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EXHIBIT 10.8
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SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
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TABLE OF CONTENTS
Page
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1. REGISTRATION RIGHTS..................................................................3
1.1 Definitions...................................................................3
1.2 Request for Registration......................................................3
1.3 Company Registration..........................................................5
1.4 Obligations of the Company....................................................6
1.5 Furnish Information...........................................................7
1.6 Expenses of Demand Registration...............................................7
1.7 Expenses of Company Registration..............................................8
1.8 Underwriting Requirements.....................................................8
1.9 Indemnification. .............................................................9
1.10 Reports Under Securities Exchange Act of 1934................................11
1.11 Form S-3 Registration........................................................12
1.12 Assignment of Registration Rights............................................13
1.13 Limitations on Subsequent Registration Rights................................13
1.14 "Market Stand-Off" Agreement.................................................13
1.15 Termination of Registration Rights...........................................14
2. COVENANTS OF THE COMPANY............................................................14
2.1 Delivery of Financial Statements.............................................14
2.2 Inspection...................................................................15
2.3 Termination of Information and Inspection Covenants..........................15
2.4 Right of First Offer.........................................................15
2.5 Right of First Refusal.......................................................16
2.6 Co-Sale Right................................................................18
2.7 Employee and Other Stock Arrangements........................................20
3. MISCELLANEOUS.......................................................................20
3.1 Successors and Assigns.......................................................20
3.2 Governing Law................................................................21
3.3 Counterparts.................................................................21
3.4 Titles and Subtitles.........................................................21
3.5 Notices......................................................................21
3.6 Amendments and Waivers.......................................................21
3.7 Severability.................................................................22
3.8 Aggregation of Stock.........................................................22
3.9 Entire Agreement.............................................................22
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
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THIS SECOND RESTATED INVESTORS' RIGHTS AGREEMENT is made as of
the 18th day of February, 2000, by and between ACCELERATED NETWORKS, INC. a
California corporation (the "Company"), Xxxxxx Xxxxxxxx and Xxxxx Xxxx (each, a
"Founder" and collectively, the "Founders"), each of the investors in Series D
Preferred Stock of the Company listed on Schedule A hereto (each of which is
referred to herein as a "Series D Investor"), and each of the shareholders
listed on Schedule B hereto (each of which is referred to herein as a "Prior
Investor"). The Series D Investors and the Prior Investors sometimes are
referred to herein as the "Preferred Stock Investors." The Founders and the
Preferred Stock Investors sometimes are referred to herein as the "Investors."
This Agreement will become effective upon the consummation of the transactions
contemplated by of the Series D Purchase Agreement (as defined below).
RECITALS
WHEREAS, the Company, the Founders and certain of the Investors
are parties to the Restated Investors' Rights Agreement dated as of May 15, 1998
(the "Restated Investors' Rights Agreement"), which agreement governs the rights
of such Investors to cause the Company to register shares of Common Stock issued
to the Founders and issuable to such Investors and certain other matters as set
forth therein;
WHEREAS, the Restated Investors' Rights Agreement was
subsequently amended by that certain Amendment No. 1 to Restated Investors'
Rights Agreement dated February 24, 1999 (the "First Amendment") and that
certain Amendment No. 2 to Restated Investors' Rights Agreement dated December
16, 1999 (the "Second Amendment");
WHEREAS, the Company and the Series D Investors have entered into
that certain Series D Preferred Stock Purchase Agreement dated February 18, 2000
(the "Series D Purchase Agreement"), pursuant to which the Series D Investors
will purchase shares of the Company's Series D Preferred Stock;
WHEREAS, in order to induce the Company to consummate the
transactions contemplated by the Series D Purchase Agreement and to induce the
Series D Investors to invest funds in the Company pursuant to the Series D
Purchase Agreement, the Investors and the Company hereby agree that the Restated
Investors' Rights Agreement, as amended by the First Amendment and the Second
Amendment, shall be of no further force and effect and that this Agreement shall
govern the rights of the Investors to cause the Company to register shares of
Common Stock issued to the Founders and issuable to the Preferred Stock
Investors and certain other matters as set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and
covenants set forth herein, the parties hereto agree as follows:
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1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of 1933, as amended.
(b) The term "Form S-3" means such form under the Act as in
effect on the date hereof or any registration form under the Act subsequently
adopted by the SEC which permits inclusion or incorporation of substantial
information by reference to other documents filed by the Company with the SEC.
(c) The term "Holder" means any person owning or having the right
to acquire Registrable Securities or any assignee thereof in accordance with
Section 1.12 hereof.
(d) The term "1934 Act" shall mean the Securities Exchange Act of
1934, as amended.
(e) The terms "register," "registered" and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
(f) The term "Registrable Securities" means (i) the Common Stock
issuable or issued upon conversion of the Series A Preferred Stock, Series B
Preferred Stock, the Series C Preferred Stock and the Series D Preferred Stock,
(ii) the Six Million Eight Hundred Thousand (6,800,000) shares of Common Stock
held by the Founders, and (iii) the Common Stock issued or issuable upon
exercise of any Warrants granted from time to time pursuant to that certain
Warrant Issuance Agreement dated as of December 16, 1999, between the Company
and Siemens Information and Communication Networks, Inc., and (iv) any Common
Stock of the Company issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i), (ii) and (iii) above, excluding in all cases, however, any
Registrable Securities sold by a Holder in a transaction in which such Holder's
rights under this Section 1 are not assigned.
(g) The number of shares of "Registrable Securities then
outstanding" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
(h) The term "SEC" shall mean the Securities and Exchange
Commission.
1.2 Request for Registration.
(a) If the Company shall receive at any time after the earlier of
(i) July 1, 2002 or (ii) six (6) months after the effective date of the first
registration statement for a public offering of securities of the Company (other
than a registration statement relating either to the
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sale of securities to employees of the Company pursuant to a stock option, stock
purchase or similar plan or a SEC Rule 145 transaction) a written request from
the Holders of sixty-six and sixty-six hundredths percent (66.66%) of the
Registrable Securities (not including Founders Stock) then outstanding that the
Company file a registration statement under the Act covering the registration of
at least twenty percent (20%) of the Registrable Securities (not including
Founders Stock) then outstanding (or such lesser number of shares as shall have
an anticipated aggregate offering price to the public of at least $10,000,000,
net of underwriting discounts and commissions), then the Company shall:
(i) within ten (10) days of the receipt thereof, give
written notice of such request to all Holders; and
(ii) use its best efforts to effect as soon as
practicable, the registration under the Act of all Registrable Securities (not
including Founders Stock) which the Holders request to be registered, subject to
the limitations set forth in subsections 1.2(b), (c) and (d), within twenty (20)
days of the mailing of notice by the Company set forth in (i) above in
accordance with Section 3.5.
(b) The Holders initiating the registration request hereunder
("Initiating Holders") shall, in accordance with subsection 1.2(f) distribute
the Registrable Securities covered by their request by means of an underwriting
and the Company shall include such information in the written notice referred to
in subsection 1.2(a)(i). The underwriter will be selected by the Company and
shall be reasonably acceptable to a majority in interest of the Initiating
Holders. The right of any Holder to include such Holder's Registrable Securities
in such underwritten registration shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting (unless otherwise mutually agreed by
a majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in usual and customary form with
the underwriter or underwriters selected for such underwriting. Notwithstanding
any other provision of this Section 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, then the Company shall so advise all
Holders of Registrable Securities which would otherwise be underwritten pursuant
hereto, and the number of shares of Registrable Securities that may be included
in the underwriting shall be eliminated or allocated among all Holders thereof,
including the Initiating Holders, in proportion (as nearly as practicable) to
the amount of Registrable Securities of the Company owned by each Holder.
(c) Notwithstanding subsection 1.2(b), if the Company shall
furnish to Holders requesting a registration pursuant to this Section 1.2, a
certificate signed by the Chief Executive Officer or 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 and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
taking action with respect to such filing for a period of not more than sixty
(60) days after receipt of the request of the
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Initiating Holders; provided, however, that the Company may not utilize this
right more than twice in any twelve-month period.
(d) Notwithstanding anything else set forth in this Section
1.2, the Company shall not be obligated to effect, or to take any action to
effect, any registration pursuant to this Section 1.2:
(i) After the Company has effected two (2) registrations
pursuant to this Section 1.2 and such registrations have been declared or
ordered effective;
(ii) During the period starting with the date sixty (60)
days prior to the Company's good faith estimate of the date of filing of, and
ending on a date one hundred eighty (180) days after the effective date of, a
registration subject to Section 1.3 hereof; provided, however, that the Company
is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective;
(iii) Within twelve (12) months of the effective date of
another registration effected pursuant to this Section 1.2; or
(iv) If the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to Section 1.11 and the Company proceeds with such registration.
