Document:

exv4w2

Exhibit 4.2

 

SPS COMMERCE, INC.

REGISTRATION RIGHTS AGREEMENT

(Amended and Restated April 10, 2007)

 

 

 

TABLE OF CONTENTS

	 	 	 	 	 
	 	 	Page
	Section 1. Definitions
	 	 	1	 
	Section 2. Securities Subject to this Agreement
	 	 	3	 
	Section 3. Demand Registration
	 	 	3	 
	Section 4. Piggyback Registrations
	 	 	4	 
	Section 5. Restrictions on Public Sale by the Company and Others
	 	 	6	 
	Section 6. Registration Procedures
	 	 	6	 
	Section 7. Registration Expenses
	 	 	9	 
	Section 8. Indemnification
	 	 	9	 
	Section 9. Rule 144 and Rule 144A; Company Obligations
	 	 	10	 
	Section 10. Participation in Underwritten Registrations
	 	 	11	 
	Section 11. Miscellaneous
	 	 	11	 
	 
	 	 	 	 
	Exhibit A                      Investors
	 	 	 	 
	Exhibit B                      Notice of Adoption
	 	 	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page A-i

 

 

SPS COMMERCE, INC.

REGISTRATION RIGHTS AGREEMENT

(Amended and Restated April 10, 2007)

     This Amended and Restated Registration Rights Agreement (“Agreement”) is entered into as of
April 10, 2007 (the “Effective Date”), by and among SPS Commerce, Inc., a Delaware corporation (the
“Company”), the investors listed on Exhibit A (each an “Investor”) and the stockholders on
Exhibit A (each a “Stockholder”).

Preliminary Statements

     A. On the Effective Date the Company filed a Fifth Amended and Restated Certificate
of Incorporation authorizing shares of Series A Convertible Preferred Stock, $.001 par value
(“Series A Preferred Stock”), Series B Convertible Preferred Stock, $.001 par value (“Series B
Preferred Stock”), and Series C Convertible Preferred Stock, $.001 par value (“Series C Preferred
Stock,” and collectively with the Series A Preferred Stock and Series B Preferred Stock, the
“Preferred Stock”).

     B. Pursuant to the terms and conditions of that certain Series C Convertible Preferred Stock
Purchase Agreement, by and among the Company and certain of the Investors, dated as of the date
hereof (the “Stock Purchase Agreement”), such Investors purchased Series C Preferred Stock.

     C. Certain of the Investors and the Company are parties to that certain Fourth Amended and
Restated Registration Rights Agreement, dated as of May 16, 2003, as amended (the “2003
Registration Rights Agreement”), that provides for certain registration rights as set forth
therein.

     D. It is a condition to the closing of the transactions contemplated by the Stock Purchase
Agreement that the parties enter into this Agreement, and that this Agreement will amend, supersede
and restate in its entirety the 2003 Registration Rights Agreement.

     E. The 2003 Registration Rights Agreement may be amended only by a written agreement executed
by the Company and the holders of at least 66.67% of the issued and outstanding Series A Preferred
Stock and the holders of at least 66.67% of the issued and outstanding Series B Preferred Stock.

     F. The Company, the holders of at least 66.67% of the issued and outstanding Series A
Preferred Stock, and the holders of 66.67% of the issued and outstanding Series B Preferred Stock
desire to amend and restate the 2003 Registration Rights Agreement to provide such contractual
rights to the Series C Preferred Stock as set forth herein.

Terms and Conditions

     In consideration of the mutual covenants and agreements contained in this Agreement and the
Stock Purchase Agreement, and intending to be legally bound, the parties hereto agree as follows:

     Section 1. Definitions. As used in this Agreement, and in addition to other terms
defined herein, the following terms have the meanings indicated below or in the referenced sections
of this Agreement:

          “2003 Purchase Agreement” means the Series B Convertible Preferred Stock Purchase Agreement,
by and among the Company and the purchasers listed therein, dated as of May 16, 2003, as from time
to time amended in accordance with the provisions thereof.

          “2006 Purchase Agreement” means the Series B Convertible Preferred Stock Purchase Agreement,
by and among the Company and the purchasers listed therein, dated as of February 21, 2006, as from
time to time amended in accordance with the provisions thereof.

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page A-1

 

 

          “Business Day” means any day other than a Saturday, Sunday or public holiday or the equivalent
for banks under the laws of the States of Minnesota or Indiana.

          “Common Stock” means the Company’s common stock, $.001 par value per share, as the same may be
constituted from time to time.

          “Demand Registration” has the meaning set forth in Section 3(a).

          “Exchange Act” means the Securities Exchange Act of 1934, as amended, or any similar federal
statute, and the rules and regulations of the SEC thereunder, all as the same may be in effect at
the time.

          “Exchange Agreement” means the Preferred Stock Exchange Agreement, by and among the Company
and the investors listed therein, dated as of May 16, 2003, as from time to time amended in
accordance with the provisions thereof.

          “Initial Public Offering” means the first primary offering of Common Stock to the public by
the Company registered pursuant to the Securities Act.

          “Majority of the Registrable Securities” means 51% or more of the Registrable Securities being
registered, unless the text of this Agreement indicates that it is 51% or more of the Registrable
Securities then issued and outstanding.

          “Person” means an individual, a partnership, a corporation, a limited liability company, an
association, a joint stock company, a trust, a joint venture, an unincorporated organization, or a
government entity or any department, agency, or political subdivision thereof.

          “Piggyback Registration” has the meaning set forth in Section 4(a).

          “Preferred Stock” means the Company’s Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock.

          “Pro rata basis” means with respect to each Investor (or Stockholder if applicable) the ratio
determined by dividing (i) the number of Registrable Securities (on an as-if-converted to Common
Stock basis) then held by such Investor (or Stockholder if applicable) by (ii) the aggregate number
of outstanding Registrable Securities (on an as-if-converted to Common Stock basis).

          “Registrable Securities” means (a) the Common Stock issued or issuable upon conversion of the
Preferred Stock acquired by the Investors pursuant to the Exchange Agreement, the 2003 Purchase
Agreement, the 2006 Purchase Agreement and the Stock Purchase Agreement; (b) any Common Stock
issued as (or issuable upon the conversion or exercise of any warrant, right, or other security
that is issued as) a dividend or other distribution with respect to, or in exchange for, or in
replacement of, the Preferred Stock; (c) any other shares of Common Stock that the Investors have
the right to acquire or do acquire upon conversion of shares of Preferred Stock or other equity or
debt securities of the Company issued or acquired pursuant to any current or future agreement
between or among any of the Investors and the Company or any current stockholder of the Company;
(d) any shares of Common Stock otherwise acquired by the Investors; and (e) the shares of Common
Stock held by the Stockholders as of the date of this Agreement (including shares of Common Stock
issuable upon the conversion or exercise of any warrant, right, or option currently held by any
Stockholder), but as to the shares subject to this phrase (e), only in connection with the
Piggyback Registration rights provided for in Section 4, and any other rights or obligations of the
Stockholders provided herein to effectuate Stockholders’ rights under Section 4.

          “Registration Expenses” has the meaning set forth in Section 7.

          “SEC” means the United States Securities and Exchange Commission (or any other federal agency
at that time administering the Securities Act).

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 2

 

 

          “Securities Act” means the Securities Act of 1933, as amended, or any similar federal statute,
and the rules and regulations of the SEC thereunder, all as the same may be in effect at the time.

          “Underwritten registration” or “underwritten offering” means a registration in which
securities of the Company are sold pursuant to a firm commitment underwriting.

     Section 2. Securities Subject to this Agreement.

          (a) Registrable Securities. The securities entitled to the benefits of this Agreement
are Registrable Securities. A Registrable Security ceases to be entitled to the benefits of this
Agreement when it is registered under the Securities Act and disposed of in accordance with the
registration statement covering it.

          (b) Holders of Registrable Securities. A Person is deemed to be a holder of
Registrable Securities whenever that Person owns, directly or beneficially, or has the right to
acquire Registrable Securities, disregarding any legal restrictions upon the exercise of that
right.

     Section 3. Demand Registration.

          (a) Requests for Registration. At any time after the completion of an Initial Public
Offering, the holders of the Registrable Securities may demand that the Company register all or
part of their Registrable Securities under the Securities Act (a “Demand Registration”) on Forms
S-1 or S-3 (or similar forms then in effect) promulgated by the SEC under the Securities Act.
Within ten days after receipt of a demand, the Company will notify in writing all holders of
Registrable Securities of the demand. Any holder who wants to include his, her or its Registrable
Securities in the Demand Registration must notify the Company within ten Business Days of receiving
the notice of the Demand Registration. Except as provided in this Section 3, the Company will
include in all Demand Registrations all Registrable Securities for which the Company receives
timely written demands for inclusion. All demands made pursuant to this Section 3(a) must specify
the number of Registrable Securities to be registered (that may not be less than 20% in the
aggregate of the then outstanding Registrable Securities on a fully diluted basis, including
Registrable Securities issued upon conversion of the then-outstanding Preferred Stock) and the
intended method of disposing of the Registrable Securities.

          (b) Number of Demand Registrations. The Company is obligated to effect up to four
Demand Registrations pursuant to this Section 3, including two that may be Demand Registrations on
Form S-1 (or any successor form).

          (c) Form of Registration. The Demand Registration will be on Form S-3 whenever the
Company is permitted to use the form, unless the holders of a Majority of the Registrable
Securities or the underwriter reasonably request registration on an expanded form; provided,
however, that no more than two Demand Registrations will be on Form S-1. The Company will use its
reasonable best efforts to qualify for registration on Form S-3.

          (d) Registration Expenses. The Company will pay all Registration Expenses for the
Demand Registrations. A registration initiated as a Demand Registration for which the Company pays
the Registration Expenses will not count (i) toward the limit on Demand Registrations set forth in
Section 3(b) or (ii) for the purposes of the first sentence of this Section 3(d) until it becomes
effective and at least 50% of all of the Registrable Securities included in that registration have
actually been sold.

          (e) Selection of Underwriters. The holders of a majority of the Registrable
Securities requested to be included in a Demand Registration may select the investment banker(s)
and manager(s) that will administer the offering, as long as the investment banker(s) and the
manager(s) are reasonably satisfactory to the Company. The Company will enter into a customary
underwriting agreement with those investment banker(s) and manager(s).

