EXHIBIT 4.1
EXTREME NETWORKS
SECOND AMENDED AND RESTATED
RIGHTS AGREEMENT
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THIS RIGHTS AGREEMENT is entered into as of January 12, 1997, by and among
Extreme Networks, a California corporation (the "Company"), the holders of
Series A Preferred Stock of the Company (the "Series A Holders"), the holders of
the Series B Preferred Stock of the Company (the "Series B Holders"), and the
undersigned purchasers of Series C Preferred Stock of the Company (the "Series C
Purchasers," and together with the Series A Holders and Series B Holders, the
"Preferred Holders") and the undersigned holders of Common Stock of the Company
(the "Common Holders").
RECITALS:
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A. The Company, the Common Holders, the Series A Holders, and the Series B
Holders are parties to that certain Amended and Restated Registration Rights
Agreement made and entered into as of May 7, 1997 (the "Restated Rights
Agreement").
B. The Series C Purchasers and the Company have entered into or concurrently
herewith are entering into a Series C Preferred Stock Purchase Agreement (the
"Series C Agreement"), pursuant to which the Series C Purchasers are purchasing
from the Company shares of its Series C Preferred Stock.
C. The obligations of the Company and the Series C Purchasers under the
Series C Agreement are conditioned, among other things, upon the execution and
delivery of this Agreement by the Company and the Series C Purchasers and the
approval of the amendment of the Restated Rights Agreement by the parties
thereto in accordance with the provisions of such agreement.
D. Pursuant to Sections 1.11, 3.9 and 4.1 of the Restated Rights Agreement,
the Restated Rights Agreement may be amended as set forth herein with the
written consent of the Company (as authorized by its Board of Directors), the
Common Holders and a majority of the Series A Holders and Series B Holders,
voting together as a single class.
AGREEMENT:
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NOW, THEREFORE, in consideration of the foregoing and of the mutual promises
and covenants contained herein, the parties agree that, effective as of the
Closing (as defined in the Series C Agreement), the Restated Rights Agreement is
hereby amended and restated to read in its entirety as follows:
1. Registration Rights.
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1.1 Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
(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 declaration or ordering of the effectiveness of such registration
statement.
(b) The term "Registrable Securities" means (i) any and all shares
of Common Stock of the Company issued or issuable upon conversion of the shares
of Series A Preferred Stock, Series B Preferred Stock or Series C Preferred
Stock issued and sold by the Company pursuant to the Series A Preferred Stock
Purchase Agreement, dated May 28, 1996 (which shares of Series A Preferred Stock
are referred to herein as the "Series A Shares") or the Series B Agreement,
dated May 7, 1997 (which shares of Series B Preferred Stock are referred to
herein as "Series B Shares"), or the Series C Agreement (which shares of Series
C Preferred Stock are referred to herein as "Series C Shares"), respectively,
and any and all Common Shares (as defined in Section 3.1(d) below); (ii) stock
issued in lieu thereof in any reorganization which has not been sold to the
public; or (iii) stock issued in respect of the stock referred to in (i) and
(ii) as a result of a stock split, stock dividend, recapitalization or the like,
which has not been sold to the public.
(c) The terms "Holder" or "Holders" means any person or persons to
whom Registrable Securities were originally issued or qualifying transferees
under subsection 1.10 hereof who hold Registrable Securities.
(d) The term "Initiating Holders" means any Holder or Holders of
50% or greater of the aggregate of the Series A Shares, Series B Shares and
Series C Shares then outstanding, voting as a single class.
(e) The term "SEC" means the Securities and Exchange Commission.
(f) The term "Registration Expenses" shall mean all expenses
incurred by the Company in complying with subsections 1.2, 1.3 and 1.4 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company.)
1.2 Demand Registration.
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(a) Request for Registration. In case the Company shall receive
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from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to Registrable Securities
with an anticipated aggregate offering price
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before deduction of standard underwriting discounts and commissions,
in excess of $10,000,000, the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect all
such registrations, qualifications and compliances (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualifications under the applicable blue sky or other state
securities laws and appropriate compliance with exemptive regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Initiating Holder's or Initiating
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder or Holders
joining in such request as are specified in a written request given within
thirty (30) days after receipt of such written notice from the Company; provided
that the Company shall not be obligated to take any action to effect such
registration, qualification or compliance pursuant to this subsection 1.2:
(A) at any time prior to six (6) months following the
effective date of the registration statement under the Securities Act for the
Company's initial registered underwritten public offering (the "IPO") of its
securities to the general public (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 a SEC Rule 145 transaction);
(B) in any particular jurisdiction in which the Company
would be required to execute a general qualification or compliance unless the
Company is already subject to service in such jurisdiction and except as
required by the Securities Act; or
(C) after the Company has effected two (2) such
registrations pursuant to this subsection 1.2(a) and such registrations have
been declared or ordered effective.
Subject to the foregoing clauses (A) through (C), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practical, but in any event within ninety (90) days, after
receipt of the request or requests of the Initiating Holders; provided, however,
that if the Company shall furnish to such holders a certificate signed by the
President of the Company stating that in the good faith judgment of the Board of
Directors it would be detrimental to the Company and its shareholders for such
registration statement to be filed at the date filing would be required and it
is therefore essential to defer the filing of such registration statement, the
Company shall have an additional period of not more than sixty (60) days after
the expiration of the initial sixty (60) day period within which to file such
registration statement.
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(b) Underwriting. If the Initiating Holders intend to distribute
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the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as part of their request made pursuant to
subsection 1.2 and the Company shall include such information in the written
notice referred to in subsection 1.2(a)(i). In such event, the underwriter shall
be selected by a majority in interest of the Initiating Holders and shall be
reasonably acceptable to the Company. The right of any Holder to registration
pursuant to subsection 1.2 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. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters. Notwithstanding any other
provision of this subsection 1.2, if the underwriter advises the Initiating
Holders in writing that marketing factors require a limitation of the number of
shares to be underwritten, the Initiating Holders shall so advise all Holders,
and the number of shares of Registrable Securities that may be included in the
registration and underwriting shall be allocated among all Holders thereof in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders; provided, however, that the number of shares of
Registrable Securities, other than the Common Shares, to be included in such
underwriting shall not be reduced unless all other securities, including the
Common Shares, are first entirely excluded from the underwriting. If any Holder
of Registrable Securities disapproves of the terms of the underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company, the
underwriter and the Initiating Holders. Any Registrable Securities which are
excluded from the underwriting by reason of the underwriter's marketing
limitation or withdrawn from such underwriting shall be withdrawn from such
registration.
