EXHIBIT 10.4
CiDRA CORPORATION
PREFERRED STOCK PURCHASE AGREEMENT
JUNE 20, 2000
TABLE OF CONTENTS
Page
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1. Purchase and Sale..................................................... 1
1.1 Cisco Systems, Inc. Nominee..................................... 1
1.2 Xxxxxxx Securities Trust - Xxxxxxx Technology Fund Nominee...... 2
2. Closing of Purchase and Sale.......................................... 2
2.1 Closing; Closing Date........................................... 2
2.2 Transactions at Closing......................................... 2
3. Representations and Warranties of the Company......................... 3
3.1 Organization, Standing and Qualification........................ 3
3.2 Capitalization.................................................. 3
3.3 Validity of Stock............................................... 4
3.4 Subsidiaries.................................................... 4
3.5 Financial Statements............................................ 4
3.6 Authorization; Approvals........................................ 5
3.7 No Conflict with Other Instruments.............................. 6
3.8 Labor Agreements and Actions.................................... 6
3.9 Title to Properties; Liens and Encumbrances..................... 6
3.10 Compliance with Other Instruments............................... 7
3.11 Patents, Trademarks and Other Intangible Assets....................... 7
3.12 Taxes........................................................... 8
3.13 Contracts....................................................... 9
3.14 Litigation...................................................... 9
3.15 Private Offering................................................ 9
3.16 Full Disclosure................................................. 9
3.17 Fees and Commissions............................................ 10
3.18 Interested Party Transactions................................... 10
3.19 ERISA........................................................... 10
3.20 Section 83(b) Elections......................................... 10
3.21 Company Transactions............................................ 10
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3.22 Permits......................................................... 11
3.23 Insurance....................................................... 11
3.24 Certain Tax-Related Provisions.................................. 11
4. Representations, Warranties and Covenants of the Investors............ 11
4.1 Authorization................................................... 11
4.2 Investment Representations...................................... 11
4.3 Investment Experience; Access to Information.................... 11
4.4 Absence of Registration......................................... 12
4.5 Restrictions on Transfer........................................ 12
4.6 Transfer Instructions........................................... 13
4.7 Economic Risk................................................... 13
4.8 Fees and Commissions............................................ 13
4.9 Offering Memorandum Acknowledgement............................. 13
5. Conditions to Closing of the Investors................................ 14
5.1 Representations and Warranties.................................. 14
5.2 Performance..................................................... 14
5.3 Consents, etc................................................... 14
5.4 Compliance Certificates......................................... 14
5.5 Proceedings and Documents....................................... 14
5.6 Co-Sale Agreement............................................... 14
5.7 Voting Agreement................................................ 14
5.8 Opinion of Counsel.............................................. 14
5.9 IPO Warrants.................................................... 15
6. Conditions to Closing of the Company.................................. 15
7. Affirmative Covenants................................................. 15
7.1 Inspection...................................................... 15
7.2 Accounting...................................................... 15
7.3 Annual Financial Statements..................................... 15
7.4 Monthly Financial Statements; Compliance Reports Budgets; Reports..... 16
7.5 Use of Proceeds................................................. 16
7.6 Public Information.............................................. 17
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7.7 Insurance....................................................... 17
7.8 Observer Rights................................................. 17
7.9 Confidentiality................................................. 18
7.10 Right of First Refusal.......................................... 19
7.11 Maintenance of Existence and Properties, etc.................... 22
7.12 Termination of Covenants........................................ 22
8. Registration.......................................................... 22
8.1 Definitions..................................................... 22
8.2 Required Registration........................................... 23
8.3 Registration Procedures......................................... 24
8.4 Limitations on Required Registrations........................... 26
8.5 Incidental Registration......................................... 27
8.6 Limitations on Incidental Registration.......................... 28
8.7 Designation of Underwriter...................................... 28
8.8 Form S-3........................................................ 28
8.9 Cooperation by Prospective Sellers.............................. 29
8.10 Expenses of Registration........................................ 30
8.11 Indemnification................................................. 30
8.12 Rights That May Be Granted to Subsequent Investors.............. 33
8.13 Transfer of Registration Rights................................. 33
8.14 "Stand-Off" Agreement........................................... 34
8.15 Delay of Registration........................................... 34
9. Negative Covenants.................................................... 34
10. Amendment of Existing Provisions...................................... 35
11. Expenses.............................................................. 35
12. Survival of Agreements................................................ 35
13. Notices............................................................... 36
14. Modifications; Waiver................................................. 37
15. Exculpation Among Investors........................................... 38
16. Entire Agreement; Aggregation......................................... 38
17. Successors and Assigns................................................ 38
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18. Connecticut Presence and Repurchase Obligation........................ 38
19. Enforcement........................................................... 41
20. Execution and Counterparts............................................ 42
21. Governing Law and Severability........................................ 42
22. Headings.............................................................. 42
23. Waiver and Consent.................................................... 42
24. Xxxxxxxxx X. Xxxxxxxxxx - Conflict of Interest........................ 42
25. IPO Participation..................................................... 42
26. Notification of Acquisition Proposal or Initiation of Sale............ 44
27. Confirmation of Notice and Waiver..................................... 46
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SCHEDULES
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1 - List of Investors
2 - Key Employees and Consultants
3 - Existing Stockholders
4 - Amerindo Group
5 - MSD Group
3.1 - Qualifications
3.2 - Security Holders of the Company
3.4 - Joint Venture, Partnership, or Similar Arrangement
3.5 - Exceptions to the Financial Statements
3.9 - Real and Personal Property of the Company
3.11 - Patents, Trademarks and Other Intangible Assets of the Company
3.12 - Taxes
3.13 - Contracts
3.17 - Fees and Commissions
3.18 - Interested Party Transactions
3.23 - Insurance
EXHIBITS
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A - Form of Warrant
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PREFERRED STOCK PURCHASE AGREEMENT
THIS AGREEMENT, dated as of June 20, 2000, is entered into by and between
the CiDRA Corporation, a Delaware corporation ("Company"), with an office at
00 Xxxxxx Xxxx Xxxxx, Xxxxxxxxxxx, Xxxxxxxxxxx 00000, and the investors
identified on Schedule 1 attached hereto (each, an "Investor" and collectively,
"Investors"), and, solely for the purposes of Sections 8, 10 and 14 hereof, the
key employees and consultants listed in Schedule 2 attached hereto (each, a "Key
Employee" and collectively, "Key Employees"), and, solely for the purposes of
Sections 7, 8, 10 and 23, certain existing stockholders listed on Schedule 3
attached hereto (each an "Existing Stockholder" and collectively, "Existing
Stockholders").
WITNESSETH:
WHEREAS, the Investors desire to purchase shares of Series D Convertible
Preferred Stock, par value $.01 per share ("Series D Preferred Stock"), of the
Company, having the rights, preferences, privileges and restrictions set forth
in the Company's Fifth Restated Certificate of Incorporation in form and
substance acceptable to the Investors ("Fifth Restated Certificate") and
incorporated herein by reference, and warrants in the form of Exhibit A attached
hereto ("Warrants"), and the Company desires to sell to the Investors the shares
of Series D Preferred Stock and Warrants.
NOW, THEREFORE, the parties agree as follows:
1. Purchase and Sale. Subject to the provisions of this Agreement, on
the Closing Date (as hereinafter defined) the Company will (i) sell to the
Investors, and the Investors will purchase from the Company, an aggregate of up
to 1,110,622 shares of Series D Preferred Stock, each Investor to purchase the
number of shares of Series D Preferred Stock set forth in the column designated
"Closing," opposite such Investor's name on Schedule l annexed hereto, at a
purchase price of $90.00 per share ("Initial Purchase Price"), and (ii) issue
the Warrants. The obligation of the Investors to purchase the number of shares
of Series D Preferred Stock set forth opposite such Investors' names on
Schedule 1 shall be several and not joint.
1.1 Cisco Systems, Inc. Nominee. Unless Cisco Systems, Inc. ("Cisco")
notifies the Company to the contrary, all shares of Series D Preferred Stock and
the Warrant issued to Cisco hereunder, and all shares of Class A Common Stock
issued upon conversion of the Series D Preferred Stock, and all shares of
securities issuable upon exercise of the Warrant, shall be issued in the name of
the Cisco nominee noted below; provided, however, that any notices issued with
respect to such stock and securities shall be addressed to Cisco at its address
as set forth on Schedule 1 hereto. Cisco's nominee registration information is
as follows: Coastdock & Co., c/o State Street Bank, P.O. Box 5756, Xxxxxx,
Xxxxxxxxxxxxx 00000 (for mail
deliveries), 000 Xxxxxxxx Xxxxxx, Xxxxxxxx, Xxxxxxxxxxxxx 00000 (for courier
deliveries), attention: Xxxxxxx Xxxxxxxx (000) 000-0000 (office), (000) 000-0000
(facsimile). The shares of Series D Preferred Stock and the Warrant will be held
on behalf of Cisco by such nominee solely for Cisco's internal business purposes
and Cisco shall retain all rights and obligations of a stockholder of the
Company, regardless of whether such shares and such Warrant are held by a
nominee, and all rights and covenants of Cisco under this Agreement, the Amended
and Restated Co-Sale Agreement (to be entered into pursuant Section 5.6 hereof)
and the Amended and Restated Voting Agreement (to be entered into pursuant
Section 5.7 hereof), shall remain rights and covenants of Cisco directly.
1.2 Xxxxxxx Securities Trust - Xxxxxxx Technology Fund Nominee.
Unless Xxxxxxx Securities Trust - Xxxxxxx Technology Fund ("Xxxxxxx") notifies
the Company to the contrary, all shares of Series D Preferred Stock and the
Warrant issued to Xxxxxxx'x nominee hereunder, and all shares of Class A Common
Stock issued upon conversion of the Series D Preferred Stock, and all shares of
securities issuable upon exercise of the Warrant, shall be issued in the name of
the Xxxxxxx nominee noted below; provided, however, that any notices issued with
respect to such stock and securities shall be addressed to Xxxxxxx at its
address as set forth on Schedule 1 hereto. Xxxxxxx'x nominee registration
information is as follows: Spanglestar & Co., DTC/New York Window, A/C of
State Street Bank, 55 Water Street, Plaza Level--3rd Floor, New York, New York,
10041, attention: Xxxxxx Xxxxxx. The shares of Series D Preferred Stock and the
Warrant will be held on behalf of Xxxxxxx by such nominee solely for Xxxxxxx'x
internal business purposes and Xxxxxxx shall retain all rights and obligations
of a stockholder of the Company, regardless of whether such shares and such
Warrant are held by a nominee, and all rights and covenants of Xxxxxxx under
this Agreement, the Amended and Restated Co-Sale Agreement (to be entered into
pursuant Section 5.6 hereof) and the Amended and Restated Voting Agreement
(to be entered into pursuant Section 5.7 hereof), shall remain rights and
covenants of Xxxxxxx directly.
2. Closing of Purchase and Sale.
----------------------------
2.1 Closing; Closing Date. The initial purchase and sale of the
Series D Preferred Stock and Warrants pursuant to Section 1 ("Closing") shall
take place at the offices of the law firm of Day, Xxxxx & Xxxxxx LLP,
CityPlace I, Xxxxxxxx, Xxxxxxxxxxx 00000, or at such other place as may be
agreed upon by the Company and the Investors, at 11:00 a.m. local time on
June 20, 2000 or at such other time as may be agreed upon by the Company and the
Investors ("Closing Date").
2.2 Transactions at Closing. At the Closing, the Company shall
deliver (i) to each Investor certificates representing the Series D Preferred
Stock and (ii) to each Participating Investor (as defined in Section 5.9 hereof)
Warrants being purchased hereunder at the Closing, against delivery by the
Investor of a wire transfer of immediately available funds or a certified check
in the amount of the purchase price therefor or other consideration agreed upon
by the Company.
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3. Representations and Warranties of the Company. The Company
represents and warrants that:
3.1 Organization, Standing and Qualification. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and has full corporate power and authority to own,
lease and operate its property and assets and to conduct its business as
proposed to be conducted by it. The Company has all requisite corporate power
and authority to enter into and perform its obligations under this Agreement and
to carry out the transactions contemplated by this Agreement. The Company is
duly qualified to do business as a foreign corporation and is in good standing
in each jurisdiction in which the nature of its business and its ownership or
leasing of property require that the Company become so qualified.
3.2 Capitalization. The authorized capital stock of the Company,
as of the Closing Date, will consist of: (a) 7,020,000 shares of preferred
stock, par value $.01 per share ("Preferred Stock") of which (i) 1,300,000
shares are designated Series A Convertible Preferred Stock ("Series A Preferred
Stock"), 1,275,161 of which are issued and outstanding; (ii) 2,500,000 shares
are designated Series B Convertible Preferred Stock ("Series B Preferred
Stock"), 2,489,272 of which are issued and outstanding; and (iii) 2,100,000
shares are designated Series C Convertible Preferred Stock, 1,624,225 of which
are issued and outstanding ("Series C Preferred Stock"); and (iv) 1,120,000
shares are designated as Series D Convertible Preferred Stock, none of which are
issued or outstanding as of the date of this Agreement; and (b) 62,720,000
shares of Class A Common Stock, par value $.001 per share ("Class A Common
Stock"), of which 9,442,211 are issued and outstanding and (i) 7,800,000 shares
are reserved for issuance upon conversion of the Series A Preferred Stock on a 6
to 1 basis; (ii) 15,000,000 shares are reserved for issuance upon conversion of
the Series B Preferred Stock on a 6 to 1 basis; (iii) 12,600,000 shares are
reserved for issuance upon conversion of the Series C Preferred Stock on a 6 to
1 basis; (iv) 6,720,000 shares are reserved for issuance upon conversion of the
Series D Preferred Stock on a 6 to 1 basis, and (v) 7,410,000 shares are
reserved for issuance pursuant to the Company's 1997 Stock Option Plan (the
"1997 Plan") that has been adopted by the Company and an option granted to an
outside director of the Company; (each of which in clauses (b) (i), (ii) (iii),
(iv) and (v) are referred to collectively as "Reserved Shares"). The Board of
Directors shall have the right to determine the rights and preferences of
undesignated Preferred Stock and sell such stock. The list set forth in
Schedule 3.2 hereto is a complete and correct list of all security holders of
the Company, showing their holdings of issued and outstanding shares of Company
securities (including options) as of the date of this Agreement. The
outstanding shares of Series A Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock and Class A Common Stock have been duly authorized and validly
issued in accordance with applicable law (including federal and state securities
laws), and are fully paid and non-assessable. Except as set forth in this
Agreement, holders of shares of the Company's capital stock have no preemptive
rights. Except for the transactions contemplated by this Agreement and as set
forth on Schedule 3.2 and Schedule 3.13 hereto, there are (a) no outstanding
warrants, options, convertible
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securities or rights to subscribe for or purchase any capital stock or other
securities from the Company, (b) no voting trusts or voting agreements among, or
irrevocable proxies executed by, stockholders of the Company, (c) no existing
rights of stockholders to require the Company to register any securities of the
Company or to participate with the Company in any registration by the Company of
its securities, (d) no agreements among stockholders providing for the purchase
or sale of the Company's capital stock, and (e) no obligations (contingent or
otherwise) of the Company to purchase, redeem, or otherwise acquire any shares
of its capital stock or any interest therein or to pay any dividend or make any
other distribution in respect thereof.
3.3 Validity of Stock. The Series D Preferred Stock, when issued, sold,
and delivered in accordance with the terms of this Agreement, will be duly and
validly issued, fully paid and non-assessable. The shares of Class A Common
Stock issuable upon conversion of the Series D Preferred Stock have been duly
authorized and reserved for issuance by all necessary corporate action and when
issued and delivered in accordance with the terms of the Fifth Restated
Certificate, will be duly and validly issued, fully paid and non-assessable. The
Warrants, when issued, sold and delivered in accordance with the terms of this
Agreement, will be duly and validly issued, fully paid and nonassessable. The
securities issuable upon exercise of the Warrants will be duly authorized and
reserved for issuance prior to or at such time as the Warrants become
exercisable in accordance with their terms, and when issued and delivered will
be duly and validly issued, fully paid and nonassessable.
3.4 Subsidiaries. Except as set forth in Schedule 3.4, the
Company does not own or control, directly or indirectly, any other corporation,
partnership, association or business entity. Except as set forth in Schedule
3.4, the Company is not a participant in any joint venture, partnership, or
similar arrangement.
3.5 Financial Statements. The Company has furnished the
Investors with an audited balance sheet as of December 31, 1999, an unaudited
balance sheet as of May 31, 2000 ("Unaudited Balance Sheet"), audited statements
of income (loss) for the period from December 31, 1998 through December 31, 1999
and unaudited statements of income (loss) for the period from January 1, 2000
through May 31, 2000 ("Unaudited Statements of Income"), (collectively,
"Financial Statements," copies of which are attached hereto as Schedule 3.5).