(e) The Company may include in any underwritten registration
under this Section 1.2 any other shares of Common Stock (including, without
limitation, issued and outstanding shares of Common Stock as to which the
holders thereof have contracted with the Company for "piggyback" registration
rights) so long as the inclusion in such registration of such shares (i) will
not, in the opinion of the managing underwriter of such registration, interfere
with the successful marketing in accordance with the intended method of sale or
other disposition of all the shares of Registrable Securities sought to be
registered by the Holder or Holders of Registrable Securities pursuant to this
Section 1.2 and (ii) will not result in the exclusion from such registration of
any Registrable Securities. If it is determined as provided above that there
will be such interference, the other shares of Common Stock sought to be
included shall be excluded to the extent deemed appropriate by the managing
underwriter of such registration.
(f) Notwithstanding anything else set forth in this Agreement,
the Company shall not be required to effect a registration under this Section
1.2 unless such registration is a firm commitment underwritten offering with a
nationally recognized underwriter.
1.3 Company Registration. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for shareholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities solely for cash (other than (i) a registration relating solely to the
sale of securities to participants in a Company stock or stock option plan, (ii)
a registration pursuant to a SEC Rule 145 transaction, or (iii) a registration
in which the only Common Stock being registered is Common Stock issuable upon
conversion of debt securities
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which are also being registered) the Company shall, at such time, promptly give
each Holder written notice in accordance with Section 3.5 of such registration.
Upon the written request of each Holder given within twenty (20) days after
mailing of such notice by the Company, the Company shall, subject to the
provisions of Section 1.8, cause to be registered under the Act all of the
Registrable Securities that each such Holder has requested to be registered.
1.4 Obligations of the Company. Whenever required under this Agreement
to use its best efforts to register any Registrable Securities, the Company
shall as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or until the distribution contemplated in the Registration Statement has
been completed; provided, however, that (i) such 120-day period shall be
extended for a period of time equal to the period the Holder refrains from
selling any securities included in such registration at the request of the
managing underwriter and (ii) in the case of any registration of Registrable
Securities on Form S-3 which are intended to be offered on a continuous or
delayed basis, such 120-day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are sold,
provided that Rule 415, or any successor rule under the Act, permits an offering
on a continuous or delayed basis, and provided further that applicable rules
under the Act governing the obligation to file a post-effective amendment
permit, in lieu of filing a post-effective amendment which (I) includes any
prospectus required by Section 10(a)(3) of the Act or (II) reflects facts or
events representing a material or fundamental change in the information set
forth in the registration statement, the incorporation by reference of
information required to be included in (I) and (II) above to be contained in
periodic reports filed pursuant to Section 13 or 15(d) of the 1934 Act in the
registration statement.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
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 Act and such other documents as they may reasonably request
in order to facilitate the disposition of Registrable Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders;
provided, however, 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,
unless the Company is already subject to service in such jurisdiction and except
as may be required by the Act.
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(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 Act of the happening of any event as a result
of which the prospectus included in such registration statement, as then in
effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in the light of the circumstances then existing.
(g) Cause all such Registrable Securities registered pursuant
hereto to be listed on each securities exchange on which similar securities
issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereto and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
1.5 Furnish Information.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to this Section 1 with respect to the
Registrable Securities of any selling Holder that such Holder shall furnish to
the Company such information regarding itself, the Registrable Securities held
by it, and the intended method of disposition of such securities as shall be
required to effect the registration of such Holder's Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 1.2 or Section 1.11 if, due to the
operation of subsection 1.5(a), the number of shares does not equal or exceed
the number of shares required to originally trigger the Company's obligation to
initiate such registration as specified in subsection 1.2(a) or Section 1.11,
whichever is applicable.
1.6 Expenses of Demand Registration. All expenses (other than
underwriting discounts and commissions) incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including,
without limitation, all registration, filing and qualification fees, printers'
and accounting fees, reasonable fees and disbursements of counsel for the
Company (including reasonable fees and disbursements of counsel for the Company
in its capacity as counsel to the selling Holders hereunder; provided, however,
if Company counsel does not make itself available for this purpose, the Company
will pay the reasonable fees and disbursements of one counsel for the selling
Holders selected by them) shall be borne by the Company; provided, however, that
the Company shall not be required to pay for any expenses of any registration
proceeding begun pursuant to Section 1.2 if the registration request is
subsequently withdrawn at the request of the Holders of a majority in interest
of the Registrable Securities to be registered or fails to close (in which case
all Holders initiating such registration
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shall bear such expenses pro rata based upon the total number of Registrable
Securities requested to be included therein by each such Holder), unless such
Holders agree to forfeit their right to one demand registration pursuant to
Section 1.2; provided further, however, that if at the time of such withdrawal
or failure to close, (a) the Holders proposing to participate in the
registration have learned of a material adverse change in the condition,
business, or prospects of the Company not known to such Holders at the time of
their request other than a change resulting from market factors or other matters
over which the Company has no control, (b) the facts producing such change were
known to the Company at the time of the request or the Company's delay in
disclosing such facts resulted in substantial additional expense, and (c) in the
case of withdrawal, such Holders have withdrawn the request with reasonable
promptness following disclosure by the Company of such material adverse change,
then such Holders shall not be required to pay any of such expenses and shall
retain their rights pursuant to Section 1.2.
1.7 Expenses of Company Registration. The Company shall bear and pay all
expenses incurred in connection with any registration, filing or qualification
of Registrable Securities with respect to registrations pursuant to Section 1.3
for each Holder (which right may be assigned as provided in Section 1.12),
including, without limitation, all registration, filing, and qualification fees,
printers and accounting fees relating or apportionable thereto and the
reasonable fees and disbursements of counsel for the Company in its capacity as
counsel to the selling Holders hereunder (provided, however, if Company counsel
does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them), but excluding underwriting discounts and commissions relating
to such Registrable Securities.
1.8 Underwriting Requirements. In connection with any offering involving
an underwriting of shares of the Company's capital stock, the Company shall not
be required under Section 1.3 to include any of the Holders' Registrable
Securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the managing underwriter(s) selected by
it (or by other persons entitled to select the underwriters), and then only in
such quantity as the underwriters determine in their sole discretion will not
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by shareholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be required
to include in the offering only that number of such securities, including
Registrable Securities, which the underwriters determine in their sole
discretion will not jeopardize the success of the offering (the securities so
included to be apportioned pro rata (A) first to the Company (B) second, pro
rata among the selling Holders according to the total amount of Registrable
Securities owned by each such Holder, and (C) to the extent additional
securities may be included therein, pro rata among the other selling
shareholders according to the total amount of securities owned by each such
selling shareholder, or in such other proportions as shall mutually be agreed to
by such selling shareholders); provided that in no event shall the amount of
Registrable Securities included in the offering be reduced below twenty-five
percent (25%) of the total amount of securities included in such offering,
unless such offering is the initial public offering of the Company's securities
in which case such Registrable Securities may be excluded if the underwriter(s)
make
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the determination described above and no other shareholder's securities are
included. For purposes of the preceding parenthetical concerning apportionment,
for any selling shareholder which is a holder of Registrable Securities and
which is a partnership or corporation, the partners, retired partners and
shareholders 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 persons shall be deemed to be a single "selling shareholder" and any
pro rata reduction with respect to such "selling shareholder" shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such "selling shareholder," as defined in
this sentence.
1.9 Indemnification. In the event any Registrable Securities are
included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Act) for such
Holder and each person, if any, who controls such Holder or underwriter within
the meaning of the Act or the 1934 Act, against any losses, claims, damages, or
liabilities (joint or several) to which they may become subject under the Act,
the 1934 Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including, without limitation, any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Act, the 1934 Act, any
state securities law or any rule or regulation promulgated under the Act, the
1934 Act or any state securities law; and the Company will pay to each such
Holder, underwriter or controlling person any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 1.9(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability, or action if such
settlement is effected without the consent of the Company (which consent shall
not be unreasonably withheld), nor shall the Company be liable in any such case
for any such loss, claim, damage, liability, or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by any such Holder, underwriter or controlling person;
provided, further, that if any losses, claims, damages or liabilities arise out
of or are based upon a Violation which did not appear in the final prospectus,
the Company shall not have any liability with respect thereto to (i) the Holder
or any person who controls such Holder within the meaning of Section 15 of the
Act if the Holder delivered a copy of the preliminary prospectus to the person
alleging such losses, claims, damages or liabilities and failed to deliver a
copy of the final prospectus, as amended or supplemented if it has been amended
or supplemented, to such person at or prior to the written confirmation of the
sale to such person or (ii) any underwriter or any person who controls such
underwriter within the meaning of Section 15 of the Act, if such underwriter
delivered a copy of the preliminary prospectus to the person alleging such
losses, claims, damages or liabilities and
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failed to deliver a copy of the final prospectus, as amended or supplemented, if
it has been amended or supplemented, to such person at or prior to the written
confirmation of the sale to such person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, any other
Holder selling securities in such registration statement and any controlling
person of any such underwriter or other Holder, against any losses, claims,
damages, or liabilities (joint or several) to which any of the foregoing persons
may become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each case to the
extent (and only to the extent) that such Violation occurs in reliance upon and
in conformity with written information furnished by such Holder expressly for
use in connection with such registration; and each such Holder will pay any
legal or other expenses reasonably incurred by any person intended to be
indemnified pursuant to this subsection 1.9(b), in connection with investigating
or defending any such loss, claim, damage, liability, or action; provided,
however, that the indemnity agreement contained in this subsection 1.9(b) shall
not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Holder, which consent shall not be unreasonably withheld; provided further,
that, in no event shall any indemnity under this subsection 1.9(b) exceed the
gross proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 1.9 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect thereof
is to be made against any indemnifying party under this Section 1.9, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, 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. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.9, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.9.
