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EXHIBIT 10.1(a)
ONDISPLAY, INC.
THIRD RESTATED
INVESTOR RIGHTS AGREEMENT
AUGUST 2, 1999
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TABLE OF CONTENTS
PAGE
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1. Restrictions on Transfer...................................................1
1.1 Transfer.............................................................1
1.2 Legend...............................................................2
1.3 Legend Removal.......................................................2
2. Registration Rights........................................................3
2.1 Definitions..........................................................3
2.2 Demand Registration..................................................4
2.3 Piggyback Registration...............................................5
2.4 Obligations of the Company...........................................5
2.5 Furnish Information..................................................6
2.6 Expenses of Demand Registration......................................7
2.7 Expenses of Piggyback Registration...................................7
2.8 Underwriting Requirements............................................7
2.9 Delay of Registration................................................8
2.10 Indemnification......................................................8
2.11 Reports Under Securities Exchange Act of 1934.......................10
2.12 Form S-3 Registration...............................................11
2.13 Assignment of Registration Rights...................................12
2.14 Limitations on Subsequent Registration Rights.......................12
2.15 "Market Stand-Off" Agreement........................................13
2.16 Termination of Registration Rights..................................13
3. Right of First Offer......................................................13
3.1 Grant of Right......................................................13
3.2 Future Shares.......................................................13
3.3 Special Right of First Refusal in Qualified IPO.....................14
3.4 Notice..............................................................14
3.5 Sale after Notice...................................................15
3.6 Assignment..........................................................16
3.7 Termination of Rights...............................................16
4. Information Rights; Board Observation Rights, Vesting.....................16
4.1 Financial Information...............................................16
4.2 Inspection Rights...................................................17
4.3 Assignment of Rights................................................17
4.4 Board Observation Rights............................................17
4.5 Termination of Covenants............................................18
4.6 Stock Vesting.......................................................18
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TABLE OF CONTENTS
(CONTINUED)
PAGE
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5. Termination of Prior Rights Agreements....................................18
6. Waiver of Right of First Offer............................................18
7. Miscellaneous Provisions...................................................19
7.1 Waivers and Amendments..............................................19
7.2 Notices.............................................................19
7.3 Governing Law.......................................................19
7.4 Counterparts........................................................19
7.5 Expenses............................................................19
7.6 Successors and Assigns..............................................19
7.7 Entire Agreement; Superseding Prior Rights Agreement................19
7.8 Separability; Severability..........................................20
7.9 Stock Splits........................................................20
7.10 Delays or Omissions.................................................20
7.11 Aggregation.........................................................20
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ONDISPLAY, INC.
THIRD RESTATED INVESTOR RIGHTS AGREEMENT
This Third Restated Investor Rights Agreement (the "Agreement") is
effective as of August 2, 1999 by and among OnDisplay, Inc. (the "Company") and
the investors listed on Schedule A attached hereto (the "Investors").
RECITALS
A. The Company sold and issued to certain of the Investors (the "Existing
Holders") 3,400,000 shares of Series A Preferred Stock of the Company on
September 23, 1996, 100,000 shares of Series A Preferred Stock of the Company on
June 12, 1997, 3,190,476 shares of the Series B Preferred Stock of the Company
on June 30, 1997, 11,905 shares of Series B Preferred Stock of the Company on
January 9, 1998, 2,146,673 shares of Series C Preferred Stock of the Company on
July 28, 1998 and 42,500 shares of Series C Preferred Stock of the Company on
October 16, 1998. Pursuant to that certain Second Restated Investor Rights
Agreement dated as of July 28, 1998 (the "Prior Rights Agreement") the Company
granted to such Existing Holders certain rights and the Existing Holders entered
into certain covenants between themselves.
B. Pursuant to that certain Series D Preferred Stock Purchase Agreement
of even date herewith and a Second Series D Preferred Stock Purchase Agreement
dated August __, 1999 (collectively referred to as the "Series D Agreement"),
the Company has agreed to sell to certain Investors (the "Series D Holders") a
total of up to 2,100,000 shares of the Series D Preferred Stock of the Company
and, as an inducement for the Series D Holders to purchase such shares, the
Company and the Existing Holders have agreed to enter into this Agreement to
supersede, amend and restate the rights granted to and covenants agreed by the
Existing Holders in the Prior Rights Agreement. The outstanding shares of Series
A Preferred Stock, the Series B Preferred Stock and Series C Preferred Stock,
and the shares of Series D Preferred Stock sold pursuant to the Series D
Agreement are collectively referred to herein as the "Preferred Shares." The
Existing Holders and the Series D Holders are collectively referred to herein as
the "Holders."
