AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
Exhibit 10.1
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this “Agreement”) dated November 2, 2005 by and among MTI
TECHNOLOGY CORPORATION, a Delaware corporation (the “Company”), and the entities listed on the
signature pages hereto (the “Investors”) amends and restates the Investor Rights Agreement, dated
as of June 17, 2004, as amended by Amendment No. 1 to Investor Rights Agreement, dated as of August
30, 2004, and as further amended by Amendment No. 2 to Investor Rights Agreement, dated as of
November 30, 2004, by and among the Company and the Investors (the original agreements and such
amendments, collectively the “Original XXX”).
BACKGROUND
A. The Company sold and the Investors purchased Series A Stock and Warrants (defined below)
pursuant to a Securities Purchase Agreement, dated as of June 17, 2004. The Company and the
Investors entered into the Original XXX in connection with the issuance of the Series A Stock and
associated Warrants.
B. The Company and the Investors have entered into another Securities Purchase Agreement,
dated as of August 19, 2005, pursuant to which such Investors are acquiring shares of Series B
Convertible Preferred Stock, par value $0.001 per share, and Warrants as provided for therein, of
the Company contemporaneously with the execution and delivery of this Agreement.
C. Under Sections 7.01(p) and 7.02(c) of such Purchase Agreement, the delivery of this
Agreement is a condition to the Investors’ acquisition, and the Company’s sale, of such shares of
Series B Convertible Preferred Stock and Warrants.
AGREEMENT
NOW THEREFORE, in consideration of the mutual covenants and agreements set forth
herein, the parties hereto hereby amend and restate the Original XXX in its entirety to be follows:
1. Definitions. As used in this Agreement, the following terms shall have the
indicated meanings:
“Advent” means Advent International Corporation, a Delaware corporation.
“Adverse Disclosure” means public disclosure of material non-public information, which
disclosure in the good faith judgment of the Board of Directors (after consultation with
external legal counsel) (i) would be required to be made in any Registration Statement so that
such Registration Statement would not be materially misleading, (ii) would not be required to
be made at such time but for the filing, effectiveness or continued use of such Registration
Statement, and (iii) would be materially detrimental to the Company’s ability to effect a
material proposed merger, acquisition, disposition, financing, reorganization,
recapitalization, or similar transaction, or otherwise be materially detrimental to the
Company.
“Board of Directors” means the Board of Directors of the Company.
“Certificate” means the Series A Certificate and/or the Series B Certificate as the
context may require.
“Commission” means the Securities and Exchange Commission.
“Common Stock” means the common stock, par value $0.001 per share, of the Company, or any
common stock or other securities issued in respect of such Common Stock, or into which such
Common Stock is converted, due to stock splits, stock dividends or other distributions,
merger, consolidation, reclassifications, recapitalizations or otherwise.
“Company” has the meaning ascribed to it in the introductory paragraph hereto.
“Company Election Notice” has the meaning ascribed to it in Section 3.2(a) below.
“Company Policies” means the Company’s (a) Xxxxxxx Xxxxxxx Policy (Control No.
10-010-R2), (b) Pre-Clearance and Blackout Policy (Control No. 10-011-R3) and (c) Section 16
Compliance Program (Control No. 10-012-R3), as such policies may be amended or modified from
time to time.
“Director” means the Series A Director and/or the Series B Director as the context may
require.
“DMC III” means Digital Media & Communications III Limited Partnership, a Delaware
limited partnership.
“EMC” means EMC Corp., a Massachusetts corporation.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.
“GAAP” means U.S. generally accepted accounting principles consistently applied and
maintained throughout the applicable periods.
“Increased Maximum Vote Allowed” has the meaning ascribed to it in Section 4.4(a) below.
“Indemnified Person” means a Person entitled to indemnification pursuant to Sections
2.6(a) or (b).
“Indemnifying Person” means a Person obligated to provide indemnification pursuant to
Sections 2.6(a) or (b).
“Investor” has the meaning ascribed to it in the introductory paragraph hereto.
“Investor Indemnified Person” has the meaning ascribed to it in Section 2.6(a) below.
“Original XXX” has the meaning set forth in the introductory paragraph hereto.
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“Other Registration Rights” means written agreements under which the Company has agreed
to include securities of the Company (other than Registrable Shares) in a Registration
Statement.
“Other Registration Rights Holders” means holders of securities subject to Other
Registration Rights.
“Person” means an individual or a corporation, partnership, limited liability company,
association, trust, or any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
“Preferred Stock” means the Series A Stock and Series B Stock.
“Prospectus” means the prospectus included in any Registration Statement, as amended or
supplemented by an amendment or prospectus supplement, including post-effective amendments,
and all material incorporated by reference or deemed to be incorporated by reference in such
Prospectus.
“Purchase Agreement” means the Securities Purchase Agreement, dated as of August 19,
2005, by and among the Company and the Investors.
“Registrable Shares” means (a) the Series A Registrable Shares, (b) the Series B
Registrable Shares, (c) any other shares of Common Stock issued or issuable upon the
conversion or exercise of any other securities held by an Investor, including the Warrants,
and (d) any other shares of Common Stock held by an Investor; provided, however, that shares
of Common Stock that are Registrable Shares shall cease to be Registrable Shares upon any sale
pursuant to a Registration Statement or Rule 144 or at such time at which such Registrable
Shares may be sold pursuant to paragraph (k) of Rule 144.
“Registration Expenses” means all expenses incurred by the Company in complying with the
provisions of Section 2, including all registration and filing fees, exchange listing fees,
printing expenses, fees and expenses of counsel for the Company and the fees and expenses of
Registration Selling Investor Counsel, state Blue Sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, but excluding
underwriting discounts, selling commissions and the fees and expenses of Registration Selling
Investors’ own counsel (other than the Registration Selling Investor Counsel).
“Registration Initiating Investors” means the Investors initiating a request for
registration pursuant to Section 2.1(a).
“Registration Selling Investor” means any Investor owning Registrable Shares included in
a Registration Statement.
“Registration Selling Investor Counsel” means, if Investors are participating as
Registration Selling Investors with respect to a registration, counsel selected by Advent to
represent all Registration Selling Investors with respect to such registration. Any notice or
other delivery requirement deliverable by the Company to the Registration Selling Investor
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Counsel shall be made to such person at such address as Advent may reasonably request
from time to time through written notice to the Company.
“Registration Statement” means a registration statement filed by the Company with the
Commission for a public offering and sale of securities of the Company, other than (a) a
registration statement on Form S-4 or Form S-8, or their successors, or any other form for a
similar limited purpose, or (b) any registration statement covering only securities proposed
to be issued in exchange for securities or assets of another corporation.
“Registration Threshold Amount” has the meaning ascribed to it in Section 2.1(a) below.
“Rule 144” means Rule 144 promulgated under the Securities Act, and any successor rule or
regulation thereto, and in the case of any referenced section of such rule, any successor
section thereto, collectively and as from time to time amended and in effect.
“Xxxxxxxx-Xxxxx Act” means the Xxxxxxxx-Xxxxx Act of 2002, as amended, and the rules and
regulations promulgated thereunder.
“Securities Act” means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
“Series A Certificate” means the Certificate of Designations of Series A Convertible
Preferred Stock forming a part of the Certificate of Incorporation of the Company, as amended
from time to time in accordance with the terms thereof.
“Series A Director” means the member of the Board of Directors designated by the holders
of shares of Series A Stock pursuant to the Series A Certificate.
“Series A Nominator” has the meaning ascribed to it in Section 3.2(b) below.
“Series A Registrable Shares” means (a) the shares of Common Stock issued or issuable
upon conversion of the Series A Stock held by an Investor from time to time, and (b) the
shares of Common Stock issued or issuable upon the exercise of the Warrants issued
contemporaneously with the Series A Stock and held by an Investor from time to time.
“Series A Stock” means the Series A Convertible Preferred Stock of the Company issued
pursuant to a Securities Purchase Agreement, dated June 17, 2004, between the Investors and
the Company.
“Series B Certificate” means the Certificate of Designations of Series B Convertible
Preferred Stock forming a part of the Certificate of Incorporation of the Company, as amended
from time to time in accordance with the terms thereof.
“Series B Director” means the member of the Board of Directors designated by the holders
of shares of Series B Stock pursuant to the Series B Certificate.