(d) If the indemnification provided for in this Section 1.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, shall contribute to the amount paid or payable
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by such indemnified party as a result of such loss, liability, claim, damage, or
expense 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 statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined 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.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and Holders under this Section
1.9 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a view to
making available to the Holders the benefits of Rule 144 promulgated under the
Act and any other rule or regulation of the SEC that may at any time permit a
Holder to sell securities of the Company to the public without registration or
pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after sixty (60) days
after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Act and the 1934 Act; and
(d) furnish to any Holder at any time after ninety (90) days
following the effective date of the first registration statement filed by the
Company, so long as the Holder owns any Registrable Securities, forthwith upon
request (i) a written statement by the Company that it has complied with the
reporting requirements of SEC Rule 144, the Act and the 1934 Act (at any time
after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably
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requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
1.11 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders who own at least fifteen percent (15%) of (i) the Registrable
Securities then outstanding or (ii) the Series A Preferred Stock (including the
Common Stock issued upon conversion thereof) then outstanding, a written request
or requests that the Company effect a registration on Form S-3 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; and
(b) as soon as practicable, use its best efforts to 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 fifteen (15) 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 1.11: (1) if Form S-3 is not available for such offering by the
Holders; (2) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Common Stock at an aggregate price to the public (including any underwriters'
discounts or commissions) of less than $1,000,000; (3) if the Company shall
furnish to the Holder or Holders a certificate signed by the Chief Financial
Officer or 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 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 sixty (60) days after
receipt of the request of the Holder or Holders under this Section 1.11;
provided, however, that the Company shall not utilize this right more than twice
in any twelve (12) month period; (4) if the Company has, within the six (6)
month period preceding the date of such request, already effected one (1)
registration on Form S-3 pursuant to this Section 1.11; or (5) 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 unless the Company is already subject
to service in such jurisdiction and except as may be required by the Act.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests set forth in this Section 1.11 of the Holder or Holders. The
Company shall bear and pay all expenses incurred in connection with
registrations requested pursuant to this Section 1.11, including, without
limitation, all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the Company
(including reasonable fees and disbursements of counsel for the Company in its
capacity as counsel to the selling Holders hereunder; provided, however, if
Company counsel
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does not make itself available for this purpose, the Company will pay the
reasonable fees and disbursements of one counsel for the selling Holders
selected by them), but excluding any underwriters' discounts or commissions
associated with the Registrable Securities. Registrations effected pursuant to
this Section 1.11 shall not be counted as demands for registration or
registrations effected pursuant to Sections 1.2 or 1.3, respectively.
1.12 Assignment of Registration Rights. The rights to cause the Company
to register Registrable Securities pursuant to this Section 1 may be assigned
(but only with all related obligations) by a Holder to a transferee or assignee
of such securities who, after such assignment or transfer, holds at least
400,000 shares of the Company's capital stock; provided, however, that (a) the
Company is, within a reasonable time after such transfer, furnished with 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; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including, without limitation, the provisions
of Section 1.14 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act. Any such assignee
shall be subject to all rights and obligations hereunder and, if requested by
the Company, shall agree in writing to be bound by the terms of this Agreement.
The foregoing share limitation shall not apply to transfers to affiliated
entities of the transferor or to distributions from a partnership to partners if
the partner holds at least one percent (1%) of the Company's outstanding capital
stock following such distribution.
1.13 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of sixty-six and sixty-six hundredths percent (66.66%) percent of
the Registrable Securities 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 (a) to include such securities in any
registration filed under Section 1.2, 1.3 or 1.11 hereof, unless under the terms
of such agreement, such holder or prospective holder may include such securities
in any such registration only to the extent that the inclusion of such holder's
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (b) to make a demand registration which could
result in such registration statement being declared effective within one
hundred twenty (120) days of the effective date of any registration effected
pursuant to Section 1.2.
1.14 "Market Stand-Off" Agreement. Each Investor hereby agrees that, for
a period of one hundred eighty (180) days following the effective date of the
first registration statement of the Company filed under the Act or ninety (90)
days following the effective date of any other registration statement of the
Company filed under the Act, it shall not, to the extent requested by the
Company and such underwriter(s), directly or indirectly sell, offer to sell,
contract to sell (including, without limitation, any short sale), grant any
option to purchase or otherwise transfer or dispose of (other than to donees who
agree to be similarly bound) any securities of the Company held by it at any
time during such period except Common Stock included in such registration;
provided, however, that such Investor shall be subject to the market stand-off
provisions of this Section 1.14 only if the officers and directors of the
Company are subject to
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similar arrangements and the Company uses reasonable efforts to have all holders
of at least one percent (1%) of the Company's capital stock also subject to
similar arrangements.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Investor (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period. Notwithstanding the
foregoing, the obligations described in this Section 1.14 shall not apply to a
registration relating solely to employee benefit plans on Form S-l or Form S-8
or similar forms which may be promulgated in the future, or a registration
relating solely to a SEC Rule 145 transaction on Form S-4 or similar forms which
may be promulgated in the future.
1.15 Termination of Registration Rights. The right of any Holder to
request registration or inclusion in any registration pursuant to Section 1.2,
1.3 or 1.11 shall terminate and such Holder's securities shall no longer be
deemed to be Registrable Securities at such time as (i)(A) such Holder holds
less than 1% of the Company's outstanding Common Stock (including the Common
Stock issued or issuable upon conversion of the Company's outstanding Preferred
Stock) and (B) such Holder's Registrable Securities may be sold pursuant to Rule
144(k) or (ii) the expiration of three years after the closing of the first
Company-initiated firm commitment underwritten public offering of Common Stock
of the Company.
2. COVENANTS OF THE COMPANY.
2.1 Delivery of Financial Statements. The Company shall deliver to (i)
each Preferred Stock Investor who holds (whether directly or by application of
Section 3.8) at least 1,650,000 shares of the Company's Series A Preferred
Stock, 1,000,000 shares of the Company's Series B Preferred Stock, 1,000,000
shares of the Company's Series C Preferred Stock, 1,000,000 shares of the
Company's Series D Preferred Stock (as adjusted for subsequent stock splits,
stock dividends or recapitalizations of the Company's capital stock) (each, a
"Major Investor") and (ii) MCI WorldCom Venture Fund, Inc., a Delaware
corporation ("MCI") for so long as MCI holds at least 800,000 shares of the
Company's Series D Preferred Stock (as adjusted for subsequent stock splits,
stock dividends or recapitalizations of the Company's capital stock):
(a) as soon as practicable, but in any event within one hundred
twenty (120) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
shareholders' equity 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 and audited and certified by independent public
accountants.
(b) as soon as practicable, but in any event within forty-five
(45) days after the end of each of the first three (3) quarters of each fiscal
year of the Company, an unaudited profit or loss statement, and an unaudited
balance sheet and a statement of shareholders' equity as of the end of such
fiscal quarter.
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(c) within thirty (30) days of the end of each month, an
unaudited income statement and schedule as to the sources and application of
funds and balance sheet for and as of the end of such month, in reasonable
detail.
(d) as soon as practicable, but in any event thirty (30) days
prior to the end of each fiscal year, a budget and business plan for the next
fiscal year showing the Company's projected monthly financial statements and, as
soon as prepared, any other budgets or revised budgets prepared by the Company.
2.2 Inspection. The Company shall permit MCI, for so long as MCI holds
at least 800,000 shares of the Company's Series D Preferred Stock (as adjusted
for subsequent stock splits, stock dividends or recapitalizations of the
Company's capital stock), and each Major Investor, at such Investor's expense,
to visit and inspect the Company's properties, to examine its books of account
and records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by the Investor;
provided, however, that the Company shall not be obligated pursuant to this
Section 2.2 to provide access to any information which it deems in good faith to
be a trade secret or similar confidential information.
