Exhibit 10.11
NETEZZA CORPORATION
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This Agreement dated as of December 22, 2004 is entered into by and among
Netezza Corporation, a Delaware corporation (the "Company"), Xxxxxx X. Xxxxxxx
and Xxxxxxxx X. Xxxxxx (the "Founders"), and the individuals and entities listed
on Exhibit A attached hereto (the "Purchasers").
Recitals
WHEREAS, the Company, certain of the Purchasers and the Founders are
parties to a Second Amended and Restated Investor Rights Agreement dated July
10, 2003, as amended (the "Original Agreement");
WHEREAS, the Company and certain of the Purchasers have entered into a
Series D Convertible Preferred Stock Purchase Agreement of even date herewith
(the "Series D Purchase Agreement").
WHEREAS, the Company, the Purchasers and the Founders desire to amend and
restate the Original Agreement in its entirety to provide for certain
arrangements with respect to (i) the registration of shares of capital stock of
the Company under the Securities Act of 1933, (ii) the Purchasers' right of
first refusal with respect to certain issuances of securities of the Company and
(iii) certain covenants of the Company;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, the parties hereby amend and restate the Original
Agreement as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" means the Securities and Exchange Commission, or any
other federal agency at the time administering the Securities Act.
"Common Stock" means the common stock, $.001 par value per share, of
the Company.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the
Commission issued under such Act, as they each may, from time to time, be in
effect.
"Initiating Holders" means the Stockholders initiating a request for
registration pursuant to Section 2.1(a) or 2.1(b), as the case may be.
"Initial Public Offering" means the Company's initial firm-commitment
underwritten public offering of shares of Common Stock pursuant to an effective
registration
statement under the Securities Act, resulting in at least $40 million of net
proceeds at a price to the public of at least $4.46 per share (subject to
appropriate adjustment for stock splits, stock dividends, recapitalizations and
other similar events).
"Founders' Shares" means any and all shares of Common Stock now owned
or subsequently acquired by a Founder.
"Other Holders" shall mean holders of securities of the Company (other
than the Stockholders) who are entitled, by contract with the Company, to have
securities included in a Registration Statement.
"Preferred Stock" means, collectively, the Series A Convertible
Preferred Stock, $.001 par value per share, of the Company ("Series A Preferred
Stock"), the Series B Convertible Preferred Stock, $.001 par value per share, of
the Company ("Series B Preferred Stock"), the Series C Convertible Preferred
Stock, $.001 par value per share, of the Company ("Series C Preferred Stock")
and the Series D Convertible Preferred Stock, $.001 par value per share, of the
Company ("Series D Preferred Stock").
"Prospectus" means the prospectus included in any Registration
Statement, as amended or supplemented by an amendment or prospectus supplement,
including post-effective amendments, and all material incorporated by reference
or deemed to be incorporated by reference in such Prospectus.
"Qualified Purchaser" means a Purchaser that is an "accredited
investor" within the meaning of Rule 501(a) under the Securities Act.
"Registration Statement" means a registration statement filed by the
Company with the Commission for a public offering and sale of securities of the
Company (other than a registration statement on Form S-8 or Form S-4, or their
successors, or any other form for a similar limited purpose, or any registration
statement covering only securities proposed to be issued in exchange for
securities or assets of another corporation).
"Registration Expenses" means the expenses described in Section 2.4.
"Registrable Shares" means (i) the shares of Common Stock issued or
issuable upon conversion of the Shares, (ii) any shares of Common Stock, and any
shares of Common Stock issued or issuable upon the conversion or exercise of any
other securities, acquired by the Purchasers pursuant to Section 3 of this
Agreement or pursuant to the Third Amended and Restated Right of First Refusal
and Co-Sale Agreement among the Company, the Purchasers and the Founders of even
date herewith, (iii) the Founders' Shares and (iv) any other shares of Common
Stock issued in respect of such shares (because of stock splits, stock
dividends, reclassifications, recapitalizations, or similar events); provided,
however, that shares of Common Stock which are Registrable Shares shall cease to
be Registrable Shares upon (i) any sale pursuant to a Registration Statement or
Rule 144 under the Securities Act, (ii) becoming eligible, at any time after an
Initial Public Offering, for sale without restriction pursuant to Rule 144(k)
under the Securities Act, provided such shares are held by a Stockholder that
together with its affiliates owns less than 2% of the outstanding shares of
Common Stock (after giving effect to the conversion of all outstanding Preferred
Stock into Common Stock) or (iii) any sale or transfer
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in any manner to a person or entity which, by virtue of Section 6 of this
Agreement, is not entitled to the rights provided by this Agreement. Wherever
reference is made in this Agreement to a request or consent of holders of a
certain percentage of Registrable Shares, the determination of such percentage
shall include shares of Common Stock issuable upon conversion of the Shares even
if such conversion has not been effected.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the Commission
issued under such Act, as they each may, from time to time, be in effect.
"Selling Stockholder" means any Stockholder owning Registrable Shares
included in a Registration Statement.
"Shares" means (i) the shares of Series A Preferred Stock issued
pursuant to the Series A Convertible Preferred Stock Purchase Agreement among
the Company, certain of the Purchasers and the Founders dated December 22, 2000,
(ii) the shares of Series B Preferred Stock issued pursuant to the Series B
Convertible Preferred Stock Purchase Agreement among the Company and certain of
the Purchasers dated January 16, 2002, (iii) the shares of Series B Preferred
Stock issued pursuant to the Series B Convertible Preferred Stock Purchase
Agreement among the Company and certain of the Purchasers dated November 29,
2002, (iv) the shares of Series C Preferred Stock issued pursuant to the Series
C Convertible Preferred Stock Purchase Agreement among the Company and certain
of the Purchasers dated July 10, 2003, (v) the shares of Series D Preferred
Stock issued pursuant to the Series D Purchase Agreement, and (vi) the SVB
Shares.
"Stockholders" means the Purchasers, the Founders, Silicon Valley Bank
and any persons or entities to whom the registration rights granted under this
Agreement are transferred pursuant to Section 6 hereof.
"SVB Shares" means (i) the shares of Series A Preferred Stock issuable
upon exercise of a Warrant to Purchase Stock dated August 27, 2001 issued by the
Company to Silicon Valley Bank and (ii) the shares of Series B Preferred Stock
issuable upon exercise of a Warrant to Purchase Stock dated September 24, 2002
issued by the Company to Silicon Valley Bank (collectively, the "SVB Warrants").
2. Registration Rights
2.1 Required Registrations.
(a) At any time after the earlier of (x) December 22, 2006 or (y)
six months after the closing of the Initial Public Offering, a Stockholder or
Stockholders (excluding the Founders and Silicon Valley Bank) holding in the
aggregate at least 50% of the Registrable Shares (excluding the Founders' Shares
and the SVB Shares) then outstanding may request, in writing, that the Company
effect the registration on Form S-1 or Form S-2 (or any successor form) of
Registrable Shares owned by such Stockholder or Stockholders having an aggregate
value of at least $5,000,000 (based on the market price or fair value on the
date of such request).
