EXHIBIT 10.1
SHAREHOLDERS AGREEMENT
This Shareholders Agreement (this "Agreement") is made and entered into as
of February 5, 2002, by and among WatchGuard Technologies, Inc., a Delaware
corporation ("Acquiror"), River Acquisition Corp., a California corporation and
wholly owned subsidiary of Acquiror ("Merger Sub"), RapidStream, Inc., a
California corporation (the "Company"), and the shareholders of the Company
listed on Exhibit A to this Agreement (the "Shareholders").
RECITALS
A. Each Shareholder is, as of the date of this Agreement, the record and
beneficial owner of that number and class of shares of capital stock of the
Company (the "Company Capital Stock") and, if applicable, Options and/or Company
Warrants, set forth opposite the name of such Shareholder on Exhibit A hereto.
B. Concurrently with the execution of this Agreement, Acquiror, Merger Sub
and the Company have entered into an Agreement and Plan of Merger, dated as of
the date hereof (the "Merger Agreement"), which provides, among other things,
(i) for all issued and outstanding Company Capital Stock to be exchanged into
the right to receive cash and shares of Acquiror Common Stock and (ii) for
Merger Sub to merge with and into the Company, with the Company continuing as
the surviving corporation (the "Merger"), all upon the terms and subject to the
conditions set forth in the Merger Agreement.
C. As a condition to the willingness of Acquiror and Merger Sub to enter
into the Merger Agreement and as an inducement and in consideration therefor,
the Shareholders have agreed to enter into this Agreement.
D. Capitalized terms used but not otherwise defined in this Agreement shall
have the meanings given to those terms in the Merger Agreement to the extent
such terms are not otherwise modified by this Agreement.
AGREEMENT
In consideration of the terms hereof, the parties hereto agree as follows:
Section 1. Representations and Warranties of the Shareholders.
Except as set forth in a Shareholder's Disclosure Memorandum attached
hereto, each Shareholder hereby represents and warrants to Acquiror and Merger
Sub, severally and not jointly, as follows:
(a) Such Shareholder is the record and beneficial owner of that number and
class of shares of Company Capital Stock and, if applicable, Options and/or
Company Warrants, set forth opposite such Shareholder's name on Exhibit A hereto
(such Company Capital Stock, together with any Company Capital Stock acquired by
such Shareholder after the date of this Agreement, whether upon the exercise of
Options or Company Warrants or otherwise, all as may be adjusted from time to
time pursuant to Section 10 hereof, the "Shares").
(b) Such Shareholder has the legal capacity to execute and deliver this
Agreement and to consummate the transactions contemplated by this Agreement.
(c) In the case of any Shareholder that is a corporation, limited
partnership or limited liability company, such Shareholder is an entity duly
organized and validly existing under the Laws of the jurisdiction in which it is
incorporated or constituted, and such Shareholder has all requisite power and
authority to execute and deliver this Agreement and to consummate the
transactions contemplated hereby, and has taken all necessary corporate action
to authorize the execution, delivery and performance of this Agreement.
(d) This Agreement has been duly executed and delivered by such Shareholder
and constitutes a legal, valid and binding obligation of such Shareholder,
enforceable against such Shareholder in accordance with its terms, except as to
the effect, if any, of the Enforceability Exceptions.
(e) The execution, delivery and performance of this Agreement by such
Shareholder and the consummation by such Shareholder of the transactions
contemplated hereby will not result in a violation of or a default under, or
conflict with, any contract, trust, commitment, agreement, understanding,
arrangement or restriction of any kind to which such Shareholder is a party or
by which such Shareholder or his, her or its assets are bound. The consummation
by such Shareholder of the transactions contemplated by this Agreement will not
violate, or require any consent, approval or notice under, any provision of any
Law or Order applicable to such Shareholder.
(f) The Shares owned by such Shareholder are now, and at all times during
the term of this Agreement will be, held by such Shareholder or by a nominee or
custodian for the benefit of such Shareholder, free and clear of all
Encumbrances, except for any Encumbrance arising under this Agreement.
Section 2. Representations and Warranties of Acquiror.
(a) Acquiror has the legal capacity to execute and deliver this Agreement
and to consummate the transactions contemplated hereby.
(b) Acquiror is an entity duly organized and validly existing under the
Laws of the jurisdiction in which it is incorporated, and Acquiror has all
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement.
(c) This Agreement has been duly executed and delivered by Acquiror and
constitutes a legal, valid and binding obligation of Acquiror, enforceable
against Acquiror in accordance with its terms, except as to the effect, if any,
of the Enforceability Exceptions.
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(d) The execution, delivery and performance of this Agreement by Acquiror
and the consummation by Acquiror of the transactions contemplated hereby will
not result in a violation of or a default under, or conflict with, any contract,
trust, commitment, agreement, understanding, arrangement or restriction of any
kind to which Acquiror is a party or by which Acquiror or its assets are bound.
The consummation by Acquiror of the transactions contemplated by this Agreement
will not violate, or require any consent, approval or notice under, any
provision of any Law or Order applicable to Acquiror.
Section 3. Representations and Warranties of the Company.
