Investors' Rights Agreement - RealNetworks Inc.
REALNETWORKS, INC.
THIRD AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
March 24, 1998
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TABLE OF CONTENTS
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1. REGISTRATION RIGHTS...................................................... 1
1.1 Certain Definitions............................................... 1
1.2 Registrable Securities............................................ 2
(a) Definition ............................................. 2
(b) Transfer of Registration Rights............................ 2
(c) Conditions to Participation................................ 3
1.3 Demand Registration............................................... 3
1.4 S-3 Registration.................................................. 4
(a) S-3 Registrations.......................................... 4
(b) Priority S-3 Registrations................................. 5
(c) Restrictions on Purchasers and S-3 Registrations........... 5
(d) Limited Number of S-3 Registrations........................ 6
(e) Selection of Underwriters.................................. 6
1.5 Piggyback Registrations........................................... 6
(a) Right to Piggyback......................................... 6
(b) Priority on Primary Registrations.......................... 6
(c) Priority on Secondary Registrations........................ 6
(d) Piggyback Rights of Vivo Shareholders...................... 7
1.6 Lockup Agreements................................................. 7
1.7 Registration Procedures........................................... 7
1.8 Registration Expenses............................................. 9
1.9 Indemnification................................................... 10
1.10 Termination....................................................... 11
2. COVENANTS OF THE COMPANY................................................. 12
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3. MISCELLANEOUS............................................................ 12
3.1 Parties in Interest............................................... 12
3.2 Entire Agreement: Amendments and Waivers.......................... 12
3.3 Governing Law, Severability....................................... 13
3.4 Notices........................................................... 13
3.5 Counterparts...................................................... 13
3.6 Captions.......................................................... 14
Exhibit A Company Shareholders
Exhibit B Vivo Shareholders
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THIRD AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
This Third Amended and Restated Investors' Rights Agreement (this
"Agreement") is entered into effective as of the 24 day of March, 1998, by and
among REALNETWORKS, INC., a Washington corporation (the "Company"), the holders
of the Company Common Stock listed on Exhibit A, certain former shareholders of
Vivo Software, Inc., a Massachusetts corporation (the "Vivo Shareholders")
identified on attached Exhibit B, and Microsoft Corporation, a Washington
corporation ("Microsoft").
RECITALS
The Company and Vivo Software, Inc. ("Vivo") are parties to that certain
Agreement and Plan of Merger dated February 20, 1998 (the "Merger Agreement"),
pursuant to which shareholders of Vivo will become shareholders of the Company
and entitled to certain benefits provided for in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
set forth herein, the parties hereto agree as follows:
1. REGISTRATION RIGHTS
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar successor federal statute and the rules and
regulations thereunder, all as the same shall be in effect from time to time.
(b) "Exempt Registrations" shall mean registrations 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 registrations relating solely to a Commission Rule
145 transaction on Form S-4 or similar forms that may be promulgated in the
future.
(c) "Investors" shall mean investors who purchased shares pursuant
to the Series B Preferred Stock Purchase Agreement by and among the Series B
Holders and the Company dated April 8, 1995 (the "Series B Agreement"), the
Series C Preferred Stock Purchase Agreement by and among the Series C Holders
and the Company dated October 26, 1995 (the "Series C Agreement"), the Series D
Preferred Stock Purchase Agreement by and among the Series D Holders and the
Company dated November 27, 1996 (the "Series D Agreement"), and/or the Series E
Preferred Stock Purchase Agreement dated July 21, 1997 (the "Series E
Agreement") and persons or entities who received any of such shares from such
Investors.
(d) "Rule 144" shall mean Rule 144 as promulgated by the Securities
and Exchange Commission (the "Commission") under the Securities Act, as such
Rule may be
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amended from time to time, or any similar successor rule that may be
promulgated by the Commission.
(e) "Rule 145" shall mean Rule 145 as promulgated by the Commission
under the Securities Act, as such Rule may be amended from time to time, or any
similar successor rule that may be promulgated by the Commission.
(f) "Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar successor federal statute and the rules and regulations
thereunder, all as the same shall be in effect from time to time, corresponding
to such act.
1.2 Registrable Securities.
(a) Definition. The term "Registrable Securities" means (i) any
common stock ("Common Stock") and other securities issued upon conversion of any
Series B Preferred, Series C Preferred, Series D Preferred or Series E Preferred
Stock (including without limitation the Series C Preferred issuable upon
exercise of those certain Series C Warrants, as defined in the Series C
Agreement, the Series D Preferred issuable upon the exercise of those certain
Series D Warrants, as defined in the Series D Agreement and the Series E
Preferred issuable upon the exercise of that certain Series E Warrant, as
defined in the Series E Agreement), (ii) any Common Stock and other securities
issued upon exercise of those certain Series B Common Warrants, as defined in
the Series C Agreement, (iii) common stock issued to Vivo Shareholders upon
consummation of the Merger (as defined in the Merger Agreement), including
common stock issued upon exercise of former Vivo Stock Options (as defined in
the Merger Agreement) or (iv) any securities issued with respect to the Series B
Preferred, Series C Preferred, Series D Preferred, Series E Preferred or the
Common Stock and other securities referred to in clauses (i), (ii) and (iii) by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization. For
purposes of this Agreement, a person will be deemed to be a holder of
Registrable Securities whenever such person has the right to acquire such
Registrable Securities whether or not such acquisition has actually been
effected. Registrable Securities, if transferred in accordance with Section
1.2(b), will remain Registrable Securities; provided, however, that Registrable
Securities shall not include shares (a) registered under the Securities Act
pursuant to an effective registration statement filed thereunder and disposed of
in accordance with the registration statement covering them or (b) that may be
publicly sold pursuant to Rule 144 under the Securities Act.
