Exhibit 10.5
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (this
"AGREEMENT") is made as of the 17th day of March, 2000 by and among Open
Solutions Inc., a Delaware corporation (the "COMPANY") and each of the
individuals and entities listed on Schedules A and B hereto (each an "INVESTOR"
and collectively the "INVESTORS").
RECITALS
WHEREAS, certain of the Investors listed on Schedule A are the holders
of Series A-1 Preferred Stock of the Company, par value $.01 per share (the
"SERIES A-1 PREFERRED STOCK") and Series A-2 Preferred Stock of the Company, par
value $.01 per share (the "SERIES A-2 PREFERRED STOCK"); and
WHEREAS, certain of the Investors listed on Schedule A are the holders
of Series B Preferred Stock of the Company, par value $.01 per share (the
"SERIES B PREFERRED STOCK"); and
WHEREAS, certain of the Investors listed on Schedule A are the holders
of Series C Preferred Stock of the Company, par value $.01 per share (the
"SERIES C PREFERRED STOCK");
WHEREAS, certain of the Investors listed on Schedule A are the holders
of Series D Preferred Stock of the Company, par value $.01 per share (the
"SERIES D PREFERRED STOCK");
WHEREAS, certain of the Investors listed on Schedule A are holders of
shares of Series E Preferred Stock of the Company, par value $.01 per share (the
"SERIES E PREFERRED STOCK");
WHEREAS, the Investors listed on Schedule B have agreed to purchase
from the Company shares of Series F Preferred Stock of the Company, par value
$.01 per share (the "SERIES F PREFERRED STOCK"); and
WHEREAS, in order to induce the Company to issue the Series F Preferred
Stock and to induce the Investors listed on Schedule B to invest funds in the
Company, the Investors and the Company hereby agree that this Agreement shall
govern the rights of the Investors to cause the Company to register shares of
Common Stock issuable to the Investors and certain other matters as set forth
herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "ACT" means the Securities Act of 1933, as
amended.
(b) The term "FORM S-3" means such form under the Act as
in effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC that permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(c) The term "HOLDER" means any person owning or having
the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.13 hereof.
(d) The term "1934 ACT" means the Securities Exchange Act
of 1934, as
amended.
(e) The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(f) The term "REGISTRABLE SECURITIES" means (i) the
Common Stock issuable or issued upon conversion of the Series A-1 Preferred
Stock, (ii) the Common Stock issuable or issued upon conversion of the Series
A-2 Preferred Stock, (iii) the Common Stock issuable or issued upon conversion
of the Series B Preferred Stock, including shares of Series B Preferred Stock
issuable upon exercise of any warrant, (iv) the Common Stock issuable or issued
upon conversion of the Series C Preferred Stock, including shares of Series C
Preferred Stock issuable upon exercise of any warrant, (v) the Common Stock
issuable or issued upon conversion of the Series D Preferred Stock, including
shares of Series D Preferred Stock issuable upon exercise of any warrant, (vi)
the Common Stock issuable or issued upon conversion of the Series E Preferred
Stock, (vii) the Common Stock issuable or issued upon conversion of the Series F
Preferred Stock, and (viii) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
that is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of the shares referenced in (i), (ii), (iii),
(iv), (v), (vi), (vii) and (viii) above, excluding in all cases, however, any
Registrable Securities sold by a person in a transaction in which his rights
under this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Request for Registration.
(a) If the Company shall receive at any time (i) before
the effective date of the first registration statement for a public offering of
securities of the Company (other than a registration statement relating either
to the sale of securities to employees of the Company pursuant to a stock
option, stock purchase or similar plan or a SEC Rule 145 transaction), a written
request from the Holders of a majority of the Registrable Securities then
outstanding that the Company file a registration statement under the Act
covering the registration of at least thirty percent (30%) of the Registrable
Securities then outstanding, or (ii) after the effective date of the
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first registration statement for a public offering of securities of the Company
(other than a registration statement relating to either the sale of securities
to employees of the Company pursuant to a stock option, stock purchase or
similar plan or a SEC Rule 145 transaction), a written request from Holders of
Registrable Securities covering the registration of Registrable Securities with
an anticipated gross offering price of at least $5,000,000, then the Company
shall:
(i) within ten (10) days of the receipt thereof,
give written notice of such request to all Holders; and
(ii) effect as soon as practicable, and in any
event within ninety (90) days of the receipt of such request, the registration
under the Act of all Registrable Securities that the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 3.5, subject to the limitations of subsection 1.2(b).
(b) If the Holders initiating the registration request
hereunder ("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 subsection 1.2(a) and the
Company shall include such information in the written notice referred to in
subsection 1.2(a). The underwriter will be selected by the Company and shall be
reasonably acceptable to a majority in interest of the Initiating Holders. In
such event, the right of any Holder to include his Registrable Securities in
such registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form for a large institutional investor with
the underwriter or underwriters selected for such underwriting. 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, then the Initiating Holders shall so advise
all Holders of Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the underwriting shall be allocated among all Holders thereof,
including the Initiating Holders, in proportion (as nearly as practicable) to
the amount of Registrable Securities of the Company owned by each Holder;
provided, however, that the number of shares of Registrable Securities to be
included in such underwriting shall not be reduced unless all other securities
are first entirely excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the 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, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than sixty
(60) 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-month period.
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(d) In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected two (2)
registrations pursuant to this Section 1.2 that have been declared or ordered
effective;
(ii) During the period starting with the date
sixty (60) days prior to the Company's good faith estimate of the date of filing
of, and ending on a date one hundred eighty (180) days after the effective date
of, a registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose
of shares of Registrable Securities that may be immediately registered on Form
S-3 pursuant to a request made pursuant to Section 1.12 below.
1.3 Company Registration. If (but without any obligation to do so)
the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
capital stock under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form which does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities which are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this
Section 1 to effect the registration of any Registrable Securities, the Company
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use 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 a period of up to one
hundred twenty (120) days or until the distribution contemplated in the
Registration Statement has been completed; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Act, permits an offering on a continuous or
delayed basis, and provided further that applicable rules under the Act
governing
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the obligation to file a post-effective amendment permit, in lieu of filing a
post-effective amendment which (I) includes any prospectus required by Section
10(a)(3) of the Act or (II) reflects facts or events representing a material or
fundamental change in the information set forth in the registration statement,
the incorporation by reference of information required to be included in (I) and
(II) above to be contained in periodic reports filed pursuant to Section 13 or
15(d) of the 1934 Act in the registration statement.