“Series B Nominator” has the meaning ascribed to it in Section 3.2(b) below.
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“Series B Registrable Shares” means (a) the shares of Common Stock issued or issuable
upon conversion of the Series B Stock held by an Investor from time to time, (b) the shares of
Common Stock issued or issuable upon the exercise of the Warrants issued contemporaneously
with the Series B Stock and held by an Investor from time to time.
“Series B Stock” means the Series B Convertible Preferred Stock of the Company issued
pursuant to the Purchase Agreement.
“Shares” means the shares of Series A Stock and Series B Stock held by the Investors.
“Shelf Registration Statement” means the Registration Statement filed by the Company with
the Commission pursuant to Section 2.3 covering the resale of all Registrable Shares for an
offering to be made on a continuous basis pursuant to Rule 415 promulgated under the
Securities Act.
“Subsidiary” means any corporation or other entity of which the capital stock or other
ownership interests having ordinary voting power to elect a majority of the board of directors
or other Persons performing similar functions is at the time directly or indirectly owned by
the Company.
“Trading Day” means (a) any day on which the Common Stock is listed or quoted and traded
on the Nasdaq National Market, the New York Stock Exchange, the American Stock Exchange or the
Nasdaq SmallCap Market or (b) if the Common Stock is not traded on any such market, then a day
on which trading occurs on the New York Stock Exchange (or any successor thereto).
“Transfer” means, as the context requires, (a) any sale, transfer, distribution or other
disposition, whether voluntarily or by operation of law, or (b) the act of effecting such a
sale, transfer, distribution or other disposition.
“Warrants” means the warrants to purchase shares of Common Stock, par value $0.001 per
share, originally issued to an Investor in connection with the issuance of either the Series A
Stock or Series B Stock.
2. Registration Rights
2.1. Demand Registrations
(a) Investors holding in the aggregate at least a majority of the shares of
Preferred Stock then outstanding may, at any time, request, in writing, that the Company
file a Registration Statement on Form S-3 (or any successor form) to effect the
registration of an offering of Registrable Shares owned by such Investor(s) and having an
aggregate value of at least $5,000,000, based on the last reported sale price of the
Common Stock on the trading day immediately preceding the date of such request (the
“Registration Threshold Amount”); provided, however, that, if at the time of such request
the Company is not eligible to register for resale the Registrable Shares on Form S-3,
the Company shall register the Registrable Shares on such other form as the Company is
eligible to use. The Company shall set forth in such Form S-3 any
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information that may be required in a registration that is filed on Form S-1 and
that the lead underwriter managing the offering reasonably requests be expressly included
in the Registration Statement.
(b) Upon receipt of any request for registration pursuant to this Section 2, the
Company shall promptly (but in any event within 10 days) give written notice of such
proposed registration to all other Investors. Such other Investors shall have the right,
by giving written notice to the Company within 20 days after the Company provides its
notice, to elect to have included in such registration such of their Registrable Shares
as such Investors may request in such notice of election, subject in the case of an
underwritten offering to the terms of Section 2.1(c). Thereupon, the Company shall, as
expeditiously as possible, use its best efforts to effect the registration on an
appropriate registration form of all Registrable Shares that the Company has been
requested to so register.
(c) If the Registration Initiating Investors intend to distribute the Registrable
Shares covered by their request by means of an underwriting, they shall so advise the
Company as a part of their request made pursuant to Section 2.1(a) and the Company shall
include such information in its written notice referred to in Section 2.1(b). In such
event, (i) the right of any other Investor to include its Registrable Shares in such
registration pursuant to Section 2.1(a) shall be conditioned upon such other Investor’s
participation in such underwriting on the terms set forth herein, and (ii) all Investors
including Registrable Shares in such registration shall enter into an underwriting
agreement upon customary terms with the underwriter or underwriters managing the
offering; provided that such underwriting agreement shall not provide for indemnification
or contribution obligations on the part of the Investors materially greater than the
obligations of the Investors pursuant to Section 2.6.
If the Company and the Registration Initiating Investors are unable to mutually
agree on the managing underwriter(s) for any underwritten offering pursuant to Section
2.1(a) within 15 days after the Company receives the Registration Initiating Investors’
request, the Company shall select an underwriter out of a pool of three underwriting
firms chosen by the Registration Initiating Investors, each of which firms shall have a
national reputation and shall have prior experience with software companies.
If any Investor that has requested inclusion of its Registrable Shares in such
registration as provided above disapproves of the terms of the underwriting, such Person
may elect, by written notice to the Company, to withdraw its Registrable Shares from such
Registration Statement and underwriting; provided, however, that, if Registration Selling
Investors holding a majority of the remaining Registrable Shares mutually agree, the
Company shall continue to effect the registration of such remaining Registrable Shares
regardless of whether the aggregate value of the remaining Registrable Shares is less
than the Registration Threshold Amount, in which case the registration, once effective,
shall be counted as a registration for the purposes of Section 2.1(d).
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If the lead managing underwriter advises the Company in writing that marketing
factors require a limitation on the number of shares to be underwritten, the number of
Registrable Shares to be included in the Registration Statement and underwriting shall be
allocated first among Investors holding the Series B Registrable Shares, in proportion,
as nearly as practicable, to the respective number of Series B Registrable Shares each
Investor has requested be included in such registration. In the event all Series B
Registrable Shares have been included, then the number of Registrable Shares to be
included in the Registration Statement and underwriting shall be allocated second among
Investors holding the Series A Registrable Shares, in proportion, as nearly as
practicable, to the respective number of Series A Registrable Shares each Investor has
requested be included in such registration. In the event all Series A Registrable Shares
have been included, then the number of remaining Registrable Shares to be included in the
Registration Statement and underwriting shall be allocated finally among Investors
holding of the remaining Registrable Shares, in proportion, as nearly as practicable, to
the respective number of Registrable Shares each Investor has requested be included in
such registration.
(d) The Company shall not be required to effect more than a total of three (3)
registrations requested pursuant to Section 2.1(a). The Investors shall not deliver a
notice pursuant to Section 2.1(a) requesting registration of any underwritten offering
until at least 6 months after the closing of any prior underwritten offering registered
pursuant to a request under Section 2.1(a). For purposes of this Section 2.1(d), a
Registration Statement shall not be counted until such time as such Registration
Statement has been declared effective by the Commission. Notwithstanding the foregoing,
any request for registration that is withdrawn by the Registration Initiating Investors
primarily as a result of material adverse information concerning the business or
financial condition of the Company, where such information is made known to the
Registration Initiating Investors after the date on which such registration statement was
filed, shall not count as a Registration Statement.
(e) If, at the time of any request to register Registrable Shares by Registration
Initiating Investors pursuant to this Section 2.1, such registration would require
Adverse Disclosure, or the Company is engaged or has plans to engage in a registered
public offering or is engaged in a material proposed merger, acquisition, disposition,
financing, reorganization, recapitalization or similar transaction that, in the good
faith determination of the Board of Directors, could be adversely affected by the
requested registration, then the Company may at its option direct that such request be
delayed for a period not in excess of 90 days from the date of such request, such right
to delay a request to be exercised by the Company not more than once in any 12-month
period.
2.2. Incidental Registrations
(a) Whenever the Company proposes to file a Registration Statement covering shares
of Common Stock (other than a Registration Statement filed (i) pursuant to Section 2.1 or
2.3 or (ii) in accordance with the requirements of a written agreement entered into prior
to the date hereof, except in any such case to the extent expressly permitted therein) at
any time and from time to time, it shall, prior to such filing, give
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written notice to all Investors of its intention to do so; provided that no such
notice need be given if no Registrable Shares are to be included therein as a result of a
written notice from the managing underwriter pursuant to Section 2.2(b). Upon the
written request of an Investor or Investors given within 10 days after the Company
provides such notice (which request shall state the intended method of disposition of
such Registrable Shares), the Company shall use its best efforts to cause all Registrable
Shares that the Company has been requested by such Investor or Investors to register to
be registered under the Securities Act to the extent necessary to permit their sale or
other disposition in accordance with the intended methods of distribution specified in
the request of such Investor or Investors; provided that the Company shall have the right
to postpone or withdraw any registration effected pursuant to this Section 2.2 without
obligation upon 10 days’ advance written notice to the Investors. Upon receipt of any
such notice, the Investors may elect to exercise their right to demand a registration in
accordance with Section 2.1.
