<PAGE>
Exhibit 4.2
Execution Version
SOUNDBITE COMMUNICATIONS, INC.
INVESTORS' RIGHTS AGREEMENT
THIS
AGREEMENT is made as of June 17, 2005, by and among SoundBite
Communications, Inc. (formerly, SoundBite Corporation), a Delaware
corporation
(the "Company"), Commonwealth Capital Ventures III L.P. and CCV III
Associates
L.P. (collectively, "Commonwealth"), Mosaic Venture Partners II,
LP, an Ontario
limited partnership ("Mosaic"), John McDonough ("McDonough"), David
Parker
("Parker"), Northbridge Venture Partners IV-A, L.P., a Delaware
limited
partnership, Northbridge Venture Partners IV-B, L.P., a Delaware
limited
partnership (collectively, "North Bridge") and the Venture Capital
Fund of New
England IV, LP ("VCFNE", together with Commonwealth, Mosaic and
North Bridge,
the "Investors").
Certain of the parties to this Agreement are parties to a Series
D
Preferred Stock Purchase Agreement of even date herewith (the
"Purchase
Agreement"), a Series C Preferred Stock Purchase Agreement dated as
of March 14,
2003 (the "Original Series C Agreement"), a Series C Preferred
Stock Purchase
Agreement dated as of January 20, 2004 (together with the Original
Series C
Agreement, the "Series C Purchase Agreement"), a Series B Preferred
Stock
Purchase Agreement dated as of November 28, 2001, as amended (the
"Series B
Purchase Agreement"), a Series A Preferred Stock Purchase Agreement
dated as of
June 6, 2000 (the "Original Series A Agreement"), a Series A
Preferred Stock
Purchase Agreement dated as of June 16, 2000 (together with the
Original Series
A Agreement, the "Series A Purchase Agreement"), amended and
restated founder
stock agreements dated as of June 16, 2000 (the "Founder Stock
Agreements"), and
that certain Third Amended and Restated Registration Rights
Agreement, dated as
of March 14, 2003, as amended (the "Prior Registration Agreement").
In order to
induce Commonwealth to enter into the Purchase Agreement, the
Company and the
other parties hereto have agreed to, among other things, provide
the
registration rights set forth in this Agreement, provide for
certain covenants
of the Company as set forth herein and to rescind the Prior
Registration
Agreement. The execution and delivery of this Agreement is a
condition to the
Closing under the Purchase Agreement. Unless otherwise provided in
this
Agreement, capitalized terms used herein shall have the meanings
set forth in
Article I hereof.
The
parties to the Prior Registration Agreement hereby agree to rescind
and
terminate the Prior Registration Agreement pursuant to Section 9(d)
thereof as
set forth herein, and the parties to the Prior Registration
Agreement hereby
consent to this Agreement and expressly waive any objection or
consent
requirement they have under the Prior Registration Agreement to
this Agreement.
The
parties hereto agree as follows:
<PAGE>
ARTICLE I
CERTAIN DEFINITIONS
"Common Stock" means the common stock of the Company, $.001 par
value
per share.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended,
or any successor federal statute, and the rules and regulations of
the
Securities and Exchange Commission issued under such Act, as they
each may, from
time to time, be in effect.
"Founder Registrable Securities" means any shares of Common Stock
held
as of the date hereof, or acquired hereafter through the exercise
of employee
stock options, by McDonough and Parker.
"Investor Registrable Securities" means (i) any Common Stock issued
or
issuable upon the conversion of the Preferred Stock, (ii)
twenty-five percent
(25%) of the outstanding Founder Registrable Securities (measured
pro rata for
each Founder based on the number of shares of Founder Registrable
Securities
held by each Founder), and (iii) any Common Stock issued or
issuable with
respect to the securities referred to in clause (i) or (ii) by way
of a stock
dividend or stock split or in connection with a combination of
shares,
recapitalization, merger, consolidation or other
reorganization.
"Person" means a natural person, a partnership, a corporation,
a
limited liability company, an association, a joint stock company, a
trust, a
joint venture, an unincorporated organization or a governmental
entity or any
department, agency or political subdivision thereof.
"Preferred
Stock" means (i) the shares of Series A Convertible
Preferred Stock, par value $0,001 per share, of the Company issued
pursuant to
the Series A Purchase Agreement, (ii) the shares of Series B
Convertible
Preferred Stock, par value $0.001 per share, of the Company issued
pursuant to
the Series B Purchase Agreement, (iii) the shares of Series C
Convertible
Preferred Stock, par value $0.001 per share (the "Series C
Preferred Stock"), of
the Company issued pursuant to the Series C Purchase Agreement, and
(iv) the
shares of Series D Convertible Preferred Stock, par value $0.001
per share (the
"Series D Preferred Stock"), of the Company issued pursuant to the
Purchase
Agreement.
