VONAGE HOLDINGS CORP. THIRD AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT April 27, 2005

Exhibit 10.12

 

 

VONAGE HOLDINGS CORP.

THIRDAMENDED AND RESTATED INVESTORS’

April 27, 2005

 

 

 



 

TABLE OF CONTENTS

 

 

Page

ARTICLE 1

 

 

 

 

GENERAL

 

1.1

Certain Definitions

2

ARTICLE 2

 

 

 

 

RESTRICTIONS ON TRANSFER; REGISTRATION

 

2.1

Restrictions on Transfer

6

2.2

Mandatory Registration

8

2.3

Demand Registration

9

2.4

Piggyback Registrations

11

2.5

Form S-3 Registration

11

2.6

Expenses of Registration

13

2.7

Underwriting

13

2.8

Obligations of the Company

16

2.9

Termination of Registration Rights

18

2.10

Furnishing Information

18

2.11

Indemnification

18

2.12

Transfer or Assignment of Registration Rights

20

2.13

Amendment of Registration Rights

21

2.14

“Market Stand-Off” Agreement

21

2.15

Rule 144 Reporting

22

ARTICLE 3

 

 

 

 

COVENANTS OF THE COMPANY

 

3.1

Basic Financial Information and Reporting

22

3.2

Inspection Rights

24

3.3

Board Observation Right

24

3.4

Directors’ Expenses

25

3.5

Board of Directors Meetings; Board Composition

25

3.6

Insurance

25

3.7

Reservation of Common Stock

26

3.8

Option Grants; Stock Vesting; Stock Repurchase; Exercise Price

26

3.9

Acceleration of Vesting

26

3.10

Non-Competition Agreement and Confidential Information and Invention

 

 

Assignment Agreement

27

3.11

Assignment of Right of First Refusal

27

3.12

Market Stand-Off Agreement

27

 

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3.13

Payment of Taxes, Compliance with Laws, etc

27

3.14

Material Changes and Litigation

28

3.15

Qualified Small Business

28

3.16

Real Property Holding Corporation

28

3.17

Management Compensation

29

3.18

Enforcement of Bylaws

29

3.19

No Impairment

29

3.20

Environmental Covenant

29

3.21

Employment Covenant

29

3.22

Board and Officer Covenant

29

3.23

Amended and Restated Certificate of Incorporation

30

3.24

Termination of Covenants; Assignment of Covenants

30

ARTICLE 4

 

 

 

 

RIGHTS OF FIRST REFUSAL

 

4.1

Subsequent Offerings

30

4.2

Exercise of Rights

31

4.3

Issuance of New Securities to Other Persons

31

4.4

Termination and Waiver of Rights of First Refusal

31

4.5

Transfer of Rights of First Refusal

31

4.6

Excluded Securities

32

ARTICLE 5

 

 

 

 

MISCELLANEOUS

 

5.1

Amendment and Waiver

33

5.2

Waiver of Preemptive Rights

33

5.3

Governing Law

33

5.4

Jurisdiction; Venue

33

5.5

Waiver of Jury Trial

34

5.6

Equitable Remedies

34

5.7

Arbitration

34

5.8

Successors and Assigns

34

5.9

Entire Agreement

34

5.10

Severability

35

5.11

Delays or Omissions

35

5.12

Notices

35

5.13

Attorneys’ Fees

36

5.14

Titles and Subtitles

36

5.15

Limitation on Subsequent Rights

36

5.16

Additional Investors

37

5.17

Non-Business Days

37

5.18

Counterparts

37

5.19

Telecopy Execution and Delivery

37

5.20

Aggregation of Stock

37

 

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VONAGE HOLDINGS CORP.

THIRDAMENDED AND RESTATED INVESTORS’

ThisTHIRD AMENDED AND RESTATED INVESTORS’ (this “Agreement”) is made and entered into as of April 27, 2005, byand among Vonage Holdings Corp., a Delaware corporation (the “Company”), the holders of the Company’s Series AConvertible Preferred Stock set forth on Exhibit A attached hereto (the “SeriesA Holders”), the holders of theCompany’s Series A-2 Convertible Preferred Stock set forth on Exhibit A attached hereto (the “SeriesA-2 Holders”), the holders of theCompany’s Series B Convertible Preferred Stock set forth on Exhibit A attached hereto (the “SeriesB Holders”), the holders of theCompany’s Series C Convertible Preferred Stock set forth on Exhibit A attached hereto (the “SeriesC Holders”), the holders of theCompany’s Series D Convertible Preferred Stock set forth on Exhibit A attached hereto (the “SeriesD Holders”), and the holders of theCompany’s Series E Convertible Preferred Stock set forth on Exhibit A attached hereto (the “SeriesE Holders” and together with theSeries A Holders, the Series A-2 Holders, the Series B Holders, the Series CHolders, the Series D Holders and the Series E Holders, the “Investors”).

RECITALS

WHEREAS,the Series A Holders, the Series A-2 Holders, the Series B Holders, the SeriesC Holders and the Series D Holders (the “ExistingInvestors”) possess registration rights, information rights,rights of first offer and other rights pursuant to a Second Amended andRestated Investors’ dated as of August 12, 2004 by and amongthe Company and such Existing Investors (the “PriorAgreement”);

WHEREAS, the Prior Agreementmay be amended, and any provision therein waived, with the consent of theCompany, the holders of at least a majority of the Registrable Securities thenoutstanding, the holders of at least a majority of the then-outstanding sharesof Series B Preferred (including shares of Common Stock issued upon conversionof the Series B Preferred), the holders of at least sixty percent (60%) of the then-outstandingshares of Series C Preferred (including shares of Common Stock issued uponconversion of the Series C Preferred) and the holders of at least sixty-six andtwo-thirds percent (66-2/3%) of the then-outstanding shares of Series DPreferred (including shares of Common Stock issued upon conversion of theSeries D Preferred);

WHEREAS, the ExistingInvestors as holders of at least (i) a majority of the Registrable Securitiesthen outstanding, (ii) a majority of the then-outstanding shares of Series BPreferred (including shares of Common Stock issued upon conversion of theSeries B Preferred), (iii) sixty percent (60%) of the then-outstanding sharesof Series C Preferred (including shares of Common Stock issued upon conversionof the Series C Preferred) and (iv) the holders of at least sixty-six andtwo-thirds percent (66-2/3%) of the then-outstanding shares of Series DPreferred (including shares of Common Stock issued upon conversion of theSeries D Preferred) desire to terminate the Prior Agreement and to accept therights created pursuant hereto in lieu of the rights granted to them under thePrior Agreement;

 

 



 

WHEREAS, the Company and theSeries E Holders are parties to that certain Stock Purchase Agreement dated asof an even date herewith (the “Purchase Agreement”),whereby the Company will sell, and the Series E Holders will purchase, sharesof the Company’s Series E Convertible Preferred Stock (the “Financing”); and

WHEREAS, the obligations ofthe Company and the Series E Holders under the Purchase Agreement areconditioned upon, among other things, the execution and delivery of thisAgreement by the Company and the Investors.

AGREEMENT

NOW, THEREFORE, inconsideration of the foregoing recitals and the mutual promises,representations and covenants hereinafter set forth, and for other good andvaluable consideration, the receipt and sufficiency of which are herebyacknowledged, the parties hereto agree as follows:

ARTICLE 1

GENERAL

1.1          Certain Definitions.  As used inthis Agreement the following terms shall have the following respectivemeanings:

(a)           “3i” means 3iTechnology Partners L.P.

(b)           “Bain Capital” means, collectively Bain Capital Venture Fund2005, L.P., Sankaty Credit Opportunities, L.P., Sankaty Credit OpportunitiesII, L.P., Prospect Harbor Credit Partners, L.P., Brookside Capital PartnersFund, L.P., BCIP Associates III, LLC and BCIP Associates III-B, LLC.

(c)           “Board” means the Board of Directors of the Company.

(d)           “Capital Stock” means shares of the Common Stock, Series A Preferred,Series A-2 Preferred, Series B Preferred, Series C Preferred, Series DPreferred, Series E Preferred and any other shares of the Common Stock orPreferred Stock issued or issuable upon exercise or conversion of any option,warrant or other security or right of any kind convertible into or exchangeablefor such Common Stock or Preferred Stock.

(e)           “Common Stock” means the Common Stock of the Company, par value$0.001 per share.

(f)            “Exchange Act” means the Securities Exchange Act of 1934, asamended, or any similar successor federal statute and the rules and regulationsthereunder, all as the same shall be in effect from time to time.

(g)           “Form S-3” means such form under the Securities Act as ineffect on the date hereof or any successor or similar registration form underthe Securities Act subsequently

 

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adopted by the SEC thatpermits inclusion or incorporation of substantial information by reference toother documents filed by the Company with the SEC.

(h)           “Founder” shall mean Jeffrey Citron.

(i)            “Holder” means any person owning of record RegistrableSecurities that have not been sold to the public or any transferee or assigneeof record of such Registrable Securities to which the registration rightsconferred by this Agreement have been transferred or assigned in accordancewith Section 2.12 hereof.

(j)            “Initial Public Offering” means the Company’s first firmcommitment underwritten public offering of the Common Stock registered underthe Securities Act.

(k)           “Major Series E Holders” means, collectively, Bain Capital andRGIP, LLC.

(l)            “Meritech” means Meritech Capital Partners.

(m)          “New Securities” means any shares of, or securities convertibleinto or exercisable for any shares of, any class of the Company’s capitalstock, issued after the date of this Agreement other than securities excludedpursuant to Section 4.6 hereof.

(n)           “NEA” means New Enterprise Associates 10, L.P. and NewEnterprise Associates 11, L.P.

(o)           “NEA 10” means New Enterprise Associates 10, L.P.

(p)           “NEA 11” means New Enterprise Associates 11, L.P.

(q)           “Register,” “registered”and “registration” refer to aregistration effected by preparing and filing a registration statement incompliance with the Securities Act, and the declaration or ordering ofeffectiveness of such registration statement or document.

(r)            “Registrable Securities” means (a) shares of Common Stockissuable or issued upon conversion of the Shares and (b) any Common Stockissued as (or issuable upon the conversion or exercise of any warrant, right orother security which is issued as) a dividend or other distribution withrespect to, or in exchange for or in replacement of, such above-describedsecurities.  Notwithstanding theforegoing, Registrable Securities shall not include any securities of theCompany sold by any person to the public either pursuant to a registrationstatement under the Securities Act or Rule 144.

(s)           “Registrable Securities then outstanding” equals the number ofshares of Common Stock that are Registrable Securities and either (a) are thenissued and outstanding or (b) are issuable pursuant to then exercisable orconvertible securities.

(t)            “Registration Expenses” shall mean all expenses incurred by theCompany in complying with Sections 2.2, 2.3, 2.4 and 2.5 hereof, including,without limitation, all registration and filing fees, printing expenses, feesand disbursements of counsel for the

 

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Company, Blue Sky fees andexpenses and the expense of any special audits incidental to or required by anysuch registration (but excluding the compensation of regular employees of theCompany, which shall be paid in any event by the Company, and all underwritingdiscounts and commissions).  In addition,Registration Expenses shall include reasonable fees and disbursements of asingle special legal counsel for the Holders selling Registrable Securities.

(u)           “Restated Certificate” means the Company’s Certificate ofIncorporation, as amended and restated to date.

(v)           “Rule 144” means Rule 144 as promulgated by the SEC under theSecurities Act, as such rule may be amended from time to time, or any similarsuccessor rule that may be promulgated by the SEC.

(w)          “Rule 144(k)” means Rule 144(k) as promulgated by the SEC underthe Securities Act, as such rule may be amended from time to time, or anysimilar successor rule that may be promulgated by the SEC.

(x)            “Rule 145” means Rule 145 as promulgated by the SEC under theSecurities Act, as such rule may be amended from time to time, or any similarsuccessor rule that may be promulgated by the SEC.

(y)           “SEC” or “Commission”means the Securities and Exchange Commission or any other federal agency at thetime administering the Securities Act.

(z)            “Securities Act” means the Securities Act of 1933, as amended,or any similar successor federal statute and the rules and regulationsthereunder, all as the same shall be in effect from time to time.

(aa)         “Selling Expenses” means all underwriting discounts, sellingcommissions and stock transfer rates applicable to the sale of RegistrableSecurities.

(bb)         “Senior Preferred Holders “ means the holders of Series BPreferred, Series C Preferred, Series D Preferred and Series E Preferred.

(cc)         “Senior Preferred Registrable Securities” means, collectively,the Series B/C/D Registrable Securities and the Series E RegistrableSecurities.

(dd)         “Series A Preferred” means the Series A Convertible PreferredStock of the Company, par value $0.001 per share.

(ee)         “Series A-2 Preferred” means the Series A-2 ConvertiblePreferred Stock of the Company, par value $0.001 per share.

(ff)           “Series B Director” means the member of the Board elected bythe holders of a majority of the outstanding shares of Series B Preferred,voting as a separate class distinct from any other series or class ofsecurities issued by the Company, to be designated by NEA 10.

 

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(gg)         “Series B Preferred” means the Series B Convertible PreferredStock of the Company, par value $0.001 per share.

(hh)         “Series B Purchase Agreement” means that certain Series BPreferred Stock Purchase Agreement dated November 14, 2003 by and among theCompany and the investors listed therein.

(ii)           “Series B/C/D Registrable Securities” means (a) shares ofCommon Stock issuable or issued upon conversion of shares of Series BPreferred, Series C Preferred and Series D Preferred and (b) any Common Stockissued as (or issuable upon the conversion or exercise of any warrant, right orother security which is issued as) a dividend or other distribution withrespect to, or in exchange for or in replacement of, such above-describedsecurities.  Notwithstanding theforegoing, Series B/C/D Registrable Securities shall not include any securitiesof the Company sold by any person to the public either pursuant to aregistration statement under the Securities Act or Rule 144.

(jj)           “Series C Director” means the member of the Board elected bythe holders of a majority of the outstanding shares of Series C Preferred,voting as a separate class distinct from any other series or class ofsecurities issued by the Company, to be designated by 3i.

(kk)         “Series C Preferred” means the Series C Convertible PreferredStock of the Company, par value $0.001 per share.

(ll)           “Series C Purchase Agreement” means that certain Series CPreferred Stock Purchase Agreement dated January 20, 2004 by and among theCompany and the investors listed therein.

(mm)       “Series D Director” means the member of the Board elected bythe holders of a majority of the outstanding shares of Series D Preferred,voting as a separate class distinct from any other series or class ofsecurities issued by the Company, to be designated by NEA 11.

(nn)         “Series D Preferred” means the Series D Convertible PreferredStock of the Company, par value $0.001 per share.

(oo)         “Series D Purchase Agreement” means that certain Series DPreferred Stock Purchase Agreement dated August 12, 2004 by and among theCompany and the investors listed therein.

