F5 LABS, INC.
INVESTOR RIGHTS AGREEMENT
F5 LABS, INC.
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (the "Agreement") is entered into as of
the 21st day of August, 1998 by and among F5 LABS, INC., a Washington
corporation (the "Company"), the holders of the Company's Series A Stock, Series
B Stock and Series C Stock (with respect to Section 2 only) and the purchasers
of the Series D Stock, all as set forth on Exhibit A hereto. The holders of the
Series A, B and C Stock shall be referred to hereinafter as the "Prior
Shareholders" and each individually as a "Prior Shareholder." The purchasers of
the Series D Stock shall be referred to hereinafter as the "Investors" and each
individually as an "Investor."
RECITALS
WHEREAS, the Company has issued Series A Stock, Series B Stock, Series
C Stock and Warrants to purchase Common Stock and has granted registration
rights to the holders thereof pursuant to (i) Section 6 of the Series A
Preferred Stock Purchase Agreement (the "Series A Agreement"), dated Xxxxx 00,
0000, (xx) Section 5 of the Series B Stock Purchase Agreement (the "Series B
Agreement"), dated August, 1997, (iii) Section 5 of the Series B Preferred Stock
and Common Stock Warrant Purchase Agreement (the "Series B and Warrant
Agreement"), dated October 27, 1997, and (iv) Section 5 of the Series C
Preferred Stock and Common Stock Warrant Purchase Agreement (the "Series C
Agreement"), dated April 15, 1998, (collectively, the "Prior Agreements");
WHEREAS, the Company and the undersigned holders of Series A Stock,
Series B Stock, Series C Stock and Warrants to purchase Common Stock desire to
terminate the registration rights under the Prior Agreements and to accept the
rights created pursuant hereto in lieu of such rights under the Prior
Agreements;
WHEREAS, the Company proposes to sell and issue up to 1,138,438 shares
of its Series D Stock pursuant to the Series D Preferred Stock Purchase
Agreement (the "Purchase Agreement"); and
WHEREAS, as a condition of entering into the Purchase Agreement, the
Investors have requested that the Prior Shareholders terminate their
registration rights under the Prior Agreements and become parties to this
Agreement and that the Company extend to the Investors registration rights,
information rights and other rights as set forth below.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:
1.
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FORM S-3" means such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities
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.
"HOLDER" means any person owning of record Registrable
Securities that have not been sold to the public or any assignee of record of
such Registrable Securities in accordance with Section 2.10 hereof.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the
Securities Act prior to or in connection with which all outstanding shares of
the Series D Preferred Stock are converted to Common Stock.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"REGISTRABLE SECURITIES" means (a) any shares of Common Stock of
the Company issued or issuable upon conversion of the Shares, (b) any Common
Stock issued upon exercise of the Warrants, and (c) any shares of Common
Stock of the Company issued as (or issuable upon the conversion or exercise
of any warrant, right or other security which is issued as) by way of
dividend, distribution, exchange, replacement or otherwise with respect to
such above described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this
Agreement are not assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued
and outstanding or (b) are issuable pursuant to then exercisable or
convertible securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3, 2.4 and 2.5 hereof, including,
without limitation, all registration and filing fees, printing expenses, fees
and disbursements of counsel for the Company, reasonable fees and
disbursements not to exceed fifteen thousand dollars ($15,000) of a single
special counsel for the Holders, blue sky fees and expenses and the expense
of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall be
paid in any event by the Company).
2.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale.
"SERIES A STOCK" shall mean the Company's Series A Preferred
Stock, no par value.
"SERIES B STOCK" shall mean the Company's Series B Preferred
Stock, no par value.
"SERIES C STOCK" shall mean the Company's Series C Preferred
Stock, no par value.
"SERIES D STOCK" shall mean the Company's Series D Preferred
Stock, no par value.
"SHARES" shall mean the Series A Stock, Series B Stock, Series C
Stock, Series D Stock held by the Investors and Prior Shareholders as of the
date hereof or subsequently acquired by the Investors or Prior Shareholders
and held by the Investors and Prior Shareholders listed on Exhibit A hereto
and their permitted assigns.
"WARRANTS" shall mean (i) the warrants issued to the holders of
the Series C Preferred Stock to purchase up to 93,750 shares of Common Stock,
(ii) the outstanding warrants issued to the holders of the Series B Stock to
purchase 562,500 shares of Common Stock, (iii) the outstanding warrants
issued to Britannia Holdings, Ltd. to purchase an aggregate 537,500 shares of
Common Stock, and (iv) an outstanding warrant issued to Xxxxxxxxx Xxxxxx
Capital, L.L.C. to purchase 120,000 shares of Common Stock.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound by
the terms of this Agreement, (B) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
detailed statement of the circumstances surrounding the proposed disposition,
and (C) if reasonably requested by the Company, such Holder shall have
furnished the Company with an opinion of counsel, reasonably satisfactory to
the Company, that such disposition will not require registration of such
shares under the
3.
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its
partners or former partners in accordance with partnership interests, (B) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, or (C) to the Holder's
family member or trust for the benefit of an individual Holder, or (D) any
transferee who acquires at least 50,000 of Registrable Securities; PROVIDED
that in each case the transferee will be subject to the terms of this
Agreement to the same extent as if he were an original Holder hereunder.
(b) Each certificate representing Shares or Registrable
Securities shall (unless otherwise permitted by the provisions of the
Agreement) be stamped or otherwise imprinted with a legend substantially
similar to the following (in addition to any legend required under applicable
state securities laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
(THE "ACT") AND MAY NOT BE OFFERED, SOLD OR
OTHERWISE TRANSFERRED, ASSIGNED, PLEDGED OR
HYPOTHECATED UNLESS AND UNTIL REGISTERED
UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY AND ITS COUNSEL THAT SUCH
REGISTRATION IS NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly
unlegended certificates at the request of any holder thereof if the holder
shall have obtained an opinion of counsel (which counsel may be counsel to
the Company) reasonably acceptable to the Company to the effect that the
securities proposed to be disposed of may lawfully be so disposed of without
registration, qualification or legend.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an order of the
appropriate blue sky authority authorizing such removal.
