Exhibit 10.4
AVESTA TECHNOLOGIES, INC.
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This Third Amended and Restated Investor Rights Agreement (this
"Agreement") is made as of July 13, 1999 by and among Avesta Technologies, Inc.,
a Delaware corporation (the "Company"), and the individuals and entities named
as Investors on the signature page(s) hereof (the "Investors").
WHEREAS, certain of the Investors (collectively, the "Series A Investors")
entered into that certain Series A Preferred Stock and Warrant Purchase
Agreement, dated December 10, 1996 (as amended, the "Series A Purchase
Agreement"), pursuant to which the Company issued and sold to the Series A
Investors shares of the Company's Series A Preferred Stock, par value $0.01 per
share;
WHEREAS, concurrently with the execution and delivery of the Series A
Purchase Agreement, the Company and the Series A Investors entered into that
certain Investor Rights Agreement, dated as of December 10, 1996 (the "Investor
Rights Agreement");
WHEREAS, certain of the Investors (collectively, the "Series B Investors,"
entered into that certain Series B Preferred Stock Purchase Agreement, dated
March 19, 1998 (the "Series B Purchase Agreement"), pursuant to which the
Company issued and sold to the Series B Investors shares of the Company's Series
B Preferred Stock, par value $0.01 per share;
WHEREAS, concurrently with the execution and delivery of the Series B
Purchase Agreement, the Company, the Series A Investors and the Series B
Investors entered into that certain Amended and Restated Investor Rights
Agreement, dated as of March 19, 1998 (the "Amended and Restated Investor Rights
Agreement");
WHEREAS, certain of the Investors (collectively, the "Series C Investors"
and together with the Series A Investors and the Series B Investors, the
"Existing Investors") entered into that certain Series C Preferred Stock
Purchase Agreement (the "Series C Purchase Agreement"), dated January 4, 1999,
pursuant to which the Company issued and sold to the Series C Investors
2,688,951 shares of the Company's Series C Preferred Stock, $0.01 par value per
share (the "Series C Stock") and warrants to purchase 407,384 shares of Series C
Stock (the "Series C Warrants");
WHEREAS, on the date hereof, the Company and certain of the Investors
(collectively, the "Series D Investors") are entering into that certain Series D
Preferred Stock Purchase Agreement (the "Series D Purchase Agreement"), pursuant
to which the Company is authorized to issue and sell to the Series D Investors
(i) an aggregate of up to 1,800,000 shares of the Company's Series D Preferred
Stock, $0.01 par value per share (the "Series D Stock", and together with the
Series A Preferred Stock, the Series B Preferred Stock, and the Series C
Preferred Stock, the "Preferred Stock"), at one of more closings to be held on
or prior to thirty (30) days from the date hereof (the "Closings").
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EXHIBIT 10.4
WHEREAS, it is a condition to the closing of the transactions contemplated
by the Series D Purchase Agreement that the Company and the Investors enter into
this Agreement to, among other things, amend and restate the rights granted to
the Existing Investors pursuant to the Second Amended and Restated Investors'
Rights Agreement in order to provide the Series D Investors with certain
registration rights, information rights and other rights in connection with the
Investors' ownership of shares of the Company's Preferred Stock (and the
Conversion Shares (as hereinafter defined) into which such shares of Preferred
Stock are convertible);
WHEREAS, pursuant to Section 4.4 of the Second Amended and Restated
Investor Rights Agreement, the Second Amended and Restated Investor Rights
Agreement may be amended, waived, discharged or terminated by the holders of a
majority of the Shares (as such term was defined in the Second Amended and
Restated Investor Rights Agreement) (as adjusted for stock splits, stock
dividends and similar events), with the prior written consent of the Company;
and
WHEREAS, by entering into this Agreement, the Company, and the holders of
a majority of the Shares (as such term was defined in the Second Amended and
Restated Investor Rights Agreement) (as adjusted for stock splits, stock
dividends and similar events), hereby consent to amending the Second Amended and
Restated Investor Rights Agreement in the manner set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
set forth herein, the Company and the Investors agree as follows:
SECTION 1
Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
a. "Acquisition" shall mean (i) a transaction in which the Company
is consolidated with or acquired by another entity in a merger or other
reorganization in which the holders of the outstanding voting stock of the
Company immediately preceding the consummation of such transaction, shall,
immediately following such transaction, hold, as a group, less than a majority
of the voting securities of the surviving or successor entity or (ii) the sale
of all or substantially all of the Company's assets.
b. "Conversion Shares" shall mean the shares of Common Stock issued
or issuable upon conversion of the Preferred Stock.
c. "Holder" shall mean any Investor holding Registrable Securities
and any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.
d. "Initiating Holders" shall mean any Holder or Holders holding, in
the aggregate, not less than thirty-five percent (35%) of the Shares (as
appropriately adjusted for
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EXHIBIT 10.4
stock splits, stock dividends, recapitalizations, consolidations, merger and
similar events) purchased by all of the Investors.
e. "Registrable Securities" shall mean (i) the Shares and (ii) the
Common Stock issued in respect to the Shares upon any stock split, stock
dividend, recapitalization, substitution or similar event.
f. "Register" The terms "register," "registered" and "registration"
refer to a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the declaration or ordering
of the effectiveness of such registration statement.
