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EXHIBIT 10.15
PIVOTAL SOFTWARE INC.
INVESTORS' RIGHTS AGREEMENT
JANUARY 15, 1999
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TABLE OF CONTENTS
1. REGISTRATION RIGHTS.....................................................................1
1.1 Definitions.............................................................1
1.2 Request for Registration................................................2
1.3 Company Registration....................................................3
1.4 Obligations of the Company..............................................4
1.5 Furnish Information.....................................................5
1.6 Expenses of Demand Registration.........................................5
1.7 Expenses of Company Registration........................................5
1.8 Underwriting Requirements...............................................6
1.9 Delay of Registration...................................................6
1.10 Indemnification.........................................................6
1.11 Reports Under Securities Exchange Act of 1934...........................9
1.12 Form S-3 Registration...................................................9
1.13 Assignment of Registration Rights......................................10
1.14 Limitations on Subsequent Registration Rights..........................11
1.15 "Market Stand-Off" Agreement...........................................11
1.16 Integral Exemption and Acknowledgement.................................12
1.17 Termination of Registration Rights.....................................12
2. COVENANTS OF THE COMPANY...............................................................12
2.1 Delivery of Financial Statements.......................................12
2.2 Inspection.............................................................13
2.3 Termination of Information and Inspection Covenants....................13
2.4 Right of First Offer...................................................13
3. MISCELLANEOUS..........................................................................15
3.1 Successors and Assigns.................................................16
3.2 Governing Law..........................................................16
3.3 Counterparts...........................................................16
3.4 Titles and Subtitles...................................................16
3.5 Notices................................................................16
3.6 Expenses...............................................................16
3.7 Amendments and Waivers.................................................16
3.8 Severability...........................................................16
3.9 Aggregation of Shares..................................................17
3.10 Further Assurances.....................................................17
3.11 Waivers................................................................17
3.12 Funds..................................................................17
3.13 Entire Agreement.......................................................17
3.14 Termination of Prior Agreement.........................................17
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INVESTORS' RIGHTS AGREEMENT
THIS INVESTORS' RIGHTS AGREEMENT is made as of the 15th day of January 1999, by
and between Pivotal Software Inc., a British Columbia company (the "Company"),
and the investors listed on Schedule A hereto, each of which is herein referred
to as an "Investor", and the founders listed on Schedule A hereto, each of which
is herein referred to as a "Founder."
RECITALS
WHEREAS, the Company and certain of the Investors are parties to the Class F
Preferred Share Subscription and Purchase Agreement of even date herewith (the
"Class F Agreement");
WHEREAS, in order to induce the Company to enter into the Class F Agreement and
to induce certain of the Investors to invest funds in the Company pursuant to
the Class F Agreement, the Investors, the Founders and the Company hereby agree
that this Agreement shall govern the rights of the Investors and the Founders to
cause the Company to register Common Shares issuable or issued to the Investors
and the Founders and certain other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS
The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Section 1:
(a) The term "register", "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement
or similar document in compliance with the Securities Act of 1933 (the
"Act"), and the declaration or ordering of effectiveness of such
registration statement or document;
(b) The term "Registrable Securities" means (1) the Class A Common Shares
issuable or issued upon conversion of the Class A Preferred Shares,
(2) the Class A Common Shares issuable or issued upon conversion of
the Class B Preferred Shares, (3) the Class A Common Shares issuable
or issued upon conversion of the Class D Preferred Shares, (4) the
Class A Common Shares issuable or issued upon conversion of the
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Class E Preferred Shares, (5) the Class A Common Shares issuable or
issued upon conversion of the Class F Preferred Shares, (6) the Common
Shares issued to the Founders as of the date hereof (but not for
purposes of Section 1.2 hereof) and (7) any Common Shares 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 Class A Preferred Shares, Class B Preferred
Shares, Class D Preferred Shares, Class E Preferred Shares, Class F
Preferred Shares or Common Shares, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which
his rights under this Section 1 are not assigned;
(c) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Shares
outstanding which are, and the number of shares of Common Shares
issuable pursuant to then exercisable or convertible securities which
are, Registrable Securities.
