EXHIBIT 4.01
RESTATED AND AMENDED INVESTORS' RIGHTS AGREEMENT
This Restated and Amended Investors' Rights Agreement (this "Agreement") is
---------
made and entered into as of December 20, 1996 between Asymetrix Corporation, a
Washington corporation (the "Company"), and the persons and entities listed on
-------
Exhibit A attached hereto (the "Investors").
--------- ---------
RECITALS
A. SOFTVEN No. 2 Investment Enterprise Partnership (the "Series A
--------
Investor") is the holder by assignment from SOFTBANK Holdings Inc. of the
--------
outstanding shares of the Company's Series A Preferred Stock, par value $0.01
per share (the "Series A Stock"), issued by the Company to SOFTBANK Holdings
--------------
Inc. pursuant to a Series A Preferred Stock Purchase Agreement dated as of
October 21, 1996 between the Company and SOFTBANK Holdings Inc. (the "Series A
--------
Purchase Agreement"), which Series A Purchase Agreement has been assigned to the
------------------
Series A Investor.
B. Multimedia Asia Pacific Pty Ltd. (the "Series B Investor") has agreed
-----------------
to purchase from the Company, and the Company has agreed to sell to the
Investor, 388,395 shares of the Company's Series B Preferred Stock, par value
$0.01 per share ("Series B Stock"), pursuant to a Series B Preferred Stock
--------------
Purchase Agreement dated of even date herewith by and between the Company and
the Series B Investor (the "Purchase Agreement").
------------------
C. The Series A Purchase Agreement and the Series B Purchase Agreement
each provides that the Series A Investor and the Series B Investor shall be
granted certain information and registration rights and rights of first refusal,
all as more fully set forth herein. This Agreement supersedes and replaces in
its entirety that certain Investor's Rights Agreement dated October 21, 1996
between the Company and the Series A Investor.
NOW, THEREFORE, in consideration of the foregoing recitals and the mutual
promises hereinafter set forth, the parties hereto agree as follows:
1. INFORMATION RIGHTS.
------------------
1.1 Financial Information. The Company covenants and agrees that,
---------------------
commencing on the date of this Agreement, (i) with respect to the Series A
Investor, for so long as the Series A Investor holds any shares of Series A
Stock issued under the Series A Purchase Agreement or shares of Common Stock of
the Company ("Common Stock") issued upon the conversion of such shares of Series
------------
A Stock ("Series A Conversion Stock"), and (ii) with respect to the Series B
-------------------------
Investor, so long as the Series B Investor (A) holds any shares of Series B
Stock issued under the Series B Purchase Agreement or shares of Common Stock
issued upon the conversion of such shares of Series B Stock ("Series B
--------
Conversion Stock," together with the Series A Conversion Stock, the "Conversion
---------------- ----------
Stock") and (B) the Series B Investor has repaid in
1
full the entire principal amount of $4.5 million, together with accrued
interest thereon, of that certain Promissory Note, dated as of the date hereof,
made by the Series B Investor in favor of the Company (the "Note"), the Company
will: ----
(a) Annual Reports. Furnish to such Investor, as soon as practicable
--------------
and in any event within 90 days after the end of each fiscal year of the
Company, a consolidated Balance Sheet as of the end of such fiscal year, a
consolidated Statement of Income and a consolidated statement of cash flows of
the Company and its subsidiaries for such year, setting forth in each case in
comparative form the figures from the Company's previous fiscal year (if any),
all prepared in accordance with generally accepted accounting principles and
practices (collectively, the "Annual Reports") and audited by nationally
--------------
recognized independent certified public accountants. Notwithstanding the
foregoing, with respect to the Annual Reports relating to the Company's 1996
fiscal year, the Company may furnish unaudited Annual Reports within such 90 day
time period, if, within 60 days after the delivery of such unaudited Annual
Reports, the Company furnishes to such Investor Annual Reports which have been
audited by nationally recognized independent certified public accountants;
(b) Quarterly Reports. Furnish to such Investor as soon as
-----------------
practicable, and in any case within forty-five (45) days of the end of each
fiscal quarter of the Company (except the last quarter of the Company's fiscal
year), quarterly unaudited financial statements, including an unaudited Balance
Sheet and an unaudited Statement of Income; and an unaudited consolidated
statement of cash flows, all prepared in accordance with generally accepted
accounting principles and practices; and
(c) Confidentiality. Each Investor agrees to hold all information
---------------
received pursuant to this Section in confidence, and not to use or disclose any
of such information to any third party, except (i) to the extent such
information may be made publicly available by the Company, (ii) as required by
law, or (iii) to any proposed permitted transferee of Series A Stock, Series B
Stock or Common Stock (provided such transferee first agrees in writing to be
bound by this section).
