EXHIBIT 4.2
FOURTH RESTATED INVESTORS' RIGHTS AGREEMENT
PLACEWARE, INC.
July__, 2000
TABLE OF CONTENTS
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1. Registration Rights........................................ 2
1.1 Definitions.......................................... 2
1.2 Request for Registration............................. 3
1.3 Company Registration................................. 4
1.4 Obligations of the Company........................... 4
1.5 Furnish Information.................................. 5
1.6 Expenses of Demand Registration...................... 6
1.7 Expenses of Company Registration..................... 6
1.8 Underwriting Requirements............................ 6
1.9 Delay of Registration................................ 7
1.10 Indemnification...................................... 7
1.11 Reports Under Securities Exchange Act of 1934........ 9
1.12 Form S-3 Registration................................ 10
1.13 Assignment of Registration Rights.................... 11
1.14 Limitations on Subsequent Registration Rights........ 11
1.15 "Market Stand-Off" Agreement Rights.................. 11
1.16 Termination of Registration Rights................... 12
2. Covenants of the Company................................... 12
2.1 Delivery of Financial Statements..................... 12
2.2 Inspection........................................... 13
2.3 Termination of Information and Inspection Covenants.. 13
2.4 Right of First Offer................................. 13
2.5 Notification Rights.................................. 14
2.6 Observer Rights...................................... 15
2.7 Directors' Liability and Indemnification............. 16
2.8 Proprietary Information and Inventions Agreement..... 16
2.9 Employee Matters..................................... 16
2.10 Certain Covenants Relating to SBA Matters............ 16
2.11 Committees of the Board.............................. 18
3. Miscellaneous.............................................. 18
3.1 Successors and Assigns............................... 18
3.2 Governing Law........................................ 18
3.3 Counterparts......................................... 18
3.4 Titles and Subtitles................................. 19
3.5 Notices.............................................. 19
3.6 Expenses............................................. 19
3.7 Amendments and Waivers............................... 19
3.8 Severability......................................... 19
3.9 Aggregation of Stock................................. 20
3.10 Entire Agreement..................................... 20
3.11 Termination of Prior Agreement....................... 20
Schedule A................................Schedule of Investors
Schedule B Schedule of Management Holders
FOURTH RESTATED INVESTORS' RIGHTS AGREEMENT
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THIS FOURTH RESTATED INVESTORS' RIGHTS AGREEMENT is made as of July
__, 2000, by and among PlaceWare, Inc., a Delaware corporation (the "Company"),
the investors listed on Schedule A hereto, each of which is herein referred to
as an "Investor," and the management holders listed on Schedule B hereto, each
of which is herein referred to as a "Management Holder."
RECITALS
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WHEREAS, certain of the Investors holding Series A Preferred Stock
(the "Series A Investors"), certain of the Investors holding Series B Preferred
Stock (the "Series B Investors"), certain Investors holding Series C Preferred
Stock (the "Series C Investors") and the Management Holders possess registration
and other rights granted pursuant to the PlaceWare, Inc. Third Restated
Investors' Rights Agreement by and among the Company, the Series A Investors,
the Series B Investors, the Series C Investors and Management Holders named
therein, dated September 17, 1999 (the "Prior Agreement"), entered into in
connection with that certain Series C Preferred Stock Purchase Agreement, dated
September 17, 1999, by and among the Company and the Investors named therein
(the "Series C Agreement");
WHEREAS, the Prior Agreement may be amended, and any provision therein
waived, with the consent of the Company, the Series A Investors, the Series B
Investors, the Series C Investors and the Management Holders holding a majority
of the "Registrable Securities" of the Company (as defined in the Prior
Agreement);
WHEREAS, certain of the Investors are parties to the Agreement and
Plan of Merger and Reorganization (the "Merger Agreement") dated June 16, 2000
by and among the Company and certain of the Investors listed on Schedule A
thereto (the "Envoy Investors");
WHEREAS, certain of the Investors are parties to that certain Series D
Preferred Stock Purchase Agreement of even date herewith, by and among the
Company and the Series D Investors named therein (the "Series D Agreement");
WHEREAS, in order to induce the Company to enter into the Merger
Agreement and the Series D Agreement, to induce the Envoy Investors to
consummate the transactions contemplated by the Merger Agreement and to induce
the Series D Investors to purchase shares of the Company's Series D Preferred
Stock, the Series A Investors, the Series B Investors, the Series C Investors
and Management Holders desire to waive, amend and restate all rights granted to
them under the Prior Agreement, to terminate the Prior Agreement, and to replace
the Prior Agreement in its entirety as set forth herein; and
WHEREAS, the Envoy Investors and the Company have agreed, pursuant to
the Merger Agreement, to enter into this Agreement.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as follows:
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1.1 Definitions. For purposes of this Section 1:
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(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in effect on the
date hereof or any registration form under the Act subsequently adopted by the
SEC that permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the right to
acquire Registrable Securities or any assignee thereof in accordance with
Section 1.13 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act of 1934, as
amended.
(e) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, and Series D Preferred Stock, (ii) the shares
of Common Stock issued to the Management Holders; provided, however, that such
shares of Common Stock shall not be deemed Registrable Securities and the
aforementioned individuals shall not be deemed Holders for the purposes of
Section 1.2, 1.12 and 3.7 hereof, (iii) up to 50% of the shares of Common Stock
issued to each of the Envoy Investors pursuant to the Merger Agreement;
provided, however, that such shares of Common Stock shall not be deemed
Registrable Securities and the aforementioned individuals shall not be deemed
Holders for the purposes of Section 2 hereof, and (iv) any Common Stock of the
Company issued as (or issuable upon the conversion or exercise of any warrant,
right or other security that is issued as) a dividend or other distribution with
respect to, or in exchange for, or in replacement of the shares referenced in
(i), (ii) and (iii) above, excluding in all cases, however, any Registrable
Securities sold by a person in a transaction in which his rights under this
Section 1 are not assigned.
(g) The number of shares of "Registrable Securities then outstanding"
shall be determined by the number of shares of Common Stock outstanding that
are, and the number of shares of Common Stock issuable pursuant to then
exercisable or convertible securities that are, Registrable Securities.
(h) The term "SEC" shall mean the Securities and Exchange Commission.
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1.2 Request for Registration.
