EXHIBIT 10.7
E-STAMP CORPORATION
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SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
_______________________________________________________
August 3, 1999
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SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
CONTENTS
1. Certain Definitions............................................................... 2
2. Financial Statements and Reports to Stockholders.................................. 4
3. Inspection........................................................................ 5
4. Participation Rights.............................................................. 5
5. Demand Registration............................................................... 7
5.1 Request for Registration on Form Other Than Form S-3........................... 7
5.2 Request for Registration on Form S-3........................................... 9
5.3 Registration of Other Securities in Demand Registration........................10
5.4 Underwriting in Demand Registration............................................10
5.4.1 Notice of Underwriting.....................................................10
5.4.2 Inclusion of Other Holders in Demand Registration..........................10
5.4.3 Selection of Underwriter in Demand Registration............................10
5.4.4 Marketing Limitation in Demand Registration................................11
5.4.5 Right of withdrawal in Demand Registration.................................11
6. Piggyback Registration............................................................11
6.1 Notice of Piggyback Registration and Inclusion of Registrable Securities.......11
6.2 Underwriting in Piggyback Registration.........................................12
6.2.1 Notice of Underwriting in Piggyback Registration...........................12
6.2.2 Marketing Limitation in Piggyback Registration.............................12
6.2.3 Allocation of Shares in Piggyback Registration.............................12
6.2.4 Withdrawal in Piggyback Registration.......................................13
7. Expenses of Registration..........................................................13
8. Registration Procedures and Obligations...........................................13
9. Information Furnished by Holder...................................................15
10. Rule 144........................................................................15
10.1 Reports.......................................................................15
10.2 Sales.........................................................................16
11. Indemnification...................................................................16
11.1 Company's Indemnification of Holders..........................................16
11.2 Holder's Indemnification of Company...........................................17
11.3 Indemnification Procedure.....................................................18
11.4 Contribution..................................................................18
11.5 Survival......................................................................19
12. Transfer of Rights................................................................19
13. Market Stand-off..................................................................19
14. Right of First Refusal............................................................19
14.1 Transfers by Investors........................................................19
14.2 Offer by an Investor..........................................................20
14.3 Acceptance of Offer...........................................................20
14.3.1 By Company................................................................20
14.3.2 By the Remaining Series C Investors.......................................20
(i)
14.3.3 Pro Rata Portion.......................................................... 20
14.4 Offer Not Accepted............................................................ 21
14.5 Transfers to Affiliates....................................................... 21
14.6 No Other Transfer Effective................................................... 21
14.7 Termination of Restrictions................................................... 21
15. Observer Rights................................................................... 21
16. Miscellaneous..................................................................... 22
16.1 No Conflicts.................................................................. 22
16.2 Entire Agreement; Successors.................................................. 22
16.3 Counterparts.................................................................. 23
16.4 Modification.................................................................. 23
16.5 Governing Law................................................................. 23
16.6 Notices....................................................................... 23
16.7 Severability.................................................................. 23
16.8 Specific Performance.......................................................... 23
16.9 Submission to Jurisdiction.................................................... 24
16.10 Aggregation of Stock......................................................... 24
16.11 Additional Parties........................................................... 24
[The remainder of this page is intentionally blank.]
(ii)
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
_______________________________________
This SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the
"Agreement") is entered into this 3rd day of August, 1999 by and between E-
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STAMP CORPORATION, a Delaware corporation (the "Company"), VENTURE FUND I, L.P.,
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a Delaware limited partnership ("Venture I"), AT&T VENTURE FUND II, L.P., a
Delaware limited partnership ("Venture II"), and MICROSOFT CORPORATION, a
Washington corporation ("Microsoft") (each of Venture I, Venture II and
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Microsoft is a "Series A Investor" and, collectively, the "Series A Investors"),
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and the entities indicated on Exhibit A attached hereto (individually, a "Series
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B Investor" and collectively, the "Series B Investors") and the entities and
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individuals indicated on Exhibit B hereto (individually, a "Series C Investor"
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and collectively, the "Series C Investors").
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RECITALS
A. The Series A Investors purchased an aggregate of 2,500,000 shares of
the Company's Series A Preferred Stock, $.001 par value (the "Series A Preferred
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Stock"), pursuant to that certain Stock Purchase Agreement dated as of September
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3, 1997 by and between the Company and the Series A Investors;
B. The Series B Investors purchased an aggregate of 4,188,000 shares of
the Company's Series B Preferred Stock (the "Series B Preferred Stock") pursuant
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to that certain Stock Purchase Agreement dated as of July 7, 1998 by and between
the Company and the Series B Investors;
C. Simultaneously with the sale and purchase of the Series B Preferred
Stock, the Company, the Series A Investors and the Series B Investors entered
into that certain Amended and Restated Investor Rights Agreement dated July 7,
1998 (the Amended Rights Agreement")
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D. The Series C Investors are purchasing shares of the Company's Series C
Preferred Stock pursuant to that certain Stock Purchase Agreement executed
simultaneously herewith between the Company and the Series C Investors (the
Stock Purchase Agreement");
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E. It is a condition to the obligations of the Company under the Stock
Purchase Agreement that this Agreement be executed by the parties hereto, and
the parties are willing to execute, and to be bound by the provisions of, this
Agreement; and
F. The parties hereto desire to amend and restate the Amended Rights
Agreement
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by replacing it entirely with the provisions of this Agreement.
AGREEMENT
NOW, THEREFORE, for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties hereto agree as follows:
1. Certain Definitions
As used in this Agreement, the following terms shall have the following
respective meanings:
(a) "Amended Rights Agreement" shall mean that certain Amended and
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Restated Investor Rights Agreement dated July 7, 1998 by and among the Company,
the Series A Investors and the Series B Investors pursuant to which certain
rights were granted in conjunction with the sale and purchase of the Series B
Preferred Stock.
(b) "Commission" shall mean the Securities and Exchange Commission
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or any other federal agency at the time administering the Securities Act.
(c) "Common Stock" shall mean the Company's common stock, $.001 par
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value.
(d) "Convertible Securities" shall mean securities of the Company
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convertible into or exchangeable for Common Stock of the Company or into other
securities that are convertible into or exchangeable for Common Stock including,
without limitation, Series A Preferred Stock, Series B Preferred Stock, and
Series C Preferred Stock.
(e) "Exchange Act" shall mean the Securities and Exchange Act of
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1934, as amended, or any successor federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in effect at
the time.
(f) "Form S-3" shall mean Form S-3 issued by the Commission or any
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substantially similar form then in effect.
(g) "Holder" shall mean any holder of outstanding Registrable
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Securities which have not been sold to the public, but only if such holder is
one of the Investors or an assignee or transferee of Registration rights as
permitted by Section 12.
(h) "Investor" shall mean any of the Series A Investors, the Series B
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Investors or the Series C Investors
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(i) "Material Adverse Event" shall mean an occurrence having a
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consequence that either (i) is materially adverse as to the business,
properties, prospects, or financial condition of the Company or (ii) is
reasonably foreseeable, has a reasonable likelihood of occurring, and if it
were to occur might materially adversely affect the business, properties,
prospects, or financial condition of the Company.
(j) The terms "Register", "Registered", and "Registration" refer to a
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registration effected by preparing and filing a registration statement in
compliance with the Securities Act ("Registration Statement"), and the
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declaration or ordering of the effectiveness of such Registration Statement.
