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EXHIBIT 4.2
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VIXEL CORPORATION
AMENDED AND RESTATED
INVESTORS' RIGHTS AGREEMENT
FEBRUARY 17, 1998
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AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
This Amended and Restated Investors' Rights Agreement (the "AGREEMENT")
is entered into as of February 17, 1998, by and among Vixel Corporation, a
Delaware corporation (the "COMPANY"), Xxxx Xxxxxxxx (the "FOUNDER") and the
individuals and entities set forth on Exhibit A attached hereto (the "HOLDERS").
RECITALS
A. The Company, the Founder and certain investors of the Company have
entered into an Amended and Restated Investor's Rights Agreement (the "PRIOR
RIGHTS AGREEMENT") dated as of October 21, 1996, as thereafter amended, pursuant
to which the Company granted such investors certain rights and such investors
have undertaken certain obligations with respect to their shares of the
Company's capital stock.
B. The Company and certain investors of the Company have entered into
the Agreement and Plan of Merger and Reorganization dated as of January 26, 1998
pursuant to which the Company issued to certain investors Series F Preferred
Stock of the Company (the "REORGANIZATION AGREEMENT") (the Series F Preferred
Stock is herein referred to as the "STOCK").
C. The Company and the Holders desire to amend and restate the Prior
Rights Agreement as set forth in this Agreement.
D. In consideration of the mutual promises and covenants hereinafter set
forth and for other good and valuable consideration, the receipt of which is
hereby acknowledged, the parties agree as follows:
1. TERMINATION OF AGREEMENTS.
Effective and contingent upon execution of this Agreement by the Holders
and upon the closing of the transactions contemplated by the Reorganization
Agreement, the Prior Rights Agreement is hereby amended and restated as set
forth herein, and the Company and the Holders hereby agree to be bound by the
provisions hereof as the sole agreement of the Company and the Holders with
respect to registration rights of the Company's securities and certain other
rights and obligations set forth herein.
2. AMENDMENT.
Except as expressly provided herein, neither this Agreement nor any term
hereof may be amended, waived, discharged or terminated other than by a written
instrument signed by the party against whom enforcement of any such amendment,
waiver, discharge or termination is sought; provided, however, except as
otherwise provided herein, any provisions hereof may be amended, waived,
discharged or terminated upon the written consent of the Company and the Holders
of a majority of the outstanding Registrable Securities (as defined below).
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3. REGISTRATION RIGHTS.
3.1 DEFINITIONS AS USED IN THIS AGREEMENT.
(a) The terms "REGISTER," "REGISTERED," and "REGISTRATION" refer
to a registration effected by preparing and filing a registration statement in
compliance with the Securities Act of 1933, as amended (the "SECURITIES ACT")
and the subsequent declaration or ordering of the effectiveness of such
registration statement.
(b) The term "REGISTRABLE SECURITIES" means:
(i) the shares of Common Stock issuable or issued upon
conversion of (i) the Series A Preferred Stock and Series B Preferred Stock of
the Company held by the Holders (or their Permitted Transferees), (ii) the
Series A Preferred Stock of the Company acquired by Xxxx Xxxxxx upon exercise of
a Warrant to purchase 240,000 shares dated July 6, 1994, (iii) the Series A
Preferred Stock of the Company acquired by the Holders (or their Permitted
Transferees) upon exercise of those certain Warrants to purchase an aggregate of
894,334 shares of Series A Preferred Stock, each dated October 6, 1995 issued
pursuant to the Series B Preferred Stock and Series A Warrant Purchase Agreement
dated October 6, 1995, (iv) the Series C Preferred Stock of the Company acquired
by Comdisco, Inc. (or its Permitted Transferee) upon exercise of a Warrant to
purchase 85,714 shares dated January 12, 1996, (v) the Series C Preferred Stock
of the Company acquired by Silicon Valley Bank upon exercise of a Warrant to
purchase 5,000 shares dated Xxxxx 0, 0000, (xx) the Series C Preferred Stock of
the Company acquired by MMC/GATX Partnership No. 1 upon exercise of a Warrant to
purchase 85,000 shares dated March 5, 1996, (vii) 2,000,000 shares of Series D
Preferred Stock of the Company acquired by Western Digital Corporation pursuant
to the Purchase Agreement dated March 29, 1996, (viii) the Series E Preferred
Stock of the Company held by the Holders (or their Permitted Transferees (as
defined below)), (ix) the Series E Preferred Stock of the Company acquired by
Xxxxxxxxxx Securities (or their Permitted Transferees) upon exercise of those
certain Warrants to purchase 69,261 shares dated October 21, 1996, (x) the
Series E Preferred Stock of the Company acquired by Transamerica Business Credit
Corporation (or their Permitted Transferees) upon exercise of a Warrant to
purchase up to 25,000 shares dated May 30, 1997, (xi) the Series F Preferred
Stock of the Company held by the Holders (or their Permitted Transferees) and
(xii) the shares of capital stock issued or issuable with respect to the
securities referred to in (i)-(xii) above, or upon any other securities issued
as a dividend or other distribution with respect to, or in exchange or
replacement of, any such securities, excluding, in all cases, any Registrable
Securities that are held by a person to whom the rights of a Holder under this
Agreement have not been validly transferred in a written instrument pursuant to
Sections 3.12 and 6 hereof to a Permitted Transferee.
(c) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" shall be determined by the number of shares of Common Stock
outstanding which are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities which are, Registrable
Securities.
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(d) The term "HOLDER" means any Holder of outstanding Registrable
Securities set forth on Exhibit A and their Permitted Transferees.
(e) The term "FORM S-3" means such form under the Securities Act
as in effect on the date hereof or any registration form under the Securities
Act subsequently adopted by the United States Securities and Exchange Commission
("SEC") which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
3.2 DEMAND REGISTRATION.
(a) If the Company shall receive at any time after the earlier of
(i) October 1, 1999, or (ii) six (6) months after the effective date of the
first registration statement for a public offering of securities of the Company
(other than a registration statement relating either to the sale of securities
to employees of the Company pursuant to a stock option, stock purchase or
similar plan or an SEC Rule 145 transaction), a written request from the Holders
of at least fifty percent (50%) of the Registrable Securities then outstanding
that the Company file a registration statement under the Securities Act: (i) for
at least twenty percent (20%) of the Registerable Securities then outstanding or
(ii) having an aggregate offering price, before deduction of underwriters
discounts and commissions, of at least $15,000,000, then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and shall, subject to the limitations of subsection 3.2(b),
effect as soon as practicable, and in any event within ninety (90) days of the
receipt of such request, the registration under the Securities Act of all
Registrable Securities which the Holders request to be registered within thirty
(30) days of the effective date of such notice delivered by the Company in
accordance with Section 7.5.
(b) The right of any Holder to request registration pursuant to
subsection (a) above or to include his Registrable Securities in such
registration shall be conditioned upon such Holder's participation in a firm
underwriting by an underwriter of nationally recognized standing and the
inclusion of such Holder's Registrable Securities in the underwriting. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company as provided in Section 3.5(e)) enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of this Section 3.2, if the underwriter advises the Holders requesting
such registration (the "INITIATING Holders") in writing that marketing factors
require a limitation of the number of shares to be underwritten, then the
Company shall so advise all Holders of Registrable Securities which would
otherwise be underwritten pursuant hereto, and the number of shares of
Registrable Securities that may be included in the underwriting shall be
allocated among all Holders thereof, including the Initiating Holders, in
proportion (as nearly as practicable) to the amount of Registrable Securities of
the Company owned by each Holder; provided, however, that the number of shares
of Registrable Securities to be included in such underwriting shall not be
reduced unless all other securities are first entirely excluded from such
underwriting.
