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EXHIBIT 10.6
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
REQUISITE TECHNOLOGY, INC.
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TABLE OF CONTENTS
PAGE
SECTION 1 GENERAL..............................................................1
1.1 Amendment and Restatement of Prior Agreement.......................1
1.2 Definitions........................................................1
SECTION 2 REGISTRATION; RESTRICTIONS ON TRANSFER...............................3
2.1 Restrictions on Transfer...........................................3
2.2 Demand Registration................................................4
2.3 Piggyback Registrations............................................6
2.4 Form S-3 Registration..............................................7
2.5 Expenses of Registration...........................................8
2.6 Obligations of the Company.........................................8
2.7 Termination of Registration Rights.................................9
2.8 Delay of Registration; Furnishing Information......................9
2.9 Indemnification...................................................10
2.10 Assignment of Registration Rights.................................12
2.11 Amendment of Registration Rights..................................12
2.12 Limitation on Subsequent Registration Rights......................12
2.13 "Market Stand-Off" Agreement......................................13
2.14 Rule 144 Reporting................................................13
SECTION 3 COVENANTS OF THE COMPANY............................................14
3.1 Basic Financial Information and Reporting.........................14
3.2 Inspection Rights.................................................15
3.3 Confidentiality of Records........................................15
3.4 Reservation of Common Stock.......................................15
3.5 Stock Vesting.....................................................15
3.6 Non-Competition and Non-Disclosure Agreement......................15
3.7 Real Property Holding Corporation.................................15
3.8 Expenses..........................................................16
3.9 SBIC Covenants....................................................16
3.10 Visitation Rights.................................................16
3.11 Certain Approvals Regarding Issuances of Certain Securities.......17
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TABLE OF CONTENTS
(CONTINUED)
PAGE
3.12 Assignment of Right of First Refusal..............................17
3.13 Auditors..........................................................17
3.14 Issuance of Prior Series of Preferred Stock.......................17
3.15 Termination of Covenants..........................................17
SECTION 4 RIGHTS OF FIRST REFUSAL.............................................17
4.1 Subsequent Offerings..............................................17
4.2 Exercise of Rights................................................18
4.3 Issuance of Equity Securities to Other Persons....................18
4.4 Termination of Rights of First Refusal............................18
4.5 Transfer of Rights of First Refusal...............................18
4.6 Excluded Securities...............................................18
SECTION 5 MISCELLANEOUS.......................................................19
5.1 Governing Law.....................................................19
5.2 Survival..........................................................19
5.3 Successors and Assigns............................................19
5.4 Severability......................................................20
5.5 Amendment and Waiver..............................................20
5.6 Delays or Omissions...............................................20
5.7 Notices...........................................................20
5.8 Entire Agreement..................................................20
5.9 Attorneys' Fees...................................................20
5.10 Titles and Subtitles..............................................21
5.11 Counterparts......................................................21
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THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement")
is entered into as of the 13th day of September, 1999, by and among REQUISITE
TECHNOLOGY, INC., a Delaware corporation (the "Company") and the holders of the
Company's Series A Preferred Stock ("Series A Stock"), Series B Preferred Stock
(the "Series B Stock"), Series C Preferred Stock ("Series C Stock") and Series D
Preferred Stock (the "Series D Stock") and the purchasers of Series E Preferred
Stock (the "Series E Stock") set forth on Exhibit A of that certain Series E
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement"). The holders of the Series A Stock, Series B Stock, Series C Stock,
Series D Stock and Series E Stock who are parties hereto are set forth on
Exhibit A hereto and shall be referred to hereinafter as the "Investors" and
each individually as an "Investor."
RECITALS
WHEREAS, the Company has granted registration rights, information rights
and certain other rights pursuant to that certain Second Amended and Restated
Investor Rights Agreement, dated as of July 1, 1998 (the "Prior Agreement");
WHEREAS, the Company proposes to sell and issue shares of Series E Stock
pursuant to the Purchase Agreement; and
WHEREAS, as a condition to entering into the Purchase Agreement, the
prospective purchasers have requested that the Company extend to them
registration rights, information rights and other rights as set forth below, and
the Company and the parties to the Prior Agreement are willing to amend the
rights given to them pursuant to the Prior Agreement by replacing such rights in
their entirety with the rights set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, representations,
warranties, covenants and conditions set forth in this Agreement and in the
Purchase Agreement, the parties mutually agree as follows:
SECTION 1 GENERAL
1.1 AMENDMENT AND RESTATEMENT OF PRIOR AGREEMENT. The undersigned parties,
who constitute the requisite parties to amend the Prior Agreement, hereby agree
that the Prior Agreement is null and void and superseded by the rights and
obligations set forth in this Agreement.
1.2 DEFINITIONS. As used in this Agreement the following terms shall have
the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FORM S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which
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permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
"HOLDER" means any person owning of record Shares or Registrable Securities
that have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.10 hereof.
"INITIAL OFFERING" means the Company's first firm commitment underwritten
public offering of its Common Stock registered under the Securities Act.
"QUALIFIED PUBLIC OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act in which (i) the per share price is at least $12.00 per share (as adjusted
for stock splits, combinations and the like) and (ii) the gross cash proceeds to
the Company (before deducting underwriting discounts, commissions and fees) are
at least $20,000,000.
