ELLIE MAE, INC. AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
Exhibit 4.2
ELLIE MAE, INC.
AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
This Amended and Restated Investors’ Rights Agreement is made and entered into as of December 21, 2005 by and among (a) Ellie Mae, Inc., a California corporation (the “Company”), (b) certain persons and entities who are holders of at least a majority of the outstanding Registrable Securities (as defined in Section 1 herein) whose names are set forth on signature pages hereto (collectively, the “Majority Holders”), and (c) the undersigned purchasers of Series H Preferred Stock of the Company (the “Purchasers”).
RECITALS:
A. The Majority Holders desire to terminate the Sixth Amended and Restated Investors’ Rights Agreement dated as of January 19, 2005, by and among the Company, the Majority Holders and certain other holders of preferred stock of the Company (the “Prior Agreement”).
B. The Purchasers have required the amendment and restatement of the Prior Agreement as set forth herein as a condition to the closing of their investment under the Series H Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual promises and covenants contained herein, the parties agree as follows:
| 1. | Restrictions on Transfer; Registration Rights. |
1.1 Definitions. As used herein:
(a) The terms “register,” “registered” and “registration” refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the “Securities Act”), and the declaration or ordering of the effectiveness of such registration statement.
(b) For the purposes hereof, the term “Registrable Securities” means shares of (i) any and all Common Stock of the Company issued or issuable upon conversion of shares of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series G-2 Preferred Stock or Series H Preferred Stock of the Company, which have not been previously resold to the public in a registered public offering, (ii) stock issued with respect to or in any exchange for or in replacement of stock included in subparagraph (i) above which have not been previously resold to the public in a registered public offering, and (iii) stock issued in respect of the stock referred to in (i) and (ii) above as a result of a stock split, stock dividend or the like, which have not been previously resold to the public in a registered public offering. For the purposes hereof, the term “Registrable Securities” also means, only with respect to The First
American Corporation, a California corporation, and its successors and transferees (“First American”), shares of any and all Common Stock of the Company issued upon exercise of that certain warrant of the Company issued to First American pursuant to the Stock Purchase Agreement entered into as of January 30, 2001 by and among the Company, First American, and Contour Software, Inc., a California corporation (the “Contour Stock Purchase Agreement”).
(c) The terms “Holder” or “Holders” mean any person or persons to whom Registrable Securities were originally issued and who execute this Agreement or qualifying transferees under Section 5 hereof who hold Registrable Securities.
(d) The term “Initiating Holders” means any Holder or Holders of in the aggregate at least 25% of the Registrable Securities which have not been previously resold to the public in a registered public offering.
1.2 Requested Registration.
(a) Request for Registration. In case the Company shall receive from the Initiating Holders a written request that the Company effect any registration with respect to Registrable Securities the reasonably expected aggregate offering price of which equals or exceeds $5,000,000 including underwriting discounts and commissions, the Company will:
(i) within ten (10) days after its receipt thereof give written notice of the proposed registration to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such registration (including, without limitation, preparation of a registration statement and prospectus complying as to form with the requirements of the Securities Act, the execution of an undertaking to file post-effective amendments, appropriate qualifications under the applicable blue sky or other state securities laws and appropriate compliance with exemptive regulations issued under the Securities Act and any other governmental requirements or regulations) as may be so requested and as would permit or facilitate the sale and distribution of all or such portion of such Holder’s or Holders’ Registrable Securities as is specified in such request, together with all or such portion of the Registrable Securities of any Holder or Holders joining in such request as are specified in a written request given within 20 days after receipt of such written notice from the Company;
provided, that the Company shall not be obligated to take any action to effect such registration pursuant to this Section 1.2:
(A) Prior to 180 days following the effective date of the Company’s first registered offering to the general public of its securities for its own account; or
(B) In any particular jurisdiction in which the Company would be required to execute a general consent to service of process in effecting such registration unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act; or
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(C) After the Company has effected two such registrations pursuant to this subsection 1.2(a) and such registrations have been declared or ordered effective.
Subject to the foregoing clauses (A) through (C), the Company shall file a registration statement covering the Registrable Securities so requested to be registered as soon as practical, but in any event within 75 days, in the case of an initial public offering, or 30 days, in the case of a subsequent offering, after receipt of the request or requests of the Initiating Holders; provided, however, that if the Company shall furnish to such Holders a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the Board of Directors it would be seriously detrimental to the Company for such registration statement to be filed at the date filing would be required and it is therefore essential to defer the filing of such registration statement, the Company shall be entitled to delay the filing of such registration statement not more than once in any twelve month period for an additional period of up to 90 days.