(b) Transfer of Registration Rights. The rights granted under this
Section may be assigned or otherwise conveyed by any holder of Registrable
Securities, in compliance with federal and applicable state securities laws, to
any transferee or assignee who, after such assignment or transfer, holds at
least 50,000 shares of Registrable Securities (subject to appropriate adjustment
for stock splits, stock dividends, combinations and other recapitalizations),
provided that the Company is given written notice by such transferee at the time
of or within thirty (30) days after said transfer, stating the name and address
of said transferee and said transferee's agreement to be bound by the provisions
of this Agreement. For the purposes of determining the number of shares of
Registrable Securities held by a transferee or
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assignee, the holdings of a transferee or assignee who is (A) a shareholder,
partner, retired partner, member, retired member or beneficiary of a Purchaser;
(B) a spouse or child of a shareholder, partner, retired partner, member,
retired member or beneficiary of a Purchaser; (C) a trust for the benefit of the
persons set forth in (A) or (B) or for the issue of the persons set forth in (A)
or (B); and (D) an entity (corporation, partnership, limited liability company
or other juridical entity) of which at least 75 percent in interest is owned or
controlled, directly or indirectly through other entities, or by one or more of
the persons set forth in (A), (B) or (C), shall be aggregated together with the
corporation, partnership or limited liability company as the case may be;
provided that all assignees and transferees who would not qualify individually
for assignment of registration rights shall have a single attorney-in-fact for
the purpose of exercising any rights, receiving notices or taking any action
under this Agreement.
(c) Conditions to Participation. No holder of Registrable Securities
may participate in any underwritten registration hereunder unless such holder
(i) agrees to sell such holder's securities on the basis provided in any
underwriting arrangements and (ii) completes and executes all questionnaires,
indemnities, underwriting agreements and other documents reasonably required
under the terms of such underwriting arrangements, provided that such documents
shall not provide for indemnification or contribution obligations to the
Company, or obligations to the Company to provide information, of holders of
Registrable Securities greater than those obligations to the Company provided
for in Section 1.9.
1.3 Demand Registration.
(a) If at any time after the earlier of (i) two (2) years after the
date of this Agreement or (ii) six (6) months after the effective date of the
Initial Public Offering (as such term is defined in Section 2 of this
Agreement), the Company shall receive a written request from Investors holding
at least 30% of the Registrable Securities then outstanding that the Company
file a registration statement (other than on Form S-3 pursuant to Section 1.4 of
this Agreement) under the Securities Act covering the registration of all or
part of the Registrable Securities, then the Company shall, within ten (10) days
of the receipt of such request, give written notice of such request to all
holders of Registrable Securities and shall, subject to the limitations of
Section 1.3(b), use its best efforts to effect as soon as practicable the
registration under the Securities Act of all Registrable Securities which the
Investors request to be registered in a written request to be given within
twenty (20) days of the giving of such notice by the Company.
(b) The Investors initiating the registration request under this
Section 1.3 (the "Initiating Investors") must distribute the Registrable
Securities covered by their request by means of a public offering underwritten
by a recognized national or regional underwriter, which underwriter shall be
reasonably acceptable to the Company. The right of any Investor to include its
Registrable Securities in such registration shall be conditioned upon such
Investor's participation in such underwriting and the inclusion of such
Investor's Registrable Securities in the underwriting to the extent provided
herein. All Investors proposing to distribute their Registrable Securities
through such underwriting shall (together with the Company as provided in
Section 1.7(h)) 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 Investors.
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Notwithstanding any other provision of this Section 1.3, if the underwriter
advises the Initiating Investors in writing that marketing factors require a
limitation of the number of shares to be underwritten, then the Initiating
Investors shall so advise all Investors who are 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
Investors, in proportion (as nearly as practicable) to the amount of Registrable
Securities of the Company owned by each Investor and requested to be registered
in such registration. Any Registrable Securities excluded or withdrawn from such
underwriting shall be withdrawn from the registration.
(c) The Company is obligated to effect only two registrations
pursuant to this Section 1.3. A request for registration under this Section 1.3
cannot be made within six (6) months of the effective date of a registration
statement for a public offering of the Company's securities (other than Exempt
Registrations).
(d) Notwithstanding the foregoing, if the Company shall furnish to
the Investors requesting a registration statement pursuant to this Section 1.3 a
certificate signed by the President 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, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Initiating Investors; provided, however, that the Company may not utilize
this right more than once in any twelve (12) month period.