Except as described in Schedule 3.5, the Financial Statements are true and
correct in all material respects, are in accordance with the books and records
of the Company and have been prepared in accordance with generally accepted
accounting principles ("GAAP") consistently applied, and fairly and accurately
present in all material respects the financial position of the Company as of
such dates and the results of its operations for the periods then ended,
provided that the Financial Statements may not contain all footnotes required by
GAAP and the Unaudited Balance Sheet and Unaudited Statements of Income are
subject to normal year-end audit adjustments, which year-end audit adjustments
will not be material individually or in the aggregate. Except as described in
Schedule 3.5, the Company has no liabilities, debts or obligations, whether
accrued, absolute or contingent other than liabilities reflected or reserved
against in either the Unaudited Balance Sheet or the December 31, 1999 audited
financial statements, and liabilities incurred since May 31, 2000 ("Balance
Sheet Date") in the ordinary and usual course of business. Since
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the Balance Sheet Date, except as contemplated by this Agreement or as described
in Schedule 3.5, the Company has been operated in the ordinary and usual course
of business, and there has not been:
(a) any change in the assets, liabilities, condition (financial or
otherwise) or business of the Company from that reflected in the Unaudited
Balance Sheet, or the trend of operating results of the Company from that
reflected in the Unaudited Statements of Income;
(b) any damage, destruction or loss, whether or not covered by
insurance, materially and adversely affecting the assets, properties, condition
(financial or otherwise), operating results, prospects or business of the
Company (as such business is presently conducted and as it is proposed to be
conducted as set forth in the Company's Private Placement Memorandum dated May
2000 ("Operating Plan"));
(c) any waiver by the Company of a valuable right or of a material
debt owed to it;
(d) any satisfaction or discharge of any lien, claim or
encumbrance or payment of any obligation by the Company, except in the ordinary
course of business and that is not individually or in the aggregate adverse to
the assets, properties, condition (financial or otherwise), operating results or
business of the Company (as such business is presently conducted and as it is
proposed to be conducted);
(e) any change or amendment to a material contract or arrangement
by or to which the Company or any of its assets or properties is bound or
subject;
(f) any material change in any compensation agreement or agreement
with any employee;
(g) any loans made by the Company to its employees, officers, or
directors, other than travel advances made in the ordinary course of business;
(h) any sale, transfer or lease of, except in the ordinary course
of business, or mortgage or pledge of imposition of lien on, any of the
Company's assets; or
(i) to the Company's knowledge, any other event or condition of
any character that would materially adversely affect the assets, properties,
condition (financial or otherwise), operating results, prospects or business of
the Company (as such business is presently conducted and as it is proposed to be
conducted).
3.6 Authorization; Approvals. All corporate action on the part
of the Company necessary for the authorization, execution, delivery, and
performance of all its obligations under this Agreement and for the
authorization, issuance, and delivery of the Series D Preferred Stock and
Warrants being sold under this Agreement and of the Class A Common Stock
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issuable upon conversion of the Series D Preferred Stock has been (or will be)
taken prior to the Closing. The Company will take all corporate action
necessary to issue the requisite securities from time to time pursuant to the
exercise of the Warrants. This Agreement, when executed and delivered by or on
behalf of the Company, shall constitute the valid and legally binding obligation
of the Company, legally enforceable against the Company in accordance with its
terms, except to the extent that the enforceability of the Warrants may be
limited by applicable law or regulations, or the rules of the National
Association of Securities Dealers or a determination, comment or judgment of or
by the Securities and Exchange Commission. The Company has obtained or will
obtain prior to the Closing Date all necessary consents, authorizations,
approvals and orders, and has made all registrations, qualifications,
designations, declarations or filings with all federal, state, or other relevant
governmental authorities required on the part of the Company to be made prior to
the Closing Date in connection with the consummation of the transactions
contemplated by this Agreement.
3.7 No Conflict with Other Instruments. The execution, delivery
and performance of the Agreement and the conduct of the Company's business as
described in the Operating Plan will not result in any violation of, be in
conflict with, or constitute a default under any terms or provision of (i) the
Fifth Restated Certificate or By-laws; (ii) any judgment, decree or order to
which the Company is a party; (iii) any agreement, contract, understanding,
indenture or other instrument to which the Company is a party, the effect of
which would give rise to a material adverse effect on the Company; or (iv) any
statute, rule or governmental regulation applicable to the Company.
3.8 Labor Agreements and Actions. The Company is not bound by or
subject to (and none of its assets or properties is bound by or subject to) any
written or oral, express or implied, contract, commitment or arrangement with
any labor union, and no labor union has requested or has sought to represent any
of the employees, representatives or agents of the Company. There is no strike
or other labor dispute involving the Company pending or threatened, which could
have a material adverse effect on the assets, properties, condition (financial
or otherwise), operating results, prospects or business of the Company (as such
business is presently conducted and as it is proposed to be conducted), nor is
the Company aware of any labor organization activity involving its employees.
The Company is not aware that any officer or Key Employee (as defined
hereinafter), or that any group of Key Employees, intends to terminate such
person's employment with the Company, nor does the Company have a present
intention to terminate the employment of any of the foregoing persons.
3.9 Title to Properties; Liens and Encumbrances. Set forth on
Schedule 3.9 hereto is a list of all of the real and personal property
(excluding items with an original cost (or in the case of intellectual property
a fair market value) of less than $1,000) owned, leased or licensed to or by the
Company. In the case of leased or licensed property, complete and correct
copies of such leases and licenses have been made available to the Investors.
Except as set forth on Schedule 3.9 hereto, (i) the Company has good and
marketable title to all of the properties and assets, both real and personal,
tangible and intangible, that it purports to own, including the properties and
assets reflected on the Unaudited Balance Sheet, and they are not subject to any
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mortgage, pledge, lien, security interest, conditional sale agreement,
encumbrance or charge except routine statutory liens securing liabilities not
yet due and payable and minor liens, encumbrances, restrictions, exceptions,
reservations, limitations and other imperfections which do not materially
detract from the value of the specific asset affected or the present use of such
asset; and (ii) the Company is not in default or in breach of any material
provision of its leases or licenses and holds a valid leasehold or licensed
interest in the property it leases or that is licensed to it.
3.10 Compliance with Other Instruments. The Company is not in
default (a) under its Fifth Restated Certificate or its By-laws or, in any
material respect, under any material note, indenture, mortgage, lease,
agreement, contract, purchase order or other instrument document or agreement to
which the Company is a party or by which it or any of its property is bound or
affected or (b) with respect to any order, writ, injunction or decree of any
court or any federal, state, municipal or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign, which
default, in any such case, would materially and adversely affect or in the
future is reasonably likely to materially and adversely affect the Company's
business prospects, condition (financial or otherwise), affairs, operations or
assets. To the knowledge of the Company, no third party is in material default
under any material agreement, contract or other instrument, document or
agreement to which the Company is a party or by which it or any of its property
is affected.
3.11 Patents, Trademarks and Other Intangible Assets.
-----------------------------------------------
(a) Schedule 3.11 hereto is a true and complete list and summary
description of all patents, patent applications, trademarks, service marks,
trade names and copyrights, and licenses and rights to the foregoing presently
owned or held by the Company, none of which is in dispute or in any conflict
with the right of any other person or entity except as indicated on Schedule
3.11. Except as set forth in Schedule 3.11, the Company: (i) owns or has the
right to use, free and clear of all liens, claims and restrictions, all patents,
trademarks, service marks, trade names and copyrights, and licenses and rights
with respect to the foregoing, used and sufficient for the conduct of its
business as now conducted and proposed to be conducted as described in the
Operating Plan without infringing upon or otherwise acting adversely to the
right or claimed right of any person, corporation or other entity under or with
respect to any of the foregoing; and (ii) is not obligated or under any
liability whatsoever to make any payments by way of royalties, fees or otherwise
to any owner or licensee of, or other claimant to, any patent, trademark,
service xxxx, trade name, copyright or other intangible asset, with respect to
the use thereof or in connection with the conduct of its business or otherwise.
(b) Except as set forth on Schedule 3.11, the Company owns and/or has
the unrestricted right to use all trade secrets, including know-how, inventions,
designs, processes, works of authorship, computer programs (with the exception
of normal software purchased and sold as such) and technical data and
information (collectively, "intellectual property") required for or incident to
the development, manufacture, operation and sale of all products and services
sold or proposed to be sold by the Company, free and clear of and without
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violating any right, lien, or claim of others, including without limitation,
former employees and former employers of its past and present employees.
(c) The Company has taken security measures to protect the secrecy,
confidentiality, and value of all the Company's intellectual property, which
measures are reasonable and customary in the industry in which it intends to
operate. Each of the Company's employees and other persons who, either alone or
in concert with others, developed, invented, discovered, derived, programmed or
designed the Company's intellectual property, or who has knowledge of or access
to information about the Company's intellectual property, have entered into a
written agreement with the Company, (i) providing that the intellectual property
and other information are proprietary to the Company and are not to be divulged
or misused, and (ii) transferring to the Company, without any further
consideration being given therefor by the Company, all of such employee's or
other person's right, title and interest in and to such intellectual property
and other information and to all patents, trademarks, service marks, trade
names, copyrights, licenses and rights with respect to such intellectual
property and information.
(d) The Company has not received any communications alleging that the
Company has violated or by conducting its business as proposed, would violate
any of the patents, trademarks, service marks, trade names, copyrights or trade
secrets or other proprietary rights of any other person or entity. The Company
is not aware that any of its employees is obligated under any contract
(including licenses, covenants or commitments of any nature) or other agreement,
or subject to any judgment, decree or order of any court or administrative
agency, that would interfere with the use of his best efforts to promote the
interests of the Company or that would conflict with the Company's business as
provided to be conducted. Neither the execution nor delivery of this Agreement,
nor the carrying on of the Company's business by the employees of the Company,
nor the conduct of the Company's business as proposed, will, to the Company's
knowledge, conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, any contract, covenant or
instrument under which any of such employees is now obligated. The Company does
not believe it is or will be necessary to utilize any inventions of any of its
employees (or people it currently intends to hire) made prior to their
employment by the Company other than those that have been assigned to the
Company pursuant to the Intellectual Property Agreement signed by such employee.
3.12 Taxes. Except as set forth on Schedule 3.12, the Company
has accurately prepared and timely filed all federal income and payroll tax
returns and filings and all state and municipal tax returns that are required to
be filed by it ("Tax Returns") and has paid or made provision for the payment of
all amounts due pursuant to such returns. The Tax Returns are true and complete
in all material respects. None of the Tax Returns have been audited by the
Internal Revenue Service or any state taxing authority, as the case may be, the
Company has not been advised that any of such Tax Returns will be so audited,
and there are no waivers in effect of the applicable statute of limitations for
any period. No deficiency assessment or proposed adjustment of federal income
taxes or state or municipal taxes of the Company is pending and the Company has
no knowledge of any proposed liability for any tax to be imposed. The
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Company has not elected pursuant to the Internal Revenue Code of 1986, as
amended ("Code"), to be treated as an S corporation or a collapsible corporation
pursuant to Section 1362(a) or Section 341(f) of the Code, nor has it made any
other elections pursuant to the Code (other than elections that related solely
to methods of accounting, depreciation or amortization) that would have a
material effect on the Company, its financial condition, its business as
presently conducted or proposed to be conducted or any of its properties or
material assets.
3.13 Contracts. Schedule 3.13 contains a true and complete list
of all material contracts and agreements to which the Company is a party or by
which its property is bound. Except as set forth on Schedule 3.13 hereto, the
Company has no employment or consulting contracts, deferred compensation
agreements or bonus, incentive, profit-sharing, or pension plans currently in
force and effect, or any understanding with respect to any of the foregoing.
Schedule 3.13 hereto also lists all employment, non-competition and
confidentiality agreements, any employee or consultant of the Company or any
other entity.
3.14 Litigation. No action, proceeding or governmental inquiry
or investigation is pending or threatened against the Company or any of its
officers, directors or employees (in their capacity as such) or any of the
Company's properties before any court, arbitration board or tribunal or
administrative or other governmental agency, nor is the Company aware that there
is any basis for the foregoing. The foregoing includes, without limiting its
generality, actions pending or known to the Company to be threatened involving
the prior employment of any of the Company's employees or use by any of them in
connection with the Company's business of any information, property or
techniques allegedly proprietary to any of their former employers. The Company
is not a party to or subject to the provisions of any order, writ, injunction,
judgment or decree of any court or governmental agency or instrumentality.
There is no action, suit, proceeding or investigation by the Company currently
pending or that the Company intends to initiate.
3.15 Private Offering. The Company agrees that neither the
Company nor anyone acting on its behalf has offered or will offer such
securities of the Company or any part thereof or any similar securities for
issuance or sale to, or solicit any offer to acquire any of the same from,
anyone so as to make the issuance and sale of the Series D Preferred Stock not
exempt from the registration requirements of Section 5 of the Securities Act of
1933, as amended ("Securities Act"). None of the shares of the Company's
capital stock issued and outstanding has been offered or sold in such a manner
as to make the issuance and sale of such shares not exempt from such
registration requirements, and all such shares of capital stock have been
offered and sold in compliance with all applicable federal and state securities
laws.
3.16 Full Disclosure. Neither this Agreement, the Operating Plan
nor any other certificates made or delivered in connection herewith contains any
untrue statement of a material fact or omits to state a material fact necessary
to make the statements herein or therein not misleading, in view of the
circumstances in which they were made, provided, however, that the Company makes
no representation or warranty (i) with respect to matters specified in the
Operating Plan as based on a source other than the Company, or (ii) with respect
to any
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projections, other than that such projections were prepared in good faith
and that the Company reasonably believes there is a reasonable basis for such
projections. There is no material fact known to the Company relating to the
business, prospects, condition (financial or otherwise), affairs, operations, or
assets of the Company that has not been disclosed to each of the Investors by
the Company.
3.17 Fees and Commissions. Except as set forth on Schedule 3.17
hereto, as to which the Company shall be solely liable, the Company has not
retained, or otherwise authorized to act, any finder, broker, agent, financial
advisor or other intermediary (collectively "Intermediary") in connection with
the transactions contemplated by this Agreement and the Company shall indemnify
and hold harmless the Investors from liability for any compensation to any
Intermediary retained or otherwise authorized to act by, or on behalf of, the
Company, and the fees and expenses of defending against such liability or
alleged liability.
3.18 Interested Party. Except as set forth in Schedule 3.18, no
officer or director of the Company or any Transactions "affiliate" or
"associate" (as these terms are defined in Rule 405 promulgated under the
Securities Act) of any such person or entity or the Company has or has had,
either directly or indirectly, (a) an interest in any person or entity which (i)
furnishes or sells services or products which are furnished or sold or are
proposed to be furnished or sold by the Company, or (ii) purchases from or sells
or furnishes to the Company any goods or services, or (b) except as set forth on
Schedule 3.13, a beneficial interest in any contract or agreement to which the
Company is a party or by which it may be bound or affected. Except as set forth
on Schedule 3.13 hereto, there are no existing material arrangements or proposed
material transactions between the Company and any other director, or holder of
more than 5% of the capital stock of the Company, or to the knowledge of the
Company any affiliate or associate of any such person.
3.19 ERISA. The Company does not maintain, sponsor, or contribute to
any program or arrangement that is an "employee pension benefit plan," an
"employee welfare benefit plan," or a "multiemployer plan", as those terms are
defined in Sections 3(1), 3(2), and 3(37) of the Employee Retirement Income
Security Act of 1974, as amended. Except as listed in Schedule 3.13, the Company
has no incentive or benefit arrangements.
3.20 Section 83(b) Elections. All elections and notices
permitted by Section 83(b) of the Code, and any analogous provisions of
applicable state tax laws have been timely filed by all individuals who have
purchased and currently own shares of the Company's Class A Common Stock other
than pursuant to any stock option plans of the Company. The Company makes no
representation or warranty regarding the content or accuracy of any such
election or notice.
3.21 Company Transactions. The Company has not engaged in the past six
(6) months in any discussion (i) with any representative of any corporation or
corporations regarding the merger of the Company with or into any such
corporation or corporations, (ii) with any corporation, partnership, association
or other business entity or any individual regarding the sale,
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conveyance or disposition of all or substantially all of the assets of the
Company or a transaction or series of related transactions in which more than
50% of the voting power of the Company is disposed of, or (iii) regarding any
other form of liquidation, dissolution or winding up of the Company.
3.22 Permits. The Company has all franchises, permits, licenses, and
any similar authority necessary for the conduct of its business as now being
conducted by it, the lack of which could materially and adversely affect the
business, properties, prospects, or financial condition of the Company, and the
Company believes it can obtain, without undue burden of expense, any similar
authority for the conduct of its business as planned to be conducted. The
Company is not in default in any material respect under any of such franchises,
permits, licenses, or other similar authority.
3.23 Insurance. Except as set forth in Schedule 3.23, the Company has
in full force and effect fire and casualty insurance policies, with extended
coverage, sufficient in amount (subject to reasonable deductibles) to allow it
to replace any of its properties that might be damaged or destroyed.
3.24 Certain Tax-Related. Except as contemplated by the agreements
listed on Schedule 3.13, the Company has Provisions not made any purchase of its
capital stock within the one (1) year period preceding the Closing Date and the
Company covenants and agrees with the Investors that the Company will not within
the one (1) year period following the Closing Date make any purchase of its
capital stock that would result in the Series D Preferred Stock issued and sold
pursuant to this Agreement to not be eligible for treatment as "qualified
business stock" within the meaning of section 1202 of the Code, without the
prior written approval of the holders of at least 50% of the Series D Preferred
Stock. The Company agrees to submit such reports to the Secretary of the
Internal Revenue Service and to the Investors as the Secretary may require to
carry out the purposes of such provisions.
4. Representations, Warranties and Covenants of the Investors. Each
Investor, severally and not jointly, represents and warrants that:
4.1 Authorization. It has full power and authority to enter into and
to perform this Agreement in accordance with its terms. This Agreement has been
duly executed and delivered by it and constitutes its valid and legally binding
obligation.
