Contract
EXECUTION
COPY
This
Investor Rights Agreement (this “Agreement”) is made
as of December 19, 2008 by and among Vector Intersect Security Acquisition
Corp., a Delaware corporation (the “Company”), and each
of the individuals and entities signatory hereto (each a “Stockholder” and
collectively, the “Stockholders”). Capitalized
terms used herein but not otherwise defined shall have the meanings assigned to
such terms in Section
7.
RECITALS
A. Each
of the Stockholders will acquire shares of the Company’s common stock, par value
$0.001 per share (the “Common Stock”),
pursuant to the Stock Purchase Agreement, as amended, by and among the Company,
Cyalume Technologies, Inc. Cyalume Acquisition Corp. and GMS Acquisition
Partners Holdings, LLC, dated February 14, 2008, as amended on October 22, 2008
and as otherwise modified from time to time (the “Purchase
Agreement”).
B. In
consideration of the mutual promises and covenants contained herein, the receipt
and sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
AGREEMENT
1. Board of
Directors. Immediately after
the Closing Date, the Company’s board of directors (the “Board”) will be
composed of twelve (12) members, two (2) of which have been selected by the Cova
Majority Holders, one (1) of which have been selected by the Xxxxx Majority
Holders and nine (9) of which have been selected by the Board of Directors of
the Company immediately prior to the transactions contemplated by the Purchase
Agreement.
1.1 The
two (2) persons selected by the Cova Majority Holders are as
follows:
(a) Xxxxx
Xxxxxxx; and
(b) Xxxxxx
Xxxxxx.
1.2 The
one (1) person selected by the Xxxxx Majority Holders is as
follows:
(a) Xxxxx
Xxxxx.
1.3 The
nine (9) persons selected by the Board of Directors of the Company immediately
prior to the consummation of the transactions contemplated by the Purchase
Agreement are as follows:
(a) Xxxxxxx
Xxxxxxxxx;
(b) Xxxxx
Xxxxx;
(c) Xxxxxx
Xxxxxxx;
(d) Xxx
Xxxxx;
(e) Xxxxx
Xxxxx;
(f) Xxxxxx
X. Xxxxxx;
(g) Xxxx
Xxxxxxxxxx;
(h) Xxxx
Xxxxxx; and
(i) General
(Ret.) Xxxx Xxxxx.
2. Nominees to the Board of
Directors.
2.1 Selection
of Nominees.
(a) For
as long as the holders of Cova Registrable Securities beneficially own at least
5% of the outstanding Common Stock of the Company in the aggregate, holders of
more than 50% of Cova Registrable Securities (the “Cova Majority
Holders”) shall have the right to name two (2) persons (the “Cova Board
Representatives”) for the Company to present to the Company’s
stockholders as nominees for election to the Board each time the Company
solicits a vote of its stockholders relating to the election of
directors.
(b) For
as long as the holders of Xxxxx Registrable Securities beneficially own at least
5% of the outstanding Common Stock of the Company in the aggregate, holders of
more than 50% of Xxxxx Registrable Securities (the “Xxxxx Majority
Holders”) shall have the right to name one (1) person (the “Xxxxx Board
Representative”) for the Company to present to the Company’s stockholders
as a nominee for election to the Board each time the Company solicits a vote of
its stockholders relating to the election of directors.
2.2 Vacancies.
In the event of a vacancy on the Company’s Board resulting from the death,
disqualification, resignation, retirement or termination of term of office of a
Cova Board Representative or a Xxxxx Board Representative, the Company shall
fill such vacancy with a representative designated by the Cova Majority Holders
or the Xxxxx Majority Holders, as applicable, as provided
hereunder. If the Cova Majority Holders or the Xxxxx Majority
Holders, as applicable, fail or decline to fill the vacancy, then the
directorship shall remain open until such time as the Cova Majority Holders or
the Xxxxx Majority Holders, as applicable, elect to fill it with a
representative designated hereunder, but only until such time as the Cova
Majority Holders or the Xxxxx Majority Holders, as applicable, would have the
right to name a nominee pursuant to Section 2.1.
