Exhibit 4.2
DOCENT, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
April 7, 2000
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
This Amended and Restated Investor Rights Agreement (the "Agreement") is
made effective as of the 7th day of April 2000, by and among Docent, Inc., a
Delaware corporation (the "Company"), and the investors set forth on Schedule I
attached hereto (each, an "Investor"; collectively, "Investors").
Now, Therefore, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement, the parties
mutually agree as follows:
SECTION 1. General.
1.1 Definitions. As used in this Agreement the following terms shall have
the following respective meanings:
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any similar federal statute and the rules and regulations thereunder, all as
the same shall be in effect from time to time.
"Form S-3" means such form under the Securities Act as in effect on
the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Holder" means any person owning of record Registrable Securities that
have not been sold to the public or any assignee of record of such Registrable
Securities in accordance with Section 2.10 hereof.
"Initial Offering" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"Register," "registered" and "registration" refer to a registration
effected by preparing and filing a registration statement in compliance with the
Securities Act, and the declaration or ordering of effectiveness of such
registration statement or document.
"Registrable Securities" means (i) Common Stock of the Company issued
or issuable upon conversion of the Shares; and (ii) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security which is issued as) a dividend or other distribution
with respect to, or in exchange for or in replacement of, such above-described
securities. Notwithstanding the foregoing, Registrable Securities shall not
include any securities after they have been sold by a person to the public
either pursuant to a registration statement or Rule 144 of the Securities Act or
after they have been sold in a private transaction in which the transferor's
rights under Section 2 of this Agreement are not assigned.
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"Registrable Securities then outstanding" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (i) are then issued and
outstanding or (ii) are issuable pursuant to then exercisable or convertible
securities.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Fifteen Thousand Dollars ($15,000) of a single special counsel for the
Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SEC" means the Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations thereunder, all as the
same shall be in effect from time to time.
"Series A Stock" shall mean the Company's Series A Convertible
Preferred Stock issued pursuant to that certain Series A Convertible Preferred
Stock Purchase Agreement, dated as of June 27, 1997.
"Series B Stock" shall mean the Company's Series B Convertible
Preferred Stock issued pursuant to that certain Series B Convertible Preferred
Stock Purchase Agreement, dated as of June 5, 1998.
"Series B-1 Stock" shall mean the Company's Series B-1 Convertible
Preferred Stock issued pursuant to that certain Series B-1 Convertible Preferred
Stock Purchase Agreement, dated as of September 25, 1998.
"Series C Stock" shall mean the Company's Series C Convertible
Preferred Stock issued pursuant to (a) that certain Series C Convertible
Preferred Stock Purchase Agreement, dated as of November 13, 1998; (b) that
certain Series C Convertible Preferred Stock Purchase Agreement, dated as of
March 23, 1999; and (c) two warrants for the purchase of up to an aggregate of
two hundred twenty-eight thousand five hundred (228,500) shares of the Company's
Series C Convertible Preferred Stock held by Comdisco, Inc. (the "Comdisco
Warrants").
"Series D Stock" shall means all the Company's Series D Convertible
Preferred Stock issued pursuant to those certain Series D Convertible Stock
Purchase Agreements, dated as of August 19, 1999, August 27, 1999, November 22,
1999 and December 22, 1999, respectively.
"Series E Stock" shall mean all the Company's Series E Convertible
Preferred Stock issued pursuant to that certain Series E Convertible Stock
Purchase Agreement, dated as of April __, 2000.
"Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities.
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"Shares" shall mean the Series A Stock, Series B Stock, Series B-1
Stock, Series C Stock, Series D Stock and Series E Stock held by the Investors
and their permitted assigns.
SECTION 2. Registration; Restrictions on Transfer.
2.1 Restrictions on Transfer.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound by
the terms of this Agreement, (B) such Holder shall have notified the Company of
the proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Holder which is (A) a partnership to its partners or former
partners in accordance with partnership interests, (B) a corporation to its
stockholders in accordance with their interest in the corporation, (C) a limited
liability company to its members or former members in accordance with their
interest in the limited liability company, or (D) to the Holder's family member
or trust for the benefit of an individual Holder; provided that in each case the
transferee will be subject to the terms of this Agreement to the same extent as
if he were an original Holder hereunder.