(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 Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders, as the case may be, such
numbers of copies of a prospectus, including a preliminary prospectus, in
conformity with the requirements of the Act, and such other documents as they
may reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(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 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) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities in each case not later than the effective date of
such registration.
1.5 Furnish Information.
(a) It shall be a condition precedent to the obligations
of the Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding himself or
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itself, the Registrable Securities held by him or it, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to
any registration requested pursuant to Section 1.2 or Section 1.12 if, due to
the operation of subsection 1.2(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to Section 1.2 if the registration request is subsequently withdrawn at the
request of the Holders of a majority of the Registrable Securities to be
registered (in which case all selling Holders shall bear such expenses), unless
(i) the registration is withdrawn following any deferral of the registration by
the Company pursuant to Section 1.2(c); (ii) the registration is withdrawn due
to a material adverse change in the Company's business or financial condition;
or (iii) the Holders of a majority of the Registrable Securities agree to
forfeit their right to one (1) demand registration pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.13), including (without limitation) all registration, filing, and
qualification fees, printers and accounting fees relating or apportionable
thereto and the fees and disbursements of one counsel for the selling Holders
selected by them, but excluding underwriting discounts and commissions relating
to Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as will not, in the opinion of the underwriters, jeopardize the success
of the offering by the Company, provided that such underwriting requirement
shall not provide for indemnification or contribution obligations on the part of
the Holders greater than the obligations set forth in Section 1.10(b). If the
total amount of securities (including Registrable Securities) requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters reasonably believe
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities which the underwriters believe will not jeopardize the
success of the offering (the securities so included to be apportioned pro rata
among the selling stockholders according to the total amount of securities
entitled to be included therein owned by
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each selling stockholder or in such other proportions as shall mutually be
agreed to by such selling stockholders, but in no event shall the amount of
securities of the selling Holders included in the offering be reduced below
twenty-five (25%) percent of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company's
securities in which case the selling stockholders may be excluded entirely if
the underwriters make the determination described above and no other
stockholder's securities are included. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder that is a
holder of Registrable Securities that is a partnership or corporation, the
partners, retired partners and stockholders of such holder (and, in the case of
a partnership, any affiliated partnerships), 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 "SELLING STOCKHOLDER,"
and any pro-rata reduction with respect to such "selling stockholder" shall be
based upon the aggregate amount of shares carrying registration rights owned by
all entities and individuals included in such "selling stockholder," as defined
in this sentence.
1.9 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 1.
1.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "VIOLATION"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(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 any such Holder, underwriter or controlling person.
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(b) 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 has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the 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 expressly for
use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person required to be
indemnified pursuant to this subsection 1.10(b), in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
1.10(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder, which consent shall not be unreasonably withheld; provided, that,
in no event shall any indemnity under this subsection 1.10(b) exceed the gross
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.10 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 1.10, 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
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. 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
1.10, 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 1.10.
(d) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be
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determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep current public information available,
as those terms are understood and defined in SEC Rule 144, at all times after
ninety (90) days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 Form S-3 Registration. In case the Company shall receive a
written request or requests from Holders of at least one-third (1/3) of the
Registrable Securities then outstanding that the Company effect a registration
on Form S-3 and any related qualification or compliance
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with respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within fifteen (15) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section
1.12: (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 (net of any underwriters' discounts or commissions) of less than
$2,000,000; (3) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than sixty (60)
days after receipt of the request of the Holder or Holders under this Section
1.12, provided, however, that the Company shall not utilize this right more than
once in any twelve-month period; or (4) in any particular jurisdiction in which
the Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to Section 1.12, including (without limitation)
all registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities, shall be paid by the
Company. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
1.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to Section 1 may be assigned
(but only with all related obligations) by a Holder to a transferee or assignee
of such securities who, after such assignment or transfer, holds at least
100,000 shares of Registrable Securities (subject to appropriate adjustment for
stock splits, stock dividends, combinations and other recapitalizations),
provided that: (a) the Company is, within a reasonable time after such transfer,
furnished with written notice of the name and address of such transferee or
assignee and the securities with respect to which such registration rights are
being assigned; (b) such transferee or assignee agrees in
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writing to be bound by and subject to the terms and conditions of this
Agreement, including without limitation the provisions of Section 1.15 below;
and (c) such assignment shall be effective only if immediately following such
transfer the further disposition of such securities by the transferee or
assignee is restricted under the Act. For the purposes of determining the number
of shares of Registrable Securities held by a transferee or assignee, the
holdings of transferees and assignees of a partnership who are partners or
retired partners of such partnership (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the partnership and its affiliated partnerships; provided that all
assignees and transferees who would not qualify individually for assignment of
registration rights shall have a single attorney-in-fact for the purpose of
exercising any rights, receiving notices or taking any action under Section 1.
1.14 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 that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.2 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 his
securities will not reduce the amount of the Registrable Securities of the
Holders that is included, (b) to include such securities in any registration
filed under Section 1.3 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 his securities will not
reduce the amount of the Registrable Securities of the Holders that is included,
or (c) to make a demand registration that 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) or within one hundred eighty (180) days of the
effective date of any registration effected pursuant to Section 1.2.
1.15 "Market Stand-Off" Agreement. Each Investor and each Common
Holder hereby agrees that, during the period of duration specified by the
Company and an underwriter of common stock or other securities of the Company,
following the effective date of a registration statement of the Company filed
under the Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at any time during such period
except common stock included in such registration; provided, however, that:
(a) all officers, employees and directors of the Company,
all stockholders holding more than one percent (1%) of the outstanding capital
stock of the Company and all other persons with registration rights (whether or
not pursuant to this Agreement) enter into similar agreements;
(b) such market stand-off time period shall not exceed
one hundred eighty (180) days; and
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(c) such "market stand-off" or "lock-up" agreement, or other
written agreement to which the underwriter is a party, shall provide that
Connecticut Innovations, Inc. and Connecticut Innovations/Xxxxxxx LLC shall be
released from any restrictions set forth therein in the event that the Company
fails to maintain a Connecticut Presence (as defined in each purchase agreement
to which the Company has issued to the holders of Registrable Securities shares
of its Preferred Stock).
