Investors' Rights Agreement - Encoding.com Inc. and Intel Corp.
ENCODING.COM, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
DECEMBER 14, 1999
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TABLE OF CONTENTS
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Page
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1. Registration Rights......................................... 2
1.1 Definitions........................................... 2
1.2 Request for Registration.............................. 3
1.3 Company Registration.................................. 4
1.4 Form S-3 Registration................................. 5
1.5 Obligations of the Company............................ 6
1.6 Furnish Information................................... 7
1.7 Expenses of Registration.............................. 7
1.8 Underwriting Requirements............................. 8
1.9 Delay of Registration................................. 9
1.10 Indemnification....................................... 9
1.11 Reports Under Securities Exchange Act of 1934......... 11
1.12 Assignment of Registration Rights..................... 12
1.13 Limitations on Subsequent Registration Rights......... 12
1.14 Market Stand-Off Agreement............................ 12
1.15 Termination of Registration Rights.................... 13
2. Covenants of the Company.................................... 13
2.1 Delivery of Financial Statements...................... 13
2.2 Inspection............................................ 14
2.3 Right of First Offer.................................. 14
2.4 Regulatory Matters.................................... 16
2.5 Termination of Covenants.............................. 17
3. Miscellaneous............................................... 17
3.1 Successors and Assigns................................ 17
3.2 Amendments and Waivers................................ 17
3.3 Notices............................................... 18
3.4 Severability.......................................... 18
3.5 Governing Law......................................... 18
3.6 Counterparts.......................................... 18
3.7 Titles and Subtitles.................................. 18
3.8 Aggregation of Stock.................................. 18
3.9 References to Securities Act and Exchange Act......... 18
3.10 Amendment and Restatement of Alive Rights Agreement... 19
3.11 Additional Investors.................................. 19
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ENCODING.COM, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
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This Amended and Restated Investors' Rights Agreement (the "Agreement") is
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made as of the 14th day of December, 1999, by and among Encoding.com, Inc., a
Delaware corporation (the "Company"), the purchasers of the Company's Series D
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Preferred Stock listed on Exhibit A hereto (each of which is herein referred to
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as an "Investor"), the holders of the Company's Series B Preferred Stock listed
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on Exhibit B hereto (the "Series B Holders"), the holders of the Company's
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Series C Preferred Stock listed on Exhibit C hereto (the "Series C Holders"),
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and Martin Tobias and Alex Tobias (each of whom is herein referred to as a
"Founder"), and the Alive Holders (as defined below) set forth on Exhibit D.
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RECITALS
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A. The Company, the Series B Holders, the Series C Holders and the
Founders entered an Amended and Restated Investors Rights Agreement on August 6,
1999 (the "Restated Rights Agreement") to provide the rights set forth therein
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to the Series B Holders and the Series C Holders.
B. The Company and the Investors are entering into a Series D Preferred
Stock Purchase Agreement (the "Purchase Agreement") of even date herewith
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pursuant to which the Company desires to sell to the Investors and the Investors
desire to purchase from the Company shares of the Company's Series D Preferred
Stock. A condition to the Investors' obligations under the Purchase Agreement
is that the Company, the Founders, the Series B Holders, the Series C Holders
and the Investors enter into this Agreement in order to provide the Investors
with (i) certain rights to register shares of the Company's Common Stock
issuable upon conversion of the Series D Preferred Stock held by the Investors,
(ii) certain rights to receive or inspect information pertaining to the Company,
and (iii) a right of first offer with respect to certain issuances by the
Company of its securities.
C. The Company, the Series B Holders, the Series C Holders and the
Founders each desire to induce the Investors to purchase shares of Series D
Preferred Stock pursuant to the Purchase Agreement by agreeing to the terms and
conditions set forth herein and desire to terminate the Restated Rights
Agreement in its entirety.
D. On November 19, 1999, the Company entered into an Agreement and Plan
of Reorganization with Alive.com, Inc. (the "Merger Agreement") pursuant to
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which the Company will acquire all of the outstanding capital stock of
Alive.com, Inc. in exchange for shares of the Company's Common Stock (the
"Merger"). Pursuant to the Merger Agreement, the Company agreed to provide those
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certain stockholders of Alive.com, Inc. party to the Alive.com Amended and
Restated Investors Rights Agreement (the "Alive Rights Agreement") dated March
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17, 1999 (the "Alive Holders") rights under this Agreement as set forth herein
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in place of their rights under the Alive Rights Agreement. The Merger is
expected to close on or about December 14,
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1999 and in connection therewith the Alive Holders shall be entitled to execute
this Agreement and have all rights and obligations set forth herein and shall by
execution of this Agreement amend and restate the Alive Rights Agreement in its
entirety to be this Agreement pursuant to Section 7.4 of the Alive Rights
Agreement.
