EXHIBIT 4.2
NOOSH, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
APRIL 4, 2000
Table Of Contents
Page
Section 1. General.......................................................... 2
1.1 Definitions...................................................... 2
Section 2. Registration; Restrictions On Transfer........................... 3
2.1 Restrictions on Transfer......................................... 3
2.2 Demand Registration.............................................. 4
2.3 Piggyback Registrations.......................................... 6
2.4 Form S-3 Registration............................................ 7
2.5 Expenses of Registration......................................... 8
2.6 Obligations of the Company....................................... 9
2.7 Termination of Registration Rights............................... 9
2.8 Delay of Registration; Furnishing Information.................... 10
2.9 Indemnification.................................................. 10
2.10 Assignment of Registration Rights................................ 12
2.11 Amendment of Registration Rights................................. 12
2.12 Limitation on Subsequent Registration Rights..................... 12
2.13 "Market Stand-Off" Agreement; Agreement to Furnish Information... 13
2.14 Rule 144 Reporting............................................... 13
Section 3. Covenants Of The Company......................................... 14
3.1 Basic Financial Information and Reporting........................ 14
3.2 Inspection Rights................................................ 14
3.3 Confidentiality of Records....................................... 15
3.4 Reservation of Stock............................................. 15
3.5 Employee Proprietary Information and Inventions Agreement........ 15
3.6 Key Man Insurance................................................ 15
3.7 Stock Vesting.................................................... 15
3.8 Observer Rights.................................................. 15
3.9 Qualified Small Business Stock................................... 16
3.10 Potential Conversion of Class B Common Stock..................... 16
3.11 Termination of Covenants......................................... 16
i.
Table Of Contents
(Continued)
Page
Section 4. Rights Of First Refusal.......................................... 17
4.1 Subsequent Offerings............................................. 17
4.2 Exercise of Rights............................................... 17
4.3 Issuance of Equity Securities to Other Persons................... 17
4.4 Termination and Waiver of Rights of First Refusal................ 18
4.5 Transfer of Rights of First Refusal.............................. 18
4.6 Excluded Securities.............................................. 18
Section 5. Miscellaneous.................................................... 19
5.1 Governing Law.................................................... 19
5.2 Survival......................................................... 19
5.3 Successors and Assigns........................................... 19
5.4 Entire Agreement................................................. 19
5.5 Severability..................................................... 19
5.6 Amendment and Waiver............................................. 19
5.7 Delays or Omissions.............................................. 20
5.8 Notices.......................................................... 20
5.9 Attorneys' Fees.................................................. 20
5.10 Titles and Subtitles............................................. 20
5.11 Prior Agreement.................................................. 20
5.12 Aggregation of Stock............................................. 20
5.13 Counterparts..................................................... 20
5.14 Waiver of Right of First Offer................................... 21
5.15 Publicity........................................................ 21
5.16 Consent to Jurisdiction, Jury Waiver............................. 21
ii.
NOOSH, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amended and Restated Investor Rights Agreement (the "Agreement") is
entered into as of the 4/th/ day of April, 2000, by and among NOOSH, Inc., a
Delaware corporation (the "Company"), the holders of the Company's Series A
Preferred Stock (the "Series A Stock"), the holders of the Company's Series B
Preferred Stock (the "Series B Stock"), the holders of the Company's Series C
Preferred Stock (the "Series C Stock"), the holders of the Company's Series D
Preferred Stock (the "Series D Stock") and the purchaser of the Company's Series
E Preferred Stock (the "Series E Stock") set forth on Exhibit A of that certain
Series E Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement"). The purchaser of the Series E Stock shall be referred to
hereinafter as the "Purchaser" or "GE," and the holders of the Series A Stock
(the "Series A Holders"), the holders of the Series B Stock (the "Series B
Holders"), the holders of the Series C Stock (the "Series C Holders"), the
holders of Series D Stock (the "Series D Holders") and the Purchaser shall be
referred to hereinafter, together, as the "Investors" and each individually as
an "Investor."