(b) Underwriting. If the Initiating Holders intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to Section 1.2 and the Company shall include such information in the written notice referred to in subsection 1.2(a)(i). The right of any Holder to registration pursuant to Section 1.2 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. The Company shall (together with all Holders proposing to distribute their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders, provided, however, that the managing underwriter shall be approved by the Company, which approval shall not be unreasonably withheld. Notwithstanding any other provision of this Section 1.2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, the Initiating Holders shall so advise all Holders of Registrable Securities who have elected to participate in such offering, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all such Holders thereof in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders. If any Holder of Registrable Securities disapproves of the terms of the underwriting, he may elect to withdraw therefrom by written notice to the Company, the underwriter and the Initiating Holders. Any Registrable Securities which are excluded from the underwriting by reason of the underwriter’s marketing limitation or withdrawn from such underwriting shall be withdrawn from such registration. If the underwriter has not limited the number of Registrable Securities to be underwritten, the Company, employees of the Company and other holders of the Company’s Common Stock may include securities for its (or their) own account in such registration if the underwriter so agrees and if the number of Registrable Securities which would otherwise have been included in such registration and underwriting will not thereby be limited by the underwriter.
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1.3 Company Registration.
(a) Right to Include. If at any time, or from time to time, the Company proposes to register any of its securities, for its own account or the account of any of its shareholders other than the Holders (other than a registration relating solely to employee stock option or purchase plans, or a registration relating solely to an SEC Rule 145 transaction, or a registration on any other form, other than Form X-0, X-0 or S-3, or any successor to such form which does not include substantially the same information as would be required to be included in a registration statement covering the sale of Registrable Securities) the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification under blue sky laws or other compliance with applicable laws), and in any underwriting involved therein, all the Registrable Securities specified in a written request or requests, made within 20 days after receipt of such written notice from the Company, by any Holder or Holders to be included in any such registration, except as set forth in subsection 1.3(b) below.
(b) Underwriting. If the registration of which the Company gives notice is for a registered public offering involving an underwriting, the Company shall so advise the Holders as a part of the written notice given pursuant to subsection 1.3(a)(i). In such event the right of any Holder to registration pursuant to Section 1.3 shall be conditioned upon such Holder’s participation in such underwriting and the inclusion of such Holder’s Registrable Securities in the underwriting to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company and the other holders distributing their securities through such underwriting) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by the Company. Notwithstanding any other provision of this Section 1.3, if the underwriter determines that marketing factors require a limitation of the number of shares to be underwritten, the underwriter may limit the number of Registrable Securities to be included in the registration and underwriting (i) completely, in the case of the Company’s initial public offering, or (ii) to not less than 25% of the shares to be included in any other registration. In the event of a cutback by the underwriters of the number of Registrable Securities to be included in the registration and underwriting, the Company shall advise all Holders of Registrable Securities which would otherwise be registered and underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the registration and underwriting shall be allocated among all of such Holders in proportion, as nearly as practicable, to the respective amounts of Registrable Securities held by such Holders. If any Holder disapproves of the terms of any such underwriting, he may elect to withdraw therefrom by written notice to the Company and the underwriter. Any Registrable Securities excluded or withdrawn from such underwriting shall be withdrawn from such registration.
1.4 Form S-3. After its initial public offering, the Company shall use its best efforts to qualify for registration on Form S-3 or any comparable or successor form. After the Company has qualified for the use of Form S-3, Holders of the outstanding Registrable Securities shall have the right to request registrations on Form S-3 (such requests shall be in writing and shall
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state the number of shares of Registrable Securities to be disposed of and the intended method of disposition of Shares by such Holders), subject only to the following:
(a) The Company shall not be required to effect a registration pursuant to this Section 1.4 within 120 days of the effective date of any registration referred to in Sections 1.2 or 1.3 above.
(b) The Company shall not be required to effect a registration pursuant to this Section 1.4 unless the Holder or Holders requesting registration propose to dispose of shares of Registrable Securities having an aggregate disposition price (before deduction of underwriting discounts and expenses of sale) of at least $500,000.
(c) The Company shall not be required to effect more than one registration pursuant to this Section 1.4 in any consecutive 12 month period.
(d) The Company shall not be required to effect any further registrations under this Section 1.4 after the Company has effected four such registrations that have been declared or ordered effective.
The Company shall promptly give written notice to all Holders of Registrable Securities of the receipt of a request for registration pursuant to this Section 1.4 and shall provide a reasonable opportunity for other Holders to participate in the registration, provided that if the registration is for an underwritten offering, the terms of subsection 1.2(b) shall apply to all participants in such offering. Subject to the foregoing, the Company will use its best efforts to effect promptly the registration of all shares of Registrable Securities on Form S-3 to the extent requested by the Holder or Holders thereof for purposes of disposition; provided, however, that if the Company shall furnish to such Holders a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgement of the Board of Directors it would be seriously detrimental to the Company for such registration statement to be filed at the date filing would be required and it is therefore essential to defer the filing of such registration statement, the Company shall be entitled to delay the filing of such registration statement not more than once in any twelve month period for a period of up to 90 days. Any registration pursuant to this Section 1.4 shall not be counted as a registration pursuant to Section 1.2.
