Exhibit C
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INVESTOR'S RIGHTS AGREEMENT
THIS INVESTOR'S RIGHTS AGREEMENT is made as of June 26, 2001, by and among
F5 NETWORKS, INC., a Washington corporation (the "Company"), and of NOKIA
FINANCE INTERNATIONAL BV a private company with limited liability (besloten
vennootschap met beperkte aansprakelijkheid), incorporated under the laws of The
Netherlands (the "Investor"), and a subsidiary of Nokia Corporation, a Finnish
corporation.
RECITALS
WHEREAS, the Company and the Investor are parties to the Common Stock and
Warrant Purchase Agreement of dated June 26, 2001 (the "Purchase Agreement");
WHEREAS, in order to induce the Company to approve the issuance of the
Company's common stock, without par value (the "Common Stock"), and to induce
the Investor to invest funds in the Company pursuant to the Purchase Agreement,
the Investor and the Company hereby agree that this Agreement shall govern the
rights of the Investor to cause the Company to register shares of Common Stock
issued or issuable to the Investor under the Purchase Agreement and certain
other matters as set forth herein;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. REGISTRATION RIGHTS. The Company covenants and agrees as follows:
1.1 DEFINITIONS. For purposes of this Agreement:
(a) The term "Securities Act" means the Securities Act of 1933, as
amended.
(b) The term "Change-in-Control Transaction" means (a) any agreement to
which the Company is a party calling for the merger or consolidation of the
Company or the sale of all or a substantial portion of the assets of the
Company; (b) any acquisition by any third party of beneficial ownership of 50%
or more of the outstanding Common Stock of the Company; or (c) any public
announcement of a tender or exchange offer for 50% or more of the outstanding
Common Stock of the Company.
(c) The term "Form S-3" means such form under the Securities Act as in
effect on the date hereof, any successor registration form or any other
registration form under the Securities Act subsequently adopted by the SEC that
permits inclusion or incorporation of substantial information by reference to
other documents filed by the Company with the SEC.
(d) The term "Holder" means the Investor and any other person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.11 hereof;
(e) The term "Exchange Act" means the Securities Exchange Act of 1934,
as amended.
(f) The term "register," "registered," and "registration" refer to a
registration effected by preparing and filing a registration statement or
similar document in compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement or document.
(g) The term "Registrable Securities" means (i) the Common Stock
originally issued under the Purchase Agreement, (ii) the Common Stock issued
upon exercise of the Warrant (as defined in the Purchase Agreement) and (iii)
any Common Stock of the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security that is issued as) a dividend
or other distribution with respect to, or in exchange for, or in replacement of,
the shares referenced in (i) and (ii) above, excluding in all cases, however,
any Registrable Securities sold by the Investor in a transaction in which its
rights under this Section 1 are not assigned; and the number of shares of
"Registrable Securities" outstanding at any time, shall be determined by the
number of shares of Common Stock outstanding that are, and the number of shares
of Common Stock issuable pursuant to then exercisable or convertible securities
that are, Registrable Securities.
(h) The term "Rule 144" shall mean Rule 144 promulgated under the
Securities Act.
(i) The term "SEC" shall mean the Securities and Exchange Commission.
(j) The term "Selling Expenses" shall mean underwriting discounts and
commission and fees of disbursements of counsel for the selling Holder or
Holders.
1.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 1.2, if the Company shall
receive a written request from either the Investor or Holders of a majority of
the Registrable Securities then outstanding (in either case, the "Initiating
Holders") that the Company file a registration statement under the Securities
Act covering the registration of Registrable Securities then outstanding such
that the anticipated aggregate offering price, net of underwriting discounts and
commissions, would exceed $5,000,000 (a "Qualified Public Offering"), then the
Company shall, within ten (10) days of the receipt thereof, give written notice
of such request to all Holders, and subject to the limitations of this Section
1.2, use its best efforts to effect, as soon as practicable, the registration
under the Securities Act of all Registrable Securities that the Holders request
to be registered; provided that the Company shall file the registration
statement no later than thirty (30) days following receipt of such notice. Such
registration statement may be filed on any appropriate registration form for
which the Company is then eligible (including Form S-3) that contemplated an
offering of the type proposed by the Initiating Holders in the request made
pursuant to the Section 1.2.
