1
EXHIBIT 10.4
AMENDED AND RESTATED
INVESTORS RIGHTS AGREEMENT
This AMENDED AND RESTATED INVESTORS RIGHTS AGREEMENT ("Agreement") is
made as of June 19, 2000 by and among (i) Silicon Energy Corp., a California
corporation (the "Company"), (ii) the Purchasers (the "New Investors") listed on
Schedule I to the Series D Preferred Stock Purchase Agreement dated as of the
date hereof (the "Stock Purchase Agreement"), and (iii) the holders of shares of
Series C Preferred Stock, without par value (the "Series C Preferred Stock"),
the holders of shares of Series B Preferred Stock, without par value (the
"Series B Preferred Stock"), and the holders of shares of Series A Preferred
Stock, without par value (the "Series A Preferred Stock") of the Company listed
on Schedule A hereto (the "Existing Investors"; the New Investors and the
Existing Investors being referred to herein collectively as the "Investors"):
WITNESSETH:
WHEREAS, the Company is a party to that certain Amended and Restated
Investors Rights Agreement dated as of October 1, 1999 (the "Existing Rights
Agreement");
WHEREAS, the Company is issuing up to 3,703,703 shares of its Series D
Preferred Stock, without par value (the "Series D Preferred Stock") to the New
Investors, and the New Investors are investing up to an aggregate of $25,000,000
in the Company, pursuant to the Stock Purchase Agreement;
WHEREAS, the Company is issuing up to 825,000 shares of its Common
Stock, without par value, to GE Capital Equity Investments, Inc. ("GE"), and GE
is investing up to $3,300,000 in the Company pursuant to the Common Stock
Purchase Agreement dated as of the date hereof;
WHEREAS, one of the conditions to the investments by the New Investors
and GE in the Company is the execution of this Agreement, and the Company and
the Existing Investors are willing to enter into this Agreement; and
WHEREAS, the Company and the Existing Investors desire to amend and
restate the Existing Rights Agreement by entering into this Agreement.
NOW, THEREFORE, in consideration of these premises and the mutual
covenants and agreements contained herein, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Common Definitions. Unless otherwise defined in this Agreement,
capitalized terms used in this Agreement that are defined in the Stock Purchase
Agreement shall have the meanings assigned to them in the Stock Purchase
Agreement, and the rules of construction and
2
documentary convention set forth in the Stock Purchase Agreement shall apply to
this Agreement.
1.2 Additional Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Affiliate" (including, with correlative meaning, the term
"affiliated") shall mean a Person that, directly or indirectly, Controls or is
Controlled by, or is under common Control with, any Person.
"Control" (including, with correlative meaning, the terms
"controlled by" and "under common control with") as used with respect to any
Person, means the possession, directly or indirectly, of the power to direct or
to cause the direction of the management and policies of such Person, whether
through ownership of voting securities or by contract or otherwise.
"Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
"Common Stock" shall mean the Common Stock, without par value, of
the Company, as constituted as of the date of this Agreement.
"Conversion Stock" shall mean shares of Common Stock issued or
issuable upon conversion of the Preferred Stock, the 825,000 shares of Common
Stock issued to GE on the date hereof and any shares of capital stock received
in respect thereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, 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.
"Investors" shall mean the New Investors and the Existing
Investors.
"Major Investor" shall mean any Investor who beneficially owns at
least 400,000 shares of Preferred Stock or Conversion Stock, in each case
subject to adjustment in the event of any stock split, stock dividend,
combination of shares, recapitalization or the like. For the purposes of
calculating the beneficial ownership of an Investor in the preceding sentence
(i) all shares of Preferred Stock or Conversion Stock held or acquired by an
Affiliate of an Investor shall be aggregated together and (ii) all shares of
Series C Preferred Stock (including Conversion Stock) purchased from the Company
by employees of the Xxxxxxxx Group and members of the Xxxxxxxx family (or trusts
for their benefit) shall be aggregated with shares of Series C Preferred Stock
purchased by the Xxxxxxxx Group.
"Commission" shall mean the Securities and Exchange Commission,
or any other federal agency at the time administering the Securities Act.
"NASD" means the National Association of Securities Dealers, Inc.
-2-
3
"Person" means any individual, corporation, general or limited
partnership, limited liability company, firm, joint venture, association,
enterprise, joint stock company, trust, unincorporated organization or other
entity.
"Preferred Stock" shall mean, collectively, the Company's Series
A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock, and
Series D Preferred Stock.
"Registration Expenses" shall mean all expenses incurred by the
Company in complying with Sections 2.3, 2.4 or 2.5, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel and independent public accountants for the Company,
fees and expenses (including counsel fees) incurred in connection with complying
with state securities or "blue sky" laws, fees of the National Association of
Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance and fees and disbursements of one counsel for the
sellers of Restricted Stock (such fees and disbursements of counsel not to
exceed $25,000), but excluding any Selling Expenses.
"Restricted Stock" shall mean the Conversion Stock, except that
Restricted Stock shall exclude shares of Common Stock (a) which have been
registered under the Securities Act pursuant to an effective registration
statement filed thereunder and disposed of in accordance with the registration
statement covering them; (b) which have been publicly sold pursuant to Rule 144
under the Securities Act; or (c) held by a holder of Restricted Stock whose
rights to request registration have terminated pursuant to Section 4.2(a)
hereof.
"SEC" means the U.S. Securities and Exchange Commission.
"Securities Act" shall mean the Securities Act of 1933, 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 and
selling commissions applicable to the sale of Restricted Stock.
ARTICLE II
TRANSFERS OF SHARES AND REGISTRATION RIGHTS
2.1 Restrictive Legend. Each certificate representing Preferred
Stock or Conversion Stock shall, except as otherwise provided in this Section
2.1 or in Section 2.2, be stamped or otherwise imprinted with a legend
substantially in the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT
OF 1933 OR ANY STATE SECURITIES LAWS AND MAY NOT BE TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS IT HAS BEEN REGISTERED UNDER
SUCH ACT AND ALL SUCH APPLICABLE LAWS OR AN EXEMPTION FROM
REGISTRATION IS AVAILABLE.
-3-
4
A certificate shall not bear such legend if a written opinion of counsel
satisfactory to the Company (it being agreed that Xxxxx, Xxxxxxx & Xxxxxxxxx,
LLP and Xxxxxxxxxxx & Xxxxxxxx LLP shall be satisfactory) is delivered to the
Company which states that the securities represented thereby may be publicly
sold without registration under the Securities Act and any applicable state
securities laws.
