EXHIBIT 10.25
STOCKHOLDERS AGREEMENT
dated as of
May 22, 1996
among
DLJ MERCHANT BANKING PARTNERS, L.P.,
DLJ INTERNATIONAL PARTNERS, C.V.,
DLJ OFFSHORE PARTNERS, C.V.,
DLJ MERCHANT BANKING FUNDING, INC.,
DLJ CAPITAL CORPORATION
SPROUT GROWTH II, L.P.,
SPROUT CAPITAL VII, L.P.,
SPROUT CEO FUND L.P.
DAVID H. IRELAND
SCOTTY R. NEAL
ROBERT FREIBURGHOUSE
and
COMMVAULT SYSTEMS, INC.
TABLE OF CONTENTS
Page
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ARTICLE 1
DEFINITIONS
1.1 Definitions......................................................... 1
ARTICLE 2
RESTRICTIONS ON TRANSFER
2.1 General............................................................. 6
2.2 Legend on Stock..................................................... 7
2.3 Permitted Transferees............................................... 8
ARTICLE 3
RIGHTS OF FIRST REFUSAL; TAG ALONG RIGHTS; PREEMPTIVE RIGHTS;
DRAG ALONG RIGHTS; TERMINATION
3.1 Right of First Refusal; Tag Along Rights............................ 8
3.2 Preemptive Rights................................................... 11
3.3 Right to Compel Participation in Certain Transfers.................. 11
3.4 Improper Transfer................................................... 12
3.5 Termination of Agreement............................................ 13
ARTICLE 4
REGISTRATION RIGHTS
4.1 Demand Registration................................................. 13
4.2 Incidental Registration............................................. 14
4.3 Holdback Agreements................................................. 16
4.4 Registration Procedures............................................. 16
4.5 Indemnification by the Issuer....................................... 18
4.6 Indemnification by Participating Stockholders....................... 19
4.7 Conduct of Indemnification Proceedings.............................. 19
4.8 Contribution........................................................ 20
4.9 Participation in Public Offering.................................... 21
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
5.1 Confidentiality..................................................... 21
5.2 New Stockholders.................................................... 22
ARTICLE 6
MISCELLANEOUS
6.1 Entire Agreement.................................................... 22
6.2 Binding Effect; Benefit............................................. 22
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6.3 Assignability....................................................... 23
6.4 Amendment; Waiver; Termination...................................... 23
6.5 Exclusive Financial Advisor and Investment Banking Advisor.......... 23
6.6 Notices............................................................. 23
6.7 Headings............................................................ 24
6.8 Counterparts........................................................ 24
6.9 Applicable Law...................................................... 25
6.10 Specific Enforcement................................................ 25
6.11 Consent to Jurisdiction............................................. 25
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STOCKHOLDERS AGREEMENT
STOCKHOLDERS AGREEMENT (this "AGREEMENT") dated as of May 22, 1996 among
DLJ Merchant Banking Partners, L.P., DLJ International Partners, C.V., DLJ
Offshore Partners, C.V., DLJ Merchant Banking Funding, Inc., DLJ Capital
Corporation, Sprout Growth II, L.P., Sprout Capital VII, L.P., Sprout CEO Fund
L.P. (each of the foregoing, a "DLJ ENTITY," and collectively, the "DLJ
ENTITIES"), David H. Ireland ("IRELAND"), Scotty R. Neal ("NEAL"), Robert
Freiburghouse ("FREIBURGHOUSE") and CommVault Systems. Inc. (the "ISSUER,"
formerly CV Systems, Inc.).
WITNESSETH:
WHEREAS, pursuant to the Asset Purchase Agreement dated as of May 22, 1996
(the "ASSET PURCHASE AGREEMENT") between the Issuer and Lucent Technologies
Inc., certain of the parties hereto, concurrently with the execution of this
Agreement, are acquiring stock of the Issuer; and
WHEREAS, the parties hereto desire to enter into this Agreement to govern
certain of their rights, duties and obligations after consummation of the
transactions contemplated by the Asset Purchase Agreement;
The parties hereto agree as follows:
ARTICLE 1
DEFINITIONS
1.1 Definitions. (a) The following terms, as used herein, have the
following meanings:
"ADVERSE PERSON" means any person that is an actual competitor or
reasonably potential competitor of the Issuer or whose interest is otherwise
materially adverse to the Issuer.
"AFFILIATE" means, with respect to any Person, any other Person directly or
indirectly controlling, controlled by, or under common control with such Person,
provided that no stockholder of the Issuer shall be deemed an Affiliate of any
other stockholder solely by reason of any investment in the Issuer. For the
purpose of this definition, the term "CONTROL" (including with correlative
meanings, the terms "CONTROLLING," "CONTROLLED BY" and "UNDER COMMON CONTROL
WITH"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting stock or by
contract or otherwise.
"AFFILIATED EMPLOYEE BENEFIT TRUST" means any trust that is a successor to
the assets held by a trust established under an employee benefit plan subject to
ERISA or any other trust established directly or indirectly under such plan or
any other such plan having the same sponsor.
"ALLOWABLE TRANSFER AMOUNT" shall mean, as to each member of Management, at
any time in any given calendar year, that number of shares of Fully Diluted
Common Stock equal to (i) (a) the aggregate Initial Ownership Position of the
DLJ Entities, minus (b) the aggregate number of Shares of Fully Diluted Common
Stock owned by the DLJ Entities at such time, divided by (ii) the aggregate
Initial Ownership Position of the DLJ Entities, multiplied by (iii) the number
of shares of Fully Diluted Common Stock owned by such individual at such time.
"BENCHMARK SHARES" means shares of Fully Diluted Common Stock sold or
proposed to be sold by the DLJ Entities (other than to their Permitted
Transferees) subsequent to the Closing Date until the aggregate number of shares
of Fully Diluted Common Stock so sold or proposed to be sold by the DLJ Entities
(other than as aforesaid) equals 70% of the aggregate Initial Ownership Position
of the DLJ Entities (taking into account any stock dividend, stock split or
reverse stock split on or subsequent to the Closing Date).
"BOARD" means the board of directors of the Issuer.
"BUSINESS DAY" means any day except a Saturday, Sunday or other day on
which commercial banks in New York City are authorized by law to close.
"COMMON STOCK" means the Common Stock, par value $.01 per share, of the
Issuer.
"EMPLOYMENT AGREEMENTS" means the Employment Agreements between the Issuer
and each of Neal and Ireland dated the date hereof.
"EQUITY STOCK" means Common Stock, stock convertible into or exchangeable
for Common Stock and options, warrants or other rights to acquire Common Stock.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Stock Exchange Act of 1934, as amended.
"FULLY DILUTED" means, with respect to Common Stock and without
duplication, all outstanding shares and all shares issuable in respect of stock
convertible into or exchangeable for Common Stock, stock appreciation rights or
options, warrants and other irrevocable rights to purchase or subscribe for
Common Stock or stock convertible into or exchangeable for Common Stock and any
Person shall be deemed to own such number of Fully Diluted shares of Common
Stock as such Person beneficially owns or has the right to acquire from any
other Person (including the Issuer).
"INITIAL OWNERSHIP POSITION" means (i) the number of Fully Diluted shares
of Common Stock held by the DLJ Entities on the date hereof, plus (ii) the
number of Fully Diluted shares of Common Stock acquired by the DLJ Entities
subsequent to the date hereof.
"INITIAL PUBLIC OFFERING" means the initial sale after the date hereof of
Common Stock pursuant to an effective registration statement under the
Securities Act (other than a registration statement on Form S-8 or any successor
form).
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"MANAGEMENT" means Neal, Ireland, Freiburghouse (and any other Person
deemed by the Board of Directors to be a key executive) and their Permitted
Transferees.
"OTHER STOCKHOLDERS" means all Stockholders other than any DLJ Entity, and
their respective Permitted Transferees.
"OPTION AGREEMENTS" means the agreements between the Issuer and each holder
of options to acquire Common Stock of the Issuer.
"PERCENTAGE OWNERSHIP" means, with respect to any Stockholder or any group
of Stockholders at any time, (i) the number of shares of Fully Diluted Common
Stock that such Stockholder or group of Stockholders owns at such time, divided
by (ii) the total number of shares of Fully Diluted Common Stock at such time.