(d) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance
with Section 1.13 hereof; and
(e) The term "Form S-3" means such form under the Act as in effect on the
date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission ("SEC") which
permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after the earlier of (i)
October 31, 1999, or (ii) six (6) months after the effective date of
the first registration statement for a public offering of securities
of the Company (other than a registration statement relating either to
the sale of securities to employees of the Company pursuant to a share
option, share purchase or similar plan or a SEC Rule 145 transaction),
a written request from the Holders of a majority of the Registrable
Securities then outstanding that the Company file a registration
statement under the Act covering the registration of at least twenty
percent (20%) of the Registrable Securities then outstanding (or a
lesser percent if the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $2,000,000), then
the Company shall, within ten (10) days of the receipt thereof, give
written notice of such request to all Holders and shall, subject to
the limitations of subsection 1.2(b), effect as soon as practicable,
and in any event within 120 days of the receipt of such request, the
registration under the Act of all Registrable Securities which the
Holders request to
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be registered within twenty (20) days of the mailing of such notice by
the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this
Section 1.2 and the Company shall include such information in the
written notice referred to in subsection 1.2(a). The underwriter will
be selected by a majority in interest of the Initiating Holders and
shall be reasonably acceptable to the Company. In such event, the
right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in
subsection 1.4(e)) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders.
Notwithstanding any other provision of this Section 1.2, if the
underwriter advises the Initiating Holders in writing that marketing
factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders
of Registrable Securities which would otherwise be underwritten
pursuant hereto, and the number of shares of Registrable Securities
that may be included in the underwriting shall be allocated among all
Holders thereof, including the Initiating Holders, in proportion (as
nearly as practicable) to the amount of Registrable Securities of the
Company owned by each Holder; provided, however, that the number of
shares of Registrable Securities to be included in such underwriting
shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) The Company is obligated to effect only two (2) such registrations
pursuant to this Section 1.2.
(d) Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would
be seriously detrimental to the Company and its shareholders for such
registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall
have the right to defer such filing for a period of not more than 90
days after receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than once in
any twelve month period.
1.3 COMPANY REGISTRATION. If (but without any obligation to do so) the Company
proposes to register (including for this purpose a registration effected by the
Company for shareholders other
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than the Holders) any of its shares or other securities under the Act in
connection with the public offering of such securities solely for cash (other
than a registration relating solely to the sale of securities to participants in
a Company share plan, or a registration on any form which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of the Registrable Securities), the
Company shall, at such time, promptly give each Holder written notice of such
registration. Upon the written request of each Holder given within twenty (20)
days after mailing of such notice by the Company in accordance with Section 3.5,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Act all of the Registrable Securities that each such Holder
has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to effect
the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with respect to
such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one
hundred twenty (120) days.
(b) Prepare and file with the SEC such amendments and supplements to such
registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may
reasonably request in order to facilitate the disposition of
Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each
Holder participating in such underwriting shall also enter into and
perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto
is required to be delivered under the
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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.
1.5 FURNISH INFORMATION.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the
intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable
Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12
if, due to the operation of subsection 1.5(a), the number of
shares or the anticipated aggregate offering price of the
Registrable Securities to be included in the registration does
not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified
in subsection 1.2(a) or subsection 1.12(b)(2), whichever is
applicable.