(k) "Registrable Securities" shall mean all Common Stock issued or
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issuable upon conversion or exercise of any of the Company's Convertible
Securities purchased by or issued to an Investor and not previously sold to the
public, including Common Stock issued or issuable pursuant to stock splits,
stock dividends and similar distributions, and any securities of the Company
granted registration rights pursuant to this Agreement; provided, however, that
shares of Common Stock or other securities shall cease to be treated as
Registrable Securities at such time as they (i) have been sold pursuant to an
effective Registration statement under the Securities Act or (ii) have otherwise
been sold or transferred to or through a broker, dealer or underwriter in a
public distribution or a public securities transaction.
(l) "Registration Expenses" shall mean all expenses incurred by the
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Company in complying with Sections 5 or 6 of this Agreement, including, without
limitation, all federal and state registration, qualification, and filing fees,
printing expenses, fees and disbursements of counsel for the Company and one
special counsel for the Holders (if different from the Company) who shall be
reasonably acceptable to the Holders, blue sky fees and expenses, and the
expense of any special audits incident to or required by any such registration.
Registration Expenses shall not include any underwriting discounts.
(m) "Securities Act" shall mean the Securities Act of 1933, as
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amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(n) "Selling Expenses" shall mean all underwriting discounts and
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selling commissions applicable to the sale of Registrable Securities pursuant
to this Agreement.
(o) "Series A Preferred Stock" shall mean the 2,500,000 shares of
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Series A Preferred Stock sold by the Company pursuant to that certain Stock
Purchase Agreement dated September 3, 1997 by and between the Company and the
Investors listed therein.
(p) "Series B Preferred Stock" shall mean the 4,188,000 shares of
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Series B Preferred Stock sold by the Company pursuant to that certain Stock
Purchase Agreement
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dated July 7, 1998 by and between the Company and the investors listed therein.
(q) "Series C Preferred Stock" shall mean the 2,931,229 shares of
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Series C Preferred Stock, $.001 par value, purchased by the Series C Investors
pursuant to the Stock Purchase Agreement executed simultaneously herewith.
2. Financial Statements and Reports to Stockholders
The Company shall deliver to the Investors the following financial
statements and reports:
(a) As soon as practicable after the end of each fiscal year of the
Company, and in any event within ninety (90) days thereafter, an audited
consolidated balance sheet of the Company as of the end of such year and audited
consolidated statements of income, stockholders' equity and cash flow for such
year, which year-end financial reports shall be in reasonable detail and shall
be prepared in accordance with generally accepted accounting principles and
accompanied by the opinion of independent public accountants of nationally
recognized standing selected by the Company;
(b) For so long as an Investor holds at least 200,000 shares (as
adjusted for stock splits, stock dividends and the like) of Series A Preferred
Stock and/or Series B Preferred Stock and/or Series C Preferred Stock, then the
Company shall deliver to such Investor as soon as practicable after the end of
each month, and in any event within thirty (30) days thereafter, consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such month, and consolidated statements of income and cash flow for such month
and for the current fiscal year to date, in reasonable detail and including
comparisons to budget, prepared in accordance with generally accepted accounting
principles (other than for accompanying notes) and accompanied by a certificate
of the Chief Financial Officer or President of the Company confirming that such
statements fairly and accurately present the financial condition and results of
operation of the Company, subject to changes resulting from year-end audit
adjustment;
(c) For so long as an Investor holds at least 200,000 shares (as
adjusted for stock splits, stock dividends and the like) of Series A Preferred
Stock and/or Series B Preferred Stock and/or Series C Preferred Stock, then the
Company shall deliver to such Investor as soon as practicable after the end of
each quarter, and in any event within thirty (30) days thereafter, consolidated
balance sheets of the Company and its subsidiaries, if any, as of the end of
such quarter, and consolidated statements of income and cash flow for such
quarter and for the current fiscal year to date, in reasonable detail and
including comparisons to budget, prepared in accordance with generally accepted
accounting principles (other than for accompanying notes) and accompanied by a
certificate of the Chief Financial Officer or President of the Company
confirming that such statements fairly and accurately present the financial
condition and results of operation of the Company, subject to changes resulting
from year-end audit adjustment;
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(d) Contemporaneously with delivery to holders of Common Stock, a copy
of each report of the Company delivered to holders of Common Stock; and
(e) For so long as an Investor holds at least 200,000 shares (as
adjusted for stock splits, stock dividends and the like) of Series A Preferred
Stock and/or Series B Preferred Stock and/or Series C Preferred Stock, then the
Company shall deliver to such Investor as soon as practicable following
submission to and approval by the Board of Directors of the Company, but in no
event later than thirty (30) days prior to the end of each fiscal year, an
operating budget and plan (the "Plan") respecting the next fiscal year, together
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with any update of the Plan as such update is prepared.
3. Inspection
For so long as an Investor holds at least 200,000 shares (as
adjusted for stock splits, stock dividends and the like) of Series A Preferred
Stock and/or Series B Preferred Stock and/or Series C Preferred Stock, the
Company shall permit such Investor, or Investor's authorized representative,
at 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 upon reasonable notice and at
such reasonable times as may be requested by each Investor.
4. Participation Rights
4.1 The Company hereby grants to each Investor a right of first
refusal to purchase up to its Pro Rata Share of any New Securities (as defined
below) that the Company may, from time to time, propose to sell and issue.
Investors may purchase New Securities on the same terms and at the same price
at which the Company proposes to sell the New Securities. The "Pro Rata Share"
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of each Investor, for purposes of this right of first refusal, is the ratio of
(a) the total number of shares of Series A Preferred Stock and Series B
Preferred Stock and Series C Preferred Stock held by such Investor to (b) the
total number of shares of capital stock of the Company then outstanding.
4.2 "New Securities" shall mean any capital stock of the Company,
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whether authorized or not, and any rights, options, or warrants to purchase
said capital stock, and securities of any type whatsoever that are, or may
become, convertible into said capital stock; provided, however, that "New
Securities" does not include:
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(a) Shares of Common Stock issuable or issued to employees,
consultants, or directors of the Company, directly or pursuant to a stock
option plan or restricted stock plan provided such issuances or plans are
approved or adopted on or before the date hereof by the Board of Directors of
the Company,
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(b) Shares of Common Stock issuable or issued to employees,
consultants, or directors of the Company pursuant to a stock option plan or
restricted stock plan provided such plan is adopted after the date hereof by
the Board of Directors of the Company
(c) Capital stock, or options or warrants to purchase capital
stock, issued to financial institutions or lessors in connection with
commercial credit arrangements, equipment financings or similar transactions,
or to vendors or customers in connection with commercial arrangements,
provided such issuances are approved by the Board of Directors of the Company,
(d) Capital stock or warrants or options to purchase capital
stock issued in connection with bona fide strategic partnering transactions or
acquisitions, the terms of which are approved by the Board of Directors of the
Company,
(e) Capital stock or warrants or options to purchase capital
stock issued in connection with mergers or similar transactions, the terms of
which are approved by the Board of Directors of the Company,
(f) Shares of Common Stock issued or issuable upon conversion
of Series A Preferred Stock, Series B Preferred Stock, or Series C Preferred
Stock,
(g) Shares of Common Stock issued or issuable in a public
offering prior to or in connection with which all outstanding shares of Series
A Preferred Stock, Series B Preferred Stock and Series C Preferred Stock will
be converted to Common Stock,
(h) Common Stock issued without consideration pursuant to a
stock dividend, stock split, or similar transaction,
(i) Capital Stock, or options or warrants to purchase Capital
Stock, issued in connection with the licensing or acquisition of intellectual
property or technology rights from third parties, the terms of which are
approved by the Board of Directors of the Company, and
(j) Shares of Series C Preferred Stock issued pursuant to the
Stock Purchase Agreement.