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(b) At any time after the Company becomes eligible to file a
Registration Statement on Form S-3 (or any successor form relating to secondary
offerings), a Stockholder or Stockholders (excluding the Founders) may request,
in writing, that the Company effect the registration on Form S-3 (or such
successor form), of Registrable Shares (excluding the Founders' Shares) having
an aggregate value of at least $500,000 (based on the public market price on the
date of such request).
(c) Upon receipt of any request for registration pursuant to this
Section 2, the Company shall promptly give written notice of such proposed
registration to all other Stockholders. Such Stockholders shall have the right,
by giving written notice to the Company within 30 days after the Company
provides its notice, to elect to have included in such registration such of
their Registrable Shares as such Stockholders may request in such notice of
election, subject in the case of an underwritten offering to Sections 2.1(d) and
2(e) below. Thereupon, the Company shall, as expeditiously as possible, use its
best efforts to effect the registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, 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) on an appropriate
registration form of all Registrable Shares which the Company has been requested
to so register (provided, however, that in the case of a registration requested
under Section 2.1(b), the Company will only be obligated to effect such
registration on Form S-3 (or any successor form)).
(d) If the Initiating Holders intend to distribute the
Registrable Shares covered by their request by means of an underwriting, they
shall so advise the Company as a part of their request made pursuant to Section
2.1(a) or (b), as the case may be, and the Company shall include such
information in its written notice referred to in Section 2.1(c). The right of
any other Stockholder to include its Registrable Shares in such registration
pursuant to Section 2.1(a) or (b), as the case may be, shall be conditioned upon
such other Stockholder's participation in such underwriting on the terms set
forth herein. The Founders' Shares shall be excluded pro rata from the
underwriting to the extent deemed advisable based upon marketing factors by the
managing underwriter, and, if a further limitation of the number of shares to be
underwritten is required, the number of Registrable Shares to be included in a
Registration Statement filed pursuant to this Section 2.1, shall be reduced pro
rata among the requesting Stockholders (excluding the Founders) based on the
quotient of (1) the total Registrable Shares to be included in the Registration
Statement, divided by (2) the total number of Registrable Shares (excluding the
Founders' Shares) that requested registration.
(e) The Initiating Holders shall have the right to select the
managing underwriter(s) for any underwritten offering requested pursuant to
Section 2.1(a) or (b), subject to the approval of the Company, which approval
shall not unreasonably be withheld, conditioned or delayed.
(f) The Company shall not be required to effect more than two
registrations pursuant to Section 2.1(a) or more than two registrations per year
pursuant to Section 2.1(b). In addition, the Company shall not be required to
effect any registration (other than on Form S-3 or any successor form relating
to secondary offerings) within six months after the effective date of the
Registration Statement relating to the Initial Public Offering. For
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purposes of this Section 2.1(f), a Registration Statement shall not be counted
until such time as such Registration Statement has been declared effective by
the Commission (unless the Initiating Holders withdraw their request for such
registration (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Stockholders after
the date on which such registration was requested) and elect not to pay the
Registration Expenses therefor pursuant to Section 2.4).
(g) If at the time of any request to register Registrable Shares
by Initiating Holders pursuant to this Section 2.1, the Company shall furnish to
the Initiating Holders a writing signed by the Chairman of the Board or Chief
Executive Officer stating that in the good faith determination of the Company's
Board of Directors, it would be seriously detrimental to the Company and its
stockholders for a Registration Statement to be filed at such time, then the
Company may at its option direct that such request be delayed for a period not
in excess of 90 days from the date of such request, such right to delay a
request to be exercised by the Company not more than once in any 12-month
period.
2.2 Incidental Registration.
(a) Whenever the Company proposes to file a Registration
Statement covering shares of Common Stock (other than a Registration Statement
filed pursuant to Section 2.1) at any time and from time to time, it will, prior
to such filing, give written notice to all Stockholders of its intention to do
so. Upon the written request of a Stockholder or Stockholders given within 20
days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Shares), the Company shall,
subject to the provisions of Section 2.2(b), use its best efforts to cause all
Registrable Shares which the Company has been requested by such Stockholder or
Stockholders to register to be registered under the Securities Act to the extent
necessary to permit their sale or other disposition in accordance with the
intended methods of distribution specified in the request of such Stockholder or
Stockholders; provided that the Company shall have the right to postpone or
withdraw any registration effected pursuant to this Section 2.2 without
obligation to any Stockholder.
(b) If the registration for which the Company gives notice
pursuant to Section 2.2(a) is a registered public offering involving an
underwriting, the Company shall so advise the Stockholders as a part of the
written notice given pursuant to Section 2.2(a). In such event, the right of any
Stockholder to include its Registrable Shares in such registration pursuant to
Section 2.2 shall be conditioned upon such Stockholder's participation in such
underwriting on the terms set forth herein. All Stockholders proposing to
distribute their securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for the underwriting by the Company. Notwithstanding any other
provision of this Section 2.2, if the managing underwriter determines that the
inclusion of all shares requested to be registered would adversely affect the
offering, the Company may limit the number of Registrable Shares to be included
in the registration and underwriting. The Company shall so advise all holders of
Registrable Shares requesting registration, and the number of shares that are
entitled to be included in the registration and underwriting shall be allocated
in the following manner: The securities of the Company held by holders other
than Stockholders and Other Holders shall be excluded from such registration and
underwriting to the
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extent deemed advisable by the managing underwriter, and, if a further
limitation on the number of shares is required, the Founders' Shares shall be
excluded pro rata from such underwriting to the extent deemed advisable by the
managing underwriter; and if a further limitation is required, the number of
shares that may be included in such registration and underwriting shall be
allocated among all Stockholders (excluding Founders) and Other Holders
requesting registration in proportion, as nearly as practicable, to the
respective number of shares of Common Stock (on an as-converted basis) which
they held at the time the Company gives the notice specified in Section 2.2(a).
If any Stockholder or Other Holder would thus be entitled to include more
securities than such holder requested to be registered, the excess shall be
allocated among other requesting Stockholders and Other Holders pro rata in the
manner described in the preceding sentence. If any holder of Registrable Shares
or any officer, director or Other Holder disapproves of the terms of any such
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, and any Registrable Shares or other securities excluded or
withdrawn from such underwriting shall be withdrawn from such registration.
2.3 Registration Procedures.
(a) If and whenever the Company is required by the provisions of
this Agreement to effect the registration of any Registrable Shares under the
Securities Act (or use its best efforts to do so), the Company shall:
(i) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become effective as soon as possible;
(ii) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to comply
with the provisions of the Securities Act (including the anti-fraud provisions
thereof) and to keep the Registration Statement effective for 180 days from the
effective date or such lesser period until all such Registrable Shares are sold;
provided, however, that such 180-day period shall be extended for a period of
time equal to the period the Selling Stockholder refrains from selling any
securities included in such registration at the request of an underwriter of
common stock or other securities of the Company.