(pp)         “Series E Director” means the member of the Board elected bythe holders of a majority of the outstanding shares of Series E Preferred,voting as a separate class distinct from any other series or class ofsecurities issued by the Company, to be designated by Bain Capital.

(qq)         “Series E Preferred” means the Series E Convertible PreferredStock of the Company, par value $0.001 per share.

 

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(rr)           “Series E Registrable Securities” means (a) shares of CommonStock issuable or issued upon conversion of shares of Series E Preferred and(b) any Common Stock issued as (or issuable upon the conversion or exercise ofany warrant, right or other security which is issued as) a dividend or otherdistribution with respect to, or in exchange for or in replacement of, suchabove-described securities. Notwithstanding the foregoing, Series E Registrable Securities shall notinclude any securities of the Company sold by any person to the public eitherpursuant to a registration statement under the Securities Act or Rule 144.

(ss)         “Series Preferred” means the Series A Preferred, the Series A-2Preferred, the Series B Preferred, the Series C Preferred, the Series DPreferred and the Series E Preferred of the Company.

(tt)           “Shares” means all shares of Series A Preferred, Series A-2Preferred, Series B Preferred, Series C Preferred, Series D Preferred andSeries E Preferred issued to the Investors.

(uu)         “SpecialRegistration Statement” means (i) a registrationstatement relating to any employee benefit plan of the Company, (ii) aregistration statement of the Company relating to any corporate reorganizationor other transaction under Rule 145, including any registration statementsrelated to the issuance or resale of securities issued in such a transaction,or (iii) a registration statement related to the offer and sale of debtsecurities.

ARTICLE 2

RESTRICTIONS ON TRANSFER; REGISTRATION

2.1          Restrictions on Transfer.

(a)           Each Holder agrees not tomake any disposition of all or any portion of the Shares or RegistrableSecurities unless and until:

(i)            there is then in effect aregistration statement under the Securities Act covering such proposeddisposition and such disposition is made in accordance with such registrationstatement; or

(ii)           (A) the transferee has agreedin writing to be bound by the terms of this Agreement (for purposes ofclarification, this condition (A) shall apply only to transferees who acquiredShares or Registrable Securities prior to the Initial Public Offering and onlywith respect to such shares), (B) such Holder shall have notified the Companyof the proposed disposition within a reasonable period of time prior to suchproposed disposition and shall have furnished the Company with a detailedstatement of the circumstances surrounding the proposed disposition and (C) ifreasonably requested by the Company, such Holder shall have furnished theCompany with an opinion of counsel, reasonably satisfactory to the Company (itbeing understood that (i) an opinion of Wilson Sonsini Goodrich & Rosati, P.C.(“WSGR”) shall be deemedsatisfactory with respect to proposed transfers by NEA and any permittedtransferee thereof, (ii) an opinion of Ropes & Gray LLP shall be deemedsatisfactory with respect to proposed transfers by Bain Capital and anypermitted transferee thereof, (iii) an opinion of Latham & Watkins LLPshall be deemed satisfactory with respect to proposed transfers by

 

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Meritech and any permittedtransferee thereof, and (iv) an opinion of Gunderson Dettmer Stough VilleneuveFranklin & Hachigian, LLP shall be deemed satisfactory with respect toproposed transfers by 3i and any permitted transferee thereof), that suchdisposition will not require registration of such shares under the Securities Act.  It is agreed that the Company will notrequire opinions of counsel for transactions made pursuant to and in accordancewith Rule 144, except in unusual circumstances.

(b)           Notwithstanding the provisions of subsection(a) above, no such restriction shall apply to a transfer by a Holder that is(A) a partnership or limited partnership transferring to its partners, formerpartners, limited partners or former limited partners in accordance withpartnership or limited partnership interests, as may be applicable, (B) acorporation transferring to a wholly owned subsidiary or a parent corporationthat owns all of the capital stock of the Holder, (C) a limited liabilitycompany transferring to its members or former members in accordance with theirinterest in the limited liability company, (D) an individual Holdertransferring to the Holder’s family members or trusts for the benefit of suchHolder or such Holder’s family members, (E) an “Affiliate” of suchHolder (as such term is defined under Rule 144), (F) one or moreAffiliated partnerships, limited liability companies or funds managed by aHolder or any of their respective directors, officers, partners or members or(G) a transfer not involving any change in beneficial ownership; provided that in eachsuch case the transferee will agree in writing to be subject to the terms ofthis Agreement to the same extent as if such transferee were an original Holderhereunder.

(c)           Notwithstanding theforegoing, any other provision of this Agreement or any other provision of anyother agreement among some or all of the parties hereto, 3i Technology PartnersL.P., Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i GlobalTechnology 2004-06 L.P. and any 3i Permitted Transferee (as defined below) may,from time to time, transfer all or any portion of the shares it owns to 3iGroup plc or any affiliate of 3i Group plc or any entity or vehicle including apartnership in which 3i Group plc and/or its affiliate has a majority economicinterest and which is managed by 3i Group plc or any of its affiliates (each a “3i Permitted Transferee”); provided that in each such case the transferee will agree inwriting to be subject to the terms of this Agreement to the same extent as ifsuch transferee were an original Holder hereunder.

(d)           Each certificaterepresenting Shares or Registrable Securities shall be stamped or otherwiseimprinted with legends substantially similar to the following (in addition toany legend required under applicable state securities laws):

THE SECURITIES REPRESENTEDHEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE “ACT”) AND MAY NOT BE OFFERED, SOLD OR OTHERWISETRANSFERRED, ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL REGISTEREDUNDER THE ACT OR UNLESS THE ISSUER HAS RECEIVED AN OPINION OF LEGAL COUNSELSATISFACTORY TO THE ISSUER AND ITS COUNSEL THAT SUCH REGISTRATION IS NOTREQUIRED.

 

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THESALE, PLEDGE, HYPOTHECATION OR OTHER TRANSFER OF THE SECURITIES REPRESENTED BYTHIS CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A CERTAIN THIRDAMENDED AND RESTATED INVESTORS’ RIGHTS AGREEMENT BY AND BETWEEN THE STOCKHOLDERAND THE ISSUER OF SUCH SECURITIES, INCLUDING A LOCK-UP PERIOD OF UP TO 180 DAYSFOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE ISSUER FILEDUNDER THE ACT.  COPIES OF SUCH AGREEMENTMAY BE OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE ISSUER.  SUCH TRANSFER RESTRICTIONS ARE BINDING ONTRANSFEREES OF SUCH SECURITIES.

(e)           The Company shall be obligatedto reissue promptly unlegended certificates at the request of any Holderthereof if (i) the Company has completed the Initial Public Offering, (ii) theHolder shall have obtained an opinion of counsel (which counsel may be counselto the Company) reasonably acceptable to the Company (it being understood thatan opinion of WSGR with respect to such requests by or on behalf of NEA shallbe deemed acceptable) to the effect that the securities proposed to be disposedof may lawfully be so disposed of without registration, qualification andlegend and (iii) the Holder shall have delivered such securities to the Companyor its transfer agent.

(f)            Any legend endorsed on aninstrument pursuant to applicable state securities laws and the stop-transferinstructions with respect to such securities shall be removed upon receipt bythe Company of an order of the appropriate Blue Sky authority authorizing suchremoval.

2.2          Mandatory Registration.

(a)           The Company shall prepare and file with theSEC a registration statement on Form S-1 covering the resale, in the mannerreasonably requested by the holders thereof, of all of the Senior PreferredRegistrable Securities (the “ShelfRegistration Statement”) (provided that before filing the Shelf Registration Statementor any amendments or supplements thereto, the Company shall furnish legalcounsel for the Holders with copies of all such documents to be filed) andshall use all commercially reasonable efforts to cause the Shelf RegistrationStatement to become effective pursuant to Rule 415 under the Securities Act bythe date on which any “market stand-off’ agreement entered into by the Holdersat the request of the underwriters of the Initial Public Offering pursuant toSection 2.14(a) hereof expires (the “RequiredEffective Date”).  Once theShelf Registration Statement is declared effective by the SEC, the Company willcause the Shelf Registration Statement to remain effective throughout, andimmediately available for use at all times until, April 27, 2007.

(b)           Notwithstanding any of theforegoing to the contrary, the Company may suspend the use of the ShelfRegistration Statement upon written notice to each Holder of Senior PreferredRegistrable Securities at any time when the Company, in its reasonable judgmentafter consultation with legal counsel, determines that (A) (i) there is inexistence material nonpublic information regarding a pending materialtransaction or transactions, (ii) the disclosure of such information withrespect to such transaction or transactions in the prospectus included in theShelf Registration Statement is required, and (iii) the disclosure of suchinformation at such time

 

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would be adverse to theCompany, or (B) the prospectus included in the Shelf Registration Statementincludes an untrue statement of material fact or omits a material fact requiredto be stated therein or necessary to make the statements therein not misleading(a “Permissible Blackout”).  Any such Permissible Blackout shall continuefor the period of time that is reasonably necessary for disclosure to occur ata time that is not adverse to the Company or until such time as the informationor event is no longer material, each as determined in good faith by the Companyafter consultation with counsel, provided, however, that no Permissible Blackout shall exceed a periodof 5 consecutive trading days, and the Company may not suspend the use of theShelf Registration Statement pursuant to this Section 2.2(b) for more than anaggregate of 20 trading days.

2.3           Demand Registration.

(a)           Subject to the conditions of this Section 2.3, if theCompany shall receive a written request from the Holders holding not less thanforty percent (40%) of the Registrable Securities then outstanding that theCompany file a registration statement with respect to all or part of theRegistrable Securities under the Securities Act with an anticipated aggregateoffering price of at least $5,000,000 (net of underwriting discounts andcommissions), then the Company shall, within ten (10) calendar days of thereceipt thereof, give written notice of such request to all Holders, and,subject to the limitations of this Section 2.3, use its best efforts to effect,as expeditiously as reasonably possible, the registration under the SecuritiesAct of all Registrable Securities that all Holders request to be registeredpursuant to, and in accordance with, this Agreement (an “Ordinary Demand Registration”).

Subjectto the conditions of this Section 2.3, if the Company shall receive a writtenrequest from the Holders holding not less than sixty-six and two-thirds percent(66-2/3%) of those Series B/C/D Registrable Securities then outstanding andheld by Series B Holders, Series C Holders, and Series D Holders (calculatedas a single class and on an as-converted to Common Stock basis) that theCompany file a registration statement with respect to all or part of suchSeries B/C/D Registrable Securities held by the Series B Holders, the Series CHolders, and the Series D Holders under the Securities Act with an anticipatedaggregate offering price of at least $5,000,000 (net of underwriting discountsand commissions), then the Company shall, within ten (10) calendar days of thereceipt thereof, give written notice of such request to all Holders, and,subject to the limitations of this Section 2.3, use its best efforts to effect,as expeditiously as reasonably possible, the registration under the SecuritiesAct of all Registrable Securities that all Holders request to be registered pursuantto, and in accordance with, this Agreement (a “SeriesB/C/D Preferred Demand Registration”).

Subject to the conditions ofthis Section 2.3, if the Company shall receive a written request from theHolders holding not less than thirty-three and one-third percent (33-1/3%) ofthose Series E Registrable Securities then outstanding and held by Series EHolders that the Company file a registration statement with respect to all orpart of such Series E Registrable Securities held by the Series E Holders underthe Securities Act with an anticipated aggregate offering price of at least$5,000,000 (net of underwriting discounts and commissions), then the Companyshall, within ten (10) calendar days of the receipt thereof, (i) give writtennotice of such request to all Holders, and, subject to the limitations of thisSection 2.3, (ii) as soon as practicable, and in any event within 45 days ofreceipt of such request, file a registration

 

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statementunder the Securities Act covering all Registrable Securities which the Holdersrequest to be registered, and (iii) use its best efforts to cause suchregistration statement to be declared effective by the SEC, as expeditiously asreasonably possible (a “Series E Preferred DemandRegistration”).

(b)           Notwithstanding the foregoing, if the Companyshall furnish to Holders requesting a registration statement pursuant to thisSection 2.3, a certificate signed by the President or Chief Executive Officerof the Company (A) stating that in the Board’s good faith judgment it would beseriously detrimental to the Company and its stockholders for such aregistration statement to be filed in the near future, and (B) setting forth inreasonable detail the general reasons for such judgment, the Company shall havethe right to defer such filing for a period of not more than 90 days afterreceipt of the request of the Holders specified in Section 23(a); provided, however, that theCompany may not utilize this right more than once in any twelve-month period.

(c)           The Company shall not berequired to effect or take any action to effect a registration pursuant to thisSection 2.3:

(i)            prior to the earlier ofApril 1, 2007 and 120 days after the Company’s Initial Public Offering;

(ii)           with respect to OrdinaryDemand Registrations, after the Company has effected three Ordinary DemandRegistrations pursuant to this Section 2.3, and such registrations have beendeclared or ordered effective (which, for the avoidance of doubt, shall meanthat the registrations shall have been continuously effective for one hundredeighty (180) calendar days, or until all Registrable Securities covered therebyhave been sold, if earlier);

(iii)          with respect to Series B/C/DPreferred Demand Registrations, after the Company has effected three SeriesB/C/D Demand Registrations pursuant to this Section 2.3, and such registrationshave been declared or ordered effective (which, for the avoidance of doubt,shall mean that the registrations shall have been continuously effective forone hundred eighty (180) calendar days, or until all Registrable Securitiescovered thereby have been sold, if earlier);

(iv)          with respect to Series EPreferred Demand Registrations, after the Company has effected three Series EPreferred Demand Registrations pursuant to this Section 2.3, and suchregistrations have been declared or ordered effective (which, for the avoidanceof doubt, shall mean that the registrations shall have been continuouslyeffective for one hundred eighty (180) calendar days, or until all RegistrableSecurities covered thereby have been sold, if earlier);

(v)           if the Company, withinthirty (30) days of its receipt of the request from the Holders provided for inSection 2.3 (a), provides written notice to all such Holders of its intent tofile a registration statement for its Initial Public Offering within ninety(90) days (provided that the Company is activelyemploying in good faith all reasonable efforts to cause such registrationstatement to become effective);

 

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(vi)          if the Holders making therequest for Ordinary Demand Registration or Series B/C/D Preferred DemandRegistration provided for in Section 2.3(a) propose to dispose of RegistrableSecurities that could be disposed of in a single ordinary brokerage transactionunder the quantity limitation of Rule 144 without a material adverse effect onthe selling price in such transaction (that would not also be present were theRegistrable Securities in question to be disposed of pursuant to an effectiveregistration statement under the Securities Act);

(vii)         if the RegistrableSecurities to be included in the registration statement pursuant to the requestfor Series E Preferred Demand Registration provided for in Section 2.3(a) couldbe sold without restriction under Rule 144(k); or

(viii)        if the Holders making therequest for Ordinary Demand Registration, Series B/C/D Preferred DemandRegistration or Series E Preferred Demand Registration provided for in Section2.3(a) propose to dispose of Registrable Securities that may be immediatelyregistered on Form S-3 pursuant to a request made pursuant to Section 2.5below.