1. Restrictions on Transfer.
1.1 Transfer. Each Holder agrees not to make any disposition of all
or any portion of the Preferred Shares (or shares of Common Stock issuable upon
conversion of the Preferred Shares) unless and until:
(a) There is then in effect a registration statement under the
Securities Act of 1933, as amended (the "Securities Act") covering such proposed
disposition and such disposition is made in accordance with such registration
statement; or
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(b) (1) The transferee has agreed in writing to be bound by the
terms of this Agreement, (2) such Holder shall have notified the Company of the
proposed disposition and shall have furnished the Company with a detailed
statement of the circumstances surrounding the proposed disposition, and (3) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(c) Notwithstanding the provisions of paragraphs (a) and (b)
above, no such registration statement or opinion of counsel shall be necessary
for a transfer by a Holder which is (A) a partnership to its partners or former
partners in accordance with partnership interests, (B) a corporation to its
shareholders in accordance with their interest in the corporation, (C) a limited
liability company to its members or former members in accordance with their
interest in the limited liability company, or (D) to the Holder's family member
or trust for the benefit of an individual Holder, provided the transferee will
be subject to the terms of this Agreement to the same extent as if the
transferee were an original Holder hereunder.
1.2 Legend. Each certificate representing Preferred Shares (or shares
of Common Stock issuable upon conversion of the Preferred Shares) shall (unless
otherwise permitted by the provisions of the Agreement) be stamped or otherwise
imprinted with a legend substantially similar to the following (in addition to
any legend required under applicable state securities laws or as provided
elsewhere in this Agreement):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 (THE "ACT") AND MAY NOT BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED
UNLESS AND UNTIL REGISTERED UNDER THE ACT OR UNLESS THE COMPANY
HAS RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY
AND ITS COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED.
1.3 Legend Removal.
(a) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder shall
have obtained an opinion of counsel (which counsel may be counsel to the
Company) reasonably acceptable to the Company to the effect that the securities
proposed to be disposed of may lawfully be so disposed of without registration,
qualification or legend.
(b) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed
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upon receipt by the Company of an order of the appropriate blue sky authority
authorizing such removal.
2. Registration Rights.
2.1 Definitions. For purposes of this Section 2:
(a) The term "register," "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document;
(b) The term "Registrable Securities" means (1) the Preferred
Shares, (2) the Common Stock issued upon conversion of the Preferred Shares, (3)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued as) a dividend
or other distribution with respect to, or in exchange for or in replacement of,
such Preferred Shares or Common Stock, excluding in all cases, however, (i) any
Registrable Securities sold by a person in a transaction in which such person's
rights under this Section 2 are not assigned, or (ii) any Registrable Securities
sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction;
(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 2.13 hereof;
(e) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the Securities and Exchange Commission (the "SEC") which permits
inclusion or incorporation of substantial information by reference to other
documents filed by the Company with the SEC; and
(f) The term "Securities Act" shall mean the Securities Act of
1933, as amended.
(g) The term "Qualified IPO" shall mean the first underwritten
public offering of Common Stock of the Company that is pursuant to a
registration statement filed with, and declared effective by, the Securities and
Exchange Commission (or any other federal agency at the time administering the
Securities Act) under the Securities Act, covering the offer and sale of Common
Stock to the public at a public offering price (prior to the underwriter
commissions and expenses) equal to or exceeding Fifteen Dollars ($15.00) per
share of Common Stock (appropriately adjusted for stock splits, stock dividends,
recapitalization, reorganizations or other similar
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transactions) and at an aggregate offering price (before deduction for
underwriter commissions and expenses) of not less than Twenty Million Dollars
($20,000,000).
2.2 Demand Registration.
(a) If the Company shall receive at any time after the earlier
of (i) September 30, 2000 or (ii) six (6) 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 a SEC Rule 145 transaction), a written request from the Holders
of at least ten percent (10%) of the Registrable Securities then outstanding
(including securities convertible into Registrable Securities) for the first
registration pursuant to this Section 2.2(b), and at least forty percent (40%)
of the Registrable Securities then outstanding (including securities convertible
into Registrable Securities) for the second registration pursuant to this
Section 2.2(b), that the Company file a registration statement under the Act
covering the registration of Registrable Securities having an aggregate offering
price in excess of Five Million Dollars ($5,000,000), 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 Section 2.2(b), effect
as soon as practicable, and in any event within ninety (90) 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 written notice by the Company; provided, however, that the
Company shall not be obligated to take any action to effect any such
registration, qualification or compliance pursuant to this Section 2.2(a):
(i) During the period starting with the date sixty (60)
days prior to the Company's estimated date of filing of, and ending on the date
120 days immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan), provided
that the Company is actively employing in good faith all reasonable efforts to
cause such registration statement to become effective;
(ii) After the Company has effected two such registrations
pursuant to this Section 2.2(a), and such registrations have been declared or
ordered effective; or
(iii) If the Company shall furnish to such Holders a
certificate signed by the Chairman of the Board of the Company stating that in
the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its stockholders for a registration statement to
be filed at such time, then the Company's obligation to use its best efforts to
register, qualify or comply under this Section 2.2(a) shall be deferred for a
period not to exceed 120 days from the date of receipt of written request from
the Holders; provided, however, that the Company may not utilize this right more
than once in any twelve-month period.
