Investor Rights Agreement - Digimarc Corp.
DIGIMARC CORPORATION
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
This Second Amended and Restated Investor Rights Agreement (the
"Agreement") is entered into as of the 2 day of November, 1999, by and
among DIGIMARC CORPORATION, an Oregon corporation (the "Company") and the
holders of the Company's Series A Preferred Stock (the "Series A Holders"),
Series B Preferred Stock (the "Series B Holders"), Series C Preferred Stock (the
"Series C Holders"), Series D Preferred Stock (the "Series D Holders") and
Series D-X Preferred Stock (the "Series D-X Holders"), (collectively, the Series
A Holders, the Series B Holders, the Series C Holders, the Series D Holders and
the Series D-X Holders are referred to herein as "Preferred Holders").
Recitals
WHEREAS, the Company, the Series A Holders, the Series B Holders and the
Series C Holders have entered into a First Amended and Restated Investor Rights
Agreement dated December 31, 1997, as amended by that First Amendment to the
First Amended and Restated Investor Rights Agreement dated June 8, 1999 by and
among the Company and the Series A Holders, the Series B Holders, the Series C
Holders and the Series D Holders, as further amended by that Second Amendment to
the First Amended and Restated Investor Rights Agreement dated August 26, 1999
by and among the Company and the Preferred Holders (collectively, the "First
Amended and Restated Agreement"); and
WHEREAS, the Company and the Preferred Holders desire to provide for
certain arrangements with respect to the registration of shares of capital stock
of the Company under the Securities Act;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement and pursuant to Sections 3.10, 3.11 and 6.5 of the
First Amended and Restated Agreement, the Company and the undersigned Preferred
Holders holding at least 60% of the Registrable Securities then outstanding (as
defined in the First Amended and Restated Agreement) hereby amend the First
Amended and Restated Agreement so that it is restated in its entirety to read
as follows:
1. General.
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1.1 Definitions. As used in this Agreement, the following terms shall
have the following respective meanings:
"Designated IPO" means the same thing as that term is defined to mean in
Section 4.2.3(a)(3) of the Company's Third Restated Articles of Incorporation,
as amended ("Third Restated Articles").
"Holder" means any Preferred Holder or other holder owning of record
Registrable Securities that have not been sold to the public or any assignee of
record of such Registrable Securities in accordance with Section 3.9 hereof.
"Initial Offering" means the Company's first firm commitment underwritten
public offering of its Common Stock pursuant to a registration statement filed
under the Securities Act.
"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.
"Registrable Securities" means (i) Common Stock of the Company issued or
issuable upon conversion of the Shares; and (ii) any Common Stock of the Company
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 (i) sold by a person to the public either pursuant to a registration
statement or Rule 144 or (ii) sold in a private transaction in which the
transferor's rights under Section 3 of this Agreement are not assigned.
"Registrable Securities then outstanding" shall be the number of shares
determined by calculating the total number of shares of the Company's Common
Stock that are Registrable Securities and either (1) are then issued and
outstanding or (2) are issuable pursuant to then exercisable or convertible
securities.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Sections 3.1, 3.2 and 3.3 hereof, including, without limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company and the underwriters, blue sky fees and expenses and the
expense of any special audits incident 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).
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes, if any, applicable to the sale.
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"Shares" shall mean shares of the Company's Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock, Series D Preferred Stock
and Series D-X Preferred Stock.
"Form S-3" means such form under the Securities Act as in effect on the
date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"SEC" or "Commission" means the Securities and Exchange Commission.
2. Restrictions on Transfer.
2.1 Transfer Only Under These Conditions. Each Holder agrees not to make
any disposition of all or any portion of such Holder's Registrable Securities
unless and until the transferee has agreed in writing for the benefit of the
Company to be bound by this Section 2, provided and to the extent such Section
is then applicable and:
2.1.1 Unless Registration Statement Then Effective. 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
2.1.2 Unless Exemption Exists. (i) Such Holder shall have notified
the Company of the proposed disposition and shall have furnished the
Company with a detailed statement of the circumstances surrounding the
proposed disposition, and (ii) if reasonably requested by the Company, such
Holder shall have furnished the Company with an opinion of counsel,
reasonably satisfactory to the Company, 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 Rule 144 except in unusual circumstances.
2.1.3 Unless Affiliated Transaction. Notwithstanding the provisions
of paragraphs 2.1.1 and 2.1.2 above, no such registration statement or
opinion of counsel shall be necessary for a transfer by a Holder which is
(i) a partnership to its partners or former partners in accordance with
partnership interests, (ii) a corporation to its shareholders in accordance
with their interest in the corporation or to an entity directly or
indirectly controlling, controlled by or under common control with such
corporation, (iii) a limited liability company to its members in accordance
with their membership interests, (iv) an individual Holder to a family
member of such Holder or to a trust for the benefit of such Holder or (v) a
partnership or limited liability company affiliated with and/or managed by
the transferee or the same manager who manages the transferee, provided the
transferee will be subject to the terms of this Section 2.1 to the same
extent as if such transferee were an original Holder hereunder.
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2.1.4 Legend. Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of this
Agreement) be stamped or otherwise imprinted with a legend substantially
similar to the following (in addition to any legend required under
applicable state securities laws or as provided elsewhere in this
Agreement):
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,
PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTERED UNDER THE ACT OR, IN THE
OPINION OF COUNSEL OR BASED ON OTHER WRITTEN EVIDENCE IN FORM AND SUBSTANCE
SATISFACTORY TO THE ISSUER OF THESE SECURITIES, SUCH OFFER, SALE OR TRANSFER,
PLEDGE OR HYPOTHECATION IS IN COMPLIANCE THEREWITH.
