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EXHIBIT 4.2
DIGITAL IMPACT, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
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TABLE OF CONTENTS
PAGE
SECTION 1. AMENDMENT AND RESTATEMENT............................................ 2
1.1 Amendment and Restatement............................................ 2
SECTION 2. GENERAL.............................................................. 2
2.1 Definitions.......................................................... 2
SECTION 3. REGISTRATION; RESTRICTIONS ON TRANSFER............................... 3
3.1 Restrictions on Transfer............................................. 3
3.2 Demand Registration.................................................. 5
3.3 Piggyback Registrations.............................................. 6
3.4 Form S-3 Registration................................................ 7
3.5 Expenses of Registration............................................. 8
3.6 Obligations of the Company........................................... 9
3.7 Termination of Registration Rights................................... 10
3.8 Delay of Registration; Furnishing Information........................ 10
3.9 Indemnification...................................................... 10
3.10 Assignment of Registration Rights.................................... 12
3.11 Amendment of Registration Rights..................................... 13
3.12 Limitation on Subsequent Registration Rights......................... 13
3.13 "Market Stand-Off" Agreement; Agreement to Furnish Information....... 13
3.14 Rule 144 Reporting................................................... 13
SECTION 4. COVENANTS OF THE COMPANY............................................. 14
4.1 Basic Financial Information and Reporting............................ 14
4.2 Inspection Rights.................................................... 15
4.3 Confidentiality of Records........................................... 15
4.4 Reservation of Common Stock.......................................... 15
4.5 Stock Vesting........................................................ 15
4.6 Proprietary Information and Inventions Agreement..................... 15
4.7 Use of Proceeds...................................................... 15
4.8 Bridge Financings.................................................... 16
4.9 Change in Authorized Number of Board of Directors.................... 16
4.10 Qualified Small Business............................................. 16
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TABLE OF CONTENTS
(CONTINUED)
PAGE
4.11 Termination of Covenants ............................................ 16
SECTION 5. RIGHTS OF FIRST REFUSAL ............................................ 16
5.1 Subsequent Offerings................................................. 16
5.2 Exercise of Rights................................................... 17
5.3 Issuance of Equity Securities to Other Persons....................... 17
5.4 Sale Without Notice.................................................. 17
5.5 Termination and Waiver of Rights of First Refusal.................... 17
5.6 Transfer of Rights of First Refusal.................................. 17
5.7 Excluded Securities.................................................. 17
SECTION 6. MISCELLANEOUS........................................................ 18
6.1 Governing Law........................................................ 18
6.2 Survival............................................................. 18
6.3 Successors and Assigns............................................... 19
6.4 Entire Agreement..................................................... 19
6.5 Severability......................................................... 19
6.6 Amendment and Waiver................................................. 19
6.7 Delays or Omissions.................................................. 19
6.8 Notices.............................................................. 19
6.9 Attorneys' Fees...................................................... 20
6.10 Titles and Subtitles................................................. 20
6.11 Counterparts......................................................... 20
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DIGITAL IMPACT, INC.
AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 7th day of July, 1999, by and among DIGITAL IMPACT, INC.,
a California corporation (the "Company"), ▇▇▇▇▇▇▇ ▇. Park and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(the "Founders"), the purchasers of the Company's Series A Preferred Stock
("Series A Stock") set forth on Exhibit A hereto, the purchasers of the
Company's Series B Preferred Stock ("Series B Stock") set forth on Exhibit B
hereto and the purchasers of the Company's Series C Preferred Stock ("Series C
Stock") set forth on Exhibit A of that certain Series C Preferred Stock
Purchase Agreement of even date herewith (the "Purchase Agreement") and Exhibit
C hereto. The purchasers of the Series A Stock shall be referred to hereinafter
as the "Series A Investors", the purchasers of the Series B Stock shall be
referred to hereinafter as the "Series B Investors", the purchasers of the
Series C Stock shall be referred to hereinafter as the "Series C Investors"
and, collectively, as the "Investors."