g. "Registration Expenses" shall mean all expenses, except as
otherwise stated below, incurred by the Company in complying with Sections 1.5,
1.6 and 1.7 hereof, including, without limitation, all registration,
qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding (i) the compensation of regular employees of the Company which
shall be paid in any event by the Company, (ii) fees and disbursements of
Counsel to the Holders, (iii) Selling Expenses and (iv) the expense of any
special audits incident to or required by a registration pursuant to Section 1.5
or 1.7 hereof).
h. "Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 hereof.
i. "Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor thereto, including the rules and regulations
promulgated thereunder or pursuant thereto.
j. "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders.
k. "Series A Preferred" shall mean the Company's Series A Preferred
Stock, par value $0.01 per share.
l. "Series B Preferred" shall mean the Company's Series B Preferred
Stock, par value $0.01 per share.
m. "Series C Preferred" shall mean the Company's Series C Preferred
Stock, par value $0.01 per share.
n. "Series D Preferred" shall mean the Company's Series D Preferred
Stock, par value $0.01 per shares.
o. "Shares" shall mean shares held by any Investor including (i)
shares of Common Stock, (ii) shares of Common Stock issuable upon the exercise
of any options or warrants for Common Stock, (iii) shares of Common Stock
issuable upon the conversion of Preferred Shares, (iv) shares of Common Stock
issued or issuable upon exercise of any
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EXHIBIT 10.4
warrants for shares of Series A Preferred, (v) shares of Common Stock issued or
issuable upon conversion of any shares of Series B Preferred or issued or
issuable upon exercise of any warrants for shares of Series B Preferred, or (vi)
shares of Common Stock issued or issuable upon conversion of any shares of
Series C Preferred issued or issuable upon exercise of any warrants for shares
of Series C Preferred; provided, however, that solely for purposes of Section
1.6 hereunder, the shares of Common Stock issuable upon the exercise of a
warrant previously issued to Transamerica Corporation shall be deemed "Shares".
The term "Shares" shall not include (a) any shares of Common Stock which have
been previously registered, (b) shares of Common Stock which have been
previously sold to the public, or sold pursuant to an exemption from
registration under the Securities Act, (c) securities which would otherwise be
Registrable Securities held by an Investor who is then permitted to sell all of
such securities pursuant to Rule 144(k) under the Securities Act (provided, that
with respect to Section 1.6 (Company Registration), until December 31, 2002, the
term Registrable Securities shall include securities held by an Investor who is
then permitted to sell all of such shares pursuant to Rule 144(k) under the
Securities Act), or (d) shares of Common Stock which may be sold pursuant to an
effective Registration Statement on Form S-8, or any successor form.
1.2 Restrictions on Transferability. The Restricted Securities shall
not be sold, assigned, transferred or pledged (other than (i) under
circumstances pursuant to Sections 1.5, 1.6 and 1.7 of this Agreement, (ii) a
transfer not involving a change in beneficial ownership, (iii) in transactions
involving the distribution without consideration of Restricted Securities by any
of the Investors to any of its partners or stockholders, or retired partners or
stockholders, or to the estate of any of its partners or stockholders or retired
partners or stockholders, so long as each such transferee agrees in writing to
be bound by the terms of this Agreement or (iv) a transfer made pursuant to Rule
144 or Rule 145 promulgated pursuant to the Securities Act) except upon the
conditions specified in this Agreement, which conditions are intended to ensure
compliance with the provisions of the Securities Act. Each Investor will cause
any proposed Investor, assignee, transferee, or pledgee of the Restricted
Securities held by such Investor to agree to take and hold such securities
subject to the provisions and upon the conditions specified in this Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the Shares
and the Preferred Shares and (ii) any other securities issued in respect of the
Shares or the Preferred Shares upon any stock split, stock dividend,
recapitalization, merger, consolidation or similar event shall (unless otherwise
permitted by the provisions of Section 1.4 below) be stamped or otherwise
imprinted with the following legend or legends to the following effect (in
addition to any legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF COUNSEL
REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT
FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT.
COPIES OF THE AGREEMENTS COVERING THE PURCHASE
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EXHIBIT 10.4
OF THESE SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO COST
BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
CLERK OF THE COMPANY AT THE PRINCIPAL EXECUTIVE OFFICES OF THE COMPANY."
Each Investor consents to the Company making a notation on its records and
giving instructions to any transfer agent of the Restricted Securities to
implement the restrictions on transfer established in this Agreement.
1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 1.4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i)
under circumstances pursuant to Sections 1.5, 1.6 and 1.7 of this Agreement,
(ii) a transfer not involving a change in beneficial ownership, (iii) in
transactions involving the distribution without consideration of Restricted
Securities by any of the Investors to any of its partners or stockholders, or
retired partners or stockholders, or to the estate of any of its partners or
stockholders or retired partners or stockholders, so long as each such
transferee agrees in writing to be bound by the terms of this Agreement or (iv)
a transfer made pursuant to Rule 144 or Rule 145 promulgated pursuant to the
Securities Act), unless there is in effect a registration statement under the
Securities Act covering the proposed transfer, the holder thereof shall give
written notice to the Company of such holder's intention to effect such
transfer, sale, assignment or pledge. Each such notice shall describe the manner
and circumstances of the proposed transfer, sale, assignment or pledge in
sufficient detail, and shall be accompanied, at such holder's expense, by either
(x) an unqualified written opinion of legal counsel who shall be, and whose
legal opinion shall be, reasonably satisfactory to the Company and addressed to
the Company, to the effect that the proposed transfer of the Restricted
Securities may be effected without registration under the Securities Act, or (y)
a "no action" letter from the Securities and Exchange Commission (the "SEC") to
the effect that the transfer of such securities without registration will not
result in a recommendation by the staff of the SEC that action be taken with
respect thereto, whereupon the holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by the holder to the Company. Each certificate evidencing
the Restricted Securities transferred as above provided shall bear, unless such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 1.3 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such holder and the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act.