(a) The Company has the legal capacity to execute and deliver this
Agreement and to consummate the transactions contemplated hereby.
(b) The Company is an entity duly organized and validly existing under the
Laws of the jurisdiction in which it is incorporated, and the Company has all
requisite power and authority to execute and deliver this Agreement and to
consummate the transactions contemplated hereby, and has taken all necessary
corporate action to authorize the execution, delivery and performance of this
Agreement.
(c) This Agreement has been duly executed and delivered by the Company and
constitutes a legal, valid and binding obligation of such Shareholder,
enforceable against the Company in accordance with its terms, except as to the
effect, if any, of the Enforceability Exceptions.
(d) The execution, delivery and performance of this Agreement by the
Company and the consummation by the Company of the transactions contemplated
hereby will not result in a violation of or a default under, or conflict with,
any contract, trust, commitment, agreement, understanding, arrangement or
restriction of any kind to which the Company is a party or by which the Company
or its assets are bound. The consummation by the Company of the transactions
contemplated by this Agreement will not violate, or require any consent,
approval or notice under, any provision of any Law or Order applicable to the
Company.
Section 4. Transfer of the Shares.
(a) Except pursuant to the Merger or as otherwise contemplated by this
Agreement, each of the Shareholders agrees that, until the Termination Date (as
defined in Section 11 of this Agreement), such Shareholder shall not, directly
or indirectly:
(i) sell, grant any option or other right to acquire, acquire any
option to dispose of, assign, donate, gift, pledge or otherwise transfer or
dispose of any Shares beneficially owned or controlled by such Shareholder or
any right or interest therein, or enter into any contract, option or other
agreement, arrangement or understanding with respect to any of the foregoing
(including, without limitation, any short sale) (each, a "Transfer");
(ii) grant any proxy, power of attorney or other authorization or
consent with respect to any of the Shares inconsistent with such Shareholder's
obligations under this Agreement;
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(iii) deposit any of the Shares into a voting trust, or enter into a
voting agreement or arrangement with respect to any of the Shares inconsistent
with such Shareholder's obligations under this Agreement; or
(iv) take any other action that would in any way restrict, limit or
interfere with the performance of such Shareholder's obligations under this
Agreement or the consummation of the transactions contemplated by this
Agreement.
(b) Notwithstanding the foregoing, any Shareholder may Transfer such Shares
(i) either during the Shareholder's lifetime or, on death, by will or intestacy
to members of the Shareholder's immediate family or to trusts exclusively for
the benefits of members of the undersigned's immediate family, (ii) to any
entity which is under common management with or related to such Shareholder,
(iii) to any partners, or retired partners, or to the estate of any partners or
retired partners of such Shareholder if such Shareholder is a partnership or
(iv) to any shareholder, parent or subsidiary corporation of such Shareholder if
such Shareholder is a corporation; provided, however that in each such case,
prior to such Transfer, the transferee executes an agreement, reasonably
satisfactory to Acquiror, to be bound by the terms of, and to hold the Shares
subject to, this Agreement.
(c) Within one business day of the date of this Agreement, each Shareholder
shall surrender to the Company, or to the transfer agent for the Company,
certificates evidencing the Shares, and the Company shall, or the Company shall
cause the transfer agent for the Company to, place on any and all certificates
evidencing the Shares a legend substantially similar to the following:
The securities evidenced by this certificate are subject to the terms
and conditions of the Shareholders Agreement dated as of February 5,
2002, a copy of which is on file at the principal office of the
Company, and may not be sold, transferred or encumbered except in
accordance with the terms and provisions of the Shareholders
Agreement.
Section 5. Voting Arrangements.
Each Shareholder covenants and agrees as follows:
(a) Agreement to Vote. Until the Termination Date, at any meeting of the
shareholders of the Company, however called, and at every adjournment or
postponement thereof (a "Company Shareholders' Meeting"), such Shareholder
shall:
(i) appear at such Company Shareholders' Meeting or otherwise cause
his, her or its Shares to be counted as present at such Company Shareholders'
Meeting for purposes of establishing a quorum;
(ii) vote or execute consents with respect to his, her or its Shares,
or cause his, her or its Shares to be voted or consents to be executed with
respect to his, her or its Shares, in favor of the approval of the Merger, the
Merger Agreement and the Articles Amendment;
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(iii) vote or execute consents with respect to his, her or its Shares,
or cause his, her or its Shares to be voted or consents to be executed with
respect to his, her or its Shares, against
(A) any Alternative Transaction; or
(B) any amendment of the Company Articles of Incorporation (other
than the Articles Amendment) or Company Bylaws or other proposal, action or
transaction involving the Company or any of the Shareholders presented to
shareholders (regardless of any recommendation of the Company Board of
Directors) or with respect to which vote or consent of the Shareholders is
requested or sought, which amendment or other proposal, action or transaction
could reasonably be expected to (1) prevent or materially impede or delay the
consummation of the Merger or the consummation of the transactions contemplated
by the Merger Agreement or this Agreement, (2) result in a breach by the Company
of any of the covenants contained in Section 6.1 of the Merger Agreement or (3)
change the voting rights of any class of Company Capital Stock in a manner that
would result in the number of Shares held by the Shareholders not being
sufficient to authorize the Merger (each, a "Frustrating Transaction").
