EXHIBIT 10.6
CRITICAL PATH, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
TABLE OF CONTENTS
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Page
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SECTION 1 Restrictions on Transferability of Securities; Registration Rights.. 2
1.1 Certain Definitions................................................. 2
1.2 Requested Registration.............................................. 3
1.3 Company Registration................................................ 6
1.4 Expenses of Registration............................................ 7
1.5 Registration on Form S-3............................................ 8
1.6 Registration Procedures............................................. 8
1.7 Indemnification..................................................... 10
1.8 Information by Holder............................................... 12
1.9 Limitations on Registration of Issues of Securities................. 12
1.10 Rule 144 Reporting.................................................. 12
1.11 Transfer or Assignment of Registration Rights....................... 13
1.12 "Market Stand-Off" Agreement........................................ 13
1.13 Delay of Registration............................................... 14
1.14 Termination of Registration Rights.................................. 14
SECTION 2 Covenants of the Company............................................ 14
2.1 Financial Information............................................... 14
2.2 Inspection.......................................................... 15
2.3 Right of First Offer................................................ 15
2.4 Employee Stock Agreements........................................... 17
2.5 Issuance of Additional Series B Preferred Stock..................... 18
2.6 Termination of Covenants............................................ 18
SECTION 3 Miscellaneous....................................................... 18
3.1 Waiver of Right of First Offer...................................... 18
3.2 Governing law....................................................... 18
3.3 Successors and Assigns.............................................. 18
3.4 Entire Agreement; Amendment; Waiver................................. 18
3.5 Notices, etc........................................................ 19
3.6 Delays or Omissions................................................. 19
3.7 Rights; Separability................................................ 19
3.8 Information Confidential............................................ 19
3.9 Titles and Subtitles................................................ 19
3.10 Counterparts........................................................ 20
3.11 Subsequent Closings................................................. 20
3.12 Expenses............................................................ 20
3.13 Aggregation of Stock................................................ 20
Exhibit A - List of Investors
Exhibit B - List of Series A Shareholders
Exhibit C - List of Founders
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CRITICAL PATH, INC.
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AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
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THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT (this "Agreement"),
made and entered into as of the 11th day of September, 1998, by and among
CRITICAL PATH, INC., a California corporation (the "Company"), and those
investors in the Company listed on Exhibit A attached hereto (the "Series B
Investors"), those shareholders of the Company listed on Exhibit B attached
hereto (the "Series A Shareholders") and those founders listed on Exhibit C
attached hereto (the "Founders"). The Series B Investors, the Series A
Shareholders and the Founders are referred to herein individually as "Investor"
and collectively as the "Investors,"
W I T N E S S E T H:
WHEREAS, the Company, the Series A Shareholders and the Founders entered
into an Investor's Rights Agreement dated as of April 1, 1998 (the "Original
Rights Agreement") pursuant to which the Company granted such Series A
Shareholders and Founders certain registration rights, information rights and
rights of first offer in connection with the purchase and sale of Series A
Preferred Stock of the Company (the "Series A Preferred Stock");
WHEREAS, concurrent with the execution of this Agreement, the Company and
the Series B Investors are entering into a Series B Preferred Stock Purchase
Agreement (the "Purchase Agreement"), pursuant to which the Company will sell,
and the Series B Investors will purchase, shares of the Series B Preferred
Stock. The Series B Investors' obligations under the Purchase Agreement are
conditioned upon the execution and delivery of this Agreement by the Company,
persons holding more than fifty (50%) in interest of the Series A Preferred
Stock and the Founders in order to provide the Series B Investors with
comparable registration rights, information rights and rights of first offer;
and
WHEREAS, the Company, the Series A Shareholders and the Founders desire to
terminate the Original Rights Agreement and to accept the rights and obligations
created pursuant hereto in lieu of the rights and obligations granted to them
under the Original Rights Agreement:
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, and for other consideration, the receipt and adequacy of which is
hereby acknowledged, the Company, the Series A Shareholders and the Founders
hereby agree that upon the execution of this Agreement, the Original Rights
Agreement shall be null and void and superseded in its entirety by the
provisions of this Agreement, and the Company, the Series A Shareholders, the
Founders and the Series B Investors hereby agree as follows:
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SECTION 1
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Restrictions on Transferability of
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Securities; Registration Rights
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1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the meanings set forth below:
(a) "Closing" shall mean the date of the initial sale of shares of the
Company's Series B Preferred Stock.
(b) "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
(c) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time.
(d) "Holder" shall mean any person or entity who holds Registrable
Securities and any holder of Registrable Securities to whom the registration
rights conferred by this Agreement have been transferred in compliance with
Section 1.11 hereof.
(e) "Initiating Holders" shall mean any Holder or Holders who in the
aggregate hold at least thirty percent (30%) of the outstanding Registrable
Securities.
(f) "Major Investor" shall mean a person or entity which, together with its
affiliates holds at least 1,500,000 Shares (subject to appropriate adjustments
for stock splits, stock dividends, combinations and other recapitalizations) and
E*TRADE Group, Inc. so long as E*TRADE Group, Inc. holds 750,000 Shares (subject
to appropriate adjustments for stock splits, stock dividends, combinations and
other recapitalizations). A Major Investor includes any general partners and
affiliates of a Major Investor (including in the case of a venture capital fund,
partners and funds affiliated with such fund).
(g) "Registrable Securities" shall mean (i) shares of Common Stock issued
to Investors or issued or issuable pursuant to the conversion of the Shares;
(ii) any Common Stock issued as a dividend or other distribution with respect to
or in exchange for or in replacement of the shares referenced in (i) above,
provided, however, that Registrable Securities shall not include any shares of
Common Stock which have previously been registered or which have been sold to
the public; and (iii) solely for the purposes of Section 1.3 hereof, Registrable
Securities shall be deemed to include shares of Common Stock of the Company held
by ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇▇▇ ("Founders
Stock").