(b) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws or as
provided elsewhere in this Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of
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counsel (which counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 Demand Registration.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of at least fifty percent (50%)
of the Registrable Securities then outstanding (the "Initiating Holders") that
the Company file a registration statement under the Securities Act covering the
registration of Registrable Securities having an aggregate offering price to the
public in excess of $7,500,000 (a "Qualified Public Offering"), then the Company
shall, within thirty (30) days of the receipt thereof, give written notice of
such request to all Holders, and subject to the limitations of this Section 2.2,
use its best efforts to effect, as soon as practicable, the registration under
the Securities Act of all Registrable Securities that the Holders request to be
registered.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
or any request pursuant to Section 2.4 and the Company shall include such
information in the written notice referred to in Section 2.2(a) or Section
2.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company). Notwithstanding any
other provision of this Section 2.2 or Section 2.4, if the underwriter advises
the Company that marketing factors require a limitation of the number of
securities to be underwritten (including Registrable Securities) then the
Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares that may be
included in the underwriting shall be allocated to the Holders of such
Registrable Securities on a pro rata basis based on the number of Registrable
Securities held by all such Holders (including the Initiating Holders). Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to the earlier of December 31, 2001 or one hundred
eighty (180) days following the effective date of the registration statement
pertaining to the Initial Offering; or
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(ii) after the Company has effected three (3) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective; or
(iii) during the period starting with the date of filing of, and
ending on the date one hundred eighty (180) days following the effective date of
the registration statement pertaining to the Initial Offering; provided that the
Company makes reasonable good faith efforts to cause such registration statement
to become effective;
(iv) if within thirty (30) days of receipt of a written request
from Initiating Holders pursuant to Section 2.2(a), the Company gives notice to
the Holders of the Company's intention to make its Initial Offering within
ninety (90) days; or
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Holders; provided that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period.
2.3 Piggyback Registrations. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within twenty (20) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(a) Underwriting. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the Company and the underwriter determine in good
faith that marketing factors require a limitation of the number of
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shares to be underwritten, the number of shares that may be included in the
underwriting shall be allocated, first, to the Company; second, to Holders, not
including members of the Company's management, on a pro rata basis based on the
total number of Registrable Securities held by these Holders; third, to all
remaining Holders on a pro rata basis based on the total number of Registrable
Securities held by the remaining Holders; and fourth to any stockholder of the
Company (other than a Holder) on a pro rata basis. No such reduction shall (i)
reduce the securities being offered by the Company for its own account to be
included in the registration and underwriting, or (ii) reduce the amount of
securities of the selling Holders included in the registration below ten percent
(10%) of the total amount of securities included in such registration, unless
such offering is the Initial Offering and such registration does not include
shares of any other selling stockholders, in which event any or all of the
Registrable Securities of the Holders may be excluded in accordance with the
immediately preceding sentence. In no event will shares of any other selling
stockholder be included in such registration which would reduce the number of
shares which may be included by Holders without the written consent of Holders
of at least sixty-six and two-thirds percent (66 2/3%) of the Registrable
Securities proposed to be sold in the offering.
(b) Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.5 hereof.
2.4 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4 if:
(i) Form S-3 (or any successor or similar form) is not available
for such offering by the Holders, or
(ii) the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose to
sell Registrable Securities and such other securities (if any) at an aggregate
price to the public of less than $1,000,000, or
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(iii) the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors of the Company stating that in
the good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than ninety (90) days after receipt of the request of the
Holder or Holders under this Section 2.4: provided, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period, or
(iv) the Company has, within the twelve (12) month period
preceding the date of such request, already effected one (1) registration on
Form S-3 for the Holders pursuant to this Section 2.4, or
(v) in any particular jurisdiction in which the Company would
be required to qualify to do business or to execute a general consent to service
of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All such Registration Expenses incurred in
connection with three registrations requested pursuant to this Section 2.4 shall
be paid by the Company.
2.5 Expenses of Registration. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration under
Section 2.3 or the first three registrations under Section 2.4 herein shall be
borne by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered. The
Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2 or 2.4, the request of which has been
subsequently withdrawn by the Initiating Holders unless (i) the withdrawal is
based upon material adverse information concerning the Company of which the
Initiating Holders were not aware at the time of such request or (ii) the
Holders of a majority of Registrable Securities agree to forfeit their right to
one requested registration pursuant to Section 2.2 or Section 2.4, as
applicable, in which event such right shall be forfeited by all Holders. If the
Holders are required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable Securities) requesting
such registration in proportion to the number of shares for which registration
was requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand
registration.