1.5 Expenses of Registration. All expenses incurred in connection with any registration, qualification or compliance pursuant to this Section 1, including without limitation, all registration, filing and qualification fees, printing expenses, fees and disbursements of counsel for the Company and one counsel for the selling Holders and expenses of any special audits incidental to or required by such registration, shall be borne by the Company except as follows:
(a) The Company shall not be required to pay for expenses of any registration proceeding begun pursuant to Section 1.2 or 1.4, the request for which has been subsequently withdrawn by the Initiating Holders, in which such case, such expenses shall be borne by the Holders requesting such withdrawal; provided, however, that in lieu of paying such expenses a majority in interest of the Initiating Holders may elect to forfeit their right to request one
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registration pursuant to Section 1.2; provided further, however, that if at the time of such withdrawal the Holders have learned of a material adverse change in the business, condition or prospects of the Company from that known to the Holders at the time of their request and have withdrawn the request with reasonable promptness following disclosure by the Company of such change, then the Holders shall not be required to pay any such expenses and shall retain their rights to such registration pursuant to Section 1.2.
(b) The Company shall not be required to pay fees of legal counsel of a Holder except for a single counsel acting on behalf of all selling Holders.
(c) The Company shall not be required to pay underwriters’ fees, discounts or commissions relating to the Registrable Securities.
1.6 Registration Procedures. In the case of each registration, qualification or compliance effected by the Company pursuant to this Agreement, the Company will keep each Holder participating therein advised in writing as to the initiation of each registration, qualification and compliance and as to the completion thereof. At its expense the Company will:
(a) Keep such registration, qualification or compliance pursuant to Sections 1.2, 1.3 or 1.4 effective for a period of 180 days or until the Holder or Holders have completed the distribution described in the registration statement relating thereto, whichever first occurs;
(b) Furnish to the Holders such numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of the Registrable Securities owned by them;
(c) 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 or 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;
(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 United States 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, unless the Company is already subject to service in such jurisdiction and except as may be required by the Securities Act;
(e) Cause all such Registrable Securities registered under this Section 1 to be listed on each securities exchange or market on which similar securities issued by the Company are then listed or quoted;
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(f) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering, and each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement;
(g) Provide a transfer agent and registrar for all Registrable Securities registered hereunder and a CUSIP number for all such Registrable Securities, in each case not later than the effective date of such registration; and
(h) Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 1, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with such registration, 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 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, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities, and (ii) a letter dated 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, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.
1.7 Indemnification.
(a) The Company will indemnify and hold harmless each Holder of Registrable Securities, each of its officers, directors and partners, and each person controlling such Holder, with respect to which such registration, qualification or compliance has been effected pursuant to this Agreement, and each underwriter, if any, and each person who controls any underwriter of the Registrable Securities held by or issuable to such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereto) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any preliminary or final prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance, or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, or any violation or alleged violation by the Company relating to action or inaction required of the Company in connection with the requirements of the Securities Act or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or any rule or regulation promulgated under the Securities Act or any state securities law applicable to the Company and will reimburse each such Holder, each of its officers, directors and partners, and each person controlling such Holder, each such underwriter and each person who controls any such underwriter, for any reasonable legal and any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action; provided, however, that the Company will not be liable in any such case to the extent that any such claim, loss, damage or liability arises out of or is based on any untrue statement or omission based upon written information furnished to the Company in an instrument duly executed by such Holder or underwriter specifically for use therein, and provided further that the agreement of the Company to indemnify any underwriter
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and any person who controls such underwriter contained herein with respect to any such preliminary prospectus shall not inure to the benefit of any underwriter, from whom the person asserting any such claim, loss, damage, liability or action purchased the stock which is the subject thereof, if at or prior to the written confirmation of the sale of such stock, a copy of the prospectus (or the prospectus as amended or supplemented) was not sent or delivered to such person, excluding the documents incorporated therein by reference, and the untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in the prospectus (or the prospectus as amended or supplemented).
(b) Each Holder will, if Registrable Securities held by or issuable to such Holder are included in the securities as to which such registration, qualification or compliance is being effected, indemnify and hold harmless the Company, each of its directors and officers, each underwriter, if any, of the Company’s securities covered by such a registration statement, each person who controls the Company within the meaning of the Securities Act, and each other such Holder, each of its officers, directors and partners and each person controlling such Holder, against all claims, losses, expenses, damages and liabilities (or actions in respect thereof) arising out of or based on any untrue statement (or alleged untrue statement) of a material fact contained in any preliminary or final prospectus, offering circular or other document (including any related registration statement, notification or the like) incident to any such registration, qualification or compliance or based on any omission (or alleged omission) to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and will reimburse the Company, such Holders, such directors, officers, partners, persons or underwriters for any reasonable legal or any other expenses incurred in connection with investigating, defending or settling any such claim, loss, damage, liability or action, in each case to the extent, but only to the extent, that such untrue statement (or alleged untrue statement) or omission (or alleged omission) is made in such registration statement, prospectus, offering circular or other document in reliance upon and in conformity with written information furnished to the Company in an instrument duly executed by such Holder specifically for use therein, and provided further that the agreement of the Holder to indemnify any underwriter and any person who controls such underwriter (or to indemnify the Company and each person who controls the Company if the Company is selling directly and not through an underwriter) contained herein with respect to any such preliminary prospectus shall not inure to the benefit of any underwriter, from whom the person asserting any such claim, loss, damage, liability or action purchased the stock which is the subject thereof (or the Company if such stock was purchased directly from the Company), if at or prior to the written confirmation of the sale of such stock, a copy of the prospectus (or the prospectus as amended or supplemented) was not sent or delivered to such person, excluding the documents incorporated therein by reference, and the untrue statement or omission of a material fact contained in such preliminary prospectus was corrected in the prospectus (or the prospectus as amended or supplemented). Notwithstanding the foregoing, in no event shall the indemnification provided by any Holder hereunder exceed the net proceeds received by such Holder for the sale of such Holder’s securities pursuant to such registration.