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(a) If the Company shall receive at any time after the earlier of (i) June
30, 2001, or (ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company (other
than a registration statement relating either to the sale of securities to
employees of the Company pursuant to a stock option, stock purchase or similar
plan or a SEC Rule 145 transaction), a written request from Holders that the
Company file a registration statement under the Act covering the registration of
at least thirty percent (30%) of the Registrable Securities then outstanding and
having an aggregate offering price, net of underwriting discounts and
commissions, of at least $10,000,000, then the Company shall:
(i) within ten (10) days of the receipt thereof, give written notice
of such request to all Holders; and
(ii) effect as soon as practicable, and in any event within sixty
(60) days of the receipt of such request, the registration under the Act of all
Registrable Securities that the Holders request to be registered, subject to the
limitations of subsection 1.2(b), within twenty (20) days of the mailing of such
notice by the Company in accordance with Section 3.5.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
by their request by means of an underwriting, they shall so advise the Company
as a part of their request made pursuant to subsection 1.2(a) and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by the Company and shall be reasonably
acceptable to a majority in interest of the Initiating Holders. In such event,
the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (unless otherwise mutually agreed by a majority in interest of the
Initiating Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company as provided in subsection 1.4(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities that would otherwise be underwritten pursuant hereto, and
the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a certificate
signed by the Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders
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for such registration statement to be filed and it is therefore essential to
defer the filing of such registration statement, the Company shall have the
right to defer taking action with respect to such filing for a period of not
more than one hundred twenty (120) days after receipt of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any twelve (12) month period.
(d) In addition, the Company shall not be obligated to effect, or to take
any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two (2) registrations pursuant to
this Section 1.2 and such registrations have been declared or ordered effective;
(ii) During the period starting with the date sixty (60) days prior
to the Company's good faith estimate of the date of filing of, and ending
on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 1.12 below.
1.3 Company Registration. If (but without any obligation to do so) the
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Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Section 1 to
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effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or, if earlier, until the distribution contemplated in the Registration
Statement has been completed.
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(b) Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Act, and such other documents as they may reasonably request in order to
facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering. Each Holder participating
in such underwriting shall also enter into and perform its obligations under
such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the 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) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
1.5 Furnish Information.
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(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.12 if, due to the
operation of subsection 1.5(a), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
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aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in subsection 1.2(a) or subsection
1.12(b)(2), whichever is applicable.
1.6 Expenses of Demand Registration. All expenses other than underwriting
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discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company and the reasonable fees and
disbursements of one counsel for the selling Holders shall be borne by the
Company; provided, however, that the Company shall not be required to pay for
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request and have withdrawn the request with
reasonable promptness 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 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay all
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expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to the registrations pursuant to Section
1.3 for each Holder (which right may be assigned as provided in Section 1.13),
including (without limitation) all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
1.8 Underwriting Requirements. In connection with any offering involving
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an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 1.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters), and then only in such quantity as the
underwriters determine in their sole discretion will not jeopardize the success
of the offering by the Company. If the total amount of securities, including
Registrable Securities, requested by stockholders to be included in such
offering exceeds the amount of securities sold other than by the Company that
the underwriters determine in good faith and in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in good faith and in
their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling stockholders
according to the total amount of securities entitled to be included therein
owned by each selling stockholder or in such other proportions as shall mutually
be agreed to by such selling stockholders) but in no event shall (i) the amount
of securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company's
securities, in which case the selling stockholders may be excluded if the
underwriters
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make the determination described above and no other stockholder's securities are
included or (ii) notwithstanding the above, any shares being sold by a
stockholder exercising a demand registration right similar to that granted in
Section 1.2 be excluded from such offering. For purposes of the preceding
parenthetical concerning apportionment, for any selling stockholder that is a
holder of Registrable Securities and that is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
stockholder," and any pro-rata reduction with respect to such "selling
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence. If any selling Holder
disapproves of the terms of any underwriting under Section 1.3, such Holder may
elect to withdraw any of its securities included in such underwriting by written
notice to the Company and the underwriter, delivered at least fifteen (15)
business days prior to the effective date of the registration statement. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
excluded and withdrawn from the registration.
1.9 Delay of Registration. No Holder shall have any right to obtain or
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seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 1.
1.10 Indemnification. In the event any Registrable Securities are included
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in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder,
any underwriter (as defined in the Act) for such Holder, and each person, if
any, who controls such Holder or underwriter within the meaning of the Act or
the 1934 Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively, a "Violation"): (i)
any untrue statement or alleged untrue statement of a material fact contained in
such registration statement, including any preliminary prospectus or final
prospectus contained therein or any amendments or supplements thereto, (ii) the
omission or alleged omission to state therein a material fact required to be
stated therein, or necessary to make the statements therein not misleading, or
(iii) any violation or alleged violation by the Company of the Act, the 1934
Act, any state securities law or any rule or regulation promulgated under the
Act, the 1934 Act or any state securities law; and the Company will pay to each
such Holder, partner, officer, director, underwriter or controlling person, as
incurred, any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection 1.10(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability or action to the extent that it arises out of or is based upon
a Violation that occurs in reliance upon and in conformity with written
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information furnished expressly for use in connection with such registration by
any such Holder, partner, officer, director, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any partner,
officer, director or controlling person of any such underwriter or other Holder,
against any losses, claims, damages or liabilities (severally, and not jointly)
to which any of the foregoing persons may become subject under the Act, the 1934
Act or other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.10(b) in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld); provided that in no event shall any indemnity
under this subsection 1.10(b) exceed the net proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.10 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.10, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties that may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage or expense
in such
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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. In no event shall
any contribution under this subsection 1.10(d) exceed the net proceeds from the
offering received by such holder.
(e) The obligations of the Company and Holders under this Section
1.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
(f) No indemnifying party, in the defense of any such claim or
litigation, shall, except with the consent of each indemnified party, consent to
entry to any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
1.11 Reports Under Securities Exchange Act of 1934. With a view to making
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available to the Holders the benefits of Rule 144 promulgated under the Act and
any other rule or regulation of the SEC that may at any time permit a Holder to
sell securities of the Company to the public without registration or pursuant to
a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in SEC Rule 144, at all times after the effective date of
the first registration statement filed by the Company for the offering of its
securities to the general public;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of SEC Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company), the Act and the 1934 Act (at any time after it
has become subject to such reporting requirements), or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3 (at any time
after it so qualifies), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company, and (iii) such other information as may be reasonably
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requested in availing any Holder of any rule or regulation of the SEC that
permits the selling of any such securities without registration or pursuant to
such form.
