EXHIBIT 2.5
FORM OF
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT") is made and
entered into as of___________, 2003, by and between Larscom, a Delaware
corporation (the "COMPANY"), XXXX XXXXXXX INC., a Delaware corporation ("AJI"),
and the parties listed on Exhibit A hereto (the "STOCKHOLDERS").
WHEREAS, the Company and AJI are parties to that certain Registration
Rights Agreement (the "FORMER LARSCOM AGREEMENT") made in connection with the
Company's Initial Public Offering;
WHEREAS, the Stockholders are parties to certain registration rights
agreements with VINA (the "FORMER VINA AGREEMENTS");
WHEREAS, the Company and AJI wish to replace the Former Larscom
Agreement with this Agreement made in connection with the Agreement and Plan of
Merger by and among the Company, Larscom Acquisition Corp. and VINA (the
"MERGER AGREEMENT"), in order to provide certain stockholders of VINA with
certain rights contained herein; and
WHEREAS, VINA and the Stockholders wish to replace the Former VINA
Agreements with this Agreement made in connection with the Merger Agreement in
order to provide AJI with certain rights contained herein; and
WHEREAS, the Company, AJI and the Stockholders desire to enter into
this Agreement pursuant to which AJI, the Stockholders and their Affiliates that
hold or may acquire shares of Common Stock of the Company, under certain
circumstances may have registered with the SEC an offering and sale of shares of
Common Stock of the Company owned by AJI, the Stockholders or any such
Affiliates, subject to the terms of this Agreement.
NOW, THEREFORE, in consideration of the premises and the agreements
herein contained, the parties of this Agreement agree as follows:
1. DEFINITIONS
As used in this Agreement, the capitalized terms shall have the
meanings set forth below.
Advice: See the last paragraph of Section 5 hereof.
Affiliate: Any Person controlling or controlled by or under direct or
indirect common control with a Party; provided, that in no event shall the
Company be treated as an Affiliate of any Party, nor shall any Person directly
or indirectly controlled by the Company (including, without limitation, its
officers, directors and employees) as a result of such Party's relationship with
the Company be treated as an Affiliate of a Party. For the purposes of this
definition, "control" means the power to direct the management and policies of a
Person, directly or
1
indirectly, through the ownership of securities, by contract or otherwise, and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
Agent: Any Person authorized to act and who acts on behalf of a Party
or any Affiliate of a Party with respect to the transactions contemplated by the
Agreement.
Common Stock: Shares of the Company's Common Stock, par value $.01 per
share, as the same may be constituted from time to time.
Company Notice: See Section 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended, and the
rules and regulations thereunder, as in effect from time to time.
Party: AJI or a Stockholder.
Person: An individual, partnership, corporation, trust or
unincorporated organization, or a government or agency or political subdivision
thereof.
Permitted Assignee: See Section 9(f) hereof.
Piggyback Notice: See Section 4(a) hereof.
Piggyback Registration Statement: See Section 4(a) hereof.
Prospectus: The prospectus included in any Registration Statement, as
amended or supplemented by any prospectus supplement with respect to the terms
of the offering of any portion of the Registrable Securities covered by the
Registration Statement and all other amendments and supplements to the
Prospectus, including post-effective amendments and all material incorporated by
reference in such Prospectus.
Registration Expenses: See Section 6 hereof.
Registrable Securities: (i) The Shares and (ii) any securities issued
or issuable with respect to the Shares by way of a stock dividend or stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or other reorganization, until such Shares or other securities are
not Restricted Securities as defined in Section 2(a).
Registration Statement: Any registration statement of the Company which
covers Registrable Securities pursuant to the provisions of this Agreement,
including (i) the Prospectus, (ii) amendments and supplements to such
Registration Statement, (iii) post-effective amendments, (iv) all exhibits and
all material incorporated by reference in such Registration Statement, (v) any
registration statement pursuant to a Demand Registration and (vi) any Piggyback
Registration Statement.
Restricted Securities: The Registrable Securities upon original
issuance thereof, subject to the provisions of Section 2(a) hereof.
2
Securities Act: The Securities Act of 1933, as amended from time to
time.
SEC: The Securities and Exchange Commission.
Shares: All shares of Common Stock held by AJI, as of the date hereof
or as later acquired, and all shares of Common Stock held by the Stockholders,
as of the date hereof or as later acquired.