2.2 Notice of Proposed Transfer. Prior to any proposed transfer of
any Preferred Stock or Conversion Stock (other than under the circumstances
described in Sections 2.3, 2.4 or 2.5), the holder thereof shall give written
notice to the Company of its intention to effect such transfer. Each such notice
shall describe the manner of the proposed transfer and, if requested by the
Company, shall be accompanied by a written opinion of counsel satisfactory to
the Company (it being agreed that Xxxxx, Xxxxxxx & Xxxxxxxxx, LLP and
Xxxxxxxxxxx & Xxxxxxxx LLP shall be satisfactory) to the effect that the
proposed transfer may be effected without registration under the Securities Act
and any applicable state securities laws, whereupon the holder of such stock
shall be entitled under the securities laws to transfer such stock in accordance
with the terms of its notice; provided, however, that no such opinion of counsel
shall be required for a transfer to one or more partners of the transferor (in
the case of a transferor that is a partnership), one or more members of the
transferor (in the case of a transferor that is a limited liability corporation)
or to an affiliated corporation (in the case of a transferor that is a
corporation). Each certificate for Preferred Stock or Conversion Stock
transferred as provided above shall bear the legend set forth in Section 2.1,
except that such certificate shall not bear such legend if (i) such transfer is
in accordance with the provisions of Rule 144 (or any other rule permitting
public sale without registration under the Securities Act) or (ii) the written
opinion of counsel referred to above is to the further effect that the
transferee and any subsequent transferee (other than an affiliate of the
Company) would be entitled to transfer such securities in a public sale without
registration under the Securities Act. The restrictions provided for in this
Section 2.2 shall not apply to securities which are not required to bear the
legend prescribed by Section 2.1 in accordance with the provisions of Section
2.1.
2.3 Required Registration.
(a) At any time after the earlier of December 31, 2000 or
the date that is six months after the effective date of the Company's first
underwritten public offering, Investors who in the aggregate hold at least 50%
of the total shares of the Restricted Stock then outstanding may by written
notice to the Company request the Company to register under the Securities Act
all or any portion of the shares of Restricted Stock held by such requesting
holder or holders for sale in the manner specified in such notice, provided that
the aggregate price to the public of such offering is reasonably anticipated to
be at least $11,684,177.
(b) Following receipt of a notice under Section 2.3(a), the
Company shall immediately notify all holders of Restricted Stock from whom
notice has not been received of the receipt of such notice. The Company shall
use its best efforts to register under the Securities Act, for public sale in
accordance with the method of disposition specified in any notice from
requesting holders, the number of shares of Restricted Stock specified in such
notice (and in all notices received by the Company from other holders of
Restricted Stock within 30 days after the giving of such notice by the Company).
If such method of disposition shall be an underwritten public offering, the
Company may designate the managing underwriter of such offering, subject
-4-
5
to the approval of the holders of a majority of the shares of Restricted Stock
held by the New Investors to be sold in such offering, which shall not be
unreasonably withheld. In the event that any registration pursuant to this
Section 2.3 shall be, in whole or in part, an underwritten public offering of
Common Stock, the number of shares of Restricted Stock to be included in such an
underwriting may be reduced (pro rata among the requesting holders based upon
the number of shares of Restricted Stock owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that such reduction
is necessary. The Company shall be obligated to register, pursuant to this
Section 2.3, Restricted Stock on two occasions only; provided, however, that, in
each case, such obligation shall be deemed satisfied only when a registration
statement covering all shares of Restricted Stock specified in notices received
as aforesaid, for sale in accordance with the method of disposition specified by
the requesting holders, shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto.
(c) In any registration statement requested pursuant to this
Section 2.3, the Company shall be entitled to include, for sale in accordance
with the method of disposition specified by the requesting holders, shares of
Common Stock to be sold by the Company for its own account. If such method of
disposition shall be an underwritten public offering and in the opinion of the
managing underwriter such inclusion would adversely affect the marketing of the
Restricted Stock to be sold then the Company at its option may (i) reduce or
eliminate the number of shares of Common Stock to be sold by the Company for its
own account to that number which, in the opinion of the managing underwriter,
would not adversely affect the marketing of the Restricted Stock requested to be
sold, or (ii) reduce or eliminate (pro rata among the requesting holders based
on the number of shares of Restricted Stock owned by such holders) the number of
shares of Restricted Stock to be sold to that number which, in the opinion of
the managing underwriter, would not adversely affect the marketing of the shares
of Common Stock desired to be sold by the Company for its own account. In the
event that the Company selects option (ii), then the registration statement
shall not count as a registration of Restricted Stock pursuant to Section 2.3(b)
above. Except for registration statements on Form S-4 or Form S-8, or any
successor thereto, or as provided in Section 2.3(b), the Company shall not file
with the Commission any other registration statement with respect to its Common
Stock, whether for its own account or that of other shareholders, from the date
of receipt of a notice from requesting holders pursuant to this Section 2.3
until the completion of the period of distribution contemplated thereby.
2.4 Incidental Registration. If the Company at any time (other than
pursuant to Section 2.3 or Section 2.5) proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to an initial public offering of the Company's securities or with
respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Restricted
Stock of its intention so to do. Upon the written request of any such holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of its Restricted Stock, the Company will use its
best efforts to cause the Restricted Stock as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder of such
Restricted Stock
-5-
6
so registered. In the event that any registration pursuant to this Section 2.4
shall be, in whole or in part, an underwritten public offering of Common Stock,
the number of shares of Restricted Stock to be included in such an underwriting
may be reduced or eliminated (pro rata among the requesting holders based upon
the number of shares Restricted Stock owned by such holders) if and to the
extent that the managing underwriter shall be of the opinion that such inclusion
would adversely affect the marketing of the securities to be sold by the Company
therein; provided, however, that such number of shares of Restricted Stock shall
not be reduced if any shares are to be included in such underwriting for the
account of any person other than the Company or requesting holders of Restricted
Stock. Notwithstanding the foregoing provisions, the Company may withdraw any
registration statement referred to in this Section 2.4 without thereby incurring
any liability to the holders of Restricted Stock.
2.5 Registration on Form S-3. If at any time (i) one or more
Investors who holds Restricted Stock request that the Company file a
registration statement on Form S-3 or any successor form thereto for a public
offering of all or any portion of the shares of Restricted Stock held by such
requesting holder or holders, the reasonably anticipated aggregate price to the
public of which (net of discounts and commissions) would exceed $3,000,000, and
(ii) the Company is a registrant entitled to use Form S-3 or any successor form
thereto to register such shares, then the Company shall use its best efforts to
register under the Securities Act on Form S-3 or any successor form thereto, for
public sale in accordance with the method of disposition specified in such
notice, the number of shares of Restricted Stock specified in such notice.