(b) If the registration for which the Company gives notice pursuant to Section
2.2(a) is a registered public offering involving an underwriting, the Company shall so
advise the Investors as a part of the written notice given pursuant to Section 2.2(a).
In such event, (i) the right of any Investor to include its Registrable Shares in such
registration pursuant to this Section 2.2 shall be conditioned upon such Investor’s
participation in such underwriting on the terms set forth herein and (ii) all Investors
including Registrable Shares in such registration shall enter into an underwriting
agreement upon customary terms with the underwriter or underwriters selected for the
underwriting by the Company. If any Investor who has requested inclusion of its
Registrable Shares in such registration as provided above disapproves of the terms of the
underwriting, such Investor may elect, by written notice to the Company, to withdraw its
shares from such Registration Statement and underwriting.
If the managing underwriter advises the Company in writing that marketing factors
require a limitation on the number of shares to be underwritten, the shares held by
Persons other than the Investors shall be excluded from such Registration Statement and
underwriting to the extent deemed advisable by the managing underwriter, and if a further
reduction of the number of shares is required, the number of shares that may be included
in such Registration Statement and underwriting shall be allocated first among Investors
holding Series B Registrable Shares requesting registration in proportion, as nearly as
practicable, to the respective number of shares of Common Stock (on an as converted basis
that are Series B Registrable Shares) held by them on the date the Company gives the
notice specified in Section 2.2(a). If all such Series B Registrable Shares are
included, then the number of shares that may be included in such Registration Statement
and underwriting shall be allocated second among Investors holding Series A Registrable
Shares requesting registration in proportion, as nearly as practicable, to the respective
number of shares of Common Stock (on an as converted basis that are Series A Registrable
Shares) held by them on the date the Company gives the notice specified in Section
2.2(a). If all such Series A Registrable Shares are included, then the number of shares
that may be included in such Registration Statement and underwriting shall be allocated
finally among Investors holding any remaining Registrable Shares requesting registration
in proportion, as
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nearly as practicable, to the respective number of shares of Common Stock (on an as
converted basis) held by them on the date the Company gives the notice specified in
Section 2.2(a). If any Investor would be entitled to include more shares than such
holder has requested to be registered, the excess shall be allocated among other
requesting Investors pro rata in the manner described in the preceding sentences. In no
event shall the number of shares permitted to be offered by the Company be reduced
pursuant to the terms of this paragraph.
2.3. Shelf Registration. The Company shall prepare and file with the Commission
a Shelf Registration Statement as promptly as practicable after the date hereof (and in any
event by no later than 30 days after the Closing Date), and shall use its best efforts to take
such steps as are necessary to enable the Shelf Registration to be declared effective by the
Commission as promptly as practicable after the date hereof. The Shelf Registration Statement
shall be on Form S-3 (except if the Company is not then eligible to register for resale the
Registrable Shares on Form S-3, in which case such Shelf Registration Statement shall be on
such other form as the Company is eligible to use). The Company shall notify Registration
Selling Investor Counsel in writing promptly (in any event within one Trading Day) after
receiving notification from the Commission that the Shelf Registration Statement has been
declared effective.
2.4. Registration Procedures
(a) If and whenever the Company is required by the provisions of this Agreement to
use its best efforts to effect the registration of any Registrable Shares under the
Securities Act, the Company shall:
| (i) | prepare and file with the Commission a Registration Statement with respect to such Registrable Shares and use its best efforts to cause that Registration Statement to become effective as soon as possible; | ||
| (ii) | not less than (a) five (5) Trading Days prior to the filing of the Shelf Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), or (b) ten (10) Trading Days prior to the filing of any other Registration Statement or any related Prospectus or any amendment or supplement thereto (including any document that would be incorporated or deemed to be incorporated therein by reference), the Company shall (i) furnish to Registration Selling Investor Counsel copies of all such documents proposed to be filed, which documents (other than those incorporated or deemed to be incorporated by reference) will be subject to the review of each Registration Selling Investor and its counsel, and (ii) cause its officers and directors, counsel and independent certified public accountants to respond to such inquiries as shall be necessary, in the reasonable opinion of respective counsel, to conduct a reasonable investigation within the meaning of the Securities Act; and the Company shall not file any Registration Statement or any such |
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| Prospectus or any amendments or supplements thereto to which the Registration Selling Investors holding a majority of the Registrable Shares to be registered thereunder and their counsel shall reasonably object, provided that such objection is communicated to the Company within three (3) Trading Days of receipt of such documents; | |||
| (iii) | as expeditiously as possible prepare and file with the Commission any amendments and supplements to the Registration Statement and the prospectus included in the Registration Statement as may be necessary to comply with the provisions of the Securities Act (including the anti-fraud provisions thereof) and use its best efforts to keep the Registration Statement continuously effective: |
| (A) | in the case of the Shelf Registration Statement filed pursuant to Section 2.3, until the earliest of (1) the date on which all of the Registrable Shares covered by the Shelf Registration Statement have been sold, and (2) the date on which all of such Registrable Shares may be sold pursuant to paragraph (k) of Rule 144, as determined by the Company after consultation with legal counsel; provided that if the Company ceases to keep the Registration Statement effective by reason of clause 2 herein, the Company must certify to the Investors, by delivery of a certificate to that effect to each Registration Selling Investor, that the Registrable Shares may be sold pursuant to paragraph (k) of Rule 144; and | ||
| (B) | in the case of all other registrations, for (1) 180 days from the effective date or such greater period, up to 360 days, as an underwriter may require, or (2) such lesser period until all such Registrable Shares are sold; provided that the number of days specified in this clause (B) shall not include any day on which a Registration Selling Investor is restricted from offering or selling Registrable Shares pursuant to Sections 2.4(b) or (c) below; |
| (iv) | in all cases respond as promptly as possible to any comments received from the Commission with respect to any Registration Statement or any amendment thereto; | ||
| (v) | as expeditiously as possible furnish to each Registration Selling Investor, without charge, at least one conformed copy of the applicable Registration Statement and each amendment thereto, including financial statements and schedules, all documents incorporated or deemed to be incorporated therein by reference, and all exhibits to the extent requested by such Person (including those previously furnished or incorporated by reference) promptly after the filing of such documents with the Commission; | ||
| (vi) | as expeditiously as possible furnish to each Registration Selling Investor such reasonable numbers of copies of the Prospectus, including any |
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| preliminary Prospectus, in conformity with the requirements of the Securities Act, and such other documents as such Registration Selling Investor may reasonably request in order to facilitate the public sale or other disposition of the Registrable Shares owned by such Registration Selling Investor; and the Company hereby consents to the use of any such Prospectus and each amendment or supplement thereto by each Registration Selling Investor in connection with the offering and sale of the Registrable Securities covered by such Prospectus and any amendment or supplement thereto; | |||
| (vii) | use its best efforts to avoid the issuance of or, if issued, obtain the withdrawal of (x) any order suspending the effectiveness of any Registration Statement or (y) any suspension of the qualification (or exemption from qualification) of any of the Registrable Securities for sale in any jurisdiction as soon as reasonably practicable; | ||
| (viii) | as expeditiously as possible (and in the case of the Shelf Registration Statement, prior to the public offering of Registrable Securities pursuant thereto) use its best efforts to register or qualify the Registrable Shares covered by the Registration Statement under the securities or Blue Sky laws of such states as the Registration Selling Investors shall reasonably request, and do any and all other acts and things that may be necessary or desirable to enable the Registration Selling Investors to consummate the public sale or other disposition in such states of the Registrable Shares owned by the Registration Selling Investors; provided, however, that the Company shall not be required in connection with this paragraph (viii) to qualify as a foreign corporation or execute a general consent to service of process in any jurisdiction; as expeditiously as possible, cause all such Registrable Shares to be listed on each securities exchange or automated quotation system on which the same securities issued by the Company are then listed; | ||
| (ix) | promptly provide a transfer agent and registrar for all such Registrable Shares not later than the effective date of such registration statement; | ||
| (x) | cooperate with the Registration Selling Investors to facilitate the timely preparation and delivery of certificates representing Registrable Securities to be delivered to a transferee pursuant to an effective Registration Statement, which certificates shall be free, to the extent permitted hereunder and in compliance with applicable law, of all restrictive legends, and to enable such Registrable Securities to be in such denominations and registered in such names as any such Registration Selling Investors may request; | ||
