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EXHIBIT 10.7
STOCKHOLDERS
AGREEMENT
Dated as of December 26, 1992
Among
XXXX X. XXXXXX, XX.
XXXXX X. EEG
CP ACQUISITION, L.P. NO.4A
CP ACQUISITION, L.P. NO.4B
CAPITAL PARTNERS, INC.
FGS, INC.
MAXTOR CORPORATION
STORAGE DIMENSIONS, INC.
and
OTHER MANAGEMENT INVESTORS
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TABLE OF CONTENTS
Page
BACKGROUND AND STATEMENT OF PURPOSE.................................... 1
ARTICLE 1 DEFINITIONS...................................... 1
1.1 "Action"......................................... 1
1.2 "Agreement"...................................... 1
1.3 "Approval"....................................... 2
1.4 "Board".......................................... 2
1.5 "Bylaws"......................................... 2
1.6 "Closing"........................................ 2
1.7 "Closing Date"................................... 2
1.8 "Exchange Act"................................... 2
1.9 "Governmental Entity"............................ 2
1.10 "Holder" or "Holders"............................ 2
1.11 "Immediate Family Member"........................ 2
1.12 "Initial Public Offering"........................ 2
1.13 "Law"............................................ 2
1.14 "Loss"........................................... 2
1.15 "Management Investor"............................ 3
1.16 "Management Investor Permitted Transferee"....... 3
1.17 "Maxtor Permitted Transferee".................... 3
1.18 "Newco Common Stock"............................. 3
1.19 "Newco Equity Equivalent"........................ 3
1.20 "Newco Equity Security".......................... 3
1.21 "Newco Voting Convertible Preferred Stock"....... 3
1.22 "1993 Stock Option Plan"......................... 3
1.23 "1993 Stock Purchase Plan"....................... 3
1.24 "Order".......................................... 3
1.25 "Other Management Investor"...................... 3
1.26 "Person"......................................... 3
1.27 "Purchaser"...................................... 3
1.28 "Register," "registered" and "registration"...... 3
1.29 "Registrable Securities"......................... 3
1.30 "Restated Certificate of Incorporation".......... 4
1.31 "Securities Act"................................. 4
1.32 "SEC"............................................ 4
1.33 "Stock Subscription Agreement"................... 4
1.34 "Total Voting Power of Newco".................... 4
1.35 "Voting Stock"................................... 4
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ARTICLE 2 LEGENDS AND TRANSFER RESTRICTIONS....................... 5
2.1 Legend.................................................. 5
2.2 Removal of Legend and Transfer Restrictions............. 5
2.3 Restrictions on Transfer................................ 5
2.4 Notice of Proposed Transfers............................ 6
ARTICLE 3 COVENANTS CONCERNING CONDUCT OF CAPITAL
INVESTORS, MANAGEMENT INVESTORS, MAXTOR AND
NEWCO AFTER CLOSING..................................... 6
3.1 Maxtor's Right of First Refusal on New Issuances........ 6
(a) Right of Pro Rata Purchase...................... 6
(b) Procedure....................................... 6
(c) Exceptions...................................... 7
3.2 Maxtor's Permitted Transfers............................ 7
3.3 Management Investors Permitted and Required Transfers... 9
3.4 Maxtor's Right of Co-Sale on Stock Transfers............ 10
3.5 Capital's "Bring-Along" Right........................... 10
3.6 Composition of Newco Board.............................. 11
3.7 Maxtor's Director-Designee's Voting Rights.............. 11
3.8 Renewal of Voting Agreement............................. 12
3.9 Books, Records and Financial Statements................. 12
3.10 Public Accountants...................................... 12
3.11 Accounting Assistance................................... 13
3.12 Proprietary Information Agreements...................... 13
3.13 Standstill.............................................. 13
3.14 Legend.................................................. 13
3.15 Other Management Investors.............................. 13
3.16 Termination............................................. 14
ARTICLE 4 REGISTRATION RIGHTS..................................... 14
4.1 Company Registration.................................... 14
(a) Registration.................................... 14
(b) Underwriting.................................... 14
4.2 Form S-3................................................ 15
4.3 Expenses of Registration................................ 16
4.4 Registration Procedures................................. 16
4.5 Indemnification......................................... 17
4.6 Information by Holder................................... 19
4.7 Rule 144 Reporting...................................... 19
4.8 Transfer of Registration Rights......................... 20
4.9 "Market Stand-Off" Agreement............................ 20
4.10 Other Registration Rights............................... 20
4.11 Most Favored Registration Rights........................ 21
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ARTICLE 5 GENERAL................................................ 21
5.1 Amendments; Waivers.................................... 21
5.2 Integration............................................ 21
5.3 Reasonable Efforts; Further Assurances................. 21
5.4 Governing Law.......................................... 21
5.5 Assignment............................................. 21
5.6 Headings............................................... 22
5.7 Counterparts........................................... 22
5.8 Parties in Interest.................................... 22
5.9 Notices................................................ 22
5.10 Remedies; Waiver....................................... 24
5.11 Severability........................................... 24
5.12 No Consequential Damages............................... 24
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STOCKHOLDERS' AGREEMENT
This Stockholders' Agreement (this "Agreement") is entered into as of
December 26, 1992 among Xxxxx X. Eeg ("Eeg"), Xxxx X. Xxxxxx, Xx. ("Xxxxxx"), CP
Acquisition, L.P. No. 4A, a Delaware limited partnership ("CP4A"), CP
Acquisition, L.P. No. 4B, a Delaware limited partnership ("CP4B"), Capital
Partners, Inc., a Connecticut corporation ("CP Inc."), FGS, Inc., a Delaware
corporation ("FGS"; and collectively with CP4A, CP4B and CP Inc., the "Capital
Investors"), Maxtor Corporation, a Delaware corporation ("Maxtor"), STORAGE
DIMENSIONS, INC., a Delaware corporation formerly known as SDI Acquisition
Corporation ("Newco") and each of the Other Management Investors (as defined
below) who becomes a party to this Agreement at the Closing (as defined below).
BACKGROUND AND STATEMENT OF PURPOSE
The Capital Investors, Xxxxxx, Eeg and Maxtor (the "Original
Investors") and Newco have entered into a Stock Purchase and Asset Acquisition
Agreement dated as of December 4, 1992 (the "Acquisition Agreement") with
Storage Dimensions, Inc. a California corporation ("SDI"). It is a condition to
the closing of the transactions contemplated by the Acquisition Agreement that
the Original Investors will have entered into a Stockholders' Agreement
substantially in the form of this Agreement. It is contemplated that Other
Management Investors (as defined below) who purchase shares of Newco Voting
Convertible Preferred Stock (as defined below) will become parties to this
Agreement.
In consideration of the mutual promises contained herein the parties,
intending to be legally bound, agree as follows:
ARTICLE 1
DEFINITIONS
As used in this Agreement, the following terms shall have the
respective meanings set forth below.
1.1 "Action" means any action, complaint, investigation, suit or other
proceeding, whether civil or criminal, in law or in equity, or before any
arbitrator or Governmental Entity.
1.2 "Agreement" means this Agreement, as amended or supplemented,
together with all exhibits and schedules attached to or incorporated by
reference pursuant to this Agreement.