(h) The terms "register," "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and applicable rules and regulations
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
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(i) "Registration Expenses" shall mean all expenses incurred in effecting
any registration pursuant to this Agreement, including, without limitation, all
registration, qualification, and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, fees and disbursements of one
special counsel for the selling Holders, blue sky fees and expenses, accounting
fees and expenses of any regular or special audits incident to or required by
any such registration, but shall not include Selling Expenses and fees and
disbursements of additional counsel for the Holders. Registration expenses do
not include the compensation of regular employees of the Company, which shall be
paid in any event by the Company.
(j) "Rule 144" shall mean Rule 144 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(k) "Rule 145" shall mean Rule 145 as promulgated by the Commission under
the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(l) "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
(m) "Selling Expenses" shall mean all underwriting discounts and selling
commissions applicable to the sale of Registrable Securities and fees and
disbursements of counsel for any Holder (other than the fees and disbursements
of counsel included in Registration Expenses).
(n) "Shares" shall mean the Company's Series A Preferred Stock and Series B
Preferred Stock.
1.2 Requested Registration.
(a) Request for Registration. If the Company shall receive from Initiating
Holders at any time or times not earlier than the earlier of (i) March 31, 2002
or (ii) six (6) months after the effective date of the first registration
statement filed by the Company covering an underwritten offering of any of its
securities to the general public, a written request that the Company effect any
registration with respect to all or a part of the Registrable Securities having
an aggregate offering price, net of underwriting discounts and expenses, the
aggregate gross proceeds of which (prior to deduction for underwriter's
discounts and expenses related to the issuance) exceed $12,500,000 and an
initial offering price of at least $1.312 per share (as adjusted for any
combinations, consolidations, subdivisions, splits or stock dividends with
respect to such shares of Common Stock) the Company will:
(i) promptly give written notice of the proposed registration to all
other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration (including, without limitation, filing post-effective
amendments, appropriate qualifications under applicable blue sky or other
state securities laws, and
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appropriate compliance with the Securities Act) and as would permit or
facilitate the sale and distribution of all or such portion of such
Registrable Securities as is specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining
in such request as is specified in a written request received by the Company
within twenty (20) days after such written notice from the Company is mailed
or delivered.
The Company shall not be obligated to effect, or to take any action to
effect, any such registration pursuant to this Section 1.2:
(A) 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;
(B) After the Company has initiated two such registrations pursuant to
this Section 1.2(a) (counting for these purposes only registrations which
have been declared or ordered effective and pursuant to which securities
have been sold and registrations which have been withdrawn by the Holders as
to which the Holders have not elected to bear the Registration Expenses
pursuant to Section 1.4 hereof and would, absent such election, have been
required to bear such expenses);
(C) During the period starting with the date sixty (60) days prior to
the Company's good faith estimate of the date of filing of, and ending on a
date one hundred eighty (180) days after the effective date of, a Company-
initiated registration; provided that (ii) the Company is actively employing
in good faith all reasonable efforts to cause such registration statement to
become effective and (ii) that such initial delay of registration relating
to a request of Initiating Holders pursuant to Section 1.2 shall be deemed
the one time delay allowed per demand registration as set forth in Section
1.2(b);
(D) If the Initiating Holders propose to dispose of shares of
Registrable Securities which may be immediately registered on Form S-3
pursuant to a request made under Section 1.5 hereof;
(b) Subject to the foregoing clauses (A) through (D) (except in the case of
a request that is subject to Section 1.5(b), in which case (B) and (D) above
shall not apply), 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 or requests of the Initiating Holders; provided,
however, that if (i) in the good faith judgment of the Board of Directors of the
Company, such registration would be seriously detrimental to the Company and the
Board of Directors of the Company concludes, as a result, that it is essential
to defer the filing of such registration statement at such time, and (ii) the
Company shall furnish to such Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company for such
registration statement to be filed in the near future and that it is, therefore,
essential to defer the filing of such registration statement, then the Company
shall have the right to defer such filing
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for the period during which such disclosure would be seriously detrimental,
provided that (except as provided in clause (C) above) the Company may not defer
the filing for a period of more than one hundred twenty (120) days after receipt
of the request of the Initiating Holders, and, provided further, that the
Company shall not defer its obligation in this manner more than once in any
twelve-month period.
The registration statement filed pursuant to the request of the Initiating
Holders may, subject to the provisions of Section 1.2(d) hereof, include other
securities of the Company, with respect to which registration rights have been
granted, and may include securities of the Company being sold for the account of
the Company.
(c) Underwriting. The right of any Holder to registration pursuant to
Section 1.2 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 with respect to such participation and
inclusion) to the extent provided herein. A Holder may elect to include in such
underwriting all or a part of the Registrable Securities he holds.
(d) Procedures. If the Company shall request inclusion in any registration
pursuant to Section 1.2 of securities being sold for its own account, or if
other persons shall request inclusion in any registration pursuant to Section
1.2, the Initiating Holders shall, on behalf of all Holders, offer to include
such securities in the underwriting and may condition such offer on their
acceptance of the further applicable provisions of this Section 1 (including
Section 1.12). The Company shall (together with all Holders and other persons
proposing to distribute their securities through such underwriting) enter into
an underwriting agreement in customary form with the representative of the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders, which underwriters are reasonably acceptable
to the Company. Notwithstanding any other provision of this Section 1.2, if the
representative of the underwriters advises the Initiating Holders in writing
that marketing factors require a limitation on the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
that any such limitation or cut back shall first be applied to all shares
proposed to be sold in such underwriting which are not Registrable Securities.
If a person who has requested inclusion in such registration as provided
above does not agree to the terms of any such underwriting, such person shall be
excluded therefrom by written notice from the Company, the underwriter or the
Initiating Holders. The securities so excluded shall also be withdrawn from
registration. Any Registrable Securities or other securities excluded shall
also be withdrawn from such registration. If shares are so withdrawn from the
registration and if the number of shares to be included in such registration was
previously reduced as a result of marketing factors pursuant to this Section
1.2(d), then the Company shall offer to all holders who have retained rights to
include securities in the registration the right to include additional
securities in the registration in an aggregate amount equal to the number of
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shares so withdrawn.