"Permitted Transferee" means:
(i) in the case of any DLJ Entity, (A) any other DLJ Entity, (B) any
general or limited partner of any such entity (a "DLJ PARTNER"), and any
corporation, partnership, Affiliated Employee Benefit Trust or other entity
which is an Affiliate of any DLJ Partner (collectively, the "DLJ
AFFILIATES"), (C) any managing director, general partner, director, limited
partner, officer or employee of such DLJ Entity or a DLJ Affiliate, or the
heirs, executors, administrators, testamentary trustees, legatees or
beneficiaries of any of the foregoing Persons referred to in this clause
(C) (collectively, "DLJ ASSOCIATES"), (D) any trust, the beneficiaries of
which, or any corporation, limited liability company or partnership, the
stockholders, members or general or limited partners of which, include only
such DLJ Entity, DLJ Affiliates, DLJ Associates, their spouses or their
lineal descendants and (E) a voting trustee for one or more DLJ Entities,
DLJ Affiliates or DLJ Associates under the terms of a voting trust designed
to conform with the requirements of the Insurance Law of the State of New
York; and
(ii) in the case of any Other Stockholder, (A) the Issuer, (B) (x)
such Stockholder's spouse or (y) such Stockholder's siblings or lineal
descendants, so long as such Stockholder retains the right to vote such
Stock, (C) a Person who acquires Stock from any such Stockholder pursuant
to a will or the laws of descent and distribution, (D) any trust the
beneficiaries of which consist only of such Stockholders and/or such
Stockholder's spouse, siblings and lineal descendants, and (E) any DLJ
Entity.
"PERSON" means an individual, corporation, partnership, association, trust
or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
"PIGGYBACK STOCKHOLDER" means: (a) if the DLJ Entities collectively hold
greater than or equal to 30% of the Initial Ownership Position, the DLJ
Entities, and (b) if the DLJ Entities collectively hold less than 30% of the
Initial Ownership Position, the DLJ Entities and the Other Stockholders.
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"PREFERRED STOCK" means the Series A Preferred Stock, par value $.01 per
share, of the Issuer.
"REGISTRABLE STOCK" means any shares of Common Stock until (i) a
registration statement covering such shares of Common Stock has been declared
effective by the SEC and such shares have been disposed of pursuant to such
effective registration statement, (ii) such shares are sold under circumstances
in which all of the applicable conditions of Rule 144 (or any similar provisions
then in force) under the Securities Act are met or such shares may be sold
pursuant to Rule 144(k) or (iii) such shares are otherwise transferred, the
Issuer has delivered a new certificate or other evidence of ownership for such
shares not bearing the legend required pursuant to this Agreement and such
shares may be resold without subsequent registration under the Securities Act.
"REGISTRATION EXPENSES" means (i) all registration and filing fees, (ii)
fees and expenses of compliance with stock or blue sky laws (including
reasonable fees and disbursements of counsel in connection with blue sky
qualifications of the Stock), (iii) printing expenses, (iv) internal expenses of
the Issuer (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), (v) reasonable
fees and disbursements of counsel for the Issuer and customary fees and expenses
for independent certified public accountants retained by the Issuer (including
expenses relating to any comfort letters or costs associated with the delivery
by independent certified public accountants of a comfort letter or comfort
letters requested pursuant to Section 4.4(h) hereof), (vi) the reasonable fees
and expenses of any special experts retained by the Issuer in connection with
such registration, (vii) reasonable fees and expenses of one counsel for the
Stockholders participating in the offering, selected by the DLJ Entities, in the
case of an offering in which any of the DLJ Entities participate, or selected by
Management in any other case involving exercise of registration rights under
Sections 4.1 or 4.2, (viii) fees and expenses in connection with any review of
underwriting arrangements by the National Association of Stock Dealers, Inc.
(the "NASD") including fees and expenses of any "QUALIFIED INDEPENDENT
UNDERWRITER" and (ix) fees and disbursements of underwriters customarily paid by
issuers or sellers of stock, but shall not include any underwriting fees,
discounts or commissions attributable to the sale of Registrable Stock, or any
out-of-pocket expenses (except as set forth in clause (vii) above) of the
Stockholders or any fees and expenses of underwriter's counsel.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STOCK" means shares of Common Stock, Preferred Stock and other voting
stock of the Issuer held by the stockholders.
"STOCKHOLDER" means each Person (other than the Issuer) who shall be a
party to this Agreement, whether in connection with the execution and delivery
hereof as of the date hereof, pursuant to Section 6.3 or otherwise, so long as
such Person shall "BENEFICIALLY OWN" (as such term is defined in Rule 13d-3
under the Exchange Act) any Stock.
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"SUBSIDIARY" means, with respect to any Person, any entity of which stock
or other ownership interests having ordinary voting power to elect a majority of
the board of directors or other persons performing similar functions are at the
time directly or indirectly owned by such Person.
"THIRD PARTY" means a prospective purchaser of shares in an arm's-length
transaction from a Stockholder where such purchaser is not a Permitted
Transferee of such Stockholder.
"TRANSACTION DOCUMENTS" means this Agreement, the Employment Agreements and
the Option Agreements.
"UNDERWRITTEN PUBLIC OFFERING" means an underwritten public offering of
Registrable Stock of the Issuer pursuant to an effective registration statement
under the Securities Act.
(b) The term "DLJ ENTITIES," to the extent such entities shall have
transferred any of their Stock to "Permitted Transferees," shall mean the DLJ
Entities and the Permitted Transferees of the DLJ Entities, taken together, and
any right or action that may be taken at the election of the DLJ Entities may be
taken at the election of the DLJ Entities, and such Permitted Transferees.
(c) The term "OTHER STOCKHOLDERS," to the extent such stockholders shall
have transferred any of their Stock to "Permitted Transferees," shall mean the
Other Stockholders and the Permitted Transferees of the Other Stockholders, as
the case may be, and any right or action that may be taken at the election of
the Other Stockholders may be taken at the election of the Other Stockholders
and the Permitted Transferees of the Other Stockholders, as the case may be.
(d) Each of the following terms is defined in the Section set forth
opposite such term:
Term Section
- ---- -------
Aggregate Tag Amount 3.1(g)(i)
Confidential Information 5.1(b)
control 1.1(a)
Demand Registration 4.1(a)
DLJ Affiliate 1.1(a)
DLJ Associates 1.1(a)
DLJ Entity 1.1(b)
DLJ Partner 1.1(a)
DLJSC 6.5
Holders 4.1(a)(ii)
Incidental Registration 4.2(a)
Indemnified Party 4.7
Indemnifying Party 4.7
Inspectors 4.4(g)
Maximum Offering Size 4.1(d)
NASD 1.1(a)
Other Stockholder 1.1(c)
Private Transaction 2.1(b)
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Records 4.4(g)
Representatives 5.1(b)
Restriction Termination Date 2.1(a)
Section 2.1(c) Termination Date 2.1(c)
Section 3.1 Offer 3.1(a)
Section 3.1 Offer Notice 3.1(a)
Section 3.1 Offer Price 3.1(a)
Section 3.2 Notice 3.2
Section 3.3 Agreement 3.3(a)
Section 3.3 Notice 3.3(a)
Section 3.3 Notice Period 3.3(a)
Section 3.3 Sale 3.3(a)
Section 3.3 Sale Price 3.3(a)
Selling Party 3.1(a)
Selling Stockholder 4.1(a)
Tag Along Notice Period 3.1(g)(i)
Tag Along Right 3.1(g)(i)
Tag Along Sale 3.1(g)(i)
Tag Along Seller 3.1(g)(i)
Tagging Person 3.1(g)(i)
transfer 2.1(a)
(e) Capitalized terms used herein and not otherwise defined herein shall
have the meanings herein that are assigned to such terms in the Asset Purchase
Agreement.
ARTICLE 2
RESTRICTIONS ON TRANSFER
2.1 General. (a) Until the earlier of (i) the fifth anniversary of the date
of this Agreement and (ii) the second anniversary of the consummation of an
Initial Public Offering (the earlier of such dates, the "RESTRICTION TERMINATION
DATE"), no Stockholder may, directly or indirectly, sell, assign, transfer,
grant a participation in, pledge or otherwise dispose of ("TRANSFER") any Stock
(or solicit any offers to buy or otherwise acquire, or to take a pledge of, any
of its Stock) except transfers permitted by Section 2.3.
(b) From and after the Restriction Termination Date, no Stockholder may
transfer any Stock (or solicit any offers to buy or otherwise acquire, or to
take a pledge of, any Stock) except for, subject to Section 2.1(c): (i)
transfers permitted by Section 2.3, (ii) transfers in a bona fide Underwritten
Public Offering upon exercise of registration rights pursuant to Article 4,
(iii) transfers pursuant to Rule 144 (or any successor provisions under the
Securities Act), (iv) in the case of any DLJ Entity and subject to Section 3.1,
transfers to any other Person in any Private Transaction (as defined below),
provided that no Stock may be transferred pursuant to this clause (iv) to any
Person unless such Person shall have agreed in writing to be bound by the terms
of this Agreement applicable to such Stockholder, (v) in the case of any
Management, subject to Section 3.1, transfers of shares of Stock and to any
other Person in any Private Transaction, provided that no Stock may be
transferred to any Person pursuant to this clause (v) unless such
6
Person shall have agreed in writing to be bound by the terms of this Agreement
applicable to such Stockholder and (vi) in the case of any Other Stockholders,
transfers pursuant to Section 3.3 hereby. As used herein, "PRIVATE TRANSACTION"
means any transfer not covered by clause (i), (ii), (iii) or (vi) above.