(c) Each party entitled to indemnification under this Section 1.7 (the “Indemnified Party”) shall give notice to the party required to provide indemnification (the “Indemnifying Party”) promptly after such Indemnified Party has actual knowledge of any claim as to which indemnity may be sought. The Indemnified Party shall promptly permit the Indemnifying Party to assume the defense of any such claim or any litigation resulting therefrom,
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provided that counsel for the Indemnifying Party, who shall conduct the defense of such claim or litigation, shall be approved by the Indemnified Party (whose approval shall not be unreasonably withheld). The Indemnified Party may participate in such defense and hire counsel at such party’s own expense; provided, however, that the Indemnified Party shall have the right to retain its own counsel with the fees and expenses to be paid by the Indemnifying Party if the Indemnifying Party refuses to assume the defense thereof or 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 of any Indemnified Party to give notice as provided herein shall not relieve the Indemnifying Party of its obligations hereunder, except to the extent that such failure is materially prejudicial to an Indemnifying Party’s ability to defend such action. No Indemnifying Party, in the defense of any such claim or litigation, shall, except with the consent of the 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. No Indemnified Party shall be entitled to indemnification hereunder if such Indemnified Party consents to entry of any judgment or enters into any settlement without the consent of the Indemnifying Party. Any Indemnified Party shall cooperate with the Indemnifying Party in the defense of any claim or litigation brought against such Indemnified Party.
1.8 Lock-Up Provision. Upon receipt of a written request by the Company or by its underwriters, the Holders shall not sell, sell short, grant an option to buy, or otherwise dispose of shares of the Company’s Common Stock or other securities (except for any such shares included in the registration) for a period of 180 days following the effective date of the initial registration of the Company’s securities; provided, however, that such Holder shall have no obligation to enter into the agreement described in this Section 1.8 unless all executive officers and directors enter into similar agreements. The Company may impose stop-transfer instructions with respect to the shares (or securities) subject to the foregoing restriction until the end of said 180-day period.
1.9 Information by Holder. The Holder or Holders of Registrable Securities included in any registration shall promptly furnish to the Company such information regarding such Holder or Holders and the distribution proposed by such Holder or Holders as the Company may reasonably request in writing and as shall be required in connection with any registration, qualification or compliance referred to herein.
1.10 Rule 144A and Rule 144 Reporting.
(a) If the Company receives a request for the information required in Rule 144A(d)(4) from Initiating Holders on or after May 31, 2001, then the Company shall, within 30 days after the date of such request, provide such information to such Initiating Holders and any person or persons designated by an Initiating Holder as a prospective buyer in a transaction pursuant to Rule 144A. The Company’s obligations pursuant to this Section 1.10(a) shall extend to any permitted transferee of Registrable Securities under Section 5.
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(b) With a view to making available to Holders of Registrable Securities the benefits of certain rules and regulations of the Securities and Exchange Commission (the “SEC”) which may permit the sale of the Registrable Securities to the public without registration, 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 the Company agrees to:
(i) Make and keep public information available, as those terms are understood and defined in SEC Rule 144 under the Securities Act;
(ii) File with the SEC in a timely manner all reports and other documents required of the Company under the Securities Act and the Exchange Act; and
(iii) So long as a Holder owns any Registrable Securities, to furnish to such Holder forthwith upon such Holder’s 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 public), and of the Securities Act and the Exchange Act (at any time after it has become subject to such reporting requirements), a copy of the most recent annual and quarterly reports of the Company, and such other reports and documents so filed by the Company as such Holder may reasonably request in availing itself of any rule or regulation of the SEC allowing such Holder to sell any such securities without registration.
1.11 Limitations on Subsequent Registration Rights. From and after the date of this Agreement, the Company shall not, without the prior written consent of the Holders of a majority of the outstanding Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company which would allow such holder or prospective holder (a) to include such securities in any registration filed under Section 1.2, 1.3 or 1.4 hereof, unless under the terms of such agreement, such holder or prospective holder may include such securities in any such registration only to the extent that the inclusion of its securities will not reduce the amount of the Registrable Securities of the Holders which is included or (b) to make a demand registration which could result in such registration statement being declared effective prior to the earlier of either of the dates set forth in subsection 1.2(a)(ii)(A) or within 120 days of the effective date of any registration effected pursuant to Section 1.2 hereof.