Notwithstanding the preceding provisions of this Section 4.2 to
the contrary, New Securities shall include the aggregate amount of shares of
Common Stock, if any, issued pursuant to subsections (b), (c), (d), or (i)
above the extent such shares exceed an amount equal to fifteen percent (15%)
of the number of shares of Common Stock outstanding thirty (30) days after the
date hereof (such number to be computed on a fully diluted basis and as
adjusted for any stock dividends, combinations, or splits with respect to such
shares.)
4.3 In the event the Company proposes to undertake an issuance of New
Securities, it shall give to each Investor written notice (the "Notice") of its
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intention,
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describing the type of New Securities, the price, the terms upon which the
Company proposes to issue the same, the number of shares that such Investor is
entitled to purchase, and a statement that Investor shall have twenty (20) days
to respond to such Notice. Investor shall have twenty (20) days from the date of
receipt of the Notice to agree to purchase any or all of its Pro Rata Share of
the New Securities for the price and upon the terms specified in the Notice by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased and forwarding payment for such New Securities to the
Company if immediate payment is required by such terms.
4.4 In the event Investor fails to exercise in full the right of
first refusal within said twenty (20) day period, the Company shall have sixty
(60) days thereafter to sell or enter into an agreement (pursuant to which the
sale of New Securities covered thereby shall be closed, if at all, within
thirty (30) days from date of said agreement) to sell the New Securities
respecting which Investor's rights were not exercised, at a price and upon
general terms no more favorable to the purchaser thereof than specified in the
Notice. In the event the Company has not sold the New Securities within said
sixty (60) day period (or sold and issued New Securities in accordance with
the foregoing within thirty (30) days from the date of said agreement), the
Company shall not thereafter issue or sell any New Securities without first
offering such securities to such Investor in the manner provided above.
4.5. The covenants of the Company set forth in this Section 4 shall
terminate upon conversion of any shares of Series A Preferred Stock or Series B
Preferred Stock or Series C Preferred Stock with respect to such shares
converted.
5. Demand Registration
5.1 Request for Registration on Form Other Than Form S-3
5.1.1 Subject to the terms of this Agreement, in the event
that the Company shall receive a written request from a Holder or Holders of
Registrable Securities obtained from the conversion of Series A Preferred
Stock requesting that the Company effect a Registration with respect to all or
a part of the Registrable Securities on a form other than Form S-3 for an
offering greater than 25% of the then outstanding Registrable Securities
obtained from the conversion of Series A Preferred Stock (or any lesser
percent if the reasonably anticipated aggregate offering price to the public
would exceed $15,000,000), the Company shall (i) promptly give written notice
of the proposed Registration to all other Holders and (ii) as soon as
practicable, use its reasonable best efforts to effect Registration of the
Registrable Securities specified in such request, together with any
Registrable Securities of any Holder joining in such request as are specified
in a written request given within twenty (20) days after written notice from
the Company. The Company shall not be obligated to take any action to effect
any such registration pursuant to this Section 5.1.1 (i) at any time within
One Hundred Eighty (180) days following the effective date of any Registration
Statement on Form S-1 (or any successor form), or (ii) at any time prior to
September 3, 1999, or (iii) if the
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Company has previously effected one (1) such Registration pursuant to this
Section 5.1.1. A Registration that is withdrawn or otherwise abandoned at the
request of such Holders will count towards the preceding limitation of one (1)
Registration unless at the time of such withdrawal or abandonment the Holders
have learned of a material adverse change in the financial condition or business
of the Company from that known to the Holders at the time of their request and
have withdrawn or abandoned their request following disclosure by the Company of
such material adverse change. The provisions of Section 5.4 shall be applicable
to each registration initiated under this Section 5.1.1.
5.1.2 Subject to the terms of this Agreement, in the event
that the Company shall receive a written request from a Holder or Holders of
Registrable Securities obtained from the conversion of Series B Preferred
Stock requesting that the Company effect a Registration with respect to all or
a part of the Registrable Securities on a form other than Form S-3 for an
offering greater than 25% of the then outstanding Registrable Securities
obtained from the conversion of Series B Preferred Stock (or any lesser
percent if the reasonably anticipated aggregate offering price to the public
would exceed $15,000,000), the Company shall (i) promptly give written notice
of the proposed Registration to all other Holders and (ii) as soon as
practicable, use its reasonable best efforts to effect Registration of the
Registrable Securities specified in such request, together with any
Registrable Securities of any Holder joining in such request as are specified
in a written request given within twenty (20) days after written notice from
the Company. The Company shall not be obligated to take any action to effect
any such registration pursuant to this Section 5.1.2 (i) at any time within
One Hundred Eighty (180) days following the effective date of any Registration
Statement on Form S-1 (or any successor form), or (ii) at any time prior to
July 7, 2000, or (iii) if the Company has previously effected one (1) such
Registration pursuant to this Section 5.1.2. A Registration that is withdrawn
or otherwise abandoned at the request of such Holders will count towards the
preceding limitation of one (1) Registration unless at the time of such
withdrawal or abandonment the Holders have learned of a material adverse
change in the financial condition or business of the Company from that known
to the Holders at the time of their request and have withdrawn or abandoned
their request following disclosure by the Company of such material adverse
change. The provisions of Section 5.4 shall be applicable to each registration
initiated under this Section 5.1.2.
5.1.3 Subject to the terms of this Agreement, in the event
that the Company shall receive a written request from a Holder or Holders of
Registrable Securities obtained from the conversion of Series C Preferred
Stock requesting that the Company effect a Registration with respect to all or
a part of the Registrable Securities on a form other than Form S-3 for an
offering greater than 25% of the then outstanding Registrable Securities
obtained from the conversion of Series C Preferred Stock (or any lesser
percent if the reasonably anticipated aggregate offering price to the public
would exceed $15,000,000), the Company shall (i) promptly give written notice
of the proposed Registration to all other Holders and (ii) as soon as
practicable, use its reasonable best efforts to effect Registration of the
Registrable Securities specified in such request, together with any
Registrable Securities of any Holder
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joining in such request as are specified in a written request given within
twenty (20) days after written notice from the Company. The Company shall not be
obligated to take any action to effect any such registration pursuant to this
Section 5.1.3 (i) at any time within One Hundred Eighty (180) days following the
effective date of any Registration Statement on Form S-1 (or any successor
form), or (ii) at any time prior to August 3, 2001, or (iii) if the Company has
previously effected one (1) such Registration pursuant to this Section 5.1.3. A
Registration that is withdrawn or otherwise abandoned at the request of such
Holders will count towards the preceding limitation of one (1) Registration
unless at the time of such withdrawal or abandonment the Holders have learned of
a material adverse change in the financial condition or business of the Company
from that known to the Holders at the time of their request and have withdrawn
or abandoned their request following disclosure by the Company of such material
adverse change. The provisions of Section 5.4 shall be applicable to each
registration initiated under this Section 5.1.3.
5.1.4 Notwithstanding the provisions of Section 5.1.1, Section
5.1.2 and Section 5.1.3, if the Company shall furnish to all such Holders who
joined in the request 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 for any Registration
to be effected as requested under Section 5.1.1, Section 5.1.2 or Section
5.1.3, the Company shall have the right, exercisable not more than once in any
twelve (12) month period, to defer the filing of a Registration Statement with
respect to such offering for a period of not more than ninety (90) days from
delivery of the request of the initiating Holder.