"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 effectiveness of such
registration statement or document.
"REGISTRABLE SECURITIES" means (i) Common Stock of the Company issued or
issuable upon conversion of the Shares or exercise of the CEI Warrant or
Comdisco Warrant; and (ii) any Common Stock of the Company issued as (or
issuable upon the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such above-described securities.
Notwithstanding the foregoing, Registrable Securities shall not include any
securities sold by a person to the public either pursuant to a registration
statement or Rule 144 of the Securities Act or sold in a private transaction in
which the transferor's rights under Section 2 of this Agreement are not
assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares
determined by calculating the total number of shares of the Company's Common
Stock that are Registrable Securities and either (i) are then issued and
outstanding or (ii) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the Company in
complying with Sections 2.2, 2.3 and 2.4 hereof, including, without limitation,
all registration and filing fees, fees to list the Registrable Securities on a
securities exchange and quotation system, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed Twenty-Five Thousand Dollars ($25,000) of a single special counsel for
the Holders, blue sky fees and expenses and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"SELLING EXPENSES" shall mean all underwriting discounts and selling
commissions applicable to the sale.
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"SHARES" shall mean (i) shares of the Company's Series A Stock and Series B
Stock issued pursuant to the Series A and Series B Preferred Stock Purchase
Agreement, dated as of July 18, 1996, as amended on January 29, 1997, (ii) those
shares of Series A Preferred Stock issuable upon exercise of that certain
warrant issued to Corporate Express, Inc. on July ▇▇, ▇▇▇▇ (▇▇▇ "▇▇▇ ▇▇▇▇▇▇▇"),
(▇▇▇) those shares of Series B Preferred Stock issuable upon exercise of that
certain warrant issued to Comdisco, Inc. on October 9, 1996 (the "Comdisco
Warrant"), (iv) shares of the Company's Series C Stock issued pursuant to the
Series C Preferred Stock Purchase Agreement, dated as of August 25, 1997, (v)
shares of the Company's Series D Stock issued pursuant to the Series D Preferred
Stock Purchase Agreement, dated as of July 1, 1998, and (vi) shares of the
Company's Series E Stock issued pursuant to the Purchase Agreement.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
SECTION 2 REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under the
Securities Act covering such proposed disposition and such disposition is made
in accordance with such registration statement;
(ii) (A) Prior to the Initial Offering, the transferee has agreed
in writing to be bound by the terms of this Agreement and (other than a
transferee of the holders of Series E Stock in their capacity as holders of such
stock and of ▇.▇. ▇▇▇▇▇▇▇▇, Inc. ("Grainger")) the Second Amended and Restated
Shareholders Agreement, dated as of even date herewith, (B) such Holder shall
have notified the Company of the proposed disposition and shall have furnished
the Company with a detailed statement of the circumstances surrounding the
proposed disposition, and (C) if reasonably requested by the Company, such
Holder shall have furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company, that such disposition will not require registration
of such shares under the Securities Act. It is agreed that the Company will not
require opinions of counsel for transactions made pursuant to Rule 144 of the
Securities Act except in unusual circumstances; or
(iii) Notwithstanding the provisions of paragraphs (i) and (ii)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Holder which is (A) a partnership to its partners or former
partners in accordance with partnership interests, (B) a corporation to its
stockholders in accordance with their interest in the corporation, (C) a limited
liability company to its members or former members in accordance with their
interest in the limited liability company, or (D) to the Holder's family member
or trust for the benefit of an individual Holder; provided the transferee will
be subject to the terms of this Agreement to the same extent as if he were an
original Holder hereunder.
(b) Each certificate representing Shares or Registrable Securities
shall (unless otherwise permitted by the provisions of the Agreement) be stamped
or otherwise imprinted with
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a legend substantially similar to the following (in addition to any legend
required under applicable state securities laws or as provided elsewhere in this
Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND MAY NOT BE
OFFERED, SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE
COMPANY HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of counsel (which counsel may be counsel to the Company)
reasonably acceptable to the Company to the effect that the securities proposed
to be disposed of may lawfully be so disposed of without registration,
qualification or legend and after a disposition under Rule 144.
