EXHIBIT 4.2
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XXXXXXXXXXX.XXX, INC.
000 XXXX XXXXXX XXXXXX, XXXXX XXXXX
XXXXXXX, XXXXXXXX 00000-0000
AMENDED AND RESTATED STOCKHOLDER RIGHTS AGREEMENT
MARCH 28, 2000
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TABLE OF CONTENTS
PAGE
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SECTION 1. Registration Rights...............................................................2
1.1 Certain Definitions........................................................2
1.2 Restrictive Legend.........................................................3
1.3 Restrictions on Transfer; Notice of Proposed Transfers.....................4
1.4 Request for Registration...................................................4
1.5 Company Registration.......................................................6
1.6 Registration on Form S-3...................................................7
1.7 Limitations on Subsequent Registration Rights..............................9
1.8 Expenses of Registration...................................................9
1.9 Registration Procedures....................................................9
1.10 Indemnification...........................................................10
1.11 Information by Holder.....................................................12
1.12 Rule 144 Reporting........................................................12
1.13 Assignment of Registration Rights.........................................13
1.14 Standoff Agreement........................................................13
1.15 Termination of Registration Rights........................................13
SECTION 2. Covenants........................................................................13
2.1 Financial Information.....................................................13
2.2 Inspection Rights.........................................................14
2.3 Confidential Information and Assignment of Inventions Agreement...........15
2.4 Key Employee Insurance....................................................15
2.5 Stock Vesting.............................................................15
2.6 Directed Shares Upon the Company's IPO....................................15
2.7 Investor Indemnification..................................................15
2.8 Approval of Expansion of Option Pool......................................17
2.9 Expenses of Directors.....................................................17
2.10 Termination of Covenants..................................................17
SECTION 3. Confidential Information.........................................................17
3.1 Confidential Business Information.........................................18
SECTION 4. Right of First Refusal...........................................................18
4.1 Right of First Refusal on New Issuances...................................18
4.2 Company Right of First Refusal............................................20
SECTION 5. Right of First Refusal Regarding Founder Stock...................................22
5.1 Grant of Right of First Refusal...........................................22
5.2 Notice of Intended Disposition............................................22
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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5.3 Exercise of Right by Company..............................................22
5.4 Non-Exercise of Company's Right...........................................23
5.5 Exercise of Right by the Purchasers.......................................23
5.6 Non-Exercise of Right.....................................................23
5.7 Termination of Right of First Refusal.....................................23
SECTION 6. Co-Sale Rights in Sales by the Founder...........................................23
6.1 Grant of Co-Sale Rights...................................................23
6.2 Payment of Proceeds.......................................................24
6.3 Non-Exercise..............................................................24
6.4 Prohibited Transfers......................................................24
6.5 Termination of Co-Sale Right..............................................25
SECTION 7. Exempt Transfers.................................................................25
7.1 Permitted Transactions....................................................25
SECTION 8. Board Representation.............................................................26
8.1 Voting of Shares..........................................................26
8.2 Termination of Board Representation.......................................26
SECTION 9. Legend Requirement...............................................................26
9.1 Legend....................................................................26
9.2 Removal...................................................................27
SECTION 10. Miscellaneous...................................................................27
10.1 Governing Law.............................................................27
10.2 Termination...............................................................27
10.3 Survival..................................................................27
10.4 Successors and Assigns....................................................27
10.5 Entire Agreement; Amendment...............................................27
10.6 Notices, etc..............................................................28
10.7 Delays or Omissions.......................................................28
10.8 Counterparts..............................................................28
10.9 Severability..............................................................28
10.10 Aggregation...............................................................28
10.11 Titles and Subtitles......................................................28
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XXXXXXXXXXX.XXX, INC.
AMENDED AND RESTATED STOCKHOLDER RIGHTS AGREEMENT
This Amended and Restated Stockholder Rights Agreement (the
"AGREEMENT") is made as of March 28, 2000 between Xxxxxxxxxxx.xxx, Inc., a
Delaware corporation (the "COMPANY"), the Purchasers of the Company's Series C
Preferred Stock (the "SERIES C PREFERRED") listed on the attached Schedule A
(each of which is referred to as a "SERIES C PURCHASER"), the purchasers of the
Company's Series B Preferred Stock (the "SERIES B PREFERRED") listed on the
attached Schedule B (each of which is referred to as a "SERIES B PURCHASER"),
certain holders of Common Stock which were also purchasers of the Company's
Series A Preferred Stock listed on the attached Schedule C (each of which is
referred to as a "SERIES A PURCHASER") Xxxxx Kereks and Xxxxx Xxxxx, who are
employees of the Company (each of whom is referred to as an "EMPLOYEE
STOCKHOLDER") and Xxxx X. Warms (the "FOUNDER").
The Series C Purchasers, the Series B Purchasers and the Series A
Purchasers are collectively referred to as the "PURCHASERS". The Purchasers and
the Employee Stockholders are collectively referred to as the "STOCKHOLDERS".
The Purchasers agree to be bound by all of the terms and conditions of
this Agreement. The Founder is a party to this Agreement for purposes of
Sections 1.1, 1.5, 1.8 through 1.15, 4, 5, 6, 7, and 8 only. The Employee
Stockholders are parties to this Agreement for purposes of Sections 4.2, 6, 7,
and 10 only (provided that Xx. Xxxxx is also a party to the other provisions of
this Agreement as a Purchaser).
BACKGROUND
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In order to induce the Company to enter into the Purchase Agreement and
to induce the Purchasers to invest funds in the Company pursuant to the Purchase
Agreement, the Purchasers, the Company and the Founder agree that this Agreement
shall govern the rights of the Purchasers to cause the Company to register
shares of Common Stock issuable to Purchasers and certain other matters as set
forth in this Agreement. Further, to induce the Employees to enter into the
Amended Employment Agreements, the Employee Stockholders, Purchasers, the
Company and the Founder desire to amend and restate in full the Stockholder
Rights Agreement, dated September 17, 1999, which governs certain rights of the
Stockholders.
NOW, THEREFORE, the parties agree as follows:
SECTION 1.
REGISTRATION RIGHTS
1.1 CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
"COMMISSION" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"CONVERSION STOCK" means (i) the Common Stock issued or issuable
pursuant to conversion of the Series B Preferred, (ii) Common Stock issued or
issuable pursuant to conversion of the Series C Preferred, (iii) Common Stock
held by the Series A Purchasers and (iv) for purposes of Sections 1.5 and 1.8
through 1.15 only, Common Stock held by the Founder.
"HOLDER" shall mean (i) any Purchaser holding Registrable Securities
(including Series B Preferred and Series C Preferred), (ii) any person holding
Registrable Securities to whom the rights under this Section 1 have been
transferred in accordance with Section 1.13 and (iii) with respect to Sections
1.5 and 1.8 through 1.15 only, "Holder" shall also be deemed to mean any
Founder.
"INITIATING HOLDERS" shall mean Holders in the aggregate of greater
than fifty percent (50%) of the Registrable Securities.
"PREFERRED STOCK" shall mean the Series B Preferred and the Series C
Preferred.
"REGISTRABLE SECURITIES" means (i) the Conversion Stock and any Common
Stock of the Company issued or issuable in respect of the Conversion Stock upon
any stock split, stock combination, stock dividend, recapitalization, or similar
event (each, a "RECAPITALIZATION"), or any Common Stock otherwise issuable with
respect to the Conversion Stock and (ii) with respect to Sections 1.5 and 1.8
through 1.15 only, the Common Stock held by the Founder and his permitted
transferees under Section 1.13; PROVIDED, HOWEVER, that shares of Common Stock
or other securities shall only be treated as Registrable Securities under
clauses (i) and (ii) above if and so long as they have not been (A) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (B) sold or are, in the opinion of counsel to the
Company, available for sale in a single transaction exempt from the registration
and prospectus delivery requirements of the Securities Act under Section 4(1)
thereof so that all transfer restrictions and restrictive legends with respect
thereto are removed upon the consummation of such sale.
The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"REGISTRATION EXPENSES" shall mean all expenses, except as otherwise
stated below, incurred by the Company in complying with Sections 1.4, 1.5 and
1.6 hereof, including, without limitation,
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all registration, qualification and filing fees, printing expenses, escrow
fees, fees and disbursements of counsel for the Company and one special
counsel for the Holders (not to exceed $25,000), blue sky fees and expenses,
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company).