(b) If the Holders initiating the registration request hereunder
(the "Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means
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of an underwriting, they shall so advise the Company as a part of their request
made pursuant to this Section 2.2 and the Company shall include such information
in the written notice referred to in Section 2.2(a). In such event, the right of
any Holder to include 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 Section 2.4(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 2.2, 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 Company 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. In any event, the Holders shall have the first right to include all
of their shares in the offering before any other shares.
2.3 Piggyback 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 or other securities 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
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
written notice by the Company, the Company shall, subject to the provisions of
Section 2.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
2.4 Obligations of the Company. Whenever required under this Section
2 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 ninety (90) days, or other period as
required in Section 2.12.
(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
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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 provided that such underwriting agreement
shall not provide for indemnification or contribution obligations on the part of
the holders greater than the obligations set forth in Section 2.10(b).
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish, at the request of any Holder requesting
registration of Registrable Securities pursuant to this Section 2, on the date
that such Registrable Securities are delivered to the underwriters for sale in
connection with a registration pursuant to this Section 2, 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) if such offering is being
underwritten, 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.
2.5 Furnish Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 2 with
respect to the Registrable Securities of
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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.
2.6 Expenses of Demand Registration. All expenses other than
underwriting discounts and commissions incurred in connection with the
registration, filing or qualification pursuant to Section 2.2 (which right may
be assigned as provided in Section 2.13), including 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 any expenses of any
registration proceeding begun pursuant to Section 2.2 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 a demand registration
pursuant to Section 2.2; 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, then the Holders shall not be required to pay any
of such expenses and shall retain their rights pursuant to Section 2.2.
2.7 Expenses of Piggyback Registration. The Company shall bear and
pay all expenses incurred in connection with any registration, filing or
qualification of Registrable Securities with respect to the registrations
pursuant to Section 2.3 for each Holder (which right may be assigned as provided
in Section 2.13), including all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding underwriting discounts and commissions relating to Registrable
Securities.
2.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 2.3 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, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Company; provided that such
underwriting agreement shall not provide for indemnification or contribution
obligations on the part of the Holders greater than the obligations set forth in
Section 2.10(b). 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
reasonably believe 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 believe
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,
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provided that the Holders shall have the first right to include all of their
shares in the offering before any shares held by other selling stockholders) and
in no event shall the Holder's shares be reduced below 25% of the shares sold in
any offering with the exception of the Qualified IPO. In the event the Company
reduces the number of Holder's shares included in the offering, as set forth in
the previous sentence, the underwriter must first set forth its reasons for the
reduction in writing. For purposes of apportionment, 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.
2.9 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 2.
2.10 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Securities Exchange
Act of 1934, amended (the "Exchange Act"), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Securities Act, the Exchange Act or other federal or state law, insofar as such
losses, claims, damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities Act,
the Exchange Act or any state securities law; 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 Section 2.10(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
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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 Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (severally and not jointly) to which any of the
foregoing persons may become subject, under the Securities Act, the Exchange Act
or other federal or state law, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder 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
Section 2.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this Section 2.10(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 Section 2.10(b) exceed the net proceeds from the offering received by
such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.10 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 shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. If the indemnified party
fails to deliver written notice to the indemnifying party within a reasonable
time of the commencement of any such action, the indemnity party's liability
under this Section 2.10 shall be reduced to the extent such failure to notify
was prejudicial to the indemnifying party's ability to defend such action, but
the omission to so deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any indemnified party otherwise
than under this Section 2.10.
(d) If the indemnification provided for in Section 2.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any losses, claims, damages or liabilities referred to herein,
the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
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amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the net proceeds from the offering received by such
Holder.
(e) The obligations of the Company and Holders under this
Section 2.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 2.
2.11 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;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the 1934 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 Securities 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 Securities 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
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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.
2.12 Form S-3 Registration.
(a) In case the Company shall receive from any Holder or Holders
who hold in excess of ten percent (10%) of the Company's Registrable Securities,
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:
(i) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(ii) 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 15 days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 2.12: (1) if
Form S-3 is not available for such offering by the Holders; (2) 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 $1,000,000; (3) if the
Company shall furnish to the Holders a certificate signed by the Chairman of the
Board 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 120 days after receipt of
the request of the Holder or Holders under this Section 2.12; provided, however,
that the Company shall not utilize this right more than once in any twelve (12)
month period; (4) if the Company has already effected one registration on Form
S-3 in any twelve (12) month period for the Holders pursuant to this Section
2.12; or (5) in any particular jurisdiction in which the Company would be
required to qualify to do business or to execute a general consent to service of
process in effecting such registration, qualification or compliance.
(b) If the Holders initiating the registration request hereunder
(the "Initiating Holders") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, they shall so advise the
Company as part of their request made pursuant to this Section 2.12 and the
Company shall include such information in the written notice referred to in
Section 2.12(a)(i). 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
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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 Section 2.4(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 2.12, 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 Company 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.