(c) Notwithstanding anything else contained herein, except pursuant to
Section 2.3 or 3.3, no transfer of any shares of Common Stock may be made by a
member of Management at any time to the extent that the number of shares then
sought to be transferred by such member of Management, as the case may be, would
exceed the Allowable Transfer Amount applicable to such individual at such time.
From and after the Section 2.1(c) Termination Date (as defined below), (x) the
restriction contained in the preceding sentence shall terminate as to transfers
pursuant to Section 2.1(b)(ii) and 2.1(b)(iii), and (y) transfers of shares of
Common Stock may be made by Management pursuant to Section 2.1(b)(ii) or
2.1(b)(iii) without regard to the Allowable Transfer Amount but only to the
extent such transfers are otherwise in accordance with the provisions of
Articles 2 and 3. Such time as the aggregate number of shares of Fully Diluted
Common Stock held by the DLJ Entities is less than 10% of the aggregate number
of shares of Fully Diluted Common Stock held by the DLJ Entities on the date
hereof (determined taking into account any adjustments in accordance with the
terms of the applicable stock) is referred to as the "SECTION 2.1(C) TERMINATION
DATE."
(d) No Stockholder may transfer any Stock at any time except in compliance
with applicable federal or state securities laws.
(e) Notwithstanding anything else contained herein, prior to making any
transfer of Stock, a Stockholder shall give at least 30 days notice to the
Board. The Board shall have the right to prevent the transfer of any Stock to
any person that the Board determines, in its sole discretion, is an Adverse
Person. The Board shall be required to notify such Stockholder within 30 days
after receipt of a notice of transfer from such Stockholder that a proposed
transferee is an Adverse Person.
2.2 Legend on Stock. (a) In addition to any other legend that may be
required, each certificate for Stock that is issued to any Stockholder shall
bear a legend in substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE
OFFERED OR SOLD EXCEPT IN COMPLIANCE THEREWITH. THIS SECURITY IS ALSO
SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AS SET FORTH IN THE
STOCKHOLDERS AGREEMENT DATED AS OF MAY 22, 1996, COPIES OF WHICH MAY
BE OBTAINED UPON REQUEST FROM COMMVAULT SYSTEMS, INC. AND ANY
SUCCESSOR THERETO."
(b) If any shares of Stock shall cease to be Registrable Stock, the Issuer
shall, upon the written request of the holder thereof, issue to such holder a
new certificate evidencing such
7
shares without the first sentence of the legend required by Section 2.2(a)
endorsed thereon. If any Stock cease to be subject to any and all restrictions
on transfer set forth in this Agreement, the Issuer shall, upon the written
request of the holder thereof, issue to such holder a new certificate evidencing
such Stock without the second sentence of the legend required by Section 2.2(a)
endorsed thereon.
2.3 Permitted Transferees. Notwithstanding anything in this Agreement to
the contrary, any Stockholder may at any time transfer any or all of its Stock
to one or more of its Permitted Transferees without the consent of the Board or
any other Stockholder or group of Stockholders and without compliance with
Section 3.1 so long as (a) such Permitted Transferee shall have agreed in
writing to be bound by the terms of this Agreement, (b) the transfer to such
Permitted Transferee is not in violation of applicable federal or state
securities laws and (c) such Permitted Transferee is not an Adverse Party.
ARTICLE 3
RIGHTS OF FIRST REFUSAL; TAG ALONG RIGHTS; PREEMPTIVE RIGHTS;
DRAG ALONG RIGHTS; TERMINATION
3.1 Right of First Refusal; Tag Along Rights. (a) Subject to the provisions
of Section 3.1(g), if any Other Stockholder receives from or otherwise
negotiates with a Third Party in a Private Transaction an offer to purchase for
cash (or, subject to clause (f) non-cash consideration) any or all of the Stock
owned or held by such Other Stockholder that is otherwise permitted under this
Agreement (including, without limitation, Section 3.1 hereof) (a "SECTION 3.1
OFFER") and such Other Stockholder (a "SELLING PARTY") intends to pursue such
sale of such Stock to such Third Party in such Private Transaction, such Selling
Party shall provide the Issuer and each DLJ Entity written notice of such
Section 3.1 Offer (a "SECTION 3.1 OFFER NOTICE"). The Section 3.1 Offer Notice
shall identify the number and type of Stock subject to the Section 3.1 Offer,
the cash price at which a sale is proposed to be made (the "SECTION 3.1 OFFER
PRICE") and all other material terms and conditions of the Section 3.1 Offer.
(b) Subject to the provisions of Section 3.1(g), the receipt of a Section
3.1 Offer Notice by the Issuer and each DLJ Entity from any Selling Party shall
constitute an offer by such Selling Party to sell, to the Issuer and each DLJ
Entity, for cash (or, subject to clause (f), non-cash consideration) in whole
and not in part, with the Issuer having priority with respect to the acceptance
of the Section 3.1 Offer. If the Issuer does not accept the offer, in whole and
not in part, in accordance herewith, then such offer may be accepted, in whole
and not in part, at the Section 3.1 Offer Price by the DLJ Entities on a pro
rata basis based on each DLJ Entity's Percentage Ownership (unless the DLJ
Entities shall agree to another allocation resulting in acceptance of the
Section 3.1 Offer with respect to all Stock subject to the Section 3.1 Offer);
provided that in the event there is an undersubscription by the DLJ Entities at
the end of the 30-day period referred to below, the unsubscribed Stock shall be
apportioned among those DLJ Entities whose written notice of acceptance referred
to below specified a number of additional shares such DLJ Entity would like to
purchase pursuant to this Section 3.1, which apportionment shall be on a pro
rata basis among such DLJ Entities in accordance with such DLJ Entity's
Percentage Ownership. Such offer shall be irrevocable for 30 days after receipt
of such Section 3.1 Offer Notice by the Issuer and each DLJ Entity (and, if not
accepted in accordance with the
8
terms hereof, shall expire at the completion of such 30-day period). During such
30-day period, subject to the Issuer's priority right of exercise as set forth
above, each DLJ Entity shall have the right to accept such offer (as provided
above). The Section 3.1 Offer may be accepted by giving a written irrevocable
notice of acceptance to such Selling Party prior to the expiration of such
30-day period.
(c) The Issuer or the DLJ Entity(ies), as the case may be, shall purchase
for cash (or, subject to clause (f), non-cash consideration) at the Section 3.1
Offer Price and pay for all Stock set forth in the Section 3.1 Offer Notice
within a 20-day period following acceptance of the Section 3.1 Offer; provided
that if the purchase and sale of such Stock is subject to expiration of any
applicable statutory waiting period, the time period during which such purchase
and sale may be consummated shall be extended until the expiration of five
Business Days after such waiting period shall have expired; provided further
that such time period shall not exceed 60 days without the written consent of
the Selling Party.
(d) Upon the rejection or expiration of the Section 3.1 Offer by the Issuer
and the DLJ Entities or the failure to obtain any required consent for the
purchase of the Stock subject thereto within 60 days, there shall commence a
90-day period during which the Selling Party shall have the right, subject to
Section 3.1(g), to consummate the sale to the Third Party making the Section 3.1
Offer of all but not less than all of the Stock subject to the Section 3.1 Offer
at a price not less than the Section 3.1 Offer Price; provided that (i) such
Third Party shall have agreed in writing to be bound by the terms of this
Agreement and (ii) the transfer to such Third Party is not in violation of
applicable federal or state or foreign securities laws. Notwithstanding the
foregoing, if the purchase and sale of such Stock is subject to any prior
regulatory approval, the time period during which such purchase and sale may be
consummated shall be extended until the expiration of five Business Days after
all such approvals shall have been received but in no event shall such time
period exceed 120 days without the consent of the Issuer. If such Selling Party
does not consummate the sale of any Stock subject to the Section 3.1 Offer in
accordance with the time limitations set forth above, such Selling Party may not
sell any Stock without repeating the foregoing procedures.
(e) Notwithstanding anything in this Agreement to the contrary, the
provisions of this Section 3.1 will not be applicable to transfers made pursuant
to and in compliance with Section 2.3, Section 3.3 or Article 4.
(f) A Stockholder may transfer Stock in accordance with the foregoing
provisions of this Section 3.1 for consideration other than cash only if such
Other Stockholder has first obtained and delivered to each DLJ Entity and the
Issuer an opinion of an investment banking firm of national standing indicating
that the fair market value of the non-cash consideration that such Stockholder
proposes to accept as consideration for such Stock, together with any cash
consideration, is at least equal to the Section 3.1 Offer Price.
