EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
GADZOOX NETWORKS, INC.
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement ("AGREEMENT") is entered into as of
January 23, 2002, by and between Gadzoox Networks, Inc., a Delaware corporation
("COMPANY"), and Xxxx & Xxxx Enterprises, LLC, a California limited liability
company ("LENDER").
RECITALS
A. Contemporaneously with the execution and delivery of this Agreement,
Lender is entering into a 2.5% Senior Secured Convertible Debenture with Company
(the "DEBENTURE AGREEMENT"), pursuant to which Lender may elect to convert up to
$5,000,000 in principal indebtedness evidenced by the Debenture into 6,587,615
shares (as adjusted for stock splits, stock dividends, recapitalizations and
similar events) of Common Stock of Company pursuant to the provisions set forth
therein (the "CONVERSION SHARES").
B. In connection with the Debenture Agreement, Company and Lender are
entering into this Agreement under which Company is granting Lender certain
resale registration rights with respect to the Conversion Shares.
NOW, THEREFORE, in consideration of the promises, mutual covenants and
terms hereof, the receipt and sufficiency of which is hereby acknowledged, the
parties hereby agree as follows:
AGREEMENT
1. Definitions. Any capitalized term not otherwise defined herein shall
have the meanings ascribed to such term in the Debenture Agreement. 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, and the declaration or ordering of the
effectiveness of such registration statement.
(b) "REGISTRATION EXPENSES" shall mean all expenses incurred in
complying with Section 2 of this Agreement, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for Company, blue sky fees and expenses, and
the expense of any special audits incident to or required by any such
registration; provided, however, Registration Expenses shall not include any
selling commissions, transfer taxes or fees and disbursements of Lender's
counsel (which expenses shall be borne by Lender and not Company).
(c) "REGISTRABLE SECURITIES" means (i) the Conversion Shares
issued to Lender pursuant to the Debenture Agreement and (ii) shares of Common
Stock of the Company issued with respect to the Conversion Shares upon any stock
split, stock dividend, recapitalization or similar event; provided, however,
that such shares shall cease to be Registrable Securities at such time as (i)
they have been registered for resale pursuant to a prospectus included in an
effective registration
statement and such securities shall have been disposed of in accordance with
such registration statement or (ii) they are otherwise available for resale
under Rule 144 of the Securities Act within a single 90-day period.
2. Registration.
(a) Company shall use its best efforts to cause the Registrable
Securities to be registered under the Securities Act so as to permit the resale
thereof, and in connection therewith shall prepare and file with the SEC within
90 days following the date of this Agreement a registration statement on Form
S-3 covering the Registrable Securities (or, if a registration statement on Form
S-3 is not available, another appropriate form of registration statement);
provided, however, if Company shall furnish to Lender a certificate signed by
the an executive officer of Company stating that, in the good faith judgment of
the Board of Directors of Company, it would be seriously detrimental to Company
or its stockholders for the registration statement to be filed within such 90
day period, then Company's obligation to use its best efforts to file such
registration statement shall be deferred for a period not to exceed 90 days from
the Effective Time. The offerings made pursuant to such registration shall not
be underwritten.
(b) Company shall (i) prepare and file with the SEC the
registration statement in accordance with this Section 2 with respect to the
Registrable Securities and shall use its commercially reasonable best efforts to
cause such registration statement to become effective as promptly as practicable
after filing and to keep such registration statement effective until the sooner
to occur of (A) the date on which all Registrable Securities included within
such registration statement have been sold or (B) January 15, 2005; (ii) prepare
and file with the SEC such amendments to such registration statement and
amendments or supplements to the prospectus used in connection therewith as may
be necessary to comply with the provisions of the Securities Act with respect to
the sale or other disposition of all securities registered by such registration
statement; (iii) furnish to Lender such number of copies of any prospectus
(including any amended or supplemented prospectus) in conformity with the
requirements of the Securities Act, and such other documents, as Lender may
reasonably request in order to effect the offering and sale of the Registrable
Securities to be offered and sold, but only while Company shall be required
under the provisions hereof to cause the registration statement to remain
effective; (iv) use its best efforts to register or qualify the Registrable
Securities covered by such registration statement under the securities or blue
sky laws of such jurisdictions as Lender shall reasonably request (provided that
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 jurisdiction where it has not been qualified), and do any and all other
acts or things which may be necessary or advisable to enable Lender to
consummate the public sale or other disposition of such Registrable Securities
in such jurisdictions; and (v) notify Lender, promptly after it shall receive
notice thereof, of the date and time the registration statement and each
post-effective amendment thereto has become effective or a supplement to any
prospectus forming a part of such registration statement has been filed.
3. Suspension of Prospectus. Under any registration statement filed
pursuant to Section 2 hereof, Company may restrict the disposition of the
Registrable Securities, and Lender will not be able to dispose of such
Registrable Securities, if Company shall have delivered a notice in writing to
the Lender stating that a delay in the disposition of such Registrable
Securities is
-2-
necessary because Company, in its reasonable judgment, has determined that such
sales would require public disclosure by Company of material nonpublic
information that is not included in such registration statement. In the event of
the delivery of the notice described above by Company, Company shall use its
best efforts to amend such registration statement and/or amend or supplement the
related prospectus if necessary and to take all other actions necessary to allow
the proposed sale to take place as promptly as possible, subject, however, to
the right of Company to delay further sales of Registrable Securities until the
conditions or circumstances referred to in the notice have ceased to exist or
have been disclosed. Such right to delay sales of Registrable Securities shall
not exceed 120 consecutive days in any 12 month period.