(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 and use its best efforts to keep such
registration statement effective until the registered shares are sold or for
three months, whichever comes first. All expenses incurred in connection with a
registration requested pursuant to Section 2.12, including all registration,
filing, qualification, printer's and accounting fees and the reasonable fees and
disbursements of one counsel for the selling Holders selected by them, but
excluding any underwriters' discounts or commissions associated with Registrable
Securities, shall be borne by the Company. Registrations effected pursuant to
this Section 2.12 shall not be counted as demands for registration or
registrations effected pursuant to Section 2.2 or 2.3, respectively.
2.13 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee who acquires at least 200,000
shares of Registrable 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 Securities Act. Notwithstanding the above, such rights may
be assigned by a Holder to a limited partner, general partner, former partner or
other affiliate of an Investor (the "Transferee") regardless of the number of
shares acquired by such Transferee.
2.14 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 at least sixty percent (60%) 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 to include such securities in any registration filed under Section 2.2
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.
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2.15 "Market Stand-Off" Agreement. Each holder of securities which are
or at one time were Registrable Securities (or which are or were convertible
into Registrable Securities) hereby agrees that, during a period not to exceed
180 days, following the effective date of a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter, sell or otherwise transfer or dispose of
(other than to donees, partners or former partners in accordance with their
partnership interests who agree to be similarly bound) any Registrable
Securities except Registrable Securities 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
(b) all officers and directors of the Company 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
Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
2.16 Termination of Registration Rights. No stockholder shall be
entitled to exercise any right provided for in this Section 2 after five (5)
years following the Qualified IPO.
3. Right of First Offer.
3.1 Grant of Right.
(a) By Company. Subject to the terms and conditions specified in
this Section 3, the Company hereby grants to each Investor a right of first
offer with respect to future sales by the Company of its Future Shares (as
hereinafter defined) and grants to each holder of Series C Preferred Stock and
Series D Preferred Stock the rights set forth in Section 3.3.
(b) By Investors. Each Investor grants to the Company a right of
first offer with respect to all future sales of the shares listed opposite each
Investor's name on Schedule A attached hereto ("Investor Shares").
3.2 Future Shares. "Future Shares" shall mean shares of any capital
stock of the Company, whether now authorized or not, and any rights, options or
warrants to purchase such capital stock, and securities of any type that are, or
may become, convertible into such capital stock; provided however, that "Future
Shares" do not include (i) the shares of Preferred Stock or the Common Stock
issued or issuable upon the conversion of such Preferred Stock, (ii) securities
offered pursuant to the Qualified IPO, (iii) securities issued pursuant to the
acquisition of another corporation by the Company by merger of, purchase of
substantially all of the assets of or other reorganization, and (iv) up to
3,000,000 shares reserved for issuance under an incentive stock plan
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or other securities issued or issuable to officers, directors, employees,
consultants, strategic partners, licensors or lessors of the Company pursuant to
any employee or consultant stock offering, plan or arrangement.
3.3 Special Right of First Refusal in Qualified IPO
(a) In the event the Company proposes to undertake a Qualified
IPO subject to the conditions set forth in Section 3.3(b), the holders of Series
C Preferred Stock and Series D Preferred Stock shall have the right to purchase
their pro rata share of the shares issued in the Qualified IPO (the "Special
Right of First Refusal"). The provisions of Section 3.4 below shall apply to the
implementation of the Special Right of First Refusal.
(b) The underwriter of the Qualified IPO, in the exercise of its
reasonable judgment and discretion, may reduce or eliminate this Special Right
of First Refusal to the extent it is deemed reasonably necessary (i) to the
success of the offering due to marketing factors as set forth in writing no less
than one week prior to the anticipated effective date of the registration
statement covering such offering, or (ii) to comply with applicable SEC or NASD
rules and regulations for reasons set forth in writing no less than one day
prior to the anticipated effective date of the registration statement covering
such offering.
3.4 Notice. In the event the Company proposes to offer any of its
Future Shares, the Company shall first make an offering of such Future Shares to
each Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail (the
"Notice") to the Investors stating (i) its bona fide intention to offer such
Future Shares, (ii) the number of such Future Shares to be offered, (iii) the
price, if any, for which it proposes to offer such Future Shares, and (iv) a
statement as to the number of days from receipt of such Notice within which the
Investor must respond to such Notice.