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities
(and the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
Notwithstanding the foregoing, the obligations described in
this Section 1.15 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms that may be promulgated
in the future, or a registration relating solely to a SEC Rule 145 transaction
on Form S-4 or similar forms that may be promulgated in the future.
1.16 Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to Sections 1.2,
1.3 or 1.12 shall terminate on the date five (5) years following the closing of
a Qualified IPO (as defined in the Company's Restated Certificate of
Incorporation).
2. Covenants of the Company. The Company covenants and agrees as
follows:
2.1 Delivery of Financial Statements. The Company shall deliver to
each Investor:
(a) as soon as practicable, but in any event within
seventy-five (75) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company and
statement of stockholder's equity as of the end of such year, and a statement of
cash flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with generally accepted accounting principles
("GAAP"), and audited and certified by independent public accountants of
nationally recognized standing selected by the Company;
(b) so long as such Investor holds at least 100,000
shares of Registrable Securities (as adjusted for stock splits, recombinations
or reclassifications), as soon as practicable, but in any event within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited income statement, a statement of
cash flows for such fiscal quarter and an unaudited balance sheet as of the end
of such fiscal quarter;
(c) so long as such Investor holds at least 100,000
shares of Registrable Securities (as adjusted for stock splits, recombinations
or reclassifications), within thirty (30) days of the end of each month, an
unaudited income statement and a statement of cash flows and balance sheet for
and as of the end of such month (including year-to-date totals for such
statements), in reasonable detail, comparing results to the annual plan and to
the prior year comparable period;
(d) so long as such Investor holds at least 100,000
shares of Registrable Securities (as adjusted for stock splits, recombinations
or reclassifications), as soon as
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practicable, but in any event thirty (30) days prior to the end of each fiscal
year, a budget and business plan for the next fiscal year, prepared on a monthly
basis, including balance sheets, income statements and statements of cash flows
for such months and, as soon as prepared, any other budgets or revised budgets
prepared by the Company;
(e) with respect to the financial statements called for
in subsection (b) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with gaap consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by gaap) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment; and
(f) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time reasonably
request; provided, however, that the Company shall not be obligated under this
subsection (f) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information unless the Investor agrees in writing to hold such information in
confidence.
2.2 Inspection. The Company shall permit each Investor who then
holds at least 100,000 shares of Registrable Securities, 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 the
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 2.2 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information unless the
Investor agrees in writing to hold such information in confidence.
2.3 Transactions with Affiliates. The Company shall not, without
the approval of a disinterested majority of the Company's Board of Directors,
engage in any loans, leases, contracts or other transactions with any director,
officer, key employee or greater than ten percent (10%) stockholder of the
Company, or any member of any such person's immediate family, including the
parents, spouse, children and other relatives of any such person, on terms less
favorable than the Company would obtain in a transaction with an unrelated
party, as determined in good faith by the Board of Directors.
2.4 Proprietary Information and Inventions Agreements and Market
Stand-Off. The Company will cause each person now or hereafter employed by it or
any subsidiary with access to confidential information to enter into a
proprietary information and inventions agreement substantially in the form
approved by the Board of Directors. The Company will use its best efforts to
cause all holders of its Common Stock who are not parties hereto to be bound by
a market stand-off provision in substantially the form set forth in Section 1.15
hereof.
2.5 Insurance.
(a) Except as otherwise decided in accordance with
policies adopted by the Company's Board of Directors, the Company will use its
best efforts to maintain from
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financially sound and reputable insurers, (i) insurance on its assets and those
of its subsidiaries that are of an insurable character against loss or damage by
fire, explosion and other risks customarily insured against by companies in the
Company's line of business, and (ii) insurance against other hazards and risks
and liability to persons and property to the extent and in the manner customary
for companies in similar businesses similarly situated. The Company does not now
have products liability insurance but may in the future in the judgment of the
Board of Directors obtain such insurance in amounts customary for companies
similarly situated.
(b) The Company has obtained directors' and officers'
liability insurance in the minimum amount of $1,000,000, and the Company
covenants that so long as a representative of Aetna Life Insurance Company,
Menlo Ventures VI, L.P., Axiom Venture Partners, L.P., Crystal Internet Venture
Fund II (BVI) Crystal Vision L.P., Crystal Internet Venture Fund II (BVI), L.P.
or Key Principal Partners LLC serves on the Company's Board of Directors, it
will use its best efforts to maintain such insurance, provided that such
insurance is available at commercially reasonable rates as determined by the
Company's Board of Directors.
2.6 Qualified Small Business Stock. The Company covenants that so
long as the Series X-0, Xxxxxx X-0, Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock, Series E Preferred Stock, Series F Preferred
Stock or the Common Stock, into which it is converted, is held by an Investor
(or a transferee in whose hands the Series A-1, Series A-2, Series B, Series C,
Series D, Series E and Series F Preferred Stock or the Common Stock into which
it is converted, is eligible to qualify as Qualified Small Business Stock as
defined in Section 1202(c) of the Internal Revenue Code of 1986, as amended), it
will use its reasonable efforts to cause the Series A-1, Series A-2, Series B,
Series C, Series D, Series E and Series F Preferred Stock or the Common Stock
into which it is converted, to qualify as Qualified Small Business Stock. The
Company will seek in good faith to qualify as a "Qualified Small Business" as
defined in Section 1202(d) of the Internal Revenue Code of 1986, as amended (the
"CODE") but no assurance is given that the Company will so qualify.
2.7 Indemnification. The Company covenants that so long as a
representative of HNC Software Inc., The BISYS Group Inc., Aetna Life Insurance
Company, Menlo Ventures VI, L.P., Axiom Venture Partners, L.P. Crystal Internet
Venture Fund II (BVI) Crystal Vision L.P., Crystal Internet Venture Fund II
(BVI), L.P. or Key Principal Partners LLC serves on the Company's Board of
Directors, its Restated Certificate will provide for the indemnification of the
Company's officers and directors to the fullest extent permitted by law.