AGREEMENT
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The parties hereby agree as follows:
1. Registration Rights. The Company and the Investors covenant and agree
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as follows:
1.1 Definitions. For purposes of this Section 1:
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(a) The terms "register," "registered," and "registration" refer
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to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act of 1933, as amended (the
"Securities Act"), and the declaration or ordering of effectiveness of such
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registration statement or document;
(b) The term "Registrable Securities" means (i) the shares of
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Common Stock issuable or issued upon conversion of the Series B, Series B-1,
Series C, Series C-1, Series D and Series D-1 Preferred Stock, (ii) the shares
of Common Stock issued to the Founders and the shares of Common Stock issuable
or issued upon conversion of the Series A Preferred Stock issued to the Founders
(collectively, the "Founders' Stock") and (iii) the shares of Common Stock held
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by the Alive Holders set forth on Exhibit D (the "Merger Shares"); provided,
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however, that for the purposes of Sections 1.2, 1.4 and 1.13 the Founders' Stock
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shall not be deemed Registrable Securities and the Founders shall not be deemed
Holders, and (iii) any other shares of 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, the shares listed in (i), and (ii); provided,
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however, that the foregoing definition shall exclude in all cases any
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Registrable Securities sold by a person in a transaction in which his or her
rights under this Agreement are not assigned. Notwithstanding the foregoing,
Common Stock or other securities shall only be treated as Registrable Securities
if and so long as they have not been (A) sold to or through a broker or dealer
or underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus delivery
requirements of the Securities Act under Section 4(1) thereof so that all
transfer restrictions, and restrictive legends with respect thereto, if any, are
removed upon the consummation of such sale;
(c) The number of shares of "Registrable Securities then
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outstanding" shall be determined by the number of shares of Common Stock
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outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities;
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(d) The term "Holder" means any person owning or having the right to
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acquire Registrable Securities or any assignee thereof in accordance with
Section 1.12 of this Agreement;
(e) The term "Form S-3" means such form under the Securities Act as
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in effect on the date hereof or any successor form under the Securities Act;
(f) The term "SEC" means the Securities and Exchange Commission; and
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(g) The term "Qualified IPO" means a firm commitment underwritten
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public offering by the Company of shares of its Common Stock pursuant to a
registration statement under the Securities Act, the public offering price of
which is not less than $10.00 per share (appropriately adjusted for any stock
split, dividend, combination or other recapitalization) and which results in
aggregate cash proceeds to the Company of at least $30,000,000 (net of
underwriting discounts and commissions).
1.2 Request for Registration.
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(a) If the Company shall receive at any time after the earlier
of (i) June 3, 2005, or (ii) twelve (12) months after the effective date of a
Qualified IPO (other than a registration statement relating either to the sale
of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or an SEC Rule 145 transaction), a written request from
the Holders of a majority of the Registrable Securities then outstanding that
the Company file a registration statement under the Securities Act covering a
registration whereby the anticipated aggregate offering price, net of
underwriting discounts and commissions, would exceed $10,000,000, then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to all Holders and shall, subject to the limitations of
subsection 1.2(b), use its best efforts to effect as soon as practicable, and in
any event within 60 days of the receipt of such request, the registration under
the Securities Act of all Registrable Securities which the Holders request to be
registered within twenty (20) days of the mailing of such notice by the Company
in accordance with Section 3.3.
(b) If the Holders initiating the registration request hereunder
("Initiating Holders") intend to distribute the Registrable Securities covered
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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 1.2 and the Company
shall include such information in the written notice referred to in subsection
1.2(a). The underwriter will be selected by a majority in interest of the
Initiating Holders and shall be reasonably acceptable to the Company. In such
event, the right of any Holder to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting (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
(together with the Company as provided in subsection 1.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting. Notwithstanding any other provision
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of this Section 1.2, if the underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, including the
Initiating Holders, in proportion (as nearly as practicable) to the amount of
Registrable Securities of the Company owned by each Holder; provided, however,
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that the number of shares of Registrable Securities to be included in such
underwriting shall not be reduced unless all other securities are first entirely
excluded from the underwriting.
(c) Notwithstanding the foregoing, if the Company shall furnish
to Holders requesting a registration statement pursuant to this Section 1.2, a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, in light of current
developments concerning the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be filed and it
is therefore essential to defer the filing of such registration statement, the
Company shall have the right to defer such filing for a period of not more than
90 days after receipt of the request of the Initiating Holders; provided,
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however, that the Company may not utilize this right more than once in any
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twelve-month period.
(d) In addition, the Company shall not be obligated to effect,
or to take any action to effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two (2) registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;
(ii) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided that the Company is
actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or
(iii) If the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 1.4 below.
