Exhibit 4.1
GUIDANCE SOFTWARE,
INC.
INVESTOR’S RIGHTS
AGREEMENT
THIS INVESTOR’S RIGHTS
AGREEMENT (the “ Agreement ”) is entered into as
of September 26, 2003 by and between Guidance Software, Inc.,
a California Company (the “ Company ”) and
Matthew Healey (the “ Purchaser ”).
The parties hereby agree as
follows:
1. Pre-Emptive Rights
. Subject to the terms and conditions specified in this
Section 1, the Company hereby grants to the Purchaser
pre-emptive rights with respect to future sales by the Company of
its Shares (as hereinafter defined) prior to December 31,
2006. Each time that 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 to the Purchaser so that he
has the option to purchase, on a pro rata basis, a portion of such
Shares in accordance with the following provisions:
1.1 The Company shall deliver a
notice by certified mail (“ Notice ”) to the
Purchaser stating (a) its bona fide intention to offer such
Shares, (b) the number of such Shares to be offered, and
(c) the price and terms, if any, upon which it proposes to
offer such Shares.
1.2 (a) Within 15 calendar days
after delivery of the Notice, the Purchaser 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
(i) the number of shares of Common Stock of the Company
acquired by the Purchaser pursuant to that Common Stock and Warrant
Purchase Agreement dated September 26, 2003, including shares
of Common Stock of the Company issued upon conversion of the
Warrant purchased thereunder, and including any adjustments
pursuant to Section 8 thereof, and shares of Common Stock
received in connection with any stock dividend, stock split or
other reclassification thereof (“ Purchaser Common
Shares ”), and then held by the Purchaser, bears to
(ii) the total number of shares of Common Stock then
outstanding (assuming full conversion and exercise of all
convertible or exercisable securities).
(b) Any purchase by the Purchaser
under this Section 1 shall be completed at the same closing as
that of any third party purchasers.
1.3 The Company may, during the
45-day period following the expiration of the period provided in
subsection 1.2(a) hereof, offer the remaining unsubscribed
portion of the 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 Shares within such period, or if such
agreement is not consummated within 60 days of the execution
thereof, the right provided hereunder shall be deemed to be revived
and such Shares shall not be offered unless first reoffered to the
Purchaser in accordance herewith.
1.4 The pre-emptive rights in this
paragraph 1 shall not be applicable to (i) securities
issued pursuant in stock split, dividend, combination or the like,
with the approval of the Board, (ii) securities issuable or
issued to employees, consultants or directors of the Company
directly or pursuant to a stock option plan or restricted stock
plan approved by the
Board of Directors of the Company,
(iii) 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, the terms of which are approved
by the Board of Directors of the Company, (iv) securities
issuable upon exercise of warrants outstanding as of the date
hereof, or (v) 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 the Board of Directors of the Company.
1.5 The rights of the Purchaser set
forth in this Section 1 may be assigned (but only with all
related obligations) only to a transferee or assignee of all of the
Purchaser Common Shares (unless the transferee or assignee is the
spouse, child, grandchild or spouse of such children or
grandchildren of the Purchaser, or a trust for the benefit of the
Purchaser or such persons, in which case the rights of the
Purchaser set forth in this Section 1 may be assigned (but
only with all related obligations) to a transferee or assignee of
less than all of Purchaser’s Common Shares), provided that
(a) the Company is, within a reasonable time prior to such
transfer, furnished with written notice of the name and address of
such transferee or assignee and the securities with respect to
which such rights are being assigned, (b) such transferee
agrees in writing to be bound by the provisions of this Agreement,
and (c) such transferee is not an actual or potential
competitor of the Company, as determined in good faith by the
Company’s Board of Directors.