4.2 Investment Representations. It is acquiring the Series D Preferred
Stock for its own account, for investment purposes and not with a view to, or
for sale in connection with, any distribution of such Series D Preferred Stock
or any part thereof.
4.3 Investment Experience; Access to Information. It (a) is an
"accredited investor" as that term is defined in Rule 501(a) promulgated under
the Securities Act, (b) is an investor experienced in the evaluation of
businesses similar to the Company, (c) is able to fend for itself in the
transactions contemplated by this Agreement, (d) has such knowledge and
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experience in financial, business and investment matters as to be capable of
evaluating the merits and risks of this investment, (e) has the ability to bear
the economic risks of this investment, and (f) has been afforded prior to the
Closing Date the opportunity to ask questions of, and to receive answers from,
the Company and to obtain any additional information, to the extent the Company
has such information or could have acquired it without unreasonable effort or
expense, all as necessary for the Investor to make an informed investment
decision with respect to the purchase of the Series D Preferred Stock. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 3 of this Agreement or the right of such Investor to
rely thereon.
4.4 Absence of Registration. It understands that:
(a) The Series D Preferred Stock to be sold and issued hereunder
is unregistered and may be required to be held indefinitely unless they are
subsequently registered under the Securities Act, or an exemption from such
registration is available.
(b) Except as provided in Section 8, the Company is under no
obligation to file a registration statement with the Securities and Exchange
Commission ("Commission") with respect to the Series D Preferred Stock.
(c) Rule 144 promulgated under the Securities Act ("Rule 144"),
which provides for certain limited sales of unregistered securities, is not
presently available with respect to the Series D Preferred Stock, and the
Company is under no obligation to make Rule 144 available except as otherwise
provided in Section 7.6.
4.5 Restrictions on Transfer.
--------------------------
(a) It will not offer, sell, pledge, hypothecate, or otherwise
dispose of the Series D Preferred Stock unless such offer, sale, pledge,
hypothecation or other disposition is (i) registered under the Securities Act,
or (ii) in compliance with an opinion of counsel to the Investor, delivered to
the Company and reasonably acceptable to the Company, to the effect that such
offer, sale, pledge, hypothecation or other disposition thereof does not violate
the Securities Act. Notwithstanding the foregoing, a transfer of shares of
Series D Preferred Stock by an Investor to (x) any family member or trust for
the benefit of an individual Investor, (y) a Beneficial Owner or affiliate (each
as defined in Section 7.10(g) hereof) or (z) with respect to any Investor that
is a registered investment company (as defined in the Investment Company Act of
1940, as amended (the "Investment Company Act") or an institutional account, or
the custodian for such investment company or institutional account, any entity
or person with which such Investor is under common investment management, shall
not require such registration under the Securities Act, and the Company may
require such opinion of counsel only if the transfer is other than a transfer
pursuant to Rule 144 under the Securities Act or a transfer to Beneficial Owners
or affiliates (each as defined in Section 7.10(g) hereof) of the Investor.
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(b) The certificate(s) representing the Series D Preferred Stock,
and any Class A Common Stock issuable upon conversion of the Series D Preferred
Stock, shall bear a legend stating in substance:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND
HAVE BEEN SOLD IN RELIANCE ON THE EXEMPTION FROM REGISTRATION PROVIDED FROM
REGULATIONS UNDER THE SECURITIES ACT. THE SECURITIES REPRESENTED BY THIS
CERTIFICATE MAY NOT BE OFFERED OR SOLD, DIRECTLY OR INDIRECTLY, EXCEPT
PURSUANT TO A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OR IN
COMPLIANCE WITH RULE 144 PROMULGATED UNDER THE SECURITIES ACT OR ANOTHER
AVAILABLE EXEMPTION THEREFROM, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) Upon request of a holder of Series D Preferred Stock, and any
Class A Common Stock issuable upon conversion of the Series D Preferred Stock,
the Company shall remove the legend set forth above from the certificates
evidencing such Series D Preferred Stock, or Class A Common Stock, as the case
may be, or issue to such holder new certificates therefor free of such legend,
if with such request the Company shall have received an opinion of counsel
selected by the holder and reasonably satisfactory to the Company, in form and
substance reasonably satisfactory to the Company, to the effect that such
Series D Preferred Stock, or Class A Common Stock, as the case may be, is not
required by the Securities Act to continue to bear the legend; provided,
however, that no such opinion of counsel shall be required if such request is
made in connection with a transfer (x) pursuant to an offering registered under
the Securities Act, or (y) pursuant to Rule 144 under the Securities Act.
4.6 Transfer Instructions. It agrees that the Company may provide
for appropriate transfer instructions to implement the provisions of Section 4.5
hereof.
4.7 Economic Risk. It understands that it must bear the economic
risk of the investment represented by the purchase of Series D Preferred Stock
for an indefinite period.
4.8 Fees and Commissions. It represents and warrants that it has not
retained, or otherwise authorized to act, any Intermediary in connection with
the transactions contemplated by this Agreement and agrees to indemnify and hold
harmless the Company from liability for any compensation to any intermediary
retained or otherwise authorized to act by, or on behalf of, the Investor and
the fees and expenses of defending against such liability or alleged liability.
4.9 Offering Memorandum Acknowledgement. It acknowledges and
understands that the Private Placement Memorandum dated May 2000 provided to it
by the Company includes certain estimates, projections and other statements that
may constitute
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"forward-looking statements" within the meaning of Section 27A of the Securities
Act of 1933, as amended or Section 21E of the Securities Exchange Act of 1934,
as amended, and that the Company's independent accountants have neither examined
nor compiled the projections and accordingly do not express an opinion or any
other form of assurance with respect thereto.
5. Conditions to Closing of the Investors. The obligation of each
Investor on the Closing Date to purchase the Series D Preferred Stock to be
purchased under this Agreement by it shall be subject to each of the following
conditions precedent, any one or more of which may be waived by Investors
purchasing at least 75% of the Series D Preferred Stock to be purchased at the
Closing:
5.1 Representations and Warranties. The representations and
warranties made by the Company herein shall be true and accurate on and as of
the Closing Date as if made on such date.
5.2 Performance. The Company shall have performed and complied with
all agreements and conditions contained herein or in other ancillary documents
incident to the transactions contemplated by this Agreement required to be
performed or complied with by it prior to or at the Closing.
5.3 Consents, etc. The Company shall have secured all permits,
consents and authorizations that shall be necessary or required lawfully to
consummate this Agreement and to issue the Series D Preferred Stock to be
purchased by each Investor at the Closing, and the Fifth Restated Certificate,
shall have been duly filed with the Secretary of State of the State of Delaware.
5.4 Compliance Certificates. The Company shall have delivered to the
Investors or their representative at the Closing an Officer's Certificate to the
effect that all conditions specified in Sections 5.1 through 5.3 have been
fulfilled.
5.5 Proceedings and Documents. All corporate and other proceedings
in connection with the transactions contemplated by this Agreement and all
documents and instruments incident to such transactions shall be reasonably
satisfactory in substance and form to the Investors and their counsel, and the
Investors and their counsel shall have received all such counterpart originals
or certified or other copies of such documents as the Investors or their counsel
may reasonably request.
5.6 Co-Sale Agreement. Certain of the Company's employees shall have
entered into an Amended and Restated Co-Sale Agreement with certain of the
Investors, in form and substance acceptable to Investors.
5.7 Voting Agreement. Certain of the Company's stockholders,
including Investors, shall have entered into an Amended and Restated Voting
Agreement, in form and substance acceptable to Investors.
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5.8 Opinion of Counsel. The Company shall have delivered to the
Investors the opinion of Day, Xxxxx & Xxxxxx LLP, counsel to the Company, in
form and substance acceptable to Investors.
5.9 IPO Warrants. As additional consideration for the purchase of
the Series D Preferred Stock hereunder, the Company shall have delivered to each
of the Investors, except for any Investor managed by Xxxxxx Investment
Management, Inc. (such Investors the "Participating Investors"), a warrant (each
a "Warrant," and collectively, the "Warrants"), in the form of Exhibit A
attached hereto.
6. Conditions to Closing of the Company. The obligation of the
Company on the Closing Date to issue and sell the Series D Preferred Stock to be
purchased under this Agreement shall be subject to the representations and
warranties made by the Investors herein being true and accurate on and as of the
applicable Closing Date as if made on such date.
7. Affirmative Covenants.
7.1 Inspection. The Company covenants and agrees that, for so long
as any Investor holds at least 25% of the Series D Preferred Stock originally
purchased by it (including for these purposes the Class A Common Stock converted
therefrom), as adjusted for stock splits, stock dividends, recapitalizations,
reclassifications and similar events (together herein called "Recapitalization
Events"), the Company will permit any authorized representatives of such
Investor free and full access at all reasonable times and upon reasonable notice
to all of the books, records, personnel and properties of the Company, for any
purpose whatsoever, subject to Section 7.9 hereof.
7.2 Accounting. The Company will maintain and cause each of its
Subsidiaries (other than inactive Subsidiaries) to maintain a system of
accounting established and administered in accordance with GAAP consistently
applied, and will set aside on its books and cause each of its operating
Subsidiaries to set aside on its books all such proper reserves as shall be
required by GAAP. For purposes of this Agreement, "Subsidiary" means any
corporation or entity at least a majority of whose voting securities are at the
time owned by the Company, or by one or more Subsidiaries, or by the Company and
one or more Subsidiaries.
7.3 Annual Financial Statements. The Company will deliver to each
Investor:
(a) within 90 days after the end of each fiscal year of the
Company, a consolidated balance sheet of the Company and its Subsidiaries as at
the end of such year and statements of income and of cash flow of the Company
and its 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 the opinion thereon of a "Big Five" firm of independent public
accountants, which opinion shall state that such balance sheet and statements of
operations and cash flow have been prepared in accordance with GAAP applied on a
basis consistent with that of the preceding fiscal year (except as otherwise
approved by the Board of Directors), and
-15-
present fairly and accurately the financial position of the Company as of their
date, and that the audit by such accountants in connection with such financial
statements has been made in accordance with Generally Accepted Auditing
Standards.
(b) within 90 days after the end of each fiscal year of the
Company, a statement from the Chief Financial Officer ("CFO") regarding
compliance with the terms of this and any other major agreements.
7.4 Monthly Financial Statements; Compliance Reports Budgets;
Reports. The Company will deliver, to each Investor:
(a) within 30 business days after the end of each month: (i) an
unaudited consolidated balance sheet of the Company as at the end of such month
and unaudited consolidated statements of source and application of funds income
and cash flow for such month and for the period from the beginning of the
current fiscal year to the end of such month, setting forth in each case in
comparative form the figures for the budget in respect of such periods all in
reasonable detail and certified, subject to changes resulting from year-end
adjustments, by the Company's CFO; and (ii) a statement indicating (A) that the
Company is, or is not, in compliance with this and other major agreements and
giving the remedies proposed to cure any defaults thereof, (B) that the
Company's financial statements have been prepared in accordance with generally
accepted accounting principles consistently applied, and (C) that there have, or
have not, been any transactions which would cause adjustments to the conversion
price per share for the outstanding Preferred Stock, which is $0.50 for the
Series A Preferred Stock, $1.165 for the Series B Preferred Stock, $3.25 for the
Series C Preferred Stock, and $15.00 for the Series D Preferred Stock
("Conversion Prices"), and if so, the new Conversion Prices and the facts
associated with the recomputation of the Conversion Prices.
(b) at least 30 days prior to fiscal year-end, a budget for the
upcoming two fiscal years, containing information set forth in monthly
projections for the first year and on an annual basis for the next year, and
will contain balance sheets, income statements, and source and application of
funds statements; the Company will also provide the Investors with any revisions
to the budget within 10 days of their acceptance with an explanation of
deviations from the prior budget;
(c) within 10 days of preparation or occurrence, the Company will
furnish the Investors with (i) any communications with shareholders, the
financial community, or the Securities and Exchange Commission, including annual
and quarterly reports, proxy statements, and press releases, (ii) any report
prepared for the Company by an outside consultant, (iii) any reports filed by
the Company or its officers with Federal or state regulatory agencies or
security exchanges, (iv) any report presented to the Board of Directors, and
(v) notices of any material events; and
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(d) with reasonable promptness, any and all operating reports or
financial data as may be reasonably requested, as well as any other information
necessary for the Investors to meet their legal requirements.
7.5 Use of Proceeds. The Company shall use the proceeds from the
sale of the Series D Preferred Stock for working capital purposes in connection
with the Company's development, manufacturing, and marketing of fiber optic-
based products.
7.6 Public Information. At any time and from time to time after the
earlier of the close of business on such date as (a) a registration statement
filed by the Company under the Securities Act becomes effective, (b) the Company
registers a class of securities under Section 12 of the Securities Exchange Act
of 1934, as amended, or any federal statute or code which is a successor thereto
("Exchange Act"), or (c) the Company issues an offering circular meeting the
requirements of Regulation A under the Securities Act, the Company shall
undertake to make publicly available and available to the Holders (as
hereinafter defined in Section 8), pursuant to Rule 144, such information as is
necessary to enable the Holders to make sales of Registrable Stock (as
hereinafter defined in Section 8) pursuant to that Rule. The Company shall
comply with the current public information requirements of Rule 144 and shall
furnish thereafter to any Holder, upon request, a written statement executed by
the Company as to the steps it has taken to so comply.
7.7 Insurance. The Company shall obtain and keep in effect so long
as the Board of Directors deem advisable, term life insurance on the lives of
certain of the employees as, and in the principal amounts as, the Board of
Directors shall determine, in each case with proceeds payable to the Company.
The Company will keep and maintain in full force and effect fire, casualty and
umbrella liability insurance policies, with extended coverage, reasonably
sufficient in amount to allow it to replace any of its properties that might be
damaged or destroyed. The Company will keep and maintain in full force and
effect director's and officer's liability insurance and employment practices
liability insurance.
7.8 Observer Rights.
(a) Each of the Amerindo Group (as defined as set forth on
Schedule 4 attached hereto), the MSD Group (as defined as set forth on Schedule
5 attached hereto) and Cisco shall be allowed by the Company to designate a
representative (for so long as each such Investor continues to own respectively
no less than 25% of the Series D Preferred Stock purchased by each such Investor
pursuant to this Agreement (or Class A Common Stock into which such shares may
be converted, in each case such number of shares appropriately adjusted for
stock splits, stock dividends and similar recapitalizations)), to attend and
observe any meeting of the Board of Directors, in a nonvoting capacity. The
Company shall give each such Investor notice of each meeting of the Board of
Directors, provided, however, that a failure to comply with the requirements of
this paragraph shall not affect the validity of any meeting of directors, or any
action taken at any such meeting.
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(b) The Company shall allow a representative designated by Axiom
Venture Partners II, Limited Partnership (for so long as such Investor continues
to own no less than 40% of the Series D Preferred Stock purchased by such
Investor pursuant to this Agreement and Series C Preferred Stock purchased by
each such Investor pursuant to the Preferred Stock Purchase Agreement, dated as
of April 19, 1999, by and among the Company and the other parties thereto (the
"Series C Purchase Agreement") (or Class A Common Stock into which such shares
of Series D Preferred Stock and Series C Preferred Stock may be converted, in
each case such number of shares appropriately adjusted for stock splits, stock
dividends and similar recapitalizations)), to attend and observe any meeting of
the Board of Directors, in a nonvoting capacity. The Company shall give such
Investor notice of each meeting of the Board of Directors, provided, however,
that a failure to comply with the requirements of this paragraph shall not
affect the validity of any meeting of directors, or any action taken at any such
meeting.
(c) With respect to each of CII/NEV LLC, and subject to the
provisions of Section 24 hereof, Xxxxxxxxx X. Xxxxxxxxxx, for so long as each
such Investor continues to own no less than 40% of the aggregate number of
shares of Series D Preferred Stock purchased by each such Investor pursuant to
this Agreement (if applicable) and, if applicable, Series A Preferred Stock
purchased by each such Investor pursuant to the Series A Purchase Agreement and
the Amendatory Agreement (each as hereinafter defined) and Series C Preferred
Stock purchased by each such Investor pursuant to the Series C Purchase
Agreement (or Class A Common Stock into which such shares of Series D Preferred
Stock, Series A Preferred Stock and Series C Preferred Stock may be converted,
in each case such number of shares appropriately adjusted for stock splits,
stock dividends and similar recapitalizations)), the Company shall invite each
such Investor (or in the case of CII/NEV LLC, a representative designated by
such Investor) to attend and observe two meetings of the Board of Directors
during each calendar year in a non-voting capacity. The Company shall give each
such Investor notice of the meetings of the Board of Directors to which such
Investor is invited to attend, provided, however, that a failure to comply with
the requirements of this paragraph shall not affect the validity of any meeting
of Directors, or any action taken at any such meeting.
7.9 Confidentiality. Any information provided pursuant to
Sections 7.1, 7.3 and 7.4 shall be used by each Investor solely in furtherance
of its interests as an investor in the Company, and each Investor, or a
prospective purchaser who agrees to be bound by the provisions of this
Section 7.9, shall (except as otherwise required by law or as may be requested
by a governmental regulatory authority) maintain the confidentiality of all non-
public information of the Company obtained under said sections, provided that
the Company makes an appropriate designation of any such confidential
information, and provided further that, any other term of this Agreement to the
contrary notwithstanding, the Company shall not be obligated to disclose any
information, the disclosure of which it believes in good faith would be
detrimental to the business of the Company. The term "confidential information"
shall not include such information that (a) is or becomes generally available to
the public other than as a result of a disclosure by an Investor or its agents,
representatives or employees; (b) is or becomes available to an Investor on a
non-confidential basis from a source (other than the Company or one of its
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directors, officers, agents, representative or employees) that is not prohibited
from disclosing such information by a legal, contractual or fiduciary
obligation; or (c) was known to an Investor on a non-confidential basis prior to
its disclosure to such Investor by the Company.