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(c) The Company is obligated to effect only two (2) such
registrations pursuant to this Section 3.2.
(d) Notwithstanding the foregoing, if the Company shall furnish
to the Initiating Holders, 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 and its stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to defer
such filing for a period of not more than ninety (90) days after receipt of the
request of the Initiating Holders; provided that, the Company shall not be
entitled to delay such registration more than once in any six (6) month period.
3.3 PIGGYBACK REGISTRATION. If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of its Common Stock
or other securities under the Securities Act in connection with the public
offering of such securities solely for cash (other than a registration relating
either to the sale of securities to participants in a Company stock option,
stock purchase or similar plan or to an SEC Rule 145 transaction, or a
registration on any form which does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Registrable Securities), the Company shall, at such
time, promptly give each Holder written notice of such registration. Upon the
written request of each Holder given within twenty (20) days after the effective
date of such notice by the Company in accordance with Section 7.5, the Company
shall, subject to the provisions of Section 3.8, cause to be registered under
the Securities Act all of the Registrable Securities that each such Holder has
requested to be registered.
3.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders a written request or requests that the Company effect a
registration on Form S-3 and any related qualification or compliance with
respect to all or a part of the Registrable Securities owned by such Holder or
Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance, pursuant to this Section 3.4, (i) if
Form S-3 is not available for such offering by the Holders; (ii) if the Holders,
together with the holders of any other securities of the Company entitled to
inclusion in such registration, propose to sell Registrable Securities and such
other securities (if any) at an aggregate price to the public (net of any
underwriters' discounts or commissions) of
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less than $1,000,000; (iii) if the Company shall furnish to the Holders 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 and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than ninety (90) days after receipt of the request of the Holder or Holders
under this Section 3.4; (iv) if the Company has, within the twelve (12) month
period preceding the date of such request, already effected one (1) registration
on Form S-3 for the Holders pursuant to this Section 3.4; (v) if the Company
has, within the one hundred eighty (180) day period preceding the date of such
request, effected any registration of its securities pursuant to the Securities
Act; (vi) in any particular jurisdiction in which the Company would be required
to qualify to do business or to execute a general consent to service of process
in effecting such registration, qualification or compliance; or (vii) if the
Company shall have effected two such registrations on Form S-3 pursuant to this
Section 3.4.
(c) subject to the foregoing, 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.
3.5 OBLIGATIONS OF THE COMPANY. Whenever required under this Section 3
to effect the registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective, and, upon the request of the Holders
of a majority of the Registrable Securities registered thereunder, keep such
registration statement effective for the earlier of one hundred twenty (120)
days or until the distribution contemplated in the registration statement has
been completed; provided, however, that (i) such one hundred twenty (120) day
period shall be extended for a period of time equal to the period the Holder
refrains from selling any securities included in such registration at the
request of an underwriter of Common Stock (or other securities) of the Company;
and (ii) in the case of any registration of Registrable Securities on Form S-3
which are intended to be offered on a continuous or delayed basis, such one
hundred twenty (120) day period shall be extended, if necessary, to keep the
registration statement effective until all such Registrable Securities are sold,
provided that Rule 415, or any successor rule under the Securities Act, permits
an offering on a continuous or delayed basis, and the obligation to file a
post-effective amendment permit, in lieu of filing a post-effective amendment
which (A) includes any prospectus required by Section 10(a)(3) of the Securities
Act or (B) reflects facts or events representing a material or fundamental
change in the information set forth in the registration statement, the
incorporation by reference of information required to be included in (A) and (B)
above to be contained in periodic reports filed pursuant to Sections 13 or 15(d)
of the Securities Exchange Act of 1934, as amended (the "1934 ACT"), in the
registration statement.
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(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 its best efforts to register and qualify the securities
covered by such registration statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided 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. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Cause all such Registrable Securities registered pursuant to
this Section 3 to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all Registrable
Securities registered pursuant to this Section 3 and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
(i) Furnish, at the request of any Holder requesting registration
of Registrable Securities pursuant to this Section 3, on the date that such
Registrable Securities are delivered to the underwriters for sale in connection
with a registration pursuant to this Section 3, 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, an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
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3.6 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to this Section 3 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.
3.7 EXPENSES OF REGISTRATIONS. All expenses (other than underwriting
discounts and commissions) incurred in connection with registrations, filings or
qualifications pursuant to this Section 3, 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;
provided, however, that the Company shall not be required to pay for any
expenses of: (i) more than two Demand Registrations pursuant to Section 3.2,
(ii) more than two Form S-3 Registrations pursuant to Section 3.4, or (iii) any
registration proceeding begun pursuant to Section 3.2 if the registration
request is subsequently withdrawn at the request of the Holders of a majority of
the Registrable Securities to be registered (in which case all Participating
Holders shall bear such expenses) unless at the time of such withdrawal, the
Holders have learned of a material adverse change in the condition, business, or
prospects of the Company from that known to the Holders at the time of their
request, then the Holders shall not be required to pay any of such expenses and
shall retain their rights pursuant to Section 3.2.
3.8 UNDERWRITING REQUIREMENTS. In connection with any offering involving
an underwriting of shares being issued by the Company, the Company shall not be
required under Section 3.3 to include any of the Holders' securities in such
underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it, and then only in such
quantity as will not, in the reasonable opinion of the underwriters, jeopardize
the success of the offering by the Company. If the total amount of securities,
including Registrable Securities, requested by stockholders to be included in
such offering exceeds the amount of securities sold other than by the Company
that the underwriters reasonably believe compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities which the underwriters reasonably believe will
not jeopardize the success of the offering (the "SELLING STOCKHOLDER
SECURITIES"), provided, however, that the Selling Stockholder Securities shall
first be allocated among the requesting Holders pro rata according to the total
amounts of Registrable Securities entitled to be included in such offering by
such requesting Holders and then among all other holders of securities
requesting and legally entitled to include securities in such offering pro rata
based on the total amount of such securities entitled to be included in such
offering by such holders and provided, further, that in no event shall the
amount of Registrable Securities of the selling Holders included in the offering
be reduced below thirty percent (30%) of the total amount of securities included
in such offering, unless such offering is the initial public offering of the
Company's securities, in which case all of the Registrable Securities may be
excluded if, in either case, the underwriters make the determination described
above and no other stockholder's securities are included. For purposes of this
section concerning apportionment, for any selling stockholder which is a holder
of Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders 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
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the foregoing persons shall be deemed to be a single "selling stockholder," and
any pro rata reduction with respect to such selling stockholder shall be based
upon the aggregate amount of shares carrying registration rights owned by all
entities and individuals included in such selling stockholders.
