Exhibit 10.12
VONAGE HOLDINGS CORP.
THIRD AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT
April 27, 2005
TABLE OF CONTENTS
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Page
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ARTICLE 1
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GENERAL
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1.1
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Certain Definitions
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2
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ARTICLE 2
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RESTRICTIONS ON TRANSFER;
REGISTRATION
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2.1
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Restrictions on Transfer
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6
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2.2
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Mandatory Registration
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8
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2.3
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Demand Registration
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9
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2.4
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Piggyback Registrations
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11
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2.5
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Form S-3 Registration
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11
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2.6
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Expenses of Registration
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13
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2.7
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Underwriting
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13
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2.8
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Obligations of the
Company
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16
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2.9
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Termination of Registration
Rights
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18
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2.10
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Furnishing Information
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18
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2.11
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Indemnification
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18
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2.12
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Transfer or Assignment of
Registration Rights
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20
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2.13
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Amendment of Registration
Rights
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21
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2.14
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“Market Stand-Off”
Agreement
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21
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2.15
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Rule 144 Reporting
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22
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ARTICLE 3
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COVENANTS OF THE COMPANY
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3.1
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Basic Financial Information and
Reporting
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22
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3.2
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Inspection Rights
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24
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3.3
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Board Observation Right
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24
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3.4
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Directors’ Expenses
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25
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3.5
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Board of Directors Meetings; Board
Composition
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25
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3.6
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Insurance
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25
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3.7
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Reservation of Common
Stock
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26
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3.8
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Option Grants; Stock Vesting; Stock
Repurchase; Exercise Price
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26
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3.9
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Acceleration of Vesting
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26
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3.10
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Non-Competition Agreement and
Confidential Information and Invention
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Assignment Agreement
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27
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3.11
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Assignment of Right of First
Refusal
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27
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3.12
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Market Stand-Off
Agreement
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27
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i
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3.13
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Payment of Taxes, Compliance with
Laws, etc
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27
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3.14
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Material Changes and
Litigation
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28
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3.15
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Qualified Small Business
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28
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3.16
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Real Property Holding
Corporation
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28
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3.17
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Management Compensation
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29
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3.18
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Enforcement of Bylaws
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29
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3.19
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No Impairment
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29
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3.20
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Environmental Covenant
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29
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3.21
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Employment Covenant
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29
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3.22
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Board and Officer
Covenant
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29
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3.23
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Amended and Restated Certificate of
Incorporation
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30
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3.24
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Termination of Covenants; Assignment
of Covenants
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30
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ARTICLE 4
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RIGHTS OF FIRST REFUSAL
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4.1
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Subsequent Offerings
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30
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4.2
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Exercise of Rights
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31
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4.3
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Issuance of New Securities to Other
Persons
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31
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4.4
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Termination and Waiver of Rights of
First Refusal
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31
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4.5
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Transfer of Rights of First
Refusal
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31
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4.6
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Excluded Securities
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32
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ARTICLE 5
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MISCELLANEOUS
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5.1
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Amendment and Waiver
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33
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5.2
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Waiver of Preemptive
Rights
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33
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5.3
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Governing Law
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33
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5.4
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Jurisdiction; Venue
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33
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5.5
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Waiver of Jury Trial
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34
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5.6
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Equitable Remedies
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34
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5.7
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Arbitration
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34
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5.8
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Successors and Assigns
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34
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5.9
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Entire Agreement
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34
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5.10
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Severability
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35
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5.11
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Delays or Omissions
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35
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5.12
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Notices
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35
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5.13
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Attorneys’ Fees
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36
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5.14
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Titles and Subtitles
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36
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5.15
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Limitation on Subsequent
Rights
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36
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5.16
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Additional Investors
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37
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5.17
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Non-Business Days
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37
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5.18
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Counterparts
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37
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5.19
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Telecopy Execution and
Delivery
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37
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5.20
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Aggregation of Stock
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37
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ii
VONAGE HOLDINGS
CORP.
THIRD AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT
This THIRD AMENDED AND RESTATED
INVESTORS’ RIGHTS AGREEMENT (this “ Agreement
”) is made and entered into as of April 27, 2005, by and
among Vonage Holdings Corp., a Delaware corporation (the “
Company ”), the holders of the Company’s Series
A Convertible Preferred Stock set forth on Exhibit A
attached hereto (the “ Series A Holders ”), the
holders of the Company’s Series A-2 Convertible Preferred
Stock set forth on Exhibit A attached hereto (the “
Series A-2 Holders ”), the holders of the
Company’s Series B Convertible Preferred Stock set forth on
Exhibit A attached hereto (the “ Series B
Holders ”), the holders of the Company’s Series C
Convertible Preferred Stock set forth on Exhibit A attached
hereto (the “ Series C Holders ”), the holders
of the Company’s Series D Convertible Preferred Stock set
forth on Exhibit A attached hereto (the “ Series D
Holders ”), and the holders of the Company’s Series
E Convertible Preferred Stock set forth on Exhibit A
attached hereto (the “ Series E Holders ” and
together with the Series A Holders, the Series A-2 Holders, the
Series B Holders, the Series C Holders, the Series D Holders and
the Series E Holders, the “ Investors
”).
