EXHIBIT 4.3
AMENDED AND RESTATED INFORMATION AND
REGISTRATION RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INFORMATION AND REGISTRATION RIGHTS AGREEMENT
(the "Agreement") is made as of April 6, 1998, by and among TERAYON
COMMUNICATION SYSTEMS, a California corporation (the "Company"), the individuals
and entities listed on Schedule A hereto (collectively, the "Investors"), and
the persons listed on Schedule B hereto (collectively, the "Founders").
RECITALS
A. Certain of the Investors (the "Prior Investors") were parties to that
certain Amended and Restated Information and Registration Rights Agreement dated
as of December 26, 1997 by and among the Company and the Prior Investors (the
"Prior Agreement"), pursuant to which the Company granted such Prior Investors
certain registration rights, information rights, rights of participation and
certain other rights set forth in the Prior Agreement;
B. In connection with the Company's issuance of Series F Preferred Stock
pursuant to the Series F Preferred Stock Purchase Agreement dated as of the date
hereof by and among the Company and Xxxx Communications Inc. ("New Investor"),
the Company and the Prior Investors wish to amend and replace the Prior
Agreement with this Agreement and to include New Investor as a party to this
Agreement; and
C. New Investor desires to become a party to this Agreement.
In consideration of the mutual covenants set forth herein, the parties
hereto agree that the Prior Agreement shall be amended and replaced with this
Agreement and the parties hereto agree as follows:
1. CERTAIN DEFINITIONS. As used in this Agreement, the following terms
shall have the following respective meanings:
(a) "COMMISSION" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act (as
hereinafter defined).
(b) "CONVERTIBLE SECURITIES" shall mean securities of the Company
convertible into or exchangeable for Registrable Securities, including the
Series A Preferred Stock, the Series B Preferred Stock, the Series B-1 Preferred
Stock, the Series C Preferred Stock, the Series D Preferred Stock, the Series E
Preferred Stock, the Series F Preferred Stock and any other securities of the
Company convertible into or exchangeable for Registrable Securities included in
this Agreement pursuant to Section 12.
(c) "FORM S-3" shall mean Form S-3 issued by the Commission or any
substantially similar form then in effect.
(d) "FOUNDERS' STOCK" shall mean all Common Stock of the Company held
by the Founders as of the date of this Agreement, and any Common Stock issued or
issuable with
1.
respect to such Common Stock upon any recapitalizations, stock splits, stock
dividends or similar distributions.
(e) "HOLDER" shall mean any holder of outstanding Registrable
Securities which have not been sold to the public, but only if such holder is an
Investor (or, solely with regard to Sections 7, 11 and 14, a Founder) or an
assignee or transferee of registration rights as permitted by Section 17.
(f) "INITIATING HOLDERS" shall mean the Holders who in the aggregate
hold at least:
(i) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series A Preferred Stock purchased by or issued to the Investors,
(ii) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series B Preferred Stock purchased by or issued to the Investors,
(iii) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series B-1 Preferred Stock purchased by or issued to the Investors,
(iv) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series C Preferred Stock purchased by or issued to the Investors,
(v) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series D Preferred Stock purchased by or issued to the Investors,
(vi) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series E Preferred Stock purchased by or issued to the Investors, or
(vii) fifty percent (50%) of the Registrable Securities that
consist of Common Stock of the Company issued or issuable upon conversion of the
Company's Series F Preferred Stock purchased by or issued to the Investors.
in each case including Common Stock issued pursuant to recapitalizations, stock
splits, stock dividends and similar distributions with respect to such shares,
and any securities of the Company granted registration rights pursuant to
Section 12 of this Agreement, and provided that such shares have not previously
been sold to the public.
(g) "MATERIAL ADVERSE EVENT" shall mean an occurrence having a
consequence that either (a) is materially adverse as to the business,
properties, prospects or financial condition of the Company or (b) is reasonably
foreseeable, has a reasonable likelihood of occurring, and, if it
2.
were to occur, would materially adversely affect the business, properties,
prospects or financial condition of the Company.
(h) The terms "REGISTER," "REGISTERED" and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act ("Registration Statement"), and the
declaration or ordering of the effectiveness of such Registration Statement.
(i) "REGISTRABLE SECURITIES" shall mean all Common Stock of the
Company issued or issuable upon conversion of the Company's Series A Preferred
Stock, Series B Preferred Stock, Series B-1 Preferred Stock, the Series C
Preferred Stock, the Series D Preferred Stock, the Series E Preferred Stock and
the Series F Preferred Stock purchased by or issued to the Investors, including
Common Stock issued pursuant to recapitalizations, stock splits, stock dividends
and similar distributions with respect to such shares, and any securities of the
Company granted registration rights pursuant to Section 12 of this Agreement,
provided that such shares have not previously been sold to the public. For
purposes of the registration rights granted to holders of Company securities
pursuant to Section 7 hereof and for purposes of the obligations imposed upon
holders of Registrable Securities under Sections 11 and 14, but not for the
definition of Initiating Holders or for purposes of Section 18.6, "Registrable
Securities" shall include Founders' Stock.