2.3 Fees and
Compensation. The Cova Board
Representatives and Xxxxx Board Representative shall be entitled to all fees and
other compensation paid to members of the Company's Board who are not employees
of the Company or its Subsidiaries, and, in all cases, shall be entitled to a
reimbursement of all reasonable expenses incurred by such Person in connection
with such Person’s duties to the Board (including, without limitation, attending
meetings of the Board).
2.4 Sub
Boards. At the request of
the Cova Majority Holders or the Xxxxx Majority Holders, as applicable, the
Company shall cause the Cova Board Representative(s) or the Xxxxx Board
Representative, as applicable, to have proportional representation (relative to
their percentage on the Board) on the board of directors (or equivalent
governing body) of each Subsidiary of the Company.
2.5 Executive
Committee. For as long as the Cova Majority Holders or the
Xxxxx Majority Holders have the right to nominate the Cova Board Representatives
or the Xxxxx Board Representative, as applicable, each of the Cova Majority
Holders and the Xxxxx Majority Holders shall have the right to designate one (1)
member to the executive committee of the Company’s Board (the “Executive
Committee”). The Executive Committee shall be composed of five
(5) members (inclusive of the members designated by the Cova Majority Holders
and the Xxxxx Majority Holders). The Executive Committee’s
responsibilities and authorities shall be determined by the Board.
3. Registration.
3.1 Demand
and Piggy-Back Registration.
(a) Demand
Registration. (i) For as long as Cova and Xxxxx (the “Required Holders”)
hold shares of Common Stock and any securities issued in exchange for or in
replacement of such shares of the Common Stock, and any securities issued by way
of any stock split, reverse stock split, recapitalization, or other similar
transaction affecting such Common Stock (collectively, the “Registrable
Securities”), each of the Required Holders may request a registration by
the Company of all or part of such Required Holder’s Registrable Securities (a
“Demand
Registration”). Within ten (10) days after receipt of such
request, the Company will serve notice of such registration request to all
Stockholders and will, subject to the provisions of Section 3.1(a)(ii) hereof,
use its commercially reasonable efforts to effect such registration and shall
include in such registration and offering all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within ten (10) Business Days after the receipt by the applicable Stockholders
of the Company’s notice. The registration statement shall be on any
form the Company is eligible to use to register for resale the Registrable
Securities. The Company shall thereafter use its commercially
reasonable efforts to cause such registration statement to be filed pursuant to
this Section to become effective as soon as reasonably practicable thereafter
and shall use its commercially reasonable efforts to keep such registration
effective until, subject to the terms and provisions of this Agreement, the
earlier of the date when (i) all the Registrable Securities covered by the
registration statement have been sold pursuant thereto or otherwise or (ii) the
Registrable Securities may be publicly sold without volume restrictions under
Rule 144 (or any similar provisions then in force) of the Securities Act, as
determined by the counsel to the Company (collectively, the “Effectiveness
Period”). All requests made pursuant to this Section 3.1(a)(i)
will specify the number of shares of Registrable Securities to be registered and
will also specify the intended method of disposition thereof.
(i) Each
of the Required Holders is entitled to request one Demand Registration pursuant
to this Section 2.1(a) prior to the 24 month anniversary of the Closing Date and
at least three (3) months must elapse after the effective date of the one Demand
Registration before any of the Required Holders shall be entitled to initiate
another Demand Registration.
(ii) If
a Demand Registration is an underwritten offering, and the managing underwriters
advise in writing the Company and the holders of the Registrable Securities
being registered that in their opinion the number of Registrable Securities
requested to be included exceeds the number of securities which can be sold in
such offering, the Company will include in such registration the number of
Registrable Securities which in the opinion of such underwriters can be sold,
and such securities shall be allocated pro rata among the holders of Registrable
Securities being registered or such other proportion as shall be mutually agreed
by all participating holders of Registrable Securities.
(iii) If
Company Securities (as defined below) are proposed to be included by the Company
or its security holders in a Demand Registration which is an underwritten
offering and the managing underwriters advise in writing the Company and the
holders of the Registrable Securities being registered that, in addition to all
of the Registrable Securities being registered on behalf of the Stockholders,
some but not all of said Company Securities can be included in such underwritten
offering, those Company Securities which in the opinion of such underwriters can
be sold shall be allocated (i) first, to the holders of Registrable Securities
and (ii) second, to the Company and the holders of such other securities,
allocated among them in such proportions as such holders and the Company may
agree.
