) days after the expiration
of the initial ninety (90) day period within which to file such registration
statement.
(b) UNDERWRITING. If the Initiating Holders
intend to distribute the Registrable Securities covered by their request by
means of an underwriting, they shall so advise the Company as part of their
request made pursuant to subsection 1.2 and the Company shall include such
information in the written notice referred to in subsection 1.2(a)(i). In such
event, the underwriter shall be selected by a majority in interest of the
Initiating Holders and shall be reasonably acceptable to the Company. The right
of any Holder to registration pursuant to subsection 1.2 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. Notwithstanding any other provision of this subsection 1.2, if the
underwriter advises the Initiating Holders in writing that marketing factors
require a limitation of the number of shares to be underwritten, the Initiating
Holders shall so advise all Holders, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders; provided,
however, that the number of shares of Registrable Securities, other than the
Common Shares, to be included in such underwriting shall not be reduced unless
all other securities, including the Common Shares, are first entirely excluded
from the underwriting. If any Holder of Registrable Securities 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. Any
Registrable Securities which are excluded from the underwriting by reason of the
underwriter's marketing limitation or withdrawn from such underwriting shall be
withdrawn from such registration.
(c) COMPANY SHARES. If the managing 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 others
in such registration if the managing underwriter so agrees and if the number of
Registrable Securities which would otherwise have been included in such
registration and underwriting will not thereby be limited.
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1.3 COMPANY REGISTRATION.
(a) REGISTRATION. If at any time or from time
to time, the Company shall determine to register any of its securities, for its
own account or the account of any of its shareholders, other than a registration
on S-8 relating solely to employee stock option or purchase plans, or a
registration on Form S-4 relating solely to an SEC Rule 145 transaction, or a
registration on any other form or any successor to such forms relating to such
transactions, which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of
Registrable Securities, the Company will:
(i) promptly give to each Holder written
notice thereof and
(ii) include in such registration (and
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request or requests, made within twenty (20)
days after receipt of such written notice from the Company, by any Holder or
Holders, except as set forth in subsection 1.3(b) below.
(b) UNDERWRITING. If the registration of which
the Company gives notice is for a registered public offering involving an
underwriting, the Company shall so advise the Holders as a part of the written
notice given pursuant to subsection 1.3(a)(i). In such event the right of any
Holder to registration pursuant to subsection 1.3 shall be conditioned upon such
Holder's participation in such underwriting and 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 shareholders 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. Notwithstanding any other provision of this
subsection 1.3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and (i) if such
registration is the IPO, the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting, or may exclude
Registrable Securities entirely from such registration and underwriting;
provided that no other securities are registered and sold in the IPO other than
those securities registered and sold by the Company, or (ii) if such
registration is other than the IPO, the underwriter may limit the amount of
securities to be included in the registration and underwriting by the Company's
shareholders; provided however, the number of Registrable Securities to be
included in such registration and underwriting under this subsection 1.3(b)(ii)
shall not be reduced to less than twenty-five percent (25%) of the aggregate
securities included in such registration without the prior consent of at least a
majority of the Holders who have requested their shares to be included in such
registration and underwriting; and provided, further, that the number of shares
of Registrable Securities, other than the Common Shares, to be included in such
underwriting shall not be reduced until all other securities, including the
Common Shares, are first entirely excluded from the underwriting. The Company
shall so advise all Holders of Registrable Securities which 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 first, to the Company; second, among the Purchasers
requesting registration in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by each of such Purchasers as
of the date of
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the notice pursuant to subsection 1.3(a)(i) above; and third, among the other
Holders on a pro rata basis. If any Holder disapproves of the terms of the any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Registrable Securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.
(c) REGISTRATION RIGHTS OF OFFICERS AND
DIRECTORS. Upon any sale by the Company of its securities to the public in a
firmly underwritten public offering, the then existing officers and directors of
the Company shall be entitled to include any of their securities of the Company
in any registration by the Company under this subsection 1.3 provided that such
inclusion shall not diminish the number of securities included by the Company or
the number of Registrable Securities which may be included by the Holders as set
forth in subsection 1.3(b) above in the event that the underwriters determine
that marketing factors require a limitation on the number of shares included in
the registration and underwriting.
1.4 FORM S-3. In addition to the rights and obligations
set forth in subsection 1.2 above, if any Holder requests that the Company file
a registration statement on Form S-3 (or any successor to Form S-3) for a public
offering of shares of Registrable Securities, the reasonably anticipated
aggregate price to the public of which (net of underwriting discounts and
commissions) would exceed $1,000,000 and the Company is then a registrant
entitled to use Form S-3 to register the shares for such an offering, the
Company shall use its best efforts to cause such shares to be registered for the
offering as soon as practicable on Form S-3 (or any successor form to Form S-3);
provided, however the Company shall not be required to effect a registration
pursuant to this subsection 1.4:
(a) in any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(b) if the Company, within ten (10) days of the
receipt of the request of such Holder(s), gives notice of its bona fide
intention to effect the filing of a registration statement with the SEC within
forty-five (45) days of receipt of such request (other than with respect to a
registration statement relating to a Rule 145 transaction, an offering solely to
employees or any other registration which is not appropriate for the
registration of Registrable Securities);
(c) during a period of ninety (90) days
following the effective date of a registration statement;
(d) if the Company shall furnish to such
Initiating 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 detrimental to the Company and its shareholders for such registration
statement to be filed on or before the date filing would be required and it is
therefore essential to defer the filing of such registration statement, in which
case the Company shall have the right to defer such filing for a period of not
more than sixty (60) days after the furnishing of
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such a certificate of deferral, provided that the Company may not defer such
filing pursuant to this subsection 1.4 more than once in any twelve (12) month
period.
