EXHIBIT 10.25
BOMBARDIER SOFTWARE, INC.
SERIES A PREFERRED STOCK PURCHASE AGREEMENT
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This Series A Preferred Stock Purchase Agreement (the "Agreement") is made
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as of the 14th day of October, 1997, by and between Bombardier Software, Inc., a
Delaware corporation (the "Company") and the investors listed on Exhibit A
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attached hereto (each a "Purchaser" and together, if more than one, the
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"Purchasers").
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The parties hereby agree as follows:
1. Purchase and Sale of Preferred Stock.
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1.1 Sale and Issuance of Series A Preferred Stock.
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(a) The Company shall adopt and file with the Secretary of State
of the State of Delaware on or before the Closing (as defined below) the Amended
and Restated Certificate of Incorporation in the form attached hereto as Exhibit
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B (the "Restated Certificate").
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(b) Subject to the terms and conditions of this Agreement, each
Purchaser agrees to purchase at the Closing and the Company agrees to sell and
issue to each Purchaser at the Closing that number of shares of Series A
Preferred Stock set forth opposite each such Purchaser's name on Exhibit A
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attached hereto at a purchase price of $0.609 per share. The shares of Series A
Preferred Stock issued to the Purchaser pursuant to this Agreement shall be
hereinafter referred to as the "Stock."
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1.2 Closing; Delivery.
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(a) The purchase and sale of the Stock shall take place at the
offices of Venture Law Group, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, at
10:00 a.m., on October 14, 1997, or at such other time and place as the Company
and the Purchasers mutually agree upon, orally or in writing (which time and
place are designated as the "Closing").
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(b) At the Closing, the Company shall deliver to each Purchaser a
certificate representing the Stock being purchased thereby against payment of
the purchase price therefor by check, by cancellation of indebtedness, or by
wire transfer to the Company's bank account.
2. Representations, Warranties and Covenants of the Company. The Company
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hereby represents, warrants and covenants to each Purchaser that, except as set
forth on a Schedule of Exceptions attached hereto as Exhibit C, which exceptions
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shall be deemed to be representations and warranties as if made hereunder:
2.1 Organization, Good Standing and Qualification. The Company is a
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corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has all requisite corporate power and authority to
carry on its business as now conducted and as proposed to be conducted. The
Company is duly qualified to transact business and is in good standing in each
jurisdiction in which the failure so to qualify would have a material adverse
effect on its business or properties.
2.2 Capitalization. The authorized capital of the Company consists,
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or will consist, immediately prior to the Closing, of:
(a) Two Million Two Hundred Seventeen Thousand Seventy-Eight
(2,217,078) shares of Preferred Stock, all of which have been designated Series
A Preferred Stock, none of which are issued and outstanding immediately prior to
the Closing. The rights, privileges and preferences of the Preferred Stock are
as stated in the Restated Certificate.
(b) Nine Million (9,000,000) shares of Common Stock, Three
Million Two Hundred Eighty-Nine Thousand (3,289,000) shares of which are issued
and outstanding immediately prior to the Closing. All of the outstanding shares
of Common Stock have been duly authorized, fully paid and are nonassessable and
issued in compliance with all applicable federal and state securities laws. The
Company has reserved (i) Two Million Two Hundred Seventeen Thousand Seventy-
Eight (2,217,078) shares of Common Stock for issuance upon conversion of the
Preferred Stock and (ii) One Million One Hundred Eleven Thousand (1,111,000)
shares of Common Stock for issuance to officers, directors, employees and
consultants of the Company under the Company's 1997 Stock Option Plan.
2.3 Subsidiaries. The Company does not currently own or control,
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directly or indirectly, any interest in any other corporation, association, or
other business entity. The Company is not a participant in any joint venture,
partnership or similar arrangement.
2.4 Authorization. All corporate action on the part of the Company,
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its officers, directors and stockholders necessary for the authorization,
execution and delivery of this Agreement, the Investors' Rights Agreement, in
the form attached hereto as Exhibit D (the "Investors' Rights Agreement"), the
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Right of First Refusal and Co-Sale Agreement in the form attached hereto as
Exhibit E (the "Co-Sale Agreement"), and the Voting Agreement in the form
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attached hereto as Exhibit F (the "Voting Agreement" and collectively with this
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Agreement, the Investors' Rights Agreement and the Co-Sale Agreement, the
"Agreements"), the performance of all obligations of the Company hereunder and
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thereunder and the authorization, issuance and delivery of the Stock and the
Common Stock issuable upon conversion of the Stock (together, the "Securities")
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has been taken or will be taken prior to the Closing, and the Agreements, when
executed and delivered by the Company, shall constitute valid and legally
binding obligations of the Company, enforceable against the Company in
accordance with their terms except (a) as limited by applicable bankruptcy,
insolvency, reorganization, moratorium, fraudulent conveyance, and other laws of
general application affecting enforcement of creditors' rights generally, as
limited by laws relating to the availability of specific performance, injunctive
relief, or other equitable remedies, or (b) to the extent the indemnification
provisions contained in the Investors' Rights Agreement may be limited by
applicable federal or state securities laws.
2.5 Valid Issuance of Securities. The Stock that is being issued to
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the Purchasers hereunder, when issued, sold and delivered in accordance with the
terms hereof for the consideration expressed herein, will be duly and validly
issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable state and federal securities laws. Based in part upon
the representations of the Purchasers in this Agreement and subject to the
provisions of Section 2.6 below, the Stock will be issued in compliance with all
applicable federal and state securities laws and neither the Company nor any
authorized agent acting on its behalf will take any action hereafter that would
cause the loss of such exemption. The Common Stock issuable upon conversion of
the Stock has been duly and validly reserved for issuance, and upon issuance in
accordance with the terms of the Restated Certificate, shall be duly and validly
issued, fully paid and nonassessable and free of restrictions on transfer other
than restrictions on transfer under this Agreement, the Investors' Rights
Agreement and applicable federal and state securities laws and will be issued in
compliance with all applicable federal and state securities laws.
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2.6 Governmental Consents. No consent, approval, order or
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authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement, except for filings pursuant to Section 25102(f)
of the California Corporate Securities Law of 1968, as amended, and the rules
thereunder, other applicable state securities laws and Regulation D of the
Securities Act of 1933, as amended (the "Securities Act").
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2.7 Litigation. There is no action, suit, proceeding or
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investigation pending or, to the Company's knowledge, currently threatened
against the Company or any of its subsidiaries that questions the validity of
the Agreements or the right of the Company to enter into them, or to consummate
the transactions contemplated hereby or thereby, or that might result, either
individually or in the aggregate, in any material adverse changes in the assets,
condition or affairs of the Company, financially or otherwise, or any change in
the current equity ownership of the Company, nor is the Company aware that there
is any basis for the foregoing. The foregoing includes, without limitation,
actions, suits, proceedings or investigations pending or threatened involving
the prior employment of any of the Company's employees, their use in connection
with the Company's business of any information or techniques allegedly
proprietary to any of their former employers, or their obligations under any
agreements with prior employers. Neither the Company nor any of its
subsidiaries is a party or subject to the provisions of any order, writ,
injunction, judgment or decree of any court or government agency or
instrumentality. There is no action, suit, proceeding or investigation by the
Company or any of its subsidiaries currently pending or which the Company or any
of its subsidiaries intends to initiate.
2.8 Patents and Trademarks. To its knowledge, the Company owns or
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possesses sufficient legal rights to all patents, trademarks, service marks,
trade names, copyrights, trade secrets, licenses, information and proprietary
rights and processes necessary for its business as now conducted and as proposed
to be conducted without any conflict with, or infringement of, the rights of
others. There are no outstanding options, licenses or agreements of any kind
relating to the foregoing, nor is the Company bound by or a party to any
options, licenses or agreements of any kind with respect to the patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses,
information, proprietary rights and processes of any other person or entity.
The Company has not received any communications alleging that the Company has
violated or, by conducting its business as proposed, would violate any of the
patents, trademarks, service marks, trade names, copyrights, trade secrets or
other proprietary rights or processes of any other person or entity. The
Company is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of such employee's best efforts to
promote the interest of the Company or that would conflict with the Company's
business as proposed to be conducted. Neither the execution or delivery of this
Agreement, nor the carrying on of the Company's business by the employees of the
Company, nor the conduct of the Company's business as proposed, will, to the
best of the Company's knowledge, conflict with or result in a breach of the
terms, conditions, or provisions of, or constitute a default under, any
contract, covenant or instrument under which any such employee is now obligated.
The Company does not believe it is or will be necessary to use any inventions of
any of its employees (or persons it currently intends to hire) made prior to
their employment by the Company.
2.9 Compliance with Other Instruments.
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(a) The Company is not in violation or default of any provisions
of its Restated Certificate or Bylaws or of any instrument, judgment, order,
writ, decree or contract to which it is a party or by which it is bound or, to
its knowledge, of any provision of federal or state statute, rule or regulation
applicable to the Company. The execution, delivery and performance of the
Agreements and
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the consummation of the transactions contemplated hereby or thereby will not
result in any such violation or be in conflict with or constitute, with or
without the passage of time and giving of notice, either a default under any
such provision, instrument, judgment, order, writ, decree or contract or an
event which results in the creation of any lien, charge or encumbrance upon any
assets of the Company or the suspension, revocation, impairment, forfeiture or
nonrenewal of any material permit, license, authorization or approval applicable
to the Company, its business or operations or of its assets or properties.
(b) To its knowledge, the Company has avoided every condition,
and has not performed any act, the occurrence of which would result in the
Company's loss of any right granted under any license, distribution agreement or
other agreement.
2.10 Agreements; Action.
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(a) Except for the Agreements, there are no agreements,
understandings or proposed transactions between the Company and any of its
officers, directors, affiliates, or any affiliate thereof.
(b) Except for agreements explicitly contemplated by the
Agreements, there are no agreements, understandings, instruments, contracts or
proposed transactions to which the Company or any of its subsidiaries is a party
or by which it is bound that involve (i) obligations (contingent or otherwise)
of, or payments to, the Company or any of its subsidiaries in excess of,
$10,000, (ii) the license of any patent, copyright, trade secret or other
proprietary right to or from the Company or any of its subsidiaries, or (iii)
the grant of rights to manufacture, produce, assemble, license, market, or sell
its products to any other person or affect the Company's exclusive right to
develop, manufacture, assemble, distribute, market or sell its products.
(c) Neither the Company nor any of its subsidiaries has (i)
declared or paid any dividends, or authorized or made any distribution upon or
with respect to any class or series of its capital stock, (ii) incurred any
indebtedness for money borrowed or incurred any other liabilities individually
in excess of $10,000 or in excess of $25,000 in the aggregate, (iii) made any
loans or advances to any person, or (iv) sold, exchanged or otherwise disposed
of any of its assets or rights, other than the sale of its inventory in the
ordinary course of business.
(d) For the purposes of subsections (b) and (c) above, all
indebtedness, liabilities, agreements, understandings, instruments, contracts
and proposed transactions involving the same person or entity (including persons
or entities the Company has reason to believe are affiliated therewith) shall be
aggregated for the purpose of meeting the individual minimum dollar amounts of
such subsections.
(e) The Company is not a party to and is not bound by any
contract, agreement or instrument, or subject to any restriction under its
Restated Certificate or Bylaws, that adversely affects its business as now
conducted or as proposed to be conducted, its properties or its financial
condition.
2.11 Disclosure. The Company has fully provided the Purchasers with
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all the information which the Purchasers have requested for deciding whether to
acquire the Stock and all information which the Company believes is reasonably
necessary to enable the Purchasers to make such a decision, including certain of
the Company's projections describing its proposed business (collectively, the
"Business Plan"). To the Company's knowledge, no representation or warranty of
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the Company
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contained in this Agreement and the exhibits attached hereto or in any
certificate furnished or to be furnished to Purchasers at the Closing (when read
together) contains any untrue statement of a material fact or omits to state a
material fact necessary in order to make the statements contained herein or
therein not misleading in light of the circumstances under which they were made.
To the extent the Business Plan was prepared by management of the Company, the
Business Plan and the financial and other projections contained in the Business
Plan were prepared in good faith and the Company reasonably believes there is a
reasonable basis for such projections.
2.12 No Conflict of Interest. The Company is not indebted, directly
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or indirectly, to any of its officers or directors or to their respective
spouses or children, in any amount whatsoever other than in connection with
expenses or advances of expenses incurred in the ordinary course of business.
To the best of the Company's knowledge, none of the Company's officers or
directors, or any members of their immediate families, are, directly or
indirectly, indebted to the Company (other than in connection with purchases of
the Company's stock) or have any direct or indirect ownership interest in any
firm or corporation with which the Company is affiliated or with which the
Company has a business relationship, or any firm or corporation which competes
with the Company except that officers, directors and/or stockholders of the
Company may own stock in (but not exceeding two percent of the outstanding
capital stock of) any publicly traded companies that may compete with the
Company. To the best of the Company's knowledge, none of the Company's officers
or directors or any members of their immediate families are, directly or
indirectly, interested in any material contract with the Company. The Company
is not a guarantor or indemnitor of any indebtedness of any other person, firm
or corporation.
2.13 Rights of Registration and Voting. Except as contemplated in
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the Investors' Rights Agreement, the Company has not granted or agreed to grant
any registration rights, including piggyback rights, to any person or entity.
To the Company's knowledge, except as contemplated in the Voting Agreement, no
stockholders of the Company have entered into any agreements with respect to the
voting of capital shares of the Company.