(iv) For
purposes hereof “Company Securities” shall mean shares of Common Stock or
securities of the Company convertible or exercisable into Common Stock (other
than Registrable Securities).
(v) In
the event that, after the Required Holders make a demand for registration, such
Required Holders determine that they no longer wish to pursue such Demand
Registration, the Required Holders may request that the Company cease pursuing
such registration. In the event that the Company chooses to cease
pursuing such registration, such cessation of a Demand Registration shall be
deemed to not count as a “Demand Registration” pursuant to Section 4.2(a)(ii)
if, and only if, the Required Holders pay for all reasonable costs and expenses
incurred by the Company in connection with the withdrawn
registration.
(b) Piggy-Back
Registration. (i) If at any time the Company proposes to
register any of its securities under the Act for its own account or for the
account of any other Person (other than the Stockholders), other than pursuant
to a registration statement on Form S-4 or S-8 or any successor forms thereto,
the Company will give written notice to all Stockholders of its intention to
effect such a registration not later than ten (10) Business Days prior to the
anticipated filing date (a “Piggyback
Registration”). Subject to Section 3.2(b)(iii) hereof, the
Company will include in such Piggyback Registration all Registrable Securities
with respect to which the Company has received written requests for inclusion
therein within seven (7) Business Days after the receipt by the applicable
Stockholder of the Company’s notice. The Stockholders shall be permitted to
withdraw all or any part of the Registrable Securities from a Piggyback
Registration at any time prior to the effective date of such Piggyback
Registration. If a Piggyback Registration is an underwritten
offering, all Persons whose securities are included in the Piggyback
Registration shall be obligated to sell their securities on the terms and
conditions of the underwriting.
(i) A
Piggyback Registration shall not count as a Demand Registration.
(ii) If
a Piggyback Registration is an underwritten registration, and the managing
underwriters advise the Company in writing that in their opinion the total
number or dollar amount of securities requested to be included in such
registration exceeds the number or dollar amount of securities which can be sold
in such offering, and such offering was demanded by persons other than the
Stockholders, the Company will include in such registration in the following
priority: (1) first, Company Securities sold for the account of any third-party
holders if the registration was initiated by such holders pursuant to
contractual demand registration rights; (2) second, pro-rata among any other
Stockholders and the holders of any other securities according to the number of
shares requested to be registered by such other holders and the Stockholders;
(3) shares of Common Stock sold for the account of the Company; and (4) pro-rata
among any other holders of Company Securities.
(iii) If
a Piggyback Registration is an underwritten registration, and the managing
underwriters advise the Company in writing that in their opinion the total
number or dollar amount of securities requested to be included in such
registration exceeds the number or dollar amount of securities which can be sold
in such offering, and the Company initiated the registration for the purpose of
selling Company Securities for its own account, the Company will include in such
registration in the following priority: (1) first, shares of Common Stock sold
for the account of the Company; and (2) second, pro-rata among any other holders
of Company Securities exercising contractual registration rights and the
Stockholders according to the number of shares requested to be registered by
such other holders and the Stockholders.