| (xi) | promptly make available for inspection by the Registration Selling Investors, any managing underwriter participating in any disposition pursuant to such Registration Statement, and any attorney or accountant |
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| or other agent retained by any such underwriter or selected by the Registration Selling Investors, all financial and other records, pertinent corporate documents and properties of the Company and cause the Company’s officers, directors, employees and independent accountants to supply all information reasonably requested by any such seller, underwriter, attorney, accountant or agent in connection with such Registration Statement; provided that, unless otherwise mutually agreed by the Company and the recipient Investor, the Company will not make any material nonpublic information available to an Investor; and | |||
| (xii) | in connection with an underwritten disposition of Registrable Shares, provide such reasonable assistance in the marketing of the Registrable Shares as is customary of issuers in primary underwritten public offerings (including participation by its senior management in “road shows”). |
(b) At any time when a Prospectus is required to be delivered under the Securities
Act, the Company shall promptly notify each Registration Selling Investor of any of the
following events: (i) the Commission notifies the Company whether there will be a
“review” of the Registration Statement; (ii) the Commission comments in writing on the
Registration Statement (in which case the Company shall deliver to each Registration
Selling Investor a copy of such comments and of all written responses thereto); (iii) the
Registration Statement or any post-effective amendment is declared effective or a
supplement to any Prospectus forming a part of such Registration Statement has been
filed; (iv) the Commission or any other Federal or state governmental authority requests
any amendment or supplement to the Registration Statement or Prospectus or requests
additional information related thereto; (v) the Commission issues any stop order
suspending the effectiveness of the Registration Statement or initiates any Suit (as
defined in the Purchase Agreement) for that purpose; (vi) the Company receives notice of
any suspension of the qualification or exemption from qualification of the Registrable
Securities for sale in any jurisdiction, or the initiation or threat of any Suit for such
purpose; or (vii) the financial statements included in the Registration Statement become
ineligible for inclusion therein or any statement made in the Registration Statement or
Prospectus or any document incorporated or deemed to be incorporated therein by reference
is untrue in any material respect or any revision to the Registration Statement,
Prospectus or other document is required so that it will not contain any untrue statement
of a material fact or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under which they
were made, not misleading. If requested, the Registration Selling Investors shall
immediately cease making offers of Registrable Shares pursuant to the Registration
Statement until their receipt of the copies of the supplemented or amended Prospectus.
Following receipt of the revised Prospectuses, the Registration Selling Investors shall
be free to resume making offers of the Registrable Shares.
(c) In the event that it is advisable to suspend use of a Prospectus included in a
Registration Statement because continued use would require Adverse Disclosure, the
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Company shall notify each Registration Selling Investor to such effect, and, upon
receipt of such notice, each such Registration Selling Investor shall immediately
discontinue any sales of Registrable Shares pursuant to such Registration Statement until
such Registration Selling Investor has received copies of a supplemented or amended
Prospectus or until such Registration Selling Investor is advised in writing by the
Company that the then current Prospectus may be used and has received copies of any
additional or supplemental filings that are incorporated or deemed incorporated by
reference in such Prospectus. Notwithstanding anything to the contrary herein, the
Company shall not exercise its rights under this Section 2.4(c) to suspend sales of
Registrable Shares for a period in excess of 60 consecutive days or a total of 90 days in
any 365-day period; provided that the Company may suspend such sales for a period of up
to 90 consecutive days (and a total of 120 days in a 365-day period) if the reason for
the continued suspension beyond 60 days relates solely to the preparation of financial
statements required to be filed in accordance with Item 9.01 of Form 8-K under the
Exchange Act (in which event the Company shall use its best efforts to cause such
financial statements to be prepared as promptly as reasonably practicable in the
circumstances), and such suspension period shall automatically terminate two Trading Days
after the filing of such financial statements. In no event shall the Company’s right
under this Section 2.4(c) be exercised to suspend sales of Registrable Shares beyond the
period during which sales of Registrable Shares would require Adverse Disclosure. After
the end of any suspension period under this Section 2.4, the Company shall use its best
efforts (including filing any required supplemental prospectus) to restore, as promptly
as reasonably possible, the effectiveness of the Registration Statement and the ability
of the Registration Selling Investors to publicly resell their Registrable Securities
pursuant to such effective Registration Statement.
2.5. Payment of Expenses. The Company will pay all Registration Expenses for all
registrations under this Agreement.
2.6. Indemnification and Contribution
(a) In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, the Company shall indemnify and hold harmless
each Registration Selling Investor and each underwriter of such Registrable Shares, their
respective partners, members, agents, directors, officers, fiduciaries, investment
advisors, brokers (including brokers who offer and sell Registrable Securities as
principal as a result of a pledge or any failure to perform under a margin call of Common
Stock) and employees of each of them, and each other Person, if any, who controls such
Registration Selling Investor or underwriter within the meaning of the Securities Act or
the Exchange Act and the officers, directors, partners, members, agents and employees of
each such controlling Person (each such Person an “Investor Indemnified Person”), to the
fullest extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, settlement costs and expenses, as incurred, joint or several, that
arise out of, relate to or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in any Registration Statement under which such
Registrable Shares were registered under the Securities Act, any preliminary prospectus
or final prospectus contained in the
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Registration Statement or any amendment or supplement to such Registration Statement
or Prospectus, (ii) the omission or alleged omission to state a material fact required to
be stated therein or necessary to make the statements therein not misleading, or (iii)
any violation or alleged violation by the Company of the Securities Act, the Exchange
Act, any state securities law or any rule or regulation promulgated under the Securities
Act, the Exchange Act or any state securities law in connection with the Registration
Statement or the offering contemplated thereby; and the Company will reimburse such
Investor Indemnified Person for any legal or any other expenses reasonably incurred by
such Investor Indemnified Person in connection with investigating or defending any such
loss, claim, damage, liability or action; provided, however, that the Company will not be
liable to any Investor Indemnified Person, in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any untrue statement or
omission made (x) in such Registration Statement, preliminary prospectus or prospectus,
or any such amendment or supplement, in reliance upon and in conformity with information
furnished to the Company, in writing, by such Person specifically for use in the
preparation thereof, or (y) in any Registration Statement, preliminary prospectus or
prospectus, or any amendment or supplement thereto, which was corrected in a subsequent
prospectus, or any amendment or supplement thereto, and such Investor Indemnified Person
failed to deliver or provide a copy of such subsequent prospectus, or amendment or
supplement thereto, to a purchaser of Registrable Shares at or prior to the confirmation
of the sale of such Registrable Shares in any case where such delivery is required by the
Securities Act, provided that the limitation on indemnification provided by this
paragraph shall not apply if such Investor Indemnified Person’s failure to deliver or
provide a copy of the prospectus resulted from the Company’s failure to furnish such
Investor Indemnified Person such prospectus, or amendment or supplement thereto, on a
timely basis to permit such delivery or provision.
(b) In the event of any registration of any of the Registrable Shares under the
Securities Act pursuant to this Agreement, each Registration Selling Investor, severally
and not jointly, will indemnify and hold harmless the Company, each of its directors and
officers and each underwriter (if any) and each Person, if any, who controls the Company
or any such underwriter within the meaning of the Securities Act or the Exchange Act,
against any and all losses, claims, damages, liabilities, settlement costs and expenses
arising solely out of (i) any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement under which such Registrable Shares were
registered under the Securities Act, any preliminary prospectus or final prospectus
contained in the Registration Statement, or any amendment or supplement to the
Registration Statement or Prospectus, or (ii) any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements therein
not misleading, if and to the extent (and only to the extent) that the statement or
omission was made in reliance upon and in conformity with information relating to such
Registration Selling Investor furnished in writing to the Company by such Registration
Selling Investor specifically for use in connection with the preparation of such
Registration Statement, prospectus, amendment or supplement; provided, however, that the
obligations of a Registration Selling Investor hereunder shall be limited to an amount
equal to the net proceeds to
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such Registration Selling Investor of Registrable Shares sold in connection with
such registration.