(d) Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from the Holders of more than fifty percent
(50%) of the Registrable Securities then outstanding (the "Initiating Holders")
that the Company file a registration statement under the Securities Act covering
the registration of Registrable Securities having an aggregate offering price to
the public in excess of $15,000,000, then the Company shall, within twenty (20)
days of the receipt thereof, give written notice of such request to all Holders,
and, subject to the limitations of this Section 2.2, use its best efforts to
effect, as soon as practicable, the registration under the Securities Act of all
Registrable Securities that the Holders request to be registered.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 2.2
and the Company shall include such information in the written notice referred to
in Section 2.2(a). In such event, the right of any Holder to include its
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 enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company). Notwithstanding any
other provision of this Section 2.2,
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if the underwriter advises the Company that marketing factors require a
limitation of the number of securities to be underwritten (including Registrable
Securities) then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the number
of shares that may be included in the underwriting shall be allocated to the
Holders of such Registrable Securities on a pro rata basis based on the number
of Registrable Securities held by all such Holders (including the Initiating
Holders). Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from the registration. Without the written
consent of Holders of not less than two-thirds (66-2/3%) of the Registrable
Securities proposed to be sold in a demand registration under this Section 2.2,
in no event will (i) the Company initiate any other registration of its
securities under the Securities Act, other than on Form ▇-▇, ▇▇▇▇ ▇-▇ or any
successor or similar forms, until any distribution pursuant to a demand
registration made under this Section 2.2 is complete or (ii) shares of any other
selling stockholder be included in such registration which would reduce the
number of shares which may be included by the Holders in such offering.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to August 25, 2000; or
(ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2 and such registrations have been declared or
ordered effective; provided that a registration will not count as one of the two
(2) registrations pursuant to this clause unless the holders of Registrable
Securities requesting such registration are able to register and sell at least
fifty percent (50%) of the Registrable Securities requested to be registered by
the Holders exercising such demand right; or
(iii) during the period starting with the date of filing of, and
ending on the date one hundred eighty (180) days following the effective date
of, the registration statement pertaining to the Initial Offering; provided that
the Company makes reasonable good faith efforts to cause such registration
statement to become effective;
(iv) if within thirty (30) days of receipt of a written request
from Initiating Holders pursuant to Section 2.2(a), the Company gives written
notice to the Holders of the Company's intention to make its Initial Offering
within ninety (90) days, which notice may be delivered only once in any twelve
(12) month period; or
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board 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 registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Holders; provided that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period.
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2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least thirty (30) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company (including, but not limited to,
registration statements relating to secondary offerings of securities of the
Company, but excluding registration statements relating to employee benefit
plans or with respect to corporate reorganizations or other transactions under
Rule 145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held by it
shall, within fifteen (15) days after the above-described notice from the
Company, so notify the Company in writing. Such notice shall state the intended
method of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed by
the Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any stockholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
and in no event shall the amount of securities of the selling Holders included
in the registration be reduced below twenty-five percent (25%) of the total
amount of securities included in such registration, unless such offering is the
Initial Offering and such registration does not include shares of any other
selling stockholders (other than the stockholder(s), if any, invoking the demand
registration) in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
In no event will shares of any other selling stockholder be included in such
registration which would reduce the number of shares which may be included by
Holders without the written consent of Holders of not less than two-thirds
(66-2/3%) of the Registrable Securities proposed to be sold in the offering.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 2.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The Registration Expenses of
such withdrawn registration shall be borne by the Company in accordance with
Section 2.5 hereof.
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2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration statement 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 of Registrable
Securities; 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 2.4:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders, or
(ii) 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 of less than $750,000, or
(iii) if the Company shall furnish to the Holders a certificate
signed by the Chairman of the Board of Directors 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 ninety (90) days after receipt of the request of the
Holder or Holders under this Section 2.4; provided, that such right to delay a
request shall be exercised by the Company not more than once in any twelve (12)
month period, or
(iv) if the Company has already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 2.4 within the previous
eighteen (18) month period, or
(v) 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 except for
those jurisdictions in which the Company is already qualified to do business or
subject to consent to service of process and except as may be required under the
Securities Act.
(c) Subject to the foregoing, the Company shall file a Form S-3
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 Registration Expenses incurred in
connection with registrations requested pursuant to this Section 2.4 which
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the Company is not obligated to effectuate pursuant to Section 2.4(b)(iv) shall
be paid by the selling Holders pro rata in proportion to the number of shares
sold by each.
2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2, Section 2.3 or Section 2.4
herein shall be borne by the Company. All Selling Expenses incurred in
connection with any registrations hereunder, shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun pursuant to Section 2.2 or 2.4, the request of
which has been subsequently withdrawn by the Initiating Holders unless (a) the
withdrawal is based upon material adverse information concerning the Company of
which the Initiating Holders were not aware at the time of such request or (b)
the Holders of a majority of Registrable Securities agree to forfeit their right
to one requested registration pursuant to Section 2.2 or Section 2.4, as
applicable, in which event such right shall be forfeited by all Holders. If the
Holders are required to pay the Registration Expenses, such expenses shall be
borne by the holders of securities (including Registrable Securities) requesting
such registration in proportion to the number of shares for which registration
was requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand
registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to ninety (90) days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.
(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
Securities Act with respect to the disposition of all securities covered by such
registration statement.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use all reasonable 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, unless the Company is
already subject to service of process or qualified to do business in such
jurisdiction and except as may be required under the Securities Act.
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(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(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all Registrable Securities to be listed on each securities
exchange and quotation system on which similar securities issued by the Company
are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereto and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of any Holder participating in the
registration, on the date that such Registrable Securities are delivered to the
underwriters for sale, if such securities are being sold through underwriters,
or, if such securities are not being sold through underwriters, on the date that
the registration statement with respect to such securities becomes effective,
(i) an opinion, dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter dated as of such date,
from the independent certified public accountants of the Company, in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering and reasonably satisfactory to a
majority in interest of the Holders requesting registration, addressed to the
underwriters, if any, and if permitted by applicable accounting standards, to
the Holders requesting registration of Registrable Securities.
2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect five
(5) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if all Registrable Securities held by
and issuable to such Holder may be sold under Rule 144 of the Securities Act
during any ninety (90) day period.