(iii) as expeditiously as possible furnish to each Selling
Stockholder such reasonable numbers of copies of the Registration Statement and
Prospectus, including any preliminary Prospectus, in conformity with the
requirements of the Securities Act, and such other documents as such Selling
Stockholder may reasonably request in order to facilitate the public sale or
other disposition of the Registrable Shares owned by such Selling Stockholder;
(iv) as expeditiously as possible use its reasonable best
efforts to register or qualify the Registrable Shares covered by the
Registration Statement under the securities or Blue Sky laws of such states as
the Selling Stockholders shall reasonably request, and do any and all other acts
and things that may be necessary or desirable to enable the Selling Stockholders
to consummate the public sale or other disposition in such states of the
Registrable
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Shares owned by the Selling Stockholders; provided, however, that the Company
shall not be required in connection with this paragraph (iv) to qualify as a
foreign corporation or execute a general consent to service of process in any
jurisdiction;
(v) as expeditiously as possible, cause all such Registrable
Shares to be listed on each securities exchange or automated quotation system on
which similar securities issued by the Company are then listed;
(vi) promptly provide a transfer agent and registrar for all
such Registrable Shares and a CUSIP number for all such Registrable Shares not
later than the effective date of such registration statement;
(vii) promptly make available for inspection by the Selling
Stockholders, any managing underwriter participating in any disposition pursuant
to such Registration Statement, and any attorney or accountant or other agent
retained by any such underwriter or selected by the Selling Stockholders, all
financial and other records, pertinent corporate documents and properties of the
Company and cause the Company's officers, directors, employees and independent
accountants to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such Registration
Statement;
(viii) as expeditiously as possible, notify each Selling
Stockholder, promptly after it shall receive notice thereof, of the time when
such Registration Statement has become effective or a supplement to any
Prospectus forming a part of such Registration Statement has been filed;
(ix) as expeditiously as possible following the
effectiveness of such Registration Statement, notify each seller of such
Registrable Shares of any request by the Commission for the amending or
supplementing of such Registration Statement or Prospectus; and
(x) promptly notify each holder of Registrable Shares
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, and at the request of any such holder, prepare and furnish to
such holder a reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter delivered to the
purchaser of such shares, such prospectus shall not include an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or incomplete
in the light of the circumstances then existing, such obligation to continue for
one hundred twenty (120) days.
(b) If the Company has delivered a Prospectus to the Selling
Stockholders and after having done so the Prospectus is amended to comply with
the requirements of the Securities Act, the Company shall promptly notify the
Selling Stockholders
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and, if requested, the Selling Stockholders shall immediately cease making
offers of Registrable Shares and return all Prospectuses to the Company. The
Company shall promptly provide the Selling Stockholders with revised
Prospectuses and, following receipt of the revised Prospectuses, the Selling
Stockholders shall be free to resume making offers of the Registrable Shares.
(c) In the event that, in the judgment of the Company, it is
advisable to suspend use of a Prospectus included in a Registration Statement
due to pending material developments or other events that have not yet been
publicly disclosed and as to which the Company believes public disclosure would
be detrimental to the Company, the Company shall notify all Selling Stockholders
to such effect, and, upon receipt of such notice, each such Selling Stockholder
shall immediately discontinue any sales of Registrable Shares pursuant to such
Registration Statement until such Selling Stockholder has received copies of a
supplemented or amended Prospectus or until such Selling Stockholder is advised
in writing by the Company that the then current Prospectus may be used and has
received copies of any additional or supplemental filings that are incorporated
or deemed incorporated by reference in such Prospectus. Notwithstanding anything
to the contrary herein, the Company shall not exercise its rights under this
Section 2.3(c) to suspend sales of Registrable Shares for a period in excess of
60 days in any 365-day period.
2.4 Allocation of Expenses. The Company will pay all Registration
Expenses for all registrations under this Agreement; provided, however, that if
a registration under Section 2.1 is withdrawn at the request of the Initiating
Holders (other than as a result of information concerning the business or
financial condition of the Company which is made known to the Stockholders after
the date on which such registration was requested) and if the Initiating Holders
elect not to have such registration counted as a registration requested under
Section 2.1, the requesting Stockholders shall pay the Registration Expenses of
such registration pro rata in accordance with the number of their Registrable
Shares included in such registration. For purposes of this Section, the term
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Section 2 of this Agreement, including, without limitation, all
registration and filing fees, exchange listing fees, printing expenses, fees and
expenses of counsel for the Company and the fees and expenses of one counsel
selected by the Selling Stockholders to represent the Selling Stockholders,
state Blue Sky fees and expenses, and the expense of any special audits incident
to or required by any such registration, but excluding underwriting discounts,
selling commissions and the fees and expenses of Selling Stockholders' own
counsel (other than the counsel selected to represent all Selling Stockholders).
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2.5 Indemnification and Contribution.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless each Selling Stockholder, each underwriter of such
Registrable Shares, and each other person, if any, who controls such Selling
Stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act against any expenses, losses, claims, damages or liabilities (or
actions, proceedings or settlements in respect thereof), joint or several, to
which such Selling Stockholder, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions, proceedings or settlements in respect thereof) arise out of or are
based upon any untrue statement or alleged untrue statement of any material fact
contained in any Registration Statement, prospectus, offering circular, or other
document (including any related registration statement, or the like) or any
amendment or supplement thereto, incident to such registration, under which such
Registrable Shares were registered under the Securities Act, any preliminary
prospectus or final prospectus contained in the Registration Statement, or any
amendment or supplement to such Registration Statement, or arise out of or are
based upon the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, or
any violation or alleged violation by the Company 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 such Registration Statement or with the offering contemplated
thereby; and the Company will pay as incurred to each such Selling Stockholder,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such Selling Stockholder, underwriter or controlling
person in connection with investigating, preparing, defending or settling any
such expense, loss, claim, damage, liability or action; provided, however, that
the Company will not be liable in any such case to the extent that any such
expense, loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, prospectus,
offering circular, or other document (including any related registration
statement, or the like) or any amendment or supplement thereto, incident to such
registration, in reliance upon and in conformity with information furnished to
the Company, in writing, by such Selling Stockholder, underwriter or controlling
person specifically for use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each Selling
Stockholder, severally and not jointly, will indemnify and hold harmless the
Company, each of its directors and officers and each underwriter (if any) and
each person, if any, who controls the Company or any such underwriter within the
meaning of the Securities Act or the Exchange Act, against any expenses, losses,
claims, damages or liabilities (or actions, proceedings or settlements in
respect thereof), joint or several, to which the Company, such directors and
officers, underwriter or controlling person may become subject under the
Securities Act, Exchange Act, state securities or Blue Sky laws or otherwise,
insofar as such expenses, losses, claims, damages or liabilities (or actions,
proceedings or settlements in respect thereof), arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
any Registration Statement, prospectus, offering circular, or other document
(including any related registration statement, or the like) or any amendment or
supplement thereto, incident to such registration, under which
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such Registrable Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if and to the extent (and only to the extent) that the
statement or omission was made in reliance upon and in conformity with
information relating to such Selling Stockholder furnished in writing to the
Company by such Selling Stockholder specifically for use in connection with the
preparation of such Registration Statement, prospectus, offering circular, or
other document (including any related registration statement, or the like) or
any amendment or supplement thereto, incident to such registration; provided,
however, that the obligations of a Selling Stockholder hereunder shall be
limited to an amount equal to the net proceeds to such Selling Stockholder of
Registrable Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section
(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 be unreasonably
withheld); 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 except to the extent that the Indemnifying Party
is adversely affected by such failure. The Indemnified Party may participate in
such defense at such party's expense; provided, however, that the Indemnifying
Party shall pay such expense 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 the Indemnified Party and any other
party represented by such counsel in such proceeding; provided, further, that in
no event shall the Indemnifying Party be required to pay the expenses of more
than one law firm per jurisdiction as counsel for the Indemnified Party. The
Indemnifying Party also shall be responsible for the expenses of such defense if
the Indemnifying Party does not elect to assume such defense. 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 of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party, which consent shall
not be unreasonably withheld. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in this Section 2.5 is
due in accordance with its terms but for any reason is held to be unavailable to
an Indemnified Party in respect to any expenses, losses, claims, damages and
liabilities referred to herein, then the Indemnifying Party shall, in lieu of
indemnifying such Indemnified Party, contribute to the amount paid or payable by
such Indemnified Party as a result of such losses, claims, damages or
liabilities to
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which such party may be subject in such proportion as is appropriate to reflect
the relative fault of the Company on the one hand and the Selling Stockholders
on the other in connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities, as well as any other relevant
equitable considerations. The relative fault of the Company and the Selling
Stockholders shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of material fact related to information
supplied by the Company or the Selling Stockholders and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and the Selling Stockholders agree that
it would not be just and equitable if contribution pursuant to this Section
2.5(d) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph of Section 2.5(d),
(a) in no case shall any one Selling Stockholder be liable or responsible for
any amount in excess of the net proceeds received by such Selling Stockholder
from the offering of Registrable Shares and (b) the Company shall be liable and
responsible for any amount in excess of such proceeds; provided, however, that
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. Any party entitled to
contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve such party from any other obligation it or they may have
thereunder or otherwise under this Section. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its prior written consent, which consent shall not be unreasonably
withheld.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution between the Company on the one
hand and the Selling Stockholders on the other hand contained in the
underwriting agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions in this
Agreement shall control.