(b) Within twenty (20) calendar days after receipt 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 Future Shares which
equals the proportion that the number of shares of Common Stock issued and held,
or issuable upon conversion of the Shares then held, by such Investor bears to
the total number of shares of Common Stock issued and outstanding, including
shares issuable upon conversion of convertible securities issued and
outstanding. The Company shall promptly, in writing, inform each Investor which
purchases all the Future Shares available to it (the "Fully-Exercising
Investor") of any other Investor's failure to do likewise. During the ten-day
period commencing after receipt of such information, each Fully-Exercising
Investor shall be entitled to obtain that portion of the Future Shares offered
to the Investors which was not subscribed for, which is equal to the proportion
that the number of shares of Common Stock issued and outstanding, or issuable
upon conversion of the Shares then held, held by such Fully-Exercising Investor
bears to the total number of shares of Common Stock issued and outstanding,
including shares issuable upon
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conversion of convertible securities issued and outstanding then held, held by
all Fully-Exercising Investors who wish to purchase some of the unsubscribed
shares. This Section 3.4 shall apply to the exercise of the rights of the Series
C Preferred Stock and Series D Preferred Stock set forth in Section 3.3 hereof;
for such purposes "Future Shares" shall mean the securities offered by the
Company in the Qualified IPO and such rights shall apply only to the holders of
Series C Preferred Stock and Series D Preferred Stock.
In the case of a proposed sale by an Investor:
(a) The Investor shall deliver a notice by certified mail (the
"Investor's Notice") to the Company stating (i) the Investor's bona fide
intention to offer the Investor Shares, (ii) the number of such Investor Shares
to be offered, (iii) the price for which it proposes to offer such Investor
Shares, and (iv) a statement as to the number of days from receipt of such
Investor's Notice within which the Company must respond to such Investor's
Notice.
(b) Within twenty (20) calendar days after receipt of the
Investor's Notice, the Company may elect to purchase or obtain, at the price and
on the terms specified in the Investor's Notice, all or a portion of the
Investor Shares so offered. If the Company elects not to purchase the Investor
shares, the Company shall promptly, in writing, inform each Investor of such
election. During the ten-day period commencing after receipt of such
information, each Investor shall be entitled to obtain that portion of the
Investor Shares offered, which is equal to the proportion that the number of
shares of Common Stock issued and outstanding, or issuable upon conversion of
the Shares then held, held by such Fully-Exercising Investor bears to the total
number of shares of Common Stock issued and outstanding, including shares
issuable upon conversion of convertible securities issued and outstanding then
held, held by all Investors (with the exception of the Investor proposing to
sell its shares) who wish to purchase some of the Investor Shares.
3.5 Sale after Notice
(a) By Company. If all such Future Shares referred to in the
Notice are not elected to be obtained as provided in Section 3.4 hereof, the
Company may, during the 90-day period following the expiration of the period
provided in Section 3.4 hereof, offer the remaining unsubscribed Future Shares
to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice. If the Company does
not enter into an agreement for the sale of the Future Shares within such
period, or if such agreement is not consummated within ninety (90) days of the
execution thereof, the right provided hereunder shall be deemed to be revived
and such Future Shares shall not be offered unless first reoffered to the
Investors in accordance herewith.
(b) By Investor. If all such Investor Shares referred to in the
Investor's Notice are not elected to be purchased as provided in Section 3.4
hereof, the Investor may, during the 90-day period following the expiration of
the period provided in Section 3.4 hereof, offer the
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remaining unsubscribed Investor Shares to any person or persons at a price not
less than, and upon terms no more favorable to the offeree than those specified
in the Investor's Notice. If the Investor does not enter into an agreement for
the sale of the Investor Shares within such period, or if such agreement is not
consummated within 90 days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Investor Shares shall not be
offered unless first reoffered to the Company in accordance herewith.
3.6 Assignment. The right of first offer granted under this Section 3
is assignable by the Company without limitation and by the Investors to (i) any
partner or retired partner of any Investor which is a partnership, (ii) any
family member or trust for the benefit of any individual holder, (iii) any
shareholder of any Investor which is a corporation, (iv) any member of any
Investor who is limited liability company, or (v) any transferee who acquires at
least 200,000 shares of Series C Preferred Stock or Series D Preferred Stock;
provided the Company is given written notice thereof.
3.7 Termination of Rights. Neither the Company not any Investor shall
be entitled to exercise any right provided for in this Section 3 following the
Qualified IPO.
4. Information Rights; Board Observation Rights, Vesting
4.1 Financial Information. The Company will provide each Investor the
following reports for so long as the Investor is a holder of a minimum of
200,000 Shares or an equivalent amount of Conversion Stock or of an equivalent
combination of Shares and Conversion Stock (as adjusted for stock splits, stock
dividends, reorganizations, recapitalizations and other similar transactions) (a
"Major Investor"), including for purposes of this Section 4 any such Shares
which have been transferred to a constituent partner of an Investor:
(a) As soon as practicable after the end of each fiscal year,
and in any event within ninety (90) days thereafter, consolidated balance sheets
of the Company and its subsidiaries, if any, as of the end of such fiscal year,
and consolidated statements of income, stockholders' equity and cash flows of
the Company and its subsidiaries, if any, for such year, prepared in accordance
with generally accepted accounting principles and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail and audited by independent public accountants of national standing
selected by the Company.