2.4          Piggyback Registrations.

(a)           The Company shall notify allHolders of Registrable Securities in writing at least thirty (30) calendar daysprior to the filing of any registration statement under the Securities Act forpurposes of a public offering of securities of the Company (including, but notlimited to, registration statements relating to follow-on offerings ofsecurities of the Company, but excluding Special Registration Statements) andwill afford each such Holder a reasonable opportunity to include in suchregistration statement all or part of such Registrable Securities held by suchHolder; provided that, with respect to the filing of a registration statementunder the Securities Act for purposes of the Company’s Initial Public Offering,such notice shall be given not later than three (3) business days following thefiling of such registration statement. Each Holder desiring to include in any such registration statement allor any part of the Registrable Securities held by such Holder shall, withinfifteen (15) calendar days after receipt of the above-described notice from theCompany, so notify the Company in writing. Such notice shall state the intended method of disposition of theRegistrable Securities by such Holder. If a Holder decides not to include all of such Holder’s RegistrableSecurities in any registration statement thereafter filed by the Company, suchHolder shall nevertheless continue to have the right to include any RegistrableSecurities in any subsequent registration statement or registration statementsas may be filed by the Company with respect to offerings of its securities, ineach case subject to the terms and conditions set forth herein.

(b)           Right to TerminateRegistration.  The Companyshall have the right to terminate or withdraw any registration initiated by itunder this Section 2.4, but excluding registration statements filed pursuant toSections 2.2, 2.3 and 2.5, prior to the effectiveness of such registrationwhether or not any Holder has elected to include securities in suchregistration.  The Registration Expensesof such withdrawn registration shall be borne by the Company in accordance withSection 2.6 below.

2.5          Form S-3 Registration.  In case the Company shall receive from either(x) the Holders holding not less than forty percent (40%) of the RegistrableSecurities then outstanding, (y) the Holders holding not less than sixty-sixand two-thirds percent (66-2/3%) of those Series B/C/D Registrable Securitiesthen outstanding, or (z) the Holders holding not less

 

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than ten percent (10%) ofthose Series E Registrable Securities then outstanding, a written request thatthe Company effect a registration on Form S-3 (or any applicable successorform) and any related qualification or compliance with respect to all or a partof the Registrable Securities owned by such Holders, the Company will:

(a)           within ten (10) calendardays after receipt of such notice, give written notice of the proposedregistration, and any related qualification or compliance, to all other Holdersof Registrable Securities; and

(b)           as soon as reasonablypracticable, effect such registration (which if requested by Holders holdingSeries B/C/D Registrable Securities shall be referred to as a “Series B/C/D Preferred S-3 Registration,”if requested by Holders holding Series E Preferred Registrable Securities shallbe referred to as a “Series E Preferred S-3Registration” and if requested by Holders holding RegistrableSecurities that are not Series B/C/D Preferred Registrable Securities or SeriesE Preferred Registrable Securities (“JuniorPreferred Registrable Securities”) shall be referred to as an “Ordinary S-3 Registration”) and all suchqualifications and compliances as may be so requested and as would permit orfacilitate the sale and distribution of all or such portion of such Holders’Registrable Securities as are specified in such request, together with all orsuch portion of the Registrable Securities of any other Holder or Holdersjoining in such request as are specified in a written request given withinfifteen (15) calendar days after receipt of such written notice from theCompany; provided, however,that the Company shall not be obligated to effect any such registration,qualification or compliance pursuant to this Section 2.5, (i) if Form S-3 isnot available to the Company for such offering, (ii) if the aggregateproceeds from the sale of Registrable Securities proposed to be sold pursuantto a Form S-3 registration statement will not exceed $1,000,000, (iii) if, withrespect to the Series B/C/D Preferred S-3 Registrations, the Company haseffected two Series B/C/D Preferred S-3 Registrations pursuant to this Section2.5 in the preceding 12 months, and such registrations have been declared orordered effective (which, for the avoidance of doubt, shall mean that theregistrations shall have been continuously effective for one hundred eighty(180) calendar days, or until all Registrable Securities covered thereby havebeen sold, if earlier), (iv) if, with respect to the Series E Preferred S-3Registrations, the Company has effected two Series E Preferred S-3Registrations pursuant to this Section 2.5 in the preceding 12 months, and suchregistrations have been declared or ordered effective (which, for the avoidanceof doubt, shall mean that the registrations shall have been continuouslyeffective for one hundred eighty (180) calendar days, or until all RegistrableSecurities covered thereby have been sold, if earlier), (v) if, with respect tothe Ordinary S-3 Registrations, the Company has effected two Ordinary S-3Registrations pursuant to this Section 2.5 in the preceding 12 months, and suchregistrations have been declared or ordered effective (which, for the avoidanceof doubt, shall mean that the registrations shall have been continuouslyeffective for one hundred eighty (180) calendar days, or until all RegistrableSecurities covered thereby have been sold, if earlier), (vi) if the Holdersrequesting a Series B/C/D Preferred S-3 Registration or Ordinary S-3Registration propose to dispose of Registrable Securities that could bedisposed of in a single ordinary brokerage transaction under the quantitylimitation of Rule 144 without a material adverse effect on the selling pricein such transaction (that would not also be present were the RegistrableSecurities in question to be disposed of pursuant to an effective registrationstatement under the Securities Act), or (vii) if the Registrable Securities tobe included in the registration statement pursuant to the request for Series EPreferred S-3 Registration could be sold without restriction under Rule 144(k).

 

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Subject to the foregoing,the Company shall file a Form S-3 registration statement covering theRegistrable Securities and other securities so requested to be registered assoon as reasonably practicable after receipt of the requests of theHolders.  Registrations effected pursuantto this Section 2.5 shall not be counted as demands for registration effectedpursuant to Section 2.3.

2.6          Expenses of Registration.  Except as specifically provided herein, allRegistration Expenses incurred in connection with any registration effectedpursuant to Section 2.2, 2.3, Section 2.4 or Section 2.5 herein shall beborne by the Company.  All SellingExpenses incurred in connection with any registrations under Section 2.3,Section 2.4 or Section 2.5 shall be borne by the holders of the securitiesso registered pro rata on the basis of thenumber of shares so registered.  TheCompany shall not, however, be required to pay for expenses of any registrationproceeding begun pursuant to Section 2.3, the request of which has beensubsequently withdrawn by the Holders initiating such registration unless (a)the withdrawal is based upon material adverse information concerning theCompany of which such Holders were not aware at the time of such request, (b)sixty-six and two-thirds percent (66-2/3%) of the Holders of Series B/C/DRegistrable Securities, sixty-six and two-thirds percent (66-2/3%) of theHolders of Series E Registrable Securities, or a majority of Junior Preferred RegistrableSecurities, as applicable, agree to forfeit their right to one Series B/C/DPreferred Demand Registration, Series E Preferred Demand Registration orOrdinary Demand Registration, as applicable, pursuant to Section 2 (in whichevent such right shall be forfeited by all Holders of Senior PreferredRegistrable Securities or Junior Preferred Registrable Securities, asapplicable); provided sixty-six and two-thirds percent (66-2/3%) of the holdersof the Series B/C/D Registrable Securities, sixty-six and two-thirdspercent (66-2/3%) of the holders of the Series E Registrable Securities, and amajority of the holders of Junior Preferred Registrable Securities shall eachbe entitled to one withdrawal of a demand, after which withdrawal, such Holdersmay be required to forfeit a demand right as a condition of being excused fromthe obligation to pay the registration expenses associated with a subsequentwithdrawal.  If such Holders are requiredto pay the Registration Expenses, such expenses shall be borne by the holdersof securities (including Registrable Securities) initiating such registrationin proportion to the number of shares for which registration wasrequested.  If the Company is required topay the Registration Expenses of a withdrawn offering pursuant to clause (a)above, then such Holders shall not forfeit their rights pursuant to Section 2.3to a demand registration.

2.7          Underwriting.  If any Holders initiating a registrationrequest hereunder (the “Initiating Holders”) intend to distribute the RegistrableSecurities covered by their request by means of an underwriting pursuant toSection 2.3 or Section 2.5, they shall so advise the Company as a part of theirrequest made pursuant to Section 2.3 or Section 2.5 and the Company shallinclude such information in the written notice referred to in Section 2.3(a) orSection 2.5(a) above, as applicable.  Insuch event, the right of any Holder to include its Registrable Securities insuch registration shall be conditioned upon such Holder’s participation in suchunderwriting and the inclusion of such Holder’s Registrable Securities in theunderwriting to the extent provided herein. All Holders proposing to distribute their securities through suchunderwriting shall enter into an underwriting agreement in customary form withthe underwriter or underwriters selected for such underwriting by theInitiating Holders (which underwriter or underwriters shall be selected by amajority of the Initiating Holders and shall be reasonably acceptable to theCompany (and with respect to the Company’s Initial Public Offering, the

 

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Holders holding not lessthan sixty-six and two-thirds percent (66-2/3%) of those Senior PreferredRegistrable Securities then outstanding). Notwithstanding any other provision of Section 2.3 or of Section 2.5, ifthe managing underwriter determines in good faith that marketing factorsrequire a limitation of the number of securities to be underwritten (includingRegistrable Securities) and the managing underwriter so advises the Company inwriting (an “UnderwriterCutback”),then the Company shall so advise all Holders of Registrable Securities thatwould otherwise be underwritten pursuant hereto, and the number of shares thatmay be included in the underwriting shall be allocated in the following orderof priority:  first, to the Major SeriesE Holders, but only until the Major Series E Holders have received an aggregateamount equal to $75,000,000 (in one or more underwritten offerings) in respectof their Registrable Securities included in underwritten offerings, taking intoaccount allocations to the Major Series E Holders from any prior underwrittenofferings; second, to Holders of Senior Preferred Registrable Securities, butexcluding the Major Series E Holders, on a pro rata basisbased on the total number of then outstanding shares of Senior PreferredRegistrable Securities held by such Holders requesting inclusion in suchoffering (on an as-converted to Common Stock basis), but only until suchHolders have received an aggregate amount equal to $125,000,000 (in one or moreunderwritten offerings) in respect of their Senior Preferred RegistrableSecurities included in underwritten offerings, taking into account allocationsto such Holders from any prior underwritten offerings; third, to Holders ofSenior Preferred Registrable Securities allocated among such Holders on a pro rata basis based on (i) the dollar amount of theoriginal purchase prices paid to the Company by the original purchaser for theSenior Preferred Registrable Securities held by each Holder requestinginclusion in such offering compared to (ii) the aggregate dollar amount ofthe original purchase prices paid to the Company by the original purchasers forall the Senior Preferred Registrable Securities held by all such Holdersrequesting inclusion in such offering; fourth, to the Holders of Series APreferred and Series A-2 Preferred on a pro rata basisbased on the total number of then outstanding shares of Series A Preferred orSeries A-2 Preferred of the Company held by such Holders (on an as-converted toCommon Stock basis); fifth, to the Company; and sixth, to any stockholder ofthe Company (other than a Holder) on a pro rata basisbased on the total number of then outstanding shares of capital stock of theCompany held by such stockholder; provided, however, that no such reduction in an offering subject tothe provisions of Section 2.4 above shall reduce the number of shares of SeniorPreferred Registrable Securities held by Holders who have requested inclusionof Registrable Securities to below twenty percent (20%) of the total amount ofshares included in such offering. Notwithstanding the foregoing, in no event will shares of any partyother than a Holder be included in such a registration without the writtenconsent of the Holders holding not less than (i) a majority of the RegistrableSecurities then outstanding, (ii) sixty-six and two-thirds percent (66-2/3%) ofthose Series B/C/D Registrable Securities then outstanding, and(iii) sixty-six and two-thirds percent (66-2/3%) of those Series ERegistrable Securities then outstanding, if such inclusion would reduce thenumber of shares that may be included by Holders.  If any Holder disapproves of the terms of anysuch underwriting, such Holder may elect to withdraw therefrom by writtennotice to the managing underwriter, delivered at least ten (10) businessdays prior to the effective date of the registration statement.  Any Registrable Securities excluded orwithdrawn from such underwriting shall be excluded and withdrawn from theregistration.  For any Holder that is apartnership, limited partnership or corporation, the partners, limitedpartners, retired partners, retired limited partners and stockholders of suchHolder, or the estates and family members of any such partners, limitedpartners, retired partners,

 

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retired limited partnersand any trusts for the benefit of any of the foregoing persons shall be deemedto be collectively a single “Holder,” and any pro ratareduction with respect to such “Holder” shall be based upon the aggregate amount of sharescarrying registration rights (or upon the original purchase price of suchshares, as the case may be) owned by all entities and individuals included insuch “Holder,” as defined in this sentence.

If the registrationstatement under which the Company gives notice under Section 2.4 is for anunderwritten offering, the Company shall so advise the Holders of Registrable Securities.  In such event, the right of any such Holderto be included in a registration pursuant to Section 2.4 shall be conditionedupon such Holder’s participation in such underwriting and the inclusion of suchHolder’s Registrable Securities in the underwriting to the extent providedherein.  All Holders proposing todistribute their Registrable Securities through such underwriting shall enterinto (directly or through a proxy, custodian or representative) an underwritingagreement in customary form with the underwriter or underwriters reasonablyselected for such underwriting by the Company (which underwriter orunderwriters shall be reasonably acceptable to the Holders holding not lessthan a majority of the Registrable Securities, sixty-six and two-thirds percent(66-2/3%) of the Series B/C/D Registrable Securities and sixty-six andtwo-thirds percent (66-2/3%) of the Series E Registrable Securities to theextent such Holders are participating in such underwritten offering).  Notwithstanding any other provision containedin this Agreement, if the managing underwriter determines in good faith thatmarketing factors require a limitation of the number of shares to beunderwritten (including Registrable Securities), the number of shares that maybe included in the underwriting shall be allocated in the same order ofpriority as provided in this Section 2.5 above, unless the registration is forthe Initial Public Offering, in which case the Registrable Securities held bythe Holders may be completely excluded if such exclusion is considerednecessary in the good faith judgment of the Board.  In no event will shares of any sellingstockholder other than a Holder be included in such registration without thewritten consent of (i) a majority of the Registrable Securities thenoutstanding, (ii) sixty-six and two-thirds percent (66-2/3%) of those SeriesB/C/D Registrable Securities then outstanding, and (iii) sixty-six andtwo-thirds percent (66-2/3%) of those Series E Registrable Securities thenoutstanding, if such inclusion would reduce the number of shares that may beincluded by Holders.  If any Holderdisapproves of the terms of any such underwriting, such Holder may elect towithdraw therefrom by written notice to the Company and the managingunderwriter, delivered at least ten (10) business days prior to the effectivedate of the registration statement.  AnyRegistrable Securities excluded or withdrawn from such underwriting shall beexcluded and withdrawn from the registration. For any Holder that is a partnership, limited partnership orcorporation, the partners, limited partners, retired partners, retired limitedpartners and stockholders of such Holder, or the estates and family members ofany such partners, limited partners, retired partners, retired limited partnersand any trusts for the benefit of any of the foregoing persons shall be deemedto be collectively a single “Holder,” and any pro ratareduction with respect to such “Holder” shall be based upon the aggregateamount of shares carrying registration rights owned by all entities andindividuals included in such “Holder,” as defined in this sentence.