(j) "REGISTRATION EXPENSES" shall mean all expenses incurred in
complying with Sections 6 or 7 of this Agreement, including, without limitation,
all federal and state registration, qualification and filing fees, printing
expenses, fees and disbursements of counsel for the Company, reasonable fees and
disbursements not to exceed ten thousand dollars ($10,000) of a single special
counsel for the Holders, blue sky fees and expenses, and the expense of any
special audits or other accounting-related fees incident to or required by any
such registration, other than Selling Expenses.
(k) "SECURITIES ACT" shall mean the Securities Act of 1933, as amended,
or any similar federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
(l) "SELLING EXPENSES" shall mean all underwriting discounts and
selling commissions applicable to the sale of Registrable Securities pursuant to
this Agreement, as well as fees and disbursements of legal counsel for the
selling Holders, except as to legal fees and expenses otherwise provided for
pursuant to Section 1(j) of this Agreement.
2. INFORMATION RIGHTS.
2.1 FINANCIAL STATEMENTS. The Company shall deliver to the Investors
as soon as practicable after the end of each fiscal year of the Company, and in
any event within 90 days thereafter, an audited consolidated balance sheet of
the Company as of the end of such year and audited consolidated statements of
income, stockholders' equity and cash flows for such year, which year-end
financial reports shall be in reasonable detail and shall be prepared in
accordance with generally accepted accounting principles and be accompanied by
the opinion of independent public accountants of recognized standing selected by
the Board of Directors of the Company.
3.
2.2 ADDITIONAL INFORMATION. As long as an Investor holds not less than
the lesser of (i) 100% of the Convertible Securities and/or Registrable
Securities originally acquired by such Investor or (ii) 120,000 shares of
Convertible Securities and/or Registrable Securities, as adjusted for
recapitalizations, stock splits, stock dividends and the like, the Company will
deliver to such Investor as soon as practicable after the end of each fiscal
quarter, and in any event within 30 days thereafter, (i) consolidated balance
sheets of the Company and its subsidiaries, if any, as of the end of such
quarter; (ii) consolidated statements of income and cash flow for such quarter
and for the current fiscal year to date, including a comparison between the
actual quarterly financial statements and the projected figures for such
quarterly periods; and (iii) a statement of stockholders' equity as of the end
of such fiscal quarter and a statement showing the number of shares of each
class and series of capital stock and securities convertible into or exercisable
for shares of capital stock outstanding at the end of the period, the number of
shares of Common Stock issuable upon conversion or exercise of any outstanding
securities convertible or exercisable for shares of Common Stock and the
exchange ratio or exercise price applicable thereto, all in sufficient detail as
to permit the Investor to calculate its percentage equity ownership in the
Company.
3. INSPECTION. The Company shall permit each Investor holding the number
of shares set forth in Section 2.2 hereof, at such Investor's expense, to visit
and inspect the Company's properties, to examine its books of account and
records and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by each such
Investor; provided, however, that the Company shall not be obligated pursuant to
this Section 3 to provide any information which it reasonably considers to be a
trade secret or confidential information, unless the Investor requesting such
information has executed a form of confidentiality agreement acceptable to the
Company.
4. RIGHT TO MAINTAIN INTEREST. The Company hereby grants to each
Investor the right to purchase its Pro Rata Amount (as defined below) of any New
Securities (as defined in this Section 4) that the Company may, from time to
time, propose to sell and issue. The Company may, at its election, sell such
Investor its Pro Rata Amount of New Securities at the initial closing of the
sale of New Securities or at a subsequent closing, which shall take place within
90 days of the initial closing. An Investor's Pro Rata Amount shall be the
ratio of (i) the number of issued and outstanding shares (on an as-converted
basis) of Convertible Securities and/or Registrable Securities held by such
Investor immediately prior to the initial closing of the sale of such New
Securities to (ii) the total number of shares of Common Stock of the Company
outstanding (on an as-converted basis) immediately prior to the initial closing
of the sale of such New Securities, including all outstanding securities
convertible into, exchangeable for or exercisable for Common Stock on an as-
converted or exercised basis (including but not limited to the Convertible
Securities and outstanding options exercisable for Common Stock). This right to
maintain interest shall be subject to the following provisions:
(a) "NEW SECURITIES" shall mean any capital stock of the Company,
whether or not now authorized, any rights, options or warrants to purchase
capital stock, and securities of any type whatsoever that are, or may become,
convertible into capital stock; provided that the term "New Securities" does not
include (i) securities issuable upon exercise or conversion of securities
outstanding as of the date of this Agreement; (ii) the Series F Preferred Stock
(or the Common Stock issuable upon conversion thereof); (iii) securities issued
pursuant to an underwritten public offering pursuant to an effective
Registration Statement; (iv) securities issued pursuant to the
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Company's acquisition of another corporation by merger, purchase of
substantially all assets or other reorganization; (v) securities issued to
employees, officers, directors or consultants of the Company pursuant to plans
and arrangements approved by the Board of Directors; (vi) securities issued in
connection with equipment lease financing arrangements, credit agreements or
other commercial transactions approved by the Board of Directors; (vii)
securities issued pursuant to a corporate strategic partner transaction
involving the license of technology, establishment of a joint venture, research
and development agreement, product development or marketing agreement, or other
similar arrangement; and (viii) securities issued in connection with any stock
split, stock dividend or recapitalization of the Company.