In the event such Holders propose to offer the shares of Registrable
Securities pursuant to this subsection 1.4 by means of an underwriting, the
proposed underwriter(s) shall be selected by a majority in interest of the such
Holders and shall be reasonably acceptable to the Company, provided, however,
that in the event such underwriter(s) is (are) not reasonably acceptable to the
Company, the Company shall be required to furnish to the Holders, within twenty
(20) days of the receipt of the request for registration from Holders pursuant
to this subsection 1.4, the names of at least 2 underwriters acceptable to the
Company, who agree to act as underwriter for the proposed offering on terms no
less favorable to the Holders than those terms proposed in writing by the
underwriter(s) selected by the Holders. The Company shall give written notice to
all Holders of the receipt of a request for registration pursuant to this
subsection 1.4 and shall provide a reasonable opportunity for other Holders to
participate in the registration, provided that if the registration is for an
underwritten offering, the terms of subsection 1.2(b), including without
limitation the provisions relating to the exclusion of other securities
(including the Common Shares) prior to any reduction of Registrable Securities
in any Underwriting, shall apply to all participants in such offering.
1.5 EXPENSES OF REGISTRATION. All Registration Expenses
incurred in connection with any registration, qualification or compliance
pursuant to this Section 1 shall be borne by the Company except as follows:
(a) The Company shall not be required to pay for
expenses of any registration proceeding begun pursuant to subsection 1.2, the
request for which has been subsequently withdrawn by the Initiating Holders, and
such withdrawal is not the result of an adverse change in the condition or the
business of the Company, in which latter such case, such expenses shall be borne
pro rata by the Holders requesting such withdrawal.
(b) The Company shall only be required to pay up
to a maximum of $30,000 in fees and/or disbursements of legal counsels for the
Holders.
(c) The Company shall not be required to pay
underwriters' fees, discounts or commissions relating to Registrable Securities.
1.6 REGISTRATION PROCEDURES. In the case of each
registration, qualification or compliance effected by the Company pursuant to
this Rights Agreement, the Company will keep each Holder participating therein
advised in writing as to the initiation of each registration, qualification and
compliance and as to the completion thereof. Except as otherwise provided in
subsection 1.5, at its expense the Company will:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its best efforts
to cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one year.
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(b) Prepare and file with the SEC such
amendments and supplements to such registration statement and the prospectus
used in connection with such registration statement as may be necessary to
comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by such registration statement.
(c) Furnish to the Holders such number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act with respect to the disposition of all
securities covered by such registration statement for a period set forth in
1.6(a).
(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) 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 statements therein not misleading in the light of the circumstances
therein.
(f) 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.
1.7 INDEMNIFICATION.
(a) The Company will indemnify each Holder of
Registrable Securities and each of its officers, directors and partners, and
each person controlling such Holder, with respect to which such registration,
qualification or compliance has been effected pursuant to this Rights Agreement,
and each underwriter, if any, and each person who controls any underwriter of
the Registrable Securities held by or issuable to such Holder, against all
claims, losses, expenses, damages and liabilities (or actions in respect
thereto) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in or incorporated by reference into any
registration statement, prospectus, offering circular, prospectus supplement,
abbreviated term sheet or other document (including any related registration
statement, notification or the like) 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 statement therein not misleading, or any violation or alleged violation by
the Company of the Securities Act, the Securities Exchange Act of 1934, as
amended, ("Exchange Act"), the Trust Indenture Act of 1939, as amended, or any
state securities law applicable to the Company or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any such state law and
relating to action or inaction required
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of the Company in connection with any such registration, qualification of
compliance, and will reimburse each such Holder, each of its officers, directors
and partners, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, within a reasonable amount of
time after incurred for any reasonable legal and any other expenses incurred in
connection with investigating, defending or settling any such claim, loss,
damage, liability or action; provided, however, that the indemnity agreement
contained in this subsection 1.7(a) shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld); and provided further, that the Company will not
be liable in any such case to the extent that any such claim, loss, damage or
liability arises out of or is based on any untrue statement or omission based
upon written information furnished to the Company by an instrument duly executed
by such Holder specifically for use therein. This obligation shall be in
addition to all other rights and remedies available to a Holder.
(b) Each Holder will, if Registrable Securities
held by or issuable to such Holder are included in the securities as to which
such registration, qualification or compliance is being effected, indemnify the
Company and each of its directors and officers, against all claims, losses,
expenses, damages and liabilities (or actions in respect thereof) (collectively
"Damages") arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in or incorporated by reference into any
such registration statement, prospectus, offering circular, prospectus
supplement or abbreviated term sheet or any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse the Company, such
directors and officers, for any reasonable legal or any other expenses incurred
in connection with investigating, defending or settling 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, each underwriter, if any, of
the Company's securities covered by such a registration statement or prospectus
in reliance upon and in conformity with written information furnished to the
Company by the Holder in an instrument duly executed by such Holder specifically
for use therein; provided, however, that the indemnity agreement contained in
this subsection 1.7(b) shall not apply to amounts paid in settlement of any such
claim, loss, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent shall not be unreasonably withheld);
and provided further, that the total amount for which any Holder shall be liable
under this subsection 1.7(b) shall not in any event exceed the lesser of the
aggregate proceeds received by such Holder from the sale of Registrable
Securities held by such Holder in such registration or its pro rata amount of
the Damages based on the number of securities sold by each such Holder. No
holder of Registrable Securities will be required to indemnify any person
against any liability arising from any untrue or misleading statement or
omission contained in any preliminary prospectus if such deficiency was
corrected in the final prospectus or for any liability which arises out of the
failure of any person to deliver a prospectus as required by the Securities Act.
(c) Each party entitled to indemnification under
this subsection 1.7 (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
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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 such party's 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 hereunder, unless such failure resulted in
prejudice to the Indemnifying Party; and provided further, that an Indemnified
Party (together with all other Indemnified Parties which may be represented
without conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party by the counsel retained by the
Indemnifying Party would be inappropriate due to actual or potential differing
interests between such Indemnified Party and any other party represented by such
counsel in such proceeding. No Indemnifying Party, in the defense of any such
claim or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or plaintiff
to such Indemnified Party of a release from all liability in respect to such
claim or litigation.
(d) If the indemnification provided for in this
Section 1.7 is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any losses, claims, damages or liabilities
referred to herein, the Indemnifying Party, in lieu of indemnifying such
Indemnified Party thereunder, shall to the extent permitted by applicable law
contribute to the amount paid or payable by such Indemnified Party as a result
of such loss, claim, damage or liability 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 violation(s) that resulted
in such loss, claim, damage or liability, as well as any other relevant
equitable considerations. The relative fault of the Indemnifying Party and of
the Indemnified Party shall be determined by a court of law 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; provided, that in no event shall any contribution by
a Holder hereunder exceed the proceeds from the offering by such Holder.