2.3 Termination of Information and Inspection Covenants. The covenants
set forth in Sections 2.1 and 2.2 shall terminate as to any Major Investor and
MCI and be of no further force or effect (i) in conjunction with or at any time
subsequent to the sale of securities pursuant to a registration statement filed
by the Company under the Act in connection with the underwritten offering of its
securities to the general public, (ii) in conjunction with or at any time
subsequent to the acquisition of more than fifty percent (50%) of the Company's
equity securities by another entity by means of any transaction or series of
related transactions (including, without limitation, any reorganization, merger
or consolidation), or a sale of all or substantially all of the assets of the
Company, or (iii) after the Company first becomes subject to the periodic
reporting requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever
event shall first occur.
2.4 Right of First Offer. Subject to the terms and conditions specified
in this Section 2.4, the Company hereby grants to each Major Investor a right of
first offer with respect to future sales by the Company of its Shares (as
hereinafter defined). Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of its
capital stock ("Shares"), the Company shall first make an offering of such
Shares to each Major Investor in accordance with the following provisions:
(a) The Company shall deliver a notice by certified mail ("Offer
Notice") to the Major Investors stating (i) its bona fide intention to offer
such Shares, (ii) the number of such Shares to be offered, and (iii) the price
and terms, if any, upon which it proposes to offer such Shares.
(b) By written notification received by the Company, within
thirty (30) calendar days after giving of the Offer Notice, each Major Investor
may elect to purchase or obtain, at the price and on the terms specified in the
Offer Notice, up to that portion of such Shares which equals the proportion that
the number of shares of Common Stock issued and held,
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or issuable upon conversion of the Preferred Stock then held, by such Major
Investor bears to the total number of shares of Common Stock of the Company then
outstanding (assuming full conversion and exercise of all convertible or
exercisable securities).
(c) If all Shares referred to in the Offer Notice are not elected
to be obtained as provided in subsection 2.4(b) hereof, the Company may, during
the 90-day period following the expiration of the period provided in subsection
2.4(b) hereof, offer the remaining unsubscribed portion of such Shares to any
person or persons at a price not less than, and upon terms no more favorable to
the offeree than those specified in the Offer Notice. If the Company does not
enter into an agreement for the sale of the Shares within such period, or if
such agreement is not consummated within thirty (30) days of the execution
thereof, the right provided hereunder shall be deemed to be revived and such
Shares shall not be offered unless first reoffered to the Major Investors in
accordance herewith.
(d) The right of first offer in this Section 2.4 shall not be
applicable (i) to the issuance or sale of Shares (or options therefor) to
employees, consultants, directors, directly or pursuant to a stock option plan
or restricted stock issuance plan approved by the Board of Directors of the
Company, (ii) to or after consummation of a firm commitment underwritten public
offering of shares of Common Stock, registered under the Act pursuant to a
registration statement, (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities, (iv) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise, (v) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has a
potential or existing customer or supplier relationship, or (vi) to or after the
acquisition of the Company by another entity by means of any bona fide
transaction or series of related transactions (including, without limitation,
any reorganization, merger or consolidation), or a sale of all or substantially
all of the assets of the Company unless the corporation's shareholders of record
as constituted immediately prior to such transaction or series of transactions
will, immediately after such transaction or series of transactions (by virtue of
securities issued as consideration in the transaction or series of transactions)
hold at least 50% of the voting power of the successor to the corporation's
business.
(e) The right of first offer set forth in this Section 2.4 may
not be assigned or transferred, except that (i) such right is assignable by each
Major Investor to any wholly owned subsidiary or parent of, or to any
corporation or entity that is, within the meaning of the Act, controlling,
controlled by or under common control with, any such Major Investor, and (ii)
such right is assignable between and among any of the Major Investors.
2.5 Right of First Refusal. Before any shares of capital stock of the
Company registered in the name of a Founder may be sold or transferred (other
than transfers set forth in paragraph (g)), such shares shall first be offered
to the Company and the Major Investors in the following manner:
(a) The Founder or his transferee shall deliver a notice by
certified mail ("Transfer Notice") to the principal business office of the
Company and to each Major Investor stating (i) his bona fide intention to sell
or transfer such shares, (ii) the number of such shares to
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be sold or transferred, (iii) the price and terms, if any, for which he proposes
to sell or transfer such shares, and (iv) the name and address of the proposed
purchaser or transferee (if known).
(b) The Company shall have the right at any time within twenty
(20) calendar days of the giving of the Transfer Notice to purchase some or all
of the shares to which the Transfer Notice refers at the price per share
specified in the Transfer Notice, or if no price is specified therein, at the
fair market value thereof as determined by the Board of Directors in good faith.
Said right shall be exercised by written notice signed by an officer of the
Company ("Company Exercise Notice") and delivered by certified mail to the
Founder, which notice shall specify the time, place and date for settlement of
such purchase (but in no event shall such date be more than sixty (60) calendar
days from the date the Transfer Notice was delivered to the Company). If the
Company does not exercise its right to purchase all of the shares to which the
Transfer Notice refers, the Company shall within twenty-five (25) calendar days
of the giving of the Transfer Notice deliver by certified mail to each Major
Investor a copy of the Company Exercise Notice or a statement that the Company
has elected not to purchase any of the shares subject to the Transfer Notice.
(c) In the event the Company does not, for any reason, exercise
its right to purchase all of the shares to which the Transfer Notice refers in
accordance with subsection 2.5(b), then each Major Investor shall have the
option, exercisable by written notice (the "Investors Exercise Notice")
delivered by certified mail to the Founder and the Company within forty-five
(45) calendar days of the giving of the Transfer Notice, to purchase up to that
portion of such shares which equals the proportion that the number of shares of
Common Stock issued and held, or issuable upon conversion of the Preferred Stock
then held, by such Major Investor bears to the total number of shares of Common
Stock of the Company then outstanding (assuming full conversion and exercise of
all convertible or exercisable securities). Such purchase shall be at the price
per share specified in the Transfer Notice, or if no price is specified therein,
at the fair market value thereof as determined by the Board of Directors in good
faith. The Investors Exercise Notice shall specify the time, place and date for
settlement of such purchase (but in no event shall such date be more than sixty
(60) calendar days from the date the Transfer Notice was received by the
Company).
(d) If some or all of the shares to which the Transfer Notice
refers are not purchased, as provided in subsections 2.5(b) and 2.5(c) hereof,
the Founder may sell such shares at the price and terms specified in the
Transfer Notice, provided that such sale or transfer is consummated within one
hundred twenty (120) calendar days from the date of said Transfer Notice to the
Company, and provided, further, that any such sale is in accordance with all the
terms and conditions hereof. If the Founder does not consummate the sale or
transfer within such one hundred twenty (120)-day period, the right provided
hereby shall be deemed to be revived with respect to such shares and no sale or
transfer shall be effected without first offering the shares in accordance
herewith.
(e) Notwithstanding the foregoing, the right of first refusal of
the Major Investors provided in this Section 2.5 shall not apply to (i) any
pledge of Common Stock made pursuant to a bona fide loan transaction that
creates a mere security interest, (ii) transfers by gift, will or intestate
succession of a Founder to a Founder's spouse or lineal descendants or ancestors
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or a trust for the benefit of such persons, (iii) any bona fide gift, or (iv)
any transfer by operation of law or other involuntary transfer; provided that,
with respect to clauses (i), (ii) and (iii) above, (A) the Founder shall inform
the Major Investors of such pledge, transfer or gift prior to effecting it and
(B) the pledgee, transferee or donee shall furnish the Major Investors with a
written agreement to be bound by and comply with all provisions of this
Agreement. Such transferred Common Stock shall remain "Founders Stock"
hereunder, and such pledgee, transferee or donee shall be treated as a "Founder"
for purposes of this Agreement.
(f) Notwithstanding the foregoing, neither the Company nor any
Major Investor shall have any right under this Section 2.5 (i) in conjunction
with or at any time subsequent to the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
underwritten offering of its securities to the general public, (ii) in
conjunction with or at any time subsequent to the acquisition of more than fifty
percent (50%) of the Company's equity securities by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation), or a sale of all or
substantially all of the assets of the Company, or (iii) after the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.
2.6 Co-Sale Right.
(a) Each Founder agrees that in the event it reaches an agreement
to sell more than twenty percent (20%) of the Founders Stock owned by such
Founder by means of any transaction or series of related transactions, it will
provide written notice (the "Co-Sale Notice") to each Major Investor at least
twenty (20) days prior to the closing of such sale or transfer. The Co-Sale
Notice shall describe in reasonable detail the proposed sale or transfer
including, without limitation, the number of shares of Common Stock to be sold
or transferred, the nature of such sale or transfer, the consideration to be
paid, and the name and address of each prospective purchaser or transferee. In
the event that the sale or transfer is being made pursuant to the provisions of
paragraph (g) or (h) hereof, the Co-Sale Notice shall state under which
paragraph the sale or transfer is being made.