(b) Irrevocable Proxy. As security for such Shareholder's obligations under
subsection (a) of this Section 5, such Shareholder hereby irrevocably
constitutes and appoints Acquiror as his, her or its attorney and proxy in
accordance with Section 705 of the CCC, with full power of substitution and
resubstitution, to cause such Shareholder's shares to be counted as present at
any Company Shareholders' Meeting, to vote his, her or its Shares at any Company
Shareholders' Meeting and to execute consents in respect of his, her or its
Shares as and to the extent provided in subsection (a) of this Section 5. Such
Shareholder hereby revokes all other proxies and powers of attorney that he, she
or it may have heretofore appointed or granted with respect to his, her or its
Shares to the extent inconsistent with such Shareholder's obligations under this
Agreement, and such Shareholder shall grant no subsequent proxy or power of
attorney inconsistent with such Shareholder's obligations under this Agreement.
(c) Such Shareholder represents that any proxies given before the date of
this Agreement with respect to his, her or its Shares are, to the extent
inconsistent with such Shareholder's obligations under this Agreement,
revocable.
(d) Such Shareholder hereby affirms that the irrevocable proxy granted by
such Shareholder pursuant to this Section 5 (the "Irrevocable Proxy") is given
in connection with the execution of the Merger Agreement, and that the
Irrevocable Proxy is given to secure the performance of the duties of such
Shareholder under this Agreement. Such Shareholder hereby further affirms that
the Irrevocable Proxy is coupled with an interest and, except as set forth in
this Section 5 or in Section 12 of this Agreement, is intended to be irrevocable
in accordance with Section 705(e) of the CCC. If for any reason the Irrevocable
Proxy is not irrevocable, then such Shareholder agrees to vote his, her or its
Shares in accordance with Section 5(a) as instructed by Acquiror in writing.
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(e) The Irrevocable Proxy shall not be terminated by any act of such
Shareholder or by operation of Law, whether by the death or incapacity of such
Shareholder or by the occurrence of any other event or events (including the
termination of any trust or estate for which such Shareholder is acting as a
fiduciary or fiduciaries or the dissolution or liquidation of any corporation or
partnership or other entity). If at any time during the term of this Agreement
(i) such Shareholder should die or become incapacitated, (ii) any trust or
estate holding the Shares should be terminated, (iii) any corporation or
partnership or other entity holding the Shares should be dissolved or
liquidated, or (iv) any other such similar event or events shall occur,
certificates representing the Shares shall be delivered by or on behalf of such
Shareholder in accordance with the terms and conditions of the Merger Agreement
and this Agreement, and any and all actions taken by Acquiror pursuant to the
terms of this Agreement shall be as valid as if such death, incapacity,
termination, dissolution, liquidation or other similar event or events had not
occurred, regardless of whether or not Acquiror has received notice of such
death, incapacity, termination, dissolution, liquidation or other event.
Section 6. No Alternative Transactions.
Each of the Shareholders agrees that, until the Termination Date, such
Shareholder shall not, directly or indirectly, between the date of this
Agreement and the Effective Time, through any Representative or otherwise,
solicit, initiate, encourage the submission of any proposal or offer from any
Person relating to any Alternative Transaction, or participate in any
negotiations regarding, or furnish to any other Person any information with
respect to, or otherwise cooperate or negotiate in any way with, or assist or
participate in, facilitate or encourage, any Alternative Transaction or any
effort or attempt by any other Person to make any such proposal or offer
relating to an Alternative Transaction. Such Shareholder shall notify Acquiror
promptly if any such proposal or offer, or any inquiry or contact with any
Person with respect thereto, is made and shall, in any such notice to Acquiror,
indicate in reasonable detail the identity of the Person making such proposal,
offer, inquiry or contact and the terms and conditions of such proposal, offer,
inquiry or contact.
Section 7. Lockup Agreement.
(a) Each of the Shareholders other than Xxxxxxx Xxx, Xxxxx XxxXxxx Xxx and
Xxxx Ji-Xxxx Xx agrees that he, she or it shall not (i) Transfer more than the
Liquid Percentage (as defined below) of the shares of Acquiror Common Stock that
such Shareholder receives in the Merger or upon payment by the Acquiror of the
Option Share Purchase Price (the "Lockup Shares") prior to the date that is 90
days after the Effective Time or the Option Closing Date, as the case may be, or
(ii) thereafter and prior to the one-year anniversary of the Effective Time or
the Option Closing Date, as the case may be, transfer more than 10% of the
Lockup Shares in any one-month period. For purposes hereof, the term "Liquid
Percentage" shall mean the percentage determined by dividing (A) $1.5 million
divided by the Base Price, by (B) the aggregate dollar value of the Stock
Portion issued to the holders of Company Preferred Stock at the Effective Time
(with shares of Acquiror Common Stock valued at the Base Price for this
purpose).