(e) The obligations of the Company and Holders
under this Section 1.7 shall survive completion of any offering of Registrable
Securities and the termination of this Agreement. No Indemnifying Party, in the
defense of any such claim or litigation, shall, except with the consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party of a release from all liability
in respect to such claim or litigation.
(f) No Holder shall be obligated to enter into
an underwriting agreement that contains any provisions more onerous to such
Holder than the provisions in this Section 1.7 and such failure to enter into
such agreement shall not adversely affect such Holder's rights set forth herein.
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1.8 INFORMATION BY HOLDER. Any Holder or Holders of
Registrable Securities included in any registration shall promptly furnish to
the Company such information regarding such 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 herein.
1.9 RULE 144 REPORTING. With a view to making available
to Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees at all times to:
(a) make and keep public information available,
as those terms are understood and defined in SEC Rule 144, after ninety (90)
days after the effective date of the first registration filed by the Company for
an offering of its securities to the general public;
(b) file with the SEC in a timely manner all
reports and other documents required of the Company under the Securities Act and
the Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) so long as a Holder owns any Registrable
Securities, to furnish to such Holder 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 ninety (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 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 so filed by the Company as the Holder may reasonably request in
complying with any rule or regulation of the SEC allowing the Holder to sell any
such securities without registration.
1.10 TRANSFER OF REGISTRATION RIGHTS. Holders' rights to
cause the Company to register their securities and keep information available,
granted to them by the Company under subsections 1.2, 1.3, 1.4 and 1.9, may be
assigned to a transferee or assignee of at least twenty percent (20%) of such
Holder's original number of Preferred Shares (and equivalent number of Common
Shares) (as adjusted for stock splits, stock dividends, recapitalization and
like events), provided, that 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. The Company may
reasonably prohibit the transfer of any Holders' rights under this subsection
1.10 to any proposed transferee or assignee who the Company reasonably believes
is a competitor of the Company. Notwithstanding anything else in this subsection
1.10, any Holder may transfer rights to a transferee if such transferee is a
partner, a retired partner, affiliate or family member of such Holder.
1.11 "MARKET STAND-OFF" AGREEMENT. Each Holder and the
Common Holder hereby agree that, during the period of duration (not to exceed
one hundred eighty (180) days) specified by the Company and an underwriter of
common stock or other securities of the Company following the effective date of
a registration statement of the Company filed under the
11
Securities Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase,
pledge or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any securities of the Company held by it at any time during
such period except common stock included in such registration; provided however,
that:
(a) such agreement shall be applicable only to
the first such registration statement of the Company which covers common stock
(or other securities) to be sold on its behalf to the public in an underwritten
offering; and
(b) such agreement shall not be required unless
all officers, directors and five percent (5%) shareholders of the Company and
all other persons with registration rights (whether or not pursuant to this
Agreement) or purchasing common stock of the Company enter into similar
agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares of securities of every other person subject to the
foregoing restriction) until the end of such period.
1.12 TERMINATION OF REGISTRATION RIGHTS. The obligations
of the Company pursuant to this Section 1 ("Registration Rights") shall
terminate with respect to any Holder on the earlier of (i) five (5) years after
the IPO, or (ii) the date on which the Holder can sell all of his/her/its
remaining Registrable Securities under Rule 144 during any three (3) month
period.
2. AFFIRMATIVE COVENANTS OF THE COMPANY AND THE HOLDERS. The Company
hereby covenants and agrees as follows:
2.1 INFORMATION RIGHTS. So long as a Holder holds a
number of Preferred Shares and Conversion Shares which together equal at least
ten percent (10%) of the outstanding Preferred Shares and Conversion Shares (or
in the case of Intel Corporation ("Intel") any Preferred Shares or Conversion
Shares) (each a "Qualified Holder" and collectively the "Qualified Holders"),
the Company shall deliver to each Qualified Holder (i) audited annual financial
statements within 90 days after the end of each fiscal year; (ii) unaudited
quarterly financial statements within 30 days of the end of each fiscal quarter;
(iii) unaudited monthly financial statements within 30 days of the end of each
month; and (iv) an annual budget within 45 days prior to the end of each fiscal
year. In addition, Qualified Holders shall have standard inspection rights to
inspect the Company's books and records and make other investigations at their
own expense; provided, however, that the Company shall not be obligated pursuant
to this Section 2.1 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information. These
information and inspection rights shall terminate upon the IPO. For a period of
three (3) years following the IPO, the Company shall deliver to each Qualified
Holder copies of the Company's 10-K's, 10-Q's, 8-K's and Annual Reports to
Shareholders promptly after such documents are filed with the Securities and
Exchange Commission.
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2.2 CONFIDENTIALITY OF COMPANY INFORMATION. Each
Qualified Holder agrees that it will keep confidential and will not disclose or
divulge any confidential, proprietary or secret information which such Qualified
Holder may obtain from the Company, and which the Company has prominently marked
"confidential", "proprietary" or "secret" or has otherwise identified as being
such, pursuant to financial statements, reports and other materials submitted by
the Company as required hereunder, unless such information is or becomes known
to the Qualified Holder from a source other than the Company without violation
of any rights of the Company, or is or becomes publicly known, or unless the
Company gives its written consent to the Qualified Holder's release of such
information, except that no such written consent shall be required (and the
Qualified Holder shall be free to release such information to such recipient) if
such information is to be provided to a Qualified Holder's counsel or accountant
(and the provision of such information is directly necessary in order for such
recipient to provide services to Qualified Holder), or to an officer, director
or partner of a Qualified Holder, provided that the Qualified Holder shall
inform the recipient of the confidential nature of such information, and such
recipient agrees in writing in advance of disclosure to treat the information as
confidential.
2.3 ASSIGNMENT OF RIGHTS OF INFORMATION. The rights
granted pursuant to subsection 2.1 may be assigned by each Qualified Holder upon
sale or transfer by such Holder of a number of Preferred Shares and Conversion
Shares which together equal at least ten percent (10%) of the outstanding
Preferred Shares and Conversion Shares. Notwithstanding anything else in this
subsection 2.3, rights may not be assigned to a transferee which the Company
reasonably believes is a competitor or intends to become a competitor of the
Company and provided further that any transferee shall agree to become subject
to the obligations of the transferring party hereunder.