In the event that an Investor, anyone to whom an Investor transmits
any confidential information, or any prospective purchaser of Series D Preferred
Stock, becomes legally compelled to disclose any confidential information, or
such confidential information is requested by a governmental regulatory
authority, such person will provide the Company with prompt notice so that it
may seek a protective order or other appropriate remedy and/or waive compliance
with the provisions of this Section 7.9. In the event that such protective
order or other remedy is not obtained, or the Company waives compliance with the
provisions of this Section 7.9, the Investor will furnish only that portion of
the confidential information that it is advised by written opinion of counsel is
legally required and will exercise its best efforts to obtain reliable assurance
that confidential treatment will be accorded the confidential information.
7.10 Right of First Refusal. The Company hereby grants to each
Investor and Existing Stockholder the right of first refusal to purchase, pro
rata, all (or any part) of New Securities (as defined in Section 7.10(a) below)
that the Company may, from time to time, propose to sell and issue and may (in
its sole discretion) assign to each Investor and Existing Stockholder its right
to purchase, pro rata, all (or any part) of Employee Stock (as defined in
Section 7.10(e) below) that the Company is entitled to, but shall not be
obligated to, repurchase from an employee. Each Investor's or Existing
Stockholder's pro rata share shall be the ratio of the number of shares of
Preferred Stock then held by such Investor or Existing Stockholder as of the
date of the Rights Notice (as defined in Section 7.10(b)) or the Repurchase
Notice (as defined in Section 7.10(f)), as the case may be, to the sum of the
total number of shares of Preferred Stock then held by all Investors and
Existing Stockholders (including for this purpose permitted transferees of the
Investors and Existing Stockholders pursuant to Section 7.10(f) hereof) as of
such date. This Section 7.10 shall be subject to the following provisions:
(a) "New Securities" shall mean (i) any capital stock of any
kind of the Company, whether now or hereafter authorized, and rights, options,
or warrants to purchase said capital stock, and securities of any type
whatsoever that are, or may become, convertible into said capital stock and
(ii) any bridge debt securities having a term of less than one year; provided,
however, that "New Securities" shall not include (i) securities issuable with
respect to Preferred Stock issued on or prior to the date hereof;
(ii) securities offered to the public pursuant to a registration statement filed
under the Securities Act; (iii) securities issued in connection with the
acquisition of another corporation, business entity or line of business of
another business entity by the Company by merger, consolidation, purchase of all
or substantially all of the assets, or other reorganization as a result of which
the Company owns not less than 51% of the voting power of such corporation;
(iv) shares of the Company's Class A Common Stock or Preferred Stock issued in
connection with any Recapitalization Event by the Company; (v) securities
reserved, not to exceed 7,410,000 shares of Class A Common Stock, under the 1997
Plan, as adjusted for Recapitalization Events; (vi) securities to be issued in
connection with the leasing or
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acquisition of assets by the Company or supply arrangements for the Company, or
securities to be issued to consultants, vendors, equipment lessors, lenders or
customers of the Company or in connection with an acquisition of an interest in
another entity or the formation of a joint venture; in each case as approved by
a majority of the Company's Board of Directors, provided, however, that in the
case of an issuance pursuant to subsection 7.10(a)(vi), such issuance shall have
been approved (x) by a two-thirds vote of the Company's Board of Directors, in
the case of any issuance where the consideration received by the Company is
equivalent to no less than $3.25 per Class A Common Stock equivalent share
issued (as adjusted for Recapitalization Events) and such issuance, or series of
related issuances to the same person, is of securities representing no more than
thirty-three percent (33%) of the outstanding capital stock of the Company (on a
fully-diluted basis) at the time of such issuance or issuances, or (y) by the
unanimous vote of the Capital Committee of the Company's Board of Directors and
by a two-thirds vote of the Company's Board of Directors, in the case of any
issuance where the consideration received by the Company is equivalent to less
than $3.25 per Class A Common Stock equivalent share issued (as adjusted for
Recapitalization Events) or such issuance, or series of related issuances to the
same person, is of securities representing more than thirty-three percent (33%)
of the outstanding capital stock of the Company (on a fully-diluted basis) at
the time of such issuance or issuances; or (vii) issuance of the Warrants or the
securities issuable upon the exercise of such Warrants.
(b) If the Company proposes to issue New Securities, it shall give the
Investors and Existing Stockholders written notice ("Rights Notice") of its
intention, describing the New Securities, the price, the general terms upon
which the Company proposes to issue them, and the number of shares that the
Investor or Existing Stockholder has the right to purchase under this
Section 7.10. Each Investor and Existing Stockholder shall have ten (10) days
from delivery of the Rights Notice to agree to purchase (i) all or any part of
its pro rata share of such New Securities and (ii) all or any part of the pro
rata share of any other Investor or Existing Stockholder (including for this
purpose any permitted transferee of such Investor or Existing Stockholder under
Section 7.10(f) hereof) to the extent that such other Investor or Existing
Stockholder does not elect to purchase its full pro rata share, in each case for
the price and upon the general terms specified in the Rights Notice, by giving
written notice to the Company setting forth the quantity of New Securities to be
purchased. If the Investors and Existing Stockholders who elect to purchase
their full pro rata shares also elect to purchase in the aggregate more than
100% of the New Securities, such New Securities shall be sold to such Investors
in accordance with their respective pro rata shares.
(c) If the Investors and Existing Stockholders fail to exercise
in full the right of first refusal within the period or periods specified in
Section 7.10(b), the Company shall have one hundred twenty (120) days after
delivery of the Rights Notice to sell the unsold New Securities at a price and
upon general terms no more favorable to the purchasers thereof than specified in
the Company's notice. If the Company has not sold all of the New Securities
originally offered hereunder within said one hundred twenty (120) day period,
the Company shall not thereafter issue or sell any New Securities without first
offering such securities to the Investors and Existing Stockholders in the
manner provided above.
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(d) In the event of any Dilutive Financing (as defined in the
Fifth Restated Certificate), an Investor or Existing Stockholder which holds
shares of Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock and which purchases all of its pro rata share of such offering
shall be entitled to price protection as to the shares of Series A Preferred
Stock, Series B Preferred Stock or Series C Preferred Stock held by it, as the
case may be, resulting in an immediate adjustment in the Conversion Price
applicable to such Investor or Existing Stockholder as set forth in the Fifth
Restated Certificate. If such an Investor or Existing Stockholder purchases less
than its pro rata share of such securities ("Participation Percentage"), the
Investor or Existing Stockholder will be entitled to price protection as to a
portion of its Series A Preferred Stock, Series B Preferred Stock or Series C
Preferred Stock, as the case may be, that is equal to the Participation
Percentage.
(e) "Employee Stock" shall mean any Class A Common Stock of the
Company, whether now or hereafter authorized, that the Company has issued or
sold to an employee pursuant to an employee stock purchase, option or benefit
plan, agreement, or other offering or arrangement, including, without
limitation, all shares sold by the Company to employees and consultants of the
Company subject to agreements of restriction, including the 1997 Plan, by the
Company, all Reserved Shares, and shares issued under those certain Stock
Restriction and Exchange Agreements entered into by and between the Company and
certain of the Employees.
(f) If the Company has the right to repurchase any Employee
Stock from any employee for any reason, including, without limiting the
generality of the foregoing, the termination of such employee's employment, and
if it shall not repurchase all of the shares of such Employee Stock, if it so
elects in its sole discretion to assign its repurchase right to the Investors
and Existing Stockholders, it shall give each Investor and Existing Stockholder
written notice ("Repurchase Notice") of the Investor's or Existing Stockholder's
right to repurchase, describing the Employee Stock, the price, the general terms
upon which such Employee Stock is available for repurchase, and the number of
shares that the Investor has the right to purchase under this Section 7.10. Each
Investor and Existing Stockholder shall have fifteen (15) days from delivery of
any such notice in accordance with Section 15 to agree to purchase (i) all or
any part of its pro rata share of such Employee Stock and (ii) all or any part
of the pro rata share of any other Investor or Existing Stockholder to the
extent that such other Investor or Existing Stockholder does not elect to
purchase his full pro rata share, in each case for the price and upon the
general terms specified in the notice by giving written notice to the Company
setting forth the quantity of Employee Stock to be purchased. If the Investors
and Existing Stockholders who elect to purchase their full pro rata shares also
elect to purchase in the aggregate more than 100% of the Employee Stock, such
Employee Stock shall be sold to such Investors and Existing Stockholders in
accordance with their respective pro rata shares.
(g) If the Company assigned its right of first refusal to Investors
and Existing Stockholders as described in this Section 7.10, those rights may
not be subsequently assigned except to (i) an "affiliate" (as defined in Rule
144 promulgated under the Securities Act)
-21-
of each Investor or Existing Stockholder, (ii) any family member of an Investor
or Existing Stockholder or trust for the benefit of any individual Investor or
Existing Stockholder, (iii) any of such Investor's or Existing Stockholder's
beneficial owners, including without limitation partners of a general or limited
partnership (including retired partners of such partnerships who retire after
the date hereof), shareholders of a corporation, members of a limited liability
company and beneficiaries of a trust ("Beneficial Owner"), or (iv) with respect
to any Investor that is a registered investment company (as defined in the
Investment Company Act) or an institutional account, to any entity or person
with which such Investor is under common investment management. Each Investor
and Existing Stockholder shall be entitled to apportion the rights of first
refusal hereby granted among itself and its affiliates in such proportions as it
deems appropriate.
7.11 Maintenance of Existence and Properties, etc. The Company will,
and will cause each of its Subsidiaries to: (a) maintain its corporate
existence, rights, governmental approvals and franchises necessary to the
conduct of its business, (b) keep its properties in good repair, working order
and condition, reasonable wear and tear excepted, (c) give appropriate notice of
events of default pursuant to any agreements of the Company, (d) enter into
transactions with "affiliates" or "associates" (as those terms are defined in
Rule 405 promulgated under the Securities Act) only on fair and reasonable terms
and (e) promptly pay and discharge, or cause to be paid and discharged, when due
and payable, all lawful taxes, assessments and governmental charges or levies
imposed upon the income, profits, property or business of the Company or any
Subsidiary; provided, however, that any such tax, assessment, charge or levy
need not be paid if the validity thereof shall at the time be contested in good
faith by appropriate proceedings and provided further that, unless otherwise
approved by the Board of Directors, the Company will pay all such taxes,
assessments, charges or levies forthwith upon the commencement of proceedings to
foreclose any lien which may have attached as security therefor.
7.12 Termination of Covenants. The covenants set forth in
Sections 7.3, 7.4 and 7.10 shall terminate and be of no further force or effect
on the consummation of the first firm commitment underwritten public offering of
the Class A Common Stock of the Company (or other security into which shares of
the Series D Preferred Stock is convertible) pursuant to a registration
statement filed by the Company under the Securities Act ("Qualified IPO") in
which over $20,000,000 in new capital is raised and the offering price per share
is at least $22.50, adjusted for any stock splits or divisions.
8. Registration. The following provisions govern the registration of
Class A Common Stock:
8.1 Definitions. As used herein, the following terms have the
following meanings:
Forms X-x, X-0 and S-3: The forms so designated, promulgated by the
Commission for registration of securities under the Securities Act,
and any forms succeeding to the functions of such forms, whether or
not bearing the same designation.
-22-
Holder: A holder of Registrable Stock (subject to Section 8.13
hereof), provided that anyone who acquires any Registrable Stock in a
distribution pursuant to a registration statement filed by the Company
under the Securities Act shall not thereby be deemed to be a "Holder."
Key Employees: The Key Employees are certain employees and consultants
of the Company set forth on Schedule 2 hereto, or as may be designated
by a majority of the Board of Directors from time to time as "Key
Employees"; provided that in no event shall a person be considered a
Key Employee if such person is no longer employed by, or a consultant
to, the Company; provided, further, that any person designated by the
Board of Directors as a "Key Employee" following the date hereof shall
agree in writing to be bound by the provisions of Sections 8, 10 and
14 hereof.
"Register", "registered" and "registration" refer to a registration
effected by filing a registration statement in compliance with the
Securities Act and the declaration or ordering by the Commission of
effectiveness of such registration statement.
Registrable Stock: All shares of Class A Common Stock issuable upon
conversion of the Series A Preferred Stock, Series B Preferred Stock,
Series C Preferred Stock and Series D Preferred Stock or held by a
person to whom registration rights have been transferred pursuant to
the provisions of this Section 8, all shares of Class A Common Stock
issued by the Company in respect of such shares and all shares of
Class A Common Stock that the Investors and Existing Stockholders may
hereafter purchase pursuant to their rights of first refusal or
otherwise (including, without limitation, the securities purchased
pursuant to any Warrants issued in accordance with the terms of
Section 25 hereof), or Class A Common Stock issued on conversion or
exercise of securities so purchased.
Required Demand Amount: Twenty-five percent (25%) of the Registrable
Stock then outstanding, in the case of the first registration effected
pursuant to Section 8.2, twenty-five percent (25%) of the Registrable
Stock then outstanding, in the case of the second registration
effected pursuant to Section 8.2, and twenty-five percent (25%) of the
Registrable Stock then outstanding, in the case of the third
registration effected pursuant to Section 8.2; provided, however, that
a request by First Reserve (as hereinafter defined) alone shall be
considered the Required Demand Amount in the case of one such
registration (a "First Reserve Registration"); and further provided,
that First Reserve must be an Initiating Holder (as defined in Section
8.2(a) below) for at least one such registration. "First Reserve"
shall mean First Reserve Fund VII, Limited Partnership and First
Reserve Fund VIII, L.P., acting together.
-23-
Subject Stock: All Registrable Stock held by the Investors and
Existing Stockholders and the shares of Class A Common Stock held by
the Key Employees other than shares acquired in a distribution
pursuant to a registration statement filed by the Company under the
Securities Act.
8.2 Required Registration.
(a) If (i) the Holder or Holders of an aggregate of at least the
Required Demand Amount propose to dispose of at least 20% of the then
outstanding Registrable Stock or, in the case of a First Reserve Registration,
at least fifty percent (50%) of the Registrable Stock held by First Reserve
(such holder or holders being herein called the "Initiating Holders"), and
(ii) such disposition may not, in the opinion of such Initiating Holders, be
effected in the public marketplace (as opposed to a private transaction under
the Securities Act) on equally favorable net terms to the Initiating Holders
without registration of such shares under the Securities Act, the Initiating
Holders may request the Company in writing to effect such registration, stating
the number of shares of Registrable Stock to be disposed of by such Initiating
Holders (which, in the aggregate, shall be not less than 20% of the then
outstanding Registrable Stock or, in the case of a First Reserve Registration,
at least fifty percent (50%) of the Registrable Stock held by First Reserve) and
the intended method of disposition. Upon receipt of such request, the Company
will give prompt written notice thereof to all other Holders whereupon such
other Holders shall give written notice to the Company within 20 days after the
date of the Company's notice ("Notice Period") if they propose to dispose of any
shares of Registrable Stock pursuant to such registration, stating the number of
shares of Registrable Stock to be disposed of by such Holder or Holders and the
intended method of disposition.
(b) The Key Employees may register securities for sale for their
own account in the registration requested pursuant to this Section 8.2, subject
to limitations on the number of shares which may be imposed by the underwriter
as set forth in Section 8.4(d) below. At the time the Company shall give the
notice to Holders required by Section 8.2(a), it shall also give the same notice
to the Key Employees whereupon each Key Employee shall give written notice to
the Company within the Notice Period if such Key Employee proposes to dispose of
any shares of Class A Common Stock held by him or her pursuant to such
registration, stating the number of shares of Class A Common Stock to be
disposed of by such Key Employee and the intended method of disposition.
(c) The Company will use its best efforts to effect promptly
after the Notice Period the registration under the Securities Act of all shares
of Subject Stock specified in the requests of the Initiating Holders, the
requests of the other Holders and the request of Key Employees, subject,
however, to the limitations set forth in Section 8.4.