"RESTRICTED SECURITIES" shall mean the securities of the Company
required to bear the legend set forth in Section 1.2 hereof.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"SELLING EXPENSES" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
"SERIES B CLOSING DATE" shall mean the date of the first purchase and
sale of Series B Preferred pursuant to the Series B Preferred Stock Purchase
Agreement.
1.2 RESTRICTIVE LEGEND. Each certificate representing (i) the Series A
Preferred, (ii) the Series B Preferred, (iii) the Series C Preferred, (iv) the
Conversion Stock and (v) any other securities issued in respect of the Series A
Preferred, Series B Preferred, Series C Preferred or the Conversion Stock upon
any stock split, stock dividend, recapitalization, merger, consolidation or
similar event, shall (unless otherwise permitted by the provisions of Section
1.3 below) be stamped or otherwise imprinted with a legend in the following form
(in addition to any legend required under applicable state securities laws):
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW
TO DISTRIBUTION AND HAVE NOT BEEN REGISTERED OR QUALIFIED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAW. THESE SECURITIES MAY NOT BE SOLD, OFFERED FOR SALE OR
OTHERWISE TRANSFERRED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT UNDER THE SECURITIES ACT AND UNTIL THEY HAVE FIRST BEEN
REGISTERED OR QUALIFIED UNDER ANY APPLICABLE STATE SECURITIES LAW,
UNLESS AN OPINION OF COUNSEL ACCEPTABLE TO XXXXXXXXXXX.XXX, INC. THAT
SUCH REGISTRATION OR QUALIFICATION IS NOT REQUIRED HAS BEEN OBTAINED.
Each Holder consents to the Company making a notation on its
records and giving instructions to any transfer agent of the Series A Preferred,
Series B Preferred, Series C Preferred or the Common Stock in order to implement
the restrictions on transfer established in this Section 1.
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1.3 RESTRICTIONS ON TRANSFER; NOTICE OF PROPOSED TRANSFERS. The holder
of each certificate representing Restricted Securities by acceptance thereof
agrees to comply in all respects with the provisions of this Section 1.3.
Prior to any proposed sale, assignment, transfer or pledge of any Restricted
Securities (other than (i) a transfer not involving a change in beneficial
ownership, (ii) in transactions involving the distribution without
consideration of Restricted Securities by the Holder to any of its partners,
members or retired partners or members, or to the estate of any of its
partners, members or retired partners or members, or family member or trust
for the benefit of such holder, (iii) any transfer by any Holder to (A) any
individual or entity controlled by, controlling, or under common control
with, such Holder or (B) any individual or entity with respect to which such
Holder (or any person controlled by, controlling, or under common control
with, such Holder) has the power to direct investment decisions, or (iv) in
transactions in compliance with Rule 144), and unless there is in effect a
registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied, at such holder's expense by either (i) if reasonably requested
by the Company, a written opinion of legal counsel who shall be, and whose
legal opinion shall be, reasonably satisfactory to the Company addressed to
the Company, to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act, or
(ii) a "no action" letter from the Commission to the effect that the transfer
of such securities without registration will not result in a recommendation
by the staff of the Commission that action be taken with respect thereto,
whereupon the holder of such Restricted Securities shall be entitled to
transfer such Restricted Securities in accordance with the terms of the
notice delivered by the holder to the Company. The Company will not require
opinions of counsel for transactions made pursuant to Rule 144 except in
unusual circumstances. Each certificate evidencing the Restricted Securities
transferred as above provided shall bear, except if such transfer is made
pursuant to Rule 144, the appropriate restrictive legend set forth in Section
1.2 above, except that such certificate shall not bear such restrictive
legend if in the opinion of counsel for such holder and the Company such
legend is not required in order to establish compliance with any provision of
the Securities Act. The Purchasers will cause any proposed purchaser,
assignee, transferee or pledgee of any shares held by the Purchasers to agree
to take and hold such securities subject to the provisions and upon the
conditions specified in this Section 1.
1.4 REQUEST FOR REGISTRATION.
(a) REQUEST FOR REGISTRATION. If the Company shall receive
from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to not less than that
number of shares of Registrable Securities which would result in an anticipated
aggregate offering price, net of underwriting discounts and commissions, of at
least Five Million Dollars ($5,000,000), the Company will:
(1) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
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(2) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable 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 Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after receipt of such written notice from
the Company;
(b) EXCEPTIONS TO REQUEST FOR REGISTRATION. The Company shall
not be obligated to take any action to effect any such registration,
qualification or compliance pursuant to this Section 1.4:
(1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(2) Prior to three (3) years after the Series B Closing
Date;
(3) During the period starting with the date thirty (30)
days prior to the Company's estimated date of filing of, and ending on the date
six (6) months immediately following the effective date of, a registration
statement pertaining to the Company's initial public offering; PROVIDED THAT (i)
the Company delivers a notice to the Initiating Holders within ten (10) days of
any written request from such Initiating Holders of its intent to file a
registration statement within thirty (30) days and (ii) the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective and that the Company's estimate of the date of
filing of such registration statement is made in good faith;
(4) After the Company has effected two (2) such
registrations pursuant to this Section 1.4(a), and such registrations have been
declared or ordered effective;
(5) If the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its stockholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.4 shall be deferred for a period not to
exceed ninety (90) days from the date of receipt of written request from the
Initiating Holders; PROVIDED THAT the Company may not exercise this deferral
right more than once per twelve (12) month period.
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Subject to the foregoing clauses (1) through (5), the
Company shall file a registration statement covering the Registrable Securities
so requested to be registered as soon as practicable, after receipt of the
request or requests of the Initiating Holders.
(c) UNDERWRITING. In the event that a registration pursuant to
this Section 1.4 is for a registered public offering involving an underwriting,
the Company shall so advise the Holders as part of the notice given pursuant to
Section 1.4(a)(1). In such event, the right of any Holder to registration
pursuant to this Section 1.4 shall be conditioned upon such Holder's
participation in the underwriting arrangements required by this Section 1.4, and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested shall be limited 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 managing underwriter selected
for such underwriting by a majority in interest of the Initiating Holders, but
subject to the Company's reasonable approval. Notwithstanding any other
provision of this Section 1.4, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by such Holders at the time of
filing the registration statement; PROVIDED HOWEVER, that the number of shares
of Registrable Securities to be included in such underwriting and registration
shall not be reduced unless all other securities of the Company are first
entirely excluded from such underwriting and registration. No Registrable
Securities excluded from the underwriting by reason of the underwriter's
marketing limitation shall be included in such registration. To facilitate the
allocation of shares in accordance with the above provisions, the Company or the
underwriters may round the number of shares allocated to any Holder to the
nearest 100 shares.
If any Holder of Registrable Securities disapproves of the
terms of the underwriting, such person may elect to withdraw therefrom by
written notice to the Company, the managing underwriter and the Initiating
Holders. The Registrable Securities and/or other securities so withdrawn shall
also be withdrawn from registration.
1.5 COMPANY REGISTRATION.
(a) NOTICE OF REGISTRATION. If at any time or from time to
time the Company shall determine to register any of its securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(1) promptly give to each Holder written notice thereof;
and
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(2) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within twenty (20) days after receipt of such written notice
from the Company, by any Holder.
(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 Section 1.5(a)(1). In such event the right of any Holder to
registration pursuant to this Section 1.5 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of 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 managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 1.5, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter and the
Company may reduce the Registrable Securities to be included in such
registration to the extent the underwriters deem necessary but in no event shall
the amount of securities of the Holders included in the offering be reduced
below twenty-five percent (25%) of the total amount of securities included in
such offering unless the offering is the Company's first bona fide, firmly
underwritten pubic offering of its common stock registered under the Securities
Act (an "IPO"). If the number of Registrable Securities to be included in such
registration is reduced according to this Section 1.5(b), then no holder of the
Company's securities may sell securities in such registration except for the
Holders, if any, who exercise their right to request registration pursuant to
Section 1.4. The Company shall so advise all Holders and other holders
distributing their securities through such underwriting and the number of shares
of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all the Holders in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities held by such
Holder at the time of filing the Registration Statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or holder to the nearest 100
shares. If any Holder or holder disapproves of the terms of any such
underwriting, he or she may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration.
