Exhibit 10.5
SECOND AMENDED AND RESTATED
STOCKHOLDERS AGREEMENT
This Amended and Restated
Stockholders Agreement, dated as of the 18th day of December, 2003
(the “Agreement”), is entered into by and among
(i) Salary.com, Inc., a Delaware corporation (the “
Company ”), (ii) the holders of the
Company’s Series A Convertible Preferred Stock, $0.0001 par
value per share (“ Series A Preferred Stock ”),
named on Schedule I hereto (the “ Series A
Holders ”), (iii) the holders of the Company’s
Series B Convertible Preferred Stock, $0.0001 par value per share
(“ Series B Preferred Stock ”), named on
Schedule I hereto (the “ Series B Holders
”), (iv) the holders of the Company’s Series C
Convertible Preferred Stock, $0.0001 par value per share (“
Series C Preferred Stock ”), named on Schedule
I hereto (the “ Series C Holders ”),
(v) the holders of the Company’s Series D Convertible
Preferred Stock, $0.0001 par value per share (“Series D
Preferred Stock), named on Schedule I hereto (the Series D
Holders”), (vi) the holders of the Company’s
Series E Convertible Preferred Stock, $0.0001 par value per share
(“ Series E Preferred Stock ”), named on
Schedule I hereto (the “ Series E Holders
” and together with the Series A Holders, the Series B
Holders, the Series C Holders, and the Series D Holders, the
“ Purchasers ” and each individually a “
Purchaser ”) and (vi) G. Kent Plunkett and Cathal
S. Brown (the “ Management Stockholders ” and
collectively with the Purchasers, the “ Stockholders
”).
WHEREAS, the Management Stockholders
collectively hold 19,781,130 shares (the “ Common
Shares ”) of the Company’s Common Stock (defined
below);
WHEREAS, the Company, the Series A
Holders, the Series B Holders, the Series C Holders, the Series D
Holders (the Series A Holders, Series B.Holders, Series D Holders
and Series D Holders, collectively, the “ Prior
Purchasers ”) and the Management Stockholders are parties
to an Amended and Restated Stockholders Agreement, dated as of
December 21, 2000, as modified in a First Amendment dated as
of September 4, 2003 (the “ Prior Agreement
”);
WHEREAS, it is a condition to the
obligations of the Series E Holders under the Series E Convertible
Preferred Stock Purchase Agreement of even date hereof (as it may
be amended from time to time, the “ Purchase Agreement
”) that the Prior Agreement be amended and restated by the
Company, the Management Stockholders and the Prior Purchasers, and
the Company, the Management Stockholders and the Purchasers are
willing to execute this Agreement and to be bound by the provisions
hereof;
WHEREAS, pursuant to Section 14 of
the Prior Agreement, the Company, the Management Stockholders and
the holders of a majority of the then outstanding shares of
Preferred Stock (as defined therein) (on an as converted basis)
(the “Majority Prior Purchasers”), may amend or waive
any provisions of the Prior Agreement, and any such amendment or
waiver shall be binding on all Prior Purchasers;
WHEREAS, as an inducement for the
Series E Holders to enter into the Purchase Agreement, the parties
to the Prior Agreement enter into this Agreement and, to the extent
not already a party hereto, admit each of the Series E Holders as a
party hereto by the signatures of the Series E Holders
hereto.
NOW, THEREFORE, in consideration of
the foregoing, the agreements set forth below and in the Purchase
Agreement, and the parties’ desire to provide for continuity
of ownership of the Company to further the interests of the Company
and its present and future stockholders, pursuant to
Section 14 of the Prior Agreement, the Company, the Management
Stockholders, and the Majority Prior Purchasers do hereby amend the
Prior Agreement so that such agreement is hereby restated it in its
entirety to read as follows:
1. Certain Defined Terms . As
used in this Agreement, the following terms shall have the
following respective meanings:
(a) “ Common Stock
” shall mean the Common Stock of the Company, $0.0001 par
value per share.
(b) “ Preferred Stock
” means, collectively, the Series A Preferred Stock, the
Series B Preferred Stock, the Series C Preferred Stock, Series D
Preferred Stock and the Series E Preferred Stock.
(c) “ Shares ”
shall mean and include all shares of Stock now owned or hereafter
acquired by any Stockholder.