2.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 2.2, if the
Company shall receive a written request from the Holders of a majority of the
Registrable Securities then outstanding (the "Initiating Holders") that the
Company file a registration statement under the Securities Act covering the
registration of Registrable Securities then outstanding such that the
anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $5,000,000 (a "Qualified Public Offering")), then
the Company shall, within thirty (30) days of the receipt thereof, give
written notice of such request to all Holders, and subject to the
4.
limitations of this Section 2.2, use its best efforts to effect, as soon as
practicable, the registration under the Securities Act of all Registrable
Securities that the Holders request to be registered.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 or any request pursuant to Section 2.4 and the Company shall
include such information in the written notice referred to in Section 2.2(a)
or Section 2.4(a), as applicable. In such event, the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent
provided herein. All Holders proposing to distribute their securities through
such underwriting shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting by a
majority in interest of the Initiating Holders (which underwriter or
underwriters shall be reasonably acceptable to the Company). Notwithstanding
any other provision of this Section 2.2 or Section 2.4, if the underwriter
advises the Company that marketing factors require a limitation of the number
of securities to be underwritten (including Registrable Securities) then the
Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares that may
be included in the underwriting shall be allocated, first, to the Holders of
Series D Stock on a pro rata basis based on the total number of Registrable
Securities held by all such Holders of Series D Stock and, second, to all
other Holders of Registrable Securities on a pro rata basis based on the
total number of Registrable Securities held by all such Holders. Any
Registrable Securities excluded or withdrawn from such underwriting shall be
withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to the later of (A) the third anniversary of the
date of this Agreement and (B) one hundred eighty (180) days following the
effective date of the registration statement pertaining to the Initial
Offering;
(ii) after the Company has effected two (2) registrations
pursuant to this Section 2.2, and such registrations have been declared or
ordered effective;
(iii) during the period starting 30 days prior to the date
of filing of, and ending on the date one hundred eighty (180) days following
the effective date of the registration statement pertaining to a public
offering of securities by the Company; PROVIDED that the Company makes
reasonable good faith efforts to cause such registration statement to become
effective;
(iv) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by
the Chairman of the Board stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its shareholders for such registration statement to be effected
at such time, in which event the Company shall have the right to defer such
filing for a period of not more than ninety (90) days after receipt of the
request of the Initiating Holders; PROVIDED that
5.
such right to delay a request shall be exercised by the Company not more than
once in any twelve (12) month period; or
(v) if the Initiating Holders propose to dispose of shares
of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders
of Registrable Securities in writing at least fifteen (15) days prior to the
filing of any registration statement under the Securities Act for purposes of
a public offering of securities of the Company (including a registration
statement filed pursuant to Section 2.2 or 2.4 of this Agreement and
including, but not limited to, registration statements relating to secondary
offerings of securities of the Company, but excluding registration statements
relating to employee benefit plans or with respect to corporate
reorganizations or other transactions under Rule 145 of the Securities Act)
and will afford each such Holder an opportunity to include in such
registration statement all or part of such Registrable Securities held by
such Holder. Each Holder desiring to include in any such registration
statement all or any part of the Registrable Securities held by it shall,
within fifteen (15) days after the above-described notice from the Company,
so notify the Company in writing. Such notice shall state the intended method
of disposition of the Registrable Securities by such Holder. If a Holder
decides not to include all of its Registrable Securities in any registration
statement thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be filed
by the Company with respect to offerings of its securities, all upon the
terms and conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering,
the Company shall so advise the Holders of Registrable Securities. In such
event, the right of any such Holder to be included in a registration pursuant
to this Section 2.3 shall be conditioned upon such Holder's participation in
such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their Registrable Securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. Notwithstanding
any other provision of the Agreement, if the underwriter determines in good
faith that marketing factors require a limitation of the number of shares to
be underwritten, the number of shares that may be included in the
underwriting shall be allocated, first, to the Company; second, to the
Holders on a PRO RATA basis based on the total number of Registrable
Securities held by the Holders; and third, to any shareholder of the Company
(other than a Holder) on a PRO RATA basis. No such reduction shall (i) reduce
the securities being offered by the Company for its own account to be
included in the registration and underwriting, or (ii) reduce the amount of
securities of the selling Holders included in the registration below
twenty-five percent (25%) of the total amount of securities included in such
registration, unless such offering is the Initial Offering, in which event
any or all of the Registrable Securities of the Holders may be excluded in
accordance with the immediately preceding sentence. In no event will shares
of any other selling shareholder be included in such registration which would
reduce the number of shares which may be included by Holders without the
written consent of Holders of not less than a majority of the Registrable
Securities proposed to be sold in the offering. If any
6.
Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder 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 person shall be deemed to be a single
"Holder", and any PRO RATA reduction with respect to such "Holder" shall be
based upon the aggregate amount of shares carrying registration rights owned
by all entities and individuals included in such "Holder," as defined in this
sentence.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration. The
Registration Expenses of such withdrawn registration shall be borne by the
Company in accordance with Section 2.5 hereof.
2.4 FORM S-3 REGISTRATION. In case the Company shall receive from
any Holder or Holders of Series D Stock a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3)
or any similar short-form registration statement and any related
qualification or compliance with respect to all or a part of the Registrable
Securities owned by such Holder or Holders of Series D Stock, the Company
will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Series D
Stock; and
(b) as soon as practicable, effect such registration and all
such qualifications and compliances as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any other
Holder or Holders of Series D Stock 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 pursuant to Section 2.3 hereof; PROVIDED,
HOWEVER, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is
not available for such offering by the Holders, or
(ii) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose
to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than two million dollars ($2,000,000),
or
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its
shareholders for such Form S-3 registration to be effected at such time, in
which event the
7.