3.9 DELAY OF REGISTRATION. No Holder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 3.
3.10 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under this Section 3:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, any underwriter (as defined in the Securities
Act) for such Holder and any of their respective officers, directors, employees
and agents each person, if any, who controls such Holder or underwriter within
the meaning of the Securities Act or the 1934 Act, against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the 1934 Act or other federal or state law or
otherwise, 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 1934
Act, any state securities law or any rule or regulation promulgated under the
Securities Act, the 1934 Act or any state securities law; and the Company will
pay as incurred to each such Holder, underwriter or controlling person, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
3.10(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) To the extent permitted by law, each selling Holder will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Securities Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages, or liabilities
(or actions in respect thereto) arise out of or are based upon
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any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Holder expressly for use in connection with such registration;
and each such Holder will pay, as incurred, any legal or other expenses
reasonably incurred by any person intended to be indemnified pursuant to this
subsection 3.10(b), in connection with investigating or defending any such loss,
claim, damage, liability, or action; provided, however, that the indemnity
agreement contained in this subsection 3.10(b) shall not apply to amounts paid
in settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Holder, which consent shall
not be unreasonably withheld, provided, further, that in no event shall any
indemnity under this Section 3.10(b) exceed the net proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 3.10 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 3.10, deliver to
the indemnifying party a written notice of the commencement thereof and the
indemnifying party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party shall
have the right to retain its own counsel, with the fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to actual
or potential differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 3.10, 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
3.10.
(d) If the indemnification provided for in this Section 3.10 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any loss, liability, claim, damage, or expense referred to
therein, then the indemnifying party, in lieu of indemnifying such indemnified
party hereunder, will 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 will be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
(e) Notwithstanding the foregoing, to the extent that the
provisions on indemnification and contribution contained in the underwriting
agreement entered into in
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connection with the underwritten public offering are in conflict with the
foregoing provisions, the provisions in the underwriting agreement will control
provided that such indemnification provisions are substantially similar to those
set forth herein.
(f) The obligations of the Company and Holders under this Section
3.10 shall survive the completion of any offering of Registrable Securities in a
registration statement under this Section 3, and otherwise.
3.11 REPORTS UNDER THE 1934 ACT. With a view to making available to the
Holders the benefits of Rule 144 promulgated under the Securities Act and any
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those terms
are understood and defined in SEC Rule 144, at all times after 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) take such action, including the voluntary registration of its
Common Stock under Section 12 of the 1934 Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective;
(c) file with the SEC in a timely manner all reports and other
documents required of the Company under the Securities Act and the 1934 Act; and
(d) 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 SEC 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 1934
Act (at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
3.12 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 3 may be assigned by
a Holder only to a transferee or assignee acquiring not less than 50,000 shares
of Registrable Securities (as presently constituted and subject to subsequent
adjustments for stock splits, stock dividends, reverse stock splits and the
like) (a "PERMITTED TRANSFEREE"), provided the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such Permitted Transferee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if (A) the Permitted Transferee agrees in
writing to be bound by the obligations of a Holder under this Agreement and
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(B) immediately following such transfer the further disposition of such
securities by the transferee or assignee is restricted under the Securities Act.
All shares beneficially owned by affiliated entities or persons shall be
aggregated together for purposes of determining whether a transferee or assignee
in a Permitted Transferee. As a condition of such aggregation, holders of a
majority of the shares of the aggregating persons and entities shall designate
in writing from time to time one representative for all aggregating persons and
entities, and the Company shall be entitled to definitively rely upon the
authority of such representative and any action or omission of such
representative in exercising or failing to exercise the rights hereunder.
3.13 "MARKET STAND-OFF" AGREEMENT. Each Holder hereby agrees that during
the period of up to 180 days following the effective date of the registration
statement filed by the Company with respect to its initial public offering under
the Securities Act, it shall not, to the extent requested by the underwriter,
sell or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any Common Stock of the Company held by it at any time during
such period except Common Stock included in such registration; provided,
however, that the obligations under this Section 3.13 are conditioned upon the
officers and the directors of the Company entering into similar agreements.
(a) To enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to the Registrable Securities of the
Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
3.14 TERMINATION OF REGISTRATION RIGHTS. No Holder shall be entitled to
exercise any right provided for in this Section 3: (A) after five (5) years
following the consummation of the Company's initial sale of its Common Stock in
a bona fide, firm commitment underwriting pursuant to a registration statement
on Form S-1 under the Securities Act (other than a registration statement
relating either to the sale of securities to employees of the Company pursuant
to a stock option, stock purchase or similar plan or an SEC Rule 145
transaction) (the "INITIAL OFFERING") or (B) at such time following the
Company's initial public offering and (i) for so long as such Holder holds
Registrable Securities equal to 1% or less of the outstanding stock of the
Company and may sell all of such Holder's Registrable Securities under Rule
144(k) or (ii) for so long as such Holder holds Registrable Securities equal to
1% or less of the outstanding stock of the Company and is able to dispose of all
of its Registrable Securities in any one (1) three-month period pursuant to Rule
144 (or such successor rule as may be adopted).
3.15 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From and after the
date hereof, the Company will not, without the prior written consent of the
Holders of at least 50% of the voting power of the then outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company providing for registration rights more favorable
than those granted to the Holders hereunder or which allows such holder or
prospective holder of any securities of the Company to include such securities
in any registration filed under Sections 3.2 or 3.3 hereof, unless under the
terms of such agreement such holder or prospective holder may include such
securities in any such registration only to the extent that the inclusion of his
Securities will not diminish the amount of Registrable Securities which are
included.
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4. ADDITIONAL RIGHTS.
4.1 RIGHT OF FIRST OFFER. Subject to the terms and conditions specified
in this Section 4.1, the Company hereby grants to each Holder (the
"RIGHTHOLDER") a right of first offer with respect to future sales by the
Company of its New Securities (as hereinafter defined). For purposes of this
Section 4.1, the term Rightholder includes transferees of shares pursuant to
Section 6.3(a), (b), (c), (d), (e), (f), (g) and (h). The Rightholder shall be
entitled to apportion the right of first offer hereby granted among itself and
its partners, stockholders and affiliates in such proportions as it deems
appropriate.
(a) In the event the Company proposes to issue New Securities, it
shall give the Rightholder written notice (the "NOTICE") of its intention
stating (i) a description of the New Securities it proposes to issue, (ii) the
number of shares of New Securities it proposes to offer, (iii) the price per
share at which, and other material terms on which, it proposes to offer such New
Securities and (iv) the number of shares that the Rightholder has the right to
purchase under this Section 4.1, based on the Rightholder's Percentage (as
defined in Subsection 4.1 (d)(i)).
(b) Within twenty (20) days after the Notice is given (in
accordance with Section 7.5), the Rightholder may elect to purchase, at the
price specified in the Notice, up to the number of shares of the New Securities
proposed to be issued that the Rightholder has the right to purchase as
specified in the Notice. An election to purchase shall be made in writing and
must be given to the Company within such twenty (20) day period (in accordance
with Section 7.5). The closing of the sale of New Securities by the Company to
the participating Rightholder upon exercise of its rights under this Section 4.1
shall take place simultaneously with the closing of the sale of New Securities
to third parties.