1.3 Company Registration.
(a) If the Company shall determine to register any of its securities either
for its own account or the account of a security holder or holders exercising
their respective demand registration rights (other than pursuant to Section 1.2
or 1.5 hereof), other than a registration relating solely to employee benefit
plans, or a registration relating solely to a Rule 145 transaction, or a
registration on any other form (other than Form ▇-▇, ▇-▇, ▇-▇ or S-18) that does
not include substantially the same information as would be required to be
included in a registration statement covering the sale of Registrable
Securities, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) use its best efforts to include in such registration (and any
related qualification under blue sky laws or other compliance), except as
set forth in Section 1.3(b) below, and in any underwriting involved therein,
all the Registrable Securities specified in a written request or requests,
made by any Holder and received by the Company within twenty (20) days after
the written notice from the Company described in clause (i) above is mailed
or delivered by the Company. Such written request may specify all or a part
of a Holder's Registrable Securities.
(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
1.3(a)(i). In such event, the right of any Holder to registration pursuant to
this Section 1.3 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 securities through such underwriting shall (together with the Company and
the other holders of securities of the Company with registration rights to
participate therein distributing their securities through such underwriting)
enter into an underwriting agreement in customary form with the representative
of the underwriter or underwriters selected by the Company.
Notwithstanding any other provision of this Section 1.3, if the
representative of the underwriters advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the
representative may (subject to the limitations set forth below) exclude all
Registrable Securities from, or limit the number of Registrable Securities to be
included in, the registration and underwriting, provided that the number of
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities proposed to be registered by shareholders of the
Company are first entirely excluded from the underwriting, and provided further
that the shares of Founders Stock, if any, proposed to be registered shall be
reduced prior to the exclusion of any other Registrable Securities in such
underwriting. If the registration is the initial public offering of the
Company's securities, the Company may limit, to the extent so advised by the
underwriters, the amount of securities (including Registrable Securities) to be
included in the registration by the Company's shareholders (including the
Holders), and such securities shall be apportioned pro rata among the selling
shareholders according to the total amount of securities entitled to be included
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therein owned by each selling stockholder, or the Company may exclude, to the
extent so advised by the underwriters, such underwritten securities entirely
from such registration; provided, however, that the number of Registrable
Securities to be included in such registration shall not be reduced unless all
other securities proposed to be registered are first excluded from the
underwriting, and provided further that the shares of Founders Stock, if any,
proposed to be registered shall be reduced prior to the exclusion of any other
Registrable Securities in such underwriting. If such registration is the second
or any subsequent registered offering of the Company's securities to the general
public, the Company may limit, to the extent so advised by the underwriters, the
amount of securities to be included in the registration by the Company's
shareholders (including the Holders); provided, however, that the aggregate
number of Registrable Securities to be included in such registration by the
Holders (excluding Founders Stock) may not be reduced to less than twenty
percent (20%) of the total number of Registrable Securities included in such
registration, to be apportioned pro rata among the Holders according to the
total amount of securities entitled to be included therein owned by each Holder.
If any person does not agree to the terms of any such underwriting, he shall be
excluded therefrom by written notice from the Company or the underwriter. Any
Registrable Securities or other securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
If shares are so withdrawn from the registration or if the number of shares
of Registrable Securities to be included in such registration was previously
reduced as a result of marketing factors, the Company shall then offer to all
persons who have retained the right to include securities in the registration
the right to include additional securities in the registration in an aggregate
amount equal to the number of shares so withdrawn.
1.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Sections 1.3 and 1.5 hereof, and the two registrations pursuant to Section 1.2
hereof and reasonable fees of one counsel for the selling shareholders shall be
borne by the Company; provided, however, that if the Holders bear the
Registration Expenses for any registration proceeding begun pursuant to Section
1.2 and subsequently withdrawn by the Holders registering shares therein, such
registration proceeding shall not be counted as a requested registration
pursuant to Section 1.2 hereof, except in the event that such withdrawal is
based upon material adverse information relating to the Company that is
different from the information known or available (upon request from the Company
or otherwise) to the Holders requesting registration at the time of their
request for registration under Section 1.2, in which event such registration
shall not be treated as a counted registration for purposes of Section 1.2
hereof, even though the Holders do not bear the Registration Expenses for such
registration. All Selling Expenses relating to securities so registered shall be
borne by the holders of such securities pro rata on the basis of the number of
shares of securities so registered on their behalf.
1.5 Registration on Form S-3
(a) After its initial public offering, the Company shall use its best
efforts to qualify for registration on Form S-3 or any comparable or successor
form or forms. After the Company has qualified for the use of Form S-3, in
addition to the rights contained in the foregoing provisions of this Section 1,
the holders of at least twenty percent (20%) of Registrable Securities
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shall have the right to request registrations on Form S-3 (such requests shall
be in writing and shall state the number of shares of Registrable Securities to
be disposed of and the intended methods of disposition of such shares by such
Holder or Holders), provided, however, that the Company shall not be obligated
to effect any such registration if (i) 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) on
Form S-3 at an aggregate price to the public of less than $1,000,000, or (ii) in
the event the Company shall furnish the certification described in paragraph
1.2(b)(ii) (but subject to the limitations set forth therein), or (iii) the
Company has, within the six (6) month period preceding the date of such request
already effected one registration on Form S-3 for the Holders pursuant to this
Section 1.5.
(b) If a request complying with the requirements of Section 1.5(a) hereof
is delivered to the Company, the provisions of Sections 1.2(a)(i) and (ii) and
Section 1.2(b) hereof shall apply to such registration. If the registration is
for an underwritten offering, the provisions of Sections 1.2(c) and 1.2(d)
hereof shall apply to such registration.