2.2 Removal of '33 Act Legend. The Company shall be obligated to reissue
promptly unlegended certificates at the request of any holder thereof if the
holder shall have obtained an opinion of counsel reasonably acceptable to the
Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend.
2.3 Removal of Blue Sky Legends. 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.
3. Registration Rights.
3.1 Demand Registration.
3.1.1 Obligation to Register. Subject to the conditions of this
Section 3.1, if the Company shall receive at any time a written request
from the Holders of more than fifty percent (50%) of the Registrable
Securities then outstanding (the "Initiating Holders") that the Company
file a registration statement under the Securities Act having an aggregate
offering price to the public in excess of $10,000,000 (excluding
underwriting discounts and commissions), then the Company shall, within
thirty (30) days of the receipt thereof, give written notice of such
request to all Holders and subject to the limitations of this Section 3.1,
shall use its best efforts to effect, as soon as practicable, the
registration under the Securities Act of all Registrable Securities that
the Holders request to be registered.
3.1.2 Underwritten Demand Offerings. If the Initiating Holders
intend to distribute the Registrable Securities covered by their request by
means of an underwriting, they shall so advise the Company as a part of
their request made pursuant to this Section 3.1 and the Company shall
include such information in the written notice referred to in Section
3.1.1. In such event, the right of any Holder to include his Registrable
Securities in
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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 (unless otherwise mutually agreed by a majority in
interest of the Initiating Holders and such Holder) 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 a
majority in interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company).
Notwithstanding any other provision of this Section 3.1, if the underwriter
advises the Company in writing that marketing factors require a limitation
of the number of securities to be underwritten (including Registrable
Securities) then the Company shall so advise all Holders which would
otherwise be underwritten pursuant hereto, and the number of shares that
may be included in the underwriting shall be allocated to the Holders on a
pro rata basis based on the number of Registrable Securities held by all
such Holders (including the Initiating Holders). Any Registrable Securities
excluded or withdrawn from such underwriting shall be withdrawn from the
registration.
3.1.3 Limits on Obligation. The Company shall not be required to
effect a registration pursuant to this Section 3.1:
(a) Earliest Allowed Demand. prior to the earlier of (i)
January 1, 2002; or (ii) the date one hundred eighty (180) days
following the Initial Offering of the Company's Common Stock; or
(b) Maximum Limits. after the Company has effected two (2)
registrations pursuant to this Section 3. 1 and such registrations
have been declared or ordered effective; or
(c) Upcoming Company Registration. during the period starting
with the date 30 days prior to the Company's good faith estimated
date of filing of, and ending on the date 120 days following the
effective date of, a registration statement pertaining to an
offering of securities for the account of the Company, provided the
Company is at all times during such period diligently pursuing such
registration provided, however, that this right to delay any
requested registration shall not be utilized more than once in any
12 month period; or
(d) Company Deferral. if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 3.1, a
certificate signed by the President or Chief Executive Officer of
the Company stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be
filed and it is therefore essential to defer the filing of such
registration statement, in which event the Company shall have the
right to defer initiation of the offering process for a single
period of not more than ninety (90) days after receipt of the
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request of the Initiating Holders, provided that such right to delay
a request shall be exercised by the Company no more than twice in
any one-year period.
3.2 Piggyback Registrations. The Company shall notify all Holders in
writing at least thirty (30) 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 secondary offerings of securities of the Company, but
excluding registration statements relating to employee benefit plans and
corporate reorganizations) and will use its best efforts to afford each such
Holder an opportunity to include in such registration statement all or part of
such Registrable Securities held by such Holder. Each Holder desiring to
include in any such registration statement all or any part of the Registrable
Securities held by it shall, within fifteen (15) days after delivery 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 its
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, all upon the terms and conditions set forth herein.
3.2.1 Underwritten Offerings, Cutback. If the registration statement
under which the Company gives notice under this Section 3.2 is for an
underwritten offering, the Company shall so advise the Holders. In such
event, the right of any Holder to be included in a registration pursuant to
this Section 3.2 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 an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith
that marketing factors require a limitation of the number of Registrable
Securities to be underwritten, the number of Registrable Securities that
may be included in the underwriting shall be reduced among the Holders on a
pro rata basis based on the total number of Registrable Securities held by
the Holders, provided no such reduction shall reduce to less than 25% of
any offering the number of shares of the Holders requested to be
registered. In no event will shares of any other selling shareholder be
included in such registration which would reduce the number of Registrable
Securities which may be included by Holders without the written consent of
Holders of not less than a majority of the Registrable Securities proposed
to be sold in the offering.
3.2.2 Company's Right to Terminate. The Company shall have the right
to terminate or withdraw any registration initiated by it under this
Section 3.2 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 3.4 hereof.
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3.3 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 (or any successor to Form S-3) or any similar short-
form registration statement and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders the Company will:
3.3.1 Notice. promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and
3.3.2 Inclusion of Offered Shares. as soon as practicable, effect
such registration and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of
all or such portion of such Holder's or Holders' Registrable Securities as
are specified in such request, together with all or such portion of the
Registrable Securities of any other Holder or Holders joining in such
request as are specified in a written request given within fifteen (15)
days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 3.3:
(a) Unless S-3 not available. if Form S-3 (or such successor or
similar form) is not available for such offering by the Holders; or
(b) Unless total offered stock less than threshold. if the
Holders, together with the holders of any other securities of the
Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an
aggregate offering price to the public of less than $1,000,000; or
(c) Unless for Company Deferral. if the Company shall furnish
to the Holders a certificate signed by the President or Chief
Executive Officer of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its shareholders for such
Form S-3 Registration to be effected at such time, in which event
the Company shall have the right to defer the filing of the Form S-3
registration statement for a single period of not more than ninety
(90) days after receipt of the request of the Holder or Holders
under this Section 3.3 and provided that such right to delay a
request shall be exercised by the Company no more than twice in any
one-year period; or
(d) Unless within 180 Days of Offering. during the period
starting with the date of filing of, and ending on the date one
hundred eighty (180) days following the effective date of any
registration statement filed by the Company under the Securities
Act; or
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(e) One per 12 Months Limit. if the Company has already
effected one (1) registration on Form S-3 for the Holders pursuant
to this Section 3.3 within the previous 12 months.