1.3 "Approval" means any approval, authorization, consent,
qualification or registration, or any waiver of any of the foregoing, required
to be obtained from, or any notice, statement or other communication required to
be filed with or delivered to, any Governmental Entity or any other Person.
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1.4 "Board" means the Board of Directors of Newco.
1.5 "Bylaws" means the bylaws of Newco in the form attached to the
Acquisition Agreement as Exhibit C, as amended.
1.6 "Closing" means the closing of the purchase by Newco from SDI of
the assets of SDI and the purchase by the Original Investors from Newco of Newco
Common Stock and Newco Voting Convertible Preferred Stock as provided in the
Acquisition Agreement.
1.7 "Closing Date" means the day on which the Closing occurs.
1.8 "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
1.9 "Governmental Entity" means any government or any agency, bureau,
commission, court, department, official, political subdivision, tribunal or
other instrumentality of any government, whether federal, state or local,
domestic or foreign.
1.10 "Holder" or "Holders" means any person or persons to whom
Registrable Securities were originally issued, any Maxtor Permitted Transferee,
any Management Investor Permitted Transferee and any qualifying transferee under
Section 4.8 hereof who holds Registrable Securities.
1.11 "Immediate Family Member" means any parent, spouse, child or
grandchild of the subject Person.
1.12 "Initial Public Offering" means the initial public offering of
securities of Newco in a firm underwriting pursuant to a registration statement
that has become effective in accordance with the provisions of the Securities
Act.
1.13 "Law" means any constitutional provision, statute or other law,
rule, regulation, or interpretation of any thereof or any Order.
1.14 "Loss" means any action, cost, damage, disbursement, expense,
liability, loss, deficiency, diminution in value, obligation, penalty or
settlement of any kind or nature, whether foreseeable or unforeseeable,
including but not limited to, interest or other carrying costs, penalties,
legal, accounting and other professional fees and expenses incurred in the
investigation, collection, prosecution and defense of claims and amounts paid in
settlement, that may be imposed on or otherwise incurred or suffered by the
specified Person.
1.15 "Management Investor" means Xxxxxx, Eeg or any Other Management
Investor.
1.16 "Management Investor Permitted Transferee" is defined in Section
3.3(a).
1.17 "Maxtor Permitted Transferee" is defined in Section 3.2(a).
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1.18 "Newco Common Stock" means the common stock, par value $0.005 per
share, of Newco.
1.19 "Newco Equity Equivalent" means any capital stock or other
security of Newco directly or indirectly convertible into, or exercisable or
exchangeable for, any equity security of Newco, including, without limitation,
the Newco Common Stock and the Newco Voting Convertible Preferred Stock. The
term "Newco Equity Equivalent" shall include the Newco Voting Convertible
Preferred Stock.
1.20 "Newco Equity Security" means any Newco Common Stock or any Newco
Equity Equivalent.
1.21 "Newco Voting Convertible Preferred Stock" means the voting
convertible preferred stock, par value $0.005 per share, of Newco.
1.22 "1993 Stock Option Plan" is defined in Section 3.1(c).
1.23 "1993 Stock Purchase Plan" is defined in Section 3.1(c).
1.24 "Order" means any decree, injunction, judgment, order, ruling,
assessment or writ.
1.25 "Other Management Investor" means those of Xxxxxx X. Xxxxx, Xxxxxx
X. Xxxx, Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxxxxxx that purchase Newco Voting
Convertible Preferred Stock pursuant to a Stock Subscription Agreement and who
becomes a party to this Agreement as provided in Section 3.15.
1.26 "Person" means any association, corporation, individual,
partnership, trust or other entity or organization, including a Governmental
Entity.
1.27 "Purchaser" means any Person that purchases any Newco Equity
Security and that becomes a party to this Agreement.
1.28 "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 the
effectiveness of such registration statement.
1.29 "Registrable Securities" means (a) all shares of Newco Common
Stock (i) acquired at any time by or issuable upon the conversion, exchange or
exercise of any Newco Equity Equivalent acquired at any time by Maxtor pursuant
to the Acquisition Agreement, this Agreement or otherwise, (ii) acquired at any
time by or issuable upon the conversion, exchange or exercise of any Newco
Equity Equivalent acquired at any time by any Capital Investor pursuant to the
Acquisition Agreement, this Agreement or otherwise, (iii) issuable upon the
conversion of the Newco Voting Convertible Preferred Stock acquired by Eeg or
Xxxxxx pursuant to the Acquisition Agreement and (iv) issuable upon the
conversion of the Newco Voting Convertible Preferred Stock acquired by any Other
Management Investor pursuant to a Stock Subscription Agreement; (b) all equity
securities issued in lieu of any of the securities referred to in clause (a)
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of this Section 1.29 in any reorganization which have not been sold in a
distribution (as defined in the Securities Act); and (c) all equity securities
issued in respect of any of the securities referred to in clause (a) or (b) of
this Section 1.29 as a result of a stock split, stock dividend, recapitalization
or the like, which have not been sold in a distribution.
1.30 "Restated Certificate of Incorporation" means the restated
certificate of incorporation of Newco in the form attached to the Acquisition
Agreement as Exhibit B, as amended.
1.31 "Securities Act" means the Securities Act of 1933, as amended,
together with the rules and regulations promulgated thereunder.
1.32 "SEC" means the Securities and Exchange Commission.
1.33 "Stock Subscription Agreement" means an agreement between Newco
and an Other Management Investor providing for the purchase of Newco Voting
Convertible Preferred Stock by such Other Management Investor from Newco. The
aggregate amount of Newco Voting Convertible Preferred Stock that will be
purchased and sold under all Stock Subscription Agreements shall not exceed
467,500 shares.
1.34 "Total Voting Power of Newco" means the total number of votes
which may be cast in the election of directors of Newco at any meeting of
stockholders of Newco if all securities entitled to vote in the election of
directors of Newco are present and vote at such meeting (other than votes that
may be cast only upon the happening of a contingency).
1.35 "Voting Stock" means the Newco Common Stock, the Newco Voting
Convertible Preferred Stock and any other securities issued by Newco having the
ordinary power to vote in the election of directors of Newco (other than
securities having such power only upon the happening of a contingency).
ARTICLE 2
LEGENDS AND TRANSFER RESTRICTIONS
2.1 Legend. Each certificate representing any Newco Equity Securities
shall be endorsed with the following legends:
(a) THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED OR
PLEDGED UNLESS THERE IS AN EFFECTIVE REGISTRATION STATEMENT
UNDER SUCH ACT COVERING SUCH SECURITIES, THE TRANSFER IS MADE
IN COMPLIANCE WITH RULE 144 PROMULGATED UNDER SUCH ACT OR THE
CORPORATION RECEIVES AN OPINION OF
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COUNSEL FOR THE HOLDER OF THESE SECURITIES WHICH IS REASONABLY
SATISFACTORY TO THE CORPORATION, STATING THAT REGISTRATION
UNDER SUCH ACT IS NOT REQUIRED.
(b) Any other legends required by California law or other
applicable state blue sky laws; and
(c) Any legends required by this Agreement.
