EXHIBIT 10.20
CO-SALE AND RIGHT OF FIRST REFUSAL AGREEMENT
This Co-Sale and Right of First Refusal Agreement (this "AGREEMENT") is made
this 19th day of May, 1995 by and among the individuals listed on the signature
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page attached hereto (the "FOUNDERS"), Virtual Realty Network, Inc., a
California corporation (the "COMPANY"), and the Investors listed on Exhibit A
(the "INVESTORS").
RECITALS
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A. The Investors have an interest in acquiring from the Company shares of
Series A Preferred Stock of the Company pursuant to a Series A Preferred
Stock Purchase Agreement of even date herewith by and among the Investors
and the Company (the "PURCHASE AGREEMENT").
B. The Founders and the Company wish to provide a further inducement to the
Investors to purchase the Series A Preferred Stock of the Company by
offering to the Investors the opportunity to participate, upon the terms
and conditions set forth in this Agreement, in subsequent sales by the
Founders of shares of the Company's Common Stock.
In consideration of the mutual covenants and agreements set forth herein and
certain other valuable consideration the receipt of which is hereby
acknowledged, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
1.1 "FOUNDER SHARES" shall mean shares of the Company's Common Stock now
owned or subsequently acquired by the Founders.
1.2 "COMMON STOCK EQUIVALENTS" shall mean the Company's Common
Stock then outstanding plus the shares of Common Stock then issuable
upon conversion of the outstanding Preferred Stock.
2. NOTICE OF SALES
Should one or more of the Founders propose to sell or transfer any Founder
Shares in one or more related transactions (the "SELLING FOUNDER"), such
Founder shall promptly deliver a written notice (the "NOTICE") to the
Company and the Investors at least twenty (20) days prior to the closing of
such sale or transfer. The Notice shall describe in reasonable detail the
proposed sale or transfer including, without limitation, the number of
Founder Shares to be sold or
transferred, the nature of such sale or transfer, the consideration to be
paid, and the name and address of each prospective purchaser or transferee.
In the event that the sale or transfer is being made pursuant to the
provisions of Section 5 hereof, the Notice shall state under which
subparagraph the sale or transfer is being made.
3. RIGHT OF FIRST REFUSAL
3.1 Right of First Refusal.
The Company shall have the right, exercisable upon written notice to
the Selling Founder, within fifteen (15) days after receipt of the
Notice, to have the first right to purchase or obtain Founder Shares,
upon the price and terms of payment designated in the Notice. If such
right by the Company is refused, the Company shall give notice of such
refusal to the Investors (which may be made by telephone if confirmed
in writing within two (2) days). The Investors shall have the right,
exercisable upon written notice to the Selling Founder within fifteen
(15) days after receipt of the notice from the Company, to purchase or
obtain such Founder Shares, upon the price and terms of payment
designated in the Notice. If the Notice provides for payment of non-
cash consideration, the Investors, at their option may pay the
consideration in cash equal to the present fair market value of the
non-cash consideration offered, which shall be determined by mutual
agreement between the parties.
3.2 Right of First Refusal Amount.
If the Company elects to exercise its right of first refusal option
pursuant to Section 3.1, it shall purchase all of the Founder Shares.
In the event the Company does not elect to exercise its right of first
refusal, each Investor may purchase pursuant to their right of first
refusal up to that number of Founder Shares of stock equivalent to the
product obtained by multiplying the aggregate number of Founder Shares
being sold or transferred in such transaction, by a fraction, the
numerator of which is the number of shares of Common Stock Equivalents
owned by such Investor at the time of the transaction and the
denominator of which is the total number of shares of Common Stock
Equivalents owned by all the Investors at the time of the transaction.
3.3 Overallotment Option.
If any Investor fails to elect to fully participate in a transaction
pursuant to this Section 3, the Investor shall promptly give notice of
such failure to the Company and the Company shall so notify the other
Investors who did so elect (the "RIGHT OF FIRST REFUSAL INVESTORS").