(c) RIGHT TO TERMINATE REGISTRATION. The Company shall have
the right to terminate or withdraw any registration initiated by it under this
Section 1.5 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
1.6 REGISTRATION ON FORM S-3.
(a) REGISTRATION ON FORM S-3. If any Holder or Holders of
Registrable Securities request that the Company file a registration statement on
Form S-3 (or any successor form to Form S-3) for a public offering of shares of
the Registrable Securities the reasonably anticipated
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aggregate price to the public of which, net of underwriting discounts and
commissions, would exceed $500,000, and the Company is a registrant entitled
to use Form S-3 to register the Registrable Securities for such an offering,
the Company shall use its best efforts to cause such Registrable Securities
to be registered for the offering on such form and to cause such Registrable
Securities to be qualified in such jurisdictions as such Holder or Holders
may reasonably request. The Company shall inform other Holders of the
proposed registration and offer them the opportunity to participate. The
substantive provisions of Section 1.4(c) shall be applicable to each
registration initiated under this Section 1.6.
(b) EXCEPTIONS TO REGISTRATION ON FORM S-3. The Company shall not
be obligated to take any action pursuant to this Section 1.6:
(1) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting
such registration, qualification or compliance unless the Company is already
subject to service in such jurisdiction and except as may be required by the
Securities Act;
(2) If the Company has already effected one (1) registration
pursuant to this Section 1.6 in the prior twelve (12) month period;
(3) If the Company, within ten (10) days of the receipt of
the request of the Initiating Holders, gives notice of its bona fide
intention to effect the filing of a registration statement with the
Commission within sixty (60) days of receipt of such request (other than with
respect to a registration statement relating to a Rule 145 transaction, an
offering solely to employees or any other registration which is not
appropriate for the registration of Registrable Securities), provided that
the Company's estimate of the date of filing of such registration statement
is made in good faith;
(4) During the period starting with the date thirty (30) days
prior to the Company's estimated date of filing of, and ending on the date
three (3) months immediately following, the effective date of any
registration statement pertaining to securities of the Company (other than a
registration of securities in a Rule 145 transaction or with respect to an
employee benefit plan), PROVIDED THAT the Company is actively employing in
good faith all reasonable efforts to cause such registration statement to
become effective; or
(5) If the Company shall furnish to such Holder a certificate
signed by the President of the Company stating that in the good faith
judgment of the Board of Directors it would be seriously detrimental to the
Company or its shareholders for registration statements to be filed in the
near future, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed one
hundred and twenty (120) days from the receipt of the request to file such
registration by such Holder; PROVIDED THAT the Company may not exercise this
deferral right more than once per twelve (12) month period.
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1.7 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
Series B Closing Date, the Company shall not, without the prior written
consent of the Holders of a majority of the 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 registration
rights on a parity with or senior to those granted to the Holders hereunder.
1.8 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with all registrations pursuant to Sections 1.4, 1.5 and 1.6 shall
be borne by the Company. Unless otherwise stated, all Selling Expenses
relating to securities registered on behalf of the Holders shall be borne by
the Holders of such securities pro rata on the basis of the number of shares
so registered.
1.9 REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section
1, the Company will keep each Holder 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) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause
such registration statement to become and remain effective for at least one
hundred eighty (180) days or until the distribution described in the
Registration Statement has been completed.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement for the period set
forth in paragraph (a) above.
(c) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus, in conformity with the Securities Act, and such other documents
as such Holders and underwriters may reasonably request in order to
facilitate the public offering of such securities.
(d) Use its reasonable best efforts to register and qualify
the securities covered by such registration statement under such state
securities or other securities laws of such jurisdictions as shall be
reasonably requested by the Holders; PROVIDED THAT the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
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(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Use its reasonable best efforts to furnish, on the date
that such Registrable Securities are delivered to the underwriters for sale,
if such securities are being sold through underwriters, (i) an opinion, dated
as of such date, of the counsel representing the Company for the purposes of
such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the
underwriters, if any, and (ii) a letter dated as of such date, from the
independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants
to underwriters in an underwritten public offering addressed to the
underwriters.
1.10 INDEMNIFICATION.
(a) The Company will indemnify each Holder, each of its
officers, directors, members and partners, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, with respect
to which registration, qualification or compliance has been effected pursuant
to this Section 1, and each underwriter, if any, and each person who controls
any underwriter within the meaning of Section 15 of the Securities Act,
against all expenses, claims, losses, damages or liabilities (or actions in
respect thereof), including any of the foregoing incurred in settlement of
any litigation, commenced or threatened, arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained
in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, 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, in light of the
circumstances in which they were made, not misleading, or any violation by
the Company of the Securities Act, the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT"), state securities law or any rule or regulation
promulgated under such laws applicable to the Company in connection with any
such registration, qualification or compliance, and within a reasonable
period the Company will pay as incurred to each such Holder, each of its
officers and directors, and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action;
PROVIDED THAT the Company will not be liable in any such case to the extent
that any such claim, loss, damage, liability or expense arises out of or is
based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration to the
Company by an instrument duly executed by such Holder, controlling person or
underwriter and stated to be specifically for use therein.
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(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify 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 or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and
directors and each person controlling such Holder within the meaning of
Section 15 of the Securities Act, against all claims, losses, 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 such registration statement, prospectus, offering circular or other
document, or any omission (or alleged omission) to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and within a reasonable period will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending 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 by an instrument duly executed by such
Holder and stated to be specifically for use therein. Notwithstanding the
foregoing, the liability of each Holder under this subsection (b) shall be
limited in an amount equal to the net proceeds such Holder received for the
shares sold by such Holder, unless such liability arises out of or is based
on willful misconduct by such Holder.
(c) Each party entitled to indemnification under this Section
1.10 (the "INDEMNIFIED PARTY") shall give notice to the party required to
provide indemnification (the "INDEMNIFYING PARTY") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Party to assume the defense of
any such claim or any litigation resulting therefrom, provided that counsel
for the Indemnifying Party, who shall conduct the defense of such claim or
litigation, shall be approved by the Indemnified Party (whose approval shall
not unreasonably be withheld), and the Indemnified Party may participate in
such defense at such party's expense, and provided further that the failure
of any Indemnified Party to give notice as provided herein shall not relieve
the Indemnifying Party of its obligations under this Section 1 unless the
failure to give such notice is materially prejudicial to an Indemnifying
Party's ability to defend such action and provided further, that the
Indemnifying Party shall not assume the defense for matters as to which there
is a conflict of interest or separate and different defenses (in which case,
fees and expenses for counsel for Indemnified Party shall be paid by the
Indemnifying Party). No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party,
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in
respect to such claim or litigation.
(d) If the indemnification provided for in this Section 1.10
is held by a court of competent jurisdiction to be unavailable to an
Indemnified Party with respect to any losses, claims,
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damages or liabilities referred to herein, the Indemnifying Party, in lieu of
indemnifying such Indemnified Party thereunder, shall to the extent permitted
by applicable law contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party, on the one hand, and of the Indemnified Party, on the
other, in connection with the acts or omissions that resulted in such loss,
claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the Indemnifying Party or by the Indemnified Party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission; PROVIDED, that in no event
shall any contribution by a Holder hereunder exceed the net proceeds from the
offering received by such Holder.
1.11 INFORMATION BY HOLDER. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held
by them and the distribution proposed by such Holder or Holders as the
Company may request in writing and as shall be required in connection with
any registration, qualification or compliance referred to in this Section 1.
1.12 RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration,
after such time as a public market exists for the Common Stock of the
Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) Use its reasonable best efforts to file with the
Commission in a timely manner all reports and other documents required of the
Company under the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements); and
(c) So long as a Holder owns any Restricted Securities, to
furnish to such Holder, forthwith upon request, a written statement by the
Company as to its compliance with the reporting requirements of Rule 144 (at
any time after ninety (90) days after the effective date of the Company's
IPO), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing the
Holder to sell any such securities without registration.
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1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 1 may be assigned
by a Holder to a transferee or assignee of Registrable Securities which (a)
is a general partner, limited partner, retired partner, member or retired
member of a Holder, (b) is a Holder's family member or trust for the benefit
of an individual Holder, (c) any transfer by any Holder to (A) any individual
or entity controlled by, controlling, or under common control with, such
Holder or (B) any individual or entity with respect to which such Holder (or
any person controlled by, controlling, or under common control with, such
Holder) has the power to direct investment decisions, or (d) acquires at
least 100,000 shares of Registrable Securities (as adjusted for any
Recapitalizations with respect to such shares); PROVIDED, HOWEVER, (i) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of the name and address of such transferee or assignee
and the securities with respect to which such registration rights are being
assigned and (ii) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
1.14 STANDOFF AGREEMENT. In connection with the Company's IPO, the
Holder agrees, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any Registrable Securities (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of such registration as
may be requested by the underwriters PROVIDED THAT all officers, directors
and holders of at least one percent (1%) of the outstanding capital stock of
the Company agree to be similarly bound.