1.6 Registration Procedures. In the case of each registration effected by
the Company pursuant to Section 1, the Company will keep each Holder advised in
writing as to the initiation of each registration and as to the completion
thereof. At its expense, the Company will use its best efforts to:
(a) Keep such registration effective for a period of one hundred twenty
(120) days or until the Holder or Holders have completed the distribution
described in the registration statement relating thereto, whichever first
occurs; provided, however, that (i) such one hundred twenty (120) day period
shall be extended for a period of time equal to the period the Holder refrains
from selling any securities included in such registration at the request of an
underwriter of Common Stock (or other securities) of the Company; and (ii) in
the case of any registration of Registrable Securities on Form S-3 which are
intended to be offered on a continuous or delayed basis, such one hundred twenty
(120) day period shall be extended, if necessary, to keep the registration
statement effective until all such Registrable Securities are sold, provided
that Rule 415, or any successor rule under the Securities Act, permits an
offering on a continuous or delayed basis, and provided further that applicable
rules under the Securities Act governing the obligation to file a post-effective
amendment permit, in lieu of filing a post-effective amendment that (A) includes
any prospectus required by Section 10(a)(3) of the Securities Act or (B)
reflects facts or events representing a material or fundamental change in the
information set forth in the registration statement, the incorporation by
reference of information required to be included in (A) and (B) above to be
contained in periodic reports filed pursuant to Section 13 or 15(d) of the
Exchange Act in the registration statement;
(b) Prepare and file with the Commission such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) Furnish such number of prospectuses, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and other
documents incident thereto,
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including any amendment of or supplement to the prospectus, as a Holder from
time to time may reasonably request in order to facilitate the disposition of
Registrable Securities owned by them;
(d) Notify each seller 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 or incomplete in the light of the
circumstances then existing, and at the request of any such seller, prepare and
furnish to such seller a reasonable number of copies of a supplement to or an
amendment of such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such shares, such prospectus shall not include an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading or
incomplete in the light of the circumstances then existing;
(e) Cause all such Registrable Securities registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed;
(f) Provide a transfer agent and registrar for all Registrable Securities
registered pursuant to such registration statement and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration;
(g) In connection with any underwritten offering pursuant to a registration
statement filed pursuant to Section 1.2 hereof, the Company will enter into an
underwriting agreement reasonably necessary to effect the offer and sale of
Common Stock, provided such underwriting agreement contains customary
underwriting provisions and provided further that if the underwriter so requests
the underwriting agreement will contain customary contribution provisions; and
(h) Use best efforts to register and qualify the securities covered by such
registration statement under such other securities or Blue Sky laws of such
jurisdictions as shall be reasonably requested by the Holders, provided that the
Company shall not be required in connection therewith or as a condition thereto
to qualify to do business or to file a general consent to service of process in
any such states or jurisdictions.
1.7 Indemnification
(a) The Company will indemnify each Holder, each of its officers, directors
and partners, legal counsel, and accountants and each person controlling such
Holder within the meaning of the Securities Act or the Exchange Act, with
respect to which registration, qualification, or compliance has been effected
pursuant to this Section 1, and each underwriter as defined in the Securities
Act, if any, and each person who controls within the meaning of the Securities
Act or the Exchange Act any underwriter, against all expenses, claims, losses,
damages, and liabilities (or actions, proceedings, or settlements in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any prospectus, offering
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circular, or other document (including any related registration statement,
notification, or the like) 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 not misleading, or any violation by the Company of the Securities Act,
the Exchange Act, any state securities laws or any rule or regulation thereunder
applicable to the Company and relating to action or inaction required of the
Company in connection with any such registration, qualification, or compliance,
and will reimburse each such Holder, each of its officers, directors, partners,
legal counsel, and accountants and each person controlling such Holder, each
such underwriter, and each person who controls any such underwriter, as
incurred, for any legal and any other expenses reasonably incurred in connection
with investigating and defending or settling any such claim, loss, damage,
liability, or action, 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 based upon written
information furnished to the Company by such Holder or underwriter and stated to
be specifically for use therein. It is agreed that the indemnity agreement
contained in this Section 1.7(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 has not been
unreasonably withheld).
(b) Each Holder will, if Registrable Securities held by him are included in
the securities as to which such registration, qualification, or compliance is
being effected, indemnify, to the extent of the net proceeds from the sale of
Registrable Securities by such Holder in the registration, qualification or
compliance (provided that such limitation shall not apply in the case of fraud
or gross negligence by the Holder in providing information to the Company for
use by the Company in the preparation of such registration, qualification or
compliance) the Company, each of its directors, officers, partners, legal
counsel, and accountants and each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of the Securities Act and the
Exchange Act, and each other such Holder, and each of their officers, directors,
and partners, and each person controlling such Holder, 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 and such
Holders, directors, officers, partners, legal counsel, and accountants, persons,
underwriters, or control persons, as incurred, for any legal and any other
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability, or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue 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 such Holder and
stated to be specifically for use therein; provided, however, that the
obligations of such Holder hereunder shall not apply to amounts paid in
settlement of any such claims, losses, damages, or liabilities (or actions in
respect thereof) if such settlement is effected without the consent of such
Holder (which consent shall not be unreasonably withheld); provided that in no
event shall any indemnity under this subsection exceed the gross proceeds from
the offering received by such Holder.
-10-
(c) Each party entitled to indemnification under this Section 1.7 (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 such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or any litigation resulting
therefrom, shall be approved 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 Section 1, to the extent such
failure is not prejudicial. 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 that 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. Each Indemnified Party shall furnish such information
regarding itself or the claim in question as an Indemnifying Party may
reasonably request in writing and as shall be reasonably required in connection
with defense of such claim and litigation resulting therefrom.
(d) If the indemnification provided for in this Section 1.7 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage, or expense referred to therein,
then the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall contribute to the amount paid or payable by such Indemnified
Party as a result of such loss, liability, claim, damage, or expense in such
proportion as is appropriate to reflect the relative fault of the Indemnifying
Party on the one hand and of the Indemnified Party on the other in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party and the parties' relative intent, knowledge, access to information, and
opportunity to correct or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement entered
into in connection with the underwritten public offering are in conflict with
the foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 1.7 shall
survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.8 Information by Holder. Each Holder of Registrable Securities shall
furnish to the Company such information regarding such Holder and the
distribution proposed by such Holder as the Company may reasonably request in
writing and as shall be reasonably required in con-
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nection with any registration, qualification, or compliance referred to in this
Section 1.