2.6 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities
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registered thereunder, keep such registration statement effective for up to one
hundred twenty (120) days or, if earlier, until the Holder or Holders have
completed the distribution related thereto; provided, however, that (i) such
120-day period shall be extended for a period of time equal to the period the
Holder refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such 120-day
period shall be extended, if necessary, to keep the registration statement
effective until all such Registrable Securities are sold, provided that Rule
415, or any successor rule under the Securities Act, permits an offering on a
continuous or delayed basis, and provided further that applicable rules under
the Securities Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (x) includes any
prospectus required by Section 10(a)(3) of the Securities Act or (y) reflects
facts or events representing a material or fundamental change in the information
set forth in the registration statement, the incorporation by reference of
information required to be included in (x) and (y) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the Exchange Act in
the registration statement.
(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use all reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable Securities
are delivered to the underwriters for sale, if such securities are being sold
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through underwriters, or, if such securities are not being sold through
underwriters, on the date that the registration statement with respect to such
securities becomes effective, (i) an opinion, dated as of such date, of the
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent certified
public accountants to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and if permitted by
applicable accounting standards, to the Holders requesting registration of
Registrable Securities.
(h) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(i) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(j) Otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC.
2.7 Termination of Registration Rights. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect four
(4) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire sooner if (i) the Company has
completed its Initial Offering and is subject to the provisions of the Exchange
Act; and (ii) all Registrable Securities held by and issuable to such Holder
(and its affiliates, partners and former partners) may be sold under Rule 144
during any ninety (90) day period.
2.8 Delay of Registration; Furnishing Information.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
(c) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection 2.2(b), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in Section 2.2 or Section 2.4,
whichever is applicable.
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2.9 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify,
defend, protect and hold harmless each Holder, the partners, officers,
directors, members and legal counsel of each Holder, any underwriter (as defined
in the Securities Act) for such Holder and each person, if any, who controls
such Holder or underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages or liabilities (joint or
several) to which they may become subject under the Securities Act, the Exchange
Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation") by the Company: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law in connection with the offering
covered by such registration statement; and the Company will reimburse each such
Holder, partner, officer, director, member, legal counsel, underwriter or
controlling person for any legal or other expenses reasonably incurred by them
in connection with investigating or defending any such loss, claim, damage,
liability or action; provided however, that the indemnity agreement contained in
this Section 2.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company, which consent shall not be unreasonably withheld,
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
such Holder, partner, officer, director, member, legal counsel, underwriter or
controlling person of such Holder or underwriter.
(b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, indemnify, defend,
protect and hold harmless the Company, each of its directors, its officers, and
legal counsel and each person, if any, who controls the Company within the
meaning of the Securities Act, any underwriter and any other Holder selling
securities under such registration statement or any of such other Holder's
partners, directors or officers or any person who controls such Holder, against
any losses, claims, damages or liabilities (joint or several) to which the
Company or any such director, officer, controlling person, underwriter or other
such Holder, or partner, director, officer or controlling person of such other
Holder may become subject under the Securities Act, the Exchange Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, legal counsel, controlling person, underwriter or
other Holder, or partner, officer, director, legal counsel or
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controlling person of such other Holder in connection with investigating or
defending any such loss, claim, damage, liability or action if it is judicially
determined that there was such a Violation; provided, however, that the
indemnity agreement contained in this Section 2.9(b) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.9 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 2.9, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 2.9 only to the extent that such party is
harmed by such failure to deliver notice, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault and/or relative benefit of the indemnifying party on the one hand
and of the indemnified party on the other in connection with the Violation(s)
that resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault and/or relative benefit 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.
(e) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof
11
the giving by the claimant or plaintiff to such Indemnified Party of a release
from all liability in respect to such claim or litigation.
2.10 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2 may be assigned by a
Holder to a transferee or assignee of Registrable Securities which (i) is a
general partner, limited partner or retired partner of a Holder that is a
partnership, (ii) is a Holder's family member or trust for the benefit of an
individual Holder, or (iii) acquires at least five percent (5%) of the
Registrable Securities then outstanding (as adjusted for stock splits and
combinations); provided however, (A) 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 (B) such transferee shall agree
to be subject to all restrictions set forth in this Agreement.