Recitals
Whereas, the Company proposes to sell and issue up to eight hundred
thousand (800,000) shares of its Series E Stock to the Purchaser pursuant to the
Purchase Agreement (the "Series E Stock");
Whereas, the Company, the Series A Holders, the Series B Holders, the
Series C Holders and the Series D Holders previously entered into that certain
Amended and Restated Investor Rights Agreement, dated as of January 25, 2000
(the "Prior Agreement");
Whereas, as a condition of entering into the Purchase Agreement, the
Purchaser has requested that the Company, the Series A Holders, the Series B
Holders, the Series C Holders, and Series D Holders agree to amend and restate
the Prior Agreement to extend to them registration rights, information rights
and other rights as set forth below; and
Whereas, pursuant to Section 5.6 of the Prior Agreement, the holders of at
least seventy-five percent (75%) of the Registrable Securities (as defined
therein) have agreed to amend and restate the Prior Agreement and supersede said
Prior Agreement in its entirety with this Agreement.
Now, Therefore, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Purchase Agreement, the parties mutually agree that the Prior Agreement shall be
amended and restated to read in its entirety as follows:
1.
SECTION 1. General
1.1 Definitions. As used in this Agreement the following terms shall
have the following respective meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Form S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Holder" means any person owning of record Registrable Securities
that have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.10 hereof.
"Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"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 effectiveness of such
registration statement or document.
"Registrable Securities" means (a) Common Stock of the Company
issued or issuable upon conversion of the Series A Stock, Series B Stock, Series
C Stock, Series D Stock and Series E-1 Stock (b) Common Stock of the Company
issued upon conversion of the Series E Stock, (c) any Common Stock issued to
Xxxx Xxx-Xxxxxxx, including Common Stock transferred by Xxxx Xxx-Xxxxxxx to the
Xxx-Xxxxxxx Family Generation Skipping Trust, dated November 6, 1998, on or
before the date of this Agreement (the "Founder Shares"); (d) Common Stock of
the Company issued upon the exercise of warrants issued to X.X. Xxxxxxxxx & Sons
Company ("RRD") as of January 25, 2000 and to GE as of the date hereof (the "GE
Warrant"); (e) Common Stock of the Company issued upon conversion of the Class B
Common Stock issued upon conversion of the Series E Stock or upon exercise of
the GE Warrant and (f) any Common Stock of the Company issued as (or issuable
upon the conversion or exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities. Notwithstanding the
foregoing, Registrable Securities shall not include any securities sold by a
person to the public either pursuant to a registration statement or Rule 144 or
sold in a private transaction in which the transferor's rights under Section 2
of this Agreement are not assigned pursuant to the terms of this Agreement.
"Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are then issuable pursuant to then exercisable or convertible
securities.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration
2.
and filing fees, printing expenses, fees and disbursements of counsel for the
Company, reasonable fees and disbursements of a single special 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).
"SEC" or "Commission" means the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale.
"Series E-1 Stock" shall mean the Series E-1 Preferred Stock issued
upon conversion of the Series E Stock.
"Shares" shall mean the Company's Series A Stock issued pursuant to
the Company's Series A Preferred Stock Purchase Agreement, dated November 20,
1998, and held by the Investors listed on Exhibit A thereto and their permitted
assigns, the Company's Series B Stock issued pursuant to the Series B Preferred
Stock Purchase Agreement, dated April 26, 1999, and held by the Investors listed
on Exhibit A thereto and their permitted assigns, the Company's Series C Stock
issued pursuant to the Series C Preferred Stock Purchase Agreement, dated
November 3, 1999, and held by the Investors listed on Exhibit A thereto and
their permitted assigns, the Company's Series D Stock issued pursuant to the
Series D Preferred Stock Purchase Agreement, dated January 25, 2000, and held by
the Investors listed on Exhibit A thereto and their permitted assigns, and the
Company's Series E Stock issued pursuant to the Purchase Agreement and held by
the Purchaser listed on Exhibit A thereto and its permitted assigns.