1.12 Termination. The rights of a Holder under this Agreement (other than rights under Section 1.7) shall terminate on the earlier to occur of (a) the sixth anniversary of the closing of the Company’s first registered public offering of its securities, or (b) the date on which a Holder can sell all of its Registrable Securities without registration pursuant to Rule 144 within a three month period, unless at the time the Holder’s Registrable Securities represent more than one percent of the outstanding capital stock of the Company.
| 2. | Covenants of the Company. |
2.1 Financial Information. So long as a Holder continues to hold at least 200,000 shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock,
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Series G-2 Preferred Stock or Series H Preferred Stock of the Company (including shares of Common Stock issued upon conversion of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series G-2 Preferred Stock or Series H Preferred Stock of the Company) (collectively, the “Securities”), the Company will furnish the following information to each such Holder:
(a) Annual Financials. As soon as practicable after the end of each fiscal year hereafter, and in any event within 90 days thereafter, the Company will provide each such holder with consolidated balance sheets of the Company and its subsidiaries, if any, as at the end of such fiscal year, and consolidated income statements and consolidated statements of cash flows of the Company and its subsidiaries, if any, for such year, prepared in accordance with generally accepted accounting principles, all in reasonable detail, certified by independent public auditors of recognized national standing selected by the Company and accompanied by a copy of such auditors’ letter to management.
(b) Quarterly Financials. As soon as practicable after the end of each fiscal quarter (except the fourth fiscal quarter), and in any event within 45 days thereafter, the Company will provide each such holder with consolidated balance sheets of the Company and its subsidiaries, if any, as at the end of such fiscal quarter, and consolidated income statements of the Company and its subsidiaries, if any, for such quarter, prepared in accordance with generally accepted accounting principles (except for required footnotes and for minor year-end adjustments), all in reasonable detail, certified by the chief financial officer of the Company.
(c) Monthly Financials. As soon as practicable after the end of each month (except the last month of the fiscal year), and in any event within 20 days thereafter, the Company will provide each such holder with consolidated balance sheets and income statements of the Company and its subsidiaries, if any, as of the end of such month, prepared in accordance with generally accepted accounting principles (except for required footnotes and for minor year end adjustments); provided, however, that the Company shall not be required to provide such monthly financial information to any Purchaser holding less than 1,000,000 shares of Securities.
(d) Budget. As soon as practicable after its adoption or approval by the Company’s Board of Directors, but not later than the commencement of such fiscal year, the Company will provide each such holder with a consolidated annual plan for such fiscal year which shall include monthly capital and operating expense budgets, cash flow statements, projected balance sheets and profit and loss projections for each such month and for the end of the year, itemized in such detail as the Board of Directors may reasonably determine; provided, however, that the Company shall not be required to provide such consolidated annual plan to any Purchaser holding less than 1,000,000 shares of Securities.
(e) Termination of Covenant. The Company’s obligation to deliver the information required under subsections (c) and (d) above shall terminate upon the date on which the Company is required to file a report with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act by reason of (i) the Company’s having registered any of its securities pursuant to Section 12 of the Exchange Act or (ii) a registration statement filed by the Company under the Securities Act having become effective.
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2.2 Confidentiality of Information. All information furnished by the Company pursuant to Section 2.1 shall be deemed proprietary and confidential to the Company and will not be disclosed by any Holder to any person or entity without the prior written consent of the Company; provided, however, that such consent shall not be unreasonably withheld. This restriction shall not apply to information which becomes known to the public without fault of the recipient or which is disclosed pursuant to a governmental regulation or order, provided that prior to disclosure pursuant to governmental regulation or order the disclosing party shall notify the Company of such proposed disclosure in order to permit the Company to seek confidential treatment of such information.
| 3. | Right to Maintain. |
3.1 “New Securities”. For purposes of this Section 3, the term “New Securities” shall mean shares of Common Stock, Preferred Stock or any other class of capital stock of the Company, whether or not now authorized, securities of any type that are convertible into shares of such capital stock, and options, warrants or rights to acquire shares of such capital stock. Notwithstanding the foregoing, the term “New Securities” will not include (a) securities issuable upon conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series G-2 Preferred Stock or Series H Preferred Stock; (b) securities offered to the public pursuant to a registration statement filed under the Securities Act; (c) securities issued pursuant to the acquisition of another corporation by the Company by merger, purchase of substantially all of the assets, or other reorganization whereby the Company owns not less than 51% of the voting power of such corporation; (d) up to an aggregate of [8,500,000] shares of Common Stock (or related options) issued or issuable at any time to officers, directors, employees or consultants of the Company, pursuant to any stock grant, stock option plan or stock purchase plan or other stock incentive agreement or arrangement approved by the Board of Directors (which figure shall include any options outstanding on the date hereof); (e) securities issued in connection with equipment lease or working capital debt financings, so long as the number of securities so issued does not exceed one percent of the then outstanding capital stock of the Company; (f) convertible securities issued in connection with business or partnership relationships with third parties designed to incentive such third parties; and (g) shares of Common Stock or Preferred Stock issued in connection with any stock split, stock dividend or recapitalization by the Company.