(c) The Company shall have ninety (90) days after the last date
on which the Rightholder's right of first offer lapsed to enter into an
agreement (pursuant to which the sale of New Securities covered thereby shall be
closed, if at all, within forty-five (45) days from the execution thereof) to
sell the New Securities which the Rightholder did not elect to purchase under
this Section 4.1, at or above the price and upon terms not materially more
favorable to the purchasers of such securities than the terms specified in the
initial Notice given in connection with such sale. In the event the Company has
not entered into an agreement to sell the New Securities within such ninety (90)
day period (or sold and issued New Securities in accordance with the foregoing
within forty-five (45) days from the date of said agreement), the Company shall
not thereafter issue or sell any New Securities without first offering such New
Securities to the Rightholder in the manner provided in this Section 4.1.
(d) "NEW SECURITIES" shall mean any shares of, or securities
convertible into or exercisable for any shares of, any class of the Company's
capital stock; provided that "New Securities" does not include: (A) securities
issued pursuant to the acquisition of another business entity by the Company by
merger, purchase of substantially all of the assets of such entity, or other
reorganization whereby the Company owns not less than a majority of the voting
power of such entity; (B) shares, or options to purchase shares, of the
Company's Common Stock and the shares of Common Stock issuable upon exercise of
such options, issued pursuant to any
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arrangement approved by the Board of Directors to employees, officers and
directors of, or consultants, advisors or other persons performing services for,
the Company; (C) shares of the Company's Common Stock or Preferred Stock of any
series issued in connection with any stock split, stock dividend or
recapitalization of the Company; (D) Common Stock issued upon exercise of
warrants, options or convertible securities if the issuance of such warrants,
options or convertible securities was a result of the exercise of the right of
first offer granted under this Section 4.1 or was subject to the right of first
offer granted under this Section 4.1; (E) capital stock or warrants or options
for the purchase of shares of capital stock issued by the Company to a lender in
connection with any loan or lease financing or technology acquisition
transaction approved by the Board of Directors of the Company; and (F)
securities sold to the public in an offering pursuant to a registration
statement filed with the SEC under the Securities Act.
(i) The applicable "Percentage" for the Rightholder shall
be the number of shares of New Securities calculated by dividing (A) the total
number of shares of Common Stock owned by the Rightholder (assuming exercise of
all options, warrants or other rights to purchase capital stock of the Company
and conversion of all outstanding shares of Preferred Stock) by (B) the total
number of shares of Common Stock outstanding at the time the Notice is given
(assuming exercise of all options, warrants or other rights to purchase capital
stock of the Company and conversion of all outstanding shares of Preferred
Stock).
(e) The right of first offer granted under this Section 4.1 shall
not apply to and shall expire upon the consummation of the Company's Initial
Offering.
(f) The right of first offer granted under this Section 4.1 may
be assigned by the Rightholder to a transferee or assignee of the Rightholder's
shares of the Company's stock acquiring at least 100,000 (as adjusted for any
stock splits, stock dividends and the like) of the Rightholder's shares of the
Company's Common Stock (treating all shares of Preferred Stock for this purpose
as though converted into Common Stock) (equitably adjusted for any stock splits,
subdivision stock dividends, changes, combinations or the like). In the event
that the Rightholder shall assign its right of first offer pursuant to this
Section 4.1 but retain not less than 100,000 shares (as adjusted for any stock
splits, stock dividends and the like), the Rightholder shall also retain its
right of first offer to the extent then applicable under this Section 4.1. All
shares beneficially owned by affiliated entities or persons shall be aggregated
together for purposes of determining whether a transferee or assignee shall have
the right of first offer granted pursuant hereto. As a condition of such
aggregation, holders of a majority of the shares of the aggregating persons and
entities shall designate in writing from time to time one representative for all
aggregating persons and entities, and the Company shall be entitled to
definitively rely upon the authority of such representative and any action or
omission of such representative in exercising or failing to exercise the rights
hereunder.
4.2 INFORMATION RIGHTS.
(a) The Company shall deliver to each Holder as soon as
practicable, but in any event within one hundred twenty (120) days after the end
of each fiscal year of the Company, an income statement for such fiscal year, a
balance sheet of the Company as of the end
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of such year, and a schedule as to the sources and applications of funds for
such year, such year-end financial reports to be in reasonable detail, prepared
in accordance with generally accepted accounting principles ("GAAP"), and
audited and certified by independent public accountants of nationally recognized
standing selected by the Company.
(b) So long as a Holder holds at least 838,464, or, in the case
of holders of the Company's Series E or Series F Preferred Stock, 200,000 (as
adjusted for any stock splits, stock dividends and the like) shares of
Registrable Securities, the Company shall deliver to each such Holder:
(i) within twenty (20) days of the end of each month, an
unaudited income statement and schedule as to the sources and application of
funds and balance sheet and comparison to budget for and as of the end of such
month, in reasonable detail;
(ii) as soon as practicable, but in any event thirty (30)
days after the end of each fiscal quarter, a report on financial and operational
highlights;
(iii) as soon as practicable, but in any event within
thirty (30) days prior to the end of each fiscal year, a budget and business
plan for the next fiscal year; and
(iv) such other information relating to the financial
condition, business, prospects or corporate affairs of the Company as the Holder
or any assignee of the Holder may from time to time request, provided, however,
that the Company shall not be obligated to provide information which the Board
of Directors deems in good faith to be proprietary. All shares beneficially
owned by affiliated entities or persons shall be aggregated together for
purposes of determining whether a Holder shall have the information rights set
forth in this Section 4.2. As a condition of such aggregation, holders of a
majority of the shares of the aggregating persons and entities shall designate
in writing from time to time one representative for all aggregating persons and
entities, and the Company shall be entitled to definitively rely upon the
authority of such representative and any action or omission of such
representative in exercising or failing to exercise the rights hereunder.
(c) The Company shall provide to each holder of the Company's
Series E and Series F Preferred Stock holding not less than 1.25% of the then
outstanding capital stock of the Company on an as-converted basis (assuming
exercise of all outstanding options and warrants to purchase capital stock of
the Company) copies of materials prepared by the Company on a monthly basis for
the Board of Directors, including, but not limited to, minutes of the previous
Board of Directors meeting, financial statements and presentation materials;
provided, however, that each Holder agrees to hold any such information received
from the Company pursuant to this Section 4.2(c) in confidence, and not to use
or disclose any of such information to any third party or to any regulatory
authority to which a Holder is subject, except to the extent such information
may be made publicly available by the Company or otherwise as required by law.
(d) The Company shall permit each Holder holding not less than
615,836 (as adjusted for any stock splits, stock dividends and the like) shares
of Registrable Shares, at such Holder's expense, to visit and inspect the
Company's properties, to examine its books of account
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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 such Holder;
provided, however, that the Company shall not be obligated pursuant to this
subsection 4.2(d) to provide access to any information which it reasonably
considers to be a trade secret or similar confidential information.
(e) The Company shall deliver to each Holder a quarterly balance
sheet and income statement.
(f) The covenants set forth in this Section 4.2 shall terminate
as to all Holders and be of no further force or effect immediately upon the
consummation of the Company's Initial Offering.
4.3 DEBT. The Company shall be required to obtain the consent of a
majority of the Board of Directors before issuing any material debt security,
including, without limitation, borrowings from any bank or financial
institution.