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4; PROVIDED, that such
right to delay a request shall be exercised by the Company not more than once
in any twelve (12) month period, or
(iv) during the period starting 30 days prior to the date of
filing of, and ending on the date one hundred eighty (180) days following the
effective date of the registration statement pertaining to a public offering
of securities by the Company; provided that the Company makes reasonable good
faith efforts to cause such registration statement to become effective, or
(v) if the Company has already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Section 2.4, or
(vi) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent
to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. Registrations effected pursuant to
this Section 2.4 shall not be counted as demands for registration or
registrations effected pursuant to Sections 2.2 or 2.3, respectively.
2.5 EXPENSES OF REGISTRATION. Except as specifically provided
herein, all Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 2.2 or any
registration under Section 2.3 or Section 2.4 herein shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
hereunder, shall be borne by the holders of the securities so registered PRO
RATA on the basis of the number of shares so registered. The Company shall
reimburse the reasonable itemized fees of and expenses of one special counsel
of the selling Holders; PROVIDED, HOWEVER that such reasonable itemized fees
and expenses shall not exceed $15,000. The Company shall not, however, be
required to pay for expenses of any registration proceeding begun pursuant to
Section 2.2 or 2.4, the request of which has been subsequently withdrawn by
the Initiating Holders unless (a) the withdrawal is based upon material
adverse information concerning the Company of which the Initiating Holders
were not aware at the time of such request or (b) the Holders of a majority
of Registrable Securities agree to forfeit their right to one requested
registration pursuant to Section 2.2 or Section 2.4, as applicable, in which
event such right shall be forfeited by all Holders). If the Holders are
required to pay the Registration Expenses, such expenses shall be borne by
the holders of securities (including Registrable Securities) requesting such
registration in proportion to the number of shares for which registration was
requested. If the Company is required to pay the Registration Expenses of a
withdrawn offering pursuant to clause (a) above, then the Holders shall not
forfeit their rights pursuant to Section 2.2 or Section 2.4 to a demand
registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
8.
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective, and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to ninety (90)
days or, if earlier, until the Holder or Holders have completed the
distribution related thereto. The Company shall not be required to file,
cause to become effective or maintain the effectiveness of any registration
statement that contemplates a distribution of securities on a delayed or
continuous basis pursuant to Rule 415 under the Securities Act.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Securities Act with respect to the disposition of
all securities covered by such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Holders, PROVIDED that the Company shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering. Each
Holder participating in such underwriting shall also enter into and perform
its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any
event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact
or omits to state a material fact required to be stated therein or necessary
to make the statements therein not misleading in the light of the
circumstances then existing.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities are
being sold through underwriters, or, if such securities are not being sold
through underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities and (ii) a letter dated as of such date, from the
independent certified public accountants of the Company, in form and
substance as is
9.
customarily given by independent certified public accountants to underwriters
in an underwritten public offering and reasonably satisfactory to a majority
in interest of the Holders requesting registration, addressed to the
underwriters, if any, and if permitted by applicable accounting standards, to
the Holders requesting registration of Registrable Securities.
2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights
granted under this Section 2 terminate to Holders, with respect to an
individual Holder, when he/she can sell all shares in one quarter under Rule
144 and as to all Holders, three years after the Company becomes subject to
the reporting requirements of the Securities Exchange Act of 1934, as amended.
2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the
selling Holders shall furnish to the Company such information regarding
themselves, the Registrable Securities held by them and the intended method
of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
(b) The Company shall have no obligation with respect to any
registration requested pursuant to Section 2.2 or Section 2.4 if, due to the
operation of subsection 2.2(b), the number of shares or the anticipated
aggregate offering price of the Registrable Securities to be included in the
registration does not equal or exceed the number of shares or the anticipated
aggregate offering price required to originally trigger the Company's
obligation to initiate such registration as specified in Section 2.2 or
Section 2.4, whichever is applicable.
2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers and directors of each
Holder, any underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or underwriter within the
meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Securities Act, the Exchange 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") by the
Company: (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including 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 Securities Act, the Exchange Act, any state
securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the
offering covered by such registration statement; and the Company will pay as
incurred to each such Holder, partner, officer, director, underwriter or
controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage,
10.
liability or action; PROVIDED HOWEVER, that the indemnity agreement contained
in this Section 2.9(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 such Holder, partner, officer, director, underwriter or
controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as
to which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers
and each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors
or officers or any person who controls such Holder, against any losses,
claims, damages or liabilities (joint or several) to which the Company or any
such director, officer, controlling person, underwriter or other such Holder,
or partner, director, officer or controlling person of such other Holder may
become subject under the Securities Act, the Exchange 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 under an instrument duly executed by such Holder and stated to be
specifically for use in connection with such registration; and each such
Holder will pay as incurred any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling person, underwriter
or other Holder, or partner, officer, director or controlling person of such
other Holder in connection with investigating or defending any such loss,
claim, damage, liability or action if it is judicially determined that there
was such a Violation; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 2.9(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 Section 2.9 exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.9 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 2.9,
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 shall have the right to retain its own 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
materially prejudicial to its
11.
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 2.9, 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 2.9.
(d) If the indemnification provided for in this Section 2.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified
party thereunder, shall to the extent permitted by applicable law contribute
to the amount paid or payable by such indemnified party as a result of such
loss, claim, damage or liability in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the Violation(s) that
resulted in such loss, claim, damage or liability, as well as any other
relevant equitable considerations. The relative fault of the indemnifying
party and of the indemnified party shall be determined by a court of law by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission to state a material fact relates
to information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; PROVIDED, that
in no event shall any contribution by a Holder hereunder exceed the proceeds
from the offering received by such Holder.