1.2 Inspection Rights. Provided (i) with respect to the Series A
-----------------
Investor, the Series A Investor (including any affiliated partnership managed by
the Series A Investor) holds at least 200,000 shares of Series A Stock issued
under the Series A Stock Purchase Agreement and/or the equivalent number (on an
as-converted basis) of shares of Conversion Stock, (ii) with respect to the
Series B Investor, the Series B Investor (A) holds at least 200,000 shares of
Series B Stock and/or the equivalent number (on an as-converted basis) of shares
of Conversion Stock, and (B) has paid all amounts due under the Note, the
Company shall permit such Investor, at such Investor's expense, to visit and
inspect the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its officers,
all at such reasonable times as may be requested by such Investor. Each
Investor agrees to hold all information received from such inspections in
confidence, and not to use or disclose any of such information to any third
party, except (i) to the extent such information may be made publicly available
by the Company, (ii) as required by law, or (iii) to any proposed permitted
2
transferee of Series A Stock, Series B Stock or Common Stock (provided such
transferee first agrees in writing to be bound by this section).
1.3 Termination of Certain Rights. The Company's obligations under
-----------------------------
Sections 1.1 and 1.2 above will terminate upon the closing of the Company's
initial public offering of Common Stock pursuant to an effective registration
statement filed under the Securities Act of 1933, as amended (the "Securities
----------
Act").
---
2. REGISTRATION RIGHTS.
-------------------
2.1 Definitions. For purposes of this Section 2:
-----------
(a) Registration. The terms "register," "registered," and
------------ -------- ----------
"registration" refer to a registration effected by preparing and filing a
-------------
registration statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term "Registrable Securities" means:
---------------------- ----------------------
(1) all the shares of Common Stock of the Company issued or issuable upon the
conversion of any shares of Series A Stock issued under the Series A Purchase
Agreement; (2) all the shares of Common Stock of the Company issued or issuable
upon the conversion of any shares of Series B Stock issued under the Series B
Purchase Agreement if all of the Series B Investor's obligations under the Note
have been paid in accordance with the terms of the Note, and (3) any shares of
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,
all such shares of Common Stock described in clauses (1) and (2) of this
subsection (b); excluding in all cases, however, any Registrable Securities sold
---------
by a person in a transaction in which rights under this Section 2 are not
assigned in accordance with this Agreement or any Registrable Securities sold to
the public or sold pursuant to Rule 144 promulgated under the Securities Act.
(c) Registrable Securities Then Outstanding. The number of shares of
---------------------------------------
"Registrable Securities then outstanding" shall mean the number of shares of
---------------------------------------
Common Stock which are Registrable Securities and (1) are then issued and
outstanding or (2) are then issuable pursuant to the exercise or conversion of
then outstanding and then exercisable options, warrants or convertible
securities.
(d) Holder. For purposes of this Section 2 and Sections 3 and 4
------
hereof, the term "Holder" means any person owning of record Registrable
------
Securities that have not been sold to the public or pursuant to Rule 144
promulgated under the Securities Act or any assignee of record of such
Registrable Securities to whom rights under this Section 2 have been duly
assigned in accordance with this Agreement; provided, however, a record holder
-------- -------
of shares of Series A Stock or Series B Stock convertible into such Registrable
Securities shall be deemed to be the Holder of such Registrable Securities; and
provided, further, that the Company shall in no event be obligated to register
-------- -------
shares of Series A Stock or Series B Stock and that Holders of Registrable
Securities will not be required to convert their shares of Series A Stock or
Series B Stock into Common Stock in order to exercise the registration rights
granted hereunder, until
3
immediately before the closing of the offering to which the registration
relates. Notwithstanding the foregoing, the Series B Investor shall not be
deemed to be a Holder for purposes of this Agreement if the Series B Investor
has not paid all of its obligations under the Note in accordance with the terms
of the Note.
(e) Form S-3. The term "Form S-3" means such form under the
-------- --------
Securities Act as is 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.
(f) SEC. The term "SEC" or "Commission" means the U.S.
--- --- ----------
Securities and Exchange Commission.