1.3 Company Registration. If (but without any obligation to do so)
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the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
stock under the Securities Act in connection with the public offering of such
securities solely for cash (other than a registration relating solely to the
sale of securities to participants in a Company stock plan or a transaction
covered by Rule 145 under the Securities Act, a registration in which the only
stock being registered is Common Stock issuable upon conversion of debt
securities which are also being registered, or any registration on any form
which does not include substantially the same information as would be required
to be included in a registration statement covering the sale of the Registrable
Securities), the Company shall, at such time, promptly give each Holder written
notice of such
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registration. Upon the written request of each Holder given within twenty (20)
days after mailing of such notice by the Company in accordance with Section 3.3,
the Company shall, subject to the provisions of Section 1.8, cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered.
1.4 Form S-3 Registration. In case the Company shall receive from
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any Holder or Holders of not less than twenty-five percent (25%) of the
Registrable Securities then outstanding a written request or requests that the
Company effect a registration on Form S-3 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:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) 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 15 days after receipt of such written notice from the Company; provided,
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however, that the Company shall not be obligated to effect any such
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registration, qualification or compliance, pursuant to this Section 1.4: (i) if
Form S-3 is not available for such offering by the Holders; (ii) 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 price to the public (net of any
underwriters' discounts or commissions) of less than $500,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, in light of current developments concerning the Company, it would
be seriously detrimental to the Company and its stockholders 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
period of not more than 90 days after receipt of the request of the Holder or
Holders under this Section 1.4; provided, however, that the Company shall not
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utilize this right more than once in any twelve month period; (iv) if the
Company has, within the twelve (12) month period preceding the date of such
request, already effected two registrations on Form S-3 for the Holders pursuant
to this Section 1.4; (v) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
or (vi) during the period ending one hundred eighty (180) days after the
effective date of a registration statement subject to Section 1.3.
(c) Subject to the foregoing, the Company shall file a
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. Registrations effected pursuant to this
Section 1.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 1.2 or 1.3, respectively. Except as otherwise
provided herein, there
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shall be no limit on the number of times the Holders may request registration of
Registrable Securities under this Section 1.4.
1.5 Obligations of the Company. Whenever required under this Section
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1 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) 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 twenty (120) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement for up to one hundred twenty
(120) days.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) 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
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condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) 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 of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable 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, such obligation to continue for one hundred twenty (120) days.
(g) Cause all such Registrable Securities registered pursuant
hereunder to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
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(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Use its best efforts to furnish, at the request of any
Holder requesting registration of Registrable Securities pursuant to this
Section 1, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
1, 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 such date, of the 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, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a letter dated 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,
addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
1.6 Furnish Information. It shall be a condition precedent to the
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obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities. The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.4 of this Agreement
if, as a result of the application of the preceding sentence, the number of
shares or the anticipated aggregate offering price of the Registrable Securities
to be included in the registration does not equal or exceed the number of shares
or the anticipated aggregate offering price required to originally trigger the
Company's obligation to initiate such registration as specified in subsection
1.2(a) or subsection 1.4(b)(ii), whichever is applicable.
1.7 Expenses of Registration.
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(a) Demand Registration. All expenses other than underwriting
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discounts and commissions incurred in connection with registrations, filings or
qualifications pursuant to Section 1.2, including (without limitation) all
registration, filing and qualification fees, printers' and accounting fees, fees
and disbursements of counsel for the Company, and the reasonable fees and
disbursements, not to exceed $10,000, of one counsel for the selling Holders
selected by them with the approval of the Company, which approval shall not be
unreasonably withheld, shall be borne by the Company; provided, however, that
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the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities agree to forfeit their right to one demand registration pursuant to
Section 1.2; provided further, however, that if at the
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time of such withdrawal, the Holders have learned of a material adverse change
in the condition, business, or prospects of the Company from that known to the
Holders at the time of their request and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to Section 1.2.
(b) Company Registration. All expenses other than underwriting
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discounts and commissions incurred in connection with registrations, filings or
qualifications of Registrable Securities pursuant to Section 1.3 for each Holder
(which right may be assigned as provided in Section 1.12), including (without
limitation) all registration, filing, and qualification fees, printers' and
accounting fees, fees and disbursements of counsel for the Company and the
reasonable fees and disbursements, not to exceed $10,000, of one counsel for the
selling Holder or Holders selected by them with the approval of the Company,
which approval shall not be unreasonably withheld, shall be borne by the
Company.
(c) Registration on Form S-3. All expenses incurred in
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connection with a registration requested pursuant to Section 1.4, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements, not to exceed
$10,000, of one counsel for the selling Holder or Holders selected by them with
the approval of the Company, which approval shall not be unreasonably withheld,
and counsel for the Company, and any underwriters' discounts or commissions
associated with Registrable Securities, shall be borne by the Company.