(b) Each Major Investor shall have the right, exercisable upon
written notice to the Founder delivered by certified mail, within fifteen (15)
days after the giving of the Co-Sale Notice to the Major Investor, to
participate in such sale of Common Stock on the same terms and conditions. To
the extent a Major Investor exercises such right of participation in accordance
with the terms and conditions set forth below, the number of shares of Common
Stock that the Founder may sell in the transaction shall be correspondingly
reduced.
(c) Each Major Investor may sell all or any part of that number
of shares of Common Stock equal to the product obtained by multiplying (i) the
aggregate number of shares of Common Stock covered by the Co-Sale Notice by (ii)
a fraction the numerator of which is the number of shares of Common Stock issued
and held on the date of the Co-Sale Notice, or issuable upon conversion of the
Preferred Stock then held, by such Major Investor and the denominator of which
is the total number of shares of Common Stock (on an as-converted basis)
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owned by all the Preferred Stock Investors and the selling Founder on the date
of the Co-Sale Notice.
(d) A Major Investor shall effect its participation in the sale
by promptly delivering to the Founder for transfer to the prospective purchaser
one or more certificates, properly endorsed for transfer, which represent:
(i) the type and number of shares of Common Stock which
the Major Investor elects to sell; or
(ii) that number of shares of Preferred Stock which is at
such time convertible into the number of shares of Common Stock which the Major
Investor elects to sell; provided, however, that if the prospective purchaser
objects to the delivery of Preferred Stock in lieu of Common Stock, the Major
Investor shall convert such Preferred Stock into Common Stock and deliver Common
Stock as provided in subparagraph (i) above. The Company agrees to make any such
conversion concurrent with the actual transfer of such shares to the purchaser.
(e) The stock certificate or certificates that a Major Investor
delivers to the Founder pursuant to paragraph (d) shall be transferred to the
prospective purchaser in consummation of the sale of the Common Stock pursuant
to the terms and conditions specified in the Co-Sale Notice, and the Founder
shall concurrently therewith remit to such Major Investor that portion of the
sale proceeds to which the Major Investor is entitled by reason of its
participation in such sale. To the extent that any prospective purchaser or
purchasers prohibits such assignment or otherwise refuses to purchase shares or
other securities from a Major Investor exercising its rights of co-sale
hereunder, the Founder shall not sell to such prospective purchaser or
purchasers any Common Stock unless and until, simultaneously with such sale, the
Founder shall purchase such shares or other securities from such Major Investor.
(f) The exercise or non-exercise of the rights of the Major
Investors hereunder to participate in one or more sales of Common Stock made by
the Founder shall not adversely affect their rights to participate in subsequent
sales of Common Stock subject to paragraph (a).
(g) Notwithstanding the foregoing, the co-sale rights of the
Major Investors provided in this Section 2.6 shall not apply to (i) any pledge
of Common Stock made pursuant to a bona fide loan transaction that creates a
mere security interest, (ii) transfers by gift, will or intestate succession of
a Founder to a Founder's spouse or lineal descendants or ancestors or a trust
for the benefit of such persons, (iii) any bona fide gift, or (iv) any transfer
by operation of law or other involuntary transfer; provided that, with respect
to clauses (i), (ii) and (iii) above, (A) the Founder shall inform the Major
Investors of such pledge, transfer or gift prior to effecting it and (B) the
pledgee, transferee or donee shall furnish the Major Investor with a written
agreement to be bound by and comply with all provisions of this Agreement. Such
transferred Common Stock shall remain "Founders Stock" hereunder, and such
pledgee, transferee or donee shall be treated as a "Founder" for purposes of
this Agreement.
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(h) Notwithstanding the foregoing, the provisions of this Section
2.6 shall not apply to the sale of any Common Stock by a Founder (i) to the
public pursuant to a registration statement filed with, and declared effective
by, the SEC under the Act, or (ii) to the Company, or (iii) if prior to such
sale, the Founder held less than five percent (5%) of the Company's outstanding
capital stock.
(i) Notwithstanding the foregoing, the co-sale right set forth in
this Section 2.6 shall terminate and be of no further force or effect (i) in
conjunction with or at any time subsequent to the sale of securities pursuant to
a registration statement filed by the Company under the Act in connection with
the underwritten offering of its securities to the general public, (ii) in
conjunction with or at any time subsequent to the acquisition of more than fifty
percent (50%) of the Company's equity securities by another entity by means of
any transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation), or a sale of all or
substantially all of the assets of the Company, or (iii) after the Company first
becomes subject to the periodic reporting requirements of Sections 12(g) or
15(d) of the 1934 Act, whichever event shall first occur.
2.7 Employee and Other Stock Arrangements.
(a) Except as determined otherwise in the discretion of the Board
of Directors, each acquisition of any option or right to acquire any shares of
capital stock of the Company by an employee, consultant, or director of the
Company pursuant to a Company stock or stock option plan shall be subject to a
four (4)-year vesting schedule, with twenty-five percent (25%) of the shares
vested upon the first anniversary of the commencement of service and the
remaining shares subject to monthly vesting thereafter; provided, however
(except as otherwise determined by the Board of Directors), if the Board of
Directors allows an option holder to exercise an option prior to full vesting,
the unvested shares shall be subject to a repurchase option in favor of the
Company which shall provide that upon termination of employment, with or without
cause, the Company may repurchase, at cost, any unvested shares held by such
shareholder.
(b) Notwithstanding the foregoing, the provisions set forth in
this Section 2.7 shall terminate and be of no further force or effect after (i)
the sale of securities pursuant to a registration statement filed by the Company
under the Act in connection with the underwritten offering of its securities to
the general public, (ii) the acquisition of more than fifty percent (50%) of the
Company's equity securities by another entity by means of any transaction or
series of related transactions (including, without limitation, any
reorganization, merger or consolidation), or a sale of all or substantially all
of the assets of the Company, or (iii) the Company first becomes subject to the
periodic reporting requirements of Sections 12(g) or 15(d) of the 1934 Act,
whichever event shall first occur.
3. MISCELLANEOUS.
3.1 Successors and Assigns. Except as otherwise provided herein, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended
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to confer upon any party other than the parties hereto or their respective
successors and assigns any rights, remedies, obligations, or liabilities under
or by reason of this Agreement, except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within California
without regard to the conflicts of law provisions thereof. The parties hereto
agree to submit to the jurisdiction of the federal and state courts of the State
of California with respect to the breach or interpretation of this Agreement or
the enforcement of any and all rights, duties, liabilities, obligations, powers,
and other relations between the parties arising under this Agreement.
3.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice required or permitted
under this Agreement shall be in writing, shall be effective when given, and
shall in any event be deemed to be given upon receipt or, if earlier, (i) five
(5) days after deposit with the U.S. postal service or other applicable postal
service, if delivered by first class mail, postage prepaid, (ii) upon delivery,
if delivered by hand, (iii) one (1) business day after the day of deposit with
Federal Express or similar overnight courier, freight prepaid, if delivered by
overnight courier or (iv) one (1) business day after the day of facsimile
transmission, if delivered by facsimile transmission with copy by first class
mail, postage prepaid, and shall be addressed, (a) if to an Investor, at such
Investor's address set forth below its signature, or at such other address as
such Investor shall have furnished the Company in writing, or (b) if to the
Company, at its address as set forth below, or at such other address as the
Company shall have furnished to each Investor in writing.
3.6 Amendments and Waivers.
(a) Any term of Section 1 or Section 3 (other than this Section
3.6) of this Agreement may be amended and the observance of any term of Section
1 or Section 3 (other than this Section 3.6) of this Agreement may be waived
(either generally or in a particular instance and either retroactively or
prospectively), only with the written consent of (i) the Company, (ii) the
holders of sixty six and sixty six hundreds percent (66.66%) of the Registrable
Securities then outstanding and held by the Preferred Stock Investors, and (iii)
the holders of a majority of the Registrable Securities then held by the
Founders.
(b) Any term of Section 2 (other than Section 2.6) of this
Agreement may be amended and the observance of any term of Section 2 (other than
Section 2.6) of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of (i) the Company, and (ii) the holders of a majority of the
Registrable Securities then outstanding and held by the Major Investors.
21
23
(c) Any term of Section 2.6 may be amended and the observance of
any term of Section 2.6 may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of (i) the holders of a majority of the Registrable Securities then
outstanding and held by the Major Investors, and (ii) the holders of a majority
of the Registrable Securities then outstanding and held by the Founders;
provided, however, any such amendment or waiver that would affect the rights of
any Major Investor or Founder in a manner different than the other Major
Investors or Founders (as applicable) shall also require the written consent of
such differently affected Major Investor or Founder.