2.4 KEY MAN INSURANCE. The Company has obtained and
agrees to use its best efforts to maintain a $2,000,000 renewable term life
insurance policy with a three year term (renewable at the request of the Board
of Directors) for Royal X. Xxxxxx naming the Company as sole beneficiary (the
"Key Man Insurance Policy").
2.5 FUTURE EMPLOYEE ISSUANCES AND AGREEMENTS. All future
issuances of securities of the Company to employees, officers and consultants
shall be made pursuant to stock grant, stock purchase and/or stock option plan
or any other stock incentive program, agreement or arrangement shall be approved
by the Board of Directors and shall provide for (i) ratable vesting over four
years, with no vesting until the end of the first year, (ii) no transfer of
unvested shares, and (iii) a right of first refusal in favor of the Company in
the event of certain transfers of shares to third parties which shall expire on
the initial public offering of the Company's securities, and including a "market
stand-off" provision substantially similar to that set forth in Section 1.11 of
the Rights Agreement, or such other terms as the Board of Directors may from
time to time approve. The Company will require that all current and future
employees of the Company enter into Employee Inventions and Proprietary Rights
Assignment and Confidentiality Agreements in substantially the form provided to
the Holders, with such amendments thereto or deviations therefrom as the Board
of Directors may from time to time approve.
2.6 CONFIDENTIALITY OF INVESTOR INFORMATION. Neither the
Company nor any Holder or Common Holder (other than Intel), without the prior
written consent of Intel, shall use
13
Intel or its affiliates' names or refer to Intel or its affiliates directly or
indirectly in connection with Intel or its affiliates' relationship with the
Company in any advertisement, news release or professional or trade publication,
or in any other manner, unless required by law. The parties agree that without
the prior written consent of Intel, there will be no press release or other
public statement (an "Announcement") issued by any party which refers directly
or indirectly to Intel's participation as a party to this Agreement or Intel's
participation in the transactions contemplated hereby. The parties further agree
that, apart from an Announcement, the parties will keep the terms and conditions
of this Agreement, the Series A Agreement, the Series B Agreement and the Series
C Agreement and any other agreements related to or entered into in connection
with these agreements (collectively, the "Financing Agreements") in strictest
confidence. These restrictions shall not prohibit disclosure to the parties'
counsel, accountants and professional advisors. If any of the parties determines
that it is required by law to disclose the terms and conditions of any or all of
the Financing Agreements, or to file any or all of the Financing Agreements with
the SEC, such party or parties shall, a reasonable time before making any such
disclosure or filing, consult with Intel regarding such filing and seek
confidential treatment for such portions of those agreements as may be requested
by Intel. Notwithstanding the foregoing, the Company may disclose the existence
of any or all of the Financing Agreements to bona fide potential investors or
its general or limited partners or investors (in the case of a venture capital
fund only) who are under obligations of nondisclosure, similar to those
contained herein and which the Company believes in good faith are seriously
considering investing in the Company.
2.7 OBSERVATION RIGHTS. For so long as Intel holds any
shares Series A or Series A-1 Preferred Stock, Intel shall have the right, at
Intel's expense, to designate a representative to attend all meetings of
Company's Board of Directors in a non-voting observer capacity, and, in this
respect, the Company shall give Intel copies of all notices, minutes, consents
and other materials that it provides to its directors; provided, however, that
Intel and its representative shall agree to hold in confidence and trust all
information so provided. Meetings to be held by telephone conference and actions
to be taken by consent shall not be prohibited provided notice and an
opportunity to participate is given to Intel.
2.8 RIGHT OF FIRST REFUSAL ON NEW ISSUANCES.
(a) If, at any time prior to the termination of
this right of first refusal pursuant to subsection 2.8(f), the Company should
desire to issue in a transaction not registered under the Securities Act in
reliance upon a claimed exemption thereunder, any Equity Securities (as
hereinafter defined), it shall give each Holder the first right to purchase such
Holder's pro rata share (or any part thereof) of all of such privately offered
Equity Securities on the same terms as the Company is willing to sell such
Equity Securities to any other person. Each Holder's pro rata share of the
Equity Securities shall be equal to that percentage of the outstanding Common
Stock of the Company held by such Holder on the date hereof. For purposes of
this subsection 2.8, the outstanding Common Stock of the Company shall consist
of (i) outstanding shares of Common Stock, and (ii) shares of Common Stock
issued or issuable upon conversion of any then outstanding Preferred Stock of
the Company.
(b) Prior to any sale or issuance by the Company
of any Equity Securities, the Company shall notify each Holder in writing of its
intention to sell and issue such
14
securities, setting forth the terms under which it proposes to make such sale.
Within thirty (30) days after receipt of such notice, each Holder shall notify
the Company whether such Holder desires to exercise the option to purchase such
Holder's pro rata share (or any part thereof) of the Equity Securities so
offered. If a Holder elects to purchase such Holder's pro rata share, then such
Holder shall have a right of over-allotment such that if any other Holder fails
to purchase such Holder's pro rata share of the Equity Securities, such
Holder(s) who have elected to purchase their pro rata shares may purchase, on a
pro rata basis, that portion of the Equity Securities which such other Holders
elected not to purchase.
(c) After termination of the thirty (30) day
period specified in subsection 2.8(b) above, the Company may, during a period of
sixty (60) days following the end of such thirty (30) day period, sell and issue
such Equity Securities as to which the Holders do not indicate a desire to
purchase to another person as well as those additional shares of Equity
Securities it originally intended to issue to other persons, upon the same terms
and conditions as those set forth in the notice to the Holders. In the event the
Company has not sold the Equity Securities, or has not entered into an agreement
to sell the Equity Securities, within said sixty (60) day period, the Company
shall not thereafter issue or sell any Equity Securities without first offering
such securities to the Holders in the manner provided above.
(d) If a Holder gives the Company notice that
such Holder desires to purchase any of the Equity Securities offered by the
Company, payment for the Equity Securities shall be by check, or wire transfer,
against delivery of the Equity Securities at the executive offices of the
Company within ten (10) days after giving the Company such notice, or, if later,
the closing date for the sale of such Equity Securities. The Company shall take
all such action as may be required by any regulatory authority in connection
with the exercise by a Holder of the right to purchase Equity Securities as set
forth in this subsection 2.8.