2.2 Demand Registration.
-------------------
(a) Request by Holders. If the Company shall receive at any time six
------------------
(6) months after the effective date of the Company's initial public offering of
its securities pursuant to a registration filed under the Securities Act, a
written request from the Holders of at least twenty percent (20%) of the
Registrable Securities then outstanding that the Company effect any registration
of Registrable Securities pursuant to this Section 2.2, then the Company shall,
within ten (10) business days of the receipt of such written request, give
written notice of such request ("Request Notice") to all Holders, and effect, as
--------------
soon as practicable, such registration under the Securities Act of all
Registrable Securities which Holders request to be registered and included in
such registration by written notice given by such Holders to the Company within
twenty (20) days after receipt of the Request Notice, subject only to the
limitations of this Section 2.2; provided that the Registrable Securities
--------
requested by all Holders to be registered pursuant to such request must either
(i) be at least twenty percent (20%) of all Registrable Securities then
outstanding or (ii) have an anticipated aggregate public offering price (before
any underwriting discounts and commissions) of not less than $5,000,000.
(b) Underwriting. If the Holders initiating the registration request
------------
under this Section 2.2 ("Initiating Holders") intend to distribute such
------------------
Registrable Securities covered by their request by means of an underwriting,
then they shall so advise the Company as a part of their request made pursuant
to this Section 2.2 and the Company shall include such information in the
written notice to other Holders referred to in subsection 2.2(a). In such
event, the right of any other Holder to include its Registrable Securities in
such registration shall be conditioned upon such other Holder's participation in
such underwriting and the inclusion of such other Holder's Registrable
Securities in the underwriting (unless otherwise mutually agreed by a majority
in interest of the Initiating Holders and such other Holder) 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 managing underwriter or underwriters selected for such underwriting by
the Holders with the consent of the Company, which will not be unreasonably
withheld. Notwithstanding any other provision of this Section 2.2, if the
underwriter(s) advise(s) the Company in writing that marketing factors require a
limitation of the number of securities to be underwritten then the Company shall
so advise all Holders of
4
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of Registrable Securities that may be included
in the underwriting shall be reduced as required by the underwriter(s) and
allocated among the Holders of Registrable Securities on a pro rata basis
according to the number of Registrable Securities then outstanding held by each
Holder requesting registration (including the Initiating Holders). If any Holder
of Registrable Securities disapproves of the terms of the underwriting, such
Holder may elect to withdraw from such registration by written notice to the
Company, the underwriter and the Initial Holder. Any Registrable Securities
excluded and withdrawn from such underwriting shall be withdrawn from the
registration.
(c) Maximum Number of Demand Registrations. The Company is obligated
--------------------------------------
to effect only two (2) such registrations pursuant to this Section 2.2, one (1)
at the demand of the Holders of the Series A Stock and one (1) at the demand of
the Holders of the Series B Stock.
(d) Deferral. Notwithstanding the foregoing, if the Company shall
--------
furnish to Holders requesting the filing of a registration statement pursuant to
this Section 2.2, a certificate signed by the President or Chief Executive
Officer 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 registration statement to be filed and it is therefore
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing for a period of not more than 90 days
after receipt of the request of the Initiating Holders; provided, however, that
-------- -------
the Company may not utilize this right more than once in any twelve (12) month
period.
(e) Expenses. All expenses incurred in connection with a registration
--------
pursuant to this Section 2.2, including without limitation all registration,
qualification and filing fees, printers' and accounting fees, fees and
disbursements of counsel for the Company and reasonable fees and disbursements
of common counsel for all Holders ("Holders' Counsel") (but excluding
----------------
underwriters' discounts and commissions), blue sky fees and expenses shall be
borne by the Company. Each Holder participating in a registration pursuant to
this Section 2.2 shall bear such Holder's proportionate share (based on the
total number of shares sold in such registration other than for the account of
the Company) of all discounts, commissions or other amounts payable to
underwriters or brokers in connection with such offering and the fees and
disbursements of any counsel for the participating Holders (other than Holders'
Counsel). Notwithstanding the foregoing, the Company shall not be required to
pay for any expenses of any registration proceeding begun pursuant to this
Section 2.2 if the registration request is subsequently withdrawn at the request
of the Holders of a majority of the Registrable Securities to be registered
unless the Holders of a majority of Registrable Securities who have demand
registration rights pursuant to this Section 2.2 agree to forfeit their demand
registration rights hereunder with respect to such registration request,
provided, however, that if at the time of such withdrawal, the Holders have
-------- -------
learned of a material adverse change in the condition, business, or prospects of
the Company not known to the Holders at the time of their request for such
registration and have withdrawn their request for registration with reasonable
promptness after
5
learning of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to this
Section 2.2.