(b) Xxxxxxx Xxx agrees that he shall not (i) Transfer any Lockup Shares
prior to the date that is 90 days after the Effective Time or the Option Closing
Date, as the case may be, or (ii) thereafter and prior to the one-year
anniversary of the Effective Time or the Option Closing Date, as the case may
be, transfer more than 10% of the Lockup Shares in any one-month period.
(c) Each of Xxxxx XxxXxxx Xxx and Xxxx Ji-Xxxx Xx agrees that he will not
Transfer any Lockup Shares prior to the two-year anniversary of the Effective
Time or the Option Closing Date, as the case may be; provided, however, that the
Lockup Shares shall be released from the Transfer restrictions of this
subsection (c) as follows: 5% shall be released on the date that is three months
after the Effective Time, 5% shall be released on the date that is six months
after the Effective Time, 10% shall be released on the first anniversary of the
Effective Time and 20% shall be released on the last day of each three-month
period thereafter.
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(d) Each Shareholder acknowledges that, in furtherance of the foregoing,
the Lockup Shares will be subject to a stop transfer order, and that the
certificates evidencing the Lockup Shares will bear a legend substantially
similar to the legend set forth in Section 4(c) of this Agreement.
Section 8. Option.
(a) Subject to the terms and conditions of this Agreement, each Shareholder
hereby grants to Acquiror an irrevocable and continuing option, exercisable as
provided in this Section 8 (the "Option"), to purchase all, but not less than
all, of the Company Capital Stock (including the Shares) beneficially owned or
controlled by such Shareholder as of the date hereof or at any time hereafter
(including Shares acquired by way of exercise of options, warrants or other
Company Stock Rights or by way of dividend, distribution, exchange, merger,
consolidation, recapitalization, reorganization, stock split, grant of proxy or
otherwise), as adjusted in accordance with subsection (e) of this Section 8 (the
"Option Shares"). Upon the exercise of the Option by Acquiror, each Option Share
shall be exchanged for the right to receive from Acquiror the applicable Merger
Consideration to be paid with respect to each such share of Company Capital
Stock pursuant to Section 1.7.1 of the Merger Agreement (the "Option Share
Purchase Price"), except that the definitions of Outstanding Stock Number and
Base Price shall be modified so that all references to "Closing Date" are
replaced with "Option Closing Date."
(b) Acquiror may exercise the Option, in whole or in part, with respect to
the Shares beneficially owned or controlled by any Shareholder if and only if
(i) such Shareholder breaches a representation, warranty or covenant of the
Shareholder set forth in this Agreement and Acquiror provides written notice of
such breach to such Shareholder (the "Breach Notice") and (ii) such breach has
not been cured, to the extent it is possible to be cured, within fifteen (15)
days of receipt of the Breach Notice.
(c) Each time Acquiror elects to exercise the Option, it shall send to the
Shareholder or Shareholders from which it elects to purchase Option Shares
(each, an "Option Shareholder") a written notice setting forth its irrevocable
election to that effect. Each such notice shall specify a date not earlier than
three (3) business days nor later than thirty (30) business days from the date
of such notice (the "Exercise Notice Date") for the closing of such purchase (an
"Option Closing Date"); provided, however, that (i) if the closing of a purchase
and sale pursuant to the Option (an "Option Closing") cannot be consummated by
reason of any applicable Law or Order, the period of time that otherwise would
run pursuant to this sentence shall run instead from the date on which the
restriction on consummation has expired or been terminated and (ii) without
limiting the foregoing, if prior notification to or approval of any Governmental
Entity is required in connection with the purchase, Acquiror and each Option
Shareholder shall promptly file the required notice or application for approval
and shall cooperate in the expeditious filing of such notice or application, and
the period of time that otherwise would run pursuant to this sentence shall run
instead from the date on which, as the case may be, (A) any required
notification period has expired or been terminated or (B) any required approval
has been obtained, and in either
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event, any requisite waiting period has expired or been terminated. Each of
Acquiror and each Option Shareholder agrees to use commercially reasonable
efforts to cooperate with and provide information to the other, for the purpose
of any required notice or application for approval. Each Option Closing, if any,
shall be at 9:00 a.m. local time at the offices of Xxxxxx, Xxxxxxxxxx &
Xxxxxxxxx LLP, 000 Xxxxxx Xxxxxx, Xxxxx 000, Xxxxxxx, Xxxxxxxxxx.
(d) At each Option Closing, simultaneously with the delivery by Acquiror of
the Option Share Purchase Price, each Option Shareholder shall deliver to
Acquiror a certificate or certificates representing his, her or its Option
Shares to be purchased at such Option Closing, which Option Shares shall be duly
endorsed for transfer or accompanied by stock powers duly executed in blank,
with all signatures guaranteed, and shall be free and clear of all Encumbrances.
(e) In connection with the issuance of Acquiror Common Stock pursuant to
the exercise by Acquiror of the Option, each Shareholder represents and warrants
to Acquiror and Merger Sub as follows:
(i) Disclosure of Information. Such Shareholder believes that he, she
or it has received all the information he, she or it considers necessary or
appropriate for deciding whether to acquire such Acquiror Common Stock,
including, without limitation, the representations and warranties made by
Acquiror in the Merger Agreement and the information contained in the Acquiror
Disclosure Memorandum. Such Shareholder further represents that he, she or it
has had an opportunity to ask questions and receive answers from Acquiror
regarding the terms and conditions of the offering of such shares of Acquiror
Common Stock, the risks of investing in such shares and the business of
Acquiror.