(e) The Company shall not be obligated to take any action to effect
any registration pursuant to this Section 1.3, if, within ten (10) days of the
receipt of a request from Initiating Investors the Company gives the Initiating
Investors written notice that it has begun substantive discussions with an
underwriter with respect to a public offering of securities that would give rise
to registration rights under Section 1.5. The Company must promptly notify the
Investors of any abandonment of such offering.
1.4 S-3 Registration.
(a) S-3 Registrations. Subject to the terms hereof, the holders
of Registrable Securities, including transferees that have acquired the
Registrable Securities in accordance with Section 1.2(b) (the "Holders"), may
request in writing registration under the Securities Act of all or part of their
Registrable Securities (an "S-3 Registration") on Form S-3 (or any other form of
offering permitted under applicable securities laws involving effort and expense
reasonably similar to that involved in effecting a registration on Form S-3 for
which the Company may then be eligible). Any such request shall state the number
of Registrable Securities to be disposed of and the intended disposition of such
shares by their Holders, provided that the aggregate offering price must be not
less than $250,000 for each such registration and on not more than three
occasions, provided, further, however, that the Vivo Shareholders shall be
entitled to request only one S-3 Registration, which must be requested by
holders of at least 50% of the then outstanding Registrable Securities held by
the Vivo Shareholders or their transferees. Such S-3
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Registration shall be in addition to the three S-3 Registrations which may be
requested by the other Holders. The Company hereby agrees that it will file an
S-3 Registration Statement in November 1998 and that all Vivo Shareholders shall
be entitled to register their shares therein. S-3 Registrations will be effected
on Form S-3 (or any similar short-form registration for which the Company may
then be eligible) whenever the Company is permitted to use such a form.
Following the initial public offering of its securities, the Company will use
its best efforts to qualify for registration on Form S-3 (or any similar
short-form registration for which the Company may then be eligible) and maintain
such registration in effect for not less than one hundred twenty (120) days.
(b) Priority S-3 Registrations. If any S-3 Registration is an
underwritten offering, the Company may request that securities to be sold on its
behalf be included in such S-3 Registration, and if the managing underwriters
advise the Company in writing that in their opinion the number of securities
requested to be included exceeds the number that can be sold in such offering
without adversely affecting such underwriters' ability to effect an orderly
distribution of the securities, the Company will include in such registration:
first, the securities the Company proposes to sell; and second, the number of
Registrable Securities that the Holders propose to sell and that in the opinion
of such underwriters can be sold; provided that in the event that the number of
Registrable Securities that the Holders propose to sell is reduced by more than
ten percent (10%), such registration will not be counted as a S-3 Registration.
Anything in this subsection (b) to the contrary notwithstanding, for a period of
twelve months following the conclusion of any offering from which, pursuant to
this subsection (b), there were excluded any Registrable Securities requested to
be included (an "Exclusion Offering"), the Company shall not exercise its right
to priority so as to exclude such Registrable Securities from a subsequent S-3
Registration; provided, however, that a S-3 Registration may not be requested by
the Holders of Registrable Securities for a period of four (4) months following
the conclusion of any such Exclusion Offering. If any S-3 Registration in which
the Company does not have the right to priority is an underwritten offering, the
Company may have securities to be sold on its behalf included in such S-3
Registration, to the extent deemed practicable by the managing underwriters,
provided the number of Registrable Securities included therein is not reduced.
(c) Restrictions on Purchasers and S-3 Registrations. The Company
may postpone for up to ninety (90) days the filing or the effectiveness of a
registration statement for a S-3 Registration if the Company's Chief Executive
Officer delivers a written certification to each Holder of the Registrable
Securities requested to be included therein stating that the Company's Board of
Directors has declared that such S-3 Registration would not be in the best
interests of the Company; provided that in any such event, the Holders of
Registrable Securities requesting such registration will be entitled to withdraw
such requests and, if the remaining requests that are not withdrawn are not
sufficient to initiate such registration, such registration need not be effected
by the Company and will not count as a S-3 Registration; provided further, that
if such event occurs during the twelve (12) month period during which the
Company may not conduct an Exclusion Offering (as described in Clause (b)
above), then such twelve (12) month period shall be extended by the length of
any such postponement. The Company may only make one election in any
twelve-month period to postpone a S-3 Registration pursuant hereto.
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(d) Limited Number of S-3 Registrations. The Company is obligated to
effect only three (3) registrations pursuant to this Section 1.4, plus the one
(1) registration which may be requested only by the Vivo Shareholders owning at
least 50% of the Registrable Securities held by the Vivo Shareholders or their
transferees.
(e) Selection of Underwriters. In a S-3 Registration, the holders of
Registrable Securities will have the right to determine the method of
distribution and, if the offering is underwritten, to select the investment
banker(s) and manager(s) to administer the offering.
1.5 Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to a
registration primarily for sales of securities to employees of the Company or in
connection with a transaction to which Rule 145 or any similar rule of the SEC
under the Securities Act is applicable) and the registration form to be used
also may be used for the registration of Registrable Securities, the Company
will give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration (a "Piggyback Registration") and will
use its best efforts to include in such registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within thirty (30) days after the receipt of the Company's notice except
as set forth in paragraph (b) below. Such written request may specify all or
part of a holder's Registrable Securities to be included in the registration.