(b) If the Initiating Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall so
advise the Company as a part of their request made pursuant to this Section 1.2
or any request pursuant to Section 1.4 and the Company shall include such
information in the written notice referred to in Section 1.2(a) or Section
1.4(a), as applicable. In such event, the right of any Holder to include its
Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such
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underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. The Company and all Holders
proposing to distribute their securities through such underwriting shall enter
into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
1.2 or Section 1.4, if the underwriter advises the Company that marketing
factors require a limitation of the number of shares to be underwritten
(including Registrable Securities) then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated on a pro rata basis based on the total number of Registrable
Securities held by all such Holders. Any Registrable Securities excluded or
withdrawn from such underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration pursuant
to this Section 1.2:
(i) prior to December 31, 2001;
(ii) after the Company has effected three (3) registrations pursuant to
this Section 1.2, and such registrations have been declared or ordered
effective;
(iii) during the period starting 30 days prior to the date of filing
of, and ending on the date ninety (90) days following the effective date of the
registration statement pertaining to a public offering of securities by the
Company; provided that the Company makes reasonable good faith efforts to cause
such registration statement to become effective; or
(iv) if the Company shall furnish to Holders requesting a registration
statement pursuant to this Section 1.2, a certificate signed by the Chairman of
the Board or Chief Executive Officer of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its shareholders for such registration to be
effected at such time (it being acknowledged that the Investor's decision to
sell or any direct or perceived impact of that decision on any related business
or commercial relationships between the Investor and the Company shall not be
deemed seriously detrimental within the meaning of this provision), in which
event the Company shall have the right to defer such filing for a period of not
more than ninety (90) days after receipt of the request of the Initiating
Holders; provided, however, that such right to delay a request shall not be
exercised by the Company more than once in any twelve (12) month period.
1.3 PIGGY-BACK REGISTRATION
(a) If (but without any obligation to do so) the Company proposes to
register (including for this purpose a registration effected by the Company for
shareholders other than the Holders) any of its stock or other securities under
the Securities Act in connection with the public offering of such securities
(other than a registration relating solely to the sale of securities to
participants in a Company stock plan or a registration relating to a corporate
reorganization or other transaction under Rule 145 of the Securities Act), the
Company shall, at such time,
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promptly give each Holder written notice of such registration. Upon the written
request of each Holder given within twenty (20) days after delivery of such
notice by the Company in accordance with Section 3.5, the Company shall, subject
to the provisions of Section 1.3(c), use all reasonable efforts to cause to be
registered under the Securities Act all of the Registrable Securities that each
such Holder has requested to be registered; provided, however, that the Company
shall not be obligated to include any Registrable Securities in any such
registration, qualification or compliance, pursuant to this Section 1.3 prior to
December 31, 2001.
(B) RIGHT TO TERMINATE REGISTRATION. The Company shall have the right
to terminate or withdraw any registration initiated by it under this Section 1.3
prior to the effectiveness of such registration whether or not any Holder has
elected to include securities in such registration. The expenses of such
withdrawn registration shall be borne by the Company in accordance with Section
1.7 hereof.