(d) Any term of this Section 3.6 may be amended and the
observance of any term of this Section 3.6 may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the parties whose consent is required to amend or waive a
particular provision.
(e) Any amendment or waiver effected in accordance with this
Section 3.6 shall be binding upon the Company and each Investor, and their
respective successors and assigns.
3.7 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.8 Aggregation of Stock. All shares of Registrable Securities held or
acquired by affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this Agreement.
3.9 Entire Agreement. This Agreement (including the Exhibits hereto, if
any) constitutes the full and entire understanding and agreement between the
parties with regard to the subjects hereof. This Agreement supersedes and
replaces the Restated Investors Rights Agreement and, to the extent necessary,
the execution and delivery of this Agreement constitutes a waiver of the
provisions of Section 2.4 of the Restated Investors Rights Agreement.
22
24
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
ACCELERATED NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------
Xxxxxx Xxxxxxxx, President
Address: 000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
25
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXXX XXXXXXXX
/s/ Xxxxxx Xxxxxxxx
----------------------------------------
Xxxxxx Xxxxxxxx
Address: c/o Accelerated Networks, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
XXXXX XXXX
/s/ Xxxxx Xxxx
----------------------------------------
Xxxxx Xxxx
Address: c/o Accelerated Networks, Inc.
000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
26
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
THE INVESTORS:
MCI WORLDCOM VENTURE FUND, INC.
By: /s/ Xxxxx Xxxxx
------------------------------------
Name: Xxxxx Xxxxx
Title: President
Address: 0000 Xxxxxxxxxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
27
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
WINDWARD VENTURES, L.P.
By: Windward Ventures Management, L.P.
General Partner
By: /s/ Xxxxx Xxxxx
----------------------------------------
Xxxxx Xxxxx
General Partner
Address: 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
ONSET ENTERPRISE ASSOCIATES III, L.P.
By: OEA III MANAGEMENT, LLC
Its: General Partner
By: /s/ Xxxxxx Xxxxxxx
----------------------------------------
Name: Xxxxxx Xxxxxxx
Title:
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
28
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
SIEMENS INFORMATION AND COMMUNICATION
NETWORKS, INC.
By: /s/ Xxxxxx Xxxxx
----------------------------------------
Name: Xxxxxx Xxxxx
Title: Executive V.P. & CFO
Address: 000 Xxxxxx Xxxxx Xxxxxxx
Xxxx Xxxxx, XX 00000
29
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
SIEMENS AG
By: /s/ Xxxxxxx Xxxxx
-----------------------------------------------
Name: Xxxxxxx Xxxxx
Title: Member of the Group Board ICN
By: /s/ Xxxxx Xxxxxxxx
-----------------------------------------------
Name: Xxxxx Xxxxxxxx
Title: Vice President ICN RU
Address: Xxxxxxxxxxxxxx 00, X-00000
Xxxxxx, Xxxxxxx
Attn: Xxxxxx Xxxxxxxx
NEW ENTERPRISE ASSOCIATES VII, Limited Partnership
By: NEA Partners VII, Limited Partnership
Its: General Partner
By: /s/ Xxxxx Xxxxxx
-----------------------------------------------
Name: Xxxxx Xxxxxx
Title: General Partner
Address: 0000 Xxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
30
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXXX-SBIC, X.X.
XXXXXX TECHNOLOGY VENTURES II, X.X.
XXXXXX MEDIA & INFORMATION TECHNOLOGY
FUND, X.X.
XXXXXX EDB PARTNERS, X.X.
XXXXXX JAPAN PARTNERS, L.P.
By: /s/ Xxxxxx Xxxxx
-----------------------------------------------
Xxxxxx Xxxxx
General Partner
Address: 000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
31
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXXX EDB PARTNERS, X.X.
XXXXXX JAPAN PARTNERS, L.P.
By: /s/ Lip-Bu Tan
----------------------------------------------
Name: Lip-Bu Tan
Title: General Partner
Address: 000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
PACVEN XXXXXX VENTURES III, L.P.
By: Pacven Xxxxxx Management, L.P.
General Partner
By: /s/ Lip-Bu Tan
-----------------------------------------
Lip-Bu Tan
Director
Of Pacven Xxxxxx Management Co., Ltd.
As General Partner of Pacven Xxxxxx
Management, L P.
As General Partner of Pacven Xxxxxx
Ventures III, L.P.
Address: 000 Xxxxxxx Xxxxxx
Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
XXXXXX-NIKKO MAURITIUS CO.
By: /s/ Lip-Bu Tan
----------------------------------------------
Lip-Bu Tan
Director
Address: 000 Xxxxxxx Xxxxxx, Xxxxxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000
32
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
U.S. VENTURE PARTNERS V, L.P.
USVP V INTERNATIONAL, L.P.
2180 ASSOCIATES FUND V, L.P.
USVP V ENTREPRENEUR PARTNERS, L.P.
By: Presidio Management Group V, L.L.C.
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxx
Title: General Partner
Address: 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
33
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
U.S. VENTURE PARTNERS VII, L.P.
By: Presidio Management Group, L.L.C.
Its: General Partner
By: /s/ Xxxxx Xxxxxx
-----------------------------------------
Name: Xxxxx Xxxxxx
Title: General Partner
Address: 0000 Xxxx Xxxx Xxxx, Xxxxx 000
Xxxxx Xxxx, XX 00000
34
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
X.X. XXXXXXX AND XXXXXX X. XXXXXXX, AS
TENANTS IN COMMON
By: /s/ X.X. Xxxxxxx
---------------------------------
X. X. Xxxxxxx
Address: 00000 Xxxxxxxxxx Xxxxx
Xxxxxxx, XX 00000
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------
Xxxxxx X. Xxxxxxx
Address: 0000 Xxxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
35
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Address: 0000 Xxxxxxx
Xxxxxx xxx Xxx, XX 00000
XXXXXXXXX XXXXX
/s/ Xxxxxxxxx Xxxxx
------------------------------------
Address: 212 Via Eboli
Xxxxxxx Xxxxx, XX 00000
XXX XXXXXXXXXX
/s/ S. Xxxxx XxXxxxxxxx
------------------------------------
Address: 00000 Xxxxxx Xxxxx Xxxx
Xxx Xxxxx Xxxxx, XX 00000
XXXXXX XXXXXX
/s/ Xxxxxx Xxxxxx
------------------------------------
Address: 000 Xxxxxxxxx Xxxx
Xxx Xxxxx, XX 00000
XXXXXX X. CHI
------------------------------------
/s/ Xxxxxx X. Chi
Address: 0000 Xxx Xxxxxxx
Xxx Xxxxxxxx, XX 00000
36
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXXXXXX X. XXXX
/s/ Xxxxxxxxx X. Xxxx
------------------------------------
Address: 00000 X. XxXxxxx Xxxxx
Xxxxxx, XX 00000
XXXXX X. XXXXXXX
/s/ Xxxxx X. Xxxxxxx
------------------------------------
Address: 00000 Xxxxx Xxxxxx
Xxxxxx Xxxxx, XX 00000
XXXXXXX XXXXXX
/s/ Xxxxxxx Xxxxxx
------------------------------------
Address: 0000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx Xxxxx, XX 00000
XXXX XXXX
/s/ Xxxx Xxxx
------------------------------------
Address: 0000 Xxxxxxxx Xxxxx
Xxxxxx xxx Xxx, XX 00000
37
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
UMB BANK, N.A., TRUSTEE OF THE
XXXXXXX, XXXXXXX & XXXXXXXX LLP
RETIREMENT SAVINGS PLAN FBO
XXXXXXXXX XXXXX
/s/ Xxxxxxx Xxxxxx
------------------------------------
Address: 0000 Xxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
UMB BANK, N.A., TRUSTEE OF THE
XXXXXXX, PHLEGER & XXXXXXXX LLP
RETIREMENT SAVINGS PLAN FBO
XXXXXX X. CHI
/s/ Xxxxxxx Xxxxxx
------------------------------------
Address: 0000 Xxxxx Xxxx.
Xxxxxx Xxxx, XX 00000
38
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXX XXXXX
/s/ Xxxx Xxxxx
------------------------------------
Address: 0000 Xxxxxxxxx Xxxx
Xxxxxxxx, XX 00000
XXXXXXXX XXXX
/s/ Xxxxxxxx Xxxx
------------------------------------
Address: 00000 Xxxxx Xxxxx
Xxxxxxxx, XX 00000
XXXXX XXXXX
/s/ Xxxxx Xxxxx
------------------------------------
Address: 11850 Xxxxxxxxxxx
Xxxxxxxx, XX 00000
39
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXX XXXXXX
/s/ Xxxx Xxxxxx
------------------------------------
Address: 000 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
XXXX XXXXX
/s/ Xxxx Xxxxx
------------------------------------
Address: 0000 Xx. Xxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
XXXX XXXXX
/s/ Xxxx Xxxxx
------------------------------------
Address: 00000 Xxxxx Xxxx
Xxxxxx, XX 00000
40
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
RIVER OAKS INVESTMENTS, L.L.C.