5.2 Request for Registration on Form S-3
5.2.1 If a Holder or Holders of outstanding Registrable
Securities request that the Company file a Registration Statement on Form S-3
(or any successor form to Form S-3) for a public offering of shares of
Registrable Securities, and the Company is entitled to use Form S-3 to
register the Registrable Securities for such an offering, the Company shall
(i) promptly give written notice of the proposed Registration to all other
Holders and (ii) as soon as practicable, use its reasonable efforts to effect
Registration of the Registrable Securities specified in such request, together
with any Registrable Securities of any Holder joining in such request as are
specified in a written request given within twenty (20) days after receipt of
written notice from the Company; provided, however, that the Company shall not
be required to effect more than two (2) Registrations pursuant to this Section
5.2 in any twelve (12) month period. Additionally, the Company shall not be
required to effect any Registrations pursuant to this Section 5.2 if the
reasonably anticipated aggregate offering price to the public would not equal
at least $500,000. The provisions of Section 5.4 shall be applicable to each
registration initiated under this Section 5.2.
5.2.2 Notwithstanding the provisions of Section 5.2.1, if the
Company provides to all Holders who joined in the request a certificate signed
by the President of the Company stating that, in the good faith judgment of the
Board of Directors of the Company,
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it would be seriously detrimental to the Company for any Registration to be
effected as requested under Section 5.2.1, the Company shall have the right,
exercisable not more than once in any twelve (12) month period, to defer the
filing of a Registration Statement with respect to such offering for a period of
not more than ninety (90) days from delivery of the request of the initiating
Holder.
5.3 Registration of Other Securities in Demand Registration
Any Registration Statement filed pursuant to the request of the
Holder or Holders under this Section 5 may, subject to the provisions of
Section 5.4, include securities registered for the account of the Company or
other security holders in addition to Registrable Securities.
5.4 Underwriting in Demand Registration
5.4.1 Notice of Underwriting
If a Holder or 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 5, and the Company shall include such information in the written
notice referred to in Section 5.1 or 5.2. The right of any Holder to
Registration pursuant to Section 5 shall be conditioned upon such Holder's
agreement to participate in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting.
5.4.2 Inclusion of Other Holders in Demand Registration
If the Company, officers or directors of the Company
holding Common Stock other than Registrable Securities, or holders of
securities other than Registrable Securities, request inclusion in such
Registration, the initiating Holders, to the extent they deem advisable and
consistent with the goals of such Registration, may, in their sole discretion,
on behalf of all Holders, offer to any or all of the Company, such officers or
directors, and such holders of securities other than Registrable Securities
that such securities other than Registrable Securities be included in the
underwriting and may condition such offer on the acceptance by such persons of
the terms of this Section 5. In the event, however, that the number of shares
so included exceeds the number of shares of Registrable Securities included by
all Holders, such Registration shall be treated as governed by Section 6
rather than Section 5, and it shall not count as a Registration for purposes
of Section 5.1.
5.4.3 Selection of Underwriter in Demand Registration
The Company shall (together with all Holders proposing
to distribute their securities through such underwriting) enter into an
underwriting agreement with the representative of the underwriter or
underwriters selected for such underwriting by the
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Holders of a majority of the Registrable Securities being registered by the
initiating Holders and agreed to by the Company.
5.4.4 Marketing Limitation in Demand Registration
In the event the Underwriter's Representative advises
the initiating Holders in writing that market factors (including, without
limitation, the aggregate number of shares of Common Stock requested to be
Registered, the general condition of the market, and the status of the persons
proposing to sell securities pursuant to the Registration) require a
limitation of the number of shares to be underwritten, then (a) first the
Common Stock (other than Registrable Securities) held by officers or directors
of the Company, (b) next the securities other than Registrable Securities, and
(c) last the securities requested to be registered by the Company, shall be
excluded from such Registration to the extent required by such limitation. If
a limitation of the number of shares is still required, the initiating Holders
shall so advise all Holders and the number of shares of Registrable Securities
that may be included in the Registration and underwriting shall be allocated
among all Holders in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities entitled to inclusion in such Registration
held by such Holders at the time of filing the Registration Statement. No
Registrable Securities or other securities excluded from the underwriting by
reason of this Section 5.4.4 shall be included in such Registration Statement.
5.4.5 Right of withdrawal in Demand Registration
If any Holder of Registrable Securities, or a holder of
other securities entitled (upon request) to be included in such Registration,
disapproves of the terms of the underwriting, such person may elect to
withdraw therefrom by written notice to the Company, the underwriter and the
initiating Holders delivered prior to the effective date of the Registration
Statement. The securities so withdrawn shall also be withdrawn from the
Registration Statement.
6. Piggyback Registration
6.1 Notice of Piggyback Registration and Inclusion of Registrable
Securities
Subject to the terms of this Agreement, in the event the
Company decides to Register any of its Common Stock (either for its own
account or the account of a security holder or holders exercising demand
registration rights) on a form that would be suitable for a registration
involving solely Registrable Securities, the Company will: (a) promptly give
each Holder written notice thereof (which shall include a list of the
jurisdictions in which the Company intends to attempt to qualify such
securities under the applicable Blue Sky or other state securities laws) and
(b) include in such Registration (and any related qualification under Blue Sky
laws or other compliance), and in any underwriting involved therein, all the
Page 11 of 24
Registrable Securities specified in a written request delivered to the Company
by any Holder within twenty (20) days after delivery of such written notice from
the Company.
6.2 Underwriting in Piggyback Registration
6.2.1 Notice of Underwriting in Piggyback Registration
If the Registration of which the Company gives notice is
for a Registered public offering involving an underwriting, the Company shall
so advise the Holders as a part of the written notice given pursuant to
Section 6.1. In such event, the right of any Holder to Registration shall be
conditioned upon such underwriting and the inclusion of such Holder's
Registrable Securities in such underwriting to the extent provided in this
Section 6. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders
distributing their securities through such underwriting) enter into an
underwriting agreement with the underwriter's representative for such
offering.
6.2.2 Marketing Limitation in Piggyback Registration
In the event the Underwriter's Representative advises
the Holders seeking registration of Registrable Securities pursuant to Section
6 in writing that market factors (including, without limitation, the aggregate
number of shares of Common Stock requested to be Registered, the general
condition of the market, and the status of the persons proposing to sell
securities pursuant to the Registration) require a limitation of the number of
shares to be underwritten, the Underwriter's Representative (subject to the
allocation priority set forth in Section 6.2.3) may:
(a) in the case of the Company's initial Registered
public offering, limit the number of shares of Registrable Securities to be
included in such registration and underwriting to zero; and
(b) in the case of any Registered public offering
subsequent to the initial public offering, limit the number of shares of
Registrable Securities to be included in such Registration and underwriting to
not less than fifty percent (50%) of the securities included in such
Registration (based on aggregate market values).
