EXHIBIT 4.03
CO-SALE AGREEMENT
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THIS CO-SALE AGREEMENT ("Agreement") is made as of the 20th day of
February, 1996 by and between VeriSign, Inc., a Delaware corporation (the
"Company"), the individuals and entities listed on Schedule A attached hereto
(the "Investors"), and RSA Data Security, Inc., a Delaware corporation
("Holder").
WHEREAS, the Company, Holder and certain of the Investors (the "Series A
Investors") are parties to that certain Series A Preferred Stock Purchase
Agreement dated April 18, 1995 (the "Series A Agreement"), pursuant to which
Holder has granted certain co-sale rights, as more particularly set forth in
Section 10 of the Series A Agreement, to the Series A Investors.
WHEREAS, Holder desires to terminate its obligations under Section 10 of
the Series A Agreement, and whereas the Company and the Series A Investors are
willing to allow Holder to terminate such obligations in consideration of Holder
entering into this Agreement.
WHEREAS, the Company and Holder desire for certain of the Investors (the
"Series B Investors") to purchase shares of the Company's Series B Preferred
Stock pursuant to that certain Series B Preferred Stock Purchase Agreement of
even date herewith (the "Series B Agreement"), and as a condition thereof and to
induce such investment, the Company and Holder are willing to enter into this
Agreement.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
I. RIGHT OF CO-SALE.
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1.1 Grant. Should Holder receive a bona fide offer (the "Purchase
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Offer") from any person or entity ("Offeror"), to purchase from Holder any
Common Stock or Preferred Stock of the Company (collectively, "Capital Stock"),
now owned or hereafter acquired by Holder upon specific terms and conditions
(including a specified purchase price payable in cash or other property), then
Holder shall promptly notify each of the Investors of the terms and conditions
of such Purchase Offer.
1.2 Exercise of Co-Sale Right. Each of the Investors shall have the
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right, exercisable upon written notice to Holder within ten (10) business days
after receipt of the notice of the Purchase Offer referenced in Section 1.1
above, to participate in Holder's sale of the Capital Stock pursuant to the
specified terms and conditions of such Purchase Offer. To the extent one or more
of the Investors exercises such right of participation in accordance with the
terms and conditions set forth below, the number of shares of Capital Stock
which Holder may sell pursuant to such Purchase Offer shall be correspondingly
reduced. The right of participation of each of the Investors shall be subject to
the following terms and conditions:
a. Each of the Investors may sell all or any part of that number
of shares of Common Stock (or Preferred Stock convertible into such number of
shares of Common Stock) of the Company equal to the product obtained by
multiplying (i) the maximum aggregate number of Common Stock and Preferred Stock
(on an as-converted to Common Stock basis) covered by the Purchase Offer by (ii)
a fraction, the numerator of which is the number of shares of Common Stock of
the Company at the time owned by the Investor (assuming for such purpose the
conversion of any Preferred Stock owned by the Investor into Common Stock) and
the denominator of which is the combined number of shares of Common Stock of the
Company at the time owned by the Holder and the Investors (assuming for such
purpose the conversion of any Preferred Stock owned by Holder and the
Investors).
b. To the extent one or more of the Investors elect not to sell
the full number of shares said Investors are entitled to sell pursuant to
Section 1.2(a) above, the Holder's right to participate in the sale shall be
increased by a corresponding number of shares.
c. Each of the Investors may effect its participation in the sale
by delivering to a closing agent reasonably acceptable to such Investors and the
Holder ("Agent") for transfer to the Offeror one or more certificates, properly
endorsed for transfer, which represent (i) the number of shares of Common Stock
which the Investor elects to sell pursuant to this Section 1.2 or (ii) that
number of shares of Preferred Stock which is at such time convertible into the
number of shares of Common Stock which the Investor elects to sell pursuant to
this Section 1.2; provided, however, that if the Offeror objects to the delivery
of Preferred Stock in lieu of Common Stock, the participating Investor or
Investors may convert and deliver Common Stock.