3.3.3 Prompt filing. 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 practicable
after receipt of the request or requests of the Holders.
3.4 Expenses of Registration. All Registration Expenses incurred in
connection with any registration, qualification or compliance pursuant to
Section 3.1 or any registration under Section 3.2 or 3.3 herein shall be borne
by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, 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 3.1 or 3.3, the request of which has been
subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is
based upon material adverse information concerning the Company of which the
Initiating Holders were not aware at the time of such request or (b) the Holders
of a majority of Registrable Securities agree to forfeit their right to one
requested registration pursuant to Section 3.1 or 3.3 (in which event such right
shall be forfeited by all Holders). If the Holders are required to pay the
Registration Expenses, such expenses shall be borne by the holders of securities
(including Registrable Securities) requesting such registration in proportion to
the number of shares for which registration was requested.
3.5 Obligations of the Company. Whenever required to effect the
registration of any Registrable Securities, the Company shall use its best
efforts, as expeditiously and as reasonably possible, to:
3.5.1 File And Keep Registration Statement Effective. Prepare and
file with the SEC a registration statement with respect to such Registrable
Securities and use its best efforts to cause such registration statement to
become effective, and, upon the request of the Holders of a majority of the
Registrable Securities registered thereunder, keep such registration
statement effective for up to one hundred eighty (180) days or, if earlier,
until the Holders have completed the distribution related thereto.
3.5.2 Update as Law Requires. 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.
3.5.3 Supply Prospectus. Furnish to the Holders such number of
copies of a prospectus, including a preliminary prospectus, in conformity
with the requirements of the
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Securities Act, and such other documents as they may reasonably request in
order to facilitate the disposition of Registrable Securities owned by
them.
3.5.4 Blue Sky, within limits. Use its best efforts to register and
qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, provided that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions.
3.5.5 Enter Underwriting Agreement. In the event of any underwritten
public offering, enter into and perform its obligations under an
underwriting agreement, in usual and customary form, with the managing
underwriter(s) of such offering. Each Holder participating in such
underwriting shall also enter into and perform its obligations under such
an agreement.
3.5.6 Keep Holders Updated for Compliance. Notify each Holder of
securities covered by such registration statement at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act of the happening of any event as a result of which the
prospectus included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
3.5.7 Opinion and Comfort Letters. Furnish, at the request of a
majority of the Holders participating in the registration, on the date that
such Registrable Securities are delivered to the underwriters for sale, if
such securities are being sold through underwriters, or, if such securities
are not being sold through underwriters, on the date that the registration
statement with respect to such securities becomes effective, (i) an
opinion, dated as of such date, of counsel representing the Company for the
purposes of such registration, in form and substance as is customarily
given to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting
registration, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a letter dated
as of such date, from the independent certified public accountants of the
Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the underwriters, if any, and
if permitted by applicable accounting standards, to the Holders requesting
registration of Registrable Securities.
3.6 Termination of Registration Rights. All registration rights granted
under this Section 3 shall terminate and be of no
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further force and effect ten (10) years after the Initial Offering, provided,
however, that registration rights granted under this Section 3 shall terminate
and be of no further force and effect as to each individual Holder (or
transferee holding registration rights hereunder) prior to ten (10) years after
the closing of the Initial Offering if such Holder and its affiliates or
transferee and its affiliates can either (i) sell all of its Registrable
Securities pursuant to Rule 144 of the Securities Act within any calendar
quarter or (ii) sell its Registrable Securities pursuant to Rule 144K of the
Securities Act.
3.7 Delay of Registration; Furnishing Information.
3.7.1 No Injunctions. No Holder shall have any right to obtain or seek
an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 3.
3.7.2 Holders' Data Conditions Precedent. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
Sections 3.1, 3.2 or 3.3 that the selling Holders shall furnish to the
Company such information regarding themselves, the Registrable Securities
held by them, and the intended method of disposition of such securities as
shall be required to effect the registration of their Registrable
Securities.
3.8 Indemnification. In the event any Registrable Securities are included
in a registration statement under Sections 3.1, 3.2 or 3.3:
3.8.1 Company Indemnification. To the extent permitted by law, the
Company will indemnify and hold harmless each Holder, the partners,
officers and directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended, (the "1934 Act"), against any
losses, claims, damages, or liabilities (joint or several) to which they
may become subject under the Securities Act, the 1934 Act or other federal
or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any of the
following statements, omissions or violations (collectively a "Violation")
by the Company: (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement, including any
preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Securities Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the
Securities Act, the 1934 Act or any state securities law in connection with
the offering covered by such registration statement; and the Company will
reimburse each such Holder, partner, officer or director, underwriter or
controlling person for any legal or other expenses as reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability or action; provided however, that the indemnity agreement
contained in this Section 3.8.1 shall not apply to amounts paid in
settlement of any such loss,
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claim, damage, liability or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably
withheld), nor shall the Company be liable in any such case for any such
loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
3.8.2 Holder Indemnification. To the extent permitted by law, each
selling Holder will indemnify and hold harmless the Company, each of its
directors, each of its officers, each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any
other Holder selling securities under such registration statement or any of
such other Holder's partners, directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities
joint or several) to which the Company or any such director, officer,
controlling person, underwriter or other such Holder, or partner, director,
officer or controlling person of such other Holder may become subject under
the Securities Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent
(and only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for
use in connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, controlling person, underwriter or other
Holder, or partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 3.8.2 shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of such Holder, which consent
shall not be unreasonably withheld; provided further, that in no event
shall any indemnity under this Section 3.8 exceed the net proceeds from the
offering received by such Holder.