 

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2.8          Obligations of the Company.  Whenever required to effect the registrationof any Registrable Securities, the Company shall, as expeditiously asreasonably possible:

(a)           In the case of registrations required underSection 2.3 and 2.5, use its best efforts to prepare and file with the SEC aregistration statement with respect to such Registrable Securities (provided that beforefiling a registration statement or prospectus or any amendments or supplementsthereto, the Company shall furnish legal counsel for the Holders with copies ofall such documents to be filed) and use all commercially reasonable efforts tocause such registration statement to become effective, and keep suchregistration statement effective for one hundred eighty (180) calendar days oruntil the Holder or Holders have completed the distribution related thereto;

(b)           Prepare and file with theSEC such amendments and supplements to such registration statement and theprospectus used in connection with such registration statement as may benecessary to comply with the provisions of the Securities Act with respect tothe disposition of all securities covered by such registration statement forthe period set forth in subsection (a) above;

(c)           Furnish to the Holders suchnumber of copies of a prospectus, including a preliminary prospectus, inconformity with the requirements of the Securities Act, and such otherdocuments as they may reasonably request in order to facilitate the dispositionof Registrable Securities owned by them;

(d)           Use its reasonable effortsto register and qualify the securities covered by such registration statementunder Blue Sky laws of such jurisdictions as shall be reasonably requested bythe Holders (and to maintain such registrations and qualifications effectivefor the applicable period of time set forth in Section 2.8(a) above, and to doany and all other acts and things that may be necessary or advisable to enablesuch Holders to consummate the disposition in such jurisdictions of such shares(provided that the Company will not berequired to (i) qualify generally to do business in any jurisdiction where itwould not be required but for this Section 2.8(d), (ii) subject itself totaxation in any such jurisdiction or (iii) file any general consent to serviceof process in any such jurisdiction));

(e)           In the event of anyunderwritten public offering, enter into and perform its obligations under anunderwriting agreement, in usual and customary form, with the managingunderwriter(s) of such offering, and enter into such other customary agreementsand take all such actions (including, without limitation, effecting a stocksplit or combination of shares) as such underwriter reasonably requests inorder to expedite or facilitate the disposition of such shares;

(f)            Cause all such RegistrableSecurities registered pursuant hereunder to be listed on each securitiesexchange on which similar securities issued by the Company are then listed (or,if not then listed, on such exchange(s) as requested by a majority of theparticipating Holders or, in the case of registrations pursuant to Section 2.3above, the Initiating Holders);

(g)           Notify each Holder ofRegistrable Securities covered by such registration statement at any time whena prospectus relating thereto is required to be delivered under the

 

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Securities Act of the happeningof any event as a result of which the prospectus included in such registrationstatement, as then in effect, includes an untrue statement of a material factor omits to state a material fact required to be stated therein or necessary tomake the statements therein not misleading in the light of the circumstancesthen existing.  The Company will usecommercially reasonable efforts to amend or supplement such prospectus in orderto cause such prospectus to not include any untrue statement of a material factor omit to state a material fact required to be stated therein or necessary tomake the statements therein not misleading in the light of the circumstancesthen existing;

(h)           Use commercially reasonableefforts to furnish, on or about the date that such Registrable Securities aredelivered to the underwriters for sale, if such securities are being soldthrough underwriters, copies of (i) the opinion, if any, of the lead legalcounsel representing the Company for the purposes of such registration issued pursuantto the underwriting agreement relating to the offering and addressed to theunderwriters and (ii) the letter (including any “bring-downs” related thereto)from the independent certified public accountants of the Company issuedpursuant to the underwriting agreement relating to the offering and addressedto the underwriters;

(i)            Provide for a transfer agentand registrar and CUSIP number for all such shares not later than the effectivedate of such registration statement;

(j)            Make available for inspectionby any Holder, by any underwriter participating in any distribution pursuant tosuch registration statement and by any attorney, accountant or other agentretained by any Holder or by any such underwriter all financing and otherrecords, pertinent corporate documents and properties (other than confidentialintellectual property and trade secrets of the Company) of the Company andcause the Company’s officers, directors, employees and independent accountantsto supply all information reasonably requested by any such Holder, underwriter,attorney, accountant or agent in connection with such registration statement;

(k)           Otherwise use itscommercially reasonable efforts to comply with all applicable rules andregulations of the Commission, and make available to its security holders, assoon as reasonably practicable, an earnings statement covering the period of atleast 12 months beginning with the first day of the Company’s first fullcalendar quarter after the effective date of the registration statement, whichearnings statement shall satisfy in all respects the provisions of Section11(a) of the Securities Act and Rule 158 promulgated thereunder;

(l)            Permit any Holder ofRegistrable Securities, which Holder, in its sole reasonable judgment, might bedeemed to be an underwriter or a controlling person of the Company, toparticipate in the preparation of such registration statement and to requirethe insertion therein of material, furnished to the Company in writing, whichin the reasonable judgment of such Holder and its counsel should be included;

(m)          In the event of the issuanceof any stop order suspending the effectiveness of a registration statement, orof any order suspending or preventing the use of any related prospectus orsuspending the qualification of any Registrable Securities included in such

 

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registration statement forsale in any jurisdiction, the Company shall use its commercially reasonableefforts to promptly obtain the withdrawal of such order; and

(n)           Use its commerciallyreasonable efforts to, within the time periods required by applicable law, fileall documents and reports required to be filed with the Commission pursuant toSection 13(a), 13(c), 14 or 15(d) of the Exchange Act, and to take any and allother actions to ensure the availability of the use of Form S-3 to the Companyand the Holders.

2.9          Termination of Registration Rights.  A Holder’sregistration rights shall expire on the date that all Registrable Securitiesheld by and issuable to such Holder may be sold pursuant to Rule 144(k) underthe Securities Act, provided thatthe Company has completed its Initial Public Offering and is subject to thereporting requirements of the Exchange Act.

2.10        Furnishing Information.  It shall be a condition precedent to theobligations of the Company to take any action pursuant to Section 2.3, 2.4 or2.5 above that the selling Holders shall furnish to the Company suchinformation regarding themselves, the Registrable Securities held by them andthe intended method of disposition of such securities as shall be required toeffect the registration of their Registrable Securities.

2.11        Indemnification.

(a)           The Company will indemnify and hold harmlesseach Holder, each of its officers, directors and partners, legal counsel, andaccountants and each person controlling such Holder within the meaning ofSection 15 of the Securities Act, with respect to which registration,qualification or compliance has been effected pursuant to this Section 2, and eachunderwriter, if any, and each person who controls within the meaning of Section15 of the Securities Act any underwriter, against all expenses, claims, losses,damages, and liabilities (or actions, proceedings or settlements in respectthereof) arising out of or based on (i) any untrue statement or alleged untruestatement of a material fact contained in any prospectus, offering circular, orother document, including any related registration statement, notification orthe like, incident to any such registration, qualification or compliance, or(ii) any omission or alleged omission to state therein a material fact requiredto be stated therein or necessary to make the statements therein notmisleading, or (iii) any violation by the Company of the Securities Act or anyrule or regulation thereunder applicable to the Company and relating to actionor inaction required of the Company in connection with any such registration,qualification or compliance, and will reimburse each such Holder, each of itsofficers, directors, partners, legal counsel, and accountants and each personcontrolling such Holder, each such underwriter and each person who controls anysuch underwriter, for any legal and any other expenses reasonably incurred inconnection with investigating and defending or settling any such claim, loss,damage, liability or action; provided, however, that theCompany will not be liable in any such case to the extent that any such claim,loss, damage, liability or expense arises out of or is based on any untruestatement or omission based upon written information furnished to the Companyby such Holder or underwriter and stated to be specifically for usetherein.  It is agreed that the indemnityagreement contained in this Section 2.11(a) shall not apply to amounts paid insettlement of any such loss, claim, damage, liability, or action if suchsettlement is effected without the consent of the Company (which consent shallnot be unreasonably withheld).

 

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(b)           Each Holder will, ifRegistrable Securities held by such Holder are included in the securities as towhich such registration, qualification or compliance is being effected,indemnify the Company, each of its directors and officers, legal counsel andaccountants, and each underwriter, if any, of the Company’s securities coveredby such a registration statement, each person who controls the Company or suchunderwriter within the meaning of Section 15 of the Securities Act, each othersuch Holder and each of its officers and directors, and each person controllingsuch other Holder, against all claims, losses, damages and liabilities (oractions in respect thereof) arising out of or based on (i) any untrue statementor alleged untrue statement of a material fact by such Holder contained in anysuch registration statement, prospectus, offering circular or other document,or (ii) any omission or alleged omission to state therein by such Holder amaterial fact required to be stated therein or necessary to make the statementstherein not misleading, and will reimburse the Company and such Holders,directors, officers, legal counsel, accountants, persons, underwriters orcontrol persons for any legal or any other expenses reasonably incurred inconnection with investigating or defending any such claim, loss, damage,liability or action, in each case to the extent, but only to the extent, thatsuch untrue statement or alleged untrue statement or omission or allegedomission is made in such registration statement, prospectus, offering circularor other document in reliance upon and in conformity with written informationfurnished to the Company by such Holder under an instrument duly executed bysuch Holder and stated to be in furnished by such Holder specifically for use therein;provided, however,that the obligations of such Holder hereunder shall not apply to amounts paidin settlement of any such claims, losses, damages or liabilities (or actions inrespect thereof) if such settlement is effected without the consent of suchHolder (which consent shall not be unreasonably withheld); and provided that in no event shall any indemnity under thisSection 2.11(b) exceed the net proceeds from the offering received by suchHolder.

(c)           Each party entitled toindemnification under this Section 2.11 (the “IndemnifiedParty”) shall give notice to the party required to provideindemnification (the “Indemnifying Party”)promptly after such Indemnified Party has actual knowledge of any claim as towhich indemnity may be sought, and shall permit the Indemnifying Party toassume the defense of such claim or any litigation resulting therefrom; provided, however, thatlegal counsel for the Indemnifying Party, who shall conduct the defense of suchclaim or any litigation resulting therefrom, shall be approved by theIndemnified Party (whose approval shall not be unreasonably withheld), and theIndemnified Party may participate in such defense at such party’s expense; and provided further, however, that the failure of any Indemnified Party to givenotice as provided herein shall not relieve the Indemnifying Party of itsobligations under this Section 2, to the extent such failure is notprejudicial.  No Indemnifying Party, inthe defense of any such claim or litigation, shall, except with the consent ofeach Indemnified Party, consent to entry of any judgment or enter into anysettlement that does not include as an unconditional term thereof the giving bythe claimant or plaintiff to such Indemnified Party of a release from allliability in respect to such claim or litigation.  Each Indemnified Party shall furnish suchinformation regarding itself or the claim in question as an Indemnifying Partymay reasonably request in writing and as shall be reasonably required inconnection with defense of such claim and litigation resulting therefrom.

(d)           If the indemnificationprovided for in this Section 2.11 is held by a court of competent jurisdictionto be unavailable to an Indemnified Party with respect to any loss,

 

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liability, claim, damage orexpense referred to herein, then the Indemnifying Party, in lieu ofindemnifying such Indemnified Party hereunder, shall contribute to the amountpaid 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 therelative fault of the Indemnifying Party on the one hand and of the IndemnifiedParty on the other in connection with the statements or omissions that resultedin such loss, liability, claim, damage or expense as well as any other relevantequitable considerations provided, however, that such contribution by such Indemnified Partyshall not in any event exceed an amount equal to the net proceeds to suchIndemnified Party (after deduction of all underwriters’ discounts andcommissions) from the disposition of the Registrable Securities disposed of bysuch Indemnified Party pursuant to the registration, qualification orcompliance effected pursuant to this Section 2. The relative fault of the Indemnifying Party and of the IndemnifiedParty shall be determined by reference to, among other things, whether theuntrue or alleged untrue statement of a material fact or the omission to statea material fact relates to information supplied by the Indemnifying Party or bythe Indemnified Party and to parties’ relative intent, knowledge, access toinformation, and opportunity to correct or prevent such statement or omissions.

(e)           Notwithstanding theforegoing, to the extent that the provisions on indemnification andcontribution contained in the underwriting agreement entered into in connectionwith an underwritten public offering of the Company’s securities are inconflict with the foregoing provisions, the provisions in the underwritingagreement shall control, except with respect to the limitation on the indemnityset forth in the last sentence of Section 2.11(b).

2.12        Transfer or Assignment of Registration Rights.  The rights tocause the Company to register Registrable Securities pursuant to this Section 2may be transferred or assigned by a Holder to a transferee or assignee ofRegistrable Securities that (a) is a general partner, limited partner orretired partner of a Holder that is a partnership or limited partnership; (b) isa subsidiary or parent corporation (or any officer, director or principalstockholder thereof) that owns all of the capital stock of the Holder; (c) is amember or former member of any Holder that is a limited liability company; (d)is a family member or a trust for the benefit of the Holder or such familymember; (e) is an Affiliate of the Holder; (f) is an Affiliated partnership,limited liability company or fund managed by a Holder or any of theirrespective directors, officers, partners or members; or (g) acquires not lessthan 1,000,000 shares of Registrable Securities (as adjusted for stockdividends, combinations, splits, recapitalizations and the like); provided, however, that(i) the transferor shall, promptly after such transfer, furnish to the Companywritten notice of the name and address of such transferee or assignee and thesecurities with respect to which such registration rights are being assignedand (ii) such transferee shall agree to be subject to all restrictions setforth in this Agreement.  Notwithstandingthe foregoing, any other provision of this Agreement or any other provision ofany other agreement among some or all of the parties hereto, 3i TechnologyPartners L.P., Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i GlobalTechnology 2004-06 L.P. and any 3i Permitted Transferee may, from time to time,transfer all or any portion of the shares it owns to any 3i PermittedTransferee; provided that in each such case thetransferee will agree in writing to be subject to the terms of this Agreementto the same extent as if such transferee were an original Holder hereunder.