2.14 Title to Property and Assets. The Company owns its property and
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assets free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens which arise in the ordinary course of business and
do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances.
2.15 Manufacturing and Marketing Rights. The Company has not granted
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rights to manufacture, produce, assemble, license, market, or sell its products
to any other person and is not bound by any agreement that affects the Company's
exclusive right to develop, manufacture, assemble, distribute, market or sell
its products.
2.16 No Financial Statements. Except as may be reflected in the
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Business Plan, the Company has not prepared any historical balance sheet, income
statement, statement of cash flows or stockholders' equity or other financial
statement. The Company has no material liability or obligation, absolute or
contingent (individually or in the aggregate), except (i) obligations and
liabilities incurred after the date of incorporation in the ordinary course of
business that are not material, individually or in the aggregate, and (ii)
obligations under contracts made in the ordinary course of business that would
not be required to be reflected in financial statements prepared in accordance
with generally accepted accounting principles.
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2.17 Changes. Since the inception of the Company's business, there
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has not been:
(a) any change in the assets, liabilities, financial condition
or operating results of the Company from that reflected in the Business Plan,
except changes in the ordinary course of business that have not been, in the
aggregate, materially adverse;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the business, properties,
prospects, or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(c) any waiver or compromise by the Company of a valuable right
or of a material debt owed to it;
(d) any satisfaction or discharge of any lien, claim, or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not material to the business, properties,
prospects or financial condition of the Company (as such business is presently
conducted and as it is proposed to be conducted);
(e) any material change to a material contract or agreement by
which the Company or any of its assets is bound or subject;
(f) any material change in any compensation arrangement or
agreement with any employee, officer, director or stockholder;
(g) any sale, assignment or transfer of any patents, trademarks,
copyrights, trade secrets or other intangible assets;
(h) any resignation or termination of employment of any officer
or key employee of the Company; and the Company, to the best of its knowledge,
does not know of any impending resignation or termination of employment of any
such officer or key employee;
(i) receipt of notice that there has been a loss of, or material
order cancellation by, any major customer of the Company;
(j) any mortgage, pledge, transfer of a security interest in, or
lien, created by the Company, with respect to any of its material properties or
assets, except liens for taxes not yet due or payable;
(k) any loans or guarantees made by the Company to or for the
benefit of its employees, officers or directors, or any members of their
immediate families, other than travel advances and other advances made in the
ordinary course of its business;
(l) any declaration, setting aside or payment or other
distribution in respect to any of the Company's capital stock, or any direct or
indirect redemption, purchase, or other acquisition of any of such stock by the
Company;
(m) to the best of the Company's knowledge, any other event or
condition of any character that might materially and adversely affect the
business, properties, prospects or financial condition of the Company (as such
business is presently conducted and as it is proposed to be conducted); or
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(n) any arrangement or commitment by the Company to do any of
the things described in this Section 2.17.
2.18 Employee Benefit Plans. The Company does not have any Employee
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Benefit Plan as defined in the Employee Retirement Income Security Act of 1974.
2.19 Tax Returns and Payments. The Company has filed all tax returns
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and reports as required by law. These returns and reports are true and correct
in all material respects. The Company has paid all taxes and other assessments
due.
2.20 Labor Agreements and Actions. The Company is not bound by or
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subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or, to the knowledge of the
Company, has sought to represent any of the employees, representatives or agents
of the Company. There is no strike or other labor dispute involving the Company
pending, or to the knowledge of the Company threatened, which could have a
material adverse effect on the assets, properties, financial condition,
operating results, or business of the Company (as such business is presently
conducted and as it is proposed to be conducted), nor is the Company aware of
any labor organization activity involving its employees. The employment of each
officer and employee of the Company is terminable at the will of the Company.
To its knowledge, the Company has complied in all material respects with all
applicable state and federal equal employment opportunity laws and with other
laws related to employment.
2.21 Proprietary Information and Inventions Agreements. Each
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employee, consultant and officer of the Company has executed an agreement with
the Company regarding confidentiality and proprietary information substantially
in the form or forms delivered to the counsel for the Purchasers. The Company,
after reasonable investigation, is not aware that any of its employees or
consultants is in violation thereof, and the Company will use its best efforts
to prevent any such violation. All consultants to or vendors of the Company
with access to confidential information of the Company are parties to a written
agreement substantially in the form or forms provided to counsel for the
Purchasers under which, among other things, each such consultant or vendor is
obligated to maintain the confidentiality of confidential information of the
Company. The Company, after reasonable investigation, is not aware that any of
its consultants or vendors are in violation thereof, and the Company will use
its best efforts to prevent any such violation.
2.22 Permits. The Company and each of its subsidiaries has all
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franchises, permits, licenses and any similar authority necessary for the
conduct of its business as now being conducted by it, the lack of which could
materially and adversely affect the business, properties, prospects, or
financial condition of the Company and believes that it can obtain, without
undue burden or expense, any similar authority for the conduct of its business
as planned to be conducted. The Company is not in default in any material
respect under any of such franchises, permits, licenses or other similar
authority.
2.23 Corporate Documents. The Restated Certificate and Bylaws of the
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Company are in the form provided to counsel for the Purchasers. The copy of the
minute books of the Company provided to the Purchasers' counsel contains minutes
of all meetings of directors and stockholders and all actions by written consent
without a meeting by the directors and stockholders since the date of
incorporation and reflects all actions by the directors (and any committee of
directors) and stockholders with respect to all transactions referred to in such
minutes accurately in all material respects.
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2.24 Real Property Holding Corporation. The Company is not a United
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States real property holding corporation within the meaning of Internal Revenue
Code Section 897(c)(2) and any regulations promulgated thereunder.
2.25 Qualified Small Business Stock. The Company represents and
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warrants to the Purchasers that, to the best of its knowledge, the Stock should
qualify as "Qualified Small Business Stock" as defined in Section 1202(c) of the
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Internal Revenue Code of 1986, as amended as of the date hereof.
3. Representations and Warranties of the Purchasers. Each Purchaser
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hereby represents and warrants to the Company that:
3.1 Authorization. The Agreements, when executed and delivered by
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the Purchaser, will constitute valid and legally binding obligations of the
Purchaser, enforceable in accordance with their terms, except (a) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance, and any other laws of general application affecting enforcement of
creditors' rights generally, and as limited by laws relating to the availability
of a specific performance, injunctive relief, or other equitable remedies, or
(b) to the extent the indemnification provisions contained in the Investors'
Rights Agreement may be limited by applicable federal or state securities laws.
3.2 Purchase Entirely for Own Account. This Agreement is made with
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the Purchaser in reliance upon the Purchaser's representation to the Company,
which by the Purchaser's execution of this Agreement, the Purchaser hereby
confirms, that the Securities to be acquired by the Purchaser will be acquired
for investment for the Purchaser's own account, not as a nominee or agent, and
not with a view to the resale or distribution of any part thereof, and that the
Purchaser has no present intention of selling, granting any participation in, or
otherwise distributing the same. By executing this Agreement, the Purchaser
further represents that the Purchaser does not presently have any contract,
undertaking, agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities. The Purchaser represents that it has full power and authority to
enter into this Agreement. The Purchaser has not been formed for the specific
purpose of acquiring the Securities.
3.3 Disclosure of Information. The Purchaser has had an opportunity
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to discuss the Company's business, management, financial affairs and the terms
and conditions of the offering of the Stock with the Company's management and
has had an opportunity to review the Company's facilities. The Purchaser
understands that such discussions, as well as the written information issued by
the Company, were intended to describe the aspects of the Company's business
which it believes to be material. The foregoing, however, does not limit or
modify the representations and warranties of the Company in Section 2 of this
Agreement or the right of the Investors to rely thereon.
3.4 Restricted Securities. The Purchaser understands that the
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Securities have not been, and will not be, registered under the Securities Act,
by reason of a specific exemption from the registration provisions of the
Securities Act which depends upon, among other things, the bona fide nature of
the investment intent and the accuracy of the Purchaser's representations as
expressed herein. The Purchaser understands that the Securities are "restricted
securities" under applicable U.S. federal and state securities laws and that,
pursuant to these laws, the Purchaser must hold the Securities indefinitely
unless they are registered with the Securities and Exchange Commission and
qualified by state authorities, or an exemption from such registration and
qualification requirements is available. The Purchaser acknowledges that the
Company has no obligation to register or qualify the Securities for
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resale except as set forth in the Investors' Rights Agreement. The Purchaser
further acknowledges that if an exemption from registration or qualification is
available, it may be conditioned on various requirements including, but not
limited to, the time and manner of sale, the holding period for the Securities,
and on requirements relating to the Company which are outside of the Purchaser's
control, and which the Company is under no obligation and may not be able to
satisfy.
3.5 No Public Market. The Purchaser understands that no public
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market now exists for any of the securities issued by the Company, and that the
Company has made no assurances that a public market will ever exist for the
Securities.
3.6 Legends. The Purchaser understands that the Securities and any
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securities issued in respect of or exchange for the Securities, may bear one or
all of the following legends:
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AND HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN
CONNECTION WITH, THE SALE OR DISTRIBUTION THEREOF. NO SUCH SALE
OR DISPOSITION MAY BE EFFECTED WITHOUT AN EFFECTIVE REGISTRATION
STATEMENT RELATED THERETO OR AN OPINION OF COUNSEL IN A FORM
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT
REQUIRED UNDER THE SECURITIES ACT OF 1933."
(b) Any legend required by the Blue Sky laws of any state to the
extent such laws are applicable to the shares represented by the certificate so
legended.
3.7 Accredited Investor. The Purchaser is an accredited investor as
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defined in Rule 501(a) of Regulation D promulgated under the Act.
3.8 Foreign Investors. If the Purchaser is not a United States
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person (as defined by Section 7701(a)(30) of the Internal Revenue Code of 1986,
as amended), such Purchaser hereby represents that it has satisfied itself as to
the full observance of the laws of its jurisdiction in connection with any
invitation to subscribe for the Stock or any use of this Agreement, including
(i) the legal requirements within its jurisdiction for the purchase of the
Stock, (ii) any foreign exchange restrictions applicable to such purchase, (iii)
any governmental or other consents that may need to be obtained, and (iv) the
income tax and other tax consequences, if any, that may be relevant to the
purchase, holding, redemption, sale, or transfer of the Stock. Such Purchaser's
subscription and payment for and continued beneficial ownership of the Stock,
will not violate any applicable securities or other laws of the Purchaser's
jurisdiction.
4. Conditions of the Purchasers' Obligations at Closing. The obligations
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of each Purchaser to the Company under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
4.1 Representations and Warranties. The representations and
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warranties of the Company contained in Section 2 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the date of the
Closing.
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4.2 Performance. The Company shall have performed and complied with
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all covenants, agreements, obligations and conditions contained in this
Agreement that are required to be performed or complied with by it on or before
the Closing.
4.3 Compliance Certificate. The President of the Company shall
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deliver to the Purchasers at the Closing a certificate certifying that the
conditions specified in Sections 4.1 and 4.2 have been fulfilled.
4.4 Qualifications. All authorizations, approvals or permits, if
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any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
4.5 Opinion of Company Counsel. The Purchasers shall have received
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from Venture Law Group, counsel for the Company, an opinion, dated as of the
Closing, in substantially the form of Exhibit G.
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4.6 Board of Directors. As of the Closing, the Board shall be
------------------
comprised of ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇.
4.7 Proceedings and Documents. All corporate and other proceedings
-------------------------
in connection with the transactions contemplated at the Closing and all
documents incident thereto shall be reasonably satisfactory in form and
substance to Investors' special counsel, and they shall have received all such
counterpart original and certified or other copies of such documents as they may
reasonably request. This may include, without limitation, good standing
certificates and certification by the Company's Secretary regarding the
Company's Certificate of Incorporation and Bylaws and Board of Director and
stockholder resolutions approving the transactions contemplated by this
Agreement.
4.8 Proprietary Information and Employee Stock Purchase Agreements.
--------------------------------------------------------------
Each employee of and consultant to the Company shall have entered into a
Proprietary Information and Inventions Agreement in the form previously provided
to counsel for the Investors. Each holder of Common Stock of the Company shall
have entered into an Employee Stock Purchase Agreement in the form previously
provided to counsel for the Investors.
4.9 Bylaws. The Bylaws of the Company shall provide that the Board
------
of Directors of the Company shall consist of five (5) persons.
4.10 Investors' Rights Agreement. The Company, each Purchaser and
---------------------------
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have executed and delivered
the Investors' Rights Agreement.
4.11 Co-Sale Agreement. The Company, each Purchaser, and ▇▇▇▇▇ ▇▇▇,
-----------------
▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have executed and delivered the Co-Sale
Agreement.
4.12 Voting Agreement. The Company, each Purchaser, and ▇▇▇▇▇ ▇▇▇,
----------------
▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ shall have executed and delivered the Voting
Agreement.
4.13 Restated Certificate. The Company shall have filed the Restated
--------------------
Certificate with the Secretary of State of Delaware on or prior to the Closing
Date, which shall continue to be in full force and effect as of the Closing
Date.
-10-
5. Conditions of the Company's Obligations at Closing. The obligations
--------------------------------------------------
of the Company to each Purchaser under this Agreement are subject to the
fulfillment, on or before the Closing, of each of the following conditions,
unless otherwise waived:
5.1 Representations and Warranties. The representations and
------------------------------
warranties of each Purchaser contained in Section 3 shall be true and correct in
all material respects on and as of the Closing with the same effect as though
such representations and warranties had been made on and as of the Closing.