(c) Each Indemnified Person shall give notice to the Indemnifying Person promptly
after such Indemnified Person has actual knowledge of any claim as to which indemnity may
be sought, and shall permit the Indemnifying Person to assume the defense of any such
claim or any litigation resulting therefrom; provided, that counsel for the Indemnifying
Person, who shall conduct the defense of such claim or litigation, shall be approved by
the Indemnified Person (whose approval shall not be unreasonably withheld, conditioned or
delayed); and provided further, that the failure of any Indemnified Person to give notice
as provided herein shall not relieve the Indemnifying Person of its obligations under
this Section 2.6 except to the extent that the Indemnifying Person is actually prejudiced
by such failure. The Indemnified Person may participate in such defense at such party’s
expense; provided, however, that the Indemnifying Person shall pay such expense if the
Indemnified Person reasonably concludes that representation of such Indemnified Person by
the counsel retained by the Indemnifying Person would be inappropriate due to actual or
potential conflicts of interests between the Indemnified Person and any other party
represented by such counsel in such proceeding; and provided further, that in no event
shall the Indemnifying Person be required to pay the expenses of more than one law firm
per jurisdiction as counsel for the Indemnified Person. The Indemnifying Person also
shall be responsible for the expenses of such defense if the Indemnifying Person does not
elect to assume such defense. No Indemnifying Person, in the defense of any such claim
or litigation shall, except with the consent of each Indemnified Person, consent to entry
of any judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Person of a
release from all liability in respect of such claim or litigation, and no Indemnified
Person shall consent to entry of any judgment or settle such claim or litigation without
the prior written consent of the Indemnifying Person, which consent shall not be
unreasonably withheld, conditioned or delayed.
(d) In order to provide for just and equitable contribution in circumstances in
which the indemnification provided for in this Section 2.6 is due in accordance with its
terms but for any reason is held to be unavailable to an Indemnified Person in respect to
any losses, claims, damages and liabilities referred to herein, then the Indemnifying
Person shall, in lieu of indemnifying such Indemnified Person, contribute to the amount
paid or payable by such Indemnified Person as a result of such losses, claims, damages or
liabilities to which such party may be subject in such proportion as is appropriate to
reflect the relative fault of the Company on the one hand and the Registration Selling
Investors on the other in connection with the statements or omissions that resulted in
such losses, claims, damages or liabilities. The relative fault of the Company and the
Registration Selling Investors shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of material fact related to information
supplied by the Company or the Registration Selling Investors and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Registration Selling Investors agree that it
would not be just and equitable if
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contribution pursuant to this Section 2.6(d) were determined by pro rata allocation
or by any other method of allocation that does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this Section 2.6(d),
in no case shall any one Registration Selling Investor be liable or responsible for any
amount in excess of the net proceeds received by such Registration Selling Investor from
the offering of Registrable Shares; provided, however, that no Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any Person who was not guilty of such fraudulent
misrepresentation. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties under this
Section 2.6(d), notify such party or parties from whom contribution may be sought, but
the omission so to notify such party or parties from whom contribution may be sought
shall not relieve such party from any other obligation it or they may have thereunder or
otherwise under this Section 2.6(d). No party shall be liable for contribution with
respect to any action, suit, proceeding or claim settled without its prior written
consent, which consent shall not be unreasonably withheld, conditioned or delayed.
(e) The indemnity and contribution agreements contained in this Section 2.6 are in
addition to any other liability that any Indemnifying Person may have to any Indemnified
Person.
2.7. Other Matters with Respect to Underwritten Offerings. In the event that
Registrable Shares are sold pursuant to a Registration Statement in an underwritten offering
pursuant to Section 2.1, the Company agrees to (a) enter into an underwriting agreement
containing customary representations and warranties with respect to the business and
operations of the Company and customary covenants and agreements to be performed by the
Company, including customary provisions with respect to indemnification by the Company of the
underwriters of such offering; (b) use its best efforts to cause its legal counsel to render
customary opinions to the underwriters with respect to the Registration Statement; and (c) use
its best efforts to cause its independent public accounting firm to issue customary “cold
comfort letters” to the underwriters with respect to the Registration Statement.
2.8. Information by Holder. Each holder of Registrable Shares included in any
registration shall furnish to the Company such customary information regarding such holder and
the distribution proposed by such holder as the Company may reasonably request in writing and
that is required under applicable laws, rules and regulations. Each holder of Registrable
Shares included in any registration shall provide the Company with written notice within 10
business days of the sale of any Registrable Shares pursuant to such registration.
2.9. Termination. The rights and obligations under this Section 2 shall
terminate with respect to an Investor on the earlier of (a) the date on which all of the
Registrable Shares owned by that Investor and covered by the Shelf Registration Statement or
another Registration Statement have been sold, and (b) the date on which all of the
Registrable
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Shares owned by that Investor may be sold within a single 90-day period under Rule 144
(as determined by such Investor after consultation with legal counsel). Notwithstanding the
foregoing, the right and obligations of the Company and the Registration Selling Investors
under Section 2.6 (relating to indemnification) shall survive any termination of this
Agreement or any part thereof.
3. Board of Directors.
3.1. Series B Director and Series A Director.
(a) If the Series B Director was named prior to the Closing, then the Company
confirms that, effective contemporaneously with the execution and delivery of this
Agreement, such individual has become a director of the Company, pursuant to the right of
the Investors holding Series B Stock to designate the Series B Director and that Xxxxxxx
Xxxx is the Series A Director, pursuant to the right of the Investors holding Series A
Stock to designate the Series A Director. If the Series B Director was not so named in
advance of the Closing, then the Company shall take all necessary action to cause such
person, promptly but in no event later than fifteen days after his designation, to become
a member of the Board.
(b) The Company agrees that, if at any time (i) Series A Shares are outstanding and
the Investors holding the Series A Stock are unable to designate a Director under Section
3(b) of the Series A Certificate by reason of the operation of the formula set forth
therein, or (ii) Series B Shares are outstanding and the Investors holding the Series B
Stock are unable to designate a Director under Section 3(b) of the Series B Certificate
by reason of the operation of the formula set forth therein the Board of Directors shall,
to the extent permitted by the Bylaws of the Company, increase the size of the Board of
Directors to such number as will then enable the Investors to designate the Series A
Director or Series B Director, as applicable (in either case, such number of Directors is
referred to herein as the “Required Number of Directors”). If at any time the Bylaws of
the Company prevent the Board of Directors from increasing the size of the Board of
Directors to the Required Number of Directors, the Board of Directors shall submit to the
Company’s stockholders for their approval an amendment to the Bylaws that will allow an
increase in the size of the Board of Directors to at least the Required Number of
Directors.
(c) In the event that the board of directors of any Subsidiary is expanded beyond
the number of members existing as of the date hereof (for reasons other than compliance
with local law), the Company shall cause the Directors to be elected to the board of
directors of such Subsidiary and to provide to the Directors the same rights with respect
to such Subsidiary as provided by the Company to the Series B Director and the Series A
Director hereunder.
(d) The Company and the Investors agree to take any such further actions as may be
necessary or desirable to effect the election, from time to time in the future, of the
Directors to (i) the Board of Directors and (ii), if and when applicable, the board of
directors of each Subsidiary.
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(e) No individual designated to serve on the Board of Directors as a Director shall
be deemed to be the deputy of or otherwise required to discharge his or her duties under
the direction of, or with special attention to the interests of, the Investors.
3.2. Designation of Series B Director and Series A Director.
(a) The Company shall provide each Investor with at least 20 days’ prior written
notice (a “Company Election Notice”) of any intended mailing of a notice to stockholders
for a meeting or other action relating to an election of directors. The Company Election
Notice shall specify (i) the date of such meeting, (ii) the date on which such mailing is
intended to be made, and (iii) the name or names of the directors of the Company whose
terms are to expire at such meeting.