4.4 REAL PROPERTY HOLDING CORPORATION. The Company covenants that it
will operate in a manner such that it will not become a "United States real
property holding corporation" as that term is defined in Section 897(c)(2) of
the Code and the regulations thereunder ("FIRPTA"). The Company agrees to make
determinations as to its status as a USRPHC, and will file statements concerning
those determinations with the Internal Revenue Service, in the manner and at the
times required under Reg. Section 1.897-2(h), or any supplementary or successor
provision thereto. Within thirty (30) days of a request from a Holder or any of
its partners, the Company will inform the requesting party, in the manner set
forth in Reg. Section 1.897-2(h)(1)(iv) or any supplementary or successor
provision thereto, whether that party's interest in the Company constitutes a
United States real property interest (within the meaning of Code Section
897(c)(1) and the regulations thereunder) and whether the Company has provided
to the Internal Revenue Service all required notices as to its USRPHC status.
4.5 BOARD VISITATION PRIVILEGES.
(a) Any Holder holding not less than 1,048,762 (as adjusted for
any stock splits, stock dividends and the like) shares of Series B Preferred
Stock (or shares issued in conversion thereof) shall be entitled to designate a
representative to attend, as a nonvoting observer, meetings of the Board of
Directors. Such representative shall be required to sign a confidentiality
agreement. Such representative shall be entitled to notice of such meeting and
distribution of the agenda and other information disseminated to the Board in
connection with such board meeting. The Company has the right to exclude the
representative, from the entire meeting or portions thereof, if attendance by
the representative at such meeting or portion of such meeting or dissemination
of such information would, in the reasonable determination by the Company,
compromise or adversely affect the attorney-client privilege or would result in
a conflict of interest situation.
(b) Subject to Section 4.2, any Holder holding not less than
615,836 (as adjusted for any stock splits, stock dividends and the like) shares
of Registrable Securities shall be entitled to (i) receive notice of all
meetings of the Board of Directors and the materials to be
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distributed therewith by the Company and (ii) attend (at such Holder's own
expense) up to one-half of the regularly-scheduled meetings of the Board of
Directors per year; provided, however, that any such observer must be reasonably
acceptable to the Company, such acceptance not to be unreasonably withheld.
4.6 INDEMNIFICATION; DIRECTORS & OFFICERS LIABILITY INSURANCE. During
the term of this Agreement and for so long as one or more representatives of the
Holders remain on the Company's Board of Directors the Company will use its best
efforts to: (i) maintain indemnification provisions in the Company's Bylaws
substantially in the form set forth in the Company's Bylaws as approved February
13, 1995, and (ii) obtain and keep directors' and officers' liability insurance
in the minimum amount of $2,000,000 if such coverage is available at
commercially reasonable rates.
4.7 INSURANCE. The Company will maintain with financially sound and
reputable insurance companies, funds or underwriters insurance of the kinds,
covering the risks and in the relative proportionate amounts usually carried by
reasonable and prudent companies conducting businesses similar to that of the
Company.
4.8 TRANSACTIONS WITH AFFILIATES. The Company will not engage in any
transaction with any affiliate on terms more favorable to the affiliate than
would have been obtainable on an arms-length basis in the ordinary course of
business.
4.9 AGREEMENTS WITH EMPLOYEES. The Company shall enter into agreements
with each of its employees and consultants, respectively, including provisions
relating to assignment of inventions and confidentiality.
4.10 BOARD EXPENSES. The Company will pay the reasonable out-of-pocket
expenses (including airfare) incurred of any representative member of the Board
of Directors who is not then an employee of the Company incurred while acting on
behalf of the Company, including attending meetings of the Board of Directors,
upon presentation to the Company of an itemized accounting of such expenses with
reasonable supporting data.
4.11 INDEMNIFICATION OF DIRECTORS AND OFFICERS. During any period in
which a representative or designee of the Holders serves on the Company's Board
of Directors, the Company will continue to indemnify its officers and directors
to the full extent permitted by law.
4.12 TERMINATION. The covenants set forth in Sections 4.3, 4.4, 4.5,
4.6, 4.7, 4.8, 4.9, 4.10, 4.11 and 4.12 shall terminate as to all Holders and be
of no further force or effect immediately upon the consummation of the Company's
Initial Offering.
5. BOARD REPRESENTATION.
5.1 Subject to the terms and conditions set forth below, each of the
Holders, the Founder and their transferees hereunder will take such action as is
necessary to cause the election to the Board of Directors of the persons
referenced below (and against any proposal to remove the persons referenced
below), including but not limited to voting or causing to be voted all
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shares of voting capital stock of the Company now or hereafter beneficially
owned or controlled by such Holder, Founder or transferee:
(a) Xxxxxx X. Xxxxx or such other person designated by Menlo
Ventures VI ("MENLO") for so long as Menlo and its affiliates hold at least
928,571 (as adjusted for any stock splits, stock dividends and the like) shares
of Series B Preferred Stock (or shares of Common Stock issuable upon conversion
thereof). The right to designate one member of the Board of Directors set forth
in this subparagraph shall be transferable to a subsequent holder or transferee
acquiring at least 928,571 (as adjusted for any stock splits, stock dividends
and the like) shares of Series B Preferred Stock (or Common Stock issuable upon
conversion thereof) held by Menlo.
(b) Xxxxx Xxxx or such other person designated by Xxxxxxxx VII
("XXXXXXXX") for so long as Xxxxxxxx and its affiliates hold at least 928,571
(as adjusted for any stock splits, stock dividends and the like) shares of
Series B Preferred Stock (or shares of Common Stock issuable upon conversion
thereof). The right to designate one member of the Board of Directors set forth
in this subparagraph shall be transferable to a subsequent holder or transferee
acquiring at least 928,571 (as adjusted for any stock splits, stock dividends
and the like) shares of Series B Preferred Stock (or Common Stock issuable upon
conversion thereof) held by Xxxxxxxx.
(c) Xxxxx Xxxx or such other person designated by Xxxx Xxxxxx
("XXXXXX") for so long as Xxxxxx and his affiliates hold at least 928,571 (as
adjusted for any stock splits, stock dividends and the like) shares of Series A
Preferred Stock and Series B Preferred Stock (or shares of Common Stock issuable
upon conversion thereof). The right to designate one member of the Board of
Directors set forth in this subparagraph shall be transferable to a subsequent
holder or transferee acquiring at least 928,571 (as adjusted for any stock
splits, stock dividends and the like) shares of Series A and Series B Preferred
Stock (or Common Stock issuable upon conversion thereof) held by Xxxxxx.