          (f) Priority on Demand Registrations. If the managing underwriters give the Company
and the holders of the Registrable Securities being registered a written opinion that the number

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 3

 

 

of
Registrable Securities requested to be included exceeds the number of securities that can be sold,
the Company will include in the registration only the number of Registrable Securities that the
underwriters believe can be sold. The number of securities registered will be allocated on a pro
rata basis among the holders of Registrable Securities on the basis of the total number of
Registrable Securities requested to be included in the registration.

          (g) Delay in Filing. The Company may delay the filing of the registration statement
in connection with a Demand Registration for a period of not more than 120 calendar days upon the
advice of the investment banker(s) and manager(s) that will administer the offering that a delay is
necessary or appropriate under the circumstances to prevent a material adverse effect on the
Company. The Company may not use this right to delay more than once during the term of this
Agreement.

          (h) Limited Piggyback Right on Demand Registrations.

               (i) Whenever the holders of Registrable Securities demand a Demand Registration, the Company
may notify in writing the other holders of securities of the same type as the Registrable
Securities that are to be registered not later than the earlier to occur of (A) the fifth Business
Day following the Company’s receipt of notice of exercise of the Demand Registration right or (B)
45 calendar days prior to the anticipated filing date.

               (ii) The Company may include in the Demand Registration securities of the same type and class
to be sold for its own account or held by other holders, but only to the extent that the managing
underwriters give the Company their written opinion that the total number or dollar amount of
securities requested to be included can be sold. If the number or dollar amount of securities
requested to be sold exceeds the amount that in the opinion of the managing underwriters can be
sold, the Company will include in the registration: (A) first, up to all Registrable Securities
(allocated on a pro rata basis among the holders of Registrable Securities on the basis of the
total number of Registrable Securities requested to be included in the registration), (B) second,
up to the full number or dollar amount of securities requested to be included for the account of
the Company, and (C) third, up to the full number or dollar amount of securities requested to be
included in the registration in excess of the number or dollar amount of Registrable Securities to
be registered (allocated on a pro rata basis among the holders of the securities in such
proportions as the Company and those holders may agree).

               (iii) The holders of securities (including the Company) other than Registrable Securities to
be registered pursuant to this Section 3(h) will enter into the same agreement with the managing
underwriters as do the holders of the Registrable Securities.

               (iv) If the Company registers any of its securities on its own behalf in a Demand Registration
(in accordance with the provisions of this Section 3(h)), that Demand Registration will not count
(i) toward the limit on Demand Registrations set forth in Section 3(b) or (ii) for the purpose of
determining the number of Demand Registrations for which the Company is required under Section 3(h)
to pay all Registration Expenses, and the Company will pay all of the Registration Expenses of that
registration.

               (v) If any of the holders of any other securities of the Company register those securities in
a Demand Registration in accordance with this Section 3(h), those holders will pay the fees and
expenses of their counsel and their share on a pro rata basis of the Registration Expenses not paid
by the Company for any reason.

     Section 4. Piggyback Registrations.

          (a) Right to Piggyback. Whenever the Company proposes to register any of its
securities under the Securities Act (except for the registration of securities to be offered
pursuant to an employee benefit plan on Form S-8 or pursuant to a registration made on Form S-4, or any successor
forms then in effect) at any time other than pursuant to a Demand Registration and the registration
form to

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 4

 

 

be used may be used for the registration of the Registrable Securities (a “Piggyback
Registration”), it will so notify in writing all holders of Registrable Securities not later than
the earlier to occur of (i) the fifth Business Day following the Company’s receipt of notice of
exercise of other demand registration rights, or (ii) 30 calendar days prior to the anticipated
filing date. Subject to the provisions of Sections 4(c) and (d), the Company will include in the
Piggyback Registration all Registrable Securities with respect to which the Company has received
written requests for inclusion within 15 Business Days after the applicable holder’s receipt of the
Company’s notice. The holders of Registrable Securities may withdraw all or any part of the
Registrable Securities from a Piggyback Registration at any time before five Business Days prior to
the effective date of the Piggyback Registration. If a Piggyback Registration is an underwritten
offering effected under Section 4(c), all Persons whose securities are included in the Piggyback
Registration must sell their securities on the same terms and conditions as apply to the securities
being issued and sold by the Company. If a Piggyback Registration is an underwritten offering
effected under Section 4(d), all Persons whose securities are included in the Piggyback
Registration must sell their securities on the same terms and conditions as apply to the securities
being sold by the Person(s) initiating the Piggyback Registration. A registration of Registrable
Securities pursuant to this Section 4 will not be counted as a Demand Registration under Section 3.

          (b) Piggyback Expenses. The Company will pay all Registration Expenses in connection
with each Piggyback Registration.

          (c) Priority on Primary Registrations. If a Piggyback Registration is an underwritten
primary registration on behalf of the Company and the managing underwriters give the Company their
written opinion that the total number or dollar amount of securities requested to be included in
the registration exceeds the number or dollar amount of securities that can be sold, the Company
will include the securities in the registration in the following order of priority: (i) first, all
securities the Company proposes to sell; (ii) second, up to the full number or dollar amount of
Registrable Securities requested to be included in the registration (allocated on a pro rata basis
among the holders of Registrable Securities on the basis of the dollar amount or number of
Registrable Securities requested to be included); and (iii) third, any other securities (provided
they are of the same class as the securities sold by the Company) requested to be included,
allocated among the holders of securities in such proportions as the Company and those holders may
agree.

          (d) Priority on Secondary Registrations. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Company’s securities, and the
managing underwriters give the Company their written opinion that the dollar amount or number of
securities requested to be included in the registration exceeds the dollar amount or number of
securities that can be sold, the Company will include in the registration: (i) to the extent of
50% of the number or dollar amount of securities other than Registrable Securities that in the
underwriter’s opinion can be sold, the securities requested to be included in the registration,
allocated among the holders of those securities in such proportions as the Company and those
holders may agree, and (ii) to the extent of the balance, the Registrable Securities requested to
be included, allocated on a pro rata basis among the holders of Registrable Securities on the basis
of the dollar amount or number of securities requested to be included. If after including all of
the Registrable Securities the underwriters determine that there are additional securities that can
be sold, then securities other than the foregoing may be added to the registration.

          (e) Selection of Underwriters. If any Piggyback Registration is an underwritten
offering, the Company will select the investment banker(s) and manager(s) that will administer the
offering, as long as the investment banker(s) and manager(s) are reasonably satisfactory to the
holders of a Majority of the Registrable Securities. The Company and the holders of Registrable
Securities participating in the offering will enter into a customary underwriting agreement with
the investment banker(s) and manager(s).

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 5

 

 

          (f) Other Registrations. The Company agrees that after filing a registration
statement with respect to Registrable Securities pursuant to Section 3 or this Section 4 that has
not been withdrawn or abandoned, the Company will not register any of its equity securities or
securities convertible or exchangeable into or exercisable for its equity securities under the
Securities Act, whether on its own behalf or at the request of any holder of those securities,
until at least three months has elapsed from the effective date of the previous registration. This
three-month hiatus does not apply to registrations of securities to be issued in connection with
employee benefit plans, to permit exercise or conversions of previously issued options, warrants,
or other convertible securities, or in connection with a Demand Registration.

     Section 5. Restrictions on Public Sale by the Company and Others. The Company agrees
not to make any public sale or distribution of its equity securities, or any securities convertible
into or exchangeable or exercisable for its equity securities, including a sale under Regulation D
of the Securities Act or under any other exemption of the Securities Act (except as part of the
underwritten registration or pursuant to registrations on Form S-8 or any successor form), during
the seven days prior to and the 90 days after the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration unless the managing underwriters agree
otherwise. The Company also agrees to use its reasonable best efforts to cause each holder of at
least 5% (on a fully diluted basis) of its equity securities or any securities convertible into or
exchangeable or exercisable for at least 5% (on a fully diluted basis) of its equity securities
(other than Registrable Securities), purchased from the Company at any time on or after the date of
this Agreement (other than in a registered public offering) to agree not to make any public sale or
distribution of those securities, including a sale pursuant to Rule 144 of the Securities Act
(except as part of the underwritten registration, if permitted), during the seven days prior to and
the 90 days after the effective date of the registration unless the managing underwriters agree
otherwise.

     Section 6. Registration Procedures.

          (a) Best Efforts. Whenever the holders of Registrable Securities request the
registration of any Registrable Securities pursuant to this Agreement, the Company will use its
reasonable best efforts to register and to permit the sale of the Registrable Securities in
accordance with the intended method of disposition. To carry out this obligation, the Company will
as expeditiously as possible:

     (i) prepare and file with the SEC, but in any event no later than 90 calendar
days after receipt of a request to file a registration statement (subject to Section
3(g)), a registration statement on the appropriate form and use its best efforts to
cause the registration statement to become effective. At least two Business Days
before filing a registration statement or prospectus or any amendments or
supplements thereto that covers Registrable Securities, the Company will furnish to
the counsel of the holders of a Majority of the Registrable Securities being
registered copies of all documents proposed to be filed for that counsel’s review
and approval, which approval will not be unreasonably withheld or delayed;

     (ii) notify immediately each seller of Registrable Securities of any stop order
threatened or issued by the SEC and take all actions reasonably required to prevent
the entry of a stop order or if entered to have it rescinded or otherwise removed;

     (iii) prepare and file with the SEC such amendments and supplements to the
registration statement and the corresponding prospectus necessary to keep the
registration statement effective for 180 days or such shorter period as may be
required to sell all Registrable Securities covered by the registration statement;
and comply with the provisions of the Securities Act with respect to the disposition
of all securities covered by the registration statement during each period in
accordance with the sellers’ intended methods of disposition as set forth in the
registration statement;

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
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     (iv) furnish to each seller of Registrable Securities a sufficient number of
copies of the registration statement, each amendment and supplement thereto (in each
case including all exhibits), the corresponding prospectus (including each
preliminary prospectus), and such other documents as seller may reasonably request
to facilitate the disposition of the seller’s Registrable Securities;

     (v) use its best efforts to register or qualify the Registrable Securities
under securities or blue sky laws of jurisdictions in the United States of America
as any seller requests and will do any and all other acts and things that may be
necessary or advisable to enable the seller to consummate the disposition of the
seller’s Registrable Securities;

