EXHIBIT 4.2
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT dated as of July 2, 1997 is among Mission
Critical Software, Inc., a Delaware corporation (the "COMPANY"), and the
investors listed on EXHIBIT A to this Agreement (the "INVESTORS").
WHEREAS, the Investors owning shares of the Company's Series B Convertible
Preferred Stock, $0.001 par value per share ("SERIES B STOCK"), and the Company
are parties to a Series B Preferred Stock Purchase Agreement, dated September 4,
1996 (the "SERIES B AGREEMENT"); and
WHEREAS, the Investors purchasing shares of the Company's Series C
Convertible Preferred Stock, $0.001 par value per share (the "SERIES C STOCK"),
pursuant to that certain Series C Convertible Preferred Stock Purchase Agreement
dated as of the date hereof (the "SERIES C AGREEMENT"), have agreed to purchase
an aggregate of 3,450,000 shares of Series C Stock, and it is a condition
precedent to the closing of such purchase and sale that the Company and the
Investors enter into this Agreement, superseding certain sections of the Series
B Agreement.
NOW THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements herein contained, and other consideration, the receipt of which
is hereby acknowledged, the parties hereto, intending to be legally bound,
hereby agree as follows:
1. CERTAIN COVENANTS OF THE COMPANY. The Company hereby covenants and
agrees, so long as any Investor owns any Series B Stock or Series C Stock (the
Series B Stock and the Series C Stock, collectively, the "INVESTOR STOCK") or
any shares of the Company's Common Stock (the "COMMON STOCK") issued upon
conversion of the Investor Stock as follows:
1.1 FINANCIAL STATEMENTS. The Company will maintain books of account in
accordance with generally accepted accounting principles applied on a consistent
basis, keep full and complete financial records and furnish to each of the
Investors the following reports and information:
(a) within 90 days after the end of each fiscal year beginning
with the fiscal year ending December 31, 1997, a copy of the financial statement
of the Company as at the end of such year, together with statements of
operations, stockholders' equity and cash flows of the Company for such year,
audited and certified by Coopers & ▇▇▇▇▇▇▇ LLP, of Houston, TX, or other
independent public accountants of recognized national standing reasonably
satisfactory to the Investors and prepared in accordance with generally accepted
accounting principles and practices consistently applied;
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(b) within 30 days after the end of each month, an unaudited
financial statement of the Company as at the end of such month, including income
statements, balance sheets, and statements of changes of cash flows of the
Company for such period and for the current fiscal year to the end of such
month, and comparisons to forecasts and to corresponding periods in prior years;
and
(c) such other financial information as the Investors may
reasonably request, including, without limitation, certificates of the principal
financial officer of the Company concerning compliance with the covenants of the
Company under this SECTION 1.1, other customary information and materials,
including, without limitation, reports of adverse developments, management
letters, communications with stockholders or directors, press releases,
registration statements and any other reports filed by the Company, or by any of
its officers and directors with respect to the Company, with a securities
exchange or with the Securities and Exchange Commission.
1.2 OPERATING PLAN. The Company will prepare and deliver to each
Investor at least 30 days prior to the start of each fiscal year, an annual
operating plan and budget prepared on a monthly basis and, promptly after
preparation, any revisions to such operating plan.
1.3 PAYMENT OF TAXES, COMPLIANCE WITH LAWS, ETC. The Company will pay
and discharge all lawful taxes, assessments and governmental charges or levies
imposed upon it or upon its income or property before the same shall become in
default, as well as all lawful claims for labor, materials and supplies which,
if not paid when due, might become a lien or charge upon its property or any
part thereof; PROVIDED, HOWEVER, that the Company shall not be required to pay
and discharge any such tax, assessment, charge, levy, or claim so long as the
validity thereof is being contested by the Company in good faith by appropriate
proceedings and an adequate reserve therefor has been established on its books.
The Company will use its best efforts to comply with all applicable laws and
regulations in the conduct of its business including, without limitation, all
federal, state, and local environmental and health and safety laws, rules,
regulations, ordinances, and by-laws.
1.4 INSURANCE. The Company will keep its insurable properties insured,
upon reasonable business terms, by financially sound and reputable insurers
against liability, and the perils of casualty, fire and extended coverage in
amounts of coverage sufficient in the reasonable business judgment of the
Company to protect the Company. The Company will also maintain with such
insurers insurance against other hazards and risks and liability to persons and
property which, in the reasonable business judgment of the Company, is customary
in the industry in which the Company operates for companies of comparable size.
1.5 KEY MAN LIFE INSURANCE. The Company will maintain term life
insurance upon the life of each of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ in the amount of $1,000,000 each, with the proceeds payable to
the Company, free and clear of any lien or encumbrance.
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1.6 MAINTENANCE OF PROPERTIES. The Company will maintain all properties
used or useful in the conduct of its business in good repair, working order and
condition as is reasonably necessary to permit such business to be properly
and advantageously conducted.
1.7 AFFILIATED TRANSACTIONS. Except with respect to compensation
arrangements with, and the reimbursement of expenses of, employees of the
Company in the ordinary course of business, all transactions by and between the
Company and any director, officer, employee or stockholder of the Company or
persons controlled by or affiliated with such director, officer, employee or
stockholder, shall be conducted on an arms-length basis, shall be on terms and
conditions no less favorable to the Company than could be obtained from
nonrelated persons and shall be approved by the Board of Directors after full
disclosure of the terms thereof, for which purpose the interested party, if a
director, and any affiliate of the interested party who is a director, shall not
be entitled to vote.
1.8 INSPECTION RIGHTS. At any time during normal business hours and upon
reasonable prior notice to the Company, the holders of 100,000 shares or more of
the Investor Stock or their designated representatives or agents may (a)
visit and inspect the premises and any of the properties of the Company
including its records and books of account (and make copies thereof and take
extracts therefrom), and (b) discuss the affairs, finances and accounts of the
Company with its officers, directors, employees and accountants, all at the
expense of such Investors, unless the Company is then in material breach or
default under any provision of the Financing Documents, in which case such
Investors' out-of-pocket expenses relating to such activities shall be at the
expense of the Company.