2.2 Removal of Legend and Transfer Restrictions.
(a) Any legend endorsed on a certificate pursuant to Section
2.1(a) and any stop transfer instructions with respect to such Newco Equity
Securities shall be removed and Newco shall issue a certificate without such
legend to the holder thereof if such Newco Equity Securities are registered
under the Securities Act and a prospectus meeting the requirements of Section 10
of the Securities Act is available, if such legend may be properly removed under
the terms of Rule 144 promulgated under the Securities Act or if such holder
provides Newco with an opinion of counsel for such holder reasonably
satisfactory to legal counsel for Newco, to the effect that a public sale,
transfer or assignment of such Newco Equity Securities may be made without
registration.
(b) Any legend endorsed on a certificate pursuant to Section
2.1(b) shall be removed upon receipt by Newco of an order of the California
Department of Corporations or other blue sky authority authorizing such removal,
as appropriate.
2.3 Restrictions on Transfer. Each Purchaser agrees that it will not,
directly or indirectly, offer, sell, transfer, assign, pledge, hypothecate or
otherwise dispose of, or make any exchange, gift, assignment or pledge of, any
Newco Equity Securities held by it except in accordance with the terms of this
Agreement. Newco need not register a transfer of any Newco Equity Securities and
may also instruct its transfer agent not to register a transfer of any Newco
Equity Securities unless the conditions specified in this Agreement are
satisfied.
2.4 Notice of Proposed Transfers. The holder of each certificate
representing any Newco Equity Securities by acceptance thereof agrees to comply
in all respects with the provisions of this Section 2.4. Prior to any proposed
transfer of any Newco Equity Securities unless there is in effect a registration
statement under the Securities Act covering the proposed transfer, the holder
thereof shall give written notice to Newco of such holder's intention to effect
such transfer. Each such notice shall set forth the manner, circumstances and
material terms of the proposed transfer in a manner satisfactory to Newco,
including without limitation the price. Unless in the opinion of counsel to
Newco the transaction is in compliance with Rule 144 or otherwise exempt from
registration, the notice required by this Section 2.4 shall be accompanied by
either (a) a written opinion of legal counsel addressed to Newco and reasonably
satisfactory in form and content to Newco's counsel to the effect that the
proposed transfer may be effected without registration under the Securities Act,
or (b) a "no action" letter from the SEC to the
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effect that the proposed transfer of such securities without registration will
not result in a recommendation by the staff of the Commission that action be
taken with respect thereto.
ARTICLE 3
COVENANTS CONCERNING CONDUCT OF CAPITAL INVESTORS,
MANAGEMENT INVESTORS, MAXTOR
AND NEWCO AFTER CLOSING
3.1 Maxtor's Right of First Refusal on New Issuances.
(a) Right of Pro Rata Purchase. If Newco decides to issue any
Newco Equity Securities it will give Maxtor the right to purchase its pro rata
share of such Newco Equity Securities based upon its then percentage ownership
of Newco Common Stock (assuming the conversion of all then outstanding Newco
Equity Equivalents convertible into shares of Newco Common Stock and the
exchange of all then outstanding Newco Equity Equivalents exchangeable for
shares of Newco Common Stock without the delivery of any additional
consideration) on the terms set forth in this Section 3.1.
(b) Procedure. In the event Newco proposes to issue any Newco
Equity Securities, it shall give Maxtor written notice of the proposed terms.
Maxtor shall have thirty days after receipt of such notice to notify Newco in
writing that Maxtor agrees to purchase all or part of its pro rata share of such
Newco Equity Securities and it shall have thirty days thereafter to complete
such purchase. If Maxtor declines to exercise its right to purchase or fails to
give notice to Newco within thirty days after receipt of Newco's notice, Newco
shall have one hundred twenty days thereafter to sell the Newco Equity
Securities upon terms no more favorable to the purchasers thereof than specified
in Newco's notice.
(c) Exceptions. The pro rata purchase rights set forth in this
Section 3.1 shall not apply to: (i) the issuance by Newco of any Newco Equity
Securities pursuant to the terms of the Acquisition Agreement or any Stock
Subscription Agreement, (ii) the issuance by Newco of up to 2,222,222 shares of
Newco Common Stock pursuant to a stock option plan (the "1993 Stock Option
Plan") to be adopted by the Board after the Closing or 467,500 shares of Newco
Voting Convertible Preferred Stock pursuant to a stock purchase plan (the "1993
Stock Purchase Plan") to be adopted by the Board promptly after the Closing, to
directors, officers, employees or consultants of Newco, such number of shares as
increased, if at all, in accordance with Section 3.7, (iii) the issuance of
Newco Equity Securities in connection with any transaction of a type described
in Rule 145 under the Securities Act in which, among other things, Maxtor has
been offered the opportunity to maintain its proportionate interest in Newco
Common Stock (assuming the conversion of all then outstanding Newco Equity
Equivalents convertible into shares of Newco Common Stock and the exchange of
all then outstanding Newco Equity Equivalents exchangeable for shares of Newco
Common Stock without the delivery of any additional consideration by purchase
for cash of Newco Equity Securities of the same type issued in such transaction
for value substantially equivalent to that paid or contributed by other offerees
or purchasers in such transaction, (iv) the issuance of Newco Equity Securities
upon the conversion,
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exercise or exchange of any Newco Equity Equivalents which were issued pursuant
to the Acquisition Agreement or any Stock Subscription Agreement, or the
issuance of which was subject to such rights or (v) the issuance of Newco Equity
Securities pursuant to the Initial Public Offering.
3.2 Maxtor's Permitted Transfers. Neither Maxtor nor any Maxtor
Permitted Transferee may transfer directly or indirectly any of the Newco Equity
Securities acquired by it pursuant to the Acquisition Agreement or otherwise
except as provided in this Section 3.2.
(a) Maxtor shall be entitled to transfer all or part of its
Newco Equity Securities to any corporation of which Maxtor owns not less than a
majority of the voting stock (each a "Maxtor Permitted Transferee"); provided,
that each Maxtor Permitted Transferee, if not a party hereto, shall
simultaneously with such transfer become a party hereto by executing and filing
with Newco a letter substantially in the following form:
Storage Dimensions, Inc. [Date]
[Address]
Dear Sirs:
The undersigned hereby agrees to become a party to the Stockholders Agreement
dated as of December 26, 1992 (the "Agreement") among Storage Dimensions, Inc.
and certain of its stockholders, and agrees, as of the date hereof, to be bound
by all of the terms and provisions thereof. The Agreement shall be binding upon
the successors and assigns of the undersigned.
Very truly yours,
__________________________
Each certificate evidencing any Newco stock transferred to any Maxtor
Permitted Transferee as above provided shall bear the appropriate restrictive
legends set forth in Section 2.1 unless such legends would be removable pursuant
to Section 2.2.