1.12 Form S-3 Registration. In case the Company shall receive from any
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Holder or Holders holding at least ten percent (10%) of the outstanding
Registrable Securities a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this section 1.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of less than $1,000,000; (3) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than one hundred twenty (120)
days after receipt of the request of the Holder or Holders under this Section
1.12; provided, however, that the Company shall not utilize this right more than
once in any twelve (12) month period; (4) if the Company has, within the six (6)
month period preceding the date of such request, already effected one (1)
registration on Form S-3 for the Holders pursuant to this Section 1.12; or (5)
in any particular jurisdiction in which the Company would be required to qualify
to do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. All expenses incurred in connection with a registration
requested pursuant to Section 1.12, including (without limitation) all
registration, filing, qualification, printer's and accounting fees and the
reasonable fees and disbursements of counsel for the selling Holder or Holders
and counsel for the Company, but excluding any underwriters' discounts or
commissions associated with Registrable Securities, shall be borne by the
Company. Registrations effected pursuant to this Section 1.12 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3, respectively.
10
1.13 Assignment of Registration Rights. The rights to cause the Company to
---------------------------------
register Registrable Securities pursuant to this Section 1 may be assigned (but
only with all related obligations) by a Holder to a transferee or assignee of
such securities who, after such assignment or transfer, holds at least 100,000
shares of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations), provided:
(a) the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
(b) such transferee or assignee agrees in writing to be bound by and subject to
the terms and conditions of this Agreement, including without limitation the
provisions of Section 1.14 below; and (c) such assignment shall be effective
only if immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Act. For the
purposes of determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of a
partnership, corporation or limited liability company who are partners,
shareholders or members or retired partners, former shareholders or members of
such entity (including spouses and ancestors, lineal descendants and siblings of
such partners, shareholders or members or spouses who acquire Registrable
Securities by gift, will or intestate succession) shall be aggregated together
and with the entity; provided that all assignees and transferees who would not
qualify individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices or
taking any action under this Section 1.
1.14 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the then outstanding shares of Series C
Preferred Stock and Series D Preferred Stock, voting together as a single class,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would allow such holder or prospective holder (a) to include
such securities in any registration filed under Section 1.3 hereof, unless under
the terms of such agreement, such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of
such securities will not reduce the amount of the Registrable Securities of the
Holders that are included or (b) to demand registration of their securities.
1.15 "Market Stand-Off" Agreement Rights. Each Investor hereby agrees
-----------------------------------
that, during the period of duration specified by the Company and an underwriter
of Common Stock or other securities of the Company, following the effective date
of a registration statement of the Company filed under the Act, it shall not, to
the extent requested by the Company and such underwriter, directly or indirectly
sell, offer to sell, contract to sell (including, without limitation, any short
sale), grant any option to purchase or otherwise transfer or dispose of (other
than to donees who agree to be similarly bound) any securities of the Company
held by it at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first such
registration statement of the Company that covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
11
(b) all officers and directors and greater than one percent (1%)
stockholders of the Company enter into similar agreements; and
(c) such market stand-off time period shall not exceed one hundred
eighty (180) days.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
1.16 Termination of Registration Rights. No Holder shall be entitled to
----------------------------------
exercise any right provided for in this Section 1 after four (4) years following
the consummation of the sale of securities pursuant to a registration statement
filed by the Company under the Act in connection with the initial firm
commitment underwritten offering of its securities to the general public or, as
to any Holder, such earlier time at which (i) all Registrable Securities held by
such Holder can be sold in any three (3) month period without registration in
compliance with Rule 144 of the Act and (ii) such Holder at that time holds less
than one percent (1%) of the Company's outstanding capital stock.
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. The Company shall deliver to each
--------------------------------
Investor:
(a) as soon as practicable, but in any event within ninety (90) days
after the end of each fiscal year of the Company, an income statement for such
fiscal year, a balance sheet of the Company and statement of stockholder's
equity as of the end of such year, and a statement of cash flows for such year,
such year-end financial reports to be in reasonable detail, prepared in
accordance with generally accepted accounting principles ("GAAP"), and audited
and certified by independent public accountants of nationally recognized
standing selected by the Company;
(b) so long as such Investor holds at least 100,000 shares of
Preferred Stock (either in the form of Preferred Stock or Common Stock issued
upon conversion thereof, and as adjusted for subsequent stock splits,
recombinations or reclassifications), as soon as practicable, but in any event
within thirty (30) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited income statement and statement of
cash flows for such fiscal quarter and an unaudited balance sheet and a
statement of stockholder's equity as of the end of such fiscal quarter comparing
results to the annual plan;
(c) so long as such Investor holds at least 100,000 shares of
Preferred Stock (either in the form of Preferred Stock or Common Stock issued
upon conversion thereof, and as adjusted for subsequent stock splits,
recombinations or reclassifications), within thirty (30) days of the end of each
month, an unaudited income statement and statement of cash flows and balance
sheet for and as of the end of such month, in reasonable detail;
(d) so long as such Investor holds at least 100,000 shares of
Preferred Stock (either in the form of Preferred Stock or Common Stock issued
upon conversion thereof, and as
12
adjusted for subsequent stock splits, recombinations or reclassifications), as
soon as practicable, but in any event thirty (30) days prior to the end of each
fiscal year, a budget for the next fiscal year, prepared on a monthly basis,
including balance sheets and statements of cash flows, for such months, and, as
soon as prepared, any other budgets or revised budgets prepared by the Company;
and
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company certifying that such financials
were prepared in accordance with GAAP consistently applied with prior practice
for earlier periods (with the exception of footnotes that may be required by
GAAP) and fairly present the financial condition of the Company and its results
of operation for the period specified, subject to year-end audit adjustment.
2.2 Inspection. The Company shall permit each Investor, at such
----------
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by the Investor; provided, however, that the Company shall not be obligated
pursuant to this Section 2.2 to provide access to any information that it
reasonably considers to be a trade secret or similar confidential information.