RECITALS
WHEREAS, the Company proposes to sell and issue shares of its Series C
Stock pursuant to the Purchase Agreement;
WHEREAS, as a condition of entering into the Purchase Agreement, the
Series C Investors have requested that the Company extend to them registration
rights, information rights and other rights as set forth below:
WHEREAS, the Company's and the Series C Investors' obligations under the
Purchase Agreement are conditioned upon the execution and delivery by such
Series C Investors, the holders of at least a majority of the Series A Stock
and Series B Stock, the Founders and the Company of this Agreement;
WHEREAS, the Series A Investors and the Series B Investors possess
registration rights, information rights and other rights pursuant to that
certain Investor Rights Agreement dated as of November 18, 1998 between the
Company and such Series A Investors and Series B Investors (the "Prior
Agreement"); and
WHEREAS, the Company and the undersigned Series A Investors and Series B
Investors desire to terminate the Prior Agreement and to accept the rights
created pursuant hereto in lieu of the rights granted to them under the Prior
Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants set
forth herein, the Series A Investors, the Series B Investors, and the Founders
who are parties to the
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Prior Agreement hereby agree that the Prior Agreement shall be superseded and
replaced in its entirety by this Agreement, and the parties hereto further
agree as follows:
SECTION 1. AMENDMENT AND RESTATEMENT
1.1 AMENDMENT AND RESTATEMENT. Effective upon the closing of the sale
and issuance of the Series C Stock pursuant to the Purchase Agreement, all
provisions of, rights granted and covenants made in the Prior Agreement are
hereby waived released and terminated in their entirety and shall have no
further force or effect whatsoever. The rights and covenants contained in this
Agreement set forth the sole and entire agreement among the Company and the
Investors on the subject matter hereof and supersede any and all rights granted
or covenants made under any prior agreement.
SECTION 2. GENERAL
2.1 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 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 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.
"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 (a) Common Stock of the Company
issued or issuable upon conversion of the Shares; (b) except with respect to
Sections 3.2, 3.4, 3.11, 3.12, 4 and 5, Common Stock held by the Founders; and
(c) 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 or sold in a
private transaction in which the transferor's rights under Section 3 of this
Agreement are not assigned.
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"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 (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 3.2, 3.3 and 3.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements not
to exceed fifteen thousand dollars ($15,000) 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).
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"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 and any reasonable fees and
disbursements (not including expenses) exceeding fifteen thousand dollars
($15,000) of a single special counsel for the Holders.
"SHARES" shall mean (i) the Company's Series A Stock held by the
Series A Investors listed on Exhibit A hereto and their permitted assigns, (ii)
the Company's Series B Stock held by the Series B Investors listed on Exhibit B
hereto and their permitted assigns, (iii) the Company's Series C Stock issued
pursuant to the Purchase Agreement and held by the Series C Investors listed on
Exhibit C hereto and their permitted assigns, and (iv) the Series A Stock
issuable upon exercise of the Warrants.
"WARRANTS" shall mean those certain warrants to purchase Series A
Stock held by certain of the Series A Investors and Series B Stock held by
certain of the Series B Investors.
SECTION 3. REGISTRATION; RESTRICTIONS ON TRANSFER
3.1 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; or
(ii) (A) The transferee has agreed in writing to be bound by
the terms of this Agreement, (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
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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 except in unusual
circumstances.
(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 limited liability
company to its members or former members in accordance with their interest in
the limited liability company, or (C) to the Holder's family member or trust for
the benefit of an individual Holder; provided that in each case 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 a legend substantially similar to the following (in
addition to any legend required under applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (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.
(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.
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3.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 3.2, if the Company
shall receive a written request from the Holders of at least two-thirds (2/3) of
the Registrable Securities then outstanding (the "Initiating Holders") that the
Company file a registration statement under the Securities Act covering the
registration of at least a majority of the Registrable Securities then
outstanding (or a lesser percent if the anticipated aggregate offering price,
net of underwriting discounts and commission, would exceed $10,000,000 (a
"Qualified Public Offering"), then the Company shall, within thirty (30) days of
the receipt thereof, give written notice of such request to all Holders, and
subject to the limitations of this Section 3.2, 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 3.2
or any request pursuant to Section 3.4 and the Company shall include such
information in the written notice referred to in Section 3.2(a) or Section
3.4(a), as applicable. 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 to the extend 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
3.2 or Section 3.4, 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.