1.15 TERMINATION OF REGISTRATION RIGHTS. The registration rights granted
pursuant to this Section 1 shall terminate as to each Holder upon the earlier
of (i) the fifth anniversary of the closing of the Company's IPO or (ii) at
such time all Registrable Securities held by such Holder may, in the opinion
of counsel to the Company (which opinion shall be addressed and rendered to
Holder), be sold within a given three (3) month period pursuant to Rule 144,
provided the Company has completed its IPO, is subject to the reporting
requirements of the Exchange Act and its common stock is traded on a national
exchange or Nasdaq.
SECTION 2.
COVENANTS
2.1 FINANCIAL INFORMATION.
(a) Within ninety (90) days after the end of each fiscal year,
the Company shall deliver to each Purchaser who continues to hold any shares
of Series B or C Preferred or Conversion Stock audited consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such
fiscal year, and audited consolidated statements of income and consolidated
statements of changes in financial position of the Company and its
subsidiaries, if any, for such year, prepared in
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accordance with generally accepted accounting principles, all in reasonable
detail. Within forty-five (45) days after the end of each fiscal quarter, the
Company shall deliver to each Purchaser who continues to hold any shares of
Series B or C Preferred or Conversion Stock, unaudited quarterly financial
statements of the Company and its subsidiaries, if any, as of the end of such
fiscal quarter prepared in accordance with GAAP. The audited financial
statements shall be accompanied by a report and opinion thereon by
independent public accountants of national standing selected by the Company's
Board of Directors.
(b) The Company shall deliver to each Purchaser who continues
to hold at least 200,000 shares of (i) Series B Preferred, (ii) Series C
Preferred and/or (iii) Common Stock issued or issuable pursuant to conversion
of the Series B Preferred or Series C Preferred (each appropriately adjusted
for any Recapitalizations with respect to such shares) (each, a "MAJOR
INVESTOR") the following:
(1) within thirty (30) days of the end of each month,
an unaudited monthly report including a balance sheet, a profit or loss
statement and a statement of cash flows for and as of the end of such month,
in reasonable detail, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to
such statements and year-end audit adjustments may not have been made; and
(2) within thirty (30) days prior to the end of each
fiscal year, a budget for the next fiscal year.
(c) The rights granted pursuant to this Section 2.1 may not be
assigned or otherwise conveyed by the Purchasers or by any subsequent
transferee of any such rights without the prior written consent of the
Company except as authorized in this Section 2.1(c). After giving notice to
the Company, the Purchasers, without the Company's consent, may assign the
rights granted pursuant to this Section 2.1 to any transferee, other than a
competitor of the Company, who acquires Series B and/or Series C Preferred
convertible into at least an aggregate of 200,000 shares of the Company's
Common Stock (appropriately adjusted for any Recapitalizations with respect
to such shares).
2.2 INSPECTION RIGHTS. Each Major Investor shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the
Company or any of its subsidiaries with its officers, and to review such
information as is reasonably requested all at such reasonable times and as
often as may be reasonably requested; PROVIDED, HOWEVER, that the Company
shall not be obligated under this Section 2.2 with respect to a competitor of
the Company or with respect to information which the Board of Directors
determines in good faith is confidential and should not, therefore, be
disclosed.
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2.3 CONFIDENTIAL INFORMATION AND ASSIGNMENT OF INVENTIONS AGREEMENT.
(a) The Company shall require each future employee of the
Company, as a condition of employment of such employee, to execute and
deliver a confidential information and assignment of inventions agreement in
such form as shall be approved by the Board of Directors.
(b) The Company shall require each future consultant of the
Company, as a condition to the engagement of such consultant, to execute and
deliver a confidential information and assignment of inventions agreement in
such form as shall be approved by the Board of Directors.
2.4 KEY EMPLOYEE INSURANCE. The Company has as of the date hereof or
shall within ninety (90) days of the date hereof, use its best efforts to
obtain from financially sound and reputable insurers term life insurance on
the life of Xxxx X. Warms in the amount of $1,000,000, except as otherwise
decided in accordance with policies adopted by the Board of Directors. The
Company will cause to be maintained the term life insurance required by this
Section 2.4, except as otherwise decided in accordance with policies adopted
by the Board of Directors. Such policies shall name the Company as loss payee
and shall not be cancelable by the Company without prior approval of the
Board of Directors.
2.5 STOCK VESTING. Unless otherwise approved by the Board of Directors,
all stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers
shall be subject to vesting as follows: (i) twenty five percent (25%) of such
stock shall vest at the end of the first year following the earlier of the
date of issuance or such person's services commencement date with the
Company, and (ii) seventy five percent (75%) of such stock shall vest monthly
over the remaining three (3) years. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide
that upon such person's termination of employment or service with the
Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person.
2.6 DIRECTED SHARES UPON THE COMPANY'S IPO. In connection with the
Company's IPO, the Company will use commercially reasonable efforts to direct
(i) 3.75% of the shares sold in such offering to the designees of InterWest
Partners, TL Ventures and CEA Capital (to be split equally among them) and
(ii) 1.25% of the shares sold in such offering to Diamond Technology
Partners, Incorporated and DTP Investments, LLC (to be split equally between
them)(the "DIRECTED SHARE PARTICIPANTS"), provided that, with respect to both
clauses (i) and (ii), such entities continue to hold at least 400,000 shares
of Preferred Stock or Conversion Stock (appropriately adjusted for any
Recapitalizations with respect to such shares).
2.7 INVESTOR INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless each
Purchaser (each, a "PURCHASER INDEMNITEE") from and against all actions,
suits, claims, proceedings, costs, damages,
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judgments, amounts paid in settlement and expenses (including, without
limitation, attorneys' fees and disbursements) relating to or arising out of
any claim, demand or cause of action asserted by any third party as a result
of any of the transactions contemplated by this Agreement, the Series B
Preferred Stock Purchase Agreement and the Series C Preferred Stock Purchase
Agreement by and among the Company and any of the Purchasers (the "PURCHASE
AGREEMENT") (including, without limitation, acts or omissions since the
commencement of the negotiations leading to such transactions); PROVIDED,
HOWEVER, that the indemnification provided hereby shall not extend to costs,
damages, judgment, amounts paid in settlement and expenses directly and
primarily attributable to activities of a Purchaser Indemnitee which do not
involve any wrongful act or omission of the Company or any of its directors,
officers, employees, agents or representatives.
(b) The Company shall reimburse the Purchaser Indemnitee for
all out-of-pocket expenses (including attorneys' fees and disbursements) as
they are incurred in connection with investigating, preparing to defend or
defending any such action, suit, claim or proceeding (including any inquiry
or investigation) whether or not a Purchaser Indemnitee is a party thereto.
If a Purchaser Indemnitee makes a claim hereunder for payment or
reimbursement of expenses, such expenses shall be paid or reimbursed promptly
upon receipt of appropriate documentation relating thereto even if the
Company reserves the right to dispute whether this Agreement requires the
payment or reimbursement of such expenses.
(c) A Purchaser Indemnitee seeking indemnification hereunder
shall give written notice to the Company of any claim with response to which
it seeks indemnification promptly after the discovery by such party of any
matters giving rise to a claim for indemnification; PROVIDED THAT the failure
of any Purchaser Indemnitee to give notice as provided herein shall not
relieve the Company of its obligations under this Section 2.7 unless the
Company shall have been materially prejudiced by the failure of Purchaser
Indemnitee to make such notification. In case any such action, suit, claim or
proceedings is brought against Purchaser Indemnitee, the Company shall be
entitled to participate in the defense thereof and, to the extent that it may
wish, to assume the defense thereof, with counsel reasonably satisfactory to
Purchaser Indemnitee, and after notice from the Company of its election so to
assume the defense thereof, the Company will not be liable to such Purchaser
Indemnitee under this Section 2.7 for any legal or other expense subsequently
incurred by such Purchaser Indemnitee in connection with the defense thereof;
PROVIDED THAT (i) if the Company shall elect not to assume the defense of
such claim or action or (ii) if Purchaser Indemnitee reasonably determines
that there may be a conflict between the positions of the Company and of
Purchaser Indemnitee in defending such claim or action, then separate counsel
shall be entitled to participate in and conduct the defense, and the Company
shall be liable for any legal or other expenses incurred by Purchaser
Indemnitee in connection with the defense; PROVIDED THAT in no event shall
the Company be required to pay the fees or expenses of more than one counsel.
