Exhibit 10.2
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT (this "AGREEMENT") dated June 17, 2004 by
and among MTI Technology Corporation, a Delaware corporation (the "COMPANY"),
and the entities listed on the signature pages hereto (the "INVESTORS").
BACKGROUND
A. The Company and the Investors have entered into a Securities Purchase
Agreement, dated as of the date hereof, pursuant to which such Investors are
acquiring shares of Series A Convertible Preferred Stock, par value $0.001 per
share, and warrants to purchase shares of Common Stock, par value $0.001 per
share (the "WARRANTS"), of the Company contemporaneously with the execution and
delivery of this Agreement.
B. Under Sections 7.01(m) and 7.02(d) 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 A Convertible Preferred Stock and such
Warrants.
AGREEMENT
Now Therefore, in consideration of the mutual covenants and agreements set
forth herein, the parties hereto agree as 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 or sale, or otherwise materially detrimental
to the Company.
"AFFILIATE" of a Person shall mean any Person which, directly or
indirectly, controls, is controlled by, or is under common control with
such Person. The term "control" (including, with correlative meaning, the
terms "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly,
of the power to elect a majority of the board of directors (or other
governing body) or to direct or cause the direction of the management and
policies of such Person, whether through the ownership of voting
securities, by contract or otherwise and, in any event and without
limiting the generality of the foregoing, any Person owning more than 20%
of the voting securities of another Person shall be deemed to control that
Person. With respect to each of the Investors, the term "Affiliate" shall
also include (i) any entity in which such Investor (or one of its
Affiliates) is a general partner or member, (ii) each investor in such
Investor, but
only in connection with the liquidation, winding up or dissolution of the
Investor, and only to the extent of such investor's pro rata share in the
Investor and (iii) any investment fund managed by Advent.
"BOARD OF DIRECTORS" means the Board of Directors of the Company.
"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.
"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 generally accepted accounting principles.
"INCREASED CONVERSION THRESHOLD ALLOWED" has the meaning ascribed to
it in Section 4.4(b) below.
"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.
-2-
"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.
"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 the date hereof, by and among the Company and the Investors.
"REGISTRABLE SHARES" means (a) the shares of Common Stock issued or
issuable upon conversion of the Series A Stock held by an Investor
pursuant to the Series A Certificate, (b) the shares of Common Stock
issued or issuable upon the exercise of the Warrants held by an Investor,
(c) any other shares of Common Stock issued or issuable upon the
conversion or exercise of any other securities held by an Investor, 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.
-3-
"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 STOCK" means the Series A Convertible Preferred Stock of
the Company issued pursuant to the Purchase Agreement.
"SHARES" means the shares of Series A 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.
"SILICON VALLEY" means Silicon Valley Bank.
"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).
-4-
"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" has the meaning ascribed to it in the Background section
hereof.
2. Registration Rights
2.1. Demand Registrations
(a) Investors holding in the aggregate at least a majority of
the shares of Series A 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 information
that may be required in a registration that is filed on Form S-1 and
that the lead underwriter managing the offering 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
-5-
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 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). 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 among all Investors requesting
registration 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 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, the Company is engaged or has plans to engage in a registered
public offering or is engaged in a material proposed 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
-6-
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 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 holders 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 among all
Investors requesting registration in proportion, as 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 thus
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
sentence.
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 date
hereof), and shall take such steps as are necessary to enable the Shelf
Registration to be declared effective by the Commission as
-7-
promptly as practicable after the date hereof (and in any event by no
later than 60 days after the date of this Agreement or, if the Shelf
Registration Statement (including any of the documents incorporated by
reference therein) is the subject of a complete or partial review by the
Commission, in any event by no later than 120 days after the date of this
Agreement). 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 each Investor 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 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)
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
the each Registration Selling Investor and its 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 such 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 Prospectus or any amendments or
supplements thereto to which the Registration Selling
Investors holding a majority of the Registrable
Securities to be registered thereunder and their counsel
shall reasonably object, provided that such objection is
communicated to the Company within three 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
-8-
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 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 and its counsel, 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 (with a copy to counsel to
such Registration Selling Investors) such reasonable
numbers of copies of the Prospectus, including any
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
-9-
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;
(ix) as expeditiously as possible, cause all such Registrable
Shares to be listed on each securities exchange or
automated quotation system on which similar securities
issued by the Company are then listed;
(x) promptly provide a transfer agent and registrar for all
such Registrable Shares not later than the effective
date of such registration statement;
(xi) 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, 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;
(xii) 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
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
-10-
by the Company and the recipient Investor, the Company
will not make any material nonpublic information
available to an Investor; and
(xiii)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 and its counsel 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 Company shall notify all Registration Selling
Investors 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
-11-
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 7 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 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
-12-
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 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.