RECITALS
WHEREAS, the Series A Holders, the
Series A-2 Holders, the Series B Holders, the Series C Holders and
the Series D Holders (the “ Existing Investors ”
) possess registration rights, information rights, rights of
first offer and other rights pursuant to a Second Amended and
Restated Investors’ Rights Agreement dated as of August 12,
2004 by and among the Company and such Existing Investors (the
“ Prior Agreement ”);
WHEREAS, the Prior Agreement may be
amended, and any provision therein waived, with the consent of the
Company, the holders of at least a majority of the Registrable
Securities then outstanding, the holders of at least a majority of
the then-outstanding shares of Series B Preferred (including shares
of Common Stock issued upon conversion of the Series B Preferred),
the holders of at least sixty percent (60%) of the then-outstanding
shares of Series C Preferred (including shares of Common Stock
issued upon conversion of the Series C Preferred) and the holders
of at least sixty-six and two-thirds percent (66-2/3%) of the
then-outstanding shares of Series D Preferred (including shares of
Common Stock issued upon conversion of the Series D
Preferred);
WHEREAS, the Existing Investors as
holders of at least (i) a majority of the Registrable Securities
then outstanding, (ii) a majority of the then-outstanding shares of
Series B Preferred (including shares of Common Stock issued upon
conversion of the Series B Preferred), (iii) sixty percent (60%) of
the then-outstanding shares of Series C Preferred (including shares
of Common Stock issued upon conversion of the Series C Preferred)
and (iv) the holders of at least sixty-six and two-thirds percent
(66-2/3%) of the then-outstanding shares of Series D Preferred
(including shares of Common Stock issued upon conversion of the
Series D Preferred) desire to terminate the Prior Agreement and to
accept the rights created pursuant hereto in lieu of the rights
granted to them under the Prior Agreement;
WHEREAS, the Company and the Series
E Holders are parties to that certain Stock Purchase Agreement
dated as of an even date herewith (the “ Purchase
Agreement ”), whereby the Company will sell, and the
Series E Holders will purchase, shares of the Company’s
Series E Convertible Preferred Stock (the “ Financing
”); and
WHEREAS, the obligations of the
Company and the Series E Holders under the Purchase Agreement are
conditioned upon, among other things, the execution and delivery of
this Agreement by the Company and the Investors.
AGREEMENT
NOW, THEREFORE, in consideration of
the foregoing recitals and the mutual promises, representations and
covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE 1
GENERAL
1.1
Certain Definitions . As used in this Agreement the following
terms shall have the following respective meanings:
(a)
“ 3i
” means 3i
Technology Partners L.P.
(b)
“ Bain Capital
” means,
collectively Bain Capital Venture Fund 2005, L.P., Sankaty Credit
Opportunities, L.P., Sankaty Credit Opportunities II, L.P.,
Prospect Harbor Credit Partners, L.P., Brookside Capital Partners
Fund, L.P., BCIP Associates III, LLC and BCIP Associates III-B,
LLC.
(c)
“ Board
” means the
Board of Directors of the Company.
(d)
“ Capital Stock
” means
shares of the Common Stock, Series A Preferred, Series A-2
Preferred, Series B Preferred, Series C Preferred, Series D
Preferred, Series E Preferred and any other shares of the Common
Stock or Preferred Stock issued or issuable upon exercise or
conversion of any option, warrant or other security or right of any
kind convertible into or exchangeable for such Common Stock or
Preferred Stock.
(e)
“ Common Stock
” means the
Common Stock of the Company, par value $0.001 per
share.
(f)
“ Exchange Act
” means the
Securities Exchange Act of 1934, as amended, or any similar
successor federal statute and the rules and regulations thereunder,
all as the same shall be in effect from time to time.
(g)
“ Form S-3
” means
such form under the Securities Act as in effect on the date hereof
or any successor or similar registration form under the Securities
Act subsequently
2
adopted by the
SEC that permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company
with the SEC.
(h)
“ Founder
” shall
mean Jeffrey Citron.
(i)
“ Holder
” means any
person owning of record Registrable Securities that have not been
sold to the public or any transferee or assignee of record of such
Registrable Securities to which the registration rights conferred
by this Agreement have been transferred or assigned in accordance
with Section 2.12 hereof.
(j)
“ Initial Public
Offering ” means the
Company’s first firm commitment underwritten public offering
of the Common Stock registered under the Securities
Act.
(k)
“ Major Series E
Holders ” means, collectively,
Bain Capital and RGIP, LLC.
(l)
“ Meritech
” means
Meritech Capital Partners.
(m)
“ New Securities
” means any
shares of, or securities convertible into or exercisable for any
shares of, any class of the Company’s capital stock, issued
after the date of this Agreement other than securities excluded
pursuant to Section 4.6 hereof.
(n)
“ NEA
” means
New Enterprise Associates 10, L.P. and New Enterprise Associates
11, L.P.
(o)
“ NEA 10
” means New
Enterprise Associates 10, L.P.
(p)
“ NEA 11
” means New
Enterprise Associates 11, L.P.
(q)
“ Register
,”
“ registered
” and
“ registration
” refer to
a registration effected by preparing and filing a registration
statement in compliance with the Securities Act, and the
declaration or ordering of effectiveness of such registration
statement or document.
(r)
“ Registrable
Securities ” means (a) shares of
Common Stock issuable or issued upon conversion of the Shares and
(b) any Common Stock issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is issued
as) a dividend or other distribution with respect to, or in
exchange for or in replacement of, such above-described
securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities of the Company sold by
any person to the public either pursuant to a registration
statement under the Securities Act or Rule 144.
(s)
“ Registrable
Securities then outstanding ” equals the number of
shares of Common Stock that are Registrable Securities and either
(a) are then issued and outstanding or (b) are issuable pursuant to
then exercisable or convertible securities.
(t)
“ Registration
Expenses ” shall mean all
expenses incurred by the Company in complying with Sections 2.2,
2.3, 2.4 and 2.5 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and
disbursements of counsel for the
3
Company, Blue Sky
fees and expenses and the expense of any special audits incidental
to or required by any such registration (but excluding the
compensation of regular employees of the Company, which shall be
paid in any event by the Company, and all underwriting discounts
and commissions). In addition, Registration Expenses shall
include reasonable fees and disbursements of a single special legal
counsel for the Holders selling Registrable Securities.