4. Indemnification.
(a) Company will indemnify and hold harmless Lender, each of its
officers and directors, and each person controlling Lender within the meaning of
Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement against
all expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by Company of any rule or regulation
promulgated under the Securities Act applicable to Company or any state
securities law applicable to Company in connection with any such registration,
qualification or compliance, and Company will reimburse (on an as incurred
basis), Lender, each of its officers and directors and each person controlling
Lender, for any reasonable legal and other expenses incurred in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that Company will not be liable in any such case to
the extent that any such claim, loss, damage, liability or expense arises out of
or is based on any untrue statement or omission or alleged untrue statement or
omission, made in reliance upon and in conformity with written information
furnished to Company by Lender; and provided, further, that Company will not be
liable to any such person or entity with respect to any such untrue statement or
omission or alleged untrue statement or omission made in any preliminary
prospectus that is corrected in the final prospectus filed with the SEC pursuant
to Rule 424(b) promulgated under the Securities Act (or any amendment or
supplement to such prospectus) if the person asserting any such loss, claim,
damage or liability purchased securities but was not sent or given a copy of the
prospectus (as amended or supplemented) at or prior to the written confirmation
of the sale of such securities to such person in any case where such delivery of
the prospectus (as amended or supplemented) is required by the Securities Act,
unless such failure to deliver the prospectus (as amended or supplemented) was a
result of Company's failure to provide such prospectus (as amended or
supplemented).
-3-
(b) Lender shall indemnify Company, each of its directors and
officers and each person who controls Company within the meaning of Section 15
of the Securities Act against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement of a
material fact contained in any such registration statement, prospectus, offering
circular or other document, BUT ONLY TO THE EXTENT, THAT SUCH UNTRUE STATEMENT
(OR ALLEGED UNTRUE STATEMENT) OR OMISSION (OR ALLEGED OMISSION) IS MADE IN SUCH
REGISTRATION STATEMENT, PROSPECTUS, OFFERING CIRCULAR OR OTHER DOCUMENT IN
RELIANCE UPON AND IN CONFORMITY WITH WRITTEN INFORMATION FURNISHED TO COMPANY BY
LENDER (WHICH WRITTEN INFORMATION PERTAINS TO THE SELLING STOCKHOLDER AND/OR
PLAN OF DISTRIBUTION SECTION(s) OF SUCH REGISTRATION STATEMENT, PROSPECTUS,
OFFERING CIRCULAR OR OTHER DOCUMENT); provided, however, that the liability of
Lender for indemnification under this Section 4(b) shall not exceed the proceeds
from the offering received by such Lender, prior to deducting any commissions,
transfer taxes or other selling expenses incurred with respect to such sale.
(c) Each party entitled to indemnification under this Section 4
(the "INDEMNIFIED PARTY") shall give notice to the party required to provide
indemnification (the "INDEMNIFYING PARTY") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 4 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
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. Any
Indemnified Party shall reasonably cooperate with the Indemnifying Party in the
defense of any claim or litigation brought against such Indemnified Party.
(d) If the indemnification provided for in this Section 4 is for
any reason not available 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, 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
will 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 statement of 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. The liability of
Lender under this Section 4(d) shall not exceed the proceeds from the offering
received by Lender, prior to deduction of any commissions, transfer taxes or
other selling expenses incurred with respect to such sale.
-4-
5. Information by Lender. Lender shall furnish to Company such
information regarding Lender, the manner in which Lender holds any securities of
Company and the distribution proposed by Lender as Company may request in
writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
6. Miscellaneous.
(a) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if upon receipt delivered
personally or by commercial delivery service, or mailed by registered or
certified mail (return receipt requested) or sent via facsimile (with
acknowledgment of complete transmission) to the parties at the following
addresses (or at such other address for a party as shall be specified by like
notice):
(i) if to the Company, to:
Gadzoox Networks, Inc.
0000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
with a copy (which shall not constitute notice) to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx, P.C.
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(ii) if to Seller, to:
Xxxx & Xxxx Enterprises, LLC
00000 Xxxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxx Xxxx
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) No Assignment of Registration Rights. The rights to cause
Company to register Registrable Securities under Section 2 of this Agreement may
not be assigned by Lender.
(c) Expenses. All Registration Expenses incurred in connection
with any registration pursuant to Section 2 shall be borne by Company.
-5-
(d) Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any party, other than the parties to this
Agreement, any rights or remedies hereunder.
(e) Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California without giving effect to the
conflicts of laws principles thereof.
(f) Severability. In the event that any provision of this
Agreement or the application thereof, becomes or is declared by a court of
competent jurisdiction to be illegal, void or unenforceable, the remainder of
this Agreement will continue in full force and effect and the application of
such provision to other persons or circumstances will be interpreted so as
reasonably to effect the intent of the parties hereto. The parties further agree
to replace such void or unenforceable provision of this Agreement with a valid
and enforceable provision that will achieve, to the extent possible, the
economic, business and other purposes of such void or unenforceable provision.
(g) Amendment. Except as is otherwise required by applicable
law, this Agreement may be amended by the parties hereto at any time by
execution of an instrument in writing signed by Company and Lender.
(h) Entire Agreement. This Agreement constitutes the full and
entire understanding among the parties regarding the subject matter herein.
(i) Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
*****
-6-
IN WITNESS WHEREOF, Company and Lender have caused this Registration
Rights Agreement to be signed as of the date first written above.
"PARENT" GADZOOX NETWORKS, INC.
a Delaware Corporation
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Xxxxxxx Xxxxxxx, President and Chief
Executive Officer
"COMPANY" XXXX & XXXX ENTERPRISES, LLC
a California Limited Liability Company
By: /s/ Xxxx X. Xxxx
-------------------------------------
Print Name: Xxxx X. Xxxx
-----------------------------
Title: Member
----------------------------------