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other than underwriting
discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1.3 for each Holder (which right may be assigned as provided in Section 1.13),
including (without limitation) all registration, filing, and qualification fees,
printers' and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
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1.8 UNDERWRITING REQUIREMENTS. In connection with any offering involving an
underwriting of shares of the Company's capital shares, the Company shall not be
required under Section 1.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by shareholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in their sole discretion is compatible with the
success of the offering, then the Company shall be required to include in the
offering only that number of such securities, including Registrable Securities,
which the underwriters determine in their sole discretion will not jeopardize
the success of the offering (the securities so included to be apportioned pro
rata among the selling shareholders according to the total amount of securities
entitled to be included therein owned by each selling shareholder or in such
other proportions as shall mutually be agreed to by such selling shareholders)
but in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below thirty percent (30%) of the total
amount of securities included in such offering, unless such offering is the
initial public offering of the Company's securities in which case the selling
shareholders may be excluded if the underwriters make the determination
described above and no other shareholder's securities are included or (ii)
notwithstanding (i) above, any shares being sold by a shareholder exercising a
demand registration right similar to that granted in Section 1.2 be excluded
from such offering. For purposes of the preceding parenthetical concerning
apportionment, for any selling shareholder which is a holder of Registrable
Securities and which is a partnership or corporation, the partners, retired
partners and shareholders of such holder, or the estates and family members of
any such partners and retired partners and any trusts for the benefit of any of
the foregoing persons shall be deemed to be a single "selling shareholder", and
any pro-rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder", as defined in
this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable Securities are included in a
registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and hold
harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange
Act of 1934, as amended (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in
respect thereof) arise out of or are based
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upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration
statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein, or necessary to make the statements therein not
misleading, or (iii) any violation or alleged violation by the Company
of the Act, the 1934 Act, any state securities law or any rule or
regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to each such Holder,
underwriter or controlling person, as incurred, any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability, or action if such settlement
is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action to
the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information
furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will indemnify and
hold harmless the Company, each of its directors, each of its officers
who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter,
any other Holder selling securities in such registration statement and
any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several)
to which any of the foregoing persons may become subject, under the
Act, the 1934 Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by
such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other
expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.10(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this
subsection 1.10(b) shall not apply to amounts paid in settlement of
any such loss, claim, damage, liability or action if such settlement
is effected without the consent of the Holder, which consent shall not
be unreasonably withheld; provided, that, in no event shall any
indemnity under this subsection 1.10(b) exceed the gross proceeds from
the offering received by such Holder.
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(c) Promptly after receipt by an indemnified party under this Section 1.10
of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in
respect thereof is to be made against any indemnifying party under
this Section 1.10, deliver to the indemnifying party a written notice
of the commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed,
to assume the defence thereof with counsel mutually satisfactory to
the parties, provided, however, that an indemnified party (together
with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate
counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel
retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party
and any other party represented by such counsel in such proceeding.
The failure to deliver written notice to the indemnifying party within
a reasonable time of the commencement of any such action, if
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under
this Section 1.10, but the omission so to deliver written notice to
the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section
1.10.
(d) If the indemnification provided for in this Section 1.10 is held by a
court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the
amount paid or payable by such indemnified party as a result of such
loss, liability, claim, damage, or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on
the one hand and of the indemnified party on the other in connection
with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant
equitable considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of
a material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified
party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or
omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public
offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
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(f) The obligations of the Company and Holders under this Section 1.10
shall survive the completion of any offering of Registrable Securities
in a registration statement under this Section 1, and otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making
available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement
filed by the Company for the offering of its securities to the general
public;
(b) take such action, including the voluntary registration of its Common
Shares under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed
by the Company for the offering of its securities to the general
public is declared effective;
(c) file with the SEC in a timely manner all reports and other documents
required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC
Rule 144 (at any time after ninety (90) days after the effective date
of the first registration statement filed by the Company), the Act and
the 1934 Act (at any time after it has become subject to such
reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report
of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC
which permits the selling of any such securities without registration
or pursuant to such form.
1.12 FORM S-3 REGISTRATION. In case the Company shall receive from any Holder or
Holders a written request or requests that the Company effect a registration on
Form S-3 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; and
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(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 15 days after receipt
of such written notice from the Company; provided, however, that the
Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the
Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $250,000; (3) if the Company shall furnish
to the Holders a certificate signed by the President of the Company
stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
shareholders 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 90 days after receipt of the request of the Holder or Holders
under this Section 1.12; provided, however, that the Company shall not
utilize this right more than once in any twelve month period; (4) if
the Company has, within the twelve (12) month period preceding the
date of such request, already effected two registrations on Form S-3
for the Holders pursuant to this Section 1.12; or (5) in any
particular jurisdiction in which the Company would be required to
qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so
requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to Section 1.12,
including (without limitation) all registration, filing,
qualification, printer's and accounting fees and the reasonable fees
and disbursements of counsel for the selling Holder or Holders and
counsel for the Company, and including any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne pro
rata by the Holder or Holders participating in the Form S-3
Registration. Registrations effected pursuant to this Section 1.12
shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 1 may be assigned (but
only with all related obligations) by a Holder to a transferee or assignee of
such securities who, after such assignment or
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transfer, holds at least 100,000 shares of Registrable Securities (subject to
appropriate adjustment for share splits, share dividends, combinations and other
recapitalizations), provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if immediately following such transfer the
further disposition of such securities by the transferee or assignee is
restricted under the Act. For the purposes of determining the number of shares
of Registrable Securities held by a transferee or assignee, the holdings of
transferees and assignees of a partnership who are partners or retired partners
of such partnership (including spouses and ancestors, lineal descendants and
siblings of such partners or spouses who acquire Registrable Securities by gift,
will or intestate succession) shall be aggregated together and with the
partnership; provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under this Section 1.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of a majority of the outstanding Registrable Securities, enter into any
agreement with any holder or prospective holder of any securities of the Company
which would allow such holder or prospective holder (a) to include such
securities in any registration filed under Section 1.2 hereof, unless under the
terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of either of the dates set forth in subsection 1.2(a) or within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.