(u)
“ Restated
Certificate ” means the
Company’s Certificate of Incorporation, as amended and
restated to date.
(v)
“ Rule 144
” means
Rule 144 as promulgated by the SEC under the Securities Act, as
such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(w)
“ Rule 144(k)
” means
Rule 144(k) as promulgated by the SEC under the Securities Act, as
such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(x)
“ Rule 145
” means
Rule 145 as promulgated by the SEC under the Securities Act, as
such rule may be amended from time to time, or any similar
successor rule that may be promulgated by the SEC.
(y)
“ SEC
” or
“ Commission
” means the
Securities and Exchange Commission or any other federal agency at
the time administering the Securities Act.
(z)
“ Securities Act
” means the
Securities Act of 1933, as amended, or any similar successor
federal statute and the rules and regulations thereunder, all as
the same shall be in effect from time to time.
(aa)
“ Selling
Expenses ” means all
underwriting discounts, selling commissions and stock transfer
rates applicable to the sale of Registrable Securities.
(bb)
“ Senior Preferred
Holders “ means the holders of
Series B Preferred, Series C Preferred, Series D Preferred and
Series E Preferred.
(cc)
“ Senior Preferred
Registrable Securities ” means, collectively,
the Series B/C/D Registrable Securities and the Series E
Registrable Securities.
(dd)
“ Series A
Preferred ” means the Series A
Convertible Preferred Stock of the Company, par value $0.001 per
share.
(ee)
“ Series A-2
Preferred ” means the Series A-2
Convertible Preferred Stock of the Company, par value $0.001 per
share.
(ff)
“ Series B
Director ” means the member of
the Board elected by the holders of a majority of the outstanding
shares of Series B Preferred, voting as a separate class distinct
from any other series or class of securities issued by the Company,
to be designated by NEA 10.
4
(gg)
“ Series B
Preferred ” means the Series B
Convertible Preferred Stock of the Company, par value $0.001 per
share.
(hh)
“ Series B Purchase
Agreement ” means that certain
Series B Preferred Stock Purchase Agreement dated November 14, 2003
by and among the Company and the investors listed
therein.
(ii)
“ Series B/C/D
Registrable Securities ” means (a) shares of
Common Stock issuable or issued upon conversion of shares of Series
B Preferred, Series C Preferred and Series D Preferred and (b) any
Common Stock issued as (or issuable upon the conversion or exercise
of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for
or in replacement of, such above-described securities.
Notwithstanding the foregoing, Series B/C/D Registrable Securities
shall not include any securities of the Company sold by any person
to the public either pursuant to a registration statement under the
Securities Act or Rule 144.
(jj)
“ Series C
Director ” means the member of
the Board elected by the holders of a majority of the outstanding
shares of Series C Preferred, voting as a separate class distinct
from any other series or class of securities issued by the Company,
to be designated by 3i.
(kk)
“ Series C
Preferred ” means the Series C
Convertible Preferred Stock of the Company, par value $0.001 per
share.
(ll)
“ Series C Purchase
Agreement ” means that certain
Series C Preferred Stock Purchase Agreement dated January 20, 2004
by and among the Company and the investors listed
therein.
(mm)
“ Series D
Director ” means the member of
the Board elected by the holders of a majority of the outstanding
shares of Series D Preferred, voting as a separate class distinct
from any other series or class of securities issued by the Company,
to be designated by NEA 11.
(nn)
“ Series D
Preferred ” means the Series D
Convertible Preferred Stock of the Company, par value $0.001 per
share.
(oo)
“ Series D Purchase
Agreement ” means that certain
Series D Preferred Stock Purchase Agreement dated August 12, 2004
by and among the Company and the investors listed
therein.
(pp)
“ Series E
Director ” means the member of
the Board elected by the holders of a majority of the outstanding
shares of Series E Preferred, voting as a separate class distinct
from any other series or class of securities issued by the Company,
to be designated by Bain Capital.
(qq)
“ Series E
Preferred ” means the Series E
Convertible Preferred Stock of the Company, par value $0.001 per
share.
5
(rr)
“ Series E Registrable
Securities ” means (a) shares of
Common Stock issuable or issued upon conversion of shares of Series
E Preferred and (b) any Common Stock issued as (or issuable upon
the conversion or exercise of any warrant, right or other security
which is issued as) a dividend or other distribution with respect
to, or in exchange for or in replacement of, such above-described
securities. Notwithstanding the foregoing, Series E
Registrable Securities shall not include any securities of the
Company sold by any person to the public either pursuant to a
registration statement under the Securities Act or Rule
144.
(ss)
“ Series
Preferred ” means the Series A
Preferred, the Series A-2 Preferred, the Series B Preferred, the
Series C Preferred, the Series D Preferred and the Series E
Preferred of the Company.
(tt)
“ Shares
” means all
shares of Series A Preferred, Series A-2 Preferred, Series B
Preferred, Series C Preferred, Series D Preferred and Series E
Preferred issued to the Investors.
(uu)
“ Special Registration
Statement ” means (i) a
registration statement relating to any employee benefit plan of the
Company, (ii) a registration statement of the Company relating to
any corporate reorganization or other transaction under Rule 145,
including any registration statements related to the issuance or
resale of securities issued in such a transaction, or (iii) a
registration statement related to the offer and sale of debt
securities.
ARTICLE 2
RESTRICTIONS ON TRANSFER; REGISTRATION
2.1
Restrictions on Transfer .
