1
EXHIBIT 10.14
XXXXX CORPORATION
AMENDED AND RESTATED RIGHTS AGREEMENT
This Amended and Restated Rights Agreement (the "Agreement") is entered
into as of the 21st day of June, 1999, by and among Xxxxx Corporation, a
California corporation (the "Company"), the Series A Purchasers, Series B
Purchasers, Series C Purchasers, the Series D Purchasers and the Ben-Efraims,
all as identified on Exhibit A hereto and shall be effective for all purposes
upon the consummation of the Initial Closing under the Series D Preferred Stock
Purchase Agreement of even date herewith (the "Effective Date"). The Series A
Purchasers, Series B Purchasers, Series C Purchasers and Series D Purchasers
shall be referred to collectively herein as the "Purchasers." The Purchasers and
the Ben-Efraims shall be referred to collectively herein as the "Investors."
RECITALS
A. Pursuant to a Rights Agreement dated June 2, 1995 (the "June 1995
Rights Agreement"), the Company, the Series A Purchasers and the Ben-Efraims
acquired certain registration rights as to securities purchased pursuant to the
Series A Preferred Stock Purchase Agreement dated June 2, 1995 and the Common
Stock Purchase Agreement dated January 13, 1995, respectively.
B. Pursuant to a Rights Agreement dated November 22, 1995 (the "November
1995 Rights Agreement"), the Company, the Series A Purchasers and the
Ben-Efraims agreed to amend and restate the registration rights acquired
pursuant to the June 1995 Rights Agreement in their entirety as set forth in the
November 1995 Rights Agreement, and to include the Series B Purchasers as
parties thereto such that the June 1995 Rights Agreement was of no further force
or effect.
C. Pursuant to a Rights Agreement dated July 31, 1996 (the "July 1996
Rights Agreement"), the Company, the Series A Purchasers, the Series B
Purchasers and the Ben-Efraims agreed to amend and restate the registration
rights acquired pursuant to the November 1995 Rights Agreement in their entirety
as set forth in the July 1996 Rights Agreement, and to include the Initial
Series C Purchasers as parties thereto such that the November 1995 Rights
Agreement was of no further force or effect.
D. Pursuant to an Amended and Restated Rights Agreement dated July 24,
1997 (the "1997 Rights Agreement"), the Company, the Series A Purchasers, the
Series B Purchasers, certain of the Series C Purchasers, and the Ben-Efraims,
agreed to amend and restate the registration rights acquired pursuant to the
July 1996 Rights Agreement in their entirety as set forth in the July 1997
Rights Agreement, and to include certain additional Series C Purchasers as
parties thereto such that the July 1996 Rights Agreement was of no further force
or effect.
E. Pursuant to an Amended and Restated Rights Agreement dated November
1997 (the "November 1997 Rights Agreement"), the Company, the Series A
Purchasers, the Series B Purchasers, certain of the Series C Purchasers, and the
Ben-Efraims, agreed to amend and restate
2
the registration rights acquired pursuant to the 1997 Rights Agreement in their
entirety as set forth in the November 1997 Rights Agreement, and to include
certain additional Series C Purchasers as parties thereto such that the 1997
Rights Agreement was of no further force or effect.
F. Pursuant to an Amended and Restated Rights Agreement dated December
19, 1997 (the "December 1997 Rights Agreement"), the Company, the Series A
Purchasers, the Series B Purchasers, the Series C Purchasers and the
Ben-Efraims, agreed to amend and restate the registration rights acquired
pursuant to the November 1997 Rights Agreement in their entirety as set forth in
the December 1997 Rights Agreement, and to include certain of the Series D
Purchasers as parties thereto such that the November 1997 Rights Agreement was
of no further force or effect.
G. Pursuant to an Amended and Restated Rights Agreement dated July 13,
1998 (the "July 1998 Rights Agreement"), the Company, the Series A Purchasers,
the Series B Purchasers, the Series C Purchasers, certain of the Series D
Purchasers and the Ben-Efraims, agreed to amend and restate the registration
rights acquired pursuant to the December 1997 Rights Agreement in their entirety
as set forth in the July 1998 Rights Agreement, and to include certain of the
Series D Purchasers as parties thereto such that the December 1997 Rights
Agreement was of no further force or effect.