(g) (i) In the event of any proposed transfer by one or more DLJ Entities
(each a "TAG ALONG SELLER") of a total of 25% or more of the aggregate Initial
Ownership Position of the DLJ Entities in a Private Transaction permitted by
Section 2.1(b)(iv) (a "TAG ALONG SALE"), the Other Stockholders may, at their
option, elect to exercise their rights under this Section 3.1(g). Such electing
Other Stockholders (each of such Other Stockholders, a "TAGGING PERSON") shall
9
have the right (a "TAG ALONG RIGHT"), exercisable by written notice given to the
Tag Along Seller within 45 days after receipt of the Section 3.1 Offer Notice
(the "TAG ALONG NOTICE PERIOD"), to request the Tag Along Seller to include in
the proposed transfer to the Third Party the number of shares of Common Stock or
Stock convertible into shares of Common Stock held by such Tagging Person as is
specified in such notice; provided that (x) the Tag Along Seller shall be
required only to include in the proposed transfer a number (the "AGGREGATE TAG
AMOUNT") of shares of Common Stock or Stock convertible into Common Stock held
by such Tagging Persons equal to not more than the number of shares of Common
Stock proposed to be sold by the Tag Along Seller to such Third Party in such
transaction multiplied by a fraction, the numerator of which is the number of
shares of Fully Diluted Common Stock owned by all such Tagging Persons
immediately prior to the Tag Along Sale, and the denominator of which is the
total number of shares of Fully Diluted Common Stock immediately prior to the
Tag Along Sale and (y) if the aggregate number of shares of Common Stock
proposed to be sold (and in fact sold) by all Tagging Persons in such
transaction exceeds the Aggregate Tag Amount, the Aggregate Tag Amount of shares
permitted to be sold shall be allocated among all Tagging Persons pro rata based
on Percentage Ownership. If the Other Stockholders exercise their Tag Along
Right hereunder, each Tagging Person shall deliver to the Tag Along Seller the
certificate or certificates representing the Stock of such Tagging Person to be
included in the transfer, together with a limited power-of-attorney authorizing
the Tag Along Seller to transfer such Stock on the terms set forth in the
Section 3.1 Offer Notice. Delivery of such certificate or certificates
representing the Stock to be transferred and the limited power-of-attorney
authorizing the Tag Along Seller to transfer such Stock shall constitute an
irrevocable acceptance of the Tag Along Sale, subject to the terms of this
Section 3.1(g), by such Tagging Persons and the Tag Along Seller. If, at the end
of a 120-day period after such delivery, the Tag Along Seller has not completed
the transfer of all such Stock, the Tag Along Seller shall return to each
Tagging Person the limited power-of-attorney (and all copies thereof) together
with all certificates representing the Stock which such Tagging Person delivered
for transfer but not sold pursuant to this Section 3.1(g), and the DLJ Entities
may not effect another Tag Along Sale without repeating the foregoing
procedures.
(ii) The per share consideration to be paid to the Tagging Persons in any
Tag Along Sale shall be: (i) in the case of Common Stock proposed to be sold by
the Tag Along Seller, the consideration per share of Common Stock for which the
transfer by the Tag Along Seller is proposed to be made; or (ii) in the case of
Stock that is convertible into Common Stock proposed to be sold by the Tag Along
Seller, the consideration set forth in clause (i), multiplied by the number of
shares into which such Stock is convertible, plus the amount of cash to be
received by the holders of such Stock upon conversion thereof.
(iii) Concurrently with the consummation of the Tag Along Sale, the Tag
Along Seller shall notify the Tagging Persons thereof, shall remit to the
Tagging Persons the total consideration for the Stock of the Tagging Persons
transferred pursuant thereto (computed pursuant to Section 3.1(g)(ii)), and
shall, promptly after the consummation of such Tag Along Sale furnish such other
evidence of the completion and time of completion of such transfer and the terms
thereof as may be reasonably requested by the Tagging Persons.
(iv) If at the termination of the Tag Along Notice Period any Tagging
Person shall not have elected to participate in the Tag Along Sale, such Tagging
Person will be deemed to have
10
waived its rights under this Section 3.1(g) with respect to the transfer of its
Stock pursuant to such Tag Along Sale.
(v) In any Tag Along Sale in which any of the Other Stockholders have
exercised their Tag Along Right, the right of any party pursuant to Section
3.1(b) to accept the offer referred to therein shall be deemed to have
terminated. If the Other Stockholders elect not to exercise their Tag Along
Right in any Tag Along Sale and elect to accept the offer referred to in Section
3.1(b), no other Person may exercise any Tag Along Right under this Section
3.1(g).
3.2 Preemptive Rights. For so long as any shares of Preferred Stock remain
outstanding, the Issuer shall provide each DLJ Entity with a written notice (a
"SECTION 3.2 NOTICE") of any proposed issuance by the Issuer of Equity Stock at
least 60 days prior to the proposed issuance date. Such notice shall specify the
price at which the Equity Stock is to be issued and the other material terms of
the issuance. Each DLJ Entity shall be entitled to purchase, at the price and on
the terms specified in such Section 3.2 Notice, the Equity Stock proposed to be
issued on a pro rata basis based upon such DLJ Entity's Percentage Ownership. A
DLJ Entity may exercise its rights under this Section 3.2 by delivering written
notice of its election to purchase Equity Stock to the Issuer within 30 days of
receipt of the Section 3.2 Notice. Each DLJ Entity shall deliver a copy of any
such written notice to the Issuer at least five Business Days prior to the
expiration of such 30-day period. A delivery of such a written notice (which
notice shall specify the number of shares (or amount) of Equity Stock to be
purchased by the DLJ Entity submitting such notice) by a DLJ Entity shall
constitute a binding agreement of such DLJ Entity to purchase, at the price and
on the terms specified in the Section 3.2 Notice, the number of shares (or
amount) of Equity Stock specified in such DLJ Entity's written notice. In the
case of any issuance of Equity Stock, the Issuer shall have 90 days from the
date of the Section 3.2 Notice to consummate the proposed issuance of any or all
of such Equity Stock which the DLJ Entities have not elected to purchase at the
price and upon terms that are not materially less favorable to the Issuer than
those specified in the Section 3.2 Notice. At the consummation of such issuance,
the Issuer shall issue certificates representing the Equity Stock to be
purchased by each DLJ Entity exercising preemptive rights pursuant to this
Section 3.2 registered in the name of such DLJ Entity, against payment by such
DLJ Entity of the purchase price for such Equity Stock. If the Issuer proposes
to issue Equity Stock after such 90-day period, it shall again comply with the
procedures set forth in this Section. Notwithstanding the foregoing, no DLJ
Entity shall be entitled to purchase Equity Stock as contemplated by this
Section 3.2 in connection with issuances of Equity Stock (i) to employees of the
Issuer or any Subsidiary of the Issuer pursuant to employee benefit plans or
arrangements approved by the Board (including upon the exercise of employee
stock options), (ii) in connection with any bona fide, arm's-length direct or
indirect merger, acquisition or similar transaction, or (iii) upon the
conversion of any shares of Preferred Stock into Common Stock. The Issuer shall
not be under any obligation to consummate any proposed issuance of Equity Stock,
regardless of whether it shall have delivered a Section 3.2 Notice in respect of
such proposed issuance. Unless earlier terminated pursuant to the terms of this
Section 3.2, the provisions of this Section 3.2 shall terminate upon the
consummation of an Initial Public Offering.
3.3 Right to Compel Participation in Certain Transfers. (a) If the DLJ
Entities should propose to transfer more than 25% of the aggregate Initial
Ownership Position of the DLJ Entities to any Third Party (a "SECTION 3.3
SALE"), the DLJ Entities may, at their option, require
11
all but not less than all the Other Stockholders to participate in such
transfer. The DLJ Entities shall provide written notice of such Section 3.3 Sale
to the Other Stockholders (a "SECTION 3.3 NOTICE") and a copy of the agreement
pursuant to which such shares are proposed to be transferred (the "SECTION 3.3
AGREEMENT"). The Section 3.3 Notice shall identify the transferee, the number of
shares of Common Stock subject to the Section 3.3 Sale, the consideration per
share of Common Stock for which a transfer is proposed to be made (the "SECTION
3.3 SALE PRICE") and all other material terms and conditions of the Section 3.3
Sale. Each Other Stockholder shall be required to participate in the Section 3.3
Sale on the terms and conditions set forth in the Section 3.3 Notice and to
tender all its shares of Common Stock, and Stock convertible into Common Stock
as set forth below. The price of such transfer shall be the Section 3.3 Sale
Price in the case of shares of Common Stock, and in the case of Stock
convertible into Common Stock shall be the Section 3.3 Sale Price multiplied by
the number of shares of Common Stock into which such Stock is convertible, plus
the amount of cash to be received by the holder(s) of such Stock upon conversion
thereof. Within ten Business Days following the date of the Section 3.3 Notice
(the "SECTION 3.3 NOTICE PERIOD"), each of the Other Stockholders shall deliver
to a representative of the DLJ Entities designated in the Section 3.3 Notice
certificates representing all shares of Common Stock held by such Other
Stockholder and all Stock convertible into Common Stock held by such Other
Shareholder, duly endorsed, together with all other documents required to be
executed in connection with such Section 3.3 Sale or, if such delivery is not
permitted by applicable law, an unconditional agreement to deliver such stock
pursuant to this Section 3.3(a) at the closing for such Section 3.3 Sale against
delivery to such other Stockholder of the consideration therefor. If an Other
Stockholder should fail to deliver such certificates to the DLJ Entities, the
Issuer shall cause the books and records of the Issuer to show that such Stock
are bound by the provisions of this Section 3.3(a) and that such Stock shall he
transferred to the Third Party immediately upon surrender for transfer by the
Other Stockholder thereof.