The Company shall not be liable for any settlement of any action, suit, claim
or proceeding effected without its written consent; PROVIDED, HOWEVER, that
the Company shall not unreasonably withhold, delay or condition its consent.
The Company further agrees that it will not, without Purchaser Indemnitee's
prior written consent, settle or compromise any claim or consent to entry of
any judgment in respect thereof in any
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pending or threatened action, suit, claim or proceeding in respect of which
indemnification may be sought hereunder (whether or not any Purchaser
Indemnitee is an actual or potential party to such action, suit, claim or
proceeding) unless such settlement or compromise includes an unconditional
release of Purchasers and each other Purchaser Indemnitee from all liability
arising out of such action, suit, claim or proceeding.
(d) If the indemnification provided for in this Section 2.7 is
held by a court of competent jurisdiction to be unavailable to a Purchaser
Indemnitee with respect to any loss, liability, claim, damage or expense
referred to therein, then the Company, in lieu of indemnifying such Purchaser
Indemnitee hereunder, shall contribute to the amount paid or payable by such
Purchaser Indemnitee as a result of such loss, liability, claim, damage or
expense in such proportion as is appropriate to reflect the relative fault of
the Company on the one hand and of Purchaser Indemnitee 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 Company and of Purchaser Indemnitee
shall be 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 Company or by Purchaser
Indemnitee and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
(e) The rights of each Purchaser under this Section 2.7 shall
be in addition to any liability that the Company might otherwise have to the
Purchaser, under this Agreement, at common law or otherwise.
2.8 APPROVAL OF EXPANSION OF OPTION POOL. Except with the written
approval of the holders of a majority of the then outstanding shares of
Series B Preferred and Series C Preferred held by the Purchasers (voting as a
class), the Company shall not increase the number of shares of Common Stock
available for issuance to employees, directors and consultants beyond the
2,871,100 shares (appropriately adjusted for any Recapitalizations with
respect to such shares) currently reserved under the 1999 Stock Option Plan.
2.9 EXPENSES OF DIRECTORS. After the date hereof, the Company shall
promptly reimburse in full each director of the Company who is not an officer
or employee of the Company for all of his or her reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors or any
committee thereof.
2.10 TERMINATION OF COVENANTS. The obligations of the Company set forth
in this Section 2 shall terminate and be of no further force or effect as
provided in Section 10.2 below.
SECTION 3.
CONFIDENTIAL INFORMATION
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3.1 CONFIDENTIAL BUSINESS INFORMATION. Each of the Purchasers covenants
and agrees that it shall maintain the confidentiality of all non-public
information related to the business of the Company made available to it
and/or any of its representatives by the Company ("CONFIDENTIAL BUSINESS
INFORMATION"). Each of the Purchasers further covenants and agrees that it
shall not disclose any Confidential Business Information to any person or
entity, other than its partners, officers, directors, employees, attorneys,
accountants and other agents with a legitimate need for such information
(which individuals and entities will in turn agree in writing to be bound by
this Section 3.1), except as required by law, without the prior written
consent of the Company. Each of the Purchasers agrees that violation of this
Section 3.1 would cause immediate and irreparable damage to the business of
the Company, and consent to the entry of immediate and permanent injunctive
relief for any violation hereof.
SECTION 4.
RIGHT OF FIRST REFUSAL
4.1 RIGHT OF FIRST REFUSAL ON NEW ISSUANCES.
(a) RIGHT OF FIRST REFUSAL ON NEW ISSUANCES. Subject to the
terms and conditions specified in this Section 4, the Company hereby grants
to each of the Major Investors and each of the Series A Purchasers a right of
first refusal with respect to future sales by the Company after the date of
this Agreement of any shares of, or securities convertible into or
exercisable for any shares of, any class of its capital stock (the "NEW
SECURITIES").
Notwithstanding the foregoing, the term "New Securities" does
not include (i) securities offered to the public generally pursuant to a
registration statement under the Securities Act, (ii) securities issued for
consideration in connection with a bona fide business acquisition of or by
the Company approved by the Board of Directors, whether by merger,
consolidation, sale of assets, sale or exchange of stock or otherwise, (iii)
shares of the Company's Common Stock or related options exercisable for such
Common Stock issued to employees, officers and directors of, and consultants
to, the Company, pursuant to any arrangement approved by the Board of
Directors of the Company, (iv) the issuance of securities (other than those
described in (iii)) pursuant to the conversion or exercise of convertible or
exercisable securities either (A) outstanding on the date of this Agreement
or (B) issued after the date of this Agreement (provided, in the case of
clause (B), the original convertible or exercisable securities were subject
to or exempt from the right of first refusal), (v) securities issued in
connection with a Recapitalization of the Company, (vi) shares of currently
authorized Series B Preferred and Series C Preferred pursuant to the terms of
the Series B Preferred Stock Purchase Agreement and the Series C Preferred
Stock Purchase Agreement, respectively, or (vii) securities issued in
connection with equipment financing, or for consideration other than cash in
connection with sponsored research, collaboration, technology licensing,
development agreements or any other strategic partnerships or mergers or
acquisitions approved by the Board of Directors.
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(b) NOTICE OF INTENDED DISPOSITION. The Company shall deliver
a notice (a "NOTICE") to the Major Investors stating, (i) its bona fide
intention to offer such New Securities, (ii) the number of such New
Securities to be offered, and (iii) the price and terms, if any, upon which
it proposes to offer such New Securities.
(c) EXERCISE OF RIGHT. Within twenty (20) days after giving
the Notice, each Major Investor may elect by written notice to purchase or
obtain, at the price and on the terms specified in the Notice, the number of
shares equal to the product of the New Securities and a fraction, the
numerator of which is the number of shares of Common Stock issued and held,
or issuable upon conversion of the Series B Preferred and Series C Preferred
then held, by such Major Investor, and the denominator of which is the total
number of shares of Common Stock of the Company then outstanding, assuming
the conversion of convertible securities (including outstanding shares of
Preferred Stock, options and warrants).
(d) NON-EXERCISE OF RIGHT. If the Major Investors do not elect
to purchase all of such New Securities, the Company may, during the ninety
(90) day period following the expiration of the period provided in Section
4.1(c) hereof, offer the remaining unsubscribed portion of such New
Securities to 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 New Securities
within such period, or if such agreement is not consummated within sixty (60)
days of the execution thereof, the right provided hereunder shall be deemed
to be revived and such New Securities shall not be offered unless first
reoffered to the Major Investors in accordance herewith.
(e) RESTRICTIONS ON TRANSFERABILITY OF RIGHT OF FIRST REFUSAL.
The right of first refusal set forth in this Section 4 may not be assigned or
transferred, except that such right is assignable by each Major Investor (i)
to a transferee or assignee that acquires all of a Major Investor's
Registrable Securities, (ii) to a transferee or assignee that acquires at
least 200,000 shares of Registrable Securities from a Major Investor
(appropriately adjusted for any Recapitalizations with respect to such
shares), or (iii) to its subsidiaries, parents, general partners, limited
partners, retired partners, members, retired members and affiliates (defined
as controlling, controlled by or under common control with), as well as
spouses and ancestors, lineal descendants and siblings of such partners or
spouses, PROVIDED THAT (a) the Company is, within a reasonable time after
such transfer or assignment, 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 transferred or assigned; and (b)
such transferee or assignee agrees in writing to be bound by and subject to
the terms and conditions of this Agreement, including without limitation the
provisions of Section 1.14.
(f) TERMINATION OF RIGHT OF FIRST REFUSAL. The obligations of
the Company set forth in this Section 4.1 shall terminate and be of no
further force or effect as provided in Section 10.2 below.