(c) Company Shares. If the managing underwriter has not limited
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the number of Registrable Securities to be underwritten, the Company may include
securities for its own account or for the account of others in such registration
if the managing underwriter so agrees and if the number of Registrable
Securities which would otherwise have been included in such registration and
underwriting will not thereby be limited.
1.3 Company Registration.
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(a) Registration. If at any time or from time to time, the
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Company shall determine to register any of its securities, for its own account
or the account of any of its shareholders, other than a registration on Form S-1
or S-8 relating solely to employee stock option or purchase plans, or a
registration on Form S-4 relating solely to an SEC Rule 145 transaction, or a
registration on any other form (other than Form X-0, X-0, X-0 or S-18, or their
successor forms) or any successor to such forms, which does not include
substantially the same information as would be required to be included in a
registration statement covering the sale of Registrable Securities, the Company
will:
(i) promptly give to each Holder written notice thereof and
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(ii) include in such registration (and compliance), and in
any underwriting involved therein, all the Registrable Securities specified in a
written request or requests, made within twenty (20) days after receipt of such
written notice from the Company, by any Holder or Holders, except as set forth
in subsection 1.3(b) below.
(b) Underwriting. If the registration of which the Company gives
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notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to subsection 1.3(a)(i). In such event the right of any Holder to
registration pursuant to subsection 1.3 shall be conditioned upon 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 securities through such underwriting shall
(together with the Company and the other shareholders distributing their
securities through such underwriting) enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any other provision of this
subsection 1.3, if the underwriter determines that marketing factors require a
limitation of the number of shares to be underwritten, and (i) if such
registration is the IPO, the underwriter may limit the number of Registrable
Securities to be included in the registration and underwriting, or may exclude
Registrable Securities entirely from such registration and underwriting, or (ii)
if such registration is other than the IPO, the underwriter may limit the amount
of securities to be included in the registration and underwriting by the
Company's shareholders; provided however, the number of Registrable Securities
to be included in such registration and underwriting under this subsection
1.3(b)(ii) shall not be reduced to less than thirty percent (30%) of the
aggregate securities included in such registration without the prior consent of
at least a majority of the Holders who have requested their shares to be
included in such registration and underwriting. The Company shall so advise all
Holders of Registrable Securities which would otherwise be registered and
underwritten pursuant hereto, and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
first, to the Company; second, among the Preferred Holders requesting
registration in proportion, as nearly as practicable, to the respective amounts
of Registrable Securities held by each of such Preferred Holders as of the date
of the notice pursuant to subsection 1.3(a)(i) above; and third, among the other
Holders on a pro rata basis. If any Holder disapproves of the terms of the any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the underwriter. Any Registrable Securities excluded or withdrawn
from such underwriting shall be withdrawn from such registration.
(c) Registration Rights of Officers, Directors and Employees.
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Upon any sale by the Company of its securities to the public in a firmly
underwritten public offering, the officers, directors and employees of the
Company shall be entitled to include any of their securities of the Company in
any registration by the Company under this subsection 1.3 provided that such
inclusion shall not diminish the number of securities included by the Company or
the number of Registrable Securities which may be included by the Holders as set
forth in subsection 1.3(b) above in the event that the underwriters determine
that marketing factors require a limitation on the number of shares included in
the registration and underwriting.
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1.4 Form S-3. In addition to the rights and obligations set forth
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in subsection 1.2 above, if Initiating Holders request that the Company file a
registration statement on Form S-3 (or any successor to Form S-3) for a public
offering of shares of Registrable Securities, the reasonably anticipated
aggregate price to the public of which (net of underwriting discounts and
commissions) would exceed $1,000,000 and the Company is then a registrant
entitled to use Form S-3 to register the shares for such an offering, the
Company shall use its best efforts to cause such shares to be registered for the
offering as soon as practicable on Form S-3 (or any successor form to Form S-3);
provided, however the Company shall not be required to effect a registration
pursuant to this subsection 1.4:
(a) in any particular jurisdiction in which the Company would be
required to execute a general consent to service of process in effecting such
registration, qualification or compliance unless the Company is already subject
to service in such jurisdiction and except as may be required by the Securities
Act;
(b) if the Company, within ten (10) days of the receipt of the
request of the Initiating Holders, gives notice of its bona fide intention to
effect the filing of a registration statement with the SEC within forty-five
(45) days of receipt of such request (other than with respect to a registration
statement relating to a Rule 145 transaction, an offering solely to employees or
any other registration which is not appropriate for the registration of
Registrable Securities);
(c) during a period of one hundred eighty (180) days following the
effective date of a registration statement;
(d) if the Company has effected 1 registration pursuant to this
subsection 1.4 within a twelve (12) month period from the date of such request;
or
(e) if the Company shall furnish to such Initiating Holders 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 detrimental
to the Company and its shareholders for such registration statement to be filed
on or before the date filing would be required and it is therefore essential to
defer the filing of such registration statement, in which case the Company shall
have the right to defer such filing for a period of not more than ninety (90)
days after the furnishing of such a certificate of deferral, provided that the
Company may not defer such filing pursuant to this subsection 1.4 more than once
in any twelve (12) month period.