H. Pursuant to an Amended and Restated Rights Agreement dated January 9,
1999 (the "January 1999 Rights Agreement"), the Company, the Series A
Purchasers, the Series B Purchasers, the Series C Purchasers, certain of the
Series D Purchasers and the Ben-Efraims, agreed to amend and restate the
registration rights acquired pursuant to the July 1998 Rights Agreement in their
entirety as set forth in the January 1999 Rights Agreement, and to include
certain of the Series D Purchasers as parties thereto such that the July 1998
Rights Agreement was of no further force or effect.
I. In connection with the closing of a certain Series D Preferred Stock
financing between the Company and certain additional Series D Purchasers and
with the approval of the majority of Common Stock of the Company issued or
issuable upon conversion of the outstanding Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and Series D Preferred Stock of the
Company, the Series A Purchasers, the Series B Purchasers, the Series C
Purchasers, the Series D Purchasers, and the Ben-Efraims, intend to amend and
restate the January 1999 Rights Agreement, as allowed in Sections 3.7 and 3.8
thereof to read as set forth herein so that all rights of the Investors to
participation and registration under Securities Act of 1933 as amended, shall
upon the effectiveness of this agreement, be consolidated and restated herein
and the provisions of the January 1999 Rights Agreement shall be of no further
force or effect.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
Restrictions on Transferability;
3
Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Common Shares" shall mean the shares of Common Stock
outstanding and issuable upon the exercise of options listed on Exhibit A
hereto.
"Conversion Shares" means the Common Stock issued or issuable
upon conversion of the Preferred ----------------- Shares.
"Holder" shall mean any Investor holding Registrable Securities,
and any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.
"Initiating Holders" shall mean Holders in the aggregate of not
less than fifty percent (50%) of the Registrable Securities; provided, however,
that the Xxxxxx Xxx-Xxxxxx and Xxxx Xxx-Xxxxxx Family Trust dated July 29, 1994
(the "Trust") shall be counted as a Holder for purposes of calculating the
foregoing fifty percent (50%) of the Registrable Securities only if Xx. Xxxxxx
Xxx-Xxxxxx, Trustee of the Trust, shall not then be employed by the Company.
"Preferred Shares" shall mean the shares of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock and Series D Preferred
Stock listed on Exhibit A hereto together with the shares of Series C Preferred
Stock and Series D Preferred Stock issuable upon exercise of the warrants listed
on Exhibit A hereto.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registrable Securities" means (i) the Common Shares; (ii) the
Conversion Shares; and (iii) any Common Stock of the Company issued or issuable
in respect of the Common Shares, Preferred Shares or Conversion Shares or other
securities issued or issuable with respect to the Preferred Shares, Conversion
Shares or Common Shares upon any stock split, stock dividend, recapitalization,
or similar event, or any Common Stock otherwise issued or issuable with respect
to the Common Shares, Conversion Shares or Preferred Shares; provided, however,
that shares of Common Stock or other securities shall only be treated as
Registrable Securities if and so long as they have not been (x) sold to or
through a broker or dealer or underwriter in a public distribution or a public
securities transaction, or (y) sold in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act under
Section 4(1) thereof so that all transfer restrictions and restrictive legends
with respect thereto are removed upon the consummation of such sale.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
including, without limitation, all
4
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company).
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 of this Agreement.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Holders and all fees and disbursements of counsel for the
Holders (except as provided by Section 1.9).