1.15 "MARKET STAND-OFF" AGREEMENT. Subject to Section 1.16, each Investor and
Founder hereby agrees that, during the period of duration specified by the
Company and an underwriter of common shares or other securities of the Company
following the effective date of a registration statement of the Company filed
under the Act, which period shall not exceed 180 days unless otherwise agreed by
the parties hereto, it shall not, to the extent requested by the Company and
such underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase or
otherwise transfer or dispose of (other than to donees who agree to be similarly
bound) any securities of the Company held by it at the beginning of such period,
at any time during such period except common shares included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such registration
statement of the Company which covers common shares (or other
securities) to be sold on its behalf to the public in an underwritten
offering; and
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(b) all officers and directors of the Company and all other persons with
registration rights (whether or not pursuant to this Agreement) enter
into similar agreements.
In order to enforce the foregoing covenant, the Company may impose stop-transfer
instructions with respect to the Registrable Securities of each Investor and
Founder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 INTEGRAL EXEMPTION AND ACKNOWLEDGEMENT. Integral Capital Partners, L.P.
Integral Capital Partners II, L.P., and Integral Capital Partners International
II, C.V. (individually and collectively, "Integral") are exempt from any
restrictions on the sale or transfer of securities as set out in Section 1.15
with respect to any Common Shares it purchases pursuant to a public offering or
any securities it purchases in the public market over and above the existing
shares it owns as at Closing. Integral acknowledges that despite this Section
1.16, an underwriter may require that Integral lock-up any Common Shares it
purchases pursuant to a public offering or securities it purchases in the public
market over and above the existing shares which Integral owns in the capital of
the Company as at Closing.
1.17 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled to exercise
any right provided for in this Section 1 after five (5) years following the
consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public.
2. COVENANTS OF THE COMPANY
2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall deliver to each
Investor:
(a) as soon as practicable, but in any event within one hundred twenty
(120) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and
statement of shareholder's equity as of the end of such year, and a
schedule as to the sources and applications of funds for such year,
such year-end financial reports to be in reasonable detail, prepared
in accordance with generally accepted accounting principles ("gaap"),
and audited and certified by independent public accountants of
nationally recognized standing selected by the Company;
(b) as soon as practicable, but in any event within forty-five (45) days
after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited profit or loss statement, schedule
as to the sources and application of funds for such fiscal quarter and
an unaudited balance sheet and a statement of shareholder's equity as
of the end of such fiscal quarter and a statement showing the number
of shares of each class and series of capital shares and securities
convertible into or exercisable for shares of capital shares
outstanding at the end of the period, the number of common shares
issuable upon conversion or exercise of any outstanding securities
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convertible or exercisable for common shares and the exchange ratio or
exercise price applicable thereto, all in sufficient detail as to
permit the Investor to calculate its percentage equity ownership in
the Company. The statements will include as a note a statement as to
the status of government filings and remittances, indicating whether
the Company is current with respect to such obligations.
(c) within forty-five (45) days of the end of each month, an unaudited
income statement and schedule as to the sources and application of
funds and balance sheet for and as of the end of such month, in
reasonable detail;
(d) as soon as practicable, but in any event thirty (30) days prior to the
end of each fiscal year, a budget and business plan for the next
fiscal year, prepared on a monthly basis, including balance sheets and
sources and applications of funds statements for such months and, as
soon as prepared, any revised budgets approved by the Board of
Directors;
(e) with respect to the financial statements called for in subsections (b)
and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with gaap consistently applied
with prior practice for earlier periods (with the exception of
footnotes that may be required by gaap) and fairly present the
financial condition of the Company and its results of operation for
the period specified, subject to year-end audit adjustment;
(f) such other information relating to the financial condition, business,
prospects or corporate affairs of the Company as the Investor or any
assignee of the Investor may from time to time request, provided,
however, that the Company shall not be obligated under this subsection
(f) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar
confidential information.