"Qualified Public Offering" means the closing of the sale of shares
of
Common Stock to the public at a price of at least $1.71945 per
share (subject to
appropriate adjustment for stock splits, stock dividends,
combinations and other
similar recapitalizations affecting such shares) in a
firm-commitment
underwritten public offering pursuant to an effective registration
statement
under the Securities Act of 1933, as amended, resulting in at least
$30,000,000
of gross proceeds to the Company.
"Registrable Securities" means Investor Registrable Securities
and
Founder Registrable Securities. As to any particular Registrable
Securities,
such securities shall cease to be Founder or Investor Registrable
Securities
when they have been distributed to the public pursuant to an
offering registered
under the Securities Act or sold to the public through a
broker,
2
<PAGE>
dealer or market maker in compliance with Rule 144 under the
Securities Act (or
any similar rule then in force). Wherever reference is made in this
Agreement to
a request or consent of holders of a certain percentage of
Registrable
Securities, the determination of such percentage shall include
shares of Common
Stock issuable upon conversion of the Preferred Stock even if such
conversion
has not been effected.
"Securities Act" means the Securities Act of 1933, as amended, or
any
successor federal statute, and the rules and regulations of the
Securities and
Exchange Commission issued under such Act, as they each may, from
time to time,
be in effect.
"Senior Preferred Stock" means the Series C Preferred Stock and
the
Series D Preferred Stock, taken together as a single class.
Unless otherwise stated, other capitalized terms contained herein
have
the meanings set forth in the Purchase Agreement.
ARTICLE II
REGISTRATION RIGHTS
2.1
Demand Registrations.
(a) Requests for Registration. At any time after the earlier of
(i)
June 17, 2008 or (ii) six (6) months after the date the Company has
completed a
public offering of its equity securities under the Securities Act,
the holders
of at least seventy percent (70%) of the Investor Registrable
Securities issued
or issuable in respect of the Senior Preferred Stock may request
registration
under the Securities Act of all or any portion of their Investor
Registrable
Securities on Form S-l or any similar long-form registration ("Long
Form
Registrations"), and the holders of at least seventy percent (70%)
of the
Investor Registrable Securities issued or issuable in respect of
the Senior
Preferred Stock may request registration under the Securities Act
of all or any
portion of their investor Registrable Securities on Form S-3 or any
similar
short-form registration ("Short-Form Registrations") if available
for use by the
Company. All registrations requested pursuant to this paragraph
2.1(a) are
referred to herein as "Demand Registrations." Each request for a
Demand
Registration shall specify the approximate number of Investor
Registrable
Securities requested to be registered by the holders making such
request. Within
ten (10) days after receipt of any such request, the Company shall
give written
notice of such requested registration to all other holders of
Investor
Registrable Securities and, subject to the terms of paragraph
2.1(d) hereof,
shall include in such registration all Investor Registrable
Securities with
respect to which the Company has received written requests for
inclusion therein
within thirty (30) days after the receipt of the Company's
notice.
(b) Long-Form Registrations. The holders of Investor
Registrable
Securities shall be entitled to request not more than two (2)
Long-Form
Registrations in the aggregate ("Company-Paid Long-Form
Registrations"), and the
Company shall pay all Registration Expenses, as defined in
paragraph 2.5 below,
associated with such Long-Form Registrations, except as set forth
in paragraph
2.5 hereof; provided that, (i) the Investor Registrable Securities
requested to
be included in such Long-Form Registration must represent at least
twenty
percent
3
<PAGE>
(20%) of the Investor Registrable Securities owned by such holders
requesting
such Long-Form Registration, or (ii) the aggregate offering value
of the
Investor Registrable Securities requested to be registered in any
Long-Form
Registration must equal at least $5,000,000. A registration shall
not count as
one of the permitted Long-Form Registrations until it has become
effective
(unless such Long-Form Registration has not become effective due
primarily to
the fault of or at the request of the holders requesting such
registration).