Such notice may be made
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by telephone if confirmed in writing within two (2) days. The Right of
First Refusal Investors shall have five (5) days from the date such
notice was given to agree to purchase their pro rata share of the
unsold portion. For purposes of this paragraph, a "PRO RATA SHARE"
shall be equal to the product obtained by multiplying (i) the number of
shares in the unsold portion by (ii) a fraction, the numerator of which
is the number of shares of Common Stock Equivalents held by such Right
of First Refusal Investor and the denominator of which is the total
number of shares of Common Stock Equivalents held by all the Right of
First Refusal Investors.
3.4 No Adverse Effect.
The exercise or nonexercise of the rights of any Investor hereunder to
elect to exercise its rights of first refusal in one or more sales or
transfers of the Founder Shares shall not adversely affect such
Investor's rights to exercise its rights of first refusal in subsequent
sales or transfers of Founder Shares pursuant to this Agreement.
3.5 No Participation.
If the Company elects not to purchase the Founder Shares pursuant to
its right of first refusal and the Investors elect not to purchase all
or a portion of the Founder Shares designated in the Notice, then the
Selling Founder may consummate the sale of such Founder Shares referred
to in the Notice to the proposed purchaser, provided such transaction
(i) is completed within thirty (30) days after the expiration of the
Investors' right to purchase such Founder Shares and the Investors' co-
sale rights as set forth in Section 4, (ii) is made at the price and
terms designated in the Notice, and (iii) the proposed purchaser agrees
to be bound by the terms and provisions of this Agreement immediately
upon receipt of such Founder Shares. Any proposed transfer on terms and
conditions more favorable than those described in the Notice, as well
as any subsequent proposed transfer or sale of any of the Founder
Shares shall again be subject to the right of first refusal hereunder.
4. RIGHT OF CO-SALE
4.1 Co-Sale Right.
Each Investor shall have the right, exercisable within fifteen (15)
days after receipt of a written Notice, to participate in such
transaction described in such Notice on the same terms and conditions
specified in the Notice.
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4.2 Co-Sale Amount.
To the extent the proposed purchaser is not willing to purchase all of
the shares as to which the Investors have requested participation
pursuant to Section 4.1, each Investor may sell in such a transaction
described in Section 4.1 that number of shares of stock equal to the
product obtained by multiplying the aggregate number of Founder Shares
being sold in such transaction, by a fraction, the numerator of which
is the number of shares of Common Stock Equivalents owned by such
investor at the time of the transaction and the denominator of which is
the total number of shares of Common Stock Equivalents owned by all the
Investors. The number of Founder Shares identified in the Notice to be
sold by such Selling Founder shall be reduced by the number of Investor
Shares to be sold pursuant to this Section 4.2.
4.3 Overallotment Option.
If any Investor fails to elect to fully participate in such co-sale
transaction pursuant to this Section 4, the Investor shall promptly
give notice of such failure to the Company and the Company shall so
notify the other Investors who did so elect (the "CO-SALE
PARTICIPANTS"). Such notice may be made by telephone if confirmed in
writing within two (2) days. The Co-Sale Participants shall have five
(5) days from the date such notice was given to agree to sell their pro
rata share of the unsold portion. For purposes of this paragraph, a Co-
Sale Participant's "PRO RATA SHARE" shall be equal to the product
obtained by multiplying (i) the number of shares in the unsold portion
by (ii) a fraction, the numerator of which is the number of shares of
Common Stock Equivalents held by such Co-Sale Participant and the
denominator of which is the total number of shares of Common Stock
Equivalents held by all the Co-Sale Participants.