     (vi) use its best efforts to cause the Registrable Securities covered by the
registration statement to be registered with or approved by those governmental
agencies or authorities necessary to enable each seller to consummate the
disposition of its Registrable Securities;

     (vii) notify each seller of Registrable Securities, at any time when a
prospectus is required to be delivered under the Securities Act, of any event as a
result of which the prospectus or any document incorporated therein by reference
contains an untrue statement of a material fact or omits to state any material fact
necessary to make the statements therein not misleading, and will prepare a
supplement or amendment to the prospectus or any such document incorporated therein
by reference so that thereafter the prospectus will not contain an untrue statement
of a material fact or omit to state any material fact necessary to make the
statements therein not misleading;

     (viii) cause all registered Registrable Securities to be listed on each
securities exchange, if any, on which similar securities issued by the Company are
then listed;

     (ix) provide an institutional transfer agent and registrar and a CUSIP number
for all Registrable Securities on or before the effective date of the registration
statement;

     (x) enter into such customary agreements (including an underwriting agreement
in customary form) and take all other actions in connection with those agreements as
the holders of the Registrable Securities being registered or the underwriters, if
any, request to expedite or facilitate the disposition of the Registrable
Securities;

     (xi) make available for inspection by any seller of Registrable Securities, any
underwriter participating in any disposition pursuant to the registration statement,
and any attorney, accountant, or other agent of any seller or underwriter, all
financial and other records, pertinent corporate documents, and properties of the
Company, and cause the Company’s officers, directors, and employees to supply all
information requested by any seller, underwriter, attorney, accountant, or agent in
connection with the registration statement; provided that an appropriate
confidentiality agreement is executed by any seller, underwriter, attorney,
accountant, or other agent;

     (xii) in connection with any underwritten offering, obtain a “cold comfort”
letter from the Company’s independent public accountants in customary form and
covering those matters customarily covered by “cold comfort” letters as the holders
of the Registrable Securities being registered or the managing underwriters request
(and the letter will be addressed to holders of the Registrable Securities);

     (xiii) furnish, at the request of any holder of Registrable Securities being
registered, an opinion of the counsel representing the Company for the purposes of
the registration, in the form and substance customarily given to underwriters in an

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 7

 

 

underwritten public offering and satisfactory to the counsel representing the
holders of Registrable Securities being registered, addressed to the underwriters,
if any, and to the holders of Registrable Securities being registered; and

     (xiv) use its best efforts to comply with all applicable rules and regulations
of the SEC, and make available to its security holders, as soon as practicable, an
earnings statement complying with the provisions of Section 11(a) of the Securities
Act and covering the period of at least 12 months, but not more than 18 months,
beginning with the first month after the effective date of the Registration
Statement.

          (b) Distribution of Securities. From time to time, the Company may require each
seller of Registrable Securities subject to the registration to furnish to the Company information
regarding the distribution of the securities subject to the registration.

          (c) Prospectus. Each holder of Registrable Securities agrees by acquisition of those
securities that, upon receipt of any notice from the Company of any event of the kind described in
Section 6(a)(vii), the holder will discontinue disposition of Registrable Securities until the
holder receives copies of the supplemented or amended prospectus contemplated by Section 6(a)(vii).
In addition, if the Company requests, the holder will deliver to the Company (at the Company’s
expense) all copies, other than permanent file copies then in the holder’s possession, of the
current prospectus covering the Registrable Securities at the time of receipt of the notice. If
the Company gives any such notice, the time period mentioned in Section 6(a)(iii) will be extended
by the number of days elapsing between the date of notice and the date that each seller receives
the copies of the supplemented or amended prospectus contemplated by Section 6(a)(iii).

          (d) Duty to Provide Information. Whenever the holders of Registrable Securities have
requested that any Registrable Securities be registered pursuant to this Agreement, those holders
will notify the Company, at any time when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event that as to any holder of Registrable
Securities is (i) to its respective knowledge, and (ii) uniquely within its respective knowledge,
and (iii) solely as to matters concerning that holder of the Registrable Securities, as a result of
which the prospectus included in the registration statement contains an untrue statement of a
material fact or omits any fact necessary to make the statements therein not misleading.

          (e) “Market Stand-Off” Agreement. Each Investor hereby agrees that during a period
not to exceed 180 days and to the extent specified by the Company and an underwriter of Common
Stock or other securities of the Company in connection with any Initial Public Offering of the
Common Stock of the Company, following the effective date of a registration statement of the
Company filed under the Securities Act, it will not, directly or indirectly, sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any option to purchase, or
otherwise transfer or dispose of (other than to donees who agree to be similarly bound) any
securities of the Company held by it at any time during that period, except Common Stock included
in the registration. Notwithstanding the foregoing:

     (i) the agreement provided by this Section will apply only to the first
registration statement of the Company that covers Common Stock (or other securities)
to be sold on its behalf to the public in an underwritten offering; and

     (ii) this Section will not be effective unless all officers and directors of
the Company, each holder of greater than 1% of the Company’s Common Stock (on a
fully converted basis), and all other Persons with registration rights (whether or
not pursuant to this Agreement) enter into similar agreements.

     In order to enforce the foregoing covenant, the Company may impose stop-transfer instructions
with respect to the securities (assuming exercise of all outstanding options, warrants, and
convertible

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 8

 

 

securities) of the Company held by each Investor (and the shares or securities of every other
Person subject to the foregoing restriction) until the end of that period.

     Section 7. Registration Expenses.

          (a) Defined. All Registration Expenses incident to the Company’s performance of or
compliance with this Agreement will be paid as provided in this Agreement. The term “Registration
Expenses” means all expenses incurred in connection with any registration, filing, or qualification
of Registrable Securities pursuant to this Agreement, including (without limitation) all
registration filing fees, professional fees, and other expenses of compliance with federal, state,
and other securities laws (including fees and disbursements of counsel for the underwriters in
connection with state or other securities law qualifications and registrations); printing expenses,
messenger, telephone, and delivery expenses; fees and disbursements of counsel for the Company and
for the sellers of the Registrable Securities (subject to the provisions of Section 7(b)); and fees
and disbursements of all independent certified public accountants (including the expenses of any
audit or “cold comfort” letters required by or incident to performance of the obligations
contemplated by this Agreement).

          (b) Legal Fees and Expenses. In connection with each registration for which the
Company is required to pay the Registration Expenses of the holders of Registrable Securities, the
Company will directly pay the reasonable fees and disbursements of one law firm, selected by the
holders of a Majority of the Registrable Securities participating in such registration, to serve as
counsel to all the holders.

          (c) Expenses Not Covered. To the extent the Company is not required to pay
Registration Expenses, each holder of securities included in any registration will pay those
Registration Expenses allocable to the holders of securities so included, and any Registration
Expenses not allocable will be borne by all sellers in proportion to the number of securities each
registers.

     Section 8. Indemnification.

          (a) Indemnification by Company. To the full extent permitted by law, the Company
agrees to indemnify each holder of Registrable Securities, its officers and directors, and each
Person who controls the holder (within the meaning of the Securities Act and the Exchange Act)
against all losses, claims, damages, liabilities, and expenses caused by any untrue or allegedly
untrue statement of material fact contained in any registration statement, prospectus, or
preliminary prospectus or any omission or alleged omission to state a material fact required to be
stated therein or necessary to make the statements therein not misleading or any violation by the
Company of the Securities Act or any rule or regulation thereunder applicable to the Company and
relating to the action or inaction of the Company in connection with any registration,
qualification or compliance, except to the extent the untrue statement or omission resulted from
information that the holder furnished in writing to the Company expressly for use therein or by the
holder’s failure to deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto to any purchaser after the Company has furnished the holder with a sufficient
number of copies of the relevant documents. In connection with a firm or best efforts underwritten
offering, to the extent required by the managing underwriters, the Company will indemnify the
underwriters, their officers and directors, and each Person who controls the underwriters (within
the meaning of the Securities Act and the Exchange Act), to the extent customary in such
agreements.

          (b) Indemnification by Holders of Securities. In connection with any registration
statement, each participating holder of Registrable Securities will furnish to the Company in
writing the information and affidavits that the Company reasonably requests for use in connection
with any registration statement or prospectus and each holder agrees to indemnify, to the extent
permitted by law, the Company, its directors and officers, and each Person who controls the Company
(within the meaning of the Securities Act and the Exchange Act) against any losses, claims,
liabilities and expenses resulting from any untrue or allegedly untrue statement of a material fact
or any omission or alleged omission 

of a

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 9

 

 

material fact required to be stated in the registration statement or prospectus or any amendment
thereof or supplement thereto necessary to make the statements therein not misleading, but only to
the extent that the untrue statement or omission is contained in or omitted from any information or
affidavit the holder furnished in writing, or resulting from the holder’s failure to deliver a copy
of the registration statement or prospectus or any amendments or supplements thereto to any
purchaser after the Company has furnished the holder with a sufficient number of copies of the
relevant documents; provided, however, that the obligations of any holder of Registrable Securities
hereunder will be limited to an amount equal to the proceeds to such holder of the sale of
securities pursuant to the applicable registration statement as contemplated herein.

          (c) Indemnification Proceedings. Any Person entitled to indemnification under this
Agreement will (i) give prompt notice to the indemnifying party of any claim with respect to which
it seeks indemnification, and (ii) unless in the indemnified party’s reasonable judgment a conflict
of interest may exist between the indemnified and indemnifying parties with respect to the claim,
permit the indemnifying party to assume the defense of the claim with counsel reasonably
satisfactory to the indemnified party. If the indemnifying party does not assume the defense, the
indemnifying party will not be liable for any settlement made without its consent (but that consent
may not be unreasonably withheld). No indemnifying party will consent to entry of any judgment or
will enter into any settlement that does not include as an unconditional term the claimant’s or
plaintiff’s release of the indemnified party from all liability concerning the claim or litigation.
An indemnifying party who is not entitled to or elects not to assume the defense of a claim will
not be obligated to pay the fees and expenses of more than one counsel for all parties indemnified
by the indemnifying party with respect to the claim, unless in the reasonable judgment of any
indemnified party a conflict of interest may exist between the indemnified party and any other
indemnified party with respect to the claim, in which event the indemnifying party will be
obligated to pay the fees and expenses of additional counsel.