2.3 Piggyback Registrations. The Company shall notify all Holders of
-----------------------
Registrable Securities in writing at least thirty (30) days prior to filing any
registration statement under the Securities Act for purposes of effecting 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 any registration
---------
under Section 2.2 or Section 2.4 of this Agreement or to any employee benefit
plan or to any acquisition, merger, consolidation or other corporate
reorganization) and will afford each such Holder an opportunity to include in
such registration statement all or any part of the Registrable Securities then
held by such Holder. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by such Holder
shall, within twenty (20) days after receipt of the above-described notice from
the Company, so notify the Company in writing, and in such notice shall inform
the Company of the number of Registrable Securities such Holder wishes to
include in such registration statement. 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 a registration statement under which the Company
------------
gives notice under this Section 2.3 is for an underwritten offering, then the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder's Registrable Securities 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 managing underwriter or underwriter(s) selected for such underwriting.
Notwithstanding any other provision of this Agreement, if the managing
underwriter determine(s) in good faith that marketing factors require a
limitation of the number of shares to be underwritten, then the managing
underwriter(s) may exclude shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares that may be included
in the registration and the underwriting shall be allocated, first, to the
-----
Company, and second, to the Holders requesting inclusion of their Registrable
------
Securities in such registration statement pursuant to this Section 2.3 on a pro
rata basis based on the total number of Registrable Securities held by each such
Holder, provided however, that the right of the underwriters to exclude shares
-------- -------
(including Registrable Securities) from the registration and underwriting as
described above shall be restricted so that the number of Registrable Securities
included in any such registration is not reduced below twenty-five percent (25%)
of the shares included in the registration, except for a registration relating
to the Company's initial public offering from which all Registrable Securities
may be excluded. 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
6
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 shareholders of such Holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons 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) Expenses. All expenses incurred in connection with a registration
--------
pursuant to this Section 2.3 (excluding underwriters' and brokers' discounts and
commissions), including, without limitation all federal and "blue sky"
registration, qualification and filing fees, printers' and accounting fees, fees
and disbursements of counsel for the Company and the reasonable fees and
expenses of Holders' Counsel shall be borne by the Company.
2.4 Form S-3 Registration. In case the Company shall receive from
---------------------
any Holder or Holders of Registrable Securities a written request or requests
that the Company effect a registration on Form S-3 and any related qualification
or compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, then the Company will:
(a) Notice. Promptly give written notice of the proposed registration
------
and the Holder's or Holders' request therefor, and any related qualification or
compliance, to all other Holders of Registrable Securities; and
(b) Registration. 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 twenty (20) 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:
(1) if Form S-3 is not available for such offering by the Holders;
(2) 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 $250,000;
(3) if the Company shall furnish to the Holders a certificate signed
by the President or Chief Executive Officer 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
7
statement no more than once during any twelve month period for a period of not
more than 90 days after receipt of the request of the Holder or Holders under
this Section 2.4;
(4) if the Company has already effected two (2) registrations on Form
S-3 for the Holders pursuant to this Section 2.4; or
(5) 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) Expenses. 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 pursuant to this Section 2.4 as soon as
practicable after receipt of the request or requests of the Holders for such
registration. The Company shall pay all expenses incurred in connection with
each registration requested pursuant to this Section 2.4 (excluding
underwriters' or brokers' discounts and commissions), including without
limitation all filing, registration, qualification, filing, printers' and
accounting fees, counsel for the Company and the reasonable fees and expenses of
Holders' Counsel.
(d) Not Demand Registration. Form S-3 registrations shall not be
-----------------------
deemed to be demand registrations as described in Section 2.2 above.
2.5 Obligations of the Company. Whenever required to effect the
--------------------------
registration of any Registrable Securities under this Agreement, 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 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 ninety (90) days.
(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 and to the underwriters, if any, such
number of copies of the registration statement, prospectus, and 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 the Registrable Securities owned by them that are included in
such registration.
(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
8
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.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting registration of
Registrable Securities, on the date that such Registrable Securities are
delivered to the underwriters for sale, if such securities are being sold
through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a "comfort"
letter dated as of such date, from the independent certified public accountants
of the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public offering
and reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
(h) Use its best efforts either to (i) cause all the Registrable
Securities covered by any Registration Statement to be listed on a national
securities exchange, if the listing of such Registrable Securities is then
permitted under the rules of such exchange, or (ii) secure the quotation of the
Registrable Securities on the Nasdaq National Market.