1.2 Restrictions. The Preferred Shares, the Conversion Shares and the
Common Shares shall not be sold, assigned, transferred or pledged except upon
the conditions specified in this Agreement, which conditions are intended to
ensure compliance with the provisions of the Securities Act. The Investors will
cause any proposed purchaser, assignee, transferee or pledgee of the Preferred
Shares, the Conversion Shares or the Common Shares to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the Preferred
Shares, (ii) the Conversion Shares, (iii) the Common Shares and (iv) any other
securities issued in respect of the securities referenced in clauses (i), (ii)
and (iii) upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 1.4 below) be stamped or otherwise imprinted with legends
in the following form (in addition to any legend required under applicable state
securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO
IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
Each Investor and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
5
1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall, and whose legal opinion shall be, reasonably
satisfactory to the Company, addressed to the Company, to the effect that the
proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "no action" letter
(a) in any transaction in compliance with Rule 144, (b) in any transaction in
which an Investor which is a corporation distributes Restricted Securities after
six (6) months after the purchase thereof solely to its majority-owned
subsidiaries or affiliates for no consideration, or (c) in any transaction in
which an Investor which is a partnership distributes Restricted Securities after
six (6) months after the purchase thereof solely to partners thereof for no
consideration, provided that each transferee agrees in writing to be subject to
the terms of this Section 1.4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear, except if such transfer is
made pursuant to Rule 144, the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.
1.5 Request for Registration.
(a) In case the Company shall receive from the Initiating
Holders a written request that the Company effect any registration,
qualification or compliance with respect to the Registrable Securities, the
Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration, qualification or compliance (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within twenty (20) days after receipt of such written notice from
the Company; provided, however, that the Company shall not be obligated to take
any action to effect
6
any such registration, qualification or compliance pursuant to this Section 1.5:
(1) In any particular jurisdiction in which the
Company would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(2) Prior to the earlier of (i) two (2) years
from the date of this Agreement or (ii) six months following the Company's
initial public offering;
(3) During the period ending on the date three
(3) months immediately following the effective date of, any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan);
(4) After the Company has effected two (2) such
registration pursuant to this subparagraph 1.5(a), such registration has been
declared or ordered effective and the securities offered pursuant to such
registration have been sold; or
(5) If the Company shall furnish to such Holders
a certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a single period
not to exceed one hundred-twenty (120) days from the date of receipt of written
request from the Initiating Holders.
Subject to the foregoing clauses (1) through (5), the Company shall file
a registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided in this Agreement.
The Company shall (together with all Holders proposing to distribute
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by a majority in interest of the Initiating Holders (which managing underwriter
shall be reasonably acceptable to the Company). Notwithstanding any other
provision of this Section 1.5, if the managing underwriter advises the
Initiating Holders in writing that marketing factors require a limitation of the
number of shares to be underwritten, then the Company shall so advise all
Holders of Registrable Securities and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all Holders thereof in proportion, as nearly as practicable, to
the respective amounts of Registrable Securities held by such Holders at the
time of filing the
7
registration statement. No Registrable Securities excluded from the underwriting
by reason of the underwriter's marketing limitation shall be included in such
registration. To facilitate the allocation of shares in accordance with the
above provisions, the Company or the underwriters may round the number of shares
allocated to any Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration.
1.6 Company Registration.
(a) Notice of Registration. If at any time or from time to time,
the Company shall determine to register any of its securities, either for its
own account or the account of a security holder or holders other than (i) a
registration relating solely to employee benefit plans, or (ii) a registration
relating solely to a Commission Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved in such registration, all the Registrable Securities specified in a
written request or requests made within twenty (20) days after receipt of such
written notice from the Company by any Holder, but only to the extent that such
inclusion will not diminish the number of securities included by the Company or
by holders of the Company's securities who have demanded such registration.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the other holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company (or by the
holders who have demanded such registration). Notwithstanding any other
provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration to a minimum of 25% of the total shares to be
included in such underwriting or exclude them entirely in the case of the
Company's initial public offering. The Company shall so advise all Holders and
the other holders distributing their securities through such underwriting
pursuant to piggyback registration rights similar to this Section 1.6, and the
number of shares of Registrable Securities and other securities that may be
included in the registration and underwriting shall be allocated among all
Holders and other holders in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by
8
such Holders and other securities held by other holders at the time of filing
the registration statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company or the underwriters may round the number
of shares allocated to any Holder or other holder to the nearest 100 shares. If
any Holder or other holder disapproves of the terms of any such underwriting, he
or she may elect to withdraw therefrom by written notice to the Company and the
managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of the registration statement relating thereto.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.7 Registration on Form S-3.