Unless the context otherwise requires: (i) "or" is not exclusive; and
(ii) words in the singular include the plural and in the plural include the
singular.
2. SECURITIES SUBJECT TO THIS AGREEMENT
(a) REGISTRABLE SECURITIES. The securities entitled to the
benefits of Sections 3 through 8 of this Agreement are the Registrable
Securities but, with respect to any particular Registrable Security, only so
long as such security continues to be a Restricted Security. A Registrable
Security ceases to be a Restricted Security when (i) it has been effectively
registered under the Securities Act and disposed of in accordance with the
Registration Statement covering it, (ii) it has been distributed pursuant to
Rule 144 (or any similar provisions then in force) under the Securities Act,
(iii) it has otherwise been transferred and a new certificate or other evidence
or ownership for it not bearing a legend restricting transfer under the
Securities Act and not subject to any stop transfer order has been delivered by
or on behalf of the Company and no other restriction on transfer exists or (iv)
it ceases to be outstanding.
(b) HOLDERS OF REGISTRABLE SECURITIES. Any reference herein to a
"Holder" or "Holders" of Registrable Securities shall mean AJI, any Stockholder,
or any Permitted Assignee. A Holder shall be deemed to be a holder of
Registrable Securities whenever it owns Registrable Securities or securities
which are convertible into or exercisable for Registrable Securities whether or
not such conversion or exercise has actually been effected and disregarding any
legal restrictions upon such conversion or exercise.
3. PIGGYBACK REGISTRATION RIGHTS
(a) REQUESTS FOR PIGGYBACK REGISTRATION. The Company covenants and
agrees with each Holder that, in the event the Company proposes to file at any
time and from time to time after the date hereof, a registration statement on
any form for the general registration of securities under the Securities Act
with respect to the offering of any class of security other than in connection
with an offering solely to the Company's employees pursuant to a registration
statement on Form S-8 under the Securities Act or an offering pursuant to a
registration statement on Form S-4 under the Securities Act, or any successor
forms thereto (a "PIGGYBACK REGISTRATION STATEMENT"), then the Company shall in
each such case give written notice (a "COMPANY NOTICE") of such proposed filing
to each Holder so that the Company Notice is received by each Holder at least
twenty (20) business days before the anticipated filing date, and such notice
shall offer to each Holder the opportunity to include in such Piggyback
Registration Statement such number of Registrable Securities as each may
request. Notwithstanding the foregoing, the Company shall not be obligated to
register the Registrable Securities of any Holder (i) unless there shall have
been received by the Company, within ten (10) business days of receipt of the
Company Notice by such Holder, written notice (a "PIGGYBACK NOTICE") from
3
such Holder, which notice shall set forth the number of Registrable Securities
to be so included, or (ii) if the Registrable Securities held by such Holder and
its Affiliates can be transferred without registration in accordance with Rule
144 under the Securities Act or any other exemption from the registration
provisions thereof (other than Rule 144A) within any 90 day period.
(b) UNDERWRITING.
(i) The Company shall use its reasonable best efforts to cause the
underwriter of a proposed offering, if any, to permit the Holders holding
Registrable Securities requested to be included in the Piggyback Registration
Statement to include such Registrable Securities in the proposed offering on
terms and conditions at least as favorable to the Holders holding such
Registrable Securities as those offered with respect to the other securities of
the Company included therein. The right of any Holder to be included in a
registration statement pursuant to this Section 3 shall be conditioned on such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their Registrable Securities through such
underwriting shall enter into an underwriting agreement in customary form with
the underwriter or underwriters selected for such underwriting by the Company.