(b) If (i) the term of the Series B Director is expiring as indicated in the Company
Election Notice and (ii) DMC III (the “Series B Nominator”) owns any shares of Series B
Stock on the record date for such election, then the Series B Nominator shall confer with
the other Investors holding shares of Series B Stock regarding the individual to be
nominated for election as the Series B Director, and after such discussion shall have the
right to nominate, in its sole discretion, the individual who shall be presented for
election by the holders of the Series B Stock, in accordance with the Certificate
relating to the Series B Stock, as the Series B Director. If (i) the term of the Series
A Director is expiring as indicated in the Company Election Notice and (ii) DMC III (the
“Series A Nominator” owns any shares of Series A Stock on the record date for such
election, then the Series A Nominator shall confer with the other Investors holding
shares of Series A Stock regarding the individual to be nominated for election as the
Series A Director, and after such discussion shall have the right to nominate, in its
sole discretion, the individual who shall be presented for election by the holders of the
Series A Stock, in accordance with the Certificate relating to the Series A Stock, as the
Series A Director. The Series B Nominator or the Series A Nominator, as the case may be,
shall give written notice to the other Investors and the Company, no later than 15 days
after receipt of the applicable Company Election Notice, of such individual to be
nominated for election as the Series B Director or the Series A Director, respectively,
for election to the Board of Directors as of the date of such meeting.
(c) If (i) a Director is one of the directors whose term is indicated in Company
Election Notice as expiring and (ii) DMC III does not own any shares of Series B Stock or
Series A Stock, as applicable, on the record date for such election, the Investors
holding in the aggregate at least a majority of the shares of Series B Stock or Series A
Stock, as the case may be, on the record date for such election shall give written notice
to the other Investors and the Company, no later than 15 days after receipt of the
Company Election Notice, of the individual to be designated by them for election to the
Board of Directors as of the date of such meeting.
(d) If the Company fails to receive notice from either the Series B Nominator or the
Series A Nominator, or other applicable Investors as provided in Section 3.2(b) or
3.2(c), respectively, then the individual then serving as the Series B Director or the
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Series A Director, as the case may be, shall be deemed to have been designated for
reelection.
(e) The Investors agree to vote any Shares or Common Stock owned or controlled by
them in favor of the election of the individuals designated pursuant to Section 3.2(b),
3.2(c) or 3.2(d), as the case may be, or otherwise in accordance with the applicable
Certificate, to the Board of Directors as the Series B Director or the Series A Director,
as the case may be, at such meeting or in any consent in lieu of a meeting of the
shareholders that is the subject of a Company Election Notice.
3.3. Observer Rights. The Company shall give EMC written notice of each meeting
of the Board of Directors and each committee thereof at least at the same time and in the same
manner as notice is given to the directors, and the Company shall permit a representative of
EMC to attend as a non-voting observer all meetings of the Board of Directors and all
committees thereof. The Company shall deliver to the representative of EMC all written
materials and other information (including without limitation copies of meeting minutes) given
to directors in connection with such meetings at the same time such materials and information
are given to the directors. EMC understands and acknowledges that the Board of Directors (or
a committee of the Board of Directors, as the case may be) shall have and reserve the right to
exclude the observer from all or any portion of a meeting to the extent (i) necessary to
preserve attorney client privilege or (ii) the Board of Directors (or such committee), in its
sole discretion, deems the presence of such observer to be inconsistent with the Company’s
goal of adhering to best practices of corporate governance or otherwise inadvisable under
then-current laws, rules, regulations, including any guidelines and interpretations thereof
set forth or proposed by the Nasdaq Stock Market or any exchange on which the Common Stock is
then traded. The Company shall use its best efforts to provide such observer with as much
advance notice as is reasonably practicable of such need for exclusion. If any action is
proposed to be taken by written consent in lieu of a meeting of the Board of Directors or any
committee thereof, the Company shall give written notice thereof to EMC on or before the
effective date of such consent describing in reasonable detail the nature and substance of
such proposed action. If and to the extent that the board of directors of a Subsidiary shall
be expanded and include the Series B Director and the Series A Director, pursuant to Section
3.1(c), then the Company shall cause the applicable Subsidiary to provide to EMC the same
rights with respect to such Subsidiary as provided by the Company to EMC hereunder.
Notwithstanding the foregoing, (a) the observer rights granted pursuant to this Section 3.3
shall be subject to EMC and the observer complying with the Company Policies, and (b) EMC
agrees, and any EMC observer will agree, to hold in confidence all confidential information
concerning the Company provided to EMC or learned by EMC in connection with its rights under
this Section 3.3, using the same degree of care as EMC uses to protect its own confidential
information, except to the extent otherwise required by law and any other regulatory process
to which EMC is subject. The Company agrees to grant Advent or any affiliate thereof observer
rights for one individual under the same terms and conditions set forth above for EMC upon
receipt of written notice from Advent requesting observer rights for itself or any affiliate.
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3.4. Other Covenants.
(a) For so long as any Director is serving on the Board of Directors:
| (i) | The Company shall reimburse the Director for his or her respective reasonable out-of-pocket expenses incurred in attending meetings of the Board of Directors or any committee thereof, to the extent provided in, and in accordance with, the Company’s reimbursement policy in effect from time to time with respect to other directors who are not employees of the Company or a Subsidiary. A Director shall be entitled to receive such fees or other compensation as may be paid by the Company from time to time to directors who are not employees of the Company or a Subsidiary. | ||
| (ii) | The Company’s Certificate of Incorporation shall at all times provide for the indemnification of the members of the Board of Directors to the fullest extent provided by the Delaware General Corporation Law and to the maximum extent provided in any indemnification agreement entered into between the Company and any of its directors and officers. In the event that the Company or any of its successors or assigns (i) consolidates with or merges into any other entity and shall not be the continuing or surviving corporation in such consolidation or merger or (ii) transfers all or substantially all of its properties and assets to any entity, then, and in each such case, to the extent necessary, proper provision shall be made so that the successors and assigns of the Company assume the obligations of the Company with respect to indemnification of members of the Board of Directors as contained in the Company’s Certificate of Incorporation. | ||
| (iii) | The Company shall use its best efforts to carry and maintain any insurance against directors’ and officers’ liability to cover each Director to the same extent as directors elected by the holders of Common Stock; provided, however, that the amount of such coverage shall not be less than $15,000,000. |
(b) For so long as the representative of EMC attends as a non-voting observer all
meetings of the Board of Directors and all committees thereof, the Company shall
reimburse the representative of EMC for his or her reasonable out-of-pocket expenses
incurred in attending meetings of the Board of Directors or any committee thereof, to the
extent provided in, and in accordance with, the Company’s reimbursement policy in effect
from time to time with respect to directors who are not employees of the Company or a
Subsidiary.
(c) By executing the signature page to this Agreement, each of the Investors hereby
(i) acknowledges the receipt of a copy of each Company Policy as in effect on the date
hereof, and (ii) agrees to comply with such Company Policies.
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4. Additional Covenants.
4.1. Compliance with Federal Securities Laws. With a view to making available to
the Investors the benefits of Rule 144 and any other rule or regulation of the Commission that
may at any time permit a Holder to sell securities of the Company to the public without
registration, and with a view to making it possible for Investors to have the Registrable
Shares registered for resale pursuant to a registration on Form S-3 (or any successor form),
the Company shall:
(a) use its best efforts to make and keep current public information about the
Company available, as those terms are understood and defined in Rule 144, at all times;
(b) use its best efforts to file with the Commission in a timely manner all reports
and other documents required of the Company under the Securities Act and the Exchange
Act;
(c) use its best efforts to comply with the applicable provisions of the
Xxxxxxxx-Xxxxx Act that are currently in effect and to comply with any other applicable
provisions of the Xxxxxxxx-Xxxxx Act not currently in effect as such provisions become
effective; and
(d) furnish to any Investor upon request (i) a written statement by the Company as
to its compliance with the reporting requirements of Rule 144 and (ii) such other reports
and documents of the Company as such Investor may reasonably request to avail itself of
any similar rule or regulation of the Commission allowing it to sell any Registrable
Shares without registration.