(b) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number that can be sold in such offering without adversely affecting such
underwriters' ability to effect an orderly distribution of such securities, the
Company will include in such registration: first, the securities the Company
proposes to sell; second, the Registrable Securities requested to be included in
such registration, pro rata among the holders of such securities on the basis of
the number of shares of Common Stock (or equivalents) represented by the
Registrable Securities owned by the holders thereof and requested to be
registered, but in no event in an offering following the Company's initial
public offering shall the number of Registrable Securities included in such
registration be less than 30% of the total of all securities included in such
registration; and third, other securities requested to be included in such
registration.
(c) Priority on Secondary Registrations. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities and there are no newly issued securities of the Company being
registered thereunder, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number that can be sold in such offering
without adversely affecting such underwriters' ability to effect an orderly
distribution of such securities, the Company will include in such registration:
first, any Registrable Securities
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requested to be included in such registration, pro rata among the holders of
such securities on the basis of the number of shares of Common Stock (or
equivalents) represented by the Registrable Securities owned by the holders
thereof and requested to be registered, and second, other securities requested
to be included in such registration. If any holder of Registrable Securities who
has requested inclusion in such registration or offering disapproves of the
terms of the underwriting, he may elect to withdraw therefrom by written notice
to the Company, the underwriter and the holders of Registrable Securities who
initiated the offering.
(d) Absence of Piggyback Rights for Vivo Shareholders.
Notwithstanding anything herein to the contrary, Vivo Shareholders and their
transferees shall not have any rights to piggyback registration as described
under this Section 1.5, except with respect to the S-3 Registration demanded by
the Vivo Shareholders.
1.6 Lockup Agreements. Each holder of the Registrable Securities agrees
not to effect any public sale or distribution of Registrable Securities, or any
securities convertible into or exchangeable or exercisable for Registrable
Securities, during the seven (7) days prior to and the period after (as
requested by the underwriters, but not to exceed 180 days) the effectiveness of
the first registration of the Company's securities to be sold in an underwritten
public offering for the account of the Company, provided that all officers and
directors of the Company and all other holders of more than one percent (1%) of
the Company's equity securities agree to be similarly bound with respect to
equity securities of the Company held by such officers, directors and one
percent (1%) holders, provided further that any discretionary waiver or
termination of the restrictions of such agreements by the representatives of the
underwriters shall apply to all persons subject to such agreements pro rata
based on the number of equity securities held by such persons and subject to
such agreements, provided further that such holders are given reasonable notice
of such Registration, and provided further, that the provisions of this Section
1.6 shall bind The Goldman Sachs Group, L.P. and any transferee of its
Registrable Securities only with respect to the Registrable Securities held by
such person and shall not otherwise in any manner bind or restrict Goldman,
Sachs & Co. (whether as a broker, dealer, underwriter or otherwise) or The
Goldman Sachs Group. L.P. or any of their affiliates or general or limited
partners. Without limiting the foregoing, it is expressly agreed that the
provisions of this Section 1.6 shall not (a) apply to any shares of Common Stock
or any securities convertible into or exercisable or exchangeable for Common
Stock acquired by a Holder directly from the underwriters in a registered public
offering of the Company's securities or in an established trading market from
any party other than the Company, or (b) prevent the exercise of the Series B
Common Warrants, the Series C Warrants, the Series D Warrants, or the Series E
Warrant described in Section 1.2(a) during such lockup period.
1.7 Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company will use its best efforts to effect the
registration of such Registrable Securities in accordance with the intended
method of disposition thereof, and pursuant thereto the Company will, without
limiting the generality of the foregoing, as expeditiously as possible:
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(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities, which
registration statement will state that the holders of Registrable Securities
covered thereby may sell such Registrable Securities either under such
registration statement or pursuant to Rule 144 (or any similar rule then in
effect), and use its best efforts to cause such registration statement to become
effective (provided that before filing a registration statement or prospectus or
any amendments or supplements thereto, the Company will furnish to the counsel
selected by the holders of a majority of the voting interest of the Registrable
Securities covered by such registration statement copies of all such documents
proposed to be filed);
(b) prepare and file with the Commission, if applicable, such
amendments and supplements to such registration statement and the prospectus
used in connection therewith as may be necessary to keep such registration
statement effective for a period of not less than one hundred eighty (180) days
in the case of the Company's initial registration of Common Stock under the
Securities Act and one hundred twenty (120) days in the case of any subsequent
registration, provided, however, that if the Company files an S-3 Registration
at the request of the Vivo Shareholders, the Company shall maintain the
effectiveness of such S-3 Registration until the later of the first anniversary
of the consummation of the Merger Agreement or 120 days;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
and the prospectus included in such registration statement (including each
preliminary prospectus) as such seller may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions of
the United States as any seller reasonably requests and do any other related
acts that may be reasonably necessary to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company will not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this Section 1.7(d) or (ii) consent to general service of
process in any such jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is or would be 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 contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company will prepare
a supplement or amendment to such prospectus so that, as thereafter delivered to
the purchasers of such Registrable Securities, such prospectus will not contain
any untrue statement of a material fact or omit any fact necessary to make the
statements therein not misleading;
(f) upon the request of the holders of 20% or more of the
Registrable Securities or such lesser number of Registrable Securities as are
actually registered pursuant to
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this Agreement, cause all such Registrable Securities to be listed on each
securities exchange or quotation system on which similar securities issued by
the Company are then listed;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements on customary terms) and take all such other actions as are reasonably
required in order to expedite or facilitate the disposition of such Registrable
Securities (including, without limitation, effecting a stock split or a
combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement, and any attorney, accountant or any other agent retained
by any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors and employees to supply all information reasonably requested
by any such seller, underwriter, attorney, accountant or agent in connection
with such registration statement;
(j) comply with all necessary filing and other requirements,
including without limitation listing shares on any national securities exchange
on which similar securities of the Company are then listed, so as to enable the
holders of Registrable Securities to sell Registrable Securities under Rule 144
(or any similar rule then in effect) after any initial public offering of the
Company's Common Stock; and
(k) obtain a comfort letter from the Company's independent
accountants in customary form and covering such matters of the type customarily
covered by comfort letters and an opinion from the Company's counsel in
customary form covering such matters normally covered in a public issuance of
securities, in each case addressed to the holders of the Registrable Securities.