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4.2 COMPANY RIGHT OF FIRST REFUSAL. Unless otherwise agreed in writing by
the Company, no Series A Purchaser or Employee Stockholder shall sell, transfer,
pledge, hypothecate or otherwise dispose of any of such Series A Purchaser's or
Employee Stockholder's Registrable Securities (which shall include, for purposes
of this Section 4.2 only, the Series A Preferred) (a "TRANSFER") and any such
Transfer shall be subject to the following:
(a) COMPANY RIGHT OF FIRST REFUSAL. Before any Registrable
Securities registered in the name of a Series A Purchaser or an Employee
Stockholder may be sold or transferred, such Registrable Securities shall first
be offered to the Company. Such Series A Purchaser or Employee Stockholder shall
deliver a written notice (the "NOTICE") to the Company stating (A) such Series A
Purchaser's or Employee Stockholder's bona fide intention to sell or transfer
such Registrable Securities (the "PROPOSED TRANSFER"), (B) the number of shares
of such Registrable Securities to be sold or transferred (C) the price for which
such Series A Purchaser proposes to sell or transfer such Registrable Securities
and (D) the name of the proposed purchaser or transferee.
(b) EXERCISE PERIOD. Within (5) business days after receipt of
the Notice, the Company or its assignees (as set forth in clause (c) below)
shall have the right to elect to purchase all (but not less than all) of the
shares of Registrable Securities to which the Notice refers, at the price per
share specified in the Notice.
(c) ASSIGNMENT OF RIGHT. The Company may not assign its rights
hereunder to any person or entity without first offering to assign its rights
hereunder to each of the holders of the Registrable Securities then outstanding
(excluding any Series A Purchaser then proposing to sell or transfer Registrable
Securities, as applicable (the "TRANSFERRING HOLDER")) and Employee
Stockholders, and any shares of Registrable Securities held by the Transferring
Holder and Common Stock held by Xx. Xxxxx that were subject to a vesting
agreement shall not be counted in determining the pro rata amount of the other
holders of Registrable Securities (the "NONTRANSFERRING HOLDERS")). In the event
the Company desires to assign its rights hereunder, it shall deliver a written
notice (the "TRANSFER NOTICE") to the Nontransferring Holders stating (A) its
intention to assign its rights hereunder, (B) the number of shares of
Registrable Securities to be sold or transferred by the Transferring Holder, and
(C) the price for which the Transferring Holder proposes to sell or transfer
such Registrable Securities. Within seven (7) days after receipt of the Transfer
Notice, each Nontransferring Holder shall have the right to elect to purchase up
to its pro rata share of the Registrable Securities proposed to be sold or
transferred by the Transferring Holder. If any Nontransferring Holder does not
exercise such right in whole, the Company shall advise the other Nontransferring
Holders by providing them with written notice within three (3) days after the
expiration of the seven (7) day period specified above. Each such
Nontransferring Holder shall thereupon be entitled, for a period of three (3)
days from the date of such notice, to purchase some or all of the shares of
Registrable Securities not otherwise purchased pursuant to this subsection (c);
provided, however, that to the extent that more than one such Nontransferring
Holder desires to purchase shares of Registrable Securities exceeding that
proportion as such Nontransferring Holder's aggregate holding of Registrable
Securities then bears to the aggregate holding of Registrable Securities then
held by all Nontransferring Holders who exercised their rights under this
subsection
- 20 -
(c) ("EXCESS REGISTRABLE SECURITIES"), the amount of such Excess Registrable
Securities which each such Nontransferring Holder shall be entitled to purchase
shall be reduced pro rata in accordance with that proportion as the number of
shares of Registrable Securities of which such Nontransferring Holder is then
the holder bears to the total number of shares of Registrable Securities then
held by all such Nontransferring Holders desiring to purchase Excess Registrable
Securities pursuant to this subsection (c). The right to purchase any remaining
shares not so elected to be purchased may be assigned thereafter by the Company
to any person or entity.
(d) EXERCISE OF RIGHT. In the event the Company and/or its
assignee(s) (as set forth in clause (c) above) elect to acquire the Registrable
Securities of a Transferring Holder as specified in the Notice, the Secretary of
the Company shall so notify the Transferring Holder and settlement thereof shall
be made in cash within five (5) business days after the Company receives the
Notice; provided that if the terms of payment set forth in the Notice were other
than cash against delivery, the Company and/or its assignee(s) (as set forth in
clause (c) above) shall pay the fair market value of such Registrable Securities
as determined by the Board, which determination shall be subject to approval by
the Company and a majority of the holders of the Registrable Securities, and if
such determination cannot be agreed upon, then the parties shall submit the
matter to final, binding arbitration.
(e) NON-EXERCISE OF RIGHT. If all of the Registrable
Securities to which the Notice refers are not elected to be purchased as
provided in Section 4.2(b), then the Transferring Holder may sell the
Registrable Securities to any person named in the Notice (or any other person)
at the price specified in the Notice or at a higher price, provided that such
sale or transfer is consummated within ninety (90) days after the date of the
Notice to the Company, and provided further, that any such sale is in accordance
with all terms and conditions hereof. All Registrable Securities so sold shall
continue to be subject to the provisions of this Section 4.2 in the same manner
as before the transfer, and any transferee of such Registrable Securities shall
execute such written agreement evidencing the same as the Company shall
reasonably request.
(f) LIMITATION OF RIGHT. The provisions of Section 4.2 shall
not apply to (i) a transfer not involving a change in beneficial ownership, (ii)
transactions involving the distribution without consideration of Restricted
Securities by the Holder to any of its partners, members or retired partners or
members, or to the estate of any of its partners, members or retired partners or
members, or family member or trust for the benefit of such holder, (iii) any
transfer by any Holder to (A) any individual or entity controlled by,
controlling, or under common control with, such Holder or (B) any individual or
entity with respect to which such Holder (or any person controlled by,
controlling, or under common control with, such Holder) has the power to direct
investment decisions.
(g) WAIVER. The provisions of this Section 4.2 may be waived
by the Company with respect to any transfer, upon duly authorized action of its
Board.
- 21 -
(h) TERMINATION OF RIGHT OF FIRST REFUSAL. The obligations of
the Company set forth in this Section 4.2 shall terminate and be of no further
force or effect as provided in Section 10.2 below.
SECTION 5.
RIGHT OF FIRST REFUSAL REGARDING FOUNDER STOCK
5.1 GRANT OF RIGHT OF FIRST REFUSAL. Subject to Section 7 below, the
Company and, to the extent such right is waived by the Company, the Purchasers
are hereby each granted a right of first refusal with respect to any proposed
disposition of Stock (as such term is defined below) by a Founder (or any
permitted transferee of the Stock under Section 7 hereof, hereafter collectively
included in all references to "Founder"). The Company shall have the first right
to purchase any Stock proposed to be transferred to a third party by a Founder.
To the extent the Company elects not to exercise its first refusal rights with
respect to all or any portion of such proposed transfer, such rights shall pass
to the Purchasers as described below. The term "Stock" as used in this Agreement
with respect to the Purchasers or Founder shall mean shares of capital stock of
the Company now owned or hereafter acquired by such Purchasers or Founder
together with any additional shares of capital stock or securities convertible
or exchangeable for such shares (but excluding Series A Preferred).
5.2 NOTICE OF INTENDED DISPOSITION. In the event a Founder desires to
accept a bona fide third-party offer for the transfer of any or all of the Stock
(such Founder to be hereafter called the "Selling Founder" and the shares
subject to such offer to be hereafter called the "Target Shares"), such Selling
Founder shall promptly deliver to the Company and the Purchasers written notice
of the intended disposition (a "Disposition Notice") and the basic terms and
conditions thereof, including the identity of the proposed purchaser.
5.3 EXERCISE OF RIGHT BY COMPANY. The Company shall, for a period of
fifteen (15) business days following receipt of a Disposition Notice, have the
right to repurchase the Target Shares upon the same terms and conditions
specified in the Disposition Notice, subject to the following conditions. Such
right shall be exercisable by written notice (the "Exercise Notice") delivered
to the Selling Founder and the Purchasers prior to the expiration of the fifteen
(15) business day exercise period setting forth the number of Target Shares the
Company elects to repurchase. If such right is exercised, then the Company shall
effect the repurchase of the number of Target Shares selected for repurchase,
including payment of the purchase price, in cash or marketable securities only,
not more than ten (10) business days after the delivery of the Exercise Notice.
At such time, the Selling Founder shall deliver to the Company the certificates
representing the Target Shares to be repurchased, each certificate to be
properly endorsed for transfer. If the Company elects to repurchase less than
all of the Target Shares specified in the Disposition Notice, the right to
repurchase shall pass to the Purchasers but shall be contingent upon the
Purchasers' election to repurchase the remaining balance of the Target Shares,
as described in Section 5.5 below.