4.4 Delivery.
Each Investor shall effect participation in the sale by promptly
delivering to the Selling Founder for transfer to the prospective
purchaser one or more certificates, properly endorsed for transfer,
which represent:
(a) the type and number of shares of Common Stock which such
Investor elects to sell; or
(b) that number of shares of Series A Preferred Stock which is at
such time convertible into the number of shares of Common Stock
which such Investor elects to sell; provided, however, that if
the prospective purchaser objects to the delivery of Series A
Preferred Stock in lieu of Common Stock, such Investor shall
convert such
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Series A Preferred Stock into Common Stock and deliver Common
Stock as provided in subsection 4.4(a) above. The Company agrees
to make any such conversion concurrent with the actual transfer
of such shares to the purchaser.
4.5 Transfer.
The stock certificate or certificates that the Investors deliver to
the Selling Founder pursuant to Section 4.4 shall be transferred to
the prospective purchaser in consummation of the sale of the Common
Stock pursuant to the terms and conditions specified in the Notice,
and the Selling Founder shall concurrently therewith remit to the
Investors that portion of the sale proceeds to which the Investors are
entitled by reason of their participation in such sale. To the extent
that any prospective purchaser prohibits such assignment or otherwise
refuses to purchase shares or other securities from the Investors
exercising their rights of co-sale hereunder, the Selling Founder
shall not sell to such prospective purchaser or purchasers any Founder
Shares unless and until, simultaneously with such sale, the Selling
Founder shall purchase such shares or other securities from the
Investors.
4.6 No Adverse Effect.
The exercise or nonexercise of the rights of each Investor hereunder
to participate in one or more sales of Founder Shares made by a
Selling Founder shall not adversely affect such Investor's rights to
participate in subsequent sales of Founder Shares pursuant to this
Agreement.
4.7 No Participation.
If the Investors elect not to participate in the sale of the Founder
Shares designated in the Notice, then the Selling Founder may
consummate the sale or transfer of such Founder Shares referred to in
the Notice to the proposed purchaser, provided such transaction (i) is
completed within thirty (30) days after the expiration of the
Investors' right of co-sale and the Investors' right of first refusal
as set forth hereunder, (ii) is made at the price and terms designated
in the Notice, and (iii) the proposed purchaser agrees to be bound by
the terms and provisions of this Agreement and become a party to this
Agreement immediately upon receipt of such Founder Shares. Any
proposed transfer on terms and conditions more favorable than those
described in the Notice, as well as any subsequent proposed transfer
or sale of any of the Founder Shares shall again be subject to the co-
sale rights hereunder.
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5. PERMITTED TRANSACTIONS
The participation rights of the Investors hereto shall not pertain or
apply to:
(a) Any pledge of Founders Shares made by such Founder pursuant to a
bona fide loan transaction which creates a mere security
interest;
(b) Any bona fide gift;
(c) Any transfer to ancestors, siblings, in-laws, descendants or
spouse or to a trust for the benefit of such persons or such
Founder; or
(d) Any transfer to a transferee in which the rights of co-sale
and/or first refusal are not utilized and such non-utilization
is in accordance with the terms of this Agreement.
provided, that (i) the Selling Founder shall inform the Company and the
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Investors of such pledge, transfer or gift prior to effecting it in
accordance with Section 2.1 above and (ii) the pledgee, transferee or
donee (collectively, the "PERMITTED TRANSFEREES") shall furnish the Company
and the other Investors with a written agreement to be bound by and comply
with all provisions of this Agreement applicable to such transferor. Such
transferred Founder Shares shall remain Founder Shares hereunder and the
Permitted Transferee shall be treated as a "Founder" and be subject to all
obligations of a "Founder" for purposes of this Agreement.
6. PROHIBITED TRANSFERS
Any attempt to transfer shares of the Company in violation of Sections 3 or
4 hereof shall be void and the Company agrees it will not effect such a
transfer nor will it treat any alleged transferee as the holder of such
shares without the written consent of the Investors.