SECTION 2. Registration; Restrictions On Transfer
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares, the Class B Common Stock issuable upon conversion of the
Series E Stock (the "Class B Common Stock") or the Registrable
Securities("Conversion Shares") unless and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound
by the terms of this Agreement if such disposition occurs prior to the Initial
Offering, (B) such Holder shall have notified the Company of the proposed
disposition and shall have furnished the Company with a detailed statement of
the circumstances surrounding the proposed disposition, and (C) if reasonably
requested by the Company, such Holder shall have furnished the Company with an
opinion of counsel, reasonably satisfactory to the Company, that such
disposition will not require registration of such shares under the Securities
Act. It is agreed that the Company will not
3.
require opinions of counsel for transactions made pursuant to Rule 144 except in
unusual circumstances.
(iii) Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its stockholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, or (D) to the Holder's family
member or trust for the benefit of an individual Holder; provided that in each
case the transferee will be subject to the terms of this Agreement to the same
extent as if he were an original Holder hereunder.
(b) Each certificate representing Shares, Series E-1 Stock, Class
B Common Stock or Registrable Securities shall (unless otherwise permitted by
the provisions of the Agreement) be stamped or otherwise imprinted with a legend
substantially similar to the following (in addition to any legend required under
applicable state securities laws:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of thirty percent (30%) or more
of the Registrable Securities (other than the Founder Shares) then outstanding
(the "Initiating Holders") that the Company file a registration statement under
the Securities Act covering the registration of Registrable Securities having an
anticipated aggregate offering price of at least $15,000,000, then the Company
shall, within thirty (30) days of receipt thereof, give written notice of such
request to all Holders, and subject to the limitations of this Section 2.2, use
its best efforts to effect, as soon
4.
as practicable, the registration under the Securities Act of all Registrable
Securities that the Holders request to be registered.
(b) 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 a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.4 and the Company shall include such
information in the written notice referred to in Section 2.2(a) or Section
2.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2 or Section 2.4, if the underwriter advises the Company that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities), then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders). Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to the earlier of April 26, 2004, or one hundred
eighty (180) days following the effective date of the registration statement
pertaining to the Initial Offering;
(ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective;
(iii) during the period starting with the date of filing of,
and ending on the date one hundred eighty (180) days following the effective
date of the registration statement pertaining to the Initial Offering; provided
that the Company makes reasonable good faith efforts to cause such registration
statement to become effective;
(iv) if within thirty (30) days of receipt of a written
request from the Initiating Holders pursuant to Section 2.2(a), the Company
gives notice to the Holders of the Company's intention to make its Initial
Offering within ninety (90) days;
(v) if the Company shall furnish to the Holders requesting
a registration statement pursuant to this Section 2.2, a certificate signed by
the Chairman of the Board or the Chief Executive Officer stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be effected at such time, in which event the Company shall have the
right to defer such filing for a period of not more than ninety (90) days after
receipt of
5.
the request of the Initiating Holders; provided that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period; or
(vi) if the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below.
2.3 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 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 Registrable Securities through such underwriting shall 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 the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders' on a pro rata
basis based on the total number of Registrable Securities held by the Holders
(provided, that, only 2,000,000 of the Founder's Shares (as adjusted for splits,
combinations, and the like) shall be included as Registrable Securities for the
purposes of this allocation); third, to the Holders of the portion of the
Founders Shares not considered for the purposes of the previous allocation; and,
fourth, to any stockholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall (i) reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting
or (ii) reduce the amount of securities of the selling Holders included in the
registration below twenty-five percent (25%) of the total amount of securities
included in such registration, unless such offering is the Initial Offering and
such registration does not include shares of any other selling stockholders, in
which event any or all of the Registrable Securities of the Holders may be
excluded in accordance with the immediately preceding sentence. In no
6.
event will shares of any other selling stockholder be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than sixty-six and
two-thirds percent (66/2/3/%) of the Registrable Securities proposed to be sold
in the offering. 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, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration. For any Holder which is a partnership or corporation, the
partners, retired partners and stockholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefits of any of the foregoing person shall be deemed to be a single "Holder",
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder," as defined in this sentence.
(b) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.
2.4 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders of at least twenty percent (20%) of the Registrable Securities
then outstanding a written request or requests that the Company effect a
registration on Form S-3 (or any successor to Form S-3) or any similar short-
form registration statement and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than seven hundred fifty thousand dollars
($750,000), or
7.