1.8 Underwriting Requirements. In connection with any offering
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involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it (or by
other persons entitled to select the underwriters), and then only in such
quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata among the selling stockholders according to
the total amount of securities entitled to be included therein owned by each
selling stockholder or in such other proportions as shall mutually be agreed to
by such selling stockholders) but in no event shall (i) any shares being sold by
a stockholder exercising a demand registration right similar to that granted in
Section 1.2 be excluded from such offering except as provided in Section 1.2,
(ii) the amount of securities of the selling Holders included in the offering be
reduced below thirty percent (30%) of the total amount of securities included in
such offering, unless such offering is the initial public offering of the
Company's securities, in which case, except as provided in clause (i), the
selling stockholders may be excluded if the underwriters make the determination
described above and no other stockholder's securities are included or (iii) any
securities held by a
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Founder be included if any securities held by any selling Holder are excluded.
For purposes of the preceding parenthetical concerning apportionment, for any
selling stockholder which is a holder of Registrable Securities and which is a
partnership or corporation, the partners, retired partners and stockholders of
such holder, or the estates and family members of any such partners and retired
partners and any trusts for the benefit of any of the foregoing persons shall be
deemed to be a single "selling stockholder," and any pro-rata reduction with
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respect to such "selling stockholder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "selling stockholder," as defined in this sentence.
1.9 Delay of Registration. No Holder shall have any right to obtain
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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 1.
1.10 Indemnification. In the event any Registrable Securities are
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included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless 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 "Exchange Act"), against any losses, claims,
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damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the Exchange 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"): (i) any untrue statement
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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 Exchange Act, any
state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law; and the Company will pay to
each such Holder, underwriter or controlling person, as incurred, any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability, or action; provided, however,
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that the indemnity agreement contained in this subsection 1.10(a) 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 the Company
(which consent shall not be unreasonably withheld), nor shall the Company be
liable to any Holder, underwriter or controlling person 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, or approved for inclusion in such registration statement, by any
such Holder, underwriter or controlling person.
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(b) To the extent permitted by law, each selling Holder will indemnify
severally and not jointly and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person, if
any, who controls the Company within the meaning of the Securities Act, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages, or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, the Exchange 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 expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 1.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
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agreement contained in this subsection 1.10(b) 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 the Holder, which consent shall
not be unreasonably withheld; provided, that in no event shall any indemnity
--------
under this subsection 1.10(b) exceed the net proceeds from the offering received
by such Holder, except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.10 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 1.10, 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 parties; provided, however, that an indemnified party
-------- -------
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the reasonable 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 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 prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.10, 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 1.10.
(d) If the indemnification provided for in this Section 1.10 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable by such
indemnified party as a result of such loss, liability, claim, damage, or expense
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand
-10-
<PAGE>
and of the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage or expense as
well as any other relevant equitable considerations; provided, that in no event
--------
shall any contribution by a Holder under this Subsection 1.10(d) exceed the net
proceeds from the offering received by such Holder, except in the case of
willful fraud by such Holder. The relative fault of the indemnifying party and
of the indemnified party shall be determined 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.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this
Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 Reports Under Securities Exchange Act of 1934. With a view to
---------------------------------------------
making available to the Holders the benefits of Rule 144 promulgated under the
Securities Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after ninety (90) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public so long as the
Company remains subject to the periodic reporting requirements under Sections 13
or 15(d) of the Exchange Act;
(b) take such action, including the voluntary registration of
its Common Stock under Section 12 of the Exchange Act, as is necessary to enable
the Holders to utilize Form S-3 for the sale of their Registrable Securities,
such action to be taken as soon as practicable after the end of the fiscal year
in which the first registration statement filed by the Company for the offering
of its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(d) furnish to any Holder, so long as the Holder owns any
Registrable Securities, forthwith upon request (i) a written statement by the
Company that it has complied with the reporting requirements of SEC Rule 144 (at
any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), or that it
-11-
<PAGE>
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
1.12 Assignment of Registration Rights. The rights to cause the
---------------------------------
Company to register Registrable Securities pursuant to this Section 1 may be
assigned (but only with all related obligations) by a Holder to (i) a transferee
or assignee of at least 100,000 shares of such securities or (ii) any affiliate,
constituent partner or member of such Holder or an entity controlling,
controlled by or under common control with such Holder, in each case provided
--------
the Company is, within a reasonable time after such transfer, furnished with
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned;
and provided, further, that such assignment shall be effective only if
-------- -------
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Securities Act. For the
purposes of determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership (including
spouses and ancestors, lineal descendants and siblings of such partners or
spouses who acquire Registrable Securities by gift, will or intestate
succession) shall be aggregated together and with the partnership.