Whenever the Company is required by this Section 2.5 to use its best efforts to
effect the registration of Restricted Stock, each of the procedures and
requirements of Section 2.3 (including but not limited to the requirement that
the Company notify all holders of Restricted Stock from whom notice has not been
received and provide them with the opportunity to participate in the offering)
shall apply to such registration; provided, however, that there shall be no
limitation on the number of registrations on Form S-3 which may be requested and
obtained under this Section 2.5, except that the Company shall not be obligated
to register, pursuant to this Section 2.5, Restricted Stock on Form S-3 more
than three times in any twelve-month period; and provided further, however, that
the requirement that the requesting holder hold at least 50% of the Conversion
Stock and Preferred Stock contained in the first sentence of Section 2.3(a)
shall not apply to any registration on Form S-3 which may be requested and
obtained under this Section 2.5; and provided further, however, that in any
registration statement requested pursuant to this Section 2.5, the Company shall
be entitled to include for sale in accordance with the method of disposition
specified by the requesting holders, shares of Common Stock to be sold by the
Company for its own account, except as and to the extent that, if such method of
disposition shall be an underwritten public offering, in the opinion of the
managing underwriter such inclusion would adversely affect the marketing of the
Restricted Stock to be sold.
2.6 Registration Procedures. If and whenever the Company is required
by the provisions of Sections 2.3, 2.4 or 2.5 to use its best efforts to effect
the registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 2.3, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause such registration
-6-
7
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(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 for
the period specified in paragraph (a) above and comply with the provisions of
the Securities Act with respect to the disposition of all Restricted Stock
covered by such registration statement in accordance with the sellers' intended
method of disposition set forth in such registration statement for such period;
(c) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the sellers of Restricted Stock or, in
the case of an underwritten public offering, the managing underwriter reasonably
shall request; provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock
covered by such registration statement with any securities exchange or
over-the-counter market on which the Common Stock of the Company is then listed
or quoted, as the case may be;
(f) immediately notify each seller of Restricted Stock and
each underwriter under 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 of which the Company has knowledge as a
result of which the prospectus contained 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 light of the circumstances then existing;
(g) if the offering is underwritten and at the request of
any seller of Restricted Stock, use its best efforts to furnish on the date that
Restricted Stock is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing the Company
for the purposes of such registration, addressed to the underwriters, stating
that such registration statement (excluding any expertized portions) has become
effective under the Securities Act and substantially to the effect that (A) to
the best knowledge of such counsel, no stop order suspending the effectiveness
thereof has been issued and no proceedings for that purpose have been instituted
or are pending or contemplated under the Securities Act, and (B) the
registration statement, the related prospectus and each amendment or supplement
thereof comply as to form in all material respects with the requirements of the
Securities Act (except that such counsel need not express any opinion as to
financial statements contained therein), (C) nothing has come to the attention
of such counsel during the course of their
-7-
8
representation of the Company that leads them to believe that the registration
statement, the related prospectus or any amendment or supplement thereof (except
as to the financial statements (including the notes thereto) and schedules and
other financial and statistical data contained or incorporated by reference
therein as to which such counsel need not express any opinion or belief) at the
time the registration statement became effective contained any untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, or that the
prospectus as of its date or the date on which the shares being offered are sold
to the underwriters, or any later date on which the underwriters purchase shares
subject to an over allotment option, contained or contains any untrue statement
of a material fact or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading (it being
understood that such counsel expresses no comment as to any financial statements
(including the notes thereto) and schedules and other financial or statistical
data contained in the registration statement, the related prospectus or any
amendment or supplement thereof), and (D) to such other effects as are customary
and reasonably may be requested by counsel to the underwriters or by such seller
or its counsel; and (ii) a letter dated such date from the independent public
accountants retained by the Company, addressed to the underwriters and to such
seller, stating that they are independent public accountants within the meaning
of the Securities Act and that, in the opinion of such accountants, the
financial statements of the Company included in the registration statement or
the prospectus, or any amendment or supplement thereof, comply as to form in all
material respects with the applicable accounting requirements of the Securities
Act, and such letter shall additionally cover such other financial matters
(including information as to the period ending no more than five business days
prior to the date of such letter) with respect to such registration as such
underwriters reasonably may request; and
(h) make available for inspection by each seller of
Restricted Stock, any underwriter participating in any distribution pursuant to
such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors and employees to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement.
For purposes of Sections 2.6(a) and 2.6(b) and of Section
2.3(c), the period of distribution of Restricted Stock in a firm commitment
underwritten public offering shall be deemed to extend until each underwriter
has completed the distribution of all securities purchased by it, and the period
of distribution of Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock covered thereby and
120 days after the effective date thereof.
In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information with
respect to themselves and the proposed distribution by them as reasonably
requested by the Company and its counsel or as shall be necessary in order to
assure compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 2.3, 2.4 or 2.5
covering an underwritten public offering, the Company and each seller agree to
enter into a written
-8-
9
agreement with the managing underwriter selected in the manner herein provided
in such form and containing such provisions as are customary in the securities
business for such an arrangement between such underwriter and companies of the
Company's size and investment stature.
2.7 Expenses. The Company will pay all Registration Expenses in
connection with each registration statement under Sections 2.3, 2.4 or 2.5. All
Selling Expenses in connection with each registration statement under Sections
2.3, 2.4 or 2.5 shall be borne by the participating sellers in proportion to the
number of shares sold by each, or by such participating sellers other than the
Company (except to the extent the Company shall be a seller) as they may agree.
2.8 Indemnification and Contribution.
(a) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Sections 2.3, 2.4 or 2.5, the Company
will indemnify and hold harmless each seller of such Restricted Stock
thereunder, each underwriter of such Restricted Stock thereunder and each other
person, if any, who controls such seller or underwriter within the meaning of
the Securities Act, against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Sections 2.3, 2.4 or 2.5, any
preliminary prospectus or final prospectus contained therein, or any amendment
or supplement thereof, or arise out of or are based upon the 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 each
such seller, each such underwriter and each such controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case if and
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement or omission or
alleged omission so made in conformity with information furnished by any such
seller, any such underwriter or any such controlling person in writing
specifically for use in such registration statement or prospectus.
(b) In the event of a registration of any of the Restricted
Stock under the Securities Act pursuant to Sections 2.3, 2.4 or 2.5, each seller
of such Restricted Stock thereunder, severally and not jointly, will indemnify
and hold harmless the Company, each person, if any, who controls the Company
within the meaning of the Securities Act, each officer of the Company who signs
the registration statement, each director of the Company, each underwriter and
each person who controls any underwriter within the meaning of the Securities
Act, against all losses, claims, damages or liabilities, joint or several, to
which the Company or such officer, director, underwriter or controlling person
may become subject under the Securities Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of any
material fact contained in the registration statement under which such
Restricted Stock was registered under the Securities Act pursuant to Sections
2.3, 2.4 or 2.5, any preliminary
-9-
10
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon the 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
such officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus and; provided
further, however, that the liability of each seller hereunder shall not in any
event exceed the net proceeds received by such seller from the sale of
Restricted Stock covered by such registration statement.