(a)
Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and
until:
(i)
there is then in effect a registration statement under the
Securities Act covering such proposed disposition and such
disposition is made in accordance with such registration statement;
or
(ii)
(A) the transferee has agreed in writing to be bound by the terms
of this Agreement (for purposes of clarification, this condition
(A) shall apply only to transferees who acquired Shares or
Registrable Securities prior to the Initial Public Offering and
only with respect to such shares), (B) such Holder shall have
notified the Company of the proposed disposition within a
reasonable period of time prior to such proposed disposition and
shall have furnished the Company with a detailed statement of the
circumstances surrounding the proposed disposition and (C) if
reasonably requested by the Company, such Holder shall have
furnished the Company with an opinion of counsel, reasonably
satisfactory to the Company (it being understood that (i) an
opinion of Wilson Sonsini Goodrich & Rosati, P.C.
(“ WSGR
”) shall be
deemed satisfactory with respect to proposed transfers by NEA and
any permitted transferee thereof, (ii) an opinion of Ropes &
Gray LLP shall be deemed satisfactory with respect to proposed
transfers by Bain Capital and any permitted transferee thereof,
(iii) an opinion of Latham & Watkins LLP shall be deemed
satisfactory with respect to proposed transfers by
6
Meritech and any
permitted transferee thereof, and (iv) an opinion of Gunderson
Dettmer Stough Villeneuve Franklin & Hachigian, LLP shall be
deemed satisfactory with respect to proposed transfers by 3i and
any permitted transferee thereof), 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 and in accordance with Rule 144,
except in unusual circumstances.
(b)
Notwithstanding the provisions of subsection (a) above, no such
restriction shall apply to a transfer by a Holder that is (A) a
partnership or limited partnership transferring to its partners,
former partners, limited partners or former limited partners in
accordance with partnership or limited partnership interests, as
may be applicable, (B) a corporation transferring to a wholly owned
subsidiary or a parent corporation that owns all of the capital
stock of the Holder, (C) a limited liability company transferring
to its members or former members in accordance with their interest
in the limited liability company, (D) an individual Holder
transferring to the Holder’s family members or trusts for the
benefit of such Holder or such Holder’s family members, (E)
an “ Affiliate
” of such
Holder (as such term is defined under Rule 144), (F) one or
more Affiliated partnerships, limited liability companies or funds
managed by a Holder or any of their respective directors, officers,
partners or members or (G) a transfer not involving any change in
beneficial ownership; provided that in each such case the
transferee will agree in writing to be subject to the terms of this
Agreement to the same extent as if such transferee were an original
Holder hereunder.
(c)
Notwithstanding the foregoing, any other provision of this
Agreement or any other provision of any other agreement among some
or all of the parties hereto, 3i Technology Partners L.P.,
Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i Global
Technology 2004-06 L.P. and any 3i Permitted Transferee (as defined
below) may, from time to time, transfer all or any portion of the
shares it owns to 3i Group plc or any affiliate of 3i Group plc or
any entity or vehicle including a partnership in which 3i Group plc
and/or its affiliate has a majority economic interest and which is
managed by 3i Group plc or any of its affiliates (each a
“ 3i Permitted
Transferee ”); provided
that in each such case the transferee will agree in writing to be
subject to the terms of this Agreement to the same extent as if
such transferee were an original Holder hereunder.
(d)
Each certificate representing Shares or Registrable Securities
shall be stamped or otherwise imprinted with legends substantially
similar to the following (in addition to any legend required under
applicable state securities laws):
THE SECURITIES REPRESENTED HEREBY
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
“ ACT ”) AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND
UNTIL REGISTERED UNDER THE ACT OR UNLESS THE ISSUER HAS RECEIVED AN
OPINION OF LEGAL COUNSEL SATISFACTORY TO THE ISSUER AND ITS COUNSEL
THAT SUCH REGISTRATION IS NOT REQUIRED.
7
THE SALE, PLEDGE, HYPOTHECATION OR
OTHER TRANSFER OF THE SECURITIES REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN THIRD AMENDED AND
RESTATED INVESTORS’ RIGHTS AGREEMENT BY AND BETWEEN THE
STOCKHOLDER AND THE ISSUER OF SUCH SECURITIES, INCLUDING A LOCK-UP
PERIOD OF UP TO 180 DAYS FOLLOWING THE EFFECTIVE DATE OF A
REGISTRATION STATEMENT OF THE ISSUER FILED UNDER THE ACT.
COPIES OF SUCH AGREEMENT MAY BE OBTAINED UPON WRITTEN REQUEST TO
THE SECRETARY OF THE ISSUER. SUCH TRANSFER RESTRICTIONS ARE
BINDING ON TRANSFEREES OF SUCH SECURITIES.
(e)
The Company shall be obligated to reissue promptly unlegended
certificates at the request of any Holder thereof if (i) the
Company has completed the Initial Public Offering, (ii) the Holder
shall have obtained an opinion of counsel (which counsel may be
counsel to the Company) reasonably acceptable to the Company (it
being understood that an opinion of WSGR with respect to such
requests by or on behalf of NEA shall be deemed acceptable) to the
effect that the securities proposed to be disposed of may lawfully
be so disposed of without registration, qualification and legend
and (iii) the Holder shall have delivered such securities to the
Company or its transfer agent.
(f)
Any legend endorsed on an instrument pursuant to applicable state
securities laws and the stop-transfer instructions with respect to
such securities shall be removed upon receipt by the Company of an
order of the appropriate Blue Sky authority authorizing such
removal.
2.2
Mandatory Registration .