5.2 Performance. All covenants, agreements and conditions contained
-----------
in this Agreement to be performed by the Purchasers on or prior to the Closing
shall have been performed or complied with in all material respects.
5.3 Qualifications. All authorizations, approvals or permits, if
--------------
any, of any governmental authority or regulatory body of the United States or of
any state that are required in connection with the lawful issuance and sale of
the Stock pursuant to this Agreement shall be obtained and effective as of the
Closing.
6. Miscellaneous.
-------------
6.1 Survival of Warranties. The warranties, representations and
----------------------
covenants of the Company and Investors contained in or made pursuant to this
Agreement shall survive the execution and delivery of this Agreement for a
period of one (1) year, and the Closing and shall in no way be affected by any
investigation of the subject matter thereof made by or on behalf of the
Purchasers or the Company.
6.2 Transfer; Successors and Assigns. The terms and conditions of
--------------------------------
this Agreement shall inure to the benefit of and be binding upon the respective
successors and assigns of the parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
6.3 Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
6.4 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
6.5 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
6.6 Notices. Any notice required or permitted by this Agreement
-------
shall be in writing and shall be deemed sufficient upon delivery, when delivered
personally or by overnight courier or sent by telegram or fax, or forty-eight
(48) hours after being deposited in the U.S. mail, as certified or registered
mail, with postage prepaid, addressed to the party to be notified at such
party's address as set forth below or on Exhibit A hereto, or as subsequently
---------
modified by written notice, and (a) if to the Company, with a copy to Venture
Law Group, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, fax (▇▇▇) ▇▇▇-▇▇▇▇, Attn:
▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇ or (b) if to the Purchasers, with a copy to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇
-▇▇-
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇
▇▇▇▇▇, fax (▇▇▇) ▇▇▇-▇▇▇▇, Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇.
6.7 Finder's Fee. Each party represents that it neither is nor will
------------
be obligated for any finder's fee or commission in connection with this
transaction. Each Purchaser agrees to indemnify and to hold harmless the
Company from any liability for any commission or compensation in the nature of a
finder's fee (and the costs and expenses of defending against such liability or
asserted liability) for which each Purchaser or any of its officers, employees,
or representatives is responsible. The Company agrees to indemnify and hold
harmless each Purchaser from any liability for any commission or compensation in
the nature of a finder's fee (and the costs and expenses of defending against
such liability or asserted liability) for which the Company or any of its
officers, employees or representatives is responsible.
6.8 Fees and Expenses. The Company shall pay the reasonable fees and
-----------------
expenses of counsel for the Purchasers, incurred with respect to this Agreement,
the documents referred to herein and the transactions contemplated hereby and
thereby (such fees not to exceed $10,000.00).
6.9 Attorney's Fees. If any action at law or in equity (including
---------------
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
6.10 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended with the written consent of the Company and the holders of at least a
majority of the Common Stock issued or issuable upon conversion of the Stock.
Any amendment or waiver effected in accordance with this Section 6.9 shall be
binding upon the Purchasers and each transferee of the Stock (or the Common
Stock issuable upon conversion thereof), each future holder of all such
securities, and the Company.
6.11 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
6.12 Delays or Omissions. No delay or omission to exercise any
-------------------
right, power or remedy accruing to any holder of any of the Stock, upon any
breach or default of the Company under this Agreement, shall impair any such
right, power or remedy of such holder nor shall it be construed to be a waiver
of any such breach or default, or an acquiescence therein, or of or in any
similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any holder of any breach or default under
this Agreement, or any waiver on the part of any holder of any provisions or
conditions of this Agreement, must be in writing and shall be effective only to
the extent specifically set forth in such writing. All remedies, either under
this Agreement or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
6.13 Entire Agreement. This Agreement, and the documents referred to
----------------
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
-12-
6.14 Corporate Securities Law. THE SALE OF THE SECURITIES WHICH ARE
------------------------
THE SUBJECT OF THIS AGREEMENT HAS NOT BEEN QUALIFIED WITH THE COMMISSIONER OF
CORPORATIONS OF THE STATE OF CALIFORNIA AND THE ISSUANCE OF THE SECURITIES OR
THE PAYMENT OR RECEIPT OF ANY PART OF THE CONSIDERATION THEREFOR PRIOR TO THE
QUALIFICATION IS UNLAWFUL, UNLESS THE SALE OF SECURITIES IS EXEMPT FROM THE
QUALIFICATION BY SECTION 25100, 25102 OR 25105 OF THE CALIFORNIA CORPORATIONS
CODE. THE RIGHTS OF ALL PARTIES TO THIS AGREEMENT ARE EXPRESSLY CONDITIONED
UPON THE QUALIFICATION BEING OBTAINED UNLESS THE SALE IS SO EXEMPT.
6.15 Confidentiality. Each party hereto agrees that, except with the
---------------
prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish or make accessible to anyone any
confidential information, knowledge or data concerning or relating to the
business or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, the performance of its obligations hereunder or the
ownership of Stock purchased hereunder. The provisions of this Section 6.14
shall be in addition to, and not in substitution for, the provisions of any
separate nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
6.15 Exculpation Among Purchasers. Each Purchaser acknowledges that
----------------------------
it is not relying upon any person, firm or corporation, other than the Company
and its officers and directors, in making its investment or decision to invest
in the Company. Each Purchaser agrees that no Purchaser nor the respective
controlling persons, officers, directors, partners, agents, or employees of any
Purchaser shall be liable for any action heretofore or hereafter taken or
omitted to be taken by any of them in connection with the Securities.
6.16 Waiver of Conflicts. Each party to this Agreement acknowledges
-------------------
that Venture Law Group, counsel for the Company, has in the past performed and
may continue to perform legal services for certain of the Purchasers in matters
unrelated to the transactions described in this Agreement, including the
representation of such Purchasers in venture capital financings and other
matters. Accordingly, each party to this Agreement hereby (a) acknowledges that
they have had an opportunity to ask for information relevant to this disclosure;
and (b) gives its informed consent to Venture Law Group's representation of
certain of the Purchasers in such unrelated matters and to Venture Law Group's
representation of the Company in connection with this Agreement and the
transactions contemplated hereby.
[Signature Pages Follow]
-13-
The parties have executed this Series A Preferred Stock Purchase Agreement
as of the date first written above.
COMPANY:
BOMBARDIER SOFTWARE, INC.
By: /s/ ▇▇▇▇▇ ▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇▇▇
-----------------------------------
(print)
Title: Chief Executive Officer
----------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASERS:
21ST CENTURY INTERNET FUND, L.P.
By: 21st Century Internet Management
Partners, LLC
/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Member
Address: ▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SERIES A PREFERRED STOCK PURCHASE AGREEMENT
/s/ ▇▇▇▇▇ ▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO SERIES A PREFERRED STOCK PURCHASE AGREEMENT
EXHIBIT A
---------
SCHEDULE OF PURCHASERS
Purchaser
---------------------------------------------
21st Century Internet Fund, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
16
EXHIBIT B
---------
SIXTH AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
AVANTGO, INC.
The undersigned, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ III hereby certifies that:
1. He is the duly elected and acting Secretary of AvantGo, Inc., a
Delaware corporation.
2. The Certificate of Incorporation of this corporation was originally
filed with the Secretary of State of Delaware on June 30, 1997 under the
corporate name "Bombardier Software, Inc."
3. The Certificate of Incorporation of this corporation shall be amended
and restated to read in full as follows:
"ARTICLE I
The name of this corporation is AvantGo, Inc. (the "Corporation").
-----------
ARTICLE II
The address of the Corporation's registered office in the State of Delaware
is ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ of New Castle. The name of its
registered agent at such address is Corporation Service Company.
ARTICLE III
The purpose of the Corporation is to engage in any lawful act or activity
for which corporations may be organized under the General Corporation Law of
Delaware.
ARTICLE IV
(A) Classes of Stock. The Corporation is authorized to issue two classes
----------------
of stock to be designated, respectively, "Common Stock" and "Preferred Stock."
------------ ---------------
The total number of shares which the Corporation is authorized to issue is
Sixty-Three Million Four Hundred Seventy Two Thousand Eighty Two (63,472,082)
shares, each with a par value of $0.0001 per share. Forty-Five Million
(45,000,000) shares shall be Common Stock and Eighteen Million Four Hundred
Seventy Two Thousand Eighty Two (18,472,082) shares shall be Preferred Stock.
(B) Rights, Preferences and Restrictions of Preferred Stock. The Preferred
-------------------------------------------------------
Stock authorized by this Restated Certificate of Incorporation may be issued
from time to time in one or more series. The first series of Preferred Stock
shall be designated "Series A Preferred Stock"
------------------------
and shall consist of Four Million Four Hundred Thirty-Four Thousand One Hundred
Fifty-Six (4,434,156) shares. The second series of Preferred Stock shall be
designated "Series B Preferred Stock" and shall consist of Three Million Three
------------------------
Hundred One Thousand Eight Hundred Eighty-Six (3,301,886) shares. The third
series of Preferred Stock shall be designated "Series C Preferred Stock" and
------------------------
shall consist of Three Million Seven Hundred Thirty-Six Thousand Forty
(3,736,040) shares. The fourth series of Preferred Stock shall be designated
"Series D Preferred Stock" and shall consist of Five Million (5,000,000) shares.
------------------------
The fifth series of Preferred Stock shall be designated "Series E Preferred
------------------
Stock" and shall consist of Two Million (2,000,000) shares. The rights,
-----
preferences, privileges, and restrictions granted to and imposed on the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock are as set forth below in this
Article IV(B).
1. Dividend Provisions.
-------------------
(a) The holders of shares of Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and Series E
Preferred Stock (collectively, the "Preferred Stock") shall be entitled to
receive dividends, out of any assets legally available therefor, prior and in
preference to any declaration or payment of any dividend (payable other than in
Common Stock or other securities and rights convertible into or entitling the
holder thereof to receive, directly or indirectly, additional shares of Common
Stock of the Corporation) on the Common Stock of the Corporation, on a pro rata
basis and at the rate of $0.0245, $0.08450, $0.3152, $0.668 and $0.668 per share
per annum, respectively, on each outstanding share of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock and
Series E Preferred Stock (adjusted to reflect subsequent stock dividends, stock
splits or recapitalizations), payable quarterly when, as and if declared by the
Board of Directors. Such dividends shall not be cumulative.
(b) The holders of the Preferred Stock shall also be entitled to
participate in, out of any assets legally available thereof, payment of any
dividend (payable other than in Common Stock or other securities and rights
convertible into or entitling the holder thereof to receive, directly or
indirectly, additional shares of Common Stock of this Corporation) on the Common
Stock of this Corporation, payable as and if such shares of Preferred Stock have
converted into Common Stock immediately prior to such dividend, payable when, as
and if declared by the Board of Directors on a pro rata basis as the Common
Stock. Such dividends shall not be cumulative.
2. Liquidation.
-----------
(a) In the event of any liquidation, dissolution or winding up of
the Corporation, either voluntary or involuntary, the holders of the Preferred
Stock shall be entitled to receive, prior and in preference to any distribution
of any of the assets of the Corporation to the holders of Common Stock by reason
of their ownership thereof, an amount equal to $0.3045, $1.06, $3.94, $8.36 and
$8.36 per share for each share of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock, Series D Preferred Stock or Series E Preferred
Stock, respectively (proportionately adjusted for any recapitalizations, stock
splits, and the like), then held by them, plus declared but unpaid dividends.
If, upon the occurrence of such event, the
-2-
assets and funds thus distributed among the holders of the Preferred Stock shall
be insufficient to permit the payment to such holders of the full aforesaid
preferential amount, then the entire assets and funds of the Corporation legally
available for distribution shall be distributed ratably among the holders of the
Preferred Stock in proportion to the preferential amount each such holder is
otherwise entitled to receive.
(b) Remaining Assets. Upon the completion of the distribution
----------------
required by Section 2(a) above, if assets remain in the Corporation, the holders
of the Common Stock of the Corporation shall receive all of the remaining assets
of the Corporation pro rata based on the number of shares of Common Stock held
by each.
(c) Certain Acquisitions.
--------------------
(i) Deemed Liquidation. For purposes of this Section 2, a
------------------
liquidation, dissolution or winding up of the Corporation shall be deemed to be
occasioned by, or to include, (A) the acquisition of the Corporation by another
entity by means of any transaction or series of related transactions (including,
without limitation, any reorganization, merger or consolidation, but excluding
any merger effected exclusively for the purpose of changing the domicile of the
Corporation; unless the Corporation's stockholders of record as constituted
------
immediately prior to such acquisition will, immediately after such acquisition
(by virtue of securities issued as consideration for the Corporation's
acquisition or sale or otherwise) hold at least 50% of the voting power of the
surviving or acquiring entity); or (B) a sale of all or substantially all of the
assets of the Corporation (a "Deemed Liquidation Event").
(ii) Valuation of Consideration. In the event of a
--------------------------
Deemed Liquidation as described in Section 2(c)(i) above, if the consideration
received by the Corporation is other than cash, its value will be deemed its
fair market value. Any securities shall be valued as follows:
(A) Securities not subject to investment letter
or other similar restrictions on free marketability:
(1) If traded on a securities exchange or the
Nasdaq National Market System, the value shall be deemed to be the average of
the closing prices of the securities on such exchange over the thirty-day period
ending three (3) days prior to the closing;
(2) If actively traded over-the-counter, the
value shall be deemed to be the average of the closing bid or sale prices
(whichever is applicable) over the thirty-day period ending three (3) days prior
to the closing; and
(3) If there is no active public market, the
value shall be the fair market value thereof, as mutually determined by the
Corporation and the holders of at least a majority of the voting power of all
then outstanding shares of Preferred Stock.