(c) The Company shall not be required to effect a registration
pursuant to this Section 3.2
(i) prior to the earlier of (A) the third anniversary of the
date of this Agreement or (B) one year following the effective date of the
registration statement pertaining to the Initial Offering;
(ii) after the Company has effected two (2) registrations
pursuant to this Section 3.2, and such registrations have been declared or
ordered effective; provided, however, that if after the Company has effected
such two (2) registrations, sixty-five percent (65%) of the Series B and Series
C is still held by the Series B and Series C Investors and has not been
registered under any registration statement, then after the Company has effected
one (1) registration pursuant to a written request from the Holders of at least
two-thirds (2/3) of the
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Series B and Series C Stock then outstanding voting together in accordance with
the terms of this Section 3.2, and such registration has been declared or
ordered effective;
(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 a public 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 3.2(a), the Company gives notice to
the Holders of the Company's intention to make a public offering within ninety
(90) days;
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 3.2, 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 shareholders 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; or
(vi) if the Initiating Holders propose to dispose of shares of
Registrable Securities that may be immediately registered on Form S-3 pursuant
to a request made pursuant to Section 3.4 below.
3.3 PIGGYBACK REGISTRATION. The Company shall notify all Holders of
Registrable Securities in writing at least fifteen (15) 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 a registration statement relating to the Company's
Initial Offering and 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 3.3 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 3.3 shall be conditioned upon such Holder's
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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 who are Investors on a pro rata basis based on the total number of
Registerable Securities held by such Holders; third, to the Holders who are
Founders on a pro rata basis based on the total number of Registrable Securities
held by such Holders; and fourth, to any shareholder of the Company (other than
a Holder) on a pro rata basis. No such reduction shall (i) reduce the securities
being offered by the Company for its own account to be included in the
registration and underwriting. If any Holder disapproves of the terms of any
such underwriting, such Holder may elect to withdraw therefrom by written notice
to the Company and the underwriter, delivered at least ten (10) business days
prior to the effective date of the registration statement. Any Registrable
Securities excluded or withdrawn from such underwriting shall be excluded and
withdrawn from the registration. For any Holder which is a partnership or
corporation, the partners, retired partners and shareholders of such Holder, or
the estates and family members of any such partners and retired partners and any
trusts for the benefit of any of the foregoing person shall be deemed to be a
single "Holder", and any pro rata reduction with respect to such "Holder" shall
be based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "Holder," as defined in this
sentence.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 3.3
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 3.5 hereof.
3.4 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 3.4:
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(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 two million dollars ($2,000,000); or
(iii) if within (30) days of receipt of a written request from
Initiating Holders pursuant to Section 3.2(a), the Company gives notice to the
Holders of the Company's intention to make a public offering within sixty (60)
days;
(iv) 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 shareholders 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 3.4; 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
(v) if the Company has, within the twelve (12) month period
preceding the date of such request, already effected two (2) registrations on
Form S-3 for the Holders pursuant to this Section 3.4; or
(vi) 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;
or
(vii) after the Company has effected three (3) registrations
pursuant to this Section 3.4, and such registration have been declared or
ordered effective.
(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. Registrations effected pursuant to this
Section 3.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 3.2 or 3.3, respectively.
3.5 EXPENSES OF REGISTRATION. Except as specifically provided herein, all
Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 3.2 or any registration under
Section 3.3 or Section 3.4 herein shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder, shall be born
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 3.2
or 3.4, 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
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to forfeit their right to one requested registration pursuant to Section 3.2 or
Section 3.4, 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 3.2 or
Section 3.4 to a demand registration.
3.6 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. The Company shall not be required to file, cause to become effective
or maintain the effectiveness of any registration statement that contemplates a
distribution of securities on a delayed or continuous basis pursuant to Rule
415 under the Securities Act.
(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 for the period set forth in paragraph (a) above.
(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 its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter(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 or 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
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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) Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (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, addressed to the underwriters, if any, 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 addressed to the underwriters.
3.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 3 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 (a) the Company has completed its
Initial Offering and is subject to the provisions of the Exchange Act, (b) such
Holder (together with its affiliates, partners and former partners) holds less
than 1% of the Company's outstanding Common Stock (treating all shares of
convertible Preferred Stock on an as converted basis) and (c) all Registrable
Securities held by and issuable to such Holder (and its affiliates, partners,
former partners, members and former members) may be sold under Rule 144 during
any ninety (90) day period.