(a)
The Company shall prepare and file with the SEC a registration
statement on Form S-1 covering the resale, in the manner reasonably
requested by the holders thereof, of all of the Senior Preferred
Registrable Securities (the “ Shelf Registration Statement ”) ( provided
that before filing the Shelf Registration Statement or any
amendments or supplements thereto, the Company shall furnish legal
counsel for the Holders with copies of all such documents to be
filed) and shall use all commercially reasonable efforts to cause
the Shelf Registration Statement to become effective pursuant to
Rule 415 under the Securities Act by the date on which any
“market stand-off’ agreement entered into by the
Holders at the request of the underwriters of the Initial Public
Offering pursuant to Section 2.14(a) hereof expires (the
“ Required Effective
Date ”). Once the
Shelf Registration Statement is declared effective by the SEC, the
Company will cause the Shelf Registration Statement to remain
effective throughout, and immediately available for use at all
times until, April 27, 2007.
(b)
Notwithstanding any of the foregoing to the contrary, the Company
may suspend the use of the Shelf Registration Statement upon
written notice to each Holder of Senior Preferred Registrable
Securities at any time when the Company, in its reasonable judgment
after consultation with legal counsel, determines that (A) (i)
there is in existence material nonpublic information regarding a
pending material transaction or transactions, (ii) the disclosure
of such information with respect to such transaction or
transactions in the prospectus included in the Shelf Registration
Statement is required, and (iii) the disclosure of such information
at such time
8
would be adverse
to the Company, or (B) the prospectus included in the Shelf
Registration Statement includes an untrue statement of material
fact or omits a material fact required to be stated therein or
necessary to make the statements therein not misleading (a
“ Permissible
Blackout ”). Any such
Permissible Blackout shall continue for the period of time that is
reasonably necessary for disclosure to occur at a time that is not
adverse to the Company or until such time as the information or
event is no longer material, each as determined in good faith by
the Company after consultation with counsel, provided ,
however , that no Permissible Blackout shall exceed a period
of 5 consecutive trading days, and the Company may not suspend the
use of the Shelf Registration Statement pursuant to this Section
2.2(b) for more than an aggregate of 20 trading days.
2.3
Demand Registration .
(a)
Subject to the conditions of this Section 2.3, if the Company shall
receive a written request from the Holders holding not less than
forty percent (40%) of the Registrable Securities then outstanding
that the Company file a registration statement with respect to all
or part of the Registrable Securities under the Securities Act with
an anticipated aggregate offering price of at least $5,000,000 (net
of underwriting discounts and commissions), then the Company shall,
within ten (10) calendar days of the receipt thereof, give written
notice of such request to all Holders, and, subject to the
limitations of this Section 2.3, use its best efforts to effect, as
expeditiously as reasonably possible, the registration under the
Securities Act of all Registrable Securities that all Holders
request to be registered pursuant to, and in accordance with, this
Agreement (an “ Ordinary Demand Registration ”).
Subject to the conditions of this
Section 2.3, if the Company shall receive a written request from
the Holders holding not less than sixty-six and two-thirds percent
(66-2/3%) of those Series B/C/D Registrable Securities then
outstanding and held by Series B Holders, Series C Holders,
and Series D Holders (calculated as a single class and on an
as-converted to Common Stock basis) that the Company file a
registration statement with respect to all or part of such Series
B/C/D Registrable Securities held by the Series B Holders, the
Series C Holders, and the Series D Holders under the Securities Act
with an anticipated aggregate offering price of at least $5,000,000
(net of underwriting discounts and commissions), then the Company
shall, within ten (10) calendar days of the receipt thereof, give
written notice of such request to all Holders, and, subject to the
limitations of this Section 2.3, use its best efforts to effect, as
expeditiously as reasonably possible, the registration under the
Securities Act of all Registrable Securities that all Holders
request to be registered pursuant to, and in accordance with, this
Agreement (a “ Series B/C/D Preferred Demand
Registration ”).
Subject to the conditions of this
Section 2.3, if the Company shall receive a written request from
the Holders holding not less than thirty-three and one-third
percent (33-1/3%) of those Series E Registrable Securities then
outstanding and held by Series E Holders that the Company file a
registration statement with respect to all or part of such Series E
Registrable Securities held by the Series E Holders under the
Securities Act with an anticipated aggregate offering price of at
least $5,000,000 (net of underwriting discounts and commissions),
then the Company shall, within ten (10) calendar days of the
receipt thereof, (i) give written notice of such request to all
Holders, and, subject to the limitations of this Section 2.3, (ii)
as soon as practicable, and in any event within 45 days of receipt
of such request, file a registration
9
statement under the Securities Act
covering all Registrable Securities which the Holders request to be
registered, and (iii) use its best efforts to cause such
registration statement to be declared effective by the SEC, as
expeditiously as reasonably possible (a “ Series E
Preferred Demand Registration ”).
(b)
Notwithstanding the foregoing, if the Company shall furnish to
Holders requesting a registration statement pursuant to this
Section 2.3, a certificate signed by the President or Chief
Executive Officer of the Company (A) stating that in the
Board’s good faith judgment it would be seriously detrimental
to the Company and its stockholders for such a registration
statement to be filed in the near future, and (B) setting forth in
reasonable detail the general reasons for such judgment, the
Company shall have the right to defer such filing for a period of
not more than 90 days after receipt of the request of the Holders
specified in Section 23(a); provided , however ,
that the Company may not utilize this right more than once in any
twelve-month period.