 

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2.13        Amendment of Registration Rights.  Any provisionof this Section 2 may be amended and the observance thereof may be waived(either generally or in a particular instance and either retroactively orprospectively), only with the written consent of the Company and (i) theholders of at least a majority of the Registrable Securities then outstanding (votingtogether as a single class), (ii) the holders of at least a majority of theSeries B Preferred then outstanding (including shares of Common Stock issuedupon conversion of the Series B Preferred), (iii) holders of at least sixtypercent (60%) of the Series C Preferred then outstanding (including shares ofCommon Stock issued upon conversion of the Series C Preferred),(iv) holders of at least sixty-six and two-thirds percent (66-2/3%) of theSeries D Preferred then outstanding (including shares of Common Stock issuedupon conversion of the Series D Preferred) and (v) holders of at leastsixty-six and two-thirds percent (66-2/3%) of the Series E Preferred thenoutstanding (including shares of Common Stock issued upon conversion of theSeries E Preferred).  Any amendment orwaiver effected in accordance with this Section 2.13 shall be binding upon eachHolder and the Company.

2.14        “Market Stand-Off” Agreement.

(a)           In connection with the Initial PublicOffering, each Holder hereby agrees that such Holder shall not sell, transfer,make any short sale of, grant any option for the purchase of, enter into anyhedging or similar transaction with the same economic effect as a sale orotherwise transfer or dispose of any Common Stock (or any other securities ofthe Company) held by such Holder (other than those included in theregistration) for a period specified by the representative of the underwritersof the Common Stock (or any other securities) of the Company not to exceed onehundred eighty (180) calendar days following the effective date of aregistration statement of the Company filed under the Securities Act inconnection with such offering; provided, however, that allcurrent and future officers and directors of the Company and all current andfuture holders of at least one percent (1%) of the Company’s outstanding votingsecurities enter into similar agreements.

(b)           In connection with anyfollow-on offering of the Company’s securities, each Series A Holder and SeriesA-2 Holder hereby agrees that such Series A Holder and Series A-2 Holder shallnot sell, transfer, make any short sale of, grant any option for the purchaseof, enter into any hedging or similar transaction with the same economic effectas a sale or otherwise transfer or dispose of any Common Stock (or any othersecurities of the Company) held by such Series A Holder and Series A-2 Holder(other than those included in the registration) for a period specified by therepresentative of the underwriters of the Common Stock (or any othersecurities) of the Company not to exceed ninety (90) calendar days followingthe effective date of a registration statement of the Company filed under theSecurities Act in connection with such offering; provided,however, that all current and futureofficers and directors of the Company and all current and future holders of atleast five percent (5%) of the Company’s voting securities enter into similaragreements.

(c)           Each Holder agrees toexecute and deliver such other agreements as may be reasonably requested by theCompany or the underwriter that are consistent with the Holder’s obligationsunder this Section 2.14 or that are necessary to give further effectthereto.  The obligations described inthis Section 2.14 shall not apply to a Special Registration Statement.  The Company may impose stop-transferinstructions with respect to the shares of Common Stock

 

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(or any other securities)subject to the foregoing restriction until the end of the relevant marketstand-off day period.

2.15        Rule 144 Reporting.  With a view to making available to theHolders the benefits of certain rules and regulations of the SEC that maypermit the sale of the Registrable Securities to the public withoutregistration after such time as a public market exists for the Common Stock,the Company agrees to use its commercially reasonable efforts to:

(a)           Make and keep publicinformation available, as those terms are understood and defined in Rule 144,at all times after the date that the Company becomes subject to the reportingrequirements of the Securities Act and the Exchange Act;

(b)           File with the SEC, in atimely manner, all reports and other documents required of the Company underthe Exchange Act; and

(c)           So long as a Holder owns anyRegistrable Securities required to bear the restrictive legends set forth inSection 2.1 above, furnish to such Holder forthwith upon request:  (i) a written statement by the Company as toits compliance with the reporting requirements of Rule 144, and of the ExchangeAct (at any time after it has become subject to such reporting requirements);(ii) a copy of the most recent annual or quarterly report of the Company filedwith the SEC; and (iii) such other reports and documents as a Holder mayreasonably request in connection with availing itself of any rule or regulationof the SEC allowing it to sell any such securities without registration.

ARTICLE 3

COVENANTS OF THE COMPANY

3.1          Basic Financial Information and Reporting.

(a)           The Company will maintain true books andrecords of account in which full and correct entries will be made of all theirbusiness transactions pursuant to a system of accounting established andadministered in accordance with U.S. generally accepted accounting principlesconsistently applied (“GAAP”), and willset aside on their books all such proper accruals and reserves as shall berequired under GAAP.

(b)           The Company will maintain asystem of internal accounting controls similar to those maintained bycorporations of established reputation in the same or similar business.

(c)           As soon as reasonablypracticable after the end of each fiscal year, and in any event within ninety(90) calendar days after the end of each such fiscal year, the Company willfurnish to each Holder of at least 2,000,000 shares of Registrable Securities(as adjusted for any stock dividends, combinations, splits, recapitalizationsand the like) (a “Significant Holder”)a consolidated balance sheet of the Company, as at the end of such fiscal year,and a consolidated statement of income and a statement of cash flows of theCompany, for such year, all prepared in accordance with GAAP and setting forthin each case in comparative form the figures for the previous fiscal year, allin reasonable detail and audited and certified by

 

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independent publicaccountants approved by the audit committee of the Board of Directors (whichshall be comprised solely of non-employee directors).

(d)           As soon as reasonablypracticable after the end of the first, second and third quarterly accountingperiods in each fiscal year of the Company, and in any event within thirty (30)calendar days after the end of each such quarter, the Company will furnish toeach Significant Holder a consolidated balance sheet of the Company as of theend of each such quarterly period, and a consolidated statement of income and astatement of cash flows of the Company for such period and for the currentfiscal year to date, all certified by the Company’s Chief Financial Officer(or, if there is no such officer, the senior employee(s) responsible for theaccounting and financial statements of the Company), prepared in accordancewith GAAP (with the exception that no notes need be attached to suchstatements, and year-end audit adjustments may not have been made) and settingforth in each case in comparative form the figures from the correspondingquarter and year-to-date periods of the previous fiscal year and from theBudget and Operating Plan (defined below).

(e)           As soon as reasonablypracticable after each calendar month, and in any event within thirty (30)calendar days after each such calendar month, the Company will furnish to eachSignificant Holder a consolidated balance sheet of the Company as of the end ofeach such monthly period, and a consolidated statement of income and astatement of cash flows of the Company for such period and for the currentfiscal year to date, all certified by the Company’s Chief Financial Officer(or, if there is no such officer, the senior employee(s) responsible for theaccounting and financial statements of the Company), prepared in accordancewith GAAP (with the exception that no notes need be attached to such statementsand year-end audit adjustments may not have been made) and setting forth ineach case in comparative form the figures from the previous month and from theBudget and Operating Plan.

(f)            The Company will furnish toeach Significant Holder at least thirty (30) calendar days prior to thebeginning of each fiscal year a consolidated annual budget and operating planfor such fiscal year (and as soon as available, any subsequent writtenrevisions thereto) which shall be approved by the Board (the “Budget and Operating Plan”), and astatement of income and a statement of cash flows of the Company for thecurrent fiscal year to date, including a comparison to the Budget and OperatingPlan figures for such current fiscal period, all certified by the Company’sChief Financial Officer (or, if there is no such officer, the senior employee(s)responsible for the accounting and financial statements of the Company) andprepared in accordance with GAAP, with the exception that no notes need beattached to such statements and year-end audit adjustments may not have beenmade.

(g)           In addition to theinformation required to be reported pursuant to Section 3.14 below, theCompany shall provide notice of a Reportable Event (as hereinafter defined) assoon as possible and in any event no later than five (5) days following theoccurrence of said event to each Significant Holder.  The following events shall be “Reportable Events”:

(i)            so long as such SignificantHolder has a right to designate a member or observer of the Board, the receiptby the Company of an offer to buy a controlling interest in the capital stockof the Company or a significant amount of its assets;

 

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(ii)           receipt by the Company ofnotice of the resignation or, subject to applicable laws, serious illness ofthe Chief Executive Officer, the President, the Chief Financial Officer or theChief Operating Officer of the Company;

(iii)          the receipt by the Companyof a notice that the Company is in default under any loan agreement to whichthe Company is a party; and

(iv)          the existence of any knownmaterial default by the Company under this Agreement or any other TransactionDocument (as defined in the Purchase Agreement).

(h)           The Company shall providepromptly any other information regarding the Company’s business to anySignificant Holder that reasonably requests such information.

3.2          Inspection Rights.  Each Significant Holder shall have the right,upon reasonable advance notice, to visit and inspect any of the properties ofthe Company, and to discuss the affairs, finances and accounts of the Companywith its officers, and to review and examine the books and records of theCompany and such other information as is reasonably requested, all duringnormal business hours.  The Company shallmake its officers reasonably available to each Significant Holder during allsuch visits and inspections.  EachSignificant Holder agrees to keep confidential and not misuse, and to use thesame degree of care as such Significant Holder uses to protect its own confidentialinformation, any Company information that the Company identifies as beingconfidential or proprietary (so long as such information is not in the publicdomain) that is obtained by such Significant Holder, except that suchSignificant Holder may disclose such proprietary or confidential information(i) to any partner, subsidiary, parent or such other agent of such SignificantHolder for the purpose of evaluating its investment in the Company as long assuch partner, subsidiary, parent or agent is advised of and bound to theconfidentiality provisions of this Section 3.2; (ii) at such time as it entersthe public domain through no fault of such Significant Holder; (iii) that iscommunicated to such Significant Holder free of any obligation ofconfidentiality; or (iv) that is developed by such Significant Holder or itsagents independently of and without reference to any confidential informationcommunicated by the Company.

3.3          Board Observation Right.

(a)           So long as Bain Capital ownsany capital stock of the Company, the Company shall invite one designatedrepresentative of Bain Capital to attend and participate in all meetings of theBoard (including any meetings of committees of the Board) in a nonvotingadvisory capacity (the “Bain Capital BoardObserver”).  The Company shallgive such designated representative copies of all notices, minutes, consentsand other materials that it provides to its directors at the same time as suchmaterials are provided to the directors.

(b)           So long as NEA owns anycapital stock of the Company, the Company shall invite two designatedrepresentatives of NEA to attend and participate in all meetings of the Board(including any meetings of committees of the Board) in a nonvoting advisorycapacity (the “NEA Board Observers”),one of whom shall initially be Mike O’Dell. The Company shall give such designated representatives copies of allnotices, minutes, consents and other materials that it provides to itsdirectors at the same time as such materials are provided to the directors.

 

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(c)           So long as 3i owns anycapital stock of the Company, the Company shall invite one designatedrepresentative of 3i to attend and participate in all meetings of the Board(including any meetings of committees of the Board) in a nonvoting advisorycapacity (the “3i Board Observer”).  The Company shall give such designatedrepresentatives copies of all notices, minutes, consents and other materialsthat it provides to its directors at the same time as such materials areprovided to the directors.

(d)           So long as Meritech owns anycapital stock of the Company, the Company shall invite one designatedrepresentative of Meritech to attend and participate in all meetings of theBoard (including any meetings of committees of the Board) in a nonvotingadvisory capacity (the “Meritech BoardObserver”).  The Company shallgive such designated representatives copies of all notices, minutes, consentsand other materials that it provides to its directors at the same time as suchmaterials are provided to the directors.

3.4          Directors’ Expenses.  The Company shall reimburse NEA, 3i, Meritechand Bain Capital for all reasonable expenses incurred by the Series B Director,the NEA Board Observers, the Series C Director, the 3i Board Observer, theMeritech Board Observer, the Series D Director, the Series E Director and theBain Capital Board Observer in connection with attendance at Board meetings(including any meetings of committees of the Board) and any other meetings orevents attended on behalf of the Company at the request of the Company’s ChiefExecutive Officer or President.  TheCompany shall not, however, pay any compensation to any of its directors fortheir services as directors, except that the Company may elect to compensateany independent director; provided, however, that any compensation to such independent directorsshall be approved by the compensation committee of the Board of Directors(which shall be comprised solely of non-employee directors).

3.5          Board of Directors Meetings; Board Composition.

(a)           The Company shall hold atleast six (6) Board meetings during every calendar year, unless otherwiseapproved by a majority of the Board.  Allcommittees of the Board shall be appointed by a vote of at least five membersof the Board, and the Series B Director, the Series C Director, the Series DDirector and the Series E Director shall each be given the option to serve onany committee of the Board, including without limitation the compensation andaudit committees (each of which shall be comprised solely of non-employeedirectors).

3.6          Insurance.

(a)           The Company shall maintaindirectors’ and officers’ insurance through a carrier approved by, and on policyterms reasonably acceptable to the Board (including the affirmative approval ofat least five directors) in an amount not less than $10,000,000.

(b)           In addition to theforegoing, the Company shall maintain, for as long as any shares of Series BPreferred, Series C Preferred, Series D Preferred and Series E Preferred shallremain outstanding, directors’ and officers’ liability insurance to cover anyclaims against directors or officers that the Company may incur in the amountof not less than $10,000,000

 

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through a carrier and onterms reasonably acceptable to NEA, 3i, Meritech and Bain Capital and where theCompany is the named beneficiary under such policy.

(c)           In addition to theforegoing, the Company shall maintain key person life insurance covering thelife of Jeffrey Citron in the amount of $2,000,000 payable to the Company.

(d)           In addition to theforegoing, the Company shall maintain, or shall cause to be maintained,property, casualty and liability policies on such terms that are customary fora company of the same size and in the same industry as the Company.

3.7          Reservation of Common Stock.  The Company will at all times reserve andkeep available, solely for issuance and delivery upon the conversion of theSeries Preferred, all Common Stock issuable from time to time upon suchconversion.

3.8          Option Grants; Stock Vesting; Stock Repurchase; Exercise Price.

(a)           The Stock Plan (as definedin the Purchase Agreement) may be amended only with the approval of the Board,subject to the approval requirements of the holders of Series B Preferred, SeriesC Preferred, Series D Preferred and Series E Preferred contained in theRestated Certificate.

(b)           Unless otherwise approved bythe Board (upon the recommendation of the compensation committee of the Board),all stock options and other stock equivalents granted or issued on or after thedate of this Agreement to (i) employees (below the vice president level),consultants, advisors and other service providers shall be subject to vestingas follows:  twenty-five percent (25%) ofsuch stock shall vest at the end of each of the first four anniversariesfollowing the date of grant; provided thatthe optionee continues to provide services throughout the end of each suchvesting period, and (ii) employees (at or above the vice president level) anddirectors shall be subject to vesting as follows:  one forty-eighth (1/48th) of such stock shallvest each month until the four (4) year anniversary of the date of grant; provided that the optionee continues to provide servicesthroughout the end of each such vesting period.

(c)           With respect to any sharesof stock purchased by any employees, directors, consultants, advisors and otherservice providers on or after the date of this Agreement, the Company’srepurchase option shall provide, unless otherwise approved by the Board (uponthe recommendation of the compensation committee of the Board), that upon suchperson’s termination of employment or service with the Company, with or withoutcause, the Company or its assignee (to the extent permitted by applicablesecurities laws) shall have the option to purchase at the lower of cost andfair market value any unvested shares of stock owned by such person.