6.2.3 Allocation of Shares in Piggyback Registration
In the event the Underwriter's Representative limits the
number of shares to be included in a Registration pursuant to Section 6.2.2,
the number of shares to be included in such Registration shall be allocated
(subject to Section 6.2.2) in the following manner: The
Page 12 of 24
shares (other than Registrable Securities) held by officers or directors of the
Company shall be excluded from such registration and underwriting to the extent
required by such limitation. If a limitation of the number of shares is still
required after such exclusion, the number of shares that may be included in the
Registration and underwriting by selling stockholders shall be allocated among
all other Holders thereof, in proportion, as nearly as practicable, to the
respective amounts of securities (including Registrable Securities) which such
Holders would otherwise be entitled to include in such Registration. No
Registrable Securities or other securities excluded from the underwriting by
reason of this Section 6.2.3 shall be included in the Registration Statement.
6.2.4 Withdrawal in Piggyback Registration
If any Holder disapproves of the terms of any such underwriting, such
person may elect to withdraw therefrom by written notice to the Company and the
underwriter delivered prior to the effective date of the Registration Statement.
Any Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such Registration.
7. Expenses of Registration
All Registration Expenses incurred in connection with one (1) Registration
pursuant to Section 5.1.1, one (1) Registration pursuant to Section 5.1.2, one
(1) Registration pursuant to Section 5.1.3, two (2) Registrations in each twelve
(12) month period pursuant to Section 5.2, and unlimited Registrations pursuant
to Section 6 shall be borne by the Company. The Company shall not be required to
pay for such expenses of any registration proceeding begun pursuant to Section 5
if the registration request is subsequently withdrawn at the request of the
Holders of a majority of the Registrable Securities to be registered (which
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 5; provided, however, that if at the time of such
withdrawal, the Holders have learned of a material adverse change in the
financial condition or business of the Company from that known to the Holders at
the time of their request and have withdrawn their request following disclosure
by the Company of such material adverse change, then the Holders shall not be
required to pay any of such expenses and shall retain their rights pursuant to
Section 5. All Selling Expenses shall be borne by the holders of the securities
Registered pro rata on the basis of the number of shares Registered.
8. Registration Procedures and Obligations
Whenever required under this Agreement to effect the registration of any
Registrable Securities, the Company shall, as expeditiously as reasonably
possible:
(a) Prepare and file with the Commission a Registration Statement with
respect to such Registrable Securities and use its reasonable best efforts to
cause such
Page 13 of 24
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 Commission such amendments and
supplements to such Registration Statement and the prospectus used in connection
with such Registration Statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use 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 or to become subject to taxation 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 Securities Act of the happening of any event
as a result of which the prospectus included in such Registration Statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to such Registration Statement and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such Registration.
(h) Furnish, at the request of any Holder requesting Registration of
Registrable Securities pursuant to this Agreement, on the date that such
Registrable Securities are delivered for sale in connection with a registration
pursuant to this Agreement, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an
Page 14 of 24
underwritten public offering, and (ii) a letter dated such date, from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters.
9. Information Furnished by Holder
It shall be a condition precedent of the Company's obligations under this
Agreement that each Holder of Registrable Securities included in any
Registration furnish to the Company such information regarding such Holder and
the distribution proposed by such Holder or Holders as the Company may
reasonably request.
10. Rule 144
10.1 Reports
With a view to making available to the Holders the benefits of Rule 144
promulgated by the Commission pursuant to the Securities Act ("Rule 144") and
--------
any other rule or regulation of the Commission 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 Commission 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 so
long as the Company remains subject to the periodic reporting requirements
under Sections 13 or 15(d) of the Exchange Act;
(b) include a statement in such public information that the
Company has complied with the reporting requirements of Rule 144 (at any time
after ninety (90) days after the effective date of the first Registration
Statement filed by the Company);
(c) take such action, including the voluntary registration of
its Common Stock under Section 12 of the Exchange Act, as is reasonably
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;
(d) 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; and
(e) furnish to any Holder such other information as may be
reasonably requested and necessary in availing such Holder of any rule or
regulation of the Commission
Page 15 of 24
which permits the selling of any such securities without Registration or
pursuant to Form S-3.
10.2 Sales
Notwithstanding any provision in this Agreement to the contrary, the
covenants of the Company set forth in Section 5 and Section 6 shall terminate as
to any Holder upon the earlier of (i) such time as the Holder qualifies to sell
pursuant to Rule 144 or any similar exemption all of such Holder's shares of
Series A Preferred Stock or Series B Preferred Stock or Series C Preferred Stock
or Registrable Securities obtained from the conversion thereof to the public
within a three (3) month period without registration and without volume
limitations or (ii) the fifth (5th) annual anniversary of the effective date of
the Registration Statement of the Company for the initial offering of its
securities to the general public.
11. Indemnification
11.1 Company's Indemnification of Holders
To the extent permitted by law, the Company will indemnify each Holder,
each of its officers, directors, and constituent partners, legal counsel for the
Holders, and each person controlling such Holder with the meaning of the
Securities Act, with respect to which Registration, qualification, or compliance
of Registrable Securities has been effected pursuant to this Agreement, and each
underwriter, if any, and each person who controls any underwriter, against all
claims, losses, damages, or liabilities (joint or several) (or actions in
respect thereof) to the extent such claims, losses, damages, or liabilities
arise out of or are based upon any untrue statement by the Company or it
officers, directors, or agent (or alleged untrue statement) of a material fact
contained in any prospectus or other document (including any related
Registration Statement) incident to any such Registration, qualification, or
compliance, or are based on any omission by the Company or it officers,
directors, or agent (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in the light of the circumstances under which they were made, or any
violation by the Company or it officers, directors, or agent of any rule or
regulation promulgated under the Securities Act or the Exchange Act or any state
securities law or any rules or regulations promulgated thereunder applicable to
the Company and relating to action or inaction required of the Company in
connection with any such Registration, qualification, or compliance; and the
Company will reimburse each such Holder, each such underwriter, and each person
who controls any such Holder or underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action; provided, however, that the
indemnity contained in this Section 11.1 shall not apply to amounts paid in
settlement of any such claim, loss, damage, liability, or action if settlement
is effected without the consent of the Company (which consent shall not
unreasonably be withheld); provided, further, that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
Page 16 of 24
liability, or expense arises directly out of or is based upon any untrue
statement or omission based upon written information furnished to the Company by
such Holder, underwriter, or controlling person and stated to be for use in
connection with such Registration; provided, further, that this indemnity
agreement with respect to a preliminary prospectus shall not inure to the
benefit of any Holder from whom the person asserting any such losses,
liabilities, claims, damages or expenses purchased Registrable Securities, or
any person controlling such Holder, if a copy of the prospectus (as amended or
supplemented at the time of sale) was not sent or given by or on behalf of the
Holder to such person and if the prospectus (as so amended or supplemented)
would have corrected the defect giving rise to such loss, liability, claim,
damage or expense unless such failure to send or give the prospectus resulted
from non-compliance by the Company with Section 8(c) or (f) hereof.