(C) UNDERWRITING REQUIREMENTS. In connection with any offering
involving an underwriting of shares of the Company's capital stock, the Company
shall not be required under this Section 1.3 to include any of the Holders'
securities in such underwriting unless they accept the customary terms of the
underwriting as reasonably agreed upon between the Company and the underwriters
selected by it (or by other persons entitled to select the underwriters) and
enter into an underwriting agreement in customary form with an underwriter or
underwriters selected by the Company, provided that if the underwriters
determine in good faith that marketing factors require a limitation on the
number of shares to be underwritten, then the Company shall be required to
include in the offering only that number of such securities, including
Registrable Securities, that the underwriters determine in good faith will not
jeopardize the success of the offering (the securities so included to be
apportioned pro rata among the selling Holders and any other selling
shareholders having similar rights according to the total amount of securities
proposed to be included therein by each selling Holder and any other selling
shareholder holding similar rights or in such other proportions as shall
mutually be agreed to by such selling Holders), but in no event shall the amount
of securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) of the total amount of securities included in such
offering. In no event will shares of any other selling shareholder be included
in such registration if such inclusion would reduce the number of shares which
may be included by Holders without the written consent of Holders of not less
than a majority of the Registrable Securities proposed to be sold in the
offering. If any Holder disapproves of the terms of any such underwriting, such
Holder may elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder which is a partnership or corporation, the
partners, retired partners and shareholders of such Holder, or the estates and
family members of any such partners and retired partners and any trusts for the
benefit of any of the foregoing person shall be deemed to be a single "Holder",
and any pro rata reduction with respect to such "Holder" shall be based upon the
aggregate amount of shares carrying registration rights owned by all entities
and individuals included in such "Holder", as defined in this sentence.
1.4 FORM S-3 REGISTRATION. In case the Company shall receive from the
Holders of Registrable Securities a written request or requests that the Company
effect a registration on
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Form S-3 and any related qualification or compliance with respect to all or a
part of the Registrable Securities owned by such Holder or Holders, the Company
shall:
(a) promptly give written notice of the proposed registration, and any
related qualification or compliance, to all other Holders; and
(b) effect, as soon as practicable, such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holders'
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any other Holders joining in such
request as are specified in a written request given within fifteen (15) days
after receipt of such written notice from the Company; provided, however, that
the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this Section 1.4:
(i) prior to December 31, 2001;
(ii) if Form S-3 is not available for such offering by the Holders;
(iii) if the Holders, together with the holders of any other securities
of the Company entitled to inclusion in such registration, propose to sell
Registrable Securities and such other securities (if any) at an aggregate price
to the public of less than $5,000,000;
(iv) if the Company shall furnish to the Holders a certificate signed
by the Chief Executive Officer or Chairman of the Board of the Company stating
that in the good faith judgment of the Board of Directors of the Company, it
would be seriously detrimental to the Company and its shareholders for such
registration to be effected at such time (it being acknowledged that the
Investor's decision to sell or any direct or perceived impact of that decision
on any related business or commercial relationships between the Investor and the
Company shall not be deemed seriously detrimental within the meaning of this
provision), in which event the Company shall have the right to defer the filing
of the Form S-3 registration statement for a period of not more than ninety (90)
days after receipt of the request of the Holder or Holders under this Section
1.4; provided, however, that the Company shall not use this right more than once
in any twelve month period; or
(v) if the Company has, within the twelve (12) month period preceding
the date of such request, already effected two registrations on Form S-3 for the
Holders pursuant to this Section 1.4.
(c) Subject to the foregoing, the Company shall file a registration
statement covering the Registrable Securities and other securities so requested
to be registered as soon as practicable after receipt of the request or requests
of the Holders. Registrations effected pursuant to this Section 1.4 shall not be
counted as demands for registration or registrations effected pursuant to
Sections 1.2 or 1.3.
1.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 1 to
effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
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(a) prepare and file with the SEC a registration statement with respect
to such Registrable Securities and use all reasonable efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for a period of up to one hundred twenty (120)
days or, if earlier, until the distribution contemplated in the Registration
Statement has been completed;
(b) prepare and file with the SEC such amendments and supplements to
such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement;
(c) furnish to the Holders such numbers of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them;
(d) use all reasonable efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions;
(e) in the event of any underwritten public offering, enter into and
perform its obligations under an underwriting agreement, in usual and customary
form, with the managing underwriter of such offering;
(f) notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(g) furnish, at the request of a majority of the Holders participating
in the registration, on the date that such Registrable Securities are delivered
to the underwriters for sale, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters, on
the date that the registration statement with respect to such securities becomes
effective, (i) an opinion, dated as of such date, of the recognized securities
counsel representing the Company for the purposes of such registration, in form
and substance as is customarily given to underwriters in an underwritten public
offering and reasonably satisfactory to a majority in interest of the Holders
requesting registration, addressed to the underwriters, if any, and to the
Holders requesting registration of Registrable Securities and (ii) a letter
dated as of such date, from the independent certified public accountants of the
Company, in form and customarily given by independent certified public
accountants to underwriters in an underwritten public offering and reasonably
satisfactory to a majority in interest of the Holders requesting registration,
addressed to the underwriters, if any, and if permitted by applicable accounting
standards, to the Holders requesting registration of Registrable Securities.