2.6 Furnish Information. It shall be a condition precedent to the
-------------------
obligations of the Company to take any action pursuant to Sections 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
timely effect the registration of their Registrable Securities.
2.7 Delay of Registration. 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.
9
2.8 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) By the Company. To the extent permitted by law, the Company will
--------------
indemnify and hold harmless each Holder, the partners, officers, 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 Securities Exchange Act of 1934, as
amended, (the "1934 Act"), against any expenses, losses, claims, damages, or
--------
liabilities (joint or several) (or actions in respect thereof) to which they may
become subject under the Securities Act, the l934 Act or other federal or state
law, insofar as such expenses, 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"):
---------
(i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement,
preliminary prospectus, final prospectus, offering circular or
other document 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 1934 Act, any federal or state securities
law or any rule or regulation promulgated under the Securities
Act, the 1934 Act or any federal or state securities law in
connection with the offering covered by such registration
statement;
and the Company will reimburse each such Holder, partner, officer, director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating, defending or
settling any such loss, claim, damage, liability or action; provided however,
-------- -------
that the indemnity agreement contained in this subsection 2.8(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
use in connection with such registration by such Holder or its agent, partner,
officer, director, underwriter or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by law, each selling
------------------
Holder will indemnify and hold harmless the Company, each of its directors, each
of its officers who have signed the registration statement, 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 within the meaning of the Securities Act or the
1934 Act,
10
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, partner or director, officer or controlling
person of such other Holder may become subject under the Securities Act, the
1934 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 or its agent expressly for use in connection with such
registration; and each such Holder will reimburse any legal or other expenses
reasonably incurred by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, officer, director or controlling
person of such other Holder in connection with investigating, defending or
settling any such loss, claim, damage, liability or action; provided, however,
-------- -------
that the indemnity agreement contained in this subsection 2.8(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; and provided further, that the total
-------- -------
amounts payable in indemnity by a Holder under this Section 2.8(b) in respect of
any Violation shall not exceed the net proceeds received by such Holder in the
registered offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified party under this
------
Section 2.8 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 2.8, 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 conflict of 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 prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.8, 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 2.8.
(d) Defect Eliminated in Final Prospectus. The foregoing indemnity
-------------------------------------
agreements of the Company and Holders are subject to the condition that, insofar
as they relate to any Violation made in a preliminary prospectus but which
Violation is eliminated or remedied in the amended prospectus on file with the
SEC at the time the registration statement in question becomes effective or the
amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the "Final
-----
Prospectus), such indemnity agreement shall not inure to the benefit of any
----------
person if a copy of the Final Prospectus was furnished to the indemnified party
and was not furnished to the person asserting the loss, liability, claim or
damage at or prior to the time such action is required by the Securities Act.
11
(e) Contribution. In order to provide for just and equitable
------------
contribution to joint liability under the Securities Act in any case in which
either (i) any Holder exercising rights under this Agreement, or any controlling
person of any such Holder, makes a claim for indemnification pursuant to this
Section 2.8 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 2.8 provides
for indemnification in such case, or (ii) contribution under the Securities Act
may be required on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided under this Section
2.8; then, and in each such case, the Company and such Holder will contribute to
the aggregate losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements or omissions
that resulted in such expense, loss, claim, damage or liability in such
proportion as is appropriate to reflect the relative fault of each such party in
connection with such statements or omissions as well as any other relevant
considerations; provided, however, that, in any such case, (A) the total amounts
-------- -------
payable in contribution by any Holder under this Section 2.8(e) shall not exceed
the net proceeds received by such Holder in the registered offering out of which
such responsibility arises; and (B) no person or entity guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who was not guilty of
such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and Holders under this
--------
Section 2.8 shall survive the completion of any offering of Registrable
Securities in a registration statement, and otherwise.