2.2 INSPECTION. The Company shall permit each Investor, at such Investor's
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by the
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 2.2 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information and access
shall not be granted to the same Investor more than once per calendar quarter.
2.3 TERMINATION OF INFORMATION AND INSPECTION COVENANTS. The covenants set forth
in subsections 2.1 (c), (d) and (f) and Section 2.2 shall terminate as to
Investors and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the
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general public is consummated or when the Company first becomes subject to the
periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act,
whichever event shall first occur.
2.4 RIGHT OF FIRST OFFER. Subject to the terms and conditions specified in this
Section 2.4, the Company hereby grants to each holder of Class A Preferred
Shares, Class B Preferred Shares, Class D Preferred Shares, Class E Preferred
Shares or Class F Preferred Shares ("Major Investor") a right of first offer
with respect to future sales by the Company of its shares (as hereinafter
defined). For purposes of this Section 2.4, Major Investor includes any general
partners and affiliates of a Major Investor. A Major Investor shall be entitled
to apportion the right of first offer hereby granted it among itself and its
partners and affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities convertible
into or exercisable for any shares of, any class of its capital shares
("Shares"), the Company shall first make an offering of such Shares to each
Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail ("Notice") to the
Major Investors stating (i) its bona fide intention to offer such
Shares, (ii) the number of such Shares to be offered, and (iii) the
price and terms, if any, upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within 20 calendar
days after giving of the Notice, the Major Investor may elect to
purchase or obtain, at the price and on the terms specified in the
Notice, up to that portion of such Shares which equals the proportion
that the number of shares of Common Shares issued and held, or
issuable upon conversion of the Class A Preferred Shares or Class B
Preferred Shares or Class D Preferred Shares or Class E Preferred
Shares or Class F Preferred Shares then held, by such Major Investor
bears to the total number of shares of Common Shares issued and held,
or issuable upon conversion of the Class A Preferred Shares or Class B
Preferred Shares or Class D Preferred Shares or Class E Preferred
Shares or Class F Preferred Shares then held, by all the Major
Investors. The Company shall promptly, in writing, inform each Major
Investor which purchases all the Shares available to it
("Fully-Exercising Investor") of any other Major Investor's failure to
do likewise. During the ten-day period commencing after such
information is given, each Fully-Exercising Investor shall be entitled
to obtain that portion of the Shares for which Major Investors were
entitled to subscribe but which were not subscribed for by the Major
Investors which is equal to the proportion that the number of shares
of Common Shares issued and held, or issuable upon conversion of Class
A Preferred Shares or Class B Preferred Shares or Class D Preferred
Shares or Class E Preferred Shares or Class F Preferred Shares then
held, by such Fully-Exercising Investor bears to the total number of
shares of Common Shares issued and held, or issuable upon conversion
of the Class A Preferred Shares or Class B Preferred Shares or Class D
Preferred Shares or Class E Preferred Shares or Class F Preferred
Shares then held,
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by all Fully-Exercising Investors who wish to purchase some of the
unsubscribed Shares.
(c) If all Shares which Major Investors are entitled to obtain pursuant to
subsection 2.4(b) are not elected to be obtained as provided in
subsection 2.4(b) hereof, the Company may, during the 30-day period
following the expiration of the period provided in subsection 2.4(b)
hereof, offer the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon terms no more
favourable to the offeree than those specified in the Notice. If the
Company does not enter into an agreement for the sale of the Shares
within such period, or if such agreement is not consummated within 30
days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first
reoffered to the Major Investors in accordance herewith.