(B) The method of valuation of securities subject
to investment letter or other restrictions on free marketability (other than
restrictions arising solely
-3-
by virtue of a stockholder's status as an affiliate or former affiliate) shall
be to make an appropriate discount from the market value determined as above in
Section 2(c)(ii)(A) to reflect the approximate fair market value thereof, as
mutually determined by the Corporation and the holders of at least a majority of
the voting power of all then outstanding shares of Preferred Stock.
(iii) Notice of Transaction. The Corporation shall
---------------------
give each holder of record of Preferred Stock written notice of such impending
transaction not later than twenty (20) days prior to the stockholders' meeting
called to approve such transaction, or twenty (20) days prior to the closing of
such transaction, whichever is earlier, and shall also notify such holders in
writing of the final approval of such transaction. The first of such notices
shall describe the material terms and conditions of the impending transaction
and the provisions of this Section 2, and the Corporation shall thereafter give
such holders prompt notice of any material changes. The transaction shall in no
event take place sooner than twenty (20) days after the Corporation has given
the first notice provided for herein or sooner than ten (10) days after the
Corporation has given notice of any material changes provided for herein;
provided, however, that such periods may be shortened or waived upon the written
consent of the holders of Preferred Stock that are entitled to such notice
rights or similar notice rights and that represent at least a majority of the
voting power of all then outstanding shares of such Preferred Stock.
(iv) Effect of Noncompliance. In the event the
-----------------------
requirements of this Section 2(c) are not complied with, the Corporation shall
forthwith either cause the closing of the transaction to be postponed until such
requirements have been complied with, or cancel such transaction, in which event
the rights, preferences and privileges of the holders of Preferred Stock shall
revert to and be the same as such rights, preferences and privileges existing
immediately prior to the date of the first notice referred to in Section
2(c)(iii) hereof.
3. Redemption. The Preferred Stock is not redeemable.
----------
4. Conversion. The holders of Preferred Stock shall have conversion
----------
rights as follows (the "Conversion Rights"):
-----------------
(a) Right to Convert. Subject to Section 4(c), each share
----------------
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock shall be convertible, at
the option of the holder thereof, at any time after the date of issuance of such
share, at the office of the Corporation or any transfer agent for such stock,
into such number of fully paid and nonassessable shares of Common Stock as is
determined by dividing $.3045, $1.06, $3.94, $8.36 and $8.36, respectively, by
the Conversion Price applicable to such share, determined as hereafter provided,
in effect on the date the certificate is surrendered for conversion. The initial
Conversion Price per share of Series A Preferred Stock shall be $.3045. The
initial Conversion Price per share of Series B Preferred Stock shall be $1.06.
The initial Conversion Price per share of Series C Preferred Stock shall be
$3.94. The initial Conversion Price per share of Series D Preferred Stock shall
be $8.36. The initial Conversion Price per share of Series E Preferred Stock
shall be $8.36. Such initial Conversion Prices shall be subject to adjustment as
set forth in Section 4(d).
-4-
(b) Automatic Conversion. Each share of Preferred Stock shall
--------------------
automatically be converted into shares of Common Stock at the Conversion Price
at the time in effect for such share immediately upon the earlier of (i) except
as provided below in Section 4(c), the Corporation's sale of its Common Stock in
a firm commitment underwritten public offering pursuant to a registration
statement under the Securities Act of 1933, as amended, the public offering
price of which is not less than $8.36 per share (adjusted to reflect subsequent
stock dividends, stock splits or recapitalization) and which results in
aggregate cash proceeds to the Corporation of at least $20,000,000 (net of
underwriting discounts and commissions) or (ii) the date specified by written
consent or agreement of the holders of a majority of the then outstanding shares
of Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock,
Series D Preferred Stock and Series E Preferred Stock, each voting as a separate
class.
(c) Mechanics of Conversion. Before any holder of Preferred Stock
-----------------------
shall be entitled to convert the same into shares of Common Stock, such holder
shall surrender the certificate or certificates therefor, duly endorsed, at the
office of the Corporation or of any transfer agent for the Preferred Stock, and
shall give written notice to the Corporation at its principal corporate office
or to such other location as may be designated by the Corporation and the
holders of the Preferred Stock, of the election to convert the same and shall
state therein the name or names in which the certificate or certificates for
shares of Common Stock are to be issued. The Corporation shall, as soon as
practicable thereafter, issue and deliver at such office to such holder of
Preferred Stock, or to the nominee or nominees of such holder, a certificate or
certificates for the number of shares of Common Stock to which such holder shall
be entitled as aforesaid. Such conversion shall be deemed to have been made
immediately prior to the close of business on the date of such surrender of the
shares of Preferred Stock to be converted and a check for cash with respect to
any fractional interest in a share of the Common Stock as provided in Section
4(h), below, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such shares of Common Stock as of such date (the
"Conversion Date"). If the conversion is in connection with (i) an underwritten
offering of securities registered pursuant to the Securities Act of 1933, or
(ii) a Deemed Liquidation Event described in Article IV, Section (B)(2)(e)(i),
the conversion may, at the option of any holder tendering Preferred Stock for
conversion, be conditioned upon the closing with the underwriters of the sale of
securities pursuant to such offering or the closing of a Deemed Liquidation
Event, in which event the person(s) entitled to receive Common Stock upon
conversion of such Preferred Stock shall not be deemed to have converted such
Preferred Stock until immediately prior to the closing of such sale of
securities or Deemed Liquidation Event.
(d) Conversion Price Adjustments of Preferred Stock for Certain
-----------------------------------------------------------
Dilutive Issuances, Splits and Combinations. The Conversion Price of the
-------------------------------------------
Preferred Stock shall be subject to adjustment from time to time as follows:
(i) (A) If the Corporation shall issue, after the date upon
which any shares of Preferred Stock were first issued (the "Purchase Date"), as
-------------
the case may be, any Additional Stock (as defined below) without consideration
or for a consideration per share less than the Conversion Price for the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock, as the case may be, in
-5-
effect immediately prior to the issuance of such Additional Stock, the
Conversion Price for the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock, Series D Preferred Stock or Series E Preferred Stock,
as the case may be, in effect immediately prior to each such issuance shall
automatically (except as otherwise provided in this clause (i)) be adjusted to a
price determined by multiplying such Conversion Price by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such issuance plus the number of shares of Common Stock
that the aggregate consideration received by the Corporation for such issuance
would purchase at such Conversion Price; and the denominator of which shall be
the number of shares of Common Stock outstanding immediately prior to such
issuance plus the number of shares of such Additional Stock; provided that for
the purposes of this subsection, all shares of Common Stock issuable upon
exercise of outstanding options and warrants and/or upon conversion of
outstanding convertible securities (including outstanding Preferred Stock),
shall be deemed to be outstanding, and immediately after any Additional Stock is
deemed issued, such Additional Stock shall be deemed to be outstanding.
(B) No adjustment of the Conversion Price for
the Preferred Stock shall be made in an amount less than one tenth of one cent
per share, provided that any adjustments which are not required to be made by
reason of this sentence shall be carried forward and shall be either taken into
account in any subsequent adjustment made prior to three years from the date of
the event giving rise to the adjustment being carried forward, or shall be made
at the end of three years from the date of the event giving rise to the
adjustment being carried forward. Except to the limited extent provided for in
Sections 4(d)(i)(E)(3) and 4(d)(i)(E)(4), no adjustment of a Conversion Price
pursuant to this Section 4(d)(i) shall have the effect of increasing such
Conversion Price above the Conversion Price in effect immediately prior to such
adjustment.
(C) In the case of the issuance of Common
Stock for cash, the consideration shall be deemed to be the amount of cash paid
therefor before deducting any reasonable discounts, commissions or other
expenses allowed, paid or incurred by the Corporation for any underwriting or
otherwise in connection with the issuance and sale thereof.
(D) In the case of the issuance of the Common
Stock for a consideration in whole or in part other than cash, the consideration
other than cash shall be deemed to be the fair value thereof as determined by
the Board of Directors irrespective of any accounting treatment.
(E) In the case of the issuance (whether
before, on or after the applicable Purchase Date) of any options or warrants to
purchase or other rights to subscribe for Common Stock, securities by their
terms convertible into or exchangeable for Common Stock or options to purchase
or rights to subscribe for such convertible or exchangeable securities, the
following provisions shall apply for all purposes of this Section 4(d)(i) and
Section 4(d)(ii):
(1) The aggregate maximum number of
shares of Common Stock deliverable upon exercise (assuming the satisfaction of
any conditions to exercisability, including without limitation, the passage of
time, but without taking into account
-6-
potential antidilution adjustments) of such options to purchase or rights to
subscribe for Common Stock shall be deemed to have been issued at the time such
options or rights were issued and for a consideration equal to the consideration
(determined in the manner provided in Sections 4(d)(i)(C) and 4(d)(i)(D)), if
any, received by the Corporation upon the issuance of such options, warrants or
rights plus the minimum exercise price provided in such options or rights
(without taking into account potential antidilution adjustments) for the Common
Stock covered thereby.
(2) The aggregate maximum number of shares of
Common Stock deliverable upon conversion of or in exchange (assuming the
satisfaction of any conditions to convertibility or exchangeability, including,
without limitation, the passage of time, but without taking into account
potential antidilution adjustments) for any such convertible or exchangeable
securities or upon the exercise of options, warrants to purchase or other rights
to subscribe for such convertible or exchangeable securities and subsequent
conversion or exchange thereof shall be deemed to have been issued at the time
such securities were issued or such options, warrants or other rights were
issued and for a consideration equal to the consideration, if any, received by
the Corporation for any such securities and related options or rights (excluding
any cash received on account of accrued interest or accrued dividends), plus the
minimum additional consideration, if any, to be received by the Corporation
(without taking into account potential antidilution adjustments) upon the
conversion or exchange of such securities or the exercise of any related
options, warrants or other rights (the consideration in each case to be
determined in the manner provided in Sections 4(d)(i)(C) and 4(d)(i)(D)).
(3) In the event of any change in the number
of shares of Common Stock deliverable or in the consideration payable to the
Corporation upon exercise of such options, warrants or other rights or upon
conversion of or in exchange for such convertible or exchangeable securities,
including, but not limited to, a change resulting from the antidilution
provisions thereof, the Conversion Price of the Series A Preferred Stock, Series
B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or Series
E Preferred Stock, as the case may be, to the extent in any way affected by or
computed using such options, warrants or other rights or securities, shall be
recomputed to reflect such change, but no further adjustment shall be made for
the actual issuance of Common Stock or any payment of such consideration upon
the exercise of any such options, warrants or other rights or the conversion or
exchange of such securities.
(4) Upon the expiration of any such options,
warrants or other rights, the termination of any such rights to convert or
exchange or the expiration of any options, warrants or other rights related to
such convertible or exchangeable securities, the Conversion Price of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Series E Preferred Stock, as the case may be, to the extent
in any way affected by or computed using such options, warrants or other rights
or securities or options or rights related to such securities, shall be
recomputed to reflect the issuance of only the number of shares of Common Stock
(and convertible or exchangeable securities which remain in effect) actually
issued upon the exercise of such options or rights, upon the conversion or
exchange of such securities or upon the exercise of the options or rights
related to such securities.
-7-
(5) The number of shares of Common Stock
deemed issued and the consideration deemed paid therefor pursuant to Sections
4(d)(i)(E)(1) and (2) shall be appropriately adjusted to reflect any change,
termination or expiration of the type described in either Section 4(d)(i)(E)(3)
or (4).
(ii) "Additional Stock" shall mean any shares of
----------------
Common Stock or any right or option to purchase any Common Stock or Stock
convertible into Common Stock, or any share of Stock convertible or exchangeable
for Common Stock issued (or deemed to have been issued pursuant to Section
4(d)(i)(E)) by the Corporation after the Purchase Date) other than
(A) Common Stock issued pursuant to a
transaction described in Section 4(d)(iii) hereof,
(B) Shares of Common Stock issuable or
issued to employees, consultants or directors of the Corporation directly or
pursuant to a stock option plan or restricted stock plan approved by a majority
of the members of Board of Directors of the Corporation who are not also
employees of the Corporation,
(C) Capital stock, or options or warrants to
purchase capital stock, issued to financial institutions or lessors in
connection with commercial credit arrangements, equipment financings or similar
transactions, where such issuance is not principally for the purpose of raising
additional equity capital for the Corporation,
(D) Shares of Common Stock or Preferred
Stock issuable upon conversion or exercise of convertible or exercisable
securities outstanding as of the date of this Amended and Restated Certificate
of Incorporation,
(E) Capital stock or warrants or options to
purchase capital stock issued in connection with bona fide acquisitions, mergers
or similar transactions, the terms of which are approved by a majority of the
members of the Board of Directors of the Corporation who are not also employees
of the Corporation,
(F) Shares of Common Stock issued or
issuable upon conversion of the Preferred Stock, and
(G) Shares of Common Stock issued or
issuable in a public offering prior to or in connection with which all
outstanding shares of Preferred Stock will be converted to Common Stock.