4.2. Other Registration Rights. Subsequent to the date hereof, the Company shall
not enter into any Other Registration Rights with any Other Registration Rights Holder unless
such Other Registration Rights do not conflict in any material respect with the provisions of
this Agreement. Other Registration Rights shall not be deemed to conflict with this Agreement
solely as a result of a grant of incidental registration rights to the Other Registration
Rights Holders with respect to a Registration Statement filed pursuant to Section 2.1;
provided that:
| (i) | Investors are granted the right to exercise incidental registration rights with respect to any registration required by such Other Registration Rights Holders to be made by the Company; | ||
| (ii) | if a managing underwriter advises the Company that marketing factors require a limitation on the number of shares to be underwritten in an offering made at the request of the Other Registration Rights Holders, the shares held by such Other Registration Rights Holders shall be excluded first, before any shares of the Investors are excluded; and | ||
| (iii) | if a managing underwriter advises the Company that marketing factors require a limitation on the number of shares to be underwritten in an |
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| offering requested under Section 2.1, the shares held by such Other Registration Rights Holders shall be excluded first, before any shares of the Investors are excluded. |
4.3. Financial and Business Information. From and after the date hereof, the
Company shall deliver to each Investor:
(a) Annual Statements. As soon as practicable after the end of each fiscal
year of the Company, and in any event within ninety (90) days thereafter:
| (i) | consolidated and consolidating balance sheets of the Company and any subsidiaries at the end of such year; | ||
| (ii) | consolidated and consolidating statements of income, stockholders’ equity and cash flows of the Company and any subsidiaries for such year, setting forth in each case in comparative form the figures for the previous fiscal year, all in reasonable detail and accompanied by an opinion thereon of independent certified public accountants of recognized national standing selected by the Company, which opinion shall state that such financial statements fairly present the financial position of the Company and any subsidiaries on a consolidated basis and have been prepared in accordance with GAAP (except as described in the notes thereto and for changes in application in which such accountants concur) and that the examination of such accountants in connection with such financial statements has been made in accordance with generally accepted auditing standards, and accordingly included such tests of the accounting records and such other auditing procedures as were considered necessary in the circumstances; and | ||
| (iii) | comparisons of each pertinent item in (i) and (ii) above to the operating and capital budget referred to in Section 4.3(b) below. |
(b) Quarterly Statements. As soon as practicable after the close of each of
the first three (3) fiscal quarters of each fiscal year of the Company, a consolidated
balance sheet, statement of income and statement of cash flows of the Company and any
subsidiaries as at the close of such quarter and covering operations for such quarter and
the portion of the Company’s fiscal year ending on the last day of such quarter, all in
reasonable detail and prepared in accordance with GAAP, subject to audit and year-end
adjustments, setting forth in each case in comparative form the figures for the
comparable period of the previous fiscal year, and a summary written analysis of such
comparison.
(c) Audit Reports. As soon as practicable after receipt thereof, a copy of
any financial report and internal control letter submitted to the Company by independent
accountants in connection with any annual, interim or special audit made by them of the
books of the Company.
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(d) Other Reports. As soon as practicable after receipt thereof, one copy
of each financial statement, report, notice of proxy statement, if any, sent by the
Company to stockholders generally, of each written communication received by the Company
from any domestic or foreign securities exchange, the Commission or any foreign
regulatory authority performing functions similar to the Commission.
(e) Corporate Governance. The Investors and the Company agree that the
preparation and discussion of the information set forth in Section 4.3(e)(i), (ii) and
(iii) below are in the best interests of the Company and that the Company will (x)
prepare such information and make it available to any member of the Board of Directors
and (y) discuss the information with its Board of Directors unless otherwise directed by
the Board of Directors. The Company shall deliver such information to an Investor upon
an investors written request only after compliance with Section 5 hereof by such Investor
and the Company.
| (i) | Business Plans and Budgets. At least thirty (30) days prior to the end of each fiscal year, (A) an annual business plan setting forth the anticipated strategic business activities and goals, including an expected operating budget, of the Company and projections of operating results, prepared on a quarterly basis, and (B) an annual capital budget describing the intended capital investment strategy of the Company that has been approved and adopted by the Board. | ||
| (ii) | Quarterly Statements. As soon as practicable after the close of each of the first three (3) fiscal quarters of each fiscal year of the Company, the Company shall also provide comparisons of each pertinent item required by 4.3(b) to the operating and capital budget referred to in Section 4.3(e)(i) above. | ||
| (iii) | Monthly Statements. Within thirty (30) days after the end of each month, a consolidated balance sheet, statement of income and statement of cash flows of the Company and any subsidiaries as at the close of such month and covering operations for such month and the portion of the Company’s fiscal year ending on the last day of such quarter, all in reasonable detail and prepared in accordance with GAAP, subject to audit and year-end adjustments, setting forth in each case in comparative form the figures for the comparable period of the previous fiscal year, and a summary written analysis of such comparison. The Company shall also provide comparisons of each pertinent item to the operating and capital budget referred to in Section 4.3(e)(i) above. |
(f) Company Policies. The business and financial information rights granted
pursuant to this Section 4.3 shall be subject to the Investors’ continuing compliance
with the Company Policies.
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4.4. Amendments to Series B Certificate and Series A Certificate.
(a) If, due to a future change in the applicable rules or regulations of the Nasdaq
Stock Market or other applicable market or exchange, shares of Series A Stock and/or
Series B Stock may be afforded a greater number of votes (the “Increased Maximum Vote
Allowed”) than the Maximum Per Share Preferred Vote (as defined in the applicable Series
A Certificate and Series B Certificate) without requiring approval of the stockholders of
the Company, the Company and the Investors shall take such actions as may be necessary to
amend Section 3(a) of the Series A Certificate and Series B Certificate to increase the
Maximum Per Share Preferred Vote to equal the Increased Maximum Vote Allowed.
(b) If, due to a future change in the applicable rules or regulations of the Nasdaq
Stock Market or other applicable market or exchange, the Series A Stock may be converted
into a greater number of shares of Common Stock (the “Increased Conversion Threshold
Allowed”) than the Conversion Threshold (as defined in the Series A Certificate) without
requiring approval of the stockholders of the Company, the Company and the Investors
shall take such actions as may be necessary to amend Section 4(a)(ii) of the Series A
Certificate to increase the Conversion Threshold to equal the Increased Conversion
Threshold Allowed.
4.5. Available Copy. The Secretary of the Company shall maintain an original
copy of this Agreement, duly executed by each of the parties hereto, at the principal
executive office of the Company and shall make such copy available for inspection by any
Person requesting it.
5. Nonpublic Information. Neither the Company nor any Person acting on its behalf
shall provide any Investor with any material, nonpublic information about the Company unless, in
advance of the delivery of such information, the Investor consents to the receipt of such
information and agrees to maintain the confidentiality of such information in writing, regardless
of whether the delivery of such information is otherwise required pursuant to the terms of this
Agreement or any other Transaction Document (as defined in the Purchase Agreement). The Company
understands and confirms that each of the Investors will rely on the foregoing covenant in
effecting transactions in securities of the Company.
6. General.
6.1. Use of Best Efforts. Where this Agreement requires the “best efforts” of
the Company, it is understood and agreed that the Company shall not be required by its
obligation to undertake “best efforts” to incur any extraordinary and material expense or
undertake or engage in any litigation.
6.2. Notices. All notices, certificates, deliverables required by this
Agreement, requests and other communications to any party hereunder shall be in writing
(including facsimile or similar writing) and shall be given to such party at its address or
facsimile number set forth on the signature page hereof, or such other address or facsimile
number as such party may hereinafter specify for the purpose of this Section 6.2 to the party
giving such notice. Each such notice, request or other communication shall be effective (a)
if
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given by facsimile transmission, when such facsimile is transmitted to the facsimile
number specified on the signature pages of this agreement and the appropriate confirmation is
received or, (b) if given by mail, 72 hours after such communication is deposited in the mails
with first class postage prepaid, addressed as aforesaid or, (c) if given by any other means,
when delivered at the address specified on the signature pages of this Agreement. Copies of
anything sent pursuant to this Agreement to any party shall be sent at the same time to the
address or facsimile number of the persons designated on the signature page hereof to receive
copies, or such other person, address or facsimile number as such party may hereinafter
specify for the purpose of this Section 6.2 to the party giving such notice.