(iii) if within thirty (30) days of receipt of a written
request from Initiating Holders pursuant to Section 2.2(a), the Company gives
notice to the Holders of the Company's intention to make a firm commitment
underwritten public offering of its Common Stock within ninety (90) days;
(iv) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period, or
(v) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 2.4, or
(vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 2.2 or 2.3, respectively. All such Registration
Expenses incurred in connection with registrations requested pursuant to this
Section 2.4 shall be paid by the Company.
2.5 Expenses of Registration. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration,
qualification, or compliance under Section 2.3 or 2.4 herein shall be borne by
the Company. All Selling Expenses incurred in connection with any registrations,
qualifications, or compliances hereunder, shall be borne by the holders of the
securities so registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of
which has been subsequently withdrawn by the Initiating Holders or the Holders
under Section 2.4 unless (a) the withdrawal is based upon material adverse
information concerning the Company of which the Initiating Holders or the
Holders under Section 2.4 were not aware at the time of such request or (b) the
Holders of a majority of Registrable Securities agree to forfeit their right to
one requested registration pursuant to Section 2.2 or 2.4, in which event such
right shall be forfeited by all the Holders. If the Holders are required to pay
the Registration Expenses, such expenses shall be borne by the holders of
securities (including Registrable Securities) requesting such registration in
proportion to the number of shares for which registration was requested. If the
Company is required to pay
8.
the Registration Expenses of a withdrawn offering pursuant to clause (a) above,
then the Holders shall not forfeit their rights pursuant to Section 2.2 or 2.4
to a demand registration.
2.6 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable 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 ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto. The
Company shall not be required to file, cause to become effective or maintain the
effectiveness of any registration statement that contemplates a distribution of
securities on a delayed or continuous basis pursuant to Rule 415 under the
Securities Act.
(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 for the period set forth in paragraph (a) above.
(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, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable 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(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
2.7 Termination of Registration Rights. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect three
(3) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if and when all Registrable Securities
held by and issuable to such Holder (and its affiliates, partners, former
partners, members and former members) may be sold under Rule 144 during any
ninety (90) day period.
9.
2.8 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be reasonably required to effect the registration of
their Registrable Securities.
(c) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection 2.2(b), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in Section 2.2 or Section 2.4,
whichever is applicable.
2.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder,
any underwriter (as defined in the Securities Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Securities Act or the Exchange Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any of the following statements, omissions or violations
(collectively a "Violation") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will pay as incurred to
each such Holder, partner, officer, director, underwriter or controlling person
for any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
10.
use in connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration, qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 2.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, but the omission so to deliver
written notice to the indemnifying party will not relieve it of any liability
that it may have to any indemnified party otherwise than under this Section 2.9.
11.
(d) If the indemnification provided for in this Section 2.9 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 received by such Holder.
(e) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities in a
registration statement 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.
2.10 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner, member or
retired member of a Holder, (b) is a Holder's family member or trust for the
benefit of an individual Holder, or (c) acquires at least fifty thousand
(50,000) shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (i) the transferor shall, within ten (10) days
after such transfer, furnish to the Company written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned and (ii) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.
2.11 Amendment of Registration Rights. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least sixty-six and two-
thirds percent (66 2/3%) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section 2.11 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Section 2, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
2.12 Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of at least sixty-six and two-thirds percent (66 2/3%) of the
Registrable Securities then outstanding, enter
12.
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder.
2.13 "Market Stand-Off" Agreement; Agreement to Furnish Information. Each
Holder hereby agrees that such Holder shall not sell or otherwise transfer or
dispose of any Common Stock (or other securities) of the Company held by such
Holder (other than those included in the registration) for a period specified by
the representative of the underwriters of Common Stock (or other securities) of
the Company not to exceed one hundred eighty (180) days following the effective
date of a registration statement of the Company filed under the Securities Act;
provided that (a) the obligations described in this Section 2.13 shall apply
only to the Company's Initial Offering; (b) all officers and directors of the
Company and holders of at least one percent (1%) of the Company's securities
enter into similar agreements; (c) such agreements shall not apply to securities
purchased by the Holder in the public market or in a registered offering; and
(d) any discretionary waiver or termination of the restrictions contained in
such agreement (or any similar lock up provision to which the Company is a
party) for the benefit of any officer, director, or holder of at least one
percent (1%) of the Company's securities shall apply to all the Holders on a
pro-rata basis (according to the total number of Registrable Securities owned by
each Holder).
Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter which are consistent
with the foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Holder shall provide,
within ten (10) days of such request, such information as may be reasonably
required by the Company or such representative in connection with the completion
of any public offering of the Company's securities pursuant to a registration
statement filed under the Securities Act. The obligations described in this
Section 2.13 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms that may be promulgated in the future.
The Company may impose stop-transfer instructions with respect to the shares of
Common Stock (or other securities) subject to the foregoing restriction until
the end of said one-hundred eighty (180) day period.
2.14 Rule 144 Reporting. With a view to making available to the 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 to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times 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 Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with
13.
the reporting requirements of said Rule 144 of the Securities Act, and of 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 as a Holder may reasonably request
in availing itself of any rule or regulation of the SEC allowing it to sell any
such securities without registration.
SECTION 3. Covenants Of The Company
3.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, the Company will
furnish each Investor owning not less than 500,000 shares of Registrable
Securities (other than Founder Shares and as adjusted for stock splits and
combinations) (a "Major Investor") a balance sheet of the Company, as at the end
of such fiscal year, and a statement of income and a statement of cash flows of
the Company, for such year, all prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail. Such financial statements shall be accompanied by a report and opinion
thereon by independent public accountants of national standing selected by the
Company's Board of Directors.
(c) The Company will furnish each Major Investor, as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days thereafter, a balance sheet of the Company as of the end of each such
quarterly period, and a statement of income and a statement of cash flows of the
Company for such period and for the current fiscal year to date, prepared in
accordance with generally accepted accounting principles, with the exception
that no notes need be attached to such statements and year-end audit adjustments
may not have been made.
(d) The Company will furnish each Major Investor (i) at least
thirty (30) days prior to the beginning of each fiscal year an annual budget and
operating plans for such fiscal year (and as soon as available, any subsequent
revisions thereto); and (ii) as soon as practicable after the end of each month,
and in any event within twenty (20) days thereafter, a balance sheet of the
Company as of the end of each such month, and a statement of income and a
statement of cash flows of the Company for such month and for the current fiscal
year to date, including a comparison to plan figures for such period, prepared
in accordance with generally accepted accounting principles consistently
applied, with the exception that no notes need be attached to such statements
and year-end audit adjustments may not have been made.
3.2 Inspection Rights. Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries, and
to discuss the affairs,
14.
finances and accounts of the Company or any of its subsidiaries with its
officers, and to review such information as is reasonably requested all at such
reasonable times and as often as may be reasonably requested; provided, however,
that the Company shall not be obligated under this Section 3.2 with respect to a
competitor of the Company or with respect to information which the Board of
Directors determines in good faith is confidential and should not, therefore, be
disclosed.
3.3 Confidentiality of Records. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives use, the same
degree of care as such Investor uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such Investor for the purpose of evaluating its investment in the Company as
long as such partner, subsidiary or parent is advised of and bound by the
confidentiality provisions of this Section 3.3. Each of RRD and GE further
covenants that it will use all information obtained pursuant to this Agreement
only for the purpose of evaluating its investment in the Company and not in
connection with its business activities.
3.4 Reservation of Stock. The Company will at all times reserve and keep
available, solely for issuance and delivery upon the conversion of the Preferred
Stock and Class B Common Stock, all Series E-1 Stock, Class B Common Stock and
Common Stock issuable from time to time upon such conversion.
3.5 Employee Proprietary Information and Inventions Agreement. The
Company shall require all employees and consultants to execute and deliver a
standard Employee Proprietary Information and Inventions Agreement.
3.6 Key Man Insurance. The Company will use its best efforts to maintain
in full force and effect term life insurance in the amount of one million
($1,000,000) dollars on each of the lives of Xxxx Xxx-Xxxxxxx and Xxxxx
Xxxxxxxxxx, naming the Company as beneficiary.