2.3 Termination of Information and Inspection Covenants. The covenants
---------------------------------------------------
set forth in Section 2.1 and Section 2.2 shall terminate as to Investors and be
of no further force or effect when the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall
first occur.
2.4 Right of First Offer. Subject to the terms and conditions specified
--------------------
in this paragraph 2.4, the Company hereby grants to each Investor a right of
first offer with respect to future sales by the Company of its Shares (as
hereinafter defined). An Investor shall be entitled to apportion the right of
first offer hereby granted it among itself and its partners and affiliates in
such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or securities
convertible into or exercisable for, any shares of any class of its capital
stock ("Shares"), the Company shall first make an offering of such Shares to
each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail ("Notice")
to the Investors stating (i) its bona fide intention to offer such Shares, (ii)
the number of such Shares to be offered, and (iii) the price and terms, if any,
upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within twenty
(20) calendar days after giving of the Notice, the Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up to
that portion of such Shares that equals the proportion that the number of shares
of Common Stock issued and held, or issuable upon
13
conversion of the Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock then held, by such Investor bears
to the total number of shares of Common Stock of the Company then outstanding
(assuming full conversion, exercise and exchange of all convertible, exercisable
or exchangeable securities).
(c) If all Shares that Investors are entitled to obtain pursuant to
subsection 2.4(b) are not elected to be obtained as provided in subsection
2.4(b) hereof, the Company may, during the ninety (90) day period following the
expiration of the period provided in subsection 2.4(b) hereof, offer the
remaining unsubscribed portion of such Shares to any person or persons at a
price not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Shares within such period, or if such agreement is not consummated
within sixty (60) days of the execution thereof, the right provided hereunder
shall be deemed to be revived and such Shares shall not be offered unless first
reoffered to the Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.4 shall not be
applicable (i) to the issuance or sale of shares of Common Stock (or options
therefor) to employees or directors of or consultants to the Company for the
primary purpose of soliciting or retaining their services, as approved by the
Board of Directors, (ii) to or after consummation of a bona fide, firmly
underwritten public offering of shares of Common Stock, registered under the Act
pursuant to a registration statement on Form S-1 or SB-2 (or any similar
successor form), at an offering price of at least $10.00 per share
(appropriately adjusted for any stock split, dividend, combination or other
recapitalization) and $20,000,000 in the aggregate, (iii) to the issuance of
securities pursuant to the conversion, exercise or exchange of convertible,
exercisable or exchangeable securities, (iv) to the issuance of securities in
connection with a bona fide business acquisition of or by the Company, whether
by merger, consolidation, sale of assets, sale or exchange of stock or
otherwise, as approved by the Board of Directors, (v) to the issuance of stock,
warrants or other securities or rights to persons or entities with which the
Company has business relationships, provided such issuances are for other than
primarily equity financing purposes, as approved by the Board of Directors, (vi)
to the issuance of shares of Series C Preferred Stock pursuant to the Series C
Agreement, or (vii) to the issuance of up to one hundred thousand (100,000)
shares for any purpose as determined in the sole discretion of the Board of
Directors.
(e) The rights provided in this Section 2.4 shall terminate as to all
Investors and be of no further force or effect (i) when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated, the public offering price of which was not
less than $10.00 per share (adjusted to reflect subsequent stock dividends,
stock splits or recapitalizations), and $20,000,000 in aggregate proceeds to the
Company or (ii) when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall
first occur.
2.5 Notification Rights. This corporation shall give each Investor of
-------------------
Series D Preferred Stock oral notice, followed by written notice on the same
day, no later than three (3) business days after receipt by the corporation of
any Takeover Proposal (as defined below) or any request for information in
connection with a Takeover Proposal or for access to the properties, books or
records of the corporation by any person or entity that informs the
14
corporation that it is considering making, or has made, a Takeover Proposal;
provided, however, that such notice shall not include the identity of the
offeror or the terms and conditions of such proposal, inquiry or contact.
Takeover Proposal shall mean any inquiries or proposals presented to the Board
of Directors that constitute, or could reasonably be expected to lead to, a
proposal or offer for an acquisition, consolidation, business combination, sale
of all or substantially all of the assets, sale of shares of capital stock
(including without limitation by way of a tender offer) or similar transactions
involving the corporation, other than the transactions contemplated by this
Agreement.
2.6 Observer Rights. Subject to Section 4 of the Fourth Restated Voting
---------------
Agreement of even date herewith, as long as Xerox Corporation ("Xerox") owns not
less than 455,000 shares of Series A Preferred Stock or Common Stock issued or
issuable upon conversion thereof (as adjusted for any subsequent stock
dividends, combinations, splits or recapitalizations), the Company shall invite
Xerox to send at Xerox' own expense one (1) representative of Xerox reasonably
acceptable to the Company's Board of Directors to attend, in a nonvoting
observer capacity, each meeting of its Board of Directors; provided, however,
that such representative shall agree to hold in confidence and trust and to act
in a fiduciary manner with respect to all information provided in connection
with such meetings; and, provided further, that the Company reserves the right
to withhold any information and to exclude such representative from any meeting
or portion thereof if the Company believes access to such information or
attendance at such meeting or portion thereof could adversely affect the
attorney-client privilege between the Company and its counsel or would result in
disclosure of highly confidential proprietary information on matters where Xerox
or its representative may be a competitor of the Company. Xerox agrees, and any
representative of Xerox will agree, to hold in confidence and trust and not use
or disclose any confidential information provided to or learned by it in
connection with its rights under this Section 2.6, and such obligations will
survive any termination of this Section 2.6 or this Agreement. The rights (but
not the obligations) of Xerox under this Section 2.6 shall not be assignable and
shall terminate as to Xerox and be of no further force or effect upon the
earlier to occur of:
(i) the date upon which the Company or a parent of the Company
consummates a sale of securities pursuant to a registration statement filed by
the Company under the Act in connection with the firm commitment underwritten
offering of its securities to the general public or the date upon which the
Company first becomes subject to the periodic reporting requirements of Section
12(g) or 15(d) of the 1934 Act, whichever event shall first occur; or
(ii) the date upon which the Company consummates (i) a consolidation
or merger of the Company or any affiliated corporation with or into any other
corporation or corporations (other than a consolidation or merger of this
Company with or into a wholly owned subsidiary of this Company), (ii) a sale of
all or substantially all of the assets or business of the Company in one or more
related transactions, (iii) a transaction or series of related transactions
(other than a public offering of the Company's securities) in which the
stockholders of the Company immediately prior to such transaction(s) own, as a
result of such transaction(s), less than a majority of the voting securities of
the successor or surviving corporation, which shall not be the Company in the
event of a consolidation or merger, immediately thereafter, or (iv) a
transaction or series of related transactions (other than a public offering of
the Company's
15
securities) in which the Company issues shares representing more than 50% of the
voting power of the Company immediately after giving effect to such transaction.