1.8 Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement with respect to any Demand Registration, S-3
Registration or Piggyback Registration, including, without limitation, all
registration and filing fees, fees and expenses of compliance with securities or
blue sky laws, printing expenses, messenger and delivery expenses, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions, which in all
cases shall be borne by the party selling the securities with respect to which
the discounts or commissions are incurred or paid) and other persons retained by
the Company, will be borne by the Company.
(b) In connection with any Demand Registration, S-3 Registration or
Piggyback Registration, the Company will reimburse the holders of Registrable
Securities
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covered by such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the voting interest of such
Registrable Securities.
1.9 Indemnification.
(a) Incident to any registration statement referred to in this
Section 1 and subject to applicable law, the Company will indemnify and hold
harmless each underwriter, each holder of Registrable Securities (including its
respective directors, officers, members, employees and agents) so registered,
and each person who controls any of them within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act and the rules and regulations
promulgated thereunder, from and against any and all losses, claims, damages,
expenses and liabilities, joint or several (including any investigation, legal
and other expenses incurred in connection with, and any amount paid in
settlement of, any action, suit or proceeding or any claim asserted), to which
they, or any of them, may become subject under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, at common law or
otherwise, insofar as such losses, claims, damages or liabilities arise out of
or are based on (i) any untrue statement or alleged untrue statement of a
material fact contained in such registration statement (including any related
preliminary or definitive prospectus, or any amendment or supplement to such
registration statement or prospectus), (ii) any omission or alleged omission to
state in such document a material fact required to be stated in it or necessary
to make the statements in it not misleading, or (iii) any violation by the
Company of the Securities Act, any state securities or "blue sky" laws or any
rule or regulation thereunder in connection with such registration, provided
that the Company will not be liable to the extent that such loss, claim, damage,
expense or liability arises from and is based on an untrue statement or omission
or alleged untrue statement or omission made in reliance on and in conformity
with information furnished in writing to the Company by such underwriter, holder
or controlling person expressly for use in such registration statement. With
respect to such untrue statement or omission or alleged untrue statement or
omission in the information furnished in writing to the Company by such holder
expressly for use in such registration statement, such holder will indemnify and
hold harmless each underwriter, the Company (including its directors, officers,
members, employees and agents), each other holder of Registrable Securities
(including its respective directors, officers, employees and agents) so
registered, and each person who controls any of them within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages, expenses and liabilities, joint or
several, to which they, or any of them, may become subject under the Securities
Act, the Exchange Act or other federal or state statutory law or regulation, at
common law or otherwise to the same extent provided in the immediately preceding
sentence. In no event, however, shall the liability of a holder for
indemnification under this Section 1.9(a) exceed the lesser of (i) that
proportion of the total of such losses, claims, damages or liabilities
indemnified against equal to the proportion of the total Registrable Securities
sold under such registration statement which is being sold by such holder of
Registrable Securities or (ii) the proceeds received by such holder from its
sale of Registrable Securities under such registration statement.