1.5 Requested Registration.
a. Notice of Registration; Registration. In case the Company shall
receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance (other than a registration on Form S-3
or any successor form) with respect to, at least thirty percent (30%) of the
Registrable Securities or at least the number of shares of Registrable
Securities that would reasonably be expected to provide aggregate proceeds, net
of underwriting discounts and commissions, to the Initiating Holders of more
than $10,000,000, the Company will:
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EXHIBIT 10.4
i promptly give written notice of the proposed registration to all
other Holders; and
ii as soon as practicable, use its reasonable efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act) as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any 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 that the Company shall use reasonable
commercial efforts to effect such registration within ninety (90) days of the
receipt of such request; and provided, further, that the Company shall NOT be
obligated to take any action to effect any such registration, qualification or
compliance pursuant to this Section 1.5:
(1) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;
(2) Prior to the earlier of December 31, 2001, or the date six
months following the effective date of the registration statement pertaining to
the first underwritten firm commitment public offering of securities of the
Company for its own account (other than a registration relating solely to a SEC
Rule 145 transaction or a registration relating solely to employee benefit
plans) at a public offering price of at least $8.25 per share (as adjusted for
stock splits, stock dividends, reclassifications, and like events) and in which
the gross aggregate proceeds received by the Company in such offering equal or
exceed $15,000,000;
(3) After the Company has effected two (2) registrations
pursuant to this Section 1.5 and such registrations have been declared or
ordered effective and the securities offered pursuant to such registration have
been sold; or
(4) If at the time of the request to register Registrable
Securities the Company gives notice within thirty (30) days of such request that
it is engaged or has fixed plans to engage within sixty (60) days of the time of
the request in a firmly underwritten registered public offering as to which the
Holders may include Registrable Securities pursuant to Section 1.5, 1.6 or 1.7
hereof.
Subject to the foregoing clauses (1) through (4) and to Section 1.5(c),
the Company shall file a registration statement covering the Registrable
Securities so requested to be registered as soon as practicable after receipt of
the request of the Initiating Holders.
b. Underwriting. If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so
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EXHIBIT 10.4
advise the Company as a part of their request made pursuant to Section 1.5 and
the Company shall include such information in the written notice referred to in
Section 1.5(a). The right of any Holder to registration pursuant to Section 1.5
shall be conditioned upon such Holder's participation in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting to the
extent requested (unless otherwise mutually agreed by a majority in interest of
the Initiating Holders and such Holder) to the extent provided herein.
The Company shall (together with all Initiating Holders and such other
Holders proposing to distribute their securities through such underwriting)
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected by the Company. Notwithstanding any other provision of
this Section 1.5, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten and so advises the
Initiating Holders in writing, then the Initiating Holders shall so advise all
Holders (except those Holders who have indicated to the Company their decision
not to distribute any of their Registrable Securities through such underwriting)
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all such Holders in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities owned by such Holders at the time of filing the registration
statement. All shares of Common Stock held by stockholders other than the
Holders shall be excluded from registration prior to exclusion of any
Registrable Securities. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration.
If any Holder disapproves of the terms of the underwriting, such person
may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. The Registrable Securities and/or other
securities so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable
Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportions used above in determining the
underwriter limitation.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account or the
account of others in such registration if the underwriter so agrees and if the
number of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited.
▇. ▇▇▇▇▇ of Registration. If the Company shall furnish to the
Initiating 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 not be in the best interests of the Company and its stockholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore appropriate to defer the filing of such
registration statement, then the Company may direct that such request for
registration be delayed for a period not in excess of ninety (90) days, such
right to delay a request to be exercised by the Company not more than twice in
any twelve (12) month period.
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EXHIBIT 10.4
1.6. Company Registration.
a. Notice of Registration. If at any time or from time to time the
Company shall determine to register any of its equity securities, either for its
own account or the account of a security holder or holders, other than (x) a
registration relating solely to employee benefit plans, or (y) a registration
relating solely to a Rule 145 transaction, the Company will:
i promptly give to each Holder written notice thereof; and
ii 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 or
requests, made within twenty (20) days after receipt of such written notice from
the Company, by any Holder.
b. Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to this Section 1.6 shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of Registrable
Securities in the underwriting to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
(together with the Company and the other holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 1.6, if in the
Company's initial registered public offering the managing underwriter determines
that marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration. The managing underwriter may apply the same
limitation for subsequent registered public offerings; PROVIDED, that, such
limitation shall not reduce the number of shares of Registrable Securities to
less than twenty-five percent (25%) of all shares registered in the second
registered public offering of the Company's or subsequent registered public
offerings of the Company's securities. All shares of Common Stock held by
stockholders other than the Holders shall be excluded from registration prior to
exclusion of any Registrable Securities. The Company shall so advise all Holders
and other holders distributing their securities through such underwriting and
the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders and such
other holders in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities held by such Holders and such other holders at the
time of filing the registration statement. To facilitate the allocation of
shares in accordance with the above provisions, the Company may round the number
of shares allocated to any Holder or holder to the nearest one hundred (100)
shares. If any Holder or holder disapproves of the terms of any such
underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter.
c. Right to Terminate Registration. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 1.6
prior to the
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EXHIBIT 10.4
effectiveness of such registration whether or not any Holder has elected to
include securities in such registration.