(iii) In the event the Corporation should at any
time or from time to time after the Purchase Date fix a record date for the
effectuation of a split or subdivision of the outstanding shares of Common Stock
or the determination of holders of Common Stock entitled to receive a dividend
or other distribution payable in additional shares of Common Stock or other
securities or rights convertible into, or entitling the holder thereof to
receive directly or indirectly, additional shares of Common Stock (hereinafter
referred to as "Common Stock Equivalents") without payment of any consideration
------------------------
by such holder for the additional shares of
-8-
Common Stock or the Common Stock Equivalents (including the additional shares of
Common Stock issuable upon conversion or exercise thereof), then, as of such
record date (or the date of such dividend distribution, split or subdivision if
no record date is fixed), the Conversion Prices of the Preferred Stock shall be
appropriately decreased so that the number of shares of Common Stock issuable on
conversion of each share of Preferred Stock shall be increased in proportion to
such increase of the aggregate of shares of Common Stock outstanding and those
issuable with respect to such Common Stock Equivalents with the number of shares
issuable with respect to Common Stock Equivalents determined from time to time
in the manner provided for deemed issuances in Section 4(d)(i)(E).
(iv) If the number of shares of Common Stock outstanding at
any time after the Purchase Date is decreased by a combination of the
outstanding shares of Common Stock, then, following the record date of such
combination, the Conversion Prices for the Preferred Stock shall be
appropriately increased so that the number of shares of Common Stock issuable on
conversion of each share of such series shall be decreased in proportion to such
decrease in outstanding shares.
(e) Other Distributions. In the event the Corporation shall
-------------------
declare a distribution payable in securities of other persons, evidences of
indebtedness issued by the Corporation or other persons, assets (excluding cash
dividends) or options or rights not referred to in Section 4(d)(iii), then, in
each such case for the purpose of this Section 4(e), the holders of Preferred
Stock shall be entitled to a proportionate share of any such distribution as
though they were the holders of the number of shares of Common Stock of the
Corporation into which their shares of Preferred Stock are convertible as of the
record date fixed for the determination of the holders of Common Stock of the
Corporation entitled to receive such distribution.
(f) Recapitalizations. If at any time or from time to time there
-----------------
shall be a recapitalization of the Common Stock (other than a subdivision,
combination or merger or sale of assets transaction provided for elsewhere in
this Section 4 or in Section 2) provision shall be made so that the holders of
the Preferred Stock shall thereafter be entitled to receive upon conversion of
the Preferred Stock the number of shares of stock or other securities or
property of the Company or otherwise, to which a holder of Common Stock
deliverable upon conversion would have been entitled on such recapitalization.
In any such case, appropriate adjustment shall be made in the application of the
provisions of this Section 4 with respect to the rights of the holders of the
Preferred Stock after the recapitalization to the end that the provisions of
this Section 4 (including adjustment of the Conversion Price then in effect and
the number of shares purchasable upon conversion of the Preferred Stock) shall
be applicable after that event and be as nearly equivalent as practicable.
(g) No Impairment. The Corporation will not, by amendment of its
-------------
Certificate of Incorporation or through any reorganization, recapitalization,
transfer of assets, consolidation, merger, dissolution, issue or sale of
securities or any other voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be observed or performed hereunder by the
Corporation, but will at all times in good faith assist in the carrying out of
all the provisions of this Section 4 and in the taking of all such action as may
be necessary or
-9-
appropriate in order to protect the Conversion Rights of the holders of
Preferred Stock against impairment.
(h) No Fractional Shares and Certificate as to Adjustments.
------------------------------------------------------
(i) No fractional shares shall be issued upon the conversion
of any share or shares of the Preferred Stock, and the number of shares of
Common Stock to be issued shall be rounded to the nearest whole share. Whether
or not fractional shares are issuable upon such conversion shall be determined
on the basis of the total number of shares of Preferred Stock the holder is at
the time converting into Common Stock and the number of shares of Common Stock
issuable upon such aggregate conversion. If, after the aforementioned
aggregation, the conversion would result in the issuance of any fractional
share, the Corporation shall, in lieu of issuing any fractional share, pay cash
equal to the product of such fraction multiplied by the Common Stock's fair
market value (as determined by the Corporation's Board of Directors) on the
Conversion Date.
(ii) Upon the occurrence of each adjustment or readjustment
of the Conversion Prices of Preferred Stock pursuant to this Section 4, the
Corporation, at its expense, shall promptly compute such adjustment or
readjustment in accordance with the terms hereof and prepare and furnish to each
holder of Preferred Stock a certificate setting forth such adjustment or
readjustment and showing in detail the facts upon which such adjustment or
readjustment is based. The Corporation shall, upon the written request at any
time of any holder of Preferred Stock, furnish or cause to be furnished to such
holder a like certificate setting forth (A) such adjustment and readjustment,
(B) the Conversion Price for the Preferred Stock, as the case may be, at the
time in effect, and (C) the number of shares of Common Stock and the amount, if
any, of other property which at the time would be received upon the conversion
of a share of the Preferred Stock.
(i) Notices of Record Date. In the event of any taking by the
----------------------
Corporation of a record of the holders of any class of securities for the
purpose of determining the holders thereof who are entitled to receive any
dividend (other than a cash dividend) or other distribution, any right to
subscribe for, purchase or otherwise acquire any shares of stock of any class or
any other securities or property, or to receive any other right, the Corporation
shall mail to each holder of Preferred Stock, at least twenty (20) days prior to
the date specified therein, a notice specifying the date on which any such
record is to be taken for the purpose of such dividend, distribution or right,
and the amount and character of such dividend, distribution or right.
(j) Reservation of Stock Issuable Upon Conversion. The
---------------------------------------------
Corporation shall at all times reserve and keep available out of its authorized
but unissued shares of Common Stock, solely for the purpose of effecting the
conversion of the shares of the Preferred Stock, such number of its shares of
Common Stock as shall from time to time be sufficient to effect the conversion
of all outstanding shares of Preferred Stock; and if at any time the number of
authorized but unissued shares of Common Stock shall not be sufficient to effect
the conversion of all then outstanding shares of Preferred Stock, in addition to
such other remedies as shall be available to the holder of such Preferred Stock,
the Corporation will take
-10-
such corporate action as may, in the opinion of its counsel, be necessary to
increase its authorized but unissued shares of Common Stock to such number of
shares as shall be sufficient for such purposes, including, without limitation,
engaging in best efforts to obtain the requisite stockholder approval of any
necessary amendment to this Certificate of Incorporation.
(k) Notices. Any notice required by the provisions of this
-------
Section 4 to be given to the holders of shares of Preferred Stock shall be
deemed given (i) upon personal delivery, (ii) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient, if not, then on
the next business day, (iii) 48 hours after having been sent by registered or
confirmed mail, return receipt requested, postage prepaid, (iv) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt, or (v) three (3) days after
deposit in the U.S. mail, postage prepaid.
5. Voting Rights.
-------------
(a) General. The holder of each share of Preferred Stock shall
-------
have the right to one vote for each share of Common Stock into which such
Preferred Stock could then be converted, and with respect to such vote, such
holder shall have full voting rights and powers equal to the voting rights and
powers of the holders of Common Stock, and shall be entitled, notwithstanding
any provision hereof, to notice of any stockholders' meeting in accordance with
the bylaws of the Corporation, and shall be entitled to vote, together with
holders of Common Stock, with respect to any question upon which holders of
Common Stock have the right to vote. Fractional votes shall not, however, be
permitted and any fractional voting rights available on an as-converted basis
(after aggregating all shares into which shares of Preferred Stock held by each
holder could be converted) shall be rounded to the nearest whole number (with
one-half being rounded upward).
(b) Voting For the Election of Directors.
------------------------------------
(i) For so long as (A) the holders of the Series A
Preferred Stock; (B) the holders of the Series B Preferred Stock; or (C) the
holders of the Series C Preferred Stock hold as a separate class of Preferred
Stock not less than five percent (5%) of the outstanding equity securities of
the Corporation, determined on an as-converted and fully-diluted basis
(including for this purpose all shares of outstanding capital stock of the
Corporation, all warrants and all outstanding options to purchase capital stock
of the Company) (each, a "Qualifying Class"), then such Qualifying Class, voting
as a separate class of Preferred Stock, shall be entitled to elect one (1)
director of the Corporation at each annual election of directors, and to appoint
any successor thereto or replacement therefor, or to fill any vacancy created by
the removal or resignation of such director, all in such manner as is provided
for by and consistent with the General Corporation Law of the State of Delaware.
(ii) The holders of the Common Stock shall be entitled to
elect three (3) directors of the Corporation at each annual election of
directors, and to appoint any successor thereto or replacement therefor, or to
fill any vacancy created by the removal or resignation of such directors, all in
such manner as is provided for by and consistent with the General Corporation
Law of the State of Delaware.
-11-
(iii) Three (3) directors shall be elected by a majority of
the directors in office.
6. Protective Provisions.
---------------------
(a) So long as shares of Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of a majority of the Preferred
Stock, voting together as a single class:
(i) sell, convey, or otherwise dispose of all or substantially
all of its property or business or merge into or consolidate with any other
corporation (other than a wholly-owned subsidiary corporation) or effect any
other transaction or series of related transactions in which more than fifty
percent (50%) of the voting power of the Corporation is disposed of and in which
would result in each holder of Series D Preferred Stock receiving proceeds
greater than $12.54 for each share of Series D Preferred Stock held thereby (as
adjusted from time to time for any stock splits, combinations and the like),
provided that this Section 6(a)(i) shall not apply to a merger effected
--------
exclusively for the purpose of changing the domicile of the Corporation;
(ii) authorize or issue, or obligate itself to issue, any other
equity security, including any other security convertible into or exercisable
for any equity security having a preference over, or being on a parity with, the
Preferred Stock with respect to voting, redemption, dividends or upon
liquidation;
(iii) redeem, purchase or otherwise acquire (or pay into or set
funds aside for a sinking fund for such purpose) any share or shares of
Preferred Stock or Common Stock; provided, however, that this restriction shall
-------- -------
not apply to the repurchase of shares of Common Stock from employees, officers,
directors, consultants or other persons performing services for the Company or
any subsidiary pursuant to agreements under which the Company has the option to
repurchase such shares at cost upon the occurrence of certain events, such as
the termination of employment;
(iv) amend the Corporation's Certificate of Incorporation or
bylaws; or
(v) change the authorized number of directors of the
Corporation.
(b) So long as shares of Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of at least a majority of the Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock and Series E Preferred Stock, voting as separate classes:
(i) alter or change the rights, preferences or privileges of
the shares of Preferred Stock so as to expressly modify the terms hereof so as
to materially and adversely affect the shares of such series; or
-12-
(ii) increase or decrease (other than by redemption or
conversion) the total number of authorized shares of Preferred Stock.
(c) So long as shares of Preferred Stock are outstanding, the
Corporation shall not without first obtaining the approval (by vote or written
consent, as provided by law) of the holders of a majority of the Series D
Preferred Stock, voting separately as a class, sell, convey, or otherwise
dispose of all or substantially all of its property or business or merge into or
consolidate with any other corporation (other than a wholly-owned subsidiary
corporation) or effect any other transaction or series of related transactions
in which more than fifty percent (50%) of the voting power of the Corporation is
disposed of and in which would result in each holder of Series D Preferred Stock
receiving proceeds from such transaction of $12.54 or less for each share of
Series D Preferred Stock held thereby (as adjusted from time to time for any
stock splits, combinations and the like), provided that this Section 6(c) shall
--------
not apply to a merger effected exclusively for the purpose of changing the
domicile of the Corporation;
7. Status of Converted Stock. In the event any shares of Preferred
-------------------------
Stock shall be converted pursuant to Section 4 hereof, the shares so converted
shall be canceled and shall not be issuable by the Corporation. The Certificate
of Incorporation of the Corporation shall be appropriately amended to effect the
corresponding reduction in the Corporation's authorized capital stock.
(C) Common Stock.
------------
1. Dividend Rights. Subject to the prior rights of holders of all
---------------
classes of stock at the time outstanding having prior rights as to dividends,
the holders of the Common Stock shall be entitled to receive, when and as
declared by the Board of Directors, pro rata with Preferred Stock out of any
assets of the Corporation legally available therefor, such dividends as may be
declared from time to time by the Board of Directors.
2. Liquidation Rights. Upon the liquidation, dissolution or winding
------------------
up of the Corporation, the assets of the Corporation shall be distributed as
provided in Section 2 of Division (B) of this Article IV.
3. Redemption. The Common Stock is not redeemable.
----------
4. Voting Rights. The holder of each share of Common Stock shall
-------------
have the right to one vote, and shall be entitled to notice of any stockholders'
meeting in accordance with the bylaws of the Corporation, and shall be entitled
to vote upon such matters and in such manner as may be provided by law.
ARTICLE V
Except as otherwise provided in this Amended and Restated Certificate of
Incorporation in furtherance and not in limitation of the powers conferred by
statute, the Board of Directors of the Corporation is expressly authorized to
make, alter or repeal Bylaws of the Corporation.
-13-
ARTICLE VI
Elections of directors need not be by written ballot unless otherwise
provided in the Bylaws of the Corporation.
ARTICLE VII
(A) To the fullest extent permitted by the Delaware General Corporation
Law, as the same exists or as may hereafter be amended, a director of the
Corporation shall not be personally liable to the Corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director.
(B) The Corporation shall indemnify to the fullest extent permitted by law
any person made or threatened to be made a party to an action or proceeding,
whether criminal, civil, administrative or investigative, by reason of the fact
that he, his testator or intestate is or was a director or officer of the
Corporation or any predecessor of the Corporation, or serves or served at any
other enterprise as a director or officer at the request of the Corporation or
any predecessor to the Corporation.