(b) If Maxtor or any Maxtor Permitted Transferee (the "Maxtor
Offeror") desires to transfer all or part of its Newco Equity Securities to a
person other than a Maxtor Permitted Transferee, it will first give written
notice to the Capital Investors stating the Newco Equity Securities it intends
to offer and the price and terms it intends to ask. Not later than 45 days after
receipt of such written notice, the Capital Investors or their designee will
give the Maxtor Offeror written notice stating either that the Capital Investors
or such designee elects to purchase such Newco Equity Securities at the price
and on the terms stated in such notice or that the Capital Investors or such
designee offers to acquire all such Newco Equity Securities at such other price
or on such other terms as the Capital Investors or such designee shall state in
such notice. If the Capital Investors or such designee does not give the Maxtor
Offeror such notice within such period, the Maxtor Offeror may transfer all of
the Newco Equity Securities with
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respect to which such notice was given free of the Capital Investors' right of
first refusal during the 317-day period after the date of the Maxtor Offeror's
notice to the Capital Investors at such price and on such terms as the Maxtor
Offeror may determine. If the Capital Investors or such designee gives such
notice timely and elects to purchase such Newco Equity Securities on the terms
offered by the Maxtor Offeror, the parties will complete the sale at the price
and on the terms offered. If the Capital Investors or such designee gives such
notice timely and offers to purchase the Newco Equity Securities on other terms,
the Maxtor Offeror may accept such offer by giving the Capital Investors or such
designee written notice not later than 45 days after receipt of notice from the
Capital Investors or such designee, whereupon the parties will complete the sale
at the price and on the terms of the offer of the Capital Investors or such
designee. If the Maxtor Offeror does not accept such offer, the Maxtor Offeror
may sell such Newco Equity Securities to a third party during the twelve (12)
month period after the date of the notice from the Capital Investors or such
designee, but only at a price and on terms that on the whole are not materially
less favorable to the Maxtor Offeror than those of the offer of the Capital
Investors or such designee. If the Maxtor Offeror does not sell the shares
during such twelve-month period, Maxtor may not sell or otherwise transfer such
Newco Equity Securities without giving a new written notice to the Capital
Investors and following again the procedure described in this Section 3.2. The
procedures set forth in this Section 3.2 may be initiated only once in any
nine-month period.
(c) The provisions of this Section 3.2 will terminate on the
fifth anniversary of the Closing Date unless earlier terminated pursuant to
Section 3.16.
3.3 Management Investors Permitted and Required Transfers.
(a) Except as provided in this Section 3.3, neither any
Management Investor nor any Management Investor Permitted Transferee may
transfer any of the Newco Equity Securities issued or issuable to such
Management Investor or Management Investor Permitted Transferee pursuant to (i)
the Acquisition Agreement, (ii) a Stock Subscription Agreement, (iii) a stock
purchase plan or stock option plan adopted by the Board or (iv) upon the
conversion, exchange or exercise of any such Newco Equity Securities referred to
in clauses (i) through (iii) of this Section 3.3(a) and each of them shall be
required to transfer his Newco Equity Securities as provided in this Section
3.3.
(b) A Management Investor shall be entitled to transfer any
such Newco Equity Securities to any of the following persons (each a "Management
Investor Permitted Transferee"): (i) an Immediate Family Member of such
Management Investor; (ii) a trust for the sole benefit of such Management
Investor or one or more Immediate Family Members of such Management Investor;
(iii) the personal representative of such Management Investor but only upon the
death of such Management Investor for purposes of administration of such
Management Investor's estate or upon the incompetency of such Management
Investor for purposes of the protection and management of such Management
Investor's assets; and (iv) any party to this Agreement including, without
limitation, Newco; provided, that each Management Investor Permitted Transferee,
if not a party hereto, shall simultaneously with such transfer become a party
hereto by executing and filing with Newco a letter substantially in the
following form:
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Storage Dimensions, Inc. [Date]
[Address]
Dear Sirs:
The undersigned hereby agrees to become a party to the Stockholders Agreement
dated as of December 26, 1992 (the "Agreement") among Storage Dimensions, Inc.
and certain of its stockholders, and agrees, as of the date hereof, to be bound
by all of the terms and provisions thereof. The Agreement shall be binding upon
the executors, administrators, successors and assigns of the undersigned.
Very truly yours,
__________________________
(c) Each certificate evidencing any Newco Equity Securities
transferred to any Management Investor Permitted Transferee as above provided
shall bear the appropriate restrictive legends set forth in Section 2.1 unless
such legends would be removable pursuant to Section 2.2.
3.4 Maxtor's Right of Co-Sale on Stock Transfers. If any of the Capital
Investors arranges a sale of any of its Newco Equity Securities to a
non-affiliate or any Management Investor arranges a sale of any of his Newco
Equity Securities to a person other than a Management Investor Permitted
Transferee, such Capital Investor or Management Investor, as the case may be,
will, before consummating the sale, offer to Maxtor and all Maxtor Permitted
Transferees the opportunity to participate in the sale pro rata in proportion to
the parties' interests in Newco Equity Securities outstanding at the time of
sale, provided, however, that neither any Capital Investor nor any Management
Investor shall be required to make any such offer to Maxtor or any Maxtor
Permitted Transferee in connection with any sale by such Capital Investor or
Management Investor as part of the Initial Public Offering. Such offer to
participate must be made in writing at least 30 days before the contemplated
closing date for the sale of the Newco Equity Securities and must set forth the
material terms of such proposed sale. If Maxtor or any Maxtor Permitted
Transferee desires to participate, it must so notify the offering party in
writing at least 5 days prior to such closing date and must agree to the same
terms and conditions for the sale as those agreed by the offering party. If
Maxtor or any Maxtor Permitted Transferee gives such notice timely, the parties
will complete the sale at the price and on the terms offered.
3.5 Capital's "Bring-Along" Right. If any of the Capital Investors
enters into an agreement with a third party not affiliated with any of the
Capital Investors under which such party agrees to purchase all outstanding
Newco Equity Securities, the Capital Investors may require Maxtor, all Maxtor
Permitted Transferees, all Management Investors and all Management Investor
Permitted Transferees, at the closing of such transaction, to sell all, but not
less than all, of the Newco Equity Securities owned by them to such third party
at the same price and on the same terms as the Capital Investors receive under
such agreement for comparable securities. The
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Capital Investors will notify Maxtor, all Maxtor Permitted Transferees, all
Management Investors and all Management Investor Permitted Transferees of the
proposed transaction and its principal terms not later than ten (10) days after
it enters into such an agreement, and will provide Maxtor, all Maxtor Permitted
Transferees, all Management Investors and all Management Investor Permitted
Transferees promptly such information as they reasonably may request regarding
the transaction and the third party. Neither Maxtor nor any Maxtor Permitted
Transferee will be obligated to sell its Newco Equity Securities under this
Section 3.5, however, unless Maxtor and all Maxtor Permitted Transferees in the
aggregate will receive in such transaction not less than $8 million in exchange
for the Newco Equity Securities acquired by Maxtor at the Closing; provided,
that such amount shall be adjusted to reflect the effect of any assignment, sale
or transfer by Maxtor or any Maxtor Permitted Transferee, other than to a Maxtor
Permitted Transferee, of any Newco Equity Securities between the Closing Date
and the closing of a transaction contemplated by this Section 3.5. Neither any
of the Management Investors nor any Management Investor Permitted Transferee
will be obligated to sell any of their Newco Equity Securities under this
Section 3.5 unless Maxtor sells its Newco Equity Securities in a transaction
contemplated by this Section 3.5.