11.2 Holder's Indemnification of Company
To the extent permitted by law, each Holder will, if Registrable Securities
held by such Holder are included in the securities as to which such
Registration, qualification or, compliance is being effected pursuant to this
Agreement, indemnify the Company, each of its directors and executive officers,
each legal counsel and independent accountant of the Company, each underwriter,
if any, of the Company's securities covered by such a Registration Statement,
each person who controls the Company or such underwriter within the meaning of
the Securities Act, and each other such Holder, each of its officers, directors,
and constituent partners, and each person controlling such other Holder, against
all claims, losses, damages, and liabilities (or actions in respect thereof)
arising out of or based upon any untrue statement by such Holder (or alleged
untrue statement) of a material fact contained in any such Registration
Statement, prospectus, offering circular, or other document, or any omission by
such Holder (or alleged omission) to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading, in
the light of the circumstances under which they were made, or any violation by
such Holder of any rule or regulation promulgated under the Securities Act or
the Exchange Act or any state securities law or any rules or regulations
promulgated thereunder applicable to such Holder and relating to action or
inaction required of such Holder in connection with any such Registration,
qualification, or compliance, and will reimburse the Company, such Holders, such
directors, officers, partners, persons, law and accounting firms, underwriters
or control persons for any legal and any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability, or action, in each case to the extent, but in each case only to the
extent that such untrue statement (or alleged untrue statement) or omission (or
alleged omission) is made in such Registration Statement, prospectus, offering
circular, or other document in reliance upon and in conformity with written
information furnished to the Company by a vice president or higher officer or
manager of such Holder if such Holder is not an individual and stated to be
specifically for use in connection with such Registration; provided, however,
that the indemnity contained in this Section 11.2 shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability or action if
settlement is effected without the consent of such Holder (which consent shall
not be
Page 17 of 24
unreasonably withheld) and provided, further, that each Holder's liability under
this Section 11.2 shall not exceed such Holder's net proceeds from the offering
of securities made in connection with such Registration.
11.3 Indemnification Procedure
Promptly after receipt by an indemnified party under this Section 11 of
notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against an indemnifying party under this
Section 11, notify the indemnifying party in writing of the commencement thereof
and generally summarize such action. The indemnifying party shall have the right
to participate in and to assume the defense of such claim; provided, however,
that the indemnifying party shall be entitled to select counsel for the defense
of such claim with the approval of any parties entitled to indemnification,
which approval shall not be unreasonably withheld; provided further, however,
that if either party reasonably determines that there may be a material conflict
between the position of the Company and the Holders in conducting the defense of
such action, suit, or proceeding by reason of recognized claims for indemnity
under this Section 11, then counsel for such party shall be entitled to conduct
the defense to the extent reasonably determined by such counsel to be necessary
to protect the interest of such party. The failure to notify an indemnifying
party promptly of the commencement of any such action, if prejudicial to the
ability of the indemnifying party to defend such action, shall relieve such
indemnifying party, to the extent so prejudiced, of any liability to the
indemnified party under this Section 11, but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise other than under this Section 11.
11.4 Contribution
If the indemnification provided for in this Section 11 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. Each Holder's liability under
this Section 11.4 shall not exceed such Holder's net proceeds from the offering
of securities made in connection with such Registration.
Page 18 of 24
11.5 Survival
The obligations of the Company and Holders under this Section 11 shall
survive the completion of any offering of Registrable Securities in a
Registration made pursuant hereto.
12. Transfer of Rights
The rights to information and inspection under Sections 2 and 3 and the
right to cause the Company to Register securities granted by the Company to such
Investor under this Agreement may be assigned by any Investor to (i) a
transferee who acquires at least 200,000 shares (as adjusted for stock splits,
stock dividends and the like) of Series A Preferred Stock and/or Series B
Preferred Stock and/or Series C Preferred Stock, or (ii) an affiliate of such
Investor which controls, is controlled by, or is under common control with such
Investor; provided, however, that the Company must receive written notice prior
to or within twenty (20) days of the time of said transfer, stating the name and
address of said transferee and identifying the securities with respect to which
such information and Registration rights are being assigned. This Section 12
shall not diminish or impair restrictions on transfer of Series A Preferred
Stock or Series B Preferred Stock or Series C Preferred Stock as contained in
any agreement executed simultaneously herewith by the parties hereto.
13. Market Stand-off
Each Holder hereby agrees that, if so requested by the Company and the
Underwriter's Representative (if any) in connection with the Company's initial
public offering, such Holder shall not sell, make any short sale of, loan, grant
any option for the purchase of, or otherwise transfer or dispose of any
Registrable Securities or other securities of the Company without the prior
written consent of the Company and the Underwriter's Representative for such
period of time (not to exceed 180 days) following the effective date of a
Registration Statement of the Company filed under the Securities Act as may be
requested by the Underwriter's Representative; provided, however, that such
restrictions shall not apply to any transactions relating to any shares of
Common Stock which such Holder purchases in the Company's initial public
offering or in the open market after the completion of such offering. The
obligations of Holders under this Section 13 shall be conditioned upon similar
agreements being in effect with each other stockholder who then is an officer,
director, or ten percent (10%) stockholder of the Company.
14. Right of First Refusal
14.1 Transfers by Investors
Except as otherwise provided in this Agreement, each Series C Investor
agrees not to sell, transfer, exchange, or assign any right, title, or interest
(a "Transfer") in or to all or any
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Page 19 of 24
part of its Series C Preferred Stock or Common Stock issued upon conversion
thereof unless it has made an offer (an "Investor Offer") and such offer has not
---------------
been accepted as provided below.
14.2 Offer by an Investor
The Investor Offer shall be made to the Company and to the remaining Series
C Investors and shall consist of a written offer to Transfer all or such part of
the capital stock of the Company owned by the Series C Investor as such Series C
Investor intends to Transfer (the "Offered Investor Shares"). A statement shall
-----------------------
be attached to the Investor Offer which shall provide a full disclosure of the
Investor Offer including (a) a statement of intention to Transfer; (b) the name
and address of any prospective transferee; (c) the number of Offered Investor
Shares; and (d) the terms and conditions of the proposed Transfer, including the
purchase price for the Offered Investor Shares.
14.3 Acceptance of Offer
14.3.1 By Company
Within twenty (20) days after its receipt of the Investor Offer, the
Company or its designee may, in its sole discretion, accept the Investor Offer
by giving written notice to the selling Series C Investor and to the remaining
Series C Investors of the election to accept. In the event the Company does not
provide such written notice within said twenty (20) days then the Company shall
be deemed to have declined to accept the Investor Offer.
14.3.2 By the Remaining Series C Investors
If the Investor Offer is not accepted by the Company, each of the
remaining Series C Investors may elect within ten (10) days after decline of the
Investor Offer by the Company to purchase up to such Series C Investor's pro
rata portion of the remaining Offered Investor Shares by giving written notice
within such 10-day period to the selling Investor and to the Company. In the
event a remaining Series C Investor does not provide such written notice within
said 10-day period then such Series C Investor shall be deemed to have declined
to accept the Investor Offer. Said 10-day period for the remaining Series C
Investors shall run sequentially to the 20-day period for the Company as
provided above.
14.3.3 Pro Rata Portion
For purposes of this Section 14.1, each accepting Series C Investor's
pro rata portion of the Offered Investor Shares is that proportion of the
Offered Investor Shares multiplied by a fraction, the numerator of which is the
number of shares of Series C Preferred Stock (or
Page 20 of 24
Common Stock issued upon conversion thereof) then owned by such Series C
Investor and the denominator of which is the aggregate number of shares of
Series C Preferred Stock (or Common Stock issued upon conversion thereof) then
issued and outstanding and held by all non-selling Series C Investors. If any
Series C Investor declines to accept all or any part of its pro rata portion of
the Offered Investor Shares, then each of the Series C Investors who has elected
to purchase pursuant to Section 14.3.2 shall have an additional 5-day period
within which such accepting Series C Investors may additionally accept up to its
pro rata portion of the declining Series C Investor's unpurchased pro rata
portion of the Offered Investor Shares.