2.11 Amendment of Registration Rights. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least sixty-six and two-
thirds percent (66-2/3%) of the Registrable Securities then outstanding. Any
amendment or waiver effected in accordance with this Section 2.11 shall be
binding upon each Holder and the Company. By acceptance of any benefits under
this Article II, Holders of Registrable Securities hereby agree to be bound by
the provisions hereunder.
2.12 Limitation on Subsequent Registration Rights. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of at least sixty-six and two-thirds percent (66-2/3%) of the
Registrable Securities then outstanding, enter into any agreement with any
holder or prospective holder of any securities of the Company that would grant
such holder registration rights senior to or on parity with those granted to the
Holders hereunder.
2.13 "Market Stand-Off" Agreement. Each Holder hereby agrees that such
Holder shall not sell or otherwise transfer or dispose of any Common Stock (or
other securities) of the Company held by such Holder (other than those included
in the registration) for a period specified by the representative of the
underwriters of Common Stock (or other securities) of the Company not to exceed
either: (i) one hundred eighty (180) days following the effective date of the
registration statement of the Company filed under the Securities Act pertaining
to the Initial Offering, provided that all officers and directors of the Company
and holders of at least one percent (1%) of the Company's voting securities
enter into similar agreements; or (ii) ninety (90) days following the effective
date of a subsequent registration statement of the Company filed under the
Securities Act in which such Holder participates, provided that all officers and
directors of the Company and holders of at least one percent (1%) of the
Company's voting securities enter into similar agreements.
Each Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter that are consistent with
the foregoing or which are necessary to give further effect thereto. The
obligations described in this Section 2.13 shall not apply to a registration
relating solely to employee benefit plans on Form S-1 or Form S-8 or similar
forms that may be promulgated in the future, or a registration relating solely
to SEC Rule 145 transaction on Form S-4 or similar forms that may be promulgated
in the future. The
12
Company may impose stop-transfer instructions with respect to the shares of
Common Stock (or other securities) subject to the foregoing restriction until
the end of the period specified in such agreements.
2.14 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;
(c) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act, and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent annual or quarterly report of
the Company; and such other reports and documents as a Holder may reasonably
request in availing itself of any rule or regulation of the SEC allowing it to
sell any such securities without registration.
SECTION 3. Covenants of the Company.
3.1 Basic Financial Information and Reporting.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within one hundred twenty (120) days thereafter, the
Company will furnish each Investor that holds a minimum of 25,000 Shares with a
consolidated balance sheet of the Company, as at the end of such fiscal year,
and a consolidated statement of income and a consolidated statement of cash
flows of the Company, for such year, all prepared in accordance with generally
accepted accounting principles consistently applied and setting forth in each
case in comparative form the figures for the previous fiscal year, all in
reasonable detail. Such financial statements shall be accompanied by a report
and opinion thereon by independent public accountants of national standing
selected by the Company's Board of Directors.
(c) The Company will furnish each holder of a minimum of 100,000
Shares (a "Major Investor") (i) within thirty (30) days after Board approval,
the annual operating plan for the next fiscal year; and (ii) as soon as
practicable after the end of each month, and in any event within forty-five (45)
days thereafter, a consolidated balance sheet of the Company as of the end of
each such month, and a consolidated statement of income and a consolidated
statement of cash
13
flows of the Company for such month and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles
consistently applied and each of which shall indicate the variance from the
operating plan, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made.
3.2 Inspection Rights. Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries, and
to discuss the affairs, finances and accounts of the Company or any of its
subsidiaries with its officers, and to review such information as is reasonably
requested all at such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under this
Section 3.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
3.3 Confidentiality of Records. Each Investor agrees to use, and to use
its best efforts to insure that its authorized representatives use, the same
degree of care as such Investor uses to protect its own confidential information
to keep confidential any information furnished to it which the Company
identifies as being confidential or proprietary (so long as such information is
not in the public domain), except that such Investor may disclose such
proprietary or confidential information to any partner, subsidiary or parent of
such Investor for the purpose of evaluating its investment in the Company as
long as such partner, subsidiary or parent is advised of the confidentiality
provisions of this Section 3.3.
3.4 Reservation of Common Stock. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
3.5 Proprietary Information and Inventions Agreement. The Company shall
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement in substantially the form attached to the
Purchase Agreement.