(a) If any Holder requests that the Company file a registration
statement on Form S-3 (or any successor form to Form S-3) for a public offering
of shares of the Registrable Securities, the reasonably anticipated aggregate
price to the public of which, net of underwriting discounts and commissions,
would exceed $500,000, and the Company is a registrant entitled to use Form S-3
to register the Registrable Securities for such an offering, the Company shall
use its best efforts to cause such Registrable Securities to be registered for
the offering on such form; provided, however, that the Company shall not be
required to effect more than one registration pursuant to this Section 1.7 in
any twelve (12) month period. The Company will (i) promptly give written notice
of the proposed registration to all other Holders, and (ii) as soon as
practicable, use its best efforts to effect such registration (including,
without limitation, the execution of an undertaking to file post-effective
amendments, appropriate qualification under applicable blue sky or other state
securities laws and appropriate compliance with applicable regulations issued
under the Securities Act and any other governmental requirements or regulations)
as may be so requested and as would permit or facilitate the sale and
distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Holder or Holders joining in such request as are specified in
a written request received by the Company within twenty (20) days after receipt
of such written notice from the Company. The substantive provisions of Section
1.5(b) shall be applicable to each registration initiated under this Section
1.7.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date three (3) months following the effective date of, a
registration statement (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), or (iii) if the Company shall furnish to such Holder a certificate
signed by the President of the Company stating that, in the good faith judgment
of the Board of Directors, it would be seriously
9
detrimental to the Company or its shareholders for registration statements to be
filed in the near future, then the Company's obligation to use its best efforts
to file a registration statement shall be deferred for a single period not to
exceed one hundred twenty (120) days from the receipt of the request to file
such registration by such Holder or Holders.
1.8 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such shares or securities are
entitled to be included in registrations only to the extent that the inclusion
of such securities will not diminish the amount of Registrable Securities that
are included.
1.9 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Sections 1.5 and 1.6 and the
reasonable cost of one special legal counsel to represent all of the Holders
together in any such registration shall be borne by the Company, provided that
the Company shall not be required to pay the Registration Expenses of any
registration proceeding begun pursuant to Section 1.5, the request of which has
been subsequently withdrawn by the Initiating Holders. In such case, the holders
of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered unless the Holders holding a majority of the Registrable Securities,
as appropriate, agree to forfeit their right to one demand registration pursuant
to Section 1.5. Notwithstanding the foregoing, however, if at the time of the
withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to such Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said
Registration Expenses or to forfeit the right to one demand registration. Unless
otherwise stated, all other Selling Expenses relating to securities registered
on behalf of the Holders and all Registration Expenses incurred in connection
with any registration pursuant to Section 1.7 shall be borne by the Holders of
the registered securities included in such registration pro rata on the basis of
the number of shares so registered.
1.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; and
(b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
1.11 Indemnification.
10
(a) The Company will indemnify each Holder, each of its
trustees, officers and directors and partners, and each person controlling such
Holder within the meaning of Section 15 of the Securities Act, with respect to
which registration, qualification or compliance has been effected pursuant to
this Section 1, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Holder, each of its officers and directors, and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action, provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by an instrument duly executed by such
Holder, controlling person or underwriter and stated to be specifically for use
therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, 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 such registration
statement, prospectus, offering circular or other document, 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, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein; provided, however, that the liability
of a Holder for indemnification under this Section 1.11(b) shall not exceed the
gross proceeds from the offering received by such Holder.
(c) Each party entitled to indemnification under this Section
1.11 (the
11
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such 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
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent 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.
1.12 Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.13 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, after such
time as a public market exists for the Common Stock of the Company, the Company
agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act");
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as an Investor owns any Restricted Securities, to
furnish to the Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as an Investor may reasonably request in
availing itself of any rule or regulation of the Commission allowing an Investor
to sell any such securities without registration.