(c)
The Company shall not be required to effect or take any action to
effect a registration pursuant to this Section 2.3:
(i)
prior to the earlier of April 1, 2007 and 120 days after the
Company’s Initial Public Offering;
(ii)
with respect to Ordinary Demand Registrations, after the Company
has effected three Ordinary Demand Registrations pursuant to this
Section 2.3, and such registrations have been declared or ordered
effective (which, for the avoidance of doubt, shall mean that the
registrations shall have been continuously effective for one
hundred eighty (180) calendar days, or until all Registrable
Securities covered thereby have been sold, if earlier);
(iii)
with respect to Series B/C/D Preferred Demand Registrations, after
the Company has effected three Series B/C/D Demand Registrations
pursuant to this Section 2.3, and such registrations have been
declared or ordered effective (which, for the avoidance of doubt,
shall mean that the registrations shall have been continuously
effective for one hundred eighty (180) calendar days, or until all
Registrable Securities covered thereby have been sold, if
earlier);
(iv)
with respect to Series E Preferred Demand Registrations, after the
Company has effected three Series E Preferred Demand Registrations
pursuant to this Section 2.3, and such registrations have been
declared or ordered effective (which, for the avoidance of doubt,
shall mean that the registrations shall have been continuously
effective for one hundred eighty (180) calendar days, or until all
Registrable Securities covered thereby have been sold, if
earlier);
(v)
if the Company, within thirty (30) days of its receipt of the
request from the Holders provided for in Section 2.3 (a), provides
written notice to all such Holders of its intent to file a
registration statement for its Initial Public Offering within
ninety (90) days ( provided that the Company is actively
employing in good faith all reasonable efforts to cause such
registration statement to become effective);
10
(vi)
if the Holders making the request for Ordinary Demand Registration
or Series B/C/D Preferred Demand Registration provided for in
Section 2.3(a) propose to dispose of Registrable Securities that
could be disposed of in a single ordinary brokerage transaction
under the quantity limitation of Rule 144 without a material
adverse effect on the selling price in such transaction (that would
not also be present were the Registrable Securities in question to
be disposed of pursuant to an effective registration statement
under the Securities Act);
(vii)
if the Registrable Securities to be included in the registration
statement pursuant to the request for Series E Preferred Demand
Registration provided for in Section 2.3(a) could be sold without
restriction under Rule 144(k); or
(viii)
if the Holders making the request for Ordinary Demand Registration,
Series B/C/D Preferred Demand Registration or Series E Preferred
Demand Registration provided for in Section 2.3(a) propose to
dispose of Registrable Securities that may be immediately
registered on Form S-3 pursuant to a request made pursuant to
Section 2.5 below.
2.4
Piggyback Registrations .
(a)
The Company shall notify all Holders of Registrable Securities in
writing at least thirty (30) calendar days prior to the filing of
any registration statement under the Securities Act for purposes of
a public offering of securities of the Company (including, but not
limited to, registration statements relating to follow-on offerings
of securities of the Company, but excluding Special Registration
Statements) and will afford each such Holder a reasonable
opportunity to include in such registration statement all or part
of such Registrable Securities held by such Holder; provided that,
with respect to the filing of a registration statement under the
Securities Act for purposes of the Company's Initial Public
Offering, such notice shall be given not later than three (3)
business days following the filing of such registration
statement. Each Holder desiring to include in any such
registration statement all or any part of the Registrable
Securities held by such Holder shall, within fifteen (15) calendar
days after receipt of the above-described notice from the Company,
so notify the Company in writing. Such notice shall state the
intended method of disposition of the Registrable Securities by
such Holder. If a Holder decides not to include all of such
Holder’s Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in
any subsequent registration statement or registration statements as
may be filed by the Company with respect to offerings of its
securities, in each case subject to the terms and conditions set
forth herein.
(b)
Right to Terminate Registration . The Company shall
have the right to terminate or withdraw any registration initiated
by it under this Section 2.4, but excluding registration statements
filed pursuant to Sections 2.2, 2.3 and 2.5, prior to the
effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne
by the Company in accordance with Section 2.6 below.
2.5
Form S-3 Registration . In case the Company shall receive from
either (x) the Holders holding not less than forty percent (40%) of
the Registrable Securities then outstanding, (y) the Holders
holding not less than sixty-six and two-thirds percent (66-2/3%) of
those Series B/C/D Registrable Securities then outstanding, or (z)
the Holders holding not less
11
than ten percent (10%) of those
Series E Registrable Securities then outstanding, a written request
that the Company effect a registration on Form S-3 (or any
applicable successor form) and any related qualification or
compliance with respect to all or a part of the Registrable
Securities owned by such Holders, the Company will:
(a)
within ten (10) calendar days after receipt of such notice, 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 reasonably practicable, effect such registration (which
if requested by Holders holding Series B/C/D Registrable Securities
shall be referred to as a “ Series B/C/D Preferred S-3 Registration
,” if
requested by Holders holding Series E Preferred Registrable
Securities shall be referred to as a “ Series E Preferred S-3 Registration
” and if
requested by Holders holding Registrable Securities that are not
Series B/C/D Preferred Registrable Securities or Series E Preferred
Registrable Securities (“ Junior Preferred Registrable Securities
”) shall
be referred to as an “ Ordinary S-3 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 Holders’ Registrable Securities as are
specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in
such request as are specified in a written request given within
fifteen (15) calendar 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 2.5, (i) if
Form S-3 is not available to the Company for such offering,
(ii) if the aggregate proceeds from the sale of Registrable
Securities proposed to be sold pursuant to a Form S-3 registration
statement will not exceed $1,000,000, (iii) if, with respect to the
Series B/C/D Preferred S-3 Registrations, the Company has
effected two Series B/C/D Preferred S-3 Registrations pursuant to
this Section 2.5 in the preceding 12 months, and such registrations
have been declared or ordered effective (which, for the avoidance
of doubt, shall mean that the registrations shall have been
continuously effective for one hundred eighty (180) calendar days,
or until all Registrable Securities covered thereby have been sold,
if earlier), (iv) if, with respect to the Series E Preferred S-3
Registrations, the Company has effected two Series E Preferred S-3
Registrations pursuant to this Section 2.5 in the preceding 12
months, and such registrations have been declared or ordered
effective (which, for the avoidance of doubt, shall mean that the
registrations shall have been continuously effective for one
hundred eighty (180) calendar days, or until all Registrable
Securities covered thereby have been sold, if earlier), (v) if,
with respect to the Ordinary S-3 Registrations, the Company has
effected two Ordinary S-3 Registrations pursuant to this Section
2.5 in the preceding 12 months, and such registrations have been
declared or ordered effective (which, for the avoidance of doubt,
shall mean that the registrations shall have been continuously
effective for one hundred eighty (180) calendar days, or until all
Registrable Securities covered thereby have been sold, if earlier),
(vi) if the Holders requesting a Series B/C/D Preferred S-3
Registration or Ordinary S-3 Registration propose to dispose of
Registrable Securities that could be disposed of in a single
ordinary brokerage transaction under the quantity limitation of
Rule 144 without a material adverse effect on the selling price in
such transaction (that would not also be present were the
Registrable Securities in question to be disposed of pursuant to an
effective registration statement under the Securities Act), or
(vii) if the Registrable Securities to be included in the
registration statement pursuant to the request for Series E
Preferred S-3 Registration could be sold without restriction under
Rule 144(k).