1.9 LITIGATION. The Company promptly (and, in any event, not later than
the date of release of such information to the public generally) shall notify
the Investors or their transferees of any litigation or governmental proceeding
or investigation pending (or, to the best knowledge of the Company, threatened)
against the Company or against any officer, director, key employee, or principal
stockholder of the Company, that materially adversely affects (or if adversely
determined, could materially adversely affect) its present or proposed business,
properties, assets, or condition (financial or otherwise) taken as a whole.
1.10 EMPLOYEE CONFIDENTIALITY AND INVENTION AND NON-COMPETITION
AGREEMENTS. The Company shall require (a) all employees of the Company engaged
after the date hereof to enter into a confidentiality and inventions agreement
in substantially the form attached hereto as EXHIBIT B-1, and (b) all future
employees designated by the Board of Directors, as Key Employees to also enter
into an employment and non-competition agreement in substantially the form
attached hereto as EXHIBIT B-2.
1.11 INTEGRATION. The Company will not offer, sell or solicit offers
to buy or otherwise negotiate in respect of any security (as defined in the
Securities Act) that will be integrated with the sale of the Series C Stock in a
manner that would require the registration of the Series C Stock under the
Securities Act.
1.12 RESERVATION OF CONVERSION STOCK. The Company will, upon any increase
in the number of shares of Common Stock issuable upon conversion or exercise of
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the Preferred Stock, reserve additional shares of Common Stock for issuance upon
such conversion, so that the number of shares of Common Stock so issued will not
at any time be less than the number of such shares issuable upon such conversion
or exercise.
1.13 PARTICIPATION RIGHTS.
(a) Each of the Investors shall be entitled to a participation
right to purchase such Investor's pro rata share of New Securities (as defined
below) which the Company may, from time to time, propose to sell and issue,
subject to the terms and conditions set forth below. An Investor's pro rata
share shall equal a fraction, the numerator of which is the number of shares of
Common Stock then held by the Investor, assuming full conversion of the Investor
Stock and exercise of any then exercisable options or warrants then held by the
Investor, and the denominator of which is the total number of shares of Common
Stock then outstanding, assuming full conversion of then outstanding shares of
Series A Convertible Preferred Stock, $0.001 par value per share of the Company
(the "SERIES A STOCK"), Series B Stock and Series C Stock (the Series A Stock,
Series B Stock and Series C Stock collectively, the "PREFERRED STOCK") and any
other convertible securities issued by the Company and exercise of all then
outstanding rights, options and warrants to acquire Common Stock of the Company.
(b) "NEW SECURITIES" shall mean any capital stock of the Company
whether now authorized or not, and rights, options or warrants to purchase
capital stock, and securities of any type whatsoever which are, or may become,
convertible into capital stock; PROVIDED, HOWEVER, that the term "New
Securities" shall not include (i) shares of Common Stock issuable upon the
conversion of the Preferred Stock; (ii) securities offered to the public
pursuant to a registration statement filed with the Securities and Exchange
Commission; (iii) securities issued as a result of any stock split, stock
dividend or reclassification of Common Stock, distributable on a pro rata basis
to all holders of Common Stock; (iv) securities issued in a merger or
acquisition approved by the Board of Directors; (v) securities and/or options
issued to employees, consultants and directors of the Company and shares of
stock granted upon exercise of such securities and/or options, under a stock
option or other plan approved by the Board of Directors; and (vi) up to 345,000
shares of Common Stock of the Company or other securities representing the right
to acquire such shares issued to banks or leasing companies to obtain financing
or equipment leases.
(c) If the Company intends to issue New Securities, it shall give
the Investors written notice of such intention, describing the type of New
Securities to be issued, the price thereof and the general terms upon which the
Company proposes to effect such issuance. Each of the Investors shall have 15
days from the date of any such notice to agree to purchase all or part of its
pro rata share of such New Securities for the price and upon the general terms
and conditions specified in the Company's notice by giving written notice to the
Company stating the quantity of New Securities to be so purchased. If for any
reason, an Investor fails to exercise its participation right provided herein,
its pro rata share may be purchased by the other Investors exercising such
right, in proportion (as nearly as practicable) to the ratio of the number of
shares of Investor Stock held by each participating Investor to the number of
shares of Investor Stock held by all participating Investors.
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(d) If an Investor fails to exercise the foregoing participation
right with respect to any New Securities within such 30-day period, the Company
may within 120 days thereafter sell any or all of such New Securities not agreed
to be purchased by the Investors, at a price and upon general terms no more
favorable to the purchasers thereof than specified in the notice given to the
Investors pursuant to paragraph (c) above. In the event the Company has not sold
such New Securities within such 120-day period, the Company shall not thereafter
issue or sell any New Securities without first offering such New Securities to
the Investors in the manner provided above.
(e) For purposes of this Section, "Investor" shall include the
general partners, officers or other affiliates of each Investor and each
Investor may apportion its pro rata share among itself and such general
partners, officers and other affiliates in such proportions as it deems
appropriate.
1.14 EXCHANGE ACT REGISTRATION. Unless required by applicable law, the
Company will not register its Common Stock or any other security under the
Securities Exchange Act of 1934, as then in effect, or any comparable similar
federal statute then in effect, other than in connection with an initial public
offering of the Company's Common Stock.
1.15 EQUITY INCENTIVE OPTIONS. The Company shall not award to any officer,
employee or consultant any shares of the Company's stock or options to purchase
shares of the Company's stock except pursuant to a plan providing for the
reservation for issuance of up to 2,325,000 shares of Common Stock, unaimously
approved by the members of the Compensation Committee of the Board of Directors
and duly adopted by the Board of Directors and stockholders of the Company.