1.7. Registration on Form S-3.
a. If any Holder or Holders request that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which, gross of underwriting
discounts and commissions, would exceed $500,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its reasonable commercial efforts to
cause such Registrable Securities to be registered for the offering on such form
and to cause such Registrable Securities to be qualified in such jurisdictions
as the Holder or Holders may reasonably request; provided, however, that the
Company shall not be required to effect more than two registrations pursuant to
this Section 1.7 in any twelve (12) month period; provided that the Company
shall use reasonable commercial efforts to file such registration statement
within forty-five (45) days after such request and shall use reasonable
commercial efforts to obtain effectiveness of such registration statement within
ninety (90) days of the filing of such registration statement. The substantive
provisions of Section 1.6(b) shall be applicable to each underwritten
registration initiated under this Section 1.7.
b. Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) if the Company, within
ten (10) days of the receipt of the request of the initiating Holders, gives
notice of its bona fide intention to effect the filing of a registration
statement with the SEC within ninety (90) days of receipt of such request in
which such Holders can exercise their rights pursuant to Section 1.6 hereof; or
(iii) during the period starting with the date sixty (60) days prior to the
Company's estimated date of filing of, and ending on the date one hundred twenty
(120) days immediately following, the effective date of any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective.
1.8. Limitations on Subsequent Registration Rights. From and after the
date of this Agreement the Company shall not, without the consent of Holders of
a majority of the Registrable Securities, enter into any agreement granting any
holder or prospective holder of any securities of the Company registration
rights with respect to such securities on parity with or superior to those
granted under this Agreement.
1.9. Expenses of Registration. All Registration Expenses incurred in
connection with all registrations pursuant to Sections 1.5, 1.6 and 1.7 shall be
borne by the Company. Unless otherwise agreed, all Selling Expenses relating to
securities registered on behalf of the Holders shall be borne by the Holders of
such securities pro rata on the basis of the number of shares so registered.
Notwithstanding anything in this Section to the contrary, if the Company
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EXHIBIT 10.4
and/or others include securities for their own account pursuant to Section
1.6(b), then the Company and such others shall bear their pro rata share of the
Registration Expenses and Selling Expenses. In connection with any registration
pursuant to Sections 1.5 and 1.6, the Company will pay fees and disbursements of
one counsel on behalf of the participating Holders incurred in so representing
such participating Holders; PROVIDED that the Company shall not be obligated to
pay such counsel's fees and disbursements exceeding $50,000 in the case of an
underwritten offering or $15,000 in the case of any other offering. All fees and
disbursements of any other counsel to any Holder in connection with any
registration pursuant to Sections 1.5, 1.6 and 1.7 shall be paid by such Holder.
1.10. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
a. Prepare and file with the SEC a registration statement with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for at least one hundred twenty (120)
days or until the distribution described in the registration statement has been
completed; and
b. Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities and such other information
necessary to allow the Holders participating in such registration to remain
reasonably informed about the public offering.
c. Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective for a period of
not less than 120 days or such shorter period in which the disposition of all
securities in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement shall be completed,
and to comply with the provisions of the Securities Act (to the extent
applicable to the Company) with respect to such dispositions;
d. Use its reasonable commercial efforts to register or qualify such
Registrable Securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as any Holder participating in
such registration reasonable requests, and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Holder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Holder, except that the Company will not for any purpose be
required to qualify generally to do business as a foreign corporation in any
jurisdiction wherein it would not, but for the requirements of this Section
1.10(d) be obligated to be qualified, to subject itself to taxation in any such
jurisdiction, or to consent to general service of process in any such
jurisdiction;
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EXHIBIT 10.4
e. Provide a transfer agent and registrar for all such Registrable
Securities covered by such registration statement not later than the effective
date of such registration statement;
f. Notify each Holder participating in such registration, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
an untrue statement of a material fact or omit to state any fact required to be
stated therein or necessary to make the statements therein not misleading;
g. Use its reasonable commercial efforts to cause all such
Registrable Securities to be listed on each securities exchange on which similar
securities issued by the Company are then listed;
h. Use its reasonable commercial efforts to obtain a cold comfort
letter from the Company's independent public accountants in customary form and
covering such matters of the type customarily covered by cold comfort letters in
such transactions;
i. Enter into such customary agreements (including an underwriting
agreement in customary form) and take all such other actions as reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities;
1.11. Indemnification.
a. The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or 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, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such under-writer and each person who controls any such underwriter, for
any legal and any other expenses reasonably incurred as such expenses are
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action,
11
EXHIBIT 10.4
provided 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 on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of such Holder, controlling person or underwriter and
stated to be specifically for use therein.
b. Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, 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 Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on 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, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred as such
expenses are 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 statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such Holder. Notwithstanding the foregoing, the liability of each Holder under
this Section 1.11(b) shall be limited to an amount equal to the aggregate
proceeds received by such Holder from the sale of Registrable Securities
hereunder.
c. Each party entitled to indemnification under this Section 1.11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved in writing by the Indemnified Party (whose approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense, and provided further that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Agreement unless the failure to
give such notice is materially prejudicial to an Indemnifying Party's ability to
defend such action and provided further, that the Indemnifying Party shall not
assume the defense for matters as to which there is a conflict of interest or
separate and different defenses. No Indemnifying Party, in the defense of any
such claim or litigation, shall, except with the written consent of each
Indemnified Party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term the release of the Indemnified
Party by the claimant or plaintiff from all liability in respect to such claim
or litigation.
12
EXHIBIT 10.4
1.12. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
1.13. Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC which may at any time permit the sale
of the Restricted Securities to the public without registration, after such time
as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:
a. Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date on which the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended, or any similar federal statute and the rules and regulations
promulgated thereunder, all as the same shall be in effect at the time (the
"Exchange Act");
b. Use its reasonable commercial efforts to file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements);
c. So long as an Investor owns any Restricted Securities to furnish
to the Investor forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
of the Company and other information in the possession of or reasonably
obtainable by the Company as an Investor may reasonably request in availing
itself of any rule or regulation of the SEC allowing an Investor to sell any
such securities without registration.
1.14. No Action Letter or Opinion of Counsel in Lieu of Registration.
Notwithstanding anything in this Agreement to the contrary, if at any time after
the date of the Company's initial public offering of its securities under the
Securities Act, the Company shall have obtained from the SEC a "no action"
letter in which the SEC has indicated that it will take no action if, without
registration under the Securities Act, any Investor disposes of Registrable
Securities covered by any request for registration made under this Agreement in
the manner in which such Investor proposes to dispose of the Registrable
Securities included in such request, or if in the opinion of counsel to the
Company concurred in by counsel for such Investor no registration under the
Securities Act is required in connection with such disposition, the Registrable
Securities included in such request shall not be eligible for registration under
this Agreement; provided, however, with respect to any Investor who may be
deemed to be an "affiliate," as that term is defined under Rule 144, if,
notwithstanding the opinion of such counsel, the Holder is unable to dispose of
all of the Registrable Securities included in his request in the manner in which
such Investor proposes without registration, the
13
EXHIBIT 10.4
Registrable Securities included in such request shall be eligible for
registration under this Agreement.
SECTION II
Participation Rights
2.1. Right of Participation. The Company hereby grants to each Investor
the right to purchase, pro rata, all or any part of New Securities (as defined
in Section 2.2) which the Company may, from time to time, propose to sell and
issue. A "pro rata share" for purposes of this participation right is the
quotient obtained by dividing (a) the sum of (i) the total number of shares of
Common Stock or options or warrants to purchase Common Stock then held by such
Investor prior to the sale and issue of the New Securities, plus (ii) the total
number of shares of Common Stock issuable upon conversion or exercise of the
Series A Preferred, Series B Preferred, Series C Preferred, Series D Preferred
or any option or warrant to purchase Preferred Stock then held by such Investor
by (b) the sum of (i) the total number of shares of Common Stock then
outstanding plus (ii) the total number of shares of Common Stock issuable upon
conversion or exercise of all then outstanding Series A Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and (iii) options or warrants
to purchase Common Stock and Preferred Stock.
2.2. New Securities. Except as set forth below, "New Securities" shall
mean any shares of capital stock of the Company, including Common Stock and
Preferred Stock, whether now authorized or not, and rights, options or warrants
to purchase said shares of capital stock, and securities of any type whatsoever
that are, or may become, convertible into said shares of capital stock.
Notwithstanding the foregoing, "New Securities" does not include:
(i) securities offered to the public generally pursuant to an
underwritten registration statement under the Securities Act,
(ii) securities issued pursuant to the acquisition of another
corporation by the Company by merger, purchase of substantially all of the
assets or other reorganization whereby the Company or its stockholders own
at least fifty percent (50%) of the voting power of the surviving or
successor corporation,
(iii) (a) shares of the Company's Common Stock or outstanding
options exercisable for the purchase of Common Stock issued to employees,
officers and directors of, and consultants and franchisees to, the
Company, pursuant to the Company's 1996 Stock Plan (as hereinafter
defined) as in effect on the date hereof or any incentive program approved
by the Board of Directors of the Company, including at least one director
elected by the holders of Preferred Shares, and (b) shares of the
Company's Common Stock reserved for issuance under the Company's 1996
Stock Plan as in effect on the date hereof or any incentive program
approved by the Board of Directors of the Company, including at least one
director elected by the holders of Preferred Shares;
14
EXHIBIT 10.4
(iv) stock issued pursuant to the exercise of any rights or
agreements including, without limitation, convertible securities, options
and warrants, provided that the rights of participation established by
Section 2.1 shall apply with respect to the initial sale or grant by the
Company of such rights or agreements,
(v) stock issued in connection with any stock split, stock dividend
or recapitalization by the Company.