2.7 Directors' Liability and Indemnification. The Company's Restated
----------------------------------------
Certificate of Incorporation and Bylaws shall provide (i) for elimination of the
liability of directors to the maximum extent permitted by law and (ii) for
indemnification of directors for acts on behalf of the Company to the maximum
extent permitted by law. In addition the Company shall use its best efforts to
retain such indemnification provisions.
2.8 Proprietary Information and Inventions Agreement. The Company shall
------------------------------------------------
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement in the form provided to the Investors.
2.9 Employee Matters. All stock and stock equivalents initially issued
----------------
after the initial Closing (defined below) to employees will be subject to
vesting as follows: 25% to vest on the first anniversary following such
issuance, with the remaining 75% to vest monthly over the next thirty-six
months. All stock and stock equivalents subsequently issued to employees shall
be subject to vesting as authorized by the Board of Directors. All stock and
stock equivalents may be early exercised and subject to a repurchase option by
the Company. The repurchase option shall provide that upon termination of the
shareholder's employment, with or without cause, the Company or its assignee (to
the extent permissible under applicable securities law qualification) retains
the option to repurchase at cost any unvested shares held by such shareholder.)
The Closing is defined as such time and place as the purchase and sale of the
Series D Preferred Stock take place or at such other time and place as the
Company and Investors acquiring in the aggregate more than half the shares of
Series D Preferred Stocks pursuant to the Series D Stock Purchase Agreement
mutually agree upon orally and in writing.
2.10 Certain Covenants Relating to SBA Matters.
-----------------------------------------
(a) Use of Proceeds. The proceeds from the issuance and sale of the
Series D Stock pursuant to the Series D Agreement (the "Proceeds") shall be used
by the Company for its growth, modernization or expansion. The Company shall
provide each Investor which is a licensed Small Business Investment Company (an
"SBIC Investor") and the Small Business Administration (the "SBA") reasonable
access to the Company's books and records for the purpose of confirming the use
of Proceeds.
(b) Business Activity. For a period of one year following the
initial Closing under the Series D Agreement the Company shall not change the
nature of its business activity if such change would render the Company
ineligible as provided in 13 C.F.R. Section 107.720.
(c) Compliance. So long as any SBIC Investor holds any securities of
the Company, the Company will at all times comply with the non-discrimination
requirements of 13 C.F.R. Parts 112, 113 and 117.
(d) Information for SBIC Investor. Within 45 days after the end of
each fiscal year and at such other times as an SBIC Investor may reasonably
request, the Company shall deliver to such SBIC Investor a written assessment,
in form and substance satisfactory to such SBIC Investor, of the economic impact
of such investment, and the impact of the financing on
16
the Company's business in terms of profits and on taxes paid by the Company and
its employees. Upon request, the Company agrees to promptly provide each SBIC
Investor with sufficient information to permit such Investor to comply with
their obligations under the Small Business Investment Act of 1958, as amended,
and the regulations promulgated thereunder and related thereto; provided,
however, each SBIC Investor agrees that it will protect any information which
the Company labels as confidential to the extent permitted by law. Any
submission of any financial information under this Section shall include a
certificate of the company's president, chief executive officer, treasurer or
chief financial officer.
(e) For purposes of this Agreement, a "Regulatory Problem" means any
set of facts or circumstances wherein both (i) it has been asserted by any
governmental regulatory agency with jurisdiction over a SBIC Investor that such
SBIC Investor is not entitled to hold, or exercise any significant right with
respect to equity securities of the Company, including the Series D Preferred
Stock or the currently unissued Common Stock of the Company into which the
Series D Preferred Stock is convertible and (ii) such SBIC Investor reasonably
determines that such assertion is meritorious and that the solutions proposed by
such SBIC Investor is necessary to cure such regulatory violation by such SBIC
Investor. If a SBIC Investor determines that it has a Regulatory Problem, it
will so notify the Company and the other Investors as soon as practicable in
writing. After giving such notice, such SBIC Investor will have the right to
transfer its Series D Preferred Stock, and/or the shares of Common Stock
issuable upon conversion of such Series D Preferred Stock, without regard to any
restrictions on transfer set forth in this Agreement, the Series D Agreement or
any other Agreement identified herein or in the Series D Agreement
(collectively, the "Related Agreements") or in the Company's Certificate of
Incorporation or Bylaws, provided that the transferee agrees to become a party
to this Agreement, the Series D Agreement and/or to such relevant Related
Agreements, and acknowledges that such securities will become again, after such
transfer to such transferee, bound by all then relevant provisions relating to
further transfer thereof by transferee, and the Company will take all such
actions as are reasonably requested by such SBIC Investor in order to (i)
effectuate and facilitate any transfer by such SBIC Investor of any securities
of the Company then held by such SBIC Investor to any person designated by such
SBIC Investor, (ii) permit such SBIC Investor (or any of its affiliates) to
exchange all or any portion of any voting security of the Company then held by
such SBIC Investor on a share-for-share basis for shares of a nonvoting security
of the Company as will be created by action of the Board, and, to the extent
required by law, its stockholder, which nonvoting security will be identical in
all respects to the voting security exchanged for it, except that it will be
nonvoting and will be convertible into a voting security on such terms, solely
as required to allow such SBIC Investor to comply with then-applicable
regulatory considerations, as are requested by such SBIC Investor in good faith,
and (iii) amend, and use its reasonable efforts to cause other relevant parties,
including without limitation the Company's stockholders, to take such actions as
are legally required in order to amend this Agreement, the Series D Agreement,
the Related Agreements, the Company's Certificate of Incorporation, the
Company's Bylaws and related agreements and instruments in order to effectuate
and reflect the foregoing. The parties to this Agreement (other than the
Company) will vote all of the Company's voting securities held by them, and will
execute and deliver all documents and instruments requested by them by the
Company, in favor of and to effect such amendments and actions.