(c) Promptly after receipt by an indemnified party hereunder
of notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 2.8 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 2.8 if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 2.8 for any legal expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation and of liaison with counsel so selected;
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that there may be reasonable defenses available to it
which are different from or additional to those available to the indemnifying
party or if the interests of the indemnified party reasonably may be deemed to
conflict with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such legal
defenses and otherwise to participate in the defense of such action, with the
expenses and fees of such separate counsel and other expenses related to such
participation to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution
to joint liability under the Securities Act in any case in which either (i) any
holder of Restricted Stock exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Section 2.8 but it is judicially determined (by the entry of a
final judgment or decree by a court of competent jurisdiction and the expiration
of time to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
this Section 2.8 provides for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any such selling holder
or any such controlling person in circumstances for which indemnification is
provided under this
-10-
11
Section 2.8; then, and in each such case, the Company and such holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
holder is responsible for the portion represented by the percentage that the net
public offering price of its Restricted Stock offered by the registration
statement bears to the net public offering price of all securities offered by
such registration statement, and the Company is responsible for the remaining
portion; provided however, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the net public offering price of
all such Restricted Stock offered by it pursuant to such registration statement;
and (B) no person or entity guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) will be entitled to contribution
from any person or entity who was not guilty of such fraudulent
misrepresentation.
2.9 Changes in Common Stock or Preferred Stock. If, and as often as,
there is any change in the Common Stock or the Preferred Stock by way of a stock
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
2.10 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 Stock to the public without registration, at all
times after 90 days after any registration statement covering a public offering
of securities of the Company under the Securities Act shall have become
effective, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Stock without
registration.
2.11 Suspension of Registration Obligation. Notwithstanding the
provisions of Section 2.3 and 2.5, the Company's obligation to file a
registration statement, or to cause such registration statement to become and
remain effective, shall be suspended for a period not to exceed 90 days in any
12-month period if there exists at the time material non-public information
relating to the Company which, in the reasonable opinion of the Board of
Directors of the Company, should not be disclosed.
-11-
12
ARTICLE III
COVENANTS OF THE COMPANY
3.1 Financial Statements, Reports, Etc. The Company shall furnish to
each Major Investor:
(a) within 120 days after the end of each fiscal year of the
Company a consolidated balance sheet of the Company and its subsidiaries, if
any, as of the end of such fiscal year and the related consolidated statements
of income, stockholders' equity and cash flows for the fiscal year then ended,
prepared in accordance with generally accepted accounting principles and
certified by a firm of independent public accountants of recognized national
standing selected by the Board of Directors of the Company;
(b) within 45 days after the end of each quarter in each
fiscal year a consolidated balance sheet of the Company and its subsidiaries, if
any, and the related consolidated statements of income, stockholders' equity and
cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such consolidated balance sheet to be as of the end of such quarter,
and such consolidated statements of income, stockholders' equity and cash flows
to be for such quarter and for the period from the beginning of the fiscal year
to the end of such quarter, in each case with comparison to budget and
comparative statements for the prior fiscal year;
(c) within 30 days after the end of each month in each
fiscal year a consolidated balance sheet of the Company and its subsidiaries, if
any, and the related consolidated statements of income, stockholders' equity and
cash flows, unaudited but prepared in accordance with generally accepted
accounting principles and certified by the Chief Financial Officer of the
Company, such consolidated balance sheet to be as of the end of such quarter,
and such consolidated statements of income, stockholders' equity and cash flows
to be for such month and for the period from the beginning of the fiscal year to
the end of such month, in each case with comparison to budget and comparative
statements for the prior fiscal year
(d) at the time of delivery of each annual financial
statement pursuant to 3.1(a), a certificate executed by the Chief Financial
Officer of the Company stating that such officer has caused this Agreement and
the terms of the Preferred Stock as set forth in the Articles to be reviewed and
has no knowledge of any default by the Company in the performance or observance
of any of the provisions of this Agreement or the terms of the Preferred Stock
as set forth in the Articles or, if such officer has such knowledge, specifying
such default and the nature thereof;
(e) no later than 30 days prior to the start of each fiscal
year, consolidated capital and operating expense budgets, cash flow projections
and income and loss projections for the Company and its subsidiaries in respect
of such fiscal year, all itemized in reasonable detail and prepared on a monthly
basis, and, promptly after preparation, any revisions to any of the foregoing;
-12-
13
(f) promptly after the commencement thereof, but in any
event within 10 days of receipt of notice thereof, notice of all actions, suits,
claims, proceedings, investigations and inquiries of the type described in
Section 2.7 of the Stock Purchase Agreement that could have a Material Adverse
Effect;
(g) promptly, from time to time, such other information
regarding the business, financial condition, operations, property or affairs of
the Company and its subsidiaries as such Major Investor reasonably may request.
The Company's obligations under this 3.1 shall terminate upon the completion of
a firm commitment underwritten public offering of the Company's Common Stock
pursuant to an effective registration statement filed by the Company under the
Securities Act (an "IPO").
3.2 Right of First Refusal Upon Issuances of Securities by the
Company.
(a) The Company hereby grants, on the terms set forth in
this Section 3.2, to each Major Investor the right of first refusal to purchase
all or any part of such Major Investor's pro rata share of the New Securities
(as defined in Section 3.2(b)) which the Company may, from time to time, propose
to sell and issue. The Major Investors may purchase said New Securities on the
same terms and at the same price at which the Company proposes to sell the New
Securities. The pro rata share of each Major Investor, for purposes of this
right of first refusal, is the ratio of the total number of shares of Conversion
Stock held by such Major Investor to the total number of shares of Common Stock
outstanding immediately prior to the issuance of the New Securities (including
any shares of Conversion Stock, shares of Common Stock issuable upon exercise of
outstanding options and warrants, and any shares of Common Stock reserved for
future issuance under an employee benefit or similar plan approved by the Board
of Directors).
(b) "New Securities" shall mean any capital stock of the
Company, whether now authorized or not, and any rights, options or warrants to
purchase said capital stock, and securities of any type whatsoever that are, or
may by their terms become, convertible into said capital stock; provided that
"New Securities" does not include (i) the Series D Preferred Stock purchased
under the Stock Purchase Agreement or the Conversion Stock, (ii) securities
offered pursuant to a registration statement filed 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 of such
corporation or other reorganization, which has been approved by the Board of
Directors, (iv) shares of Common Stock issued or issuable to officers,
directors, employees, scientific advisors or consultants of the Company in
connection with their service to the Company pursuant to any employee benefit
plan of the Company approved by the Board of Directors of the Company, (v) all
securities issued pursuant to agreements approved by the Board of Directors of
the Company to license technology and/or provide services, including but not
limited to all securities issued pursuant to the agreements with Xxxxxxxx
Consulting LLP, General Electric Company and Peregrine Systems, Inc., and (vi)
all shares of Common Stock or other securities issued in connection with
equipment leasing or equipment financing arrangements approved by the Board of
Directors of the Company.