1.16 TERMINATION. Without the consent of at least eighty percent of the
members of the Compensation Committee of the Board of Directors, no person who
is an ancestor, descendant, sibling, sibling's descendant, spouse or spouse's
sibling of any officer or employee of the Company may be hired by or continued
in the employ of the Company; PROVIDED that this SECTION 1.16 shall not apply to
the employment of the Company's Chief Executive Officer.
1.17 U.S. REAL PROPERTY INTEREST STATEMENT. The Company shall provide
prompt written notice to each Investor following any "determination date" (as
defined in Treasury Regulation Section 1.897-2(c)(i)) on which the Company
becomes a United States real property holding corporation. In addition, upon a
written request by any Investor, the Company shall provide such Investor with a
written statement informing the Investor whether such Investor's interest in the
Company constitutes a U.S. real property interest. The Company's determination
shall comply with the requirements of Treasury Regulation Section 1.897-2(h)(1)
or any successor regulation, and the Company shall provide timely notice to the
Internal Revenue Service, in accordance with and to the extend required by
Treasury Regulation Section 1.897-2(h)(2) or any successor regulation, that such
statement has been made. The Company's written statement to any Investor shall
be delivered to such Investor within ten (10) days of such Investor's written
request therefor. The Company's obligation furnish a written statement pursuant
to this SECTION 1.17 shall continue notwithstanding the
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fact that a class of the Company's stock may be regularly traded on an
established securities market.
2. REGISTRATION RIGHTS.
2.1 CERTAIN DEFINITIONS. As used in this Section, the following terms
shall have the following respective meanings:
(a) "COMMISSION" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
(b) "FORM S-1" shall mean Form S-1 issued by the Commission or any
substantially similar form then in effect.
(c) "FORM S-2" shall mean Form S-2 issued by the Commission or any
substantially similar form then in effect.
(d) "FORM S-3" shall mean Form S-3 issued by the Commission or any
substantially similar form then in effect.
(e) "MATERIAL ADVERSE EVENT" shall mean an occurrence having a
consequence that either (a) is materially adverse as to the business,
properties, prospects or financial condition of the Company or (b) is reasonably
foreseeable, has a reasonable likelihood of occurring, and if it were to occur
would materially adversely affect the business, properties, prospects or
financial condition of the Company.
(f) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act ("REGISTRATION STATEMENT"), and the
declaration or ordering of the effectiveness of such Registration Statement.
(g) "REGISTRABLE SECURITIES" shall mean all Common Stock not
previously sold to the public (i) issued or issuable upon conversion of the
Company's Investor Stock or (ii) Common Stock issued pursuant to stock splits,
stock dividends and similar distributions with respect to such shares; PROVIDED,
HOWEVER, that shares of Common Stock which are Registrable Securities shall
cease to be Registrable Securities at such time, and for so long as, such shares
are eligible for sale pursuant to Rule 144(k) under the Securities Act.
(h) "REGISTRATION EXPENSES" shall mean all expenses incurred by
the Company in complying with SECTIONS 2.2 or 2.3 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, fees
and disbursements of one counsel for the Investors, blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration, but shall not include Selling Expenses.
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(i) "SECURITIES ACT" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
(j) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities pursuant to
this Agreement.
2.2 DEMAND REGISTRATION.
(a) REQUEST FOR REGISTRATION ON FORM OTHER THAN FORM S-3. In the
event that the Company shall receive from holders of at least a majority of the
Registrable Securities then outstanding, at any time after the earlier of (i)
five years from the date hereof or (ii) six months after the closing of the
Company's first underwritten public offering of shares of Common Stock, a
written request that the Company effect any Registration with respect to all or
a part of such holders' Registrable Securities on Form S-1, the Company shall,
as soon as practicable, use its best efforts to effect Registration of the
Registrable Securities specified in such request, provided that the aggregate
offering price to the public of such Registrable Securities equals or exceeds
$1,000,000. Upon receipt of any such request, the Company shall notify all
holders of Registrable Securities from whom such notice was not received (which
notice shall be delivered by the Company within fifteen days of the Company's
receipt of such request) and shall include in a Registration Statement any
Registrable Securities requested for inclusion under such Registration Statement
by such other holders. The Company shall not be obligated to effect more than
two registrations pursuant to this subsection 2.2(a), provided that a
Registration shall not be counted for this purpose if (i) the Company elects to
sell stock pursuant to a Registration at the same time as the Registration
requested hereunder and less than all the Registrable Securities for which
Registration was requested are included, (ii) the Registration Statement does
not become effective or (iii) the requesting holders are not able to sell at
least 75% of the Registrable Securities requested to be included in such
Registration Statement.
(b) REQUEST FOR REGISTRATION ON FORM S-3. Subject to the terms
of this Agreement, in the event that the Company receives from the holders of
Registrable Securities a written request that the Company effect any
Registration on Form S-3 (or any successor form to Form S-3 regardless of its
designation) at a time when the Company is eligible to register securities on
Form S-3 (or any successor form to Form S-3 regardless of its designation) for
an offering of Registrable Securities, the Company will as soon as practicable
use its best efforts to effect Registration of the Registrable Securities
specified in such request provided that the aggregate offering price to the
public of such Registrable Securities equals or exceeds $1,000,000. The Company
shall be obligated to effect Registration under this Section 2.2(b) on no more
than three (3) occasions.
(c) REGISTRATION OF OTHER SECURITIES IN DEMAND REGISTRATION. A
Registration pursuant to Section 2.2(a) or (b) may include securities other than
Registrable Securities included in such Registration only with the prior written
consent of the holders of a majority of the Registrable Securities.
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(d) UNDERWRITING IN DEMAND REGISTRATION.
(i) NOTICE OF UNDERWRITING. If the Investors intend to
distribute the Registrable Securities covered by their request by means of an
underwriting, they shall so advise the Company as a part of their request made
pursuant to this Section 2.2.
(ii) SELECTION OF UNDERWRITER IN DEMAND REGISTRATION. The
Company shall, together with the Investors engaged in a Registration, enter into
an underwriting agreement with the representative ("Underwriter's
Representative") of the underwriter or underwriters selected for such
underwriting by the Investors engaged in the Registration and agreed to by the
Company, which agreement shall not be unreasonably withheld provided such
underwriter is experienced and reputable.