(b) In the event the Company issues New Securities, it shall give each
Investor written notice before such issuance or within ten (10) days thereafter,
describing the type of New Securities, the price and number of shares and the
general terms upon which the Company proposes to issue or issued the same. Each
Investor shall have ten (10) business days from the date of receipt of any such
notice to agree to purchase up to the amount of New Securities equal to the
Investor's Pro Rata Amount of such New Securities for the price and upon the
general terms specified in the notice by giving written notice to the Company at
the initial closing of the sale of New Securities or, at the Company's election,
at a subsequent closing within ninety (90) days of the initial closing.
(c) In the event an Investor fails to exercise in full the right to
maintain its interest within said ten (10) day period as set forth in Section
4(b) above, the Company shall have ninety (90) days thereafter to sell
additional amounts of New Securities respecting which the Investor's option was
not exercised, at the price and upon the terms specified in the Company's
notice. The Company shall not issue or sell any additional amounts of New
Securities after the expiration of such 90-day period without first offering
such securities to the Investors in the manner provided above.
(d) The right of participation set forth in this Section 4, including
the notice provisions relating thereto, may be waived, as to the holders of each
series of Preferred Stock, by the holders of more than fifty percent (50%) of
the then-outstanding shares of such series of Preferred Stock.
5. TERMINATION OF COVENANTS. Except as otherwise provided herein, the
covenants of the Company set forth in Sections 2, 3 and 4 shall be terminated
and be of no further force or effect upon the closing of the Company's initial
public offering of its Common Stock at an aggregate offering price to the public
of $10,000,000 or more (prior to deduction of underwriter commissions and
offering expenses) pursuant to a Registration Statement filed by the Company
under the Securities Act ("IPO").
6. DEMAND REGISTRATION.
6.1 REQUEST FOR REGISTRATION ON FORM OTHER THAN FORM S-3. Subject to
the terms of this Agreement, in the event that the Company shall receive from
the Initiating Holders at any time six (6) months after the effective date of
the IPO, a written request that the Company effect any Registration with respect
to all or a part of the Registrable Securities on a Form other than Form S-3 for
an offering covering the registration of Registrable Securities having a
reasonably anticipated aggregate offering price to the public in excess of five
million dollars ($5,000,000), the
5.
Company shall (i) promptly give written notice of the proposed Registration to
all other Holders and (ii) as soon as practicable, and in any event within
ninety (90) days of such request, use its best efforts to effect registration of
the Registrable Securities specified in such request, together with any
Registrable Securities of any Holder joining in such request as are specified in
a written request given within twenty (20) days after written notice from the
Company. The Company shall not be obligated to take any action to effect any
such registration pursuant to this Section 6.1 within ninety (90) days of the
effective date of a registration initiated by the Company. The Company shall be
obligated to take action to effect only one such registration requested by the
Initiating Holders described in Section 1(f)(i), one such registration requested
by the Initiating Holders described in Section 1(f)(ii), one such registration
requested by the Initiating Holders described in Section 1(f)(iii), one such
registration requested by the Initiating Holders described in Section 1(f)(iv),
one such registration requested by the Initiating Holders described in Section
1(f)(v), one such registration requested by the Initiating Holders described in
Section 1(f)(vi) and one such registration requested by the Initiating Holders
described in Section 1(f)(vii) where such registrations have been declared
effective and, if underwritten, have closed.
6.2 RIGHT OF DEFERRAL OF REGISTRATION ON FORM OTHER THAN FORM S-3.
If the Company shall furnish to all such Holders who joined in the request
pursuant to Section 6.1 a certificate signed by the President of the Company
stating that, in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company for any registration
to be effected as requested under Section 6.1, the Company shall have the right
to defer the filing of a Registration Statement with respect to such offering
for a period of not more than six (6) months from delivery of the request of the
Initiating Holders; provided, however, that the Company may not utilize this
right more than once in any 12-month period.