3.9          Acceleration of Vesting.  Unless otherwise approved by the Board (uponthe recommendation of the compensation committee of the Board), on or after thedate of this Agreement, the Company shall not grant any stock option or stockequivalent containing acceleration of vesting provisions.

 

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3.10        Non-Competition Agreement and ConfidentialInformation and Invention Assignment Agreement.

(a)           The Company shall require all current andfuture members of its senior management team to execute and deliver aNon-Competition Agreement substantially in the form attached as Exhibit E to thePurchase Agreement.

(b)           The Company shall requireall future officers, employees and consultants to execute and deliver aConfidential Information and Invention Assignment Agreement substantially inthe form attached as Exhibit E to the Purchase Agreement; provided, however, thatsuch form may be amended with the approval of a majority of the Board.

3.11        Assignment of Right of First Refusal.  In the eventthe Company elects not to exercise any right of first refusal or right of firstoffer the Company may have on a proposed transfer of any of the Company’soutstanding capital stock pursuant to the Company’s charter documents, bylaws,by contract or otherwise, the Company shall, to the extent it may do so underthe relevant charter or bylaw provision or contract, assign such right of firstrefusal or right of first offer to each Investor on a pro ratabasis.  In the event of such assignment,each Investor shall have a right to purchase its pro rata portion of thecapital stock proposed to be transferred. Each Investor’s pro rataportion shall be equal to the product obtained by multiplying (i) the aggregatenumber of shares proposed to be transferred by (ii) a fraction, the numeratorof which is the number of shares of Registrable Securities held by such Investorat the time of the proposed transfer and the denominator of which is the totalnumber of shares owned by all Investors at the time of such proposedtransfer.  To the extent of any conflictbetween this Section 3.11 and the Third Amended and Restated Right of FirstRefusal, Co-Sale and Voting Agreement by and among the Company and thestockholders of the Company listed on the exhibits thereto dated on or aboutthe date of this Agreement (the “ROFR Agreement”),the ROFR Agreement shall prevail.

3.12        Market Stand-Off Agreement.  The Company shall cause (i) all entities andindividuals that become stockholders of the Company after the Closing (as suchterm is defined in the Purchase Agreement), (ii) all employees, executives,consultants, advisors and other service providers to the Company who receivestock options of the Company, and (iii) all persons and entities who receivewarrants for the Company’s capital stock to be bound by market stand-offrestrictions substantially similar to the market stand-off agreement containedin Section 2.14 above.

3.13        Payment of Taxes, Compliance with Laws, etc.  The Companywill pay and discharge all lawful taxes, assessments and governmental chargesor levies imposed upon it or upon its income or property before the same shallbecome overdue, as well as all lawful claims for labor, materials and supplieswhich, if not paid when due, might become a lien or charge upon its property orany part thereof; provided, however,that the Company shall not be required to pay and discharge any such tax,assessment, charge, levy, or claim so long as the validity thereof is beingcontested by the Company in good faith by appropriate proceedings and anadequate reserve therefor has been established on its books.  All transfer, excise or other taxes payableto any jurisdiction (in the United States and outside of the United States)and/or by reason of the sale or issuance of Series B Preferred Stock pursuantto the Series B Preferred

 

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Purchase Agreement(except for such taxes payable by reason of any subsequent transfer of theSeries B Preferred Stock) shall be paid or provided for by the Company.  All transfer, excise or other taxes payableto any jurisdiction (in the United States and outside of the United States)and/or by reason of the sale or issuance of Series C Preferred Stock pursuantto the Series C Purchase Agreement (except for such taxes payable by reason ofany subsequent transfer of the Series C Preferred Stock) shall be paid orprovided for by the Company.  Alltransfer, excise or other taxes payable to any jurisdiction (in the UnitedStates and outside of the United States) and/or by reason of the sale orissuance of Series D Preferred Stock pursuant to the Purchase Agreement (exceptfor such taxes payable by reason of any subsequent transfer of the Series DPreferred Stock) shall be paid or provided for by the Company.  All transfer, excise or other taxes payableto any jurisdiction (in the United States and outside of the United States)and/or by reason of the sale or issuance of Series E Preferred Stock pursuantto the Purchase Agreement (except for such taxes payable by reason of anysubsequent transfer of the Series E Preferred Stock) shall be paid or providedfor by the Company.  All United Statesfederal and state, and all other jurisdictions, income tax returns of theCompany for any period shall be prepared and signed by an independentaccounting firm acceptable to either (i) two-thirds of the Series B Holders,the Series C Holders, the Series D Holders and the Series E Holders (whoseconsent shall not be unreasonably withheld) (voting together as a single classand on an as-converted to Common Stock basis) or (ii) the audit committee ofthe Board of Directors (which shall be comprised solely of non-employeedirectors).  The preparation of suchreturns shall be at the Company’s expense. The Company will use all commercially reasonable efforts to comply withall applicable laws and regulations in the conduct of its business including,without limitation, all environmental laws.

3.14        Material Changes and Litigation.  The Companywill promptly notify each Series B Holder, Series C Holder, Series D Holder andSeries E Holder of any material adverse change in the business, properties,assets or condition, financial or otherwise, of the Company or any subsidiaryand of any litigation or governmental or regulatory proceeding or investigationpending or, to the best knowledge of the Company, threatened against theCompany or against any officer, director, any person in charge of a principalbusiness function or any other individual designated by the Board as a keyemployee or principal stockholder of the Company or any subsidiary, materiallyadversely affecting or which, if adversely determined, could materiallyadversely affect its present or proposed business, properties, assets orcondition.

3.15        Qualified Small Business.  The Company will use reasonable efforts tocomply with the reporting and record-keeping requirements of Section 1202 ofthe Internal Revenue Code of 1986, as amended (the “Code”), any regulations promulgated thereunder and anysimilar state laws and regulations, and agrees not to repurchase any stock ofthe Company if such repurchase would cause the Shares not to so qualify as “Qualified Small Business Stock,” so long as the Board determines thatit is in the best interests of and not unduly burdensome to the Company tocomply with the provisions of Section 1202 of the Code.

3.16        Real Property Holding Corporation.  The Companyshall provide prompt notice to NEA following any “determination date” (asdefined in Treasury Regulation Section 1.897-2(c)(1)) on which the Companybecomes a United States real property holding corporation.  In addition, upon a written request by NEA,the Company shall provide NEA with a written statement informing NEA whetherNEA’s interest in the Company constitutes a United

 

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States real propertyinterest.  The Company’s determination shallcomply with the requirements of Treasury Regulation Section 1.897-2(h)(1) orany successor regulation, and the Company shall provide timely notice to theInternal Revenue Service, in accordance with and to the extent required byTreasury Regulation Section 1.897-2(h)(2) or any successor regulation, thatsuch statement has been made.  TheCompany’s written statement to NEA shall be delivered to NEA within 10 days ofNEA’s written request therefor.  TheCompany’s obligation to furnish such written statement shall continuenotwithstanding the fact that a class of the Company’s stock may be regularlytraded on an established securities market or the fact that there is nopreferred stock then outstanding.

3.17        Management Compensation.  The Company shall not pay to its managementteam compensation in excess of the compensation customarily paid tomanagement-level employees of companies of similar sizes, of similarmaturities, and in similar businesses of that of the Company without theconsent of the Compensation Committee (which shall be composed solely of non-employeedirectors).

3.18        Enforcement of Bylaws.  For so long as the outstanding shares ofSeries B Preferred (including shares of Common Stock issued or issuable uponconversion of the Series B Preferred), Series C Preferred (including shares ofCommon Stock issued or issuable upon conversion of the Series C Preferred),Series D Preferred (including shares of Common Stock issued or issuable uponconversion of the Series D Preferred) or Series E Preferred (including sharesof Common Stock issued or issuable upon conversion of the Series E Preferred)represent at least one percent (1%) of the outstanding voting power of thecapital stock of the Company (calculated on an as-converted to Common Stockbasis), the Company and the Investors shall promptly take all corporate andother actions necessary to enforce Section 3.17 of the Company’s by-laws(relating to Board approval rights).

3.19        No Impairment.  The Company shall not take, or fail to take,any action, or avoid or seek to avoid the observance or performance of any ofthe terms of this Agreement to be observed or performed hereunder, but will atall times in good faith assist in the carrying out of all the provisions ofthis Agreement and in the taking of all action as may be necessary orappropriate in order to protect the rights of the Investors hereunder.

3.20        Environmental Covenant.  The Company shall continue to comply in allmaterial respects with any applicable statute, law or regulation relating to theenvironment or occupational health and safety and shall notify the Investorspromptly if the Company (or any of its subsidiaries) shall be in violation ofany such applicable statutes, laws or regulations.

3.21        Employment Covenant.  The Company shall continue to comply with anyapplicable statute, law or regulation relating to equal employment opportunityand other laws related to employment, including but not limited to, the healthand safety of such employees and any labor rights of such employees.

3.22        Board and Officer Covenant.  The Company shall deliver to each of itsofficers and directors on the date hereof, and to each officer and directorappointed or elected after the date hereof, a notice, in the form attachedhereto as Exhibit B regarding Article XI of

 

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the Restated Certificatein effect on the date hereof, or in the case of any such officer or directorappointed or elected after the date hereof, at the time of such appointment orelection.

3.23        Amended and Restated Certificate of Incorporation.  The Companyshall file an amendment to the Company’s Amended and Restated Certificate ofIncorporation within 60 days of the Closing Date (as such term is defined inthe Purchase Agreement) to reduce the number of authorized shares of Series EPreferred (and reduce the corresponding number of shares of Common Stock) tothat number of shares of Series E Preferred that are then issued andoutstanding and all Investors agree to provide all necessary consents to enablethe Company to effect such actions.

3.24        Termination of Covenants; Assignment of Covenants.  Unlessterminated earlier pursuant to the terms and provisions hereof, the covenantsof the Company contained in this Section 3 shall terminate and be of no furtherforce and effect upon the consummation of an Initial Public Offering in whichall of the Series Preferred converts to Common Stock.  The rights of the Investors contained in thisSection 3 may be transferred or assigned by an Investor to a transferee orassignee of the Shares that (a) is a general partner, limited partner orretired partner of such Investor that is a partnership; (b) is a member orformer member of any Investor that is a limited liability company; (c) is afamily member or a trust for the benefit of the Investor or such family member,(d) is a subsidiary or parent corporation (or any officer, director orprincipal stockholder thereof) that owns all of the capital stock of theInvestor; (e) is an Affiliate of the Investor; (f) is an Affiliatedpartnership, limited liability company or fund managed by an Investor or any oftheir respective directors, officers, partners or members; or (g) acquires notless than 1,000,000 Registrable Securities (as adjusted for stock dividends, combinations,splits, recapitalizations and the like); provided, however, that (i) the transferor shall, within a reasonabletime after such transfer, furnish to the Company written notice of the name andaddress of such transferee or assignee and the securities with respect to whichsuch rights and obligations are being assigned and (ii) such transferee shallagree in writing to be subject to all restrictions set forth in thisAgreement.  Notwithstanding the foregoing,any other provision of this Agreement or any other provision of any otheragreement among some or all of the parties hereto, 3i Technology Partners L.P.,Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3i Global Technology2004-06 L.P. and any 3i Permitted Transferee may, from time to time, transferall or any portion of the shares it owns to any 3i Permitted Transferee; provided, that in each such case the transferee will agreein writing to be subject to the terms of this Agreement to the same extent asif such transferee were an original Holder hereunder.

ARTICLE 4

RIGHTS OF FIRST REFUSAL

4.1          Subsequent Offerings.  Each Series B Holder, Series C Holder, SeriesD Holder and Series E Holder (each, a “Section 4 Holder”and collectively, the “Section 4 Holders”)shall have a right of first refusal to purchase its pro ratashare of all New Securities that the Company may, from time to time, propose tosell and issue after the date of this Agreement.  Each Section 4 Holder’s pro ratashare is equal to the ratio of (a) the number of shares of Common Stock(including all shares of Common Stock issuable or issued upon

 

30



 

conversion of the Shares)of which such Section 4 Holder is deemed to be a holder immediately prior tothe issuance of such New Securities to (b) the total number of shares of theoutstanding Common Stock (including all shares of Common Stock issued orissuable upon conversion of the Shares, and excluding any shares of CommonStock issuable upon exercise or conversion of any options, warrants or otherrights to purchase shares of Common Stock) immediately prior to the issuance ofthe New Securities.

4.2          Exercise of Rights.  If the Company proposes to issue any NewSecurities, it shall give each Section 4 Holder written notice of itsintention, describing the New Securities, the price and the terms andconditions upon which the Company proposes to issue the same.  Each Section 4 Holder shall have twenty (20)days from the receipt of such notice to agree to purchase its pro rata share of the New Securities for the price and uponterms and conditions at least as favorable to the Company as those specified inthe notice by giving written notice to the Company and stating therein thequantity of New Securities to be purchased. Notwithstanding the foregoing, the Company shall not be required tooffer or sell such New Securities to any Section 4 Holder who would cause theCompany to be in violation of applicable federal or state securities laws byvirtue of such offer or sale.

4.3          Issuance of New Securities to Other Persons.  If not all ofthe Section 4 Holders elect to purchase their pro ratashare of the New Securities, then the Company shall promptly notify in writingthe Section 4 Holders who do so elect and shall offer such Section 4 Holdersthe right to acquire such unsubscribed shares. Each such Section 4 Holder shall have ten (10) days after receiptof such notice to notify the Company of its election to purchase all or aportion thereof of the unsubscribed shares. If the Section 4 Holders fail to exercise in full the rights of firstrefusal, the Company shall have ninety (90) days thereafter to sell the NewSecurities in respect of which the Section 4 Holder’s rights were notexercised, at a price and upon general terms and conditions not more favorableto the purchasers thereof than specified in the Company’s notice to the Section4 Holders pursuant to Section 4.2 hereof. If the Company has not sold such New Securities within ninety (90) daysof the notice provided pursuant to Section 4.2, the Company shall notthereafter issue or sell any New Securities, without first offering suchsecurities to the Section 4 Holders in the manner provided above.

4.4          Termination and Waiver of Rights of First Refusal.  The rights offirst refusal established by this Section 4 shall not apply to, and shallterminate upon an Initial Public Offering in which all of the Series Preferredconverts to Common Stock.  The rights offirst refusal established by this Section 4 may be amended, or any provisionwaived, with the written consent of the Company and the Section 4 Holdersholding (i) at least sixty-six and two-thirds percent (66-2/3%) of theoutstanding shares of the Series B Preferred, Series C Preferred and Series DPreferred then held by all Series B Holders, Series C Holders and Series DHolders (including shares of Common Stock issuable or issued upon conversion ofthe Series B Preferred, the Series C Preferred and Series D Preferred) and (ii)sixty-six and two-thirds percent (66-2/3%) of the outstanding shares of theSeries E Preferred then held by all Series E Holders (including shares ofCommon Stock issuable or issued upon conversion of the Series E Preferred), oras permitted by Section 5.1 below.