In the event such Initiating Holders propose to offer the shares of
Registrable Securities pursuant to this subsection 1.4 by means of an
underwriting, the proposed underwriter(s) shall be selected by a majority in
interest of the Initiating Holders and shall be reasonably acceptable to the
Company, provided, however, that in the event such underwriter(s) is (are) not
reasonably acceptable to the Company, the Company shall be required to furnish
to the Holders, within twenty (20) days of the receipt of the request for
registration from Initiating Holders pursuant to this subsection 1.4, the names
of at least 2 underwriters acceptable to the Company, who agree to act as
underwriter for the proposed offering on terms no less favorable to the Holders
than those
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terms proposed in writing by the underwriter(s) selected by the Initiating
Holders. The Company shall give written notice to all Holders of the receipt of
a request for registration pursuant to this subsection 1.4 and shall provide a
reasonable opportunity for other Holders to participate in the registration,
provided that if the registration is for an underwritten offering, the terms of
subsection 1.2(b) shall apply to all participants in such offering.
1.5 Expenses of Registration. All Registration Expenses incurred
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in connection with any registration, qualification or compliance pursuant to
this Section 1 shall be borne by the Company except as follows:
(a) The Company shall not be required to pay for expenses of any
registration proceeding begun pursuant to subsection 1.2, the request for which
has been subsequently withdrawn by the Initiating Holders, in which latter such
case, such expenses shall be borne pro rata by the Holders requesting such
withdrawal.
(b) The Company shall not be required to pay fees or disbursements
of legal counsel of a Holder unless all the Holders specify one special counsel.
(c) The Company shall not be required to pay underwriters' fees,
discounts or commissions relating to Registrable Securities.
1.6 Registration Procedures. In the case of each registration,
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qualification or compliance effected by the Company pursuant to this Rights
Agreement, the Company will keep each Holder participating therein advised in
writing as to the initiation of each registration, qualification and compliance
and as to the completion thereof. Except as otherwise provided in subsection
1.5, at its expense the Company will:
(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 the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for up to one hundred twenty (120) days.
(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 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
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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 or 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.
1.7 Indemnification.
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(a) The Company will indemnify each Holder of Registrable
Securities and each of its officers, directors and partners, and each person
controlling such Holder, with respect to which such registration, qualification
or compliance has been effected pursuant to this Rights Agreement, and each
underwriter, if any, and each person who controls any underwriter of the
Registrable Securities held by or issuable to such Holder, against all claims,
losses, expenses, damages and liabilities (or actions in respect thereto)
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any prospectus, offering circular or other document
(including any related registration statement, notification or the like)
incident to any such registration, qualification or compliance, or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statement therein not misleading, or any
violation or alleged violation by the Company of the Securities Act, the
Securities Exchange Act of 1934, as amended, ("Exchange Act") or any state
securities law applicable to the Company or any rule or regulation promulgated
under the Securities Act, the Exchange Act or any such state law and relating to
action or inaction required of the Company in connection with any such
registration, qualification of compliance, and will reimburse each such Holder,
each of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
within a reasonable amount of time after incurred for any reasonable legal and
any other expenses incurred in connection with investigating, defending or
settling any such claim, loss, damage, liability or action; provided, however,
that the indemnity agreement contained in this subsection 1.7(a) shall not apply
to amounts paid in settlement of any such claim, loss, damage, liability, or
action if such settlement is effected without the consent of the Company (which
consent shall not be unreasonably withheld); and provided further, that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage or liability arises out of or is based on any untrue statement or
omission based upon written information furnished to the Company by an
instrument duly executed by such Holder or underwriter specifically for use
therein.
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(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company within the meaning of the Securities Act, and each other
such Holder, each of its officers, directors and partners and each person
controlling such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any such registration statement, prospectus, offering circular or other
document, 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, and will reimburse the Company, such Holders, such directors,
officers, partners, persons or underwriters for any reasonable legal or any
other expenses incurred in connection with investigating, defending or settling
any such claim, loss, damage, liability or action, in each case to the extent,
but only to the extent, that such untrue statement (or alleged untrue statement)
or omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by the Holder in an
instrument duly executed by such Holder specifically for use therein; provided,
however, that the indemnity agreement contained in this subsection 1.7(b) shall
not apply to amounts paid in settlement of any such claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Holder, (which consent shall not be unreasonably withheld); and provided
further, that the total amount for which any Holder shall be liable under this
subsection 1.7(b) shall not in any event exceed the aggregate proceeds received
by such Holder from the sale of Registrable Securities held by such Holder in
such registration.
(c) Each party entitled to indemnification under this subsection
1.7 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not be unreasonably
withheld), and the Indemnified Party may participate in such defense at such
party's expense; and provided further, that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations hereunder, unless such failure resulted in prejudice to the
Indemnifying Party; and provided further, that an Indemnified Party (together
with all other Indemnified Parties which may be represented without conflict by
one counsel) shall have the right to retain one separate counsel, with the fees
and expenses to be paid by the Indemnifying Party, if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between such
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which
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does not include as an unconditional term thereof the giving by the claimant or
plaintiff to such Indemnified Party of a release from all liability in respect
to such claim or litigation.
(d) If the indemnification provided for in this Section 1.7 is
held by a court of competent jurisdiction to be unavailable to an Indemnified
Party with respect to any losses, claims, damages or liabilities referred to
herein, the Indemnifying Party, in lieu of indemnifying such Indemnified Party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the Indemnifying Party on the one hand and of the Indemnified
Party on the other in connection with the violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
Indemnifying Party or by the Indemnified Party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the proceeds from the offering by such Holder.
(e) The obligations of the Company and Holders under this Section
1.7 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this Agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
1.8 Information by Holder. Any Holder or Holders of Registrable
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Securities included in any registration shall promptly furnish to the Company
such information regarding such Holder or Holders and the distribution proposed
by such Holder or Holders as the Company may request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to herein.