(d) Xxxxxxx Xxxxxxxx, provided that, such obligation to elect
Xxxxxxx Xxxxxxxx ("XXXXXXXX") shall terminate on the earlier of the following
events: (i) the date he no longer owns beneficially at least 750,000 shares of
the Company's voting capital stock (as adjusted by any stock split, stock
dividend or similar occurrence after the date hereof), or (ii) the date he shall
engage in another business as a founder or employee of, or consultant to
(provided that serving solely as a director shall not be deemed to be acting as
a consultant), such business which in the reasonable determination of the
majority of the Board of Directors, is directly competitive with the Company's
business or (iii) Olbright and the Company are engaged in a dispute relating to
his employment with the Company, which dispute is not resolved within a period
of thirty (30) days after the date of its inception (as determined in good faith
by the Board of Directors), and on or after the thirtieth (30th) day after the
inception of such dispute, seventy-five (75%) percent of the members of the
Board of Directors (without including Olbright in the total number of Directors
for calculation of such seventy-five percent), with Olbright abstaining,
determines in good faith that a continuing dispute exists and that Olbright's
continuation as a member of the Board of Directors would be detrimental to the
best interests of the Company; or (iv) in his capacity as a shareholder and
during the period of his employment with the Company Olbright
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votes against any proposal as to which the Board of Directors has recommended a
vote in favor and as to which a negative shareholder vote would give rise to
dissenter's rights pursuant to Delaware law. No amendment to this subparagraph
(D) shall be effective without the express written consent of Olbright.
(e) Xxxx X. Xxxxxxxxx or such other person designated by a
majority of the Board of Directors and is not an employee or officer of the
Company or a Holder, or an "affiliate" or "associate" of the Company or a Holder
as such terms are defined in Rule 12b-2 of the rules and regulations promulgated
under the 1934 Act.
(f) Xxxxxxx X. Xxxxxxxx, or such other person designated by
Western Digital Corporation ("WDC") for so long as WDC holds at least 928,571
(as adjusted for any stock splits, stock dividends and the like) shares of
Series D Preferred Stock (or shares of Common Stock issuable upon conversion
thereof). The right to designate one member of the Board of Directors set forth
in this subparagraph shall not be transferable.
(g) Xxx Xxxxxx or such other person designated by AVI/Arcxel
Investors A, L.P. ("AVI") for so long as AVI and its affiliates hold at least
928,571 (as adjusted for any stock splits, stock dividends and the like) shares
of Series F Preferred Stock (or shares of Common Stock issuable upon conversion
thereof). The right to designate one member of the Board of Directors set forth
in this subparagraph shall be transferable to a subsequent holder or transferee
acquiring at least 928,571 (as adjusted for any stock splits, stock dividends
and the like) shares of Series F Preferred Stock (or Common Stock issuable upon
conversion thereof) held by AVI.
(h) The Holders, the Founder and Permitted Transferees will vote
shares and execute and deliver or cause to be executed and delivered any
instruments, certificates, stockholders written consents or other documents or
take such other actions (or refrain from taking such actions) as may reasonably
be required for the purposes of fully implementing this Section 5.
5.2 BOARD OF DIRECTORS. Each Holder will vote all of his or its voting
securities of the Company and take all other necessary or desirable actions
within his or its control (whether in the capacity of stockholder, director,
member of the executive committee or officer of the Company or otherwise), in
order to cause the Board to consist of not more than seven members; provided
that, upon unanimous consent by the Board of Directors, the board may increase
its size to not more than eight members and the foregoing covenant shall apply
to such increased number of Board Members.
6. RESTRICTIONS ON TRANSFERS.
6.1 GENERAL RESTRICTION. No sale, assignment, transfer, pledge,
hypothecation, gift, or other disposition of any shares of the Company's capital
stock, including, without limitation, certain Warrants dated as of October 6,
1995 to purchase the Company's Series A Preferred Stock, (the "SHARES") now
owned or hereafter held by any Holder, whether voluntary, involuntary or by
operation of law or (in the case of a Holder which is not a natural person)
pursuant to a merger, consolidation, sale of assets or other reorganization, or
a change in
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beneficial ownership, and whether testamentary or inter-vivos, or otherwise, may
be made except as permitted by this Agreement and in accordance with its terms.
The Company agrees that it will not cause or permit the transfer of any Shares
to be made on its books unless the transfer is permitted by this Agreement and
has been made in accordance with its terms.
6.2 RESTRICTIONS ON TRANSFER.
(a) RIGHT OF FIRST OFFER. If a Holder at any time proposes to
sell for cash all or any portion of the shares of capital stock of the Company
now owned or hereafter acquired by such Holder, the Holder shall first deliver
to the Company written notice stating the terms and conditions of the proposed
transfer and offering to sell the shares to the Company as hereinafter provided
at the purchase price set forth in the offer (the "PURCHASE PRICE").
(b) PURCHASE OPTION. Subject to any limitations imposed by law,
the Company shall have a period of fifteen (15) days, after receipt of the
notice described in Section 6.3 (a), in which to elect to purchase all, and not
less than all, of the offered shares upon the terms stated in the notice by
delivering written notice to the Holder of its election to purchase such shares.
The Holder and any of its representatives shall not vote at the shareholders
and/or directors meeting on the question of the exercise or non-exercise of the
Company's right to purchase as provided herein; however, if the Company elects
to exercise its right to purchase, the Holder shall then participate in any vote
taking any other action in connection with the purchase, including the reduction
of stated capital or re-evaluation of assets, as may be necessary in order to
effect the purchase.
(c) ASSIGNMENT. The Company may, in its sole discretion, assign
its purchase rights to any of its existing shareholders as it may determine. The
assignment may be made at any time during the fifteen (15) day exercise period
by notice to the shareholder. The assignee shareholders shall have fifteen (15)
days from the date of such notice to exercise the purchase rights hereunder.
(d) TRANSFER; NEW OFFER. If all of the shares are not purchased
pursuant to the foregoing provisions of this Section 6, then the entire amount
of the Shares may be transferred by the Holder on the terms set forth in the
initial notice to the Company pursuant to the terms and conditions specified
therein; provided, however, that such transferee and the transferred shares
shall be bound by the terms of this Agreement. If such transfer is not made
within thirty (30) days following the termination of the right to purchase, a
new offer must be made pursuant to the provisions of this Section 6 before the
Holder can transfer any portion of his Shares and the provisions of this Section
6 shall again apply to such transfer.
6.3 EXCLUDED TRANSFERS. Provided that the Holder has first given the
Company notice of any such transfer, the restrictions on transfer set forth in
this Section 6 shall not apply to (a) a transfer to the Holder's estate, heirs,
administrators or executors, (b) a transfer in connection with a merger,
reorganization or the sale of all or substantially all of the assets of a Holder
which is a corporation, (c) a transfer by right of survivorship of Shares held
as joint tenants, (d) a transfer (whether by gift or otherwise) from the Holder
to such Holder's spouse, lineal descendants or ancestors (or to a trustee of a
trust for the benefit of such persons), (e) a transfer to
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a corporation or other business entity wholly owned by, or under common control
with, the Holder, (f) a transfer to the Holder's general or limited partners or,
if the Holder is a corporation, to any or all of its stockholders, (g) a
transfer to the Company, its officers or directors, or any other stockholder of
the Company; provided, however, that as to each such transfer, transferees and
the transferred Shares shall be bound by the terms of this Agreement, or (h)
transfers by Xxxxxx of not more than an aggregate of 669,000 shares of capital
stock to persons or entities having a close preexisting business relationship
with Xxxxxx provided that, in no event shall Xxxxxx make transfers pursuant to
this Section 6.3(h) to more than an aggregate of ten (10) persons or entities
and further, that any transfer to a person or entity that is not an "accredited
investor" as that term is defined in Rule 501 of Regulation D of the Rules and
Regulations promulgated under the Securities Act shall be subject to prior
written approval by the Company.