1.14 Transfer of Registration Rights. The rights to cause the Company to
register
12
securities granted Investors under Sections 1.5, 1.6 and 1.7 may be assigned to
a transferee or assignee reasonably acceptable to the Company in connection with
any transfer or assignment of Registrable Securities by an Investor (together
with any affiliate); provided, that (a) such transfer may otherwise be effected
in accordance with applicable securities laws, (b) notice of such assignment is
given to the Company, and (c) such transferee or assignee (i) is a wholly-owned
subsidiary or constituent partner (including limited partners) of such Investor,
or (ii) acquires from such Investor the lesser of (a) 100,000 or more shares of
Restricted Securities (as appropriately adjusted for stock splits and the like)
or (b) all of the Restricted Securities then owned by such Investor.
1.15 Standoff Agreement. Each Investor, and any transferee of shares
held by an Investor, agrees in connection with the initial registration of the
Company's securities that, upon request of the Company or the underwriters
managing any underwritten initial public 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 Registrable Securities (other than those included in
the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days from the effective date of such registration) as may
be requested by the Company or such managing underwriters; provided that the
officers and directors of the Company who own stock of the Company also agree to
such restrictions.
1.16 Termination of Rights. The rights of any particular Holder to cause
the Company to register securities under Sections 1.5, 1.6 and 1.7 shall
terminate with respect to such Holder following a bona fide firm underwritten
public offering of shares of the Company's Common Stock registered under the
Securities Act (provided the aggregate offering price, net of underwriting
discounts and commissions, exceeds ten million dollars ($10,000,000)) at such
time as such Holder is able to dispose of all its Registrable Securities in one
three-month period pursuant to the provisions of Rule 144; provided, that such
Holder holds Registrable Securities constituting less than 1% of the outstanding
voting stock of the Company.
SECTION 2
Right of Participation
2.1 Purchasers' Right of Participation.
(a) Right of Participation. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Purchaser the
right of participation to purchase its Pro Rata Portion of any New Securities
(as defined in subsection 2.1(b)) which the Company may, from time to time,
propose to sell and issue. A Purchaser's "Pro Rata Portion" for purposes of this
Section 2.1 is the ratio that (x) the sum of the number of shares of the
Company's Common Stock then held by such Purchaser and the total number of
shares of the Company's Common Stock issuable upon conversion of the Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock then held by such Purchaser bears to (y) the sum of the total
number of shares of the Company's Common Stock then outstanding and the total
number of shares of the Company's Common Stock issuable upon conversion of the
then outstanding Series A Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock
13
and Series D Preferred Stock.
(b) Definition of New Securities. Except as set forth below,
"New Securities" shall mean any shares of capital stock of the Company,
including Common Stock and Preferred Stock, whether authorized or not, and
rights, options or warrants to purchase said shares of Common Stock or Preferred
Stock, and securities of any type whatsoever that are, or may become,
convertible into said shares of Common Stock or Preferred Stock. Notwithstanding
the foregoing, "New Securities" does not include (i) the Common Shares, the
Preferred Shares or the Conversion Shares, (ii) securities offered to the public
generally pursuant to a registration statement under the Securities Act, (iii)
securities issued pursuant to the acquisition of another corporation by the
Company by merger, purchase of substantially all of the assets or shares or
other reorganization whereby the Company or its shareholders own not less than a
majority of the voting power of the surviving or successor corporation, (iv)
shares of the Company's Common Stock or related options or warrants convertible
into or exercisable for such Common Stock issued to employees, officers and
directors of, and consultants to, the Company, pursuant to any arrangement
approved by the Board of Directors of the Company, (v) shares of the Company's
Common Stock or related options or warrants convertible into or exercisable for
such Common Stock issued to customers and vendors of the Company pursuant to any
arrangement unanimously approved by the Board of Directors of the Company; (vi)
shares of the Company's Common Stock or related options convertible into or
exercisable for such Common Stock issued to banks, commercial lenders, lessors
and other financial institutions in connection with the borrowing of money or
the leasing of equipment by the Company, (vii) stock issued pursuant to any
rights or agreements, including, without limitation, convertible securities,
options and warrants, provided that the Company shall have complied with the
rights of participation established by this Section 2.1 with respect to the
initial sale or grant by the Company of such rights or agreements, or (viii)
stock issued in connection with any stock split, stock dividend or
recapitalization by the Company.