(b) If, within 120 days after the DLJ Entities give the Section 3.3 Notice,
they have not completed the transfer of all the stock subject to the Section 3.3
Sale, the DLJ Entities shall return to each of the Other Stockholders all
certificates representing Stock that such Other Stockholder delivered for
transfer pursuant hereto, together with any documents in the possession of the
DLJ Entities executed by the Other Stockholder in connection with such proposed
transfer, and all the restrictions on transfer contained in this Agreement or
otherwise applicable at such time with respect to Stock owned by the Other
Stockholders shall again be in effect.
(c) Promptly after the consummation of the transfer of Stock of the DLJ
Entities and the Other Stockholders pursuant to this Section 3.3, the DLJ
Entities shall give notice thereof to the Other Stockholders, shall remit to
each of the Other Stockholders who have surrendered their certificates the total
consideration for the shares of Common Stock and Stock convertible into Common
Stock transferred pursuant hereto and shall furnish such other evidence of the
completion and time of completion of such transfer and the terms thereof as may
be reasonably requested by such Other Stockholders.
3.4 Improper Transfer. Any attempt to transfer any Stock not in compliance
with this Agreement shall be null and void and neither the Issuer nor any
transfer agent shall give any effect in the Issuer's records to such attempted
transfer.
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3.5 Termination of Agreement. This Agreement shall terminate upon the
earliest of:
(i) the tenth anniversary of the date hereof; and
(ii) such time as the DLJ Entities own less than 5% of the aggregate
number of shares of Fully Diluted Common Stock.
ARTICLE 4
REGISTRATION RIGHTS
4.1 Demand Registration. (a) The DLJ Entities may at any time make a
written request (such requesting DLJ Entity, a "SELLING STOCKHOLDER") that the
Issuer effect the registration under the Securities Act of all or a portion of
such Selling Stockholder's Registrable Stock, and specifying the intended method
of disposition thereof. The Issuer will promptly give written notice of such
requested registration (a "DEMAND REGISTRATION") at least 30 days prior to the
anticipated filing date of the registration statement relating to such Demand
Registration to the Other Stockholders and thereupon will use its best efforts
to effect, as expeditiously as possible, the registration under the Securities
Act of:
(i) the Registrable Stock then held by the Selling Stockholders which
the Issuer has been so requested to register by the Selling Stockholders;
and
(ii) subject to Section 4.2, all other Registrable Stock which any
Other Stockholder entitled to request the Issuer to effect an Incidental
Registration (as such term is defined in Section 4.2) pursuant to Section
4.2 (all such Stockholders, together with the Selling Stockholders, the
"HOLDERS") has requested the Issuer to register by written request received
by the Issuer within 15 days after the receipt by such Holders of such
written notice given by the Issuer,
all to the extent necessary to permit the disposition (in accordance with the
intended methods thereof as aforesaid) of the Registrable Stock so to be
registered; provided that, subject to Section 4.1(c) hereof, the Issuer shall
not be obligated to effect more than three Demand Registrations for the DLJ
Entities collectively pursuant to this Section 4.1 other than any such Demand
Registrations effected on Form S-3; and provided further that the Issuer shall
not be obligated to effect a Demand Registration unless the Registrable Stock
requested to be included in such Demand Registration constitutes at least 25% of
the Common Stock then outstanding or to be issued upon conversion of the
Preferred Stock. In no event will the Issuer be required to effect more than two
Demand Registrations on Form S-3 within any 12 month period.
Promptly after the expiration of the 15-day period referred to in Section
4.1(a)(ii) hereof, the Issuer will notify all of the Holders to be included in
the Demand Registration of the other Holders and the number of shares of
Registrable Stock requested to be included therein. The Selling Stockholders
requesting a registration under this Section 4.1(a) may, at any time prior to
the effective date of the registration statement relating to such registration,
revoke such request, without liability to any of the other Holders, by providing
a written notice to the Issuer revoking such request, in which case such
request, so revoked, shall be considered a Demand Registration unless such
revocation arose out of the fault of the Issuer, in which case such request
shall not be
13
considered a Demand Registration. Notwithstanding anything contained in this,
Agreement to the contrary, nothing herein shall be construed as requiring the
Issuer to register any of its stock other than Common Stock.
(b) The Issuer will pay all Registration Expenses in connection with any
Demand Registration.
(c) A registration requested pursuant to this Section 4.1 shall not be
deemed to have been effected unless the registration statement relating thereto
(i) has become effective under the Securities Act and (ii) has remained
effective for a period of at least 90 days (or such shorter period in which all
Registrable Stock of the Holders included in such registration has actually been
sold thereunder); provided that if after any registration statement requested
pursuant to this Section 4.1 becomes effective (i) such registration statement
is interfered with by any stop order, injunction or other order or requirement
of the SEC or other governmental agency or court and (ii) less than 75% of the
Registrable Stock included in such registration statement has been sold
thereunder, such registration statement shall be at the sole expense of the
Issuer and shall not be considered a Demand Registration, unless any such
interference referred to in clause (i) of this proviso arose out of the fault of
the Selling Stockholders, in which case such registration statement shall be
considered a Demand Registration.
(d) If a Demand Registration involves an Underwritten Public Offering and
the managing underwriter shall advise the Issuer and the Selling Stockholders
that, in its view, (i) the number of shares of Common Stock requested to be
included in such registration (including Common Stock which the Issuer proposes
to be included which is not Registrable Stock) or (ii) the inclusion of some or
all of the Stock owned by the Holders, in either case, exceeds the largest
number of Stock which can be sold without having an adverse effect on such
offering, including the price at which such Stock can be sold (the "MAXIMUM
OFFERING SIZE"), the Issuer will include in such registration, in the priority
listed below, up to the Maximum Offering Size:
(A) first, all Benchmark Shares requested to be registered by the
DLJ Entities (allocated, if necessary for the offering not to exceed
the Maximum Offering Size, pro rata among the DLJ Entities on the
basis of the relative number of shares of Registrable Stock requested
to he included in such registration);
(B) second, any Common Stock proposed to be registered by the
Issuer; and
(C) third, all Registrable Stock requested to be registered by
any Selling Stockholders and any other Holders (allocated, if
necessary for the offering not to exceed the Maximum Offering size,
pro rata among such Selling Stockholders and other Holders on the
basis of the relative number of shares of Registrable Stock (excluding
any Benchmark Shares) so requested to be included in such
registration).
4.2 Incidental Registration. (a) If the Issuer proposes to register any of
its Common Stock under the Securities Act (other than a registration (A) in
connection with an Initial Public Offering, (B) on Form S-8 or S-4 or any
successor or similar forms, (C) relating to Common
14
Stock issuable upon exercise of employee stock options or in connection with any
employee benefit or similar plan of the Issuer or (D) in connection with a
direct or indirect merger, acquisition or other similar transaction) whether or
not for sale for its own account, the Issuer will each such time, subject to the
provisions of Section 4.2(b) hereof, give prompt written notice at least 30 days
prior to the anticipated filing date of the registration statement relating to
such registration to each Piggyback Stockholder, which notice shall set forth
such Piggyback Stockholders' rights under this Section 4.2 and shall offer all
Piggyback Stockholders the opportunity to include in such registration statement
such number of shares of Registrable Stock as each such Piggyback Stockholder
may request (an "INCIDENTAL REGISTRATION"). Upon the written request of any such
Piggyback Stockholder made within 15 days after the receipt of notice from the
Issuer (which request shall specify the number of shares of Registrable Stock
intended to be disposed of by such Piggyback Stockholder), the Issuer will use
its best efforts to effect the registration under the Securities Act of all
Registrable Stock which the Issuer has been so requested to register by such
Piggyback Stockholders, to the extent requisite to permit the disposition of the
Registrable Stock so to be registered: provided that (i) if such registration
involves an Underwritten Public Offering, all such Piggyback Stockholders
requesting to be included in the Issuer's registration must sell their
Registrable Stock to the underwriters selected as provided in Section 4.4(f) on
the same terms and conditions as apply to the Issuer and the selling Piggyback
Stockholders and (ii) if, at any time after giving written notice of its
intention to register any stock pursuant to this Section 4.2(a) and prior to the
effective date of the registration statement filed in connection with such
registration, the Issuer shall determine for any reason not to register such
stock, the Issuer shall give written notice to all such Piggyback Stockholders
and, thereupon, shall be relieved of its obligation to register any Registrable
Stock in connection with such registration. No registration effected under this
Section 4.2 shall relieve the Issuer of its obligations to effect a Demand
Registration to the extent required by Section 4.1 hereof. The Issuer will pay
all Registration Expenses in connection with each registration of Registrable
Stock requested pursuant to this Section 4.2.