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to paragraph 2.1(b), the holders of
Investor
Registrable Securities shall be entitled to request an unlimited
number of
Short-Form Registrations in which the Company shall pay all
Registration
Expenses; provided that, the aggregate offering value of the
Investor
Registrable Securities requested to be registered in any Short-Form
Registration
must equal at least $1,000,000; provided further, that the Company
shall not be
required to file more than two (2) Short-Form Registrations
pursuant to this
paragraph 2.1(c) in any twelve (12) month period. Demand
Registrations shall be
Short-Form Registrations whenever the Company is permitted to use
any applicable
short form and if the managing underwriters (if any) agree to the
use of a
Short-Form Registration. After the Company has become subject to
the reporting
requirements of the Securities Exchange Act, the Company shall use
its
reasonable efforts to make Short-Form Registrations available for
the sale of
Investor Registrable Securities.
(d) Priority on Demand Registrations. The Company shall not include
in
any Demand Registration any securities that are not Investor
Registrable
Securities without the prior written consent of the holders of at
least seventy
percent (70%) of the Investor Registrable Securities issued or
issuable in
respect of the Senior Preferred Stock. If a Demand Registration is
an
underwritten offering and the managing underwriters advise the
Company in
writing that in their opinion the number of Investor Registrable
Securities and,
if permitted hereunder, other securities requested to be included
in such
offering exceeds the number of Investor Registrable Securities and
other
securities, if any, which can be sold therein without adversely
affecting the
marketability of the offering, the Company shall include in such
registration
(i) first, the Investor Registrable Securities requested to be
included in such
registration, pro rata among the holders of such Investor
Registrable Securities
on the basis of the number of shares owned by each such holder and
(ii) second,
if permitted hereunder, other securities requested to be included
in such
registration.
(e) Restrictions on Demand Registrations. The Company shall not
be
obligated to effect any Demand Registration (i) within one hundred
eighty (180)
days after the effective date of the Company's initial public
offering of its
securities pursuant to a registration statement filed under the
Securities Act
and (ii) within ninety (90) days after the effective date of a
previous Demand
Registration or a previous registration in which the holders of
Registrable
Securities were given piggyback rights pursuant to paragraph 2.2
and in which
there was no reduction in the number of Registrable Securities
requested to be
included. The Company may postpone the filing or the effectiveness
of a Demand
Registration (i) for up to ninety (90) days in the case of
Long-Form
Registration and (ii) for up to sixty (60) days in the case of a
Short-Form
Registration if the Company's board of directors determines in its
good faith
judgment that such Demand Registration would reasonably be expected
to have a
material adverse effect on any proposal or plan by the Company or
any of its
Subsidiaries to engage in any acquisition of assets (other than in
the ordinary
course of business) or any merger, consolidation, tender offer,
4
<PAGE>
reorganization or similar transaction; provided that, in such
event, the holders
of Registrable Securities initially requesting such Demand
Registration shall be
entitled to withdraw such request and, if such request is
withdrawn, such Demand
Registration shall not count as one of the permitted Demand
Registrations
hereunder and the Company shall pay all Registration Expenses in
connection with
such registration. The Company may delay a Demand Registration
hereunder only
twice in any twelve (12) month period.
(f) Selection of Underwriters. The holders of a majority of the
Investor Registrable Securities included in any Demand Registration
shall have
the right to select the investment banker(s) and manager(s) to
administer the
offering, subject to the Company's approval which shall not be
unreasonably
withheld or delayed.
(g) Other Registration Rights. Except as provided in this
Agreement,
the Company shall not grant to any Persons the right to request the
Company to
register, on terms which are senior to the rights of the holders of
Investor
Registrable Securities provided in this Agreement, any equity
securities of the
Company, or any securities convertible or exchangeable into or
exercisable for
such securities, without the prior written consent of the holders
of at least
seventy percent (70%) of the Investor Registrable Securities issued
or issuable
in respect of the Senior Preferred Stock.
2.2
Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any
of its securities under the Securities Act (other than pursuant to
a Demand
Registration) and the registration form to be used may be used for
the
registration of Registrable Securities (a "Piggyback
Registration"), the Company
shall give prior written notice to all holders of Registrable
Securities of its
intention to effect such a registration and, subject to the terms
of paragraphs
2.2(c) and 2.2(d) hereof, shall include in such registration all
Registrable
Securities with respect to which the Company has received written
requests for
inclusion therein within twenty (20) days after the receipt of the
Company's
notice.