(b) If the indemnification provided for in Section 1.9(a) above for
any reason is held by a court of competent jurisdiction to be unavailable to an
indemnified party in respect of
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<PAGE> 14
any losses, claims, damages, expenses or liabilities referred to therein, then
each indemnifying party under this Section 1.9, in lieu of indemnifying such
indemnified party thereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, expenses or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the other selling holders of Registrable
Securities and the underwriters from the offering of the Registrable Securities
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, the other selling holders of Registrable Securities and the
underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, expenses or liabilities, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the selling holders of Registrable Securities and the underwriters
shall be deemed to be in the same respective proportions as the net proceeds
from the offering (before deducting expenses) received by the Company and the
selling holders and the underwriting discount received by the underwriters, in
each case as set forth in the table on the cover page of the applicable
prospectus, bear to the aggregate public offering price of the Registrable
Securities. The relative fault of the Company, the selling holders of
Registrable Securities and the underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Company, the selling holders or the underwriters and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such statement or omission. The Company, the holders of
Registrable Securities, and the underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 1.9(b) were determined by pro
rata or per capita allocation or by any other method of allocation which does
not take account of the equitable considerations referred to in the first
sentence of this Section 1.9(b). In no event, however, shall a holder of
Registrable Securities be required to contribute any amount under this Section
1.9(b) in excess of the lesser of (i) that proportion of the total of such
losses, claims, damages or liabilities indemnified against equal to the
proportion of the total Registrable Securities sold under such registration
statement which is being sold by such holder or (ii) the proceeds received by
such holder from its sale of Registrable Securities under such registration
statement. No person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(c) The amount paid or payable by an indemnified party as a result
of the losses, claims, damages and liabilities referred to in this Section 1.9
shall be deemed to include, subject to the limitations set forth above, any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or claim. The
indemnification and contribution provided for in this Section 1.9 will remain in
full force and effect regardless of any investigation made by or on behalf of
the indemnified parties or any officer, director, employee, agent or controlling
person of the indemnified parties.
1.10 Termination. The rights to registration of Registrable Securities
set forth in this Section shall terminate and have no further effect on the
seventh (7th) anniversary of the closing of the Company's Initial Public
Offering, as defined below, provided, however, that the Vivo
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<PAGE> 15
Shareholders shall have no further registration rights, and the Common Stock
issued to Vivo Shareholders pursuant to the Merger Agreement shall no longer be
considered Registrable Securities, upon the later of the first anniversary of
the consummation of the Merger Agreement or 120 days after filing of the Vivo
S-3 Registration Statement.
2. COVENANTS OF THE COMPANY
During the term of this Agreement, the Company covenants and agrees that
for so long as any (a) Common Stock issued upon conversion of the Series B
Preferred, Series C Preferred, Series D Preferred, or Series E Preferred
(including without limitation the Series C Preferred issuable upon exercise of
the Series C Warrants, Series D Preferred issuable upon exercise of the Series D
Warrants, and Series E Preferred issuable upon exercise of the Series E
Warrant), or pursuant to Section 1.2(a)(iii) of this Agreement, or (b)
securities issued with respect to the securities referred to in clause (a) above
by way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization
(hereinafter collectively referred to as "Restricted Securities"), remain
outstanding (the Series C Preferred issuable upon exercise of the Series C
Warrants, the Series D Preferred issuable upon exercise of the Series D
Warrants, and the Series E Preferred issuable upon exercise of the Series E
Warrant being deemed outstanding for purposes of this Section 2), at all times
after the Company has filed a registration statement pursuant to the
requirements of the Securities Act, or the Exchange Act, the Company will file
all reports required to be filed by it under the Securities Act or the Exchange
Act and the rules and regulations adopted by the Securities and Exchange
Commission (the "Commission") thereunder, and will take such further action as
any holder or holders of Restricted Securities may reasonably request, all to
the extent required to enable each such holder to sell Restricted Securities
pursuant to (i) Rule 144 under the Securities Act, or (ii) any similar rule or
regulation hereafter adopted by the Commission. Upon request, the Company will
deliver to each such holder a written statement as to whether the Company has
complied with such requirements.
3. MISCELLANEOUS
3.1 Parties in Interest. All covenants, agreements, representations,
warranties and undertakings in this Agreement made by and on behalf of any of
the parties hereto shall bind and inure to the benefit of their respective
successors and assigns.
3.2 Entire Agreement: Amendments and Waivers. This Agreement (including
the attachments hereto) and the other documents delivered pursuant hereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof. This Agreement may be amended,
or compliance with any term, covenant, agreement, condition or provision set
forth herein may be omitted or waived (either generally or in a particular
instance and either retroactively or prospectively) if agreed to in writing by
the Company and either: (a) the holders of at least two-thirds (2/3) of the
outstanding Registrable Securities (other than those held by Microsoft), and
two-thirds (2/3) of the Common Stock issuable upon conversion of the Series E
Preferred Stock, or (b) the holders of at least 51% of the outstanding Common
Stock issued upon conversion of the Series B Preferred Stock, the holders
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<PAGE> 16
of at least 51% of the outstanding Common Stock issued upon conversion of the
Series C Preferred Stock, the holders of at least 51% of the outstanding Common
Stock issued upon conversion of the Series D Preferred Stock, the holders of at
least 51% of the Common Stock issued upon conversion of the Series E Preferred
Stock; and 51% of the Registrable Securities held by the Vivo Shareholders;
provided, however, that the holder(s) of the Series E Preferred Stock hereby
agree to: (i) any amendment that is limited to adding holders of Common Stock or
a new series of Common Stock or Preferred Stock or securities convertible into
or carrying the rights to purchase Common Stock or a new series of Common Stock
or Preferred Stock (the "New Securities") as parties to this Agreement as long
as the New Securities have rights under this Agreement that are equivalent or
subordinate to those of the Series E Preferred, and (ii) any amendment that does
not (A) adversely affect the holders of Series E Preferred Stock but not the
holders of the other series of Preferred Stock or (B) otherwise disadvantage
disproportionately the holders of Series E Preferred Stock; and provided
further, that if any amendment or omission or waiver of compliance with any
term, covenant, agreement or condition or provision affects any Holder
disproportionately, the written agreement of such Holder shall also be required.