1.9 Limitations on Registration of Issues of Securities. From and after
the date of this Agreement, the Company shall not, without the prior written
consent of a majority in interest of the Holders, enter into any agreement with
any holder or prospective holder of any securities of the Company giving such
holder or prospective holder any registration rights the terms of which are
equal to or more favorable than the registration rights granted to the Holders
hereunder.
1.10 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission that may permit the sale of the
Restricted Securities to the public without registration, or pursuant to a
registration on Form S-3, the Company agrees to use its best efforts to:
(a) Make and keep public information regarding the Company available as
those terms are understood and defined in Rule 144 under the Securities Act, at
all times following the effective date of the first registration under the
Securities Act filed by the Company for an offering of its securities to the
general public;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
at any time after it has become subject to such reporting requirements;
(c) So long as a Holder owns any Restricted Securities, furnish to the
Holder forthwith upon written request (i) a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 (at any time from
and after ninety (90) days following 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), or its
qualification as a registrant whose securities may be resold pursuant to Form S-
3 (at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company, and (iii) such other reports and documents so
filed as a Holder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any such securities
without registration.
1.11 Transfer or Assignment of Registration Rights. The rights to cause
the Company to register securities granted to a Holder by the Company under this
Section 1 may be transferred or assigned by a Holder only to a transferee or
assignee of not less than 100,000 shares of Registrable Securities or all
Registrable Securities held by such transferor if the amount is less than
100,000 shares of Registrable Securities (as presently constituted and subject
to subsequent adjustments for stock splits, stock dividends, reverse stock
splits, and the like), provided that the Company is given written notice at the
time of or within a reasonable time after such transfer or assignment, stating
the name and address of the transferee or assignee and identifying the
securities with respect to which such registration rights are being transferred
or assigned, and, provided further, that the transferee or assignee of such
rights assumes the obligations of such Holder under this Section 1. The
foregoing 100,000 share limitation shall not apply, however, to transfers by a
Holder to shareholders, partners, retired partners or affiliates (including in
the case of a venture capital fund partners and funds affiliated with such
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fund) of the transferring Holder (including spouses and ancestors, lineal
descendants, and siblings of such partners or spouses who acquire Registrable
Securities by gift, will or intestate succession).
1.12 "Market Stand-Off" Agreement. If requested by the Company and an
underwriter of Common Stock (or other securities) of the Company, an Investor
shall not sell (including, without limitation, any short sale) or otherwise
transfer or dispose of any Common Stock (or other securities) of the Company
held by such Investor (other than those included in the registration) for a
period of up to one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act, provided
that:
(a) such one hundred eighty (180) day "market stand-off" agreement shall
only apply to the first such registration statement of the Company, including
securities to be sold on its behalf to the public in an underwritten offering;
and
(b) all Holders and officers and directors of the Company enter into
similar agreements.
The obligations described in this Section 1.12 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 shares (or securities) subject to the
foregoing restriction until the end of such applicable one hundred eighty (180)
day period.
1.13 Delay of Registration. No Holder shall have any right to take any
action to restrain, enjoin, or otherwise delay any registration as the result of
any controversy that might arise with respect to the interpretation or
implementation of this Section 1.
1.14 Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to Section 1.2,
1.3 or 1.5 shall terminate after the earlier of (i) five (5) years following the
closing of the initial public offering of Common Stock of the Company, or (ii)
such time as Rule 144 or another similar exemption under the Securities Act is
available for the sale of all of such Holder's shares during any ninety (90) day
period.
SECTION 2
---------
Covenants of the Company
------------------------
The Company hereby covenants and agrees, so long as any Holder owns any
Registrable Shares, as follows:
2.1 Financial Information.
(a) The Company will furnish the following reports to each Holder:
As soon as practicable after the end of each fiscal year of the Company, and
in any event within ninety (90) days thereafter, an audited consolidated balance
sheet and statement of
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shareholders' equity of the Company and its subsidiaries, if any, as at the end
of such fiscal year, and audited consolidated statements of income and cash
flows of the Company and its subsidiaries, if any, for such year, 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 and certified by independent public
accountants of recognized national standing selected by the Company.
(b) The Company shall deliver to each Major Investor:
(i) within thirty (30) days of the end of each month, an unaudited
income statement and a statement of cash flows and balance sheet for and as
of the end of such month, in reasonable detail;
(ii) 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, an unaudited
consolidated balance sheet of the Company and its subsidiaries, if any, as
of the end of each such quarterly period, and unaudited consolidated
statements of income and statement of cash flow of the Company and its
subsidiaries for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles
consistently applied, subject to changes resulting from normal year-end
audit adjustments, all in reasonable detail and certified by the principal
financial or accounting officer of the Company, except that such financial
statements need not contain the notes required by generally accepted
accounting principles;
(iii) as soon as practicable, but in any event fifteen (15) days prior
to the end of each fiscal year, a business plan and a budget for the next
fiscal year, which budget shall be prepared on a monthly basis, including
balance sheets, income statements and statements of cash flows for such
months and, as soon as prepared, any revised business plans or budgets
prepared by the Company;
(iv) with respect to the financial statements called for in
subsections (a) and (b)(ii) of this Section 2.1, an instrument executed by
the Chief Financial Officer or President of the Company certifying that such
financials were prepared in accordance with generally accepted accounting
principles consistently applied with prior practice for earlier periods
(with the exception of footnotes that may be required by generally accepted
accounting principles) and fairly present the financial condition of the
Company and its results of operation for the period specified, subject to
year-end audit adjustments; and
(v) such other information relating to the financial condition,
business, prospects or corporate affairs of the Company as a Major Investor,
or upon reasonable consent of the Company, any assignee of such Major
Investor may from time to time request; provided, however, that the Company
shall not be obligated under this subsection (v) or any other subsection of
Section 2.1 to provide information that it deems in good faith to be a trade
secret or similar confidential information.