(ii) Notwithstanding the foregoing, if any underwriter shall advise
the Company in writing that, in its opinion, the distribution of the Registrable
Securities requested to be included in the Piggyback Registration Statement
concurrently with the securities being registered by the Company would
materially adversely affect the distribution of such securities by the Company,
then (i) if the securities being offered by the Company include Common Stock
(other than shares of Common Stock issuable on the conversion or exchange of
other securities then being offered), the Holders holding such Registrable
Securities shall delay their offering and sale for such period, not to exceed
ninety (90) calendar days, as such underwriter shall request, or (ii) if the
securities being offered by the Company do not include Common Stock, the Holders
holding such Registrable Securities shall withdraw their offering and sale, as
such underwriter shall request; provided, that the Holders holding such
Registrable Securities shall have no obligation to delay or withdraw if the
offering includes a secondary offering of any securities other than such
Registrable Securities. In the event of the delay described in clause (i) in the
preceding sentence, the Company shall file such supplements and post-effective
amendments, and take any such other steps as may be necessary to permit such
Holders to make their proposed offering and sale for a period of ninety (90)
calendar days immediately following the end of such period of delay. If any
underwriter shall advise the Company in writing that, in its opinion, marketing
factors require a limitation of the number of shares to be underwritten, the
number of shares that may be included in the underwriting shall be allocated,
first, to the Company; second, to the Holders on a pro rata basis based on the
total number of Registrable Securities held by the Holders; and third, to any
stockholder of the Company (other than a Holder) on a pro rata basis; provided,
however, that no such reduction shall reduce the amount of securities of the
selling Holders included in the registration below twenty-five percent (25%) of
the total amount of securities included in such registration. For any Holder
which is a partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single "Holder," and any pro rata
reduction with respect to such
4
"Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
(iii) If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by written notice to
the Company and the underwriter, delivered at least ten (10) business days prior
to the effective date of the registration statement. Any Registrable Securities
excluded or withdrawn from such underwriting shall be excluded and withdrawn
from the registration.
4. FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities, on or after the date that is 180
days from the date hereof, a written request or requests that the Company effect
a registration on Form S-3 (or any successor to Form S-3) or any similar
short-form registration statement and any related qualification or compliance
with respect to all or a part of the Registrable Securities owned by such Holder
or Holders, the Company will:
(a) promptly give written notice of the proposed registration, and
any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within ten
(10) days after receipt of such written notice from the Company; provided,
however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 4:
(i) if Form S-3 is not available for such offering by the
Holders, or
(ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than five hundred thousand dollars
($500,000), or
(iii) if within thirty (30) days of receipt of a written
request from any Holder or Holders pursuant to this Section 4, the Company gives
notice to such Holder or Holders of the Company's intention to make a public
offering within ninety (90) days on a Piggyback Registration Statement provided
that such Holders were permitted to register such shares as requested to be
registered pursuant to Section 3 hereof without reduction by the underwriter
thereof; or
(iv) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors 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 Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than one hundred twenty (120) days after
receipt of the request of the
5
Holder or Holders under this Section 4; provided, that such right to delay a
request shall be exercised by the Company not more than twice in any twelve (12)
month period, or
(v) if the Company has within the twelve (12) month
period preceding the date of such request already effected two (2) registrations
on Form S-3 for the Holders pursuant to this Section 4, or
(vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance;
or
(vii) if the Registrable Securities held by such Holder and
its Affiliates can be transferred without registration in accordance with Rule
144 under the Securities Act or any other exemption from the registration
provisions thereof (other than Rule 144A) within any 90 day period.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
requests of the Holders. All Registration Expenses incurred in connection with
registrations requested pursuant to this Section 4 after the first two (2)
registrations shall be paid by the selling Holders pro rata in proportion to the
number of shares sold by each such Holder.
5. REGISTRATION PROCEDURES
Whenever a Holder has requested that any Registrable Securities be
registered pursuant to this Agreement, the Company will promptly take all such
actions as may be necessary or desirable to permit the sale of such Registrable
Securities in accordance with the intended method or methods of disposition
thereof, and pursuant thereto the Company will promptly:
(a) with respect to a request for a Form S-3 Registration, use its
best efforts to prepare and file with the SEC, not later than 60 days after
receipt of such request (which 60-day period may be extended by the Company for
up to an additional 30 days if during such 60-day period the Company is engaged
to a significant extent in negotiations looking toward its participation in a
material merger, acquisition or other form of business combination and if, by
reason of such negotiations, the Company is not in a position to timely prepare
and file the Registration Statement) a Form S-3 Registration Statement, and use
all reasonable efforts to cause such Registration Statement to become effective;
the Company shall not file any Registration Statement pursuant to Section 4 or
any amendment thereto or any Prospectus or any supplement thereto (including
such documents incorporated by reference) to which the Holders or the
underwriters, if any, shall reasonably object in light of the requirements of
the Securities Act or any other applicable laws or regulations;
(b) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto (excluding documents to be incorporated by
reference therein filed after the effectiveness of the Registration Statement),
the Company will, five business days prior to filing, furnish to the Holders and
the underwriters, if any, copies of all such documents in substantially the form
proposed to be filed (including documents incorporated therein by reference), to
enable
6
the Holders and the underwriters, if any, to review such documents prior to the