8.3 Registration Procedures. Whenever the Company is required by
the provisions of this Section 8 to use its best efforts to effect promptly the
registration of shares of Registrable Stock, the Company will:
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(a) prepare and file with the Commission a registration statement
with respect to such shares and use its best efforts to cause such registration
statement to become and remain effective as provided herein;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
current and to comply with the provisions of the Securities Act with respect to
the disposition of all shares covered by such registration statement, including
such amendments and supplements as may be necessary to reflect the intended
method of disposition from time to time of the prospective seller or sellers of
such shares, but for no longer than one hundred twenty (120) days subsequent to
the effective date of such registration in the case of a registration statement
on Form S-l or S-2 and for no longer than ninety (90) days in the case of a
registration statement on Form S-3;
(c) furnish to each prospective seller such number of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents, as such seller may
reasonably request in order to facilitate the public sale or other disposition
of the shares owned by such seller;
(d) use its best efforts to register or qualify the shares
covered by such registration statement under such other securities or blue sky
or other applicable laws of such jurisdiction within the United States as each
prospective seller shall reasonably request, to enable such seller to consummate
the public sale or other disposition in such jurisdictions of the shares owned
by such seller; provided, however, that in no event shall the Company be
obligated to qualify to do business in any jurisdiction where it is not at the
time so qualified or to take any action which would subject it to service of
process in suits other than those arising out of the offer or sale of the
Subject Stock covered by such registration statement in any jurisdiction where
it is not at the time so subject;
(e) furnish to each prospective seller (i) a signed counterpart,
addressed to the prospective sellers, of an opinion of counsel for the Company,
dated the effective date of the registration statement, covering substantially
the same matters with respect to the registration statement (and the prospectus
included therein) as are customarily covered (at the time of such registration)
in opinions of issuer's counsel delivered to the underwriters in underwritten
public offerings of securities, and (ii) a letter dated such date from the
independent certified public accountants of the Company, in form and substance
as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Stock;
(f) in the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering; each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement;
-25-
(g) notify each Holder of Registrable Stock covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing; and
(h) apply for listing and use its best efforts to list the
Registrable Stock being registered on any national securities exchange on which
a class of the Company's equity securities are listed or, if the Company does
not have a class of equity securities listed on a national securities exchange,
apply for qualification and use its best efforts to qualify the Registrable
Stock being registered for inclusion on the automated quotation system of the
National Association of Securities Dealers, Inc. or on a national securities
exchange.
8.4 Limitations on Required Registrations.
-------------------------------------
(a) The Company shall not be required to effect more than three
registrations on behalf of the Investors pursuant to Section 8.2.
(b) As to the First Reserve Registration, the Company shall not
be required to cause a registration requested pursuant to Section 8.2 to become
effective prior to the earlier of (i) April 13, 2002, or (ii) the expiration of
six (6) months after the effective date of the first registration statement
initiated by the Company (other than a registration effected solely to implement
an employee benefit plan or a transaction to which Rule 145 of the Commission is
applicable).
(c) The Company shall not register securities for sale for its
own account in any registration requested pursuant to Section 8.2 unless
permitted to do so by the written consent of Holders who hold at least 51% of
the Registrable Stock as to which registration has been requested. The Company
may not cause any other registration of securities for sale for its own account
(other than a registration effected solely to implement an employee benefit
plan) to be initiated after a registration requested pursuant to Section 8.2 and
to become effective less than 120 days after the effective date of any
registration requested pursuant to Section 8.2.
(d) Whenever a requested registration is for an underwritten
offering, only shares which are to be included in the underwriting may be
included in the registration. Notwithstanding the provisions of Sections 8.2(b)
and 8.4(c), if the underwriter determines that (i) marketing factors require a
limitation of the total number of shares to be underwritten or a limitation of
the total number of shares of the Key Employees to be underwritten, or (ii) the
offering price per share would be reduced by the inclusion of the shares of the
Key Employees and/or the Company, then the number of shares to be included in
the registration and underwriting shall first be allocated among all Holders who
indicated to the Company their decision to distribute any of their Registrable
Stock through such underwriting, in proportion, as
-26-
nearly as practicable, to the respective numbers of shares of Registrable Stock
owned by such Holders at the time of filing the registration statement, then to
the Key Employees who have indicated to the Company their decision to distribute
any of their Subject Stock through such underwriting, in proportion, as nearly
as practicable, to the respective numbers of shares of Subject Stock owned by
the Key Employees at the time of filing the registration statement, and the
remainder, if any, to the Company; provided, however, that if the underwriter
determines that marketing factors require a limitation of the number of shares
of the Key Employees to be underwritten or that the offering price per share
would be reduced by the inclusion of the shares of the Key Employees, then the
number of shares of the Key Employees that may be so included shall be reduced,
or eliminated from registration, as the underwriter shall advise. No stock
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration. If any Holder, Key Employee,
or the Company disapproves of any such underwriting, such person may elect to
withdraw therefrom by written notice to the Initiating Holders and the
underwriter. The securities so withdrawn from such underwriting shall also be
withdrawn from such registration.
(e) Unless and until there shall have first occurred the earlier of
(i) an Automatic Conversion Event, as defined in the Fifth Restated Certificate
or (ii) the expiration of six (6) months after the effective date of the first
registration statement initiated by the Company (other than a registration
effected solely to implement an employee benefit plan or a transaction to which
Rule 145 of the Commission is applicable), the Company shall not be required to
effect a registration pursuant to Section 8.2 unless the proposed disposition of
shares of Subject Stock has an aggregate expected offering price (before
deduction of underwriting discounts and expenses of sale) of not less than
$20,000,000 and the offering price per share is at least $3.50, adjusted for any
stock splits or divisions.
(f) If at the time of any request to register Registrable Stock
pursuant to Section 8.2 hereof, the Company is engaged, or has fixed plans to
engage within 90 days of the time of the request, in a registered public
offering as to which the Holders may include such Registrable Stock pursuant to
Section 8.5 hereof or is engaged in any other activity which, in the good faith
determination of the Company's Board of Directors, would be adversely affected
by the requested registration to the material detriment of the Company, then the
Company may at its option direct that such request be delayed for a period not
in excess of six months from the effective date of such offering, or the date of
commencement of such other material activity, as the case may be, such right to
delay a request to be exercised by the Company not more than once while the
rights set forth in Section 8.2 are in effect.
(g) The registration rights granted under Section 8.2 shall terminate
as to any Holder or permissible transferee or assignee of such rights if such
person would be permitted to sell all of the Subject Stock held by it pursuant
to Rule 144(k), provided, however, that such registration rights shall continue
to be applicable until, and including, the initial public offering of the
Company's securities.
-27-
8.5 Incidental Registration. If the Company at any time proposes to
register any of its securities under the Securities Act (other than a
registration effected solely to implement an employee benefit plan or a
transaction to which Rule 145 of the Commission is applicable), it will each
such time give prompt written notice to all Holders and to the Key Employees of
its intention so to do. Upon the written request of a Holder or Holders or a Key
Employee or Key Employees given within 20 days after receipt of any such notice
(stating the number of shares of Subject Stock to be disposed of by such Holder
or Holders or such Key Employee or Key Employees and the intended method of
disposition), the Company will use its best efforts to cause all such shares of
Subject Stock intended to be disposed of, the Holders or the Key Employees
owners of which shall have requested registration thereof, to be registered
under the Securities Act so as to permit the disposition (in accordance with the
methods in said request) by such Holder or Holders or such Key Employee or Key
Employees of the shares so registered, subject, however, to the limitations set
forth in Section 8.6.
8.6 Limitations on Incidental Registration. If the registration of
which the Company gives notice pursuant to Section 8.5 is for an underwritten
offering, only securities that are to be included in the underwriting may be
included in the registration. Notwithstanding any provision of Section 8, if the
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the underwriter may eliminate or reduce the number
of shares of Subject Stock to be included in the registration and underwriting.
The Company shall so advise all Holders and the Key Employees (except those
Holders and Key Employees who have not indicated to the Company their decision
to distribute any of their Subject Stock through such underwriting), and the
number of shares of Subject Stock that may be included in the registration and
underwriting shall be allocated among such Holders and Key Employees in
proportion, as nearly as practicable, to the respective amounts of Subject Stock
owned by such Holders and Key Employees at the time of filing the registration
statement. No Subject Stock excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. If
any Holder or Key Employee disapproves of any such underwriting, such person may
elect to withdraw therefrom by written notice to the Company and the
underwriter. The Subject Stock and/or other securities so withdrawn from such
underwriting shall also be withdrawn from such registration. The registration
rights granted under Section 8.5 shall terminate as to any Key Employee or
Holder or permissible transferees or assignee of such rights if such person
would be permitted to sell all of the Subject Stock held by such person pursuant
to Rule 144(k), provided, however, that such registration rights shall continue
to be applicable until, and including, the initial public offering of the
Company's securities.
8.7 Designation of Underwriter.
(a) In the case of any registration effected pursuant to
Section 8.2 or 8.8, a majority in interest of the requesting Holders shall have
the right to designate the managing underwriter(s) in any underwritten offering.
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(b) In the case of any registration initiated by the Company, the
Company shall have the right to designate the managing underwriter in any
underwritten offering.
8.8 Form S-3.
--------
(a) The Company shall register its Class A Common Stock under the
Exchange Act as soon as legally permissible following the effective date of the
first registration of any securities of the Company on Form S-l and the Company
shall thereafter file all reports and effect all qualifications and compliances
as would permit or facilitate the sale and distribution of its stock on Form S-
3. After the Company has qualified for the use of Form S-3, the Holders shall
have the right to request up to three (3) registrations on Form S-3 (such
requests shall be in writing and shall state the number of shares of Registrable
Stock to be disposed of and the intended method of disposition) subject only to
the following:
(i) The Company shall not be required to effect a
registration pursuant to this Section 8.8 unless the Holder or Holders
requesting registration propose to dispose of shares of Registrable Stock having
an aggregate expected public offering price (before deduction of underwriting
discounts and expenses of sale) of at least $5,000,000.
(ii) The Company shall not be required to effect a
registration pursuant to this Section 8.8 more frequently than once during any
twelve-month period.
The Company shall give prompt written notice to all Holders and
Key Employees of the receipt of a request for registration pursuant to this
Section 8.8 and shall provide a reasonable opportunity for other Holders and Key
Employees to participate in the registration, provided that if the registration
is for an underwritten offering, the terms of paragraph (d) of Section 8.4 shall
apply to all participants in such offering. Subject to the foregoing, the
Company will use its best efforts to effect promptly the registration of all
shares of Subject Stock on Form S-3 to the extent requested by the Holder or
Holders thereof or by a Key Employee.
(b) The registration rights granted under this Section 8.8 shall
terminate as to any Holder or permissible transferees or assignee of such rights
if such person would be permitted to sell all of the Subject Stock held by such
person pursuant to Rule 144(k).
8.9 Cooperation by Prospective Sellers.
----------------------------------
(a) Each prospective seller of Subject Stock, and each
underwriter designated by a majority in interest of the requesting Holders, will
furnish to the Company such information as the Company may reasonably require
from such seller or underwriter in connection with the registration statement
(and the prospectus included therein).
-29-
(b) Failure of a prospective seller of Subject Stock to furnish
the information and agreements described in this Section 8.9 shall not affect
the obligations of the Company under this Section 8 to remaining sellers who
furnish such information and agreements unless, in the reasonable opinion of
counsel to the Company or the underwriters, such failure impairs or may impair
the viability of the offering or the legality of the registration statement or
the underlying offering.
(c) The Holders of and the Key Employees holding shares included
in the registration statement will not (until further notice) effect sales
thereof after receipt of telegraphic or written notice from the Company to
suspend sales to permit the Company to correct or update a registration
statement or prospectus; but the obligations of the Company with respect to
maintaining any registration statement current and effective shall be extended
by a period of days equal to the period such suspension is in effect unless
(i) such extension would result in the Company's inability to use the financial
statements in the registration statement initially filed pursuant to the Holder
or Holders' request and (ii) such correction or update did not result from the
Company's acts or failures to act.
At the end of the period during which the Company is obligated to
keep the registration statement current and effective as described in paragraph
(b) of Section 8.3 (and any extensions thereof required by the preceding
sentence), the Holders and the Key Employees holding shares included in the
registration statement shall discontinue sales of shares pursuant to such
registration statement upon receipt of notice from the Company of its intention
to remove from registration the shares covered by such registration statement
which remain unsold, and such Holders and Key Employees shall notify the Company
of the number of shares registered which remain unsold immediately upon receipt
of such notice from the Company.
8.10 Expenses of Registration.
(a) All expenses incurred in effecting any registration pursuant
to Sections 8.2 and 8.5 including, without limitation, all registration and
filing fees, printing expenses, expenses of compliance with blue sky laws, fees
and disbursements of counsel for the Company, expenses, fees and disbursements
of one special counsel retained by the Holders and/or the Key Employees not to
exceed $10,000, and expenses of any audits incidental to or required by any such
registration, shall be borne by the Company, except (a) that all expenses, fees
and disbursements of any additional counsel retained by the Holders and/or the
Key Employees, and all underwriting discounts and commissions shall be borne by
the Holders of and the Key Employees holding the securities registered pursuant
to such registration, pro rata according to the quantity of their securities so
registered; (b) the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant to Section 8.2 if the registration
request is subsequently withdrawn at the request of the Holders of a majority of
the Registrable Securities to be registered (in which case all participating
Holders shall bear such expenses) unless the Holders of a majority of the
Registrable Securities agree to forfeit their right to one demand registration
pursuant to Section 8.2; provided, however, that if immediately prior to the
time of such withdrawal, the Holders have learned of a materially adverse change
in the
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condition, business or prospects of the Company from that known to the Holders
at the time of their request, then the Holders shall not be required to pay any
of such expenses and shall retain their rights pursuant to Section 8.2; and
(c) with respect to registrations effectuated under Section 8.2. the Company
shall be required to pay expenses only in respect of the first two such
registrations.
(b) All expenses incurred in effecting any registration pursuant
to Section 8.8, including without limitation all registration and filing fees,
printing expenses, expenses of compliance with blue sky laws, fees and
disbursements of counsel for the Company, expenses, fees and disbursements of
special counsel retained by the Holders and/or the Key Employees, all
underwriting discounts and commissions, and expenses of any audits incidental to
or required by any such registration, shall be borne by the Holders of, and the
Key Employees holding, the securities registered pursuant to such registration,
pro rata according to the quantity of their securities so registered.
8.11 Indemnification.
(a) The Company will indemnify and hold harmless each Holder and
Key Employee requesting or joining in a registration, each agent, officer and
director of such Holders, each person controlling such Holder and each
underwriter and selling broker of the securities so registered (collectively,
"Indemnitees") against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any prospectus, offering
circular or other document incident to any registration, qualification or
compliance (or in any related registration statement, notification or the like)
or any omission (or alleged omission) to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or any violation (or alleged violation) by the Company of the Securities Act,
the Exchange Act or state securities laws or any rule or regulation promulgated
under the Securities Act, the Exchange Act or a state securities law, in each
case applicable to the Company, and will reimburse each such Indemnitee for any
legal and any other fees and expenses reasonably incurred in connection with
investigating or defending any such claim, loss, damage, liability or action,
provided, however, that the Company will not be liable to any Indemnitee in any
such case to the extent that any such claim, loss, damage or liability is caused
by any untrue statement or omission so made in strict conformity with written
information furnished to the Company by an instrument duly executed by such
Indemnitee and stated to be specifically for use therein and except that the
foregoing indemnity agreement is subject to the condition that, insofar as it
relates to any such untrue statement (or alleged untrue statement) or omission
(or alleged omission) made in the preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the Commission at the time the
registration statement becomes effective or in the amended prospectus filed with
the Commission pursuant to Rule 424(b) ("Final Prospectus"), such indemnity
agreement shall not inure to the benefit of any underwriter, or any Indemnitee
if there is no underwriter, if a copy of the Final Prospectus was not furnished
to the person or entity asserting the loss, liability, claim or damage at or
prior to the time such furnishing is required by the Securities Act; provided,
further, that this indemnity shall not be deemed to relieve any
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underwriter of any of its due diligence obligations; provided, further, that the
indemnity agreement contained in this subsection 8.11(a) shall not apply to
amounts paid in settlement of any such claim, loss, damage, liability or action
if such settlement is effected without the consent of the Company, which consent
shall not be unreasonably withheld.
(b) Each Holder, severally and not jointly, and each Key
Employee requesting or joining in a registration and each underwriter and
selling broker of the securities so registered will indemnify and hold harmless
the Company and its officers and directors and each person, if any, who controls
any thereof within the meaning of Section 15 of the Securities Act and their
respective successors against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on any untrue statement (or
alleged untrue statement) of a material fact contained in any prospectus,
offering circular or other document incident to any registration, qualification
or compliance (or in any related registration statement, notification or the
like) or any omission (or alleged omission) to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading and will reimburse the Company and each other person indemnified
pursuant to this paragraph (b) for any legal and any other fees and expenses
reasonably incurred in connection with investigating or defending any such
claim, loss, damage, liability or action, provided, however, that this paragraph
(b) shall apply only if (and only to the extent that) such statement or omission
was made in reliance upon and in strict conformity with written information
(including, without limitation, written negative responses to inquiries)
furnished to the Company by an instrument duly executed by such Holder, Key
Employee, underwriter or selling broker and stated to be specifically for use in
such prospectus, offering circular or other document (or related registration
statement, notification or the like) or any amendment or supplement thereto; and
except that the foregoing indemnity agreement is subject to the condition that,
insofar as it relates to any such untrue statement (or alleged untrue statement)
or omission (or alleged omission) made in the preliminary prospectus but
eliminated or remedied in the amended prospectus on file with the Commission at
the time the registration statement becomes effective or in the Final
Prospectus, such indemnity agreement shall not inure to the benefit of the
Company, if a copy of the Final Prospectus was not furnished to the person or
entity asserting the loss, liability, claim or damage at or prior to the time
such furnishing is required by the Securities Act; provided, further, that this
indemnity shall not be deemed to relieve any underwriter of any of its due
diligence obligations; provided, further, that the indemnity agreement contained
in this subsection 8.11(b) shall not apply to amounts paid in settlement of any
such claim, loss, damage, liability or action if such settlement is effected
without the consent of the Holder, Key Employee or underwriter, as the case may
be, which consent shall not be unreasonably withheld; and provided, further,
that the obligations of such Holders or Key Employees shall be limited to an
amount equal to the net proceeds received by such Holder or Key Employee from
the sale of Subject Stock in such offering as contemplated herein, unless such
claims, loss, damage, liability or action resulted from such Holder's or Key
Employee's fraudulent misconduct.