2.8 Termination of Covenants. Except for those contained in
Section 2.5(b), Section 2.7 and Section 2.11, the covenants set forth in this
Section 2 shall terminate as to Investors and be of no further force or effect
(i) when the sale of securities pursuant to a registration statement filed by
the Company under the Act in connection with the firm commitment underwritten
offering of its securities to the general public is consummated or when the
Company is subject to the requirements of Sections 12(g) or 15(d) of the 1934
Act, whichever event shall first occur or (ii) as to any Investor, or transferee
or assignee of such Investor, who holds less than 100,000 shares of Registrable
Securities (subject to appropriate adjustment for stock splits, stock dividends,
combinations and other recapitalizations).
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2.9 Right of First Offer. Subject to the terms and conditions
specified in this Section 2.9, the Company hereby grants to each Major Investor
(as hereinafter defined) a right of first offer with respect to future sales by
the Company of its Shares (as hereinafter defined). For purposes of this Section
2.9, a Major Investor shall mean any Investor who holds 100,000 shares of
Registrable Securities. For purposes of this Section 2.9, Investor includes any
general partners and affiliates of an Investor. An Investor shall be entitled to
apportion the right of first offer hereby granted it among itself and its
partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("SHARES"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by nationally
recognized overnight courier ("NOTICE") to the Major Investors stating (i) its
bona fide intention to offer such Shares, (ii) the number of such Shares to be
offered, and (iii) the price and terms, if any, upon which it proposes to offer
such Shares.
(b) Within twenty (20) calendar days after giving of the
Notice, a Major Investor may elect to purchase or obtain, at the price and on
the terms specified in the Notice, up to that portion of such Shares which
equals the proportion that the number of shares of common stock issued and held,
or issuable upon conversion and/or exercise of the Series A-1 Preferred Stock,
Series A-2 Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock, Series E Preferred Stock, Series F Preferred Stock or
any other securities of the Company then held, by such Major Investor bears to
the total number of shares of Common Stock of the Company (assuming full
conversion and exercise of all outstanding convertible or exercisable
securities, options or warrants) then issued and held, or issuable upon
conversion of the Series A-1 Preferred Stock, Series A-2 Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock, Series E
Preferred Stock, Series F Preferred Stock or any other securities of the Company
then held, by the Major Investors. The Company shall promptly, in writing,
inform each Major Investor that timely elects to purchase all the shares
available to it (a "FULLY-EXERCISING INVESTOR") of any other Major Investor's
failure to do likewise. During the ten (10) day period commencing after such
information is given, each Fully-Exercising Investor shall be entitled to
purchase that portion of the Shares for which Major Investors were entitled to
subscribe but which were not subscribed for by the Major Investors which is
equal to the proportion that the number of shares of Common Stock issued and
held, or issuable upon conversion and/or exercise of Preferred Stock or any
other securities of the Company then held, by such Fully-Exercising Investor
bears to the total number of shares of Common Stock issued and held, or issuable
upon conversion and/or exercise of the Preferred Stock or any other securities
of the Company then held, by all Fully-Exercising Investors who wish to purchase
some of the unsubscribed shares.
(c) If all Shares referred to in the Notice which
Investors are entitled to obtain pursuant to subsection 2.9(b) are not elected
to be purchased as provided in subsection 2.9(b) hereof, the Company may, during
the 60-day period following the expiration of the period provided in subsection
2.9(b) hereof, offer the remaining unsubscribed portion of such Shares to
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any person or persons at a price not less than, and upon terms no more favorable
to the offeree than those specified in the Notice. If the Company does not enter
into an agreement for the sale of the Shares within such period, or if such
agreement is not consummated within 60 days of the execution thereof, the right
provided hereunder shall be deemed to be revived and such Shares shall not be
offered unless first reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2.9 shall
not be applicable (i) to the issuance or sale of 3,000,000 shares of common
stock (or options therefor) to employees or consultants for the primary purpose
of soliciting or retaining their employment or to the issuance of any additional
shares of common stock (or options therefor) to such persons for such purposes
which shares (or options) are approved for issuance by the holders of a majority
of the outstanding Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock, Series E Preferred Stock and Series F Preferred Stock, voting
together as a single class; (ii) to or after consummation of a bona fide, firmly
underwritten public offering of shares of common stock, registered under the Act
pursuant to a registration statement on Form S-1; (iii) to the issuance of
securities pursuant to the conversion or exercise of convertible or exercisable
securities; (iv) to the issuance of securities in connection with a bona fide
business acquisition of or by the Company, whether by merger, consolidation,
sale of assets, sale or exchange of stock or otherwise; or (v) to the issuance
of stock, warrants or other securities or rights to persons or entities with
which the Company has business relationships provided such issuances are for
other than primarily equity financing purposes.
(e) The right of first offer set forth in this Section
2.9 may not be assigned or transferred, except that (i) such right is assignable
by each Holder to any wholly owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Holder, and (ii) such right
is assignable between and among any of the Holders.
2.10 [Intentionally Omitted.]
2.11 Board Members: Election of Directors.
(a) The Company will promptly reimburse members of the
Company's Board of Directors (the "BOARD OF DIRECTORS") for the reasonable
expenses, including airfare, incurred by such Board members when acting on
behalf of the Company including attendance at Board of Director meetings.
(b) So long as the Investor named below shall continue to
hold no less than thirty-five percent (35%) of the shares of Series B Preferred
Stock originally acquired by it, such Investor shall be entitled, but shall be
under no obligation, to designate one (1) nominee for election to the Board of
Directors by the Investors:
Axiom Venture Partners, L.P.
Menlo Ventures VI, L.P.
In the event a designation is not made by an Investor named above in accordance
with this Section 2.11(b), unless otherwise agreed by such Investor, the
Investors will use their best efforts
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to ensure that such position on the Board of Directors shall be left vacant
until a nominee is so designated.
(c) So long as the Aetna Life Insurance Company shall
continue to hold no less than thirty-five percent (35%) of the shares of Series
C Preferred Stock originally acquired by it, Aetna Life Insurance Company shall
be entitled, but shall be under no obligation, to designate one (1) nominee for
election to the Board of Directors by the Investors. In the event a designation
is not made by Aetna Life Insurance Company in accordance with this Section
2.11(c), unless otherwise agreed by it, the Investors will use their best
efforts to ensure that such position on the Board of Directors shall be left
vacant until a nominee is so designated.