1.9 Rule 144 Reporting. With a view to making available to Holders
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the benefits of certain rules and regulations of the SEC which may permit the
sale of the Registrable Securities to the public without registration, the
Company agrees at all times to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, after ninety (90) days after the
effective date of the first registration filed by the Company for an offering of
its securities to the general public;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements) ; and
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(c) so long as a Holder owns any Registrable Securities, to
furnish to such Holder forthwith upon request a written statement by the Company
as to its compliance with the reporting requirements of said Rule 144 (at any
time after ninety (90) days after the effective date of the first registration
statement filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after it
has become subject to such reporting requirements), a copy of the most recent
annual or quarterly report of the Company, and such other reports and documents
so filed by the Company as the Holder may reasonably request in complying with
any rule or regulation of the SEC allowing the Holder to sell any such
securities without registration.
1.10 Transfer of Registration Rights. Holders' rights to cause the
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Company to register their securities and keep information available, granted to
them by the Company under subsections 1.2, 1.3, 1.4 and 1.9, may be assigned to
a transferee or assignee of at least 75,000 shares (as adjusted for stock
splits, stock dividends, recapitalization and like events) of a Holder's
Registrable Securities not sold to the public, provided, that the Company is
given written notice by such Holder at the time of or within a reasonable time
after said transfer, stating the name and address of said transferee or assignee
and identifying the securities with respect to which such registration rights
are being assigned. The Company may prohibit the transfer of any Holders'
rights under this subsection 1.10 to any proposed transferee or assignee who the
Company reasonably believes is a competitor of the Company. Notwithstanding
anything else in this subsection 1.10, any Holder may transfer rights to a
transferee of fewer than 75,000 shares (as adjusted for stock splits, stock
dividends, recapitalizations and like events) of a Holder's Registrable
Securities if such transferee is a partner or a retired partner of such Holder.
1.11 Limitations on Subsequent Registration Rights. From and after
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the date hereof, the Company shall not, without the prior written consent (which
consent will not be unreasonably withheld) of not less than a majority of the
Registrable Securities held by all of the Preferred Holders then outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder to demand any
registration or include such securities in any registration filed under
subsections 1.2, 1.3 or 1.4 hereof if such inclusion would adversely affect the
rights of any Holder (or any qualifying transferee under subsection 1.10) under
such subsections.
1.12 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
----------------------------
during the period of duration (not to exceed one hundred eighty (180) days)
specified by the Company and an underwriter of common stock or other securities
of the Company following the effective date of a registration statement of the
Company filed under the Securities Act, it shall not, to the extent requested by
the Company and such underwriter, directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase, pledge 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 such period except common stock included in such
registration; provided, however, that:
11
(a) such agreement shall be applicable only to the first such
registration statement of the Company which covers common stock (or other
securities) to be sold on its behalf to the public in an underwritten offering;
and
(b) such agreement shall not be required unless all officers and
directors and employees of the Company and all other persons with registration
rights (whether or not pursuant to this Agreement) or purchasing common stock of
the Company enter into similar agreements.
In order to enforce the foregoing covenant, the Company may impose stop-
transfer instructions with respect to the Registrable Securities of each Holder
(and the shares of securities of every other person subject to the foregoing
restriction) until the end of such period.
1.13 Termination of Registration Rights. The obligations of the Company
----------------------------------
pursuant to this Section 1 ("Registration Rights") shall terminate with respect
to any Holder on the earlier of (i) ten (10) years after the IPO (as defined in
subsection 1.2 above), or (ii) the date on which the Holder can sell any
Registrable Securities under Rule 144K or sell all of his/her remaining
Registrable Securities under Rule 144 during any three (3) month period.
2. Affirmative Covenants of the Company. The Company hereby covenants and
------------------------------------
agrees as follows:
2.1 Annual Financial Information. The Company shall deliver to each
----------------------------
Preferred Holder, so long as such Preferred Holder (each a "Qualified Preferred
Holder") holds at least 750,000 Series A Shares, Series B Shares, Series C
Shares or shares of Common Stock issued or issuable upon conversion of such
Series A Shares, Series B Shares or Series C Shares (as adjusted for stock
dividends, stock splits, recapitalizations and the like) ("Qualifying Shares")
within ninety (90) days after the end of each fiscal year of the Company,
income, shareholders' equity and cash flow statements of the Company for such
year, and a balance sheet of the Company as of the end of such year, such year-
end financial reports to be in reasonable detail, prepared in accordance with
generally accepted accounting principles ("GAAP"), and audited by independent
public accountants of national standing selected by the Company's Board of
Directors.
2.2 Quarterly Financial Information. The Company shall deliver to each
-------------------------------
Qualified Preferred Holder within forty-five (45) days after the end of each of
the first three (3) quarters of each fiscal year of the Company, unaudited
balance sheets of the Company as of the end of each such quarter, and
consolidated statements of income and cash flows of the Company for each such
quarter, all prepared in accordance with GAAP.
2.3 Monthly Financial Information. The Company shall deliver to each
-----------------------------
Qualified Preferred Holder within twenty (20) days after the monthly accounting
period of the Company an unaudited monthly report including a balance sheet,
income statement, cash flow analysis, and comparison to previous year's and
projected results.
12
2.4 Budgets; Additional Information. The Company will provide each
-------------------------------
Qualified Preferred Holder with the Company's annual (and, as applicable,
quarterly) budget as approved by the Company's Board of Directors and within
thirty (30) days after the end of each fiscal quarter, a report on financial and
operational highlights for such quarter.