(c) Each party entitled to indemnification hereunder
("indemnified party") shall give notice to the party required to provide
indemnification ("indemnifying party")
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promptly after such indemnified party has actual knowledge of any claim as to
which indemnity may be sought, and shall permit the indemnifying party (at its
expense) to assume the defense of any claim or any litigation resulting
therefrom, provided that counsel for the indemnifying party, who shall conduct
the defense of such claim or litigation, shall be reasonably satisfactory to the
indemnified party, and the indemnified party may participate in such defense at
such party's expense, and provided further that the omission by any indemnified
party to give notice as provided herein shall not relieve the indemnifying party
of its obligations under this Section 8.11 except to the extent that the
omission results in a failure of actual notice to the indemnifying party and
such indemnifying party is damaged solely as a result of the failure to give
notice. No indemnifying party, in the defense of any such claim or litigation,
shall consent, except with the consent of each indemnified party, to entry of
any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such claim or
litigation.
(d) The reimbursement required by this Section 8.11 shall be
made by periodic payments during the course of the investigation or defense, as
and when bills are received or expenses incurred.
(e) The obligation of the Company under this Section 8.11 shall
survive the redemption, if any, of the Series D Preferred Stock, the completion
of any offering of Subject Stock in a registration statement under this
Section 8, or otherwise.
8.12 Rights That May Be Granted to Subsequent Investors.
(a) Within the limitations prescribed by this paragraph (a), but
not otherwise, the Company may grant to subsequent investors in the Company
rights of incidental registration (such as those provided in Section 8.5). Such
rights may only pertain to shares of Class A Common Stock, including shares of
Class A Common Stock into which any other securities may be converted. Such
rights may be granted with respect to (i) registrations actually requested by
Initiating Holders pursuant to Section 8.2, but only in respect of that portion
of any such registration as remains after inclusion of all Registrable Stock
requested by Holders but before inclusion of any Subject Stock requested by the
Key Employees and (ii) registrations initiated by the Company, but only in
respect of that portion of such registration as remains after inclusion of all
Subject Stock. With respect to registrations which are for underwritten public
offerings, "available portion" shall mean the portion of the underwritten shares
that is available as specified in clauses (i) and (ii) of the third sentence of
this paragraph (a). Shares not included in such underwriting shall not be
registered.
(b) The Company may not grant to subsequent investors in the
Company rights of registration upon request (such as those provided in Sections
8.2 and 8.8) unless (i) such rights are limited to shares of Class A Common
Stock, (ii) all Holders and the Key Employees are given enforceable contractual
rights to participate in registrations requested by such subsequent investors
(but subordinate to the rights of priority of registration set forth in Sections
8.4(d) and 8.6), such participation to be on a pro rata basis, and subject to
the
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limitations, described in the final three sentences of paragraph (a) of this
Section 8.12 (iii) such rights shall not become effective prior to 90 days after
the effective date of the registration pursuant to Section 8.2, and (iv) such
rights shall not be more favorable than those granted to the Holders.
8.13 Transfer of Registration Rights. The registration rights
granted to the Investors under this Section 8 may be transferred but only to (i)
a transferee who shall acquire not less than 100,000 shares of Registrable
Stock, as adjusted for Recapitalization Events, (ii) affiliates of the Investors
(as defined pursuant to Section 7.10(g) hereof), (iii) Beneficial Owners
(including spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Registrable Stock by gift, will or intestate
succession, or trusts for the benefit of any individual Investor), and (iv) with
respect to any Investor that is a registered investment company (as defined in
the Investment Company Act) or an institutional account or the custodian for
such investment company or institutional account, any entity with which such
Investor is under common investment management, if all such transferees or
assignees agree in writing to appoint a single representative as their attorney
in fact for the purpose of receiving any notices and exercising their rights
under this Section 8.
8.14 "Stand-Off" Agreement. In consideration for the Company
performing its obligations under this Section 8, each Investor and each Key
Employee severally agrees for a period of time (not to exceed 180 days) from the
effective date of any registration (other than a registration effected solely to
implement an employee benefit plan) of securities of the Company (upon request
of the Company or of the underwriters managing any underwritten offering of the
Company's securities) not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Subject Stock or any
other stock of the Company held by each Investor or Key Employee, other than
shares of Subject Stock included in the registration, without the prior written
consent of the Company or such underwriters, as the case may be, provided that
(i) all officers and directors of the Company and each holder of more than 2% of
the outstanding Class A Common Stock (including shares of Class A Common Stock
issuable upon conversion of Preferred Stock) shall enter into similar
agreements, (ii) such agreement shall only apply to the first registration
statement covering securities to be sold to the public and shall not apply to
securities acquired in the Company's initial offering of securities to the
public or securities purchased in the open market thereafter, and (iii) with
respect to any Investor that is a registered investment company (as defined in
the Investment Company Act) or an institutional account, or the custodian for
such investment company or institutional account, such Investor may transfer
during such period Subject Stock held by such Investor to any entity with which
such Investor is under common investment management, provided that such
transferee agrees in writing to be bound by such agreement. The provisions of
this Section 8.14 may not be changed, waived, discharged or terminated except as
set forth in Section 14 hereof.
8.15 Delay of Registration. The Investors and the Key Employees
shall have no right to take any action to restrain, enjoin, or otherwise delay
any registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 8.
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9. Negative Covenants. So long as shares of Series D Preferred Stock
are outstanding, or if earlier until the close of a Qualified IPO, the Company
shall not, without the affirmative vote of the holders of record of at least 51%
of the outstanding shares of Series D Preferred Stock, voting as a separate
class:
(a) declare or pay any dividends or make any other distributions on
shares of Class A Common Stock;
(b) repurchase any shares of Class A Common Stock or Preferred Stock
(other than Employee Stock or redemptions effected upon the terms contained in
the Fifth Restated Certificate);
(c) make, or permit any corporation, firm or entity under its control
(a "Controlled Entity") to make, any loans or advances (other than to the
Company, a wholly-owned subsidiary of the Company or to their respective
employees in the ordinary course of business as advances against salary, as
travel advances or to enable such employees to either purchase Employee Stock or
exercise options for Class A Common Stock issued to them pursuant to stock
option plans by giving a promissory note therefor);
(d) make, or permit any Controlled Entity to make, any guaranty, other
than in the ordinary course of business or on behalf of the Company or a wholly-
owned subsidiary of the Company;
(e) merge with or consolidate into any corporation, firm or entity, or
sell, lease or otherwise dispose of all or substantially all of its assets; or
(f) own, or permit any Controlled Entity to own, any stock or other
securities of any Controlled Entity or other corporation, partnership or entity
unless it is wholly owned by the Company, except certificates of deposit, high
quality commercial paper, United States government securities and other short-
term, high quality liquid investment grade securities, including money market
funds.
10. Amendment of Existing Provisions. Each of the parties hereto
acknowledges and agrees that the provisions contained in Sections 7 and 8 hereof
shall supersede and substitute in full any comparable provisions of any other
agreements previously entered into by the Investors, the Key Employees or the
Existing Stockholders.
11. Expenses. The Company will pay (a) all the costs and expenses of
the reproduction of this Agreement, of all agreements and documents referred to
herein and of the certificates for the Series D Preferred Stock; (b) all taxes
(if any) payable with respect to this Agreement and the issuance of its shares;
(c) all costs of complying with the securities or blue sky laws of any
jurisdiction with respect to the offering or sale of the Series D Preferred
Stock; (d) the cost of delivering to such address as each Investor shall specify
the certificates for the Series D Preferred Stock purchased by each such
Investor; (e) the reasonable fees of
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(x) Xxxxxxxxx, Xxxxx, Xxxxxx & Younger, special counsel for the Investors (not
to exceed $15,000), and (ii) counsel to the Company, in each case (i) plus
actual expenses and disbursements, (ii) in connection with the subject matter of
this Agreement and the transactions contemplated hereby (other than events
described in Section 8 hereof) and (iii) payable at the Closing. The Company
will pay the aforementioned fees plus actual expenses and disbursements of
special counsel to the Investors in the event that the transactions contemplated
hereby are not consummated due to the Company's election to proceed on or before
August 15, 2000 with an equity financing that does not include the Investors,
provided that the Investors stood ready, willing and able to proceed with the
transactions contemplated hereby. In addition, the Company will pay the
reasonable fees and expenses of counsel for the Investors in subsequently
reviewing any amendments, waivers, consents or approvals requested by the
Company with respect to the rights of the Investors contemplated in this
Agreement or the Amended and Restated Co-Sale Agreement and the Amended and
Restated Voting Agreement referred to in Section 5 hereof.
12. Survival of Agreements. All representations and warranties
contained herein or made in writing by or on behalf of the Company in connection
with the transactions contemplated hereby shall survive the execution and
delivery of this Agreement (despite any investigation at any time made by the
Investors or on their behalf) for a period equal to the later of (i) twelve (12)
months from the Closing, or (ii) sixty (60) days after the delivery of the
annual audited financial statements for the fiscal year ended December 31, 2000
delivered pursuant to Section 7.3(a) hereof; provided, however, that such
representations and warranties made by the Company in Sections 3.1, 3.2, 3.3.
3.6 and 3.13 shall survive the execution and delivery of this Agreement (despite
any investigation at any time made by the Investors or on their behalf) without
regard to the limitation set forth in the preceding clause. All agreements and
covenants contained herein or made in writing by or on behalf of the Company in
connection with the transactions contemplated hereby shall survive the execution
and delivery of this Agreement (despite any investigation at any time made by
the Investors or on their behalf). All statements contained in any certificate
or other instrument executed and delivered by the Company or its duly authorized
officers or representatives pursuant hereto in connection with the transactions
contemplated hereby shall be deemed representations by the Company hereunder.
13. Notices. All notices, requests, consents and other communications
herein (except as stated in the last sentence of this Section 13) shall be in
writing and shall be deemed to be delivered (i) on the date delivered, if
personally delivered or transmitted via facsimile with return confirmation of
such transmission; (ii) on the business day after the date sent, if sent by
recognized overnight courier service and (iii) on the fifth day after the date
sent, if mailed by first-class certified mail, postage prepaid and return
receipt requested, as follows:
(a) If to the Company:
CiDRA Corporation
00 Xxxxxx Xxxx Xxxxx
Xxxxxxxxxxx, Xxxxxxxxxxx 00000
Attention: F. Xxxxx Xxxxxx
Facsimile: (000) 000-0000
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with a copy to:
Day, Xxxxx & Xxxxxx LLP
CityPlace I
Hartford, Connecticut 06103-3499
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile: (000) 000-0000
(b) If to the Investors, at their respective addresses set forth
in Schedule 1 hereto, with copies to:
HRLD Venture Partners I, L.P.
0000 Xxxxxx Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Attention: Xxxx X. Xxxxxxx, Esq.
Facsimile: (000) 000-0000
and
Xxxxxx, Xxxx & Xxxxxxxx LLP
0000 Xxxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
Attention: Xxxxxx X. Xxxxx, Xx., Esq.
Facsimile: (000) 000-0000
and
Buchalter, Nemer, Fields & Younger, P.C.
000 Xxxxx Xxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxx X. Xxx, Esq.
Facsimile: (000) 000-0000
or such other addresses as each of the parties hereto may provide from time to
time in writing to the other parties. The financial statements and other
reports required by Section 7 may be mailed by first-class regular mail.
14. Modifications; Waiver. Neither this Agreement nor any provision
hereof may be changed, waived, discharged or terminated orally or in writing,
except that any provision of this Agreement may be amended and the observance of
any such provision may be waived (either generally or in a particular instance
and either retroactively or prospectively) with (but only with)
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the written consent of (i) the Company and (ii) either (x) with respect to any
action regarding Section 7.10 or Section 8 hereof, the holders of at least fifty
one percent (51%) of the aggregate voting power of shares of each of the
Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and
Series D Preferred Stock (excluding from each the numerator and denominator of
the fraction from which such percentage is derived all shares theretofore
disposed of by the Investors or their Transferees pursuant to one or more
registration statements under the Securities Act or pursuant to Rule 144) acting
separately, and provided that any amendment or change with respect to Section
8.14 hereof shall require the consent of Amerindo Group in the aggregate, or
(y) with respect to all other actions, the holders of at least sixty six and
two-thirds percent (66 2/3%) of the aggregate voting power of shares of the
Series D Preferred Stock (excluding from it the numerator and denominator of the
fraction from which such percentage is derived all shares theretofore disposed
of by the Investors or their Transferees pursuant to one or more registration
statements under the Securities Act or pursuant to Rule 144), and (iii) in the
event the Key Employees' registration rights in Section 8 are modified, waived
or terminated, the holders of at least fifty one percent (51%) of the aggregate
number of shares of Class A Common Stock outstanding as of the date of such
modification, waiver or termination that are held by the Key Employees who at
such time are stockholders of the Company; provided, that this Section 14 may
not be modified or amended without the written consent of all the parties
hereto; and provided, further, that in the event that any modification,
amendment or waiver of any terms of this Agreement that adversely affects the
obligations and/or rights of an Investor hereunder in a manner different than
other Investors hereto, such modification, amendment or waiver shall also
require the written consent of such Investor.
15. Exculpation Among Investors. Each Investor acknowledges that it
is not relying upon any statements or instruments made or issued by any person,
firm or corporation, other than the Company and its officers, directors and
agents, in making its decision to invest in the Company. Each Investor agrees
that no other Investor nor the respective controlling persons, officers,
directors, partners, agents, or employees of any Investor shall be liable to
such Investor for any action heretofore or hereafter taken or omitted to be
taken by any of them in connection with the Series D Preferred Stock (and Class
A Common Stock issued upon conversion thereof).
16. Entire Agreement; Aggregation. This Agreement, together with the
schedules and exhibits attached hereto and made a part hereof contains the
entire agreement between the parties with respect to the transactions
contemplated hereby, and supersedes all negotiations, agreements,
representations, warranties, commitments, whether in writing or oral, prior to
the date hereof. All shares of Series D Preferred Stock held or acquired by
affiliated entities or entities or persons under common investment management
shall be aggregated together for the purpose of determining any rights under
this Agreement.
17. Successors and Assigns. Except as otherwise expressly provided in
this Agreement, all of the terms of this Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective successors, assigns
and permitted transferees of the parties hereto, except that the rights set
forth in Sections 7.1, 7.3 and 7.4 hereof may be assigned but only:
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(a) to an assignee who shall acquire not less than 100,000 shares (as
adjusted for Recapitalization Events) of Series D Preferred Stock and
Registrable Stock; or
(b) in connection with the distribution by a purchaser of Series D
Preferred Stock or of Registrable Stock to a Beneficial Owner, any family member
or a trust for the benefit of an individual purchaser who holds at least 100,000
Shares or Registrable Stock that has been distributed to it, as adjusted for
Recapitalization Events.
18. Connecticut Presence and Repurchase Obligation.
----------------------------------------------
(a) The Company agrees that as long as Investors hold at least 25% of
the number of shares of Series D Preferred Stock purchased hereunder, the
Company will maintain a "Connecticut Presence." A Connecticut Presence shall
mean (a) maintaining the Company's principal place of business (including its
executive offices and officers) in the State of Connecticut, (b) basing a
majority of its employees and those of its subsidiaries in the State of
Connecticut, except for those employees who are based outside of the State of
Connecticut to conduct field operations, and (c) conducting a majority of its
operations and those of its subsidiaries in the State of Connecticut, except for
field operations that must take place outside of the State of Connecticut.
(b) For purposes of determining whether the Company is in compliance
with this covenant, the assets, revenues, and employees of any business acquired
by the Company (by stock purchase, asset acquisition or otherwise) after the
Closing Date on an arm's-length basis from a non-affiliate of the Company
(provided that such acquired business had been operating for at least one year
prior to the Closing Date) ("Excluded Acquired Business") shall be excluded and
disregarded, and the Company shall not be deemed in violation of this covenant
by virtue of the operations of any Excluded Acquired Business.
(c) It shall not constitute a violation of this covenant for the
Company to purchase goods and services, participate in clinical trials of its
products, sell its products and services or engage distributors outside the
State of Connecticut. In addition, it shall not constitute a violation of this
covenant if the Company ceases to maintain a Connecticut Presence by virtue of a
Company Acquisition (as defined below) in connection with which each of
Connecticut Innovations, Incorporated ("CII"), CII/NEV LLC, and Connecticut
Innovations/Xxxxxxx LLC ("CII/Xxxxxxx") holders of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and/or Series D Preferred
Stock receives a liquidation distribution with respect to, or cash, securities,
or other property in exchange for, all of the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock held by such Investor on substantially the same terms as the other holders
of the Company's Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and Series D Preferred Stock, as the case may be. For purposes
of this Section 18, "Company Acquisition" shall mean the merger or consolidation
of the Company into or with a corporation not previously affiliated with the
Company, or the acquisition of the Company's capital stock by a person not
previously affiliated with the Company, or the sale of all or substantially all
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the assets of the Company to a person not previously affiliated with the
Company, in a single transaction or series of related transactions, unless, upon
consummation of such merger, consolidation, acquisition of capital stock or sale
of assets, the holders of voting securities of the Company immediately prior to
such merger, consolidation, acquisition of capital stock or sale of assets own
directly or indirectly more than 50% of the voting power to elect directors of
the consolidated or surviving or acquiring corporation.