(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 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
-13-
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 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.
-14-
(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.
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 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 A Director.
(a) The Company confirms that, effective contemporaneously
with the execution and delivery of this Agreement, Xxxx Xxxx has become
a director of the Company, pursuant to the right of the Investors to
designate the Series A Director under Section 3(b) of the Series A
Certificate.
(b) The Company agrees that, if at any time Series A Stock is
outstanding and the Investors are unable to designate the Series A
Director under Section 3(b) of the Series A 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 (the "REQUIRED NUMBER
OF DIRECTORS") as will then enable the Investors to designate the
Series A Director under Section 3(b) of the Series A Certificate. 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
-15-
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 Series A Director to be elected to the board of directors of
such Subsidiary and to provide to the Series A Director the same rights
with respect to such Subsidiary as provided by the Company to 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 Series A Director to
(i) the Board of Directors and (ii), if and when applicable, the board
of directors of each Subsidiary.
(e) No individual designated to serve on the Board of
Directors as the Series 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 A Director.
(a) The Company shall provide the Investors 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 Series A Director is one of the directors whose
term is indicated in the Company Election Notice as expiring and (ii)
DMC III owns any shares of Series A Stock on the record date for such
election, then DMC III shall confer with the other Investors regarding
the individual to be designated as the Series A Director, and after
such discussion shall have the right to choose, in its sole discretion,
the individual who shall be designated as the Series A Director. DMC
III shall give written notice to the other Investors and the Company,
no later than 15 days after receipt of the Company Election Notice, of
such individual to be designated as the Series A Director for election
to the Board of Directors as of the date of such meeting.
(c) If (i) the Series 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 A Stock on the record date for
such election, the Investors holding in the aggregate at least a
majority of the shares of Series A Stock 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 the Investors for
election to the Board of Directors as of the date of such meeting.
-16-
(d) If the Company fails to receive notice from either DMC III
or other Investors as provided in Section 3.2(b) or 3.2(c),
respectively, then the individual then serving as the Series A Director
shall be deemed to have been designated for reelection.
(e) The individual 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 Series A Certificate, shall be elected to the Board of Directors as
the Series A Director contemporaneously with such election of
directors.
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 Nasdaq 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 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.
3.4. Other Covenants.
(a) For so long as any Series A Director is serving on the
Board of Directors pursuant to the Series A Certificate:
-17-
(i) The Company shall reimburse the Series A Director 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
other directors who are not employees of the Company
or a Subsidiary. The Series 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 the Series A 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.
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
-18-
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.
(a) 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 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.
-19-
(b) The Investors hereby acknowledge that the Company has
granted certain registration rights to Silicon Valley pursuant to that
certain Amended and Restated Registration Rights Agreement, dated as of
January 11, 2002, between the Company and Silicon Valley. To the extent
such registration rights of Silicon Valley require, Silicon Valley
shall be treated as an "Investor" under this Agreement.
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) Business Plans and Budgets. At least thirty (30) days
prior to the end of each fiscal year, (i) an annual business plan
setting forth the anticipated strategic business activities and goals,
including an expected budget, of the Company an projections of
operating results, prepared on a quarterly basis, and (ii) an annual
capital budget describing the intended capital investment strategy of
the Company that has been approved and adopted by the Board.
(c) Quarterly Statements. Within forty-five (45) days 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
-20-
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(b) above.
(d) 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(b) above.
(e) 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.
(f) 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.
(g) 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.
4.4. Amendments to 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, each share of Series A 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 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 3(a) of the Series A 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.
-21-
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, 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 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.
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 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 A Stock 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
-22-
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 A Stock then held by Investors.
6.5. 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.
6.6. 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.
6.7. 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.
6.8. Headings. The headings in this Agreement are included for
convenience of reference only and shall be ignored in the construction or
interpretation hereof.
-23-
6.9. 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]
-24-
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: __________________________
Name:
Title:
Address for notices:
MTI Technology Corporation
00000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxx 00000
Attention:
Facsimile:
with a copy to:
Xxxxxxxxx Xxxxx Xxxxxxx & Xxxxx
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxx X. Xxxxx, 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: __________________________
Name: Xxxxxxx Xxxx
Title: Partner
Address for notices:
c/o Advent International Corporation
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxx
Operating 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
S-2
ADVENT PARTNERS DMC III LIMITED
PARTNERSHIP
ADVENT PARTNERS II LIMITED PARTNERSHIP
By: Advent International Corporation,
General Partner
By: __________________________
Name: Xxxxxxx Xxxx
Title: Partner
Address for notices:
c/o Advent International Corporation
00 Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxx Xxxx
Operating 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
S-3
EMC CORP.
By: __________________________
Name:
Title:
Address for notices:
000 Xxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: C. Xxxxxxx Xxxxx
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
S-4