2.5 Termination of Information Covenants and Confidentiality of
-----------------------------------------------------------
Information. The covenants of the Company set forth in subsections 2.1, 2.2
-----------
and 2.3 shall terminate as to all Qualified Preferred Holders and be of no
further force or effect (i) upon the consummation by the Company of the IPO (as
defined in subsection 1.2 above), or (ii) when the Company first becomes subject
to the periodic reporting requirements of Section 12(g) or 15(d) of the
Exchange, whichever event shall first occur. Notwithstanding this Section 2, the
Company reserves the right to withhold from 3Com Corporation ("3Com") any
information provided to Qualified Preferred Holders pursuant to this Section 2
which the Company deems to be confidential; provided, however, that the
Company's annual and monthly income, shareholders' equity and cash flow
statements and balance sheets shall not be withheld from 3Com, except to the
extent that notes thereto contain confidential information, in which case each
such note may be withheld from 3Com. Each Qualified Preferred Holder agrees that
it will keep confidential and will not disclose or divulge any confidential,
proprietary or secret information which such Qualified Preferred Holder may
obtain from the Company, and which the Company has prominently marked
"confidential", "proprietary" or "secret" or has otherwise identified as being
such, pursuant to financial statements, reports and other materials submitted by
the Company as required hereunder, unless such information is or becomes known
to the Qualified Preferred Holder from a source other than the Company without
violation of any rights of the Company, or is or becomes publicly known, or
unless the Company gives its written consent to the Qualified Preferred Holder's
release of such information, except that no such written consent shall be
required (and the Qualified Preferred Holder shall be free to release such
information to such recipient) if such information is to be provided to a
Qualified Preferred Holder's counsel or accountant (and the provision of such
information is directly necessary in order for such recipient to provide
services to Qualified Preferred Holder), or to an officer, director or partner
of a Qualified Preferred Holder, provided that the Qualified Preferred Holder
shall inform the recipient of the confidential nature of such information, and
such recipient agrees in writing in advance of disclosure to treat the
information as confidential.
2.6 Assignment of Rights of Information. The rights granted pursuant to
-----------------------------------
subsections 2.1, 2.2, 2.3 and 2.4 may be assigned by each Qualified Preferred
Holder upon sale or transfer by such Qualified Preferred Holder of at least that
number and type of shares that would constitute Qualifying Shares.
Notwithstanding anything else in this subsection 2.6, rights may not be assigned
to a transferee which the Company reasonably believes is a competitor or intends
to become a competitor of the Company and provided further that any transferee
shall agree to become subject to the obligations of the transferring party
hereunder.
2.7 Right of First Refusal on New Issuances.
---------------------------------------
(a) If, at any time prior to the termination of this right of
first refusal pursuant to subsection 2.6(f), the Company should desire to issue
in a transaction not registered
13
under the Securities Act in reliance upon a claimed exemption thereunder, any
Equity Securities (as hereinafter defined), it shall give each Series B Holder
that holds at least 375,000 Series B Shares or shares of Common Stock issued or
issuable upon conversion of such Series B Shares (as adjusted for stock
dividends, stock splits recapitalizations and the like), each Series C Holder
that holds at least 375,000 Series C Shares or shares of Common Stock issued or
issuable upon conversion of such Series C Shares (as adjusted for stock
dividends, stock splits recapitalizations and the like), and each Series A
Holder (each a "Qualified Participant") the first right to purchase such
Qualified Participant's pro rata share (or any part thereof) of all such
privately offered Equity Securities on the same terms as the Company is willing
to sell such Equity Securities to any other person. Each Qualified Participant's
pro rata share of the Equity Securities shall be equal to that percentage of the
outstanding Common Stock of the Company held by such Qualified Participant on
the date hereof. For purposes of this subsection 2.7, the outstanding Common
Stock of the Company shall include (i) outstanding shares of Common Stock, and
(ii) shares of Common Stock issued or issuable upon conversion of any then
outstanding Preferred Stock of the Company.
(b) Prior to any sale or issuance by the Company of any Equity
Securities, the Company shall notify each Qualified Participant in writing of
its intention to sell and issue such securities, setting forth the terms under
which it proposes to make such sale. Within thirty (30) days after receipt of
such notice, each Qualified Participant shall notify the Company whether such
Qualified Participant desires to exercise the option to purchase such Qualified
Participant's pro rata share (or any part thereof) of the Equity Securities so
offered. If a Qualified Participant elects to purchase such Qualified
Participant's pro rata share, then such Qualified Participant shall have a right
of over-allotment such that if any other Qualified Participant fails to purchase
such Qualified Participant's pro rata share of the Equity Securities, such
Qualified Participant(s) who have elected to purchase their pro rata shares may
purchase, on a pro rata basis, that portion of the Equity Securities which such
other Qualified Participants elected not to purchase.
(c) After termination of the thirty (30) day period specified in
subsection 2.7(b) above, the Company may, during a period of sixty (60) days
following the end of such thirty (30) day period, sell and issue such Equity
Securities as to which the Qualified Participants do not indicate a desire to
purchase to another person as well as those additional shares of Equity
Securities it originally intended to issue to other persons, upon the same terms
and conditions as those set forth in the notice to the Qualified Participants.
In the event the Company has not sold the Equity Securities, or has not entered
into an agreement to sell the Equity Securities, within said sixty (60) day
period, the Company shall not thereafter issue or sell any Equity Securities
without first offering such securities to the Qualified Participants in the
manner provided above.
(d) If a Qualified Participant gives the Company notice that such
Qualified Participant desires to purchase any of the Equity Securities offered
by the Company, payment for the Equity Securities shall be by check, or wire
transfer, against delivery of the Equity Securities at the executive offices of
the Company within ten (10) days after giving the Company such notice, or, if
later, the closing date for the sale of such Equity Securities. The
14
Company shall take all such action as may be required by any regulatory
authority in connection with the exercise by a Qualified Participant of the
right to purchase Equity Securities as set forth in this subsection 2.7.
(e) The right of first refusal contained in this Section 2 shall
not apply to the issuance by the Company of Equity Securities (i) of up to
1,285,691 shares of Common Stock reserved for issuance to employees,
consultants, directors or officers of the Company pursuant to stock grant, stock
purchase and/or stock option plans or any other stock incentive program,
agreement or arrangement approved by the Board of Directors, (ii) of up to
7,514,309 shares of Common Stock reserved for the exercise of outstanding
options to purchase Common Stock issued pursuant to stock option plans, (iii) as
part of an acquisition by the Company of all or substantially all of the assets
or shares of another company or entity whether through a merger, exchange,
reorganization or the like, (vi) pursuant to equipment financing or leasing
arrangements or in connection with strategic partnering transactions approved by
the Company's Board of Directors, (v) issued upon conversion of the Series A
Shares, Series B Shares or Series C Shares (vi) issued in connection with any
stock split, stock dividend, recapitalization or similar event or (vii) issued
in connection with the IPO (as defined in subsection 1.2 above).