3.2 Grant of Rights. Subject to the terms specified in this Section 3, the Company hereby grants to each Holder who at the time holds not less than 200,000 shares of Securities the right of first refusal to purchase a portion of any issue of New Securities which the Company hereafter may from time to time propose to issue and sell as shall maintain such Holder’s pro rata percentage ownership of the Company’s capital stock. The “pro rata” percentage ownership of a Holder is calculated by dividing (i) the number of shares of Common Stock held by such Holder plus the total number of shares of Common Stock issuable upon the conversion of all Preferred Stock then held by such Holder by (ii) the total number of shares of Common Stock then outstanding, including shares issuable upon conversion of any Preferred Stock.
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3.3 Procedure.
(a) In the event the Company proposes to undertake an issuance of New Securities, it shall give those Holders who qualify pursuant to Section 3.2 written notice of its intention, describing the type of New Securities, the price and the material terms upon which the Company proposes to issue the same. A Holder shall have 20 calendar days from the date of receipt of any such notice to agree to purchase up to its pro rata share of such New Securities for the price and upon the terms specified in the Company’s notice by giving written notice to the Company to such effect and stating therein the quantity of New Securities to be purchased.
(b) The Company shall promptly, in writing, inform each Holder electing to purchase its full pro rata share of such New Securities (a “Fully-Exercising Purchaser”) of any other Holder’s failure to do likewise. During the 15 calendar day period commencing after receipt of such information, each Fully-Exercising Holder shall be entitled to purchase that portion of the New Securities for which Holders were entitled to subscribe but which were not subscribed for by the Holders which is equal to multiplying the total number of unsubscribed New Securities by a fraction, the numerator of which is the number of shares of Common Stock held by such Fully-Exercising Holder plus the total number of shares of Common Stock issuable upon the conversion of all Preferred Stock then held by such Fully-Exercising Holder, and the denominator of which is the total number of shares of Common Stock owned by all Fully-Exercising Holders, including shares issuable upon conversion of any Preferred Stock held by Fully-Exercising Holders.
(c) If less than all of the New Securities are subscribed for after the expiration of the 20 calendar day period referred to in Section 3.3(a), and (so long as there is at least one Fully Exercising Holder) after the expiration of the additional 15 calendar day period referred to in Section 3.3(b), the Company shall have 90 days thereafter to sell or enter into an agreement to sell any New Securities not purchased by Holders exercising their rights at a price and upon terms no more favorable to the purchaser than the terms specified in the Company’s notice to the Holders, after which 90 day period the Company shall not thereafter sell such New Securities without first offering a portion to the Holders in accordance with this Section 3.
3.4 Termination of Rights. The rights granted under this Section 3 shall expire as to all Holders upon the closing of a firm commitment 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 to the public with net proceeds to the Company of not less than $20,000,000 and at a public offering price per share (prior to underwriter commissions and expenses) that is not less than $7.50 (as adjusted for stock splits, stock combinations and the like) (a “Qualified Offering”).
4. Board Observation Rights.
(a) So long as Hotung Venture Capital Corporation, Shengtung Venture Capital Corporation, Daitung Venture Capital Corporation and Xxxxx—Xxxx XX Venture Capital Corporation (collectively, “Hotung”) collectively holds at least 500,000 shares (as adjusted for any stock splits or recapitalizations) of Registrable Securities, the Company agrees to permit one observer (the “Observer”) acceptable to the Company, whom will be designated by and
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represents Hotung to be present at all meetings of the Company’s Board of Directors or any committee thereof, and the Company will give the Observer notice of such meetings at the same time notice is provided or delivered to members of the Board of Directors; provided, however, that such Observer may be excluded from any meeting or any portion thereof if, in the reasonable opinion of a majority of the directors present, such exclusion is necessary or appropriate based on the subject matter to be discussed. Materials that are sent to the directors before a meeting of the Board of Directors will be sent simultaneously by the Company to the Observer; provided, however, that the Company may exclude from the materials sent to the Observer any materials that the Company believes relate directly and substantially to any matter in which Hotung, as applicable, has a material business or financial interest (other than by reason of its interests as a Company stockholder).