(C) Neither any amendment nor repeal of this Article VII, nor the adoption
of any provision of the Corporation's Certificate of Incorporation inconsistent
with this Article VII, shall eliminate or reduce the effect of this Article VII
in respect of any matter occurring, or any action or proceeding accruing or
arising or that, but for this Article VII, would accrue or arise, prior to such
amendment, repeal or adoption of an inconsistent provision."
* * *
-14-
EXHIBIT C
SCHEDULE OF EXCEPTIONS TO
REPRESENTATIONS AND WARRANTIES
The following are exceptions to the representations and warranties of
Bombardier Software, Inc. (the "Company") contained in the Series A Preferred
Stock Purchase Agreement dated October 14, 1997 (the "Agreement") and should be
considered an integral part of the Agreement. The section numbers in this
Schedule of Exceptions correspond to the section numbers in the Agreement;
however, any information disclosed herein under any section number or in any
schedule to the Agreement provided by the Company shall be deemed disclosed and
incorporated into any other section or schedule under the Agreement where such
disclosure would be appropriate. Any terms defined in the Agreement shall have
the same meaning when used in this Schedule of Exceptions as when used in the
Agreement, unless the context otherwise requires.
2.2 Capitalization
Set forth below are the current stockholders of the Company, as
currently set forth in the Company's records.
Stockholder Shares Vesting Start Date
-----------------------------------------------------------------------------------------------------------------------
Common Stock
Founders
--------
▇▇▇▇▇ ▇▇▇ 960,000 6/17/97
▇▇▇▇▇ ▇▇▇▇▇ 960,000 5/10/97
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 880,000 4/1/97
Employees/Service Providers
---------------------------
Pool for option plan and issuance of stock/options to
service providers outside of plan 711,000
▇▇▇▇▇ ▇▇▇▇▇ 280,000 9/8/97
▇▇▇▇▇ ▇▇▇▇▇ 140,000 9/8/97
▇▇▇▇▇▇ ▇▇▇▇▇ 16,000 9/29/97
▇▇▇▇▇▇ ▇▇▇▇ 5,000 9/29/97
▇▇▇▇ ▇▇▇▇▇ 8,000 9/29/97
VI.G Investments 1997 32,000 6/26/97
▇▇▇ ▇▇▇▇ 4,000 6/26/97
▇▇▇▇▇▇▇ ▇▇▇▇▇ 4,000 6/26/97
Total Shares 4,000,000 100.00%
2.8 Patents and Trademarks
The Company has not performed any substantive search or investigation to
determine the availability of "Bombardier Software, Inc." as a potential
trademark and makes no assurance that such name will be available to it.
The Company is party to certain assignments of assets, proprietary
information and business concepts related to the proposed business of the
Company, made by each of ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ in
connection with their purchase of the Company's Common Stock. Copies of
the Common Stock Purchase Agreements under which such assignments were
made have been provided to special counsel to the Purchasers.
2.10 Agreements; Actions
The Company sold shares of its Common Stock to each of ▇▇▇▇▇ ▇▇▇ (960,000
shares), ▇▇▇▇▇ ▇▇▇▇▇ (960,000 shares), and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (880,000
shares), pursuant to separate Common Stock Purchase Agreements dated
August 11, 1997, copies of which have been provided to special counsel to
the Purchasers. Each such individual is an officer and a director of the
Company. Such shares were issued in exchange for an assignment of certain
proprietary information and business concepts related to the proposed
business of the Company.
The Company sold 4,000 shares of its Common Stock to ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇,
an officer, pursuant to a Common Stock Purchase Agreement dated
August 11, 1997.
The Company has entered into Indemnification Agreements with each of
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇. ▇. ▇▇▇▇.
▇▇▇▇▇ ▇▇▇ loaned the Company $30,000.00, pursuant to a Convertible
Promissory Note dated July 1, 1997, a copy of which has been provided to
special counsel to the Purchasers. The principal amount of such note will
be converted into shares of Series A Preferred Stock at the Closing.
▇▇▇▇▇ ▇▇▇▇▇ loaned the Company $30,000.00, pursuant to a Convertible
Promissory Note dated July 1, 1997, a copy of which has been provided to
special counsel to the Purchasers. The principal amount of such note will
be converted into shares of Series A Preferred Stock at the Closing.
▇▇▇▇▇ ▇▇▇▇▇ loaned the Company $40,000.00, pursuant to a Convertible
Promissory Note dated August 17, 1997, a copy of which has been provided
to special counsel to the Purchasers. The principal amount of such note
will be converted into shares of Series A Preferred Stock at the Closing.
-2-
In August 1997, The Company has paid ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, an officer and a
director of the Company, a cash bonus of $20,000 for services rendered to
the Company.
The Company has entered into an Office Lease dated June 23, 1997 with
Cornerstone Properties I, LLC, pursuant to which the Company has agreed
to lease 1,117 square feet of office space at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, on a month-to-month
basis.
2.14 Title to Property and Assets
The Company is currently leasing its office space in San Mateo,
California. See Section 2.10 above.
-3-
EXHIBIT D
---------
BOMBARDIER SOFTWARE, INC.
INVESTORS' RIGHTS AGREEMENT
---------------------------
This Investors' Rights Agreement (the "Agreement") is made as of the 14th
---------
day of October, 1997, by and among Bombardier Software, Inc., a Delaware
corporation (the "Company"), the investors listed on Exhibit A hereto, each of
------- ---------
which is herein referred to as an "Investor," and ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and
--------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, each of whom is herein referred to as a "Founder".
-------
RECITALS
--------
The Company and the Investors have entered into a Series A Preferred Stock
Purchase Agreement (the "Purchase Agreement") of even date herewith pursuant to
------------------
which the Company desires to sell to the Investors and the Investors desire to
purchase from the Company shares of the Company's Series A Preferred Stock. A
condition to the Investors' obligations under the Purchase Agreement is that the
Company, the Founders and the Investors enter into this Agreement in order to
provide the Investors with (i) certain rights to register shares of the
Company's Common Stock issuable upon conversion of the Series A Preferred Stock
held by the Investors, (ii) certain rights to receive or inspect information
pertaining to the Company, and (iii) a right of first offer with respect to
certain issuances by the Company of its securities. The Company, the Investors
and the Founders each desire to induce the Investors to purchase shares of
Series A Preferred Stock pursuant to the Purchase Agreement by agreeing to the
terms and conditions set forth herein.
AGREEMENT
---------
The parties hereby agree as follows:
1. Registration Rights. The Company and the Investors covenant and
-------------------
agree as follows:
1.1 Definitions. For purposes of this Section 1:
-----------
(a) The terms "register," "registered," and "registration"
-------- ---------- ------------
refer to a registration effected by preparing and filing a registration
statement or similar document in compliance with the Securities Act of 1933, as
amended (the "Act"), and the declaration or ordering of effectiveness of such
---
registration statement or document;
(b) The term "Registrable Securities" means (i) the shares
----------------------
of Common Stock issuable or issued upon conversion of the Series A Preferred
Stock (such shares of Common Stock are collectively referred to hereinafter as
the "Stock"), (ii) any other shares of 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, the Stock, and (iii) the shares of
Common Stock issued to the Founders (the "Founders' Stock"), provided, however,
--------------- -------- -------
that for the purposes of
Section 1.2, 1.4 or 1.13 the Founders' Stock shall not be deemed Registrable
Securities and the Founders shall not be deemed Holders and provided, further,
-------- -------
that the foregoing definition shall exclude in all cases any Registrable
Securities sold by a person in a transaction in which his or her rights under
this Agreement are not assigned. Notwithstanding the foregoing, Common Stock or
other securities shall only be treated as Registrable Securities if and so long
as they have not been (A) sold to or through a broker or dealer or underwriter
in a public distribution or a public securities transaction, or (B) sold in a
transaction exempt from the registration and prospectus delivery requirements of
the Act under Section 4(1) thereof so that all transfer restrictions, and
restrictive legends with respect thereto, if any, are removed upon the
consummation of such sale;
(c) The number of shares of "Registrable Securities then
---------------------------
outstanding" shall be determined by the number of shares of Common Stock
-----------
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
(d) The term "Holder" means any person owning or having the
------
right to acquire Registrable Securities or any assignee thereof in accordance
with Section 1.12 hereof;
(e) The term "Form S-3" means such form under the Act as in
--------
effect on the date hereof or any successor form under the Act; and
(f) The term "SEC" means the Securities and Exchange
---
Commission.
1.2 Request for Registration.
------------------------
(a) If the Company shall receive at any time after the
earlier of (i) three (3) years following the date hereof, or (ii) three (3)
months after the effective date of the first registration statement for a public
offering of securities of the Company (other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction), a written request from the Holders of a majority of the
Registrable Securities then outstanding that the Company file a registration
statement under the Act covering the registration of at least thirty-three
percent (33%) of the Registrable Securities then outstanding, then the Company
shall, within ten (10) days of the receipt thereof, give written notice of such
request to all Holders and shall, subject to the limitations of subsection
1.2(b), use its best efforts to effect as soon as practicable, and in any event
within sixty (60) days of the receipt of such request, the registration under
the Act of all Registrable Securities which the Holders request to be registered
within twenty (20) days of the mailing of such notice by the Company in
accordance with Section 3.5.
(b) If the Holders initiating the registration request
hereunder ("Initiating Holders") intend to distribute the Registrable Securities
------------------
covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to this Section 1.2 and the
Company shall include such information in the written notice
-2-
referred to in subsection 1.2(a). The underwriter will be selected by a majority
in interest of the Initiating Holders and shall be reasonably acceptable to the
Company. In such event, the right of any Holder to include his Registrable
Securities in such registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.5(e)) 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. Notwithstanding any other provision of this
Section 1.2, if the underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities 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 the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
1.2, a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such registration
statement to be filed and it is therefore essential to defer the filing of such
registration statement, the Company shall have the right to defer such filing
for a period of not more than one hundred twenty (120) days after receipt of the
request of the Initiating Holders; provided, however, that the Company may not
-------- -------
utilize this right more than once in any twelve-month period.
(d) In addition, the Company shall not be obligated to
effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected two (2)
registrations pursuant to this Section 1.2 and such registrations have been
declared or ordered effective;
(ii) During the period starting with the date sixty
(60) days prior to the Company's good faith estimate of the date of filing of,
and ending on a date one hundred eighty (180) days after the effective date of,
a registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 1.4 below.
-3-
1.3 Company Registration. If (but without any obligation to do
--------------------
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock under the Act in connection with the public offering of such securities
solely for cash (other than a registration relating solely to the sale of
securities to participants in a Company stock plan or a transaction covered by
Rule 145 under the Act, a registration in which the only stock being registered
is Common Stock issuable upon conversion of debt securities which are also being
registered, or any registration on any form which does not include substantially
the same information as would be required to be included in a registration
statement covering the sale of the Registrable Securities), the Company shall,
at such time, promptly give each Holder written notice of such registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company in accordance with Section 3.5, the
Company shall, subject to the provisions of Section 1.8, cause to be registered
under the Act all of the Registrable Securities that each such Holder has
requested to be registered.
1.4 Form S-3 Registration. In case the Company shall receive
---------------------
from any Holder or Holders of not less than thirty percent (30%) of the
Registrable Securities then outstanding a written request or requests that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) as soon as practicable, effect such registration and
all such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders joining in such request as are specified in a written request
given within fifteen (15) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be obligated to effect
any such registration, qualification or compliance, pursuant to this Section
1.4: (i) if Form S-3 is not available for such offering by the Holders; (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 (net of any underwriters' discounts or commissions) of less than
$250,000; (iii) if the Company shall furnish to the Holders a certificate signed
by the President of the Company stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such Form S-3 Registration to be effected at
such time, in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than one hundred
twenty (120) days after receipt of the request of the Holder or Holders under
this Section 1.4; provided, however, that the Company shall not utilize this
right more than once in any twelve (12) month period; (iv) if the Company has,
within the twelve (12) month period preceding the date of such request, already
effected two registrations on Form S-3 for the Holders pursuant to this Section
1.4; or (v) in any particular jurisdiction in which the Company would be
-4-
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively.
1.5 Obligations of the Company. Whenever required under this
--------------------------
Section 1 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 its best efforts to cause
such registration statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered thereunder, keep
such registration statement effective for up to one hundred twenty (120) days.
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
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 Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by
such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a
-5-
material fact or omits to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for all
such Registrable Securities, in each case not later than the effective date of
such registration.
(i) Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, if such securities are being sold through underwriters, or, if such
securities are not being sold through underwriters, on the date that the
registration statement with respect to such securities becomes effective, (i) an
opinion, dated 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 to the Holders requesting registration of Registrable Securities and
(ii) a letter dated 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, if any, and to the Holders requesting
registration of Registrable Securities.
1.6 Furnish Information. It shall be a condition precedent to
-------------------
the obligations of the Company to take any action pursuant to this Section 1
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement
if, as a result of the application of the preceding sentence, 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 subsection
1.2(a) or subsection 1.4(b)(2), whichever is applicable.
1.7 Expenses of Registration.
-------------------------
(a) Demand Registration. All expenses other than
-------------------
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees, printers'
and accounting fees, fees and disbursements of counsel for the Company, and the
reasonable fees and disbursements of one counsel for the selling Holders shall
be borne by the Company; provided, however, that the Company shall not be
required to pay for
-6-
any expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders of
a majority of the Registrable Securities to be registered (in which case all
participating Holders shall bear such expenses), unless the Holders of a
majority of the Registrable Securities agree to forfeit their right to one
demand registration pursuant to Section 1.2; provided further, however, that if
at the time of such withdrawal, the Holders have learned of a material adverse
change in the condition, business, or prospects of the Company from that known
to the Holders at the time of their request and have withdrawn the request with
reasonable promptness, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2.