2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Holder shall have any right to obtain or seek an injunction
restraining or otherwise delaying any such registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the
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Company such information regarding themselves, the Registrable Securities held
by them and the intended method of disposition of such securities as shall be
required to effect the registration of their Registrable Securities.
(c) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection 2.2(b), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's obligation
to initiate such registration as specified in Section 2.2 or Section 2.4,
whichever is applicable.
2.9 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers, directors and legal counsel
of each Holder, any underwriter (as defined in the Securities Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange 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") by the Company: (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 Securities Act,
the Exchange Act, any state securities law or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any state securities law in
connection with the offering covered by such registration statement; and the
Company will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for 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 Section 2.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Company, which consent shall
not be unreasonably withheld, nor shall the Company be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) To the extent permitted by law, each Holder, severally and not
jointly, will, if Registrable Securities held by such Holder are included in the
securities as to which such registration qualifications or compliance is being
effected, indemnify and hold harmless the Company, each of its directors, its
officers, and legal counsel and each person, if any, who controls the Company
within the meaning of the Securities Act, any underwriter and any other Holder
selling securities under such registration statement or any of such other
Holder's partners,
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directors or officers or any person who controls such Holder, against any
losses, claims, damages or liabilities (joint or several) to which the Company
or any such director, officer, controlling person, underwriter or other such
Holder, or partner, director, officer or controlling person of such other Holder
may become subject under the Securities Act, the Exchange 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 under
an instrument duly executed by such Holder and stated to be specifically for use
in connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9(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 further, that in no event shall any
indemnity under this Section 2.9(b) exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
2.9 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 2.9, 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 shall
have the right to retain its own 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 materially prejudicial to its ability to
defend such action, shall relieve such indemnifying party of any liability to
the indemnified party under this Section 2.9, 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 2.9.
(d) If the indemnification provided for in this Section 2.9 is held by
a court of competent jurisdiction to be unavailable to an indemnified party with
respect to any losses, claims, damages or liabilities referred to herein, the
indemnifying party, in lieu of indemnifying such indemnified party thereunder,
shall to the extent permitted by applicable law contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim, damage or
liability in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the Violation(s) that resulted in such loss, claim, damage or
liability, 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
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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; provided, that in no event
shall any contribution by a Holder hereunder exceed the net proceeds from the
offering received by such Holder.
(e) The obligations of the Company and Holders under this Section 2.9
shall survive completion of any offering of Registrable Securities in a
registration statement. No Indemnifying Party, in the defense of any such claim
or litigation, shall, except with the consent of each Indemnified Party, consent
to entry of 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.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to this Section 2.10 may be assigned by
a Holder to a transferee or assignee of Registrable Securities which (i) with
respect to Holders other than Grainger, is a subsidiary, parent, general
partner, limited partner, member or former partner or member of a Holder, (ii)
is a Holder's family member or trust for the benefit of an individual Holder,
(iii) acquires at least three hundred thousand (300,000) shares of Registrable
Securities (as adjusted for stock splits and combinations), or (iv) with respect
to transfers by Grainger, is a wholly owned subsidiary of Grainger; provided,
however, (A) the transferor shall, within ten (10) days after such transfer,
furnish to the Company written notice of the name and address of such transferee
or assignee and the securities with respect to which such registration rights
are being assigned and (B) such transferee shall agree to be subject to all
restrictions set forth in this Agreement.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2 may
be amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least sixty percent (60%)
of the Registrable Securities then outstanding. Any amendment or waiver effected
in accordance with this Section 2.11 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Section 2, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of this
Agreement, the Company shall not, without the prior written consent of the
Holders of at least sixty percent (60%) of the Registrable Securities, enter
into any agreement with any holder or prospective holder of any securities of
the Company that would grant such holder registration rights senior to those
granted to the Holders hereunder. After the date of this Agreement, the Company
shall not enter into an agreement with any holder or prospective holder of any
securities of the Company that would grant such holder registration rights on
parity with or superior to those granted to the Holders hereunder, without the
following: (a) the approval of at least a majority of the Board of Directors
present at a meeting duly convened or by written consent of the Board of
Directors if such rights are granted in connection with (i) any equipment
leasing, loan arrangement or debt financing; (b) the unanimous approval of the
Board of Directors present at a meeting duly convened or by unanimous written
consent of the Board of Directors if such rights are granted in connection with
(i) a merger, consolidation, reorganization,
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acquisition (whether of tangible or intangible assets) or other similar
combination or acquisition, or (ii) strategic transactions; or (c) the approval
of at least sixty percent (60%) of the Registrable Securities at a meeting duly
convened or by written consent if such rights are granted in any other case, as
provided in the Company's Restated Certificate of Incorporation.
2.13 "MARKET STAND-OFF" AGREEMENT. If requested by the Company or the
representative of the underwriters of Common Stock (or other securities) of the
Company, each Holder shall not sell or otherwise transfer or dispose of any
Registrable Securities of the Company held by such Holder (other than those
included in the registration) for a period specified by the representative of
the underwriters not to exceed one hundred eighty (180) days following the
effective date of a registration statement of the Company filed under the
Securities Act; provided that:
(i) such agreement shall apply only to the Company's Qualified
Public Offering; and
(ii) all officers and directors of the Company and holders of at
least one percent (1%) of the Company's voting securities enter into similar
agreements.