7. LEGENDED CERTIFICATES
7.1 Legend.
Each certificate representing shares of capital stock of the Company now or
hereafter owned by the Founders, or issued to any Permitted Transferee
pursuant to Section 5 shall be endorsed with the following legend:
THE SALE OR TRANSFER OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE IS SUBJECT TO THE TERMS AND CONDITIONS OF A
CERTAIN CO-SALE AND
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RIGHT OF FIRST REFUSAL AGREEMENT DATED AS OF MAY___,1995 BY
AND AMONG THE CORPORATION AND CERTAIN HOLDERS OF CAPITAL
STOCK OF THE CORPORATION. COPIES OF SUCH AGREEMENT MAY BE
OBTAINED UPON WRITTEN REQUEST TO THE SECRETARY OF THE
CORPORATION.
7.2 Removal.
The Section 7.1 legend shall be removed upon termination of this
Agreement in accordance with the provisions of Section 8.1.
8. TERMINATION
This Agreement shall terminate upon the earliest to occur of any one of the
following events:
(a) after the effective date of a registration statement pertaining to the
Company's initial registered firm commitment underwritten public
offering at a price per share of at least $7.50 (as adjusted for stock
dividends, stock splits or recapitalizations) and with aggregate
proceeds to the Company in excess of $15,000,000, or
(b) the merger or other form of corporate reorganization in which the
shareholders of the Company do not own a majority of the outstanding
shares of the surviving corporation or the sale of all or
substantially all the assets of the Company.
9. MISCELLANEOUS
9.1 Governing Law.
This Agreement shall be governed in all respects by the laws of the
state of Delaware without regard to provisions regarding choice of
laws.
9.2 Successors and Assigns.
Except as otherwise expressly provided herein, the provisions hereof
shall inure to the benefit of, and be binding upon, the successors,
assigns, heirs, executors and administrators of the parties hereto
whose rights or obligations hereunder are affected by such amendments.
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9.3 Entire Agreement.
This Agreement and the exhibits hereto which are hereby expressly
incorporated herein by this reference constitute the entire
understanding and agreement between the parties with regard to the
subjects hereof and thereof; provided, however, that nothing in this
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Agreement shall be deemed to terminate or supersede the provisions of
any confidentiality and nondisclosure agreements executed by the
parties hereto prior to the date hereof, which agreements shall
continue in full force and effect until terminated in accordance with
their respective terms.
9.4 Notices.
Except as may be otherwise provided herein, all notices and other
communications required or permitted hereunder shall be in writing and
shall be hand delivered or mailed by registered or certified first
class mail, postage prepaid, addressed, (a) if to the Investors, to
each such Investor's address set forth on Exhibit A attached hereto,
or to such other address as such Investor or any of its successors or
assigns shall have furnished to the Company in writing, (b) if to the
Founders, to each such Founder's address as set forth on Exhibit A
attached hereto, or to such other address as such Founder or any of
its successors or assigns shall have furnished to the Company and the
Investors in writing, or (c) if to the Company, to its address set
forth below its signature hereto, or to such other address as the
Company shall have furnished to the Investors and Founders or their
successors or assigns in writing. Notices hand delivered shall be
effective upon delivery and notices sent by first class mail shall be
effective three (3) days following deposit in the United States mail.
9.5 Amendments and Waivers.
Any term of this Agreement may be amended and the observance of any
term of the Agreement may be waived (either generally or in a
particular instance and either retroactively or prospectively), only
with the written consent of the Company, the Investors and the
Founders.
9.6 Delays or Omissions.
No delay or omission to exercise any right, power or remedy accruing
to the Company, the Founders or to the Investors upon any breach or
default of any party hereto under this Agreement, shall impair any
such right, power or remedy of the Company, the Founders or the
Investors nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of any similar breach of
default thereafter
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occurring; nor shall any waiver of any other breach or default
theretofore or thereafter occurring. Any waiver, permit, consent or
approval of any kind or character on the part of the Company, the
Founders or the Investors of any breach of default under this
Agreement or any waiver on the part of the Company, the Founders or
the Investors of any provisions or conditions of this Agreement, must
be in writing and shall be effective only to the extent specifically
set forth in such writing. All remedies, either under this Agreement,
or be law or otherwise afforded to the Company, the Founders or the
Investors shall be cumulative and not alternative.