(b) Company Registration. The Company shall bear and pay
--------------------
all expenses incurredunderwriting in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 1.3 for each Holder (which right may be assigned as provided
in Section 1.12), including (without limitation) all registration, filing, and
qualification fees, printers' and accounting fees relating or apportionable
thereto and the reasonable fees and disbursements of one counsel for the selling
Holders selected by them with the approval of the Company, which approval shall
not be unreasonably withheld, but excluding underwriting discounts and
commissions relating to Registrable Securities.
(c) Registration on Form S-3. All expenses incurred in
------------------------
connection with a registration requested pursuant to Section 1.4, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable Securities,
shall be borne pro rata by the Holder or Holders participating in the Form S-3
Registration.
1.8 Underwriting Requirements. In connection with any offering
-------------------------
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders), but in no event shall (i) the amount of
securities (not including Founders' Stock) of the selling Holders included in
the offering be reduced unless the securities of all other selling shareholders
(including Founders) are excluded entirely and (ii) the amount of securities
(not including Founders' Stock) of the selling Holders included in the offering
be reduced below thirty percent (30%) of the total amount of securities included
in such offering. For purposes of the preceding
-7-
parenthetical concerning apportionment, for any selling stockholder which is a
holder of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing persons shall be deemed to be a single "selling
-------
stockholder," and any pro-rata reduction with respect to such "selling
-----------
stockholder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"selling stockholder," as defined in this sentence.
1.9 Delay of Registration. 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 1.
1.10 Indemnification. In the event any Registrable Securities are
---------------
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), against any losses, claims, damages, or liabilities (joint
------------
or several) to which they may become subject under the 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"): (i) any untrue statement or alleged untrue statement of a material
---------
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Act, the Exchange Act or any state securities
law; and the Company will pay to each such Holder, underwriter or controlling
person, as incurred, any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 1.10(a) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability, or action if such settlement is effected
without the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such loss,
claim, damage, liability, or action to the extent that it arises out of or is
based upon a Violation which occurs in reliance upon and in conformity with
written information furnished expressly for use in connection with such
registration by any such Holder, underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder
will indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration
-8-
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to which
any of the foregoing persons may become subject, under the 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 expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld; provided, that, in no event shall any indemnity
under this subsection 1.10(b) exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under
this Section 1.10 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.10.
(d) If the indemnification provided for in this Section
1.10 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such 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; provided, that, in no event shall any contribution by a Holder
under this Subsection 1.10(d) exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder. The relative
fault of the indemnifying party and of the
-9-
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 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view
---------------------------------------------
to making available to the Holders the benefits of Rule 144 promulgated under
the Act and any other rule or regulation of the SEC that may at any time permit
a Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public so long as the
Company remains subject to the periodic reporting requirements under Sections 13
or 15(d) of the Exchange Act;
(b) take such action, including the voluntary registration
of its Common Stock under Section 12 of the Exchange Act, as is necessary to
enable the Holders to utilize Form S-3 for the sale of their Registrable
Securities, such action to be taken as soon as practicable after the end of the
fiscal year in which the first registration statement filed by the Company for
the offering of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Act and the Exchange Act; and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the Exchange Act (at
any time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
-10-
1.12 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to a transferee or
assignee of at least twenty-five thousand (25,000) shares of such securities,
provided the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address of such transferee or assignee and
the securities with respect to which such registration rights are being
assigned; and provided, further, that such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a transferee
or assignee, the holdings of transferees and assignees of a partnership who are
partners or retired partners of such partnership (including spouses and
ancestors, lineal descendants and siblings of such partners or spouses who
acquire Registrable Securities by gift, will or intestate succession) shall be
aggregated together and with the partnership; provided that all assignees and
transferees who would not qualify individually for assignment of registration
rights shall have a single attorney-in-fact for the purpose of exercising any
rights, receiving notices or taking any action under Section 1.
1.13 Limitations on Subsequent Registration Rights. From and
---------------------------------------------
after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 1.2.
1.14 "Market Stand-Off" Agreement. Each Holder hereby agrees that
---------------------------
during the period of duration (up to, but not exceeding, one hundred eighty
(180) days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the effective date of a registration
statement of the Company filed under the Act, it shall not, to the extent
requested by the Company and such underwriter, directly or indirectly sell,
offer to sell, contract to sell (including, without limitation, any short sale),
grant any option to purchase or otherwise transfer or dispose of (other than to
donees who agree to be similarly bound) any securities of the Company held by it
at any time during such period except Common Stock included in such
registration; provided, however, that:
(a) such agreement shall be applicable only to the first
such registration statement of the Company which covers Common Stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
-11-
(b) all officers and directors of the Company, all one-
percent security holders, and all other persons with registration rights
(whether or not pursuant to this Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.14.
Notwithstanding the foregoing, the obligations described in this
Section 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to an SEC Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future.
1.15 Termination of Registration Rights. No Holder shall be
----------------------------------
entitled to exercise any right provided for in this Section 1 after the earlier
of (i) five (5) years following the consummation of the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the initial firm commitment underwritten offering of its
securities to the general public, or (ii) such time as Rule 144 or another
similar exemption under the Act is available for the sale of all of such
Holder's shares during a three (3)-month period without registration.
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. The Company shall deliver
--------------------------------
to each Investor holding, and to transferees of, at least four hundred thousand
(400,000) shares of Registrable Securities:
(a) as soon as practicable, but in any event within ninety
(90) days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
----
and audited and certified by an independent public accounting firm of nationally
recognized standing selected by the Company;
(b) as soon as practicable, but in any event within thirty
(30) days after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited profit or loss statement, a statement of cash
flows for such fiscal quarter and an unaudited balance sheet as of the end of
such fiscal quarter;
(c) a copy of each report delivered to the holders of
Common Stock;
-12-
(d) within thirty (30) days of the end of each month, an
unaudited income statement and a consolidated statement of cash flows and
balance sheet for and as of the end of such month, in reasonable detail;
(e) as soon as practicable, but in any event thirty (30)
days prior to the end of each fiscal year, a budget and business plan for the
next fiscal year, prepared on a monthly basis, including balance sheets, income
statements and statements of cash flows for such months and, as soon as
prepared, any other budgets or revised budgets prepared by the Company;
(f) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors determines that it is in the best interest of the Company to do so;
and
(g) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the
Investor or any assignee of the Investor may from time to time reasonably
request, provided, however, that the Company shall not be obligated under this
subsection (f) or any other subsection of Section 2.1 to provide information
which it deems in good faith to be a trade secret or similar confidential
information.
2.2 Inspection. The Company shall permit each Investor who holds
----------
not less than four hundred thousand (400,000) shares of Registrable Securities,
at such Investor's expense, to visit and inspect the Company's properties, to
examine its books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as may be
requested by the Investor; provided, however, that the Company shall not be
obligated pursuant to this Section 2.2 to provide access to any information
which it reasonably considers to be a trade secret or similar confidential
information.
2.3 Termination of Information and Inspection Covenants. The
---------------------------------------------------
covenants set forth in Section 2.1 and Section 2.2 shall terminate as to
Investors and be of no further force or effect when the sale of securities
pursuant to a registration statement filed by the Company under the Act in
connection with the firm commitment underwritten offering of its securities to
the general public is consummated or when the Company first becomes subject to
the periodic reporting requirements of Sections 13 or 15(d) of the Exchange Act,
whichever event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this Section 2.4, the Company hereby grants to each Investor a
right of first offer with respect to future sales by the Company of its Shares
(as hereinafter defined). For purposes of this Section 2.4, "Investor" includes
any general partners and affiliates of an Investor. An
-13-
Investor shall be entitled to apportion the right of first offer hereby granted
it among itself and its partners and affiliates in such proportions as it deems
appropriate. Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
------
Shares to each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Investors stating (i) its bona fide intention to offer such
------
Shares, (ii) the number of such Shares to be offered, and (iii) the price and
terms, if any, upon which it proposes to offer such Shares.
(b) Within fifteen (15) calendar days after delivery of the
Notice, the Investor may elect to purchase or obtain, at the price and on the
terms specified in the Notice, up to that portion of such Shares which equals
the proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Investor bears to the total number of shares of
Common Stock then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities). The Company shall promptly, in writing,
inform each Investor that purchases all the shares available to it (each, a
"Fully-Exercising Investor") of any other Investor's failure to do likewise.
-------------------------
During the ten (10)-day period commencing after receipt of such information,
each Fully-Exercising Investor shall be entitled to obtain that portion of the
Shares for which Investors were entitled to subscribe but which were not
subscribed for by the Investors that is equal to the proportion that the number
of shares of Common Stock issued and held, or issuable upon conversion and
exercise of all convertible or exercisable securities then held, by such Fully-
Exercising Investor bears to the total number of shares of Common Stock then
outstanding (assuming full conversion and exercise of all convertible or
exercisable securities).
(c) The Company may, during the forty-five (45)-day period
EXHIBIT E
---------
BOMBARDIER SOFTWARE, INC.
RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
--------------------------------------------
This Right of First Refusal and Co-Sale Agreement (the "Agreement") is made
---------
and entered into as of October 14, 1997, by and among Bombardier Software, Inc.,
a Delaware corporation (the "Company"), and ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇
-------
▇▇▇▇▇▇▇▇▇ (the "Founders"), and the holder or holders of Series A Preferred
--------
Stock of the Company listed on Exhibit A hereto (collectively, the "Investors"
--------- ---------
and individually, the "Investor").
--------
RECITALS
--------
The Company and the Investors have entered into a Series A Preferred Stock
Purchase Agreement (the "Purchase Agreement") of even date herewith pursuant to
------------------
which the Company desires to sell to the Investors and the Investors desire to
purchase from the Company shares of the Company's Series A Preferred Stock. A
condition to the Investors' obligations under the Purchase Agreement is that the
Company, the Founders and the Investors enter into this Agreement in order to
provide the Investors the opportunity to purchase and/or participate, upon the
terms and conditions set forth in this Agreement, in subsequent sales by the
Founders of shares of the Company's Common Stock. The Company, the Investors
and the Founders each desire to induce the Investors to purchase shares of
Series A Preferred Stock pursuant to the Purchase Agreement by agreeing to the
terms and conditions set forth herein.
AGREEMENT
---------
The parties hereby agree as follows:
1. Sales by Founders.
-----------------
(a) Notice of Sales; Assignment of Company Right of First Refusal.
-------------------------------------------------------------
(i) Should any Founder propose to accept one or more bona fide
offers (collectively, a "Purchase Offer") from any persons to purchase shares of
--------------
the Company's Common Stock (the "Shares") from such Founder (other than as set
------
forth in subsection 1(e) hereof), such Founder shall promptly deliver a notice
(the "Notice") to the Company and each Investor stating the terms and conditions
------
of such Purchase Offer including, without limitation, the number of shares of
the Company's capital stock to be sold or transferred, the nature of such sale
or transfer, the consideration to be paid, and the name and address of each
prospective purchaser or transferee.
(ii) The Company agrees that in the event that the Company
declines to exercise in full the Right of First Refusal set forth in Section 3
of the Common Stock Purchase Agreement between such Founder and the Company (the
"Right of First Refusal"), the Company will provide each Investor with
----------------------
notice of such determination at least fifteen (15) days prior to the end of the
period in which the Right of First Refusal expires under such Common Stock
Purchase Agreement. Each Investor shall then have the right, exercisable by
notice prior to the
-1-
end of such period, to exercise such Right of First Refusal as the Company's
assignee on a pro rata basis (based upon the number of Conversion Shares (as
defined below) held by such Investor relative to the aggregate number of
Conversion Shares held by all Investors); provided that if fewer than all
Investors elect to participate, the Shares that would otherwise be allocated to
non-participating Investors shall be allocated to each participating Investor in
a manner such that each participating Investor is entitled to purchase at least
such Investor's pro rata portion of such unallocated Shares (based upon the
number of Conversion Shares held by all participating Investors) or such
different number of shares as the participating Investors shall mutually agree.
Upon expiration or exercise of the Right of First Refusal, the Company will
provide notice to all Investors as to whether or not the Right of First Refusal
has been exercised by the Company or the Investors.
(b) Co-Sale Right. To the extent that the Right of First Refusal is
-------------
not exercised by the Company or the Investors, each Investor shall have the
right (the "Co-Sale Right"), exercisable upon written notice to the Company
-------------
within fifteen (15) business days after the expiration of the Right of First
Refusal to participate in such Founder's sale of Shares pursuant to the
specified terms and conditions of such Purchase Offer. To the extent an
Investor exercises such Co-Sale Right in accordance with the terms and
conditions set forth below, the number of Shares which such Founder may sell
pursuant to such Purchase Offer shall be correspondingly reduced. The Co-Sale
Right of each Investor shall be subject to the following terms and conditions:
(i) Calculation of Shares. Each Investor may sell all or any
---------------------
part of that number of shares of Common Stock of the Company issued or issuable
upon conversion of Preferred Stock or Common Stock received in connection with
any stock dividend, stock split or other reclassification thereof (the
"Conversion Shares") equal to the product obtained by multiplying (x) the
-----------------
aggregate number of shares of Common Stock covered by the Purchase Offer by (y)
a fraction, the numerator of which is the number of Conversion Shares at the
time owned by such Investor and the denominator of which is the combined number
of shares of Common Stock of the Company at the time owned by all Investors and
all Founders participating in such sale, including shares transferred by such
Founder to Permitted Transferees (as hereinafter defined) in accordance
herewith. The provisions of this Agreement do not confer any Co-Sale rights with
respect to any shares of Common Stock or other securities held by an Investor
that are not Conversion Shares.