3.7 Stock Vesting. Unless otherwise approved by the Board of Directors,
all stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants, and other service providers
shall be subject to vesting as follows: twenty five percent (25%) of such stock
shall vest at the end of the first year following the date of such person's
services commencement date with the Company and seventy five percent (75%) of
such stock shall vest no more rapidly than monthly over the next three years.
With respect to any shares of stock purchased by any such person, the Company's
repurchase option shall provide that upon such person's termination of
employment or service with the Company, with or without cause, the Company or
its assignee (to the extent permissible under applicable securities laws and
other laws) shall have the option to purchase at cost any unvested shares of
stock held by such person.
3.8 Observer Rights. Each of MeriTech Capital Partners, Xxxxxx Capital
Management, Technology Crossover Ventures (so long as the Series C Preferred
does not have a separate representative on the Company's Board of Directors),
RRD and GE for so long as each
15.
is a Major Investor, shall be entitled to have a representative reasonably
acceptable to the Company attend all meetings of its Board of Directors in a
non-voting observer capacity and, in this respect, the Company shall provide
such representative copies of all notices, minutes, consents and other material
that it provides to its directors at the same time that such notices, minutes,
consents and other materials are provided to its directors; provided, however,
that the Company reserves the right to exclude such representative from access
to any material or meeting or portion thereof if the Company believes that such
exclusion is reasonably necessary to preserve the attorney-client privilege, to
protect highly confidential proprietary information or for other similar
reasons.
3.9 Qualified Small Business Stock. In the event that the Company
proposes to act or engage in a transaction that would be reasonably expected to
result in the termination or impairment of the status of the Series A Stock or
Series B Stock (or the Common Stock issuable upon conversion thereof) as
"qualified small business stock" as set forth in Section1202(c) of the Internal
Revenue Code of 1986, as amended (the "Code"), the Company shall use reasonable
efforts to notify the Major Investors who are Major Investors as of the date
hereof and consult in good faith to attempt to devise, if commercially
practicable, a mutually agreeable and reasonable alternative transaction
structure that would preserve such status. In addition, the Company shall use
reasonable efforts to submit to the Major Investors and with the Internal
Revenue Service any reports that may be required under Section 1202(d)(1)(C) of
the Code and any related Treasury Regulations. In addition, within twenty (20)
days after any Major Investor has delivered to the Company a written request
therefor, the Company shall deliver to such Major Investor a written statement
informing the Major Investor whether to the Company's knowledge such Major
Investor's interest in the Company should constitute "qualified small business
stock" as defined in Section 1202(c) of the Code. The Company's obligation to
furnish a written statement pursuant to this Section 3.9 shall continue
notwithstanding the fact that a class of the Company's stock may be traded on an
established securities market. The Company's obligations under this Section 3.9
shall continue irrespective of the number of shares any such Major Investor may
hold subsequent to the date of this Agreement.
3.10 Potential Conversion of Class B Common Stock. The Company agrees
that, in the event that a holder of the Company's Class B Common Stock requests
that the Company provide its written consent to the conversion of such shares
into shares of Common Stock pursuant to Article IV.D.5(a)(iv) of the Company's
Amended and Restated Certificate of Incorporation prior to the earlier of (i)
the date one year after the date the Series E Stock was first issued or (ii) the
date 180 days after a Initial Offering, the Company will not unreasonably
withhold such consent, provided further, the Company agrees that ninety (90)
days after an Initial Offering, the Company will consent to the conversion of
twenty-five percent (25%) of the Class B Common Stock held by each holder of
Class B Common Stock into the equivalent number of fully paid and nonassessable
shares of Common Stock.
3.11 Termination of Covenants. All covenants, except Section 3.9 and 3.10,
of the Company contained in Section 3 of this Agreement shall expire and
terminate as to each Investor upon the earlier of (i) the effective date of the
registration statement pertaining to the Initial Offering or (ii) upon (a) the
acquisition of all or substantially all of the assets of the Company or (b) an
acquisition of the Company by another corporation or entity by consolidation,
merger or other reorganization in which the holders of the Company's outstanding
voting stock
16.
immediately prior to such transaction own immediately after such transaction,
securities representing less than fifty percent (50%) of the voting power of the
corporation or other entity surviving such transaction (a "Change of Control").