filing thereof, and the Company shall make such reasonable changes thereto
(including changes to documents incorporated by reference) as may be reasonably
requested by the Holders and the managing underwriter or underwriters, if any;
(c) prepare and file with the SEC such amendments and
post-effective amendments to the Registration Statement as may be necessary to
keep the Registration Statement continuously effective for a period of not less
than 180 days or such longer period as is required for the intended method of
distribution, or such shorter period which will terminate when all Registrable
Securities covered by such Registration Statement have been sold or withdrawn;
cause the Prospectus to be supplemented by any required Prospectus supplement,
and as so supplemented to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in such Registration Statement or supplement to the
Prospectus;
(d) notify the Holders and the managing underwriters, if any,
promptly, and confirm such advice in writing, (1) when the Prospectus or any
Prospectus supplement or post-effective amendment has been filed, and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective, (2) of any request by the SEC for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (3) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose, (4) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable Securities for
sale in any jurisdiction or the initiation or threatening of any proceeding for
such purpose, and (5) of the happening of any event which makes any statement
made in the Registration Statement, the Prospectus or any document incorporated
therein by reference untrue or which requires the making of any changes in the
Registration Statement, the Prospectus or any document incorporated therein by
reference in order to make the statements therein not misleading, so that, in
the case of the Registration Statement, it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, not misleading, and that in
the case of the Prospectus, it will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading;
(e) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement at the earliest
possible moment;
(f) as promptly as practicable after the filing with the SEC of
any document which is incorporated by reference into the Registration Statement
or the Prospectus (after initial filing of the Registration Statement) provide
copies of such document to counsel to the Holders and to the managing
underwriters, if any;
(g) furnish to the Holders and each managing underwriter, if any,
without charge, at least one signed copy of the Registration Statement and any
post-effective amendment thereto,
7
including financial statements and schedules, all documents incorporated therein
by reference and all exhibits (including those incorporated by reference) and a
reasonable number of conformed copies of all such documents;
(h) in the event of an 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; provided, that,
each Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement;
(i) deliver to the Holders and the underwriters, if any, as many
copies of the Prospectus (including each preliminary prospectus) and any
amendment or supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or supplement
thereto by the Holders and the underwriters, if any, in connection with the
offering and sale of the Registrable Securities covered by the Prospectus or any
amendment or supplement thereto;
(j) prior to the date on which the Registration Statement is
declared effective, use its reasonable efforts to register or qualify or
cooperate with the Holders and the underwriters, if any, and their respective
counsel in connection with the registration or qualification (or exemption from
such registration or qualification) of such Registrable Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as any seller
or underwriter reasonably requests in writing and do any and all other acts or
things necessary or advisable to enable the disposition in such jurisdictions of
the Registrable Securities covered by the Registration Statement; provided, that
the Company will not be required to qualify generally to do business in any
jurisdiction where it is not then so qualified or to take any action which would
subject it to general service of process in any such jurisdiction where it is
not then so subject;
(k) cooperate with the Holders and the managing underwriters, if
any, to facilitate the timely preparation and delivery of certificates
representing Registrable Securities to be sold and not bearing any restrictive
legends; and enable such Registrable Securities to be in such denominations and
registered in such names as the managing underwriters, if any, or the Holders
may request at least two business days prior to any such sale of Registrable
Securities;
(l) use its reasonable efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof or the underwriters, if any, to consummate the
disposition of such Registrable Securities;
(m) upon the occurrence of any event contemplated by paragraph
(d)(5) above, prepare a supplement or post-effective amendment to the
Registration Statement or the Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, 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, in light of the circumstances under
which they were made, not misleading;
8
(n) use its reasonable efforts to cause all Registrable Securities
covered by the Registration Statement to be listed on each securities exchange
or authorized to be quoted on the National Association of Securities Dealers
Automated Quotation ("NASDAQ") National Market if similar securities issued by
the Company are then so listed or authorized, if requested by the Holders or the
managing underwriters, if any;
(o) provide a transfer agent and registrar for all Registrable
Securities;
(p) enter into such agreements (including an underwriting
agreement) and take all such other actions in connection therewith as the
Holders or the managing underwriters, if any, reasonably request in order to
expedite or facilitate the disposition of such Registrable Securities;
(q) make available for inspection during normal business hours by
the Holders, any underwriter participating in any disposition pursuant to such
Registration Statement, and any attorney, accountant or other agent retained by
any such Holder 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 reasonably requested
by any such Holder, underwriter, attorney, accountant or agent in connection
with such Registration Statement; provided, that any records, information or
documents that are designated by the Company in writing as confidential shall be
kept confidential by such Persons;
(r) otherwise use its reasonable efforts to comply with all
applicable rules and regulations of the SEC, and make generally available to its
security holders, earnings statements satisfying the provisions of Section 11(a)
of the Securities Act, no later than 45 days after the end of any 12-month
period (1) commencing at the end of any fiscal quarter in which Registrable
Securities are sold to underwriters in a firm or best efforts underwriting
offering, and (2) beginning with the first month of the Company's first fiscal
quarter commencing after the effective date of the Registration Statement, which
statements shall cover said 12-month periods.