(ii) Financial Sophistication. By reason of such Shareholder's
business or financial experience or together with such Shareholder's
professional advisor or advisors, such Shareholder is capable of evaluating the
merits and risks of his, her or its investment in the Acquiror Common Stock, has
the ability to protect his, her or its own interests in the transaction and is
financially capable of bearing the economic risk of his, her or its investment,
including a total loss of the investment.
(iii) Exemption from Registration Requirements. Such Shareholder
understands that such Acquiror Common Stock has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), in reliance upon the
exemption from the registration provisions of the Securities Act contained in
Section 4(2) of the Securities Act and/or Regulation D promulgated thereunder,
which exemption depends upon, among other things, the bona fide nature of such
Shareholder's investment intent and the accuracy of such Shareholder's
representations as expressed herein.
(iv) Restricted Securities. Such Shareholder understands that such
shares of Acquiror Common Stock are characterized as "restricted securities"
under the federal securities Laws because they are being acquired from Acquiror
in a transaction not involving a public offering and that under such Laws and
applicable regulations such Acquiror Common Stock may be resold without
registration under the Securities Act only in certain limited circumstances. In
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this connection, Shareholder represents that he, she or it is familiar with Rule
144 promulgated by the Securities and Exchange Commission (the "Commission"), as
presently in effect, and understands the resale limitations imposed thereby and
by the Securities Act.
(v) Further Limitations on Disposition. Without in any way limiting
the representations set forth above, such Shareholder further agrees not to make
any disposition of all or any portion of the Acquiror Common Stock received,
owned or controlled by him, her or it unless and until:
(A) there is then in effect a registration statement under the
Securities Act covering such proposed disposition, and such disposition is made
in accordance with such registration statement; or
(B) an exemption from registration under the Securities Act is
available and, if requested by Acquiror, such Shareholder shall have furnished
Acquiror with an opinion of counsel, which may be counsel to Acquiror,
reasonably satisfactory to Acquiror, that such disposition will not require
registration under the Securities Act.
(vi) Legends. Such Shareholder understands that certificates
evidencing such Acquiror Common Stock, and any securities issued in respect
thereof or in exchange therefor, may bear one or more restrictive legends,
including the following:
(A) The shares represented by this certificate have not been
registered under the Securities Act of 1933 or applicable
state securities laws (collectively, the "Acts"). No
interest in such shares may be sold, encumbered or otherwise
transferred unless (i) there is an effective registration
statement under the Acts covering the transaction, (ii) the
Company receives an opinion of counsel, which may be counsel
to the Acquiror, satisfactory to the Company that such
registration is not required under the Acts, or (iii) the
Company otherwise satisfies itself that registration is not
required under the Acts.
(B) Any legend required by the securities Laws of any state.
Section 9. Waiver of Dissenters' Rights.
Each Shareholder hereby waives any appraisal rights with respect to his,
her or its Company Capital Stock or any other rights to dissent from the Merger
(including, without limitation, under Chapter 13 of the CCC), that he, she or it
has or may have with respect to the Merger or the transactions contemplated
thereby.
Section 10. Adjustments for Certain Events.
(a) In the event of any change in the Company Capital Stock or Option
Shares by reason of a stock dividend, stock split, split-up, recapitalization,
reorganization, business combination, consolidation, exchange of shares, or any
similar transaction or other change in the
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capital structure of the Company affecting the Company Capital Stock or the
acquisition by any Shareholder of additional Company Capital Stock, Company
Stock Rights or other securities or rights of the Company (whether through the
exercise of any options, warrants or other Company Stock Rights or otherwise),
(i) the number of Shares owned by such Shareholder shall be adjusted
appropriately, (ii) the type and number of shares or securities subject to the
Option and the Option Share Purchase Price (as defined in Section 8 of this
Agreement) shall be adjusted appropriately and (iii) this Agreement and the
Shareholders' obligations under this Agreement shall attach to any additional
Company Capital Stock, Company Stock Rights or other securities or rights of the
Company issued to or acquired by each of the Shareholders.
(b) In the event that the Company shall (i) enter into an agreement to
consolidate with or merge into any Person, other than Acquiror or one of
Acquiror's Subsidiaries, and shall not be the continuing or surviving
corporation of such consolidation or merger, (ii) enter into an agreement to
permit any Person, other than Acquiror or one of Acquiror's Subsidiaries, to
merge into the Company and the Company shall be the continuing or surviving
corporation but, in connection with such merger, Company Capital Stock then
outstanding shall be changed into or exchanged for stock or other securities of
the Company or any other Person or cash or any other property or (iii)
liquidate, then, in the case of any of (i), (ii) or (iii), Acquiror shall
thereafter be entitled to receive upon exercise of the Option the securities or
properties to which an Option Shareholder holding the number of Option Shares
then deliverable upon the exercise of the Option would have been entitled to
receive upon such consolidation, merger or liquidation, and such Option
Shareholder shall use his, her or its best efforts to assure that the provisions
of this Section 10 shall thereafter be applicable, as nearly as reasonably may
be practicable, in relation to any securities or property thereafter deliverable
upon exercise of the Option.