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(h) cause all such Registrable Securities registered pursuant hereunder
to be listed on each securities exchange on which similar securities issued by
the Company are then listed; and
(i) provide a transfer agent and registrar for all Registrable
Securities registered pursuant hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
1.6 INFORMATION FROM HOLDER. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 1 with
respect to the Registrable Securities of any selling Holder that such Holder
shall furnish to the Company such information regarding itself, the Registrable
Securities held by it, and the intended method of disposition of such securities
as shall be required to effect the registration of such Holder's Registrable
Securities.
1.7 EXPENSES OF REGISTRATION. All expenses other than Selling Expenses
incurred in connection with registrations, filings or qualifications pursuant to
Sections 1.2, 1.3 and 1.4, including (without limitation) all registration,
filing and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company shall be borne by the Company. All
Selling Expenses incurred in connection with any registration hereunder, shall
be borne by the holders of the securities so registered pro rata on the basis of
the number of shares so registered. Notwithstanding anything else in this
Section 1.7 to the contrary, in the event a Holder demands registration pursuant
to Sections 1.2 or 1.4 after such time at which all Registrable Securities held
by such Holder (and any affiliate of the Holder with whom such Holder must
aggregate its sales under Rule 144) can in the written opinion of securities
counsel for the Company provided to such Holder be sold in any three (3) month
period without registration in compliance with Rule 144, all registration,
filing and qualification fees, printers' and accounting fees, fees and
disbursements of counsel for the Company incurred in connection with such
registration, filing or qualification shall be borne by such Holder; provided
that such Holder will not bear accounting fees or fees and disbursements of
counsel to the Company that, in the aggregate, exceed $50,000.
1.8 INDEMNIFICATION. In the event any Registrable Securities are included
in a registration statement under this Section 1:
(a) The Company will indemnify and hold harmless each Holder, the
partners or officers, directors and shareholders of each Holder, legal counsel
and accountants for each Holder, any underwriter (as defined in the Securities
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or several) to which
they may become subject under the Securities Act, the Exchange Act or any state
securities laws, insofar as such losses, claims, damages, or liabilities (or
actions in respect thereof) arise out of or are based upon any of the following
statements, omissions or violations (collectively a "Violation"): (i) any untrue
statement or alleged untrue statement of a material fact contained in such
registration statement, including any preliminary prospectus or final prospectus
contained therein or any amendments or supplements thereto, (ii) the omission or
alleged omission to state therein a material fact required to be stated therein,
or necessary to make the statements therein not misleading, or (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities laws or any rule or regulation promulgated
under the
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Securities Act, the Exchange Act or any state securities laws; and the
Company will reimburse each such Holder or controlling person as incurred for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
l.8(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability
or action to the extent that it arises out of or is based upon a Violation that
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person; provided further, however, that the foregoing
indemnity agreement with respect to any preliminary prospectus shall not inure
to the benefit of any Holder or underwriter, or any person controlling such
Holder or underwriter, from whom the person asserting any such losses, claims,
damages or liabilities purchased shares in the offering, if a copy of the
prospectus (as then amended or supplemented if the Company shall have furnished
any amendments or supplements thereto) was not sent or given by or on behalf of
such Holder or underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the shares to
such person, and if the prospectus (as so amended or supplemented) would have
cured the defect giving rise to such loss, claim, damage or liability.