(e) The right of first refusal contained in this
Section 2 shall not apply to the issuance by the Company of Equity Securities
(i) of up to 2,647,807 shares of Common Stock reserved for issuance to
employees, consultants, directors or officers of the Company pursuant to stock
grant, stock purchase and/or stock option plans or any other stock incentive
program, agreement or arrangement approved by the Board of Directors (including
approval by the Series A, Series B and Series C Preferred designees), (ii) as
part of an acquisition by the Company of all or substantially all of the assets
or shares of another company or entity whether through a merger, exchange,
reorganization or the like approved by Board of Directors (including approval by
the Series A, Series B and Series C Preferred designees), (iii) pursuant to
equipment financing or leasing arrangements or in connection with strategic
partnering transactions approved by the Company's Board of Directors (including
approval by the Series A, Series B and Series C Preferred designees), (iv)
shares of Series C Preferred Stock sold pursuant to the Series C Agreement after
the Initial Closing (as defined therein), (v) issued upon conversion of the
Preferred Shares, (vi) issued in connection with any stock split, stock
dividend, recapitalization or similar event approved by Board of Directors
(including approval by the Series A, Series B and Series C Preferred designees)
or (vii) issued in connection with the IPO (as defined in subsection 1.2 above)
approved by Board of Directors.
15
(f) The right of first refusal contained in this
subsection 2.8 shall terminate upon the closing of the IPO (as defined in
subsection 1.2 above).
(g) The term "Equity Securities" shall mean (i)
Common Stock, rights, options or warrants to purchase Common Stock; (ii) any
security other than Common Stock having voting rights in the election of the
Board of Directors, not contingent upon a failure to pay dividends; (iii) any
security convertible into or exchangeable for any of the foregoing; and (iv) any
agreement or commitment to issue any of the foregoing.
(h) A Holder's right to purchase any Equity
Securities pursuant to this subsection 2.8 may be assigned by a Holder to an
affiliate of a Holder. For the purposes of this subsection 2.8, an "affiliate"
shall mean any partner or shareholder of a Holder or any person or entity that
directly or indirectly through one or more intermediaries controls or is
controlled by or is under common control with a Holder.
3. AGREEMENTS BETWEEN COMMON HOLDER AND HOLDERS.
3.1 HOLDERS' RIGHT OF FIRST REFUSAL UPON SECONDARY SALE
OF COMMON STOCK.
(a) In the event the Company is unable to or
elects not to exercise its right of first refusal to repurchase shares of Common
Stock issued to the Common Holder, Holders shall have a right of first refusal
as described in this Section 3.1, subordinate to the Company's right, to
purchase any shares of Common Stock proposed to be sold by the Common Holder at
any time prior to the Company's initial public offering. This right of first
refusal shall be shared pro rata among the Holders. A pro rata share, for
purposes of this section, is the ratio of the number of shares of capital stock
then held by each Holder to the sum of the total number of shares of Common
Stock then outstanding each on an as converted to Common Stock basis held by all
Holders.
(b) With respect to any proposed transfer by the
Common Holder (a "Transferring Shareholder") of any shares of Common Stock (the
"Offered Shares"), the Transferring Shareholder shall first provide the Holders
a right to purchase such Offered Shares by delivery of an offer notice (an
"Offer Notice") to all Holders. The Offer Notice shall disclose in reasonable
detail the identity of the prospective transferee(s), the proposed number of
Offered Shares to be transferred and the proposed terms and conditions of the
transfer. The purchase price specified in the Offer Notice shall be payable
solely in cash or marketable securities at the closing of the transaction or in
installments over time. Each Holder may elect to purchase that Holder's pro rata
share of such Offered Shares specified in the Offer Notice at the price and on
the terms specified therein by delivering written notice of such election to the
Transferring Shareholder within thirty (30) days after delivery of the Offer
Notice. Any Offered Shares not elected to be purchased by the end of such thirty
(30) day period will be reoffered for an additional fifteen (15) day period by
the Transferring Shareholder on a pro rata basis to the Holders who have elected
to purchase Offered Shares. So long as any Offered Shares remain to be acquired
pursuant to this Section 3.1, comparable pro rata offers shall be made to those
Holders who continue to be eligible pursuant to this Section 3.1 until no such
Holders desires to acquire any more Offered Shares. If any Holders have elected
to purchase Offered Shares from the Transferring Shareholder, the transfer of
such Offered Shares shall be consummated within
16
ninety (90) days after the delivery of the Offer Notice. To the extent that the
Holders have not elected to purchase all of the Transferring Shareholder's
Offered Shares being offered, the Transferring Shareholder may, within sixty
(60) days after the delivery of the Offer Notice and subject to the provisions
of Section 3, if applicable, transfer any remaining Offered Shares to the
transferee(s) identified in the Offer Notice at a price not less than the price
per share specified in the Offer Notice and on other terms no more favorable to
such transferee(s) than offered to the Holders in the Offer Notice.
(c) The right of first refusal granted under
this Section 3.1 shall expire upon the closing of the first firm commitment
underwritten offering of the Company's securities to the public pursuant to an
effective registration statement under the Securities Act.
(d) The right of first refusal granted under
this Section 3.1 may be assigned by a Holder to a transferee or assignee
reasonably acceptable to the Company in connection with any transfer or
assignment of Preferred Shares or securities issuable upon conversion thereof,
or in exchange therefor, by a Holder provided that (i) such transfer may
otherwise be effected in accordance with applicable securities laws, and (ii)
such assignee or transferee acquires at least 100,000 Preferred Shares (or
shares of Common Stock issued upon conversion thereof) (appropriately adjusted
for stock splits, stock dividends, recapitalizations or the like).
Notwithstanding the foregoing, such rights of first refusal may be assigned to
another Holder or any constituent partner or affiliate of a Holder, without
compliance with item (ii) above, provided written notice thereof is promptly
given to the Company.