-13-
14
(c) In the event the Company proposes to undertake an
issuance of New Securities, it shall give to the Major Investors written notice
(the "Notice") of its intention, describing the type of New Securities, the
price, the terms upon which the Company proposes to issue the same, and a
statement as to the number of days (which shall not be less than thirty (30))
from receipt of such Notice within which the Major Investors must respond to
such Notice. The Major Investors shall have no less than thirty (30) days from
the date of receipt of the Notice to purchase any or all of their pro rata
portion of the New Securities 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 and forwarding payment for such New Securities
to the Company if immediate payment is required by such terms, or in any event
no later than thirty (30) days after the date of receipt of the Notice.
3.3 Inspection, Consultation and Advice. The Company shall permit
and cause each of its subsidiaries (if any) to permit each Major Investor and
its representatives, at such Major Investor's expense to visit and inspect any
of the properties of the Company and its subsidiaries, examine their books and
take copies and extracts therefrom, discuss the affairs, finances and accounts
of the Company and its subsidiaries with their officers, employees and public
accountants (and the Company hereby authorizes said accountants to discuss with
such Major Investor and such designees such affairs, finances and accounts), and
consult with and advise the management of the Company and its subsidiaries as to
their affairs, finances and accounts, all at reasonable times and upon
reasonable notice.
3.4 Expenses of Directors. The Company shall promptly reimburse in
full, each director of the Company who is not an employee of the Company for all
of his reasonable out-of-pocket expenses incurred in attending each meeting of
the Board of Directors of the Company or any Committee thereof.
3.5 Use of Proceeds. The Company shall use the proceeds from the
sale of the Preferred Shares to fund operating losses, to purchase capital
equipment necessary for operation and to fund the Company's general working
capital needs.
3.6 Ernst & Young Independence. In the event that the ownership by
Red Rock Ventures, L.P. ("Red Rock") of shares of capital stock of the Company
were to raise issues concerning Ernst & Young LLP's "independence" as
independent public accountants with respect to any of its audit clients, upon
the request of Red Rock, the Company will use commercially reasonable efforts to
assist Red Rock in identifying potential buyers for Red Rock's shares of Series
B Preferred Stock at the then current fair market value or to resolve the
"independence" issue by taking such other prudent action as the Company may
reasonably consider appropriate.
3.7 Purchase of IPO Shares.
(a) If other Investors receive a right to purchase shares of
the Company at the Company's IPO, then, subject to the approval of the
underwriter selected to run the books of the Company's IPO and to the Securities
and Exchange Commission and the National Associate of Securities Dealers not
requiring otherwise or imposing any requirements that the Company reasonably
determines to be unduly burdensome, the Company will use its best efforts to
provide
-14-
15
to the holders of Series C Preferred Stock an opportunity to purchase from the
underwriters in the aggregate up to 5% of the shares sold in the IPO, excluding
any shares sold upon exercise of the underwriters' overallotment option (the
"IPO Shares"), at the initial offering price paid by the public to the
underwriters (the "Offering Price"). Each Series C Preferred Stock Shareholder's
maximum purchase pursuant to this Section 3.7 will be equal to the product of
multiplying the total number of IPO Shares by a fraction whose numerator is the
number of shares of Series C Preferred Stock held by such Series C Preferred
Stock Shareholder at the time of the IPO and whose denominator is the total
number of shares of Series C Preferred Stock held by all holders of Series C
Preferred Stock at the time of the IPO. In no event shall the rights and
obligations of the parties in this Section apply if the IPO occurs within one
year of October 1, 1999.
(b) All IPO Shares sold to holders of Series C Preferred
Stock pursuant to this Section 3.7 shall be included in the IPO registration
statement and shall be subject to the lock-up agreement contained in Section
4.11 of this Agreement.
(c) The Company shall give notice of the IPO to all holders
of Series C Preferred Stock within 10 days of the filing of the IPO registration
statement. Within seven days after the giving of such notice by the Company,
each holder of Series C Preferred Stock that desires to purchase any IPO Shares
pursuant to this Section 3.7 must deliver to the underwriter identified in the
Company's notice an indication of interest stating the number of IPO Shares
which such holder of Series C Preferred Stock may elect to purchase. Such
indication of interest shall not be legally binding, but if not withdrawn prior
to the Offering Commencement (as defined below) shall become at such time an
acceptance by the holder of Series C Preferred Stock of the Company's offer to
sell (through the underwriters) the number of IPO Shares stated in the
indication of interest and thereupon shall be legally binding on such holder of
Series C Preferred Stock. The "Offering Commencement" means the later of (i) the
time at which the IPO registration statement becomes effective and (ii) two
hours after notification to the holder of Series C Preferred Stock of the
determination of the Offering Price by the Company and the underwriters by
telephone, email or telecopy (Section 4.8 hereof shall not apply to such
notification).
(d) Any holder of Series C Preferred Stock may assign its
rights under this Section 3.7 only to an Affiliate (as the term is defined in
Rule 405 promulgated under the Securities Act) of such holder of Series C
Preferred Stock or a partner, member or shareholder of a holder of Series C
Preferred Stock that is a partnership, limited liability company or corporation.
3.8 Observer Rights. A representative of each of AV Ventures B.V.,
GE, Integral Capital Partners IV, L.P., Nth Power Technologies Fund II, L.P.,
Nevada Bond Investment Corp. II, and Red Rock Ventures, L.P., provided that such
representative is reasonably acceptable to the Company, shall have the right to
attend all meetings of the Company's Board of Directors in a non-voting observer
capacity and, in this respect, the Company shall give such representative
attending the meeting, copies of all notices, minutes, consents and other
materials that it provides to its directors at the same time that such materials
are provided to the directors; provided, however, (i) that such representative
shall agree to hold in confidence and trust all information so provided; (ii)
that the Company reserves the right to withhold any information and to exclude
such representative from any meeting, or portion thereof, if the Board of
Directors determines in
-15-
16
good faith that access to such information or attendance at such meeting could
materially and adversely affect the Company, whether by way of adversely
affecting the attorney-client privilege between the Company and its counsel, or
otherwise, (iii) that in no event shall the failure to provide the notice
described above invalidate in any way any action taken at a meeting of the
Company's Board of Directors. Each representative designated hereunder shall
bear its own costs associated with his or her attendance at meetings of the
Board of Directors.
3.9 Issuance of Common Stock. The Company will not, without approval
of the Company's Board of Directors, issue any shares of Common Stock.
3.10 Business. Unless otherwise directed by the Company's Board of
Directors, the Company will not enter into lines of business that materially
differ from the business as presently conducted.
3.11 Insurance.
(a) Unless otherwise directed by the Company's Board of
Directors, the Company will maintain in full force and effect, with reputable
insurers, fire, casualty and other types of insurance policies with coverage
customary for companies similarly situated to the Company.
(b) The Company will maintain in full force and effect term
life insurance in the amount of one million dollars ($1,000,000) on the lives of
each of Xxxx Xxxx and Xxxx Xxxxxxx, naming the Company as beneficiary.