The obligations described in this Section 2.13 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose
stop-transfer instructions with respect to the Registrable Securities subject to
the foregoing restriction until the end of said one hundred eighty (180) day
period.
2.14 RULE 144 REPORTING. With a view to making available to the Holders the
benefits of certain rules and regulations of the SEC which may permit the sale
of the Registrable Securities to the public without registration, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an 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 Exchange 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 Exchange Act; and
(d) So long as a Holder owns any Registrable Securities, furnish to
such Holder forthwith upon request: a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 of the Securities
Act and of the Exchange Act (at any time after it has become subject to such
reporting requirements); a copy of the most recent
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annual or quarterly report of the Company; and such other reports and documents
as a Holder may reasonably request in availing itself of any rule or regulation
of the SEC allowing it to sell any such securities without registration.
SECTION 3 COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(a) The Company will maintain true books and records of account in
which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of the
Company, and in any event within one hundred twenty (120) days thereafter, the
Company will furnish each Investor a consolidated balance sheet of the Company,
as at the end of such fiscal year, and a consolidated statement of income and a
consolidated statement of cash flows of the Company, for such year, all prepared
in accordance with generally accepted accounting principles consistently applied
and setting forth in each case in comparative form the figures for the previous
fiscal year, all in reasonable detail. Such financial statements shall be
accompanied by a report and opinion thereon by independent public accountants of
national standing selected by the Company's Board of Directors. Notwithstanding
the foregoing, in the event that such audited financial statements are not
delivered by the Company within ninety (90) days following the end of a fiscal
year the Company shall deliver to each Investor unaudited financial statements
for such fiscal year within ninety (90) days following the end of such fiscal
year.
(c) The Company will furnish each Investor, as soon as practicable
after the end of the first, second and third quarterly accounting periods in
each fiscal year of the Company, and in any event within forty-five (45) days
thereafter, a consolidated balance sheet of the Company as of the end of each
such quarterly period, and a consolidated statement of income and a consolidated
statement of cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally accepted accounting
principles, with the exception that year-end audit adjustments may not have been
made.
(d) So long as an Investor (with its affiliates) shall own not less
than three hundred thousand (300,000) shares of Registrable Securities (as
adjusted for stock splits and combinations) (a "Major Investor"), the Company
will furnish each such Major Investor (i) at least thirty (30) days prior to the
beginning of each fiscal year an annual budget and operating plans for such
fiscal year (and as soon as available, any subsequent revisions thereto); and
(ii) as soon as practicable after the end of each fiscal quarter, and in any
event within twenty (20) days thereafter, a consolidated balance sheet of the
Company as of the end of each such fiscal quarter and a consolidated statement
of income and a consolidated statement of cash flows of the Company for such
fiscal quarter and for the current fiscal year to date, including a comparison
to plan figures for such period, prepared in accordance with generally accepted
accounting principles consistently applied, with the exception that no notes
need be attached to such statements and year-end audit adjustments may not have
been made. The Company will also
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provide the foregoing information to Sumitomo Corporation of America in the
manner provided above so long as it owns not less than 115,000 shares of Series
E Stock.
3.2 INSPECTION RIGHTS. Each Major Investor shall have the right to visit
and inspect any of the properties of the Company or any of its subsidiaries, and
to discuss the affairs, finances and accounts of the Company or any of its
subsidiaries with its officers, and to review such information as is reasonably
requested all at such reasonable times and as often as may be reasonably
requested; provided, however, that the Company shall not be obligated under this
Section 3.2 with respect to a competitor of the Company.
3.3 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to use its
best efforts to insure that its authorized representatives use, the same degree
of care as such Investor uses to protect its own confidential information to
keep confidential any information furnished to it which the Company identifies
as being confidential or proprietary (so long as such information is not in the
public domain), except that such Investor may disclose such proprietary or
confidential information to any partner, subsidiary or parent of such Investor
for the purpose of evaluating its investment in the Company as long as such
partner, subsidiary or parent is advised of the confidentiality provisions of
this Section 3.3.
3.4 RESERVATION OF COMMON STOCK. The Company will at all times reserve and
keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
3.5 STOCK VESTING. Unless otherwise approved by the Board of Directors, all
stock options and other stock equivalents issued after the date of this
Agreement to employees, directors, consultants and other service providers shall
be subject to vesting as follows: (i) twenty-five percent (25%) of such stock
shall vest at the end of the first year following the earlier of the date of
issuance or such person's services commencement date with the Company, and (ii)
seventy-five percent (75%) of such stock shall vest monthly in equal amounts
over the remaining three (3) years. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide that
upon such person's termination of employment or service with the Company, with
or without cause, the Company or its assignee (to the extent permissible under
applicable securities laws and other laws) shall have the option to purchase at
cost any unvested shares of stock held by such person.
3.6 NON-COMPETITION AND NON-DISCLOSURE AGREEMENT. The Company shall require
all officers, employees and consultants of the Company to execute and deliver
agreements regarding non-competition and non-disclosure of confidential
information containing provisions substantially similar to those contained in
the form agreements attached as exhibits to the Purchase Agreement.