3.8 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 3.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 3.2, 3.3 or 3.4 that the selling
Holders shall furnish to the 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 3.2 or Section 3.4 if, due to the
operation of subsection 3.2(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 3.2 or Section
3.4, whichever is applicable.
3.9 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under Sections 3.2, 3.3 or 3.4:
a. To the extent permitted by law, the Company will indemnify and
hold harmless each Holder, the partners, officers and directors of each Holder,
any underwriter (as defined in the 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,
10.
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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 pay as incurred to each such Holder, partner, officer, 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 3.9(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 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 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, 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 pay as incurred 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 3.9(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 3.9 exceed the net proceeds from the offering
received by such Holder.
11.
15
(c) Promptly after receipt by an indemnified party under this
Section 3.9 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 3.9,
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 3.9, 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 3.9.
(d) If the indemnification provided for in this Section 3.9 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 a court of law 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; provided, that in no event shall any contribution
by a Holder hereunder exceed the proceeds from the offering received by such
Holder.
(e) The obligations of the Company and Holders under this Section
3.9 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. 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.
3.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 3 may be assigned
by a Holder to a transferee or assignee of Registrable Securities which (a) is
a subsidiary, parent, general partner, limited partner, retired partner, member
or retired member of a Holder, (b) is a Holder's family member or trust for the
benefit of an individual Holder, (c) acquires at least fifteen percent (15%) of
the
12.
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Registrable Securities then outstanding (as adjusted for stock splits and
combinations), or (d) acquires all of the Registrable Securities held by such
holder and its affiliates; provided, however, (i) 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 (ii) such transferee
shall agree to be subject to all restrictions set forth in this Agreement.
3.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 3
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 two-thirds (2/3) of
the Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 3.11 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Section 3, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.
3.12 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 two-thirds (2/3) of the Registrable Securities then
outstanding, 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.
3.13 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION. Each
Holder hereby agrees that such Holder shall not sell or otherwise transfer or
dispose of any Common Stock (or other 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 of Common Stock (or other securities) of
the Company 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, such agreement shall apply only to the Company's Initial
Offering.
Each Holder agrees to execute and deliver such other agreements as may be
reasonably requested by the Company or the underwriter which are consistent with
the foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Holder shall provide,
within ten (10) days of such request, such information as may be required by the
Company or such representative in connection with the completion of any public
offering of the Company's securities pursuant to a registration statement filed
under the Securities Act. The obligations described in this Section 3.13 shall
not apply to a registration relating solely to employee benefit plans on Form
S-1 or 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 of Common Stock
(or other securities) subject to the foregoing restriction until the end of said
one hundred eighty (180) day period.
3.14 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:
13.
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(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) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns by 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 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 4. COVENANTS OF THE COMPANY
4.1 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 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 balance sheet of the Company, as at the
end of such fiscal year and a statement of income and a 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.
(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 balance sheet of the Company as of the end of each such quarterly
period, and a statement of income and a 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 no notes
need be attached to such statements and year-end audit adjustments may not have
been made.
(d) So long as an Investor (with its affiliates) shall own not less
than ten percent (10%) of Registrable Securities then outstanding (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
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soon as practicable after the end of each month, and in any event within twenty
(20) days thereafter, a balance sheet of the Company as of the end of each such
month, and a statement of income and a statement of cash flows of the Company
for such month 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.
4.2 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 4.2 with respect to a competitor of the Company or with respect to
information which the Board of Directors determines in good faith is
confidential and should not, therefore, be disclosed.
4.3 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 (as long as such information is
not in the public domain), except that such Investor may disclose such
proprietary of 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 4.3.
4.4 RESERVATION OF COMMON STOCK. The Company will at all times reserves
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.
4.5 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: (a) 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
(b) seventy-five percent (75%) of such stock shall vest monthly 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.
4.6 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall
require all employees and consultants to execute and deliver a Proprietary
Information and Inventions Agreement in the form provided to the Investors.
4.7 USE OF PROCEEDS. The proceeds from the issuance and sale of the Series
A Stock, the Series B Stock, and the Series C Stock (collectively, the
"Proceeds") shall be used by the
15.
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Company for its growth, modernization or expansion. The Company shall provide
each Investor which is a licensed Small Business Investment company (an "SBIC
Investor") and the Small business Administration (the "SBA") reasonable access
to the Company's books and records for the purpose of confirming the use of
Proceeds.