(d) “ Stock ”
shall mean and include all shares of Common Stock and Preferred
Stock (on an as converted basis), and all other securities of the
Company which may be issued in exchange for or in respect of shares
of Common Stock or Preferred Stock (on an as converted basis)
whether by way of stock split, stock dividend, combination,
reclassification, reorganization, or any other means.
All other capitalized terms that are
not specifically defined herein shall have the respective meanings
assigned to such terms in the Purchase Agreement.
2. Prohibited Transfers
.
(a) Management Stockholder
Prohibition and Exceptions . No Management Stockholder shall
sell, assign, transfer, pledge, hypothecate, mortgage, encumber or
otherwise dispose of all or any of its Shares, except as expressly
provided in this Agreement. Notwithstanding the foregoing, any
Management Stockholder may transfer (i) all or any of its
Shares by will or the laws of descent and distribution;
(ii) up to 50% of the Shares to a member of such
Stockholder’s family, or a trust for the benefit of such
Management Stockholder or a member of such Management
Stockholder’s family; or (iii) up to 400,000 (as
equitably adjusted to reflect future stock splits, stock dividends,
recapitalizations and the like which affect the number of issued
and outstanding shares of Common Stock) of its Shares to any third
party that is not a competitor of the Company (each, a “
Permitted Transferee ”), provided that any
Permitted Transferee agrees in writing to be bound by the terms and
conditions of this Agreement by executing a counterpart hereto. As
used herein, the word family shall include any spouse, significant
other, lineal ancestor or descendant, brother or sister.
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(b) Purchaser Prohibition .
No Purchaser shall sell, assign, transfer, pledge, hypothecate,
mortgage, encumber or otherwise dispose of all or any of its Shares
to any direct or indirect competitor of the Company or any
significant investor in any direct or indirect competitor of the
Company. No Purchaser shall otherwise transfer all or any of its
Shares, or any interest therein, except in accordance with the
provisions of this Agreement.
(c) Transfers in Violation
Void. Any transfer or attempted transfer of Shares in violation
of this Agreement shall be void.
3. Rights of First Refusal on
Dispositions .
(a) Receipt of Third-Party
Offer . If at any time any Management Stockholder desires to
sell, transfer or otherwise dispose of all or any part of its
Shares to a person (a “ Third Party ”) such
Management Stockholder (the “ Selling Stockholder
”) shall submit a written offer (the “ Offer
”) to sell such Shares (the “ Offered Shares
”) to the Company and the Purchasers on terms and conditions,
including price, not less favorable than those on which the Selling
Stockholder proposes to sell such Offered Shares to the Third
Party. The Offer shall disclose the identity of the Third Party,
the Offered Shares proposed to be sold, the total number of Shares
owned by the Selling Stockholder, the terms and conditions,
including price, of the proposed sale, and any other material facts
relating to the proposed sale. The Company shall have the right to
purchase all or any of the Offered Shares by notice to the Selling
Stockholder and the Purchasers in accordance with Section 13 below
within twenty (20) days of the date the Offer was
made.
(b) Purchaser Right of First
Refusal . Each Purchaser shall have the absolute right to
purchase that number of Offered Shares, less any Offered Shares
purchased by the Company, such difference being the Remaining
Shares (the “ Remaining Shares ” ), equal to the
number of Remaining Shares multiplied by a fraction, the numerator
of which shall be the number of Shares then owned by such Purchaser
and the denominator of which shall be the aggregate number of
Shares then owned by all Purchasers. For purposes of this
Section 3, all of the Stock which a Purchaser has the right to
acquire from the Company upon the conversion, exercise or exchange
of any of the securities of the Company then owned by such
Purchaser shall be deemed to be Shares then owned by such
Purchaser. (The amount of Remaining Shares that each Purchaser is
entitled to purchase under this Section 3(b) shall be referred
to as its “ Pro Rata Fraction. ”)
(c) Purchasers’ Notice of
Intent to Purchase . If the Purchasers desire to purchase any
or all of the Remaining Shares in accordance with this
Section 3, such Purchasers shall communicate in writing their
election to purchase to the Selling Stockholder, which
communication shall state the number of Remaining Shares each such
Purchaser desires to purchase (the “ Notice of Intent to
Purchase ”) and shall be given to the Selling Stockholder
in accordance with Section 13 below within thirty
(30) days of the date the Offer was made.
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(d) Oversubscription Rights .
The Purchasers shall have a right of oversubscription such that if
any Purchaser fails to accept the Offer as to its Pro Rata Fraction
pursuant to Section 3(b), the other Purchasers shall, among
them, have the right to purchase up to the balance of the Remaining
Shares not so purchased. Within 35 days of the date the Offer was
made, the Selling Stockholder will send a notice to the Purchasers
who responded to the Offer pursuant to Section 3(c) listing
the number of Remaining Shares that remain unpurchased (the “
Oversubscription Offer ”). Such right of
oversubscription may be exercised by a Purchaser by accepting the
Oversubscription Offer in writing by another Notice of Intent to
Purchase within five days of the date of the Oversubscription Offer
as to any amount of the Remaining Shares. If, as a result thereof,
such oversubscriptions exceed the total number of Remaining Shares
available in respect of such oversubscription privilege, the
oversubscribing Purchasers shall be cut back with respect to their
oversubscriptions on a pro rata basis in accordance with their
respective Pro Rata Fractions or as they may otherwise agree among
themselves.
(e) Mechanics of Purchase .
Any Notice of Intent to Purchase shall, when taken in conjunction
with the Offer, be deemed to constitute a valid, legally binding
and enforceable agreement for the sale and purchase of such
Remaining Shares. Sales of the Remaining Shares to be sold to
purchasing Purchasers pursuant to this Section 3 shall be made
at the offices of the Company on the 45th day following the date
the Offer was made (or if such 45th day is not a business day, then
on the next succeeding business day). Such sales shall be effected
by the Selling Stockholder’s delivery to each purchasing
Purchaser of a certificate or certificates evidencing the Remaining
Shares to be purchased by it, duly endorsed for transfer to such
purchasing Purchaser, against payment to the Selling Stockholder of
the purchase price therefor by such purchasing Purchaser. If the
Company and the Purchasers do not exercise their right to purchase
all of the Offered Shares in accordance with this Section 3,
the right of first refusal with respect to the Offered Shares not
so purchased shall terminate and such Offered Shares may be sold by
the Selling Stockholder pursuant to Section 4
hereof.
4. Right of Participation in
Sales .
(a) Co-Sale Right . If the
Company and the Purchasers shall decline to purchase any or all of
the Offered Shares pursuant to the terms of Section 3, each
Purchaser shall, as a condition to such sale by the Selling
Stockholder, have the right to sell to the Third Party, at the same
price per share and on the same terms and conditions as involved in
such sale by the Selling Stockholder, such number of Shares which
is equal to the product of the total number of Shares to be
purchased by the Third Party times a fraction, the numerator of
which is the total number of Shares then owned by such Purchaser
and the denominator of which is the number of Shares owned by all
Purchasers and all Management Stockholders immediately prior to the
transaction.
(b) Notice of Intent to
Participate . Each Purchaser wishing to so participate in any
sale under this Section 4 shall notify the Selling Stockholder in
writing of such intention (the “ Co-Sale Notice
”) as soon as practicable after such Purchaser’s
receipt of the Offer made pursuant to Section 3(a), and in any
event within twenty-five (25) days after the date such Offer was
made (the “ Co-Sale Period ”). Such notification
shall be given to such Selling Stockholder in accordance with
Section 13 below.
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(c) Sale of Co-Sale Shares .
The Selling Stockholder and each participating Purchaser shall sell
to the Third Party all or, at the option of the Third Party, any
part of the shares proposed to be sold by them at not less than the
price and upon other terms and conditions, if any, not more
favorable to the Third Party than those in the Offer;
provided , however , that any purchase of less than
all of such shares by the Third Party shall be made from the
Selling Stockholder and each participating Purchaser pro rata based
upon the relative amount of the shares that the Selling Stockholder
and each participating Purchaser is otherwise entitled to sell
pursuant to Section 4(a).
5. Sale to Third Party .
After expiration of the Co-Sale Period, if the provisions of
Section 3 have been complied with in all respects and no
Co-Sale Notice has been given, the Selling Stockholder may sell any
Remaining Shares at any time within 90 days after the date the
Offer was made. Any such sale shall be to the Third Party, at not
less than the price and upon other terms and conditions, if any,
not more favorable to the Third Party than those specified in the
Offer. Any Remaining Shares not sold within su