- 22 -
5.4 NON-EXERCISE OF COMPANY'S RIGHT. In the event the Company does not
deliver an Exercise Notice to the Selling Founder within fifteen (15) business
days following the date of the Company's receipt of the Disposition Notice, the
Company shall be deemed to have waived its right of first refusal pursuant to
Section 5.1.
5.5 EXERCISE OF RIGHT BY THE PURCHASERS. Subject to the rights of the
Company, the Purchasers shall, for a period of thirty (30) business days from
receipt of the Disposition Notice, have the right to purchase the remaining
balance of the Target Shares after the Company's repurchase upon the terms and
conditions specified in the Disposition Notice. The Purchasers shall exercise
this right of first refusal by delivery of an Exercise Notice in the same manner
and subject to the same rights and conditions as the Company, as more
specifically set forth in Section 5.3 above. To the extent that the Target
Shares need to be allocated among the Purchasers, they shall be allocated in
proportion to the holdings of Common Stock (assuming the conversion of all
outstanding shares of Series B Preferred) of each Purchaser that desires to
exercise the right of first refusal.
5.6 NON-EXERCISE OF RIGHT. Subject to the Purchasers' co-sale rights
described in Section 6 below, in an event an Exercise Notice with respect to any
portion of the Target Shares is not given to the Selling Founder within thirty
(30) business days following the date of the Company's and the Purchasers'
receipt of the Disposition Notice, the Selling Founder shall have a period of
ninety (90) business days thereafter in which to sell the Target Shares to the
third-party transferee upon terms and conditions (including the purchase price)
no more favorable than those specified in the Disposition Notice. The
third-party transferee shall acquire the Target Shares free and clear of
subsequent rights of first refusal under this Section 5. In the event the
Selling Founder does not notify the Company or the Purchasers pursuant to
Section 5.2 or consummate the sale or disposition of the Target Shares within
the ninety (90) business day period, then the Selling Founder may not transfer
the Target Shares without again complying with all of the provisions of this
Section 5.
5.7 TERMINATION OF RIGHT OF FIRST REFUSAL. The obligations of the Founder
set forth in this Section 5 shall terminate and be of no further force or effect
as provided in Section 10.2 below.
SECTION 6.
CO-SALE RIGHTS IN SALES BY THE FOUNDER
6.1 GRANT OF CO-SALE RIGHTS. Subject to Section 7 below, if a Founder
proposes to enter into a transaction regarding the disposition of Stock held by
such Founder, and the right of first refusal described in Section 5 has lapsed,
the Purchasers shall have the right, exercisable upon written notice to the
Founder within fifteen (15) business days after receipt of such Founder's
Disposition Notice, to participate in such sale of the shares subject to such
offer on the same terms and conditions as those set forth in the Disposition
Notice. The right of participation of the Purchasers shall be subject to the
terms and conditions set forth in this section.
- 23 -
(a) Each Purchaser may sell in the proposed sale described in
the Founder's Disposition Notice a number of shares of Stock (as defined in
Section 5.1) equal to the product obtained by multiplying (i) the aggregate
number of shares of Stock described in the Disposition Notice by (ii) a
fraction, the numerator of which is the number of shares of Stock at the time
owned by such Purchaser and the denominator of which is the combined number of
shares of Stock of the Company at the time owned by the Selling Founder and the
Purchasers. To the extent the Purchasers exercise such right of participation,
the number of shares subject to such offer that the Founder may sell in the
transaction shall be correspondingly reduced.
(b) Each Purchaser may effect its participation in the sale by
delivering to the Founder a written notice described in this Section 6.1
specifying the number of shares of Stock that it elects to and is entitled to
sell pursuant to this Section 6.1 (the "CO-SALE SHARES") along with one or more
certificates, properly endorsed for transfer, which represent the Co-Sale Shares
or that number of shares of Series B Preferred or Series C Preferred that is at
such time convertible into the Co-Sale Shares; PROVIDED, HOWEVER, that if the
offeror described in the Disposition Notice objects to the delivery of Series B
Preferred or Series C Preferred in lieu of Common Stock, such Purchaser may
convert the Series B Preferred or Series C Preferred and deliver Common Stock.
To the extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase shares or other securities from a
Purchaser exercising its rights of co-sale hereunder, such Founder shall not
sell to such prospective purchaser or purchasers any Stock unless and until,
simultaneously with such sale, such Founder shall purchase such shares or other
securities from such Purchaser on the same terms and conditions specified in the
Disposition Notice.
6.2 PAYMENT OF PROCEEDS. The stock certificates that the Purchasers deliver
to the Founder pursuant to Section 6.1 shall be transferred by the Selling
Founder to the offeror described in the Disposition Notice in consummation of
the sale of the Stock pursuant to the terms and conditions specified in the
Disposition Notice, and the Selling Founder shall promptly thereafter remit to
the Purchasers that portion of the sale proceeds to which the Purchasers are
entitled by reason of their participation in such sale.
6.3 NON-EXERCISE. The exercise or non-exercise of the rights of the
Purchasers hereunder to participate in one or more sales of Stock made by a
Selling Founder shall not adversely affect their right to participate in
subsequent Stock sales by such Selling Founder or any other Founder.
6.4 PROHIBITED TRANSFERS.
(a) In the event that a Founder should transfer any Stock in
contravention of the co-sale right of the Purchasers under this Agreement (a
"PROHIBITED TRANSFER"), each Purchaser, in addition to such other remedies as
may be available at law, in equity or hereunder, shall have the put option
provided below, and such Founder shall be bound by the applicable provisions of
such option.
(b) In the event of a Prohibited Transfer, each Purchaser
shall have the right to sell to such Founder the type and number of shares of
Stock equal to the number of shares of Stock each
- 24 -
Purchaser would have been entitled to transfer to the purchaser under Section
6.1 hereof had the Prohibited Transfer been effected pursuant to and in
compliance with the terms hereof. Such sale shall be made on the following term
and conditions:
(1) The price per share at which the Stock is to
be sold to the Founder shall be equal to the price per share paid by the
purchaser to such Founder in such Prohibited Transfer. The Founder shall also
reimburse each Purchaser for any and all fees and expenses, including legal fees
and expenses, incurred pursuant to the exercise or the attempted exercise of
the Purchaser's rights under this Section 6.
(2) Within ninety (90) days after the date on
which a Purchaser received notice of the Prohibited Transfer or otherwise
become aware of the Prohibited Transfer, such Purchaser shall, if exercising
the option created hereby, deliver to the Founder the certificate or
certificates representing Stock to be sold, each certificate to be properly
endorsed for transfer.
(3) Such Founder shall, upon receipt of the
certificate or certificates for the Stock to be sold by an Purchaser, pursuant
to this Section 6.4(b), pay the aggregate purchase price therefor and the
amount of reimbursable fees and expenses, as specified in Section 6.4(b)(1),
in cash or by any other means acceptable to the Purchaser.
(4) Notwithstanding the foregoing, any attempt by
a Founder to transfer Stock in violation of this Section 6 hereof shall be
voidable at the option of a majority in interest of the Purchasers if a
majority in interest of the Purchasers do not elect to exercise the put option
set forth in this Section 6.4(b), and the Company agrees it will not effect such
a transfer nor will it treat any alleged transferee as the holder of such Stock
without the written consent of a majority in interest of the Purchasers.
6.5 TERMINATION OF CO-SALE RIGHT. The obligations of the Founder set forth
in this Section 6 shall terminate and be of no further force or effect as
provided in Section 10.2 below.
SECTION 7.
EXEMPT TRANSFERS
7.1 PERMITTED TRANSACTIONS. Notwithstanding the foregoing, the first
refusal rights of the Company and the Purchasers provided by Section 5, and the
co-sale right of the Purchasers provided by Section 6 shall not apply to any
transfer (i) from a Founder to the Founder's spouse or lineal descendants, (ii)
to any trust for estate planning purposes, (iii) effected pursuant to a
Founder's will or the laws of intestate succession following such Founder's
death, or (iv) to the extent the transfer occurs on or prior to September 1,
2000 and involves no more 870,000 shares of Stock, from a Founder to the Series
B and Series C Major Investors, provided such Shares are offered to each Series
B and Series C Major Investor on a pro rata basis (based on the shares held by
all Series B and Series C Major Investors) or a Founder's "immediate family" as
that term is defined in IM-2110-1
- 25 -
under the NASD conduct rules; provided that the transferee shall furnish the
Purchasers and the Company with a written agreement to be bound by and comply
with all provisions of this Agreement. Such transferred Stock shall remain
"Stock" hereunder, and such transferee shall be treated as a "Founder" for the
purposes of this Agreement.