(e) The obligations of the Company and Holders under this
Section 2.9 shall survive completion of any offering of Registrable
Securities in a registration statement and the termination of this agreement.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of Registrable Securities
which (a) is a subsidiary, parent, general partner, limited partner, retired
partner, member or retired member of a Holder, (b) is a Holder's family
member or trust for the benefit of an individual Holder, or (c) acquires at
least fifty thousand (50,000) shares of Registrable Securities (as adjusted
for stock splits and combinations); provided, however, (i) the transferor
shall, within ten (10) days after such transfer, furnish to the Company
written notice of the name and address of such transferee or assignee and the
securities with respect to which such registration rights are being assigned
and (ii) such transferee shall agree to be subject to all restrictions set
forth in this Agreement.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section
2 may be amended and the observance thereof may be waived (either generally
or in a particular instance and either retroactively or prospectively), only
with the written consent of the Company and the Holders of at least
two-thirds (2/3) of the Registrable Securities then outstanding; PROVIDED,
HOWEVER, that any amendment to this Section 2 that adversely affects the
holders of Series D Preferred Stock shall require the written consent of the
holders of at least two-thirds (2/3) of the
12.
Series D Preferred Stock. Any amendment or waiver effected in accordance with
this Section 2.11 shall be binding upon each Holder and the Company.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of
the Holders of two-thirds (2/3) of the Registrable Securities then
outstanding, enter into any agreement with any holder or prospective holder
of any securities of the Company that would grant such holder registration
rights senior to or on parity with those granted to the Holders hereunder.
2.13 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION.
Each Holder hereby agrees that such Holder shall not sell or otherwise
transfer or dispose of any Common Stock (or other securities) of the Company
held by such Holder (other than those included in the registration) for a
period specified by the representative of the underwriters of Common Stock
(or other securities) of the Company not to exceed one hundred eighty (180)
days following the effective date of a registration statement of the Company
filed under the Securities Act; PROVIDED that:
(i) such agreement shall apply only to the Company's Initial
Offering; and
(ii) all officers and directors of the Company enter into
similar agreements.
Each Holder agrees to execute and deliver such other agreements as
may be reasonably requested by the Company or the underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. In addition, if requested by the Company or the representative of
the underwriters of Common Stock (or other securities) of the Company, each
Holder shall provide, within ten (10) days of such request, such information
as may be required by the Company or such representative in connection with
the completion of any public offering of the Company's securities pursuant to
a registration statement filed under the Securities Act. The obligations
described in this Section 2.13 shall not apply to a registration relating
solely to employee benefit plans on Form S-1 or Form S-8 or similar forms
that may be promulgated in the future, or a registration relating solely to a
Commission Rule 145 transaction on Form S-4 or similar forms that may be
promulgated in the future. The Company may impose stop-transfer instructions
with respect to the shares of Common Stock (or other securities) subject to
the foregoing restriction until the end of said one hundred eighty (180) day
period.
2.14 RULE 144 REPORTING. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date
of the first registration filed by the Company for an offering of its
securities to the general public;
(b) File with the SEC, in a timely manner, all reports and
other documents required of the Company under the Exchange Act; and
13.
(c) So long as a Holder owns any Registrable Securities,
furnish to such Holder forthwith upon request: a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
of the Securities Act, and of the Exchange Act (at any time after it has
become subject to such reporting requirements); a copy of the most recent
annual or quarterly report of the Company; and such other reports and
documents as a Holder may reasonably request in availing itself of any rule
or regulation of the SEC allowing it to sell any such securities without
registration.
2.15 TERMINATION OF REGISTRATION RIGHTS UNDER PRIOR AGREEMENTS. The
registrations rights provided under (i) Section 6 of the Series A Agreement,
(ii) Section 5 of the Series B Agreement, (iii) Section 5 the Series B and
Warrant Agreement, and (iv) Section 5 of the Series C Preferred Stock and
Common Stock Warrant Purchase Agreement are terminated in their entirety and
shall have no further force or effect whatsoever. The registration rights
contained in this Agreement set forth the sole and entire agreement among the
Company and the Prior Shareholders on the subject matter hereof and supersede
any and all rights granted and covenants made under any prior agreements (and
the undersigned parties to the Prior Agreements hereby amend such agreements
such that the registration rights provided for herein shall apply to all
parties under the Prior Agreements).
SECTION 3. COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(a) The Company will maintain true books and records of account
in which full and correct entries will be made of all its business
transactions pursuant to a system of accounting established and administered
in accordance with generally accepted accounting principles consistently
applied, and will set aside on its books all such proper accruals and
reserves as shall be required under generally accepted accounting principles
consistently applied.
(b) As soon as practicable after the end of each fiscal year of
the Company, and in any event within one hundred twenty (120) days
thereafter, the Company will furnish each Investor a consolidated balance
sheet of the Company, as at the end of such fiscal year, and a consolidated
statement of income and a consolidated statement of cash flows of the
Company, for such year, all prepared in accordance with generally accepted
accounting principles consistently applied and setting forth in each case in
comparative form the figures for the previous fiscal year, all in reasonable
detail, with the exception that no notes need be attached to such statements.
The Company will furnish each Investor, as soon as practicable after the end
of the first, second and third quarterly accounting periods in each fiscal
year of the Company, and in any event within forty-five (45) days thereafter,
a consolidated balance sheet of the Company as of the end of each such
quarterly period, and a consolidated statement of income and a consolidated
statement of cash flows of the Company for such period and for the current
fiscal year to date, prepared in accordance with generally accepted
accounting principles, with the exception that no notes need be attached to
such statements and year-end audit adjustments may not have been made.
(c) The Company will additionally furnish each Investor that
(with its affiliates) shall own not less than two hundred thousand (200,000)
shares of Registrable
14.