(c) Unless otherwise directed by the Company's Board of
Directors, the Company will maintain in full force and effect directors and
officers insurance.
3.12 Compliance with Law. For so long as any shares of Preferred
Stock shall be outstanding, the Company shall use its commercially reasonable
efforts to comply with all laws applicable to it, except where the failure to so
comply would not be reasonably likely to result in a material adverse effect on
the Company.
ARTICLE IV
MISCELLANEOUS
4.1 Waiver of Right of Participation; Approval of Certain Matters.
The Existing Investors hereby waive the provisions of Section 3.2 of the
Existing Rights Agreement (including any rights to receive notice thereunder)
and such other provisions of the Existing Rights Agreement to the extent
necessary to effectuate the provisions hereof and hereby consent to the issuance
of the shares of Series D Preferred Stock pursuant to the Stock Purchase
Agreement. The Existing Investors hereby represent and warrant, jointly and
severally, to the Company and the New Investors that they have the requisite
voting power and authority under the Existing Rights Agreement and the Articles,
as the case may be, to enter into this Agreement and to grant the waivers
contemplated by this Section 4.1. The Existing Rights Agreement is hereby
terminated and superseded by this Agreement.
-16-
17
4.2 Termination.
(a) Registration Rights. The right of any holder of
Restricted Stock to request registration pursuant to Section 2.3, 2.4 or 2.5
shall terminate with respect to such holder of Restricted Stock immediately, if
all shares of Restricted Stock held or entitled to be held upon conversion by
such holder of Restricted Stock may immediately be sold in a 90-day period under
Rule 144 under the Securities Act. Notwithstanding the foregoing, the
obligations of the Company to register shares of Restricted Stock under Article
II of this Agreement shall terminate with respect to all holders of Restricted
Stock on the fifth anniversary of the date of the Company's IPO.
(b) Covenants. Except as otherwise set forth herein, each of
the covenants set forth in Article III of this Agreement shall terminate upon
the closing of the Company's IPO.
4.3 Merger. This Agreement and the other Transaction Documents,
together with all exhibits and schedules to the various agreements, constitute
the entire agreement among the parties hereto pertaining to the subject matter
hereof and, subject to the terms and conditions herein, supersede all prior and
contemporaneous agreements and understandings (including the Existing Rights
Agreement), whether oral or written, of any of the parties hereto with respect
thereto.
4.4 Counterparts. This Agreement may be executed in more than one
counterpart, each of which shall be deemed to be an original and which,
together, shall constitute one and the same instrument.
4.5 Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of California, excluding the
choice of law rules thereof.
4.6 Severability. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
4.7 Specific Performance. In addition to any and all other remedies
that may be available at law in the event of any breach of this Agreement, each
of the parties hereto shall be entitled to specific performance of the
agreements and obligations hereunder of the Company and the other parties hereto
and to such other injunctive or other equitable relief as may be granted by a
court of competent jurisdiction.
4.8 Notices. All notices to be given or otherwise made to any part
to this Agreement shall be deemed to be sufficient if contained in a written
instrument, delivered by hand in person, by express overnight courier service,
or by electronic facsimile transmission (with a confirming copy sent by U.S.
mail, first class, postage prepaid mail), or by registered or certified mail,
return receipt requested, postage prepaid, addressed to such party at the
address set forth in Schedule A of the Amended and Restated Shareholders
Agreement of even date hereof or at such other address as may hereafter be
designated in writing by the addressee to the address or listing all parties.
All notices shall be considered to be delivered three (3) days after dispatch in
the event of first class or registered mail, and on the next succeeding business
day in the event of facsimile
-17-
18
transmission (with confirmation of receipt) or overnight courier service. Any
notice sent to the Xxxxxxxx Group as a Major Investor shall constitute notice to
any other investor whose shares are aggregated with the Xxxxxxxx Group for the
purpose of defining a Major Investor.
4.9 Amendment and Waiver. Except as otherwise provided herein, this
Agreement may be amended, and compliance with any provision of the Agreement may
be omitted or waived (either generally or in a particular instance, either
retroactively or prospectively and either for a specified period of time or
indefinitely) by the written agreement of a majority in voting power of the
issued and outstanding Conversion Stock then held by the Investors (or their
permitted transferees); provided, however, that the rights of the Major
Investors set forth in Article III may only be amended, omitted or waived by the
written agreement of a majority in voting power of the issued and outstanding
Conversion Stock then held by the Major Investors (or their permitted
transferees) provided further, however, that no amendment approved in accordance
with this Section shall be effective if and to the extent that such amendment
treats one or more Investors differently than all of the other Investors. Any
waiver may be given subject to the satisfaction of conditions stated therein and
any waiver shall be effective only in the specific instance and for the specific
purpose for which given. Neither this Agreement nor any of the provisions hereof
may be amended, waived or terminated orally, but only by a signed statement in
writing. For purposes of this Section 4.9, the Investors or Major Investor, as
the case may be, shall act as if voting as a separate class with each share of
Preferred Stock held by an Investor or Major Investor, as the case may be, being
entitled to the number of votes equal to the number of shares of Common Stock
into which such share of Preferred Stock is then convertible. Notwithstanding
anything to the contrary in this Section 4.9, additional New Investors who
purchase Restricted Stock pursuant to Section 1.3 of the Stock Purchase
Agreement may be added as parties to this Agreement without the consent of any
of the Investors. Any amendment or waiver effected in accordance with this
Section 4.9 will be binding upon the Company and each person or entity that is
granted rights under this Agreement.
4.10 Assignment; Binding Effect. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including without limitation transferees of any Preferred
Stock), whether so expressed or not; provided, however, that registration rights
conferred herein on the holders of Restricted Stock shall only inure to the
benefit of a transferee of such Restricted Stock if (i) such transferee is an
Affiliate of the Investor who is making the transfer or (ii) there is
transferred to such transferee at least 400,000 shares of Restricted Stock.