(b) If a registration pursuant to this Section 4.2 involves an Underwritten
Public Offering (other than in the case of an Underwritten Public Offering
requested by any Stockholder in a Demand Registration, in which case the
provisions with respect to priority of inclusion in such offering set forth in
Section 4.1(d) shall apply) and the managing underwriter advises the Issuer
that, in its view, the number of shares of Common Stock which the Issuer and the
selling Piggyback Stockholders intend to include in such registration exceeds
the Maximum Offering Size, the Issuer will include in such registration, in the
following priority, up to the Maximum Offering Size:
(i) first, so much of the Common Stock proposed to be registered by
the Issuer as would not cause the offering to exceed the Maximum Offering
Size;
(ii) second, all Benchmark Shares requested to be included in such
registration statement by any DLJ Entity pursuant to this Section 4.2
(allocated, if necessary for the offering not to exceed the Maximum
Offering Size, pro rata among such DLJ Entities on the basis of the
relative number of shares of Registrable Stock requested to be so
included); and
15
(iii) third, all Registrable Stock other than Benchmark Shares
requested to be included in such registration by any Piggyback Stockholder
pursuant to Section 4.2 (allocated, if necessary for the offering not to
exceed the Maximum Offering Size, pro rata among such Piggyback
Stockholders on the basis of the relative number of shares of Registrable
Stock (excluding any Benchmark Shares) so requested to be included in such
registration).
4.3 Holdback Agreements. If any registration of Registrable Stock shall be
in connection with an Underwritten Public Offering, each Stockholder agrees not
to effect any public sale or distribution, including any sale pursuant to Rule
144, or any successor provision, under the Securities Act, of any Registrable
Stock, and not to effect any such public sale or distribution of any other
Common Stock of the Issuer or of any stock convertible into or exchangeable or
exercisable for any Common Stock of the Issuer (in each case, other than as part
of such Underwritten Public Offering) during the 14 days prior to the effective
date of such registration statement (except as part of such registration) or
during the period after such effective date that such managing underwriter and
the Issuer shall agree (but not to exceed 90 days).
4.4 Registration Procedures. Whenever Stockholders request that any
Registrable Stock be registered pursuant to Section 4.1 or 4.2 hereof, the
Issuer will, subject to the provisions of such sections, use its best efforts to
effect the registration and the sale of such Registrable Stock in accordance
with the intended method of disposition thereof as quickly as practicable, and
in connection with any such request:
(a) The Issuer will as expeditiously as possible prepare and file with the
SEC a registration statement on any form for which the Issuer then qualifies or
which counsel for the Issuer shall deem appropriate and which form shall be
available for the sale of the Registrable Stock to be registered thereunder in
accordance with the intended method of distribution thereof, and use its best
efforts to cause such filed registration statement to become and remain
effective for a period of not less than 90 days (or such shorter period in which
all of the Registrable Stock of the Holders included in such registration
statement shall have actually been sold thereunder).
(b) The Issuer will, if requested, prior to filing a registration statement
or prospectus or any amendment or supplement thereto, furnish to each
Stockholder and each underwriter, if any, of the Registrable Stock covered by
such registration statement copies of such registration statement as proposed to
be filed, and thereafter the Issuer will furnish to such Stockholder and
underwriter, if any, such number of copies of such registration statement, each
amendment and supplement thereto (in each case including all exhibits thereto
and documents incorporated by reference therein), the prospectus included in
such registration statement (including each preliminary prospectus) and such
other documents as such Stockholder or underwriter may reasonably request in
order to facilitate the disposition of the Registrable Stock owned by such
Stockholder.
(c) After the filing of the registration statement, the Issuer will
promptly notify each Stockholder holding Registrable Stock covered by such
registration statement of any stop order issued or threatened by the SEC and
take all reasonable actions required to prevent the entry of such stop order or
to remove it if entered.
16
(d) The Issuer will use its best efforts to (i) register or qualify the
Registrable Stock covered by such registration statement under such other stock
or blue sky laws of such jurisdictions in the United States as any Stockholder
holding such Registrable Stock reasonably (in light of such Stockholder's
intended plan of distribution) requests and (ii) cause such Registrable Stock to
be registered with or approved by such other governmental agencies or
authorities as may be necessary by virtue of the business and operations of the
Issuer and do any and all other acts and things that may be reasonably necessary
or advisable to enable such Stockholder to consummate the disposition of the
Registrable Stock owned by such Stockholder; provided that the Issuer will not
be required to (A) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph (d), (B)
subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(e) The Issuer will immediately notify each Stockholder holding such
Registrable Stock covered by such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the occurrence of an event requiring the preparation of a supplement or
amendment to such prospectus so that, as thereafter delivered to the purchasers
of such Registrable Stock, such prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading and promptly
prepare and make available to each such Stockholder and file with the SEC any
such supplement or amendment.
(f) Subject to Section 6.5, the Issuer may select, in its sole discretion,
the underwriter or underwriters in connection with any Underwritten Public
Offering as it may deem appropriate. Notwithstanding the foregoing, the DLJ
Entities will have the right, in their sole discretion, to select the
underwriter or underwriters in connection with any underwritten Demand
Registration initiated by any of the DLJ Entities pursuant to Section 4.1. Any
Affiliate of any of the DLJ Entities may be selected as underwriter for an
Underwritten Public Offering. The Issuer will enter into customary agreements
(including an underwriting agreement in customary form) and take such other
actions as are reasonably required in order to expedite or facilitate the
disposition of such Registrable Stock, including the engagement of a "qualified
independent underwriter" in connection with the qualification of the
underwriting arrangements with the NASD.
(g) The Issuer will make available for inspection by any Stockholder and
any underwriter participating in any disposition pursuant to a registration
statement being filed by the Issuer pursuant to this Section 4.4 and any
attorney, accountant or other professional retained by any such Stockholder or
underwriter (collectively, the "INSPECTORS"), all financial and other records,
pertinent corporate documents and properties of the Issuer (collectively, the
"RECORDS") as shall be reasonably requested by any such Person, and cause the
Issuer's officers, directors and employees to supply all information reasonably
requested by any Inspectors in connection with such registration statement.
(h) The Issuer will furnish to each such Stockholder and to each such
underwriter, if any, a signed counterpart, addressed to such underwriter, of (i)
an opinion or opinions of counsel to the Issuer and (ii) a comfort letter or
comfort letters from the Issuer's independent public accountants, each in
customary form and covering such matters of the type customarily covered
17
by opinions or comfort letters, as the case may be, as a majority of such
Stockholders or the managing underwriter therefor reasonably requests.
(i) The Issuer will otherwise use its best efforts to comply with all
applicable rules and regulations of the SEC, and make available to its
stockholders, as soon as reasonably practicable, an earnings statement covering
a period of 12 months, beginning within three months after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of section 11(a) of the Securities Act. The Issuer may require each
such Stockholder to promptly furnish in writing to the Issuer such information
regarding the distribution of the Registrable Stock as the Issuer may from time
to time reasonably request and such other information as may be legally required
in connection with such registration.
Each such Stockholder agrees that, upon receipt of any notice from the
Issuer of the happening of any event of the kind described in Section 4.4(e)
hereof, such Stockholder will forthwith discontinue disposition of Registrable
Stock pursuant to the registration statement covering such Registrable Stock
until such Stockholder's receipt of the copies of the supplemented or amended
prospectus contemplated by Section 4.4(e) hereof, and, if so directed by the
Issuer, such Stockholder will deliver to the Issuer all copies, other than any
permanent file copies then in such Stockholder's possession, of the most recent
prospectus covering such Registrable Stock at the time of receipt of such
notice. In the event that the Issuer shall give such notice, the Issuer shall
extend the period during which such registration statement shall be maintained
effective (including the period referred to in Section 4.4(a) hereof) by the
number of days during the period from and including the date of the giving of
notice pursuant to Section 4.4(e) hereof to the date when the Issuer shall make
available to such Stockholder a prospectus supplemented or amended to conform
with the requirements of Section 4.4(e) hereof.