17
(f) Number of Holders of Voting Securities. So long as any SBIC
Investor holds any securities purchased pursuant to the Purchase Agreement or
issued by the Company with respect thereto, the Company shall notify each SBIC
Investor (i) at least 15 days prior to taking any action after which the number
or record holders of the Company's voting securities would be increased from
fewer than 50 to 50 or more, and (ii) of any other action or occurrence after
which the number of record holders of the Company's voting securities was
increased (or would increase) from fewer than 50 to 50 or more, as soon as
practicable after the Company becomes aware that such other action or occurrence
has occurred or is proposed to occur.
(g) Termination of Obligations. The obligations of the Company under
any provision of this Section 2.8 shall terminate and be of no further force and
effect to the extent that (i) compliance with such provision is not required
under the Small Business Investment Company Act of 1958 as amended, or the rules
and regulations of the SBA thereunder, or (ii) an Investor is no longer a SBIC
Investor.
2.11 Committees of the Board. As long as Apex is entitled to
-----------------------
designate one individual to serve as a member of the Board of Directors of the
Company, such Apex designee shall be a member of the Compensation Committee and
any executive committee of the Board of Directors of the Company. As long as
BankAmerica Ventures is entitled to designate one individual to serve as a
member of the Board of Directors of the Company, such BankAmerica Ventures
designee shall be a member of the Compensation Committee and shall have equal
consideration to be on all committees of the Board of Directors. The
Compensation Committee of the Board of Directors of the Company shall have no
more than four (4) members (the "Compensation Committee Members") and shall have
the power and authority to approve compensation-related matters with respect to
executive officers of the Company and to administer the Company's 1997 Stock
Plan and any other stock or option plan of the Company. Two (2) of the
Compensation Committee Members shall be outside directors.
3. Miscellaneous.
-------------
3.1 Successors and Assigns. Except as otherwise provided herein, the
----------------------
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties (including
transferees of any shares of Registrable Securities). Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed
-------------
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without reference to California conflict of laws provisions.
3.3 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.
18
3.4 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or
-------
permitted under this Agreement shall be given in writing and shall be deemed
effectively given upon personal delivery to the party to be notified or upon
deposit with the United States Post Office, by registered or certified mail,
postage prepaid and addressed to the party to be notified at the address
indicated for such party on the signature page hereof, or at such other address
as such party may designate by ten (10) days' advance written notice to the
other parties.
3.6 Expenses. If any action at law or in equity is necessary to
--------
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorneys' fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.7 Amendments and Waivers. (a) 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
a majority of the Registrable Securities then outstanding; provided, however,
that (i) in the event such amendment or waiver adversely affects the rights
and/or obligations of the Management Holders under this Agreement in a
different manner than the other Holders, such amendment or waiver
shall also require the written consent of a majority of the Common
Stock held by the Management Holders, (ii) Section 2.6 shall not be
amended or waived without the prior written consent of Xerox, (iii)
Section 1.1(f)(iii) shall not be amended or waived without the prior
written consent of a majority of the Registrable Securities held by
the Envoy Investors Common Stock pursuant to the Merger Agreement, and
Section 1.1(f) shall not be amended to remove the Series D Preferred
Stock from the definition of "Registrable Securities" without the
consent of a majority in interest of the Series D Preferred. Any
amendment or waiver effected in accordance with this paragraph shall
be binding upon each holder of any Registrable Securities then
outstanding, each future holder of all such Registrable Securities and
the Company.
(b) Notwithstanding anything to the contrary contained herein, if the
Company shall issue additional shares of its Series D Preferred Stock, any
purchaser of such shares of Series D Preferred Stock may become a party to this
Agreement by executing and delivering an additional counterpart signature page
to this Agreement and shall be deemed an "Investor" hereunder.
3.8 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, such provision shall be excluded
from this Agreement and the balance of the Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
19
3.9 Aggregation of Stock. All shares of Registrable Securities held
--------------------
or acquired by affiliated entities or persons shall be aggregated together for
the purpose of determining the availability of any rights under this Agreement.
3.10 Entire Agreement. This Agreement (including the Exhibits hereto,
----------------
if any) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof and thereof.
3.11 Termination of Prior Agreement. Upon the effectiveness of this
------------------------------
Agreement, the Prior Agreement shall terminate and be of no further force and
effect, and shall be superseded and replaced in its entirety by this Agreement.
20
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
COMPANY:
PLACEWARE, INC.
By: _________________________________________
βββββ βββββ ββββββ, President and
Chief Executive Officer
Address: βββ βββββ ββββββββ ββββββ
ββββββββ ββββ, ββ βββββ
SIGNATURE PAGE
FOURTH RESTATED INVESTORS' RIGHTS AGREEMENT
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
INVESTORS:
____________________________________
Print Name
By:_________________________________
Name:_______________________________
Title:______________________________
Address: ____________________________________
____________________________________
____________________________________
SIGNATURE PAGE
FOURTH RESTATED INVESTORS' RIGHTS AGREEMENT
Schedule A
Investors
---------
Bank of America Ventures
βββ βββββ ββββ
βββββ βββ
ββββββ ββββ, ββ βββββ
Attn: ββββ β'ββββββββ
BA Venture Partners V
βββ βββββ ββββ
βββββ βββ
ββββββ ββββ, ββ βββββ
Attn: ββββ β'ββββββββ
Trans Cosmos USA
βββ ββββ βββββββ βββββ
βββββ βββ
βββββββ ββββββ, ββ βββββ
Attn: Yasushi βββββββ
βββββββ Venture Partners, L.P.
ββββ ββββββ βββ.
ββββββββββ, ββ βββββ
Attn: ββββ ββββββββ
βββββββ Legacy Fund, L.P.
ββββ ββββββ βββ.
ββββββββββ, ββ βββββ
Attn: ββββ ββββββββ
Hewlett-Packard Company
ββββ βββββββ ββββββ
Mailstop 20BQ
ββββ ββββ, ββ βββββ
Attn: General Counsel
Apex Investment Fund III, L.P.
Suite 9600
βββ βββββ ββββββ βββββ
βββββββ, ββ βββββ
Apex Strategic Partners, LLC
Suite 9600
βββ βββββ ββββββ βββββ
βββββββ, ββ βββββ
A-1
InterWest Partners VI, L.P.