(c) Notice of Right. In the event the Company proposes to
undertake an issuance of New Securities, it shall give each Purchaser written
notice of its intention, describing the type of New Securities and the price and
terms upon which the Company proposes to issue the same. Each Purchaser shall
have twenty (20) days from the date of receipt of any such notice to agree to
purchase shares of such New Securities (up to the amount referred to in
subsection 2.1(a)), for the price and upon the terms specified in the notice, by
giving written notice to the Company and stating therein the quantity of New
Securities to be purchased.
(d) Exercise of Right. If any Purchaser exercises its right of
participation under this Agreement, the closing of the purchase of the New
Securities with respect to which such right has been exercised shall take place
within ninety (90) calendar days after the Purchaser gives notice of such
exercise, which period of time shall be extended in order to comply with
applicable laws and regulations. Upon exercise of such right of participation,
the Company and the Purchaser shall be legally obligated to consummate the
purchase contemplated thereby and shall use their best efforts to secure any
approvals required in connection therewith.
(e) Lapse and Reinstatement of Right. In the event a Purchaser
fails to exercise the right of participation provided in this Section 2.1 within
said twenty (20) day period, the Company shall have ninety (90) days thereafter
to sell or enter into an agreement (pursuant to
14
which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of said agreement) to sell the New
Securities not elected to be purchased by such Purchaser at the price and upon
the terms no more favorable to the purchasers of such securities than specified
in the Company's notice. In the event the Company has not sold the New
Securities or entered into an agreement to sell the New Securities within said
ninety (90) day period (or sold and issued New Securities in accordance with the
foregoing within sixty (60) days from the date of said agreement), the Company
shall not thereafter issue or sell any New Securities without first offering
such securities to the Purchasers in the manner provided above.
(f) Assignment. The right of the Purchasers to purchase any part
of the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of a Purchaser, or other persons or
organizations who acquire the lesser of (i) 100,000 or more shares of Restricted
Securities (as adjusted for stock splits and the like) or (ii) all of the
Restricted Securities then owned by such Purchaser.
2.2 Termination of Participation Right. The rights of participation
granted under Section 2.1 of this Agreement shall terminate on and be of no
further force or effect upon the earlier of (i) the consummation of the
Company's sale of its Common Stock in an underwritten public offering pursuant
to an effective registration statement filed under the Securities Act
immediately subsequent to which the Company shall be obligated to file annual
and quarterly reports with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act or (ii) the registration by the Company of a class of its equity
securities under Section 12(b) or 12(g) of the Exchange Act.
2.3 Waiver of Prior Right. Pursuant to the terms of the June 1995 Rights
Agreement, the November 1995 Rights Agreement, the July 1996 Rights Agreement,
the 1997 Rights Agreement, the November 1997 Rights Agreement, the December 1997
Rights Agreement and the July 1998 Rights Agreement, the Purchasers hereby waive
any right of pro rata participation which may have accrued to them in the past
with respect to any prior issuance of securities by the Company, including the
issuance of shares of Series D Preferred Stock to certain Series D Purchasers in
connection herewith.
SECTION 3
Miscellaneous
3.1 Assignment. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties to this
Agreement.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
3.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California in the United States of America
without giving effect to the conflicts of laws principles thereof.
15
3.4 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.5 Notices. Any notice, demand or request required or permitted to be
given under this Agreement shall be in writing and shall be deemed sufficient
when delivered personally by a recognized international courier (e.g., Federal
Express or DHL) or sent by confirmed facsimile, and addressed, if to the
Company, at its principal place of business, attention the President, and if to
a Purchaser, at their address as shown on the stock records of the Company. Such
notice shall be effective upon receipt by the organization being notified.