3.8.3 Procedure on Indemnification Claims. Promptly after receipt by
an indemnified party under this Section 3.8 of notice of the commencement
of any action (including any governmental action), such indemnified party
will, if a claim in respect thereof is to be made against any indemnifying
party under this Section 3.8, deliver to the indemnifying party a written
notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to
assume the defense thereof with counsel mutually satisfactory to the
indemnifying and indemnified parties; provided, however, that an
indemnified party shall have the right to retain its own counsel, with the
fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential differing interests
between such indemnified party and any other
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party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 3.8, but the omission
so to deliver written notice to the indemnifying party will not relieve it
of any liability that it may have to any indemnified party otherwise than
under this Section 3.8.
3.8.4 Alternate Remedies. If the indemnification provided for in
this Section 3.8 is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any losses, claims,
damages or liabilities referred to herein, the indemnifying party, in lieu
of indemnifying such indemnified party hereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the
other in connection with the Violation(s) that resulted in such loss,
claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
3.8.5 Indemnification Obligations Survive. The obligations of the
Company and Holders under this Section 3.8 shall survive the completion of
any offering of Registrable Securities in a registration statement, and
otherwise.
3.8.6 Limits on Settlement Obligation. No Holder shall be obligated
to consent to any settlement of any claim entered into by the Company in
satisfaction of its indemnification obligations hereunder unless the
settlement includes a full and complete release of the Holder.
3.9 Assignment of Registration Rights. The rights to cause the Company to
register Registrable Securities pursuant to this Section 3 may be assigned by a
Holder to a transferee or assignee of Registrable Securities who (i) is a
subsidiary, affiliate, parent, general partner, limited partner or retired
partner of a Holder or affiliated partnership managed by the Holder, (ii) is a
Holder's family member or trust for the benefit of an individual Holder, (iii)
is a Holder prior to the transfer, or (iv) acquires either (x) at least five
hundred thousand (500,000) shares of Series A Preferred Stock or Series B
Preferred Stock (or Common Stock issued upon conversion thereof) subject to
Registration Rights pursuant to this Section 3; or (y) at least one hundred
twenty-five thousand (125,000) shares of Series C Preferred Stock, Series D
Preferred Stock or Series D-X Preferred Stock (or Common Stock issued upon
conversion thereof) subject to Registration Rights pursuant to this Section 3
(as adjusted for stock splits and combinations); provided, however, (a) the
transferor shall, within ten (10) days after such transfer, furnish to the
Company written notice of
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the name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned and (b) such
transferee shall agree in writing to be subject to all restrictions set forth in
this Agreement.
3.10 Amendment of Registration Rights. Any provision of this Section 3
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of not less than sixty percent
(60%) of the Registrable Securities then outstanding. Any amendment or waiver
effected in accordance with this Section 3.10 shall be binding upon each Holder
and the Company. By acceptance of any benefits under this Section 3, Holders
hereby agree to be bound by the provisions hereunder.
3.11 Limitation on Subsequent Registration Rights. The Company shall
grant no additional parties registration rights on parity with or superior to
those granted the Holders hereunder, without the written consent of the Company
and the Holders of not less than sixty percent (60%) of the Registrable
Securities then outstanding.
3.12 "Market Stand-Off" Agreement. If requested by the Company or a
representative of the underwriters of Common Stock (or other securities) of the
Company acting reasonably, each Holder shall not sell or otherwise transfer or
dispose of any Common Stock (or other securities) of the Company held by such
Holder (other than those included in the registration) for a period specified by
the representative of the underwriters, not to exceed one hundred eighty (180)
days following the effective date of a registration statement of the Company
filed under the Securities Act (the "Effective Date"). The foregoing commitment
has two limitations: (i) no Holder shall be required to refrain from selling
under this paragraph, unless all officers and key employees of the Company enter
into similar agreements; and (ii) no Holder (including for this purpose
affiliates of any Holder) shall be required to refrain from selling under this
paragraph unless all other holders of the Company's Common Stock owning an equal
or a larger percentage of the Company's Common Stock (on an as-converted basis)
as the Holder and its affiliates are also required by a representative of the
underwriter to enter into market standoff agreements on the same terms.
The obligations described in this Section 3.12 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form S-8
or similar forms that may be promulgated in the future, or a registration
relating solely to a Commission Rule 145 transaction on Form S-4 or similar
forms that may be promulgated in the future. The Company may impose stop-
transfer instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
3.13 Rule 144 Reporting. With a view to making available to the Holders
the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees to use its good faith efforts to:
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3.13.1 Do things that Make Rule 144 Available. Make and keep public
information available, as those terms are understood and defined in Rule
144 or any similar or analogous rule promulgated under the Securities Act,
at all times after the effective date of the first registration filed by
the Company for an offering of its securities to the general public;
3.13.2 File '33 and '34 Act Reports Timely. File with the SEC, in a
timely manner, all reports and other documents required of the Company
under the Securities Act and the 1934 Act;
3.13.3 Data to Holders. So long as a Holder owns any Registrable
Securities, furnish to such Holder forthwith upon written request: a
written statement by the Company as to its compliance with the reporting
requirements of said Rule 144 of the Securities Act, and of the 1934 Act
(at any time after it has become subject to such reporting requirements); a
copy of the most recent annual or quarterly report of the Company; and such
other reports and documents as a Holder may reasonably request in availing
itself of any rule or regulation of the SEC allowing it to sell any such
securities without registration.