Securities (as adjusted for stock splits and combinations) (a "Major
Investor") (i) at least thirty (30) days prior to the beginning of each fiscal
year an annual budget and operating plans for such fiscal year and (ii) as
soon as practicable after the end of each month a consolidated balance sheet
of the Company as of the end of such month and consolidated statements of
income and cash flows of the Company for each month and for the current fiscal
year of the Company to date, all subject to normal year-end adjustments,
together with a comparison of such statements against plan.
3.2 INSPECTION RIGHTS. Each Major Investor shall have the right to
visit and inspect any of the properties of the Company or any of its
subsidiaries, and to discuss the affairs, finances and accounts of the
Company or any of its subsidiaries with its officers, and to review such
information as is reasonably requested all at such reasonable times and as
often as may be reasonably requested; provided, however, that the Company
shall not be obligated under this Section 3.2 with respect to a competitor of
the Company or with respect to information which the Board of Directors
determines in good faith is confidential and should not, therefore, be
disclosed.
3.3 CONFIDENTIALITY OF RECORDS. Each Investor agrees to use, and to
use its best efforts to insure that its authorized representatives use, the
same degree of care as such Investor uses to protect its own confidential
information to keep confidential any information furnished to it which the
Company identifies as being confidential or proprietary (so long as such
information is not in the public domain), except that such Investor may
disclose such proprietary or confidential information to any partner,
subsidiary or parent of such Investor for the purpose of evaluating its
investment in the Company as long as such partner, subsidiary or parent is
advised of the confidentiality provisions of this Section 3.3.
3.4 RESERVATION OF COMMON STOCK. The Company will at all times
reserve and keep available, solely for issuance and delivery upon the
conversion of the Preferred Stock, all Common Stock issuable from time to
time upon such conversion.
3.5 STOCK VESTING. Unless otherwise approved by the Board of
Directors, all stock options and other stock equivalents issued after the
date of this Agreement to employees, directors, consultants and other service
providers shall be subject to vesting as follows: (a) twenty-five percent
(25%) of such stock shall vest at the end of the first year following the
earlier of the date of issuance or such person's services commencement date
with the company, and (b) seventy-five percent (75%) of such stock shall vest
monthly over the remaining three (3) years; provided that subsequent stock
options granted to employees after their initial employment by the Company
may vest over a four year monthly vesting schedule in which such monthly
vesting would begin immediately. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide
that upon such person's termination of employment or service with the
Company, with or without cause, the Company or its assignee (to the extent
permissible under applicable securities laws and other laws) shall have the
option to purchase at cost any unvested shares of stock held by such person.
3.6 KEY MAN INSURANCE. Subject to the approval of the Board of
Directors, the Company will use its best efforts to obtain and maintain in
full force and effect term life
15.
insurance in the amount of one million ($1,000,000) dollars on the life of
Xxxxxxx Xxxxxx, naming the Company as beneficiary.
3.7 ASSIGNMENT OF INVENTIONS AGREEMENTS. The Company shall require
all officers, employees and consultants to execute and deliver an Assignment
of Inventions Agreement in a form approved by the Company's Board of
Directors.
3.8 DIRECTORS AND OFFICERS LIABILITY INSURANCE. The Company shall
use its best efforts to secure and maintain directors and officers liability
insurance no less than $1,000,000, provided that such coverage is available
at commercially reasonable rates, as determined by the Board of Directors of
the Company. Such directors and officers liability insurance shall be
maintained for so long as any of the representative(s) of the Investors serve
on the Company's Board of Directors.
3.9 REIMBURSEMENT OF EXPENSES FOR ATTENDING BOARD MEETINGS. The
Company will reimburse all directors for reasonable expenses (including
airfare, lodging and other travel expenses) incurred in connection with
attending meetings of the Company's Board of Directors.
3.10 TERMINATION OF COVENANTS. All covenants of the Company contained
in Section 3 of this Agreement shall expire and terminate as to each Investor
upon the earlier of (i) the effective date of the registration statement
pertaining to the Initial Offering or (ii) upon (a) the acquisition of all or
substantially all of the assets of the Company or (b) an acquisition of the
Company by another corporation or entity by consolidation, merger or other
reorganization in which the holders of the Company's outstanding voting stock
immediately prior to such transaction own, immediately after such
transaction, securities representing less than fifty percent (50%) of the
voting power of the corporation or other entity surviving such transaction (a
"Change in Control").
SECTION 4. RIGHTS OF FIRST REFUSAL
4.1 SUBSEQUENT OFFERINGS. Each Holder of Series D Preferred Stock
shall have a right of first refusal to purchase its PRO RATA share of all
Equity Securities, as defined below, that the Company may, from time to time,
propose to sell and issue after the date of this Agreement, other than the
Equity Securities excluded by Section 4.6 hereof. Each Investor's PRO RATA
share is equal to the ratio of (a) the number of shares of the Company's
Common Stock (including all shares of Common Stock issued or issuable upon
conversion of the Shares) which such Investor is deemed to hold immediately
prior to the issuance of such Equity Securities to (b) the total number of
shares of the Company's outstanding Common Stock (including all shares of
Common Stock issued or issuable upon conversion of the Shares or upon the
exercise of any outstanding warrants or options) immediately prior to the
issuance of the Equity Securities. The term "Equity Securities" shall mean
(i) any Common Stock or Preferred Stock of the Company, (ii) any security
convertible, with or without consideration, into any Common Stock or
Preferred Stock (including any option to purchase such a convertible
security), or (iii) any warrant or right to subscribe to or purchase any
Common Stock or Preferred Stock
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Holder written notice of its intention,
describing the Equity Securities, the price
16.