The Series B Holders and the Company expressly agree that this Agreement
supersedes Sections 4 and 5 of the Series B Agreement in their entirety and that
such sections of the Series B Agreement are no longer in force or effect, the
Series B Holders, Series C Holders and the Company expressly agree that this
Agreement supersedes the C Rights Agreement in its entirety and the C Rights
Agreement is no longer in force and effect; and the Series B Holders, Series C
Holders, Series D Holders, and the Company expressly agree that this Agreement
supersedes the D Rights Agreement in its entirety and the D Rights Agreement is
no longer in force and effect.
3.3 Governing Law, Severability. This Agreement, together with the
rights and obligations of the parties hereunder, shall be governed by, construed
and enforced in accordance with the laws of the State of Washington without
regard to principles of conflicts of laws. In the event any provision of this
Agreement or the application of any such provision to any party shall be held by
a court of competent jurisdiction to be contrary to law, the remaining
provisions of this Agreement shall remain in full force and effect.
3.4 Notices. All notices, requests, consents, and demands shall be in
writing and shall be deemed to have been sufficiently given if sent, postage
prepaid, by registered or certified mail, return receipt requested, to the
Company at RealNetworks, Inc., 1111 Third Avenue, Suite 500, Seattle, WA 98101,
Attention: President, with a second copy addressed separately to the General
Counsel; to the Investors at the addresses listed in Exhibits A and B and to
Microsoft at Microsoft Corporation, One Microsoft Way, Redmond, Washington
98052-6399, Attention: Robert A. Eshelman, Assistant Secretary; or to such other
address as may from time to time be furnished in writing to the other parties
hereto.
3.5 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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<PAGE> 17
3.6 Captions. The captions and headings of this Agreement are for
convenience only and are not to be construed as defining or limiting the scope
or intent of any of the provisions hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
REALNETWORKS, INC.
By: ____________________________________
Its: ___________________________________
The undersigned, who are parties to that certain Second Amended and Restated
Investors' Rights Agreement dated July 21, 1997 (the "Agreement"), hereby
consent to amend and restate such Agreement in its entirety as set forth in this
Third Amended and Restated Investors' Rights Agreement:
INVESTOR: ______________________________
(Please Print Name)
By: ____________________________________
Its: ___________________________________
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<PAGE> 18
EXHIBIT A
FORMER SERIES B PREFERRED HOLDERS
Name and Address
Phillip Barrett
13224 - 178th N.E.
Redmond, WA 98052
Howard P. Welt
820 - 34th Avenue E.
Seattle, WA 98112
Jeanine Tang
16015 Olympic Drive N.W.
Seattle, WA 98177
Elaine Yeomelakis
3 Spruce Street
Stoneham, MA 02180
Julius and Barbara Glaser TR U/A 09-03-91
Julius and Barbara Glaser, Trustees
424 Trail Ridge Place
Santa Rosa, California 95409
Martha E. Glaser
7720 Bodega Avenue, #11
Sebastapol, CA 95472
Rob Glaser
c/o RealNetworks, Inc.
1111 Third Avenue, Suite 2900
Seattle, Washington 98101-3207
Dennis L. Heck
1518 South Columbia
Olympia, Washington 98501
Mitchell Kapor
Kapor Enterprises, Inc.
238 Main Street, Suite 400
Cambridge, Massachusetts 02142
<PAGE> 19
Michael B. Slade
3732 East High Lane
Seattle, Washington 98112
<PAGE> 20
FORMER SERIES C PREFERRED HOLDERS
Name and Address
Accel IV L.P.
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: James W. Breyer
Accel Keiretsu L.P.
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: James W. Breyer
Accel Investors '95 L.P.
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: James W. Breyer
Ellmore C. Patterson Partners
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn: James W. Breyer
Jeanine Tang
16015 Olympic Drive N.W.
Seattle, WA 98177
Julius and Barbara Glaser TR U/A 09-03-91
Julius and Barbara Glaser, Trustees
424 Trail Ridge Place
Santa Rosa, CA 95409
Martha E. Glaser
7720 Bodega Avenue, #11
Sebastapol, CA 95472
Rob Glaser
c/o RealNetworks, Inc.
1111 Third Avenue, Suite 2900
Seattle, WA 98101-3207
<PAGE> 21
Dennis L. Heck
1518 South Columbia
Olympia, WA 98501
Mitchell Kapor
Kapor Enterprises, Inc.
238 Main Street, Suite 400
Cambridge, MA 02142
Michael B. Slade
3732 East High Lane
Seattle, WA 98112
Howard P. Welt
820 - 34th Avenue E.