2. Registration Rights
. The Company and the Purchaser covenant and agree as
follows:
2.1 Definitions . For
purposes of this Section 2:
(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 “ Securities Act ”), and the
declaration or ordering of effectiveness of such registration
statement or document;
(b) The term “ Registrable
Securities ” means the Purchaser Common Shares;
provided , however , that the foregoing definition
shall exclude in all cases (i) any and all Purchaser Common
Shares sold by a person in a transaction in which his or her rights
under this Agreement are not assigned, and (ii) any and all
Purchaser Common Shares that are available for sale by the
Purchaser under Rule 144 or another similar exemption under
the Securities Act during a three (3)-month period without
registration. Notwithstanding the foregoing, Purchaser Common Stock
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 Securities
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 term “ Holder
” means any person of record owning or having the right to
acquire Registrable Securities or any assignee thereof in
accordance with Section 2.8 of this Agreement;
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(d) The term “
Form S-3 ” means such form under the Securities
Act as in effect on the date hereof or any successor form under the
Securities Act;
(e) The term “ SEC
” means the Securities and Exchange Commission;
and
(f) The term “ IPO
” means a firm commitment underwritten public offering by the
Company of shares of its Common Stock pursuant to a registration
statement under the Securities Act.
2.2 Form S-3 Registration
. In case the Company shall receive, at any time after one
hundred eighty (180) days after the effective date of the
first registration statement (or upon the expiration of applicable
underwriters’ lock-ups, if sooner) 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), from any Holder or Holders of
the then-outstanding Registrable Securities a written request or
requests that the Company effect a registration on Form S-3
(or any successor to Form S-3) or any similar short-form
registration statement and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, the Company will:
(a) promptly give written notice of
the proposed registration, and any related qualification or
compliance, to all other Holders of Registrable Securities;
and
(b) as soon as practicable, effect
such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Holder’s or
Holders’ Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such request
as are specified in a written request given within 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 2.2: (i) if Form S-3 or any successor
or similar form is not available for such offering by the Holders;
(ii) if the Holders propose to sell Registrable Securities in
an amount fewer than 20,000 shares of Common Stock (as adjusted for
any stock dividend, stock split or other reclassification thereof
); (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 ninety (90) days after receipt of the request
of the Holder or Holders under this Section 2.2;
provided , however , that the Company shall not
utilize this right more than once in any twelve month period;
(iv) if the Company has, within the twelve (12) month
period preceding the date of such request, already a registration
on Form S-3 for the Holders pursuant to this Section 2.2;
or (v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration,
qualification or compliance.
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(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.
2.3 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) Prior to the filing of the
registration statement and each amendment thereof (including any
documents incorporated by reference in such registration statement)
and each amendment or supplement to the prospectus, make available
for inspection by the Holders of Registrable Securities covered by
such registration statement and any attorney, accountant or other
agent retained by such Holders all relevant financial and other
records, pertinent corporate documents and properties of the
Company and its subsidiaries, if any, and shall cause the officers,
directors and employees of the Company to make reasonably available
for inspection all other relevant information reasonably requested
by such Holders in connection therewith, in each case as is
customary for similar due diligence examinations; provided,
however, that any information that is designated in writing by the
Company, in good faith, as confidential at the time of delivery of
such information shall be kept confidential by the Holders or any
such attorney, accountant or agent, unless such disclosure is
required by law after notice to the Company, or such information
becomes available to the public generally or through a third party
without an accompanying obligation of confidentiality.
(b) 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
year.
(c) Prepare and file with the SEC
such amendments and supplements to such registration statement and
the prospectus used in connection with such registration statement
as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by
such registration statement for up to one hundred twenty
(120) days.
(d) Take such action as may be
necessary so that (i) any registration statement, and any
amendment thereto, and any prospectus forming a part thereof, and
any amendment or supplement thereto (and each report or other
document incorporated therein by reference in each case) complies
in all material respects with the Securities Act and the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), and the respective rules and regulations thereunder,
(ii) any registration statement, and any amendment thereto,
does not, when it becomes effective, contain and untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading and (iii) any prospectus forming part of any
registration statement, and any amendment or supplement to such
prospectus, does not include an untrue statement of a material fact
or omit to state a material fact necessary in order to make the
statements, in the light of the circumstance under which they were
made, not misleading.
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