(f) The right of first refusal contained in this subsection 2.7
shall terminate upon the closing of the IPO (as defined in subsection 1.2
above).
(g) The term "Equity Securities" shall mean (i) Common Stock,
rights, options or warrants to purchase Common Stock; (ii) any security other
than Common Stock having voting rights in the election of the Board of
Directors, not contingent upon a failure to pay dividends; (iii) any security
convertible into or exchangeable for any of the foregoing except that Equity
Securities shall not include the Series A Shares, Series B Shares or Series C
Shares issued as of the date hereof; and (iv) any agreement or commitment to
issue any of the foregoing.
(h) A Qualified Participant's right to purchase any Equity
Securities pursuant to this subsection 2.7 may be assigned by a Qualified
Participant to an affiliate of a Qualified Participant. For the purposes of this
subsection 2.7, an "affiliate" shall mean any partner or shareholder of a
Qualified Participant or any person or entity that directly or indirectly
through one or more intermediaries controls or is controlled by or is under
common control with a Qualified Participant.
2.8 3Com's and Compaq's Right to Notification. In the event that,
-----------------------------------------
after the date hereof, the Board of Directors determines to offer a majority
controlling interest in the Company and/or its subsidiaries, if any, taken as a
whole ("Controlling Interest") for sale, or the Board of Directors receives a
serious indication of interest from a third party to purchase a Controlling
Interest, the Company agrees that it shall immediately notify each of 3Com and
Compaq of such intention or indication of interest; provided, however, that the
Company shall not be obligated to disclose to 3Com or Compaq the identity of any
third party which indicates its interest or the terms thereof.
15
3. Agreements Between Preferred Holders and Common Holders.
-------------------------------------------------------
3.1 Right of First Refusal on Sales by Common Holders. Before any
-------------------------------------------------
Common Shares (as defined in Section 3.1(d) below) registered in the name of any
Common Holder may be sold or transferred, such shares shall first be offered to
the Company, which will have the right to purchase all or any part of such
shares proposed to be transferred and subsequently to the Preferred Holders, who
will have the right to purchase up to his/her pro rata portion of the Common
Shares offered by the Common Holder and not purchased by the Company, if any,
(each such right shall hereinafter be referred to as a "Right of First
Refusal"):
(a) Transfer Notice. The Common Holder or his or her legal
---------------
representative shall first give written notice (the "Transfer Notice") of any
proposed transfer to the Company and the Preferred Holders. The Transfer Notice
shall name the proposed transferee, state the number of Common Shares to be
transferred, the price per share and all other terms of the offer. The Transfer
Notice shall be signed by the Common Holder or his or her representative and the
prospective transferee and must constitute a binding agreement for the transfer
of the Common Shares subject only to the Right of First Refusal.
(b) Bona Fide Determination. Within 15 days of delivery of the
-----------------------
Transfer Notice, the Company's Board of Directors shall determine the bona fide
nature of the proposed transfer and give the Common Holder written notice of its
determination. If the proposed transfer is deemed to be bona fide, the remaining
subsections of this section shall apply to the sale. If the proposed transfer is
deemed not to be bona fide, the Common Holder will be responsible for providing
additional information to the Board to show the bona fide nature of the proposed
transfer and no Common Shares will be transferred on the books of the Company
until the Board has approved the proposed transfer as bona fide.
(c) Failure to Exercise; Exercise. The Company's and the
-----------------------------
Preferred Holders' Rights of First Refusal with respect to each other are as
follows:
(i) If the Company elects not to exercise in full the Right
of First Refusal within 15 days from the later of the date the Transfer Notice
is delivered to the Company or the date the transfer is determined to be bona
fide (if the Common Holder is required to provide additional information as
provided in Section 3(b)), each Preferred Holder shall have the right to
exercise his/her Right of First Refusal to purchase up to his/her pro rata
portion of Common Shares offered by the Common Holder and not purchased by the
Company, if any. For the purposes of this subsection 3.1, the "pro rata portion"
which each Preferred Holder shall be entitled to purchase shall be an amount of
Common Shares equal to a fraction of the total amount of Common Shares proposed
to be sold to such third party. The numerator of such fraction shall be the
number of Equity Securities (assuming the conversion of all such securities to
Common Stock) owned by the respective Preferred Holder and the denominator shall
be the total number of Equity Securities (assuming the conversion of all such
securities to Common Stock) owned by all Preferred Holders electing to exercise
such right of first refusal.
16
(ii) The Company shall have 15 days from the later of the date
the Transfer Notice is delivered to the Company or the date the transfer is
determined to be bona fide (if the Common Holder is required to provide
additional information as provided in Section 3(b)), to deliver to the Common
Holder and the Preferred Holders written notice indicating the number of Common
Shares it intends to purchase, if any. If the Company fails to provide written
notice during such period, its Right of First Refusal shall lapse as to such
proposed transfer. If the Company elects not to exercise its Right of First
Refusal in part or in full or such right lapses, each Preferred Holder shall
have 10 days from the date of such election or lapse, as applicable, to deliver
to the Company and the Common Holder written notice indicating the number of
Common Shares he/she intends to purchase pursuant to his/her Right of First
Refusal. If any Preferred Holder fails to provide written notice during such
period, his/her Right of First Refusal shall lapse as to such proposed transfer.
(iii) If the Preferred Holders elect not to exercise in full
or in part their Rights of First Refusal within 10 days from the earlier of the
date the Company provides the Preferred Holders with written notice of its
intent to exercise or not to exercise or the date on which the Company's Right
of First Refusal lapses, the Common Holder may, at any time after 30 days from
the later of the date of delivery of the Transfer Notice to the Company and the
Preferred Holders or the date the transfer is determined to be bona fide (if the
Common Holder is required to provide additional information as provided in
Section 3(b)), conclude a transfer of the Common Shares subject to the Transfer
Notice which have not been purchased by the Company and/or Preferred Holders
pursuant to the exercise of their Rights of First Refusal on the terms and
conditions described in the Transfer Notice.