3.6 Directors' Expenses. The Company shall not pay any compensation to any
member of the Company's Board of Directors in connection with the performance of
their duties as a Director, provided however, the Company shall pay reasonable
expenses incurred by Directors in performance of their duties.
3.7 Real Property Holding Corporation. The Company covenants that it will
operate in a manner such that it will not become a "United States real property
holding corporation" as that term is defined in Section 897(c)(2) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA"). The Company agrees to make determinations as to its status as a
USRPHC, and will file statements concerning those determinations with the
Internal Revenue Service, in the manner and at the times required under Reg. (S)
1.897-2(h), or any supplementary or successor provision thereto. Within 30 days
of a request from an Investor or any of its partners, the Company will inform
the requesting party, in the manner set forth in Reg. (S) 1.897- 2(h)(1)(iv) or
any supplementary or successor provision thereto, whether that party's interest
in the Company constitutes a United States real property interest (within the
meaning of Internal Revenue Code Section 897(c)(1) and the regulations
14
thereunder) and whether the Company has provided to the Internal Revenue Service
all required notices as to its USRPHC status.
3.8 Termination of Covenants. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor on
the effective date of the registration statement pertaining to the Initial
Offering.
SECTION 4. Right of First Refusal.
4.1 Subsequent Offerings. Each Investor shall have a right of first
refusal to purchase up to its pro rata share of all Equity Securities, as
defined below, that the Company may, from time to time, propose to sell and
issue after the date of this Agreement, other than the Equity Securities
excluded by Section 4.5 hereof. Each Investor's pro rata share is equal to the
ratio of (i) the number of shares of the Company's Common Stock (including all
shares of Common Stock issued or issuable upon conversion of the Shares) which
such Investor is deemed to be a holder immediately prior to the issuance of such
Equity Securities to (ii) the total number of shares of the Company's
outstanding Common Stock (including all shares of Common Stock issued or
issuable upon conversion of the Shares or upon the exercise of any outstanding
warrants or options) immediately prior to the issuance of the Equity Securities.
The term "Equity Securities" shall mean (i) any Common Stock, Preferred Stock or
other security of the Company, (ii) any security convertible, with or without
consideration, into any Common Stock, Preferred Stock or other security
(including any option, warrant or right to purchase such a convertible
security), (iii) any security carrying any option, warrant or right to subscribe
to or purchase any Common Stock, Preferred Stock or other security or (iv) any
such option, warrant or right. The Right of First Refusal provided by this
Section 4.1 shall be applicable to only the initial sale or grant by the Company
of Equity Securities, but not upon the exercise or conversion thereof.
4.2 Exercise and Waiver of Rights. If the Company proposes to issue any
Equity Securities, it shall give each Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase up to its pro rata
share of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity Securities to be purchased. Notwithstanding the
foregoing, the Company shall not be required to offer or sell such Equity
Securities (i) if the holders of a majority of the Registrable Securities waive
such rights or (ii) to any Investor who would cause the Company to be in
violation of applicable federal securities laws by virtue of such offer or sale.
4.3 Termination of Rights of First Refusal. The rights of first refusal
established by this Section 4 shall not apply to, and shall terminate upon the
effective date of the registration statement pertaining to the Company's Initial
Offering.
4.4 Transfer of Rights of First Refusal. The rights of first refusal of
each Investor under this Section 4 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.
4.5 Excluded Securities. The rights of first refusal established by this
Section 4 shall have no application to any of the following Equity Securities:
15
(a) shares of Common Stock (and/or options, warrants or other Common
Stock issued or to be issued to employees, officers or directors of, or
consultants or advisors to the Company or any subsidiary, pursuant to stock
purchase or stock option plans or other arrangements that are approved by the
Board of Directors;
(b) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(c) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(d) shares of Common Stock issued upon conversion of the Shares;
(e) any Equity Securities issued in connection with any leasing
arrangement, loan or debt financing from a bank or similar financial institution
approved by the Board of Directors of the Company;
(f) any Equity Securities that are issued by the Company pursuant to
a registration statement filed under the Securities Act; and
(g) any Equity Securities with an aggregate valuation of less than
$250,000, as determined by the Company's Board of Directors, which Equity
Securities are issued in connection with strategic transactions involving the
Company and other entities, including (i) joint ventures, manufacturing,
marketing or distribution arrangements or (ii) technology transfer or
development arrangements.
SECTION 5. Miscellaneous.