(d) So long as The BISYS Group, Inc. shall continue to
hold no less than thirty-five percent (35%) of the shares of Series D Preferred
Stock originally acquired by it, The BISYS Group, Inc. shall be entitled, but
shall be under no obligation, to designate one (1) nominee for election to the
Board of Directors by the Investors. In the event a designation is not made by
The BISYS Group, Inc. in accordance with this Section 2.11(d), unless otherwise
agreed by it, the Investors will use their best efforts to ensure that such
position on the Board of Directors shall be left vacant until a nominee is so
designated.
(e) So long as HNC Software Inc. shall continue to hold
no less than thirty-five percent (35%) of the shares of Series E Preferred Stock
originally acquired by it, HNC Software Inc. shall be entitled, but shall be
under no obligation, to designate one (1) nominee for election to the Board of
Directors by the Investors. In the event a designation is not made by HNC
Software Inc. in accordance with this Section 2.11(e), unless otherwise agreed
by it, the Investors will use their best efforts to ensure that such position on
the Board of Directors shall be left vacant until a nominee is so designated.
(f) So long as Crystal Internet Venture Fund II (BVI)
Crystal Vision L.P. ("CIV-CV"), Crystal Internet Venture Fund II (BVI), L.P.
("CIV") and Key Principal Partners LLC ("Key Principal", and together with
CIV-CV, and CIV, the "Crystal Key Group") shall continue to hold no less than
thirty-five percent (35%) of the shares of Series F Preferred Stock originally
acquired by them, the Crystal-Key Group, acting jointly, shall be entitled, but
shall be under no obligation, to designate one (1) nominee for election to the
Board of Directors by the Investors. In the event a designation is not made by
the Crystal-Key Group in accordance with this Section 2.11(f), unless otherwise
agreed by them, the Investors will use their best efforts to ensure that such
position on the Board of Directors shall be left vacant until a nominee is so
designated.
(g) The nominees selected in accordance with Sections
2.11(b), (c), (d), (e) and (f), as applicable, on the one hand, and the nominees
selected by the holders of a majority of the outstanding Common Stock in
accordance with the Restated Certificate of Incorporation of the Company, on the
other hand, shall consult in good faith and use their best efforts to mutually
agree as to the designation of an additional nominee or nominees for election to
the Board of Directors by the holders of the outstanding Common Stock and
Preferred Stock voting together as a class, as provided in the Restated
Certificate of Incorporation of the Company. In the event that an agreement is
not reached in accordance with this Section 2.11(g) as to such nominee or
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nominees, the Investors will use their best efforts to cause such position or
positions to remain vacant.
(h) Each Investor agrees to vote the Series A-1, Series
A-2, Series B, Series C, Series D, Series E and Series F Preferred Stock, or the
Common Stock into which it is converted, held by it from time to time for the
nominees so designated in accordance with Sections 2.11(b), (c), (d), (e), (f)
and (g), as applicable, at each annual meeting of stockholders of the Company,
and at any special meeting of stockholders of the Company called for the
election of directors, in such manner as may be required to elect such nominees.
(i) The Company agrees to use its best efforts to cause
the nominees so designated in accordance with Section 2.11(b), (c), (d), (e),
(f) and (g), as applicable, to be included in part of the slate of directors and
to be recommended to, and elected by stockholders, at each annual meeting of
stockholders of the Company, and at any special meeting of stockholders of the
Company called for the election of directors.
(j) If (i) the Company receives a written notice from an
Investor named in Section 2.11(b), (c), (d), (e) or (f), as applicable, that
such Investor wishes to remove a director designated by it and elected pursuant
to Section 2.11(b), (c), (d), (e) or (f), as the case may be, or (ii) such
director shall have resigned or shall be unable to serve, then, in any such
case, the Company and the Investors agree to take such action as may be
necessary to call a special meeting of the stockholders of the Company for the
purpose of effecting any such removal or filling such vacancy, as the case may
be, and at such meeting each Investor shall vote to accomplish said result.
(k) If any Investor shall refuse to vote the Series A-1,
Series A-2, Series B, Series C, Series D, Series E or Series F Preferred Stock,
or the Common Stock into which it is converted, held by it as provided in any of
the foregoing subsections of this Section 2.11 at any meeting of stockholders of
the Company, or shall refuse to give its written consent in lieu of a meeting,
thereupon, without further action by such Investor, the President or any Vice
President of the Company shall be, and hereby is, irrevocably constituted the
attorney-in-fact and proxy of such Investor for the purpose of voting, and shall
vote such shares at such meeting as provided in the foregoing subsections of
this Section 2.11 or give such consent, as the case may be.
(l) For such period as Connecticut Innovations,
Incorporated ("CII") holds Series A-2 Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series F Preferred Stock or Common Stock shares, or
warrants to purchase any such shares, or any of the Company's securities into
which any of the foregoing has been converted, and provided that the Company is
not a public company, the Company hereby agrees that it shall not hold any
meetings of its Directors on less than ten (10) days written notice and will
permit CII to send a representative (without voting rights) to each meeting of
the Company's Board of Directors and all committees of such Board. For such
period as CII holds Series A-2 Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock, warrants or Common Stock into which any of the foregoing has
been converted, and provided the Company is not a public company, the Company
shall give CII notice of each such meeting in the form and manner such notice is
given to the Company's Directors. The Company hereby agrees that it will not
permit its Directors or stockholders to conduct any corporate action or business
by written consent without giving at
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least ten (10) days' prior written notice to CII, which notice shall contain an
exact copy of the consent resolution proposed to be adopted, except, however,
under exceptional circumstances when such written notice cannot be delivered, at
which time telephonic notice shall be permitted.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided herein,
the terms and conditions of this Agreement shall inure to the benefit of, and be
binding upon, the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of Connecticut without regard to
principles of conflicts of law.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery, delivery by nationally recognized
overnight courier or five (5) days after deposit in the U.S. mail, by registered
or certified mail, postage prepaid and addressed to the party to be notified at
the address indicated for such party on the signature page hereof, or at such
other address as such party may designate by ten (10) days advance written
notice to the other parties. A copy of any such notice to the Company shall be
similarly delivered to counsel for the Company as specified by the Company.