4. Covenants of the Company.
4.1 Basic Financial Information and Reporting. The Company will maintain
true books and records of account in which full and correct entries will be made
of all its business transactions pursuant to a system of accounting established
and administered in accordance with generally accepted accounting principles
consistently applied, and will set aside on its books all such proper accruals
and reserves as shall be required under generally accepted accounting principles
consistently applied. In addition, so long as a Series B Holder, Series C
Holder, Series D Holder or Series D-X Holders (or Series B Holders, Series C
Holders, Series D Holders or Series D-X Holders under common management) shall
own on an as-converted basis not less than three percent (3%) of the outstanding
shares of the Company's Common Stock (including such Common Stock issuable upon
conversion of the Company's outstanding shares of preferred stock), the Company
will furnish such Series B Holder, Series C Holder, Series D Holder or Series D-
X Holder (or Series B Holders, Series C Holders, Series D Holders or Series D-X
Holders under common management, by furnishing to the common manager):
4.1.1 Annual Data. As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days thereafter, a
consolidated balance sheet of the Company, as at the end of such fiscal
year, and a consolidated statement of income and a consolidated statement
of cash flows of the Company, for such year, all prepared in accordance
with generally accepted accounting principles and setting forth in each
case in comparative form the figures for the previous fiscal year, and for
the operating plan for the year as to which the financial statements
pertain, all in reasonable detail. Such financial statements shall be
audited by an independent public accounting firm selected by the Company's
Board of Directors.
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4.1.2 Monthly Data. As soon as practicable after each monthly
accounting period in each fiscal year of the Company, and in any event
within twenty-five (25) days thereafter, a consolidated balance sheet of
the Company as of the end of each such monthly period, a consolidated
statement of income and a consolidated statement of cash flows of the
Company for such period and for the current fiscal year to date, with
comparisons to year earlier results and to results projected in that year's
operating plan, prepared in accordance with generally accepted accounting
principles, with the exception that no notes need be attached to such
statements and year-end audit adjustments need not have been made.
4.1.3 Quarterly Data. As soon as practicable after each quarterly
accounting period in each fiscal year of the Company, and in any event
within thirty (30) days after such quarterly period, a report setting forth
the Company's financial and operational highlights corresponding to each
such period.
4.2 Qualified Small Business and SBA Covenants.
4.2.1 Use of Proceeds. The proceeds from the issuance and sale of the
Series C Preferred Stock, the Series D Preferred Stock and the Series D-X
Preferred Stock (the "Proceeds") that have been provided by Series C
Holders, Series D Holders or Series D-X Holders who are licensed Small
Business Investment Companies ("SBIC Investors") shall be used by the
Company for its growth, modernization, or expansion. The Company shall
provide each SBIC Investor and the Small Business Administration (the
"SBA") reasonable access to the Company's books and records for the purpose
of confirming use of Proceeds from SBIC Investors.
4.2.2 Business Activity. For a period of one year following the
initial Closing under the Series C Purchase Agreement, the Company shall
not change its business activity if the change would render the Company
ineligible as provided in 13 CFR Section 107.720.
4.2.3 Compliance. So long as any SBIC Investor holds any securities of
the Company, the Company will at all times comply with the non-
discrimination requirements of 13 CFR Parts 112, 113, and 117.
4.2.4 Information for SBIC Investor. Within 45 days after the end of
each fiscal year and at such other times as an SBIC Investor may reasonably
request, the Company shall deliver to such SBIC Investor a written
assessment, in form and substance satisfactory to such SBIC Investor, of
the economic impact of such SBIC Investor's financing specifying the full
time equivalent jobs created or retained in connection with such
investment, and the impact of the financing on the Company's business in
terms of profits and on taxes paid by the Company and its employees. Upon
request, the Company agrees to promptly provide each SBIC Investor with
sufficient information to permit such Investor to comply with its
obligations under the Small Business Investment Act of 1958, as amended,
and the
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<PAGE>
regulations promulgated thereunder and related thereto. Any submission of
any financial information under this Section shall include a certificate of
the Company's President, Chief Executive Officer, Treasurer, or Chief
Financial Officer.
4.2.5 Compliance with 1202. The Company will use reasonable efforts to
comply with the reporting and recordkeeping requirements of Section 1202(c)
f of the Internal Revenue Code of 1986, as amended (the "Code") and any
regulations promulgated thereunder, and unless by vote of the Board of
Directors including the Series B Preferred Stock Director (as defined in
the Third Restated Articles of Incorporation of the Company) will not
repurchase any stock of the Company if such purchase would cause the
Registrable Securities not to qualify as "Qualified Small Business Stock"
as defined in Section 1202(c) of the Code.
4.2.6 Number of Holders of Voting Securities. So long as any SBIC
Investor holds any shares of Series B Preferred Stock, Series C Preferred
Stock, Series D Preferred Stock or Series D-X Preferred Stock or securities
issued by the Company with respect thereto, the Company shall use good
faith efforts to notify each SBIC Investor (i) at least 15 days prior to
taking any action after which the number of record holders of the Company's
voting securities would be increased from fewer than 50 to 50 or more, and
(ii) of any other action or occurrence after which the number of record
holders of the Company's voting securities was increased (or would
increase) from fewer than 50 to 50 or more, as soon as practicable after
the Company becomes aware that such other action or occurrence has occurred
or is proposed to occur.
4.3 Stock Options. Unless otherwise determined by the Board of Directors
for particular individuals, shares and options issued under the Company's Stock
Incentive Plan shall vest 25 percent after 12 months from issuance, and monthly
at the rate of 1/48th of the total grant per month thereafter over the remaining
36-month period. Such shares will have restrictions on transfer prior to
vesting, and thereafter the Company shall have the right of first refusal to
purchase, such right to terminate on the Initial Offering or on such other terms
as the Board may determine.