6.4 MARKING OF CERTIFICATES. Each certificate representing Shares
subject to this Agreement shall bear the following legend:
"THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE SUBJECT
TO RESTRICTIONS PURSUANT TO CERTAIN STOCK AGREEMENTS, (THE "AGREEMENTS"). SUCH
AGREEMENTS, AMONG OTHER THINGS, RESTRICT CERTAIN RIGHTS WITH RESPECT TO VOTING,
TRANSFER OR PLEDGE OF THE SHARES, OR OTHERWISE ENCUMBER THE SHARES REPRESENTED
HEREBY. COPIES OF SUCH AGREEMENTS MAY BE OBTAINED UPON WRITTEN REQUEST TO THE
SECRETARY OF THE CORPORATION."
6.5 ACQUISITION OF OTHER SHARES. If the Holder shall acquire any other
Shares, such other Shares shall be subject to all the terms of this Agreement
and the certificates representing them shall be marked as set forth in Section
6.4.
6.6 TERMINATION OF RIGHT OF FIRST OFFER. The foregoing right of first
offer shall terminate on the closing of the transaction in which securities of
the Company are first offered to the public pursuant to a registration statement
filed with, and declared effective by, the United States SEC pursuant to the
Securities Act and such right of first refusal shall not extend to shares sold
pursuant to such registration statement.
7. MISCELLANEOUS.
7.1 ASSIGNMENT. Subject to the transfer restrictions set forth above,
the terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties. Nothing in
this Agreement, express or implied, is intended to confer upon any party, other
than the parties hereto, and 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.
7.2 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements entered into
solely between residents of, and to be performed entirely within, such state.
20.
22
7.3 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.
7.4 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.
7.5 NOTICES.
(a) All notices, requests, demands and other communications under
this Agreement or in connection herewith shall be given to or made upon the
Holders to their respective addresses as set forth under their name on Exhibit A
attached hereto and, if to the Company, to Vixel Corporation, 000 Xxxxxxxxxxx
Xxxx., Xxxxxxxxxx, Xxxxxxxx 00000, Attention: President, with a copy to Xxxxxx
Godward LLP, 0000 Xxxxxx Xxxx., Xxxxx 000, Xxxxxxx, XX 00000 Attention: Xxxxx
C.T. Linfield.
(b) All notices, requests, demands and other communications given
or made in accordance with the provisions of this Agreement shall be in writing,
and shall be sent by airmail, return receipt requested, by a nationally
recognized overnight courier service, or by telex or telecopy (facsimile) with
confirmation of receipt, and shall be deemed to be given or made when receipt is
so confirmed.
(c) Any party may, by written notice to the other, alter its
address or respondent, and such notice shall be considered to have been given
five (5) days after the airmailing, overnight couriering, telexing or
telecopying thereof.
7.6 ATTORNEY'S FEES. If any action at law or in equity (including
arbitration) is necessary to enforce or interpret the terms of this Agreement,
the prevailing party shall be entitled to reasonable attorney's fees, costs and
necessary disbursements in addition to any other relief to which such party may
be entitled.
7.7 EFFECT OF AMENDMENT OR WAIVER. Each Holder and its successors and
assigns acknowledge that by the operation of Section 2 hereof the holders of a
majority of the outstanding Registrable Securities, acting in conjunction with
the Company, will have the right and power to diminish or eliminate all rights
pursuant to this Agreement.
7.8 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
7.9 RIGHTS OF HOLDERS. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability
21.
23
to any other holder of any securities of the Company as a result of exercising
or refraining from exercising any such right or rights.
7.10 DELAYS OR OMISSIONS. No delay or omission to exercise any right,
power or remedy accruing to any holder of any of the Registrable Securities,
upon any breach or default of the Company under this Agreement, shall impair any
such right, power or remedy of such Holder nor shall it be construed to be a
waiver of any such breach or default, or an acquiescence therein, or of or in
any similar breach or default thereafter occurring; nor shall any waiver of any
single breach or default be deemed a waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or approval of
any kind or character on the part of any party of any holder of any breach or
default under this Agreement, or any waiver on the part of any holder of any
provisions or conditions of this Agreement, must be made in writing and shall be
effective only to the extent specifically set forth in such writing. All
remedies, either under this Agreement or by law or otherwise afforded to any
holder, shall be cumulative and not alternative.
7.11 ENTIRE AGREEMENT. This Agreement and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any and all other written or oral agreements
existing between the parties hereto are expressly canceled.
[Signature Page Follows]
22.
24
IN WITNESS WHEREOF, this Amended and Restated Investors Rights Agreement
is hereby executed as of the date first above written.
COMPANY:
VIXEL CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------------------
Xxxxxxx Xxxxxxxx, President and CEO
HOLDERS:
Printed Name
---------------------------
(person or entity)
By:
-------------------------------------
Title:
----------------------------------
25
TABLE OF CONTENTS
PAGE
1. TERMINATION OF AGREEMENTS...........................................................1
2. AMENDMENT...........................................................................1
3. REGISTRATION RIGHTS.................................................................2
3.1 Definitions as used in this Agreement........................................2
3.2 Demand Registration..........................................................3
3.3 Piggyback Registration.......................................................4
3.4 Form S-3 Registration........................................................4
3.5 Obligations of the Company...................................................5
3.6 Furnish Information..........................................................6
3.7 Expenses of Registrations....................................................7
3.8 Underwriting Requirements....................................................7
3.9 Delay of Registration........................................................8
3.10 Indemnification..............................................................8
3.11 Reports under the 1934 Act..................................................10
3.12 Assignment of Registration Rights...........................................10
3.13 "Market Stand-Off" Agreement................................................11
3.14 Termination of Registration Rights..........................................11
3.15 Limitations on Subsequent Registration Rights...............................11
4. ADDITIONAL RIGHTS..................................................................11
4.1 Right of First Offer........................................................11
4.2 Information Rights..........................................................13
4.3 Debt........................................................................15
4.4 Qualified Small Business....................................................15
4.5 Real Property Holding Corporation...........................................15
4.6 Board Visitation Privileges.................................................15
4.7 Indemnification; Directors & Officers Liability Insurance...................16
4.8 Insurance...................................................................16
4.9 Transactions with Affiliates................................................16
4.10 Agreements with Employees...................................................16
4.11 Board Expenses..............................................................16
4.12 Indemnification of Directors and Officers...................................16
4.13 Termination.................................................................16
5. BOARD REPRESENTATION...............................................................17
5.2 Board of Directors..........................................................18
6. RESTRICTIONS ON TRANSFERS..........................................................18
i
26
TABLE OF CONTENTS
(CONTINUED)
PAGE
6.1 General Restriction.........................................................18
6.2 Restrictions on Transfer....................................................19
6.3 Excluded Transfers..........................................................19
6.4 Marking of Certificates.....................................................20
6.5 Acquisition of other Shares.................................................20
6.6 Termination of Right of First Offer.........................................20
7. MISCELLANEOUS......................................................................20
7.1 Assignment..................................................................20
7.2 Governing Law...............................................................20
7.3 Counterparts................................................................21
7.4 Titles and Subtitles........................................................21
7.5 Notices.....................................................................21
7.6 Attorney's Fees.............................................................21
7.7 Effect of Amendment or Waiver...............................................21
7.8 Severability................................................................21
7.9 Rights of Holders...........................................................22
7.10 Delays or Omissions.........................................................22
7.11 Entire Agreement............................................................22
ii.