2.9 "Market Stand-Off" Agreement. Each Holder hereby agrees, and in
---------------------------
the event that the Series B Investor is not a Holder, the Series B Investor
agrees, that it shall not, to the extent requested by the Company or an
underwriter of securities of the Company, sell or otherwise transfer or dispose
of any Registrable Securities or other shares of stock of the Company then owned
by such Holder or, if the Series B Investor is not a Holder, the Series B
Investor (other than to donees or partners of the Holder or Series B Investor
who agree to be similarly bound) for up to one hundred eighty (180) days
following the effective date of any registration statement of the Company filed
under the Securities Act (whether filed pursuant to the provisions of this
Agreement or otherwise); provided, however, that:
-------- -------
(a) such agreement shall not apply to Registrable Securities sold
pursuant to such registration statement; and
(b) all executive officers and directors of the Company then holding
Common Stock of the Company and all shareholders owning more than 1% of the
Common Stock of the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company shall have the
right to place restrictive legends on the certificates representing the shares
subject to this Section and to
12
impose stop transfer instructions with respect to the Registrable Securities and
such other shares of stock of each Holder or, if applicable, Series B Investor
(and the shares or securities of every other person subject to the foregoing
restriction), until the end of such period.
2.10 Rule 144 Reporting. With a view to making available the
------------------
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Registrable Securities to the public without
registration, after such time as a public market exists for the Common Stock of
the Company, the Company agrees to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date of the first registration under the Securities Act filed by
the Company for an offering of its securities to the general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 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
the 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
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), of the
Securities Act and the 1934 Act (at any time after it has become subject to the
reporting requirements of the 0000 Xxx) or that it qualifies as a registrant
whose securities may be resold pursuant to a Form S-3 (at any time after it so
qualifies), a copy of the most recent annual or quarterly report of the Company,
and such other reports and documents of the Company as a Holder may reasonably
request in availing itself of any rule or regulation of the Commission allowing
a Holder to sell any such securities without registration or pursuant to Form S-
3 (at any time after the Company has become subject to the reporting
requirements of the 1934 Act).
2.11 Termination of the Company's Obligations. The Company shall
----------------------------------------
have no obligations pursuant to Sections 2.2 through 2.4 with respect to: (i)
any request or requests for registration made by any Holder on a date more than
five (5) years after the closing date of the Company's initial public offering;
or (ii) any Registrable Securities proposed to be sold by a Holder in a
registration pursuant to Section 2.2, 2.3 or 2.4 if, in the opinion of counsel
to the Company, all such Registrable Securities proposed to be sold by a Holder
may be sold in the public market in a three-month period without registration
under the Securities Act pursuant to Rule 144 under the Securities Act.
3. RIGHT OF FIRST REFUSAL.
----------------------
3.1 General. Each Holder (as defined in Section 2.1(d)) and any
-------
party to whom such Holder's rights under this Section 3 have been duly assigned
in accordance with Section 4.1(b) (each such Holder or assignee being
hereinafter referred to as a "Rights Holder") has the right of first refusal to
-------------
purchase such Rights Holder's Pro Rata Share (as defined below),
13
of all (or any part) of any "New Securities" (as defined in Section 3.2) that
the Company may from time to time issue after the date of this Agreement. A
Rights Holder's Pro Rata Share" for purposes of this right of first refusal is
--------------
the ratio of (a) the number of Registrable Securities as to which such Rights
Holder is the Holder (and/or is deemed to be the Holder under Section 2.1(d)),
to (b) a number of shares of Common Stock of the Company equal to the sum of (i)
the total number of shares of Common Stock of the Company then outstanding plus
(ii) the total number of shares of Common Stock of the Company into which all
then outstanding shares of Registrable Securities of the Company are then
convertible plus (iii) the number of shares of Common Stock of the Company
reserved for issuance under stock purchase and stock option plans of the Company
and outstanding warrants and options plus (iv) the number of shares of Common
Stock of the Company into which all other outstanding convertible securities of
the Company are then convertible.
3.2 New Securities. "New Securities" shall mean any Common Stock or
-------------- --------------
Class B Stock of the Company, whether now authorized or not, and rights, options
or warrants to purchase such Common Stock or Class B Stock, and securities of
any type whatsoever that are, or may become, convertible or exchangeable into
such Common Stock or Class B Stock; provided, however, that the term "New
-------- -------
Securities" does not include:
---- --- -------
(i) any shares of the Company's Common Stock (and/or options or
warrants therefor) issued or issuable to employees, officers, directors,
contractors, advisors or consultants of the Company pursuant to incentive
agreements or plans approved by the Board of Directors of the Company;
(ii) any shares of Series A Stock issued under the Series A Purchase
Agreement, as such agreement may be amended, or any shares of Series B Stock
issued under the Series B Purchase Agreement, as such agreement may be amended,
and any shares of Common Stock or other securities issuable upon conversion
thereof.