4.4 Termination of Covenants. All covenants of the Company contained in
Section 4 of this Agreement shall expire and terminate as to each Preferred
Holder on the closing of a Designated IPO.
4.5 Reserve for Conversion Shares. The Company shall at all times reserve
and keep available out of its authorized but unissued shares of common stock,
for the purpose of effecting the conversion of the Shares and otherwise
complying with the terms of this Agreement, such number of its duly authorized
shares of common stock as shall be sufficient to effect the conversion of the
Shares from time to time outstanding or otherwise to comply with the terms of
this Agreement. If at any time the number of authorized but unissued shares of
common stock shall not be sufficient to effect the conversion of the Shares or
otherwise to comply with the terms of this Agreement, the Company will forthwith
take such corporate action as may be necessary to increase its authorized
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but unissued shares of common stock to such number of shares as shall be
sufficient for such purposes. The Company will obtain any authorization,
consent, approval or other action by or make any filing with any court or
administrative body that may be required under applicable state securities laws
in connection with the issuance of shares of common stock upon conversion of the
Shares.
4.6 Corporate Existence. The Company shall maintain and cause each of its
subsidiaries (if any) to maintain, their respective corporate existence, rights
and franchises in full force and effect.
4.7 Inspection, Consultation and Advice. The Company shall permit and
cause each of its subsidiaries (if any) to permit each Holder and such persons
as it may designate, at such Holder's expense, to visit and inspect any of the
properties of the Company and its subsidiaries, examine their books and take
copies and extracts therefrom, discuss the affairs, finances and accounts of the
Company and its subsidiaries with their officers, employees and public
accountants (and the Company hereby authorizes said accountants to discuss with
such Holder and such designees such affairs, finances and accounts), and consult
with and advise the management of the Company and its subsidiaries as to their
affairs, finances and accounts, all at reasonable times and upon reasonable
notice.
4.8 Restrictive Agreements Prohibited. Neither the Company nor any of its
subsidiaries shall become a party to any agreement which by its terms restricts
the Company's performance of this Agreement, the Series C Purchase Agreement,
the Series D Purchase Agreement or the Series D-X Purchase Agreement or any of
the Related Agreements (as defined in the Series D-X Purchase Agreement) except
for standard commercial lending agreements as approved by the Board of Directors
including the Series B Preferred Stock Director and the Series C Preferred Stock
Director (as those terms are defined in the Third Restated Articles).
4.9 Expenses of Directors; Outside Directors. The Company shall promptly
reimburse in full in accordance with payment policies consistent with this
Section 4.9 established by the Board of Directors, each director of the Company
who is not an employee of the Company for all of his reasonable out-of-pocket
expenses incurred in attending each meeting of the Board of Directors of the
Company or any Committee thereof. The Company shall use its best efforts
promptly to increase the size of the Board of Directors to include two outside
directors (as such term is reasonably construed by the Board of Directors).
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<PAGE>
5. Confidentiality.
5.1 Commitments Regarding Use. Each Series B Holder, Series C Holder,
Series D Holder and Series D-X Holder agrees not to use Confidential Information
(as hereinafter defined) of the Company for its own use or for any purpose
except to evaluate and enforce its equity investment in the Company. Except as
permitted under subsection (B) below, each Series B Holder, Series C Holder,
Series D Holder and Series D-X Holder agrees to use its respective best efforts
not to disclose such Confidential Information to any third parties. Each Series
B Holder, Series C Holder, Series D Holder and Series D-X Holder shall undertake
to treat such Confidential Information in a manner consistent with the treatment
of its own information of such proprietary nature and agrees that it shall
protect the confidentiality of and use reasonable best efforts to prevent
disclosure of the Confidential Information to prevent it from falling into the
public domain or the possession of unauthorized persons. Each transferee of any
Series B Holder, Series C Holder, Series D Holder or Series D-X Holder who
receives Confidential Information shall agree to be bound by such provisions.
For purposes of this Section 5, "Confidential Information" means any
information, technical data, or know-how, including, but not limited to, the
Company's research, products, software, services, development, inventions,
processes, designs, drawings, engineering, marketing, or finances, disclosed by
the Company either directly or indirectly in writing, orally or by drawings or
inspection of parts or equipment.
5.2 Confidential Information Defined. Confidential Information does not
include information, technical data or know-how which (i) is in the Series B
Holder's, Series C Holder's, Series D Holder's or Series D-X Holder's
possession at the time of disclosure as shown by such Series B Holder's, Series
C Holder's, Series D Holder's or Series D-X Holder's files and records
immediately prior to the time of disclosure; (ii) before or after it has been
disclosed to the Series B Holder, Series C Holder, Series D Holder or Series D-X
Holder, is part of the public knowledge or literature, not as a result of any
action or inaction of the Series B Holder, Series C Holder, Series D Holder or
Series D-X Holder; or (iii) is approved for release by written authorization of
Company. The provisions of this Section 5 shall not apply (A) to the extent
that a Series B Holder, Series C Holder, Series D Holder or Series D-X Holder is
required to disclose Confidential Information pursuant to any law, statute, rule
or regulation or any order of any court or jurisdiction process or pursuant to
any direction, request or requirement (whether or not having the force of law
but if not having the force of law being of a type with which institutional
investors in the relevant jurisdiction are accustomed to comply) of any self-
regulating organization or any governmental, fiscal, monetary or other
authority; (B) to the disclosure of Confidential Information to a Series B
Holder's, Series C Holder's, Series D Holder's or Series D-X Holder's employees,
counsel, accountants or other professional advisors; (C) to the extent that a
Series B Holder, Series C Holder, Series D Holder or Series D-X Holder needs to
disclose Confidential Information for the protection of any such Series B
Holder's, Series C Holder's, Series D Holder's or Series D-X Holder's rights or
interest against the Company, whether under this Agreement or otherwise; or (D)
to the disclosure of Confidential Information to a prospective transferee of
securities which agrees to be bound by the provisions of this Section 5 in
connection with the receipt of such Confidential Information.