and the terms and conditions upon which the Company proposes to issue the
same. Each Holder shall have fifteen (15) days from the giving of such notice
to agree to purchase its pro rata share of the Equity Securities for the price
and upon the terms and conditions specified in the notice by giving written
notice to the Company and stating therein the quantity of Equity Securities to
be purchased. Notwithstanding the foregoing, the Company shall not be required
to offer or sell such Equity Securities to any Holder who would cause the
Company to be in violation of applicable federal securities laws by virtue of
such offer or sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If not all of
the Holders elect to purchase their pro rata share of the Equity Securities,
then the Company shall promptly notify in writing the Holders who do so elect
and shall offer such Holders the right to acquire a pro rata share of such
unsubscribed shares. The Holders shall have five (5) days after receipt of
such notice to notify the Company of its election to purchase all or a
portion thereof of the unsubscribed shares. If the Holders fail to exercise
in full the rights of first refusal, the Company shall have ninety (90) days
thereafter to sell the Equity Securities in respect of which the Holder's'
rights were not exercised, at a price and upon general terms and conditions
materially no more favorable to the purchasers thereof than specified in the
Company's notice to the Holders pursuant to Section 4.2 hereof. If the
Company has not sold such Equity Securities within ninety (90) days of the
notice provided pursuant to Section 4.2, the Company shall not thereafter
issue or sell any Equity Securities without first offering such securities to
the Holders in the manner provided above.
4.4 TERMINATION AND WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of
first refusal established by this Section 4 shall not apply to, and shall
terminate upon the effective date of the registration statement pertaining to
the Company's Initial Public Offering of the Company in which all of the
Preferred Stock is converted into Common Stock.
4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal
of each Holder under this Section 4 may be transferred to the same parties,
and subject to the same restrictions, as any transfer of registration rights
pursuant to Section 2.10.
4.6 EXCLUDED SECURITIES. The rights of first refusal established by
this Section 4 shall have no application to any of the following Equity
Securities:
(a) shares of Common Stock (and/or options, warrants or other
Common Stock purchase rights issued pursuant to such options, warrants or
other rights) issued or to be issued to employees, officers or directors of,
or consultants or advisors to, the Company or any subsidiary, pursuant to
stock purchase or stock option plans or other arrangements that are approved
by the Board of Directors;
(b) stock issued pursuant to any rights or agreements
outstanding as of the date of this Agreement, options and warrants
outstanding as of the date of this Agreement; and stock issued pursuant to
any such rights or agreements granted after the date of this Agreement,
provided that the rights of first refusal established by this Section 4
applied with respect to the initial sale or grant by the Company of such
rights or agreements;
17.
(c) any Equity Securities issued pursuant to a merger,
consolidation, acquisition or similar business combination;
(d) shares of Common Stock issued in connection with any stock
split, stock dividend or recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of the Shares;
(f) any Equity Securities issued pursuant to any equipment
leasing arrangement, or pursuant to debt financing from a bank or other
financial institution;
(g) any Equity Securities that are issued by the Company
pursuant to a registration statement filed under the Securities Act for the
Company's Initial Offering;
(h) shares of the Company's Common Stock or Preferred Stock
issued in connection with strategic transactions involving the Company and
other entities, including (A) joint ventures, manufacturing, marketing or
distribution arrangements or (B) technology transfer or development
arrangements; provided that such strategic transactions and the issuance of
shares therein, have been approved by the Company's Board of Directors; and
(i) any shares of Common Stock or options, warrants or
convertible securities issued upon receipt of written consent or approval of
the holders of two-thirds (2/3) of the Registrable Securities.
SECTION 5. MISCELLANEOUS
5.1 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. In any action between or among any of the parties, whether
arising out of this Agreement or otherwise, (a) each of the parties
irrevocably and unconditionally consents to jurisdiction and venue in any
federal or state court located in the State of Washington; and (b) if any
such action is commenced in a state court, then, subject to applicable law,
no party shall object to the removal of such action to any federal court
located in the State of Washington.
5.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder and
the closing of the transactions contemplated hereby. All statements as to
factual matters contained in any certificate or other instrument delivered by
or on behalf of the Company pursuant hereto in connection with the
transactions contemplated hereby shall be deemed to be representations and
warranties by the Company hereunder solely as of the date of such certificate
or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
PROVIDED, HOWEVER, that prior to the receipt by the Company of adequate
written notice of the transfer of any Registrable Securities specifying the
full name and address of the transferee, the
18.
Company may deem and treat the person listed as the holder of such shares in
its records as the absolute owner and holder of such shares for all purposes,
including the payment of dividends or any redemption price.
5.4 ENTIRE AGREEMENT. Except for those certain inspection rights
granted pursuant to Section 7.2 of the Series A Agreement and Section 9.2 of
the Series B and Warrant Agreement, which the parties hereto agree shall
continue pursuant to the respective terms of such agreements, this Agreement,
the Exhibits and Schedules hereto, the Purchase Agreement and the other
documents delivered pursuant thereto constitute the full and entire
understanding and agreement between the parties with regard to the subjects
hereof and no party shall be liable or bound to any other in any manner by
any representations, warranties, covenants and agreements except as
specifically set forth herein and therein.
5.5 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
5.6 AMENDMENT AND WAIVER.
(a) Except with respect to Section 2 and as otherwise expressly
provided, this Agreement may be amended or modified only upon the written
consent of the Company and the holders of at least two-thirds (2/3) of the
Series D Preferred Stock.
(b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of at least two-thirds (2/3) of
the Series D Preferred Stock.
(c) Notwithstanding the foregoing, this Agreement may be
amended with only the written consent of the Company to include additional
purchasers of Shares as "Investors," "Holders" and parties hereto.
(d) Notwithstanding the foregoing, Section 2 of this Agreement
may be amended or modified only upon written consent of (i) the Company, (ii)
the holders of a majority of the Registrable Securities and (iii) the holders
of at least two-thirds (2/3) of the Series D Stock, and the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of (i) the holders of a majority of the
Registrable Securities and (ii) the holders of two-thirds (2/3) of the Series
D Stock.