(e) PERMITTED TRANSFERS. The restrictions
contained in this Section 3.1 shall not apply with respect to any transfer of
shares to or among the Common Holder's immediate family and trusts for the
benefit of such individual or such individual or such individual's family;
provided that the restrictions contained in this Section 3 shall continue to be
applicable to the Common Stock after any such transfer; and further provided
that the transferees of such shares shall have agreed in writing to be bound by
the provisions of this Agreement affecting the shares so transferred.
17
3.2 RIGHT OF CO-SALE.
(a) THE RIGHT. If at any time the Common Holder
proposes to sell or otherwise transfer any Common Shares to parties in a
transaction (the "Transaction") and to the extent that the Company and the
Holders waive any rights of first refusal they may have with respect to such
shares then any Holder (a "Selling Holder" for purposes of this Section 3.2)
which notifies such Common Holder in writing within 30 days after receipt of the
notification from such Common Holder referred to in subsection 3.2(c), shall
have the opportunity to sell up to a pro rata portion of the Common Shares which
the Common Holder proposes to sell to such third party in the Transaction (which
are not purchased by the Company, the Holders or their respective assigns). In
such instance, the Common Holder shall assign so much of his interest in the
proposed agreement of sale as the Selling Holder shall be entitled to and shall
request hereunder, and the Selling Holder shall assume such part of the
obligations of the Common Holder under such agreement as shall relate to the
sale of the securities by the Selling Holder. For the purposes of this Section
3.2, the "pro rata portion" which the Selling Holder shall be entitled to sell
shall be an amount of Common Shares equal to a fraction of the total amount of
Common Shares proposed to be sold to such third party. The numerator of such
fraction shall be the number of Equity Securities (assuming the conversion of
all such securities to Common Stock) owned by a Selling Holder and the
denominator shall be the total number of Equity Securities (assuming the
conversion of all such securities to Common Stock) owned by all participating
Selling Holders and the Common Holder proposing to sell shares in the
Transaction. Each Selling Holder shall notify the Common Holder whether it
elects to sell an amount equal to or less than its pro rata share of the Common
Shares so offered. Each Selling Holder shall be entitled to apportion Common
Shares to be sold among its partners and affiliates (as defined in subsection
2.8 above), provided that such Selling Holder notifies the Common Holder of such
allocation, and provided that such allocation does not threaten the Company's
reliance on any exemption from the registration provisions of the Securities Act
or the applicable qualifications provisions.
(b) NOTICE. Prior to any sale by the Common
Holder of any Common Shares, the Common Holder shall notify each Holder, in
writing, of his, her or its intention to sell and issue such securities (the
"Offered Securities"), setting forth in reasonable detail the general terms
under which he proposed to make such sale including the number of Common Shares
to be sold or transferred, the nature of the sale or transfer, the consideration
to be paid and the identity of the Holder. Within thirty (30) days after receipt
of such notice, any Holder who desires to exercise his, her or its rights under
this Section 3.2 shall notify the Common Holder that it desires to sell its pro
rata share of the Offered Securities. Any securities which Holders would
otherwise have been entitled to sell under this Section 3.2 but which Holders
have not elected to sell by the end of such thirty (30) day period will be
available for sale on a pro rata basis to the Selling Holders for an additional
ten (10) day period. So long as any Offered Securities remain to be sold
pursuant to this Section 3.2, comparable pro rata sales may be made by those
Selling Holders who continue to be eligible pursuant to this Section 3.2 until
no Selling Holders desire to sell any more securities. Each Selling Holder shall
be entitled to apportion Offered Securities to be sold among its partners and
affiliates (as defined in subsection 2.8 above), provided that such Selling
Holder notifies the Common Holder of such allocation.
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(c) WAIVER OF RIGHT. If within 30 days after the
Common Holder gives his aforesaid notice to the Holders, the Holders do not
notify the Common Holder that they desire to sell their pro rata portions of the
Common Shares described in such notice for the price and on the terms and
conditions set forth therein, then the Common Holder may sell such Common Shares
as to which the Holders do not elect to sell, provided such sale occurs not
later than ninety (90) days following delivery of notice to the Holders. Any
such sale shall be made only to persons identified in the Common Holder's notice
and at the same price and upon the same terms and conditions as those set forth
in the notice. In the event the Common Holder has not sold the Common Shares or
entered into an agreement to sell the Common Shares within ninety (90) days
after delivering notice to the Holders, the Common Holder shall not thereafter
sell any Common Shares without first notifying the Holders in the manner
provided above.
(d) LIMITATIONS TO RIGHTS OF CO-SALE. Without
regard and not subject to the provisions of this Section 3.2;
(i) The Common Holder may sell or
otherwise assign, without consideration, Common Shares to any or all of his
ancestors, descendants, spouse, or members of his immediate family, or to a
custodian, trustee (including a trustee of a voting trust), executor, or other
fiduciary for the account of his ancestors, descendants, spouse, or members of
his immediate family without compliance with this Section 3.2, provided that
each such transferee or assignee, prior to the completion of the sale, transfer,
or assignment, shall have executed documents assuming the obligations of such
Common Holder under this Agreement with respect to the transferred securities;
(ii) The Common Holder may sell, transfer
or pledge up to five percent (5%), in the aggregate, of the Common Stock of the
Company held by such Common Holder as of the date hereof without compliance with
this Section 3.2; or
(iii) The Common Holder may sell the
Common Stock of the Company held by such Common Holder in connection with the
IPO without compliance with this Section 3.2.
3.3 CONDITION TO TRANSFER. All transferees of Common
Shares or any interest therein other than the Company shall be required as a
condition of such transfer to agree in writing (in a form satisfactory to the
Company) that they will receive and hold such shares of Common Shares or
interests subject to the provisions of the Common Holder's original stock
purchase agreement, including "Market Stand-Off" provisions.
3.4 LEGENDS. All instruments evidencing Common Shares
held by the Common Holder shall be legended, describing the obligations of the
Common Holder under this Section 3.
3.5 ADJUSTMENTS. For purposes of this Section 3, the
stock of the Company shall be arithmetically adjusted for stock dividends, stock
splits, recapitalizations and the like.
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3.6 DURATION. Notwithstanding anything in this Section 3
to the contrary, for the period of time between sixty (60) and ninety (90) days
following delivery of notice to the Holders, the Common Holder shall be entitled
to sell any and all Common Shares which such Common Holder included in his or
her notice to Holders and for which the Company and the Holders have not
exercised their rights of first refusal and the Holders have not exercised their
right of co-sale.