SECTION 8.
BOARD REPRESENTATION
8.1 VOTING OF SHARES. At each election of directors, the Purchasers and the
Founder (and their permitted transferees) shall vote all of their respective
capital stock so as to elect: (a) three representatives of the Series B
Purchasers, who shall be appointed as follows: (i) one representative of
InterWest Partners VII, L.P. so long as it (together with its affiliates) holds
any shares of Series B Preferred Stock, which individual shall initially be
Xxxxx Xxxxxxx; (ii) one representative of TL Ventures, so long as it (together
with its affiliates) holds any shares of Series B Preferred, which individual
shall initially be Xxxx XxXxxx; and (iii) one representative of CEA Capital so
long as it (together with its affiliates) holds any shares of Series B
Preferred, which individual shall initially be Xxx Xxxxxx; (b) one
representative of the Series C Purchasers, who shall be appointed by Diamond
Technology Partners Inc. so long as it (together with its affiliates) holds any
shares of Series C Preferred, and which individual shall be acceptable to the
Chief Executive Officer of the Company (the "SERIES C NOMINEE") and such
individual shall initially be Xxxxxx X. Xxxxxxxxx; and (c) three representatives
to be appointed by Xxxx X. Warms (or in the event of death or incapacitation,
the holders of a majority of the outstanding Common Stock). Any vote taken to
remove any director elected pursuant to this Section 8.1(a), or to fill any
vacancy created by the resignation or death of a director elected pursuant to
this Section 8.1(a), shall also be subject to the provisions of this Section
8.1(a). The Purchasers and the Founder will take best efforts to elect the
Series C Nominee within forty-five (45) days of the date hereof.
8.2 TERMINATION OF BOARD REPRESENTATION. The obligations of the
Purchasers and Founder set forth in this Section 8 shall terminate and be of no
further force or effect as provided in Section 10.2 below.
SECTION 9.
LEGEND REQUIREMENT
9.1 LEGEND. Each certificate representing the Stock owned by the
Purchasers and Founder shall be endorsed with the following legend:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE
IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN AMENDED AND
RESTATED STOCKHOLDER RIGHTS AGREEMENT, DATED MARCH 28, 2000, BY AND
AMONG THE COMPANY, THE PURCHASERS OF THE
- 26 -
PREFERRED STOCK OF THE COMPANY AND CERTAIN HOLDERS OF THE COMPANY'S
COMMON STOCK. A COPY OF SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY."
9.2 REMOVAL. The Section 9.1 legend shall be removed upon termination of
this Agreement in accordance with the provisions of Section 10.2.
SECTION 10.
MISCELLANEOUS
10.1 GOVERNING LAW. This Agreement shall be governed in all respects by
the internal laws of the State of Delaware.
10.2 TERMINATION. The rights of the Company and the Stockholders under
Sections 2, 3, 4, 5 and 6 of this Agreement and the correlative obligations of
the Stockholders with respect to the Company and the Founder with respect to the
Company and the Stockholders shall terminate upon the earlier of (i) such time
as the Stockholders no longer own any shares of capital stock of the Company,
(ii) the closing of the Company's IPO, (iii) the effective date of a
reorganization, merger or consolidation which results in the Company's
stockholders immediately prior to such transaction not holding at least 50% of
the voting power of the surviving or continuing entity or its immediate parent,
or (iv) a sale, transfer or disposition of all or substantially all of the
assets of the Company.
10.3 SURVIVAL. The covenants and agreements made herein shall survive
any investigation made by the Purchasers and the closing of the transactions
contemplated hereby.
10.4 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
10.5 ENTIRE AGREEMENT; AMENDMENT. This Agreement, Series B Preferred
Stock Purchase Agreement, the Series C Preferred Stock Purchase Agreement, the
Amended Employment Agreement and the agreements referenced therein, including
the exhibits thereto, constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof and supersede
any prior agreements or understandings, written or oral, regarding the subject
matter hereof and thereof. 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. 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.
- 27 -
10.6 NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed (i) if to a Stockholder, at such Stockholder's address, as shown on
the stock records of the Company, or at such other address as such Stockholder
shall have furnished to the Company in writing, (ii) if to any other holder of
Series B or C Preferred, at such address as such holder shall have furnished the
Company in writing, or, until any such holder so furnishes an address to the
Company, then to and at the address of the last holder of such Series B or C
Preferred who has so furnished an address to the Company, or (iii) if to the
Company, one copy should be sent to its address set forth on the cover page of
this Agreement and addressed to the attention of the President, or at such other
address as the Company shall have furnished to the Stockholders. Each such
notice or other communication shall for all purposes of this Agreement be
treated as effective or having been given when delivered if delivered
personally, or, if sent by mail, at the earlier of its receipt or 72 hours after
the same has been deposited in a regularly maintained receptacle for the deposit
of the United States mail, addressed and mailed as aforesaid.
10.7 DELAYS OR OMISSIONS. Except as expressly provided herein, no delay
or omission to exercise any right, power or remedy accruing to any party to this
Agreement upon any breach or default of any other party under this Agreement,
shall impair any such right, power or remedy of such nondefaulting party nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
party of any breach or default under this Agreement, or any waiver on the part
of any holder of any provisions or conditions of this Agreement, must be in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any party to this Agreement, shall be cumulative and not
alternative.
10.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
10.9 SEVERABILITY. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; PROVIDED THAT no such severability shall be effective
if it materially changes the economic benefit of this Agreement to any party.
10.10 AGGREGATION. All shares of Registrable Securities or Series B
Preferred or Series C Preferred Stock, as the case may be, held or acquired by
affiliated entities or persons shall be aggregated together for purpose of
determining the availability of any rights under this Agreement.
10.11 TITLES AND SUBTITLES. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
- 28 -
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
XXXXXXXXXXX.XXX, INC.
a Delaware Corporation
---------------------------------------
Xxxx X. Warms, President
"PURCHASERS"
DIAMOND TECHNOLOGY PARTNERS
INCORPORATED
By:
------------------------------------
Print Name: XXXXX XXXXXX
--------------------------
Title: VICE PRESIDENT/OFFICER
-------------------------------
DTP INVESTMENTS, LLC
By:
------------------------------------
Print Name: XXXXX XXXXXX
--------------------------
Title: VICE PRESIDENT, SECRETARY &
TREASURER
-------------------------------
(SIGNATURE PAGE TO STOCKHOLDER RIGHTS AGREEMENT)
CONTINUATION SIGNATURE PAGE RIGHTS
AGREEMENT
"FOUNDER"
---------------------------------------
Xxxx X. Warms
(SIGNATURE PAGE TO STOCKHOLDER RIGHTS AGREEMENT)
The foregoing agreement is hereby executed as of the date first above
written.
"PURCHASERS"
BREAKAWAY CAPITAL LLC
By:
------------------------------------
Print Name: XXXXX XXXXXXX
--------------------------
Title: VICE PRESIDENT
-------------------------------
BREAKAWAY CAPITAL FRIENDS LLC
By:
------------------------------------
Print Name: XXXXX XXXXXXX
--------------------------
Title: VICE PRESIDENT
-------------------------------
(SIGNATURE PAGE TO STOCKHOLDER RIGHTS AGREEMENT)
The foregoing agreement is hereby executed as of the date first above
written.
"PURCHASERS"
INTERWEST PARTNERS VII, LP
By:
------------------------------------
Print Name: XXXXXXX XXXXXXX
--------------------------
Title: VENTURE PARTNERS
-------------------------------
INTERWEST INVESTORS VII, LP
By:
------------------------------------
Print Name: XXXXXXX XXXXXXX
--------------------------
Title: VENTURE PARTNERS
-------------------------------
(SIGNATURE PAGE TO STOCKHOLDER RIGHTS AGREEMENT)
The foregoing agreement is hereby executed as of the date first above
written.
"PURCHASERS"
TL VENTURES IV LP
By:
------------------------------------
Print Name: XXXX X. XXXXXX
--------------------------
Title: MANAGING DIRECTOR
-------------------------------
TL VENTURES IV INTERFUND LP
By:
------------------------------------
Print Name: XXXX X. XXXXXX
--------------------------
Title: MANAGING DIRECTOR
-------------------------------
(SIGNATURE PAGE TO STOCKHOLDER RIGHTS AGREEMENT)