(d) CII shall be entitled to require the Company to purchase the
shares of Company stock held by CII, CII/NEV LLC and CII/Xxxxxxx (each, a "CII-
Related Entity") at any time if, so long as any CII-Related Entity owns Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, Series D
Preferred Stock or Class A Common Stock and such shares are not freely tradable
to the public without the registration thereof for such purposes under Section 5
of the Securities Act, the Board of Directors, stockholders, or officers of the
Company authorize the Company to take any action that, if taken, would cause the
Company to fail to maintain a Connecticut Presence. The price of the shares
shall be the greater of: (i) the Initial Purchase Price per share, plus a 25%
annually compounded rate of return thereon from the date of such purchase by the
CII-Related Entity until the date of such payment, or (ii) the fair market value
of said shares as determined in a manner mutually acceptable to CII and the
Company.
(e) Payment pursuant to the redemption shall be due and payable within
sixty (60) days of the redemption notice from CII to the Company, except that
the Company may elect to pay the amount in three equal annual installments, the
first payment due as provided above, plus 25% annual interest on the outstanding
balance, and the second and third installments payable on the first and second
anniversary of the first payment, respectively.
(f) The Company shall create jobs in the State of Connecticut and
shall use its best efforts to employ residents of Connecticut in these jobs.
(g) The Company shall furnish to CII copies of the quarterly reports
filed by the Company and any of its subsidiaries with the Connecticut Department
of Labor and upon request, employment records and such other personnel records
to the extent permitted by law as the Purchaser may reasonably request to verify
the creation or retention of Connecticut employment.
(h) The Company hereby authorizes CII to examine upon reasonable
notice, and will at any time at the request of CII provide CII with such
additional authorization satisfactory to the Connecticut Department of Labor as
may be necessary to enable CII to examine upon reasonable notice all records of
said Department relating to the Company and/or any of its subsidiaries.
(i) The Company agrees and warrants that it is an equal opportunity
employer and that it does not discriminate. The Company further agrees and
warrants that:
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(i) The Company will not discriminate or permit
discrimination against any employee or applicant for employment
because of sex, sexual orientation, race, color, religious creed,
age, martial status, mental retardation, physical disability,
national origin, or ancestry; such action shall include, but
shall not be limited to, employment upgrading, demotion or
transfer, recruitment advertising, lay-off or termination, rates
of pay or other forms of compensation, and selection for
training, including apprenticeship.
(ii) The Company agrees to take affirmative action to insure
that applicants with job-related qualifications are employed.
(iii) The Company will, in its solicitation for employees,
state that it is an "affirmative action-equal opportunity
employer."
(iv) The Company agrees to provide each labor union or
representative of workers with which the Company has a collective
bargaining agreement or other contract or understanding and each
vendor with which the Company has a contract or understanding, a
notice to be provided by the Commission of Human Rights and
Opportunities ("CHRO") and to post copies of the notice in
conspicuous places available to employees and applicants for
employment.
(v) The Company agrees to cooperate with the CII, the State
of Connecticut and/or any of its agencies and the CHRO to ensure
that the purposes of this equal opportunity clause is being
carried out.
(vi) The Company agrees to comply with all relevant
regulations and orders issued by CHRO, to provide the CHRO with
such information as it may request, and to permit the CHRO access
upon reasonable notice to pertinent books, records, and accounts
concerning the contractor's employment practices and procedures.
(vii) The Company agrees to comply with all of the
requirements set out by Section 4a-60 of the Connecticut General
Statutes, as it may be amended.
(viii) The Company agrees to post a notice of this
acceptance of the foregoing equal employment opportunity
provisions at its place of business, clearly visible.
-41-
19. Enforcement.
-----------
(a) Remedies at Law or in Equity. If the Company shall default in any
of its obligations under this Agreement or if any representation or warranty
made by or on behalf of the Company in this Agreement or in any certificate,
report or other instrument delivered under or pursuant to any term hereof shall
be untrue or misleading in any material respect as of the date of this Agreement
or as of the Closing Date or as of the date it was made, furnished or delivered,
the Investors may proceed to protect and enforce their rights by suit in equity
or action at law, whether for the specific performance of any term contained in
this Agreement or the Fifth Restated Certificate, injunction against the breach
of any such term or in furtherance of the exercise of any power granted in this
Agreement or the Fifth Restated Certificate, or to enforce any other legal or
equitable right of such Investors or to take any one or more of such actions.
In the event the Investors bring such an action against the Company, the
prevailing party in such dispute shall be entitled to recover from the losing
party all fees, costs and expenses of enforcing any right of such prevailing
party under or with respect to this Agreement or the Fifth Restated Certificate,
including without limitation such reasonable fees and expenses of attorneys and
accountants, which shall include, without limitation, all fees, costs and
expenses of appeals.
(b) Remedies Cumulative; Waiver. No remedy referred to herein is
intended to be exclusive, but each shall be cumulative and in addition to any
other remedy referred to above or otherwise available to the Investors at law or
in equity. No express or implied waiver by the Investors of any default shall
be a waiver of any future or subsequent default. The failure or delay of the
Investors in exercising any rights granted them hereunder shall not constitute a
waiver of any such right and any single or partial exercise of any particular
right by the Investors shall not exhaust the same or constitute a waiver of any
other right provided herein.
20. Execution and Counterparts. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and all such counterparts together shall constitute one
instrument. Each party shall receive a duplicate original of the counterpart
copy or copies executed by it and by the Company.
21. Governing Law and Severability. This Agreement shall be governed
by the internal laws of the State of Delaware, without regard to principles of
conflicts of law. In the event any provision of this Agreement or the
application of any such provision to any party shall be held by a court of
competent jurisdiction to be contrary to law, the remaining provisions of this
Agreement shall remain in full force and effect.
22. Headings. The descriptive headings of the Sections hereof and the
Schedules and Exhibits hereto are inserted for convenience only and do not
constitute a part of this Agreement.
23. Waiver and Consent. Each of the parties hereto who or which was a
party to the Preferred Stock Purchase Agreement dated as of April 28, 1997 (the
"Series A Purchase Agreement"), the Preferred Stock Purchase Agreement and
Amendment dated as of August 11, 1997 (the "Amendatory Agreement") and/or the
Preferred Stock Purchase Agreement dated as of February 12, 1998 (the "Series B
Purchase Agreement") and/or the Series C Purchase
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Agreement, hereby consents to the execution and delivery of this Agreement by
the Company and the other parties hereto and the carrying out of all of the
transactions contemplated hereby and hereby waives any covenant, agreement or
undertaking contained in the Series A Purchase Agreement and the Amendatory
Agreement, the Series B Purchase Agreement, and/or the Series C Purchase
Agreement, as applicable, to the contrary in order to permit the execution and
delivery of this Agreement and the carrying out of all of the transactions
contemplated hereby.
24. Xxxxxxxxx X. Xxxxxxxxxx - Conflict of Interest. The Investors and
the Company acknowledge that Xxxxxxxxx X. Xxxxxxxxxx ("Leonberger"), an Investor
and holder of Series A Preferred Stock, Series B Preferred Stock and Series C
Preferred Stock of the Company, is also currently a shareholder and an officer
of a corporation that manufactures switches, fiber xxxxx gratings and related
components and that this corporation could serve as a vendor to the Company,
depending on whether the products developed by the Company require such
components. If in the judgment of a majority of the members of the Board of
Directors, Leonberger's ownership of Preferred Stock or Class A Common Stock
presents a conflict of interest, Leonberger shall have the option to sell his
Series D Preferred Stock or Class A Common Stock to HRLD Venture Partners I,
L.P. and CII on a pro rata basis, at the then fair market value of such stock.
Leonberger also shall not be entitled to any proprietary information of the
Company to the extent that a majority of the Board of Directors determines that
access to such information could cause a conflict of interest to arise between
Leonberger and the Company.
25. IPO Participation.
-----------------
(a) Under the terms set forth in this Section 25, the Participating
Investors shall be entitled to participate as a purchaser directly in the
Company's initial public offering of securities (an "IPO") pursuant to a
registration statement under the Securities Act (the "Participation
Right"), only if the IPO is consummated after the first anniversary of the
Closing Date hereof. The type of securities offered in the IPO shall be
referred to herein as "IPO Securities."
(b) The Participation Right shall be for up to a maximum of 5% of the
securities offered in the IPO (exclusive of any over-allotment option), and
shall be allocated to the Participating Investors in accordance with each
Participating Investor's IPO Ratable Portion. "IPO Ratable Portion" shall
mean, as to each Participating Investor, an amount equal to the product of:
(x) a number equal to the total number of IPO Securities offered
in the IPO, multiplied by a fraction (A) the numerator of which is the
number of shares of Class A Common Stock issued or issuable on
conversion of all of the Series D Preferred Stock outstanding
immediately prior to the consummation of the IPO, and (B) the
denominator of which is the number of shares of Class A Common Stock
outstanding on a fully-diluted
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basis; provided that the number determined hereby shall not exceed 5%
of the securities offered in the IPO (exclusive of any over-allotment
option),
multiplied by
(y) a fraction, (A) the numerator of which is the total number of
shares of the Company's Class A Common Stock issued or issuable on
conversion of the Series D Preferred Stock held by such Participating
Investor immediately prior to the consummation of the IPO, and (B) the
denominator of which is the total number of shares of the Company's
Class A Common Stock issued or issuable on conversion of all of the
Series D Preferred Stock outstanding immediately prior to the
consummation of the IPO.
The Company shall give written notice of the proposed issuance of any IPO
Securities pursuant to the Participation Right to each Participating Investor at
least twenty (20) days prior to the scheduled IPO. Such notice shall contain
the terms and conditions of such proposed issuance. Each Participating Investor
may elect to exercise all or a lesser portion of its rights under this Section
25(b) to purchase its IPO Ratable Portion of such IPO Securities by providing
written notice to the Company within five (5) business days of its receipt of
the Company's notice. Upon expiration of such five (5) business day period, the
Company shall, in writing, promptly inform each Participating Investor that
elects to purchase its entire IPO Ratable Portion (each, a "Fully Electing
Investor") of any other Participating Investor's failure to do likewise. Each
Fully Electing Investor shall have a right of over allotment, such that, if any
other Participating Investor fails to purchase its entire IPO Ratable Portion,
all Fully Electing Investors may, before the date which is five (5) business
days prior to the IPO, exercise an additional right to purchase, on a pro rata
basis based upon the IPO Ratable Portions of the Fully Electing Investors, the
IPO Securities not previously purchased by those Participating Investors who did
not elect to purchase their IPO Ratable Portions.
(c) The Participation Right shall be subject to pro rata cutback in
the event that the lead underwriter of the IPO specifies in writing to the
Participating Investors at least five (5) days prior to the IPO, the exact
reasons why, in its reasonable judgment, the requested cutback is necessary
for the success of the IPO. In addition, the Participation Right shall not
be exercisable to the extent that such exercise would be contrary to, or in
violation of, any applicable law or regulations, or the rules of the
National Association of Securities Dealers or any determination, comment or
judgment of or by the Securities and Exchange Commission.
26. Notification of Acquisition Proposal or Initiation of Sale.
(a) In the event that the Board of Directors of the Company ("Board")
receives a bona fide offer to be acquired by means of (x) a merger,
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consolidation or other business combination pursuant to which the
stockholders of the Company immediately prior to the effective date of such
transaction have beneficial ownership of less than fifty percent (50%) of
the total combined voting power for election of directors of the surviving
corporation immediately following such transaction, or (y) the sale of all
or substantially all of the assets of the Company, prior to accepting such
acquisition proposal, the Company shall provide to Cisco written notice
within 24 hours (the "Notice of Acquisition Proposal") of such acquisition
proposal. In the event that the Board votes to initiate a sale to any other
person or entity of (xx) securities, where, as a result of the sale, such
person or entity will have beneficial ownership of fifty percent (50%) or
more of the total voting power of the Company, or (yy) all or substantially
all of the Company's assets the Company shall provide to Cisco written
notice within 24 hours (the "Notice of Sale") of such initiation of sale of
the Company. The Notice of Acquisition Proposal or the Notice of Sale
(each, a "Notice"), as the case may be, shall include the identity of any
party making or involved with such acquisition proposal or proposed sale
(the "Bidder"), and a summary of the material terms of such acquisition
proposal. The Company shall also provide access to (and copies of, if
requested) all documents containing nonpublic material information of the
Company that are or have been supplied to, or made available to, a Bidder
(the "Acquisition Materials"). Once the Company gives Cisco Notice of
Acquisition Proposal by a Bidder, the Company shall not be required to
provide any additional Notice of Acquisition Proposal to Cisco in response
to any non-material revisions ("Non-Material Revisions") to acquisition
proposals from such Bidder received within four (4) months of the initial
Notice of Acquisition Proposal. The Company shall not be required to
provide any additional Notice of Acquisition Proposal or Notice of Sale to
Cisco of any Non-Material Revisions to acquisition proposals received by
the Company within four (4) months of the Company providing Cisco Notice of
Sale. For purposes of this Section 2.8, an increase or decrease in the
proposed purchase price or consideration for the acquisition proposal or
proposed sale equal to or less than 10% of the proposed purchase price or
consideration set forth in an initial Notice shall be deemed a Non-Material
Revision.
(b) The Company shall not accept an acquisition proposal within five
(5) business days of providing a Notice of Acquisition Proposal, or agree
to a sale within ten (10 business days of providing a Notice of Sale, to
Cisco unless Cisco agrees in writing to waive all or a portion of such
period.
(c) Upon receiving a Notice of Sale that a sale of the Company has
been initiated, Cisco (or its assignee as described below) shall have ten
(10) business days (which time period may be extended by mutual written
agreement) (the "Offer Period") following its receipt of the Notice in
which to present an offer (the "Offer") to acquire the Company (the "Right
of Offer"). Cisco shall have the right to assign the Right of Offer to two
assignees (which two assignees shall not have any right to further assign
or otherwise transfer the Right of Offer) which shall be selected by the
Company within two (2) business days after receiving a list of five
potential assignees provided by Cisco. If the assignees agree to be bound
by a commercially reasonable confidentiality agreement (which shall be
delivered by the Company to the two assignees at such time it has selected
such assignees as described above), Cisco shall have the
-45-
right to (i) deliver to such assignees (x) the Acquisition Materials and
(y) a general summary of the Notice prepared by the Company that shall
include the material terms contained in the Notice including the offer
price or price-range, and (ii) assist and provide guidance to such
assignees in evaluating the Company and preparing their respective Offers;
provided, however, that (a) any summary delivered pursuant to (i) above
shall not include the identity of the Bidder, and (b) Cisco shall not
reveal the identity of the Bidder to any such assignees or their
representatives. Notwithstanding the foregoing, the Company acknowledges
that Cisco shall not be accountable if the identity of the Bidder is
rightfully obtained by an assignee from a source other than Cisco. Each
assignee shall deliver its independent Offers within such ten (10) day
period (or other mutually agreed upon time period, as set forth above) to
the Company and Cisco upon which delivery the Company may elect to pursue
the Offer of one such assignee (the "Selected Assignee"), which shall be at
the Company's sole discretion, and shall promptly notify any assignee whose
Offer the Company has elected not to pursue of such election. Cisco agrees
that it will not receive any finders' fees or other payments or
compensation in connection with any assignment made pursuant to this
Section 26.
(i) If the Company, in its sole discretion, elects to pursue
Cisco's (if not assigned) or the Selected Assignee's Offer, the Company
will promptly provide Cisco and the Selected Assignee (if any) written
acknowledgment of such election. If such is the case, the Company and Cisco
agree to negotiate, or, if applicable, the Company agrees to negotiate with
the Selected Assignee, in good faith for a period of ten (10) business days
(the "Negotiation Period") (which may be extended by mutual written
agreement) after receipt by Cisco or the Selected Assignee, as the case may
be, of the Company's written acknowledgment to pursue Cisco's or the
Selected Assignee's Offer, to reach agreement on mutually agreeable terms.
(ii) In the event:
(a) Cisco or at least one of its assignees does not deliver
an Offer to the Company within ten (10) business days (or other mutually
agreed upon time period, as set forth above), after Cisco's receipt of the
Notice;
(b) The Company elects not to accept Cisco's or the Selected
Assignee's Offer (which it may elect in its sole discretion); or
(c) Within the ten (10) business days (or other mutually
agreed upon time period, as set forth above) following the Company's
acknowledgment of its desire to pursue Cisco's or the Selected Assignee's
Offer, Cisco or the Selected Assignee, as the case may be, and the Company
do not mutually agree to the terms of an agreement for an acquisition of
the Company,
-46-
then, and only then, the right of first negotiation of Cisco or the
Selected Assignee hereunder shall expire with respect only to such
acquisition proposal or initiation of a sale and the Company shall be free
thereafter to enter into a definitive agreement with the Bidder identified
in the Notice for an acquisition or sale of the Company. If, following the
expiration of the right of first negotiation with respect to an acquisition
proposal or initiation of a sale, the Company fails to enter into an
acquisition with the Bidder identified in the Notice relating thereto, any
subsequent acquisition proposal or proposed sale of the Company shall be
subject to the provisions of this Section 26.
(d) The rights under this Section 26 shall terminate upon the
consummation of an initial public offering of the Company.
27. Confirmation of Notice and Waiver. Each of the undersigned
parties hereto who or which was a party to the Series C Purchase Agreement,
hereby confirms that such party received proper notice under, and waived their
rights with respect to, Section 7.10 of the Series C Purchase Agreement.