3.7 TERMINATION. The obligations of the Common Holder
under this Section 3 shall terminate and be of no further force and effect upon
the closing of the registration statement relating to the IPO (as defined in
subsection 1.2 above).
3.8 NO WAIVER. The exercise or non-exercise of the rights
of a Holder hereunder to participate in one or more sales of Common Shares made
by the Common Holder shall not adversely affect their rights to participate in
subsequent sales of Common Shares subject to Section 3.
4. VOTING AGREEMENT.
4.1 BOARD OF DIRECTORS.
(a) From and after the date of this Agreement
and until the provisions of this Section 4 cease to be effective, each Common
Holder and Preferred Stockholder shall vote all shares of Common Stock and
Preferred Stock of the Company over which such shareholder has voting control,
and will take all other necessary or desirable actions within his or its control
(whether in his or its capacity as a shareholder, director or officer of the
Company or otherwise), and the Company will take all necessary and desirable
actions within its control, in order to cause:
(i) the election to the Board of
Directors of the Company of
(A) One (1) representative
designated by Information Technology Ventures, who initially shall be Xxxx
Xxxxxxx;
(B) One (1) representative
designated by Canaan Partners, who initially shall be Xxxxxx Xxxxx;
(C) One (1) representative
designated by Softbank Technology Ventures V, L.P., who shall initially be Xxxxx
Xxxxxx;
(D) One (1) representative
designated by the holders of Common Stock or their assignees, who shall
initially be Royal Farros;
(E) Three (3) representatives
who are not employed by the Company and who are industry experts designated by
mutual agreement of the Common Holder and the Preferred Purchasers (determined
on the basis of a vote of a majority of the then outstanding shares of Preferred
Stock), voting on an as-converted basis;
20
(ii) in the event that any representative
designated hereunder for any reason ceases to serve as a member of the Board of
Directors during his or her term of office, the resulting vacancy on the Board
of Directors to be filled by a representative designated as provided in clause
(i) above by the person or persons entitled to designate such representative
under clause (i) above.
(b) The Company shall pay the reasonable out-of-
pocket expenses incurred by each director in connection with attending the
meetings of the Board of Directors and any committee thereof and in connection
with any projects assigned to such director by the Board of Directors and any
committee thereof.
4.2 LEGENDS ON STOCK CERTIFICATES. In addition to the
legend in Sections 4.2(a) and 4.2(c) of the Series A Agreement, the Series B
Agreement and the Series C Agreement, the certificates representing shares held
by the Founders and the Preferred Stockholders shall bear the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN
VOTING LIMITATIONS AND RESTRICTIONS AND RESTRICTIONS ON TRANSFER SET
FORTH IN A RIGHTS AGREEMENT AMONG THE COMPANY, THE HOLDER HEREOF AND
CERTAIN OTHER SHAREHOLDERS OF THE COMPANY, A COPY OF WHICH AGREEMENT IS
ON FILE AT THE PRINCIPAL OFFICES OF THE COMPANY.
4.3 APPLICATION OF AGREEMENT TO AFTER-ACQUIRED-SHARES.
All of the provisions of this Section 4 shall apply to all of the shares of
Common Stock and Preferred Stock of the Company, whether issued before or after
the Closing Date, and all securities issued as a replacement for the shares or
with respect to the shares as a result of any stock dividend, stock split or
other similar event.
4.4 TERM OF THE VOTING AGREEMENT. This voting agreement
shall terminate on the earlier of (a) the consummation by the Company of any
underwritten public offering of the Company's securities having an aggregate
value of at least $10,000,000, (b) the sale of the Company (through a merger,
consolidation, sale of all or substantially all of its assets or stock), or (c)
the effective time of the liquidation of the Company.
4.5 BINDING EFFECT ON TRANSFEREES. This Section 4 and all
of the terms, covenants, and conditions herein contained shall be binding upon
and inure to the benefit of all of the parties hereto and their respective
transferees, successors, heirs, executors, administrators and assigns. A
condition precedent to the transfer of any of the Common Stock or Preferred
Stock of the Company to any third party by the Common Holder or Purchaser is
that the transferee shall become a party to this voting agreement and shall
execute any and all instruments, and take all other actions, necessary to carry
out the purposes of this voting agreement.
4.6 INTERPRETATION. The terms of this Section 4 shall
supersede Section 5 of Article III of the Company's Third Amended and Restated
Articles of Incorporation.
5. GENERAL.
21
5.1 WAIVERS AND AMENDMENTS. With the written consent of
the record or beneficial holders of at least a majority of the Registrable
Securities, the obligations of the Company and the rights of the parties under
this agreement may be waived (either generally or in a particular instance,
either retroactively or prospectively, and either for a specified period of time
or indefinitely), and with the same consent the Company, when authorized by
resolution of its Board of Directors, may enter into a supplementary agreement
for the purpose of adding any provisions to or changing in any manner or
eliminating any of the provisions of this Agreement; provided, however, that no
such modification, amendment or waiver shall reduce the aforesaid percentage of
Registrable Securities without the consent of all of the Holders of the
Registrable Securities. Upon the effectuation of each such waiver, consent,
agreement of amendment or modification, the Company shall promptly give written
notice thereof to the record holders of the Registrable Securities who have not
previously consented thereto in writing. This Agreement or any provision hereof
may be changed, waived, discharged or terminated only by a statement in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought, except to the extent provided in this subsection 5.1.
5.2 GOVERNING LAW. This Agreement shall be governed in
all respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
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.
5.4 ENTIRE AGREEMENT. Except as set forth below, this
Agreement and the other documents delivered pursuant hereto constitute the full
and entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and this Agreement shall supersede and cancel all
prior agreements between the parties hereto with regard to the subject matter
hereof.
5.5 REMEDIES. The rights of the parties under this
Agreement are unique and, accordingly, the parties intend that in addition to
all other legal or equitable remedies available, injunctive relief and the
remedy of specific performance may be utilized in the event of the breach or
threatened breach of this Agreement.