(b)
Piggyback Expenses. The Registration Expenses of the holders of
Registrable Securities shall be paid by the Company in all
Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration
is
an underwritten primary registration on behalf of the Company, and
the managing
underwriters advise the Company in writing that in their opinion
the number of
securities requested to be included in such registration exceeds
the number
which can be sold in an orderly manner in such offering within a
price range
acceptable to the Company, the Company shall include in such
registration (i)
first, the securities the Company proposes to sell, (ii) second,
the Investor
Registrable Securities requested to be included in such
registration, pro rata
among the holders of such Investor Registrable Securities on the
basis of the
number of shares owned by each such holder, (iii) third, the
Founder Registrable
Securities requested to be included in such registration, pro rata
among the
holders of such Founder Registrable Securities on the basis of
5
<PAGE>
the number of shares owned by each such holder, and (iv) fourth,
other
securities requested to be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback
Registration
is an underwritten secondary registration on behalf of holders of
the Company's
securities, and the managing underwriters advise the Company in
writing that in
their opinion the number of securities requested to be included in
such
registration exceeds the number which can be sold in such offering
without
adversely affecting the marketability of the offering, the Company
shall include
in such registration (i) first, the Investor Registrable Securities
requested to
be included in such registration, pro rata among the holders of
such Investor
Registrable Securities on the basis of the number of shares owned
by each such
holder, (ii) second, the Founder Registrable Securities requested
to be included
in such registration, pro rata among the holders of such Founder
Registrable
Securities on the basis of the number of shares owned by each such
holder, and
(iv) third, other securities requested to be included in such
registration.
(e) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities
pursuant to
paragraph 2.1 or pursuant to this paragraph 2.2, and if such
previous
registration has not been withdrawn or abandoned, the Company shall
not file or
cause to be effected any other registration of any of its equity
securities or
securities convertible or exchangeable into or exercisable for its
equity
securities under the Securities Act (except on Form S-8 or any
successor form),
whether on its own behalf or at the request of any holder or
holders of such
securities, until a period of at least sixty (60) days has elapsed
from the
effective date of such previous registration.
2.3
Holdback Agreements. Each holder of Registrable Securities shall
not
effect any public sale or distribution (including sales pursuant to
Rule 144) of
equity securities of the Company, or any securities convertible
into or
exchangeable or exercisable for such securities, during the seven
(7) days prior
to and the one hundred eighty (180) day period beginning on the
effective date
of any underwritten registration, unless the underwriters managing
the
registered public offering otherwise agree; provided that, (i) such
restriction
shall only apply for 90 days to secondary offerings and (ii) all
stockholders of
the Company then holding at least one percent (1%) of the Company's
outstanding
Common Stock (on an as-converted basis) and all officers and
directors of the
Company enter into agreements with similar provisions.
2.4
Registration Procedures. Whenever the holders of Registrable
Securities
have requested that any Registrable Securities be registered
pursuant to this
Agreement, the Company shall use its best efforts to effect the
registration and
the sale of such Registrable Securities in accordance with the
intended method
of disposition thereof, and pursuant thereto the Company shall
promptly:
(a) prepare and file with the Securities and Exchange Commission
a
registration statement with respect to such Registrable Securities
and use its
reasonable best efforts to cause such registration statement to
become effective
(provided that before filing a registration statement or prospectus
or any
amendments or supplements thereto, the Company shall furnish to the
counsel
selected by the holders of a majority of the Registrable Securities
covered by
such registration statement copies of all such documents proposed
to be filed);
6
<PAGE>
(b) notify each holder of Registrable Securities of the
effectiveness
of each registration statement filed hereunder and prepare and file
with the
Securities and Exchange Commission such amendments and supplements
to such
registration statement and the prospectus used in connection
therewith as may be
necessary to keep such registration statement effective for a
period of not less
than one hundred eighty (180) days or such lesser period until all
Registrable
Securities included in such registration statement are sold and
comply with the
provisions of the Securities Act with respect to the disposition of
all
securities covered by such registration statement during such
period in
accordance with the intended methods of disposition by the sellers
thereof set
forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number
of
copies of such registration statement, each amendment and
supplement thereto,
the prospectus included in such registration statement (including
each
preliminary prospectus) and such other documents as such seller may
reasonably
request in order to facilitate the disposition of the Registrable
Securities
owned by such seller;
(d) use its reasonable best efforts to cause all such
Registrable
Securities to be listed on each securities exchange on which
similar securities
issued by the Company are then listed;
(e) enter into such customary agreements (including
underwriting
agreements in customary form) and take all such other actions as
the holders of
a majority of the Registrable Securities being sold or the
underwriters, if any,
reasonably request in order to expedite or facilitate the
disposition of such
Registrable Securities (including effecting a stock split or a
combination of
shares);
(f) otherwise use its best efforts to comply with all applicable
rules
and regulations of the Securities and Exchange Commission, and make
available to
its security holders,