5.1 Governing Law. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California. The
parties hereto hereby (a) expressly consent to the personal jurisdiction and
venue of the state and federal courts located in Santa Xxxxx County, California
for any action brought by either party to interpret or enforce any provision of
this Agreement and (b) agree not to assert (by way of motion, as a defense or
otherwise), in any such action any claim that such legal proceeding has been
brought in an inconvenient forum.
5.2 Survival. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
5.3 Successors and Assigns. Except as otherwise expressly provided herein,
the provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors, and administrators of the parties hereto
and shall inure to the benefit of and be
16
enforceable by each person who shall be a holder of Registrable Securities from
time to time; provided, however, that prior to the receipt by the Company of
adequate written notice of the transfer of any Registrable Securities specifying
the full name and address of the transferee, the Company may deem and treat the
person listed as the holder of such shares in its records as the absolute owner
and holder of such shares for all purposes, including the payment of dividends
or any redemption price.
5.4 Entire Agreement. This Agreement and the Purchase Agreement and the
other documents delivered pursuant thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by any
representations, warranties, covenants and agreements except as specifically set
forth herein and therein.
5.5 Severability. In case any provision of the Agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
5.6 Amendment and Waiver.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least sixty-six and two-thirds percent (66 2/3%) of the Registrable
Securities.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least sixty-six and two-thirds
percent (66 2/3%) of the Registrable Securities.
(c) Notwithstanding the foregoing, this Agreement may be amended with
only the written consent of the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.
5.7 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.8 Notices. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to the
party to be notified, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (c) five (5) days after having been sent by registered or certified mail,
return receipt requested, postage prepaid, or (d) one (1) day after deposit with
a nationally recognized overnight courier, specifying next day delivery, with
written verification of receipt. All communications shall be sent to the party
at the address as set forth on Schedule I attached
17
hereto or at such other address as such party may designate by ten (10) days
advance written notice to the other parties hereto.
5.9 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.10 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
5.12 Consent and Waiver. Each Investor hereby:
(a) consents, on behalf of all such "Investors," under Sections
5.6(a), 5.6(b) and 5.6(c) of this Agreement, to the registration rights granted
to Holders hereunder; and
(b) waives, on behalf of all such "Investors," such "Investors"
rights of first refusal, and related rights to notice, under Section 4.1 and
Section 4.2 of this Agreement as they apply to the issuance of Series A Stock,
Series B Stock, Series B-1 Stock, Series C Stock, Series D Stock, Series E Stock
and the Comdisco Warrants.
18
In Witness Whereof, the parties hereto have executed this Amended and
Restated Investor Rights Agreement as of the date set forth in the first
paragraph hereof.
COMPANY
Docent, Inc.
By:________________________________________
Xxxxx X. Xxxxxx
President and Chief Executive Officer
S-1
In Witness Whereof, the parties hereto have executed this Amended and
Restated Investor Rights Agreement as of the date set forth in the first
paragraph hereof.
INVESTORS: American Express Financial Advisors
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
Norwest Venture Partners, VI Xxxxxxx X. and Xxxxxxx X.
a Minnesota Limited Partnership, Vonderschmitt Joint Declaration of
Trust dtd 1/4/96
By: Itasca VC Partners VI, L.L.P,
General Partner
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
Advanced Technology Ventures IV
By: _______________________________
Print Name:________________________
_________________________________
Title: ____________________________ Xxxxx Xxxxxx Xxxxxx
Xxxxx IT Fund
_________________________________
By: _______________________________ Xxxxxxx Xxxxx
Print Name:________________________
Title: ____________________________
S-2
Comdisco GC&H Investments
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
___________________________________ ___________________________________
Pardner Xxxx Xxxxx Xxxxxxx
Credit Suisse First Boston BancBoston Ventures Inc.
Venture Fund I, L.P.
By: QBB Management I, L.L.C. By: _______________________________
General Partner Print Name:________________________
By: ______________________________ Title: ____________________________
Xxxxxx Xxxxxxx
Member
Citiventure 96 Partnership, X.X. Xxxxxxxxxx Private Capital
Partners III, L.P.