3.6 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements (by
application to the court in which the action was conducted and as determined by
such court) in addition to any other relief to which such party may be entitled.
3.7 Amendments and Waivers. Any term of this Agreement may be
amended and the observance of any term of this Agreement may be waived (either
generally or in a particular instance and either retroactively or
prospectively), only with the written consent of the Company and the holders of
a majority of the Registrable Securities then outstanding; provided that, no
such amendment shall materially adversely affect any single holder or group of
holders in a manner distinct from all other holders of Registrable Securities.
Any amendment or waiver effected in accordance with this paragraph shall be
binding upon each holder of any Registrable Securities then outstanding, each
future holder of all such Registrable Securities, and the Company.
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3.8 Severability. If one or more provisions of this Agreement are
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
3.9 Aggregation of Stock. All shares of Registrable Securities
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.
3.10 Entire Agreement; Amendment; Waiver. This Agreement (including
the Exhibits hereto, if any) constitutes the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
3.11 Waiver of Rights Under and Termination of Prior Investors'
Rights Agreement. Each of the parties to that certain Amended and Restated
Investors' Rights Agreement dated as of April 12, 1999, and among the Company
and the investors identified therein (the "AMENDED AND RESTATED INVESTORS'
RIGHTS AGREEMENT"), hereby (i) waives all rights to notice of, and to purchase,
the Series F Preferred Stock pursuant to Section 2.9 of such Amended and
Restated Investors' Rights Agreement, and (ii) agrees that upon execution and
delivery of this Agreement by each of the parties hereto, such Amended and
Restated Investors' Rights Agreement shall be superseded, amended and restated
in its entirety by this Agreement.
3.12 Amendment of Put Rights Under Existing Purchase Agreements.
(a) Reference is hereby made to the following agreements (i) that
certain Purchase Agreement dated as of May 12, 1995 by and between the Company
and CII (the "SERIES A-2 PURCHASE AGREEMENT"), (ii) that certain Series B
Preferred Stock and Warrant Purchase Agreement dated as of December 27, 1995 by
and among the Company and the investors listed on Schedule A thereto (the
"SERIES B PURCHASE AGREEMENT"), (iii) that certain Series C Preferred Stock and
Warrant Purchase Agreement dated as of October 23, 1996 by and among the Company
and the investors listed on Schedule A thereto (the "SERIES C PURCHASE
AGREEMENT"), (iv) that certain Series D Preferred Stock and Warrant Purchase
Agreement dated as of April 22, 1997 by and between the Company and The Bisys
Group, Inc. (the "SERIES D PURCHASE AGREEMENT"), and (v) that certain Series E
Preferred Stock Purchase Agreement dated as of April 12, 1999 by and between the
Company and HNC Software Inc. (the "SERIES E PURCHASE AGREEMENT", and
collectively with the Series A-2 Purchase Agreement, the Series B Purchase
Agreement, the Series C Purchase Agreement and the Series D Purchase Agreement,
the "EXISTING PURCHASE AGREEMENTS").
(b) Each of the parties hereto that is a party to the Series A-2
Purchase Agreement hereby agrees that the Series A-2 Purchase Agreement shall be
amended in the manner and to the extent set forth on Exhibit A attached hereto,
and each of the parties hereto that is a party to one or more of the
Series B Purchase Agreement, the Series C Purchase Agreement, the Series D
Purchase Agreement and the Series E Purchase Agreement, hereby agrees that such
Series B Purchase Agreement, Series C Purchase Agreement, Series D Purchase
Agreement and Series E Purchase Agreement, respectively, shall be amended in the
manner and to the extent set forth on Exhibit B attached hereto. Each of the
parties hereto that is a party to one or more of the
- 20 -
Existing Purchase Agreements is sometimes referred to herein individually as an
"EXISTING HOLDER" and collectively as the "EXISTING HOLDERS."
(c) Each of the Existing Holders that is a holder of one or more
of the warrants issued pursuant to the Series B Purchase Agreement, the Series C
Purchase Agreement or the Series D Purchase Agreement (collectively the
"Warrants") hereby agrees that each such Warrant shall be amended by adding a
new Section 16 immediately following Section 15 thereof, to read as follows:
"SECTION 16. Exercise for Common Stock. Notwithstanding
anything herein to the contrary, upon conversion of all of the outstanding
Preferred Stock into shares of the Company's Common Stock, par value $.01 per
share ("Common Stock") in accordance with the Company's Restated Certificate of
Incorporation ("Conversion"), this Warrant shall thereupon be exercisable into
that number of shares of Common Stock as the holder hereof would have been
entitled to receive if immediately prior to Conversion such holder had exercised
this Warrant in full into shares of Preferred Stock and such shares of Preferred
Stock were simultaneously converted into shares of Common Stock. From and after
Conversion, this Warrant shall be deemed amended in any equitable manner
necessary to give effect to the intention of the Company and the holder of this
Warrant to provide that upon conversion of the Preferred Stock into shares of
Common Stock, this Warrant will thereafter be exercisable into shares of Common
Stock and the Company shall have no duty or obligation thereafter to maintain
any class or series of Preferred Stock."
(d) Each Existing Holder hereby represents and warrants to the
Company and to each other party hereto that such holder has not transferred any
Subject Securities (as defined in each of the Existing Purchase Agreements after
giving effect to the amendments contemplated hereby) to any person that is not a
party to this Agreement and covenants and agrees not to transfer any Subject
Securities to any person unless such person shall agree in writing to be bound
by and adhere to the terms of this Section 3.12.
[Intentionally Left Blank)
- 21 -
IN WITNESS WHEREOF, the parties have executed this Amended and Restated
Investors' Rights Agreement as of the date first above written.
OPEN SOLUTIONS INC.
By: /s/ Xxxxx Xxxxxxxxx, Xx.
----------------------------------------------
Name: Xxxxx Xxxxxxxxx Xx.
Title: Chief Executive Officer
INVESTORS:
ATENA LIFE INSURANCE COMPANY
By: /s/ Xxxxx X. Xxxxxxxx
----------------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Investment Manager
/s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------------
XXXXXXX X. XXXXXXXX
XXXXXXX XXXXX & ASSOCIATES INC.