/s/ Xxxxxxx X. Xxxx
------------------------------------
By: Xxxxxxx X. Xxxx, Member
Address: 000 Xxxxxxxxx Xxxxxx
Xx. Xxxxxxx, Xxxxxxxx 00000
XXXXXX X. XXXXXXXXXXXX & PARTNERS
/s/ Xxxxxx X. Xxxxxxxxxxxx
------------------------------------
Address: c/o CTC Communications
000 Xxxx Xxxx Xxxx
Xxxxxxx, XX 00000
41
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
ANTARES INVESTMENTS, LLC
/s/ Xxx X. Xxxx
------------------------------------
By: Xxx X. Xxxx
Its: President
Address: Antares Investments, LLC
c/o Xxx Xxxx
000 Xxxxxxx Xxxx
Xxxxxxxxx, XX 00000
42
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
MMK INVESTMENTS, LLC
/s/ Xxxx X. Xxxxxxxx
----------------------------------------------
By: Xxxx X. Xxxxxxxx
Its: Manager
Address: c/o National Registered Agents, Inc.
0 Xxxx Xxxxxxxxxx Xxxxxx
Xxxxx, Xxxxxx xx Xxxx, XX 00000
43
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
UA VENTURES, LLC
/s/ S. Xxxxxx XxXxx
----------------------------------------
By: S. Xxxxxx XxXxx
Address: 0000 Xxx Xxxx
Xxxxxxxxxx, Xxxxxxxx 00000
Attention: S. Xxxxxx XxXxx
44
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXX XXXXXXX
/s/ Xxx Xxxxxxx
-----------------------------------
Xxx Xxxxxxx
Address: 0 Xxxxxxxx Xxxxxx
Xxxxx, Xxxxx 00000
45
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXX AND XXXXX XXXXXX, HUSBAND AND WIFE
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
Address:
-------------------------------
-------------------------------
46
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXX AND XXXX XXXXXX, HUSBAND AND WIFE
/s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx
/s/ Xxxx Xxxxxx
--------------------------------------
Xxxx Xxxxxx
Address: 0 Xxxxxx Xxxx
Xxxxxxx, XX 00000
47
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
JMI, INC.
/s/ Xxxxxxx Xxxxx
-------------------------------------------
By: Xxxxxxx Xxxxx, President
Address: 00000 Xxxx Xxxxx Xxxxx, Xxxxx 000
Xxx Xxxxx, XX 00000
48
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXXXXX INVESTMENTS, LLC
/s/ Xxxxx X. Xxxxxxxx
------------------------------------
By: Xxxxx X. Xxxxxxxx, Manager
Address: 0000 Xxxxxx Xxxxx Xxxxx
Xxxxxxxx, XX 00000
49
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
XXXXXXX X. XXXXXXX AND XXXXXXX X.
XXXXXXX, JTWROS
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Xxxxxxx X. Xxxxxxx
Address: 0000 Xxxxxxxx Xxxxxx, XX
Xxxxx X-000
Xxxxxxxxxx, XX 00000
50
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT SIGNATURE PAGE
VIKRAM & XXXX XXXXX FAMILY TRUST
DATED FEBRUARY 9, 1994
/s/ Xxxxxx X. Xxxxx
-----------------------------------
Xxxxxx X. Xxxxx
/s/ Xxxx X. Xxxxx
-----------------------------------
Xxxx X. Xxxxx
Address: 00000 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
51
SCHEDULE A
SERIES D INVESTORS
NAME OF INVESTOR
MCI Worldcom Venture Fund, Inc.
Windward Ventures, L.P.
Siemens AG
New Enterprise Associates VII, Limited Partnership
US Venture Partners VII, L.P.
ONSET Enterprise Associates III, L.P.
Pacven Xxxxxx Ventures III, X.X.
Xxxxxx EDB Partners II, X.X.
Xxxxxx-Nikko Mauritius Co.
X.X. Xxxxxxx & Xxxxxx X. Xxxxxxx, as Tenants in Common
Xxxx Xxxxx
Xxxxxxxx Xxxx
Xxxxx Xxxxx
Xxxxx X. Xxxxxxx
UMB Bank, n.a., Trustee of the Xxxxxxx, Phleger & Xxxxxxxx LLP Retirement
Savings Plan FBO Xxxxxxxxx
Xxxxx
Xxxxxxxxx Xxxxx
Xxx XxXxxxxxxx
Xxxxxx Xxxxxx
UMB Bank, n.a., Trustee of the Xxxxxxx, Phleger & Xxxxxxxx LLP Retirement
Savings Plan FBO Xxxxxx X. Chi
Xxxxxx X. Chi
Xxxxxxxxx X. Xxxx
Xxxxx X. Xxxxxxx
Xxxxxxx Xxxxxx
Xxxx Xxxx
Xxxx Xxxxxx
Xxxx Xxxxx
Xxxx Xxxxx
River Oaks Investments L.L.C.
Antares Investments, L.L.C.
Xxxxxx X. Xxxxxxxxxxxx & Partners
MMK Investors, LLC
UA Ventures, LLC
Xxx X. Xxxxxxx
Xxxxx and Xxxxx Xxxxxx, husband and wife Xxxx & Xxxx Xxxxxx, husband and wife
JMI, Inc.
Xxxxxxxx Investments LLC
Xxxxxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx, JTWROS
Vikram and Xxxx Xxxxx Family Trust dtd February 9, 1994
52
SCHEDULE B
PRIOR INVESTORS
Xxxxxxx, Xxxxxxx & Xxxxxxxx LLP Stanford University
Xxxxxxx Investment Company V, L.P. Xxxxxx Xxxxxxx
Xxxxx X. Xxxxxx Xxxxx Xxxxxxx
Xxx Xxxxxxxxx Xxxxxx Xxxxxxx
Xxxxxxx X. D'Amour, Trustee of the D'Amour 2180 Associates Fund V, L.P.
Family Trust
Defta Partners U.S. Venture Partners V, L.P.
Xxxxxxx X. Xxxx USVP V International, X.X.
Xxx X. Xxxxxx USVP V Entrepreneur Partners, L.P.
NEA Presidents Fund, L.P. Pacven Xxxxxx Ventures III, L.P.
NEA Ventures 1997, Limited Partnership Xxxxxx EDB Partners, L.P.
New Enterprise Associates VII, Limited Xxxxxx Japan Partners, L.P.
Partnership
Rajesh Xxxxx Xxxxxx Media & Information Technology
Fund, L.P.
Xxxxxx Xxxxxxxx and Xxxxxxx Xxxxxxxx Xxxxxx-Nikko Mauritius Co.
Onset Enterprise Associates III, X.X. Xxxxxx-SBIC, L.P.
Xxxxxxxx X. Xxxxxxx, Xx. Xxxxxx Technology Ventures II, L.P.
United Missouri Bank of Kansas City, Windward Ventures, L.P.
Successor Trustee for Xxxxxxx, Phleger &
Xxxxxxxx LLP Retirement Savings Trust,
F.B.O Xxxxxxxx X. Xxxxxxx, Xx.
Siemens AG
Siemens Information and Communication
Networks, Inc.
53
AMENDMENT NO. 1 TO
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT NO. 1 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "Amendment") is made as of March 2, 2000, by and between Accelerated
Networks, Inc., a California corporation (the "Company") and Xxxxxxxx
Communications, Inc., a Delaware corporation ("Xxxxxxxx"). This Amendment will
become effective upon the date hereof. All capitalized terms used herein without
definition shall have the meanings ascribed to them in that certain Second
Restated Investors' Rights Agreement dated as of February 18, 2000 (the
"Existing Rights Agreement"), among the Company and certain of its shareholders.
WHEREAS, the Company and Xxxxxxxx have entered into a Second Series D
Preferred Stock Purchase Agreement dated as of February 24, 2000, pursuant to
which the Company will issue to Xxxxxxxx, and Xxxxxxxx will purchase from the
Company, shares of the Company's Series D Preferred Stock;
WHEREAS, as a condition precedent to such issuance and purchase, the
Company and Xxxxxxxx are required to enter into this Amendment;
WHEREAS, the consent of the following shareholders of the Company is
required to approve this Amendment: (a) holders of a majority of the outstanding
Registrable Securities held by the Major Investors, (b) the holders of 66.66% of
the Registrable Securities currently outstanding and held by the Preferred Stock
Investors, and (c) the holders of a majority of the Registrable Securities
currently held by the Founders; and
WHEREAS, the Company has obtained such requisite consent to approve this
Amendment.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby the parties hereto agree
as follows:
1. The Existing Agreement is hereby amended as follows:
(a) The term "Preferred Stock Investor" as used therein shall be deemed
to include Xxxxxxxx.