6.3 REQUEST FOR REGISTRATION ON FORM S-3. Subject to the terms of
this Agreement, in the event that the Company receives from Holders a written
request that the Company effect any registration on Form S-3 (or any successor
form to Form S-3, regardless of its designation) at a time when the Company is
eligible to register securities on Form S-3 (or any successor form to Form S-3,
regardless of its designation) for an offering of Registrable Securities the
reasonably anticipated aggregate offering price to the public of which would
exceed $1,000,000 the Company will promptly give written notice of the proposed
registration to all the Holders and will, as soon as practicable, use its best
efforts to effect registration of the Registrable Securities specified in such
request, together with all or such portion of the Registrable Securities of any
Holder joining in such request as are specified in a written request delivered
to the Company within thirty (30) days after written notice from the Company of
the proposed registration.
6.4 REGISTRATION OF OTHER SECURITIES IN DEMAND REGISTRATION. Any
Registration Statement filed pursuant to the request of the Initiating Holders
under this Section 6 may, subject to the provisions of Section 6.5, include
securities of the Company other than Registrable Securities.
6.5 UNDERWRITING IN DEMAND REGISTRATION.
6.5.1 NOTICE OF UNDERWRITING. 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 6, and the Company
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shall include such information in the written notice referred to in Section 6.1
or 6.3. The right of any Holder to registration pursuant to Section 6.1 shall be
conditioned upon such Holder's agreement to participate in such underwriting and
the inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the Initiating
Holders and such Holder with respect to such participation and inclusion).
6.5.2 INCLUSION OF OTHER HOLDERS IN DEMAND REGISTRATION. If the
Company, officers or directors of the Company holding Common Stock other than
Registrable Securities or holders of securities other than Registrable
Securities, request inclusion in such registration, the Initiating Holders, to
the extent they deem advisable and consistent with the goals of such
registration and subject to the allocation provisions of Section 6.5.4 below,
shall, on behalf of all Holders, offer to any or all of the Company, such
officers or directors and such holders of securities other than Registrable
Securities, that such securities other than Registrable Securities be included
in the underwriting and may condition such offer on the acceptance by such
persons of the terms of this Section 6.
6.5.3 SELECTION OF UNDERWRITER IN DEMAND REGISTRATION. The
Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into and perform its obligations
under an underwriting agreement in usual and customary form with the
representative of the underwriter or underwriters (the "Underwriter's
Representative") selected for such underwriting by the Holders of a majority of
the Registrable Securities being registered by the Initiating Holders and
consented to by the Company (which consent shall not be unreasonably withheld).
6.5.4 MARKETING LIMITATION IN DEMAND REGISTRATION. In the event
the Underwriter's Representative advises the Initiating Holders in writing that
market factors (including, without limitation, the aggregate number of shares of
Common Stock requested to be registered, the general condition of the market,
and the status of the persons proposing to sell securities pursuant to the
registration) require a limitation of the number of shares to be underwritten,
then the Initiating Holders shall so advise all Holders, and the number of
shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all Holders in proportion, as nearly as
practicable, to the number of shares held by such Holder at the time of filing
the Registration Statement; provided, however, that the number of shares of
Registrable Securities to be included in such underwriting shall not be reduced
unless all other securities (including those proposed to be included by the
Company) are first entirely excluded from the underwriting. No Registrable
Securities or other securities excluded from the underwriting by reason of this
Section 6.5.4 shall be included in such Registration Statement.
6.5.5 RIGHT OF WITHDRAWAL IN DEMAND REGISTRATION. If any Holder
of Registrable Securities, or a holder of other securities entitled (upon
request) to be included in such registration, disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the underwriter and the Initiating Holders delivered at least seven
(7) days prior to the effective date of the Registration Statement. The
securities so withdrawn shall also be withdrawn from the Registration Statement.
6.6 BLUE SKY IN DEMAND REGISTRATION. In the event of any
registration pursuant to this Section 6, the Company will exercise its best
efforts to register and qualify the
7.
securities covered by the Registration Statement under such other securities or
Blue Sky laws of such jurisdictions as the Holders shall reasonably request and
as shall be reasonably appropriate for the distribution of such securities;
provided, however, that the Company shall not be required to qualify to do
business or to file a general consent to service of process in any such states
or jurisdictions.