(iii) RIGHT OF WITHDRAWAL IN DEMAND REGISTRATION. If an
Investor disapproves of the terms of the underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter delivered at
least seven days prior to the effective date of the Registration Statement. The
securities so withdrawn shall also be withdrawn from the Registration Statement.
(e) Blue Sky in Demand Registration. In the event of any
Registration pursuant to this SECTION 2.2, the Company will exercise its best
efforts to Register and qualify the securities covered by the Registration
Statement under such other securities or Blue Sky laws of such jurisdictions as
the Investors shall reasonably request and as shall be reasonably appropriate
for the distribution of such securities; PROVIDED, HOWEVER, that (i) the Company
shall not be required to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions, and (ii) notwithstanding
anything in this Agreement to the contrary, in the event any jurisdiction in
which the securities shall be waivable requirement that expenses incurred in
connection with the qualification of the securities be borne by selling
shareholders, such expenses shall be payable pro rata by selling shareholders.
(f) The Investors agree that, in exercising their rights under this
SECTION 2.2, they will permit the Registration of the Registrable Securities on
such forms issued by the Commission as will minimize the Company's time and
expense in effecting such Registration without affecting the liquidity afforded
by such Registration or otherwise adversely affecting the Investors. If, for
example, the Investors wish to register Registrable Securities pursuant to
SECTION 2.2(a) at a time when the Company is eligible to use Form S-3 for
purposes of registering such Registrable Securities, the Investors will permit
the Company to fulfill its obligations under SECTION 2.2(a) by effecting such
Registration on Form S-3; PROVIDED, HOWEVER, that nothing in this SECTION 2.2(f)
will permit the Company to fulfill such obligation by using Form ▇▇-▇, ▇▇-▇ or
similar forms limited to "Small Business Issuers," without the consent of the
holders of at least 50% of the Registrable Securities.
2.3 PIGGYBACK REGISTRATION.
(a) 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 an Investor or
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other securityholder exercising demand registration rights), other than (i) a
Registration Statement which exclusively relates to the Registration of
securities under an employee stock option, purchase, bonus or other benefit
plan, or (ii) a Registration relating solely to a transaction under Rule 145
promulgated by the Commission, the Company will: (1) promptly give the Investors
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 (2) include in such Registration
(and any related qualification under Blue Sky laws or other compliance), and in
any underwriting involved therein, all the Registrable Securities specified in a
written request delivered to the Company by the Investors within 15 days after
delivery of such written notice from the Company.
(b) UNDERWRITING IN PIGGYBACK REGISTRATION.
(i) If the Registration of which the Company gives notice is a
Registered public offering involving an underwriting, the Company shall so
advise the Investors as a part of the written notice given pursuant to SECTION
2.3(a). In such event the right of the Investors to Registration shall be
conditioned upon such underwriting and the inclusion of an Investor's
Registrable Securities in such underwriting to the extent provided in this
SECTION 2.3. The Investors shall, together with the Company, enter into an
underwriting agreement with the Underwriter's Representative for such offering.
The Investors shall have no right to participate in the selection of the
underwriters for an offering pursuant to this SECTION 2.3.
(ii) MARKETING LIMITATION IN PIGGYBACK REGISTRATION. In the
event the Underwriter's Representative advises the Company and the Investors
engaged in a Registration under SECTION 2.3(a) 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
clause (iii) below) may exclude some or all of the Registrable Securities from
such registration and underwriting.
(iii) ALLOCATION OF SHARES IN PIGGYBACK REGISTRATION. In the
event that the Underwriter's Representative limits the number of shares to be
included in a Registration pursuant to SECTION 2.3(a), each Investor requesting
Registration shall be entitled to include a portion of the Registrable
Securities requested to be included in such registration pro rata (based on the
number of shares requested to be included) with all other requesting Investors
and other persons currently holding similar written piggyback registration
rights requesting registration. Unless all Registrable Securities and such other
piggybacking shares requested to be included in such Registration are so
included, no other securities may be included in the Registration Statement
other than for the account of the Company.
(iv) WITHDRAWAL IN PIGGYBACK REGISTRATION. If any Investor
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to the Company and the underwriter delivered at
least seven (7) days 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.
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(c) BLUE SKY IN PIGGYBACK REGISTRATION. In the event of any
Registration of Registrable Securities pursuant to SECTION 2.3(a), the Company
will exercise its best efforts to Register and qualify the securities covered by
the Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as the Investors shall reasonably request and as shall be
reasonably appropriate for the distribution of such securities; PROVIDED,
HOWEVER, that (i) the Company shall not be required to qualify to do business or
to file a general consent to service of process in any such states or
jurisdictions, and (ii) notwithstanding anything in this Agreement to the
contrary, in the event any jurisdiction in which the securities shall be
qualified imposes a non-waivable requirement that expenses incurred in
connection with the qualification of the securities be born by selling
shareholders, such expenses shall be payable pro rata by selling shareholders.
2.4 EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with the Registration pursuant to SECTION 2.2(a), all Registrations
on Form S-3 pursuant to SECTION 2.2(b), and all Registrations pursuant to
SECTION 2.3 shall be borne by the Company. Notwithstanding the above, the
Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to SECTION 2.2(a) if the registration request is
subsequently withdrawn at the request of the Investors requesting such
Registration (whereafter such Investors shall bear such expenses); PROVIDED,
FURTHER, that if at the time of such withdrawal, the Investors have learned of a
Material Adverse Event with respect to the condition, business or prospects of
the Company not known to the Investors at the time of their request, then the
Investors, shall not be required to pay any of such expenses and shall retain
their rights pursuant to SECTION 2.2(a). Selling Expenses to be borne by the
holders of the Registrable Securities Registered shall be borne pro rata on the
basis of the number of Registrable Securities included in the Registration.