6.3. Amendments and Waivers. Other than with regard to the provisions of Section
2, this Agreement may be amended or terminated and the observance of any term of this
Agreement may be waived with respect to all parties to this Agreement (either generally or in
a particular instance and either retroactively or prospectively), with the written consent of
the Company and Investors holding at least a majority of the Series A Stock and Series B
Stock, each voting as a separate class, then held by Investors. The provisions of Section 2
may be amended or terminated and the observance of any term of Section 2 may be waived with
respect to all parties to this Agreement (either generally or in a particular instance and
either retroactively or prospectively), with the written consent of the Company and Investors
holding at least a eighty-five percent (85%) of the Series B Stock and Series A Stock, each
voting as a separate class, then held by Investors. Notwithstanding the foregoing, this
Agreement may not be amended or terminated and the observance of any term hereunder may not be
waived with respect to any Investor without the written consent of such Investor unless such
amendment, termination or waiver applies to all Investors in the same fashion. The Company
shall give prompt written notice of any amendment or termination of this Agreement or waiver
hereunder to any party hereto that did not consent in writing to such amendment, termination
or waiver. Any amendment, termination or waiver effected in accordance with this Section 6.3
shall be binding on all parties hereto, even if they do not execute such consent. No waivers
of or exceptions to any term, condition or provision of this Agreement, in any one or more
instances, shall be deemed to be, or construed as, a further or continuing waiver of any such
term, condition or provision.
6.4. Successors and Assigns. The provisions of this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective successors and
assigns; provided that the Company may not assign, delegate or otherwise transfer any of its
rights or obligations under this Agreement without the written consent of Investors holding at
least a majority of the Series B Stock and Series A Stock, each voting as a separate class,
then held by Investors.
6.5. Transfer of Rights. Provided that the Company is given written notice by
the Investor at the time of each transfer stating the name and address of the transferee and
identifying the securities with respect to which the rights under this Agreement are being
assigned, the rights under this Agreement may be transferred in whole or in part in connection
with the transfer of Registrable Shares, Series A Stock, Series B Stock or Warrants.
Notwithstanding the foregoing, if such transfer is subject to covenants, agreements or other
undertakings restricting transferability of the rights under this Agreement shall not be
transferred in connection with such transfer unless such transfer
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unless such transfer complies with all such covenants, agreements and other undertakings.
In all cases, such rights shall not be transferred unless the transferee thereof executes a
Counterpart. If any Investor transfers to another Person and such Person becomes a party to
this Agreement, such Person shall be deemed an Investor for all purposes hereof.
6.6. Governing Law; Venue; Waiver of Jury Trial. All questions concerning the
construction, validity, enforcement and interpretation of this Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of Delaware.
Each party hereby irrevocably submits to the exclusive jurisdiction of the state and federal
courts sitting in the State of Delaware, for the adjudication of any dispute hereunder or in
connection with any transaction contemplated hereby or discussed herein, and hereby
irrevocably waives, and agrees not to assert in any suit, action or proceeding, any claim that
it is not personally subject to the jurisdiction of any such court, or that such suit, action
or proceeding is improper. Each party hereby irrevocably waives personal service of process
and consents to process being served in any such suit, action or proceeding by mailing a copy
thereof via registered or certified mail or overnight delivery (with evidence of delivery) to
such party at the address in effect for notices to it under this Agreement and agrees that
such service shall constitute good and sufficient service of process and notice thereof.
Nothing contained herein shall be deemed to limit in any way any right to serve process in any
manner permitted by law. Each of the parties hereby waives all rights to a trial by jury.
6.7. Entire Agreement. This Agreement constitutes the entire agreement and
understanding among the parties hereto with respect to the subject matter of this Agreement
and supersedes any and all prior agreements and understandings, written or oral, relating to
such subject matter, including without limitation the Original XXX.
6.8. Severability. The invalidity or unenforceability of any provision of this
Agreement shall not affect the validity or enforceability of any other provision of this
Agreement.
6.9. Headings. The headings in this Agreement are included for convenience of
reference only and shall be ignored in the construction or interpretation hereof.
6.10. Counterparts; Facsimile Signatures; Effectiveness. This Agreement may be
executed in any number of counterparts (including facsimile signature) each of which shall be
an original with the same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto shall have received a
counterpart hereof signed by the other party hereto.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have caused this Investor Rights Agreement to be duly
executed by their respective authorized signatories as of the date first above written.
| MTI TECHNOLOGY CORPORATION |
||||
| By: | /s/ Xxxxxx X. Xxxxxxxx, Xx. | |||
| Name: | Xxxxxx X. Xxxxxxxx, Xx. | |||
| Title: | President and Chief Executive Officer | |||
| Address for notices: | ||
| MTI Technology Corporation | ||
| 00000 Xxxxxxxxxx Xxxx | ||
| Xxxxxx, Xxxxxxxxxx 00000 | ||
| Attention: Chief Financial Officer | ||
| Facsimile: (000) 000-0000 | ||
| with a copy to: | ||
| Xxxxxxxx & Xxxxxxxx LLP | ||
| 00000 XxxXxxxxx Xxxxxxxxx, 00xx Xxxxx | ||
| Xxxxxx, Xxxxxxxxxx 00000 | ||
| Attention: Xxxxxx Xxxx, Esq. | ||
| Facsimile: (000) 000-0000 |
[Investor signature pages follow]
S-1
| INVESTORS: | ||
DIGITAL
MEDIA & COMMUNICATIONS III LIMITED PARTNERSHIP |
||
DIGITAL MEDIA & COMMUNICATIONS III-A LIMITED PARTNERSHIP |
||
DIGITAL MEDIA & COMMUNICATIONS III-B LIMITED PARTNERSHIP |
||
DIGITAL MEDIA & COMMUNICATIONS III-C LIMITED PARTNERSHIP |
||
DIGITAL MEDIA & COMMUNICATIONS III-D C.V. |
||
DIGITAL MEDIA & COMMUNICATIONS III-E C.V. |
| By: | Advent International Limited
Partnership, General Partner |
|||
| By: | Advent International Corporation, General Partner |
|||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Partner | |||
| Address for notices: | ||||
| c/o Advent International Corporation | ||||
| 00 Xxxxx Xxxxxx | ||||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attention: | Xxxxxxx Xxxx | |||
| Partner | ||||
| Facsimile: | 617.951.0566 | |||
| With a copy to: | ||||
| Xxxxxx Xxxxxxxx LLP | ||||
| 3000 Two Xxxxx Square | ||||
| 00xx xxx Xxxx Xxxxxxx | ||||
| Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 | ||||
| Attention: | Xxxxx X. Xxxxxxx, Esquire | |||
| Facsimile: | 215.981.4750 | |||
Investor Signature Page to Investor Rights Agreement
| ADVENT PARTNERS DMC III LIMITED PARTNERSHIP | ||
| ADVENT PARTNERS II LIMITED PARTNERSHIP |
| By: | Advent
International Corporation, General Partner |
|||
| By: | /s/ Xxxxxxx Xxxx | |||
| Name: | Xxxxxxx Xxxx | |||
| Title: | Partner | |||
| Address for notices: | ||||
| c/o Advent International Corporation | ||||
| 00 Xxxxx Xxxxxx | ||||
| Xxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attention: | Xxxxxxx Xxxx | |||
| Partner | ||||
| Facsimile: | 617.951.0566 | |||
| With a copy
to: |
||||
| Xxxxxx Xxxxxxxx LLP | ||||
| 3000 Two Xxxxx Square | ||||
| 00xx xxx Xxxx Xxxxxxx | ||||
| Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 | ||||
| Attention: | Xxxxx X. Xxxxxxx, Esquire | |||
| Facsimile: | 215.981.4750 | |||
Investor Signature Page to Investor Rights Agreement
| EMC CORP. |
||||
| By: | /s/ Xxxxxxx X. Xxxx | |||
| Name: | Xxxxxxx X. Xxxx | |||
| Title: | Vice President – Corporate Development | |||
| Address for notices: | ||||
| 000 Xxxxx Xxxxxx | ||||
| Xxxxxxxxx, Xxxxxxxxxxxxx 00000 | ||||
| Attention: | C. Xxxxxxx Xxxxx, Esquire | |||
| Senior Corporate Counsel | ||||
| Facsimile: | 508.497.6915 | |||
| With a copy to: | ||||
| Xxxxxx Xxxxxxxx LLP | ||||
| 3000 Two Xxxxx Square | ||||
| 00xx xxx Xxxx Xxxxxxx | ||||
| Xxxxxxxxxxxx, Xxxxxxxxxxxx 00000 | ||||
| Attention: | Xxxxx X. Xxxxxxx, Esquire | |||
| Facsimile: | 215.981.4750 | |||
Investor Signature Page to Investor Rights Agreement