ββββ ββββ ββββ ββββ
ββββββββ β, βββββ βββ
βββββ ββββ, ββ βββββ
Attn: Flip ββββββ
InterWest Investors VI, L.P.
ββββ ββββ ββββ ββββ
ββββββββ β, βββββ βββ
βββββ ββββ, ββ βββββ
Attn: Flip ββββββ
Bay Partners SBIC, L.P.
βββββ βββββ ββ ββββ ββββ., #βββ
βββββββββ, ββ βββββ
Xerox Corporation
βββ ββββ βββββ ββββ
P. O. βββ ββββ
ββββββββ, ββ βββββ
Attn: βββββββ βββββββ
βββββ β. ββββββββ and ββββββββ β. ββββββββ,
Trustees of the ββββββββ Family Trust
U/D/T dated 7/30/91
ββ βββββββ ββ.
βββββ ββββ, ββ βββββ
ββββββββ Revocable Trust Dated 1/14/94
c/o βββββββ β. & βββ β. ββββββββ, Trustees
βββ ββββββββ ββββββ
βββ βββββ, ββ βββββ
Rekhi Family Trust Dated 12/15/89
c/o ββββββ β. βββββ & βββ β. βββββ, Trustees
βββββ ββββββββ ββββββ
βββββ ββββββ, ββ βββββ
βββ-βββ ββββ βββββ Trust Dated 12/15/89
ββββββββ βββββ Trust Dated 12/15/89
c/o ββββββββ ββββ, ββββββ β. βββββ & βββ β. βββββ, Trustees
βββββ ββββββββ ββββββ
βββββ ββββββ, ββ βββββ
Rekhi Family Trust, Created on June 17, 1992
A-2
c/o βββββββ ββββ βββββ βββββ & βββββββββ ββββ βββββ, Trustees
βββββ ββββββ βββββ
βββ βββββ, ββ βββββ
β.β. ββββ Co., Inc. as nominee 1996-48
c/o ββββββ ββββ
βββ ββββ ββββββ βββββ
ββββββ, ββ βββββ
βββββ β. β. ββββββ
βββ βββββ ββββ
ββββββββ, ββ βββββ
βββββββ Ventures, LLC
βββ βββββ βββ ββββββ
βββ βββββββββ, ββ βββββ
Attn: ββββ βββββββ
βββββββ Revocable Trust UTD 10/15/96
ββββ β. βββββββ Revocable Trust UTD 10/15/96
βββββββ βββββββ Trust
ββββ β. βββββββ, ββ. Trust
βββββββ βββ βββββββ Trust
ββββββ Trust
βββ βββββ βββ ββββββ
βββ βββββββββ, ββ βββββ
Attn: ββββ βββββββ
K. B. βββββββββββββ
c/o Exodus Communications, Inc.
ββββ βββ βββββ ββββββββββ
βββββ βββββ, ββ βββββ
Ayer Family Trust Dated 6/30/82
βββββββ β. ββββ
c/o βββββββ β. ββββ
ββββ ββββ ββββ ββββ, #β-βββ
βββββ ββββ, ββ βββββ
Goel Family Partnership
ββ βββββββββ βββββ
ββββββββ, ββ βββββ
ββββββ β. ββββ
ββββ ββββ ββββ
ββββββ, ββ βββββ
A-3
βββββββ β. ββββ
βββββ β.β. ββββ βββββ
ββββββββ, ββ βββββ
βββββ β. ββββββ
βββ ββββ ββββ ββββββ, #βββ
βββ ββββ, ββ βββββ
ββββ βββββββ βββββββ & βββββ βββββββ,
Trustees or successor trustee, under the
βββββββ family living trust u/a/d 2/19/87
βββ βββββ ββββ
ββββββββ, ββ βββββ
ββββββ β. βββββ
βββββ βββββββ βββββ
βββ βββββ βββββ, ββ βββββ
ββββββ β. and ββββ βββ βββββ Trust U/A DTD 10/15/91
βββ βββββ ββββββ, #β
βββ βββββββββ, ββ βββββ
ββββββββ β. ββββββ
Anjali Chopra
βββββ ββββββ βββββ
βββββββββ, ββ βββββ
Rajdak Investment LLC
βββ ββββββββ βββββ
βββ βββββ, ββ βββββ
βββββ βββββ ββββββ
βββββ βββββ ββββββββ ββββ
βββ βββββ βββββ, ββ βββββ
βββββββ/ββββββ Family Trust,
Dated 5/14/98
c/o ββββ βββββββ
βββββ ββββββββ ββββ
βββ βββββ βββββ, ββ βββββ
Comdisco, Inc.
c/o Comdisco Ventures Division
ββββ ββββ ββββ ββββ
ββββββββ β, βββββ βββ
βββββ ββββ, ββ βββββ
A-4
Invesco Private Capital
ββββ ββββββ ββ βββ ββββββββ
βββ ββββ, ββ βββββ
βββββββ β. ββββββββ
ββββ ββ ββββββββ ββββββ
ββββββββ, ββ βββββ
βββββ βββ
βββ βββββββββ ββββββ
ββββ ββββ, ββ βββββ
βββββββ β. ββββββ
βββββ ββββββ βββ βββββ
ββββ ββββββ, ββ βββββ
ββββββ Family Trust
ββββ ββ βββββ ββββββ
ββββββββ, ββ βββββ
ββββ βββββ
βββ βββββββ βββββ βββββ
ββββββββ, ββ βββββ
ββββββ β. βββββ
βββ ββββββββ βββββ
βββββββ ββββ, ββ βββββ
βββββββ-βββ, Inc.
Attn: ββββββ β. βββββββ
βββββ ββββ βββββ ββββ, βββββ β
ββββ, ββ βββββ
βββββββ βββββββ
ββββ ββ ββββββ ββββββ
ββββββββ, ββ βββββ
ββββ β. ββββββ
βββββ ββ βββββββ ββββ
βββββββββββ, ββ βββββ
βββββ Strategy Group, LLC
_________________________
_________________________
A-5
ββββββββ β. ββββββββββββ
βββ βββββ βββββ ββββ
βββββββββ, ββ βββββ
βββββββ β. ββββββββ
ββββ ββββ. βββββ
ββββββ ββββββ, ββ βββββ
ββββββ β. ββββββββ, ββ.