(vi) Any proposed transfer on terms and conditions different
from those described in the Transfer Notice, as well as any subsequent proposed
transfer by the Common Holder, shall again be subject to the Rights of First
Refusal and shall require compliance by the Common Holder with the procedure
described in this Section 3.1.
(v) Within 15 days from the date on which the Company or any
of the Preferred Holders elects to exercise its Rights of First Refusal, the
applicable Company or Preferred Holder (s) and the Common Holder shall
consummate the sale of Common Shares on the terms set forth in the Transfer
Notice; provided, however, in the event the Transfer Notice provides for the
payment for the Common Shares other than in cash, the Company and/or the
Preferred Holders shall have the option of paying for the Common Shares by the
discounted cash equivalent of the consideration described in the Transfer Notice
as reasonably determined by the Company or the Preferred Holders in the event
that the Company does not exercise its Right of First Refusal.
(d) Definition. The term "Common Shares" shall mean all shares
----------
of Common Stock of the Company owned or subsequently acquired by Common Holder
and all shares of Common Stock issuable upon exercise or conversion of any
exercisable or convertible securities held or subsequently acquired by Common
Holder.
3.2 Right of Co-Sale.
----------------
17
(a) The Right. If at any time one or more of the Common Holders
---------
propose to sell or otherwise transfer any Common Shares to parties (other than
the Company or the Preferred Holders pursuant to their Rights of First Refusal
described in Section 3.1 above) in a transaction (the "Transaction") not
registered under the Securities Act then any Preferred Holder (a "Selling
Preferred Holder " for purposes of this subsection 3.2) which notifies such
Common Holder in writing within 15 days after receipt of the notification from
such Common Holder referred to in subsection 3.2(b), shall have the opportunity
to sell up to a pro rata portion of the Common Shares which the Common Holder
proposes to sell to such third party in the Transaction. In such instance, the
Common Holder shall assign so much of his interest in the proposed agreement of
sale as the Selling Preferred Holder shall be entitled to and shall request
hereunder, and the Selling Preferred Holder shall assume such part of the
obligations of the Common Holder under such agreement as shall relate to the
sale of the securities by the Selling Preferred Holder. For the purposes of this
subsection 3.2, the "pro rata portion" which the Selling Preferred Holder shall
be entitled to sell shall be an amount of Common Shares equal to a fraction of
the total amount of Common Shares proposed to be sold to such third party. The
numerator of such fraction shall be the number of Equity Securities (assuming
the conversion of all such securities to Common Stock) owned by a Selling
Preferred Holder and the denominator shall be the total number of Equity
Securities (assuming the conversion of all such securities to Common Stock)
owned by all participating Selling Preferred Holders and the Common Holder
proposing to sell shares in the Transaction. Each Selling Preferred Holder shall
notify the Common Holder whether it elects to sell an amount equal to or less
than its pro rata share of the Common Shares so offered. Each Selling Preferred
Holder shall be entitled to apportion Common Shares to be sold among its
partners and affiliates (as defined in subsection 2.6(h) above), provided that
such Selling Preferred Holder notifies the Common Holder of such allocation, and
provided that such allocation does not threaten the Company's reliance on any
exemption from the registration provisions of the Securities Act or the
applicable qualifications provisions.
(b) Failure to Notify. If within 15 days after the Common Holder
-----------------
gives his aforesaid notice to the Preferred Holders, the Preferred Holders do
not notify the Common Holder that they desire to sell all of their pro rata
portions of the Common Shares described in such notice for the price and on the
terms and conditions set forth therein, then the Common Holder may sell during
the period set forth in subsection 3.2(c) such Common Shares as to which the
Preferred Holders do not elect to sell. Any such sale shall be made only to
persons identified in the Common Holder's notice and at the same price and upon
the same terms and conditions as those set forth in the notice. In the event the
Common Holder has not sold the Common Shares or entered into an agreement to
sell the Common Shares within the period set forth in Section 3.2(c), the Common
Holder shall not thereafter sell any Common Shares without first notifying the
Preferred Holders in the manner provided above.
(c) Notice. Prior to any sale by a Common Holder of any Common
------
Shares, the Common Holder shall notify each Preferred Holder, in writing, of his
intention to sell and issue such securities (the "Offered Securities"), setting
forth in reasonable detail the general terms under which he proposed to make
such sale including the number of Common Shares to be
18
sold or transferred, the nature of the sale or transfer, the consideration to be
paid and the identity of the Preferred Holder. Within 15 days after receipt of
such notice, any Preferred Holder which desires to exercise its rights under
this subsection 3.2 shall notify the Common Holder that it desires to sell its
pro rata share of the Offered Securities. Each Preferred Holder shall be
entitled to apportion Offered Securities to be sold among its partners and
affiliates (as defined in subsection 2.6(h) above), provided that such Preferred
Holder notifies the Common Holder of such allocation.
3.3 Limitations to Rights of First Refusal and Rights of Co-Sale.
------------------------------------------------------------
Without regard and not subject to the provisions of subsection 3.1 and 3.2;
(a) A Common Holder may sell or otherwise assign, without
consideration, Common Shares to any or all of his ancestors, descendants,
spouse, or members of his immediate family, or to a custodian, trustee
(including a trustee of a voting trust), executor, or other fiduciary for the
account of his ancestors, descendants, spouse, or members of his immediate
family without compliance with this Section 3, provided that each such
transferee or assignee, prior to the completion of the sale, transfer, or
assignment, shall have executed documents assuming the obligations of such
Common Holder under this Agreement with respect to the transferred securities;
(b) A Common Holder may sell, transfer or pledge up to five percent
(5%), in the aggregate, of the Common Stock of the Company held by such Common
Holder as of the date hereof without compliance with this Section 3.
(c) A Common Holder may sell the Common Stock of the Company held
by such Common Holder in connection with the IPO without compliance with this
Section 3.