By: INVESCO Private Capital, Inc., By: CPCP Associates, L.P., its
As Investment Adviser and Attorney- General Partner
in-Fact
By: INVESCO Private Capital, Inc.,
By: _______________________________ Its General Partner
Print Name:________________________
By: _______________________________
Title: ____________________________
Print Name:________________________
Title: ____________________________
S-3
Chancellor Private Capital Offshore Chancellor Private Capital Offshore
Partners II, L.P. Partners I, C.V.
By: CPCP Associates, L.P., its By: Chancellor KME IV, L.P., its
Investment General Partner Investment General Partner
By: INVESCO Private Capital, Inc., By: INVESCO Private Capital, Inc.,
Its General Partner Its General Partner
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
Xxxxxxxx Consulting Apollo Group, Inc.
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
Xxxxxxxx, Xxxxxx Xxxxxxx, Xxxxxxx
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
DHM Arcadia Partners, X.X. Xxx Xxxxxxx Capital Management
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
S-4
Xxxxxx, Xxxxxx Xxxxx Xxxxxx, Xxxxxxx X. Individual
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
Xxxx Xxxxxxxx Xxxxxxx Hampton Partners X
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
GDC Partners 2000 Fund, LLC X.X. Xxxxxxxx
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
Xxxxxxxxxx, Xxxxxxx Xxxxxx Xxxxxx Partners
By: _______________________________ By: _______________________________
Print Name:________________________ Print Name:________________________
Title: ____________________________ Title: ____________________________
S-5
Xxxxx del Xxxxx and Xxxxxxxxx Xxxxxxx Xxx, Xxxxxxx
as husband and wife
By:_________________________________ By:____________________________
Print Name:_________________________ Print Name:____________________
Title:______________________________ Title:_________________________
Xxxxx, Xxxxx X. Pillsbury Venture Fund III
By:_________________________________ By:____________________________
Print Name:_________________________ Print Name:____________________
Title:______________________________ Title:_________________________
Sylvan Learning Educational Ventures US Development Capital Portfolio
Fund Company
By:_________________________________ By:____________________________
Print Name:_________________________ Print Name:____________________
Title:______________________________ Title:_________________________
S-6
Schedule I
Schedule of Investors
----------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of Number of Number of
Name of Person or Entity Shares Shares Shares of Shares Shares of Shares of
of Series A of Series B Series B-1 of Series C Series D Series E
Preferred Preferred Preferred Preferred Preferred Preferred
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Norwest Venture Partners, VI 2,592,592 984,275 410,417 2,150,539 1,223,776
A Minnesota Limited
Partnership,
BY: Itasca VC Partners VI,
L.L.P., General Partner
Address: 000 Xxxxxx Xxxxxx,
Xxxxx 000
Xxxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Advanced Technology 2,592,592 984,275 410,417 403,230 524,476 39,894
Ventures IV
Address: 000 Xxxxxx, Xxxxxx
#000
Xxxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Pardner Xxxx 370,370 10,000 4,166 5,000 3,000
Address: 0000 X.
Xxxxxxxxxx, Xxx. 000
Xxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
SCH-1
----------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of Number of Number of
Name of Person or Entity Shares Shares Shares of Shares Shares of Shares of
of Series A of Series B Series B-1 of Series C Series D Series E
Preferred Preferred Preferred Preferred Preferred Preferred
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx X. and Xxxxxxx X. 74,074 -------- -------- ------- --------
Vonderschmitt joint
Declaration of Trust dtd
1/4/96
Address: 000 Xxxx Xxxxxx
Xxxx
Xxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxx Xxxxxx 37,037 -------- ------- ------- --------
Address: 000 Xxxxxx Xxxxxx
Xxx Xxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxxxx Xxxxx 37,037
Xxxxxxx Xxxx
Despository Trust
00 Xxxxx Xxxxxx, 0/xx/
Xxxxxxxx
Xxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
GC&H Investments 74,074 21,450 8,333 19,263 --------
Address: Xxx Xxxxxxxx
Xxxxx, 00/xx/ Xxxxx
Xxx Xxxxxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Xxxxx Xxxxxxx 22,222 -------- -------- ------- --------
Address: 0000 Xxxxxx Xxxxx
Xxxxx
Xxx Xxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Gilde IT Fund -------- -------- -------- -------- 1,048,951
Address: X.X. Xxx 00000
0000 XX Xxxxxxx
Netherlands
----------------------------------------------------------------------------------------------------------------------------------
SCH-2
----------------------------------------------------------------------------------------------------------------------------------
Number of Number of Number of Number of Number of Number of
Name of Person or Entity Shares Shares Shares of Shares Shares of Shares of
of Series A of Series B Series B-1 of Series C Series D Series E
Preferred Preferred Preferred Preferred Preferred Preferred
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Chancellor Private Capital -------- -------- -------- ------- 243,706
Partners III, L.P.