(f) The obligations of the Company and the Selling Stockholders
under this Section 2.5 shall survive completion of any offering of Registrable
Shares pursuant to a registration statement and the termination of this
Agreement.
2.6 Other Matters with Respect to Underwritten Offerings. In the event
that Registrable Shares are sold pursuant to a Registration Statement in an
underwritten offering pursuant to Section 2.1, the Company agrees to (a) enter
into an underwriting agreement containing customary representations and
warranties with respect to the business and operations of the Company and
customary covenants and agreements to be performed by the Company, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering; (b) use its reasonable best
efforts to cause its legal counsel to render customary opinions to the
underwriters with respect to the Registration Statement; and (c) use its
reasonable best efforts to cause its independent public accounting firm to issue
customary "cold comfort letters" to the underwriters with respect to the
Registration Statement.
-11-
2.7 Information by Holder. Each holder of Registrable Shares included
in any registration shall furnish to the Company such information regarding such
holder and the distribution proposed by such holder as the Company may
reasonably request in writing and as shall be required in connection with any
registration, qualification or compliance referred to in this Agreement.
2.8 "Stand-Off" Agreement; Confidentiality of Notices. Each
Stockholder, if requested by the Company and the managing underwriter of an
underwritten public offering by the Company of Common Stock, shall not sell or
otherwise transfer or dispose of any Registrable Shares or other securities of
the Company held by such Stockholder (other than securities included in the
Registration Statement or securities acquired after the effective date of the
Registration Statement) for a period of 180 days following the effective date of
a Registration Statement; provided, that:
(a) such agreement shall only apply to the Initial Public
Offering; and
(b) all stockholders of the Company then holding at least 1% of
the outstanding Common Stock (on an as-converted basis) and all officers and
directors of the Company enter into similar agreements.
The Company will use its reasonable best efforts to ensure that (1) such
agreement provides for periodic early releases of portions of the securities
subject thereto, which may be conditioned upon the trading price of the
Company's Common Stock and (2) that all Stockholders will participate on a pro
rata basis in any early release from the lock-up agreement of any stockholder.
The Company may impose stop-transfer instructions with respect to the
Registrable Shares or other securities subject to the foregoing restriction
until the end of such 180-day period.
Any Stockholder receiving any written notice from the Company regarding the
Company's plans to file a Registration Statement shall treat such notice
confidentially and shall not disclose such information to any person other than
as necessary to exercise its rights under this Agreement.
2.9 Limitations on Subsequent Registration Rights. The Company shall
not, without the prior written consent of Stockholders holding Shares
representing a majority of the votes represented by all Shares then held by all
Stockholders, enter into any agreement (other than this Agreement) with any
holder or prospective holder of any securities of the Company which grants such
holder or prospective holder registration rights pari passu or senior to those
granted to the Stockholders hereunder.
2.10 Rule 144 Requirements. After the earliest of (i) the closing of
the sale of securities of the Company pursuant to a Registration Statement, (ii)
the registration by the Company of a class of securities under Section 12 of the
Exchange Act, or (iii) the issuance by the Company of an offering circular
pursuant to Regulation A under the Securities Act, the Company agrees to:
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(a) make and keep current public information about the Company
available, as those terms are understood and defined in Rule 144;
(b) 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) furnish to any holder of Registrable Shares upon request (i)
a written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and of the Securities Act and the Exchange Act (at any
time after it has become subject to such reporting requirements), (ii) a copy of
the most recent annual or quarterly report of the Company, and (iii) such other
reports and documents of the Company as such holder may reasonably request to
avail itself of any similar rule or regulation of the Commission allowing it to
sell any such securities without registration.
2.11 Termination. All of the Company's obligations to register
Registrable Shares under Sections 2.1 and 2.2 of this Agreement shall terminate
five years after the closing of the Initial Public Offering.
3. Right of First Refusal
3.1 Rights of Qualified Purchasers
(a) The Company shall not issue, sell or exchange, agree to
issue, sell or exchange, or reserve or set aside for issuance, sale or exchange,
(i) any shares of its Common Stock, (ii) any other equity securities of the
Company, including, without limitation, shares of preferred stock, (iii) any
option, warrant or other right to subscribe for, purchase or otherwise acquire
any equity securities of the Company, or (iv) any debt securities convertible
into capital stock of the Company (collectively, the "Offered Securities"),
unless in each such case the Company shall have first complied with this Section
3.1. The Company shall deliver to each Qualified Purchaser a written notice of
any proposed or intended issuance, sale or exchange of Offered Securities (the
"Offer"), which Offer shall (i) identify and describe the Offered Securities,
(ii) describe the price and other terms upon which the Offered Securities are to
be issued, sold or exchanged, and the number or amount of the Offered Securities
to be issued, sold or exchanged, (iii) identify the persons or entities (if
known) to which or with which the Offered Securities are to be offered, issued,
sold or exchanged and (iv) offer to issue and sell to or exchange with such
Qualified Purchaser (A) a pro rata portion of the Offered Securities determined
by dividing the aggregate number of shares of Preferred Stock then held by such
Qualified Purchaser (on an as-converted to Common Stock basis) by the total
number of shares of Preferred Stock then outstanding (on an as-converted to
Common Stock basis) (the "Basic Amount"), and (B) any additional portion of the
Offered Securities attributable to the Basic Amounts of other Qualified
Purchasers as such Qualified Purchaser shall indicate it will purchase or
acquire should the other Qualified Purchasers subscribe for less than their
Basic Amounts (the "Undersubscription Amount").