7. PIGGYBACK REGISTRATION.
7.1 NOTICE OF PIGGYBACK REGISTRATION AND INCLUSION OF REGISTRABLE
SECURITIES. Subject to the terms of this Agreement, in the event the Company
decides to register any of its Common Stock (either for its own account or the
account of a security holder or holders exercising their respective demand
registration rights) on a form that would be suitable for a registration
involving Registrable Securities, the Company will: (i) promptly give each
Holder written notice thereof (which shall include a list of the jurisdictions
in which the Company intends to attempt to qualify such securities under the
applicable Blue Sky or other state securities laws) and (ii) include in such
registration (and any related qualification under Blue Sky laws or other
compliance), and in any underwriting involved therein, all the Registrable
Securities specified in a written request delivered to the Company by any Holder
within twenty (20) days after delivery of such written notice from the Company.
7.2 UNDERWRITING IN PIGGYBACK REGISTRATION.
7.2.1 NOTICE OF UNDERWRITING IN PIGGYBACK REGISTRATION. If the
registration of which the Company gives notice is for a registered public
offering involving an underwriting, the Company shall so advise the Holders as a
part of the written notice given pursuant to Section 7.1. In such event the
right of any Holder to registration shall be conditioned upon such underwriting
and the inclusion of such Holder's Registrable Securities in such underwriting
to the extent provided in this Section 7. All Holders proposing to distribute
their securities through such underwriting shall (together with the Company and
the other holders distributing their securities through such underwriting) enter
into an underwriting agreement with the Underwriter's Representative for such
offering. The Holders shall have no right to participate in the selection of
the underwriters for an offering pursuant to this Section 7.
7.2.2 MARKETING LIMITATION IN PIGGYBACK REGISTRATION. In the
event the Underwriter's Representative advises the Holders seeking registration
of Registrable Securities pursuant to this Section 7 in writing that market
factors (including, without limitation, the aggregate number of shares of Common
Stock requested to be registered, the general condition of the market, and the
status of the persons proposing to sell securities pursuant to the registration)
require a limitation of the number of shares to be underwritten, the
Underwriter's Representative may:
(a) in the case of the Company's initial public offering,
exclude some or all Registrable Securities from such registration and
underwriting; and
(b) in the case of any registered public offering
subsequent to the Company's initial public offering, limit the number of shares
of Registrable Securities to be included in such registration and underwriting
to not less than twenty-five percent (25%) of the total amount of securities
included in such registration.
8.
In such event, the Underwriter's Representative shall so advise all Holders and
the number of shares of Registrable Securities that may be included in the
registration and underwriting (if any) shall be allocated among all Holders of
Registrable Securities that desire to participate in the registration in
proportion, as nearly as practicable, to the number of Registrable Securities
held by such Holder at the time of filing of the Registration Statement. The
number of shares of Registrable Securities to be included in such underwriting
shall not be reduced unless all other securities (other than those to be sold by
the Company) are first entirely excluded from the underwriting. No Registrable
Securities or other securities excluded from the underwriting by reason of this
Section 7.2.2 shall be included in such Registration Statement.
7.2.3 WITHDRAWAL IN PIGGYBACK REGISTRATION. If any Holder, or a
holder of other securities entitled (upon request) to be included in such
registration, 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 seven (7) days prior to the effective date of the
Registration Statement. Any Registrable Securities or other securities excluded
or withdrawn from such underwriting shall be withdrawn from such registration.
7.3 BLUE SKY IN PIGGYBACK REGISTRATION. In the event of any
registration of Registrable Securities pursuant to Section 7, the Company will
exercise its best efforts to register and qualify the securities covered by the
Registration Statement under such other securities or Blue Sky laws of such
jurisdictions as the Holders shall reasonably request and as shall be reasonably
appropriate for the distribution of such securities; provided, however, that the
Company shall not be required to qualify to do business or to file a general
consent to service of process in any such states or jurisdictions.
8. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with seven registrations pursuant to Section 6.1, up to four
registrations on Form S-3 pursuant to Section 6.3, and all registrations
pursuant to Section 7 shall be borne by the Company. All Registration Expenses
incurred in connection with any other registration, qualification or compliance
shall be apportioned among the Holders and other holders of the securities so
registered on the basis of the number of shares so registered. Notwithstanding
the above, the Company shall not be required to pay for any expenses of Holders
in connection with any registration proceeding begun pursuant to Section 6.1 if
the registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (which Holders
shall bear such expenses), unless the Holders of a majority of the Registrable
Securities of the Initiating Holders agree to forfeit the right of such
Initiating Holders to one demand registration pursuant to Section 6.1; provided
further, however, that (i) if at the time of such withdrawal, the Holders have
learned of a Material Adverse Event with respect to the condition, business or
prospects of the Company not known to the Holders at the time of their request
or (ii) such withdrawal is made after a deferral of such registration by the
Company pursuant to Section 6.2, then the Holders shall not be required to pay
any of such expenses and shall retain their rights pursuant to Section 6.1. All
Selling Expenses shall be borne by the holders of the securities registered pro
rata on the basis of the number of shares registered.