1.13 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of all of the outstanding Registrable Securities,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder (a) to
include such securities in any registration filed under Section 1.2 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the Registrable
Securities of the Holders which is included or (b) to make a demand registration
which could result in such registration statement being declared effective prior
to the earlier of either of the dates set forth in subsection 1.2(a) or within
one hundred eighty (180) days of the effective date of any registration effected
pursuant to Section 1.2.
1.14 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
----------------------------
during the period of duration (up to, but not exceeding, 180 days; provided,
however with respect to the first registered offering following the initial
public offering, such period shall be no more than 90 days) specified by the
Company and an underwriter of Common Stock or other securities of the Company,
following the effective date of a registration statement of the Company filed
under the Securities Act, it shall not, to the extent requested by the Company
and such underwriter, directly or indirectly sell, offer to sell, contract to
sell (including, without limitation, any short sale), grant any option to
purchase or otherwise transfer or dispose of (other than to donees who agree to
be similarly bound) any securities of the Company held by it at any time during
such period except Common Stock included in such registration; provided,
--------
however, that:
-------
-12-
<PAGE>
(a) such agreement shall be applicable only to (i) the initial
public offering and (ii) the first such registered offering following the
initial public offering, provided the such registered offering is completed
before the first year anniversary of the date of the final prospectus
distributed pursuant to the first such registration statement of the Company
which covers Common Stock (or other securities) to be sold on its behalf to the
public in an underwritten offering; and
(b) all officers and directors of the Company, all one-percent
securityholders, and all other persons with registration rights (whether or not
pursuant to this Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period, and each Holder agrees
that, if so requested, such Holder will execute an agreement in the form
provided by the underwriter containing terms which are essentially consistent
with the provisions of this Section 1.14.
Notwithstanding the foregoing, the obligations described in this
Section 1.14 shall not apply to a registration relating solely to employee
benefit plans on Form S-1 or Form S-8 or similar forms which may be promulgated
in the future, or a registration relating solely to an SEC Rule 145 transaction
on Form S-4 or similar forms which may be promulgated in the future.
1.15 Termination of Registration Rights. No Holder shall be entitled
----------------------------------
to exercise any right provided for in this Section 1 after the earlier of (i)
four (4) years following the consummation of a Qualified IPO or (ii) such time
as Rule 144 or another similar exemption under the Securities Act is available
for the sale of all of such Holder's shares during a three (3)-month period
without registration. Following a Qualified IPO, the Company will pay for
reasonable and customary expenses of the Company's counsel incurred in
processing the sale and transfer of a Holder's Registrable Securities in
transactions under Rule 144 of the Securities Act.
2. Covenants of the Company.
------------------------
2.1 Delivery of Financial Statements. The Company shall deliver to
--------------------------------
each Holder of at least 375,000 shares of Registrable Securities (other than a
Holder reasonably deemed by the Company to be a competitor of the Company):
(a) as soon as practicable, but in any event within ninety (90)
days after the end of each fiscal year of the Company, an income statement for
such fiscal year, a balance sheet of the Company and statement of stockholder's
equity as of the end of such year, and a statement of cash flows for such year,
such year-end financial reports to be in reasonable detail, prepared in
accordance with generally accepted accounting principles ("GAAP"), and audited
----
and certified by an independent public accounting firm of nationally recognized
standing selected by the Company;
-13-
<PAGE>
(b) as soon as practicable, but in any event within thirty (30)
days after the end of each of the first three (3) quarters of each fiscal year
of the Company, an unaudited profit or loss statement, a statement of cash flows
for such fiscal quarter and an unaudited balance sheet as of the end of such
fiscal quarter;
(c) within thirty (30) days of the end of each month, an
unaudited income statement and a statement of cash flows and balance sheet for
and as of the end of such month, in reasonable detail;
(d) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and annual business plan for the
next fiscal year, prepared on a monthly basis, and, as soon as prepared, any
other budgets or revised budgets prepared by the Company; and
(e) with respect to the financial statements called for in
subsections (b) and (c) of this Section 2.1, an instrument executed by the Chief
Financial Officer or President of the Company and certifying that such
financials were prepared in accordance with GAAP consistently applied with prior
practice for earlier periods (with the exception of footnotes that may be
required by GAAP) and fairly present the financial condition of the Company and
its results of operation for the period specified, subject to year-end audit
adjustment, provided that the foregoing shall not restrict the right of the
Company to change its accounting principles consistent with GAAP, if the Board
of Directors determines that it is in the best interest of the Company to do so.