(ii) Delivery of Certificates. Each Investor may effect its
------------------------
participation in the sale by delivering to the selling Founder for transfer to
the purchase offeror one or more certificates, properly endorsed for transfer,
which represent the number of shares of Preferred Stock, or Common Stock issued
upon conversion thereof, which such Investor elects to sell.
(c) Transfer. The stock certificate or certificates which the
--------
Investor delivers to the selling Founder pursuant to Section 1(b) shall be
delivered by such Founder to the purchase offeror in consummation of the sale
pursuant to the terms and conditions specified in the Notice, and such Founder
shall promptly thereafter remit to such Investor that portion of the sale
proceeds to which such Investor is entitled by reason of its participation in
such sale. To the
-2-
extent that any prospective purchaser or purchasers prohibits such
assignment or otherwise refuses to purchase shares of capital stock of the
Company from an Investor exercising its Co-Sale Right hereunder, the
selling Founder or Founders shall not sell to such prospective purchaser or
purchasers any shares of Company stock unless and until, simultaneously
with such sale, the selling Founder or Founders shall purchase such shares
from such Investor for the same consideration and on the same terms and
conditions as the proposed transfer described in the Notice (which terms
and conditions shall be no less favorable than those governing the sale to
the purchaser by the Founder or Founders).
(d) No Adverse Effect. The exercise or non-exercise of the rights of
-----------------
the Investors hereunder to participate in one or more sales of Shares made by a
Founder shall not adversely affect their rights to participate in subsequent
sales of Common Stock by a Founder.
(e) Permitted Transactions. The provisions of Section 1 of this
----------------------
Agreement shall not pertain or apply to:
(i) Any pledge of the Company's Common Stock made by a Founder
pursuant to a bona fide loan transaction which creates a mere security interest;
(ii) Any repurchase of Common Stock by the Company;
(iii) Any bona fide gift;
(iv) Any transfer to a Founder's ancestors, descendants or
spouse or to a trust for their benefit;
(v) any sale or transfer of shares of Common Stock among the
Founders; or
(vi) any sale or transfer by a Founder of up to 5% of the total
number of shares of Common Stock held by such Founder on the date of this
Agreement in any twelve-month period.
provided, that (x) the Founder(s) shall inform the Investors of such pledge,
--------
transfer or gift prior to effecting it, and (y) the pledgee, transferee or donee
(collectively, the "Permitted Transferees") shall furnish the Investors with a
---------------------
written agreement to be bound by and comply with all provisions of this
Agreement applicable to the Founders.
2. Prohibited Transfers. Any attempt by a Founder to transfer shares of
--------------------
the Company in violation of Section 1 hereof shall be void and the Company
agrees it will not effect such a transfer nor will it treat any alleged
transferee as the holder of such shares without the written consent of the
holders of a majority of the Conversion Shares.
3. Legended Certificates. Each certificate representing shares of the
---------------------
Common Stock of the Company now or hereafter owned by the Founders or issued to
any Permitted Transferee pursuant to Section 1(e) shall be endorsed with the
following legend:
-3-
"THE SALE, PLEDGE, HYPOTHECATION OR TRANSFER OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS
OF A CERTAIN RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT BY AND
BETWEEN THE STOCKHOLDER, THE CORPORATION AND CERTAIN HOLDERS OF COMMON
AND PREFERRED STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY
BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE CORPORATION."
The foregoing legend shall be removed upon termination of this Agreement in
accordance with the provisions of Section 4(a).
4. Miscellaneous Provisions.
------------------------
(a) Termination. This Agreement shall terminate upon the earliest to
-----------
occur of any one of the following events (and shall not apply to any transfer by
a Founder in connection with any such event):
(i) The liquidation, dissolution or indefinite cessation of the
business operations of the Company;
(ii) The execution by the Company of a general assignment for the
benefit of creditors or the appointment of a receiver or trustee to take
possession of the property and assets of the Company;
(iii) The closing of the Company's initial public offering of
securities; provided that all shares of the Company's Preferred Stock are
--------
converted into shares of Common Stock prior to or in connection with such
offering; or
(iv) The closing of any acquisition, merger, reorganization or
other transaction which results in the stockholders of the Company immediately
prior to such transaction owning less than 50% of the Company's voting stock
immediately after such transaction.
(b) Notices. Any notice required or permitted by this Agreement shall
-------
be in writing and shall be deemed sufficient on the date of delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified
at such party's address as set forth below or on Exhibit A hereto, or as
---------
subsequently modified by written notice.
(c) Successors and Assigns. This Agreement and the rights and
----------------------
obligations of the parties hereunder shall inure to the benefit of, and be
binding upon, their respective successors, assigns and legal representatives.
The rights of the Investors hereunder shall be assignable only (i) by each of
such Investors to any other Investor or (ii) an assignee or transferee who
acquires not less than 400,000 shares of the Company's Common Stock (as adjusted
for
-4-
stock splits, stock dividends and the like, and assuming conversion of all
Preferred Stock held by such Investor); provided that such limitation shall not
--------
apply to transfers by an Investor to constituent stockholders, constituent
partners or retired constituent partners (including any constituent of a
constituent) of the Investor (including spouses and ancestors, lineal
descendants and siblings of such partners or spouses who acquire the Preferred
Stock or Common Stock issued upon conversion thereof) if all such transferees or
assignees irrevocably agree in writing to appoint a single representative as
their attorney in fact for the purpose of receiving any notices and exercising
their rights under this Agreement.
(d) Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(e) Modifications and Amendments. Any term hereof may be amended or
----------------------------
waived with the written consent of the Company, holders of at least a majority
of the Series A Preferred Stock, and holders of a majority of the Founders'
shares (or their respective successors and assigns) voting together as a class.
Any amendment or waiver effected in accordance with this Section 4(e) shall be
binding upon the Company, the holders of Series A Preferred Stock and any holder
of Founders' Shares, and each of their respective successors and assigns.
(f) Attorney's Fees. If any action at law or in equity (including
---------------
arbitration) is necessary to enforce or interpret the terms of any of the
Agreements, the prevailing party shall be entitled to reasonable attorney's
fees, costs and necessary disbursements in addition to any other relief to which
such party may be entitled.
(g) Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto and the rights and obligations of the parties hereto shall be
governed, construed and interpreted in accordance with the laws of the State of
California, without giving effect to principles of conflicts of law.
(h) Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original and all of which
together shall constitute one and the same instrument.
[Signature Page Follows]
-5-
The parties have executed this Agreement as of the date first written
above.
COMPANY: INVESTORS:
BOMBARDIER SOFTWARE, INC. 21ST CENTURY INTERNET FUND L.P.
By: _________________________________ By: 21st Century Internet
▇▇▇▇▇ ▇▇▇, Management Partners, LLC
Chief Executive Officer
By: _______________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Member
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Address: ▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
FOUNDERS:
_______________________________
▇▇▇▇▇ ▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO RIGHT OF FIRST REFUSAL AND CO-SALE AGREEMENT
EXHIBIT A
---------
INVESTORS
---------
21st Century Internet Fund, L.P.
▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXHIBIT F
---------
BOMBARDIER SOFTWARE, INC.
VOTING AGREEMENT
----------------
This Voting Agreement (the "Agreement") is made as of the 14th day of
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October, 1997, by and among Bombardier Software, Inc., a Delaware corporation
(the "Company"), ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (the "Founders"),
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and the holder or holders of shares of Series A Preferred Stock listed on
Exhibit A (collectively, the "Investors" and individually, the "Investor").
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RECITALS
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The Company and the Investors have entered into a Series A Preferred Stock
Purchase Agreement (the "Purchase Agreement") of even date herewith pursuant to
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which the Company desires to sell to the Investors and the Investors desire to
purchase from the Company shares of the Company's Series A Preferred Stock. A
condition to the Investors' obligations under the Purchase Agreement is that the
Company, the Founders and the Investors enter into this Agreement for the
purpose of setting forth the terms and conditions pursuant to which the
Investors and the Founders shall vote their shares of the Company's voting stock
in favor of certain designees to the Company's Board of Directors. The Company,
the Investors and the Founders each desire to facilitate the voting arrangements
set forth in this Agreement, and the sale and purchase of shares of Series A
Preferred Stock pursuant to the Purchase Agreement, by agreeing to the terms and
conditions set forth herein.
AGREEMENT
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The parties hereby agree as follows:
1. Board Representation. During the term of this Agreement, to the extent
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they are entitled under the Company's Amended and Restated Certificate of
Incorporation (the "Restated Certificate") to vote on a particular matter, the
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Founders and the Investors agree to vote all of the shares of the Company's
voting securities now or hereafter owned by them, whether beneficially or
otherwise (the "Shares"), by written consent, or at any annual or special
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meeting called for the purpose of electing directors, so as to cause the total
number of authorized directors of the Company to be not more or less than five
(5) and to elect members of the Board of Directors as more fully set forth
below.
(a) The Founders and the Investors agree to vote the Shares to elect
three (3) designees of the Founders, which designees shall be determined by the
vote or written consent of a majority of the Shares held by the Founders, and
which designees shall initially be ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇;
(b) The Founders and the Investors agree to vote the Shares to elect
one (1) designee of the Investors, which designee shall initially be ▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇; and
(c) The Founders and the Investors agree to vote the Shares to elect
one (1) designee who shall be appointed with the unanimous consent of the
directors identified in 1(a) and (b) above.
(d) If a majority of the Board of Directors determines that it is in
the best interests of the Company to designate an additional non-employee
director and there is at such time no vacancy on the Board of Directors, the
Founders and the Investors agree to elect as directors the following designated
nominees:
(i) two (2) designees determined by the vote or written
consent of a majority of the Shares held by the Founders;
(ii) one (1) designee of the Investors; and
(iii) two (2) designees who shall be appointed with the consent
of a majority of the directors then in office.
(e) This Agreement shall not extend to voting upon questions and
matters (other than the election of directors) upon which stockholders of the
Company have a right to vote under the Restated Certificate or Bylaws of the
Company or under the laws of the State of Delaware.
2. Legends. Each certificate representing Founders' or Investor's Shares
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shall be endorsed by the Company with a legend reading as follows:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A VOTING AGREEMENT BY AND AMONG
THE COMPANY, THE FOUNDERS AND THE INVESTORS (A COPY OF WHICH MAY BE
OBTAINED FROM THE COMPANY), AND BY ACCEPTING ANY INTEREST IN SUCH SHARES
THE PERSON ACCEPTING SUCH INTEREST SHALL BE DEEMED TO AGREE TO AND SHALL
BECOME BOUND BY ALL THE PROVISIONS OF SAID VOTING AGREEMENT."
3. Termination. This Agreement shall terminate upon the earliest to
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occur of (a) the consummation of the Company's initial public offering on a firm
underwriting basis of any of its securities, (b) ten (10) years from the date
hereof or (c) the date upon which 21st Century Internet Fund, L.P., its
affiliates, partners, or limited partners no longer collectively owns,
beneficially or of record, a number of shares of Company capital stock (or the
Common Stock issuable upon conversion thereof) which shall represent in the
aggregate not less than five percent (5%) of the outstanding equity securities
of the Company, determined on an as-converted and fully-diluted basis (including
for this purpose all shares of outstanding capital stock of the Company, all
warrants and all outstanding options to purchase capital stock of the Company).
4. Amendments; Waivers. Any term hereof may be amended or waived with the
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written consent of the Company, holders of at least a majority of the Series A
Preferred Stock, and holders of a majority of the Founders' shares (or their
respective successors and assigns). Any amendment or waiver effected in
accordance with this Section 4 shall be binding upon the Company, the holders of
Series A Preferred Stock and any holder of Founders' Shares, and each of their
respective successors and assigns.
5. Notices. Any notice required or permitted by this Agreement shall be
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in writing and shall be deemed sufficient on the date of delivery, when
delivered personally or by overnight courier or sent by telegram or fax, or
forty-eight (48) hours after being deposited in the U.S. mail, as certified or
registered mail, with postage prepaid, and addressed to the party to be notified
at such party's address as set forth below or on Exhibit A hereto, or as
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subsequently modified by written notice.
6. Severability. If one or more provisions of this Agreement are held to
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be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
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7. Governing Law. This Agreement and all acts and transactions pursuant
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hereto and the rights and obligations of the parties hereto shall be governed,
construed and interpreted in accordance with the laws of the State of Delaware,
without giving effect to principles of conflicts of law.
8. Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
9. Successors and Assigns. The terms and conditions of this Agreement
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shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
[Signature Page Follows]
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The parties hereto have executed this Voting Agreement as of the date first
written above.
COMPANY: INVESTORS:
BOMBARDIER SOFTWARE, INC. 21ST CENTURY INTERNET FUND, L.P.
By: 21st Century Internet Management
Partners, LLC
By:_____________________________ ___________________________________
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Member
Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
___________________________________
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Address: ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
___________________________________
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO VOTING AGREEMENT
FOUNDERS:
_______________________________
▇▇▇▇▇ ▇▇▇
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇ ▇▇▇▇▇
Address: ▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
_______________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇. ▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SIGNATURE PAGE TO VOTING AGREEMENT
EXHIBIT A
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INVESTORS
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21st Century Internet Fund, L.P.
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▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
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