4.8 BRIDGE FINANCINGS. The Company agrees that in the event it (a) issues
debt convertible into or exchangeable for any class of equity securities or (b)
issues debt with associated warrants or other rights exercisable for any class
of equity securities, the Company shall first obtain the approval of a majority
of the directors then in office (including one representative designated by
either the Series A Stock or series B Stock).
4.9 CHANGE IN AUTHORIZED NUMBER OF BOARD OF DIRECTORS. The Company agrees
that in the event that the Board of Directors, pursuant to Section 19 of the
Company's Bylaws, as amended, changes the number of directors from seven (7),
the Company shall first obtain the approval of a majority of the directors then
in office (including the representative designated by the Series B Stock).
4.10 QUALIFIED SMALL BUSINESS. The Company will use reasonable efforts to
comply with the reporting and recordkeeping requirements of Section 1202 of the
Code, any regulations promulgated thereunder and any similar state laws and
regulations.
4.11 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 4 of this Agreement shall expire and terminate as to each Investor upon
the earlier of (i) the effective date of the registration statement pertaining
to the Initial Offering or (ii) upon (a) the acquisition of all or substantially
all of the assets of the Company or (b) an acquisition of the Company by another
corporation or entity by consolidation, merger or other reorganization in which
the holders of the Company's outstanding voting stock immediately prior to such
transaction own, immediately after such transaction, securities representing
less than fifty percent (50%) of the voting power of the corporation or other
entity surviving such transaction (a "Change in Control").
SECTION 5. RIGHTS OF FIRST REFUSAL
5.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of first
refusal to purchase its pro rata share of all 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
5.6 hereof. Each 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) of which such Investor
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 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
16.
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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.
5.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each 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 Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase 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 Investor who would cause the Company to be in violation of
applicable federal securities laws by virtue of such offer or sale.
5.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If the Investors fail
to exercise in full the rights of first refusal, the Company shall have one
hundred twenty (120) days thereafter to sell the Equity Securities in respect of
which the 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 Investors pursuant to Section 5.2
hereof. If the Company has not sold such Equity Securities within one hundred
twenty (120) days of the notice provided pursuant to Section 5.2, the Company
shall not thereafter issue or sell any Equity Securities, without first offering
such securities to the Investors in the manner provided above.
5.4 SALE WITHOUT NOTICE. In lieu of giving notice to the Investors prior
to the issuance of Equity Securities as provided in Section 5.2, the Company may
elect to give notice to the Investors within thirty (30) days after the issuance
of Equity Securities. Such notice shall describe the type, price and terms of
the Equity Securities. Each Investor shall have fifteen (15) days from the date
of receipt of such notice to elect to purchase its pro rata share of Equity
Securities (as defined in Section 5.1, and calculated before giving effect to
the sale of the Equity Securities to the purchasers thereof). The closing of
such sale shall occur within sixty (60) days of the date of notice to the
Investors.
5.5 TERMINATION AND WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of first
refusal established by this Section 5 shall not apply to, and shall terminate
upon the earlier of (i) effective date of the registration statement pertaining
to the Company's Initial Public Offering or (ii) a Change in control. The rights
of first refusal established by this Section 5 may be amended, or any provision
waived with the written consent of Investors holding at least two-thirds (2/3)
of the Registrable Securities held by all Investors, or as permitted by Section
6.6.
5.6 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Investor under this Section 5 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 3.10.
5.7 EXCLUDED SECURITIES. The rights of first refusal established by this
Section 5 shall have no application to any of the following Equity Securities:
17.
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(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 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
including one representative designated by either the Series A Stock or Series B
Stock;
(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 5 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;
(f) any Equity Securities issued pursuant to any equipment leasing
arrangement, or debt financing from a bank or similar financial institution;
(g) any Equity Securities that are issued by the Company pursuant to
a registration statement filed under the Securities Act; and
(h) shares of the Company's Common Stock or Preferred Stock issued in
connection with strategic transactions involving the Company and other entities,
including, but not limited to, (i) joint ventures, manufacturing, marketing or
distribution arrangements or (ii) technology transfer or development
arrangements; provided that such strategic transactions and the issuance of
shares therein, has been approved by the Company's Board of Directors including
one representative designated by either the Series A or Series B Stock.