2.2 Inspection. The Company shall permit each Holder of at least
----------
375,000 shares of Registrable Securities (except for a Holder reasonably deemed
by the Board of Directors of the Company to be a competitor of the Company,
provided that an investment fund owning securities of another company does not
in and of itself make such investment fund a competitor), at such Holder's
expense, to visit and inspect the Company's properties, to examine its books of
account and records and to discuss the Company's affairs, finances and accounts
with its officers, all at such reasonable times as may be requested by such
Holder; provided, however, that the Company shall not be obligated pursuant to
--------- -------
this Section 2.2 to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information, unless such
Holder executes a confidentiality agreement in such form as approved by the
Company.
2.3 Right of First Offer. Subject to the terms and conditions
--------------------
specified in this Section 2.3, the Company hereby grants to each Major Investor
(as hereinafter defined) a right of first offer with respect to future sales by
the Company of its Shares (as hereinafter defined). For purposes of this
Section 2.3, a "Major Investor" shall mean any person who holds at least 500,000
--------------
(i) shares of Series B, Series B-1, Series C, Series C-1, Series D, Series D-1
Preferred Stock (or the Common Stock issued upon conversion thereof) issued
pursuant to the Purchase Agreement or (ii) Merger Shares. For purposes of this
Section 2.3, Major Investor includes any general partners and affiliates of a
Major Investor. A Major Investor who chooses to exercise the
-14-
<PAGE>
right of first offer may designate as purchasers under such right itself or its
partners or affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
------
Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail
("Notice") to the Major Investors stating (i) its bona fide intention to offer
------
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) Within 15 calendar days after delivery of the Notice, the
Major Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Shares which equals the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Major Investor bears to the total number of shares
of Common Stock then outstanding (assuming full conversion and exercise of all
convertible or exercisable securities). The Company shall promptly, in writing,
inform each Major Investor that purchases all the shares available to it (each,
a "Fully-Exercising Investor") of any other Major Investor's failure to do
-------------------------
likewise. During the ten (10)-day period commencing after receipt of such
information, each Fully-Exercising Investor shall be entitled to obtain that
portion of the Shares for which Major Investors were entitled to subscribe but
which were not subscribed for by the Major Investors that is equal to the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion and exercise of all convertible or exercisable
securities then held, by such Fully-Exercising Investor bears to the total
number of shares of Common Stock then outstanding (assuming full conversion and
exercise of all convertible or exercisable securities).
(c) The Company may, during the 45-day period following the
expiration of the period provided in subsection 2.3(b) hereof, offer the
remaining unsubscribed portion of the Shares to any person or persons at a price
not less than, and upon terms no more favorable to the offeree than those
specified in the Notice. If the Company does not enter into an agreement for the
sale of the Shares within such period, or if such agreement is not consummated
within 60 days of the execution thereof, the right provided hereunder shall be
deemed to be revived and such Shares shall not be offered unless first reoffered
to the Major Investors in accordance herewith.
(d) The right of first offer in this paragraph 2.3 shall not be
applicable (i) to the issuance or sale (including shares and options issued
before the date of this Agreement) of Common Stock issuable or issued to
employees, consultants or directors of the Company directly or pursuant to a
stock option plan or restricted stock plan approved by the Board of Directors of
the Company for the primary purpose of soliciting or retaining their services,
(ii) to or after consummation of a public offering prior to or in connection
with which all outstanding
-15-
<PAGE>
shares of Series A, Series B, Series B-1, Series C, Series C-1, Series D or
Series D-1 Preferred Stock will be converted into Common Stock, (iii) to the
issuance of securities upon exercise of options, notes, warrants or other
rights, (iv) to the issuance of securities in connection with a bona fide
business acquisitions, mergers or similar transactions, the terms of which are
approved by the Board of Directors of the Company, (v) to the issuance of
securities to a strategic partner in connection with an investment or to
financial institutions, lenders or lessors in connection with commercial credit
arrangements, loans, equipment financings or similar transactions, (vi) to the
issuance or sale of the Series D Preferred Stock, (vii) to the issuance of
securities that, with unanimous approval of the Board of Directors of the
Company, are not offered to any existing stockholder of the Company, (viii) to
the issuance of securities to an academic or research institution in connection
with the license of technology or research and development services or shares
issued to a strategic partner in connection with a license agreement, joint
marketing agreement, technology development agreement or similar strategic
relationship, or (ix) to stock splits, stock dividends or like transactions.
(e) Notwithstanding the foregoing, the right of first offer in
this Section 2.3 shall terminate (solely with respect to any single issuance of
Shares), with respect to any Major Investor who fails to purchase all of such
Major Investor's pro rata amount of Shares allocated to such Major Investor
pursuant to this Section 2.3.