CUSTODIAN FBO XXXXXXX X. XXXXXXXX
MP ACCOUNT #00000000
By: /s/ Xxxxxxx X. Xxxxxxxx, Trustee
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Trustee
XXXXXXX XXXXX & ASSOCIATES INC.
CUSTODIAN FBO XXXXXXX X. XXXXXXXX
PS ACCOUNT #00000000
By: /s/ Xxxxxxx X. Xxxxxxxx, Trustee
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Trustee
[Signature Page to Amended and Restated Investors' Rights Agreement]
/s/ Xxxxx X. Xxxx
-------------------------------------------------
XXXXX X. XXXX
AXIOM VENTURE PARTNERS, L.P.
By: /s/ Xxxxxx XxXxx
----------------------------------------------
Name: Xxxxxx XxXxx
Title: General Partner
BANKING SPECTRUM SERVICES, INC.
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: President
/s/ Xxxxx Xxxxxxx
-------------------------------------------------
XXXXX XXXXXXX
/s/ Xxxxx X. Xxxxx
-------------------------------------------------
XXXXX X. XXXXX
/s/ Xxxxx X. Xxxxxxx
-------------------------------------------------
JOHAN VAN'T XXX XXXXXXX
BUSINESS MANAGEMENT TOOLS LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxxx X. Xxxxxxx
Title: President
[Signature Page to Amended and Restated Investors' Rights Agreement]
CONNECTICUT INNOVATIONS, INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Executive Director
CONNECTICUT INNOVATIONS/XXXXXXX LLC
BY: INNOVATIONS XXXXXXX MANAGEMENT LLC, ITS
MANAGER
BY: CONNECTICUT INNOVATIONS, INCORPORATED, ITS
SOLE MEMBER
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Executive Director
CRYSTAL INTERNET VENTURE FUND II (BVI), CRYSTAL
VISION, L.P.
BY: CRYSTAL VENTURE, LTD., ITS GENERAL PARTNER
BY: XXXXXX XXXXXXX, ITS VICE PRESIDENT
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------------
Name:
CRYSTAL INTERNET VENTURE FUND II (BVI), L.P.
BY: CRYSTAL VENTURE, LTD., ITS GENERAL PARTNER
BY: XXXXXX XXXXXXX, ITS VICE PRESIDENT
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------------
Name:
Title:
/s/ Xxxx Xxxxxx
-------------------------------------------------
XXXX XXXXXX
[Signature Page to Amended and Restated Investors' Rights Agreement]
HNC SOFTWARE INC.
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: CFO
----------------------------------------------
XXXXX X. XXXXXXXXX, XX.
/s/ Xxx Xxxxxx
----------------------------------------------
XXX XXXXXX
/s/ Xxxx Xxxxxx
----------------------------------------------
XXXX XXXXXX
/s/ Xxxxx Xxxxxx
----------------------------------------------
XXXXX XXXXXX
KEY PRINCIPLE PARTNERS LLC
By: /s/ Xxxx X. Xxxxxxxxxx
-------------------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: Managing Partner
/s/ Xxxxxx X. Xxxxxxxx
----------------------------------------------
XXXXXX XXX XXXXXXXX
/s/ Xxxxx X. Xxxxxx
----------------------------------------------
XXXXX X. XXXXXX
/s/ S. Xxxxxx Xxxxxx
----------------------------------------------
S. XXXXXX XXXXXX
/s/ Xxxxx X. Xxxxxxx
----------------------------------------------
XXXXX X. XXXXXXX
[Signature Page to Amended and Restated Investors' Rights Agreement]
/s/ Xxxxxxx X. Xxxxxxx
-------------------------------------------------
XXXXXXX X. XXXXXXX
MENLO ENTREPRENEURS FUND VI, L.P.
By its General Partner:
MV Management VI, L.P.
By: /s/ Xxxx Xxxxxxxx
----------------------------------------------
Name:
Title:
MENLO VENTURES VI, L.P.
By its General Partner:
MV Management VI, L.P.
By: /s/ Xxxx Xxxxxxxx
----------------------------------------------
Name:
Title:
/s/ Xxxx X. Xxxxxxx
-------------------------------------------------
XXXX X. XXXXXXX
/s/ Xxxxxx X. Xxxxxx
-------------------------------------------------
XXXXXX X. XXXXXX
PRO-SPV II LLC
By: /s/ Xxxxxxx Xxxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxxx
Title: President
[Signature Page to Amended and Restated Investors' Rights Agreement]
/s/ Xxxxxxx X. Xxxx
-------------------------------------------------
XXXXXXX X. XXXX
XXXXXXX X. XXXX PSP
By: /s/ Xxxxxxx X. Xxxx, Trustee
----------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Trustee
THE BISYS GROUP, INC.
By: /s/ Xxxxx X. Dell
----------------------------------------------
Name: Xxxxx X. Dell
Title: EVP
/s/ Xxxxxxxx Xxxxxxx
-------------------------------------------------
XXXXXXXX XXXXXXX
/s/ Xxxx X. Xxxxxxxx
-------------------------------------------------
XXXX X. XXXXXXXX
/s/ Xxxx Xxxxxxxxx
-------------------------------------------------
XXXX XXXXXXXXX
WINFIELD CAPITAL CORP.
By: /s/ Xxxx X. Xxxxxx
----------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Executive Officer
[Signature Page to Amended and Restated Investors' Rights Agreement]
ZACHS CMP
By: /s/ Xxxx Xxxxxxxx
----------------------------------------------
Name: Power of Attorney for
Title: Xxxxx X. Xxxxx
/s/ Xxxx Xxxxxxx
-------------------------------------------------
XXXX XXXXXXX
-------------------------------------------------
XXXXX XXXXXX
/s/ Xxxxx Xxxxxxxxx
-------------------------------------------------
XXXXX XXXXXXXXX
[Signature Page to Amended and Restated Investors' Rights Agreement]
Schedule A
Schedule of Investors
Aetna Life Insurance Company Menlo Ventures VI, L.P.
000 Xxxxxxxxxx Xxxxxx 0000 Xxxx Xxxx Xxxx
Xxxxxxxx, XX 00000 Building 4, Xxxxx 000
Xxxxx Xxxx, XX 00000
Allister & Naudon P/S, Menlo Entrepreneurs Fund VI, X.X.