3.6 Composition of Newco Board. So long as Maxtor and all Maxtor
Permitted Transferees in the aggregate own Voting Stock representing not less
than 16% of the Total Voting Power of Newco, the Purchasers will vote their
stock and take all other action reasonably required to elect to the Board an
individual designated by Maxtor and the Maxtor Permitted Transferees. Maxtor and
the Maxtor Permitted Transferees agree that such designee will not be the Chief
Executive Officer or Chairman of Maxtor. Such director may be removed, with or
without cause, at any time by Maxtor and the Maxtor Permitted Transferees. If a
vacancy is created on the Board at any time by the death, permanent disability,
retirement, resignation, removal or expiration of the term of the director
designated by Maxtor and the Maxtor Permitted Transferees, each party hereby
agrees promptly to take such action as may be reasonably required to fill such
vacancy by electing as a director an individual designated by Maxtor and the
Maxtor Permitted Transferees. Each party hereto agrees to take promptly such
action as may be reasonably required to call, or cause promptly Newco and the
appropriate officers and directors of Newco to call, special or annual meetings
of the Board or the stockholders of Newco, or to take promptly such other action
as may be reasonably required, including voting or the execution of written
consents in lieu of any meeting, to ensure promptly that the composition of the
Board is consistent with, and that the election of individuals as members of the
Board is in accordance with, this Section 3.6. The provisions of this Section
3.6 shall terminate at such time as Maxtor and all Maxtor Permitted Transferees
in the aggregate own Voting Stock representing less than 16% of the Total Voting
Power of Newco.
3.7 Maxtor's Director-Designee's Voting Rights. Without the affirmative
approval of the director-designee of Maxtor and the Maxtor Permitted Transferees
on the Board given at a duly called and held meeting of the Board or by
unanimous written consent in accordance with the Delaware General Corporation
Law and the Bylaws: (i) the number of authorized directors of Newco will not be
increased to more than seven, (ii) Newco will not enter into an agreement to
merge with, or to sell substantially all of its assets to, any buyer in which
the Capital Investors or any of their affiliates has a financial interest or in
a transaction in which Maxtor and all of the Maxtor Permitted Transferees in the
aggregate receive less than $8 million in cash in exchange for
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the Newco Equity Securities acquired by Maxtor at the Closing; provided, that
such amount shall be adjusted to reflect the effect of any assignment, sale or
transfer by Maxtor or any Maxtor Permitted Transferee (other than to a Maxtor
Permitted Transferee) of any Newco Equity Securities between the Closing Date
and the closing of any such merger or sale of assets, (iii) Newco will not adopt
any stock option or stock purchase plan other than the 1993 Stock Option Plan
and the 1993 Stock Purchase Plan to be adopted by the Board following the
Closing and in connection with which no more than 2,222,222 shares of Newco
Common Stock and 467,500 shares of Newco Voting Convertible Preferred Stock,
respectively, will be reserved for issuance, (iv) Newco will not increase the
number of shares of Newco Voting Convertible Preferred Stock reserved for
issuance pursuant to the 1993 Stock Purchase Plan to more than 467,500 shares,
(v) Newco will not increase the number of shares of Newco Common Stock reserved
in connection with any employee stock option or stock purchase plan to a level
that would permit the aggregate share reserve of all such plans (excluding the
1993 Stock Purchase Plan) to exceed, at any time, 10% (or such larger percentage
as the Capital Investors and Maxtor and the Maxtor Permitted Transferees may
agree) of the then outstanding shares of Newco Common Stock, assuming for the
purpose of such calculation the conversion of all then outstanding Newco Equity
Securities convertible into shares of Newco Common Stock and the exercise or
exchange of all outstanding Newco Equity Securities exercisable or exchangeable
for shares of Newco Common Stock and (vi) no dividends shall be paid on any
share of Newco Voting Convertible Preferred Stock unless at the same time a
comparable dividend is paid with respect to each outstanding share of Newco
Common Stock. The provisions of this Section 3.7 shall terminate at such time as
Maxtor and all Maxtor Permitted Transferees in the aggregate own Voting Stock
representing less than 16% of the Total Voting Power of Newco.
3.8 Renewal of Voting Agreement. Prior to the tenth anniversary of the
Closing Date, and beginning at any time after the eighth anniversary thereof,
the Purchasers will negotiate in good faith a ten-year extension to the voting
arrangements set forth in Section 3.7, such extension to take effect on the
tenth anniversary of the Closing Date. The Purchasers will negotiate in good
faith consecutive extensions of such voting arrangements for additional ten-year
periods, each to take effect upon the expiration of the prior extension, such
negotiations to begin prior to the tenth anniversary of the effective date of
the current extension, beginning at any time after the eighth anniversary
thereof. The provisions of this Section 3.8 shall terminate at such time as
Maxtor and all Maxtor Permitted Transferees in the aggregate own Voting Stock
representing less than 16% of the Total Voting Power of Newco.
3.9 Books, Records and Financial Statements. Only so long as Maxtor and
all Maxtor Permitted Transferees in the aggregate own Voting Stock representing
not less than 16% of the Total Voting Power of Newco: Newco will keep proper
corporate records and books of account in which true and correct entries will be
made of all transactions on an accrual basis; the books of account will be
sufficient to permit the preparation of the financial statements of Newco in
accordance with United States generally accepted accounting principles; Newco
will prepare and provide to the Board on a timely basis (a) monthly and
quarterly unaudited financial statements; and (b) annual financial statements
audited by an independent certified public accounting firm; and Newco will
deliver copies of such financial statements to Maxtor and all Maxtor Permitted
Transferees; provided, that in addition to the director designated by Maxtor and
the Maxtor Permitted Transferees such financial statements will be distributed
only to such other employees
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of Maxtor or such Maxtor Permitted Transferees, as such director can reasonably
demonstrate have a need to know the information contained in such financial
statements.
3.10 Public Accountants. Newco will retain an independent certified
public accounting firm to perform an audit of the annual financial statements of
Newco.
3.11 Accounting Assistance. Newco will provide information and
assistance to each party to this Agreement and its independent auditors as they
may reasonably request to enable such party and its independent auditors to
prepare financial statements in accordance with generally accepted accounting
principles as appropriate, including accounting for such party's investment in
Newco pursuant to the equity method, and to comply with such party's reporting
requirements and other disclosure obligations under applicable securities laws
and regulations.
3.12 Proprietary Information Agreements. Newco will require all of its
employees to execute agreements with respect to the protection of Newco's
proprietary information and technology and the assignment of inventions in a
form satisfactory to the Board.
3.13 Standstill. Maxtor and each Maxtor Permitted Transferee agrees
that, except as permitted by Section 3.1 above, none of them will, unless the
prior written approval of the Board has been obtained, acquire, or permit any of
their affiliates to acquire, by purchase or otherwise, any Newco Equity
Securities. The provisions of this Section 3.13 shall terminate upon the
earliest to occur of (a) the fourth anniversary of the Closing Date, (b) the
second anniversary of the closing of the Initial Public Offering and (c) such
time as Maxtor and all Maxtor Permitted Transferees in the aggregate own Voting
Stock representing less than 16% of the Total Voting Power of Newco.