(b) Each selling Holder will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Securities Act, legal counsel and accountants for the Company, any
underwriter, any other Holder selling securities in such registration statement
and any controlling person of any such underwriter or other Holder, against any
losses, claims, damages or liabilities (joint or several) to which any of the
foregoing persons may become subject, under the Securities Act, the Exchange Act
or any state securities laws, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon any
Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will reimburse any person intended to be indemnified
pursuant to this subsection l.8(b), for any legal or other expenses reasonably
incurred by such person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this subsection l.8(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder (which consent shall
not be unreasonably withheld), provided that in no event shall any indemnity
under this subsection l.8(b) exceed the gross proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this Section
1.8 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim in respect thereof is to be
made against any indemnifying party under this Section 1.8, deliver to the
indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however,
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that an indemnified party (together with all other indemnified parties that may
be represented without conflict by one counsel) shall have the right to retain
one separate counsel, with the fees and expenses to be paid by the indemnifying
party, if representation of such indemnified party by the counsel retained by
the indemnifying party would be inappropriate due to actual or potential
differing interests between such indemnified party and any other party
represented by such counsel in such proceeding. The failure to deliver written
notice to the indemnifying party within a reasonable time of the commencement of
any such action, if (but only if) prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.8, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.8.
(d) If the indemnification provided for in this Section 1.8 is
unavailable to an indemnified party or is insufficient to hold to such
indemnified party harmless against any such loss with respect to any loss,
liability, claim, damage or expense referred to herein, then the indemnifying
party, in lieu of indemnifying such indemnified party hereunder, shall
contribute to the amount paid or payable by such indemnified party as a result
of such loss, liability, claim, damage or expense in such proportion as is
appropriate to reflect the relative fault of the indemnifying party on the one
hand and of the indemnified party on the other in connection with the statements
or omissions that resulted in such loss, liability, claim, damage or expense, as
well as any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct or
prevent such statement or omission; provided that in no event shall any Holder
be required to contribute an amount that exceeds the proceeds received by such
Holder from the Offering.
(e) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in any underwriting agreement entered
into in connection with an underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement shall
control.
(f) The obligations of the Company and Holders under this Section 1.8
shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 1, and the termination of this
agreement. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.9 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a view to making
available to the Holders the benefits of Rule 144 and any other rule or
regulation of the SEC that may at any time permit a Holder to sell securities of
the Company to the public without registration or pursuant to a registration on
Form S-3, the Company agrees to:
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(a) make and keep public information available, as those terms are
understood and defined in Rule 144, at all times while the Company is a
reporting issuer under the Exchange Act;
(b) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act;
and
(c) furnish to any Holder, so long as the Holder owns any Registrable
Securities, forthwith upon request (i) a written statement by the Company that
it has complied with the reporting requirements of Rule 144, the Securities Act
and the Exchange Act (at all times it remains subject to such reporting
requirements), or that it qualifies as a registrant whose securities may be
resold pursuant to Form S-3, (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 Holder of any rule or regulation of the SEC that permits the
selling of any such securities without registration or pursuant to such form.
1.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company to
register Registrable Securities pursuant to Sections 1.2, 1.3 and 1.4 hereof may
be assigned by a Holder to a transferee or assignee of such securities that is a
subsidiary of the Investor or the ultimate parent of the Investor or any other
subsidiary of such parent. The right to cause the Company to register
Registrable Securities under Section 1.3 hereof may be assigned by the Holder to
one or more unaffiliated transferees that after such assignment or transfer,
hold at least that number of shares of Registrable Securities equal to one
percent (1%) of the outstanding capital stock of the Company (as measured at the
time of such transfer); provided: (a) the Company shall, within a reasonable
time after such transfer, be furnished with written notice of the name and
address of such transferee or assignee and the securities with respect to which
such registration rights are being assigned; and (b) such transferee or assignee
shall agree in writing to be bound by and subject to the terms and conditions of
Section 1 of this Agreement. The rights to cause the Company to register
Registrable Securities pursuant to Section 1.2 may not be assigned by the
Investor to an unaffiliated transferee.
2. COVENANTS OF THE COMPANY AND THE INVESTOR.
2.1 COVENANTS OF THE COMPANY
(a) Pre-emptive Right . Until such time as the Investor has sold shares
in the Company such that the Investor owns not less than five percent (5%) of
the outstanding capital stock of the Company, subject to the terms and
conditions specified in this Section 2.1(a) the Investor shall be entitled to a
pre-emptive right with respect to future sales by the Company of its Shares (as
hereinafter defined). Each time the Company proposes to offer any shares of, or
securities convertible into or exchangeable or exercisable for any shares of,
any class of its capital stock ("Shares"), the Company shall notify the Investor
in accordance with the following provisions.