Section 11. Further Assurances.
Each Shareholder shall, upon request of Acquiror or Merger Sub, execute and
deliver any additional documents and take such further actions as may reasonably
be deemed by Acquiror or Merger Sub to be necessary or desirable to carry out
the provisions hereof and to vest in Acquiror the power to vote the Shares as
contemplated by Section 5 of this Agreement.
Section 12. Termination.
This Agreement, and all rights and obligations of the parties hereunder,
shall terminate immediately upon the earlier of (a) the Effective Time and (b)
the date of termination of the Merger Agreement (the "Termination Date");
provided, however, that Section 7(a) shall survive until the one-year
anniversary of the Effective Time and Section 7(b) shall survive until the
two-year anniversary of the Effective Time; and provided further that Section 8
shall survive until 30 days after the Termination Date in the event the Merger
Agreement is terminated pursuant to Section 7.1(f) of the Merger Agreement; and
provided further that Section 13 shall survive any termination of this
Agreement; and provided further, that if Acquiror has delivered a notice to any
Shareholder pursuant to Section 8(c)(ii) of this Agreement before the
Termination Date, this Agreement shall not terminate until ten (10) business
days following the Closing Date specified in such notice, as such Closing Date
may be extended pursuant to Section 8(c)(ii).
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Section 13. Expenses.
Each party will pay his, her or its own fees and expenses incident to the
negotiation, preparation and execution of this Agreement and the consummation of
the transactions contemplated hereby (including legal fees and accounting
expenses).
Section 14. Public Announcements.
Acquiror and each of the Shareholders agrees that he, she or it will not
issue any press release or otherwise make any public statement with respect to
the Merger Agreement, this Agreement or any other Operative Document or the
transactions contemplated hereby or thereby without the prior consent of the
other parties; provided, however, that such disclosure may be made without
obtaining such prior consent (a) if (i) the disclosure is required by Law or by
any Governmental Entity, including Nasdaq or any other national securities
exchange, trading market or inter-dealer quotation system on which the Shares
trade and (ii) the party making such disclosure has first used its best efforts
to consult with the other parties about the form and substance of such
disclosure, or (b) by Acquiror and Merger Sub in accordance with Section 6.5 of
the Merger Agreement.
Section 15. Miscellaneous.
(a) Nonsurvival of Representations and Warranties. None of the
representations and warranties in this Agreement shall survive the Effective
Time; provided, however, that this Section 15(a) shall not limit any covenant or
agreement of the parties which by its terms contemplates performance after the
Effective Time.
(b) Amendment and Waiver. No amendment, modification or waiver in respect
of this Agreement shall be effective against any party unless it shall be in
writing and signed by such party or his, her or its permitted successors and
assigns. Any amendment or waiver effected in accordance with this Section 15(b)
shall be binding upon the parties and their respective successors and assigns.
(c) Notices. Any notice, request or demand desired or required to be given
hereunder shall be in writing given by personal delivery, confirmed facsimile
transmission or overnight courier service, in each case addressed as set forth
below or to such other address as any party shall have previously designated by
such a notice. The effective date of any notice, request or demand shall be the
date of personal delivery, the date on which successful facsimile transmission
is confirmed or the date actually delivered by a reputable overnight courier
service, as the case may be, in each case properly addressed as provided in this
Section 15(c) and with all charges prepaid.
-11-
TO ANY OF THE SHAREHOLDERS: at the address set forth opposite the name
of such Shareholder on Exhibit A hereto:
With a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, Xxxxxxxxxx 00000-0000
Fax: (000) 000-0000
Attention: Xxxxxx Xxxxx
and
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
Professional Corporation
Spear Tower, Suite 3300, One Market
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxx X. Xxxxxxxx
TO ACQUIROR OR MERGER SUB:
WatchGuard Technologies, Inc.
000 Xxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Fax: 000-000-0000
Attention: General Counsel
With a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxxx Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxxxxxxx 00000
Fax: (000) 000-0000
Attention: Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxx
(d) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of Law, or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner adverse to
any party. Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall negotiate in
good faith to modify this Agreement so as to effect the original intent of the
parties as closely as possible in a mutually acceptable manner in order that the
transactions contemplated hereby be consummated as originally contemplated to
the fullest extent possible.
(e) Entire Agreement. This Agreement, together with Section 6.16 of the
Merger Agreement and the other Operative Documents, if any, to which the
Shareholders are a party, constitutes the entire agreement among the parties
with respect to the subject matter hereof and thereof and supersedes all prior
agreements and understandings, whether written or oral, among the parties with
respect to the subject matter hereof and thereof.