3.2 Procedures
on Registration. If and whenever the Company is required by
the provisions hereof to effect the registration of any Registrable Securities
under the Securities Act, the Company will:
(a) respond
as promptly as commercially reasonable to any comments received from the SEC,
and use its commercially reasonable efforts to cause such registration statement
to become effective, and promptly provide to the Stockholders’ copies of all
filings and SEC letters of comment relating thereto provided that such letters
do not contain material non-public information, in which case such letters may
be redacted by the Company;
(b) furnish
to each Stockholder such number of copies of the registration statement, the
prospectus included therein, any Free Writing Prospectus and such other document
as such Stockholder reasonably may request to facilitate the public sale or
disposition of the Registrable Securities covered by such registration
statement;
(c) use
its commercially reasonable efforts to register or qualify each Stockholders’
Registrable Securities covered by such registration statement under the
securities or “blue sky” laws of such jurisdictions within the United States as
such Stockholder may reasonably request and do any and all other acts and things
which may be reasonably necessary or advisable to enable such Stockholder to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such Stockholder; provided, however, that the
Company shall not for any such purpose be required to qualify generally to
transact business as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in any such
jurisdiction;
(d) list the Registrable Securities covered
by such registration statement with any securities exchange on which the Common
Stock of the Company is then listed;
(e) promptly
notify the Stockholders at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of any circumstance or event
of which the Company has knowledge as a result of which the prospectus contained
in such registration statement, as then in effect, (i) includes an untrue
statement of a material fact or omits to state a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances then existing or (ii) is otherwise not legally
available to support sales of Registrable Securities, and, at the request of the
holders of a majority of the Registrable Securities covered by such registration
statement, the Company shall promptly prepare and furnish to each such
Stockholder a reasonable number of copies of a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
Registrable Securities; provided that such
prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading in light
of the circumstances under which they were made;
(f) provide
a transfer agent and registrar for all such Registrable Securities not later
than the effective date of such registration statement;
(g) enter into and perform such customary
agreements (including underwriting agreements in customary form) and take all
such other actions as the holders of a majority of the Registrable Securities
being sold or the underwriters, if any, reasonably request in order to expedite
or facilitate the disposition of Registrable Securities (including, without
limitation, participation in "road shows," investor presentations and marketing
events, and effecting a share or unit split or a combination of shares or units,
provided that such road shows, investor presentations and marketing events occur
at places and times reasonably acceptable to the Company);
(h) make available for inspection by any
underwriter participating in any disposition pursuant to such registration
statement, and any attorney, accountant, or other agent retained by any such
underwriter, all reasonably related 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 underwriter, attorney, accountant,
or agent in connection with such registration statement and assist and, at the
request of any participating underwriter, use commercially reasonable efforts to
cause such officers or directors to participate in presentations to prospective
purchasers;
(i) promptly
notify the Stockholders of the effectiveness of each registration statement
filed;
(j) otherwise
use commercially reasonable efforts to comply with all applicable rules and
regulations of the Securities and Exchange Commission, and make available to its
security holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the first day of
the Company’s first full calendar quarter after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in
the event of the issuance of any stop order suspending the effectiveness of a
registration statement, or of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any equity securities
included in such registration statement for sale in any jurisdiction, the
Company shall use commercially reasonable efforts promptly to obtain the
withdrawal of such order;
(l) use
commercially reasonable efforts to cause such Registrable Securities covered by
such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
Stockholders to consummate the disposition of such Registrable
Securities;
(m) take
all reasonable actions to ensure that any Free-Writing Prospectus utilized in
connection with any Demand Registration or Piggyback Registration hereunder
complies in all material respects with the Securities Act, is filed in
accordance with the Securities Act to the extent required thereby, is retained
in accordance with the Securities Act to the extent required thereby and, when
taken together with the related prospectus, will not contain any untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading;
(n) in
connection with an underwritten public offering, obtain one or more cold comfort
letters (and provide copies to the holders of Registrable Securities), dated the
closing date under the underwriting agreement and addressed to the underwriters,
from the Company’s independent public accountants in customary form and covering
such matters of the type customarily covered by cold comfort letters as the
holders of a majority of the Registrable Securities being sold in such
registered offering reasonably request; and
(o) in
connection with an underwritten public offering, provide to the holders of
Registrable Securities a copy of a legal opinion of the Company’s outside
counsel, dated the closing date under the underwriting agreement and addressed
to the underwriters, with respect to the registration statement, each amendment
and supplement thereto, the prospectus included therein (including the
preliminary prospectus) and such other documents relating thereto in customary
form and covering such matters of the type customarily covered by legal opinions
of such nature.
3.3 Lock-Up Each
Stockholder hereby agrees that during the periods specified in the this Section 3.3 (each, a
“Lock Up
Period”), such Stockholder will not offer, sell, contract to sell, pledge
or otherwise dispose of (“Transfer”) the
Registrable Securities held by such Stockholder in accordance with the
following, without, in each case, the prior written consent of the
Company:
(a) 20%
of the Common Stock issued to each Stockholder pursuant to the Purchase
Agreement, will not be Transferred by such Stockholder for a period of 120 days
following the Closing Date.
(b) an
additional 20% of the Common Stock issued to each Stockholder pursuant to the
Purchase Agreement, will not be Transferred by such Stockholder for a period of
150 days following the Closing Date.