(b) To accept an Offer, in whole or in part, a Qualified
Purchaser must deliver a written notice to the Company prior to 30 days after
the date of delivery of the Offer,
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setting forth the portion of the Qualified Purchaser's Basic Amount that such
Qualified Purchaser elects to purchase and, if such Qualified Purchaser shall
elect to purchase all of its Basic Amount, the Undersubscription Amount (if any)
that such Qualified Purchaser elects to purchase (the "Notice of Acceptance").
If the Basic Amounts subscribed for by all Qualified Purchasers are less than
the total of all of the Basic Amounts available for purchase, then each
Qualified Purchaser who has set forth an Undersubscription Amount in its Notice
of Acceptance shall be entitled to purchase, in addition to the Basic Amounts
subscribed for, the Undersubscription Amount it has subscribed for; provided,
however, that if the Undersubscription Amounts subscribed for exceed the
difference between the total of all of the Basic Amounts available for purchase
and the Basic Amounts subscribed for (the "Available Undersubscription Amount"),
each Qualified Purchaser who has subscribed for any Undersubscription Amount
shall be entitled to purchase only that portion of the Available
Undersubscription Amount as the Undersubscription Amount subscribed for by such
Qualified Purchaser bears to the total Undersubscription Amounts subscribed for
by all Qualified Purchasers, subject to rounding by the Board of Directors to
the extent it deems reasonably necessary.
(c) The Company shall have 90 days from the expiration of the
period set forth in Section 3.1(b) above to issue, sell or exchange all or any
part of such Offered Securities as to which a Notice of Acceptance has not been
given by the Qualified Purchasers (the "Refused Securities"), but only to the
offerees or purchasers described in the Offer (if so described therein) and only
upon terms and conditions (including, without limitation, unit prices and
interest rates) which are not more favorable to the acquiring person or persons
or less favorable to the Company than those set forth in the Offer. In the event
the Company has not sold the Offered Securities or entered into an agreement to
sell the Offered Securities within said 90 day period (or sold and issued
Offered Securities in accordance with the foregoing within 30 days from the date
of said agreement), the Company shall not thereafter issue or sell any Offered
Securities without first offering such securities to the Qualified Purchasers in
the manner provided above.
(d) In the event the Company shall propose to sell less than all
the Refused Securities (any such sale to be in the manner and on the terms
specified in Section 3.1(c) above), then each Qualified Purchaser may, at its
sole option and in its sole discretion, reduce the number or amount of the
Offered Securities specified in its Notice of Acceptance to an amount that shall
be not less than the number or amount of the Offered Securities that the
Qualified Purchaser elected to purchase pursuant to Section 3.1(b) above
multiplied by a fraction, (i) the numerator of which shall be the number or
amount of Offered Securities the Company actually proposes to issue, sell or
exchange (including Offered Securities to be issued or sold to Qualified
Purchasers pursuant to Section 3.1(b) above prior to such reduction) and (ii)
the denominator of which shall be the original amount of the Offered Securities.
In the event that any Qualified Purchaser so elects to reduce the number or
amount of Offered Securities specified in its Notice of Acceptance, the Company
may not issue, sell or exchange more than the reduced number or amount of the
Offered Securities unless and until such securities have again been offered to
the Qualified Purchasers in accordance with Section 3.1(a) above.
(e) Upon the closing of the issuance, sale or exchange of all or
less than all of the Refused Securities, the Qualified Purchasers shall acquire
from the Company, and
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the Company shall issue to the Qualified Purchasers, the number or amount of
Offered Securities specified in the Notices of Acceptance, as reduced pursuant
to Section 3.1(d) above if the Qualified Purchasers have so elected, upon the
terms and conditions specified in the Offer. The purchase by the Qualified
Purchasers of any Offered Securities is subject in all cases to the preparation,
execution and delivery by the Company and the Qualified Purchasers of a purchase
agreement relating to such Offered Securities reasonably satisfactory in form
and substance to the Qualified Purchasers and their respective counsel.
(f) Any Offered Securities not acquired by the Qualified
Purchasers or other persons in accordance with Section 3.1(c) above may not be
issued, sold or exchanged until they are again offered to the Qualified
Purchasers under the procedures specified in this Agreement.
(g) The rights of the Qualified Purchasers under this Section 3
shall not apply to:
(1) the issuance of any shares of Common Stock as a stock
dividend to holders of Common Stock or upon any subdivision or combination of
shares of Common Stock;
(2) the issuance of any shares of Common Stock upon
conversion of shares of convertible preferred stock;
(3) the issuance of shares of Common Stock by the Company in
a firm-commitment underwritten public offering pursuant to an effective
registration statement under the Securities Act;
(4) up to 21,442,917 shares (or such greater number as may
be approved pursuant to Section 4(g) hereof) of Common Stock (or options or
warrants to purchase shares of Common Stock ("Options")) issued or issuable to
employees or directors of, or consultants to, the Company pursuant to a plan or
arrangement approved by the Board of Directors of the Company and by a majority
of the members of the Board of Directors who are not employees of the Company or
any of its subsidiaries (provided that any Options for such shares that expire
or terminate unexercised or any restricted stock repurchased by the Company
shall not be counted toward such maximum number unless and until such shares are
regranted as new stock grants (or as new Options) pursuant to the terms of any
such plan or arrangement);
(5) the shares of Series A Preferred Stock and Series B
Preferred Stock issuable upon exercise of the SVB Warrants;
(6) shares of Common Stock or securities that are
convertible into Common Stock ("Convertible Securities") issued solely in
consideration for the acquisition (whether by merger or otherwise) by the
Company or any of its subsidiaries of all or substantially all of the stock or
assets of any other entity pursuant to a transaction approved by the Board of
Directors of the Company and by a majority of the members of the Board of
Directors who are not employees of the Company or any of its subsidiaries; or
-15-
(7) shares of Common Stock, Options or Convertible
Securities issued or granted in connection with any present or future borrowing,
loan, line of credit, equipment or real estate leasing or similar financing
arrangement that is approved by the Board of Directors of the Company and by a
majority of the members of the Board of Directors who are not employees of the
Company or any of its subsidiaries;
provided that the aggregate number of shares of Common Stock issued (or subject
to Options or Convertible Securities issued) pursuant to clauses (6) and (7) of
this Subsection 3.1(g) shall not exceed 10% of the issued and outstanding shares
of Common Stock of the Company (after giving effect to the conversion of all
outstanding Convertible Securities and the exercise of all outstanding Options).