          (d) Contribution to Joint Liability. In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in which either (i) any holder
of Registrable Securities exercising rights under this Agreement, or any controlling Person of any
such holder, makes a claim for indemnification pursuant to this Section 8 but it is judicially
determined (by the entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact this Section 8 provides for
indemnification in such case, or (ii) contribution under the Securities Act may be required on the
part of any such selling holder or any such controlling Person in circumstances for which
indemnification is provided under this Section 8; then, and in each such case, the Company and such
holder will contribute to the aggregate losses, claims, damages or liabilities that they may be
subject to (after contribution to others) in such proportion so that such holder is responsible for
the portion represented by the percentage that the public offering price of its Registered
Securities offered by the registration statement bears to the public offering price of all
securities offered by such registration statement, and the Company is responsible for the remaining
portion; provided, however, that in any such case, (A) no such holder will be required to
contribute any amount in excess of the public offering price of all such Registered Securities
offered by it pursuant to such registration statement; and (B) no Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) will be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation.

     Section 9. Rule 144 and Rule 144A; Company Obligations. If the Company files a
registration statement pursuant to the requirements of the Securities Act or Section 12 of the
Exchange Act, the Company covenants that it will file the reports required to be filed by it under
the Securities Act and the Exchange Act and the rules and regulations adopted by the SEC thereunder
(or, if the Company is not required to file such reports, it will, upon the request of any holder
of Registrable

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 10

 

 

Securities, make publicly available other information), and it will take such further action as any holder of Registrable Securities reasonably may request,
all to the extent required from time to time, to enable the holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the exemptions provided by
(i) Rule 144 under the Securities Act as amended from time to time, or (ii) any similar rule or
regulation hereafter adopted by the SEC. Upon the request of any holder of Registrable Securities,
the Company will deliver to the holder a written statement as to whether it has complied with Rule
144 or any successor rule requirements. The Company also covenants that it will provide all such
information and it will take such further action as any holder of Registrable Securities reasonably
may request to enable the holder to sell Registrable Securities without registration under the
Securities Act within the limitation of Rule 144A under the Securities Act, as amended from time to
time, or any successor rule requirements.

     Section 10. Participation in Underwritten Registrations. No Person may participate in
any underwritten registration without (a) agreeing to sell securities on the basis provided in
underwriting arrangements approved by the Persons entitled hereunder to approve such arrangements
(the holders of the Registrable Securities in a Demand Registration pursuant to Section 3(d) and
the Company in a Piggyback Registration pursuant to Section 4(e)), and (b) completing and executing
all questionnaires, powers of attorneys, indemnities, underwriting agreements and other documents
required by the underwriting arrangements.

     Section 11. Miscellaneous.

          (a) Adjustments Affecting Securities. The Company will not take any action, or permit
any change to occur, with respect to the Registrable Securities that would affect adversely the
ability of the holders to include those securities in a registration undertaken pursuant to this
Agreement or the marketability of the Registrable Securities in any registration.

          (b) Amendment. This Agreement may be amended or modified only by a written agreement
executed by the Company and the holders of (i) at least 66.67% of the then issued and outstanding
Series A Preferred Stock and (ii) the holders of at least 66.67% of the then issued and outstanding
Series B and Series C Preferred Stock (taken together as a single class on an as-if converted to
Common Stock basis).

          (c) Attorneys’ Fees. In any legal action or proceeding brought to enforce any
provision of this Agreement, the prevailing party will be entitled to recover all reasonable
expenses, charges, court costs, and attorneys’ fees in addition to any other available remedy at
law or in equity.

          (d) Benefit of Parties; Assignability. All of the terms and provisions of this
Agreement will be binding upon and inure to the benefit of the parties and their respective
successors and assigns, including without limitation all subsequent holders of securities entitled
to the benefits of this Agreement who agree in writing to become bound by the terms of this
Agreement; provided, however, the Company may not delegate its responsibilities or assign its
rights under this Agreement without the prior written consent of the holders of at least 66.67% of
the then issued and outstanding shares of Preferred Stock, voting separately as a series.

          (e) Cooperation. The parties agree that after execution of this Agreement they will
from time to time, upon the request of any other party and without other consideration, execute,
acknowledge, and deliver in proper form any further instruments and take such other action as any
other party may reasonably require to carry out effectively the intent of this Agreement.

          (f) Cumulative Remedies and Survival. The rights and remedies specified in this
Agreement will not be exclusive of any other right or remedy and are cumulative and in addition to
every other right or remedy now or hereafter existing at law or in equity or by statute or
otherwise that may be available to the Investors.

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 11

 

 

          (g) Counterparts. This Agreement may be executed by facsimile signature and
simultaneously in two or more counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.

          (h) Entire Agreement. This Agreement, the Stock Purchase Agreement, the 2006 Purchase
Agreement, the 2003 Purchase Agreement, the Exchange Agreement and the Amended and Restated Voting
and Co-Sale Agreement, dated of even date herewith among the Company, the Investors, and certain of
the Company’s other stockholders (“Voting and Co-Sale Agreement”) contain the entire understanding
of the parties with respect to the subject matter hereof and thereof. There are no
representations, promises, warranties, covenants, or undertakings other than those expressly set
forth or provided for herein and therein. This Agreement and the Voting and Co-Sale Agreement
supersede all prior agreements and understandings among the parties with respect to the
transactions contemplated herein and therein. Without limiting the foregoing, this Agreement
amends, supersedes and restates in its entirety the 2003 Registration Rights Agreement.

          (i) Governing Law. The internal laws of the State of Delaware will govern all
questions concerning the relative rights of the Company and its stockholders. Delaware law also
will govern the interpretation, construction, and enforcement of this Agreement and all
transactions and agreements contemplated hereby, notwithstanding any state’s choice of law rules to
the contrary.

          (j) Interpretation. The terms and conditions of this Agreement represent the results
of bargaining and negotiations among the parties, each of which has the opportunity to be
represented by counsel of its own selection, and none of which has acted under duress or
compulsion, whether legal, economic or otherwise, and represent the results of a combined
draftsmanship effort. Consequently, the terms and conditions hereof will be interpreted and
construed in accordance with their usual and customary meanings and the parties hereby expressly
waive and disclaim in connection with the interpretation and construction hereof any rule of law or
procedures requiring otherwise, specifically including but not limited to any rule of law to the
effect that ambiguous or conflicting terms or conditions contained herein will be interpreted or
construed against the party whose counsel prepared this Agreement or any earlier draft hereof.

          (k) Listing. If the Common Stock is listed for trading on any national securities
exchange, that listing will include all of the Registrable Securities (to the extent permitted by
the rules of the exchange).

          (l) No Inconsistent Agreements. Except with the prior written consent of the holders
of at least a majority of the then issued and outstanding shares of Series A Preferred Stock, the
holders of at least a majority of the then issued and outstanding shares of Series B Preferred
Stock, each considered separately as a series, and the holders of at least a majority of the then
issued and outstanding shares of Series B Preferred Stock and Series C Preferred Stock, voting
together as a class, the Company will not enter into any agreement with respect to its securities
that will grant to any Person registration rights that are senior to, are in conflict with, or will
interfere with the practical realization of the rights provided under this Agreement except as
disclosed on Schedule 3.2 to the Stock Purchase Agreement.

          (m) Notices. All notices, requests, demands, or other communications that are
required or may be given pursuant to the terms of this Agreement will be in writing and delivery
will be deemed sufficient in all respects and to have been duly given on the date of service if
delivered personally by overnight courier or by facsimile transmission if receipt is confirmed to
the party to whom notice is to be given, or on the third day after mailing if mailed by first-class
mail, return receipt requested, postage prepaid, and properly addressed to the most recent
respective address set forth in the 2003 Purchase Agreement, the Exchange Agreement, the 2006
Purchase Agreement or the Stock Purchase Agreement or to such other addresses as the respective
parties hereto may from time to time designate to the others in writing.

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 12

 

 

          (n) Severability. Whenever possible, each provision of this Agreement will be
interpreted in such a manner as to be effective and valid under applicable law, but if any
provision of this Agreement is held to be prohibited by or invalid under applicable law, that
provision will be ineffective only to the extent of the prohibition or invalidity, without
invalidating the remainder of this Agreement.

          (o) Specific Performance. Each of the parties agrees that damages for a breach of or
default under this Agreement would be inadequate and that in addition to all other remedies
available at law or in equity the parties and their successors and assigns will be entitled to
specific performance or injunctive relief, or both, in the event of a breach or a threatened breach
of this Agreement.

          (p) Table of Contents and Captions. The table of contents and captions of the
sections and subsections of this Agreement are solely for convenient reference and will not be
deemed to affect the meaning or interpretation of any provision of this Agreement.

          (q) Waiver of Breach. Neither any waiver of any breach of, nor any failure to enforce
any term or condition of, this Agreement will operate as a waiver of any other breach of any term
or condition, nor constitute nor be deemed a waiver or release of any other rights, in law or at
equity, or claims that any party may have against any other party for anything arising out of,
connected with, or based upon this Agreement. No waiver will be enforceable against any party
hereto unless set forth in a written instrument or agreement signed by that party. No waiver will
be deemed to occur as a result of the failure of any party to enforce any term or condition of this
Agreement.

          (r) Additional Parties. Upon approval by the Company’s board of directors, any holder
of the Company’s capital stock or rights, warrants, or options to purchase the Company’s capital
stock, may become a party to this Agreement as an “Investor.” A holder of the Company’s capital
stock or rights, warrants, or options to purchase the Company’s capital stock shall become a party
to this Agreement following approval of the Company’s board of directors upon such holder’s
execution and proper delivery to the Company of a Notice of Adoption in substantially the form
attached hereto as Exhibit B and Exhibit A to this Agreement shall be automatically
amended to add such holder.

[The remainder of this page is intentionally left blank — signature pages follow]

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 13

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	COMPANY:	 	SPS COMMERCE, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Archie C. Black	 	 
	 

	 	 	 	 

Archie C. Black
	 	 
	 

	 	 	 	Chief Executive Officer	 	 
	 
	 	 	 	 	 	 
	INVESTORS:	 	ABN AMRO CAPITAL (USA), INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	THE STEVEN ADDIS TRUST U/D/T 7/28/92	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Steven Addis	 	 
	 

	 	 	 	Trustee	 	 
	 
	 	 	 	 	 	 
	 	 	ALLENWOOD VENTURES, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	AXIOM VENTURE PARTNERS II LIMITED PARTNERSHIP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/
Alan Mendelson	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Alan Mendelson	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	/s/ Barry M. Bloom	 	 
	 	 	 	 	 
	 	 	Barry M. Bloom	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page A-1

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	 	 	BVCF IV, L.P.	 	 
	 