3.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
3.7 Amendment and Waiver. Any provision of this Agreement may be amended
or waived with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities, so long as the
effect is to treat all Holders equally. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities and the Company. In addition, the Company may waive performance of
any obligation owing to it, as to some or all of the Holders of Registrable
Securities, or agree to accept alternatives to such performance, without
obtaining the consent of any Holder of Registrable Securities. In the event that
an underwriting agreement is entered into between the Company and any Holder,
and such underwriting agreement contains terms differing from this Agreement, as
to any such Holder the terms of such underwriting agreement shall govern.
3.8 Effect of Amendment or Waiver. The Investors and their successors
and assigns acknowledge that by the operation of Section 3.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
3.9 Rights of Holders. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation, the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
3.10 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver,
16
permit, consent or approval of any kind or character on the part of any party of
any breach or default under this Agreement, or any waiver on the part of any
party of any provisions or conditions of this Agreement, must be made in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, or by law or otherwise
afforded to any holder, shall be cumulative and not alternative.
3.11 Additional Parties. The Investors agree that any additional persons
who become "Purchasers" under the Purchase Agreement at any "Subsequent Closing"
as such term is described in the Purchase Agreement shall become "Purchasers"
under this Agreement without further action by any other Investor.
17
The parties hereto have executed this Amended and Restated Rights
Agreement as of the day of _____, ______, and it shall be effective for all
purposes as of the Effective Date.
COMPANY: INVESTORS:
XXXXX CORPORATION,
a California corporation (Print Name of Investor)
By: By:
Xxxxxx Xxx-Xxxxxx,
President & CEO Title:
Address: 0000 X. Xxxxx Xxxxxx Xxxxxxx:
Xxx Xxxx, XX 00000
(Print Name of Investor)
By:
Title:
Address:
18
EXHIBIT A
The Ben-Efraims (Common Stock)
Shareholder Number of Shares
----------- ----------------
Gideon and Xxxx Xxx-Xxxxxx, Trustees of the Xxxxxx
Xxx-Xxxxxx and Xxxx Xxx-Xxxxxx Family Trust dated July
29, 1994 2,800,000
Amir Xxx-Xxxxxx 400,000
Xxxxx Xxx-Xxxxxx 400,000
Xxxxx Xxx-Xxxxxx, Custodian for Xxxx Xxxxx Xxx-Xxxxxx 400,000
Xxxxxx Xxx-Xxxxxx (options) 400,000
TOTAL: 4,400,000
19
The Series A Purchasers (Series A Preferred Stock)
Shareholder Number of Shares
----------- ----------------
AT&T Venture Company, L.P. 3,222,222
Venture Law Group Retirement Savings Plan U/A DTD 2/1/93
FBO Xxxxx X. Xxxxxx 11,110
Brentwood Associates VI, L.P. 1,333,334
Jerusalem Pacific Ventures, L.P. 1,481,480
Xxxxx X. Xxxxxxx 27,776
Beams Technology Investments Ltd. (formerly Due Diligence
Ltd.) 22,222
Mofet Israel Technology Fund Ltd. 740,742
Venture Law Group Retirement Savings Plan U/A DTD 2/1/93
FBO Tae Xxx Xxxx 5,554
U.S. Venture Partners IV 2,787,222
Second Ventures II, L.P. 338,334
U.S.V.P. Entrepreneur Partners II, L.P. 96,666
Vebacom GmbH 2,222,222
VLG Investments 1994 33,334