(b) The portion of Section 2.1 of the Existing Rights Agreement which
immediately precedes subsection (a) thereof shall be amended and restated in its
entirety as follows:
3.11 "Delivery of Financial Statements. The Company shall deliver
to (i) each Preferred Stock Investor who holds (whether directly or by
application of Section 3.8) at least 1,650,000 shares of the Company's
Series A Preferred Stock, 1,000,000 shares of the Company's Series B
Preferred Stock, 1,000,000 shares of the Company's Series C Preferred
Stock, 1,000,000 shares of the Company's Series D Preferred Stock (as
adjusted for subsequent stock splits, stock dividends or
recapitalizations of the
1
54
Company's capital stock) (each, a "Major Investor") and (ii) each of MCI
WorldCom Venture Fund, Inc., a Delaware corporation ("MCI") and Xxxxxxxx
Communications, Inc., a Delaware corporation ("Xxxxxxxx") and for so
long as MCI or Xxxxxxxx, as the case may be, holds at least 800,000
shares of the Company's Series D Preferred Stock (as adjusted for
subsequent stock splits, stock dividends or recapitalizations of the
Company's capital stock):"
(c) Section 2.2 of the Existing Rights Agreement shall be amended and
restated in its entirety as follows:
"Inspection. The Company shall permit each of MCI or Xxxxxxxx, for so
long as MCI or Xxxxxxxx, as the case may be, holds at least 800,000
shares of the Company's Series D Preferred Stock (as adjusted for
subsequent stock splits, stock dividends or recapitalizations of the
Company's capital stock), and each Major Investor, at such Investor's
expense, to visit and inspect the Company's properties, to examine its
books of account and records and to discuss the Company's affairs,
finances and accounts with its officers, all at such reasonable times as
may be requested by the Investor; provided, however, that the Company
shall not be obligated pursuant to this Section 2.2 to provide access to
any information which it deems in good faith to be a trade secret or
similar confidential information."
(d) Section 2.3 of the Existing Rights Agreement shall be amended and
restated in its entirety as follows:
3.12 "Termination of Information and Inspection Covenants. The
covenants set forth in Sections 2.1 and 2.2 shall terminate as to any
Major Investor, MCI and Xxxxxxxx and be of no further force or effect
(i) in conjunction with or at any time subsequent to the sale of
securities pursuant to a registration statement filed by the Company
under the Act in connection with the underwritten offering of its
securities to the general public, (ii) in conjunction with or at any
time subsequent to the acquisition of more than fifty percent (50%) of
the Company's equity securities by another entity by means of any
transaction or series of related transactions (including, without
limitation, any reorganization, merger or consolidation), or a sale of
all or substantially all of the assets of the Company, or (iii) after
the Company first becomes subject to the periodic reporting requirements
of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall first
occur."
2. In all other respects, the Existing Rights Agreement shall remain in
full force and effect and shall apply to the parties hereto.
2
55
AMENDMENT NO. 1 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
THE COMPANY:
ACCELERATED NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxxxx
------------------------------------------
Xxxxxx Xxxxxxxx, President
Address: 000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
XXXXXXXX:
XXXXXXXX COMMUNICATIONS, INC.
By: /s/ Xxxxxx X. Xxxxxxx
------------------------------------------
Name & Title: Xxxxxx X. Xxxxxxx,
President, Domestic Strategic Investments
Address: Xxx Xxxxxxxx Xxxxxx
Xxxxx, XX 00000
56
AMENDMENT NO. 2 TO
SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
THIS AMENDMENT NO. 2 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
(this "Amendment") is made as of May 15, 2000, among Accelerated Networks,
Inc., a California corporation (the "Company"), U S WEST Internet Ventures,
Inc., a Colorado corporation ("U S WEST") and each of the parties on Schedule A
hereto (the "Prior Investors"). This Amendment will become effective upon, and
only in the event of, the closing of the Company's initial public offering (the
"IPO") and the closing of the transactions contemplated by the Subscription
Agreement (as defined below). All capitalized terms used herein without
definition shall have the meanings ascribed to them in that certain Second
Restated Investors' Rights Agreement dated as of February 18, 2000, among the
Company and certain of its shareholders, as amended by that certain Amendment No
1 to Second Restated Investors' Rights Agreement dated as of March 2, 2000, by
and between the Company and Xxxxxxxx Communications Inc. (as so amended, the
"Existing Rights Agreement").
WHEREAS, the Company and U S WEST have entered into a Common Stock
Subscription Agreement dated as of May 15, 2000 (the "Subscription Agreement"),
pursuant to which the Company has agreed to issue to U S WEST, and U S WEST has
agreed to purchase from the Company, shares of the Company's Common Stock
immediately following the closing of the Company's IPO.
WHEREAS, the Company and an affiliate of U S WEST have also entered
into a Memorandum of Understanding dated as of May 10, 2000 (the "MOU"),
pursuant to which the Company has agreed to issue to U S WEST a warrant (the
"Warrant") to purchase shares of the Company's Common Stock immediately
following the closing of the Company's IPO.
WHEREAS, as a condition precedent to the Subscription Agreement, the
Company and U S WEST are required to enter into this Amendment;
WHEREAS, the consent of the following shareholders of the Company is
required to approve this Amendment: (a) holders of a majority of the outstanding
Registrable Securities held by the Major Investors, (b) the holders of 66.66% of
the Registrable Securities currently outstanding and held by the Preferred Stock
Investors, and (c) the holders of a majority of the Registrable Securities
currently held by the Founders; and
WHEREAS, the Company has obtained, or will obtain, the requisite
consent to approve this Amendment.
NOW THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
1
57
1. The Existing Rights Agreement is hereby amended as follows:
(a) The term "Preferred Stock Investor" as used therein shall be deemed to
include U S WEST Internet Ventures, Inc., a Colorado corporation. U S WEST
hereby agrees to be bound by all of the terms and conditions set forth in the
Existing Rights Agreement, as amended by this Amendment, as though it were a
Preferred Stock Investor thereunder.
(b) Section 1.1(f) of the Existing Rights Agreement shall be amended and
restated in its entirety as follows:
"The term "Registrable Securities" means (i) the Common Stock issuable
or issued upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, the Series C Preferred Stock and the Series D Preferred Stock, (ii) the
Six Million Eight Hundred Thousand (6,800,000) shares of Common Stock held by
the Founders, and (iii) the Common Stock issued or issuable upon exercise of any
warrants granted from time to time pursuant to that certain Warrant Issuance
Agreement dated as of December 16, 1999, between the Company and Siemens
Information and Communication Networks, Inc., (iv) the Common Stock issued to U
S WEST Internet Ventures, Inc. ("U S WEST") pursuant to that certain Common
Stock Subscription Agreement dated as of May 15, 2000, (v) the Common Stock
issuable to U S WEST upon exercise of the warrant to be issued to U S WEST upon
the closing of the Company's initial public offering, and (vi) any Common Stock
of the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of the shares
referenced in (i), (ii), (iii), (iv) and (v) above, excluding in all cases,
however, any Registrable Securities sold by a Holder in a transaction in which
such Holder's rights under this Section 1 are not assigned; provided, that
notwithstanding anything herein to the contrary, the securities described in
(iv) and (v) (and any related securities described in (vi) with respect to (iv)
and (v)) shall not be deemed Registrable Securities during the one-year period
beginning on the closing of the Company's initial public offering and ending on
the first anniversary of such date, it being understood that the securities
described in (iv) and (v) (and any related securities described in (vi) with
respect to (iv) and (v)) will be deemed Registrable Securities thereafter,
subject to the other terms and conditions set forth in this Agreement."
2. In all other respects, the Existing Rights Agreement shall remain in
full force and effect and shall apply to the parties hereto.
2
58
AMENDMENT NO. 2 TO SECOND RESTATED INVESTORS' RIGHTS AGREEMENT
SIGNATURE PAGE
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
THE COMPANY:
-----------
ACCELERATED NETWORKS, INC.
By: /s/ Xxxxxx Xxxxxxxx
-----------------------------------------
Xxxxxx Xxxxxxxx, President
Address: 000 Xxxxxxx Xxxxx
Xxxxxxxx, XX 00000
U S WEST:
---------
U S WEST INTERNET VENTURES, INC.
By: /s/ Xxxxxx Xxxx
-----------------------------------------
Xxxxxx Xxxx, President
Address: 0000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