3.7 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it will
operate in a manner such that it will not become a "United States real property
holding corporation" as that term is defined in Section 897(c)(2) of the
Internal Revenue Code of 1986, as amended, and the regulations thereunder
("FIRPTA").
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3.8 EXPENSES. The Company shall reimburse the members of the Board of
Directors and approved observers for their reasonable travel and lodging
expenses incurred in connection with attending Board of Director and committee
meetings.
3.9 SBIC COVENANTS.
(a) The Company acknowledges that Liberty Ventures I, L.P. (the "SBIC
Investor") is a Federal licensee under the Small Business Investment Act of
1958, as amended (the "Small Business Act"), and, as such, is subject to
regulation by the United States Small Business Administration (the "SBA") as a
small business investment company.
(b) The Company covenants and agrees that for a period of one year
after the Closing Date (as such term is defined in the Purchase Agreement), the
Company shall not make a material change in its primary business activity which
would make it ineligible for financing as a portfolio company by a small
business investment company under 13 C.F.R. Section 107.760(b), a regulation
promulgated by the SBA. In the event that the Company breaches the foregoing
covenant, the Company agrees that, subject to applicable law, the SBIC Investor
shall be authorized to rescind its purchases of Series C Stock and to return
such shares to the Company in exchange for reimbursement by the Company of the
entire purchase price paid for such shares.
(c) The Company covenants and agrees that proceeds from the SBIC
Investor from its purchase of Series C Stock, Series D Stock and Series E Stock
has been or will be used for working capital purposes or to otherwise finance
the growth, modernization or expansion of the Company. The Company shall provide
the SBIC Investor and the SBA reasonable access to the Company's books and
records for the purpose of confirming the use of such proceeds.
(d) The Company shall provide the SBIC Investor with sufficient
information to permit such Investor to comply with its obligations under the
Small Business Act; provided, however, that the SBIC Investor agrees that it
will protect any information which the Company labels as confidential to the
extent permitted by law. For a period of two (2) years following the Closing
Date, any submission of financial information under Sections 3.1(b) and 3.1(c)
to the SBIC Investor shall be accompanied by a certificate of the president,
chief executive officer, treasurer or chief financial officer of the Company,
which certificate shall state that the Company is not in material default under
any of its covenants set forth in this Section 3.
3.10 VISITATION RIGHTS. The Company shall allow one representative
designated by ▇▇▇▇▇▇ Capital Management, L.L.C., which representative shall be
approved by the Company's Chief Executive Officer (initially, ▇▇▇▇▇▇ ▇▇▇▇▇▇),
which approval shall not be unreasonably withheld, to attend all meetings of the
Company's Board of Directors in a nonvoting capacity, and in connection
therewith, the Company shall give such representative copies of all notices,
minutes, consents and other materials, financial or otherwise, which the Company
provides to its Board of Directors; provided, however, that the Company reserves
the right to exclude such representative from access to any material or meeting
or portion thereof if the Company believes upon advice of counsel that such
exclusion is reasonably necessary to preserve that attorney-client privilege;
provided further, that as a condition to such representative's attendance, such
representative shall agree to keep any information divulged in
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connections with such meetings confidential and to sign any confidentiality
agreements reasonably requested by the Company.
3.11 CERTAIN APPROVALS REGARDING ISSUANCES OF CERTAIN SECURITIES. In the
event that the Company issues any shares of its Series E Preferred Stock or any
security convertible into or exercisable for such Series E Preferred Stock after
the date hereof, the Company agrees as follows: (a) such issuance shall be
approved by at least a majority of the Board of Directors present at a meeting
duly convened or by written consent of the Board of Directors if issued in
connection with any equipment leasing, loan arrangement or debt financing; (b)
such issuance shall be unanimously approved by the Board of Directors present at
a meeting duly convened or by unanimous written consent of the Board of
Directors if issued in connection with (i) a merger, consolidation,
reorganization, acquisition (whether of tangible or intangible assets) or other
similar combination or acquisition, or (ii) strategic transactions; or (c) such
issuance shall be approved by at least sixty percent (60%) of the Registrable
Securities at a meeting duly convened or by written consent if issued in any
other case, as provided in the Company's Restated Certificate of Incorporation.
3.12 ASSIGNMENT OF RIGHT OF FIRST REFUSAL. The Company's Bylaws contain an
assignable right of first refusal on transfers of Common Stock, and the Company
agrees that it will not amend or modify its Bylaws to prevent any assignment of
that right, unless such amendment or modification is approved by sixty percent
(60%) of the Registrable Securities then outstanding.
3.13 AUDITORS. The Company will retain independent public accountants of
recognized national standing who shall audit the Company's financial statements
at the end of each fiscal year.
3.14 ISSUANCE OF PRIOR SERIES OF PREFERRED STOCK. After the Closing Date
(as defined in the Purchase Agreement), the Company shall not issue any shares
of Series A Stock, Series B Stock, Series C Stock or Series D Stock (except with
respect to existing warrants issued with respect thereto) without the consent of
sixty percent (60%) in interest of the Registerable Securities.