SECTION 6. MISCELLANEOUS
6.1 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of California as applied to agreements among California
residents entered into and to be performed entirely within California.
6.2 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.
18.
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6.3 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 of
any redemption price.
6.4 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 and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and
agreements except as specifically set forth herein and therein.
6.5 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.
'
6.6 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 two-thirds (2/3) of the Registrable Securities.
(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 two-thirds (2/3) of the
Registrable Securities.
(d) Notwithstanding the foregoing, this Agreement may be amended
with only the written consent of the Company to include additional purchasers
of Shares as "Investors," "Holders" and parties hereto.
6.7 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 acquiescense 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.
6.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be noticed, (b) when sent by confirmed telex or facsimile if sent
during normal business hours of the recipient; if not, then
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on the next business day, (c) five (5) days after having been sent by registered
or certified mail, return receipt requested, postage prepaid, or (d) 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 Exhibits A, B or C hereto or at such other address as such party
may designate by ten (10) days advance written notice to the other parties
hereto.
6.9 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 reasonable fees and
expenses of attorneys and accountants, which shall include, without limitation,
all fees, costs and expenses of appeals.
6.10 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.
6.11 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 LEFT BLANK INTENTIONALLY]
24
IN WITNESS WHEREOF, the parties hereto have executed this AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY:
DIGITAL IMPACT, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. Park
------------------------------------
Title: Chief Executive Officer
---------------------------------
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
25
FOUNDERS:
/s/ ▇▇▇▇▇▇▇ ▇. PARK
-----------------------------
▇▇▇▇▇▇▇ ▇. Park
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
2.
26
INVESTORS:
INSTITUTIONAL VENTURE PARTNERS VIII, L.P.
By: Institutional Venture Management VIII, L.P.
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Managing Director
IVM INVESTMENT FUND VIII, LLC
By: Institutional Venture Management VIII, LLC
its Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Managing Director
IVM INVESTMENT FUND VIII-A, LLC
By: Institutional Venture Management VIII, LLC
its Manager
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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Its: Managing Director
IVP FOUNDERS FUND I, L.P.
By: Institutional Venture Management VI, L.P.
its General Partner
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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General Partner
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
3.
27
▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES FUND IV, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS IV, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇.▇.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Management Company
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Its: President
LABRADOR VENTURES II, L.P.
By:
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▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Partner
GC&H INVESTMENTS
By:
----------------------------------
Its:
▇▇▇▇▇-▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
4.
28
▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES FUND IV, L.P.
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS IV, L.L.C.
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇.▇.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Management Company
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Its: President
LABRADOR VENTURES II, L.P.
By:
----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Partner
GC&H INVESTMENTS
By:
----------------------------------
Its:
▇▇▇▇▇-▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
4.
29
▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES FUND IV, L.P.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS IV, L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇.▇.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Management Company
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Its: President
LABRADOR VENTURES II, L.P.
By: /s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Managing Director
GC&H INVESTMENTS
By:
----------------------------------
Its:
▇▇▇▇▇-▇▇▇▇▇
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
4.
30
▇▇▇▇▇▇ ▇▇▇▇▇▇ ASSOCIATES FUND IV, L.P.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS IV, L.L.C.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Its: Director
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇.▇.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Management Company
By:
----------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
Its: President
LABRADOR VENTURES II, L.P.
By:
----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Its: Partner
GC&H INVESTMENTS
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Its: Executive Partner
INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
4.
31
▇▇▇▇▇-▇▇▇▇▇, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Keenly
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▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP II, LTD.
By:
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5.
32
▇▇▇▇▇-▇▇▇▇▇, INC.
By:
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
/s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Keenly
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▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP II, LTD.
By:
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5.
33
▇▇▇▇▇-▇▇▇▇▇, INC.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
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▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Keenly
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▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP II, LTD.
By:
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5.
34
▇▇▇▇▇-▇▇▇▇▇, INC.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
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▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. KEENLY
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▇▇▇▇▇▇▇ ▇. Keenly
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▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP II, LTD.
By:
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5.
35
▇▇▇▇▇-▇▇▇▇▇, INC.
By:
----------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Its: Chief Financial Officer
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▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇
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▇▇▇▇ ▇. ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. Keenly
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▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇ INVESTMENT
PARTNERSHIP II, LTD.
By: /s/ [Signature Illegible]
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5.