9. REGISTRATION PROCEDURES. The Company will keep each Holder whose
Registrable Securities are included in any registration pursuant to this
Agreement advised as to the initiation and completion of such registration. At
its expense the Company will: (a) use its best efforts to keep
9.
such registration effective for a period of 180 days or until the Holder or
Holders have completed the distribution described in the Registration Statement
relating thereto, whichever first occurs; (b) furnish such number of
prospectuses (including preliminary prospectuses) and other documents as a
Holder from time to time may reasonably request; (c) 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; and
(d) 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.
10. INFORMATION FURNISHED BY HOLDER. It shall be a condition precedent of
the Company's obligations under this Agreement that each Holder of Registrable
Securities included in any registration furnish to the Company such information
regarding such Holder and the distribution proposed by such Holder or Holders as
the Company may reasonably request.
11. INDEMNIFICATION.
11.1 COMPANY'S INDEMNIFICATION OF HOLDERS. To the extent permitted
by law, the Company will indemnify each Holder, each of its officers, directors
and constituent partners, legal counsel for the Holders, and each person
controlling such Holder, with respect to which registration, qualification or
compliance of Registrable Securities has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter against all claims, losses, damages or liabilities (or actions in
respect thereof) to the extent such claims, losses, damages or liabilities arise
out of or are based upon any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus or other document (including any
related Registration Statement) incident to any such registration, qualification
or compliance, or are based on 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, or any violation by the Company of the
Securities Act, the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), or any state securities law, or any rule or regulation promulgated under
the Securities Act, the Exchange Act or any state securities law, applicable to
the Company and relating to action or inaction required of the Company in
connection with any such registration, qualification or compliance; and the
Company will reimburse each such Holder, each of its officers, directors and
constituent partners, and legal counsel, each such underwriter, and each person
who controls any such Holder or underwriter, for any legal and any other
expenses reasonably incurred, as incurred, in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however,
that the indemnity contained in this Section 11.1 shall not apply to amounts
paid in settlement of any such claim, loss, damage, liability or action if
settlement is effected without the consent of the Company (which consent shall
not unreasonably be withheld); and provided, further, that the Company will not
be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based upon any untrue statement or
omission based upon written information furnished to the Company by such Holder,
its officers, directors, constituent partners, or legal counsel,
10.
underwriter, or controlling person and stated to be for use in connection with
the offering of securities of the Company.
11.2 HOLDER'S INDEMNIFICATION OF COMPANY. 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, qualification or
compliance is being effected pursuant to this Agreement, indemnify the Company,
each of its directors and officers, each legal counsel and independent
accountant of the Company, each underwriter, if any, of the Company's securities
covered by such a Registration Statement, each person who controls the Company
or such underwriter within the meaning of the Securities Act, and each other
such Holder, each of its officers, directors and constituent partners and each
person controlling such other Holder, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based upon any
untrue statement (or alleged untrue statement) of a material fact contained in
any such Registration Statement, prospectus, offering circular or other document
(including any related Registration Statement) incident to any such
registration, qualification or compliance, 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, or any violation by such Holder of
the Securities Act, the Exchange Act or any state securities law, or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law, applicable to such Holder and relating to action or inaction
required of such Holder in connection with any such registration, qualification
or compliance, and will reimburse the Company, such Holders, such directors,
officers, partners, persons, law and accounting firms, underwriters or control
persons for any legal and any other expenses reasonably incurred, as incurred,
in connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such Registration Statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder and stated to be specifically for use in
connection with the offering of securities of the Company; provided, however,
that each Holder's liability under this Section 11.2 shall not exceed such
Holder's proceeds from the offering of securities made in connection with such
Registration; and provided, further, that the indemnity contained in this
Section 11.2 shall not apply to amounts paid in settlement of any such claim,
loss, damage, liability or action if settlement is effected without the consent
of the Holder (which consent shall not unreasonably be withheld).
11.3 INDEMNIFICATION PROCEDURE. Promptly after receipt by an
indemnified party under this Section 11 of notice of the commencement of any
action, such indemnified party will, if a claim in respect thereof is to be made
against an indemnifying party under this Section 11, notify the indemnifying
party in writing of the commencement thereof and generally summarize such
action. The indemnifying party shall have the right to participate in and to
assume the defense of such claim, jointly with any other indemnifying party
similarly noticed; provided, however, that the indemnifying party shall be
entitled to select counsel for the defense of such claim with the approval of
any parties entitled to indemnification, which approval shall not be
unreasonably withheld; provided further, however, that if either party
reasonably determines that there may be a conflict between the position of the
Company and the Investors in conducting the defense of such action, suit or
proceeding by reason of recognized claims for indemnity under this Section 11,
then counsel for such party shall be entitled to conduct the defense to the
extent reasonably determined by such counsel to be necessary to protect the
interest of such party. The failure to notify an indemnifying
11.
party promptly of the commencement of any such action, if prejudicial to the
ability of the indemnifying party to defend such action, shall relieve such
indemnifying party, to the extent so prejudiced, of any liability to the
indemnified party under this Section 11, but the omission so to notify the
indemnifying party will not relieve such party of any liability that such party
may have to any indemnified party otherwise other than under this Section 11.