3.15 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor on
(i) the effective date of the registration statement pertaining to the Qualified
Public Offering (other than Section 3.9(b)) or (ii) following an Acquisition or
Asset Transfer (as defined in the Company's Restated Certificate of
Incorporation).
SECTION 4 RIGHTS OF FIRST REFUSAL
4.1 SUBSEQUENT OFFERINGS. Each Major Investor shall have a right of first
refusal to purchase its pro rata share of the Equity Securities, as defined
below, that the Company may, from time to time, propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by Section
4.6 hereof. Each Major Investor's pro rata share is equal to the ratio of (A)
the number of shares of the Company's Common Stock (including all shares of
Common Stock issued or issuable upon conversion of the Shares) which such Major
Investor
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is deemed to be a holder immediately prior to the issuance of such Equity
Securities to (B) the total number of shares of the Company's outstanding Common
Stock (including all shares of Common Stock issued or issuable upon conversion
of the Shares or upon the exercise of any outstanding warrants or options)
immediately prior to the issuance of the Equity Securities. The term "Equity
Securities" shall mean (i) any Common Stock, Preferred Stock or other security
of the Company, (ii) any security convertible, with or without consideration,
into any Common Stock, Preferred Stock or other security (including any option
to purchase such a convertible security), (iii) any security carrying any
warrant or right to subscribe to or purchase any Common Stock, Preferred Stock
or other security or (iv) any such warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Major Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Major Investor shall have
fifteen (15) days from the giving of such notice to agree to purchase up to its
pro rata share of the Equity Securities for the price and upon the terms and
conditions specified in the notice by giving written notice to the Company and
stating therein the quantity of Equity Securities to be purchased.
Notwithstanding the foregoing, the Company shall not be required to offer or
sell such Equity Securities to any Major Investor who would cause the Company to
be in violation of applicable federal securities laws by virtue of such offer or
sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of the Major
Investors elect to purchase their pro rata share of the Equity Securities, then
the Company shall promptly notify in writing the Major Investors who do so elect
and shall offer such Major Investors the right to acquire such unsubscribed
shares. The Major Investors shall have five (5) days after receipt of such
notice to notify the Company of its election to purchase all or a portion
thereof of the unsubscribed shares. If the Major Investors fail to exercise in
full the rights of first refusal, the Company shall have ninety (90) days
thereafter to sell the Equity Securities in respect of which the Major
Investor's rights were not exercised at a price and upon general terms and
conditions materially no more favorable to the purchasers thereof than specified
in the Company's notice to the Major Investors pursuant to Section 4.2 hereof.
If the Company has not sold such Equity Securities within ninety (90) days of
the notice provided pursuant to Section 4.2, the Company shall not thereafter
issue or sell any Equity Securities, without first offering such securities to
the Major Investors in the manner provided above.
4.4 TERMINATION OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
established by this Section 4 shall not apply to, and shall terminate upon the
effective date of the registration statement pertaining to the Company's
Qualified Public Offering.
4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Major Investor under this Section 4 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.
4.6 EXCLUDED SECURITIES. The rights of first refusal established by this
Section 4 shall have no application to any of the following Equity Securities:
(a) shares of Common Stock (and/or options, warrants or other Common
Stock purchase rights issued pursuant to such options, warrants or other rights)
issued or to be
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issued to employees, officers or directors of, or consultants or advisors to the
Company or any subsidiary, pursuant to stock purchase or stock option plans or
other arrangements that are approved by the Board of Directors or any
compensation committee of the Board of Directors;
(b) stock issued pursuant to any rights or agreements outstanding as
of the date of this Agreement, options and warrants outstanding as of the date
of this Agreement; and stock issued pursuant to any such rights or agreements
granted after the date of this Agreement; provided that the rights of first
refusal established by this Section 4 applied with respect to the initial sale
or grant by the Company of such rights or agreements;
(c) any Equity Securities issued for consideration other than cash
pursuant to a merger, consolidation, acquisition or similar business
combination;
(d) shares of Common Stock issued in connection with any stock split,
stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares; and
(f) any Equity Securities that are issued by the Company pursuant to a
registration statement filed under the Securities Act.
SECTION 5 MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of Delaware as applied to agreements among Delaware
residents entered into and to be performed entirely within Delaware.
5.2 SURVIVAL. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly 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
and shall inure to the benefit of and be enforceable by each person who shall be
a holder of Registrable Securities from time to time; provided, however, that
prior to the receipt by the Company of adequate written notice of the transfer
of any Registrable Securities specifying the full name and address of the
transferee, the Company may deem and treat the person listed as the holder of
such shares in its records as the absolute owner and holder of such shares for
all purposes, including the payment of dividends or any redemption price.
5.4 SEVERABILITY. In case any provision of the Agreement shall be invalid,
illegal, or unenforceable, the validity, legality, and enforceability of the
remaining provisions shall not in any way be affected or impaired thereby.
19.
24
5.5 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the holders
of at least sixty percent (60%) of the Registrable Securities; provided that no
amendment or modification to Section 3.9 may be made without the written consent
of the SBIC Investor.