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2.2 Inspection. The Company shall permit each Major Investor, at such
Investor's expense, to visit and inspect the Company's properties, to examine
its books of account and records and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Major Investor; provided, however, that the Company shall not be
obligated pursuant to this Section 2.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information, unless such Major Investor enters into a confidentiality agreement
in form and substance satisfactory to the Company.
2.3 Right of First Offer. The Company hereby grants to each Major Investor
and to ▇▇▇▇▇ ▇▇▇▇▇▇ the right of first offer to purchase a pro rata share of New
Securities (as defined in this Section 2.3) which the Company may, from time to
time, propose to sell and issue. A Holder's pro rata share, for purposes of this
right of first offer, is the ratio of the number of shares of Common Stock owned
by such Holder immediately prior to the issuance of New Securities, assuming
full conversion of the Shares and exercise of any option or warrant held by such
Holder to the total number of shares of Common Stock outstanding immediately
prior to the issuance of New Securities, assuming full conversion of the Shares
and exercise of all outstanding rights, options and warrants to acquire Common
Stock of the Company. For purposes of this Section 2.3, Major Investor includes
any general partners and affiliates of a Major Investor. A Major Investor shall
be entitled to apportion its right of first offer hereby granted among itself
and its partners and affiliates in such proportions as it deems appropriate.
This right of first offer shall be subject to the following provisions:
(a) "New Securities" shall mean any capital stock (including Common Stock
and/or Preferred Stock) of the Company whether now authorized or not, and
rights, options or warrants to purchase such capital stock, and securities of
any type whatsoever that are, or may become, convertible into capital stock;
provided that the term "New Securities" does not include (i) securities
purchased under the Purchase Agreement; (ii) securities issued upon conversion
of the Shares; (iii) securities issued pursuant to the acquisition of another
business entity or business segment of any such entity by the Company by merger,
purchase of substantially all the assets or other reorganization whereby the
Company will own more than fifty percent (50%) of the voting power of such
business entity or business segment of any such entity; (iv) any borrowings,
direct or indirect, from financial institutions or other persons by the Company,
whether or not presently authorized, including any type of loan or payment
evidenced by any type of debt instrument, provided such borrowings do not have
any equity features including warrants, options or other rights to purchase
capital stock and are not convertible into capital stock of the Company; (v)
securities issued to employees, consultants, officers or directors of the
Company pursuant to any stock option, stock purchase or stock bonus plan,
agreement or arrangement approved by the Board of Directors; provided that such
approval of the Board of Directors must include the approval of the directors
elected by the holders of the Preferred Stock; (vi) securities issued in
connection with obtaining lease financing, whether issued to a lessor, guarantor
or other person; (vii) securities issued in a public offering pursuant to a
registration under the Securities Act which would trigger an automatic
conversion of the Preferred Stock into Common Stock pursuant to the Company's
Articles of Incorporation; (viii) securities issued in connection with any stock
split, stock dividend or recapitalization of the Company; and (ix) any right,
option or warrant to acquire
-15-
any security convertible into the securities excluded from the definition of New
Securities pursuant to subsections (i) through (ix) above.
(b) In the event the Company proposes to undertake an issuance of New
Securities, it shall give each Holder written notice of its intention,
describing the type of New Securities, and their price and the general terms
upon which the Company proposes to issue the same. Each Holder shall have
twenty (20) days after any such notice is mailed or delivered to agree to
purchase such Holder's 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. The Company
shall promptly, in writing, inform each Major Investor that elects to purchase
all the shares available to it (a "Fully-Exercising Investor") of any other
Major Investor's failure to do likewise. During the five (5) day period
commencing after such information is given, each Fully-Exercising Investor may
elect to purchase that portion of the New Securities for which Major Investors
were entitled to subscribe but which were not subscribed for by the Major
Investors that is equal to the proportion that the number of shares of Common
Stock issued and held, or issuable upon conversion of Shares then held, by such
Fully-Exercising Investor bears to the total number of shares of Common Stock
issued and held, or issuable upon conversion of the Shares then held, by all
Fully-Exercising Investors who wish to purchase some of the unsubscribed shares.
(c) In the event the Holders fail to exercise fully the right of first
refusal within such twenty (20) day period, the Company shall have ninety (90)
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 sixty (60)
days from the date of such agreement) to sell the New Securities respecting
which the Holders' right of first refusal option set forth in this Section 2.4
was not exercised, at a price and upon terms no more favorable to the purchasers
thereof than specified in the Company's notice to Holders pursuant to Section
2.4(b). In the event the Company has not sold within such (90) day period or
entered into an agreement to sell the New Securities in accordance with the
foregoing within sixty (60) days from the date of such agreement, the Company
shall not thereafter issue or sell any New Securities, without first again
offering such securities to the Holders in the manner provided in Section 2.4(b)
above.
(d) The right of first offer granted under this Agreement shall expire
upon, and shall not be applicable to, the first sale of Common Stock of the
Company to the public effected pursuant to a registration statement filed with,
and declared effective by, the Securities and Exchange Commission (the
"Commission") under the Securities Act, which such registration would trigger an
automatic conversion of the Preferred Stock into Common Stock pursuant to the
Company's Articles of Incorporation.
(e) The right of first refusal set forth in this Section 2.3 may not be
assigned or transferred, except that (i) such right is assignable by each Holder
to any wholly owned subsidiary or parent of, or to any corporation or entity
that is, within the meaning of the Securities Act, controlling, controlled by or
under common control with, any such Holder, and (ii) such right is assignable
between and among any of the Holders.
2.4 Employee Stock Agreements. Unless otherwise approved by the Company's
Board of Directors, including the directors elected by the holders of Preferred
Stock pursuant to the
-16-
Company's Amended and Restated Articles of Incorporation, all service providers,
including but not limited to employees and consultants, of the Company who shall
purchase or receive options to purchase shares of the Company's Common Stock
following the date hereof shall be required to execute stock purchase or option
agreements in a form approved by the Board of Directors providing for vesting of
such shares over a forty-eight (48)-month period at the rate of twenty-five
percent (25%) of the shares one year from the date of hire and 1/48th of the
shares per month thereafter (and without acceleration of such vesting schedule
unless otherwise so agreed) and providing further for a right of repurchase in
favor of the Company or its assigns with respect to future sales of such Common
Stock by such persons .