12. LIMITATIONS ON REGISTRATION RIGHTS GRANTED TO OTHER SECURITIES. From
and after the date of this Agreement, the Company shall not enter into any
agreement with any holder or prospective holder of any securities of the Company
providing for the granting to such holder of any registration rights unless such
rights are subordinate to the registration rights set forth herein, except that,
with the consent of the Holders of fifty percent (50%) of the aggregate of the
Convertible Securities and Registrable Securities then outstanding, additional
holders may be added as parties to this Agreement with regard to any or all
securities of the Company held by them. Any such additional parties shall
execute a counterpart of this Agreement, and upon execution by such additional
parties and by the Company, shall be considered an Investor for all purposes of
this Agreement. The additional parties and the additional Registrable
Securities shall be identified in an amendment to Schedule A hereto.
13. REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making
available to the Investors the benefits of Rule 144 and any other rule or
regulation of the Commission that may at any time permit an Investor to sell
securities of the Company to the public without registration or pursuant to a
Registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms are
defined in Rule 144, at all times after ninety (90) days after the effective
date of the first Registration Statement filed by the Company for the offering
of its securities to the general public;
(b) file with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Investor, so long as such Investor owns any
Convertible Securities or Registrable Securities, forthwith upon request (i) a
written statement by the Company that it has complied with the reporting
requirements of Rule 144 (at any time after ninety (90) days after the
effective date of the first registration statement filed by the Company), the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), or that it qualifies as a registrant whose
securities may be resold pursuant to Form S-3 (at any time after it so
qualifies), (ii) a copy of the most recent annual or quarterly report of the
Company and such other reports and documents so filed by the Company and (iii)
such other information as may be reasonably requested in availing any Investor
of any rule or regulation of the Commission which permits the selling of any
such securities without registration.
14. MARKET STAND-OFF. Each Holder hereby agrees that, if so requested by
the Company and the Underwriter's Representative (if any), such Holder shall not
sell or otherwise transfer (other than to donees who agree to be similarly
bound) any Registrable Securities or other securities of the Company during the
one hundred eighty (180) day period following the effective date of a
Registration Statement of the Company filed under the Securities Act; provided
that such restriction shall only apply to the first two Registration Statements
of the Company to become effective which
12.
include securities to be sold on behalf of the Company to the public in an
underwritten offering; and provided, further, that all officers and directors of
the Company and all other persons with registration rights (whether or not
pursuant to this Agreement) enter into similar agreements.
15. CONVERSION OF PREFERRED STOCK. The registration rights of the Holders
of the Registrable Securities set forth in this Agreement are conditioned upon
the conversion of the Registrable Securities with respect to which registration
is sought into Common Stock prior to the closing date of the public offering
effected pursuant to such Registration Statement.
16. TERMINATION OF REGISTRATION RIGHTS. The right to cause the Company to
register securities granted by the Company to the Investors under the Agreement
shall terminate as to each Investor on the earlier of (a) seven (7) years after
the date of the closing of the Company's initial public offering of its
securities or (b) such time as such Investor owns less than one percent (1%) of
the outstanding stock of the Company and is free to sell all of such stock to
the public pursuant to Rule 144 (including Rule 144(k)).
17. TRANSFER OF RIGHTS. The rights to information under Sections 2 and 3,
the right of first refusal set forth in Section 4 and the registration rights of
the Investors set forth in Sections 6, 7, 8 and 9 may be assigned by any Holder
to a transferee or assignee of any Convertible Securities or Registrable
Securities not sold to the public acquiring at least the lesser of (i) 100% of
the Convertible Securities and/or Registrable Securities originally acquired by
such Holder or (ii) 120,000 shares of such Holder's Convertible Securities or
Registrable Securities (equitably adjusted for any recapitalizations, stock
splits, combinations and the like) or acquiring all of the Convertible
Securities and Registrable Securities held by such Holder if transferred to a
single entity; provided, however, that (i) the Company must receive written
notice prior to the time of said transfer, stating the name and address of said
transferee or assignee and identifying the securities with respect to which such
information and registration rights are being assigned and (ii) the transferee
or assignee of such rights must not be a person deemed by the Board of Directors
of the Company to be a competitor or potential competitor of the Company.