The Company may require the Holders to furnish to the Company such
information and documents regarding the distribution of the Registrable
Securities and the Holders as the Company may from time to time reasonably
request in writing.
The Holders each agree by acquisition of such Registrable Securities
that, upon receipt of any notice from the Company of the happening of any event
of the kind described in Section 5(d)(5) hereof, such Holder will forthwith
discontinue disposition of Registrable Securities until such Holder's receipt of
the copies of the supplemented or amended Prospectus contemplated by Section
5(m) hereof, or until it is advised in writing (the "ADVICE") by the Company
that the use of the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by reference in the
Prospectus, and, if so directed by the Company, each Holder will, or will
request the underwriters (if any) to, deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in such Holder's
possession, of the Prospectus covering such Registrable Securities current at
the time of receipt of such notice. If the Company shall give such notice, the
time periods mentioned in Section 5(c) hereof shall be extended by the number of
days during the period from and including the date of the giving of such notice
pursuant to Section 5(d)(5) to and including the
9
date when the Holders shall have received the copies of the supplemented or
amended prospectus contemplated by Section 5(m) hereof or the Advice.
6. REGISTRATION EXPENSES
Except as otherwise provided herein, all expenses incident to the
Company's performance of or compliance with this Agreement will be borne by the
Company, whether or not a Registration Statement is filed or becomes effective,
including, without limitation, all registration and filing fees, including with
respect to filings required to be made with the National Association of
Securities Dealers, Inc. (the "NASD") fees and expenses of compliance with
securities or blue sky laws (including reasonable fees and disbursements of
counsel for the underwriters, if any, in connection with blue sky qualifications
of the Registrable Securities and determination of their eligibility for
investment under the laws of such jurisdictions as the managing underwriters or
holders of a majority of the Registrable Securities being sold may designate),
printing expenses, messenger, telephone and delivery expenses, and fees and
disbursements of counsel for the Company and of all independent certified public
accountants (including the expenses of any special audit and "cold comfort"
letters required by or incident to such performance), the fees and expenses
incurred in connection with the listing of the securities to be registered on
any securities exchange or authorized to be quoted on NASDAQ, the reasonable
fees and expenses of any special experts retained by the Holders or by the
Company at the request of the managing underwriters in connection with such
registration and fees and expenses of other Persons retained by the Holders
(including, without limitation, any qualified independent underwriter or other
independent appraiser participating pursuant to the Bylaws of the NASD) (all
such expenses being herein called "REGISTRATION EXPENSES"). The Company shall
also pay its internal expenses (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties)
and the expense of any annual audit, which are not "Registration Expenses" for
purposes of this Agreement. In no event shall the Company be liable for the
payment of any discounts or commissions of underwriters, selling brokers, dealer
managers or similar industry professionals relating to the distribution of the
Registrable Securities or any related fees and disbursements of counsel retained
by the Holders (if any). Each Holder shall be liable for the cost and expense of
the time spent by its officers, employees and Agents incurred in connection with
the registration of Registrable Securities owned by it.
7. INDEMNIFICATION
(a) INDEMNIFICATION BY COMPANY. The Company will indemnify and
hold harmless, to the full extent permitted by law, each Holder, its officers
and directors, their Agents and each Person who controls each such Holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses to which any such Person may be subject, under the
Securities Act or otherwise, and reimburse all such Persons for any legal or
other expenses incurred with investigating or defending against any such losses,
claims, damages or liabilities, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in a Registration Statement, Prospectus
or preliminary prospectus or any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as the same arise out of or are based
upon an untrue statement of a
10
material fact or omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, which statement or
omission is made therein in reliance upon and in conformity with information
furnished in writing to the Company by such Holder, expressly for use therein.