(b) As soon as practicable after the end of each fiscal quarter,
and in any event within twenty (20) days thereafter, a consolidated balance
sheet of the Company and its subsidiaries, if any, as of the end of each such
quarter, consolidated statements of income, consolidated statements of changes
in financial condition, and a consolidated statement of cash flow of the Company
and its subsidiaries for such period and for the current fiscal year to date,
and setting forth in each case in comparative form the figures for corresponding
periods in the previous fiscal year, and setting forth in comparative form the
budgeted figures for such period and for the current fiscal year then reported,
prepared in accordance with generally accepted accounting principles
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(other than for accompanying notes), subject to changes resulting from year-end
audit adjustments, all in reasonable detail and signed by the principal
financial or accounting officer of the Company.
(c) At least thirty (30) days prior to the beginning of each
fiscal year an annual budget and operating plans for such fiscal year (and as
soon as available, any subsequent revisions thereto); and
(d) As soon as practicable after the end of each month, and in
any event within twenty (20) days thereafter, a consolidated balance sheet of
the Company as of the end of each such month, and a consolidated statement of
income and a consolidated statement of cash flows of the Company for such month
and for the current fiscal year to date, including a comparison to plan figures
for such period, prepared in accordance with generally accepted accounting
principles consistently applied, with the exception that no notes need be
attached to such statements and year-end audit adjustments need not have been
made.
4.2 Inspection Rights. Each Major Investor shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the Company
or any of its subsidiaries with its officers and to review such information as
is reasonably requested all at such reasonable times and as often as may be
reasonably requested; provided, however, that the Company shall not be obligated
under this Section 4.2 with respect to a competitor of the Company or with
respect to information which the Board of Directors believes in good faith upon
the advice of counsel is reasonably necessary to not disclose in order to
preserve the attorney client privilege.
4.3 Assignment of Rights. Subject to the limitations set forth in
Sections 4.1, the rights granted pursuant to Sections 4.1 and 4.2 may be
assigned or otherwise conveyed by the Investors or by any subsequent transferee
to an investor who acquires a minimum of 200,000 Shares, Conversion Stock, or a
combination thereof, other than a competitor of the Company, as reasonably
determined by the Board of Directors of the Company excluding any director with
an interest in such transferee, provided that written notice of such assignment
or conveyance is given to the Company.
4.4 Board Observation Rights
(a) Series C Observer. For as long as Amerindo Investors and its
affiliates holds Preferred Shares, a representative shall be invited to
participate in all meetings of the Board of Directors as an observer and the
Company shall send such observer a copy of all notices, minutes and other
materials distributed by the Company to the directors. The initial Series C
observer shall be ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇. In the event Amerindo Investors wishes to
replace the Series C observer, the nominee to become the new Series C Observer
must be approved by a majority of the then current Board of Directors.
(b) Series D Observer. For as long as Omega Venture Partners and
its affiliates holds Preferred Shares, a representative shall be invited to
participate in all meetings of the
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Board of Directors as an observer and the Company shall send such observer a
copy of all notices, minutes and other materials distributed by the Company to
the directors. The initial Series D observer shall be ▇▇▇▇▇▇▇ ▇▇▇▇▇. In the
event Omega Venture Partners wishes to replace the Series D observer, the
nominee to become the new Series D Observer must be approved by a majority of
the then current Board of Directors.
(c) Restrictions. The Company reserves the right to exclude the
Series C Observer and the Series D Observer from access to any material or
meeting or portion thereof if the Board of Directors believes in good faith upon
advice of counsel that such exclusion is reasonably necessary to preserve the
attorney-client privilege.
4.5 Termination of Covenants. The covenants set forth in Sections
4.1, 4.2 and 4.4, shall terminate and be of no further force or effect upon the
closing of the Company's initial underwritten public offering pursuant to an
effective registration statement filed by the Company under the Securities Act
(other than a registration of securities in a Rule 145 transaction or with
respect to an employee benefit plan).
4.6 Stock Vesting. Unless otherwise approved by the Board of
Directors, all stock options and other stock equivalents issued after the date
of this Agreement to employees, directors, consultants and other service
providers shall be subject to vesting as follows: (i) twenty-five percent (25%)
of such stock shall vest at the end of the first year following the earlier of
the date of issuance or such person's services commencement date with the
Company, and (ii) seventy-five percent (75%) of such stock shall vest monthly
over the remaining three (3) years. With respect to any shares of stock
purchased by any such person, the Company will have a repurchase option that
shall provide that upon such person's termination of employment or service with
the Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person. In
the event the Company does not exercise the repurchase option, the Company
hereby agrees to assign such right to the Investors on a pro rata basis.
5. Termination of Prior Rights Agreements. The Prior Rights Agreement is
hereby terminated and superseded by this Agreement. This termination is
effective upon the execution of this Agreement by Investors who are holders of a
sixty percent (60%) of the Registrable Securities under the Prior Rights
Agreement.