(c) the
remaining 60% of the Common Stock issued to each Stockholder pursuant to the
Purchase Agreement, will not be Transferred by such Stockholder for a period of
180 days following the Closing Date.
For the
avoidance of doubt, this Section 3.3 shall
apply only on the Common Stock issued to the Stockholders pursuant to the
Purchase Agreement, but shall not apply on any other Common Stock held by any of
the Stockholders.
3.4 Registration
Expenses; Registration Indemnification.
(a) All
Registration Expenses shall be borne by the Company.
(b) The
Company agrees to indemnify, to the extent permitted by law, each holder of
Registrable Securities, its partners, members, officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses arising out of or
based upon any untrue or alleged untrue statement of material fact contained in
any registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and shall reimburse such holder, partners, members,
director, officer or controlling person for any legal or other expenses
reasonably incurred by such holder, partner, member, officer, director or
controlling person in connection with the investigation or defense of such loss,
claim, damage, liability or expense, except insofar as the same are caused by or
contained in any information furnished in writing to the Company by a holder of
Registrable Securities expressly for use therein or by the failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto by a holder of Registrable Securities (unless if such
failure is caused by the Company’s failure to deliver copies of such
registration statement or prospectus or any amendments or supplements thereto to
such holder of Registrable Securities following such holder’s
request).
(c) In
connection with any registration statement in which a holder of Registrable
Securities is participating, each such holder shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact relating to such holder and provided by such holder to the Company or the
Company’s agent contained in the registration statement, prospectus or
preliminary prospectus or any amendment thereof or supplement thereto or any
omission or alleged omission of a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only to the extent
that such untrue statement or omission is contained in, or based upon, any
information furnished in writing by such holder; provided, that the
obligation to indemnify will be individual, not joint and several, to each
holder and will be limited to the net amount of proceeds received by such holder
from the sale of Registrable Securities pursuant to such registration
statement.
(d) Any
Person entitled to indemnification under this Section 3.4 shall (i) give prompt
written notice to the indemnifying party of any claim with respect to which it
seeks indemnification (provided, that
failure to give such notice shall not affect the right of such Person to
indemnification hereunder unless such failure is prejudicial to the indemnifying
party's ability to defend such claim) and (ii) unless any indemnified party
reasonably believes, based on the written advice of counsel, that a conflict of
interest between such indemnified and indemnifying parties may exist with
respect to such claim, permit such indemnifying party to assume the defense of
such claim with counsel reasonably satisfactory to the indemnified
party. If such defense is assumed, the indemnifying party will not be
subject to any liability for any settlement made by the indemnified party
without its prior written consent (but such consent shall not be unreasonably
withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim.
(e) The
indemnification provided for under this Section 3.4 will remain in full force
and effect regardless of any investigation made by or on behalf of the
indemnified party or any officer, director or controlling Person of such
indemnified party and will survive the transfer of securities.
(f) If
the indemnification provided for in this Section 3.4 is held by a court of
competent jurisdiction to be unavailable to an indemnified party or is otherwise
unenforceable with respect to any loss, claim, damage, liability or action
referred to herein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amounts paid or payable by
such indemnified party as a result of such loss, claim, damage, liability or
action 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
hand in connection with the statements or omissions which resulted in such loss,
claim, damage, liability or action as well as any other relevant equitable
considerations; provided, that the maximum amount of
liability in respect of such contribution shall be limited, in the case of each
holder of Registrable Securities, to an amount equal to the net proceeds
actually received by such holder from the sale of Registrable Securities
effected pursuant to such registration. The relative fault of the
indemnifying party and of the indemnified party will be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party and the parties’
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The parties hereto agree that it
would not be just or equitable if the contribution pursuant to this Section
3.4(f) were to be determined by pro rata allocation or by any
other method of allocation that does not take into account such equitable
considerations. The amount paid or payable by an indemnified party as
a result of the losses, claims, damages, liabilities or expenses referred to
herein will be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending against
any action or claim which is the subject hereof. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any Person who is not
guilty of such fraudulent misrepresentation.
(g) No
indemnifying party shall, except with the consent of the indemnified party,
consent to the entry of any judgment or enter into any settlement that does not
include as an unconditional term thereof given by the claimant or plaintiff to
such indemnified party of a release from all liability in respect to such claim
or litigation.