(i) The Company shall deliver a notice in accordance with Section 3.5
("Notice") to the Investor stating (1) its bona fide intention to offer such
Shares, (2) the number
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of such Shares to be offered, and (3) the price and terms upon which it proposes
to offer such Shares.
(ii) By written notification received by the Company, within twenty
(20) calendar days after receipt of the Notice, the Investor may elect to
purchase or obtain, at the price and on the terms specified in the Notice, up to
that portion of such Shares that equals the proportion that the number of shares
of Registrable Securities issued and held by the Investor bears to the total
number of shares of Common Stock of the Company then outstanding (assuming full
conversion of all convertible securities).
(iii) If all Shares that the Investor is entitled to obtain pursuant to
subsection 2.1(a)(ii) are not elected to be obtained as provided in subsection
2.1(a)(ii) hereof, the Company may, during the ninety (90) day period following
the expiration of the period provided in subsection 2.1(a)(ii) hereof, offer the
remaining unsubscribed portion of such Shares either: (1) in a private offering
to any person or persons at a price not less than, and upon terms no more
favorable to the offeree than those specified in the Notice, or (2) pursuant to
a registered offering. If the Company does not either enter into an agreement
for the issue and sale of the Shares within such period, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Investor in accordance herewith.
(iv) The right of first offer in this paragraph 2.1(a) shall not be
applicable to (1) the issuance or sale of shares of Common Stock (or options
therefor) to employees, directors and consultants for the primary purpose of
soliciting or retaining their services, (2) the issuance of securities pursuant
to the conversion or exercise of convertible or exercisable securities, (3) the
issuance of securities in connection with a bona fide business acquisition of or
by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise or (4) the issuance of stock, warrants or other
securities or rights to persons or entities with which the Company has business
relationships provided such issuances are for other than primarily equity
financing purposes.
(v) In the event of an issue or sale of Common Stock contemplated by
clause (iv) above after the close of business on June 25, 2001, the Investor
shall have the right exercisable during the initial ten Business Days after the
end of each fiscal quarter, commencing September 30, 2001 to purchase additional
shares of Common Stock sufficient to retain its percentage ownership interest in
the Company's outstanding common stock at a price per share equal to the Average
Closing Price in effect on the last trading day of such fiscal quarter. For
purposes of this clause (v), the "Average Closing Price" means as of any date
the average of the last reported sales prices of the shares of Common Stock on
the Nasdaq National Market (or other exchange in which the shares are then
listed) for the ten (10) consecutive trading days ending on the date specified,
or if such date is not a trading day, on the previous trading day and "Business
Day" means any day other than a Saturday or Sunday or any on which commercial
banks in Seattle, Washington or Helsinki, Finland are authorized or obligated by
law to close.
(b) Reservation of Common Stock. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the exercise of the
Warrant, all Common Stock issuable from time to time upon such exercise.
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(c) Board Representation. Promptly following the execution and delivery
of this Agreement, the Company shall take all necessary steps to appoint the
Investor's designee as a member of the Company's Board of Directors, to serve
until the Company's next annual shareholders' meeting at which time the Company
will nominate such designee in its proxy statement to be elected by the
shareholders to serve for a full term as a member of the Board of Directors. As
long as the Investor has not sold shares such that the Investor holds less than
five percent (5%) of the outstanding capital stock of the Company, the Company
shall use its best efforts to cause and maintain the election to the Board of
Directors of a representative designated by the Investor.
(d) Reimbursement of Expenses For Attending Board Meetings. The Company
will reimburse the director nominated by the Investor for reasonable expenses
(including airfare, lodging and other travel expenses) incurred in connection
with attending meetings of the Company's Board of Directors. The director
nominated by the Investor shall waive any director's fees, options or similar
compensation payable by the Company to members of the Board of Directors for
service as a director.