4.5          Transfer of Rights of First Refusal.  The rights offirst refusal of each Section 4 Holder under this Section 4 may be transferredto the same parties, subject to the same

 

31



 

restrictions, as anytransfer of the rights pursuant to Section 3.28 above.  For purposes of this Section 4, “Section 4 Holders” includes any general partners, limitedpartners, members and affiliates of the Section 4 Holders.  Each Section 4 Holder shall be entitled toapportion the right of first refusal hereby granted it among itself and itsgeneral partners, limited partners, members and affiliates in such proportionsas it deems appropriate.  Notwithstandingthe foregoing, any other provision of this Agreement or any other provision ofany other agreement among some or all of the parties hereto, 3i TechnologyPartners L.P., Mayflower L.P., 3i Pan European Technology 2004-06 L.P., 3iGlobal Technology 2004-06 L.P.  and any3i Permitted Transferee may, from time to time, transfer all or any portion ofthe shares it owns to any 3i Permitted Transferee; provided,that in each such case the transferee will agree in writing to be subject tothe terms of this Agreement to the same extent as if such transferee were anoriginal Holder hereunder.

4.6          Excluded Securities.  The defined term “New Securities” does not include shares of Common Stockissued or issuable:

(a)           upon conversion of shares ofSeries Preferred;

(b)           to officers, directors oremployees of, or consultants to, the Company pursuant to stock option or stockpurchase plans or agreements (including, for example, restricted stock awardagreements) on terms approved by the Board (upon the recommendation of thecompensation committee of the Board) up to an aggregate amount of 39,201,900shares of Common Stock (as adjusted for stock dividends, combinations, splits,recapitalizations and the like), including shares issued prior to the date ofthis Agreement;

(c)           pursuant to a Qualified IPO(as such term is defined in the Restated Certificate);

(d)           with the vote or writtenconsent of holders of at least (i) a majority of the outstanding shares ofSeries B Preferred, (ii) sixty percent (60%) of the outstanding shares ofSeries C Preferred, (iii) sixty-six and two-thirds percent (66-2/3%) of theoutstanding shares of Series D Preferred and (iv) sixty-six and two-thirdspercent (66-2/3%) of the outstanding shares of Series E Preferred, each suchseries voting separately as a distinct class;

(e)           pursuant to the acquisitionor licensing of technology by the Company or to a strategic partner of theCompany in connection with a corporate partnering transaction, each of which isapproved by the holders of at least sixty-six and two-thirds percent (66-2/3%)of the then-outstanding shares of Series B Preferred, Series C Preferred,Series D Preferred and Series E Preferred (voting together as a single classand on an as-converted to Common Stock basis);

(f)            pursuant to an acquisitionof an unaffiliated corporation by the Company by merger, purchase of all orsubstantially all of the assets or reorganization resulting in the ownership bythe Company of not less than 51% of the voting power of such corporation; or

(g)           to financial institutions orlessors in connection with commercial credit arrangements, equipmentfinancings, commercial property lease transactions or similar transactions thatare approved by the holders of at least sixty-six and two-thirds percent (66-2/3%)of the then-outstanding shares of Series B Preferred, Series C Preferred,Series D

 

32



 

Preferred and Series EPreferred (voting together as a single class and on an as-converted to CommonStock basis).

ARTICLE 5

MISCELLANEOUS

5.1          Amendment and Waiver.

(a)           Except as otherwise expressly provided, theprovisions of this Agreement may be amended, modified or waived only upon thewritten consent of (i) the Company, (ii) the holders of at least a majority ofthe Registrable Securities then outstanding, (iii) the holders of at least amajority of the then-outstanding shares of Series B Preferred (including sharesof Common Stock issued upon conversion of the Series B Preferred), (iv) theholders of at least sixty percent (60%) of the then outstanding shares ofSeries C Preferred (including shares of Common Stock issued upon conversion ofthe Series C Preferred), (v) the holders of at least sixty-six and two-thirdspercent (66-2/3%) of the then outstanding shares of Series D Preferred(including shares of Common Stock issued upon conversion of the Series DPreferred) and (vi) the holders of at least sixty-six and two-thirdspercent (66-2/3%) of the then outstanding shares of Series E Preferred(including shares of Common Stock issued upon conversion of the Series EPreferred); provided, however, that anyamendment, modification or waiver of a provision explicitly providing BainCapital, NEA, 3i or Meritech with a right or benefit shall also require theseparate written consent of Bain Capital, NEA, 3i or Meritech, as may beapplicable.

(b)           Any amendment or waivereffected in accordance with this Agreement shall be binding upon each Investorand Holder of Registrable Securities in accordance with the terms hereof.

5.2          Waiver of Preemptive Rights.  The Investors as holders of at leastsixty-six and two-thirds percent (66-2/3%) of the outstanding shares of theSeries B Preferred, Series C Preferred and Series D Preferred hereby fullywaive on behalf of all Section 4 Holders their rights of first refusal,including all notice provisions thereof, under Article IV of this Agreement andArticle IV of the Prior Agreement with respect to the issuance and sale ofshares of Series E Preferred Stock of the Company (and the Common Stockissuable upon conversion thereof) at the first and any subsequent closingpursuant to the Purchase Agreement as in effect on the date hereof.

5.3          Governing Law.  This Agreement shall be governed in allrespects by and construed under the internal laws of the State of Delaware assuch laws are applied to agreements that are entered into by and among Delawareresidents while located in Delaware and that are to be performed entirelywithin Delaware, without regard to principles of conflicts of law.

5.4          Jurisdiction; Venue.  With respect to any disputes arising out ofor related to this Agreement, the parties consent to the exclusive jurisdictionof, and venue in, the state courts in the City of Baltimore, in the State ofMaryland (or in the event of exclusive federal jurisdiction, the courts of theDistrict of Maryland).

 

33



 

5.5          Waiver of Jury Trial.  EACH OF THE PARTIES HERETOHEREBY VOLUNTARILY AND IRREVOCABLY WAIVES TRIAL BY JURY IN ANY ACTION OR OTHERPROCEEDING BROUGHT IN CONNECTION WITH THIS AGREEMENT, ANY OF THE OTHERTRANSACTION DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED HEREBY ORTHEREBY.

5.6          Equitable Remedies.  The parties hereto agree that irreparableharm would occur in the event that any of the agreements and provisions of thisAgreement were not performed fully by the parties hereto in accordance withtheir specific terms or conditions or were otherwise breached, and that moneydamages are an inadequate remedy for breach of this Agreement because of thedifficulty of ascertaining and quantifying the amount of damage that will besuffered by the parties hereto in the event that this Agreement is notperformed in accordance with its terms or conditions or is otherwisebreached.  It is accordingly herebyagreed that the parties hereto shall be entitled to an injunction or injunctionsto restrain, enjoin and prevent breaches of this Agreement by the other partiesand to enforce specifically such terms and provisions of this Agreement in anycourt of the United States or any state having jurisdiction, such remedy beingin addition to and not in lieu of, any other rights and remedies to which theother parties are entitled to at law or in equity.

5.7          Arbitration.  Regarding any dispute arising hereunder, theparties hereto shall first attempt in good faith to resolve such dispute amongthe applicable parties.  If such attemptfails, then any dispute between or among the parties to this Agreement relatingto or in respect of this Agreement, its negotiation, execution performance,subject matter, or any course of conduct or dealing or actions under or inrespect of this Agreement, shall be submitted to, and resolved exclusivelypursuant to arbitration in accordance with the commercial arbitration rules ofthe American Arbitration Association (“AAA”) or the Judicial Arbitration and Mediation Services,Inc. (“JAMS”). Such arbitration shall take place in Baltimore, Maryland, with onemutually acceptable arbitrator presiding at such arbitration proceeding, andshall be subject to the substantive law of the State of Delaware.  If after sixty (60) days the parties cannotagree on an acceptable arbitrator, then the Chairman or other authorized AAA orJAMS representative shall appoint an arbitrator.  Decisions pursuant to such arbitration shallbe final, conclusive and binding on the parties.  Upon the conclusion of arbitration, the partiesmay apply to any state court of the State of Delaware, the United StatesDistrict Courts in the State of Delaware, any state court of the State ofMaryland or the United States District Courts in the District of Maryland toenforce the decision pursuant to such arbitration.  ACCORDINGLY, EACH OF THE PARTIES HERETOHEREBY WAIVES ITS RIGHT, IF ANY, TO A JURY TRIAL IN RESPECT OF SUCH DISPUTE.

5.8          Successors and Assigns.  Except as otherwise expressly providedherein, the provisions hereof shall inure to the benefit of, and be bindingupon, the successors, assigns, heirs, executors, and administrators of theparties hereto and shall inure to the benefit of and be enforceable by eachperson who shall be a holder of Registrable Securities from time to time.

5.9          Entire Agreement.  This Agreement, the exhibits and scheduleshereto, the Purchase Agreement and the other documents delivered pursuantthereto constitute the full and entire understanding and agreement among theparties hereto, whether written or oral, with regard to the subjects hereof andthereof, and no party shall be liable or bound to any other party

 

34



 

in any manner with regardto the subjects hereof or thereof by any warranties, representations orcovenants except as specifically set forth herein and therein.  Any previous agreements among the partiesrelative to the specific subject matter hereof, including but not limited tothe Prior Agreement, are terminated and superseded by this Agreement.

5.10        Severability.  In the event one or more of the provisions ofthis Agreement should, for any reason, be held to be invalid, illegal orunenforceable in any respect, such invalidity, illegality, or unenforceabilityshall not affect any other provisions of this Agreement, and this Agreementshall be construed as if such invalid, illegal or unenforceable provision hadnever been contained herein.

5.11        Delays or Omissions.  It is agreed that no delay or omission toexercise any right, power, or remedy accruing to any Holder, upon any breach,default or noncompliance of the Company under this Agreement shall impair anysuch right, power or remedy, nor shall it be construed to be a waiver of anysuch breach, default or noncompliance, or any acquiescence therein, or of anysimilar breach, default or noncompliance thereafter occurring.  It is further agreed that any waiver, permit,consent or approval of any kind or character on any Holder’s part of anybreach, default or noncompliance under this Agreement or any waiver on suchHolder’s part of any provisions or conditions of this Agreement must be inwriting and shall be effective only to the extent specifically set forth insuch writing.  All remedies, either underthis Agreement, by law, or otherwise afforded to Holders, shall be cumulativeand not alternative.

5.12        Notices.  All notices and other communications requiredor permitted hereunder shall be in writing and shall be mailed by registered orcertified mail, postage prepaid, sent by facsimile or otherwise:

(a)           if to Bain Capital, at Bain Capital’s addressor facsimile number set forth on the Schedule of Investors attached hereto as Exhibit A or as shown inthe Company’s records, as may be updated in accordance with the provisionshereof;

(b)           if to NEA, at NEA’s addressor facsimile number set forth on the Schedule of Investors attached hereto as ExhibitA or as shown in the Company’s records, as may be updated in accordancewith the provisions hereof, and addressed to the attention of Louis Citron,Esq., with a copy to Trevor J.  Chaplick,Esq., Wilson Sonsini Goodrich & Rosati, P.C., Two Fountain Square, 11921Freedom Drive, Reston, Virginia 20190;

(c)           if to any other Holder, atsuch address or facsimile number as shown in the Company’s records, or, until anysuch Holder so furnishes an address or facsimile number to the Company, then toand at the address of the last Holder of the Registrable Securities in questionfor which the Company has contact information in its records; or

(d)           if to the Company, one copyshould be sent to its address or facsimile number set forth on the signaturepages hereof and addressed to the attention of the Chief Executive Officer, orat such other address or facsimile number as the Company shall have furnishedto the Investors, with a copy to Robinson Markel, Esq., Katten Muchin ZavisRosenman, 575 Madison Avenue, New York, New York 10022.

 

35



 

Each such notice or othercommunication shall for all purposes of this Agreement be treated as effectiveor as having been given:  (a) upondelivery, if personally delivered; (b) three (3) business days after pre-paiddeposit for next business day delivery with a commercial courier service (e.g., DHL or FedEx); (c) five (5) business days afterdeposit, postage pre-paid, with first class airmail (which airmail must becertified or registered); or (d) upon confirmation of facsimile transfer whensent by facsimile.

5.13        Attorneys’ Fees.  In the event that any arbitration, suit oraction is instituted to enforce any provision in this Agreement, the prevailingparty in such dispute shall be entitled to recover from the losing party allfees, costs and expenses of enforcing any right of such prevailing party underor with respect to this Agreement, including, without limitation, suchreasonable fees and expenses of attorneys and accountants, which shall include,without limitation, all reasonable fees, costs and expenses of appeals.

5.14        Titles and Subtitles.  The titles of the sections and subsections ofthis Agreement are for convenience of reference only and are not to beconsidered in construing this Agreement.

5.15        Limitation on Subsequent Rights.  After the dateof this Agreement, for so long as the outstanding shares of Series B Preferred(including the Common Stock issued or issuable upon conversion of the Series BPreferred), outstanding shares of Series C Preferred (including the CommonStock issued or issuable upon conversion of the Series C Preferred),outstanding shares of Series D Preferred (including the Common Stock issued orissuable upon conversion of the Series D Preferred) or outstanding shares ofSeries E Preferred (including the Common Stock issued or issuable uponconversion of the Series E Preferred) represent at least 1% of the outstandingvoting power of the capital stock of the Company (calculated on an as-convertedto Common Stock basis), the Company shall not (a) without the prior writtenconsent of (x) the holders of at least a majority of the Registrable Securitiesthen outstanding, (y) the holders of at least sixty-six and two-thirds percent(66-2/3%) of the shares of Series B Preferred, Series C Preferred and Series DPreferred then outstanding (voting together as a single class and includingshares of Common Stock issuable or issued upon conversion of the Series BPreferred, the Series C Preferred and the Series D Preferred), and (z) theholders of at least sixty-six and two-thirds percent (66-2/3%) of the shares ofSeries E Preferred then outstanding enter into any agreement with any holder orprospective holder of any securities of the Company that would grant suchholder Rights of First Refusal, information rights, registration rights or anyother rights contained in this Agreement on a parity with or senior to thosegranted to the Holders hereunder or (b) without the prior written consentof (x) the holders of at least a majority of the Registrable Securities thenoutstanding, (y) the holders of at least sixty-six and two-thirds percent(66-2/3%) of the shares of Series B Preferred, Series C Preferred and Series DPreferred then outstanding (voting together as a single class and includingshares of Common Stock issuable or issued upon conversion of the Series BPreferred, the Series C Preferred and the Series D Preferred) and (z) theholders of at least sixty-six and two-thirds percent (66-2/3%) of the shares ofSeries E Preferred then outstanding, enter into any agreement with any holderor prospective holder of any securities of the Company which would allow suchholder or prospective holder (i) to include such securities in any registrationfiled under Section 2.3, Section 2.4 or Section 2.5 hereof, unless under theterms of such agreement, such holder or prospective holder may include suchsecurities in any such registration only to the extent that the

 

36



 

inclusion of hissecurities will not reduce the amount of the Registrable Securities of theHolders which is included or (ii) to make a demand registration.