5.6 NOTICES, ETC. All notices and other communications
required or permitted hereunder shall be in writing and shall be delivered by
overnight courier service of mailed by first class mail, postage prepaid,
certified or registered mail, return receipt requested, addressed (a) if to any
Purchaser, at such party's address as set forth in the Company's records, or at
such other address as such party shall have furnished to the Company in writing,
or (b) if to the Company, at Veterans Square, 0000 Xxxxxxx Xxxxx, Xxxxxxx Xxxx,
Xxxxxxxxxx 00000, or at such other address as the Company shall have furnished
to the Purchaser in writing.
5.7 SEVERABILITY. In case any provision of this Agreement
shall be invalid, illegal, or unenforceable, the validity, legality and
enforceability of the remaining provisions of
22
this Agreement or any provision of the other Agreements shall not in any way be
affected or impaired thereby.
5.8 TITLES AND SUBTITLES. The titles of the sections and
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
5.9 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
23
IN WITNESS WHEREOF, the parties hereby have executed this Rights
Agreement as of the date first above written.
"COMPANY"
iPrint, Inc., a California corporation
By:/s/ Royal X. Xxxxxx
----------------------------------------
Royal X. Xxxxxx, President
In consideration of the execution and delivery of this Rights Agreement and the
transactions contemplated hereby, the undersigned hereby have executed this
Rights Agreement as of the date first above written.
"COMMON HOLDER"
/s/ Royal X. Xxxxxx
-------------------------------------------
Royal X. Xxxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
CANAAN EQUITY, L.P.
/s/ Xxxxxx Xxxxx
-------------------------------------------
By: Canaan Equity Partners L.L.C.
Name: Xxxxxx Xxxxx
Title: Member/Manager
XXXXXX XXXXX
/s/ Xxxxxx Xxxxx
-------------------------------------------
Xxxxxx Xxxxx
DAWNTREADER FUND I LP
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Name: Xxxxxx Xxxxxxxx
------------------------------------
Title: Managing Director
------------------------------------
BAYVIEW INVESTORS, LTD.
By: /s/ Xxxx Xxxxx
------------------------------------
Name: Xxxx Xxxxx
------------------------------------
Title: Authorized Signatory
-------------------------------------
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
XXXXXX XXXXXXX XXXXXX AND
XXXXXXXX XXXXXXXXX XXXXXX,
HUSBAND AND WIFE AS COMMUNITY PROPERTY
/s/ Xxxxxx Xxxxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxxx Xxxxxx
/s/ Xxxxxxxx Xxxxxxxxx Xxxxxx
-------------------------------------------
Xxxxxxxx Xxxxxxxxx Xxxxxx
XXXXXX XXXXXX
/s/ Xxxxxx Xxxxxx
-------------------------------------------
Xxxxxx Xxxxxx
XXXX X. XXXXXXXXX
/s/ Xxxx X. Xxxxxxxxx
-------------------------------------------
Xxxx X. Xxxxxxxxx
XXXX HELZBERG
/s/ Xxxx Helzberg
-------------------------------------------
Xxxx Helzberg
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
AT&T VENTURE FUND II, LP
By: Venture Management, LLC,
its General Partner
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
SPECIAL PARTNERS FUND, LP
By: Venture Management III, LLC,
its General Partner
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
SPECIAL PARTNERS FUND INTERNATIONAL, LP
By: Venture Management III, LLC,
its Investment General Partner
By: /s/ Xxxx Xxxxxxx
----------------------------------------
Name: Xxxx Xxxxxxx
Title: Manager
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
GCWF INVESTMENT PARTNERS
By: Xxxx Xxxx Corporation, Managing
Partner
By: /s/ Xxxxxxx X. Xxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxx
Title: President and Chief Financial
Officer
XXXXXX XXXXX AND XXXXX XXXXX TRUSTEES OF
THE CHASE 1991 REVOCABLE TRUST DATED
04/02/91
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Xxxxxx Xxxxx
By: /s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
ROYAL X. XXXXXX
/s/ Royal X. Xxxxxx
-------------------------------------------
Royal X. Xxxxxx
XXXXXXX X. XXXXX
/s/ Xxxxxxx X. Xxxxx
-------------------------------------------
Xxxxxxx X. Xxxxx
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
XXXXXXX AND XXXXX XXXXXXX
/s/ Xxxxxxx Xxxxxxx
-------------------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxxx Xxxxxxx
-------------------------------------------
Xxxxx Xxxxxxx
INFORMATION TECHNOLOGY VENTURES L.P.,
a California limited partnership
By: ITV Management, LLC,
a California limited liability
company
Title: General Partner
/s/ Xxx Xxx
-----------------------------------
Name: Xxx Xxx
Title: Principal Member
ITV AFFILIATES FUND, L.P.,
a California limited partnership
By: ITV Management, LLC,
a California limited liability
company
Title: General Partner
/s/ Xxx Xxx
-----------------------------------
Name: Xxx Xxx
Title: Principal Member
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
XXXXXXXXXX X. XXXXXX AND XXXXX X. XXXXX III
/s/ Xxxxxxxxxx X. Xxxxxx
-------------------------------------------
Xxxxxxxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxx III
-------------------------------------------
Xxxxx X. Xxxxx III
(By Xxxxxxxxxx X. Xxxxxx, Attorney-
in-Fact)
DELAWARE CHARTER GUARANTEE AND TRUST COMPANY
CUST FOR XXXXXX XXXXXX KRUBERG, MD SEP XXX
By:
----------------------------------------
X. Xxxxxx Kruberg, M.D.
JO XXX XXXXX XXXXXX AND XXXXX X. XXXXXX,
M.D. COMM PROP
/s/ Jo Xxx Xxxxx Xxxxxx
-------------------------------------------
Jo Xxx Xxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxx
-------------------------------------------
Xxxxx X. Xxxxxx
INTEL CORPORATION
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
--------------------------------------
Title: Vice President and Treasurer
-------------------------------------
PURCHASER'S COUNTERPART SIGNATURE PAGE
IPRINT, INC. SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
XX XXXXXX
/s/ Xx Xxxxxx
-------------------------------------------
Xx Xxxxxx
SOFTBANK TECHNOLOGY
VENTURES V, L.P.
By: /s/ Xxxxx Xxxxxx
----------------------------------------
Name: Xxxxx Xxxxxx
--------------------------------------
Title: Managing Director
-------------------------------------