(h) Notwithstanding
the foregoing, to the extent that the provisions on indemnification and
contribution contained in the underwriting agreement entered into in connection
with an underwritten public offering conflict with the foregoing provisions of
this Section 3.4, the provisions in the underwriting agreement will
control.
4. Rule 144
Reporting. With a view to making available the benefits of
certain rules and regulations of the SEC that may permit the sale of Registrable
Securities to the public without registration, the Company agrees at all times
to use its commercially reasonable efforts to: (a) make and keep
public information regarding the Company available as those terms are understood
and defined in Rule 144 under the Securities Act; (b) file with the SEC in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and (c) so long as a holder owns any
Registrable Securities, furnish to the holder forthwith upon written request a
written statement by the Company as to its compliance with the reporting
requirements of Rule 144 and Rule 144A, and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed as a holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing a holder to sell any such Registrable Securities without registration;
provided, that
if such reports or documents have been filed with the SEC pursuant to the
Exchange Act, the Company's obligations under this clause (c) shall be deemed
satisfied with respect to such reports or documents that are publicly
available.
5. Financial
Statements and Other Information. For as long as any holder of
Registrable Securities beneficially own at least 5% of the shares of the
outstanding Common Stock of the Company, the Company shall deliver to such
holder:
(a) within
45 days after the end of each of the first three quarterly accounting period in
each fiscal year, unaudited consolidated statements of income and cash flows of
the Company and its Subsidiaries for such quarterly period and for the period
from the beginning of the fiscal year to the end of such quarter, and unaudited
consolidated balance sheet of the Company and its Subsidiaries as of the end of
such quarterly period, setting forth in each case comparisons to the preceding
fiscal year, and all such items shall be prepared in accordance with GAAP; provided that, for as
long as the Company is filing quarterly reports on Form 10-Q (or any successor
form) pursuant to the Exchange Act, the Company's obligations under this clause
(a) shall be deemed satisfied by timely filing of such report; and
(b) within
90 days after the end of each fiscal year, audited consolidated statements of
income, cash flows and shareholders' equity of the Company and its Subsidiaries
for such fiscal year, and audited consolidated balance sheets of the Company and
its Subsidiaries as of the end of such fiscal year, setting forth in each case
comparisons to the preceding fiscal year, all prepared in accordance with GAAP;
provided that,
for as long as the Company is filing annual reports on Form 10-K (or any
successor form) pursuant to the Exchange Act, the Company's obligations under
this clause (b) shall be deemed satisfied by timely filing of such
report;
(c) promptly
upon receipt thereof, any additional reports, management letters or other
detailed information concerning significant aspects of the Company's and/or any
of its Subsidiaries' operations or financial affairs given to the Company's
Audit Committee by its independent accountants (and not otherwise contained in
other materials provided hereunder), unless if at the Company’s reasonable
determination such information constitutes material non-public information;
and
(d) as
soon as practicable following the request of such holder, such other information
and financial data concerning the Company and its Subsidiaries as such holder
may reasonably request, unless if at the Company’s reasonable determination such
information constitutes material non-public information.
6. Inspection
Rights. The Company shall, and shall cause its Subsidiaries
to, permit any holder of Registrable Securities who beneficially owns at least
5% of the shares of the outstanding Common Stock of the Company (or its
designees) to (i) visit and inspect any of the properties of the Company and its
Subsidiaries with a reasonable prior notice and on regular business hours, (ii)
examine the corporate and financial records of the Company and its Subsidiaries
and make copies thereof or extracts therefrom,
unless if at the Company’s reasonable determination such corporate and financial records contain material
non-public information and (iii) discuss the
affairs, finances and accounts of any such corporations with the directors,
officers, key employees and independent accountants of the Company and its
Subsidiaries, provided that the Stockholder understands that such persons will
not be obligated to provide material non-public information to a holder of
Registrable Securities. The presentation of an executed copy of this
Agreement by any such Person to the Company's independent accountants shall
constitute the Company's permission to its independent accountants to
participate in discussions with such Person.