4.5 Indemnification by the Issuer. The Issuer agrees to indemnify and hold
harmless each Stockholder holding Registrable Stock covered by a registration
statement, its officers, directors and agents, and each Person, if any, who
controls such Stockholder within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act from and against any and all losses, claims,
damages and liabilities caused by any untrue statement or alleged untrue
statement of a material fact contained in any registration statement or
prospectus relating to the Registrable Stock (as amended or supplemented if the
Issuer shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages or liabilities are caused by any such untrue statement or omission or
alleged untrue statement or omission so made in strict conformity with
information furnished in writing to the Issuer by such Stockholder or on such
Stockholder's behalf expressly for use therein; provided that with respect to
any untrue statement or omission or alleged untrue statement or omission made in
any preliminary prospectus, or in any prospectus, as the case may be, the
indemnity agreement contained in this paragraph shall not apply to the extent
that any such loss, claim, damage, liability or expense results from the fact
that a current copy of the prospectus (or, in the case of a prospectus, the
prospectus as amended or supplemented) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Stock concerned to such
Person if it is determined that the Issuer has provided such prospectus and it
was the responsibility of such Stockholder to provide such
18
Person with a current copy of the prospectus (or such amended or supplemented
prospectus, as the case may be) and such current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) would have cured the
defect giving rise to such loss, claim, damage, liability or expense. The Issuer
also agrees to indemnify any underwriters of the Registrable Stock, their
officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Stockholders
provided in this Section 4.5.
4.6 Indemnification by Participating Stockholders. (a) Subject to Section
4.6(b), each Stockholder holding Registrable Stock included in any registration
statement agrees, severally but not jointly, to indemnify and hold harmless the
Issuer, its officers, directors and agents and each Person, if any, who controls
the Issuer within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act to the same extent as the foregoing indemnity
from the Issuer to such Stockholder, but only (i) with respect to any untrue
statement or omission or alleged untrue statement or omission made in strict
conformity with information furnished in writing by such Stockholder or on such
Stockholder's behalf expressly for use in any registration statement or
prospectus relating to the Registrable Stock, or any amendment or supplement
thereto, or any preliminary prospectus or (ii) to the extent that any loss,
claim, damage, liability or expense described in Section 4.5 results from the
fact that a current copy of the prospectus (or, in the case of a prospectus, the
prospectus as amended or supplemented) was not sent or given to the Person
asserting any such loss, claim, damage, liability or expense at or prior to the
written confirmation of the sale of the Registrable Stock concerned to such
Person if it is determined that it was the responsibility of such Stockholder to
provide such Person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the
prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such loss, claim, damage, liability
or expense. Subject to Section 4.6(b), each such Stockholder also agrees to
indemnify and hold harmless underwriters of the Registrable Stock, their
officers and directors and each person who controls such underwriters on
substantially the same basis as that of the indemnification of the Issuer
provided in this Section 4.6. As a condition to including Registrable Stock in
any registration statement filed in accordance with Article 4 hereof, the Issuer
may require that it shall have received an undertaking reasonably satisfactory
to it from any underwriter to indemnify and hold it harmless to the extent
customarily provided by underwriters with respect to similar stock.
(b) No Stockholder shall be liable under Section 4.6(a) for any damage
thereunder in excess of the net proceeds realized by such Stockholder in the
sale of the Registrable Stock of such Stockholder.
4.7 Conduct of Indemnification Proceedings. In case any proceeding
(including any governmental investigation) shall be instituted involving any
Person in respect of which indemnity may be sought pursuant to this Article 4,
such Person (an "INDEMNIFIED PARTY") shall promptly notify the Person against
whom such indemnity may be sought (the "INDEMNIFYING PARTY") in writing and the
Indemnifying Party shall assume the defense thereof, including the employment of
counsel reasonably satisfactory to such Indemnified Party, and shall assume the
payment of all fees and expenses; provided that the failure of any Indemnified
Party so to notify the Indemnifying Party shall not relieve the Indemnifying
Party of its obligations hereunder
19
except to the extent that the Indemnifying Party is materially prejudiced by
such failure to notify. In any such proceeding, any Indemnified Party shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Party unless (i) the Indemnifying
Party and the Indemnified Party shall have mutually agreed to the retention of
such counsel or (ii) in the reasonable judgment of such Indemnified Party
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
Indemnifying Party shall not, in connection with any proceeding or related
proceedings in the same jurisdiction, be liable for the reasonable fees and
expenses of more than one separate firm of attorneys (in addition to any local
counsel) at any time for all such Indemnified Parties, and that all such fees
and expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be designated in
writing by the Indemnified Parties. The Indemnifying Party shall not be liable
for any settlement of any proceeding effected without its written consent, but
if settled with such consent, or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any and all losses, claims, damages, liabilities and
expenses or liability (to the extent stated above) by reason of such settlement
or judgment. No Indemnifying Party shall, without the prior written consent of
the Indemnified Party, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Party is or could have been a
party and indemnity could have been sought hereunder by such Indemnified Party,
unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such proceeding.
4.8 Contribution. If the indemnification provided for in this Article 4 is
held by a court of competent jurisdiction to be unavailable to the Indemnified
Parties in respect of any losses, claims, damages or liabilities referred to
herein, then each such Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities (i)
as between the Issuer and the Stockholders holding Registrable Stock covered by
a registration statement on the one hand and the underwriters on the other, in
such proportion as is appropriate to reflect the relative benefits received by
the Issuer and such Stockholders on the one hand and the underwriters on the
other, from the offering of the Registrable Stock, or if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits but also the relative fault of the Issuer and such
Stockholders on the one hand and of such underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations and (ii)
as between the Issuer on the one hand and each such Stockholder on the other, in
such proportion as is appropriate to reflect the relative fault of the Issuer
and of each such Stockholder in connection with such statements or omissions, as
well as any other relevant equitable considerations. The relative benefits
received by the Issuer and such Stockholders on the one hand and such
underwriters on the other shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions
but before deducting expenses) received by the Issuer and such Stockholders bear
to the total underwriting discounts and commissions received by such
underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of the Issuer and such Stockholders on the one
hand and of such underwriters on the other shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a material
fact or the omission or alleged omission to state a material fact relates to
information supplied by the Issuer and such
20
Stockholders or by such underwriters. The relative fault of the Issuer on the
one hand and of each such Stockholder on the other shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by such party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Issuer and the Stockholders agree that it would not be just and
equitable if contribution pursuant to this Section 4.8 were determined by pro
rata allocation (even if the underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Section 4.8, no underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Registrable Stock underwritten by it and distributed to the
public were offered to the public exceeds the amount of any damages which such
underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and no Stockholder
shall be required to contribute any amount in excess of the amount by which the
net proceeds realized on the sale of the Registrable Stock of such Stockholder
exceeds the amount of any damages which such Stockholder has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. Each Stockholder's obligation to contribute pursuant to this
Section 4.8 is several in the proportion that the proceeds of the offering
received by such Stockholder bears to the total proceeds of the offering
received by all such Stockholders and not joint.
4.9 Participation in Public Offering. No Person may participate in any
Underwritten Public Offering hereunder unless such Person (a) agrees to sell
such Person's stock on the basis provided in any underwriting arrangements
approved by the Persons entitled hereunder to approve such arrangements and (b)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and the provisions of this Agreement in
respect of registration rights.
ARTICLE 5
CERTAIN COVENANTS AND AGREEMENTS
5.1 Confidentiality. (a) Each Stockholder hereby agrees that Confidential
Information (as defined below) furnished and to be furnished to it was and will
be made available in connection with such Stockholder's investment in the
Issuer. Each Stockholder agrees that it will not use the Confidential
Information in any way to the competitive disadvantage of the Issuer. Each
Stockholder further acknowledges and agrees that it will not
21
disclose any Confidential Information to any Person; provided that Confidential
Information may be disclosed (i) to such Stockholder's Representatives (as
defined below) in the normal course of the performance of their duties, (ii) to
the extent required by applicable law, rule or regulation (including complying
with any oral or written questions, interrogatories, requests for information or
documents, subpoena, civil investigative demand or similar process to which a
Stockholder is subject), (iii) to any Person to whom such Stockholder is
contemplating a transfer of its Stock (provided that such transfer would not be
in violation of the provisions of this Agreement and as long as such potential
transferee is advised of the confidential nature of such information and agrees
to be bound by a confidentiality agreement in form and substance satisfactory to
the Issuer and consistent with the provisions hereof) or (iv) if the prior
written consent of the Board shall have been obtained. Nothing contained herein
shall prevent the use of Confidential Information in connection with the
assertion or defense of any claim by or against the Issuer or any Stockholder.