14.4 Offer Not Accepted
If the Company and the accepting Series C Investors have not elected to
accept all of the Offered Shares pursuant to and within the time periods
specified above (maximum of 35 days), the Series C Investor may Transfer the
balance of the Offered Investor Shares to the prospective transferee named in
the statement attached to the Investor Offer as provided in Section 14.2, such
Transfer to be made only in strict accordance with the terms set forth in such
statement, and to be completed within thirty (30) days following the expiration
of the time provided for the election by the Series C Investors to accept the
Offered Shares, after which time any such Transfer shall again become subject to
all the restrictions of this Agreement.
14.5 Transfers to Affiliates
The restrictions on Transfers by the Series C Investors set forth in this
Section 14 shall not apply to Transfers by a Series C Investor to an affiliate
which controls, is controlled by, or under common control with such Series C
Investor provided that all such transferees shall simultaneously with such
Transfer execute this Agreement and become a party hereto and subject to the
provisions hereof.
14.6 No Other Transfer Effective
Except as provided in this Section 14, no Transfer in or to all or any part
of the capital stock of the Company now owned or hereafter acquired by the
Investors shall be effective, and the Company shall not record or recognize any
such Transfer, until there has been compliance with the provisions of this
Agreement.
14.7 Termination of Restrictions
The restrictions on Transfers by the Series C Investors set forth in this
Section 14 shall terminate upon the effective date of the Registration Statement
of the Company for the initial offering of its securities to the general public.
15. Observer Rights
Page 21 of 24
The Company shall permit the holders of a majority of the outstanding
Series C Preferred Stock to designate one (1) individual representative to
attend each meeting of the Company's Board of Directors and to participate in
all discussions during each such meeting (but not to vote on any matters). The
Company shall send to such representative notice of the time and place of each
meeting in the same manner and at the same time as it shall send such notice to
its directors and the Company shall also provide to the representative copies of
all notices, reports, minutes and consents at the time and in the manner as they
are provided to all directors; provided, however, that the Company reserves the
right to exclude such representative from any meeting or portion thereof, and
deny access to any materials, to the extent the Company believes that such
exclusion or denial of access is reasonably necessary to preserve the attorney-
client privilege, to protect confidential or proprietary information, material
non-public information or for other similar reasons. The representative
designated by the holders of the Series C Preferred Stock may designate a new
representative at any time and for any reason upon a written election by the
holders of a majority of the then outstanding Series C Preferred Stock. Such
representative shall not be deemed to be an officer or director of the Company
and shall not receive any direct or indirect compensation from the Company for
such activities. The observer rights contained herein shall terminate upon the
effective date of the Registration Statement of the Company for the initial
offering of its securities to the general public.
In connection with an initial public offering of its securities to the
general public, the Company will nominate said representative as a member of the
Board of Directors, subject to applicable stockholder approval. If the Company
fails to complete an initial public offering within one hundred eighty (180)
days following the date hereof, the Company shall use its best efforts to obtain
the requisite approvals from the holders of the Series A Preferred Stock, the
Series B Preferred Stock, and the Common Stock pursuant to existing arrangements
between such stockholders and the Company for purposes of allowing the holders
of the Series C Preferred Stock to elect said individual to the Board of
Directors.
16. Miscellaneous
16.1 No Conflicts
The parties hereto represent that they are not parties to and do not know
of any other agreements that conflict with any of the provisions of this
Agreement.
16.2 Entire Agreement; Successors
This Agreement and any documents executed simultaneously herewith
constitute the entire contract between the parties hereto relative to the
subject matter hereof. Without diminishing the generality of the preceding
sentence, this Agreement shall replace in its entirely all of the provisions of
the Amended Rights Agreement which shall be null and void as of the date hereof.
The provisions of this Agreement shall inure to the benefit of and shall
Page 22 of 24
be binding upon the permitted successors and assigns of the parties hereto.
16.3 Counterparts
This Agreement may be executed in two or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
16.4 Modification
This Agreement shall not be subject to modification or amendment in any
respect, except by an instrument in writing signed by (a) the Company, (b) the
holders of not less than fifty percent (50%) of the Series A Preferred Stock
then outstanding, (c) the holders of not less than fifty percent (50%) of the
Series B Preferred Stock then outstanding, and (d) the holders of not less than
fifty percent (50%) of the Series C Preferred Stock then outstanding.
16.5 Governing Law
This Agreement shall for all purposes be governed by and construed in
accordance with the laws of the state of California as applied to agreements
among California residents entered into and to be performed entirely within the
state of California.
16.6 Notices
Unless otherwise provided, any notice required or permitted under this
Agreement shall be given in writing and shall be deemed effectively given upon
personal delivery to the party to be notified (including via facsimile
transmission with confirmation) or three (3) business days after deposit with
the United States Post Office, postage prepaid, registered or certified with
return receipt requested 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 given in the foregoing manner.
16.7 Severability
If one or more provisions of this Agreement are held to be unenforceable
under applicable law, such provisions shall be excluded from this Agreement and
the balance of this Agreement shall be interpreted as if such provisions were so
excluded and shall be enforceable in accordance with its terms .
16.8 Specific Performance
Each of the parties to this Agreement agrees that the other parties to this
Agreement will be irreparably damaged if this Agreement is not specifically
enforced. Upon a breach or threatened breach of the terms, covenants and/or
conditions of this Agreement by any party
Page 23 of 24
to this Agreement, the parties to this Agreement shall, in addition to all other
remedies, each be entitled to a temporary or permanent injunction, and/or a
decree for specific performance, in accordance with the provisions of this
Agreement.
16.9 Submission to Jurisdiction
Each party hereby irrevocably submits to the personal jurisdiction of the
United States District Court for San Mateo County, California, as well as of the
District Courts of the State of California in San Mateo County, California over
any suit, action or proceeding arising out of or relating to this Agreement or
any other agreement as contemplated herein or entered into simultaneously
herewith or any amendment or modification thereto. Each party hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may now
or hereafter have to the laying of the venue of any such mediation, arbitration,
suit, action or proceeding brought in any such county and any claim that any
such mediation, arbitration, suit, action or proceeding brought in such county
has been brought in an inconvenient forum.
16.10 Aggregation of Stock.
Any shares of Series A Preferred held by Venture I or Venture II shall be
aggregated together for purposes of determining the availability of any rights
under this Agreement.
16.11 Additional Parties.
Additional persons or entities that purchase Series C Preferred Stock
pursuant to the terms of the Stock Purchase Agreement after the date hereof may
become parties to this Agreement by executing a signature page to this Agreement
and agreeing to be bound by the terms hereof. Any such additional parties shall
be deemed Series C Investors for all purposes hereunder, and the Company may
after the date hereof and without the consent of any other party hereto update
Exhibit B to this Agreement to reflect the inclusion of any such subsequent
purchasers of the Series C Preferred Stock as Series C Investors.
Page 24 of 24
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day first above written.
E-STAMP CORPORATION,
a Delaware corporation
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By:_________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President/CEO
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Fax: 650/▇▇▇-▇▇▇▇
INVESTOR SIGNATURE PAGE
FOR
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
-------------------------
IN WITNESS WHEREOF, the undersigned hereby agrees to the terms and
conditions of that certain Second Amended and Restated Investor Rights Agreement
dated August 3, 1999.