(d) The right of first offer in this Section 2.4 shall not be applicable
(i) to the issuance or sale of not to exceed 2,500,000 shares of
Common Shares (or options therefor) to employees or consultants for
the primary purpose of soliciting or retaining their employment or
services, provided each employee or consultant executes an agreement
under the Pivotal Software Inc. Incentive Stock Option Plan or (ii) to
or after consummation of a bona fide, firmly underwritten public
offering of shares of Common Shares, registered under the Act; at an
offering price of at least $7.50 per share (appropriately adjusted for
any share split, dividend, combination or other recapitalization) and
$15,000,000 in the aggregate, (iii) the issuance of securities
pursuant to the conversion or exercise of convertible or exercisable
securities, (iv) the issuance of securities in connection with a bona
fide business acquisition of or by the Company, whether by merger,
consolidation, sale of assets, sale or exchange of shares or otherwise
or (v) the issuance of shares, warrants or other securities or rights
to persons or entities with which the Company has business
relationships provided such issuances are for other than primarily
equity financing purposes and provided that such issuance shall not
exceed 20% of the shares of the Company on a fully converted basis and
provided that the recipient of the issuance enters into an agreement
in the same terms in all material respects as the Shareholders
Agreement of even date herewith.
3. MISCELLANEOUS
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms and
conditions of this Agreement shall inure to the benefit of and be binding upon
the respective successors and assigns of the parties (including transferees of
any shares of Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by
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reason of this Agreement, except as expressly provided in this Agreement.
3.2 GOVERNING LAW. This Agreement shall be governed by and construed under the
laws of British Columbia and the laws of Canada applicable therein.
3.3 COUNTERPARTS. This Agreement may be executed in two or more counterparts and
facsimile counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
3.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement are
used for convenience only and are not to be considered in construing or
interpreting this Agreement.
3.5 NOTICES. Unless otherwise provided, any notice required or permitted under
this Agreement shall be given in writing and shall be deemed effectively given
by personal delivery to the party to be notified, by facsimile transmission or
by mailing from a United States or Canadian Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties and any such notice shall be considered to have been received,
if delivered, upon the date of delivery, if sent by facsimile, then on the
business day next following the date of transmission, and if mailed, then five
business days after the date of mailing. If normal mail service is interrupted
by strike, slowdown, force majeure, or other cause, a notice sent by mail will
not be considered to be received until actually received, and the party sending
the notice will deliver or transmit by facsimile such notice in order to ensure
prompt receipt thereof.
3.6 EXPENSES. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable legal fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
3.7 AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of at least seventy-five percent
(75%) of the Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Section shall be binding upon each holder of
any Registrable Securities then outstanding, each future holder of all such
Registrable Securities, and the Company.
3.8 SEVERABILITY. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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3.9 AGGREGATION OF SHARES. All shares of Registrable Securities held or acquired
by affiliated entities or persons shall be aggregated together for the purpose
of determining the availability of any rights under this Agreement.
3.10 FURTHER ASSURANCES. The parties will execute and deliver all other
appropriate supplemental agreements and other instruments, and take any other
action necessary, to give full effect to this Agreement, and to make this
Agreement legally effective, binding and enforceable as between them, and as
against third parties.
3.11 WAIVERS. The failure of a party to insist upon the strict performance of
any term of this Agreement, or to exercise any right, or remedy contained in
this Agreement, will not be construed as a waiver or a relinquishment by that
party for the future, of that term, right or remedy.
3.12 FUNDS. All references to funds and/or dollar amounts are stated in U.S.
currency, unless expressly stated otherwise.
3.13 ENTIRE AGREEMENT. This Agreement (including the Schedules and Exhibits
hereto, if any) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof.
3.14 TERMINATION OF PRIOR AGREEMENT. This Agreement supersedes and replaces the
Investors' Rights Agreement dated November 5, 1996 made among the Company, the
Founders, Xxxxxxx Xxxxxxx Xxxxxxxx & Xxxxx VI, Integral Capital Partners I,
L.P., Integral Capital Partners II, L.P., VW B.C. Technology Investment Fund
Limited Partnership, Xxxxx Xxxxxx, Integral Capital Partners International II
C.V., Bank of Montreal Capital Corporation, Xxxxxx Xxxxx and Oak Investment
Partners VI, L.P. (the "Prior Agreement"), and upon execution and delivery of
this Agreement the Prior Agreement shall terminate and have no further force or
effect.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
first above written.