3.2 Pay to Play Provisions. If a Purchaser is given the opportunity,
pursuant to this Section 3, to purchase its pro rata portion of Offered
Securities of the Company, and such Purchaser does not purchase at least 66 2/3
% of its Basic Amount of such Offered Securities, then such Purchaser shall have
no rights under this Section 3 with respect to any future offers or sales of
Offered Securities by the Company. The terms of this Section 3.2 shall not apply
to any offering of Offered Securities as to which the purchase rights under this
Section 3 have been waived by the Purchasers (pursuant to Section 7(f) hereof)
or as to which the Board of Directors of the Company has voted to waive the
application of this Section 3.2. In determining whether a Purchaser has
purchased a sufficient number of Offered Securities to maintain its rights under
this Section 3 with respect to future offers or sales of Offered Securities, any
portion of such Offered Securities purchased by an affiliate of such Purchaser
shall be deemed to have been purchased by such Purchaser.
3.3 Termination. This Section 3 shall terminate upon the earlier of
the following events:
(a) the sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise;
(b) the closing of the Initial Public Offering; or
(c) at such time as there are fewer than 5,000,000 Shares
outstanding (such number to be proportionately adjusted in the event of any
stock splits, stock dividends, recapitalizations or similar events occurring on
or after the date of this Agreement).
3.4 Waiver of Right of First Refusal. Each Purchaser that is a party
to the Original Agreement hereby waives, on behalf of all Purchasers that are
party to the Original Agreement, the terms of Section 3 of the Original
Agreement (including any rights to any notices thereunder) with respect to the
sale of shares of Series D Preferred Stock pursuant to the Series D Purchase
Agreement.
4. Negative Covenants. So long as at least 5,000,000 Shares (such number to
be proportionately adjusted in the event of any stock splits, stock dividends,
recapitalizations or similar events occurring on or after the date of this
Agreement) are outstanding the Company
-16-
shall not, without the prior written consent of the holders of Shares
representing at least 51% of the votes represented by all then outstanding
Shares:
(a) make (or permit any corporation, a majority of the voting
stock of which is owned or controlled by the Company to make) any loan or
advance to, or own any stock or other securities of, any subsidiary or other
corporation, partnership or other entity unless it is wholly owned by the
Company;
(b) make any loan or advance to any person, including, without
limitation, any employee or director of the Company or any subsidiary, except
advances and similar expenditures in the ordinary course of business or under
the terms of an employee stock or option plan approved by the Board of
Directors;
(c) incur any indebtedness for borrowed money without prior
written approval by the Board of Directors in excess of $50,000 in the
aggregate:
(d) guarantee directly or indirectly, any indebtedness or
obligations except for trade accounts of any subsidiary arising in the ordinary
course of business;
(e) (i) merge with or into or consolidate with any other
corporation, (ii) sell, lease, or otherwise dispose of all or substantially all
of its properties or assets, (iii) enter into any agreement providing for, or
otherwise authorize, the acquisition by any person or any group of persons
(other than the Company, any of its direct or indirect subsidiaries, or any
trustee, fiduciary or other person or entity holding securities under any
employee benefit plan or trust of the Company or any of its direct or indirect
subsidiaries) acting together in any transaction or related series of
transactions, of such number of shares of the Company's voting capital stock as
causes such person, or group of persons, to own beneficially, directly or
indirectly, as of the time immediately after such transaction or series of
transactions, fifty percent (50%) or more of the combined voting power of the
voting capital stock of the Company other than as a result of an acquisition of
securities directly from the Company, or solely as a result of an acquisition of
securities by the Company which by reducing the number of shares of the voting
capital stock outstanding increases the proportionate voting power represented
by the voting capital stock owned by any such person to fifty percent (50%) or
more of the combined voting power of such voting capital stock; or (iv) effect a
reclassification or recapitalization of the outstanding capital stock of the
Company;
(f) voluntarily liquidate or dissolve;
(g) increase the number of shares of Common Stock issuable under
the 2000 Stock Incentive Plan of the Company;
(h) increase or decrease the number of shares of Common Stock or
Preferred Stock authorized under the Company's Certificate of Incorporation, as
may be amended from time to time;
(i) redeem or repurchase any shares of Common Stock (other than
pursuant to contractual rights of repurchase at cost upon employee or consultant
service
-17-
terminations or pursuant to Article IV.B. Section 6 of the Company's Certificate
of Incorporation, as amended); or
(j) pay or declare any dividend on any shares of Common Stock.
5. Affirmative Covenants of the Company.
5.1 Inspection. The Company shall permit each Purchaser, or any
authorized representative thereof, to visit and inspect the properties of the
Company, including its corporate and financial records, and to discuss its
business and finances with officers of the Company, during normal business hours
following reasonable notice and as often as may be reasonably requested.
5.2 Financial Statements and Other Information.
(a) The Company shall deliver to each Major Purchaser (as defined
below):
(i) as soon as available, but in any event within 120 days
after the end of each fiscal year of the Company, an audited balance sheet of
the Company as at the end of such year and audited statements of income and of
cash flows of the Company for such year, certified by certified public
accountants of established national reputation selected by the Company, and
prepared in accordance with generally accepted accounting principles
consistently applied;
(ii) as soon as available, but in any event within 45 days
after the end of each fiscal quarter of the Company (other than the fourth
quarter), an unaudited balance sheet of the Company as at the end of such
quarter, and unaudited statements of income and of cash flows of the Company for
such fiscal quarter and for the current fiscal year to the end of such fiscal
quarter prepared in accordance with generally accepted accounting principles
consistently applied, with the exception that no notes need be attached to such
statements and year-end audit adjustments may not have been made;
(iii) as soon as available, but in any event within 30 days
after the end of each month (other than the last month of any fiscal quarter),
an unaudited balance sheet of the Company as at the end of such month and
unaudited statements of income and of cash flows of the Company for such month
and for the current fiscal year to the end of such month, setting forth in
comparative form the Company's projected financial statements for the
corresponding periods for the current fiscal year prepared in accordance with
generally accepted accounting principles consistently applied, with the
exception that no notes need be attached to such statements and year-end audit
adjustments may not have been made;
(iv) as soon as available, but in any event at least 15 days
prior to the commencement of each new fiscal year, an annual budget and
operating plan (including projected financial statements) for such fiscal year,
and, as soon as available, any other budgets or operating plans or revisions
thereto; and
-18-
(v) with reasonable promptness, such other information and
data as such Major Purchaser may from time to time reasonably request.
(b) For purposes of this Agreement, the term "Major Purchaser"
shall mean a Purchaser holding not less than 1,000,000 Shares (subject to
appropriate adjustment in the event of any stock splits, stock dividends,
recapitalizations or similar events). For purposes of determining the number of
Shares held by a Purchaser: (i) Shares shall include Shares which have been
converted into Common Stock so long as such Common Stock is held by such
Purchaser; and (ii) Shares shall include Shares held by affiliates of such
Purchaser and, with respect to a Purchaser that is a corporation, partnership or
limited liability company, Shares distributed to and held by its shareholders,
partners or members.
5.3 Material Changes and Litigation. The Company shall promptly notify
the Purchasers of any material adverse change in the business, prospects, assets
or condition, financial or otherwise, of the Company and of any litigation or
governmental proceeding or investigation brought or, to the Company's knowledge,
threatened in writing against the Company, or against any Founder, officer,
director, key employee or principal stockholder of the Company which, if
adversely determined, would have a material adverse effect on the Company.