2.4 Regulatory Matters
-------------------
(a) Cooperation of Other Investors. Each Holder agrees to
------------------------------
cooperate with the Company in all reasonable respects in complying with the
terms and provisions of the letter agreement between the Company and Wasserstein
Adelson Ventures, L.P. ("WAV"), a copy of which is attached hereto as Exhibit E,
---------
regarding small business matters (the "Small Business Sideletter"), including
-------------------------
without limitation, voting to approve amending the Company's Certificate of
Incorporation, the Company's bylaws or this Agreement in a manner reasonably
acceptable to the Holders and WAV or any Regulated Holder (as defined in the
Small Business Sideletter) entitled to make such request pursuant to the Small
Business Sideletter in order to remedy a Regulatory Problem (as defined in the
Small Business Sideletter). Anything contained in this Section 2.4 to the
contrary notwithstanding, neither the Company nor any Holder shall be required
under this Section 2.4 to take any action that would adversely affect in any
material respect such Holder's rights under this Agreement or as an investor of
the Company.
(b) Covenant Not to Amend. The Company and each Holder agree
---------------------
not to amend or waive any provision of the Company's Certificate of
Incorporation, the Company's bylaws or this Agreement if such amendment or
waiver would cause any Regulated Holder to have a Regulatory Problem (as defined
in the Small Business Sideletter). WAV agrees to notify the Company and each
Holder as to whether or not it would have a Regulatory Problem promptly after it
has notice of such amendment or waiver, and, in the event WAV fails to notify
the Company and each Holder within a reasonable amount of time thereafter, then,
the obligations contained in this Section 2.4(b) shall terminate with respect to
such amendment or waiver.
-16-
<PAGE>
2.5 Termination of Covenants. The covenants set forth in Sections
------------------------
2.1 through 2.4 shall terminate as to each Holder and be of no further force or
effect upon the earlier of (i) immediately prior to the consummation of a
Qualified IPO, (ii) when the Company first becomes subject to the periodic
reporting requirements of Sections 13 or 15(d) of the Exchange Act, or (iii)
when the Company shall (a) merge into or consolidate with any other corporation
or business entity (other than a wholly-owned subsidiary corporation) or (b)
effect any other transaction or series of related transactions in which more
than fifty percent (50%) of the voting power of the Company is disposed of,
provided that this subsection (iii) shall not apply to a merger effected
exclusively for the purpose of changing the domicile of the Company.
3. Miscellaneous.
-------------
3.1 Successors and Assigns. Except as otherwise provided in this
----------------------
Agreement, the terms and conditions of this Agreement shall inure to the benefit
of and be binding upon the respective permitted successors and assigns of the
parties, their affiliates, constituent partners or members of such entities or
an entity controlling, controlled by or under common control with such entities
(including transferees of any of the Merger Shares, the Founders Stock, Series B
Preferred Stock, Series C Preferred Stock, Series D Preferred Stock or any
Common Stock issued upon conversion thereof, as applicable). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement. Upon the issuance of Series B-
1, Series C-1 or Series D-1 Preferred Stock, the holders thereof shall be a
party to this Agreement and shall be subject to all of the benefits and
obligations hereof applicable to the holders of Series B, Series C or Series D
Preferred Stock, as the case may be.
3.2 Amendments and Waivers. Any term of this Agreement may be
----------------------
amended, waived, discharged or terminated only with the written consent of the
Company and the holders of a majority of the Registrable Securities then
outstanding, not including the Founders' Stock; provided that (i) if such
amendment, waiver, discharge or termination has the effect of affecting the
Founders' Stock (a) in a manner different than securities issued to the Holders
and (b) in a manner adverse to the interests of the holders of the Founders'
Stock, then such amendment, waiver, discharge or termination shall require the
consent of the holder or holders of a majority of the Founders' Stock, (ii) if
such amendment, waiver, discharge or termination has the effect of affecting the
Series B Preferred Stock (a) in a manner different than securities issued to the
holders of the Series C and Series D Stock and (b) in a manner adverse to the
interests of the holders of the Series B Preferred stock, then such amendment,
waiver, discharge or termination shall require the consent of the holder or
holders of a majority of the Series B Preferred Stock, (iii) if such amendment,
waiver, discharge or termination has the effect of affecting the Series C
Preferred Stock (a) in a manner different than securities issued to the holders
of the Series B and Series D Preferred Stock and (b) in a manner adverse to the
interests of the holders of the Series C Preferred stock, then such amendment,
waiver, discharge or termination shall require the consent of the holder or
holders of a majority of the Series C Preferred Stock, (iv) if such amendment,
waiver, discharge or termination has the effect of affecting the Series D
Preferred Stock (a) in a manner different than securities issued to the
-17-
<PAGE>
holders of the Series B and Series C Preferred Stock and (b) in a manner adverse
to the interests of the holders of the Series D Preferred Stock, then such
amendment, waiver, discharge or termination shall require the consent of the
holder or holders of a majority of the Series D Preferred Stock and (v) if such
amendment, waiver, discharge or termination has the effect of affecting the
Merger Shares (a) in a manner different than securities issued to the holders of
the Series B, Series C and Series D Preferred Stock and (b) in a manner adverse
to the interests of the holders of the Merger Shares, then such amendment,
waiver, discharge or termination shall require the consent of the holder or
holders of a majority of the Merger Shares. Any amendment, waiver, discharge or
termination effected in accordance with this paragraph shall be binding upon
each holder of any Registrable Securities then outstanding, each future holder
of all such Registrable Securities, and the Company.