6. Waiver of Right of First Offer. To the extent that an Investor under
the Prior Rights Agreement is not purchasing its pro rata share of Series D
Preferred Stock pursuant to the Series D Agreement, all rights under the Right
of First Offer set forth in Section 3 of the Prior Rights Agreement to purchase
such securities are hereby waived. This waiver is effective upon the execution
of this Agreement by the holders of sixty percent (60%) of the Registrable
Securities under the Prior Rights Agreement.
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7. Miscellaneous Provisions.
7.1 Waivers and Amendments Any term of this Agreement may be amended
and the observance of any term of this Agreement may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the holders of at least sixty
percent (60%) of the shares of Registrable Securities, provided, however, that
the rights of the Series C Preferred Stock shall not be materially changed
without the written consent of a majority of the holders of Series C Preferred
Stock and that the rights of the Series D Preferred Stock shall not be
materially changed without the written consent of more than two thirds (2/3) of
the holders of Series D Preferred Stock. In the event such amendment or waiver
adversely affects the rights and or obligations of any party under this
agreement in a different manner than other parties, such amendment or waiver
must be approved by the holders of more than two thirds (2/3) of the securities
held by the affected party. Any amendment or waiver effected in accordance with
this Section 7.1 shall be binding upon each person or entity which are granted
certain rights under this Agreement and the Company.
7.2 Notices. All notices and other communications required or
permitted hereunder shall be in writing and, except as otherwise noted herein,
shall be deemed effectively given upon personal delivery, delivery by nationally
recognized courier or five business days after deposit with the United States
Post Office (by first class mail, postage prepaid), addressed: (a) if to the
Company, at ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (or
at such other address as the Company shall have furnished to the Investors in
writing) attention of President and (b) if to an Investor, at the latest address
of such person shown on the Company's records.
7.3 Governing Law. This Agreement shall be governed by and
interpreted under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.
7.4 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
7.5 Expenses. If any action at law or in equity is necessary to
enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
7.6 Successors and Assigns. Except as otherwise expressly provided in
this Agreement, this Agreement shall benefit and bind the successors, assigns,
heirs, executors and administrators of the parties to this Agreement.
7.7 Entire Agreement; Superseding Prior Rights Agreement. This
Agreement constitutes the entire agreement among the parties hereto with respect
to the specific subject matter hereof. Without in any manner limiting the
foregoing, the parties hereto agree that this Agreement
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supersedes and replaces the Prior Rights Agreement, and that the Prior Rights
Agreement shall hereafter have no further force or effect.
7.8 Separability; Severability. Unless expressly provided in this
Agreement, the rights of each Investor under this Agreement are several rights,
not rights jointly held with any other Investors. Any invalidity, illegality or
limitation on the enforceability of this Agreement with respect to any Investor
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Investors. If any provision of this Agreement is judicially
determined to be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not be affected or impaired.
7.9 Stock Splits. All references to numbers of shares in this
Agreement shall be appropriately adjusted to reflect any stock dividend, split,
combination, recapitalization, reorganization or other similar transaction of
shares by the Company occurring after the date of this Agreement.
7.10 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any Holder upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power or remedy nor shall it be construed to be a waiver of any such
breach, default or noncompliance or any acquiescence therein or of any similar
breach, default or noncompliance thereafter occurring. It is further agreed that
any waiver, permit, consent or approval of any kind or character on any Holder's
part of any breach, default or noncompliance under the Agreement or any waiver
on such Holder's part of any provisions or conditions of this Agreement must be
in writing and shall be effective only to the extent specifically set forth in
such writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders shall be cumulative and not alternative.
7.11 Aggregation. For the purposes of determining the availability of
any rights under the transaction documents, all shares of the Series C Preferred
Stock and Series D Preferred Stock held by or acquired by affiliate entities,
entities under common management or persons associated with such entities shall
be aggregated together.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year first set forth above.
COMPANY: ONDISPLAY, INC.
By:
------------------------------------
Title: President
Address: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
INVESTORS:
OMEGA VENTURES III, L.L.C.
By: RS Omega III Holdings, L.L.C.,
Authorized Signatory
By:
------------------------------------
Managing Member
Address:
RS & CO. OFFSHORE OMEGA VENTURES III
By: RS Omega III Holdings, L.L.C.,
Authorized Signatory
By:
------------------------------------
Managing Member
Address:
SIGNATURE PAGE
THIRD RESTATED INVESTOR RIGHTS AGREEMENT
25
OMEGA BAYVIEW, L.L.C.
By:
------------------------------------
Authorized Signatory
Address:
CROSSOVER FUND II, L.P.
By: Crossover Investment
Management, L.L.C., Its General
Partner
By:
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Member
Address:
COMDISCO, INC.