[Signature Pages Follow]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement by
their duly authorized officers as of the date first above written.
CiDRA CORPORATION
By:/s/ F. Xxxxx Xxxxxx
----------------------------
Name: F. Xxxxx Xxxxxx
Title: Chief Executive Officer
[Purchase Agreement Signature Pages Continue]
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/s/ Xxxxx Xxxxxxxxxx
_______________________________________________
Xxxxx Xxxxxxxxxx
/s/ Xxxxxxx Xxxxxx
_______________________________________________
Xxxxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxx-Xxxxxxx
_______________________________________________
Xxxxxxx Xxxxxx-Xxxxxxx
/s/ Xxxx Xxxxx
_______________________________________________
Xxxx Xxxxx
/s/ Xxxxxx Xxxxxx
_______________________________________________
Xxxxxx Xxxxxx
/s/ Xxxxxxxx X. Xxxxxxxx
_______________________________________________
Xxxxxxxx X. Xxxxxxx
/s/ Xxxxxxx X. Xxxxxxxx, III
_______________________________________________
Xxxxxxx X. Xxxxxxxx, III
[Purchase Agreement Signature Pages Continue]
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VERTEX CAPITAL II, LLC
By: /s/ Xxxxxxx Xxxxxxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: Manager
VERTEX CAPITAL III, LLC
By: /s/ Xxxxxxx Xxxxxxxxxxx
--------------------------------------------
Name: Xxxxxxx Xxxxxxxxxxx
Title: Manager
EMERGING TECHNOLOGY PORTFOLIO
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Attorney-in-fact
AMERINDO INTERNET FUND PLC
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Manager
AMERINDO TECHNOLOGY GROWTH FUND II, INC.
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Director
[Purchase Agreement Signature Pages Continue]
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MSD SELECT SPONSORS VENTURE CAPITAL
PARTNERSHIP , L.P.
By: MSD Select Sponsors GP LLC, its General Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Manager
MSD PORTFOLIO, L.P. -- INVESTMENTS
By: MSD Capital, L.P., its General Partner
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Managing Principal
MSD EC I, LLC
By: MSD EC Management LLC, its Manager
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Manager
DOUBLE MAKO INVESTMENTS, LLC
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Manager
XXXXXXXXXX INVESTMENTS, LLC
By: /s/ Xxxx Xxxxxx
--------------------------------------------
Name: Xxxx Xxxxxx
Title: Director
[Purchase Agreement Signature Pages Continue]
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CiDRA CORPORATION
SERIES D PREFERRED STOCK
PREFERRED STOCK PURCHASE AGREEMENT
COUNTERPART SIGNATURE PAGE
XXXXXX OTC AND EMERGING GROWTH FUND
By Xxxxxx Investment Management, Inc.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Address: c/x Xxxxxx Investment Management, Inc.
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Law Department
Phone:
Fax:
Tax Identification Number:
XXXXXX WORLD TRUST II - XXXXXX EMERGING
INFORMATION SCIENCES FUND
By the Xxxxxx Advisory Company, Inc.
By: /s/ Xxxx X. Xxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Senior Vice President
Address: c/x Xxxxxx Investment Management, Inc.
0 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Law Department
Phone:
Fax:
Tax Identification Number:
[Purchase Agreement Signature Pages Continue]
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XXXXXXX SECURITIES TRUST--
XXXXXXX TECHNOLOGY FUND*
By: /s/ Xxxxxx Xxxxxxxxx
--------------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
*A copy of the Agreement and/or Declaration of Trust of the referenced trust or
fund (the "Fund") is on file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given, and by your acceptance hereof you
acknowledge, that this instrument is executed on behalf of the Fund and that the
obligations of or arising out of this instrument are not binding upon any of the
trustees, officers or shareholders individually but are binding only upon the
assets and property of the Fund. If this instrument is executed by a Series of
the Fund, you also acknowledge that the obligations of or arising out of this
instrument are not binding upon the assets and property of any Series of a Fund
other than the Series executing this instrument.
[Purchase Agreement Signature Pages Continue]
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CISCO SYSTEMS, INC.
By: /s/ X. Xxxxx
--------------------------------------------
Name: X. Xxxxx
Title: CSO
[Purchase Agreement Signature Pages Continue]
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INFOSYS TECHNOLOGIES LIMITED
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Director
[Purchase Agreement Signature Pages Continue]
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XXXXXX XXXXXXX XXXX XXXXXX EQUITY FUNDING, INC.
By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
[Purchase Agreement Signature Pages Continue]
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DAMAC TECHNOLOGY PARTNERS, LP
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Director of General Partner
[Purchase Agreement Signature Pages Continue]
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DAMAC INVESTORS (XI) INC.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Director
[Purchase Agreement Signature Pages Continue]
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DAMAC INVESTORS (XII) INC.
By: /s/ Xxxxxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxxx
Title: Director
[Purchase Agreement Signature Pages Continue]
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BAYVIEW 2000, L..P.
By: /s/ Xxxx Xxxxx
--------------------------------------------
Name: Xxxx Xxxxx
Title: CFO & General Counsel
[Purchase Agreement Signature Pages Continue]
-00-
XXXXXXXX XXXXXXX, X.X.
VALHALLA CAPITAL MANAGEMENT & LLC, GP
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Managing Member
XXXXXXXX FOREIGN PARTNERS, L.P.
By: Xxxxxxxx Partners, LLC, General Partner
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XXXXXXXX PARTNERS II, L.P.
By: Xxxxxxxx Partners, LLC, General Partner
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
XXXXXXXX PARTNERS III, L.P.
By: Xxxxxxxx Partners, LLC, GP
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Member
XXXXXXXX ASSOCIATES III, L.P.
By: Xxxxxxxx Partners, LLC, GP
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Member
XXXXXXXX FOREIGN PARTNERS III, L.P.
By: Xxxxxxxx Partner, LLC, GP
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Member
[Purchase Agreement Signature Pages Continue]
-00-
XXXXXXXX XXXXXXXX, L.P.
By: Xxxxxxxx Partners, LLC, General Partner
By: /s/ Xxxxxxxx Xxxxxx
--------------------------------------------
Name: Xxxxxxxx Xxxxxx
Title: Vice President
FIRST RESERVE FUND VII, LIMITED PARTNERSHIP,
a Delaware limited partnership
By: First Reserve GP VII, L.P., a Delaware limited
partnership, its general partner
By: First Reserve Corporation, a Delaware corporation,
its general partner
By: /s/ Will Honeybourne
--------------------------------------------
Name: Will Honeybourne
Title: Managing Director
FIRST RESERVE FUND VIII, L.P., a Delaware limited
partnership
By: First Reserve GP VIII, L.P., a Delaware limited
partnership, its general partner
By: First Reserve Corporation, a Delaware corporation,
its general partner
By: /s/ Will Honeybourne
--------------------------------------------
Name: Will Honeybourne
Title: Managing Director
[Purchase Agreement Signature Pages Continue]
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HRLD VENTURE PARTNERS I, L.P.
By: HRLD Corporation
Its General Partner
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title:
HRLD VENTURE PARTNERS II, L.P.
By: HRLD Corporation
Its General Partner
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title:
OPTICAL CAPITAL GROUP, LLC
By: /s/ Xxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxx X. Xxxxxxx
Title: Managing Member
[Purchase Agreement Signature Pages Continue]
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CONNECTICUT INNOVATIONS, INCORPORATED
LD By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Executive Director
CONNECTICUT INNOVATIONS/XXXXXXX LLC
By: Innovations Xxxxxxx Management LLC,
Its Manager
By: Connecticut Innovations, Incorporated,
Its Member
LD By: /s/ Xxxxxx X. Xxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Executive Director
CII/NEV LLC
By: Innovations Management LLC
Its Manager
By: Connecticut Innovations, Incorporated
Its Member
LD By: /s/ Xxxxxx X. Xxxxxxx
--------------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: President and Executive Director
AXIOM VENTURE PARTNERS II
LIMITED PARTNERSHIP
By: Axiom Venture Associates II Limited Liability
Company
Its General Partner
By: /s/ Xxxx Xxxxxxx
--------------------------------------------
Name: Xxxx Xxxxxxx
Title: General Partner
[Purchase Agreement Signature Pages Continue]
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KS TEKNOINVEST V
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: General Manager
KS TEKNOINVEST VI
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: General Manager
GLADSTAD CAPITAL AS
By: /s/ Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Financial Director
VENTUROS HOLDINGS AS
By: /s/ Asmund Slogedal
--------------------------------------------
Name: Asmund Slogedal
Title: Managing Director
GEZINA AS
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
SELVAAG INVEST AS
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
[Purchase Agreement Signature Pages Continue]
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FURUHOLMES INVEST AS
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
AIG PRIVATE BANK LTD
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
VENTUROS I DA
By: /s/ Asmund Slogedal
--------------------------------------------
Name: Asmund Slogedal
Title: Managing Director
GEZINA AS DIREKTE
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
HANDS ON MANAGEMENT AS
By: /s/ Asmund Slogedal
--------------------------------------------
Name: Asmund Slogedal
Title: Managing Director
SVENNEVIK INVEST AS
By: /s/ Bjorn Bjora
--------------------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
[Purchase Agreement Signature Pages Continue]
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PRIVATE VENTURES LTD.
By: /s/ Xxxxx Xxxxxxx
--------------------------------------------
Name: Xxxxx Xxxxxxx
Title: Atty. in Fact
/s/ Xxxxx Xxxxxxx
________________________________________________
Xxxxx Xxxxxxx
/s/ Bjorn Bjora
________________________________________________
Xxxxxxx Xxxxxxxx, by Xxxxx Xxxxx his attorney-in-fact
/s/ Bjorn Bjora
________________________________________________
Tore Mengshoel, by Bjorn Bjora his attorney-in-fact
/s/ Bjorn Bjora
________________________________________________
Andreas Mollatt, by Bjorn Bjora his attorney-in-fact
/s/ Bjorn Bjora
________________________________________________
Xxx Lips, Xxxxx Xxxxx
Attorney in Fact
[Purchase Agreement Signature Pages Continue]
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VEP, LLC
By: /s/ Xxxxx Xxxxx
--------------------------------------------
Name: Xxxxx Xxxxx
Title: Member
VPF CIDRA INVESTMENTS, LLC
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Member
VPF CIDRA INVESTMENTS II, LLC
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Member
PILOT HOLDINGS, L.P.
By: /s/ signature illegible
--------------------------------------------
Name:
Title:
[Purchase Agreement Signature Pages Continue]
-68-
Agreed to and accepted as to
Sections 8, 10 and 14 only:
/s/ F. Xxxxx Xxxxxx
--------------------------------------------
F. Xxxxx Xxxxxx
/s/ E. Xxxxxxx Xxxxxx
--------------------------------------------
E. Xxxxxxx Xxxxxx
/s/ Xxxxxx Xxxxxxxx Hay
--------------------------------------------
Xxxxxx Xxxxxxxx Hay
/s/ Xxxx X. Xxxxxx
--------------------------------------------
Xxxx X. Xxxxxx
/s/ Xxxxxxx Xxxxxx
--------------------------------------------
Xxxxxxx Xxxxxx
[Purchase Agreement Signature Pages Continue]
-69-
Agreed to and accepted as to
Sections 7, 8, 10 and 23 only:
/s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx
/s/ Xxxxx X. Xxxxx
--------------------------------------------
Xxxxx X. Xxxxx, Trustee of the Xxxxx
X. Xxxxx Grantor Retained Annuity
Trust
/s/ Xxxxxxxxx X. Xxxxxxxxxx
--------------------------------------------
Xxxxxxxxx X. Xxxxxxxxxx
VELOCITY CAPITAL, LLC
By: /s/ Xxxxx X. Xxxxxx
------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Managing Member
[Purchase Agreement Signature Pages Continue]
-70-
Agreed to and accepted as to
Sections 7, 8, 10 and 23 only:
UNITED EASTERN INVESTMENT CORP.
By: /s/ Xxxx X. Xx Xxxxxx
-----------------------------
Name: Xxxx X. Xx Xxxxxx
Title: President
SUMITOMO ELECTRIC INDUSTRIES, LTD.
By: /s/ Satoshi Otohata
------------------------------
Name: Satoshi Otohata
Title: Director & General Manager - International Business Division
[Purchase Agreement Signature Pages Continue]
-71-
Agreed to and accepted as to
Sections 7, 8, 10 and 23 only:
/s/ Bjorn Bjora
__________________________________
Bjorn Bjora
/s/ Asmund Slogedal
__________________________________
Asmund Slogedal
/s/ Bjorn Bjora
__________________________________
Tharald Brovig, by Bjorn Bjora his
attorney-in-fact
SAND FINAS AS
By:/s/ Bjorn Bjora
----------------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
EIKEN INVEST 97 AS
By:/s/ Bjorn Bjora
----------------------------------
Name: Bjorn Bjora
Title: General Manager
EIKEN INVEST 98 AS
By:/s/ Bjorn Bjora
----------------------------------
Name: Bjorn Bjora
Title: General Manager
[Purchase Agreement Signature Pages Continue]
-72-
Agreed to and accepted as to
Sections 7, 8, 10 and 23 only:
EIKEN INVEST 99 AS
By: /s/ Bjorn Bjora
-----------------------------
Name: Bjorn Bjora
Title: Attorney in Fact
AS LENE
By: /s/ Bjorn Bjora
-----------------------------
Name:
Title:
GJARM INVEST AS
By:/s/ Magne Degrard
-----------------------------
Name: Magne Degrard
Title: Attorney in Fact
[Purchase Agreement Signature Pages End]
-73-
SCHEDULE 1
-74-
SCHEDULE 2
NAME AND ADDRESS
1. F. Xxxxx Xxxxxx
000 X. Xxxx Xxxxxx
Xxxxxxxxxxx, XX 00000
2. E. Xxxxxxx Xxxxxx
0000 Xxxxxxxx Xxxxxxx
Xxxxxxxxxxx, XX 00000
3. Xxxxxx Xxxxxxxx Hay
00 Xxxxxxxxx Xxxxx
Xxxxxxxx, XX 00000
4. Xxxx X. Xxxxxx
00 Xxxxxx Xxxx Xxxx
Xxxxx Xxxxxxxxxxx, XX 00000
5. Xxxxxxx Xxxxxx
00 Xxxxx Xxxx Xxxx
Xxxxx Xxxx, XX 00000
-75-
SCHEDULE 3
NAME AND ADDRESS
1. Xxxxx X. Xxxxx
0000 Xxxxxxxx Xxxxxx Xxx
Xxxxxxxx, XX 00000
2. Xxxxx X. Xxxxx
0000 X. 000 X
Xxxxx, XX 00000
3. Xxxxx X. Xxxxx and Xxxxx X. Xxxxx,
Trustees of the Xxxxx X. Xxxxx Grantor
Retained Annuity Trust
0000 Xxxxxxxx Xxxxxx Xxx
Xxxxxxxx, XX 00000
4. Xx. Xxxxxxxxx Xxxxxxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
5. Velocity Capital, LLC
Attn: Xxxxx X. Xxxxxx
000 Xxxx Xxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
6. United Eastern Investment Corp.
Attn: Xxxx X'Xxxxx
Xxxxx 000 Xxxxxx Xxxxxxxx
Xxxxx XXxx Xxxxxx
P.O. Box 277
Abu Dhabi, U.A.E.
7. Sumitomo Electric Industries, Ltd.
Attn: Xxxxxx Xxxx, Assistant Manager
Strategic Planning Group
International Business Division
0-0-00, Xxxxxxxxxxx
Xxxxxx-xx
Xxxxx, 000-0000
Xxxxx
-76-
8. Xxxxx Xxxxx
Xxxx Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
9. Asmund Slogedal
Xxxx Xxxxxxxxxx 00
0000 Xxxx
Xxxxxx
10. Tharald Brovig
c/o Xxxxx Xxxxx
Xxxx Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
11. Sand Finas AS
c/o Teknoinvest Management AS
Grev Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
12. Eiken Invest 97 AS
c/o Teknoinvest Management AS
Grev Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
13. Eiken Invest 98 AS
c/o Teknoinvest Management AS
Grev Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
14. Morvold-Farsund AS
c/o Teknoinvest Management AS
Grev Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
-77-
15. AS Lene
c/o Teknoinvest Management AS
Grev Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
16. Gjarm Invest AS
c/o Teknoinvest Management AS
Grev Wedels Xxxxx 5
X.X. Xxx 000 Xxxxxxx
0000 Xxxx
Xxxxxx
-78-
SCHEDULE 4
The "Amerindo Group" for purposes of this Agreement shall include the
following Investors listed on Schedule 1 hereto:
Xxxxx Xxxxxxxxxx
Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx-Xxxxxxx
Xxxx Xxxxx
Xxxxxx Xxxxxx
Vertex Capital II, LLC
Vertex Capital III, LLC
Xxxxxxxx Xxxxxxxx
Xxxxxxx X. Xxxxxxxx, III
Emerging Technology Portfolio
Amerindo Internet Fund PLC
Amerindo Technology Growth Fund II Inc.
-79-
SCHEDULE 5
The "MSD Group" for purposes of this Agreement shall include the following
Investors listed on Schedule 1 hereto:
MSD Select Sponsors Partnership, L.P.
MSD Portfolio, L.P. - Investments
MSD EC I, LLC
Double Mako Investments, LLC
Xxxxxxxxxx Investments, LLC
-80-