(PLEASE COMPLETE AND EXECUTE)
______________________________________________
(Legal Name of Investor)
By____________________________________________
(Signature of Authorized Representative)
______________________________________________
(Printed Name of Authorized Representative)
______________________________________________
(Title of Authorized Representative)
Address: __________________________________
__________________________________
(fax)_____________________________
(e-mail)__________________________
EXHIBIT A
Series B Investors
Investor S Series B Shares
-------- ---------------
Canaan Equity, L.P. 1,047,000
Unified Holdings, L.L.C. 1,047,000
CPQ Holdings, Inc. 785,250
Francotyp-Postalia AG & Co 785,250
Microsoft Corporation 261,750
AT&T Venture Fund II, L.P. 235,575
Venture Fund I, L.P. 26,175
---------
4,188,000
EXHIBIT B
Series C Investors
Investor Series C Shares
-------- ---------------
Canaan Equity, L.P. 151,302
CPQ Holdings, Inc. 113,476
Microsoft Corporation 109,231
AT&T Venture Fund II, L.P. 196,616
Venture Fund I, L.P. 21,846
Declaration of Trust for Defined Benefit
Plans of Zeneca Holdings, Inc. 77,575
Declaration of Trust for Defined Benefit
Plans of ICI American Holdings, Inc. 116,392
Delaware State Employees' Retirement Fund 387,992
At Home Corporation 242,483
Remington Investment Strategies, L.P. 34,918
▇▇▇▇▇ Global Investments, Ltd. 159,069
▇. ▇▇▇▇ Price Media & Telecommunications Fund, Inc. 193,986
GE Capital Equity Investments, Inc. 193,986
▇▇▇▇▇▇▇▇ Investment Opportunities (Master) Fund -
NTV Portfolio 23,278
▇▇▇▇▇▇▇▇ New Technologies Fund, Inc. 122,212
Hillside Internet Ventures, L.L.C. 106,693
Winfield Capital Corp. 96,993
DLJ Private Equity Partners Fund, L.P. 42,884
DLJ Fund Investment Partners II, L.P. 16,694
DLJ Capital Corporation 8,729
DLJ Private Equity Employees Fund, L.P. 1,528
DLJ ESC II, L.P. 17,459
Parallel Capital I, L.L.C. 31,037
Parallel Capital II, L.L.C. 31,037
45th Parallel, L.L.C. 3,880
Double Black Diamond II, L.L.C. 11,640
Crossover Fund II, L.P. 46,072
Beta Bayview, L.L.C. 2,425
Talon Opportunity Fund, L.P. 48,497
Columbus Avenue, L.L.C. 19,399
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ 18,728
Dallas Semiconductor Corporation 9,699
▇▇▇▇▇ Ventures IV, L.P. 24,248
Prisma German American Venture Partners GGR 16,973
Cornerstone Equities, L.L.C. 16,973
▇.▇. ▇▇▇▇▇▇▇▇▇ ▇▇. Company 2,708
Akwirus Inc. 2,708
(formerly Interactive Public Relations)
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1995 Trust 2,708
▇▇▇▇▇ ▇. ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1995 Trust 2,708
▇▇▇▇▇ ▇. ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Bacon 1995 Trust 2,708
▇▇▇▇▇ ▇. ▇▇▇▇▇, Co-Trustee
▇▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ 2,708
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇., 2,708
as his Separate Property & Estate
L. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, 2,708
as his Separate Property & Estate
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, 2,708
as his Separate Property & Estate
▇▇▇▇▇▇▇▇ One Ltd. 2,708
▇▇▇▇▇▇▇▇ Two Ltd. 2,708
BBN Partners 2,708
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 2,708
Verwood Capital Corp. 2,708
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Trust 1,083
▇▇▇▇▇▇▇▇▇▇ Associates L.P. 2,708
▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇ 2,708
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇ 2,708
▇▇▇▇, ▇▇▇▇▇▇ ▇. 2,708
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 1,083
▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 1,354
▇▇▇/Rollover
Big Hat Cattle Company G.P. 1,083
▇▇▇▇ ▇. ▇▇▇▇▇▇ 2,708
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇▇▇▇, Jr., ▇▇▇▇▇▇▇ ▇. 2,708
Hill ▇. ▇▇▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇▇▇, J. ▇▇▇▇▇▇ 2,708
Financiera E Inversionista Las Colinas 2,708
▇▇▇▇, ▇▇▇▇▇ ▇. 2,708
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ (Sep. Property) 2,708
▇▇▇▇▇, ▇▇▇▇▇▇ 2,708
▇▇▇▇, ▇▇▇▇ ▇. 2,708
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇▇▇▇ Venture Partnership L.P. 2,708
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Estate 1,083
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ 1,083
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. ▇▇. 1,083
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Revocable Trust 1,083
DTD 5-4-93
Kapoor, ▇▇▇▇▇ ▇. 2,708
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇ 1,083
▇▇▇▇▇ ▇▇▇▇▇▇ Custodian
KitchCo Investments, Ltd. 2,708
LARJA Company 2,708
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 2,708
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ 1,083
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 1,083
▇▇▇▇, ▇▇▇▇▇▇ ▇. 2,708
▇▇▇▇, ▇. ▇▇▇▇▇ 2,708
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. 2,708
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ 1995 Trust 2,708
▇▇▇▇▇ ▇. ▇▇▇▇▇ Co-Trustee
Heptagon Investments ltd. 2,708
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 1995 Trust 2,708
▇▇▇▇▇ ▇. ▇▇▇▇▇ Co-Trustee
▇▇▇▇▇▇▇▇, ▇▇▇ & ▇▇▇▇▇▇▇ 2,166
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ 2,708
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ 2,708
Trustee
▇▇▇▇▇, ▇▇▇▇ 2,708
Middleton, Jr., ▇▇▇▇ ▇. 1,083
Monroe, Jr., ▇▇▇▇▇▇▇ ▇. 2,708
▇▇▇▇▇▇, ▇. ▇▇▇▇▇▇ 1,624
O'Dell, ▇▇▇▇▇ ▇. 2,708
O'▇▇▇▇, ▇▇▇▇ 2,708
▇'▇▇▇▇▇, ▇▇▇▇▇▇▇ 1,083
▇▇▇▇▇, ▇▇▇▇▇▇ 2,166
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 1,083
Parrot, ▇▇▇▇▇ 1,083
Prime, ▇▇▇▇ 1,083
▇▇▇▇▇▇▇ III, ▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ 2,708
Rio Bravo Inversiones Ltd. 2,708
▇▇▇▇▇▇▇▇▇, ▇▇▇ 1,083
▇▇▇▇, ▇▇▇▇▇▇ ▇. 2,708
FSI Corporation 1,083
Seeligson III, ▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇, ▇▇▇▇▇▇ 1,624
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 2,708
Sintra Capital Corp. 2,708
Sintra Fund Ltd. 2,708
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. 2,166
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Trustee 1,083
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ P.C. Retirement Trust
Vaghi III, ▇▇▇▇▇▇ ▇. 1,354
▇▇▇▇▇, ▇▇▇▇ ▇. 1,354
▇▇▇▇▇▇▇, ▇▇▇▇ ▇. 2,708
▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ 2,708
▇▇▇▇▇▇ & ▇▇▇▇▇ Ltd. 2,708
▇▇▇▇▇▇ Family Partnership VI 2,708
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Employee Savings Trust 1,083
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 1,083
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇. 2,708
Green Funds L.L.C. 2,708
▇▇▇▇, ▇▇▇▇▇▇ ▇. 2,708
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇. F/b/o ▇▇▇▇▇▇ ▇. 1,083
Wurfel Profit Sharing Plan
American Mailing Equip.
Financiera E Inversionista Xana 2,708
Glaw ▇▇▇▇▇ Consulting Group 2,708