-12-
(f) Specific Performance. Each of the parties hereto acknowledges and
agrees that the other parties hereto would be damaged irreparably in the event
any of the provisions of this Agreement are not performed in accordance with
their specific terms or otherwise are breached. Accordingly, each of the parties
hereto agrees that the other parties hereto shall be entitled to an injunction
to prevent breaches of the provisions of this Agreement and to enforce
specifically this Agreement and the terms and provisions hereof in any competent
court having jurisdiction over the parties, in addition to any other remedy to
which they may be entitled at Law or in equity.
(g) Parties in Interest. This Agreement shall be binding upon and inure
solely to the benefit of the parties hereto and their respective successors
heirs, legal Representatives and permitted assigns. Nothing in this Agreement,
express or implied, is intended to or shall confer upon any other Person any
right, benefit or remedy of any nature whatsoever under or by reason of this
Agreement.
(h) Governing Law. This Agreement shall be governed by, and construed in
accordance with, the Laws of the state of Delaware applicable to contracts
executed in and to be performed in that state.
(i) Headings. The descriptive headings contained in this Agreement are
included for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(j) Counterparts. This Agreement may be executed and delivered (including
by facsimile transmission) in one or more counterparts, and by the different
parties hereto in separate counterparts, each of which when executed and
delivered shall be deemed to be an original but all of which taken together
shall constitute one and the same agreement.
(k) Waiver of Jury Trial. EACH PARTY HERETO 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, THE
TRANSACTIONS CONTEMPLATED HEREBY OR THE ACTIONS OF SUCH PARTIES IN THE
NEGOTIATION, ADMINISTRATION, PERFORMANCE AND ENFORCEMENT HEREOF.
(l) Representation by Counsel; Construction. Each party to this Agreement
was represented by his, her or its own counsel in connection with this Agreement
and had the opportunity to discuss with such counsel the terms of this
Agreement. This Agreement has been drafted with the joint participation of each
of the parties and shall be construed to be neither against nor in favor of any
party.
-13-
(m) Capacity as Shareholder. All representations and covenants made by a
Shareholder hereunder are made solely in his, her or its capacity as a
shareholder of the Company and shall not in any way affect or limit his, her or
its, or his, her or its affiliates' actions to act in accordance with such
person's obligations or duties as an officer or director of the Company.
(n) No Obligation to Exercise, Convert, Etc. Notwithstanding any other
provisions hereof, no Shareholder shall have any obligation to exercise any
Options or Company Warrants or to exercise or convert any other Company Stock
Rights.
[Signature Page Follows]
-14-
IN WITNESS WHEREOF, Acquiror, Merger Sub and the each of the Shareholders
have caused this Agreement to be duly executed and delivered as of the date
first written above.
WATCHGUARD TECHNOLOGIES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------------
Name: Xxxxxx X. Xxxxx
----------------------------------
Title: Executive Vice President and
Secretary
---------------------------------
RIVER ACQUISITION CORP.
By: /s/ Xxxxxxx X. XxXxxxxxx
------------------------------------
Name: Xxxxxxx X. XxXxxxxxx
----------------------------------
Title: Vice President, CFO and Secretary
---------------------------------
Address: 000 Xxxxx Xxxxxx
-------------------------------
Suite 500
-------------------------------
Xxxxxxx, XX 00000
-------------------------------
Fax: 000-000-0000
-------------------------------
-15-
SHAREHOLDERS:
XXXXXXX XXX
/s/ Xxxxxxx Xxx
----------------------------------------
Address: 00000 Xxxxxx Xx.
-------------------------------
Xxxxxxxx, XX 00000
-------------------------------
-------------------------------
Fax: 000-000-0000
-------------------------------
XXXXX XXXXXXX XXX
/s/ Xxxxx Xxxxxxx Xxx
----------------------------------------
Address:
-------------------------------
-------------------------------
-------------------------------
Fax:
-------------------------------
XXXX JI-XXXX XX
/s/ Xxxx Ji-Xxxx Xx
----------------------------------------
Address: 00000 Xxxxxxx Xxx
-------------------------------
Xxxxxxxx, XX 00000
-------------------------------
-------------------------------
Fax: 000-000-0000
-------------------------------
Signature Page to Shareholders Agreement
-16-
BARING ASIA II HOLDINGS (8) LTD.
By: /s/ C.A.E. Helyar
----------------------------------------------
Name: Mrs. C.A.E. Helyar
--------------------------------------------
Title: Director
-------------------------------------------
Address: X.X. Xxx 000; 0000 Xxxxxxxx Xxxx,
-----------------------------------------
Xx. Xxxxx Xxxx, Xxxxxxxx, XXX 00X
-----------------------------------------
-----------------------------------------
Fax: x00 0000 000000
-----------------------------------------
FOREFRONT VENTURE PARTNERS, L.P.
By: /s/ Xxxxxxx Xxxxx
----------------------------------------------
Name: Xxxxxxx Xxxxx
--------------------------------------------
Title: General Partner
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
INVESTAR DAYSPRING VENTURE CAPITAL, INC.