SECTION 4. Rights Of First Refusal
4.1 Subsequent Offerings. Each Major Investor shall have a right of
first refusal to purchase its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 4.6 hereof. Each Major Investor's pro rata share is equal to
the ratio of (a) the number of shares of the Company's Common Stock (including
all shares of Common Stock issued or issuable upon conversion of the Shares)
which such Major Investor is deemed to be a holder immediately prior to the
issuance of such Equity Securities to (b) the total number of shares of the
Company's outstanding Common Stock (including all shares of Common Stock issued
or issuable upon conversion of the Shares or upon the exercise of any
outstanding warrants or options) immediately prior to the issuance of the Equity
Securities. The term "Equity Securities" shall mean (i) any Common Stock,
Preferred Stock or other security of the Company, (ii) any security convertible,
with or without consideration, into any Common Stock, Preferred Stock or other
security (including any option to purchase such a convertible security), (iii)
any security carrying any warrant or right to subscribe to or purchase any
Common Stock, Preferred Stock or other security or (iv) any such warrant or
right.
4.2 Exercise of Rights. If the Company proposes to issue any Equity
Securities, it shall give each Major Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Major Investor shall have
fifteen (15) days from the giving of such notice to agree to purchase its pro
rata share of the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company and
stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Major Investor who would cause the Company to
be in violation of applicable federal securities laws by virtue of such offer or
sale.
4.3 Issuance of Equity Securities to Other Persons. If not all of the
Major Investors elect to purchase their pro rata share of the Equity Securities,
then the Company shall promptly notify in writing the Major Investors who do so
elect and shall offer such Major Investors the right to acquire such
unsubscribed shares on a pro rata basis. The Major Investors shall have five
(5) days after receipt of such notice to notify the Company of its election to
purchase all or a portion thereof of the unsubscribed shares. If the Major
Investors fail to exercise in full the rights of first refusal, the Company
shall have ninety (90) days thereafter to sell the Equity Securities in respect
of which the Major Investor's rights were not exercised, at a price and upon
general terms and conditions materially no more favorable to the purchasers
thereof than specified in the Company's notice to the Major Investors pursuant
to Section 4.2 hereof. If the Company has not sold such Equity Securities
within ninety (90) days of the notice provided pursuant to Section 4.2, the
Company shall not thereafter issue or sell any Equity Securities, without first
offering such securities to the Major Investors in the manner provided above.
17.
4.4 Termination and Waiver of Rights of First Refusal. The rights of
first refusal established by this Section 4 shall not apply to, and shall
terminate upon the earlier of (i) immediately upon the closing of a firmly
underwritten public offering pursuant to an effective registration statement
under the Securities Act covering the offer and sale of Common Stock for the
account of the Company in which the per share price is at least $11.00 (as
adjusted for stock splits, combinations, and the like) and the gross cash
proceeds to the Company (before underwriting discounts, commissions and fees)
are at least $20,000,000 (a "Qualifying IPO") or (ii) a Change in Control. The
rights of first refusal established by this Section 4 may be amended, or any
provision waived with the written consent of Major Investors with rights under
this Section 4 holding at least sixty-six and two-thirds percent (66/2/3/%) of
the Registrable Securities held by all such Major Investors, or as permitted by
Section 5.6.
4.5 Transfer of Rights of First Refusal. Subject to Section 2.1 hereof,
the rights of first refusal of each Major Investor having rights under this
Section 4 may be transferred to the same parties, subject to the same
restrictions as any transfer of registration rights pursuant to Section 2.10.
4.6 Excluded Securities. The rights of first refusal established by this
Section 4 shall have no application to any of the following Equity Securities:
(a) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights issued pursuant to such options, warrants or other rights)
issued or to be issued to employees, officers or directors of, or consultants or
advisors to the Company or any subsidiary, pursuant to stock purchase or stock
option plans or agreements or other arrangements that are approved by the Board
of Directors;
(b) stock issued pursuant to any rights or agreements outstanding as
of the date of this Agreement, options and warrants outstanding as of the date
of this Agreement; and stock issued pursuant to any such rights or agreements
granted after the date of this Agreement; provided that the rights of first
refusal established by this Section 4 applied with respect to the initial sale
or grant by the Company of such rights or agreements;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business combination
approved by the Board of Directors;
(d) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares, the
Series E-1 Stock or the Class B Common Stock;
(f) any Equity Securities issued pursuant to any equipment leasing
arrangement, or debt financing from a bank or similar financial institution
approved by the Board of Directors;
(g) any Equity Securities that are issued by the Company pursuant to
a registration statement filed under the Securities Act in connection with a
Qualifying IPO;
18.
(h) shares of the Company's Common Stock or Preferred Stock issued in
connection with strategic transactions involving the Company and other entities,
including (i) joint ventures, manufacturing, marketing or distribution
arrangements or (ii) technology transfer or development arrangements; provided
that such strategic transactions and the issuance of shares therein, have been
approved by the Company's Board of Directors; and
(i) shares of Series E Stock (including shares of Series E-1 Stock,
Class B Common Stock and Common Stock issuable upon conversion of such Series E
Stock and/or Class B Common Stock) issued or issuable pursuant to the Purchase
Agreement.
SECTION 5. Miscellaneous
5.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California.
5.2 Survival. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by or
on behalf of the Company pursuant hereto in connection with the transactions
contemplated hereby shall be deemed to be representations and warranties by the
Company hereunder solely as of the date of such certificate or instrument.
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 and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
5.4 Entire Agreement. This Agreement, the Exhibits and Schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein.
5.5 Severability. In case any provision of the 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
thereby.
5.6 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least sixty-six and two-thirds percent (66 2/3%) of the Registrable
Securities.
19.
(d) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least sixty-six and two-thirds
percent (66 2/3%) of the Registrable Securities.
(c) Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.
5.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
to be notified at the address as set forth on the signature pages hereof or
Exhibit A hereto or at such other address as such party may designate by ten
(10) days advance written notice to the other parties hereto.
5.9 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.10 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.
5.11 Prior Agreement. The Prior Agreement is hereby superseded in its
entirety and shall be of no further force or effect.
5.12 Aggregation of Stock. All Shares held or acquired by affiliated
entities or person shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
5.13 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.
20.
5.14 Waiver of Right of First Offer. By execution of this Agreement below,
the holders of the Company's Series A Stock, Series B Stock, Series C Stock and
Series D Stock and each of them, hereby consent to the issuance of the shares of
Series E Stock to the Purchaser as contemplated by the Purchase Agreement and
waive any rights to notice or to acquire shares of Series E Stock to which they
may be entitled, including but not limited to, those provided in Section 4 of
the Prior Agreement.
5.15 Publicity. Each of the parties hereto agrees that it will make no
statement regarding the transactions contemplated hereby which is inconsistent
with any press release agreed to by the parties hereto. In addition, neither
the Company nor any of its subsidiaries will, without the prior written consent
of the Purchaser, refer to the Purchaser or any trademark or trade name of the
Purchaser or any of its affiliates in any corporate, marketing or promotional
material or otherwise identify the Purchaser as an investor in or business
associate of the Company or any of its subsidiaries. Notwithstanding the
foregoing, each of the parties hereto may, in documents required to be filed by
it with any regulatory body, make such statements with respect to the
transactions contemplated hereby as each may be advised is legally necessary
upon advice of its counsel, subject to prior review and comment by the other
party.
5.16 Consent to Jurisdiction, Jury Waiver. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the non-exclusive
jurisdiction of the courts of the State of California and of the United States
of America, located in the State of California, for any action, proceeding or
investigation in any court or before any governmental authority ("Litigation")
arising out of or relating to this Agreement and the transactions contemplated
hereby, and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in this
Agreement shall be effective service of process for any Litigation brought
against it in any such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any Litigation
arising out of this Agreement or the transactions contemplated hereby in the
courts of the State of California or the United States of America, located in
the State of California, and hereby further irrevocably and unconditionally
waives, to the fullest extent permitted by applicable law, any and all rights to
trial by jury in connection with any Litigation arising out of or relating to
this Agreement or the transactions contemplated hereby.
[THIS SPACE INTENTIONALLY LEFT BLANK]
21.