5.4 Key Man Insurance. For so long as at least 10,000,000 Shares are
outstanding (such number to be proportionately adjusted in the event of any
stock splits, stock dividends, recapitalizations or similar events occurring on
or after the date of this Agreement) and Xxxxxxxx Xxxxxx is employed by the
Company, the Company shall maintain in full force and effect term life insurance
in the amount of $1,000,000 upon the life of Xxxxxxxx Xxxxxx, with the proceeds
payable to the Company.
5.5 Agreements with Employees; Options.
(a) The Company shall require (i) all persons now or hereafter
employed by the Company to enter into the Company's standard form of invention
and nondisclosure agreement, (ii) all consultants retained by the Company to
enter into an invention and nondisclosure agreement in substantially the form
used for employees, modified appropriately for consultants, and (iii) all
employees at or above the director level or whose responsibilities are technical
in nature to enter into the Company's standard form of non-competition
agreement.
(b) The Company agrees that it will not, without the prior
written consent of the holders of a majority of the Shares then outstanding,
terminate, amend or waive any rights under any inventions, confidentiality,
non-competition or restricted stock agreement between the Company and any
Founder.
(c) Unless otherwise agreed by a majority of the members of the
Board of Directors including a majority of the members designated by the
Purchasers, all options or restricted stock granted or issued under the 2000
Stock Incentive Plan of the Company shall vest at the rate of 25% on the first
anniversary of grant or issue and 6.25% per quarter thereafter over the
subsequent three years so long as the holder continues to be an employee of the
Company, subject to accelerated vesting of one year (or six months in the case
of employees who
-19-
have been employed for less than one year) in the event of an Acquisition (as
defined in the standard form of stock option agreement and restricted stock
agreement for use under such Plan).
5.6 Directors. The Company shall promptly reimburse in full each
director of the Company who is not an employee of the Company for all of his
reasonable out-of-pocket expenses incurred in attending each meeting of the
Board of Directors of the Company or any committee thereof.
5.7 Reservation of Common Stock. The Company shall reserve and
maintain a sufficient number of shares of Common Stock for issuance upon
conversion of all of the outstanding Shares.
5.8 Related Party Transactions. The Company shall not enter into any
agreement with any stockholder, officer or director of the Company, or any
"affiliate" or "associate" of such persons (as such terms are defined in the
rules and regulations promulgated under the Securities Act), without the consent
of at least a majority of the members of the Company's Board of Directors having
no interest in such agreement.
5.9 International Investment and Trade in Services Survey Act. The
Company shall use its best efforts to file on a timely basis all reports
required to be filed by it under 22 U.S.C. Section 3104, or any similar statute,
relating to a foreign person's direct or indirect investment in the Company.
5.10 Qualified Small Business Stock. The Company shall submit to its
stockholders (including the Purchasers) and to the Internal Revenue Service any
reports that may be required under Section 1202(d)(1)(C) of the Internal Revenue
Code of 1986, as amended (the "Code"), and the Regulations promulgated
thereunder. In addition, within a reasonable time period after any Purchaser's
written request therefor, the Company shall deliver to such Purchaser a written
statement indicating whether, to the knowledge of the Company, such Purchaser's
interest in the Company constitutes "qualified small business stock" as defined
in Section 1202(c) of the Code, or, at the election of the Company, a written
statement containing such factual information available to the Company as may be
reasonably requested by the Purchaser to permit the Purchaser or the Purchaser's
advisors to determine whether the Purchaser's interest in the Company
constitutes "qualified small business stock" as defined in Section 1202(c) of
the Code.
5.11 Notice. The Company shall send to each Purchaser the notice
required by Section B.4(k) of Article Fourth of the Certificate of Incorporation
of the Company at least 20 days prior to the record date or effective date for
the event specified in such notice.
5.12 Termination of Covenants. The covenants set forth in Section 4
and this Section 5 shall terminate as to each Purchaser upon the earlier of the
following events:
(a) The sale of all or substantially all of the assets or
business of the Company, by merger, sale of assets or otherwise; or
(b) The closing of the Initial Public Offering.
-20-
6. Transfers of Rights. This Agreement, and the rights and obligations of
each Purchaser hereunder, may be assigned by such Purchaser to (i) any person or
entity to which at least 1,000,000 Shares, as adjusted for stock splits, stock
dividends and similar events (or such lesser number as are then owned by such
Purchaser) are transferred by such Purchaser, (ii) any venture capital fund now
or hereafter existing which is controlled by or under common control or common
management with one or more general partners, investment managers, management
companies or advisors of such Purchaser or (iii) to any partner, retired
partner, member, retired member, stockholder or affiliate of such Purchaser, and
such transferee shall be deemed a "Purchaser" for purposes of this Agreement;
provided that the transferee provides written notice of such assignment to the
Company and agrees in writing to be bound hereby. Notwithstanding anything to
the contrary herein, the Purchasers and Founders shall not transfer any Shares
unless the transferee agrees in writing to be bound by Section 2.8 hereof.
7. General.
(a) Severability. The invalidity or unenforceability of any
provision of this Agreement shall not affect the validity or enforceability of
any other provision of this Agreement.
(b) Specific Performance. In addition to any and all other
remedies that may be available at law in the event of any breach of this
Agreement, each Purchaser shall be entitled to specific performance of the
agreements and obligations of the Company hereunder and to such other injunctive
or other equitable relief as may be granted by a court of competent
jurisdiction.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of Delaware (without
reference to the conflicts of law provisions thereof).
(d) Notices. All notices, requests, consents, and other
communications under this Agreement shall be in writing and shall be deemed
delivered (i) two business days after being sent by registered or certified
mail, return receipt requested, postage prepaid or (ii) one business day after
being sent via a reputable nationwide overnight courier service guaranteeing
next business day delivery, in each case to the intended recipient as set forth
below:
If to the Company, at Netezza Corporation, 000 Xxxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, Attention: Xxxxxxxx X. Xxxxxx, President, or at
such other address or addresses as may have been furnished in writing by the
Company to the Purchasers, with a copy to Xxxxxxx X. Xxxxxxx, Esq. at Xxxxxx
Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx
00000.
If to the Founders, c/o Netezza Corporation, 000 Xxxxxxxx Xxxxxxxxx,
Xxxxxxxxxx, Xxxxxxxxxxxxx 00000, or at such other address or addresses as may
have been furnished in writing by the Founders to the Purchasers, with a copy to
Xxxxxxx X. Xxxxxxx, Esq. at Xxxxxx Xxxxxx Xxxxxxxxx Xxxx and Xxxx LLP, 00 Xxxxx
Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000; or
If to a Purchaser, at his or its address set forth on Exhibit A, or at such
other address or addresses as may have been furnished to the Company in writing
by such Purchaser.