By: /s/ Xxxxxxxxx Sun
----------------------------------------------
Name: Xxxxxxxxx Sun
--------------------------------------------
Title: Partner & CFO
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
Signature Page to Shareholders Agreement
-17-
INVESTAR EXCELSUS VENTURE CAPITAL (INT'L)
INC., LDC
By: /s/ Xxxxxxxxx Sun
----------------------------------------------
Name: Xxxxxxxxx Sun
--------------------------------------------
Title: Partner & CFO
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
INVESTAR SEMICONDUCTOR DEVELOPMENT FUND, INC.
By: /s/ Xxxxxxxxx Sun
----------------------------------------------
Name: Xxxxxxxxx Sun
--------------------------------------------
Title: Partner & CFO
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
INVESTAR BURGEON VENTURE CAPITAL, INC.
By: /s/ Xxxxxxxxx Sun
----------------------------------------------
Name: Xxxxxxxxx Sun
--------------------------------------------
Title: Partner & CFO
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
Signature Page to Shareholders Agreement
-18-
INVESTAR SEMICONDUCTOR DEVELOPMENT FUND, INC.
(IT) LDC
By: /s/ Xxxxxxxxx Sun
----------------------------------------------
Name: Xxxxxxxxx Sun
--------------------------------------------
Title: Partner & CFO
-------------------------------------------
Address:
-----------------------------------------
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
ACORN VENTURE PARTNERS, LLC
By: /s/ Wu-Fu Chen
----------------------------------------------
Name: Wu-Fu Chen
--------------------------------------------
Title: General Partner
-------------------------------------------
Address: 6 Results Way
-----------------------------------------
Xxxxxxxxx, XX 00000
-----------------------------------------
-----------------------------------------
Fax:
-----------------------------------------
TECHNOLOGY ASSOCIATES CORP.
By: /s/ Xxxxx X. Xxxx
----------------------------------------------
Name: Xxxxx Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 9F., 108 Nan Xxxx X. Road, Sec. 5
-----------------------------------------
Taipei, Taiwan 105, R.O.C.
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
Signature Page to Shareholders Agreement
-19-
TECH ALLIANCE CORP.
By: /s/ Xxxxx X. Xxxx
----------------------------------------------
Name: Xxxxx X. Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 9F., 108, Nan Xxxx X. Road, Sec. 5
-----------------------------------------
Taipei, Taiwan 105, R.O.C.
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
XXXX-XXXX VENTURE CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxx
----------------------------------------------
Name: Xxxxxxx Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 00xx-0 Xxxxx, 000 Xxx Xxx X. Road, Sec. 2
-----------------------------------------
Taipei, Taiwan, R.O.C. 106
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
HUA-CHIH VENTURE CAPITAL CORP.
By: /s/ Xxxxxxx Xxxx
----------------------------------------------
Name: Xxxxxxx Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 00xx-0 Xxxxx, 000 Xxx Xxx X. Road, Sec. 2
-----------------------------------------
Taipei, Taiwan, R.O.C. 106
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
Signature Page to Shareholders Agreement
-20-
XXX-XXXXX VENTURE CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxx
----------------------------------------------
Name: Xxxxxxx Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 00xx-0 Xxxxx, 000 Xxx Xxx X. Road, Sec. 2
-----------------------------------------
Taipei, Taiwan, R.O.C. 106
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
HUA-JING VENTURE CAPITAL CORPORATION
By: /s/ Xxxxxxx Xxxx
----------------------------------------------
Name: Xxxxxxx Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 00xx-0 Xxxxx, 000 Xxx Xxx X. Road, Sec. 2
-----------------------------------------
Taipei, Taiwan, R.O.C. 106
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
INFO VENTURE CAPITAL CORP.
By: /s/ Xxxxxxx Xxxx
----------------------------------------------
Name: Xxxxxxx Xxxx
--------------------------------------------
Title: President
-------------------------------------------
Address: 00xx-0 Xxxxx, 000 Xxx Xxx X. Road, Sec. 2
-----------------------------------------
Taipei, Taiwan, R.O.C. 106
-----------------------------------------
-----------------------------------------
Fax: 000-0-0000-0000
-----------------------------------------
Signature Page to Shareholders Agreement
-21-
XXXX XXXX
/s/ Wu-Fu Chen
----------------------------------------
Address: 00000 Xxxxxxx Xxx
-------------------------------
Xxx Xxxxx Xxxxx, XX 00000
-------------------------------
-------------------------------
Fax:
-------------------------------
Signature Page to Shareholders Agreement
-22-
Exhibit A--Shareholders
Series A Series B Series C Series C
Name Common Options Preferred Preferred Preferred Warrants Total Shares
---- ------ ------- --------- --------- --------- -------- ------------
Xxxxx Xxx 2,430,000 180,000 600,000 79,584 3,289,584
Xxxxx XxxXxxx Xxx 1,492,500 105,000 1,597,500
Xxxx Ji-Xxxx Xx 1,485,000 67,500 1,552,500
Baring Asia II Holdings Ltd. 3,487,156 627,688 4,114,844
InveStar Capital, Inc. 3,300,000 406,284 491,601 4,197,885
Acorn Partners, LLC 2,700,000 487,540 69,744 3,257,284
Technology Associates Corp. 2,437,704 323,336 2,761,040
Star Capital Group 1,625,135 278,973 1,904,108
-23-