2.5 Issuance of Additional Series B Preferred Stock. Unless otherwise
approved by the Company's Board of Directors or issued pursuant to the Series B
Preferred Stock Purchase Agreement, the Company shall not issue any shares or
warrants to purchase shares of Series B Preferred Stock following the date
hereof.
2.6 Termination of Covenants. The covenants set forth in Sections 2.1,
2.2, 2.3, 2.4 and 2.5 shall terminate and be of no further force or effect (a)
when the sale of securities pursuant to a registration statement filed by the
Company under the Securities Act in connection with the firm commitment
underwritten offering of its securities to the general public is consummated,
the aggregate gross proceeds of which (prior to deduction for underwriter's
discounts and expenses related to the issuance) exceed $12,500,000 and an
initial offering price of at least $1.312 per share (as adjusted for any
combinations, consolidations, subdivisions, splits or stock dividends with
respect to such shares of Common Stock), or (b) when the Company first becomes
subject to the periodic reporting requirements of Sections 13 or 15(d) of the
Exchange Act, whichever event shall first occur.
SECTION 3
---------
Miscellaneous
-------------
3.1 Waiver of Right of First Offer. Each Series A Shareholder and Founder
holding a right of first offer to purchase new securities of the Company
pursuant to Section 2.3 of the Original Rights Agreement, by its execution of
this Agreement, hereby waives any rights it may have pursuant to such section to
purchase a greater number of shares of Series A Preferred Stock than the number
such Series A Shareholder is purchasing under the Purchase Agreement.
3.2 Governing law. This Agreement shall be governed in all respects by the
laws of the State of California, as if entered into by and between California
residents exclusively for performance entirely within California.
3.3 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.
3.4 Entire Agreement; Amendment; Waiver. This Agreement (including the
Exhibits hereto) constitutes the full and entire understanding and agreement
between the parties with regard to the subjects hereof and thereof. Neither this
Agreement nor any term hereof may be
-17-
amended, waived, discharged or terminated, except by a written instrument signed
by the Company and the holders of at least a majority of the Registrable
Securities and any such amendment, waiver, discharge or termination shall be
binding on all the Holders, but in no event shall the obligation of any Holder
hereunder be materially increased, except upon the written consent of such
Holder.
3.5 Notices, etc. Any notice required or permitted to be given to a party
pursuant to the provisions of this Agreement shall be in writing and shall be
effective and deemed given to such party under this Agreement on the earliest of
the following: (i) the date of personal delivery; (ii) two (2) business days
after transmission by facsimile, addressed to the other party at its facsimile
number, with confirmation of transmission; (iii) four (4) business days after
deposit with a return receipt express courier for United States deliveries; or
(iv) three (3) business days after deposit in the United States mail by
registered or certified mail (return receipt requested) for United States
deliveries. All notices not delivered personally or by facsimile will be sent
with postage and/or other charges prepaid and properly addressed to the party to
be notified at the address on file with the Company or, in the case of the
Company, at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇,▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, or at such other
address as such other party may designate by ten (10) days advance written
notice to the other parties hereto. Notices to the Company will be marked
"Attention: President."
3.6 Delays or Omissions. No delay or omission to exercise any right, power
or remedy accruing to any Holder, 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 therefore 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 made in
writing and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement or by law or otherwise
afforded to any Holder, shall be cumulative and not alternative.
3.7 Rights; Separability. Unless otherwise expressly provided herein, each
Holder's rights hereunder are several rights, not rights jointly held with any
of the other Holders. In case any provision of this 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.
3.8 Information Confidential. Each Holder acknowledges that the
information received by them pursuant hereto may be confidential and for its use
only, and it will not use such confidential information in violation of the
Exchange Act or reproduce, disclose or disseminate such information to any other
person (other than its employees or agents having a need to know the contents of
such information, and its attorneys), except in connection with the exercise of
rights under this Agreement, unless the Company has made such information
available to the public generally or such Holder is required to disclose such
information by a governmental body.
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3.9 Titles and Subtitles. The titles of the paragraphs and subparagraphs
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
3.10 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.
3.11 Subsequent Closings. In the event that the Company shall issue, after
the date hereof, any shares of Series B Preferred Stock or grant options or
warrants therefore, any holder of such shares of Series B Preferred Stock or
securities convertible into Series B Preferred Stock pursuant to the Purchase
Agreement shall be deemed a Holder with all of the rights of a Holder under this
Agreement; provided that as a condition thereto such Investor and the Company
shall sign a counterpart signature page to this Agreement.
3.12 Expenses. If any action at law or in equity is necessary to enforce
or interpret the terms of this Agreement, the prevailing party shall be entitled
to reasonable attorneys' fees, costs and necessary disbursements in addition to
any other relief to which such party may be entitled.
3.13 Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Investors' Rights Agreement effective as of the day and year first
above written.
COMPANY: CRITICAL PATH, INC.
By /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
President and Chief Executive Officer
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INVESTORS: E*TRADE Group, Inc.
By /s/
----------------------------------------
Title CFO
-------------------------------------
BENCHMARK CAPITAL PARTNERS II, L.P.
as nominee for
Benchmark Capital Partners II, L.P.,
Benchmark Founders Fund II, L.P.,
Benchmark Founders Fund II-A, L.P. and
Benchmark Members' Fund II, L.P.
By: Benchmark Capital Management Co. II,
L.L.C., general partner
By /s/
----------------------------------------
Managing Member
▇▇▇▇, ▇▇▇▇▇▇▇ VENTURES V, L.P.
By: Fifth MDV Partners, L.L.C.
By______________________________________
Managing Member
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
-20-
CMG@Ventures II, L.L.C.