3.14 Legend. To assist in effectuating the provisions of this Article
3, each Purchaser hereby consents to the placement of the following legend on
all certificates certifying ownership of any securities issued hereunder:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE
PROVISIONS OF AN AGREEMENT BETWEEN THE HOLDER AND THE CORPORATION, AND
MAY NOT BE SOLD, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF EXCEPT
IN ACCORDANCE THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE
OFFICE OF THE SECRETARY OF THE CORPORATION".
3.15 Other Management Investors. Newco shall not issue any Newco Equity
Securities to any Other Management Investor unless such Other Management
Investor shall simultaneously with such issuance become a party hereto by
executing and filing with Newco a letter substantially in the following form:
Storage Dimensions, Inc. [Date]
[Address]
Dear Sirs:
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The undersigned hereby agrees to become a party to the Stockholders Agreement
dated as of December 26, 1992 (the "Agreement") among Storage Dimensions, Inc.
and certain of its stockholders, and agrees, as of the date hereof, to be a
Management Investor (as defined therein) and to be bound by all of the terms and
provisions thereof. The Agreement shall be binding upon the successors and
assigns of the undersigned.
Very truly yours,
_____________________________
Each certificate evidencing any Newco Equity Securities issued to any
Other Management Investor as above provided shall bear the appropriate
restrictive legends set forth in (i) Section 2.1 unless such legends would be
removable pursuant to Section 2.2 and (ii) Section 3.14.
3.16 Termination. Except for Sections 3.11 and 3.13, the provisions of
this Article 3 shall terminate upon the closing of the Initial Public Offering.
ARTICLE 4
REGISTRATION RIGHTS
4.1 Company Registration.
(a) Registration. If at any time or from time to time, Newco
determines to register any of its securities either for its own account or for
the account of any of its stockholders, other than a registration relating
solely to employee benefit plans, or a registration relating solely to an SEC
Rule 145 transaction, Newco will:
(i) promptly give to each Holder written notice
thereof (which will include a list of the jurisdictions in which Newco intends
to attempt to qualify such securities under the applicable blue sky or other
state securities laws); and
(ii) include in such registration (and compliance),
and in any underwriting involved therein, all the Registrable Securities
specified in a written request or requests, made within 20 days after receipt of
such written notice from Newco, by any Holder or Holders, except as set forth in
subsection 4.1(b) below.
(b) Underwriting. If the registration of which Newco gives
notice is for a registered public offering involving an underwriting, Newco will
so advise the Holders as a part of the written notice given pursuant to
subsection 4.1(a)(i). In such event the right of any Holder to registration
pursuant to subsection 4.1 will be conditioned upon such Holder's participation
in such underwriting and the inclusion of such Holder's Registrable Securities
in the underwriting to
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the extent provided herein. All Holders proposing to distribute their securities
through such underwriting will (together with Newco and the other shareholders
distributing their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by Newco. Notwithstanding any other provision of
this subsection 4.1, if the underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the underwriter
and Newco may limit the number of Registrable Securities to be included in the
registration and underwriting, or may exclude Registrable Securities entirely
from such registration and underwriting; provided, however, that no Registrable
Securities will be so excluded unless all other securities proposed to be
included in such registration (other than securities registered for the account
of Newco) also have been reduced on a pro rata basis, or excluded entirely from
such registration and underwriting, as the case may be; and provided further,
however, that after the Initial Public Offering, the shares to be included in
any registration and underwriting pursuant to this subsection 4.1(b) by Holders
and other stockholders may not be reduced below 20% of the shares included in
such registration and underwriting. In the event of any such limitation of the
number of shares to be underwritten, Newco will so advise all Holders of
Registrable Securities which would otherwise be registered and underwritten
pursuant hereto, and the number of shares of Registrable Securities that may be
included in the registration and underwriting will be allocated among the
Holders requesting registration in proportion, as nearly as practicable, as the
respective amounts of Registrable Securities held by each of such Holders
participating in such registration as of the date of the notice pursuant to
subsection 4.1(a)(i) above bears to the total number of Registrable Securities
held by all of such Holders participating in such registration. If any Holder
disapproves of the terms of any such underwriting, it may elect to withdraw
therefrom by written notice to Newco and the underwriter. Any Registrable
Securities excluded or withdrawn from such underwriting will be withdrawn from
such registration.
4.2 Form S-3. Newco will use its reasonable efforts to qualify for
registration on SEC Form S-3 or any successor form. After Newco has qualified
for the use of Form S-3, a Holder or Holders will have the right to request
registrations on Form S-3 (which requests will be in writing and will state the
number of shares of Registrable Securities to be disposed of and the intended
method of disposition of shares by such Holders), subject to the following
limitations:
(a) No Holder or group of Holders may require Newco to effect
a registration pursuant to this subsection 4.2 (i) within 12 months after the
effective date of the Initial Public Offering, (ii) within 180 days after the
effective date of the last registration pursuant to this subsection 4.2 or (iii)
from and after such time as Newco is then providing current public information
within the meaning of Rule 144(c)(1), and such Holder or group of Holders is
able to sell under Rule 144 during any 3-month period all of the Registrable
Securities then held by such Holder or group of Holders.
(b) Newco will not be required to effect a registration
pursuant to this subsection 4.2 unless the Holder or Holders requesting
registration propose to dispose of shares of Registrable Securities having an
anticipated aggregate price to the public (before deduction of underwriting
discounts and expenses of sale) of at least $1,000,000.
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(c) Newco will have the right to defer filing a registration
statement pursuant to this subsection 4.2 for a period of up to 60 days
following the requested filing date if Newco furnishes to the Holders requesting
registration a certificate signed by the Chief Executive Officer of Newco
stating that in his good faith judgment it would be detrimental to Newco and its
shareholders for a registration statement to be filed at the requested filing
date and that it is therefore highly desirable to defer the filing of such
registration statement.
Newco will give written notice to all Holders of Registrable Securities
of the receipt of a request for registration pursuant to this subsection 4.2 and
will provide a reasonable opportunity for all Holders to participate in the
registration, provided that if the registration is for an underwritten offering,
the terms of subsection 4.1(b) will apply to all participants in such offering.
Newco may include shares for its own account in any registration pursuant to
subsection 4.2, up to 50% of the shares included in any such registration.
Subject to the foregoing, Newco will use its reasonable efforts to effect
promptly the registration of all shares of Registrable Securities on Form S-3 to
the extent requested by any Holder or Holders thereof for purposes of
disposition.
4.3 Expenses of Registration. All expenses incurred in connection with
any registration, qualification or compliance pursuant to this Article 4
including, without limitation, all registration, filing and qualification fees,
printing expenses, fees and disbursements of counsel for Newco and expenses of
any special audits incidental to or required by such registration, will be borne
by Newco except as follows:
(a) Newco will not be required to pay fees or disbursements of
more than one legal counsel for all Holders who are selling Registrable
Securities in such registration, qualification or compliance.
(b) Newco will not be required to pay underwriters' fees,
discounts, commissions or transfer taxes relating to Registrable Securities.
(c) Newco will not be required to pay any expenses incurred in
connection with any registration pursuant to subsection 4.2 after the second
such registration; provided, however, if Newco includes shares in any
registration pursuant to subsection 4.2, Newco will bear all such expenses.