The Company will also indemnify underwriters, selling brokers, dealer managers
and similar securities industry professionals participating in the distribution,
their officers and directors and each Person who controls such Persons (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of each Holder of Registrable Securities.
(b) INDEMNIFICATION BY HOLDERS. Each Holder, if Registrable
Securities held by such Holder are included in the securities as to which such
registration qualifications or compliance is being effected, will, severally and
not jointly, indemnify and hold harmless, to the full extent permitted by law,
the Company, its directors and officers and each Person who controls the Company
(within the meaning of the Securities Act) against any losses, claims, damages,
liabilities and expenses to which any such Person may be subject, under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities arise out of or are based upon any untrue or alleged untrue
statement of a material fact contained in a Registration Statement or Prospectus
or preliminary prospectus or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, to the extent, but only if and to the extent, that such untrue or
alleged untrue statement or omission or alleged omission is made therein in
reliance upon and in conformity with the information furnished in writing by
such Holder specifically for inclusion therein. In no event shall the liability
of a Holder hereunder be greater in amount than the dollar amount of the net
proceeds received by such Holder upon the sale of the Registrable Securities
giving rise to such indemnification obligation, unless such liability arises out
of or is based on willful conduct by such Holder. The Company shall be entitled
to receive indemnities from underwriters, selling brokers, dealer managers and
similar securities industry professionals participating in the distribution, to
the same extent as provided above with respect to information so furnished in
writing by such Persons.
(c) CONDUCT OF INDEMNIFICATION PROCEEDINGS. Any Person entitled to
indemnification hereunder will (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) unless, in
such indemnified party's reasonable judgment, a conflict of interest may exist
between such indemnified and indemnifying parties with respect to such claim,
permit such indemnifying party to assume at its own expense the defense of such
claim. The indemnified party shall have the right to participate in the conduct
of such defense by the indemnifying party provided that it will pay for the fees
of its own counsel. Whether or not such defense is assumed by the indemnifying
party, the indemnifying party will not be subject to any liability for any
settlement made without its consent (but such consent will not be unreasonably
withheld). No indemnifying party will consent to entry into any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving of the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such 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 such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party and any
11
other of such indemnified parties with respect to such claim, in which event the
indemnifying party shall be obligated to pay the fees and expenses of such
additional counsel or counsels.
(d) CONTRIBUTION. If the indemnification provided for in Section
7(a) or 7(b) is unavailable or insufficient to hold harmless an indemnified
party, then each indemnifying party in lieu of indemnifying such indemnified
party shall contribute to the amount paid or payable by such indemnified party
as a result of the losses, liabilities, claims or damages referred to in Section
7(a) or 7(b) in such proportion as is appropriate to reflect the relative fault
of the indemnifying party on the one hand and any indemnified party on the other
hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims or damages. The relative fault shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information initially supplied or developed by the
indemnifying party or such indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct such untrue
statement or omission. The amount paid by an indemnified party as a result of
the losses, liabilities, claims or damages referred to in the first sentence of
this Section 7(d) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any action or claim which is the subject of this Section 7(d). No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
8. FUTURE RESTRICTIONS ON GRANTS OF REGISTRATION RIGHTS
The Company shall not grant registration rights to any other Person
without the prior written consent of the Company and the Holders of at least a
majority of the Registrable Securities then outstanding.
9. NOTIFICATION
Each of the Stockholders, on the one hand and AJI, on the other, agrees
that no later than forty-eight (48) hours prior to making any sale, transfer or
other disposition of any Shares owned by any such Stockholder or AJI, such
Stockholder or AJI, as the case may be, shall provide written notice to the
other of such sale, transfer or other disposition; provided, however, that any
Stockholder may elect not to provide such notice in connection with a
distribution of Shares to its limited or general partners, members or other
equity owners, but in the event that such Stockholder elects not to provide such
a notice in connection with such a distribution pursuant to this proviso, the
distribution shall not be effected until each of the distributees has agreed to
be bound by the notice requirements set forth in this Section 9. Once any Shares
are sold, transferred or otherwise disposed of in compliance with the provisions
of this Section 9, the notice requirements set forth in this Section 9 will
terminate as to any further sale, transfer or other disposition of such Shares.