2.3. Notice. In the event that the Company proposes to undertake an
issuance of New Securities, it shall give each Investor written notice of its
intention, describing the type of New Securities, and the price and terms upon
which the Company proposes to issue the same. Each Investor shall have fifteen
(15) days from the date of receipt of any such notice to agree to purchase up to
its respective pro rata share of such New Securities for the price and upon the
terms specified in the notice by giving written notice to the Company and
stating therein the quantity of New Securities to be purchased.
2.4. Exercise of Right. In the event that an Investor fails to exercise
the participation right within said fifteen (15) day period, the Company shall
have thirty (30) days thereafter to sell or enter into an agreement (pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within thirty (30) days from the date of said agreement) to sell the New
Securities not elected to be purchased by such Investors at the price and upon
terms no more favorable to the purchasers of such securities than specified in
the Company's notice. In the event that the Company has not sold the New
Securities or entered into an agreement to sell the New Securities within said
thirty (30) day period (or sold and issued New Securities in accordance with the
foregoing within thirty (30) days from the date of said agreement); the Company
shall not thereafter issue or sell any New Securities without first offering
such securities in the manner provided above.
SECTION III
Additional Covenants
The Company and each Investor hereby covenant and agree as follows:
3.1. Financial Information.
a. The Company will deliver to each Investor that owns (together
with any partner, member, fund or other affiliates of such Investor) at least
100,000 shares (as adjusted for stock splits, stock dividends and similar
events), as soon as practicable after the end of each fiscal year, and in any
event within 120 days thereafter, audited consolidated balance sheets of the
Company and any subsidiaries as of the end of such fiscal year, and consolidated
statements of income and stockholders equity and consolidated statements of cash
flows of the Company and any subsidiaries for such year, prepared in accordance
with generally accepted accounting principles and accompanied by a report of an
independent certified public accountant of national standing selected by the
Company.
15
EXHIBIT 10.4
b. The Company will deliver to each Investor that owns (together
with any partner, member, fund or other affiliates of such Investor) at least
100,000 (as adjusted for stock splits, stock dividends, and similar events) the
following reports:
i As soon as practicable after the end of each quarter within
each fiscal year of the Company, and in any event within 45 days thereafter, a
consolidated balance sheet of the Company and any subsidiaries as of the end of
each such quarter, and consolidated statements of income of the Company and any
subsidiaries for such period and for the then current fiscal year to date,
prepared in accordance with generally accepted accounting principles (other than
for accompanying notes), subject to changes resulting from year-end audit
adjustments, and signed by the principal financial or accounting officer of the
Company; and
ii As soon as it is available, but in no event later than
thirty (30) days prior to the beginning of the Company's fiscal year, the annual
operating plans, including monthly projected financials for that fiscal year, of
the Company for the succeeding fiscal year, as approved by the Company's Board
of Directors; and
iii As soon as practicable after the end of each month, and in
any event within three weeks after the end of each month, updates to the monthly
projected financials for the current fiscal year; monthly projected backlog
schedules; monthly updates of significant contracts or accounts; a consolidated
balance sheet of the Company and any subsidiaries as of the end of each such
month; and consolidated statements of income of the Company and any subsidiaries
for such period and for the then current fiscal year to date, all prepared in
accordance with generally accepted accounting principles (other than for
accompanying notes), subject to changes resulting from year-end audit
adjustments, and signed by the principal financial or accounting officer of the
Company.
c. As long as Investor (together with any partner, member, fund or
other affiliates of such Investor) holds not less than 100,000 Shares (as
adjusted for any stock dividends, stock splits or similar events), the Company
shall permit each such Investor, at such Investor's expense, to visit and
inspect the Company's properties, to examine its books of account and records
(including Board of Directors and stockholder meeting minutes) and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by such Investor; provided, however, that
the Company shall not be obligated pursuant to this Section 3.1(c) to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
3.2. Confidential Information. Each Investor agrees that any information
obtained by such Investor pursuant to this Agreement which is, or would
reasonably be perceived to be, proprietary to the Company or otherwise
confidential will not be disclosed without the prior written consent of the
Company. Notwithstanding the foregoing, each Investor may disclose such
information, on a need to know basis, to its employees, accountants or
attorneys, or to the employees, accountants or attorneys of its general partner
or investment manager (so long as each such person to whom confidential
information is disclosed agrees to keep such information confidential), in
compliance with a court order or when otherwise necessary to enforce any of
Investor's rights hereunder. Such information may also be disclosed to an
16
EXHIBIT 10.4
Investor's limited partners or stockholders (so long as each such person to whom
confidential information is disclosed agrees to keep such information
confidential). Each Investor further acknowledges and understands that any
information will not be utilized by such Investor in connection with purchases
and/or sales of the Company's securities except in compliance with applicable
state and federal antifraud statutes.