7. Definitions.
“Affiliate” means,
with respect to any Person, any Person directly or indirectly controlling,
controlled by, or under common control with such other Person. With
respect to any natural person, the term Affiliate shall also include any member
of said person’s immediate family, any family limited partnership, limited
liability company or other entity in which said person owns any beneficial
interest and any trust, voting or otherwise, of which said person is a trustee
or of which said person or any of said person’s immediate family is a
beneficiary.
“Business Day” means
any day other than a Saturday, Sunday or a legal holiday on which commercial
banking institutions in New York are not open for business.
“Closing Date” shall
have the meaning set forth in the Purchase Agreement.
“Cova” means Cova
Small Cap Holdings, LLC and its Affiliates.
“Cova Registrable
Securities” means the Registrable Securities held by Cova.
“Exchange Act” means
the Securities Exchange Act of 1934, as amended.
"Free Writing
Prospectus" means a free-writing prospectus, as defined in Rule 405 of
the Securities Act.
“GAAP” means United
States generally accepted accounting principles, consistently applied and
interpreted.
“Kilne” means Xxxxx
Xxxxxx Pacific, L.P., Xxxxx Xxxxxx Pacific Friends Fund, LLC and their
Affiliates.
“Xxxxx Registrable
Securities” means the Registrable Securities held by Xxxxx.
“Person” means an
individual, a corporation, a partnership, a limited liability company, an
association, a trust or other entity or organization, including a government,
domestic or foreign, or political subdivision thereof, or an agency or
instrumentality thereof.
“Registration
Expenses” means all expenses incident to the Company’s performance of or
compliance with this Agreement, including without limitation all registration,
qualification and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, fees and
expenses of custodians, and fees and disbursements of counsel for the Company
and all independent certified public accountants, underwriters (excluding
discounts and commissions) and other Persons retained by the
Company.
“SEC” means the United
States Securities and Exchange Commission.
“Securities Act” means
the Securities Act of 1933, as amended.
“Subsidiary” or “Subsidiaries” with
respect to any specified Person, any other Person (i) whose board of directors
or a similar governing body, or a majority thereof, may presently be directly or
indirectly elected or appointed by such specified Person, (ii) whose management
decisions and corporate actions are directly and indirectly subject to the
present control of such specified Person or (iii) whose voting securities are
more than fifty percent (50%) owned, directly or indirectly by such specified
Person.
8. Covenants. The Company and
each Stockholder agrees to take all actions required to ensure that the rights
given hereunder are effective. Neither the Company nor any
Stockholder will, by any voluntary action, avoid or seek to avoid the observance
or performance of any of the terms to be performed hereunder by the Company or
any such Stockholder, as applicable, but will at all times in good faith assist
in the carrying out of all of the provisions of this Agreement and in the taking
of all such actions as may be necessary or appropriate in order to protect the
rights of each Stockholder hereunder against impairment. For so long as Cova and Xxxxx are entitled to select
nominees pursuant to Section 2.1, the Company, acting through
its board of directors, shall include in any proxy
statement relating to the election of directors the recommendation of its board of
directors that the stockholders of the Company vote in favor of the election of
the Cova Board Representatives and the Xxxxx Board Representative to the Board
and shall not withdraw or modify its recommendation. The Company
shall use commercially reasonable efforts to obtain the such approval of its
stockholders.
9. Amendments
and Waivers. Any provision of
this Agreement may be amended or the observance thereof may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of (a) the Company, (b) the Cova Majority Holders
and (c) the Xxxxx Majority Holders.
10. Severability. In the event that
any provision of the Agreement shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement, but
this Agreement shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein.
11. Governing
Law. This Agreement
and the legal relations between the parties arising hereunder shall be governed
by and interpreted in accordance with the laws of the State of New York without
reference to its conflicts of laws provisions.
12. Counterparts. This Agreement
may be executed by facsimile, photocopied or electronic signature in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
13. Successors
and Assigns. Except as
otherwise expressly provided in this Agreement, the provisions hereof shall
inure to the benefit of, and be binding upon, the successors and assigns of the
parties hereto.
14. Entire
Agreement. This Agreement
constitutes the full and entire understanding and agreement among the parties,
and supersedes any prior agreement or understanding among the parties, with
regard to the subjects hereof and thereof, and no party shall be liable or bound
to any other party in any manner by any warranties, representations or covenants
except as specifically set forth herein or therein.