Notwithstanding the limitation set forth in the foregoing sentence respecting
the minimum number of shares that must be transferred, any Holder may transfer
such Holder's Registration rights to any subsidiary, parent, affiliate, general
partner or limited partner of such Holder (or may transfer to their heirs in the
case of individuals) without restriction as to the number or percentage of
shares acquired by any such entity (or heirs).
18. MISCELLANEOUS.
18.1 ENTIRE AGREEMENT; SUCCESSORS AND ASSIGNS. This Agreement
constitutes the entire contract between the Company, the Investors and the
Founders relative to the subject matter hereof. Any previous agreement between
the Company and the Investors or the Founders concerning information rights,
rights of first refusal or registration rights is superseded by this Agreement.
Subject to the exceptions specifically set forth in this Agreement, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective executors, administrators, heirs, successors and assigns of
the parties.
18.2 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and wholly to be performed within the State of California
by California residents.
13.
18.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
18.4 HEADINGS. The headings of the Sections of this Agreement are
for convenience and shall not by themselves determine the interpretation of this
Agreement.
18.5 NOTICES. Any notice required or permitted hereunder shall be
given in writing and shall be conclusively deemed effectively given upon
personal delivery, or five (5) days after deposit in the United States mail, by
first class mail, postage prepaid, or upon sending if sent by commercial
overnight delivery service addressed (i) if to the Company, as set forth below
the Company's name on the signature page of this Agreement and (ii) if to an
Investor or a Founder, at such Investor's or Founder's address as set forth in
the Company's shareholder records, or at such other address as the Company or
such Investor or Founder may designate by ten (10) days advance written notice
to the Investors and Founders or to the Company, respectively.
18.6 AMENDMENT OF AGREEMENT. Except as otherwise specifically
provided herein, any provision of this Agreement may be amended and any
obligations of the Company and the rights of the Holders under this Agreement
may be waived by a written instrument signed by the Company and by persons
holding more than fifty (50%) of the then-outstanding Convertible Securities and
Registrable Securities (calculated on an as-converted basis).
18.7 AGGREGATION OF STOCK. All Convertible Securities and
Registrable Securities held or acquired by affiliated entities or persons shall
be aggregated together for the purpose of determining the availability of any
rights under this Agreement.
18.8 SEVERABILITY. If any provision of this Agreement is held to be
unenforceable for any reason, it shall be adjusted rather than voided, if
possible, in order to achieve the intent of the parties to the extent possible.
In any event, all other provisions of this Agreement shall be deemed valid and
enforceable to the full extent possible.
14.
IN WITNESS WHEREOF, the parties hereto have executed this Amended and
Restated Information and Registration Rights Agreement as of the day and year
first above written.
COMPANY:
TERAYON COMMUNICATION SYSTEMS
By:____________________________________________
Xxxx Xxxxx
Chief Executive Officer
Address: 0000 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxx, XX 00000
FOUNDERS:
____________________________________ ________________________________
XXXXXX XXXXX XXXX XXXXX
INVESTORS:
____________________________________
Signature
Name:_______________________________
By:_________________________________
Its:________________________________
AMENDED AND RESTATED
INFORMATION AND REGISTRATION RIGHTS
SCHEDULE A
INVESTORS
Attractor LP
Attractor Dearborn Partners LP
Attractor Institutional LP, Inc.
BancAmerica Xxxxxxxxx Xxxxxxxx
Bayview Investors, Ltd.
CDC - Valeurs de Croissance
Cisco Systems, Inc.
Clariden Bank
GC&H Investments
Globo Radio and Television Network International Co.
Xxxxxxx Associates
Korea Technology Banking Corporation
Xxxx X. Xxxxxx
Lauder Partners
Closefire Ltd.
Sequoia Capital VI
Sequoia 1995
Sequoia 1997
Sequoia Technology Partners VI
Sequoia XXIV
Xxxx Communications Inc.
Sierra Ventures V, L.P.
SQP 1997
Stanford University
Sumitomo Corporation
Tower Financial Ltd.
Xxxxxx-Israel Ventures, X.X.
Xxxxxx-SBIC, X.X.
Xxxxxx Technology Ventures II, L.P.
WPG Enterprise Fund II, X.X.
Xxxxx, Xxxx & Xxxxx Venture Associates III, L.P.
AMENDED AND RESTATED
INFORMATION AND REGISTRATION RIGHTS
SCHEDULE B
FOUNDERS
Xxxxxx Xxxxx
Xxxx Xxxxx
AMENDED AND RESTATED
INFORMATION AND REGISTRATION RIGHTS