(b) In addition and notwithstanding the foregoing, if the Company receives advice from legal counsel that there is a substantial risk that discussing a specified matter in the presence of a person who is not a member of the Board of Directors, or sending specified materials to such person, would result in the Company’s loss of attorney-client privilege with respect to a specified matter, then the Company may exclude the Observer or exclude such materials from the materials sent to such person, or both, provided that the Company will promptly notify the Observer that any exclusion from a meeting or materials distributed to directors was effected to preserve its attorney-client privilege or avoid conflicts of interest. Hotung agrees to maintain, and to cause its Observer and their respective officers, directors, employees, and agents to maintain, the confidentiality of any Proprietary Information obtained by Hotung and/or its Observer.
(c) The rights granted under this Section 4 are not assignable by Hotung and shall expire upon the closing of a Qualified Offering.
5. Assignment of Rights.
The rights granted pursuant to this Agreement (other than the rights set forth in Section 4) may be assigned by a Holder, or its transferee, (i) upon sale or transfer (other than a sale to the public) of at least 200,000 shares of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock, Series G Preferred Stock, Series G-2 Preferred Stock or Series H Preferred Stock of the Company (including shares of Common Stock issued upon conversion thereof) (as adjusted for stock dividends, stock splits, recapitalization and the like) held by a Holder.
6. Miscellaneous.
6.1 Aggregation of Stock. All shares of Preferred Stock of the Company held or acquired (or Common Stock issuable upon conversion thereof) by affiliated entities or persons (including current or former constituent partners or members of any partnership or limited liability company or affiliated partnerships or other entities) shall be aggregated together for the purpose of determining the availability or discharge of any rights under this Agreement.
6.2 Amendment or Waiver. Any term of this Agreement may be amended and the observance of any such term may be waived (either generally or in a particular instance and
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either retroactively or prospectively) with the written consent of the Company and holders of at least a majority of the outstanding Registrable Securities. Any amendment or waiver effected in accordance with this paragraph shall be binding upon all of the parties hereto and their successors and assigns, even if such party did not consent in writing to such amendment or waiver.
6.3 Governing Law. This Agreement shall be governed in all respects by the laws of the State of California as such laws are applied to agreements between California residents entered into and to be performed entirely within California.
6.4 Entire Agreement. This Agreement constitutes the full and entire understanding and agreement between the parties with respect to the subject hereof and it supersedes, merges, and renders void any and all prior understandings and/or agreements, written or oral, with respect to such subject matter.
6.5 Notices. All notices and other communications required or permitted hereunder shall be in writing and shall be personally delivered, mailed by certified or registered mail, postage prepaid, or delivered by overnight delivery or express courier, addressed to the Holders at their addresses shown on the records of the Company or, to the Company, at its principal executive office, or at such other address as the Company or any Holder shall hereafter furnish in writing. All notices that are mailed shall be deemed delivered five (5) days after deposit in the United States mail.
6.6 Severability. In case any provision of this Agreement shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby.
6.7 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 and the same instrument.
6.8 Additional Parties. The parties hereto agree that additional holders of Preferred Stock of the Company may, with the consent only of the Company, be added as parties to this Agreement with respect to any or all Preferred Stock of the Company held by them, and shall thereupon be deemed for all purposes “Holders” hereunder; provided, however, that from and after the date of this Agreement, the Company shall not without the prior written consent of the Holders holding at least a majority of the shares of Registrable Securities, enter into any agreement with any holder or prospective holder of any securities of the Company providing for the grant of such holder of rights superior to those granted herein. Any such additional party shall execute a counterpart with this Agreement, and upon execution by such additional party and by the Company, shall be considered a Holder for the purposes of this Agreement.
Signature Page Follows
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.
| COMPANY: | ELLIE MAE, INC. | |||||
| By: | /s/ Xxxxxxx Xxxxxxxx | |||||
| Xxxxxxx Xxxxxxxx, Chief Executive Officer | ||||||