(iii) up to an aggregate of 50,000 shares of the Company's Series 1
Class B Stock (and the shares of Common Stock issued or issuable upon conversion
of such Series 1 Class B Stock) to be issued from time to time in connection
with a written agreement concerning a business relationship between the Company
and the holder of such Series 1 Class B Stock;
(iv) any securities issuable upon exercise of any options, warrants or
rights to purchase any securities of the Company outstanding on the date of this
Agreement;
(v) shares of the Company's Common Stock or Class B Stock issued
in connection with any stock split or stock dividend;
(vi) securities offered by the Company to the public pursuant to a
registration statement filed under the Securities Act;
14
(vii) any shares of the Company's stock (and/or options or warrants
therefor) issued or issuable to employees, directors, consultants, or other
parties pursuant to contracts or other arrangements that are approved by the
Board of Directors of the Company;
(viii) any shares of the Company's stock (and/or options or warrants
therefor) issued or issuable to banks, equipment leasing organizations or
similar entities pursuant to any transaction in which the Company borrows money
or anything else of value; or
(ix) securities issued pursuant to the acquisition of another
corporation or entity by the Company by consolidation, merger, purchase of all
or substantially all of the assets, or other reorganization in which the Company
acquires, in a single transaction or series of related transactions, all or
substantially all of the assets of such other corporation or entity or fifty
percent (50%) or more of the voting power of such other corporation or entity or
fifty percent (50%) or more of the equity ownership of such other entity.
3.3 Procedures. In the event that the Company proposes to undertake
----------
an issuance of New Securities, it shall give to each Rights Holder written
notice of its intention to issue New Securities (the "Notice"), describing the
------
type of New Securities and the price and the general terms upon which the
Company proposes to issue such New Securities. Each Rights Holder shall have
twenty (20) days from the date of mailing of any such Notice to agree in writing
to purchase such Rights Holder's Pro Rata Share of such New Securities for the
price and upon the general terms specified in the Notice by giving written
notice to the Company and stating therein the quantity of New Securities to be
purchased (not to exceed such Rights Holder's Pro Rata Share). If any Rights
Holder fails to so agree in writing within such twenty (20) day period to
purchase such Rights Holder's full Pro Rata Share of an offering of New
Securities (a "Nonpurchasing Holder"), then such Nonpurchasing Holder shall
--------------------
forfeit the right hereunder to purchase that part of his Pro Rata Share of such
New Securities that it did not so agree to purchase. Each Rights Holder who has
timely agreed to purchase his full Pro Rata Share of such offering of New
Securities (a "Purchasing Holder") shall have a right of over-allotment such
-----------------
that such Purchasing Holder may purchase, on a pro rata basis, such portion of
the New Securities which any Nonpurchasing Holder elected not to purchase. The
Company shall take all such action as may be required by any regulatory
authority in connection with the exercise by a Purchasing Holder of the right to
purchase New Securities as set forth in this Section 3; provided, however, 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 state or jurisdiction where it is not so qualified or where it
has not made such a filing.
3.4 Failure to Exercise. In the event that the Rights Holders fail
-------------------
to exercise in full the right of first refusal within such twenty (20) plus five
(5) day period, then the Company shall have 90 days thereafter to sell the New
Securities with respect to which the Rights Holders' rights of first refusal
hereunder were not exercised, at a price and upon general terms not materially
more favorable to the purchasers thereof than specified in the Company's Notice
to the Rights Holders. In the event that the Company has not issued and sold
the New Securities within such 90 day period, then the Company shall not
thereafter issue or sell any New Securities without again first offering such
New Securities to the Rights Holders pursuant to this Section 3.
15
3.5 Termination. This right of first refusal shall terminate (i)
-----------
immediately before the closing of the first underwritten sale of Common Stock of
the Company to the public pursuant to a registration statement filed with, and
declared effective by, the SEC under the Securities Act, covering the offer and
sale of Common Stock to the public, or (ii) upon (a) the acquisition of all or
substantially all 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
immediately prior to such transaction own, immediately after such transaction,
securities representing less than fifty percent (50%) or more of the voting
power of the corporation or other entity surviving such transaction pursuant to
this Section 3.