(e) Inspection Rights; Confidentiality. The Investor will have the
right to receive all business information provided to the Company's Board of
Directors in connection with each meeting of the Board of Directors promptly
following the meeting at which such information is furnished to the Board of
Directors. The Investor shall have the right to discuss the affairs, finances
and accounts of the Company or any of its subsidiaries with the Company's
executive officers, and to review such information as is reasonably requested
all at such reasonable times and as often as may be reasonably requested, but
not more than once each calendar quarter; provided, however, that the Company
shall not be obligated under this Section 2.1(e) to furnish information to the
extent that the Board of Directors determines in good faith that furnishing such
information would be a violation of the Board's fiduciary duties
2.2 COVENANTS OF THE INVESTOR.
(a) Business Combination. The Investor covenants to and agrees with the
Company that, for a period of two years from the date of this Agreement, the
Investor will not act in concert with another party to effect a business
combination involving, or sale of material assets of, the Company (including any
soliciting of proxies designed to achieve such a transaction), except in the
event of a third party Change-in-Control Transaction.
(b) Accumulation of Shares. The Investor covenants to and agrees with
the Company that, for a period of two years from the date of this Agreement, the
Investor shall not, without the prior written consent of the Company, increase
its ownership interest in the Company, directly or indirectly, other than as a
result of: (i) the Investor exercising the Warrant in whole in part, (ii) stock
splits, dividends, rights offerings and recapitalizations; (iii) any decrease in
the total number of outstanding shares of the Company; and (iv) a
Change-in-Control Transaction; provided, however, the Investor may acquire
additional shares of the Company's capital stock in the event any third party or
group acquires an ownership interest in the Company that would exceed the
Investor's, provided that the Investor shall only be allowed to acquire that
number of shares necessary to have an equal ownership interest as such third
party or group.
-12-
(c) Exception. Nothing in Section 2.2(a) or 2.2(b) or elsewhere in this
Agreement, shall be deemed in any way to prohibit or limit: (i) any lawful
action taken by the Investor in direct competition with any bona fide offer by a
third party seeking a Change-in-Control Transaction with the Company, (ii) any
lawful action of any director nominated by the Investor and serving as a member
of the Company's Board of Directors acting in such capacity; and (iii) any
lawful action by the Investor or any of its affiliates, officers, directors or
employees in connection with ongoing or prospective business relationships with
or affecting the business relationships with or affecting the Company or any of
its affiliates.
(d) Private Sale of Shares to Third Party. The Investor shall not,
without the prior written consent of the Company's Board of Directors, transfer
any Registrable Securities in a private sale to a third-party investor or
"group" (as defined for purposes of Section 13(d) of the Exchange Act) if, as a
result of such transfer, any individual or "group" would acquire more than two
percent (2%) of the outstanding capital stock of the Company.
(e) Sale of Shares to the Public. In the event the Investor sells
shares of the Company's Common Stock in the public market other than pursuant to
Sections 1.2, 1.3 or 1.4 hereof, the Investor shall limit those sales to either
(i) sales in "brokers' transactions" within the meaning of Rule 144; or (ii) the
sale of shares to a third-party investor or "group", provided that any
individual investor or "group" would not acquire more than two percent (2%) of
the outstanding capital stock of the Company.
(f) Change-in-Control Transactions. In the event the Warrant is
accelerated in connection with a Change-in-Control Transaction, and the Investor
exercises the Warrant upon such accelerated vesting, any shares acquired by the
Investor upon such exercise shall be voted, at any shareholder vote on such
Change-in-Control Transaction, in proportion to the other outstanding shares
entitled to vote, such that those shares held by the Investor shall not impact
the outcome of such shareholder vote. Notwithstanding the above, shares held by
the Investors other than as a result of the exercise of an accelerated Warrant,
may be voted at the sole discretion of the Investor.