10. MISCELLANEOUS
(a) REMEDIES. AJI, the Stockholders and any of their Affiliates
shall each be entitled to exercise all rights provided herein or granted by law,
including recovery of damages, and each
12
will be entitled to specific performance of their rights under this Agreement.
The Company agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of this
Agreement and hereby agrees to waive the defense in any action for specific
performance that a remedy at law would be adequate.
(b) NO INCONSISTENT AGREEMENTS. The Company will not on or after
the date of this Agreement enter into any agreement with respect to its
securities which is inconsistent with the rights granted to AJI, the
Stockholders and any of their Affiliates in this Agreement or otherwise
conflicts with the provisions hereof.
(c) AMENDMENTS; WAIVERS. Any provision of this Agreement may be
amended and the observance thereof may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities then outstanding; provided, however, that (i) for so long
as AJI holds at least 50% of the Registrable Securities AJI holds as of the date
hereof, no amendment may be effected without AJI's consent and (ii) for so long
as the Stockholders associated with Sierra Ventures hold in the aggregate at
least 50% of the Registrable Securities such Stockholders hold in the aggregate
as of the date hereof, no amendment may be effected without such Stockholders'
consent. Any amendment or waiver effected in accordance with this Section 9(c)
shall be binding on each Holder and the Company. By acceptance of any benefits
under this Agreement, Holders of Registrable Securities hereby agree to be bound
by the provisions hereunder.
(d) NOTICES. Any notice, request, instruction or other document to
be given hereunder shall be in writing and delivered personally or sent by
facsimile or prepaid overnight courier, if to:
the Company:
______________
______________
______________
______________
______________
Facsimile:
If to AJI:
______________
______________
______________
______________
______________
Facsimile:
13
with a copy to:
______________
______________
______________
______________
______________
Facsimile:
If to a Stockholder, to the address opposite their name on Exhibit A hereto. Any
notice or other communication transmitted in accordance with this Section 9(d)
shall for all purposes of this Agreement be treated as given or effective, if
personally delivered, upon receipt, or, if sent by courier, upon the earlier of
receipt or the end of the business day following the date of delivery to such
courier, or, if sent by facsimile, on transmission and confirmation of receipt.
(e) ENTIRE AGREEMENT. This Agreement embodies the entire agreement
between the parties and any and all prior oral or written agreements,
representations or warranties, contracts, understandings, correspondence,
conversations, and memoranda, whether written or oral, between the Company and
AJI or between any agents, representatives, parents, subsidiaries, affiliates,
predecessors in interest or successors in interest, with respect to the subject
matter hereof, are merged herein and replaced hereby.
(f) ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Agreement may be
assigned by a Holder to a transferee or assignee of Registrable Securities that
(a) is a subsidiary, parent, general partner, limited partner, retired partner,
member or retired member, or stockholder of a Holder, (b) is a Holder's family
member or trust for the benefit of an individual Holder, or (c) acquires at
least five hundred thousand (500,000) shares of Registrable Securities (as
adjusted for stock splits and combinations); or (d) is an Affiliate of such
Holder; provided, however, (i) the transferor shall, within ten (10) days after
such transfer, furnish to the Company written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned and (ii) such transferee shall agree to
be subject to all restrictions set forth in this Agreement (such transferee, a
"PERMITTED ASSIGNEE").
(g) GOVERNING LAW. This Agreement shall be construed in accordance
with the laws of the State of Delaware without giving effect to principles of
conflict of laws. The parties consent to the jurisdiction of all state and
federal courts of record situated in the State of Delaware. Service of process
upon either party shall be deemed, in every respect, effective upon such party
if made by prepaid registered or certified mail, return receipt requested, or if
personally delivered against receipt to the address set forth in Section 9(d) or
to such other address as a party may designate in writing to the other.
(h) HEADINGS; DEFINITIONS. The section and other headings
contained in this Agreement are for reference purposes only and shall not in any
way affect the meaning or interpretation of this Agreement. Wherever in this
Agreement words indicating the plural number appear, such words shall be
considered as words indicating the singular number and vice versa where the
context indicates the propriety of such use.
14
(i) COUNTERPARTS. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original, and all such
counterparts shall together constitute but one and the same instrument.
[signature page attached]
15
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
Larscom
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
XXXX XXXXXXX INC.
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
STOCKHOLDER:
__________________________________________
Name of Stockholder
By: ______________________________________
Name: ____________________________________
Title: ___________________________________
S-1
EXHIBIT A
STOCKHOLDERS