	 	By:
	 	J.W. Puth Associates LLC, its General Partner	 	 
	 

	 	By:
	 	Brinson Venture Management LLC, its Attorney-in-Fact	 	 
	 

	 	By:
	 	Adams Street Partners, LLC, as its Administrative	 	 
	 

	 	 	 	Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Jeffrey T. Diehl	 	 
	 

	 	 	 	 

Jeffrey T. Diehl
	 	 
	 

	 	 	 	Partner	 	 
	 
	 	 	 	 	 	 
	 	 	CID EQUITY CAPITAL V, L.P.	 	 
	 

	 	By:
	 	CID Equity Partners V, as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John C. Aplin	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John C. Aplin	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	 	 	 	 	 
	 	 	CID MEZZANINE CAPITAL, L.P.	 	 
	 

	 	By:
	 	CID Mezzanine Partners, L.P., as General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ John C. Aplin	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	John C. Aplin	 	 
	 

	 	 	 	General Partner	 	 
	 
	 	/s/ Molly Joel Coye	 	 
	 	 	 	 	 
	 	 	Molly Joel Coye	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 2

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	 	 	DAMAC INVESTORS, INC.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	DAMAC TECHNOLOGY PARTNERS, L.P.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	GTG DAMAC PARTNERS, LP	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	 	 	 
	 	 	Thomas Domencich	 	 
	 
	 	 	 	 	 	 
	 	 	GRANITE PRIVATE EQUITY II, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Daren J. Wells
	 	 
	 

	 	 	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	ML PARTNERS	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 3

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	 	 	PACIFIC CAPITAL VENTURES, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Roy L. Wickland	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Roy L. Wickland	 	 
	 

	 	 	 	Member	 	 
	 
	 	 	 	 	 	 
	 	 	JAMIT LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Roy L. Wickland	 	 
	 

	 	 	 	Member	 	 
	 
	 	 	 	 	 	 
	 	 	PV SECURITIES CORP.	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	RONALD P. KARLSBERG, TTEE FBO R.P.	 	 
	 	 	KARLSBERG CARDIOVASCULAR MEDICAL	 	 
	 	 	GROUP OF SOUTHERN CALIFORNIA 401K	 	 
	 	 	PROFIT SHARING PLAN DTD 1/1/1989	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Ronald P. Karlsberg	 	 
	 

	 	 	 	 

Ronald P. Karlsberg
	 	 
	 

	 	 	 	Trustee	 	 
	 
	 	 	 	 	 	 
	 	 	RIVER CITIES CAPITAL FUND II LIMITED PARTNERSHIP	 	 
	 	 	By: Mayson, Inc.	 	 
	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Edwin T. Robinson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Edwin T. Robinson	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	President	 	 
	 

	 	 	 	 	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 4

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	 	 	/s/ Casimir Skrzypcak	 	 
	 	 	 	 	 
	 	 	Casimir Skrzypcak	 	 
	 
	 	 	 	 	 	 
	 	 	ST. PAUL VENTURE CAPITAL AFFILIATES 

FUND I, LLC	 	 
	 	 	By: St. Paul Venture Capital, Inc.	 	 
	 	 	Its: Manager	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael B. Gorman	 	 
	 

	 	 	 	 

Michael B. Gorman
	 	 
	 

	 	 	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	ST. PAUL VENTURE CAPITAL IV, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael B. Gorman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Michael B. Gorman	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	ST. PAUL VENTURE CAPITAL V, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael B. Gorman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Michael B. Gorman	 	 
	 

	 	 	 	Managing Member	 	 
	 
	 	 	 	 	 	 
	 	 	ST. PAUL VENTURE CAPITAL VI, LLC	 	 
	 	 	By: SPVC Management VI, LLC	 	 
	 	 	Its: Managing Member	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Michael B. Gorman	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Michael B. Gorman	 	 
	 

	 	 	 	Managing Director	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 5

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	 	 	SVOBODA, COLLINS & COMPANY, L.P.	 	 
	 	 	By: Svoboda, Collins L.L.C.	 	 
	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

Maneesh A. Gandhi
	 	 
	 

	 	 	 	Analyst	 	 
	 
	 	 	 	 	 	 
	 	 	SVOBODA, COLLINS & COMPANY Q.P., L.P.	 	 
	 	 	By: Svoboda, Collins L.L.C.	 	 
	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	 	 	Maneesh A. Gandhi	 	 
	 

	 	 	 	Analyst	 	 
	 
	 	 	 	 	 	 
	 	 	TENX VENTURE PARTNERS, LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	ZAFA LLC	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	 	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	 	 	 
	 

	 	 	 	 	 	 
	 
	 	 	 	 	 	 
	 	 	RIVER CITIES SBIC III, L.P.	 	 
	 	 	By: RCCF Management Inc.	 	 
	 	 	Its: General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	/s/ Edwin T. Robinson	 	 
	 

	 	 	 	 	 	 
	 

	 	Name:	 	Edwin T. Robinson	 	 
	 

	 	 	 	 	 	 
	 

	 	Its:	 	President	 	 
	 

	 	 	 	 	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 6

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 	 	 
	 	 	SVOCO, L.P.	 	 
	 	 	By: SvoCo, G.P.	 	 
	 	 	Its: General Partner	 	 
	 	 	By: SvoCo, Inc.	 	 
	 	 	Its: Managing General Partner	 	 
	 
	 	 	 	 	 	 
	 

	 	By:	 	 	 	 
	 

	 	 	 	 

John Svoboda
	 	 
	 

	 	 	 	President	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page 7

 

 

     IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their duly
authorized representatives as of the date first written above.

	 	 	 	 	 
	 
	 	 	 	 
	STOCKHOLDERS:

	 	 

Gary Anderson
	 	 
	 
	 	 	 	 
	 

	 	 

Roger Anderson
	 	 

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page A-8

 

 

EXHIBIT A

INVESTORS

Steven Addis Trust U/D/T 7/28/92

Allenwood Ventures, Inc.

Axiom Venture Partners II Limited Partnership

Barry Bloom

BVCF IV, LP

CID Equity Capital V, L.P.

CID Mezzanine Capital, L.P.

Molly Joel Coye

Damac Investors, Inc.

Damac Technology Partners, LP

Thomas Domencich

Granite Private Equity II, LLC

GTG Damac Partners, LP

JAMIT, LLC

Ronald Karlsberg

Ronald Karlsberg, TTEE**

ML Partners

Pacific Capital Ventures, LLC

PV Securities Corp.

River Cities Capital Fund II Limited Partnership

River Cities SBIC III, L.P.

Casimir Skrzypczak

St. Paul Venture Capital Affiliates Fund I, L.L.C.

St. Paul Venture Capital IV, L.L.C.

St. Paul Venture Capital V, LLC

St. Paul Venture Capital VI, L.L.C.

Svoboda, Collins & Company Q.P., L.P.

Svoboda, Collins & Company, L.P.

TenX Venture Partners, LLC

ZAFA LLC

BlueCrest Strategic Limited

 

			
	**	 	Ronald P. Karlsberg, TTEE FBO R.P. Karlsberg Cardiovascular Medical Group of Southern California
401K, profit sharing plan, DTD 1/1/1989

STOCKHOLDERS

Gary Anderson

Roger Anderson

			
	 	 	 
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page A-1

 

 

EXHIBIT B

NOTICE OF ADOPTION

(Registration Rights Agreement)

          This Notice of Adoption (“Adoption Notice”) is executed by the undersigned (the “Adopting
Party”) pursuant to the terms of that certain Amended and Restated Registration Rights Agreement
dated as of April 10, 2007, as may be amended from time to time (the “Agreement”), by and among SPS
Commerce, Inc., a Delaware corporation, and the other parties thereto. Capitalized terms used but
not defined herein will have the respective meanings ascribed to such terms in the Agreement. By
the execution and delivery of this Adoption Notice, the Adopting Party agrees as follows:

          1. Acknowledgment. Adopting Party acknowledges that Adopting Party is purchasing the
shares of the Company’s capital stock set forth below (the “Shares”).

          2. Agreement. Adopting Party: (i) agrees that the Shares acquired by Adopting Party
will be bound by and subject to the terms of the Agreement; and (ii) hereby adopts the Agreement
with the same force and effect as if Adopting Party were originally an “Investor.”

          3. Notice. Any notice required or permitted by the Agreement will be given to
Adopting Party at the address or facsimile listed beside Adopting Party’s signature below.

          IN WITNESS WHEREOF, the Adopting Party has caused this Notice of Adoption to be executed by
its duly authorized representative as of the date first written below.

	 	 	 
	Shares Purchased:
	 	 
	  

	 	 
	Class of Stock:

	 	Printed Name of Adopting Party
	 

	 	 
	 
	 	 
	Date:
	 	 
	 

	 	 
	 
	 	 
	 	 
	 
	 
	 	 
	 

	 	 
	 

	 	Signature
	 

	 	 
	Address
	 	 
	 
	 	 
	 

	 	 
	Facsimile: (                    )

	 	Printed Name and Title of Authorized Signatory of Adopting Party
	 

	 	 

			
	SPS Registration Rights Agreement [Amended and Restated April 2007]
	 	Page B-1exv10w1

Exhibit 10.1

[1]

ST. PAUL SOFTWARE, INC.

1999 EQUITY INCENTIVE PLAN

     1. Purpose of the Plan. This St. Paul Software, Inc. 1999 Equity Incentive
Plan adopted on this 12th day of May, 1999, is intended to enable officers and other key employees
and consultants of the Company and its Subsidiaries to acquire or increase their ownership of
common stock of the Company on reasonable terms. The opportunity so provided is intended to foster
in participants an incentive to put forth maximum effort for the continued success and growth of
the Company and its Subsidiaries, to aid in retaining individuals who put forth such efforts, and
to assist in attracting the best available individuals to the Company and its Subsidiaries in the
future.

     2. Definitions. When used herein, the following terms shall have the meaning set
forth below:

     2.1 “Award” means an Option or a Restricted Stock Award.

     2.2 “Award Agreement” means a written agreement in such form as may be, from
time to time, hereafter approved by the Board, or the Committee if one has been appointed,
which shall be duly executed by the Company and the Participant and which shall set forth
the terms and conditions of an Award under the Plan.

     2.3 “Board” means the Board of Directors of St. Paul Software, Inc.

     2.4 “Change in Control” means a change in control of the Company of a nature
that would be required to be reported in response to 

Item 6(e) of Schedule 14A of Regulation
14A promulgated under the Exchange Act (as in effect on the date the Plan is adopted by the
Board), whether or not the Company is then subject to such reporting requirement; provided,
that, without limitation, a Change in Control shall be deemed to have occurred if:

     (a) any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act)
other than an Exempt Person (an “Acquiring Person”) is or

 

 

becomes the “beneficial owner” (as defined in Rule 13d-3 under the Exchange Act), directly or
indirectly, of securities of the Company representing forty percent (40%) or more of the combined
voting power of the Company’s then outstanding securities, other than either in connection with a
transaction or series of related transactions approved by the Board (which Board must include at
least a majority who were Continuing Directors and which transaction or series of related
transactions must have been approved by a majority of the Continuing Directors) or as the result
of the reduction in the number of issued and outstanding Shares pursuant to a transaction or
series of related transactions approved by the Board.

     (b) any “person” (as defined in Sections 13(d) and 14(d) of the Exchange Act) other than an
Exempt Person commences, or publicly announces an intent to commence, a tender or exchange offer,
the consummation of which would result in such person becoming the “beneficial owner” (as defined
in Rule 13d-3 under the Exchange Act), directly or indirectly, of securities of the Company
representing forty percent (40%) or more of the combined voting power of the Company’s then
outstanding securities;

     (c) there shall cease to be a majority of the Board comprised of Continuing Directors; or

     (d) (i) the shareholders of the Company approve a merger or consolidation of the
Company with any other corporation, other than a merger or consolidation which would result in the
voting securities of the Company outstanding immediately prior thereto continuing to represent more
than eighty percent (80%) of the combined voting power of the voting securities of the Company or
such surviving entity outstanding immediately after such merger or consolidation, or (ii) the
shareholders of the Company approve a plan of complete

 

 

liquidation of the Company or an agreement for the sale or disposition by the Company of
all or substantially all the Company’s assets.

     2.5 “Code” means the Internal Revenue Code of 1986, as in effect at the time of reference, or
any successor revenue code which may hereafter be adopted in lieu thereof, and reference to any
specific provisions of the Code shall refer to the corresponding provisions of the Code as it may
hereafter be amended or replaced.

     2.6 “Committee” means the Compensation Committee of the Board or any other committee appointed
by the Board which is invested by the Board with responsibility for the administration of the Plan.

     2.7 “Company” means St. Paul Software, Inc.

     2.8 “Continuing Director” means a director of the Company who is not an Acquiring
Person or an affiliate or associate thereof or any of their representatives and who was either a
director of the Company before any “person” (as defined in Sections 13(d) and 14(d) of the Exchange
Act) became an Acquiring Person or whose nomination or election to the Board was recommended or
approved by a majority of the then Continuing Directors.

     2.9 “Employee Shareholder” means a Participant who is an employee of the Company or
any of its Subsidiaries and who, at the time an Incentive Stock Option is granted owns, as defined
in Section 424 of the Code, stock possessing more than ten percent (10%) of the total combined
voting power of all classes of stock of: (a) the Company; or (b) if applicable, a Subsidiary or a
Parent.

     2.10 “ERISA” means the Participant Retirement Income Security Act of 1974, as in effect at the
time of reference, or any successor law which may hereafter be adopted in lieu thereof, and any
reference to any specific provisions of ERISA shall refer to the corresponding provisions of ERISA
as it may hereafter be amended or replaced.

     2.11 “Exchange Act” means the Securities Exchange Act of 1934, as in effect at the time of
reference, or any successor law which may hereafter be adopted in lieu

 

 

thereof, and any reference to any specific provisions of the Exchange Act shall refer to the
corresponding provisions of the Exchange Act as it may hereafter be amended or replaced.

     2.12 “Exempt Person” means the Company, any Subsidiary, any employee benefit plan of the
Company or any Subsidiary, any entity holding Shares for or pursuant to the terms of any such plan,
any director of the Company holding office as of the close of business on the date the Plan is
adopted by the Board, and any immediate family member of or person controlled by any such director.

     2.13 “Fair Market Value” means with respect to the Shares, the fair market value
determined in good faith by the Board, or the Committee if one has been appointed, in its
discretion, which determination may, but need not, be based on (i) the advice of an independent
financial advisor (which may be the Company’s regular outside auditors) or (ii) the last known
price per Share paid by a purchaser in an arm’s length transaction; provided, however, that if
there shall be a public market for the Shares, Fair Market Value shall mean (i) the closing price
of the Shares on the principal stock exchange on which Shares are then traded or admitted to
trading, on the last business day prior to the date on which the value is to be determined, (ii) if
no sale takes place on such day on any such exchange, the average of the last reported closing bid
and asked prices on such day as officially quoted on any such exchange, or (iii) if the Shares are
not then listed or admitted to trading on any such exchange, the average of the last reported
closing bid and asked prices on such day on the over-the-counter market. For purposes of (i) above,
the National Association of Securities Dealers National Market System shall be deemed a principal
stock exchange. If there shall be a public market for the Shares, and the foregoing references
are unavailable or inapplicable, then the Fair Market Value shall be determined on the basis of the
appropriate substitute public market price indicator as determined by the Board, or the Committee
if one has been appointed, in its sole discretion.

 

 

     2.14 “Incentive Stock Option” means an Option intending to meet the
requirements and containing the limitations and restrictions set forth in Section 422 of the Code.

     2.15 “Non-Qualified Stock Option” means an Option other than an Incentive Stock
Option.

     2.16 “Option” means the right to purchase the number of Shares specified by the Board, or the
Committee if one has been appointed, at a price and for a term fixed by the Board, or the Committee
if one has been appointed, in accordance with the Plan, and subject to such other limitations and
restrictions as the Plan and the Board or the Committee, as the case may be, may impose.

     2.17 “Parent” means any corporation, other than the employer corporation, in an unbroken chain
of corporations ending with the employer corporation if, at the time of the granting of the Option,
each of the corporations other than the employer corporation owns stock possessing fifty percent
(50%) or more of the total combined voting power of all classes of stock in one of the other
corporations in such chain.

     2.18 “Participants” means officers (including officers who are members of the Board) and other
key employees and consultants of the Company or any of its Subsidiaries.

     2.19 “Plan” means the St. Paul Software, Inc. 1999 Equity Incentive Plan.

     2.20 “Regulation T” means Part 220, chapter II, title 12 of the Code of Federal Regulations,
issued by the Board of Governors of the Federal Reserve System pursuant to the Exchange Act, as
amended from time to time, or any successor regulation which may hereafter be adopted in lieu
thereof.

     2.21 “Restricted Stock Award Agreement” means an Award Agreement executed in
connection with a Restricted Stock Award.

 

 

     2.22 “Restricted Stock Award” means the right to receive Shares, but subject to
forfeiture and/or other restrictions set forth in the related Restricted Stock Award
Agreement and the Plan.

     2.23 “Rule 16b-3” means Rule 16b-3 of the General Rules and Regulations of the
Securities and Exchange Commission as in effect at the time of reference, or any successor
rules or regulations which may hereafter be adopted in lieu thereof, and any reference to
any specific provisions of Rule 16b-3 shall refer to the corresponding provisions of Rule
16b-3 as it may hereafter be amended or replaced.

     2.24 “Shares” means shares of the Company’s common stock, without par value, or, if by
reason of the adjustment provisions contained herein, any rights under an Award under the
Plan pertain to any other security, such other security.

     2.25
“Subsidiary” or “Subsidiaries” means any corporation or corporations other than
the employer corporation in an unbroken chain of corporations beginning with the employer
corporation if each of the corporations other than the last corporation in the unbroken
chain owns stock possessing fifty percent (50%) or more of the total combined voting power
of all classes of stock in one of the other corporations in such chain.

     2.26 “Successor” means the legal representative of the estate of a deceased Participant
or the person or persons who shall acquire the right to exercise or receive an Award by
bequest or inheritance or by reason of the death of the Participant.

     2.27 “Term” means the period during which a particular Award may be exercised.

     3. Stock Subject to the Plan. There will be reserved for use, upon the issuance,
vesting or exercise of Awards to be granted from time to time under the Plan, an aggregate of Five
Hundred Thousand (500,000) Shares, which Shares may be, in whole or in part, as the Board shall
from time to time determine, authorized but unissued Shares, or issued Shares which shall have been
reacquired by the Company. Any Shares subject to issuance upon exercise of Options but which are
not issued because of a surrender, lapse, expiration, forfeiture or

 

 

termination of any such Option prior to issuance of the Shares shall once again be available for
issuance in satisfaction of Awards. Similarly, any Shares issued pursuant to a Restricted Stock
Award which are subsequently forfeited pursuant to the terms of the related Restricted Stock Award
Agreement shall once again be available for issuance in satisfaction of Awards.

     4. Administration of the Plan. The Board shall be invested with the responsibility for
the administration of the Plan; provided, however, that the Board may appoint a Committee which
shall be invested with the responsibility for the administration of the Plan; provided further,
however, that at such time, if ever, that the Company becomes subject to the Exchange Act, the
Board shall appoint a Committee, which shall consist of not less than two (2) outside directors as
defined in Treasury Regulation 1.162-27 who shall also qualify as disinterested directors within
the meaning of Rule 16b-3, which shall be invested with the responsibility for the administration
of the Plan; provided further, however, that the failure to appoint a Committee satisfying the
foregoing requirement shall not effect the validity of any Options granted under the Plan. Subject
to the provisions of the Plan, the Committee shall have full authority, in its discretion, to
determine the Participants to whom Awards shall be granted, the number of Shares to be covered by
each of the Awards, and the terms of any such Award; to amend or cancel Awards (subject to Section
19 of the Plan); to accelerate the vesting of Awards; to require the cancellation or surrender of
any previously granted awards under this Plan or any other plans of the Company as a condition to
the granting of an Award; to interpret the Plan; to prescribe, amend and rescind rules and
regulations relating to the Plan; and generally to interpret and determine any and all matters
whatsoever relating to the administration of the Plan and the granting of Awards hereunder. The
Board may from time to time appoint members to the Committee in substitution for or in addition to
members previously appointed and may fill vacancies, however caused, in the Committee. The
Committee shall select one of its members as its chairman and shall hold its meetings at such times
and places as it shall deem advisable. A majority of its members shall constitute a quorum. Any
action of the Committee may be taken by a written instrument signed by all of the members, and any
action so taken shall be fully as

 

 

effective as if it had been taken by a vote of a majority of the members at a meeting duly called
and held. The Committee shall make such rules and regulations for the conduct of its business as
it shall deem advisable and shall appoint a Secretary who shall keep minutes of its meetings and
records of all action taken in writing without a meeting. No member of the Committee shall be
liable, in the absence of bad faith, for any act or omission with respect to his or her service on
the Committee.

     5. Participants to Whom Awards May Be Granted. Awards may be granted in each
calendar year or portion thereof while the Plan is in effect to such of the Participants as the
Board, or the Committee if one has been appointed, in its discretion, shall determine. In
determining the Participants to whom Awards shall be granted and the number of Shares to be issued
or subject to purchase or issuance under such Awards, the Board, or the Committee if one has been
appointed, shall take into account the recommendations of the Company’s management as to the duties
of the respective Participants, their present and potential contributions to the success of the
Company and its Subsidiaries, and such other factors as the Board or the Committee, as the case may
be, shall deem relevant in connection with accomplishing the purposes of the Plan; provided,
however, that no Incentive Stock Options may be granted to a Participant who is not an employee of
the Company or any of its Subsidiaries. If the Company becomes subject to the Exchange Act, no
Participant shall receive Options and/or Restricted Stock Awards to acquire more than One Hundred
Twenty Five Thousand (125,000) Shares in any one calendar year. No Award shall be granted to any
member of the Board who is not also an officer or key employee or consultant of the Company or any
Subsidiary.

 

 

     6. Stock Options.

     6.1 Types of Options. Options granted under the Plan may be (i) Incentive Stock
Options, (ii) Non-Qualified Stock Options or (iii) a combination of the foregoing. The Award
Agreement shall designate whether an Option is an Incentive Stock Option or a Non-Qualified Stock
Option and separate Award Agreements shall be issued for each type of Option when a combination of
an Incentive Stock Option and a Non-Qualified Stock Option are granted on the same date to the same
Participant. Any Option which is designated as a Non-Qualified Stock Option shall not be treated by
the Company or the Participant to whom the Option is granted as an Incentive Stock Option for
federal income tax purposes.

     6.2 Option Price. The option price per Share of any Non-Qualified Stock Option
granted under the Plan shall be the Fair Market Value of the Shares covered by the Option on the
date the Option is granted unless the Board, or the Committee if one has been appointed, in its
sole discretion, determines to set the option price at an amount less than or greater than the Fair
Market Value of the Shares on such date. The option price per Share of any Incentive Stock Option
granted under the Plan shall not be less than the Fair Market Value of the Shares covered by the
Option on the date the Option is granted.

     Notwithstanding anything herein to the contrary, the option price per Share of any Incentive
Stock Option granted to an Employee Shareholder shall not be less than one hundred ten percent
(110%) of the Fair Market Value of the Shares covered by the Option on the date the Option is
granted.

     6.3 Term of Options. Options granted hereunder shall be exercisable for a Term of
not more than ten (10) years from the date of grant thereof, but shall be subject to earlier
termination as hereinafter provided. Each Award Agreement issued hereunder shall specify the Term
of the Option, which shall be determined by the Board, or the Committee if one has been appointed,
in accordance with its discretionary authority hereunder.

 

 

     Notwithstanding anything herein to the contrary, if an Incentive Stock Option is
granted to an Employee Shareholder, then such Incentive Stock Option shall not be
exercisable more than five (5) years from the date of grant thereof, but shall be subject
to earlier termination as hereinafter provided.

     7. Limit on Fair Market Value of Incentive Stock Options. No Participant may be
granted an Incentive Stock Option hereunder to the extent that the aggregate fair market value
(such fair market value being determined as of the date of grant of the option in question) of the
stock with respect to which incentive stock options are first exercisable by such Participant
during any calendar year (under all such plans of the Participant’s employer corporation, its
Parent, if any, and its Subsidiaries, if any) exceeds One Hundred Thousand Dollars ($100,000). For
purposes of the preceding sentence, options shall be taken into account in the order in which they
were granted. Any Option granted under the Plan which is intended to be an Incentive Stock
Option, but which exceeds the limitation set forth in this Section 7, shall be a Non-Qualified Stock
Option.

     8. Restricted Stock Awards. Restricted Stock Awards granted under the Plan shall be
subject to such terms and conditions as the Board, or the Committee if one has been appointed, in
its discretion, determine and set forth in the related Restricted Stock Award Agreements.
Restricted Stock Awards shall be granted in accordance with, and subject to, the provisions set
forth below.

     8.1 Issuance of Shares. Each Restricted Stock Award shall be evidenced by a
Restricted Stock Award Agreement which shall set forth the number of Shares issuable under
the Restricted Stock Award. Subject to the restrictions in Section 8.3 of the Plan, and
subject further to such other restrictions or conditions established by the Board, or the
Committee if one has been appointed, in its discretion, and set forth in the related
Restricted Stock Award Agreement (such as requiring the Participant to pay an amount equal
to the aggregate par value of the Shares to be issued thereunder), the number of Shares
granted under a Restricted Stock Award shall be issued in the recipient

 

 

Participant’s name on the date of grant of such Restricted Stock Award or as soon as reasonably
practicable thereafter.

     8.2 Rights of Recipient Participants. Shares received pursuant to Restricted Stock
Awards shall be duly issued or transferred to the Participant, and a certificate or certificates
for such Shares shall be issued in the Participant’s name. Subject to the restrictions in Section
8.3 of the Plan, and subject further to such other restrictions or conditions established by the
Board, or the Committee if one has been appointed, in its discretion, and set forth in the related
Restricted Stock Award Agreement, the Participant shall thereupon be a shareholder with respect to
all the Shares represented by such certificate or certificates and shall have all the rights of a
shareholder with respect to such Shares, including the right to vote such Shares and to receive
dividends and other distributions paid with respect to such Shares. In aid of the restrictions in
Section 8.3 of the Plan and in the related Restricted Stock Award Agreement, the certificate or
certificates for Shares awarded hereunder, together with a suitably executed stock power signed by
such recipient Participant, shall be held by the Company in its control for the account of such
Participant (i) until the restrictions in Section 8.3 of the Plan and in the related Restricted
Stock Award Agreement lapse pursuant to the Plan or the Restricted Stock Award Agreement, at which
time a certificate for the appropriate number of Shares (free of all restrictions imposed by the
Plan or the Restricted Stock Award Agreement) shall be delivered to the Participant, or (ii) until
such Shares are forfeited to the Company and cancelled as provided by the Plan or the Restricted
Stock Award Agreement.

     8.3 Restrictions. Except as otherwise determined by the Board, or the Committee, if
one has been appointed, in its sole discretion, each Share issued pursuant to a Restricted Stock
Award Agreement shall be subject, in addition to any other restrictions set forth in the related
Restricted Stock Award Agreement, to the following restrictions until such restrictions have lapsed
pursuant to Section 8.4 of the Plan or the related Restricted Stock Award Agreement:

 

 

     (a) Disposition. The Shares awarded to a Participant and held by the
Company pursuant to Section 8.2 of the Plan, and the right to vote such Shares or
receive dividends on such Shares, may not be sold, exchanged, transferred, pledged,
hypothecated or otherwise disposed of; provided, however, that such Shares may be
transferred upon the death of the Participant to the Participant’s Successor. Any
transfer or purported transfer of such Shares in violation of the restrictions
outlined in this Section 8.3 shall be null and void and shall result in the
forfeiture of the Shares transferred or purportedly transferred to the Company
without notice and without consideration.

     (b) Forfeiture. The Shares awarded to a Participant and held by the
Company pursuant to Section 8.2 of the Plan shall be forfeited to the Company without
notice and without consideration therefor immediately upon the
termination of the Participant’s employment with the Company and all
Subsidiaries of the Company for any reason whatsoever.

     8.4 Lapse of Restrictions. The restrictions set forth in Section 8.3 of the
Plan on Shares issued under a Restricted Stock Award shall lapse on such terms as the Board,
or the Committee if one has been appointed, in its sole discretion, shall determine and set
forth in the related Restricted Stock Award Agreement, and certificates for the Shares held
for the account of the Participant in accordance with Section 8.2 of the Plan hereof shall
be appropriately distributed to the Participant as soon as reasonably practical thereafter.

     9. Date of Grant. The date of grant of an Award granted hereunder shall be the date on
which the Board, or the Committee if one has been appointed, acts in granting the Award.

     10. Exercise of Rights Under Options.

     10.1 Notice of Exercise. A Participant entitled to exercise an Option shall do
so by delivery of a written notice to that effect specifying the number of Shares with
respect to which the Option is being exercised and any other relevant information the

 

 

Board, or the Committee if one has been appointed, may require. The notice shall be
accompanied by payment in full of the purchase price of any Shares to be purchased, which
payment may be made in cash or, with the Board’s approval, or the Committee’s approval if
one has been appointed (which in the case of Incentive Stock Options must be given at the
time of grant), in Shares valued at Fair Market Value at the time of exercise or a
combination thereof. No Shares shall be issued upon exercise of an Option until full
payment has been made therefor. All notices or requests provided for herein shall be
delivered to the Company’s President, or such other person as the Board, or the Committee
if one has been appointed, may designate.

     10.2 Cashless Exercise Procedures. At such time, if ever, that Shares are
traded on the over-the-counter market or on any established securities market, the Company,
in its sole discretion, may establish procedures whereby a Participant, subject to the
requirements of Rule 16b-3, Regulation T, federal income tax laws, and other federal, state
and local tax and securities laws, can exercise an Option or a portion thereof without
making a direct payment of the option price to the Company; provided, however, that these
cashless exercise procedures shall not apply to Incentive Stock Options which are
outstanding on the date the Company establishes such procedures unless the application of
such procedures to such Options is permitted pursuant to the Code and the regulations
thereunder without affecting the Options’ qualification under Code Section 422 as Incentive
Stock Options. If the Company so elects to establish a cashless exercise program, the
Company shall determine, in its sole discretion, and from time to time, such administrative
procedures and policies as it deems appropriate and such procedures and policies shall be
binding on any Participant wishing to utilize the cashless exercise program.

     11. Other Award Terms and Conditions. Each Award or each agreement setting
forth an Award shall contain such other terms and conditions not inconsistent herewith as shall
be approved by the Board, or the Committee if one has been appointed.

 

 

     12. Rights of Award Holder. The holder of an Award shall not have any of the rights
of a shareholder with respect to the Shares subject to purchase or receipt under the Award, except
that (a) an Award holder’s rights with respect to a Restricted Stock Award shall be as prescribed
in Section 8.2 and (b) shareholder rights with respect to any other Award shall arise at the time
and to the extent that one or more certificates for such Shares shall be delivered to the holder
upon the due exercise or grant of the Award.

     13. Nontransferability of Awards. An Award shall not be transferable other than:
(a) by will or the laws of descent and distribution, and an Award subject to exercise may be
exercised, during the lifetime of the holder of the Award, only by the holder or in the event of
death, the holder’s Successor, or in the event of disability, the holder’s personal representative,
or (b) pursuant to a qualified domestic relations order, as defined in the Code or ERISA or the rules
thereunder; provided, however, that an Incentive Stock Option may not be transferred pursuant to a
qualified domestic relations order unless such transfer is otherwise permitted pursuant to the Code
and the regulations thereunder without affecting the Option’s qualification under Code Section 422
as an Incentive Stock Option.

     14. Adjustments Upon Changes in Capitalization. In the event of changes in all of the
outstanding Shares by reason of stock dividends, stock splits, reclassifications,
recapitalizations, mergers, consolidations, combinations, or exchanges of shares, separations,
reorganizations or liquidations, or similar events, or in the event of extraordinary cash or
non-cash dividends being declared with respect to the Shares, or similar transactions or events,
the number and class of Shares available under the Plan in the aggregate, the number and class of
Shares subject to Awards theretofore granted, applicable purchase prices and all other applicable
provisions, shall, subject to the provisions of the Plan, be equitably adjusted by the Board, or
the Committee if one has been appointed (which adjustment may, but need not, include payment to the
holder of an Option, in cash or in shares, in an amount equal to the difference between the price
at which such Option may be exercised and the then current fair market value of the Shares subject
to such Option as equitably determined by the Board or the Committee, as the case may

 

 

be). The foregoing adjustment and the manner of application of the foregoing provisions shall be
determined by the Board, or the Committee if one has been appointed, in its sole discretion;
provided, however, that to extent applicable, any adjustment to an Incentive Stock Option shall be
made in a manner consistent with Section 424 of the Code. Any such adjustment may provide for the
elimination of any fractional share which might otherwise become subject to an Award.

     15. Change in Control. Notwithstanding anything to the contrary in the Plan or
any Award Agreement, in the case of a Change in Control of the Company:

     (a) If the Change in Control of the Company is described in Section 2.4(d)(i) of this
Plan, the Board, or the Committee if one has been appointed, shall use its best efforts to
cause the acquiring Company to assume all outstanding Awards or to replace all outstanding
Awards with comparable Awards that neither enlarge nor diminish the rights thereunder;

     (b) The Board, or the Committee if one has been appointed, may, in its discretion,
taking into account the purposes of this Plan, determine, on a case by case basis, that each
Award granted under the Plan shall, subject to the provisions in paragraphs (c) and (d)
below, terminate thirty (30) days after the occurrence of such Change in Control in the
event of a Change in Control described in Section 2.4(a), 

2.4(b) or 2.4(c) of this Plan, or
upon the closing of the corporate transaction, the approval of which resulted in the Change
in Control pursuant to Section 2.4(d) of this Plan;

     (c) In the event of either (i) a Change in Control of the Company described in Section
2.4(d) of the Plan pursuant to which the acquiring corporation does not either assume, or
issue replacement awards in lieu of, all outstanding Awards or (ii) a decision of the Board,
or the Committee if one has been appointed, to terminate an Option as provided in Section
15(b) above, an Option holder shall have the right, commencing at least five (5) days prior
to such Change in Control and subject to any other limitation on the exercise of such Option
in effect on the date of exercise (and, in the case of a Change in Control described in
Section 2.4(d) of this Plan, conditioned upon the closing of the

 

 

corporate transaction, the approval of which constituted such Change in Control) to
immediately exercise any Options in full, without regard to any vesting limitations, to the
extent they shall not have been theretofore exercised; and

     (d) In the event of either (i) a Change in Control of the Company described in Section
2.4(d) of the Plan pursuant to which the acquiring corporation does not assume, or issue
replacement awards in lieu of, Restricted Stock Awards or (ii) a decision of the Board, or
the Committee if one has been appointed, to terminate a Restricted Stock Award as provided
in Section 15(b) above, all restrictions on such Restricted Stock Award shall lapse
immediately prior to the consummation of the corporate transaction, the approval of which
resulted in a Change in Control pursuant to Section 2.4(d) of the Plan or immediately
following the Board’s or Committee’s decision, as the case may be, to terminate a
Restricted Stock Award pursuant to Section 15(b) hereof and certificates for the affected
Shares shall be appropriately distributed.

     16. Forms of Awards. Nothing contained in the Plan nor any resolution adopted or to be
adopted by the Board or by the shareholders of the Company shall constitute the granting of any
Award. An Award shall be granted hereunder only by action taken by the Board, or the Committee if
one has been appointed, in granting an Award. Whenever the Board, or the Committee if one has been
appointed, shall designate a Participant for the receipt of an Award, the Company’s Secretary, or
such other person as the Board or the Committee, as the case may be, may designate, shall forthwith
send notice thereof to the Participant, in such form as the Board or the Committee, as the case may
be, shall approve, stating the number of Shares subject to the Award, its Term, and the other terms
and conditions thereof. The notice shall be accompanied by a written Award Agreement in such form
as may from time to time hereafter be approved by the Board, or the Committee if one has been
appointed, which shall have been duly executed by or on behalf of the Company. If the surrender of
previously issued Awards is made a condition of the grant, the notice shall set forth the pertinent
details of such condition. Execution by the Participant to whom such Award is granted of said Award
Agreement in

 

 

accordance with the provisions set forth in this Plan shall be a condition precedent to the
exercise or receipt of any Award.

     17. Taxes.

     17.1 Right to Withhold Required Taxes. The Company shall have the right to
require a person entitled to receive Shares pursuant to the receipt, vesting or exercise of
an Award under the Plan to pay the Company the amount of any taxes which the Company is or
will be required to withhold with respect to such Shares before the certificate for such
Shares is delivered pursuant to the Award. Furthermore, the Company may elect to deduct
such taxes from any other amounts then payable in cash or in shares or from any other
amounts payable any time thereafter to the Participant. If the Participant disposes of
Shares acquired pursuant to an Incentive Stock Option in any transaction considered to be a
disqualifying disposition under Sections 421 and 422 of the Code, the Participant shall
notify the Company of such transfer and the Company shall have the right to deduct any taxes
required by law to be withheld from any amounts otherwise payable then or at any time
thereafter to the Participant.

     17.2 Participant Election to Withhold Shares. Subject to Board approval, or
Committee approval if one has been appointed (which in the case of Incentive Stock Options
must be given at the time of grant), a Participant may elect to satisfy the tax liability
with respect to the exercise of an Option by having the Company withhold Shares otherwise
issuable upon exercise of the Option; provided, however, that if a Participant is subject to
Section 16(b) of the Exchange Act at the time the Option is exercised, such election must
satisfy the requirements of Rule 16b-3.

     18. Termination of the Plan. The Plan shall terminate ten (10) years from the date
hereof, and an Award shall not be granted under the Plan after that date although the terms of any
Awards may be amended at any date prior to the end of its Term in accordance with the Plan. Any
Awards outstanding at the time of termination of the Plan shall continue in full force and effect
according to the terms and conditions of the Award and this Plan.

 

 

     19. Amendment of the Plan. The Plan may be amended at any time and from time to time
by the Board, but no amendment without the approval of the shareholders of the Company shall be
made if shareholder approval under Section 422 of the Code or, if the Company is subject to the
Exchange Act at the time of such amendment, under Rule 16b-3, or Code Section 162(m) would be
required. Notwithstanding the discretionary authority granted to the Board, or the Committee, if
one has been appointed, in Section 4 of the Plan, no amendment of the Plan or any Award granted
under the Plan shall impair any of the rights of any holder, without the holder’s consent, under
any Award theretofore granted under the Plan.

     20. Delivery of Shares on Exercise or Grant. Delivery of certificates for Shares
pursuant to the grant or exercise of an Award may be postponed by the Company for such period as
may be required for it with reasonable diligence to comply with any applicable requirements of any
federal, state or local law or regulation or any administrative or quasi-administrative requirement
applicable to the sale, issuance, distribution or delivery of such Shares. The Board, or the
Committee if one has been appointed, may, in its sole discretion, require a Participant to furnish
the Company with appropriate representations and a written investment letter prior to the exercise
of an Award or the delivery of any Shares pursuant to an Award.

     21. Fees and Costs. The Company shall pay all original issue taxes on the issuance or
exercise of any Award granted under the Plan and all other fees and expenses necessarily incurred
by the Company in connection therewith.

     22. Effectiveness of the Plan. The Plan shall become effective when approved by the
Board. The Plan shall thereafter be submitted to the Company’s shareholders for approval and
unless the Plan is approved by the affirmative votes of the holders of shares having a majority of
the voting power of all shares represented at a meeting duly held in accordance with Minnesota law
within twelve (12) months after having been approved by the Board, the Plan and all Awards made
under it shall be null and void and of no force and effect. In aid of this provision, any Awards
granted prior to the approval of the Plan by the Company’s shareholders shall be conditioned upon
the receipt of such approval.

 

 

     23. Other Provisions. As used in the Plan, and in Awards and other documents
prepared in implementation of the Plan, references to the masculine pronoun shall be deemed to
refer to the feminine or neuter, and references in the singular or the plural shall refer to the
plural or the singular, as the identity of the person or persons or entity or entities being
referred to may require. The captions used in the Plan and in such Awards and other documents
prepared in implementation of the Plan are for convenience only and shall not affect the meaning of
any provision hereof or thereof.

     24. Minnesota Law to Govern. This Plan shall be governed by and construed in
accordance with the laws of the State of Minnesota.

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