By:
------------------------------------
Title:
---------------------------------
Address: ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Venture Group
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇
SIGNATURE PAGE
THIRD RESTATED INVESTOR RIGHTS AGREEMENT
26
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▇▇▇▇▇▇ ▇. ▇▇▇▇ & ▇▇▇▇▇▇ ▇. ▇▇▇▇,
trustees, or the successor trustee(s),
of the ▇▇▇▇ Family 1982 Trust,
dated 12/01/82, as amended
BANCBOSTON CAPITAL INC.
By:
------------------------------------
Title:
---------------------------------
Address:
▇▇▇▇▇▇▇▇ ONDISPLAY, L.P.
By: Spring Creek Partners
its General Partner
By:
------------------------------------
Address: ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATGF II, a Panamanian Corporation
By:
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Director
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
SIGNATURE PAGE
THIRD RESTATED INVESTOR RIGHTS AGREEMENT
27
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▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
NORWEST VENTURE PARTNERS VI, LP
By: Itasca VC Partners
By:
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▇▇▇▇▇▇ ▇▇▇▇▇, General Partner
MATRIX PARTNERS IV, L.P.
By: Matrix IV Management Co., L.P.,
its General Partner
By:
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Address: Bay Colony Corporate Center
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
MATRIX IV ENTREPRENEURS FUND, LP.
By:
------------------------------------
Address: Bay Colony Corporate Center
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
ATLAS VENTURE FUND II, L.P.
By:
------------------------------------
Title:
---------------------------------
Address:
SIGNATURE PAGE
THIRD RESTATED INVESTOR RIGHTS AGREEMENT
28
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as trustee under
declaration of trust dated 3/13/85 or
any successor trustee(s) under said
declaration of trust
WS INVESTMENT COMPANY 99A
By:
------------------------------------
Title:
---------------------------------
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
SIGNATURE PAGE
THIRD RESTATED INVESTOR RIGHTS AGREEMENT
29
▇.▇. ▇▇▇▇▇▇▇▇, INC.
By:
------------------------------------
P. O. ▇▇▇▇
Senior Vice President, Finance &
Chief Financial Officer
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
EXPERTEYES EXPANSIONS CAPITAL N.V.
By:
------------------------------------
Title:
---------------------------------
Address: ▇▇▇▇▇▇▇▇ ▇
▇-▇▇▇▇ ▇▇▇▇ -- ▇▇▇▇▇▇▇
SIGNATURE PAGE
THIRD RESTGATED INVESTOR RIGHTS AGREEMENT
30
EXHIBIT A
LIST OF INVESTORS
PREFERRED
INVESTOR NAME AND ADDRESS NUMBER OF SHARES SERIES
------------------------- ---------------- ---------
ExpertEyes Expansions Capital N.V. 36,765 Series D
▇.▇. ▇▇▇▇▇▇▇▇, Inc. 315,126 Series D
Omega Ventures III, L.L.C. 204,516 Series D
RS & Co. Offshore Omega Ventures III 318,921 Series D
Omega Bayview, L.L.C. 28,196 Series D
Crossover Fund II, L.P. 52,358 Series D
BancBoston Capital Inc. 210,084 Series ▇
▇▇▇▇▇▇▇▇ OnDisplay, L.P. (Spring Creek Partners) 26,261 Series D
Comdisco Ventures 105,042 Series D
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ 10,504 Series D
▇▇▇▇▇▇ ▇. ▇▇▇▇ & ▇▇▇▇▇▇ ▇. ▇▇▇▇, trustees, or the successor
trustee(s), of the ▇▇▇▇ Family 1982 Trust, dated 12/01/82, as
amended. 2,101 Series D
52,521 Series D
ATFG II, a Panamanian Corporation 945,000 Series C
52,521 Series D
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ 50,000 Series C
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 5,000 Series C
119,088 Series D
500,000 Series C
Norwest Venture Partners VI, LP 1,904,762 Series B
130,353 Series D
323,864 Series C
598,376 Series B
Matrix Partners IV, L.P. 1,710,000 Series A
6,861 Series D
17,045 Series C
31,494 Series B
Matrix IV Entrepreneurs Fund, L.P. 90,000 Series A
31
EXHIBIT A
LIST OF INVESTORS
PREFERRED
INVESTOR NAME AND ADDRESS NUMBER OF SHARES SERIES
------------------------- ---------------- ---------
52,521 Series D
284,091 Series C
524,892 Series B
Atlas Venture Fund II, L.P. 1,500,000 Series A
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, as trustee under declaration of trust dated
3/13/85 or any successor trustee(s) under said declaration of trust 15,248 Series C
119,047 Series B
11,905 Series B
▇▇▇▇ ▇▇▇▇▇▇▇ 100,000 Series A
4,727 Series C
11,905 Series B
WS Investments (▇▇▇▇▇ ▇▇▇▇▇▇) 25,000 Series A
▇▇▇▇▇ ▇▇▇▇▇▇ 25,000 Series C
▇▇▇▇ ▇▇▇▇▇ 12,500 Series C
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ 5,000 Series C
▇▇▇▇▇ ▇▇▇▇ 75,000 Series A