(b) Except as otherwise expressly provided, the obligations of the
Company and the rights of the Holders under this Agreement may be waived only
with the written consent of the holders of at least sixty percent (60%) of the
Registrable Securities; provided that no waiver of the rights and obligations
under Section 3.9 may be made without the written consent of the SBIC Investor.
(c) Notwithstanding the foregoing, this Agreement may be amended with
the written consent of only the Company to include additional purchasers of
Shares as "Investors," "Holders" and parties hereto.
5.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to exercise
any right, power, or remedy accruing to any Holder upon any breach, default or
noncompliance of the Company under this Agreement shall impair any such right,
power, or remedy, nor shall it be construed to be a waiver of any such breach,
default or noncompliance, or any acquiescence therein, or of any similar breach,
default or noncompliance thereafter occurring. It is further agreed that any
waiver, permit, consent, or approval of any kind or character on any Holder's
part of any breach, default or noncompliance under the Agreement or any waiver
on such Holder's part 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, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
5.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery to the
party to be notified, (ii) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then on the next business
day, (iii) five (5) business days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on the signature
pages hereof or Exhibit A hereto or at such other address as such party may
designate by ten (10) days advance written notice to the other parties hereto.
5.8 ENTIRE AGREEMENT. This Agreement, the exhibits and schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto,
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof.
5.9 ATTORNEYS' FEES. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including, without limitation, such
20.
25
reasonable fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
21.
26
IN WITNESS WHEREOF, the parties hereto have executed this THIRD AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY: PURCHASER:
REQUISITE TECHNOLOGY, INC. SPINNAKER CLIPPER FUND, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇ By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------------- ------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ - Controller
President and Chief Executive Officer
SPINNAKER CROSSOVER INSTITUTIONAL
FUND, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇ - Controller
SPINNAKER CROSSOVER FUND, L.P.
By: /s/ ▇▇▇▇ ▇▇▇▇▇
------------------------------
▇▇▇▇ ▇▇▇▇▇ - Controller
COVESTCO-MEDEURA, LLC
By: Medeura Limited
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Director
H&Q REQUISITE TECHNOLOGY
INVESTORS, L.P.
By: /s/
------------------------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ CALIFORNIA
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ EMPLOYEE
VENTURE FUND, ▇.▇. ▇▇
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
ACCESS TECHNOLOGY PARTNERS, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
ACCESS TECHNOLOGY PARTNERS
BROKERS FUND, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇, VP, Invesment
Management
▇▇▇▇, ▇▇▇▇▇▇▇ VENTURES IV, L.P.
By: Fourth MDV Partners, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Member
MDV IV ENTREPRENEURS' NETWORK
FUND, L.P.
By: Fourth MDV Partners, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
------------------------------------
Member
SEQUEL LIMITED PARTNERSHIP
By: Sequel Venture Partners, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. WASHING
------------------------------------
Member
SEQUEL EURO LIMITED PARTNERSHIP
By: Sequel Venture Partners, L.L.C.,
General Partner
By: /s/ ▇▇▇▇▇▇ ▇. WASHING
------------------------------------
Member
LIBERTY VENTURES I, L.P.
By: Liberty Ventures, Inc.
Managing General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
Vice President
TRINITY VENTURES V, L.P.,
A California Limited Partnership
By: Trinity TVL Partners V, L.P.,
A California Limited Partnership
Its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇
------------------------------------
General Partner
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
28
TRINITY V SIDE-BY-SIDE FUND, L.P.,
A California Limited Partnership
By: Trinity TVL Partners V, L.P.,
A California Limited Partnership
Its General Partner
By: /s/ ▇▇▇▇▇ ▇▇▇
------------------------------------
General Partner
---------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇ ▇. WASHING
---------------------------------------
▇▇▇▇▇▇ ▇. WASHING
CORPORATE EXPRESS INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
----------------------------------
Title: President, N.A. Operations
---------------------------------
---------------------------------------
▇▇▇▇▇▇▇ AND ▇▇▇▇▇ ▇▇▇▇▇
COMDISCO, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
29
▇.▇. ▇▇▇▇▇▇▇▇, INC.
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
GC&H INVESTMENTS
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
UNIVERSITY OF COLORADO AT BOULDER
VENTURE CAPITAL FUND
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
30
REQUISITE TECHNOLOGY, INC.
EXHIBIT A TO
THIRD AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SCHEDULE OF INVESTORS
Spinnaker Clipper Fund, L.P.
Spinnaker Crossover Institutional Fund, L.P.
Spinnaker Crossover Fund, L.P.
Covestco-Medeura, LLC
H&Q Requisite Technology Investors, ▇.▇.
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ California
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ Employee Venture Fund, ▇.▇. ▇▇
Access Technology Partners, L.P.
Access Technology Partners Brokers Fund, L.P.
Sumitomo Corporation of America
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures IV, L.P.
MDV IV Entrepreneurs' Network Fund, L.P.
Sequel Limited Partnership
Sequel Euro Limited Partnership
Trinity Ventures V, L.P.
Trinity V Side-by-Side Fund, L.P.
Liberty Ventures I, L.P.
▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇. and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. Washing
Corporate Express, Inc.
▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇
Comdisco, Inc.
▇.▇. ▇▇▇▇▇▇▇▇, Inc.
GC&H Investments
University of Colorado at Boulder Venture Capital Fund