9.7 Legal Fees.
In the event of any action at law, suit in equity or arbitration
proceeding in relation to this Agreement, the prevailing party, shall
be paid by the other party a reasonable sum for attorney's fees and
expenses for such prevailing party.
9.8 Titles and Subtitles.
The titles of the sections and subsections of this Agreement are for
convenience of reference only and are not to be considered in
construing this Agreement.
9.9 Counterparts.
This Agreement may be executed in any number of counterparts, each of
which shall be an original, but all of which together shall
constitute one instrument.
9.10 Severability.
Should any provision of this Agreement be determined to be illegal or
unenforceable, such determination shall not affect the remaining
provisions of this Agreement.
9.11 Confidentiality.
Each party hereto agrees that, except with the prior written
permission of the other party, it shall at all times keep confidential
and not divulge, furnish or make accessible to anyone any confidential
information, knowledge or data concerning or relating to the business
or financial affairs of the other parties to which such party has been
or shall become privy by reason of this Agreement, discussions or
negotiations relating to this Agreement or the performance of its
obligations hereunder. The parties hereto further agree that there
shall be no press release or other public statement issued by either
party relating to this Agreement or the
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transactions contemplated hereby, unless the parties otherwise agree
in writing. The provisions of this Section 9.11 shall be in addition
to, and not in substitution for, the provisions of any separate
nondisclosure agreement executed by the parties hereto with respect to
the transactions contemplated hereby.
9.12 Public Announcements.
Neither the Company nor any Founder nor any Investor (other than
Intel) shall use Intel's name or refer to Intel directly or indirectly
in connection with Intel's relationship with the Company in any
advertisement, news release or professional or trade publication, or
in any other manner, unless otherwise required by law or with Intel's
prior written consent, which consent will generally not be granted.
The parties agree that there will be no press release or other public
statement issued by either party relating to this Agreement or the
transactions contemplated hereby unless required by law. If the
Company determines that it is required by law to file this Agreement
with the Securities and Exchange Commission, it shall at a
reasonable time before making any such filing, consult with Intel
regarding such filing and seek confidential treatment for such
portions of the Agreement as may be requested by Intel.
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IN WITNESS WHEREOF, this parties hereto have executed this Agreement as of the
day and year herein above first written.
VIRTUAL REALITY, INC.
0000 XxxXxxxxx Xxxx., Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
By:
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Title:
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INVESTORS:
INTEL CORPORATION
By: /s/ XXXXX XXXXXXX
---------------------------------
Title:
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IN WITNESS WHEREOF, this parties hereto have executed this Agreement as of the
day and year herein above first written.
VIRTUAL REALITY, INC.
0000 XxxXxxxxx Xxxx, Xxx. 000
Xxxxxxx Xxxxx, XX 00000
By: /s/ XXXXXXX X. XXXXXX
--------------------------------
Title: President
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INVESTORS:
INTEL CORPORATION
By:
--------------------------------
Title:
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FOUNDERS:
[SIGNATURES]
/s/ XXXXXXX X. XXXXXX
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XXXXXXX X. XXXXXX
/s/ XXXXXX X. XXXXX
-----------------------------------
XXXXXX X. XXXXX
/s/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX
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EXHIBIT A
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FOUNDERS: INVESTORS:
Intel Corporation
0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000
Attn:
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/s/ XXXXXXX X. XXXXXX
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XXXXXXX X. XXXXXX
/s/ XXXXXX X. XXXXX
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XXXXXX X. XXXXX
/s/ XXXXXX X. XXXXXX
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XXXXXX X. XXXXXX
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