4. ASSIGNMENT AND AMENDMENT.
------------------------
4.1 Assignment of Registration Rights. Notwithstanding anything
---------------------------------
herein to any the contrary, the registration rights of a Holder under Section 2
hereof may be assigned by Investor only to a party who acquires at least 75,000
shares of Series A Stock or Series B Stock issued under the Series A Purchase
Agreement or Series B Purchase Agreement, as applicable, and/or an equivalent
number (on an as-converted basis) of Registrable Securities issued upon
conversion thereof; provided, however that no party may be assigned any of the
-------- -------
foregoing rights unless the Company is given written notice by the assigning
party at the time of such assignment stating the name and address of the
assignee and identifying the securities of the Company as to which the rights in
question are being assigned; and provided further that any such assignee shall
-------- -------
receive such assigned rights subject to all the terms and conditions of this
Agreement, including without limitation the provisions of this Section 4.
5. GENERAL PROVISIONS.
------------------
5.1 Notices. Any notice, request or other communication required or
-------
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if deposited in the U.S. mail by registered or
certified mail, return receipt requested, postage prepaid, as follows: if to the
Investor, at the address for Investor indicated in Exhibit A hereto and if to
---------
the Company, at:
ASYMETRIX CORPORATION
000 000xx Xxxxxx, XX, Xxxxx 000
Xxxxxxxx, XX 00000
Phone: (000) 000-0000
Attn: President
with a copy to:
FENWICK & WEST LLP
Xxx Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx, Esq.
16
Any party hereto (and such party's permitted assigns) may by notice so given
change its address for future notices hereunder. Notice shall conclusively be
deemed to have been given when personally delivered or when deposited in the
mail in the manner set forth above.
5.2 Entire Agreement. This Agreement, together with all the Exhibits
----------------
hereto, constitutes and contains the entire agreement and understanding of the
parties with respect to the subject matter hereof and supersedes any and all
prior negotiations, correspondence, agreements, understandings, duties or
obligations between the parties respecting the subject matter hereof.
5.3 Governing Law. This Agreement shall be governed by and construed
-------------
exclusively in accordance with the internal laws of the State of Washington,
excluding that body of law pertaining to conflict of laws.
5.4 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
5.5 Third Parties. Nothing in this Agreement, express or implied, is
-------------
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
5.6 Successors And Assigns. Subject to the provisions of Section
----------------------
4.1, the provisions of this Agreement shall inure to the benefit of, and shall
be binding upon, the successors and permitted assigns of the parties hereto.
5.7 Captions. The captions to sections of this Agreement have been
--------
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
5.8 Counterparts. This Agreement may be executed in counterparts,
------------
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
5.9 Costs And Attorneys' Fees. In the event that any action, suit or
-------------------------
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
5.10 Adjustments for Stock Splits, Etc. Wherever in this Agreement
----------------------------------
there is a reference to a specific number of shares of Common Stock, Class B
Stock, Series A Stock or Series B Stock of the Company of any class or series,
then, upon the occurrence of any subdivision, combination or stock dividend of
such class or series of stock, the specific number of shares so referenced in
this Agreement shall automatically be proportionally adjusted to reflect
17
the affect on the outstanding shares of such class or series of stock by such
subdivision, combination or stock dividend.
5.11 Aggregation of Stock. All shares held or acquired by affiliated
--------------------
entities or persons shall be aggregated together for the purpose of determining
the availability of any rights under this Agreement.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
18
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
THE COMPANY INVESTORS
----------- ---------
ASYMETRIX CORPORATION SOFTVEN NO. 2 INVESTMENT
ENTERPRISE PARTNERSHIP
By: /s/ X. Xxxxxxxxx By: /s/ SOFTVEN NO. 2 INVESTMENT
----------------------------- -----------------------------
ENTERPRISE PARTNERSHIP
Title: President & CEO -----------------------------
--------------------------
Title: Chief Financial Officer
---------------------------
MULTIMEDIA ASIA PACIFIC PTY LTD.
By: /s/ MULTIMEDIA ASIA PACIFIC
------------------------------
PTY. LTD.
------------------------------
Title: DIRECTOR
---------------------------
[SIGNATURE PAGE TO RESTATED AND AMENDED
INVESTORS' RIGHTS AGREEMENT]
19
EXHIBIT A
---------
Series A Investor:
SOFTVEN NO. 2 INVESTMENT ENTERPRISE PARTNERSHIP
a limited partnership
0000 00xx Xxxxxx, Xxxxx 0000
Xxxxx Xxxxxx, XX 00000
Series B Investor:
MULTIMEDIA ASIA PACIFIC PTY LTD.
A proprietary limited company
000 Xxxxxxxxx Xxxx
Xxxxxxxxx Xxxxx
Xxxxxxxx 0000, Xxxxxxxxx
20