3.3. Board of Directors. The Company agrees that it will pay the
reasonable expenses incurred by the directors designated by the holders of the
Series A Preferred, the Series B Preferred and the Series D Preferred (the
"Preferred Directors") while traveling on the Company's behalf, including
without limitation those expenses incurred while attending meetings of the Board
of Directors or committees thereof. The Company agrees that it will pay the
reasonable expenses incurred by the observer appointed by Pilgrim ▇▇▇▇▇▇ Hybrid
Partners I, L.P. on behalf of the Series C Preferred (the "Series C Observer")
while traveling on the Company's behalf, including without limitation those
expenses incurred while attending meetings of the Board of Directors or
committees thereof. The Investors agree that, where appropriate, each Preferred
Director and the Series C Observer will allocate travel expenses among the
Company and the other portfolio companies of the Investor affiliated with such
Preferred Director and Series C Observer.
3.4. Key-Man Life Insurance. The Company shall acquire and maintain a
key-man life insurance policy in the face amount of not less than $2,000,000
with respect to ▇▇▇ ▇▇▇▇▇, with the Company as the beneficiary of such policy.
3.5. Nondisclosure and Development Agreement; Noncompetition and
Nonsolicitation Agreement. The Company has caused each of its current employees
and will cause each of its future employees and consultants to enter into a
Nondisclosure and Development Agreement with the Company in substance as set
forth in an exhibit to the Series C Purchase Agreement. The Company has caused
each of its current key employees and will cause each of its future key
employees (as determined in good faith by the Board of Directors of the Company
or senior members of the Company's management designated by the Board of
Directors of the Company) to enter into Noncompetition and Nonsolicitation
Agreement with the Company in substance as set forth in an exhibit to the Series
C Purchase Agreement.
3.6. Stock Options.
a. The Company will maintain a stock option plan in the form of
Exhibit A hereto ( the "1996 Stock Plan").
b. The Company agrees that stock options granted to employees and
consultants of the Company will be subject to vesting, conditioned upon the
employee's continued employment or consulting relationship with the Company, at
the rate of 25% of the shares subject to each option on the first anniversary
date of employment or consulting and 1/48 of the shares subject to such option
at the end of each month thereafter.
c. The Company agrees that it shall not accelerate the vesting of
stock options granted by the Company or restricted stock issued by the Company
upon any event unless the Board of Directors, including at least one director
elected by the holders of
17
EXHIBIT 10.4
Preferred Stock, affirmatively resolve at the time of such acceleration that
such acceleration shall occur, provided, however, that stock option agreements
and restricted stock agreements for officers of the Company and key employees of
the Company as determined by the Board of Directors, including at least one
director elected by the holders of Preferred Shares, may provide for automatic
partial acceleration of the option or the lapsing of restrictions on disposition
as if such officer or employee had been employed by the Company for an
additional twelve months upon the following events: (1) a termination of the
employee by the Company that is not For Cause (as defined in EXHIBIT J to the
Series C Purchase Agreement) or is without Cause (as defined any of the forms of
Stock Option Agreements attached as exhibits to EXHIBIT A hereto) or (2) an
Acquisition of the Company.
3.7. Termination; Assignment of Rights to Financial Information.
The covenants set forth in Sections II and III shall terminate and be of no
further force or effect at such time as the Company is required to file reports
pursuant to Section 13 or 15(d) of the Exchange Act.
3.8. Standoff Agreement. Each Investor agrees, in connection with the
initial underwritten public offering of the Company's securities pursuant to an
effective registration statement under the Securities Act and in connection with
the first underwritten public offering of the Company's securities which may
occur thereafter, upon request of the Company or the underwriters managing such
underwritten offerings, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any securities of the
Company (other than those included in the registration) without the prior
written consent of the Company or such underwriters, as the case may be, for
such period of time (not to exceed one hundred eighty (180) days) from the
effective date of such registration as may be requested by the underwriters;
PROVIDED that each officer and director of the Company (and affiliates of each
such officer and director) is similarly bound and the Company uses reasonable
efforts to obtain a similar covenant from holders of at least one percent (1%)
of the Company's outstanding securities.
3.9. Maintain Rights. The Company will, at all times, maintain and
preserve its corporate existence and all permits, rights and franchises material
to the conduct of its business in full force and effect and adequate for its
business as presently conducted. The Company will qualify, and will cause any
subsidiary of the Company to qualify to do business as a foreign corporation in
any jurisdiction where the failure to do so would have a material adverse effect
on the business, condition (financial or otherwise), assets, properties or
operations of the Company and its subsidiaries taken as a whole.
3.10. Books and Records. The Company shall make and keep books, records
and accounts, which, in reasonable detail, accurately and fairly reflect its
transactions, and shall devise and maintain a system of internal accounting
controls sufficient to provide reasonable assurances that: (a) transactions are
executed in accordance with management's general or specific authorization; and
(b) transactions are recorded as necessary to permit preparation of the
financial statements required herein and to maintain accountability for assets.
18
EXHIBIT 10.4
3.11. Compliance with Laws, Charter and Agreements. The Company shall
comply with all laws, rules and regulations of all governmental authorities and
agencies applicable to the Company, its business or its properties, the failure
to comply with which might have a material adverse effect on the Company. The
Company shall perform and observe all the obligations and provisions set forth
in its Certificate of Incorporation (including any amendments) and By-laws. The
Company shall comply in all material respects with the provisions of all
contracts, indentures, instruments and agreements to which it is a party or by
which the company or its properties are bound.