27
EXHIBIT A
Japan Associated Finance Co., Ltd. JAFCO R-1(A) Investment Enterprise Partnership
c/o Xxxx Xxxxxx c/o Xxxx Xxxxxx
000 Xxxxxxxx Xxxxxx, Xxxxx 000 000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000 Xxxx Xxxx, XX 00000
JAFCO R-1(B) Investment Enterprise Partnership U.S. Information Technology Investment
c/o Xxxx Xxxxxx Enterprise Partnership
000 Xxxxxxxx Xxxxxx, Xxxxx 000 x/x Xxxx Xxxxxx
Xxxx Xxxx, XX 00000 000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Xxxxxxxx VII, a California Limited Xxxxxx X. Xxxx
Partnership c/o Rondor Music International
0000 Xxxx Xxxx Xxxx Xxxxx Xx Cienega Blvd.
Menlo Park, CA 94025 Xxx Xxxxxxx, XX 00000
Xxxxxxxx Associates Fund II, a California Xxxxxx X. Xxxxxx
Limited Partnership x/x Xxxxx & Xxxxxxx
0000 Xxxx Xxxx Xxxx 0000 Xxxxxx xx xxx Xxxxx
Xxxxx Xxxx, XX 00000 Xxx Xxxxxxx, XX 00000
Menlo Ventures VI, L.P. Xxxx X. Xxxxxxxxx
0000 Xxxx Xxxx Xxxx 0000 Xxxxxx Xxxxx
Xxxxx Xxxx, XX 00000 Xxxxxxx, XX 00000
Menlo Entreprenuers Fund VI, L.P. Xxxx X. Xxxxxxx
0000 Xxxx Xxxx Xxxx Brincko Associates, Inc.
Xxxxx Xxxx, XX 00000 1801 Avenue of the Stars
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Xxxxxxxxx Family Trust U/D/T 8/26/88 X. X. Xxxxxxxx
000 Xxxx Xxxxx Xxxxxx x/x Xxxxxxxx Xxxxx Xxxxxxxxxxxx Xx.
Xxx Xxxxx, XX 00000 000 Xxxxxxx 0, Xxxxx 000
Xxxxxx 0000
Xxxxxxxxxxxx, XX 00000
Xxxx Xxxxx Xxxxxxx Xxxxxxxx
P.O. Box 8751 x/x Xxxxx Xxxxxxxxxxx
00000 Xxxxx Xxxxx 000 Xxxxxxxxxxx Xxxxxxx
Xxxxxx Xxxxx Xx, XX 00000 Xxxxxxxxxx, XX 00000
28
Xxxx Xxxxxx Silicon Valley Bank
c/o Rondor Music International 0000 Xxxxxxxxxxx Xxxx, Xxxxx 000
000 Xxxxx Xx Xxxxxxx Xxxx. Xxxx Xxxx, XX 00000
Xxx Xxxxxxx, XX 00000
Comdisco, Inc. Western Digital Corporation
0000 Xxxxx Xxxxx Xxxx 0000 Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, XX 00000 Xxxxxx, XX 00000
Triumph-Connecticut Limited Partnership Tudor Arbitrage Partners, L.P.
000 Xxxxxxxxxx Xxxxxx, Xxxxx 000 00 Xxxxx Xxxxx, 0xx Xxxxx
Xxx Xxxxxxxxx, XX 00000 Xxxxxx, XX 00000
Xxxxxxx XxXxxxxxxx Attention: Xxxxxx Fortenza
With a copy to:
Xxxxxxx X. Xxxxxxx
Cityplace I
00xx Xxxxx
Xxxxxxxx, XX 00000
Xxxxxxx Venture Partners IV-Direct Fund X.X. Xxxxx BVI Futures, Ltd.
One Financial Center, 39th floor 00 Xxxxx Xxxxx, 0xx Xxxxx
Xxxxxx, XX 00000 Xxxxxx, XX 00000
Attention: Xxxxxx Fortenza
Pilgrim Xxxxxx Hybrid Partners I, L.P. Vixel Investors, L.P.
0000 Xxxxxxxx Xxxx, Xxxxx 000 000 0xx Xxxxxx, 0xx Xxxxx
Xxxxx, XX 00000 Xxx Xxxx, XX 00000
Raptor Global Fund, L.P. Navigator Fund, L.P.
00 Xxxxx Xxxxx, 0xx Xxxxx 000 0xx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxxxxx Fortenza
Raptor Global Fund, Ltd. Navigator Global Fund, Limited
00 Xxxxx Xxxxx, 0xx Xxxxx 000 0xx Xxxxxx, 0xx Xxxxx
Xxxxxx, XX 00000 Xxx Xxxx, XX 00000
Attention: Xxxxxx Fortenza
Xxxxx Xxxx Xxxxxxx Family Revocable Trust Dated April
x/x Xxxxx & Xxxxxxx 00, 0000
0000 Xxxxxx of the Stars 00000 Xxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000 Xxxxxxxx, XX 00000
29
Stanford University Xxxxxx X. Xxxxxx
c/o Stanford Management Company 0000 Xxxxx Xxxxxx Xxxx
0000 Xxxx Xxxx Xxxx Xxxxxxxxx, XX 00000
Xxxxx Xxxx, XX 00000
Xxxxxx Xxxxxxx X. X. Xxxxxxxx, Xx.
00000 Xxxxxxx Xxx, Xxxxx 000 000 Xxxxxxxxxx Xx.
Xxxxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
Xxxx X. and Xxxx X. Xxxxxx Xxxx Xxxxxx Xxxxxxx and Xxxxxx
0000 Xxxxxxxxx Xxxxxx Xxxxxx-Xxxxxxxx Tschudi, Trustee or Successor
Xxxxxxxxxx, XX 00000 Trustee, of the Xxxx Xxxxxx Xxxxxxx and
Xxxxxx Xxxxxx-Xxxxxxxx Revocable Living
Trust, Dated Sept. 8, 1988
0000 Xx. Xxxxxxx Xxxxx
Xxxxxx, XX 00000
Xxxxx Xxxxx-xxx Xxxxx Xxxxxxx X. Xxxxxx
00 00xx Xxxxxx 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
Xxxxxxx X. Xxxxxxx Xxxx Xxxxxxxxx
00 Xxxxxxxx Xxxxxx 0000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000 Xxx Xxxxxxxxx, XX 00000
Xxxxxxx X. XxXxxxx AVI/Arcxel Investors A, L.P.
0000 Xxxxxxx Xx. AVI/Arcxel Investors B, L.P.
Xxxxxxx, XX 00000 AVI/Arcxel Investors C
Xxx Xxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attn: Xxx Xxxxxx
Nationsbank Xxxxxxxxxx Securities Transamerica Business Credit Corporation
000 Xxxxxxxxxx Xxxxxx Xxxxxxxx XX
Xxx Xxxxxxxxx, XX 00000 West Office Tower
Attn: Xxxx Xxxxxx 0000 Xxxx Xxxxxxx Xxxx
Xxxxxxxx, XX 00000
Xxxxxx Xxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, XX 00000-0000