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<PAGE>
6. Miscellaneous.
6.1 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of Oregon as applied to agreements among Oregon
residents entered into and to be performed entirely within Oregon.
6.2 Survival. The representations, warranties, covenants, and agreements
made herein shall survive any investigation made by any Holder and the closing
of the transactions contemplated hereby. All statements as to factual matters
contained in any certificate or other instrument delivered by or on behalf of
the Company pursuant hereto in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties by the Company
hereunder solely as of the date of such certificate or instrument.
6.3 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a Holder from time to time; provided, however, that prior to
the receipt by the Company of adequate written notice of the transfer of any
Registrable Securities specifying the full name and address of the transferee,
the Company may deem and treat the person listed as the holder of such shares in
its records as the absolute owner and holder of such shares for all purposes,
including the payment of dividends or any redemption price.
6.4 Separability. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
6.5 Amendment and Waiver. Except as otherwise expressly provided, this
Agreement may be amended or modified only upon the written consent of the
Company and the Holders of more than sixty percent (60%) of the Registrable
Securities. Notwithstanding the foregoing, Section 4.12 of this Agreement may
not be amended without the written consent of Reuters and the Company.
6.6 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
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6.7 Entire Agreement. This Agreement constitutes the entire agreement
between the parties relative to the specific subject matter hereof. Any
previous agreement among the parties related to the specific subject matter
hereof is superseded by this Agreement.
6.8 Notices. Notices will be given to the people designated, at the
address designated at the conclusion of this Agreement. Each party can change
its own Notice address and designated Notice recipient, by Notice. Notice shall
be effective when actually received by the designated person, in any form that
leaves a hard copy record of the notice in that person's possession. If sent
certified or registered mail, postage prepaid, return receipt requested, notice
is considered effective on the date the return receipt shows the notice was
accepted, refused, or returned undeliverable.
6.9 Attorneys' Fees. In the event that any dispute among the parties to
this Agreement should result in litigation, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
6.10 Titles and Subtitles. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.11 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
In Witness Whereof, the parties hereto have executed this Second Amended
and Restated Investor Rights Agreement as of the date set forth in the first
paragraph hereof.
DIGIMARC CORPORATION
By: /s/ Bruce Davis
--------------------------------------------
Bruce Davis, Chief Executive Officer
Address: One Centerpointe Drive,
Suite 500
Lake Oswego, Oregon 97035
[Signatures continue on the next page]
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<PAGE>
Holders of Series B Preferred Stock
AVI Capital L.P. Associated Venture Investors III L.P.
By: AVI Capital Management, L.P., its By: AVI Management Partners III, L.P.
General Partner
By: /s/ Brian J. Grossi By: /s/ Brian J. Grossi
---------------------------------- ----------------------------------
Title: Brian J. Grossi, General Partner Title: Brian J. Grossi, General Partner
Address: One First Street Address: One First Street
Los Altos, California 94022 Los Altos, California 94022
AVI Silicon Valley Partners L.P. AVI Partners Growth Fund II L.P.
By: AVI Management Partners III, L.P. By: AVI Management Partners III, L.P., its
General Partner
By: /s/ Brian J. Grossi By: /s/ Brian J. Grossi
---------------------------------- ----------------------------------
Title: Brian J. Grossi, General Partner Title: Brian J. Grossi, General Partner
Address: One First Street Address: One First Street
Los Altos, California 94022 Los Altos, California 94022
Justsystem, Inc. Softbank Holdings Inc.
By: /s/ Jun Iuchi By: /s/ Yoshitaka Kitao
---------------------------------- ----------------------------------
Title: President & Coo Title: Yoshitaka Kitao, President & CEO
Address: 2460 Sand Hill Road, Suite 201 Address: 333 W. San Carlos, Suite 1225
Menlo Park, CA 94025 San Jose, CA 95110
Adobe Ventures L.P.
By: H & Q Adobe Ventures Management, L.P.
H & Q Adobe Ventures Management Corp.
By: /s/ Jackie Berterretche
----------------------------------
Title: Jackie Berterrtche, Attorney-In-Fact
Address: One Bush Street, 15th Floor
San Francisco, CA 94104
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<PAGE>
Holders of Series C Preferred Stock
Reuters, Ltd. AVI, Capital L.P.
By: /s/ R.O. Rowley By: AVI Capital Management, L.P.,
----------------------------------- its General Partner
Finance Director
Address: 85 Fleet Street By: /s/ Brian J. Grossi
London, EC4P4AJ ----------------------------------
Title: Brian J. Grossi, General Partner
Address: One First Street
Los Altos, California 94022
Associated Venture Investors III L.P. AVI Silicon Valley Partners L.P.
By: AVI Management Partners III, L.P. By: AVI Management Partners III, L.P.
By: /s/ Brian J. Grossi By: /s/ Brian J. Grossi
---------------------------------- ----------------------------------
Title: Brian J. Grossi, General Partner Title: Brian J. Grossi, General Partner
Address: One First Street Address: One First Street
Los Altos, California 94022 Los Altos, California 94022
AVI Partners Growth Fund II L.P. Justsystem, Inc.
By: AVI Management Partners III, L.P.,
its General Partner
By: /s/ Brian J. Grossi By: /s/ Jun Iuchi
---------------------------------- ----------------------------------
Title: Brian J. Grossi, General Partner Title: President & Coo
Address: One First Street Address: 2460 Sand Hill Road, Suite 201
Los Altos, California 94022 Menlo Park, CA 94025
Adobe Ventures L.P. Macrovision Corporation
By: H & Q Adobe Ventures Management, L.P.