1.3 Payment of Proceeds. The stock certificates which the Investors deliver
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to the Agent pursuant to Section 1.2 above shall be transferred by the Agent to
the buyer thereof in consummation of the sale of the stock pursuant to the terms
and conditions specified in the Section 1.1 notice to the Investors. The Holder
agrees to cause the buyer thereof to make payment therefor to the Agent and the
Agent shall promptly thereafter remit to each Investor that portion of the sale
proceeds to which the Investor is entitled by reason of said Investor's
participation in such sale.
1.4 Non-Exercise. The exercise or non-exercise of the rights of the
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Investors hereunder to participate in one or more sales of stock made by Holder
shall not adversely affect their rights to participate in any subsequent stock
sales by Holder.
II. EXEMPT TRANSFERS.
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2.1 Permitted Transactions. The participation rights of the Investors
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contained in this Agreement shall not pertain or apply to any pledge of the
Company's capital Stock made by Holder which creates a mere security interest,
nor shall such rights pertain or apply to any sales or transfers of the
Company's Capital Stock to shareholders of Holder or affiliates of Holder or its
shareholders, provided such shareholders or affiliates shall furnish the
Investors with a written agreement agreeing to be bound by and comply with all
of the provisions of this Agreement. Such transferred Capital Stock shall
remain "Capital Stock" hereunder, and such transferee shall be treated as
"Holder" for purposes of this Agreement.
III. PROHIBITED TRANSFERS.
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3.1 Put Option. In the event Holder should sell any Capital Stock of the
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Company in contravention of the participation rights of the Investors under this
Agreement (a "Prohibited Transfer"), the Investors shall have, in addition to
such other remedies as may be available in law, in equity or otherwise, the
option to sell to Holder a number of shares of Common Stock of the Company
(either directly or through delivery of Preferred Stock at the time convertible
into such number of shares of Common Stock) equal to the number of shares such
Investor would have had the right to sell in the Prohibited Transfer, on the
following terms and conditions:
a. The price per share at which the shares are to be sold to the
Holder shall be equal to the price per share paid by the buyer to the Holder in
the Prohibited Transfer.
b. The Investors shall deliver to the Holder, within ninety (90) days
after they have received notice from the Holder or otherwise become aware of the
Prohibited Transfer, the certificate or certificates representing shares to be
sold, each certificate to be properly endorsed for transfer.
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c. The Holder shall, upon receipt of the certificates for the
repurchased shares, pay the aggregate purchase price therefor, by certified
check or bank draft made payable to the order of the Investor exercising the put
option set forth in this Article III.
IV. LEGEND REQUIREMENTS.
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4.1 Legend. Each certificate representing the Capital Stock owned by
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Holder shall be endorsed with the following legend:
"THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN CO-SALE AGREEMENT BY AND BETWEEN THE REGISTERED
HOLDER (OR HIS PREDECESSOR IN INTEREST) AND CERTAIN
INVESTORS IN THE CAPITAL STOCK OF THE COMPANY. A COPY OF
SUCH AGREEMENT IS ON FILE AT THE PRINCIPAL OFFICE OF THE
COMPANY."
4.2 Removal. The Section 4.1 legend shall be removed upon termination of
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this Agreement in accordance with the provisions of Section 5.1.
V. TERMINATION.
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5.1 Termination.