All expenses of any registered offering not otherwise borne by Newco
will be borne pro rata among the Holders and other stockholders participating in
the offering (and Newco, if it is selling securities in the offering) on the
basis of the number of shares registered.
4.4 Registration Procedures. In the case of each registration,
qualification or compliance effected by Newco pursuant to this Agreement, Newco
will keep each Holder participating therein advised in writing as to the
initiation of such registration, qualification and compliance and as to the
completion thereof. Except as otherwise provided in subsection 4.3, at its
expense Newco will:
(a) Prepare and file with the SEC a registration statement
with respect to the Registrable Securities to be included in the registration
and use its reasonable efforts to cause
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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 120 days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them and covered by such registration statement.
(d) Use its 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 may be reasonably requested by the
Holders, provided that Newco will 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 state or jurisdiction.
(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 and
other stockholder participating in such underwriting will also enter into such
an agreement.
(f) Notify each Holder of Registrable Securities covered by
any such registration statement at any time when a prospectus relating thereto
is required to be delivered under the Securities Act or 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.
4.5 Indemnification.
(a) Newco will indemnify each Holder of Registrable Securities
and each of its officers, directors and partners, and each person controlling
such Holder, with respect to which registration, qualification or compliance has
been effected pursuant to this Agreement, and each underwriter, if any, and each
person who controls any underwriter of the Registrable Securities held by or
issuable to such Holder, against all claims, losses, expenses, damages and
liabilities (or actions in respect thereto), including any of the foregoing
incurred in settlement of any litigation, commenced or threatened, arising out
of or based on any untrue statement (or alleged untrue statement) of a material
fact contained in any prospectus, offering circular or other document (including
any related registration statement, notification or the like) incident to any
such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make any statement therein not misleading, or any violation or
alleged violation by Newco of the Securities Act, the Exchange
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Act, or any state securities law applicable to Newco or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any such state law and
relating to action or inaction required of Newco in connection with any such
registration, qualification of compliance, and will reimburse each such Holder,
each of its officers, directors and partners, and each person controlling such
Holder, each such underwriter and each person who controls any such underwriter,
within a reasonable amount of time after the incurrence thereof, for any
reasonable legal and any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection 4.5(a) will not apply to amounts paid in settlement of any such
claim, loss, damage, liability, or action if such settlement is effected without
the consent of Newco (which consent will not be unreasonably withheld); and
provided further, that Newco will not be liable in any such case to the extent
that any such claim, loss, damage or liability arises out of or is based on any
untrue statement or omission based upon written information furnished to Newco
by an instrument duly executed by such Holder or underwriter specifically for
use therein.
(b) Each Holder will, if Registrable Securities held by or
issuable to such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify Newco,
each of its directors and officers, each underwriter, if any, of Newco's
securities covered by such a registration statement, each person who controls
Newco within the meaning of the Securities Act, and each other such Holder, each
of its officers, directors and partners and each person controlling such Holder,
against all claims, losses, expenses, damages and liabilities (or actions in
respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
Newco, and such Holders, directors, officers, partners, persons and
underwriters, within a reasonable amount of time after the incurrence thereof,
for any reasonable legal or any other expenses incurred in connection with
investigating, defending or settling any such claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to Newco by an instrument duly executed by such Holder specifically for use
therein; provided, however, that the indemnity agreement contained in this
subsection 4.5(b) will not apply to amounts paid in settlement of any such
claim, loss, damage, liability or action if such settlement is effected without
the consent of the Holder (which consent will not be unreasonably withheld); and
provided further, that the total amount for which any Holder will be liable
under this subsection 4.5(b) will not in any event exceed the aggregate proceeds
received by such Holder from the sale of Registrable Securities held by such
Holder in such registration.
(c) Each party entitled to indemnification under this Section
4.5 (the "Indemnified Party") will give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and will
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided that counsel for the Indemnifying
Party, who will conduct the defense of such claim or litigation, will be
approved by the
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Indemnified Party (whose approval will not be unreasonably withheld), and the
Indemnified Party may participate in such defense at such party's expense; and
provided further, that the failure of any Indemnified Party to give notice as
provided herein will not relieve the Indemnifying Party of its obligations
hereunder, unless such failure resulted in prejudice to the Indemnifying Party;
and provided further, that an Indemnified Party (together with all other
Indemnified Parties which may be represented without conflict by one counsel)
will have the right to retain one separate counsel, with the fees and expenses
to be paid by the Indemnifying Party, if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between such Indemnified Party
and any other party represented by such counsel in such proceeding. No
Indemnifying Party, in the defense of any such claim or litigation, will, 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.
4.6 Information by Holder. Any Holder or Holders of Registrable
Securities included in any registration will promptly furnish to Newco such
information regarding such Holder or Holders and the distribution proposed by
such Holder or Holders as Newco may request in writing and as may be required in
connection with any registration, qualification or compliance referred to
herein.
4.7 Rule 144 Reporting. With a view to making available to 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, Newco agrees
at all times to:
(a) make and keep public information available, as those terms
are understood and defined in Rule 144, after the effective date of the
registration filed by Newco for the Initial Public Offering;
(b) file with the SEC in a timely manner all reports and other
documents required of Newco under the Securities Act and the Exchange Act (at
any time after it has become subject to such reporting requirements); and
(c) so long as a Holder owns any Registrable Securities, to
furnish to such Holder forthwith upon request a written statement by Newco as to
its compliance with the reporting requirements of said Rule 144 (at any time
after 90 days after the effective date of the registration statement filed by
Newco for the Initial Public Offering), and of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), a copy of the most recent annual or quarterly report of Newco,
and such other reports and documents so filed by Newco as the Holder may
reasonably request in complying with any rule or regulation of the SEC allowing
the Holder to sell any such securities without registration.
4.8 Transfer of Registration Rights. Holders' rights to cause Newco to
register their securities and keep information available granted to them by
Newco under this Section 4 may be assigned to any transferee or assignee of a
Holder's Registrable Securities not sold to the public, provided that Newco is
given written notice by such Holder at the time of or within a reasonable
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time after said transfer, stating the name and address of said transferee or
assignee and identifying the securities with respect to which such registration
rights are being assigned. Newco may prohibit the transfer of any Holders'
rights under this subsection 4.8 to any proposed transferee or assignee who
Newco reasonably believes is a competitor of Newco.
4.9 "Market Stand-Off" Agreement. Each Holder hereby agrees that,
during the period of duration (not to exceed 180 days) specified by Newco and an
underwriter of Newco Common Stock or other securities of Newco, following the
effective date of a registration statement of Newco filed under the Securities
Act, it will not, to the extent requested by Newco and such underwriter,
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 Newco held by it at any time during such period except Newco
Common Stock included in such registration; provided, however, that:
(a) such agreement will be applicable only to the Initial
Public Offering; and
(b) such agreement will not be required unless all executive
officers and directors of Newco and all other holders of at least 5% of Newco's
outstanding voting equity securities enter into similar agreements.
In order to enforce the foregoing covenant, Newco may impose
stop-transfer instructions with respect to the Registrable Securities of each
Holder (and the shares of securities of every other person subject to the
foregoing restriction) until the end of such period.