H & Q Adobe Ventures Management Corp.
By:----------------------------------
/s/ Jackie Berterretche Title:
By:----------------------------------
Title: Jackie Berterretche, Attorney-In-Fact Address: 1341 Orleans Drive
Address: One Bush Street, 15th Floor Sunnyvale, CA 94089
San Francisco, CA 94104
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<PAGE>
Beagle Ltd.
By: /s/ Michael Hecht /s/ Steve Combs
----------------------------------- ----------------------------------
Title: Michael Hecht, President Steve Combs
Address: c/o Hecht & Co., P.C. Address: 282 20th Avenue
111 W. 40th Street San Francisco, CA 94121
New York, NY 10018
/s/ Steven Joseph Phinney
/s/ Warren Rosenfeld /s/ Dana Phinney
-------------------------------------- --------------------------------------
Warren Rosenfeld Steven Joseph and Dana Phinney, JTWROS
Address: P.O. Box 10068 Address: 1001 Godetia Drive
Portland, OR 97210-0067 Woodside, CA 94062
/s/ Thomas Garnier /s/ Dennis Johnson
-------------------------------------- --------------------------------------
Thomas Garnier Dennis Johnson
Address: 9760 SW Freeman Drive Address: 3545 SW Santa Monica
Wisonville, OR 97070 Portland, OR 97221
/s/ Philip Monego, Sr. /s/ Thomas Toy
-------------------------------------- --------------------------------------
Philip Monego, Sr. Thomas Toy
Address: P.O. Box 620065 Address: 331 Parrott Drive
Woodside, CA 94062 San Mateo, CA 94402
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<PAGE>
Holders of Series A Preferred Stock
Deborah A. Coleman Stephen Joseph and Dana Phinney,
JTWROS
/s/ Stephen Anthony Phinney
/s/ Deborah A. Coleman /s/ Dana Phinney
---------------------------------------- --------------------------------------------
#2904 Fountain Plaza 1001 Godetia Drive
1414 SW 3rd Avenue Woodside, CA 94062
Portland, OR 97201
Dennis Johnson Herbert M. Gardner
/s/ Dennis Johnson
---------------------------------------- ------------------------------------------
SW Santa Monica Court 4 Darley Road
Portland, OR 97201 Great Neck, NY 11021
Thomas Garnier Warren Rosenfeld
/s/ Thomas Garnier /s/ Warren Rosenfeld
---------------------------------------- ------------------------------------------
9760 SW Freeman Drive P.O. Box 10067
Wilsonville, OR 97070 Portland, OR 97210-0067
Hugh Mackworth John C. Thuma
/s/ Hugh Mackworth /s/ John C. Thuma
---------------------------------------- -----------------------------------------
248 NW Sundown Way 1017 E. Street, Suite D
Portland, OR 97229 San Rafael, CA 94901
Philip Monego, Sr. Thomas J. Toy
/s/ Philip Monego, Sr. /s/ Thomas J. Toy /s/ Constance K. Toy
---------------------------------------- -----------------------------------------
P.O. Box 620065 331 Parrott Drive
Woodside, CA 94062 San Mateo, CA 94402
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<PAGE>
Holders of Series D Preferred Stock
Reuters, Holdings Switzerland, S.A. Hewlett-Packard Company
By: /s/ Illegible By:
----------------------------------------------- ------------------------------------
Title:
Address: 3000 Hanover Street
Palo Alto, CA 94034
Address: 153 Route Thornon
1245 Collonge
Bellgrive, Switzerland
Adobe Ventures L.P. Macrovision Corporation
By: H & Q Adobe Ventures Management, L.P.
H & Q Adobe Ventures Management Corp.
By: /s/ Jackie Berterretche, Attorney-In-Fact By:
--------------------------------------------- -----------------------------------------
Title: Title:
Address: One Bush Street, 15th Floor Address: 1341 Orleans Drive
San Francisco, CA 94104 Sunnyvale, CA 94089
Beagle Ltd.
By: /s/ Michael Hecht, President /s/ Warren Rosenfeld
---------------------------------- ---------------------------------
Title: Warren Rosenfeld
Address: c/o Hecht & Co., P.C. Address: P.O. Box 10068
111 W. 40th Street Portland, OR 97210-0067
New York, NY 10018
/s/ Thomas Garnier /s/ Philip Monego
--------------------------------------------- ------------------------------------
Thomas Garnier Philip Monego, Sr.
Address: 9760 SW Freeman Drive Address: P.O. Box 620065
Wisonville, OR 97070 Woodside, CA 94062
AVI Management Partners Growth Fund III, L.P.
By: AVI Capital Management, L.P., its
General Partner
By: /s/ Brian Grossi /s/ Dennis Johnson
----------------------------------------- ------------------------------------
Title: Brian Grossi, General Partner Dennis Johnson
Address: One First Street Address: 3545 SW Santa Monica Court
Los Altos, California 94022 Portland, OR 97221
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Holders of Series D-X Preferred Stock
/s/ Philip Monego, Sr. BANCBOSTON ROBERTSON STEPHENS
------------------------------------- By: Bayview
Philip Monego, Sr.
Address: PO Box 620065 By: Dana Welch
Woodside, CA 94062 ---------------------------
Title: Authorized Signatory
Address: 555 California Street
San Francisco, CA
ATTN: Jennifer Sherrill
BUILDING C PARTNERS
By: /s/ Gavin Grover
-------------------
Title: Partner
--------------------------
Address: 425 Market St
-------------------------
San Francisco, CA
94105
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