3.4 Condition to Transfer. All transferees of Common Shares or any
---------------------
interest therein other than the Company shall be required as a condition of such
transfer to agree in writing (in a form satisfactory to the Company) that they
will receive and hold such shares of Common Shares or interests subject to the
provisions of the Founder Stock Purchase Agreement, including the "Market Stand-
Off" Agreement.
3.5 Legends. All instruments evidencing Common Shares held by the
-------
Common Holders shall be legended, describing the obligations of the Common
Holders under this Section 3.
3.6 Adjustments. For purposes of this Section 3, the stock of the
-----------
Company shall be arithmetically adjusted for stock dividends, stock splits,
recapitalizations and the like.
3.7 Termination. The obligations of the Common Holders under this
-----------
Section 3 shall terminate and be of no further force and effect upon the closing
of the registration statement relating to the IPO (as defined in subsection 1.2
above).
19
3.8 Assignment. Upon written notice to the Common Holders, the rights
----------
granted pursuant to this Section 3 may be assigned by a Preferred Holder or its
transferees upon a sale or transfer (other than a sale thereof to the public) of
Preferred Shares and/or Common Shares held by such Preferred Holder or
transferee; provided that any transferee of a Preferred Holder shall agree to
become subject to the obligations of the Preferred Holders hereunder.
3.9 Amendment. The rights and obligations of the Common Holders under
---------
this Section 3 may only be amended (either generally or in a particular
instance) by a statement in writing signed by each Common Holder whose rights
and obligations are to be amended.
3.10 No Waiver. The exercise or non-exercise of the rights of a
---------
Preferred Holder hereunder to participate in one or more sales of Common Shares
made by a Common Holder shall not adversely affect their rights to participate
in subsequent sales of Common Shares subject to Section 3.
4. General.
-------
4.1 Waivers and Amendments. Subject to subsection 3.9, with the
----------------------
written consent of the record or beneficial holders of at least a majority of
the Registrable Securities other than the Common Shares, the obligations of the
Company and the rights of the parties under this agreement may be waived (either
generally or in a particular instance, either retroactively or prospectively,
and either for a specified period of time or indefinitely), and with the same
consent the Company, when authorized by resolution of its Board of Directors,
may enter into a supplementary agreement for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Agreement; provided, however, that no such modification, amendment or
waiver shall reduce the aforesaid percentage of Registrable Securities without
the consent of all of the Holders of the Registrable Securities and provided,
further, however, that no such modification, amendment or waiver shall be
binding as to a holder who did not consent thereto, unless such modification,
amendment or waiver applies equally to all Registrable Securities. Upon the
effectuation of each such waiver, consent, agreement of amendment or
modification, the Company shall promptly give written notice thereof to the
record holders of the Registrable Securities who have not previously consented
thereto in writing. This Agreement or any provision hereof may be changed,
waived, discharged or terminated only by a statement in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought, except to the extent provided in this subsection 4.1.
4.2 Governing Law. This Agreement shall be governed in all
-------------
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and to be performed
entirely within California.
4.3 Successors and Assigns. Except as otherwise expressly provided
----------------------
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors and administrators of the
parties hereto.
20
4.4 Entire Agreement. Except as set forth below, this Agreement
----------------
and the other documents delivered pursuant hereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and thereof, and this Agreement shall supersede and cancel all prior
agreements between the parties hereto with regard to the subject matter hereof.
4.5 Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be delivered by overnight
courier service of mailed by first class mail, postage prepaid, certified or
registered mail, return receipt requested, addressed (a) if to any Preferred
Holder, at such party's address as set forth in the Company's records, or at
such other address as such party shall have furnished to the Company in writing,
or (b) if to the Company, at 00000 Xxxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxxxx 00000,
or at such other address as the Company shall have furnished to the Purchaser in
writing.
4.6 Severability. In case any provision of this Agreement shall be
------------
invalid, illegal, or unenforceable, the validity, legality and enforceability of
the remaining provisions of this Agreement or any provision of the other
Agreement s shall not in any way be affected or impaired thereby.
4.7 Titles and Subtitles. The titles of the sections and
--------------------
subsections of this Agreement are for convenience of reference only and are not
to be considered in construing this Agreement.
4.8 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
21
IN WITNESS WHEREOF, the parties hereby have executed this Agreement on the
date first above written.
"COMPANY"
EXTREME NETWORKS, a California
corporation
/s/ Xxxxxx Xxxxx
--------------------------------
Xxxxxx Xxxxx, President
"COMMON HOLDERS"
/s/ Xxxxxx Xxxxx
---------------------------------
Xxxxxx Xxxxx
/s/ Xxxxxxx Xxxxxxx
----------------------------------
Xxxxxxx Xxxxxxx
/s/ Xxxx Xxxxxxxxx
-----------------------------------
Xxxx Xxxxxxxxx
22
SERIES A AND SERIES B PURCHASERS' COUNTERPART SIGNATURE PAGE
EXTREME NETWORKS AMENDED AND RESTATED RIGHTS AGREEMENT
If the signatory is an individual, please
sign and print your name to the right. -----------------------------------
(Printed Name)
-----------------------------------
Signature(s)
-----------------------------------
Date: ___________, 1998
If the signatory is an organization, please Name of Organization:
print the legal name of the organization
and have an authorized person sign to the
right. -----------------------------------
By:
-------------------------------
Title:
----------------------------
Date: ___________, 1998
23
SERIES C PURCHASERS' COUNTERPART SIGNATURE PAGE
EXTREME NETWORKS AMENDED AND RESTATED RIGHTS AGREEMENT
If the signatory is an individual, please
sign and print your name to the right. -----------------------------------
(Printed Name)
-----------------------------------
Signature(s)
-----------------------------------
Date: ___________, 1998
If the signatory is an organization, please Name of Organization:
print the legal name of the organization
and have an authorized person sign to the
right. -----------------------------------
By:
-----------------------------------
Title:
----------------------------
Date: ___________, 1998
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