3.12. Agreements. The Company shall not enter into any contract,
agreement, lease or other instrument which, by its terms, restricts, in any
material respect, the Company's ability to perform its obligations under this
Agreement, the Series D Purchase Agreement, the Second Amended and Restated
Voting Agreement, the Third Amended and Restated Co-Sale and Right of First
Refusal Agreement or the Certificate, or any transaction contemplated herein or
therein.
SECTION IV
Miscellaneous
4.1. Governing Law. This Agreement shall be governed in all respects by
the internal laws of the State of New York without regard to conflicts of laws
principles. The parties expressly stipulate that any litigation under this
Agreement shall be brought in the state courts of the County of New York, New
York or in the United States District Court for the Southern District of New
York. The parties agree to submit to the jurisdiction and venue of those courts.
4.2. Successors and Assigns. Except as otherwise provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon, the
successors, assigns, heirs, executors and administrators of the parties hereto.
4.3. Transfer or Assignment Rights. The rights granted to Investors by the
Company under this Agreement may only be transferred or assigned by Investors to
a transferee or assignee of any of the Restricted Securities, if the Company is
given notice by Investors prior to the time of said transfer or assignment,
stating the name and address of said transferee or assignee and identifying the
securities with respect to which such rights are being transferred or assigned;
the transferee or assignee of such rights assumes the obligations of Investors
under this Agreement, and PROVIDED THAT (i) the transfer is in connection with a
transfer of all securities of the Company held by the transferor, (ii) the
transferee after the transfer has an aggregate of at least 100,000 shares of the
Shares (in either case, as adjusted for stock splits, stock dividends and events
of a similar nature), (iii) the transfer is from one Investor to another
Investor, or (iv) the transfer or assignment is to constituent partners or
stockholders who agree to act through a single representative.
4.4. Entire Agreement; Amendment. This Agreement constitutes the full and
entire understanding and agreement between the parties with regard to the
subjects hereof and thereof, and no party shall be liable or bound to any other
party in any manner by any
19
EXHIBIT 10.4
warranties, representations or covenants except as specifically set forth herein
or therein. Except as expressly provided herein, neither this Agreement nor any
term hereof may be amended, waived, discharged or terminated other than by a
written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought; provided, however, that
holders of a majority of the Series A Preferred (as adjusted for stock splits,
stock dividends and similar events), holders of a majority of the Series B
Preferred (as adjusted for stock splits, stock dividends and similar events),
the holders of a majority of the Series C Preferred (as adjusted for stock
splits, stock dividends and similar events), and the holders of a majority of
the Series D Preferred Stock (as adjusted for stock splits, stock dividends and
similar events) (each voting as a single class) may, with the prior written
consent of the Company, waive, modify or amend on behalf of all holders, any
provisions hereof.
4.5. Notices, etc. All notices and other communications required or
permitted in this Agreement shall be in writing, shall be effective when given,
and shall in any event be deemed to be given upon receipt or, if earlier, (a)
five (5) days after deposit with the U.S. Postal Service or other applicable
postal service, if delivered by first class mail, postage prepaid, (b) upon
delivery, if delivered by hand, (c) one business day after the business day of
deposit with Federal Express or similar overnight courier, freight prepaid or
(d) one business day after the business day of facsimile transmission, if
delivered by facsimile transmission with copy by first class mail, postage
prepaid, and shall be addressed if to an Investor, at the Investor's address as
set forth on EXHIBIT A to the Series A Purchase Agreement, the Series B Purchase
Agreement, the Series C Purchase Agreement, or the Series D Purchase Agreement,
if to the Company, to its address set forth in the Purchase Agreement
(attention: Chief Executive Officer), or at such other address as a party may
designate by ten days' advance written notice to the other party pursuant to the
provisions above.
4.6. Delays or Omissions. Except as expressly provided herein, no delay or
omission to exercise any right, power or remedy accruing to any holder of any
Shares, 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 an acquiescence therein, or of
or in any similar breach or default thereafter occurring; nor shall any waiver
of any single breach or default be deemed a waiver of any other breach or
default theretofore or thereafter occurring. 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 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.
20
EXHIBIT 10.4
4.7. California Corporate Securities Law. THE SALE OF THE SECURITIES WHICH
ARE THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER
OF CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF SUCH SECURITIES
OR THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO
SUCH QUALIFICATION IS UNLAWFUL UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED UPON
SUCH QUALIFICATION BEING OBTAINED, UNLESS THE SALE IS SO EXEMPT.
4.8. Counterparts. This Agreement may be executed in any number of
counterparts, each of which may be executed by less than all of the Investors,
each of which shall be enforceable against the parties actually executing such
counterparts, and all of which together shall constitute one instrument.
4.9. Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
4.10. Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
4.11. Termination of Earlier Agreement. By execution and delivery of this
Agreement by the parties to the Second Amended and Restated Investor Rights
Agreement, dated as of January 4, 1999, as amended, between the Company and the
Investors which are parties thereto (the "Prior Agreement"), the Prior Agreement
is terminated and superseded by this Agreement.
21
The foregoing agreement is hereby executed by each party as of the date
set forth below his, her or its name.
AVESTA TECHNOLOGIES, INC.
By /s/ ▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------------
Name: ▇▇▇ ▇. ▇▇▇▇▇
Title: President and Chief Executive Officer
By /s/ the Investors
-----------------------------------------
23