(b) "CONFIDENTIAL INFORMATION" means any information concerning the Issuer,
its financial condition, business, operations or prospects in the possession of
or to be furnished to any Stockholder in its capacity as a shareholder of the
Issuer or by virtue of its present or former right to designate a director of
the Issuer; provided, that the term "Confidential Information" does not include
information which (i) becomes generally available to the public other than as a
result of a disclosure by a Stockholder or its partners, directors, officers,
employees, agents, counsel, investment advisers or representatives (all such
persons being collectively referred to as "REPRESENTATIVES") in violation of the
Asset Purchase Agreement, (ii) is or was available to such Stockholder on a
nonconfidential basis prior to its disclosure to such Stockholder or its
Representatives by the Issuer or (iii) was or becomes available to such
Stockholder on a non-confidential basis from a source other than the Issuer,
provided that such source is or was (at the time of receipt of the relevant
information) not, to the best of such Stockholder's knowledge, bound by a
confidentiality agreement with (or other confidentiality obligation to) the
Issuer or another Person.
5.2 New Stockholders. The Issuer agrees (and each Stockholder acknowledges)
that as a condition precedent to the issuance of any Equity Stock (including
options issued or reserved for issuance to Management and employees of the
Issuer) the Issuer will require the holder of such Equity Stock to agree in
writing to be bound by the terms of this Agreement. The terms of this Section
5.2 shall not apply to the issuance of Equity Stock in an Underwritten Public
Offering.
ARTICLE 6
MISCELLANEOUS
6.1 Entire Agreement. The Transaction Documents constitute the entire
agreement between the parties with respect to the subject matter of the
Transaction Documents and supersede all prior agreements and understandings,
both oral and written, between the parties with respect to the subject matter of
this Agreement and the other Transaction Documents.
6.2 Binding Effect; Benefit. This Agreement shall inure to the benefit of
and be binding upon the parties hereto and their respective heirs, successors,
legal representatives and
22
permitted assigns. Nothing in this Agreement, expressed or implied, is intended
to confer on any Person other than the parties hereto, and their respective
heirs, successors, legal representatives and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
6.3 Assignability. Neither this Agreement nor any right, remedy, obligation
or liability arising hereunder or by reason hereof shall be assignable by the
Issuer or any Stockholder, except in connection with a transfer of Stock
pursuant to the terms hereof; provided that any Person acquiring Stock who is
required by the terms of this Agreement to become a party hereto shall execute
and deliver to the Issuer an agreement to be bound by this Agreement and shall
thenceforth be a "Stockholder." Any Stockholder who ceases to beneficially own
any Stock shall cease to be bound by the terms hereof (other than Sections 4.6,
4.7, 4.8 and 5.1).
6.4 Amendment; Waiver; Termination. (a) No provision of this Agreement may
be waived except by an instrument in writing executed by the party against whom
the waiver is to be effective. No provision of this Agreement may be amended or
otherwise modified except by an instrument in writing executed by the Issuer
with the approval of the Board and Stockholders holding or having the right to
acquire at least 85% of the Fully Diluted Common Stock held by parties to this
Agreement.
(b) In addition, any amendment, modification or termination of any
provision of this Agreement that would adversely affect a DLJ Entity may be
effected only with the consent of such DLJ Entity.
(c) In addition, any amendment, modification or termination of any
provision of this Agreement that would adversely affect Management may be
effected only with the consent of Management, respectively.
6.5 Exclusive Financial Advisor and Investment Banking Advisor. During the
period from and including the date hereof through and including the fifth
anniversary hereof, Donaldson, Lufkin & Jenrette Securities Corporation
("DLJSC"), or any Affiliate of DLJSC that the DLJ Entities may choose in their
sole discretion, shall, at the option of the DLJ Affiliates, be engaged as the
exclusive financial advisor and investment banker for the Issuer for an annual
retainer fee which shall be on commercially reasonable terms to be agreed
between the Issuer and DLJSC.
6.6 Notices. All notices and other communications given or made pursuant
hereto or pursuant to any other agreement among the parties, unless otherwise
specified, shall be in writing and shall be deemed to have been duly given or
made if sent by fax (with confirmation in writing), delivered personally or sent
by registered or certified mail (postage prepaid, return receipt requested) to
the parties at the fax number or address set forth below or at such other
addresses as shall be furnished by the parties by like notice, and such notice
or communication shall be deemed to have been given or made upon receipt:
23
if to the DLJ Entities, to:
DLJ Merchant Banking Partners, L.P.
DLJ International Partners, C.V.
DLJ Offshore Partners, C.V.
DLJ Merchant Banking Funding, Inc.
277 Park Avenue
New York, New York 10172
Attention: Thomas J. Barry
Fax: (212) 892-7272
and to:
DLJ Capital Corporation
Sprout Growth II, L.P.
Sprout Capital VII, L.P.
Sprout CEO Fund L.P.
3000 Sand Hill Road
Suite 270
Menlo Park, California 94025
Attention: Keith B. Geeslin
Fax: (415) 854-8779
with a copy to:
Latham & Watkins
885 Third Avenue
New York, New York 10022
Attention: R. Ronald Hopkinson
Fax: (212) 751-4864
if to Management or the Issuer, to:
CommVault Systems, Inc.
2 Industrial Way, Building D
Eatontown, New Jersey 07724
Attention: Scotty R. Neal
Fax: (908) 935-8070
Any Person who becomes a Stockholder shall provide its address and fax number to
the Issuer, which shall promptly provide such information to each other
Stockholder.
6.7 Headings. The headings contained in this Agreement are for convenience
only and shall not affect the meaning or interpretation of this Agreement.
6.8 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
together shall be deemed to be one and the same instrument.
24
6.9 Applicable Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, without regard to the
conflicts of law rules of such state.
6.10 Specific Enforcement. Each party hereto acknowledges that the remedies
at law of the other parties for a breach or threatened breach of this Agreement
would be inadequate and, in recognition of this fact, any party to this
Agreement, without posting any bond, and in addition to all other remedies which
may be available, shall be entitled to obtain equitable relief in the form of
specific performance, a temporary restraining order, a temporary or permanent
injunction or any other equitable remedy which may then be available.
6.11 Consent to Jurisdiction. Any suit, action or proceeding seeking to
enforce any provision of, or based on any matter arising out of or in connection
with, this Agreement or the transactions contemplated hereby be brought in the
United States District Court for the Southern District of New York or any other
New York State court sitting in New York City, and each of the parties hereby
consents to the non-exclusive jurisdiction of such courts (and of the
appropriate appellate courts therefrom) in any such suit, action or proceeding
and irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such suit,
action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
inconvenient form. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 7.6 shall be deemed
effective service of process on such party.
[Remainder of this page intentionally left blank.]
25
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of, the day and year
first above written.
DLJ MERCHANT BANKING PARTNERS, L.P.
BY DLJ Merchant Banking, Inc.
Managing General Partner
By: /s/ Illegible
------------------------------------
Name:
----------------------------------
Attorney-In-Fact
DLJ INTERNATIONAL PARTNERS, C.V.
BY DLJ Merchant Banking, Inc.
Advisory General Partner
By: /s/ Illegible
------------------------------------
Name:
----------------------------------
Attorney-In-Fact
DLJ OFFSHORE PARTNERS, C.V.
BY DLJ Merchant Banking, Inc.
Advisory General Partner
By: /s/ Illegible
------------------------------------
Name:
----------------------------------
Attorney-In-Fact
DLJ MERCHANT BANKING FUNDING, INC.
By: /s/ Illegible
------------------------------------
Name:
----------------------------------
Attorney-In-Fact
COMMVAULT SYSTEMS, INC.
By: /s/ Scotty R. Neal
------------------------------------
Name: Scotty R. Neal
Title: President
/s/ Scotty R. Neal
----------------------------------------
SCOTTY R. NEAL
/s/ David H. Ireland
----------------------------------------
DAVID H. IRELAND
/s/ Robert Freiburghouse
----------------------------------------
ROBERT FREIBURGHOUSE
DLJ CAPITAL CORPORATION
By: /s/ Arthur S. Zuckerman
------------------------------------
Arthur S. Zuckerman
Attorney-In-Fact
SPROUT GROWTH II, L.P.
By: DLJ Capital Corporation,
Managing General Partner
By: /s/ Arthur S. Zuckerman
------------------------------------
Arthur S. Zuckerman
Attorney-In-Fact
SPROUT CAPITAL VII, L.P.
By: DLJ Capital Corporation,
Managing General Partner
By: /s/ Arthur S. Zuckerman
------------------------------------
Arthur S. Zuckerman
Attorney-In-Fact
SPROUT CEO FUND L.P.
By: DLJ Capital Corporation,
Managing General Partner
By: /s/ Arthur S. Zuckerman
------------------------------------
Arthur S. Zuckerman
Attorney-In-Fact