2.5 REGISTRATION PROCEDURES. The Company will keep the registering
Investors advised as to the initiation and completion of such Registration. At
its expense the Company will: (a) use its best efforts to keep such
Registration effective for a period of 180 days or until the registering
Investors have completed the distribution described in the Registration
Statement relating thereto, whichever first occurs; and (b) furnish such number
of prospectuses (including preliminary prospectuses) and other documents as the
registering Investors from time to time may reasonably request.
2.6 INFORMATION FURNISHED BY INVESTOR. It shall be a condition precedent
of the Company's obligations under this Agreement that the Investors furnish to
the Company such information regarding the Investors and the distribution
proposed by the Investors as the Company may reasonably request.
2.7 INDEMNIFICATION.
(a) COMPANY'S INDEMNIFICATION OF THE INVESTORS. To the extent
permitted by law, the Company will indemnify each of the Investors, each of its
directors, officers, stockholders, partners or other beneficial owners and legal
counsel, and each person controlling such Investor, 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
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liabilities (or actions in respect thereof) to the extent such claims, losses,
damages or liabilities arise out of or are based upon any untrue statement (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 (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, or any violation by
the Company of any rule or regulation promulgated under the Securities Act
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 Investor, each of such Investor's directors,
officers, stockholders, partners or other beneficial owners, each such
underwriter and each person who controls any such Investor 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 2.7(a) 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); and PROVIDED, FURTHER, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or expense arises out of or is based upon any untrue
statement or omission based upon written information furnished to the Company by
any Investor, underwriter, or controlling person and stated to be for use in
connection with the offering of securities of the Company.
(b) INVESTOR'S INDEMNIFICATION OF COMPANY. To the extent permitted
by law, each Investor will, if Registrable Securities held by such Investor 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 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, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any such Registration Statement, prospectus, offering
circular or other document, or any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, or any violation by such Investor of any rule
or regulation promulgated under the Securities Act applicable to such Investor
and relating to action or inaction required of such Investor in connection with
any such Registration, qualification or compliance; and will reimburse the
Company, 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 only to the extent,
that such untrue statement (or alleged untrue omission) 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 such Investor and stated to be specifically for use
in connection with the offering of securities of the Company, provided, however,
that each Investor's liability under this SECTION 2.7 shall not exceed such
Investor's net proceeds from the offering of securities made in connection with
such Registration.
11
(c) INDEMNIFICATION PROCEDURE. Promptly after receipt by an
indemnified party under this SECTION 2.7 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 2.7, 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, that if any party reasonably
determines that there may be a conflict between the position of the Company and
the Investors in conducting the defense of such action, suit or proceeding by
reason of recognized claims for indemnity under this SECTION 2.7, 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 2.7,
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 2.7.
2.8 LIMITATIONS ON ADDITIONAL REGISTRATION RIGHTS. The Company shall not,
without the prior written consent of the holders of two-thirds of the then-
outstanding Registrable Securities, enter into any agreement with any holder or
prospective holder of any securities of the Company providing for the granting
to such holder of any right to Register or cause the Registration of any
securities of the Company, unless such rights are in all respects subordinate to
those of the holders of Registrable Securities.
2.9 MARKET STAND-OFF. Each Investor hereby agrees that, if so requested by
the Company and the Underwriter's Representative (if any), such Investor shall
agree not to sell or otherwise transfer any Registrable Securities or other
securities of the Company during the 90-day period following the effective date
of a Registration Statement of the Company filed under the Securities Act;
provided that all Investors holding not less than one percent (1%) of the
aggregate number of shares of Common Stock outstanding (including shares of
Common Stock issuable upon the conversion of the Investor Stock and any
convertible securities or upon the exercise of options, warrants or other
rights) and all officers and directors of the Company enter into similar
agreements.
2.10 CURRENT PUBLIC INFORMATION. At all times after the Company has filed
a registration statement pursuant to the Securities Act, the Company will file
all reports required under the Securities Act or the Securities Exchange Act of
1934 and the rules and regulations thereunder, and will take such further action
as may be reasonably required to enable any holder of "restricted securities"
(as defined in Rule 144 adopted by the Commission under the Securities Act) to
sell such securities pursuant to Rule 144, as amended from time to time, or any
similar rule or regulation hereafter adopted by the Commission.
12
3. MISCELLANEOUS.
3.1 TRANSFER OF RIGHTS. The rights granted to any Investor under
SECTIONS 1 and 2 may be transferred to any person or entity acquiring or which
would own after such transfer, the lesser of all securities owned by such
Investor or at least 100,000 shares of Preferred Stock or Common Stock;
PROVIDED, HOWEVER, that the Company must receive written notice of said
transfer, stating the name and address of said transferee or assignee and
identifying the securities with respect to which such rights are being assigned.
3.2 Transferees. Any transferee (other than an Investor) to whom rights
under SECTIONS 1 and 2 are transferred shall, as a condition to such transfer,
deliver to the Company a written instrument by which such transferee agrees to
be bound by the obligations imposed by SECTIONS 1 and 2 hereof, to the same
extent as if such transferee were an Investor hereunder. Upon the execution of
such instrument, such transferee shall become an Investor for all purposes
hereunder.
3.3 SUBSEQUENT TRANSFEREES. A transferee to whom rights are transferred
pursuant to this SECTION 3.3 may not again transfer such rights to any other
person or entity, other than as provided in SECTION 3.1 or 3.2.
3.4 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to any holder of any Investor Stock or any shares of Common
Stock issuable upon conversion of the Investor Stock, upon any breach or default
of the Company under this Agreement, shall impair any such right, power or
remedy of such holder nor shall it be construed to be a waiver of any such
breach or default or of any similar breach or default theretofore or thereafter
occurring, or an acquiescence therein. Any waiver, permit, consent or approval
of any kind or character on the part of any holder of any breach or default
under this Agreement, or any waiver on the part of any holder of any provisions
or conditions of this Agreement must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
3.5 RIGHTS. Unless otherwise expressly provided herein, an Investor's
rights hereunder are several rights, not rights jointly held with any of the
other Investors.