4.10 Other Registration Rights. Except as otherwise provided in Section
4.11 below, without the prior written consent of Holders of a majority of the
then Registrable Securities, Newco will not grant (a) any rights to require
Newco to register securities (other than "piggyback" registration rights) or (b)
any "piggyback" registration rights superior to or on a parity with the rights
granted pursuant to Section 4.1 hereof.
4.11 Most Favored Registration Rights. If Newco grants registration
rights to any other Person which are more favorable in any material respect to
such Person than those contained in this Article 4 are to the Holders, Newco
will amend this Article 4 or grant new registration rights to the Holders to
provide rights at least as favorable to the Holders.
ARTICLE 5
GENERAL
5.1 Amendments; Waivers. This Agreement may be amended only by an
agreement in writing signed by Newco and parties to this Agreement owning Voting
Stock representing not less than seventy-five percent of the Voting Stock the
owners of which are parties to this Agreement, but may not be so amended if such
amendment would adversely effect any party to this Agreement in a manner
different from other parties to this Agreement unless such party
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agrees to such amendment; provided, however, Sections 3.1, 3.2, 3.4, 3.7, 3.9
and 3.13 may be amended by an agreement in writing signed by Maxtor and, subject
to the approval of the Board, by Newco. No waiver of any provision nor consent
to any exception to the terms of this Agreement will be effective unless in
writing and signed by the party to be bound.
5.2 Integration. This Agreement, together with the exhibit attached
hereto, constitutes the entire agreement among the parties pertaining to the
subject matter hereof and supersedes all prior agreements and understandings of
the parties in connection therewith.
5.3 Reasonable Efforts; Further Assurances. Each party will use
reasonable efforts to perform and fulfill all obligations on its part to be
performed and fulfilled under this Agreement, to the end that the transactions
contemplated by this Agreement will be effected substantially in accordance with
its terms as soon as reasonably practicable. The parties will cooperate with
each other in such actions and in securing requisite Approvals.
5.4 Governing Law. This Agreement and the legal relations between the
parties will be governed by and construed in accordance with the laws of the
State of California applicable to contracts made and performed in such state and
without regard to conflicts of law doctrines except to the extent that certain
matters are preempted by federal law or are governed by the laws of the
jurisdictions of organization of the respective parties.
5.5 Assignment. This Agreement will inure to the benefit of, and be
binding on, the successors and assigns of the parties to this Agreement.
5.6 Headings. The descriptive headings of the Articles, Sections and
subsections of this Agreement are for convenience only and do not constitute a
part of this Agreement.
5.7 Counterparts. This Agreement and any amendment hereto or any other
agreement or document delivered pursuant hereto may be executed in one or more
counterparts and by different parties in separate counterparts. All of such
counterparts will constitute one and the same instrument and will become
effective (unless otherwise provided therein) when one or more counterparts have
been signed by each party thereto and delivered to the other parties thereto.
5.8 Parties in Interest. This Agreement will be binding upon and inure
to the benefit of each party, and nothing in this Agreement, express or implied,
is intended to confer upon any other person any rights or remedies of any nature
whatsoever under or by reason of this Agreement. Nothing in this Agreement is
intended to relieve or discharge the obligation of any third person to (or to
confer any right of subrogation or action over against) any party to this
Agreement.
5.9 Notices.
(a) Notices or other communications required to be given
pursuant to this Agreement will be written and delivered personally or sent in
letter form or by facsimile to the address of the recipient specified herein or
to such other address as may from time to time be
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designated by such recipient through notification to the other parties. The
dates on which notices will be deemed to have been effectively given will be
determined as follows:
(i) Notices given by personal delivery (including
courier delivery) will be deemed effectively given on the date of personal
delivery;
(ii) Notices given in letter form will be deemed
effectively given five business days after the date mailed by registered
airmail, postage prepaid; and
(iii) Notices given by facsimile will be deemed
effectively given on the 1st business day following the date of transmission, as
indicated on the document in question.
(b) Addresses to which notices are to be sent are as follows:
(i) If to the Capital Investors:
Capital Partners
Xxx Xxxxxxxx Xxxxx
Xxxxx 000
Xxxxxxxxx, XX 00000
Attention: A. Xxxxxx Xxxxxxx
Facsimile: (000) 000-0000
With a copy to:
Xxxxxx, Xxxxx & Bockius
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxxx, III
Facsimile: (000) 000-0000
(ii)If to Maxtor:
Maxtor Corporation
000 Xxxxx Xxxx Xxxxxxx
Xxx Xxxx, XX 00000
Attention: General Counsel
Facsimile: (000) 000-0000
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With a copy to:
Xxxx & Freidenrich,
A Professional Corporation,
000 Xxxxxxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxx
Facsimile: (000) 000-0000
(iii) If to any Management Investor, to the address
for such Management Investor set forth on Exhibit A or the records of Newco,
With a copy to:
Wilson, Sonsini, Xxxxxxxx & Xxxxxx
Professional Corporation
Two Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attn: Xxxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
5.10 Remedies; Waiver. All rights and remedies existing under this
Agreement are cumulative to and not exclusive of, any rights or remedies
otherwise available. No failure on the part of any party to exercise or delay in
exercising any right hereunder will be deemed a waiver thereof, nor will any
single or partial exercise preclude any further or other exercise of such or any
other right.
5.11 Severability. If any provision of this Agreement is determined by
any Governmental Entity to be unenforceable, the remaining provisions of this
Agreement will remain in effect provided that the essential terms and conditions
of this Agreement for both parties remain enforceable. In event of any such
determination, the parties agree to negotiate in good faith to modify this
Agreement to fulfill as closely as possible the original intents and purposes
hereof.
5.12 No Consequential Damages. No party will have any liability to any
other party for any special, consequential or similar damages arising from any
actual or alleged breach of this Agreement.
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IN WITNESS WHEREOF, each of the parties hereto has executed this
Agreement as of the day and year first above written.
CP ACQUISITION, L.P. NO. 4A MAXTOR CORPORATION
By: Capital Partners, Inc.
By: /s/ A. XXXXXX XXXXXXX By: /s/ XXXXXX X. XXXXXX
------------------------- ----------------------------
A. Xxxxxx Xxxxxxx Xxxxxx X. Xxxxxx
Title: Vice President Title:
-------------------------
CP ACQUISITION, L.P. NO. 4B STORAGE DIMENSIONS, INC.
By: Capital Partners, Inc.
By: /s/ A. XXXXXX XXXXXXX By: /s/ A. XXXXXX XXXXXXX
------------------------- ----------------------------
A. Xxxxxx Xxxxxxx A. Xxxxxx Xxxxxxx
Title: Vice President Title: President
CAPITAL PARTNERS, INC. FGS, INC.
By: /s/ A. XXXXXX XXXXXXX By: /s/ A. XXXXXX XXXXXXX
------------------------- ----------------------------
A. Xxxxxx Xxxxxxx A. Xxxxxx Xxxxxxx
Title: Vice President Title: Vice President
/s/ XXXX X. XXXXXX, XX.
--------------------------------
XXXX X. XXXXXX, XX.
/s/ XXXXX X. EEG
--------------------------------
XXXXX X. EEG
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