Seattle, WA 98112
<PAGE> 22
FORMER SERIES D PREFERRED HOLDERS
Name and Address
Bayview Investors, Ltd.
555 California St.
San Francisco, CA 94104
Attn: Jennifer Sherrill
IPG Network, Inc.
1700 Montgomery Street, Suite 420
San Francisco, CA 94111
Attn: Yoshiteru Sagiya
Ziff Asset Management, L.P.
153 E. 53rd St., 43rd Floor
New York, NY 10022
Attn: Philip B. Korsant
Technology Crossover Ventures, L.P.
56 Main Street, Suite 210
Millburn, NJ 07041
Attn: Robert C. Bensky
Technology Crossover Ventures, C.V.
56 Main Street, Suite 210
Millburn, NJ 07041
Attn: Robert C. Bensky
Accel IV L.P.
428 University Avenue
Palo Alto, CA 94301
Attn: James W. Breyer
Accel Keiretsu L.P.
428 University Avenue
Palo Alto, CA 94301
Attn: James W. Breyer
Accel Investors '95 L.P.
428 University Avenue
Palo Alto, CA 94301
Attn.: James W. Breyer
<PAGE> 23
Ellmore C. Patterson Partners
c/o Accel Partners
428 University Avenue
Palo Alto, CA 94301
Attn.: James W. Breyer
Velocity Technology and
Communications Trust B
260 Hamilton Avenue, Suite 212
Palo Alto, CA 94301
Attn: Andy Kessler
Dennis L. Heck
1518 S. Columbia
Olympia, WA 98501
Norma Ann Crampton
820 - 34th Avenue E.
Seattle, WA 98112
Elaine Yeomelakis
3 Spruce Street
Stoneham, MA 02180
Jeanine Tang
16015 Olympic Drive N.W.
Seattle, WA 98177
Rob Glaser
c/o RealNetworks, Inc.
1111 Third Avenue, Suite 2900
Seattle, WA 98101-3207
Merrill Lynch KECALP L.P. 1994
Attn.: Robert Tully
World Financial Center, South Tower
225 Liberty Street
New York, NY 10080
CSK Venture Capital Co., Ltd.
Kenchiku Kaikan, 7th Floor
26-20 Shiba, 5-chome, Minato-ku
Tokyo 105, Japan
Attn: Kenji Suzuki
<PAGE> 24
CSK Corporation
Shinjuku Sumitomo Bldg.
2-6-1 Nishi-Shinjuku, Shinjuku-ku
Tokyo 163-02 Japan
Attn: Tadashi Fujisawa
Encompass Group, Inc.
Suite 205
4040 Lake Washington Blvd. N.E.
Kirkland, WA 98033
Attn: Yasuki Matsumoto
Trans Cosmos USA, Inc.
Suite 205
4040 Lake Washington Blvd. N.E.
Kirkland, WA 98033
Attn.: Yasuki Matsumoto
The Goldman Sachs Group, L.P.
c/o Goldman Sachs & Co.
85 Broad Street, 19th Floor
New York, NY 10004
Attn: Joseph Gleberman
Mitchell Kapor
c/o Kapor Enterprises
238 Main Street, Suite 400
Cambridge, MA 02142
Peter J. Rubin Trustee,
PSP and Trust
PS Plan DTD 11/14/96,
FBO Peter J. Rubin
400 Seward Square, S.E., Apt. 42
Washington, DC 20003
<PAGE> 25
EXHIBIT B
VIVO SHAREHOLDERS
Accel IV L.P.
Accel Japan L.P.
Accel Investors '93 L.P.
Accel Keiretsu L.P.
Prosper Partners
Ellmore C. Patterson Partners
St Paul Venture Capital IV, LLC
St Paul Venture Capital Affiliates Fund I, LLC
Morgenthaler Venture Partners III
Matrix Partners III L.P.
CMP Media Inc.
PictureTel Corp.
Sigma Partners III
Sigma Associates III
Sigma Investors III
Gardner Hendrie
Susanne Lilly Hutcheson Trust
David M Lilly
Flach & Associates
James Flach
Staffan Ericsson
Anthony Antonuccio
Bernd Girod
Zenas Hutcheson
Mark Bretl
Daud Power
Oliver Jones
Peter Zaballos
Dean Wiltse
John Bruder
George Madaus
Roz Hoffman
John Carlton
Andreas Wanka
Joseph Rovine
Lesley Peebles
Enna Rojas
Stephanie Woiciechowski
Bin Zhang
Corinne Howard
Vadim Matskin
<PAGE> 26
H Bondar
Ann-Marie Sweeney
Matt Greer
Hugh Montague
Thomas Wolf
Lisa Nalewak
Meg Munger
Jane Spencer
Karen Crine
Dan Cronin
Joe Schoendorf
Ted Adelson
Randy Smith
Robert Pryor
Ted Mina
Ken Faubel
Joe Kluck
Dan Brown
Gene Su
Win Crofton
Weili Zhang
Mary Campbell
Pauline L McCormack
Peter Haimovitz
Jeff Miller
John Wolfe
Mary Deshon
Chet Graham
Gerry Hall