3.6 ADJUSTMENTS. Except as otherwise specifically provided, all
applicable provisions of this Agreement shall be automatically adjusted to
reflect any stock dividend, stock split or combination or other such
recapitalization.
3.7 CONFIDENTIALITY. The Investors shall keep confidential and shall not
disclose, divulge, use or otherwise take advantage of (except as contemplated
hereunder) any confidential, proprietary, or secret information that it may
obtain from the Company pursuant to financial statements, reports, and other
materials and information transmitted by the Company to the Investors pursuant
to this Agreement, or pursuant to any visitation or inspection rights granted
hereunder, unless and until such information is known to the public through no
fault of the Investors.
13
3.8 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions of this Agreement shall bind and inure to the benefit of
the respective successors, assigns, heirs, executors, and administrators of the
parties hereto.
3.9 NOTICES. All notices, requests, consents and other communications
under this Agreement shall be in writing and shall be delivered by hand, by
telecopier, by overnight mail or mailed by first class certified or registered
mail, return receipt requested, postage prepaid:
(a) If to the Company:
Mission Critical Software, Inc.
Suite 505
▇▇▇ ▇▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, President
(or at such other address as may have been furnished in writing by the Company
to the Investors)
with a copy to:
▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇., Esq.
(b) If to the Investors at the respective
addresses set forth on Exhibit A hereto, or at
such other address as may have been furnished
to the Company in writing by the Investors.
with a copy to:
▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
14
Notices provided in accordance with this SECTION 3.9 shall be deemed delivered
upon personal delivery, receipt by telecopy or overnight mail, or 48 hours after
deposit in the mail in accordance with the above.
3.10 NO CONDITIONS TO EFFECTIVENESS; ENTIRE AGREEMENT. There are no
conditions to the effectiveness of this Agreement. This Agreement, together
with the instruments and other documents contemplated to be executed and
delivered in connection herewith, contains the entire agreement and
understanding of the parties hereto, and supersedes any prior agreements or
understandings between or among them, with respect to the subject matter hereof.
3.11 AMENDMENTS AND WAIVERS. Except as otherwise expressly set forth in
this Agreement, 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 a majority of the shares of
Common Stock issued or issuable upon conversion of the Investor Stock. No
waivers of or exceptions to any term, condition or provision of this Agreement,
in any one or more instances, shall be deemed to be, or construed as, a further
or continuing waiver of any such term, condition or provision.
3.12 COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.13 CAPTIONS. The captions of the sections, subsections and
paragraphs of this Agreement have been added for convenience only and shall not
be deemed to be a part of this Agreement.
3.14 GOVERNING LAW. This Agreement shall be governed by and interpreted
and construed in accordance with the laws of the State of Delaware.
3.15 SUPERSESSION. This Agreement replaces and supersedes SECTIONS 7
and 8 of the Series B Agreement which in all other respects shall remain in full
force and effect from the date hereof.
3.16 WAIVER OF PARTICIPATION RIGHTS. Each of the Investors holding
Series B Stock and entitled to exercise certain rights to acquire shares of
Series C Stock pursuant to Section 1.13 of the Series B Agreement hereby waives
all of such Investors rights in connection with the sale of Series C Stock
pursuant to the Series C Agreement other than as specifically set forth therein.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement as an instrument as of the date first above written.
MISSION CRITICAL SOFTWARE, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
INTERNATIONAL CAPITAL PARTNERS, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇
____________________________________
Title: President and Managing Partner
NEW ENTERPRISE ASSOCIATES VI, LIMITED
PARTNERSHIP
By: NEA Partners VI, Limited Partnership
its general partner
By: ___________________________________
General Partner
NEW ENTERPRISE ASSOCIATES VII, LIMITED
16
PARTNERSHIP
By: NEA Partners VII, Limited Partnership
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________________
General Partner
NEA PRESIDENTS' FUND, L.P.
By: NEA General Partners, L.P.
its general partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
_________________________________________
General Partner
NEA VENTURES 1996, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
Title: Vice President
17
AUSTIN VENTURES V, L.P.
By: AV Partners V, L.Title:
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
__________________________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, General Partner
▇▇▇▇▇▇▇ CAPITAL GROUP LLC, as agent and
attorney-in-fact for certain of the investors
as indicated on Exhibit A
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
__________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Principal
COMMERCE FUNDING CORPORATION
18
COMMERCE FUNDING CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
19
/s/ E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
______________________________________
E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇
______________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇
______________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇
______________________________________
▇▇▇▇▇▇ ▇. ▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
______________________________________
▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
20
/s/ ▇▇▇▇ ▇▇▇▇▇▇
______________________________________
▇▇▇▇ ▇▇▇▇▇▇
______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ Goran Lars Rynger by ▇. ▇. ▇▇▇▇▇
______________________________________
Goran Lars Rynger
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ by ▇. ▇. ▇▇▇▇▇
______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
JMI EQUITY III, L.P.
By: JMI Associates III, L.L.C.
its general partner
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
___________________________________
Managing Member
21
JMI EQUITY FUND III, L.P.
By: JM
Exhibit A
E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Goran Lars ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇
▇-▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
22
▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
International Capital Partners, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇, Managing Partner
(Notices copied to:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇ & Dodge LLP
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ 02108)
Austin Ventures V, L.P.
▇▇▇ ▇. ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
(Notices copied to:
S. ▇▇▇▇▇▇▇ ▇▇▇▇, P.C.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ 78701)
23
JMI Equity Fund
▇▇▇ ▇▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇
(Notices copied to:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ LLP
High Street Tower
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ 02110)
New Enterprise Associates VI, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
New Enterprise Associates VII, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
NEA Ventures 1996, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
NEA President's Fund, L.P.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇▇
24
Commerce Funding Corporation
* A. ▇▇▇▇▇ ▇▇▇▇▇▇▇
* ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
* Alexa ▇. ▇▇▇▇▇▇▇
* Alza Corporation Retirement Plan
* ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
* ▇▇▇▇▇▇▇▇ School General Investment Fund
* ▇▇▇▇▇▇ School Ltd. - Endowment Fund
* State of Oregon PERS/ZCG
* ▇▇▇▇▇ ▇▇▇▇▇▇▇
* ▇▇▇▇ ▇▇▇▇▇▇ Foundation
* ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Trust
* ▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ JTWROS
25
* ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
* ▇▇▇▇ ▇. ▇▇▇▇
* ▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust for Self
* ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ Raiser
* ▇▇▇▇▇▇ Trust Co. of the Bahamas Ltd.
* ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
* ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of NY
* Psychology Associates
* Tab Products Co. Pension Plan
* The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Family Trust
* The ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Foundation
* The ▇▇▇▇▇▇ Investment Partnership I, L.P.
* Van Loben Sels Foundation
* ▇▇▇▇▇▇ Investment Group Ltd.
26
* Public Employees Retirement System of Idaho
* ▇▇▇▇▇ Family LLC
* The Trustees of Amherst College
* An asterisk next to a stockholders name indicates that the stockholder has
designated ▇▇▇▇▇▇▇ Capital Group LLC as his, her or its agent and attorney-in-
fact. A copy of the Limited Power of Attorney signed by the Stockholder has
been provided to Mission Critical Software, Inc. The address of all such
stockholders is c/o Zesiger Capital Group LLC, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇.
27
AMENDMENT TO
INVESTOR RIGHTS AGREEMENT
This Amendment (the "Amendment") to the Investor Rights Agreement dated as
of July 2, 1997, is made and entered into as of May 24, 1999 by and among
Mission Critical Software, Inc. (the "Company"), the holders of a majority of
the outstanding Investor Stock (as defined in the foregoing Investor Rights
Agreement, the "Agreement") of the Company. This Amendment shall become
effective as to the Company and all Investors as of the date hereof. All
capitalized terms used, but not defined, herein shall have the same meanings
ascribed to them in the Agreement.
RECITALS
A. The Company is currently contemplating the registration of shares of
its Common Stock for sale to the public.
B. In connection with such registration, the underwriters have advised the
Company that the provisions of the Agreement with respect to covenants by the
Company and registration rights held by the Investors will need to be amended
and that current market conditions require the lock up of shares held by the
Investors be extended until 180 days after the effective date of the
Registration Statement rather than 90 days as set forth in the Agreement.
C. The Company wishes to obtain the consent of the Investors of a majority
of the shares of Investor Stock currently outstanding to add Section 1.18, amend
Section 2.9 and to add Section 2.11 with respect to such provisions.
AGREEMENT
NOW, THEREFORE, in consideration of the foregoing and of the mutual
promises and covenants contained herein, the parties agree as follows:
1. Section 1of the Agreement is hereby amended to add Section 1.18 as
follows:
"1.18 TERMINATION OF COVENANTS. The covenants set forth in this
Section 1 shall terminate on and be of no further force or effect upon the
earlier of (i) the consummation of the Company's sale of its Common Stock
in an underwritten public offering pursuant to an effective registration
statement filed under the Securities Act immediately subsequent to which
the Company shall be obligated to file annual and quarterly reports with
the Commission pursuant to Section 13 or 15(d) of the Exchange Act or (ii)
the registration by the Company of a class of its equity securities under
Section 12(b) or 12(g) of the Exchange Act."
2. Section 2.9 of the of the Agreement is hereby amended to read in its
entirety as follows, with the changes thereto underlined:
"2.9 MARKET STAND-OFF. Each Investor hereby agrees that, if so
requested by the Company and the Underwriters' Representatives (if any),
such Investor shall agree not to sell or otherwise transfer any Registrable
Securities or other securities of the Company during the 180-day period
following the effective date of a Registration Statement of the Company
filed under the Securities Act; provided that all Investors holding not
less than one percent (1%) of the aggregate number of shares of Common
Stock outstanding (including shares of Common Stock issuable upon the
conversion of the Investor Stock and any convertible securities or upon the
exercise of options, warrants or other rights) and all officers and
directors of the Company enter into similar agreements."
3. Section 2 of the Agreement is hereby amended to add subsection 2.11 as
follows:
"2.11 TERMINATION OF RIGHTS. No Holder shall be entitled to exercise
any right provided for in this Section 2 on or after the closing of a
public offering of the Common Stock of the Company, initiated by the
Company, when all shares of the Holder's Registrable Securities may be sold
under Rule 144 during any 90-day period."
4. Except as amended as set forth in this Amendment, the Agreement shall
continue in full force and effect. This Amendment may be executed in
counterparts, each of which shall be an original and all of which taken together
shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
and year first above written.
MISSION CRITICAL SOFTWARE, INC.
By:
__________________________
Title:
__________________________
INTERNATIONAL CAPITAL PARTNERS, INC.
By:
__________________________
Title: __________________________
-2-
NEW ENTERPRISE ASSOCIATES VII, LIMITED
PARTNERSHIP
By: NEA Partners VII, Limited Partnership
its general partner
By:
_____________________________
General Partner
NEA PRESIDENTS' FUND, L.P.
By: NEA General Partners, L.P.
its general partner
By:
_____________________________
General Partner
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇.▇.
By:
___________________________
Title:
___________________________
AUSTIN VENTURES V, L.P.
By: AV Partners V, L.P.
its general partner
By:
____________________________
General Partner
-3-
▇▇▇▇▇▇▇ CAPITAL GROUP LLC, as agent and
attorney-in-fact for certain of the
investors as indicated on Exhibit A
By:
____________________________
Title:
____________________________
COMMERCE FUNDING CORPORATION
By:
____________________________
Title:
____________________________
__________________________________
E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇ ▇. ▇▇▇
__________________________________
▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
-4-
__________________________________
▇▇▇▇ ▇▇▇▇▇▇
__________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
__________________________________
Goran Lars Rynger
__________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
__________________________________
E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
JMI EQUITY FUND III, L.P.