3.3 Notices. Unless otherwise provided, any notice required or
-------
permitted by this Agreement shall be in writing and shall be deemed sufficient
upon delivery, when delivered personally or by overnight courier or sent by
telegram or fax, or forty-eight (48) hours after being deposited in the U.S.
mail, as certified or registered mail, with postage prepaid, and addressed to
the party to be notified at such party's address or fax number as set forth on
the signature page on Exhibit A hereto or as subsequently modified by written
---------
notice.
3.4 Severability. If one or more provisions of this Agreement are
------------
held to be unenforceable under applicable law, the parties agree to renegotiate
such provision in good faith. In the event that the parties cannot reach a
mutually agreeable and enforceable replacement for such provision, then (a) such
provision shall be excluded from this Agreement, (b) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (c) the
balance of the Agreement shall be enforceable in accordance with its terms.
3.5 Governing Law. This Agreement and all acts and transactions
-------------
pursuant hereto shall be governed, construed and interpreted in accordance with
the laws of the State of Washington, without giving effect to principles of
conflicts of laws.
3.6 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.7 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.8 Aggregation of Stock. All shares of the Preferred Stock held or
--------------------
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
3.9 References to Securities Act and Exchange Act. All references
---------------------------------------------
herein to forms, sections or provisions of the Securities Act and the Exchange
Act shall be deemed to include references to any successor forms, sections or
provisions which may be adopted after the date hereof.
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<PAGE>
3.10 Amendment and Restatement of Alive Rights Agreement. By
---------------------------------------------------
execution of this Agreement by the Company (as successor to Alive.com, Inc.) and
by the Holders of a majority of the Registrable Securities under the Alive
Rights Agreement, the Alive Rights Agreement is hereby amended and restated in
its entirety as set forth herein with the result that the Alive Holders shall
receive the rights and obligations set forth herein in lieu of all rights and
obligations set forth therein.
3.11 Additional Investors. In the event the Company sells additional
--------------------
shares of Series D Preferred Stock after the date hereof pursuant to the and in
accordance with the Purchase Agreement or in the event an Alive Holder executes
a signature page hereto, each party to this Agreement hereby consents to the
Company, in its sole discretion and without any requirement of providing notice
to or obtaining any additional consent of any other existing Holders, adding the
additional investors and the additional shares of Series D Preferred Stock to
this Agreement and the Alive Holder and the shares of Encoding.com Common Stock
held by such Alive Holder, and, with respect to such additional shares, the
additional investor shall have all the rights and obligations of an Investor and
of a Holder of Registrable Securities hereunder.
[Signature page follows.]
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<PAGE>
The parties have executed this Amended and Restated Investors' Rights
Agreement as of the date first above written.
COMPANY:
ENCODING.COM, INC.
/s/ David Bullis
_________________________________
David Bullis, President
Address: 414 Olive Way, Suite 300
Seattle, WA 98101
Fax: (206) 832-4001
FOUNDERS:
/s/ Martin Tobias
_________________________________
Martin Tobias
Address: 3406 E. Union Avenue
Seattle, WA 98122
Fax: (206) 329-3276
/s/ Alex Tobias
_________________________________
Alex Tobias
Address: 3406 E. Union Avenue
Seattle, WA 98122
Fax: (206) 329-3276
[SIGNATURE PAGE TO ENCODING.COM, INC.
INVESTORS' RIGHTS AGREEMENT]
<PAGE>
SERIES B HOLDERS, SERIES C HOLDERS, SERIES D
PURCHASERS AND ALIVE HOLDERS:
____________________________________
____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
(if applicable)
____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
(if applicable)
[SIGNATURE PAGE TO ENCODING.COM, INC.
INVESTORS' RIGHTS AGREEMENT]
<PAGE>
INTEL CORPORATION
By:_________________________________
Print Name:_________________________
Title:______________________________
[SIGNATURE PAGE TO ENCODING.COM, INC.
INVESTORS' RIGHTS AGREEMENT]