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a. The rights of each Investor under Article I of this Agreement and
the correlative obligations of Holder with respect to such Investor shall
terminate at such time as such Investor shall no longer be the owner of any
shares of Capital Stock of the Company. Unless sooner terminated in accordance
with the preceding sentence, Article I of this Agreement shall terminate upon
the first to occur of the following events:
(i) the liquidation or dissolution of the Company;
(ii) the execution by the Company of a general assignment for the
benefit of creditors or the appointment of a receiver or trustee to take
possession of the property and assets of the Company; or
(iii) immediately prior to the closing of a bona fide firm
commitment underwritten public offering of the Company's Common Stock registered
under the Securities Act of 1933 on Form S-1 (or any successor form designated
by the Securities and Exchange Commission), resulting in aggregate gross
proceeds to the Company of at least $15,000,000 at an offering price to the
public of not less than $7.50 per share (appropriately adjusted to reflect any
stock splits, stock dividends or similar events).
VI. MISCELLANEOUS PROVISIONS.
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6.1 Notice. Any notice required or permitted to be given to a party
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pursuant to the provisions of this Agreement shall be in writing and shall be
effective upon personal delivery or five (5) days after deposit in the U.S. mail
(or equivalent independent service), postage prepaid and properly addressed to
the party to be notified as set forth below such party's signature or at such
other address as such party may designate by ten (10) days' advance written
notice to the other parties hereto.
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6.2 Severability. In the event one or more of the provisions of this
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Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed and interpreted in such manner as to be effective and valid
under applicable law.
6.3 Waiver or Modification. Any amendment or modification of this
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Agreement shall be effective only if evidenced by a written instrument executed
Holder, (ii) the Company, and (iii) Investors, or their assignees, holding not
less than a majority of the Common Stock issued or issuable upon conversion of
the Preferred Stock then held by the Investors. Notwithstanding the foregoing,
this Agreement may be amended to add additional Investors without the consent of
the Holder.
6.4 Governing Law. This Agreement shall be governed by and construed in
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accordance with the laws of the State of California as applied in contracts
among California residents entered into and performed entirely within
California.
6.5 Attorneys' Fees. In the event of any dispute involving the terms
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hereof, the prevailing parties shall be entitled to collect legal fees and
expenses from the other party to the dispute.
6.6 Further Assurances. Each party agrees to act in accordance herewith
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and not to take any action which is designed to avoid the intention hereof.
6.7 Ownership. Holder represents and warrants that he is the sole legal
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and beneficial owner of the shares of stock subject to this Agreement and that
no other person has any interest (other than a community property interest) in
such shares.
6.8 Successors and Assigns. This Agreement and the rights and obligations
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of the parties hereunder shall inure to the benefit of, and be binding upon,
their respective successors, assigns and legal representatives. This Agreement
and the rights and obligations of the parties hereunder is specifically
assignable by the Investors.
6.9 Aggregation of Stock. For the purposes of determining the availability
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of any rights under this Agreement, the holdings of transferees and assignees of
an individual or a partnership who are spouses, ancestors, lineal descendants or
siblings of such individual or partners or retired partners of such partnership
(including spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Common Stock by gift, will or intestate
succession) shall be aggregated together with the individual or partnership, as
the case may be, for the purpose of exercising any rights or taking any action
under this Agreement.
6.10 Counterparts. This Agreement may be executed in two or more
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counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
6.11 Separate Counsel. Each party to this Agreement acknowledges and agrees
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that such party has been provided the opportunity and encouraged to consult with
counsel of such party's own choosing with respect to this Agreement and that
Brobeck, Phleger & Harrison LLP solely represents the interests of Kleiner
Perkins Caufield & Byers VII, KPCB VII Founders Fund and KPCB Information
Science Zaibatsu Fund II.
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[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day and
year indicated above.