5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent, or approval of any kind or character
on any Holder's part of any breach, default or noncompliance under the
Agreement or any waiver on such Holder's part of any provisions or conditions
of this Agreement must be in writing and shall be effective only to the
extent specifically set forth in such writing. All remedies, either under
this Agreement, by law, or otherwise afforded to Holders, shall be cumulative
and not alternative.
19.
5.8 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (a) upon personal delivery to
the party to be notified, (b) when sent by confirmed telex or facsimile if
sent during normal business hours of the recipient; if not, then on the next
business day, (c) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (d) one (1) day
after deposit with a nationally recognized overnight courier, specifying next
day delivery, with written verification of receipt. All communications shall
be sent to the party to be notified at the address as set forth on the
signature pages hereof or Exhibit A hereto or at such other address as such
party may designate by five (5) days advance written notice to the other
parties hereto.
5.9 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable fees
and expenses of attorneys and accountants, which shall include, without
limitation, all fees, costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections
of this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[THIS SPACE INTENTIONALLY LEFT BLANK]
20.
IN WITNESS WHEREOF, the parties hereto have executed this INVESTOR
RIGHTS AGREEMENT as of the date set forth in the first paragraph hereof.
COMPANY:
F5 LABS, INC.
By: /s/ Xxxx Xxxxxx
---------------------------------
Name: Xxxxxxx X. Xxxxxx
-------------------------------
Title: CEO & President
------------------------------
21.
INVESTORS:
SERIES D HOLDERS:
MENLO VENTURES VII, L.P.
By: MV MANAGEMENT VII, L.L.C.
Its General Partner
By: /s/ Xxxxx Xxxx
------------------------------
Managing Member
MENLO ENTREPRENEURS FUND VII, L.P.
By: MV MANAGEMENT VII, L.L.C.
Its General Partner
By: /s/ Xxxxx Xxxx
------------------------------------
Managing Member
PACIFIC TECHNOLOGY VENTURES U.S.A., L.P.
BY: IDG VENTURES, L.L.C.
Name: /s/ Xxx Xxxxx
----------------------------------
Title: General Partner Managing Member
---------------------------------
22.
SERIES A HOLDERS:
-------------------------
By: /s/ Xxxxxxx Xxxxxxxx 8/20/98
-------------------------------
Name: Xxxxxxx X. Xxxxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxxx Xxxxxx 8/18/98
-------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxxx Xxxx Xxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxx Xxxxxx Xxxxxxx, Jr.
-----------------------------
Title:
----------------------------
By: /s/ Xxxx Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxx X. Xxxxxxxxx
-------------------------------
/s/ Xxxxx Xxxxxxxxx
-------------------------------
Name: Xxxxxx X. & Xxxxx Xxxxxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxx X. Xxxxxx
-------------------------------
/s/ Xxxxxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. & Xxxxxxx X. Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxx Xxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxx Xxxxx
-------------------------------
/s/ Xxxxxxxx Xxxxx
-------------------------------
Name: Xxxxx & Xxxxxxxx Xxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxx Xxxxx
-------------------------------
Name: Xxxxx Xxxxx
-----------------------------
Title:
----------------------------
Encompass Group, Inc.
By: /s/ Xxxxx X. XxXxxxxx
-------------------------------
Name: Xxxxx X. XxXxxxxx
-----------------------------
Title: Senior Vice President
----------------------------
By: /s/ Xxxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx and Xxxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
-----------------------------
Title: Atrieva Corp.
----------------------------
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
Name: Xxxxx X. Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxx X. Xxxxxx
-------------------------------
/s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxx X. and Xxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxx Xxxxxx
-------------------------------
Name: Xxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
KLJ Ventures, LLC
By: /s/ Xxxx Xxxxxxx
-------------------------------
Name: Xxxx Xxxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxxx Xxxx 8-19-98
-------------------------------
Name: Xxxxxxx Xxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxx Xxxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxx Xxxxxxxxx
-------------------------------
Name: Xxxx Xxxxxxxxx
-----------------------------
Title:
----------------------------
Xxxxxx Bldg. Co.
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxx Xxxxxxx
-------------------------------
Name: Xxxxx Xxxxxxx
-----------------------------
Title:
----------------------------
23.
By: /s/ Xxxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx Xxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxxx Xxxxxx
-------------------------------
Name: Xxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxxx Xxxxx
-------------------------------
/s/ Xxxxxx Xxxxx
-------------------------------
Name: Xxxxxxx and Xxxxxx Xxxxx
-----------------------------
Title:
----------------------------
By: /s/ Xxxxxxx Xxxx for
Xxxxxxx Xxxx, Xxxxxx Xxxxxx,
and Xxxxxxx Xxxxxxxx
Trustees,
Anesthesia Service Inc.
FBO Xxxxxxx Xxxx
-------------------------------
Name: Xxxxxxx Xxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxx X. & Xxxxx Xxxxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxxx & Xxxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxxxx X. Xxxxxx &
Xxx Xxxxxx Xxxxxxxxxxx Xxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxx & Xxxxxxx Xxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxx X. Xxxxxxxxxxx
-----------------------------
Title: DDS
----------------------------
By:
-------------------------------
Name: Xxxx X. & Xxxxxxxx X. Xxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title:
----------------------------
24.
By:
-------------------------------
Name: Xxxxxx X. Xxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Chi-Dooh & Xxxxxxx Xxxx Xx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxxxxx X. Xxxxxx
-----------------------------
Title:
----------------------------
By:
-------------------------------
Name: Xxxxxxx & Xxxx Xxxxx
-----------------------------
Title: Trust
----------------------------
By:
-------------------------------
Name: Delaware Charter,
Trustee FBO
Xxxxxxx X. Xxxxxxxxx
-----------------------------
Title:
----------------------------
25.