12
Subject to the foregoing, the
Company shall file a Form S-3 registration statement covering the
Registrable Securities and other securities so requested to be
registered as soon as reasonably practicable after receipt of the
requests of the Holders. Registrations effected pursuant to
this Section 2.5 shall not be counted as demands for registration
effected pursuant to Section 2.3.
2.6
Expenses of Registration . Except as specifically provided herein,
all Registration Expenses incurred in connection with any
registration effected pursuant to Section 2.2, 2.3, Section
2.4 or Section 2.5 herein shall be borne by the Company. All
Selling Expenses incurred in connection with any registrations
under Section 2.3, Section 2.4 or Section 2.5 shall be borne
by the holders of the securities so registered pro rata on
the basis of the number of shares so registered. The Company
shall not, however, be required to pay for expenses of any
registration proceeding begun pursuant to Section 2.3, the request
of which has been subsequently withdrawn by the Holders initiating
such registration unless (a) the withdrawal is based upon material
adverse information concerning the Company of which such Holders
were not aware at the time of such request, (b) sixty-six and
two-thirds percent (66-2/3%) of the Holders of Series B/C/D
Registrable Securities, sixty-six and two-thirds percent (66-2/3%)
of the Holders of Series E Registrable Securities, or a majority of
Junior Preferred Registrable Securities, as applicable, agree to
forfeit their right to one Series B/C/D Preferred Demand
Registration, Series E Preferred Demand Registration or Ordinary
Demand Registration, as applicable, pursuant to Section 2 (in which
event such right shall be forfeited by all Holders of Senior
Preferred Registrable Securities or Junior Preferred Registrable
Securities, as applicable); provided sixty-six and two-thirds
percent (66-2/3%) of the holders of the Series B/C/D
Registrable Securities, sixty-six and two-thirds percent (66-2/3%)
of the holders of the Series E Registrable Securities, and a
majority of the holders of Junior Preferred Registrable Securities
shall each be entitled to one withdrawal of a demand, after which
withdrawal, such Holders may be required to forfeit a demand right
as a condition of being excused from the obligation to pay the
registration expenses associated with a subsequent
withdrawal. If such Holders are required to pay the
Registration Expenses, such expenses shall be borne by the holders
of securities (including Registrable Securities) initiating such
registration in proportion to the number of shares for which
registration was requested. If the Company is required to pay
the Registration Expenses of a withdrawn offering pursuant to
clause (a) above, then such Holders shall not forfeit their rights
pursuant to Section 2.3 to a demand registration.
2.7
Underwriting . If any Holders initiating a registration
request hereunder (the “ Initiating Holders ”)
intend to distribute the Registrable Securities covered by their
request by means of an underwriting pursuant to Section 2.3 or
Section 2.5, they shall so advise the Company as a part of their
request made pursuant to Section 2.3 or Section 2.5 and the Company
shall include such information in the written notice referred to in
Section 2.3(a) or Section 2.5(a) above, as applicable. In
such event, the right of any Holder to include its Registrable
Securities in such registration shall be conditioned upon such
Holder’s participation in such underwriting and the inclusion
of such Holder’s Registrable Securities in the underwriting
to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by the
Initiating Holders (which underwriter or underwriters shall be
selected by a majority of the Initiating Holders and shall be
reasonably acceptable to the Company (and with respect to the
Company’s Initial Public Offering, the
13
Holders holding not less than
sixty-six and two-thirds percent (66-2/3%) of those Senior
Preferred Registrable Securities then outstanding).
Notwithstanding any other provision of Section 2.3 or of Section
2.5, if the managing underwriter determines in good faith that
marketing factors require a limitation of the number of securities
to be underwritten (including Registrable Securities) and the
managing underwriter so advises the Company in writing (an “
Underwriter Cutback ”), then the Company shall so
advise all Holders of Registrable Securities that would otherwise
be underwritten pursuant hereto, and the number of shares that may
be included in the underwriting shall be allocated in the following
order of priority: first, to the Major Series E Holders, but
only until the Major Series E Holders have received an aggregate
amount equal to $75,000,000 (in one or more underwritten offerings)
in respect of their Registrable Securities included in underwritten
offerings, taking into account allocations to the Major Series E
Holders from any prior underwritten offerings; second, to Holders
of Senior Preferred Registrable Securities, but excluding the Major
Series E Holders, on a pro rata basis based on the total
number of then outstanding shares of Senior Preferred Registrable
Securities held by such Holders requesting inclusion in such
offering (on an as-converted to Common Stock basis), but only until
such Holders have received an aggregate amount equal to
$125,000,000 (in one or more underwritten offerings) in respect of
their Senior Preferred Registrable Securities included in
underwritten offerings, taking into account allocations to such
Holders from any prior underwritten offerings; third, to Holders of
Senior Preferred Registrable Securities allocated among such
Holders on a pro rata basis based on (i) the dollar amount
of the original purchase prices paid to the Company by the original
purchaser for the Senior Preferred Registrable Securities held by
each Holder requesting inclusion in such offering compared to
(ii) the aggregate dollar amount of the original purchase
prices paid to the Company by the original purchasers for all the
Senior Preferred Registrable Securities held by all such Holders
requesting inclusion in such offering; fourth, to the Holders of
Series A Preferred and Series A-2 Preferred on a pro rata
basis based on the total number of then outstanding shares of
Series A Preferred or Series A-2 Preferred of the Company held by
such Holders (on an as-converted to Common Stock basis); fifth, to
the Company; and sixth, to any stockholder of the Company (other
than a Holder) on a pro rata basis based on the total number
of then outstanding shares of capital stock of the Company held by
such stockholder; provided , however , that no such
reduction in an offering subject to the provisions of Section 2.4
above shall reduce the number of shares of Senior Preferred
Registrable Securities held by Holders who have requested inclusion
of Registrable Securities to below twenty percent (20%) of the
total amount of shares included in such offering.
Notwithstanding the foregoing, in no event will shares of any party
other than a Holder be included in such a registration without the
written consent of the Holders holding not less than (i) a majority
of the Registrable Securities then outstanding, (ii) sixty-six and
two-thirds percent (66-2/3%) of those Series B/C/D Registrable
Securities then outstanding, and (iii) sixty-six and
two-thirds percent (66-2/3%) of those Series E Registrable
Securities then outstanding, if such inclusion would reduce the
number of shares that may be included by Holders. If any
Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the
managing underwriter, delivered at least ten (10) business
days prior to the effective date of the registration
statement. Any Registrable Securities excluded or withdrawn
from such underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, limited
partnership or corporation, the partners, limited partners, retired
partners, retired limited partners and stockholders of such Holder,
or the estates and family members of any such partners, limited
partners, retired partners,
14
retired limited partners and any
trusts for the benefit of any of the foregoing persons shall be
deemed to be collectively a single “Holder,” and any
pro rata reduction with respect to such “Holder”
shall be based upon the aggregate amount of shares carrying
registration rights (or upon the original purchase price of such
shares, as the case may be) owned by all entities and individuals
included in such “Holder,” as defined in this
sentence.
If the registration statement under
which the Company gives notice under Section 2.4 is for an
underwritten offering, the Company shall so advise the Holders of
Registrable Securities. In such event, the right of any such
Holder to be included in a registration pursuant to Section 2.4
shall be conditioned upon such Holder’s participation in such
underwriting and the inclusion of such Holder’s Registrable
Securities in the underwriting to the extent provided herein.
All Holders proposing to distribute their Registrable Securities
through such underwriting shall enter into (directly or through a
proxy, custodian or representative) an underwriting agreement in
customary form with the underwriter or underwriters reasonably
selected for such underwriting by the Company (which underwriter or
underwriters shall be reasonably acceptable to the Holders holding
not less than a majority of the Registrable Securities, sixty-six
and two-thirds percent (66-2/3%) of the Series B/C/D Registrable
Securities and sixty-six and two-thirds percent (66-2/3%) of the
Series E Registrable Securities to the extent such Holders are
participating in such underwritten offering). Notwithstanding
any other provision contained in this Agreement, if the managing
underwriter determines in good faith that marketing factors require
a limitation of the number of shares to be underwritten (including
Registrable Securities), the number of shares that may be included
in the underwriting shall be allocated in the same order of
priority as provided in this Section 2.5 above, unless the
registration is for the Initial Public Offering, in which case the
Registrable Securities held by the Holders may be completely
excluded if such exclusion is considered necessary in the good
faith judgment of the Board. In no event will shares of any
selling stockholder other than a Holder be included in such
registration without the written consent of (i) a majority of the
Registrable Securities then outstanding, (ii) sixty-six and
two-thirds percent (66-2/3%) of those Series B/C/D Registrable
Securities then outstanding, and (iii) sixty-six and two-thirds
percent (66-2/3%) of those Series E Registrable Securities then
outstanding, if such inclusion would reduce the number of shares
that may be included by Holders. If any Holder disapproves of
the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the
managing underwriter, delivered at least ten (10) business days
prior to the effective date of the registration statement.
Any Registrable Securities excluded or withdrawn from such
underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, limited
partnership or corporation, the partners, limited partners, retired
partners, retired limited partners and stockholders of such Holder,
or the estates and family members of any such partners, limited
partners, retired partners, retired limited partners and any trusts
for the benefit of any of the foregoing persons shall be deemed to
be collectively a single “Holder,” and any pro
rata reduction with respect to such “Holder” shall
be based upon the aggregate amount of shares carrying registration
rights owned by all entities and individuals included in such
“Holder,” as defined in this sentence.
15
2.8
Obligations of the Company . Whenever required to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a)
In the case of registrations required under Section 2.3 and 2.5,
use its best efforts to prepare and file with the SEC a
registration statement with respect to such Registrable Securities
( provided that before filing a registration statement or
prospectus or any amendments or supplements thereto, the Company
shall furnish legal counsel for the Holders with copies of all such
documents to be filed) and use all commercially reasonable efforts
to cause such registration statement to become effective, and keep
such registration statement effective for one hundred eighty (180)
calendar days or until the Holder or Holders have completed the
distribution related thereto;
(b)
Prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration
statement for the period set forth in subsection (a)
above;
(c)
Furnish to the Holders such number of
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