PIVOTAL SOFTWARE, INC.
by: /s/ XXXXXX XXXXXXX
----------------------------------
Xxxxxx Xxxxxxx, President
Address: 000-000 Xxxx Xxxxxxxxx
Xxxxx Xxxxxxxxx, XX X0X 0X0
Facsimile: 000-000-0000
INVESTORS:
XXXXXXX XXXXXXX XXXXXXXX & XXXXX VI
by: /s/ SIGNED
----------------------------------
Address: SUITE 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: 650.233-0366
KPMG PEAT MARWICK LLP
by: /s/ SIGNED
----------------------------------
Address: Xxxxx 0000 - 000 Xxxxxxxxx
Xxxxxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxx XxXxxx
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VW B.C. TECHNOLOGY INVESTMENT FUND
LIMITED PARTNERSHIP
By its general partner Ventures West
Management B.C. Ltd.
Per: /s/ SIGNED
------------------------------------
Address: 000 - 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxx
BANK OF MONTREAL CAPITAL CORPORATION
By its manager, Ventures West Management
TIP Inc.
Per: /s/ SIGNED
------------------------------------
Address: 000 - 0000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX X0X 0X0
Facsimile: 000-000-0000
Attention: Xxxxx X. Xxxxx
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INTEGRAL CAPITAL PARTNERS, L.P.
by: /s/ SIGNED
----------------------------------
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx XxXxxxx or
Xxxx Xxxxxx
INTEGRAL CAPITAL PARTNERS II, L.P.
by: /s/ XXXXXX XXXXXXX
----------------------------------
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx XxXxxxx or
Xxxx Xxxxxx
INTEGRAL CAPITAL PARTNERS INTERNATIONAL
II C.V.
by: /s/ XXXXXX XXXXXXX
----------------------------------
A General Partner
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Xxxxx XxXxxxx or
Xxxx Xxxxxx
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OAK INVESTMENT PARTNERS VI, L.P.
by: /s/ SIGNED
---------------------------
Address: 000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000, Xxxx Xxxx, XX 00000
Facsimile: 000-000-0000
Attention: Mr. Xxxx Xxxxxx
OAK VI AFFILIATES FUND, L.P.
by: /s/ SIGNED
---------------------------
Address: 000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000, Xxxx Xxxx, XX 00000
Facsimile: 650-614-3700
Attention: Mr. Xxxx Xxxxxx
/s/ XXXXXX XXXXX
-------------------------------
XXXXXX XXXXX
Address: 0000 X. Xxxxxxxx Xxxxxx
Xxxxxxx, XX 00000-0000
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FOUNDERS:
THE XXXXXXX FAMILY TRUST
by: /s/ XXXXXX XXXXXXX
-----------------------------------
Address: 0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
Facsimile: 000-000-0000
BOARDWALK VENTURES INC.
by: /s/ XXXXXX XXXXXXX
-----------------------------------
Address: 0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
Facsimile: 000-000-0000
DAYBREAK SOFTWARE INC.
by: /s/ XXXXX WALES
-----------------------------------
Address: 0000 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
FIREWOOD INVESTMENTS INC.
by: /s/ XXXXXXXX WALES
-----------------------------------
Address: 000 Xxxxxxxxx Xxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
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/s/ XXXXXX XXXXXXX
----------------------------------------
XXXXXX XXXXXXX
Address: 0000 Xxxxxx Xxxxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
Facsimile: 000-000-0000
/s/ XXXXX WALES
----------------------------------------
XXXXX WALES
Address: 0000 Xxxxx Xxxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
/s/ XXXXXXXX WALES
----------------------------------------
XXXXXXXX WALES
Address: 000 Xxxxxxxxx Xxxx
Xxxx Xxxxxxxxx, XX X0X 0X0
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SCHEDULE A
INVESTORS:
XXXXXXX XXXXXXX XXXXXXXX & XXXXX VI
INTEGRAL CAPITAL PARTNERS, L.P.
INTEGRAL CAPITAL PARTNERS II, L.P.
INTEGRAL CAPITAL PARTNERS INTERNATIONAL II C.V.
VW B.C. TECHNOLOGY INVESTMENT FUND LIMITED PARTNERSHIP
BANK OF MONTREAL CAPITAL CORPORATION
XXXXXX XXXXX
OAK INVESTMENT PARTNERS VI, L.P.
OAK VI AFFILIATES FUND, L.P.
KPMG PEAT MARWICK LLP
FOUNDERS:
THE XXXXXXX FAMILY TRUST
BOARDWALK VENTURES INC.
DAYBREAK SOFTWARE INC.
FIREWEED INVESTMENTS INC.
XXXXXX XXXXXXX
XXXXX WALES
XXXXXXXX WALES