SERIES B HOLDERS:
BRITANNIA HOLDINGS LIMITED
By: /s/ Xxxxxxx Xxxxxx Xxxx
------------------------------
[Its General Partner]
Name: Xxxxxxx Xxxxxx Xxxx
-----------------------------
Title: Director
----------------------------
ENCOMPASS GROUP INCORPORATED
By: [______________________]
Name: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Title: Senior Vice President
----------------------------
XXXX XXXXXXX
By: /s/ Xxxx Xxxxxxx
Name: Xxxx Xxxxxxx
------------------------------
Title:
-----------------------------
26.
SERIES C HOLDERS:
CYPRESS PARTNERS, L.P.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
[Its General Partner]
Name: Xxxxxxx X. Xxxxxxx
------------------------------
Title: General Partner
-----------------------------
27.
TABLE OF CONTENTS
PAGE
SECTION 1. GENERAL.................................................. 2
1.1 Definitions.............................................. 2
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER................... 3
2.1 Restrictions on Transfer................................. 3
2.2 Demand Registration...................................... 4
2.3 Piggyback Registrations.................................. 6
2.4 Form S-3 Registration.................................... 7
2.5 Expenses of Registration................................. 8
2.6 Obligations of the Company............................... 8
2.7 Termination of Registration Rights....................... 10
2.8 Delay of Registration; Furnishing Information............ 10
2.9 Indemnification.......................................... 10
2.10 Assignment of Registration Rights........................ 12
2.11 Amendment of Registration Rights......................... 12
2.12 Limitation on Subsequent Registration Rights............. 13
2.13 "Market Stand-Off" Agreement; Agreement to Furnish
Information.............................................. 13
2.14 Rule 144 Reporting....................................... 13
2.15 Termination of Registration Rights Under Prior
Agreements............................................... 14
SECTION 3. COVENANTS OF THE COMPANY................................. 14
3.1 Basic Financial Information and Reporting................ 14
3.2 Inspection Rights........................................ 15
3.3 Confidentiality of Records............................... 15
3.4 Reservation of Common Stock.............................. 15
3.5 Stock Vesting............................................ 15
3.6 Key Man Insurance........................................ 15
3.7 Assignment of Inventions Agreements...................... 16
3.8 Directors and Officers Liability Insurance............... 16
3.9 Reimbursement of Expenses for Attending Board Meetings... 16
3.10 Termination of Covenants................................. 16
TABLE OF CONTENTS
(CONTINUED)
PAGE
SECTION 4. RIGHTS OF FIRST REFUSAL.................................. 16
4.1 Subsequent Offerings..................................... 16
4.2 Exercise of Rights....................................... 16
4.3 Issuance of Equity Securities to Other Persons........... 17
4.4 Termination and Waiver of Rights of First Refusal........ 17
4.5 Transfer of Rights of First Refusal...................... 17
4.6 Excluded Securities...................................... 17
SECTION 5. MISCELLANEOUS............................................ 18
5.1 Governing Law............................................ 18
5.2 Survival................................................. 18
5.3 Successors and Assigns................................... 18
5.4 Entire Agreement......................................... 18
5.5 Severability............................................. 19
5.6 Amendment and Waiver..................................... 19
5.7 Delays or Omissions...................................... 19
5.8 Notices.................................................. 19
5.9 Attorneys' Fees.......................................... 20
5.10 Titles and Subtitles..................................... 20
5.11 Counterparts............................................. 20
ii.
EXHIBIT A
SCHEDULE OF INVESTORS
A-1
INVESTOR RIGHTS AGREEMENT
SCHEDULE OF INVESTORS
Xxxxxxx X. Xxxxxxxx
Xxxxxxx X. Xxxxxx
Xxxx Xxxxxx Barnettt, Jr.
Xxxxxxxx X. & Xxxx X. Xxxxxx JWROS
Xxxx X. Xxxxxxx
Britannia Holdings Limited
Xxxxxx X. & Xxxxx X. Xxxxxxxxx
Xxxx X. & Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxxxxxxx, D.D.S.
Xxxxxx X. Xxxxxx & Xxx Xxxxxx Xxxxxxxxxxx Xxxx JTWROS
Xxxx Xxxxxxxx
Cypress Partners Limited Partnership
Xxxxx X. & Xxxxxxxx X. Xxxxx, Tenants In Common
Xxxx X. Xxxxxx & Xxxxxxxx X. Xxxxxx, JTWROS
Xxxxxx X. Xxxxx & Xxxx X. Xxxxxx, JTWROS
Delaware Charter, Trustee, fbo Xxxxx X. Xxxxxx XXX
Delaware Charter, Trustee, fbo Xxxxxxx X. Xxxxxxxxx XXX
Xxxxx X. Xxxxx
Encompass Group Incorporated
Xxxxxx X. Xxxxx
Xxxxxx X. & Xxxxxxxx X. Xxxxxx JTWROS
Xxxx X. Xxxxxxxxx
Xxxx X. & Xxxxxxx X. Xxxxxx
Xxxxxx Xxxxxx
KLJ Ventures, L.L.C.
Chi-Dooh & Xxxxxxx Xxxx Xx
Xxxxxxxx X. Xxxxxx
Xxxxxxx X. Xxxx
Xxxx Xxxxxxxxxx
Menlo Entrepreneurs Fund VII, L.P.
Menlo Ventures VII, L.P.
Pacific Technology Ventures U.S.A., L.P.
Xxxx Xxxxxxxxx
Xxxx Xxxxxxx
Xxxxxx Building Company
Xxxxx Xxxxxxx
Xxxxxxx X. Xxxxx
Xxxxxxx X. Xxxxxx
Xxxxxxx X. & Xxxxxx X. Xxxxx, Tenants in Common
Xxxxxxx Xxxx, Xxxxxx Xxxxxx & Xxxxxxx Xxxxxxxx, Trustees, Anesthesia Services
Inc. Deferred Retirement Plan fbo Xxxxxxx Xxxx
A-2.