COMPANY: VERISIGN, INC., a Delaware corporation
By:/s/ Stratton Sclavos
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Stratton Sclavos, President
Address: 2593 Coast Ave
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Mountain View, CA 94043
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INVESTORS: KLEINER PERKINS CAUFIELD & BYERS VII
By:/s/ Kevin R. Compton
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Name: Kevin Compton
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Title: General Partner
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Address: 2750 Sand Hill Road
Menlo Park, CA 94025
KPCB VII FOUNDERS FUND
By:/s/ Kevin R. Compton
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Name: Kevin Compton
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Title: General Partner
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Address: 2750 Sand Hill Road
Menlo Park, CA 94025
[SIGNATURE PAGE TO CO-SALE AGREEMENT]
KPCB INFORMATION SCIENCE ZAIBATSU FUND II
By:/s/ Kevin R. Compton
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Name:___________________________________________
Title: General Partner
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Address: 2750 Sand Hill Road
Menlo Park, CA 94025
BESSEMER VENTURE PARTNERS DCI
By: Bessemer Venture Partners III L.P.
Managing General Partner
By: Deer III & Co.
BY: /s/ Robert H. Buescher
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Name: __________________________________________
Title: Partner
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Address: 1025 Old Country Road, Suite 205
Westbury, NY 11590
MITSUBISHI CORPORATION
By:_____________________________________________
Name: Yukihiro Kayama
Title: Senior Assistant to Managing Director
Information Systems and Services Group
Address: 6-3, Marunouchi 2-Chome
Chiyoda-ku, Tokyo 100-86
Japan
[SIGNATURE PAGE TO CO-SALE AGREEMENT]
SECURITY DYNAMICS TECHNOLOGIES, INC.
By:/s/ Charles R. Stuckey, Jr.
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Name: Charles R. Stuckey, Jr.
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Title: President and CEO
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Address: One Alewife Center
Cambridge, MA 02140-2312
INTEL CORPORATION
By: /s/ Arvind Sodhani
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Name:___________________________________________
Title: Vice President and Treasurer
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Address: 2200 Mission College Blvd.
Santa Clara, CA 95052
AMERITECH DEVELOPMENT CORPORATION
By: /s/ Thomas Touton
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Name: Thomas Touton
Title: Vice President - Venture Capital
Address: 30 South Wacker Drive, 37th Floor
Chicago, IL 60606
GC&H INVESTMENTS
By: /s/ James C. Kitch
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Name: James C. Kitch
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Title: Executive Partner
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Address: 3000 Sand Hill Road
Building 3, Suite 230
Menlo Park, CA 94025
VISA INTERNATIONAL SERVICE ASSOCIATION
By: /s/ William Chenevich
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Name: William Chenevich
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Title: Group EVP
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Address: c/o Andrew Konstantaras
Legal Department
VISA
900 Metro Center Boulevard
Foster City, CA 94404
FISCHER SECURITY CORPORATION L.L.C.
By: /s/ Addison M. Fischer
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Name: Addison M. Fischer
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Title: Managing Director
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Address: 4073 Mercantile Avenue
Naples, FL 33942
FIRST TZMM INVESTMENT PARTNERSHIP
By: /s/ Timothy Tomlinson
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Name: Timothy Tomlinson
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Title: General Partner
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Address: c/o Tomlinson Zisko Morosoli & Maser
200 Page Mill Road, 2nd Floor
Palo Alto, CA 94306
HOLDER: RSA DATA SECURITY, INC.
By: /s/ D. James Bidzos
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D. James Bidzos, President
Address: 100 Marine Parkway, Suite 500
Redwood City, CA 94065
[SIGNATURE PAGE TO CO-SALE AGREEMENT]
VeriSign, Inc.
Schedule A
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INVESTORS
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KLEINER, PERKINS, CAUFIELD & BYERS VII
KPCB VII FOUNDERS FUND KPCB
INFORMATION SCIENCE ZAIBATSU FUND II
BESSEMER VENTURE PARTNERS DCI
MITSUBISHI CORPORATION
SECURITY DYNAMICS TECHNOLOGIES, INC.
INTEL CORPORATION
AMERITECH DEVELOPMENT CORPORATION
GC&H INVESTMENTS
VISA INTERNATIONAL SERVICE ASSOCIATION
FISCHER SECURITY CORPORATION L.L.C.
FIRST TZMM INVESTMENT PARTNERSHIP
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