(g) Confidentiality. The Investor acknowledges that the Company may
pursuant to Section 2.1(e), above, provide it with information that is
confidential or proprietary to the Company and agrees that all such information
designated as confidential will be held and treated by it in confidence and it
will not disclose such information in any manner whatsoever, in whole or in
part, to any person (other than an agent, attorney or employee of the Investor)
without the Company's prior written consent. The Investor agrees that any
confidential information may be used by the Investor and its agents, attorneys
and employees only in connection with the Investor's investment in the Company
and any commercial arrangements between them. None of the following will
constitute confidential information for purposes of this agreement: (i)
information already in the Investor's possession and not received in confidence
from the Company; (ii) information that now or in the future is made available
to the Investor by a third party which, to the Investor's knowledge, has no
obligation of confidentiality to the Company with respect to such information;
(iii) information which is or becomes publicly available through no fault of the
Investor or (iv) information that is independently developed by Nokia without
reference to, or use of, any confidential information..
-13-
3. MISCELLANEOUS.
3.1 SUCCESSORS AND ASSIGNS. Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any shares of Registrable Securities). Nothing in this Agreement, express or
implied, is intended to confer upon any party other than the parties hereto or
their respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.2 GOVERNING LAW. This Agreement shall be governed by and construed under
the laws of the State of New York as applied to agreements among New York
residents entered into and to be performed entirely within New York.
3.3 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 TITLES AND SUBTITLES. The titles and subtitles used in this Agreement
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
3.5 NOTICES. Unless otherwise provided, any notice required or permitted
under this Agreement shall be given in writing and shall be deemed effectively
given upon personal delivery to the party to be notified or upon delivery by
confirmed facsimile transmission, nationally recognized overnight courier
service, or upon deposit with the United States Post Office, by registered or
certified mail, postage prepaid and addressed to the party to be notified at the
address indicated for such party on the signature page hereof, or at such other
address as such party may designate by ten (10) days' advance written notice to
the other parties.
3.6 EXPENSES. If any action at law or in equity is necessary to enforce or
interpret the terms of this Agreement, the prevailing party shall be entitled to
reasonable attorneys' fees, costs and necessary disbursements in addition to any
other relief to which such party may be entitled.
3.7 ENTIRE AGREEMENT: AMENDMENTS AND WAIVERS. This Agreement constitutes
the full and entire understanding and agreement among the parties with regard to
the subjects hereof. Any term of this Agreement may be amended and the
observance of any term of this Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only with the
written consent of the Company and the holders of a majority of the Registrable
Securities. Any amendment or waiver effected in accordance with this paragraph
shall be binding upon each holder of any Registrable Securities, each future
holder of all such Registrable Securities, and the Company.
3.8 SEVERABILITY. If one or more provisions of this Agreement are held to
be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
3.9 TERMINATION. This Agreement shall terminate on the latest of (i) the
second anniversary hereof, (ii) the termination of the OEM Agreement (as defined
in the Purchase
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Agreement) or (iii) the termination of the Technology Agreement (as defined in
the Purchase Agreement).
IN WITNESS WHEREOF, the parties have executed this Investor's Rights
Agreement as of the date first above written.
COMPANY F5 NETWORKS, INC.
BY: /s/ Xxxx XxXxxx
---------------------------------
Xxxx XxXxxx, President
Address: 000 Xxxxxxx Xxxxxx Xxxx
Xxxxxxx, Xxxxxxxxxx 00000
INVESTOR NOKIA FINANCE INTERNATIONAL BV
BY: /s/ Mika Vehvilainen
---------------------------------
Mika Vehvilainen,
Attorney-in-fact
Address: Strawinskylaan 3111, 1077 ZX
Amsterdam, The Netherlands
With copies to
Nokia Corporation
X.X. Xxx 000
XXX-00000
XXXXX GROUP
Xxxxxxxxxxxxxx 0
XXX-00000
Xxxxx, Xxxxxxx
Attn: Xxxxxx Xxxxx, Vice President,
General Counsel
and
Nokia Internet Communications
000 Xxxxxxxxx Xxxxx
Xxxxxxxx Xxxx, Xxxxxxxxxx 00000 XXX
Attn: Xxxx Xxxxxxxx, Senior Vice
President and General
Manager
Nokia Inc.
0000 Xxxxxxxxxx Xxxxx
Xxxxxx, Xxxxx 00000 XXX
Attn: Xxxxxxx X. Xxxxxxx, Vice
President, Legal Services
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