-21-
Any party may give any notice, request, consent or other communication
under this Agreement using any other means (including, without limitation,
personal delivery, messenger service, telecopy, first class mail or electronic
mail), but no such notice, request, consent or other communication shall be
deemed to have been duly given unless and until it is actually received by the
party for whom it is intended. Any party may change the address to which
notices, requests, consents or other communications hereunder are to be
delivered by giving the other parties notice in the manner set forth in this
Section.
(e) Complete Agreement. This Agreement constitutes the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings relating to
such subject matter.
(f) Amendments and Waivers. Any term of this Agreement may be
amended or terminated and the observance of any term of this Agreement may be
waived with respect to all parties to this Agreement (either generally or in a
particular instance and either retroactively or prospectively), with the written
consent of the Company and the holders of Registrable Shares representing at
least 51% of the votes represented by all Registrable Shares then held by the
Purchasers (provided that, for purposes of this Subsection 7(f), any Registrable
Shares then held by Xxxxxxxx Xxxxxx shall not be counted in the numerator or the
denominator of the calculation described in this sentence). Notwithstanding the
foregoing, this Agreement may be amended or terminated, and any right hereunder
may be waived with respect to all parties to this Agreement with the consent of
the holders of less than all Registrable Shares only in a manner which applies
by its terms to all such holders in the same fashion (it being agreed that a
waiver of the provisions of Section 3 with respect to a particular transaction
shall be deemed to apply to all Purchasers in the same fashion if such waiver
does so by its terms, notwithstanding the fact that certain Purchasers may
nonetheless, by agreement with the Company, purchase securities in such
transaction). Any such amendment, termination or waiver effected in accordance
with this Section 7(f) shall be binding on all parties hereto, even if they do
not execute such consent, and the Company; provided, however, that
notwithstanding anything to the contrary herein, no amendment to or termination
or waiver of Section 3 hereof shall be effective with respect to a Qualified
Purchaser that holds, in the aggregate, more than 3,000,000 Shares unless such
Qualified Purchaser provides prior written consent for such amendment,
termination or waiver. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
(g) Pronouns. Whenever the context may require, any pronouns used
in this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
(h) Counterparts; Facsimile Signatures. This Agreement may be
executed in any number of counterparts, each of which shall be deemed to be an
original, and all of which together shall constitute one and the same document.
This Agreement may be executed by facsimile signatures.
-22-
(i) Section Headings. The section headings are for the
convenience of the parties and in no way alter, modify, amend, limit or restrict
the contractual obligations of the parties.
(j) Aggregation of Stock. All Shares held by affiliated entities
or persons shall be aggregated together for the purpose of determining the
availability of any rights under this Agreement (provided that no Shares may be
attributed to more than one entity or person within any such group of affiliated
entities or persons).
(k) Additional Purchasers. Persons or entities that, after the
date hereof, purchase shares of Series D Preferred Stock pursuant to the Series
D Purchase Agreement and become "Additional Purchasers" thereunder may, with the
prior written approval of the Company (but without the need for approval by any
other party to this Agreement), become parties to this Agreement by executing
and delivering a Financing Signature Page, whereupon they shall be deemed
"Purchasers" for all purposes of this Agreement.
(l) 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.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided by this Agreement.
(m) Rights of Investors. Each party to this Agreement shall have
the absolute right to exercise or refrain from exercising any right or rights
that such party may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such party shall not incur any liability to any other
party or other holder of any securities of the Company as a result of exercising
or refraining from exercising any such right or rights.
[Remainder of this page has been left blank intentionally.]
-23-
Executed as of the date first written above.
COMPANY:
NETEZZA CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx, Xx.
------------------------------------
Name: Xxxxxxx X. Xxxxxxxx, Xx.
Title: Vice President, Chief Financial
Officer and Treasurer
PURCHASERS:
MERITECH CAPITAL PARTNERS II L.P.
By: Meritech Capital Associates II
L.L.C. its General Partner
By: Meritech Management Associates II
L.L.C. a managing member
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, a managing member
MERITECH CAPITAL AFFILIATES II L.P.
By: Meritech Capital Associates II
L.L.C. its General Partner
By: Meritech Management Associates II
L.L.C. a managing member
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, a managing member
MCP ENTREPRENEUR PARTNERS II L.P.
By: Meritech Capital Associates II
L.L.C. its General Partner
By: Meritech Management Associates II
L.L.C. a managing member
By: /s/ Xxxxxxx X. Xxxxxx
------------------------------------
Xxxxxxx X. Xxxxxx, a managing member
[Third Amended and Restated Investor Rights Agreement]
Sequoia Capital X
Sequoia Technology Partners X
Sequoia Capital X Principals Fund
By: SC X Management, L.L.C.
A Delaware Limited Liability Company
General Partner of Each
By: /s/ [Illegible]
------------------------------------
Managing Member
BATTERY VENTURES VI, L.P.
By: Battery Partners VI, LLC
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Member Manager
BATTERY INVESTMENT PARTNERS VI, LLC
By: /s/ Xxxxx X. Xxxxx
------------------------------------
Member Manager
[Third Amended and Restated Investor Rights Agreement]
MATRIX PARTNERS VI, L.P.
By: Matrix VI Management Co., L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Managing Member
MATRIX VI PARALLEL PARTNERSHIP-A, L.P.
By: Matrix VI Management Co., L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Managing Member
MATRIX VI PARALLEL PARTNERSHIP-B, L.P.
By: Matrix VI Management Co., L.L.C.,
its General Partner
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Managing Member
WESTON & CO. VI LLC, as Nominee
By: Matrix Partners Management Services,
L.P. Sole Member
By: Matrix Partners Management Services
GP, LLC, its General Partner
By: /s/ Xxxxx Xxxx
------------------------------------
Name: Xxxxx Xxxx
Authorized Member
[Third Amended and Restated Investor Rights Agreement]
XXXXXXX RIVER PARTNERSHIP XI, LP
By: Xxxxxxx River XI GP, LP
Its General Partner
By: Xxxxxxx River XI GP, LLC
Its: General Partner
By: /s/ Xxx X. Xxxxxxxxxxx
--------------------------------
Authorized Manager
Address: 0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXXXXXX RIVER FRIENDS XI-A, LP
By: Xxxxxxx River XI GP, LLC
Its: General Partner
By: /s/ Xxx X. Xxxxxxxxxxx
--------------------------------
Authorized Manager
Address: 0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
XXXXXXX RIVER FRIENDS XI-B, LP
By: Xxxxxxx River XI GP, LLC
Its: General Partner
By: /s/ Xxx X. Xxxxxxxxxxx
--------------------------------
Authorized Manager
Address: 0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
ORANGE Ventures I, L.P.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
[Third Amended and Restated Investor Rights Agreement]
/s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
XXXXXXXX X. XXXXXX
----------------------------------------
XXXXXX XXXXXX
/s/ Xxxxxxx X. Xxxxxxxx, Xx.
----------------------------------------
XXXXXXX X. XXXXXXXX, XX.
FOUNDERS:
/s/ Xxxxxx X. Xxxxxxx
----------------------------------------
Xxxxxx X. Xxxxxxx
/s/ Xxxxxxxx X. Xxxxxx
----------------------------------------
Xxxxxxxx X. Xxxxxx
[Third Amended and Restated Investor Rights Agreement]