By /s/
--------------------------------------
Title General Partner
-----------------------------------
SOFTBANK TECHNOLOGY VENTURES
By______________________________________
Title___________________________________
SOFTBANK TECHNOLOGY ADVISORS FUND
By______________________________________
Title___________________________________
DIGITAL MEDIA CAPITAL, LLC
By______________________________________
Title___________________________________
________________________________________
▇▇▇▇ ▇. Axel
________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
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________________________________________
▇▇▇▇ ▇. ▇▇▇▇
________________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇
________________________________________
▇▇▇▇ ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
Storey ▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
-22-
________________________________________
Minturn ▇. ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
________________________________________
▇▇▇ ▇▇▇▇▇▇▇
________________________________________
S.D. Living Trust
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ del ▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
-23-
US WEST DATA INVESTMENTS, INC.
By /s/
--------------------------------------
Title___________________________________
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
By /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
--------------------------------------
Title Attorney-In-Fact
-----------------------------------
NETWORK SOLUTIONS, INC.
By /s/
--------------------------------------
Title Chief Financial Officer and Acting
-----------------------------------
Chief Operating Officer
-----------------------------------
ATTRACTOR, L.P.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, MM
--------------------------------------
Title Attractor Ventures LLC, GP
-----------------------------------
Attractor LP
-----------------------------------
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
-24-
ATTRACTOR DEARBORN PARTNERS, L.P.
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, MM
--------------------------------------
Title Attractor Ventures LLC, GP
-----------------------------------
Attractor LP
-----------------------------------
ATTRACTOR INSTITUTIONAL
By /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, MM
--------------------------------------
Title Attractor Ventures LLC, GP
-----------------------------------
Attractor LP
-----------------------------------
THE ▇▇▇▇▇▇▇▇ FAMILY TRUST
By /s/
--------------------------------------
Title Trustee
-----------------------------------
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
THE ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ REVOCABLE TRUST
By /s/
--------------------------------------
Title Trustee
-----------------------------------
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
-25-
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇ INVESTMENT POOL II, LLC
By /s/
--------------------------------------
Title Member / CFO
-----------------------------------
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, TTEE THE
COTSAKOS REVOCABLE TRUST, UAD 9/3/87
________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
________________________________________
▇▇▇▇▇ ▇▇▇▇▇▇▇
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
Second Closing
-26-
________________________________________
▇▇▇▇▇ ▇▇▇▇▇
________________________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇
c/o ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
Signature Page to Critical Path, Inc.
Amended & Restated Investors' Rights Agreement
-27-
EXHIBIT A
---------
LIST OF INVESTORS
-----------------
First Closing - September 11, 1998
----------------------------------
Number of Total
Series B Purchase
Investor Shares Price
------------------------------------------------ --------- --------------
E*TRADE Group, Inc.................................. 7,742,735 $15,000,000.00
Four Embarcadero
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures V, L.P....................... 240,025 465,000.43
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures V, L.P. as nominee for MDV
Entrepreneurs' Network Fund II(A), L. P. and MDV
Entrepreneurs' Network Fund II(B), L.P............. 18,067 35,001.20
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇ --------- --------------
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
TOTAL............................................ 8,000,827 $15,500,001.63
========= ==============
Second Closing - January __, 1999
---------------------------------
Number of Total
Series B Purchase
Investor Shares Price
------------------------------------------------ --------- --------------
U S West............................................ 4,129,459 $8,000,000.92
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇▇▇▇▇▇
CMG@Ventures II, L.L.C.............................. 774,274 1,500,001.02
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
A-1
Number of Total
Series B Purchase
Investor Shares Price
------------------------------------------------ --------- --------------
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇................................... 825,892 1,600,000.57
▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Benchmark Capital................................... 516,183 1,000,001.33
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇▇▇▇▇▇
Network Solutions, Inc./1/.......................... 500,000 968,650.00
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ Korzienewski
Network Solutions, Inc.............................. 500,000 774,920.00
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ Korzienewski
Attractor LP........................................ 322,840 625,437.93
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attractor Dearborn Parnters LP...................... 171,165 331,597.95
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Attractor Institutional............................. 22,177 42,963.50
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
_________
/1/ Network Solutions, Inc. ("NSI") is exercising its right to purchase
1,000,000 shares of Series B Preferred Stock which the Company granted to NSI in
connection with a Lease Agreement entered into between NSI and the Company.
According to such agreement, NSI has the right to purchase 500,000 shares at a
discount of 80% of the price per share for the Series B Preferred Stock
(1.54984) and the remaining 500,000 shares at the full price per share for the
Series B Preferred Stock (1.9373).
A-2
Number of Total
Series B Purchase
Investor Shares Price
------------------------------------------------ --------- --------------
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures V, L.P....................... 240,025 465,000.43
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures V, L.P. as nominee for MDV
Entrepreneurs' Network Fund II(A), L. P. and MDV
Entrepreneurs' Network Fund II(B), L.P............. 18,067 35,001.20
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
The ▇▇▇▇▇▇▇▇ Family Trust, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, trustees, 1/17/94............... 51,619 100,001.49
c/o E*TRADE Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇..................................... 25,810 50,001.72
c/o E*TRADE Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
The ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ Revocable Trust, UAD 4/24/97.. 12,905 25,000.86
c/o E*TRADE Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇................................... 2,581 5,000.18
c/o E*TRADE Group, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
TOTAL............................................ 8,112,997 $15,523,579.10
========= ==============
EXHIBIT B
LIST OF SHAREHOLDERS
--------------------
A-3
Name
----
Benchmark Capital
▇▇▇▇, ▇▇▇▇▇▇▇ Ventures
CMG@Ventures II, L.L.C.
Softbank Technology Ventures
Softbank Technology Advisors Fund
E*TRADE Group, Inc.
Digital Media Capital, LLC
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
Storey ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇
S.D. Living Trust,
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Trustee
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. Axel
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Minturn ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ del ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
B-4
EXHIBIT C
LIST OF FOUNDERS
----------------
Name
----
▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇
C-5