Xxxxxxx Xxxxx & Associates, Inc. 0000 Xxxx Xxxx Xxxx
XXXX XXX, Xxxxxxx X. Xxxxxxxx Xxxxxxxx 0, Xxxxx 000
c/o Banking Spectrum Services, Inc. Xxxxx Xxxx, XX 00000
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Xxxx X. Xxxx Xxxxxx X. Xxxxxx
c/o Banking Spectrum Services, Inc. c/o Banking Spectrum Services, Inc.
00 Xxxx 00xx Xxxxxx 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000 Xxx Xxxx, XX 00000
Axiom Venture Partners L.P. The BISYS Group, Inc.
000 Xxxxxxxx Xxxxxx Overlook at Great Notch
Xxxxxxxx, XX 00000 000 Xxxxx Xxxx
Xxxxxx Xxxxx, XX 00000
Xxxxx X. Xxxxx Xxxx X. Xxxxxxxx
00 Xxxxxxxxxx Xxxx c/o Banking Spectrum Services, Inc.
Xxxx, XX 00000 00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Connecticut Innovations, Incorporated Zachs CMP
000 Xxxxx Xxxxxx 00 Xxxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000 Xxxxxxxx, XX 00000
Xxxx Xxxxxx
00000 Xxxxx Xxxx Xxxxxx
Xxxxxxx, XX 00000
HNC Software Inc.
0000 Xxxxxxxxxxx Xxxxx Xxxx
Xxx Xxxxx, XX 00000
- 1 -
Schedule B
Schedule of Series F Investors
Winfield Capital Corp. Menlo Ventures VI, L.P.
000 Xxxxxxxxxx Xxxxxx 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxxxx, XX 00000 Building 4, Xxxxx 0000
Xxxxx Xxxx, XX 00000
PRO-SPV II LLC Menlo Entrepreneurs Fund VI, L.P.
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx 0000 Xxxx Xxxx Xxxx
Xxx Xxxx, XX 00000 Building 4, Xxxxx 000
Xxxxx Xxxx, XX 00000
Crystal Internet Venture Fund II (BVI) HNC Software Inc.
Crystal Vision, L. P. 0000 Xxxxxxxxxxx Xxxxx Xxxx
0000 Xxxxxxx Xxxxxx, Xxxxx 000 Xxx Xxxxx, XX 00000-0000
Xxxxxxxxx, XX 00000
Crystal Internet Venture Fund II (BVI), L.P. Aetna Life Insurance Co.
0000 Xxxxxxx Xxxxxx, Xxxxx 000 Mail Drop RC21
Xxxxxxxxx, XX 00000 000 Xxxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Key Principal Partners LLC Xxxxx Xxxxxxx
000 Xxxxxxxx Xxxxxx, 0xx Xxxxx 0000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000 Xx Xxxxx, XX 00000-0000
Connecticut Innovations/Xxxxxxx LLC Xxxxxxxx Xxxxxxx
Connecticut Innovations, Incorporated 00 Xxx Xxxx Xxxxx Xxxxxx
000 Xxxx Xxxxxx Xxxxxxx Xxxxxx, XX 00000
Xxxxx Xxxx, XX 00000
Connecticut Innovations, Incorporated Xxxx Xxxxxx
000 Xxxx Xxxxxx 000 Xxxxxxx Xxxxxx
Xxxxx Xxxx, XX 00000 Xxxxxx, XX 00000
Axiom Venture Partners, L.P. Xxxx Xxxxxxx
City Place II, 17th Floor xxx.xxx
000 Xxxxxx Xxxxxx 000 Xxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxxxxx, XX 00000
S. Xxxxxx Xxxxxx Xxxxx Xxxxxxxxx
000 X. Xxx Xxxxxx Open Solutions
Xxx Xxxx, XX 00000 000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
- 2 -
Xxxxx X. Xxxxxx Xxxx X. Xxxxxxxxx
000 X. Xxx Xxxxxx Open Solutions
Xxx Xxxx, XX 00000 000 Xxxxxxx Xxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxx PSP, Xxxxxxx X. Xxxx Trustee Xxxxxxx X. Xxxxxxx
00 Xxxx 00xx Xxxxxx, 0xx Xxxxx 000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000 X.X. Xxx 000
Xxxxxxxxxx, XX 00000
Xxxxxxx X. Xxxx Xxxxx Xxxxxx
000 X. 00xx Xxxxxx, #00X Xxxxxxx Xxxx LLP
Xxx Xxxx, XX 00000 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxx Xxxxxx Johan Van't Xxx Xxxxxxx
57 West 38th Street, 0xx Xxxxx Xxxxxxx Xxxx XXX
Xxx Xxxx, XX 00000 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxx X. Xxxxxxx Xxxxxx Xxx XxXxxxxx
57 West 38th Street, 0xx Xxxxx Xxxxxxx Xxxx XXX
Xxx Xxxx, XX 00000 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
Xxxxxxx Xxxxx & Assoc., Inc. Custodian Business Management Tools Ltd.
FBO Xxxxxxx X. Xxxxxxxx PS 0000 Xxxxxxxxxx Xxxxxx
Account #00000000 Xxxxxxx, XX 00000
000 X. Xxx Xxxxxx
Xxx Xxxx, XX 00000
Xxxxx X. Xxxx Xxxxxxx X. Xxxxxxxx
00 Xxxxxxx Xxxxx Xxxxx 000 X. Xxx Xxxxxx
Xxxxxxxxxx, XX 00000 Xxx Xxxx, XX 00000
Xxxxx X. Xxxxxxx Xxxxxxx Xxxxx & Assoc., Inc. Custodian
32 Xxxxx Point Road FBO Allister MP
Xxxx Xxxxxxx, XX 00000 Account #00000000
000 X. Xxx Xxxxxx
Xxx Xxxx, XX 00000
Allianz Life Insurance Company of North CPQ Holdings, Inc.
America 00000 Xxxxx Xxxxxxx 249
C/o Allianz of America, Inc. Xxxxxxx, XX 00000
00 Xxxxxx Xxxxx Xxxx
Xxxxxxxx, XX 00000-0000
- 3 -