ββββ βββββ ββββ βββ
βββββ ββββ, ββ βββββ
ββββββ β. ββββββββ and βββββββ β.
ββββββββ 1989 Living Trust
ββββ ββ βββββββββ ββββ
ββββ ββββ, ββ βββββ
βββββ β. ββββββββ
Before July 7, 2000:
βββ ββββββββ βββ
βββββββ ββββ, ββ βββββ
Starting July 7, 2000:
ββββ βββββββββ ββββ
βββββββ, ββ βββββ
βββββ ββββββββ Miyaishi
βββββ ββββββ βββββββββ #βββ
βββββ β-β-ββ, ββββ ββββ
βββββ 520-2144
βββββββ β. ββββββββ
ββββ ββββββ ββββββ
βββββββ, ββ βββββ
First Executive LLC
Attn: ββββββ β. ββββ
βββββ ββ βββββ, βββββ βββ
βββββββββ, ββ βββββ
βββββ ββββββββββ
ββββ ββββββββββ βββββ
ββββ ββββ, ββ βββββ
βββββ ββββββββββ as Custodian
under the Uniform Transfer to
A-6
Minors Act FBO
ββββββ β. ββββββββββ
c/o βββββ ββββββββββ
ββββ ββββββββββ βββββ
ββββ ββββ, ββ βββββ
βββββ ββββββββββ as Custodian
under the Uniform Transfer to
Minors Act FBO
βββββββ β. ββββββββββ
c/o βββββ ββββββββββ
ββββ ββββββββββ βββββ
ββββ ββββ, ββ βββββ
ββββββββββ β. ββββββββββ
c/o βββββ ββββββββββ
ββββ ββββββββββ βββββ
ββββ ββββ, ββ βββββ
ββββββ Communications, LLC
Attn: βββββ ββββββ
ββ ββββββββ ββββββ
ββββ ββββββ, ββ βββββ
ββββββ βββββββ
ββββ βββββββ βββββββ
ββββ ββββ, ββ βββββ
βββββ ββββββ
βββββ βββββ ββββ ββ
ββββββ, ββ βββββ
ββββ ββββ
ββββ ββββββββ βββββ
ββββ ββββ, ββ βββββ
ββββββ β. ββββ
ββββ ββ βββββββββ ββββ
ββββ ββββ, ββ βββββ
ββββββ βββββ
ββββ ββββ βββββββ
βββββββββ, ββ βββββ
ββββ β. βββββββ
ββββ ββ ββββββ βββββ
β-β
ββββββββ, ββ βββββ
ββββββ β. βββββ and
βββββ β. βββββ, Joint Tenants
c/o PMB 86
βββ ββββββββββ ββββββ
βββββββ ββββ, ββ βββββ-ββββ
with copy to:
βββββ βββββββββ ββββ
ββββββββ, ββ βββββ
West End Partners, Inc.
βββ ββββββββ ββββββ
βββββ βββββββ, ββ βββββ
ββββ βββββββ
βββββ ββ βββββββ ββ.
βββββββββββ, ββ βββββ
ββββ ββββββββ
βββββ ββ βββββββ ββββββ
ββββββββ, ββ βββββ
ββββ ββββββββ
βββ ββββ ββββ ββββ
βββββ, ββ βββββ
ββββββββ Family Trust
ββββ β. ββββββββ, Trustee
ββββ βββββ βββββ βββ
ββββββ βββ βββ, ββ βββββ
ββββ β. ββββββββ
βββββ ββ βββββ ββββββ
ββββββ, ββ βββββ
ββββββ βββββββ
βββ βββββ ββββββ, #βββ
βββ βββββββββ, ββ βββββ
ββββββ ββββββββ
ββββ ββββ ββββββ
βββββββ, ββ βββββ
ββββββ β. ββ ββββββ
A-8
ββββ βββββββ βββββ
βββββ, ββ βββββ
ββββββββ β. ββββββ
βββββ ββ ββββ ββββββ
ββββββ, ββ βββββ
ββββ ββββ
ββββ ββ βββββ ββ.
ββββββββ, ββ βββββ
1998 ββββββββ Family Trust
βββ β βββββββββββ ββββ
ββββββββ ββββ, ββ βββββ
βββββ O'ββββ
βββββ ββββββββββ ββββ, ββ. βββ
ββββββββ, ββ βββββ
βββββ β. β'ββββ
βββββ ββββββββ βββ
ββββ ββββ, ββ βββββ
βββββββ β. β'ββββββ
and βββββββββ β'ββββββ
ββββ βββββββββ ββββ
ββββββββββββ, ββ βββββ
ββββββ βββββββββ
βββββ ββ ββββββ ββ.
ββββββββ, ββ βββββ
βββββββ and βββββ βββββ Trust
ββββ ββββββββββ ββ.
ββββββββ, ββ βββββ
TWB Investment Partnership
ββββ βββ ββββββ, βββββ ββββ
βββββββ, ββ βββββ
ββββ ββββββββ
βββββ βββββ ββ.
ββββ ββββββ, ββ βββββ
A-9
Schedule B
Management Holders
------------------
βββββββ β. βββββ
ββββ ββββββ βββββ
βββ βββββ, ββ βββββ-ββββ
βββββ ββββββ
βββββ βββ βββββββ
βββ βββββ βββββ, ββ βββββ
βββββββ β. βββββ
ββββ βββββββ ββββββ
ββββ ββββ, ββ βββββ
ββββββ β. ββββββββ
ββββ βββββ βββββ
βββ ββββ, ββ βββββ
βββββ β. βββββββ
ββββ ββββ ββββββ
ββββββββ ββββ, ββ βββββ
The βββββββ β. and βββββ β. βββββ
Family Trust Dated May 14, 1993
βββ βββββββββββ
βββββββ ββββββ, ββ βββββ
ββββββββ Revocable Trust Dated 1/14/94
c/o βββββββ β. & βββ β. ββββββββ, Trustees
βββ ββββββββ ββββββ
βββ βββββ, ββ βββββ
Rekhi Family Trust Dated 12/15/89
c/o ββββββ β. βββββ & βββ β. βββββ, Trustees
βββββ ββββββββ ββββββ
βββββ ββββββ, ββ βββββ
B-1