4.11 Lock-Up. Each Investor agrees not to offer, sell, contract to
sell or otherwise dispose of any securities of the Company owned (beneficially
or of record) by such Investor, including but not limited to any shares of
Common Stock (other than shares of Restricted Stock or other shares of Common
Stock being registered in the IPO), without the consent of such underwriters,
for a period of 180 days following the effective date of the registration
statement relating to the IPO, or such shorter period requested by the
underwriters (the "Lock-up Period"), other than to affiliated entities or
persons who acquire such securities for no consideration; provided, however,
that any such affiliated entity or person who acquires securities in this manner
agrees not to offer, sell, contract to sell or otherwise dispose of such
securities for the period of time beginning from the date of acquisition of such
securities and continuing to and including the last day of the Lock-up Period;
provided, however, that such restriction on sales
-18-
19
shall not apply to any shares purchased in the IPO (other than shares purchased
pursuant to Section 3.7 of this Agreement) or shares purchased in the open
market following the IPO; provided further, however, that if (i) all persons
entitled to registration rights with respect to shares of Common Stock who are
not parties to this Agreement, (ii) all other persons selling shares of Common
Stock in such offering, (iii) all persons holding in excess of 1% of the capital
stock of the Company on a fully diluted basis, and (iv) all executive officers
and directors of the Company shall not have agreed to not sell publicly their
Common Stock under the circumstances and pursuant to the terms set forth in this
Section 4.11, then each Investor shall be released from this covenant on a pro
rata basis. Each Investor's pro rata amount to be released from this provision
shall be equal to the product of (A) the total number of shares held by such
Investor multiplied by (B) a fraction, the numerator of which shall be the
aggregate number of shares that are subject to clauses (i) through (iv) of this
Section 4.11 but are not so locked-up, and the denominator of which shall be the
aggregate number of shares subject to lock-up agreements. If requested in
writing by the underwriters for the IPO, each Investor further agrees to enter
into an agreement with the underwriters regarding the foregoing covenant and any
other customary terms with which the underwriters and such Investor may agree.
The Company may impose stop transfer instructions in order to enforce the
foregoing covenants.
4.12 Expenses. Each of the parties hereto will pay its own expenses
in connection with this Agreement.
4.13 WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM (WHETHER BASED ON CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR THE ENFORCEMENT OF ALL RIGHTS AND DEFENSES UNDER
THIS AGREEMENT.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
-19-
20
IN WITNESS WHEREOF, the parties hereto have caused this Amended and
Restated Investors Rights Agreement to be executed as of the date first above
written.
SILICON ENERGY CORP.
By: /s/ XXXX XXXXXXX
----------------------
Name: Xxxx Xxxxxxx
Title: President and Chief
Executive Officer
PURCHASERS NAMED IN SCHEDULE I TO
THE STOCK PURCHASE AGREEMENT
(SOME OF WHOM ARE ALSO EXISTING
INVESTORS):
FIRST CLOSING (JUNE 19, 2000)
/s/ XXX XXXXX
----------------------
Xxx Xxxxx
/s/ XXXXXX XXXXXXX
----------------------
Xxxxxx XxXxxxx
/s/ XXXXX XXXXX XXXXX
---------------------------------------
Xxxxx Xxxxx Xxxxx
ENERGY VENTURES GROUP, LLC
By: /s/ XXXXXX X. XXXXXXXX
-----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Chairman
-20-
21
EOP OPERATING LIMITED PARTNERSHIP
By:
Its:
By:
Name:
Title:
/s/ XXXXX XXXXXXXXX
-------------------------------------------
Xxxxx Xxxxxxxxx
GE CAPITAL EQUITY INVESTMENTS, INC.
By:
Its:
By: /s/ XXXX XXXXXX
---------------------------------------
Name: Xxxx Xxxxxx
Title: Vice President
/s/ XXXX XXXXXXX
-------------------------------------------
Xxxx Xxxxxxx
INTEGRAL CAPITAL PARTNERS IV, L.P.
By: Integral Capital Management IV, LLC
Its: General Partner
By: /s/ XXXX X. XXXXXX
-------------------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
-21-
22
INTEGRAL CAPITAL PARTNERS IV MS
SIDE FUND, L.P.
By: Integral Capital Partners NBT, LLC
Its: General Partner
By: /s/ XXXX X. XXXXXX
---------------------------------
Name: Xxxx X. Xxxxxx
Title: Manager
/s/ XXXXXXX XXXXX
---------------------------------
Xxxxxxx Xxxxx
/s/ XXXX XXXXXXXXX
---------------------------------
Xxxx Xxxxxxxxx
/s/ XXXXX X. XXXXXX III
---------------------------------
Xxxxx X. Xxxxxx III
/s/ XXXXXX X. XXXX
---------------------------------
Xxxxxx X. Xxxx
/s/ XXXXXX XXXXXXX XX.
---------------------------------
Xxxxxx Xxxxxxx Xx.
/s/ XXXX XXXXXXX
---------------------------------
Xxxx Xxxxxxx
/s/ XXXXXXX XXXXXXXXXX
---------------------------------
Xxxxxxx Xxxxxxxxxx
/s/ XXXXX XXXX XXXXXXXX
---------------------------------
Xxxxx Xxxx Xxxxxxxx
-22-
23
XXXXXX XXXXXXX XXXX XXXXXX
EQUITY FUNDING, INC.
By:
Its:
By: /s/ XXXXXX X. XXXXXXX
--------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Vice President
NEVADA BOND INVESTMENT CORP. II
By:
Its:
By: /s/ XXXXXXXX X. XXXXXX, XX.
--------------------------------
Name: Xxxxxxxx X. Xxxxxx, Xx.
Title: Vice President
Nth POWER TECHNOLOGIES FUND I, L.P.
By: Nth Power Technologies, Inc.
Its: General Partner
By: /s/ XXXXX X. XXXXX
--------------------------------
Name: Xxxxx X. Xxxxx
Title: President
Nth POWER TECHNOLOGIES FUND II, L.P.
By: Nth Power Technologies, Inc.
Its: General Partner
By: /s/ XXXXX X. XXXXX
--------------------------------
Name: Xxxxx X. Xxxxx
Title: President
-23-
24
PEREGRINE SYSTEMS, INC.
By: /s/ XXXX XXXXXX
--------------------------------
Name: Xxxx Xxxxxx
Title:
INTERGY SILICON PARTNERS, LLC
By: Xxxxxx Court Ventures, LLC
Its: Manager
By: /s/ XXXXX X. XXXXX
--------------------------------
Name: Xxxxx X. Xxxxx
Title: Manager
RED ROCK VENTURES, L.P.
By: RRV Partners, L.L.C.
Its: General Partner
By: /s/ XXXXX XXXXXXXX
--------------------------------
Name: Xxxxx Xxxxxxxx
Title: Member
/s/ XXXXX X. XXXXXX
------------------------------------
Xxxxx X. Xxxxxx
/s/ XXXXXX SIKHTIAN
------------------------------------
Xxxxxx Sikhtian
/s/ XXX XXXXXXXXX
------------------------------------
Xxx Xxxxxxxxx
/s/ XXXXX X. XXXXXX
------------------------------------
Xxxxx X. Xxxxxx
-24-
25
WS INVESTMENT COMPANY 2000A
By: /s/ XXX XXXXXXXXX
--------------------------------
Its:
--------------------------------
SECOND CLOSING (JUNE 30, 2000)
AC VENTURES B.V.
By:
Its:
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Managing Director
THIRD CLOSING (JULY 18, 2000)
GPU ENERTECH HOLDINGS, INC.