15. Jurisdiction;
Venue. With respect to
any disputes arising out of or related to this Agreement, the parties consent
and submit to the exclusive jurisdiction of, and venue in, the state courts in
New York County in the State of New York (or in the event of exclusive federal
jurisdiction, the courts of the Southern District of New York).
16. Remedies. Any
Person having rights under any provision of this Agreement will be entitled to
enforce such rights specifically to recover damages caused by reason of any
breach of any provision of this Agreement and to exercise all other rights
granted by law. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that any party may in its sole discretion apply to any court of
law or equity of competent jurisdiction (without posting any bond or other
security) for specific performance and for other injunctive relief in order to
enforce or prevent violation of the provisions of this Agreement.
17. Descriptive
Headings. The descriptive headings of this Agreement are
inserted for convenience only and do not constitute a part of this
Agreement.
* * * * *
IN WITNESS WHEREOF, the
parties hereto have executed this Investor Rights Agreement as of the date first
above written.
VECTOR INTERSECT SECURITY ACQUISITION
CORP.,
a
Delaware corporation
By: /s/ Xxxxx
Xxxxx
Name: Xxxxx
Xxxxx
Title: Chief
Executive Officer and President
XXXXX
XXXXXX PACIFIC, L.P.
By: Xxxxx
Xxxxxx Pacific Advisors, LLC,
its
General Partner
By: /s/ Xxxxx X.
Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Managing Member
XXXXX
XXXXXX PACIFIC FRIENDS FUND, LLC
By: Xxxxx
Xxxxxx Pacific Advisors, LLC,
its
Managing Member
By: /s/ Xxxxx X.
Xxxxx
Name:
Xxxxx X. Xxxxx
Title:
Managing Member
COVA
SMALL CAP HOLDINGS LLC
By: /s/ Xxxxxx
Xxxxxxxx
Name: Xxxxxx
Xxxxxxxx
Title: Chief
Executive Officer
THE
XXXX XXXXXX LIVING TRUST
By: /s/ Xxxx Xxxxxx, Trustee
Name:
Xxxx Xxxxxx
Title:
Trustee
THE
XXXXX REVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxx and Xxxxxxxxx X.
Xxxxx,
Trustee
Name:
Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx
Title:
Trustee
THE
XXXXXXXX X. XXXXX 2003 IRREVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx,
Trustee
Name:
Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx
Title:
Trustee
THE
XXXXXX XXXXXX XXXXX 2004 IRREVOCABLE TRUST
By: /s/ Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx,
Trustee
Name:
Xxxxxx X. Xxxxx and Xxxxxxxxx X. Xxxxx
Title:
Trustee
/s/ Marceau
Schlumberger
MARCEAU
SCHLUMBERGER
/s/
Xxxxxxx
X.
Xxxxxxxx
XXXXXXX
X. XXXXXXXX
/s/ Xxxxx
Xxxxx
XXXXX
XXXXX
Signature
Page to
Investor
Rights Agreement
/s/ Xxxxx
Xxxxxxxxx
XXXXX
XXXXXXXXX
Signature
Page to
Investor
Rights Agreement
/s/
Xxxxxx X.
Xxxxx
XXXXXX
X. XXXXX
Signature
Page to
Investor
Rights Agreement
/s/ Xxxxxx
X.
Xxxxxxxx
XXXXXX
X. XXXXXXXX
Signature
Page to
Investor
Rights Agreement
/s/
Xxxx
Xxxxxxxx
XXXX
XXXXXXXX
Signature
Page to
Investor
Rights Agreement
/s/
Xxxxxxx
Xxxxxxxx
XXXXXXX
XXXXXXXX
Signature
Page to
Investor
Rights Agreement
/s/ Xxx
XxXxxxxx
XXX
XXXXXXXX
Signature
Page to
Investor
Rights Agreement
/s/
Xxxx
Xxxxxx
XXXX
XXXXXX
Signature
Page to
Investor
Rights Agreement
/s/
Xxxxx
Xxxxx
XXXXX
XXXXX
Signature
Page to
Investor
Rights Agreement
/s/
Xxxx
Challenger
XXXX
CHALLENGER
Signature
Page to
Investor
Rights Agreement