Address: 0000 0/xx/ Xxxxxx,
Xxxxx 00
Xxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Citiventure 96 Partnership, -------- -------- -------- ------- 1,061,888
L.P.
Address: 0000 0/xx/ Xxxxxx,
Xxxxx 00
Xxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Chancellor Private Capital -------- -------- -------- ------- 401,399
Offshore Partners II, L.P.
Address: 0000 0/xx/ Xxxxxx,
Xxxxx 00
Xxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
Chancellor Private Capital -------- -------- -------- ------- 41,259
Offshore Partners I, C.V.
Address: 0000 0/xx/ Xxxxxx,
Xxxxx 00
Xxx Xxxx, XX 00000
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Comdisco, Inc. -------- -------- -------- ------- 87,413
Address: 000 Xxxxxxxx
Xxxxxx, Xxxxx 000X
Xxxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
SCH-3
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Number of Number of Number of Number of Number of Number of
Name of Person or Entity Shares Shares Shares of Shares Shares of Shares of
of Series A of Series B Series B-1 of Series C Series D Series E
Preferred Preferred Preferred Preferred Preferred Preferred
----------------------------------------------------------------------------------------------------------------------------------
----------------------------------------------------------------------------------------------------------------------------------
Credit Suisse First Boston -------- -------- -------- ------- 699,301
Address: 0000 Xxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
BancBoston Ventures Inc. -------- -------- -------- ------- 524,476
Address: 000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
DHM Arcadia Partners, L.P. -------- -------- -------- ------- 174,825
Address: 0 Xxxxx Xxxxxx
Xxxxxx, XX 00000
----------------------------------------------------------------------------------------------------------------------------------
SCH-4
TABLE OF CONTENTS
Page
Section 1. General....................................................... 1
1.1 Definitions................................................... 1
Section 2. Registration; Restrictions on Transfer........................ 3
2.1 Restrictions on Transfer...................................... 3
2.2 Demand Registration........................................... 4
2.3 Piggyback Registrations....................................... 5
2.4 Form S-3 Registration......................................... 6
2.5 Expenses of Registration...................................... 7
2.6 Obligations of the Company.................................... 7
2.7 Termination of Registration Rights............................ 9
2.8 Delay of Registration; Furnishing Information................. 9
2.9 Indemnification............................................... 10
2.10 Assignment of Registration Rights............................. 12
2.11 Amendment of Registration Rights.............................. 12
2.12 Limitation on Subsequent Registration Rights.................. 12
2.13 "Market Stand-Off" Agreement.................................. 12
2.14 Rule 144 Reporting............................................ 13
Section 3. Covenants of the Company...................................... 13
3.1 Basic Financial Information and Reporting..................... 13
3.2 Inspection Rights............................................. 14
3.3 Confidentiality of Records.................................... 14
3.4 Reservation of Common Stock................................... 14
3.5 Proprietary Information and Inventions Agreement.............. 14
3.6 Directors' Expenses........................................... 14
3.7 Real Property Holding Corporation............................. 14
3.8 Termination of Covenants...................................... 15
Section 4. Right of First Refusal........................................ 15
4.1 Subsequent Offerings.......................................... 15
4.2 Exercise and Waiver of Rights................................. 15
4.3 Termination of Rights of First Refusal........................ 15
4.4 Transfer of Rights of First Refusal........................... 16
4.5 Excluded Securities........................................... 16
i
Section 5. Miscellaneous................................................ 16
5.1 Governing Law................................................ 17
5.2 Survival..................................................... 17
5.3 Successors and Assigns....................................... 17
5.4 Entire Agreement............................................. 17
5.5 Severability................................................. 17
5.6 Amendment and Waiver......................................... 17
5.7 Delays or Omissions.......................................... 17
5.8 Notices...................................................... 18
5.9 Attorneys' Fees.............................................. 18
5.10 Titles and Subtitles......................................... 18
5.11 Counterparts................................................. 18
5.12 Consent and Waiver........................................... 18
5.13 Entire Agreement............................................. 18
Schedule I - Investors
ii