VLG Investments 1995 33,332
StrataCom, Inc. 1,111,110
TOTAL: 13,466,660
20
The Series B Purchasers (Series B Preferred Stock)
Shareholder Number of Shares
----------- ----------------
AT&T Venture Company, L.P. 725,000
Brentwood Associates VI, L.P. 1,250,000
Jerusalem Pacific Ventures, L.P. 150,000
Norwest Equity Partners V, L.P. 1,250,000
U.S.V.P. Entrepreneur Partners II, L.P. 21,750
StrataCom, Inc. 250,000
Second Ventures II, L.P. 76,126
U.S. Venture Partners IV, L.P. 627,124
Xxxxxxxxxx, Xxxxxx X. Trustee of the Xxxxxx X
Xxxxxxxxxx Trust U/A Dated 6/24/1987 56,500
Vebacom GmbH 500,000
Mofet Israel Technology Fund Ltd. 150,000
TOTAL: 5,056,500
21
The Series C Purchasers (Series C Preferred Stock)
Shareholder Number of Shares
----------- ----------------
Pan Dacom GmbH 285,714
AT&T Venture Company, L.P. 142,858
Brentwood Associates VI, L.P. 292,858
U.S. Venture Partners IV, L.P. 61,136
Second Ventures II, L.P. 7,422
U.S.V.P. Entrepreneur Partners II, L.P. 2,120
Norwest Equity Partners V, L.P. 71,428
Cisco Systems, Inc. 82,142
Korea Technology Banking Corporation 160,679
Xxxxxx X. Xxxxxxxxxx, Trustee of the Xxxxxx X
Xxxxxxxxxx Trust U/A Dated 6/24/1987 234,071
Xxxx Xxxx and Xxxx Xxxx Xxxxxxx, TTEES, The Xxxxxxx
Family Trust UTD 1/12/199 35,714
Xxxxx Xxxxxxx, Trustee of the Xxxxx Xxxxxxx Trust U/A
DTD 9/15/89 241,071
Xxxxxxxxx, Xxxxxxxx & Company 28,572
Xxxxxx X. Xxxxxx & Xxxx X. Xxxxxx, trustees of the
Xxxxxx Living Trust u/d/t April 18th, 1995 142,858
Citicorp 1,428,572
German American Capital Corporation 160,681
21st Century Communications T-E Partners, L.P. 164,780
22
Series C Purchasers (Series C Preferred Stock) - continued
Shareholder Number of Shares
----------- ----------------
21st Century Communications Partners, L.P. 484,306
21st Century Communications Foreign Partners, L.P. 65,200
Brentwood Affiliates Fund, L.P. 35,714
GS Capital Partners II, L.P. 268,899
GS Capital Partners II Offshore, L.P. 106,898
Xxxxxxx, Xxxxx & Co. Verwaltungs GmbH 9,918
Xylan Corporation 285,714
Xxx Xxxxxxx Capital Management 714,285
Stone Street Fund 1997, L.P. 28,849
Xxxxxx Xxxxxx Xxxx 0000, X.X. 14,008
Vebacom GmbH 230,000
Comdisco, Inc. 35,715
Comdisco, Inc. (warrants) 28,750
Xxxxx Xxxxxxxx 714,286
Xxxxxxx X. Xxxxx 50,000
Xxxxx Xxxxxx 24,000
Wireless ATM Investors 379,786
Tae Xxx Xxxx 2,857
TOTAL: 7,021,861
23
The Series D Purchasers (Series D Preferred Stock)
Shareholder Number of Shares
----------- ----------------
Italtel SpA 1,285,347
Comdisco, Inc. (warrants) 8,997
Al Shams Holdings Ltd. 642,674
Xxxxxx and Xxxxxxxx Xxxxxxxxxx, JTWROS 25,707
Xxxxxxx X. Xxxxxxx, M.D 12,854
J. Xxxxxxx Xxxxxxxxxx 12,853
Xxxxx Xxxxxx 6,425
ML IBK Positions 642,674
DRW Investors LLC 64,267
Venture Fund I, LP 125,991
Brentwood Associates VI, L.P. 86,110
Brentwood Affiliates Fund, L.P. 3,588
U.S. Venture Partners IV, L.P. 107,058
Second Ventures II, L.P. 12,996
USVP Entrepreneur Partners II, L.P. 3,713
Norwest Equity Partners V, A Minnesota Limited Liability 40,705
Partnership
Citicorp 44,006
Xxxxx Xxxxxxxx 128,535
Dynamic Securities & Holdings Inc. 64,267
Xxxxxx International Holdings Inc. 192,802
Comdisco, Inc. 1,928
24
The Series D Purchasers (Series D Preferred Stock) - continued
Shareholder Number of Shares
----------- ----------------
Xxx Xxxxxxx Capital Management 283,572
Lesk Investments Ltd. 154,241
MiniCap Investment Technology AG 183,161
Xxxx Xxx Xxxx 9,640
TOTAL: 4,144,111