By: JMI Associates III, L.L.C.
its general partner
By: _______________________________
Managing Partner
__________________________________
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ Raiser
-5-
Exhibit A
Westcoast & Co.
Mellon Bank N.A., Custodian for Public Employee Retirement System of Idaho
▇▇▇▇ & Co.
▇▇▇▇▇ Family LLC
▇▇▇▇ ▇▇▇▇▇▇ Foundation
Alza Corporation Retirement Plan
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ & Co.
BT ▇▇▇▇ ▇▇▇▇▇ & Sons Incorporated as custodian for FBO ▇▇▇▇▇▇ Investment Group
LLC
▇▇▇▇ & Co.
▇▇▇▇▇▇ & Co. ▇▇-▇▇▇▇▇▇▇
Hare & Co.
▇▇▇▇ ▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Trust for Self
▇▇▇▇▇▇ Trust of the Bahamas Ltd.
The ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Family Trust
The ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Foundation
The ▇▇▇▇▇▇ Investment Partnership I, L.P.
Barrie ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ Investment Partners, L.P.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ of NY
Psychology Associates
▇▇▇▇▇▇ & ▇▇▇▇▇ ▇▇▇▇▇▇▇ JTWROS
A. ▇▇▇▇▇ ▇▇▇▇▇▇▇
Alexa ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-6-
MISSION CRITICAL SOFTWARE, INC.
AMENDMENT TO INVESTOR RIGHTS AGREEMENT
This Amendment (the "Amendment") to the Investor Rights Agreement dated as
of July 2, 1997, as amended is entered into as of July 2, 1999 by and among
Mission Critical Software, Inc., a Delaware corporation (the "Company"), the
investors listed on Exhibit A hereto (the "Prior Investors"), and the investors
listed on Exhibit B hereto (the "New Investors").
The Company and the Prior Investors are parties to the Investor Rights
Agreement dated as of July 2, 1997, as amended (the "Investor Rights
Agreement"). The Company and the Prior Investors desire to amend the Investor
Rights Agreement to add the New Investors as "Investors" under the Investor
Rights Agreement for purposes of the indemnification provisions under Section
2.7 in connection with the Company's IPO. Section 3.11 of the Investor Rights
Agreement provides that the Investor Rights Agreement may be amended only by
written consent of the Company and the holders of at least a majority of the
shares of Common Stock issued or issuable upon conversion of the Investor Stock.
Capitalized terms used, but not defined, herein shall have the meaning ascribed
to them in the Investor Rights Agreement.
Now, therefore, in consideration of the mutual covenants and agreements set
forth herein and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto hereby agree as
follows:
1. Exhibit A to the Investor Rights Agreement is hereby amended to include
the New Investors as "Investors" solely for purposes of Section 2.7 in
connection with the Company's IPO.
2. Except to the extent amended by the Amendment, the provisions of the
Investor Rights Agreement shall remain in full force and effect.
3. This Amendment shall be effective upon execution by the Company and at
least the minimum number of stockholders whose written consent is required
pursuant to Section 3.11 of the Investor Rights Agreement.
4. This Amendment may be executed in one or more counterparts, each of
which shall for all purposes be deemed an original and all of which shall
constitute the same instrument.
5. Each of the New Investors hereby agrees to be bound by the provisions
of the Investor Rights Agreement, as amended by this Amendment, as an "Investor"
solely for purposes of Section 2.7 in connection with the Company's IPO.
Dated: July 2, 1999
"COMPANY"
MISSION CRITICAL SOFTWARE, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------
Title: President
"PRIOR INVESTORS"
NEW ENTERPRISE ASSOCIATES VII,
LIMITED PARTNERSHIP
By: NEA Partners VII, Limited Partnership
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
General Partner
NEA PRESIDENTS' FUND, L.P.
By: NEA General Partners, L.P.
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
----------------------------
General Partner
NEA VENTURES 1996, L.P.
By: NEA General Partners, L.P.
its general partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Title: Vice President
--------------------------
INTERNATIONAL CAPITAL PARTNERS INC.
PROFIT-SHARING TRUST
By: /s/ ▇▇▇▇▇▇▇ Ayes
---------------------------------
Title: President, International Capital
Partners, Inc.
------------------------------
AUSTIN VENTURES V, L.P.
By: AV Partners V, L.P.
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Title: General Partner
COMMERCE FUNDING CORPORATION
By:
----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
President
JMI EQUITY FUND III, L.P.
By: JMI Associates III, L.L.C.
its general partner
By:
------------------------------
Managing Partner
▇▇▇▇▇▇▇ CAPITAL GROUP LLC, as agent
and attorney-in-fact for the New ▇▇▇▇▇▇▇
Investors and certain of the investors indicated
on Exhibit A of the Investor Rights Agreement
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
--------------------------------
Title:
-----------------------------
---------------------------------------------
E. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
---------------------------------------------
Goran Lars Rynger
---------------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇
---------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇ ▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇
---------------------------------------------
▇▇▇▇▇ ▇▇▇▇
AUSTIN VENTURES V AFFILIATES FUND, LP
By: AV Partners V, L.P.
its general partner
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
Title: General Partner
"NEW INVESTORS"
MISSION CRITICAL SOFTWARE I, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Its: Chairman
---------------------------------------
SERVERWARE GROUP P.L.C.
By:
-------------------------------------------
Name:
--------------------------------------
Its:
---------------------------------------
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
----------------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.
EXHIBIT A
New Enterprise Associates VII, Limited Partnership
NEA Presidents' Fund, L.P.
NEA Ventures 1996, L.P.
International Capital Partners, Inc.
Austin Ventures V, ▇.▇.
▇▇▇▇▇▇ Ventures V Affiliates Fund, L.P.
Commerce Funding Corporation
JMI Equity Fund III, ▇.▇.
▇▇▇▇▇▇▇ Capital Group LLC
▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ Rynger
▇▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
EXHIBIT B
Mission Critical Software I, Inc.
Serverware Group p.l.c.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇.