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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
such 90-day period shall continue to be subject to the requirements
of a prior offer pursuant to Sections 3 and 4.
6. Release of Shares . Any Shares sold by the Management
Stockholders to Purchasers or a Third Party pursuant to Sections 3,
4 or 5 shall no longer be subject to the restrictions imposed by
this Agreement and any Shares sold by a participating Purchaser
pursuant to Section 4 shall no longer be entitled to the
benefits conferred by this Agreement.
7. Right of First Offer .
(a) Right of First Offer . The Company shall, prior to
any issuance by the Company of any of its securities (other than
debt securities with no equity feature or any right to acquire the
same), offer to each Stockholder by written notice the right, for a
period of thirty (30) days, to purchase their pro-rata portion
of such securities for cash at an amount equal to the price or
other consideration for which such securities are to be issued;
provided , however , that the first offer rights of
the Stockholders pursuant to this Section shall not apply to the
issuance of 808,251 shares of Series A Preferred Stock, l,350,000
shares of Series B Preferred Stock, 6,000,000 shares of Series C
Preferred Stock, 10,000,000 shares of Series D Preferred Stock, and
6,000,000 shares o
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