By: /s/ XXXXX XXXX
-----------------------------------
Name: Xxxxx Xxxx
Title: President
-25-
26
HADDINGTON VENTURES LLC
By: /s/ J. XXXXX XXXXX
-------------------------------------
Name: J. Xxxxx Xxxxx
Title: Managing Director
ITOCHU INTERNATIONAL INC
By: /s/ XXXXXXXXX XXXXXX
-------------------------------------
Name: Xxxxxxxxx Xxxxxx
Title: Senior Vice President and
General Manager of
Machinery Division
-26-
27
EXISTING INVESTORS WHO ARE NOT PURCHASING
SHARES OF SERIES D PREFERRED STOCK:
/s/ J. XXXXX XXXXXXXX
-----------------------------------------
J. Xxxxx Xxxxxxxx
/s/ XXXXXX XXXXXXXX
-----------------------------------------
Xxxxxx Xxxxxxxx
/s/ XXXX XXXXXX
-----------------------------------------
Xxxx Xxxxxx
-----------------------------------------
Xxxxxx X. Xxxxxx
Xxxxx Xxxxxx Family Trust
By: /s/ XXXXXX X. XXXXX
-------------------------------------
Title: Trustee
/s/ XXXXXXX XXXXXX
-----------------------------------------
Xxxxxxx Xxxxxx
Xxxxx X. Xxxx, Trustee, Hyperion Ventures
Trust UTA dated January 15, 1998
By: /s/ XXXXX X. XXXX
-------------------------------------
Title: Trustee
/s/ A. XXXXXXXXX XXXXXXXXX
-----------------------------------------
A. Xxxxxxxxx Xxxxxxxxx
-27-
28
/s/ XXXXX XXXXXXX
-----------------------------------------
Xxxxx Xxxxxxx
/s/ XXXXXX X. XXXXX
-----------------------------------------
Xxxxxx X. Xxxxx
/s/ XXXX XXXXXXX-XXXXX
-----------------------------------------
Xxxx Xxxxxxx-Xxxxx
-----------------------------------------
Xxxxxx X. Xxxxxxxxxx
JMI EQUITY FUND III, L.P.
By: JMI Associates III, L.L.C.
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
------------------------------
Name:
Title:
JMI EQUITY SIDE FUND, L.P.
By: JMI Associates III, L.L.C
Its: General Partner
By: /s/ XXXXXXX X. XXXXXX
------------------------------
Name:
Title:
/s/ XXXXXX KONG
-----------------------------------------
Xxxxxx Kong
/s/ XXXX XXXXX
-----------------------------------------
Xxxx Xxxxx
/s/ XXXXX XXXXX
-----------------------------------------
Xxxxx Xxxxx
-28-
29
XXXXXXXX GROUP, INC.
By:
Its:
By: /s/ XXXXXXX XXXXXX JR.
-------------------------------------
Name: Xxxxxxx Xxxxxx Jr.
Title: Vice President
XXXXXXXX GROUP, INC.
Attorney-In-Fact for each investor set
forth below
By: /s/ XXXXXXX XXXXXX JR.
-------------------------------------
Name: Xxxxxxx Xxxxxx Jr.
Title: Vice President
XXXXXX X. XXXXXXXX TRUST UID 9/30/87
XXXXXXX XXXXXXX XXXXXXXX TRUST UID 3/22/84
XXXXXX & XXXXXXX XXXXXXXX CHILDREN'S TRUST
UID 9/30/87
MAM HOLDINGS INTERNATIONAL, INC.
XXXXXX XXXXX XXXXXXXX TRUST ONE UID 4/10/92
X.X. XXXXXXXX XX. REVOCABLE TRUST UID
2/19/93
X.X. XXXXXXXX CHILDREN'S TRUST UID 3/1/95
XXXXXXXX INVESTMENT PARTNERS III, LLC
XXXXXX ENTERPRISES, INC.
XXXXXX X. XXXXXXXX
XXXXXXX X. XXXXXX
XXXXXX FAMILY PARTNERSHIP III
C. XXX XXXX
XXXXXX X. XXXXXXX
-29-
30
K. XXXX XXXXXX
K. XXXX XXXXXX XXX
XXXXXX XXXXX
XXXXXXX XXXXXX, JR.
XXXXXXX X. XXXXXX
XXXXXXX X. XXXXX
XXXXXX X. XXXXXXX
-----------------------------------------
Xxxx Xxxxxxxxxxxx
/s/ XXXXXXXXX XXXXXXX
-----------------------------------------
Xxxxxxxxx Xxxxxxx
WS Investment Company 98A
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------------
Title:
WS Investment Company 98B
By: /s/ XXXXX X. XXXXXXXXX
-----------------------------------------
Title:
-29-
31
SCHEDULE A
EXISTING INVESTORS
J. Xxxxx Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Xxxxxx Xxxxxxxx
Xxxx Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxx Xxxxxx Family Trust
Xxxxxxx Xxxxxx
Xxxxxxx Xxxxxx Jr.
Xxxxx X. Xxxx, Trustee, Hyperion Ventures Trust UTA dated January 15, 1998
C. Xxx Xxxx
Xxxxxxxxx X. Xxxxxxxxx
Xxxxx Xxxxxxx
Xxxxxx X. Xxxxx
Xxxxxxx Xxxxxxx Xxxxxxxx Trust UID 3/22/84
Integral Capital Partners IV, L.P.
Integral Capital Partners IV MS Side Fund, X.X.
Xxxxxx Enterprises, Inc.
Xxxxxx Xxxxx
Xxxx Xxxxxxx-Xxxxx
Xxxxxx X. Xxxxxxxxxx
JMI Equity Fund III, L.P.
JMI Equity Side Fund, L.P.
-30-
32
Xxxxxx Kong
Xxxx Xxxxx
MAM Holdings International, Inc.
Xxxxxxx X. Xxxxxx
Xxxxxx Family Partnership III
Xxxxx Xxxx Xxxxxxxx
Nth Power Technologies Fund I, L.P.
Xxxxxx X. Xxxxxxx
Xxxxxx Xxxxx Xxxxxxxx Trust One UID 4/10/92
Peregrine Systems, Inc.
Red Rock Ventures, L.P.
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxx
Xxxxx Xxxxx
Xxxxxxxx Investment Partners III, LLC
Xxxxxxxx Group, Inc.
Xxxx Xxxxxxxxxxxx
K. Xxxx Xxxxxx
K. Xxxx Xxxxxx XXX
Xxxxxxx X. Xxxxxx
Xxxxxx X. Xxxxxxxx Trust UID 9/30/87
Xxxxxx & Xxxxxxx Xxxxxxxx Children's Trust UID 9/30/87
Xxxxxxxxx X. Xxxxxxx
X. X. Xxxxxxxx Children's Trust XXX 0/0/00
-00-
00
X. X. Xxxxxxxx Xx. Revocable Trust UID 2/19/93
WS Investment Company 98A
WS Investment Company 00X
Xxxxxxx X. Xxxxx
-32-