5.16        Additional Investors.  Notwithstanding anything to the contrarycontained herein, if the Company shall issue additional shares of its Series EPreferred pursuant to the Purchase Agreement, any purchaser of such shares ofSeries E Preferred may become a party to this Agreement by executing anddelivering an additional counterpart signature page to this Agreement and shallbe deemed an “Investor,” a “Holder” and a party hereunder.

5.17        Non-Business Days.  Notwithstanding anything to the contrarycontained herein, in the event that any calendar day referred to in thisAgreement falls on a Saturday, a Sunday or a U.S. holiday (each a “Non-Business Day”), then any transaction or notice thatmust be effected or delivered on such a Non-Business Day will instead berequired to be effected or delivered on the next day that is not a Non-BusinessDay.

5.18        Counterparts.  This Agreement may be executed in any numberof counterparts, each of which shall be an original, but all of which togethershall constitute one instrument.

5.19        Telecopy Execution and Delivery.  A facsimile,telecopy or other reproduction of this Agreement may be executed by one or moreparties hereto, and an executed copy of this Agreement may be delivered by oneor more parties hereto by facsimile or similar electronic transmission devicepursuant to which the signature of or on behalf of such party can be seen, andsuch execution and delivery shall be considered valid, binding and effectivefor all purposes.  At the request of anyparty hereto, all parties hereto agree to execute an original of this Agreementas well as any facsimile, telecopy or other reproduction hereof.

5.20        Aggregation of Stock.  All shares of Registrable Securities held oracquired by affiliated entities or persons or persons or entities under commonmanagement or control shall be aggregated together for the purpose ofdetermining the availability of any rights under this Agreement.

 

37


IN WITNESS WHEREOF, theparties hereto have executed this Third Amended and Restated Investors’ RightsAgreement as of the date set forth in the first paragraph hereof.

 

 

 

“COMPANY”

 

 

 

 

 

 

 

 

 

 

 

 

VONAGE HOLDINGS CORP.

 

 

 

 

 

 

 

 

 

/s/ Jeffrey Citron

 

 

 

 

Jeffrey Citron

 

 

 

 

 

 

Chief Executive Officer

 

 

 

 

 

 

 

 

 

 

 

 

Address:

2147 Route 27

 

 

 

 

Edison, NJ 08817

 

 

 

 

 

 

 

 

38



 

“INVESTORS”

 

 

 

 

 

BAIN CAPITAL VENTURE FUND 2005, L.P.

 

 

 

By:

Bain Capital Venture Partners 2005, L.P.,

 

 

its General Partner

 

 

By:

Bain Capital Venture Investors, LLC,

 

 

its General Partner

 

 

 

 

 

 

By:

/s/ Michael A. Krupka

 

 

 

Name: Michael A. Krupka

 

 

 

Title: Managing Director

 

 

 

 

 

 

SANKATY CREDIT OPPORTUNITIES, L.P.

 

By:

Sankaty Credit Opportunities Investors, LLC,

 

 

 

its general partner

 

 

By:

Sankaty Credit Member, LLC,

 

 

 

the managing member of the general partner

 

 

 

 

 

 

By:

/s/ Jonathan S. Lavine

 

 

 

Name: Jonathan S. Lavine

 

 

 

Title: Managing Director

 

 

 

 

 

 

SANKATY CREDIT OPPORTUNITIES II, L.P.

 

By:

Sankaty Credit Opportunities Investors II, LLC,

 

 

its general partner

 

 

By:

Sankaty Credit Member, LLC,

 

 

 

the managing member of the general partner

 

 

 

 

 

By:

/s/ Jonathan S. Lavine

 

 

 

Name: Jonathan S. Lavine

 

 

 

Title: Managing Director

 

 

39



 

 

PROSPECT HARBOR CREDIT PARTNERS, L.P.

 

By:

Prospect Harbor Investors, LLC,

 

 

its general partner

 

By:

Sankaty Credit Member, LLC,

 

 

the managing member of the general partner

 

 

 

 

By:

/s/ Jonathan S. Lavine

 

 

Name: Jonathan S. Lavine

 

 

Title:  Managing Director

 

 

 

 

BROOKSIDE CAPITAL PARTNERS FUND, L.P.

 

By:

Brookside Capital Investors, L.P.,

 

 

its general partner

 

By:

Brookside Capital Management, LLC,

 

 

its general partner

 

 

 

 

By:

/s/ Domenic J. Ferrante

 

 

Name: Domenic J. Ferrante

 

 

Title: Managing Director

 

 

 

 

BCIP ASSOCIATES III, LLC

 

By:

BCIP Associates III,

 

its sole member and manager

 

 

 

BCIP ASSOCIATES III-B, LLC

 

By:

BCIP Associates III-B,

 

its sole member and manager

 

 

 

By:

Bain Capital Investors, LLC

 

their Managing Partner

 

 

 

By:

/s/ Michael A. Krupka

 

 

Name: Michael A. Krupka

 

 

Title: Authorized Person

 

 

 

 

RGIP, LLC

 

 

 

By:

/s/ R. Bradford Malt

 

 

Name: R. Bradford Malt

 

 

Title: Managing Member

 

40



 

NEW ENTERPRISE ASSOCIATES 11, L.P.

 

 

 

By:

NEA Partners 11, L.P., its General Partner

 

By:

NEA 11 GP, LLC, its General Partner

 

 

 

 

By:

/s/ Eugene A. Trainor, III

 

 

Name: Eugene A. Trainor, III

 

 

 

Title: Manager

 

 

 

 

 

 

NEW ENTERPRISE ASSOCIATES 10, L.P.

 

 

 

By:

NEA Partners 10, L.P., its General Partner

 

 

 

 

By:

/s/ Eugene A. Trainor, III

 

 

Name: Eugene A. Trainor, III

 

 

 

Title: General Partner

 

 

 

 

 

 

NEA VENTURES 2003, L.P.

 

 

 

By:

/s/ Pamela J. Clark

 

 

Pamela J. Clark, Vice President

 

 

 

 

 

 

 

 

 

 

 

Ryan D. Drant

 

 

 

 

 

 

 

 

 

 

 

Charles M. Linehan

 

 

 

 

 

 

41



 

 

 

 

 

 

 

THE BOARD OF TRUSTEES OF THE LELAND STANFORD JUNIOR UNIVERSITY

 

 

 

 

 

By:

/s/

 

 

 

Name:

 

 

 

Title:

 

 

 

 

 

 

3I TECHNOLOGY PARTNERS L.P.

 

 

 

 

 

By:

3i Technology Associates LLC, its general partner

 

 

By:

3i Technology Corporation, its manager

 

 

 

 

 

By:

/s/ J. Sanford Miller

 

 

 

Name: J. Sanford Miller

 

 

 

Title: Managing Director

 

 

 

 

 

 

MAYFLOWER L.P.

 

 

 

 

 

Signed on behalf of Mayflower L.P.

 

 

acting by its manager, 3i Investments plc, by

 

 

 

 

 

/s/

 

 

Authorized Signatory

 

 

 

 

 

 

3i PAN EUROPEAN TECHNOLOGY

 

 

2004-06 L.P.

 

 

 

 

 

 

 

Signed on behalf of 3i Pan European Technology

2004-06 L.P.

 

 

acting by its manager, 3i Investments plc, by

 

 

 

 

 

 

/s/

 

 

Authorized Signatory

 

42



 

 

 

 

 

 

 

3i GLOBAL TECHNOLOGY 2004-06 L.P.

 

 

 

 

 

Signed on behalf of 3i Global Technology 2004-06

 

 

L.P.

 

 

 

acting by its manager, 3i Investments plc, by

 

 

 

 

 

 

/s/

 

 

Authorized Signatory

 

 

 

 

 

MERITECH CAPITAL PARTNERS II L.P.

 

 

 

 

 

By:

Meritech Capital Associates II L.L.C

 

 

 

its General Partner

 

 

By:

Meritech Management Associates II L.L.C.

 

 

 

a managing member

 

 

 

 

 

 

By:

/s/ Paul S. Madera

 

 

 

Paul S. Madera, a managing member

 

 

 

 

 

 

MERITECH CAPITAL AFFILIATES II L.P.

 

 

 

 

 

By:

Meritech Capital Associates II L.L.C.

 

 

 

its General Partner

 

 

By:

Meritech Management Associates II L.L.C.

 

 

 

a managing member

 

 

 

 

 

 

By:

/s/ Paul S. Madera

 

 

 

Paul S. Madera, a managing member

 

 

 

 

 

 

MCP ENTREPRENEUR PARTNERS II L.P.

 

 

 

 

 

By:

Meritech Capital Associates II L.L.C.

 

 

 

its General Partner

 

 

By:

Meritech Management Associates II L.L.C

 

 

 

a managing member

 

 

 

 

 

 

By:

/s/ Paul S. Madera

 

 

 

Paul S. Madera, a managing member

 

43



 

 

 

INSTITUTIONAL VENTURE PARTNERS X, L.P.

 

 

By:

Institutional Venture Management X, LLC

 

 

Its:

General Partner

 

 

 

 

 

 

By:

/s/ D.P.

 

 

 

Managing Director

 

 

 

 

 

 

INSTITUTIONAL VENTURE PARTNERS X

 

 

GMBH & CO. BETEILIGUNGS KG

 

 

 

 

 

By:

Institutional Venture Management X, LLC

 

 

Its:

Managing Limited Partner

 

 

 

 

 

 

By:

/s/ D.P.

 

 

 

Managing Director

 

 

 

 

 

 

INSTITUTIONAL VENTURE PARTNERS XI, L.P.

 

 

 

 

 

By:

Institutional Venture Management XI, LLC

 

 

Its:

General Partner

 

 

 

 

 

 

By:

/s/ D.P.

 

 

 

Managing Director

 

 

 

 

 

44



 

 

 

INSTITUTIONAL VENTURE PARTNERS XI

GMBH & CO. BETEILIGUNGS KG

 

 

 

 

 

By:

Institutional Venture Management XI, LLC

 

 

Its:

Managing Limited Partner

 

 

 

 

 

 

By:

/s/ D.P.

 

 

 

Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

45



 

 

/s/ Jeffrey Citron

 

Jeffrey Citron

 

 

 

/s/ Daniel J. Bemis

 

Daniel J. Bemis

 

 

 

 

 

Rene Benedetto

 

 

 

/s/ John M. Breech

 

John M. Breech

 

 

 

/s/ Marc Byron

 

Marc Byron

 

 

 

/s/ Cynthia Capone

 

Cynthia Capone

 

 

 

 

 

Todd P. Corbett

 

 

 

/s/ Edward J. Couri

 

Edward J. Couri

 

 

 

/s/ Morton David

 

Morton David

 

 

 

 

 

Michael DeBiase

 

 

 

 

 

Liberato DeCicco

 

 

 

 

 

Sekar Desamangalam

 

 

 

 

 

Bruce Eatroff

 

 

 

/s/ I. Steven Edelson

 

I. Steven Edelson

 

 

 

/s/ Thomas R. Elkins

 

Thomas R. Elkins

 

 

 

/s/ Grenn S. Eisen

 

Grenn S. Eisen

 

 

 

/s/ David J. Fiszor

 

David J. Fiszor

 

 

 

 

 

Peter C. Gerhard

 

 

 

/s/ Phil Giordano

 

Phil Giordano

 

 

 

/s/ John Glade

 

John Glade

 

 

 

/s/ John J. Gorman

 

John J. Gorman

 

 

 

 

 

Kenneth Hanau

 

 

 

/s/ Afzal Martin Hakimdin

 

Afzal Martin Hakimdin

 

46



 

 

 

 

Louis B. Holder

 

 

 

 

 

Mark Holodnak

 

 

 

 

 

Peter A. Hurwitz

 

 

 

/s/

 

JMM PHLP Ltd.

 

 

 

 

 

J2 Partners, L.P.

 

 

 

/s/ Dennis H. and Daryl B. Kraus

 

Dennis H. and Daryl B. Kraus

 

 

 

Lake Travis Ventures, LLC

 

By:

 /s/ Christopher Yeoman

 

Christopher Yeoman

 

 

 

/s/ Jonathan Lamensdorf

 

Jonathan Lamensdorf

 

 

 

 

 

Ken Laputka

 

 

 

/s/ Louis Mamakos

 

Louis Mamakos

 

 

 

/s/ Robinson Markel

 

Robinson Markel

 

 

 

/s/ Stephen P. McDermott

 

Stephen P. McDermott

 

 

 

/s/ Bruce Nakfoor

 

Bruce Nakfoor

 

 

 

/s/ Emily A. Nakfoor

 

Emily A. Nakfoor

 

 

 

/s/ Karen Nakfoor

 

Karen Nakfoor

 

 

 

Trust f/b/o Grey Emil Nakfoor

 

 

 

/s/ Katie Nehra

 

Katie Nehra

 

 

 

/s/ Lauren Nehra

 

Lauren Nehra

 

 

 

 

 

Robert B. Nolan, Jr.

 

 

 

/s/ Ben D. Orlanski

 

Ben D. Orlanski

 

 

 

/s/ Joseph Parent

 

Joseph Parent

 

 

 

 

 

Nicholas Picciolo

 

47



 

 

 

 

 

 

Michael Porta

 

 

 

/s/ Michael Poster

 

Michael Poster

 

 

 

 

 

Ronald A. Purpora

 

 

 

/s/ Jay Rappaport

 

Jay Rappaport

 

 

 

 

 

John Rego

 

 

 

/s/ Douglas Rhoten

 

Douglas Rhoten

 

 

 

/s/ Kerry Ritz

 

Kerry Ritz

 

 

 

 

 

Brooke Schulz

 

 

 

 

 

Mona Shah

 

 

 

/s/ Jeffrey Stambovsky

 

Jeffrey Stambovsky

 

 

 

 

 

Joshua C. Tanzer

 

 

 

 

 

Michael Tribolet

 

 

 

 

 

Steven Van Saders

 

 

 

/s/ Joann M. Vought

 

Joann M. Vought

 

 

 

/s/ Thomas J. Vought

 

Thomas J. Vought

 

 

 

/s/ Joshua S. Wanderer

 

Joshua S. Wanderer

 

 

 

/s/ Craig Wert, Jr.

 

Craig Wert, Jr.

 

 

 

 

 

Neil Wrightington

 

 

 

/s/ David S. Wu

 

David S. Wu

 

48



 

 

 

 

 

 

Philip Giordano

 

 

 

 

 

Christopher Murray

 

 

 

 

 

49