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| PURCHASERS: | ||||||
| GKM SBlC, L.P. | ||||||
| By: | GKM SBIC Management, LLC, its Managing Partner | |||||
| By: | /s/ Xxxxxxxx Xxxxx | |||||
| Xxxxxxxx Xxxxx, its Managing Member | ||||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||||
| Xxxxx X. Xxxxxxx, its Managing Member | ||||||
| OSPREY VENTURES, L.P. | ||||||
| By: | Osprey Management, LLC, its Managing Partner | |||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||||
| Xxxxx X. Xxxxxxx, its Managing Member | ||||||
| OSPREY VENTURES Q, L.P. | ||||||
| By: | Osprey Management, LLC, its Managing Partner | |||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||||
| Xxxxx X. Xxxxxxx, its Managing Member | ||||||
| OSPREY VENTURES AFFILIATES, L.P. | ||||||
| By: | Osprey Management, LLC, its Managing Partner | |||||
| By: | /s/ Xxxxx X. Xxxxxxx | |||||
| Xxxxx X. Xxxxxxx, its Managing Member | ||||||
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| MAJORITY HOLDERS: | ||||||
| ALTA CALIFORNIA PARTNERS II, L.P. | ||||||
| By: | Alta California Management Partners II, LLC, its General Partner | |||||
| By: | /s/ Xxxxxx Xxxxxx | |||||
| Xxxxxx Xxxxxx, Member | ||||||
| Address: | Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000 Xxx Xxxxxxxxx, XX 00000 | |||||
| Phone: | (000) 000-0000 | |||||
| Fax: | (000) 000-0000 | |||||
| ALTA EMBARCADERO PARTNERS II, LLC | ||||||
| By: | /s/ Xxxxxx Xxxxxx | |||||
| Xxxxxx Xxxxxx Under Power of Attorney | ||||||
| Address: | Xxx Xxxxxxxxxxx Xxxxxx, Xxxxx 0000 Xxx Xxxxxxxxx, XX 00000 | |||||
| AMA 98 Partners, L.P. | ||||||
| AMA 98 Ventures, L.P. | ||||||
| AMA 98 Corp., L.P. | ||||||
| AMA 98 Investors, L.P. | ||||||
| By: | ALLOY VENTURES 1998, LLC, General Partner of AMA 98 Partners, L.P., AMA 98 Ventures, L.P., AMA 98 Corp., L.P. and AMA 98 Investors, L.P. | |||||
| By: |
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| Name and Position: |
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| Address: | Alloy Ventures | |||||
| 000 Xxxxxx Xxxxxx, Xxxxxx Xxxxx | ||||||
| Xxxx Xxxx, XX 00000 | ||||||
| Phone: | (000) 000-0000 | |||||
| Fax: | (000) 000-0000 | |||||
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| CAPITAL ENTREPRENEURSHIP OPPORTUNITIES, LLC | ||
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| CHARTER VENTURES III, LLC | ||
| By: | /s/ X. Xxxx Xxxxx | |
| X. Xxxx Xxxxx, Member | ||
| Address: | Charter Venture Capital | |
| 000 Xxxxxxxxxx Xxx. #0000 | ||
| Xxxx Xxxx, XX 00000 | ||
| Phone: | (000) 000-0000 | |
| Fax: | (000)000-0000 | |
| XXXX X. XXXXXX CHARITABLE REMAINDER TRUST | ||
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SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| THE PIDWELL FAMILY LIVING TRUST DATED 6/25/87 | ||
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| PIEDMONT CITRUS | ||
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| PMI MORTGAGE INSURANCE CO. | ||
| By: | /s/ Xxxxxxx X. Xxxxxxx | |
| Name: | Xxxxxxx X. Xxxxxxx | |
| Title: | Vice President | |
| Address: | 0000 Xxx Xxxx | |
| Xxxxxx Xxxxx, XX 00000 | ||
| Phone: | (000) 000-0000 | |
| Fax: | (000) 000-0000 | |
| XXXXXX X. XXXXX | ||
| Signed: |
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SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| XXXXXXX XXXXXX & CO., INC. FBO | ||
| XXXXX X. XXXXXXX XXX #7924-9330 | ||
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| XXXXX XXXXXXXX | ||
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| THE FIRST AMERICAN CORPORATION | ||
| Signed: | /s/ Xxxxxx X. Xxxxxxx | |
| Name: |
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| Address: Xxx Xxxxx Xxxxxxxx Xxx | ||
| Xxxxx Xxx, XX 00000 | ||
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| THE PlDWELL FAMILY LIVING TRUST DATED 6/25/87 | ||
| Signed: |
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| PIEDMONT CITRUS | ||
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| PMI MORTGAGE INSURANCE CO. | ||
| By: |
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| Address: | 000 Xxxxxxxxxx Xx. | |
| Xxx Xxxxxxxxx, XX 00000 | ||
| Phone: | (000)000-0000 | |
| Fax: | (000) 000-0000 | |
| XXXXXX X. XXXXX | ||
| Signed: | /s/ Xxxxxx X. Xxxxx | |
| Address: | c/o Alloy Ventures | |
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SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
| HOTUNG VENTURE CAPITAL CORPORATION | ||
| By: | /s/ Tsui-Xxx Xxxxx | |
| Name: | Tsui-Xxx Xxxxx |
| Title: |
President |
| DAITUNG DEVELOPMENT AND INVESTMENT CORPORATION | ||
| By: | /s/ Tsui-Xxx Xxxxx | |
| Name: | Tsui-Xxx Xxxxx |
| Title: |
President |
| XXXXX-XXXX XX VENTURE CAPITAL CORPORATION | ||
| By: | /s/ Tsui-Xxx Xxxxx | |
| Name: | Tsu-Xxx Xxxxx |
| Title: |
President |
| SHENGTUNG VENTURE CAPITAL CORPORATION | ||
| By: | /s/ Tsui-Xxx Xxxxx | |
| Name: | Tsui-Xxx Xxxxx |
| Title: |
President |
| Address: | 10F,NQ. 000, XXXX-XXXXXX XX., XXXXXX, 00000, XXXXXX, R.O.C. | |
| Phone: 000-0-00000000 | ||
| Fax: 000-0-00000000 | ||
SIGNATURE PAGE TO AMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT
