INVESTOR RIGHTS AGREEMENT

ACCRUE SOFTWARE, INC.













SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT











AUGUST 13, 1998





TABLE OF CONTENTS







Page

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1. Amendment...............................................................................................................1

1.1 Procedure...................................................................................................1

1.2 Rights of Holders...........................................................................................2

2. Registration Rights.....................................................................................................2

2.1 Definitions.................................................................................................2

2.2 Requested Registration......................................................................................3

2.3 Company Registration........................................................................................4

2.4 Obligations of the Company..................................................................................5

2.5 Furnish Information.........................................................................................6

2.6 Expenses of Demand Registration.............................................................................6

2.7 Expenses of Company Registration............................................................................7

2.8 Underwriting Requirements...................................................................................7

2.9 No Delay of Registration....................................................................................8

2.10 Indemnification............................................................................................8

2.11 Reports Under Securities Exchange Act of 1934.............................................................10

2.12 Form S-3 Registration.....................................................................................10

2.13 Assignment of Registration Rights.........................................................................12

2.14 Limitations on Subsequent Registration Rights.............................................................12

2.15 "Market Stand-Off"Agreement...............................................................................12

2.16 Termination of Registration Rights........................................................................13

3. Financial Information..................................................................................................13

3.1 Annual, Quarterly and Monthly Information..................................................................13

3.2 Inspection.................................................................................................13

3.3 Termination of Covenants...................................................................................14

4. Additional Rights......................................................................................................14

4.1 Right of First Refusal.....................................................................................14

4.2 Termination................................................................................................15

4.3 Assignment.................................................................................................15

4.4 Additional Registration Rights.............................................................................16

5. Miscellaneous..........................................................................................................16

5.1 Assignment.................................................................................................16

5.2 Third Parties..............................................................................................16

5.3 Governing Law..............................................................................................16

5.4 Counterparts...............................................................................................16

5.5 Notices....................................................................................................16

5.6 Severability...............................................................................................18

5.7 Delays or Omissions........................................................................................18

5.8 Consent and Waiver.........................................................................................19

5.9 Waiver of Conflicts........................................................................................19

5.10 Legal Representation......................................................................................19







SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT





THIS SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of August 13, 1998, by and among Accrue Software, Inc., a Delaware corporation (the "Company"), the holders of a majority of the Company's Registrable Securities (as defined in the First Amended and Restated Investor Rights Agreement dated May 29, 1998, (the "Prior Rights Agreement")), the holders of the Company's Series E Preferred Stock (the "Series E Purchasers"), Organic Online, Inc., a California corporation ("Organic"), and the Warrant Holder (as defined below).





A. The Company, the holders of the Series A Preferred Stock, the holders of the Series B Preferred Stock, the holders of the Series C Preferred Stock, the holders of the Series D Preferred Stock, Organic and Sterling Payot Company ("Sterling Payot" or the "Warrant Holder") entered into the Prior Rights Agreement, which granted the parties thereto (the "Former Rights Holders") certain registration rights and certain other rights regarding the Company's securities;



B. The Company entered into a Series E Preferred Stock Purchase Agreement of even date herewith (the "Series E Agreement") providing for the sale and issuance of up to 5,000,000 shares of the Company's Series E Preferred Stock (the "Series E") to the Series E Purchasers;



C. The Company wishes to amend the registration rights of the Former Rights Holders so as to conform them to those granted to the Series E Purchasers under this Agreement and to set forth said registration rights and certain other rights of all Former Rights Holders and Series E Purchasers (collectively the "Rights Holders") in this Agreement as the sole agreement of the Company and the Rights Holders with respect thereto.



D. The execution of this Agreement by the Company is a condition to the obligations of the Series E Purchasers under the Series E Agreement; and



E. The Company wishes to execute this Agreement and grant to the Rights Holders the rights contained herein in order to fulfill such condition.



THE PARTIES AGREE AS FOLLOWS:



1. Amendment.



1.1 Procedure. Except as expressly provided herein, neither this Agreement nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the party against whom enforcement of any such amendment, waiver, discharge or termination is sought. Notwithstanding the foregoing, any provision of this Agreement may be amended, waived, discharged or terminated upon the written consent of the Company and Organic and the holders of a majority of the outstanding Registrable Securities











(as defined below) not held by Organic, determined on the basis of assumed conversion of all Series A, Series B, Series C, Series D and Series E Preferred Shares (the "Shares") and Warrant Shares (as defined hereinafter) into Registrable Securities; provided, however, that no such amendment shall be effective with respect to any Holder if such amendment materially adversely affects any of the rights granted pursuant to the Agreement to such Holder (the "Uniquely Affected Holder") in a manner different from the manner in which such amendment affects all other Holders, unless such amendment is consented to in writing by the Uniquely Affected Holder. If such Holder does not so consent, then the amendment shall be effective as to all Holders other than the Uniquely Affected Holder.



1.2 Rights of Holders. Each holder of Registrable Securities shall have the absolute right to exercise or refrain from exercising any right or rights that such holder may have by reason of this Agreement, including, without limitation, the right to consent to the waiver or modification of any obligation under this Agreement, and such holder shall not incur any liability to any other holder of any securities of the Company as a result of exercising or refraining from exercising any such right or rights.



2. Registration Rights.



2.1 Definitions. As used in this Agreement:



(a) The terms "register," "registered," and "registration" refer to a registration effected by preparing and filing a registration statement in compliance with the Securities Act of 1933, as amended (the "Securities Act"), and the subsequent declaration or ordering of the effectiveness of such registration statement.



(b) The term "Registrable Securities" means:



(i) The shares of Common Stock issuable or issued upon conversion of the Shares purchased under: the Series A Preferred Stock Purchase Agreement dated May 3, 1996 (the "Series A Agreement"); the Series B Preferred Stock Purchase Agreement dated September 18, 1996 (the "Series B Agreement"); the Series B Preferred Stock and Series C Preferred Stock Purchase Agreement dated November 22, 1996, as amended by Amendment No. 1 thereto dated November 26, 1997 (collectively, the "Series B and C Agreement"); the Series D Preferred Stock Purchase Agreement dated May 29, 1998, (the "Series D Agreement"); and the Series E Agreement.



(ii) The shares of Common Stock issued to Organic pursuant to that certain Technology Assignment Agreement and that certain Restricted Stock Agreement, each dated May 3, 1996;



(iii) The shares of Common Stock issuable or issued upon exercise of the Warrant issued by the Company to Sterling Payot pursuant to the Series A Agreement at the time of the Series A financing and the shares of Common Stock issuable or issued upon exercise of the Warrant issued by Organic to Mohr, Davidow Ventures IV, L.P. and MDV IV Entrepreneurs' Network Fund, L.P. at the time of the Series B and C financing











(collectively, the "Warrant Shares") (the shares of Common Stock referred to in clauses (i), (ii) and (iii) hereof are collectively referred to hereafter as the "Stock"); and



(iv) Any other shares of Common Stock of the Company issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the Stock, excluding in all cases, however, any Registrable Securities sold by a person in a transaction in which his or her rights under this Agreement are not assigned; provided, however, that Common Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been (A) sold to or through a broker or dealer or underwriter in a public distribution or a public securities transaction, or (B) sold in a transaction exempt from the registration and prospectus delivery requirements of the Securities Act under Section 4(1) thereof so that all transfer restrictions, and restrictive legends with respect thereto, if any, are removed upon the consummation of such sale.



(c) The number of shares of "Registrable Securities then outstanding" shall be determined by the number of shares of Common Stock or other securities outstanding which are, and the number of shares of Common Stock or other securities issuable pursuant to then exercisable or convertible securities which are, Registrable Securities.



(d) The term "Holder" means any holder of outstanding Registrable Securities who, subject to the limitations set forth in Section 2.13 below, acquired such Registrable Securities in a transaction or series of transactions not involving any registered public offering.



(e) The term "Form S-3" means such form under the Securities Act of 1933, as amended (the "Act") as in effect on the date hereof or any registration form under the Act subsequently adopted by the Securities and Exchange Commission ("SEC") which permits inclusion or incorporation of substantial information by reference to other documents filed by the Company with the SEC.



2.2 Requested Registration.



(a) If the Company shall receive at any time after the earlier of (i) January 31, 2001, or (ii) one (1) year after the effective date of the first registration statement for a public offering of securities of the Company (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan or an SEC Rule 145 transaction), a written request from the Holders of at least twenty-five percent (25%) of the Registrable Securities then outstanding that the Company file a registration statement under the Act covering the registration of that number of shares of Registrable Securities whose anticipated aggregate offering price, net of underwriting discounts and commissions, would equal at least $10,000,000, then the Company shall, within ten (10) days of the receipt thereof, give written notice of such request to all Holders and shall, subject to the limitations of subsection 2.2(b), effect as soon as practicable, and in any event within 90 days of the receipt of such request, the registration under the Act of all Registrable Securities which the Holders request to be registered











within twenty (20) days of the mailing of such notice by the Company in accordance with Section 5.5.



(b) If the Holders initiating the registration request hereunder ("Initiating Holders") intend to distribute the Registrable Securities covered by their request by means of an underwriting, they shall so advise the Company as a part of their request made pursuant to this Section 2.2 and the Company shall include such information in the written notice referred to in subsection 2.2(a). The underwriter will be selected by the Company and shall be reasonably acceptable to a majority in interest of the Initiating Holders. In such event, the right of any Holder to include his Registrable Securities in such registration shall be conditioned upon such Holder's participation in such underwriting and the inclusion of such Holder's Registrable Securities in the underwriting (unless otherwise mutually agreed by a majority in interest of the Initiating Holders and such Holder) to the extent provided herein. All Holders proposing to distribute their securities through such underwriting shall (together with the Company as provided in subsection 2.4(e)) enter into an underwriting agreement in customary form with the underwriter or underwriters selected for such underwriting by a majority in interest of the Initiating Holders. Notwithstanding any other provision of this Section 2.2, if the underwriter advises the Initiating Holders in writing that marketing factors require a limitation of the number of shares to be underwritten, then the Initiating Holders shall so advise all Holders of Registrable Securities which would otherwise be underwritten pursuant hereto, and the number of shares of Registrable Securities that may be included in the underwriting shall be allocated among all Holders thereof, including the Initiating Holders, in proportion (as nearly as practicable) to the amount of Registrable Securities of the Company owned by each Holder; provided, however, that the number of shares of Registrable Securities to be included in such underwriting shall not be reduced unless all other securities proposed to be sold by persons other than the Holders are first entirely excluded from the underwriting.



(c) The Company is obligated to effect only two (2) such registrations pursuant to this Section 2.2.



(d) Notwithstanding the foregoing, if the Company shall furnish to Holders requesting a registration statement pursuant to this Section 2.2, a certificate signed by the President of the Company stating that in the good faith judgment of the Board of Directors of the Company, it would be seriously detrimental to the Company and its stockholders for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer such filing for a period of not more than 90 days after receipt of the request of the Initiating Holders; provided, however, that the Company may not utilize this right more than once in any twelve month period.



2.3 Company Registration. If (but without any obligation to do so) the Company proposes to register (including for this purpose a registration effected by the Company for stockholders other than the Holders) any of its Common Stock or other securities under the Securities Act in connection with the public offering of such securities solely for cash (other than a registration relating either to the sale of securities to participants in a Company stock option, stock purchase or similar plan or to an SEC Rule 145 transaction, or a registration on any form which does not include substantially similar information as would be required to











be included in a registration statement covering the sale of the Registrable Securities), the Company shall, at such time, promptly give each Holder written notice of such registration. Upon the written request of each Holder given within fifteen (15) days from receipt of such notice by the Company in accordance with Section 5.5, the Company shall, subject to the provisions of Section 2.7, cause to be registered under the Securities Act all of the Registrable Securities that each such Holder has requested to be registered.



2.4 Obligations of the Company. Whenever required under this Section 2 to effect the registration of any Registrable Securities, the Company shall, as expeditiously as reasonably possible:



(a) Prepare and file with the SEC a registration statement with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective, and, upon the request of either Organic or the Holders of a majority of the Registrable Securities not held by Organic registered thereunder, keep such registration statement effective for one hundred twenty (120) days, or until the distribution contemplated in the Registration Statement has been completed; provided, however, that (i) such 120-day period shall be extended for a period of time equal to the period the Holder refrains from selling any securities included in such registration at the request of an underwriter of Common Stock (or other securities) of the Company; and (ii) in the case of any registration of Registrable Securities on Form S-3 which are intended to be offered on a continuous or delayed basis, such 120-day period shall be extended, if necessary, to keep the registration statement effective until all such Registrable Securities are sold, provided that Rule 415, or any successor rule under the Act, permits an offering on a continuous or delayed basis, and provided further that applicable rules under the Act governing the obligation to file a post-effective amendment permit, in lieu of filing a post-effective amendment which (I) includes any prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or events representing a material or fundamental change in the information set forth in the registration statement, the incorporation by reference of information required to be included in (I) and (II) above to be contained in periodic reports filed pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, (the "1934 Act") in the registration statement.



(b) Prepare and file with the SEC such amendments and supplements to such registration statement and the prospectus used in connection with such registration statement as may be necessary to comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such registration statement.



(c) Furnish to the Holders such reasonable numbers of copies of a prospectus, including a preliminary prospectus, in conformity with the requirements of the Securities Act, and such other documents as they may reasonably request in order to facilitate the disposition of Registrable Securities owned by them.



(d) Use its best efforts to register and qualify the securities covered by such registration statement under such other securities or Blue Sky laws of such jurisdictions as shall be reasonably requested by the Holders, provided that the Company shall











not be required in connection therewith or as a condition thereto to qualify to do business or to file a general consent to service of process in any such states or jurisdictions.



(e) In the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering. Each Holder participating in such underwriting shall also enter into and perform its obligations under such an agreement.



(f) Notify each Holder of Registrable Securities covered by such registration statement at any time when a prospectus relating thereto is required to be delivered under the Securities Act of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state a material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing.



(g) Furnish, at the request of any Holder requesting registration of Registrable Securities pursuant to this Section 2, on the date that such Registrable Securities are delivered to the underwriters for sale in connection with a registration pursuant to this Section 2, if such securities are being sold through underwriters, or, if such securities are not being sold through underwriters, on the date that the registration statement with respect to such securities becomes effective, (i) an opinion, dated such date, of the counsel representing the Company for the purposes of such registration, in form and substance as is customarily given to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities and (ii) a letter dated such date, from the independent public accountants of the Company, in form and substance as is customarily given by independent certified public accountants to underwriters in an underwritten public offering, addressed to the underwriters, if any, and to the Holders requesting registration of Registrable Securities.



(h) Cause all such Registrable Securities registered pursuant hereunder to be listed on each securities exchange or automated quotation system on which similar securities issued by the Company are then listed.



2.5 Furnish Information. It shall be a condition precedent to the obligations of the Company to take any action pursuant to this Section 2 with respect to the Registrable Securities of any selling Holder that such Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of such Holder's Registrable Securities.



2.6 Expenses of Demand Registration. All expenses other than stock transfer taxes, the fees and disbursements of special counsel for individual Holders, underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 2.2, including (without limitation), all registration, filing and qualification fees, printers and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one counsel for the selling Holders (not to exceed $15,000) shall be borne by the











Company; provided, however, that the Company shall not be required to pay for any expenses of any registration proceeding begun pursuant to Section 2.2 if the registration request is subsequently withdrawn at the request of the Holders of a majority of the Registrable Securities to be registered (in which case all Participating Holders shall bear such expenses), unless the Holders of a majority of the Registrable Securities agree to forfeit their right to one demand registration pursuant to Section 2.2; provided further, however, that if at the time of such withdrawal, the Holders have learned of a material adverse change in the condition, business, or prospects of the Company from that known to the Holders at the time of their request, then the Holders shall not be required to pay any of such expenses and shall retain their rights pursuant to Section 2.2.



2.7 Expenses of Company Registration. All expenses, other than stock transfer taxes, the fees and disbursements of special counsel of individual Holders, underwriting discounts and commissions incurred in connection with registrations, filings or qualifications pursuant to Section 2.3, including (without limitation), all registration, filing and qualification fees, printers and accounting fees, fees and disbursements of counsel for the Company, and the reasonable fees and disbursements of one special counsel for all of the participating Holders (not to exceed $15,000) shall be paid by the Company.



2.8 Underwriting Requirements. In connection with any offering involving an underwriting of shares being issued by the Company, the Company shall not be required under Section 2.3 to include any of the Holders' securities in such underwriting unless they accept the terms of the underwriting as agreed upon between the Company and the underwriters selected by it, and then only in such quantity as will not, in the opinion of the underwriters, adversely affect the success of the offering by the Company. If the total amount of securities, including Registrable Securities, requested by Holders to be included in such offering exceeds the amount of securities sold other than by the Company that the underwriters reasonably believe would not adversely affect the success of the offering, then the Company shall be required to include in the offering only that number of such securities, including Registrable Securities, which the underwriters believe will not adversely affect the success of the offering (the securities so ...