1
EXHIBIT 10.6
MARVELL TECHNOLOGY GROUP LTD.
INVESTOR RIGHTS AGREEMENT
SEPTEMBER 10, 1999
2
TABLE OF CONTENTS
Page
----
Section 1. Certain Definitions.............................................. 3
Section 2. Restrictions on Transferability.................................. 5
Section 3. Restrictive Legend............................................... 5
Section 4. Notice of Proposed Transfers..................................... 5
Section 5. Registration..................................................... 6
5.1 Requested Registration........................................... 6
5.2 Company Registration............................................. 8
5.3 Registration on Form S-3......................................... 9
5.4. Expenses of Registration......................................... 10
5.5. Registration Procedures.......................................... 10
5.6 Indemnification.................................................. 11
5.7 Information by Holders........................................... 12
5.8 Rule 144 Reporting............................................... 13
5.9 Transfer of Registration Rights.................................. 13
5.10 Termination of Registration Rights............................... 13
Section 6. Financial Information and Inspection Rights...................... 14
Section 7. Standoff Agreement............................................... 15
Section 8. Additional Parties............................................... 15
Section 9. Amendment........................................................ 15
Section 10. Governing Law................................................... 16
Section 11. Entire Agreement................................................ 16
Section 12. Notices, Etc.................................................... 16
Section 13. Counterparts.................................................... 16
3
MARVELL TECHNOLOGY GROUP LTD.
INVESTORS RIGHTS AGREEMENT
This Investors Rights Agreement (this "Agreement") is made as of September
10, 1999 by and among Marvell Technology Group Ltd., a Bermuda corporation (the
"Company"), the undersigned purchasers of Series A Preferred Stock of the
Company (the "Series A Purchasers"), the undersigned purchasers of Series B
Preferred Stock of the Company (the "Series B Purchasers"), the undersigned
purchasers of Series C Preferred Stock of the Company (the "Series C
Purchasers"), the undersigned Purchasers of this Series D Preferred Stock of the
Company (the "Series D Purchasers") and the undersigned Purchasers of this
Series E Preferred Stock of the Company (the "Series E Purchasers") (the Series
A Purchasers, the Series B Purchasers, the Series C Purchasers, the Series D
Purchasers, the Series E Purchasers and GBC Venture Capital, Inc. ("GBC"), being
hereinafter referred to individually as a "Purchaser" and together, along with
such additional parties as are hereafter deemed Purchasers pursuant to Section 8
hereof, as the "Purchasers"), and Xxxxx Xxx, Pantas Sutardja and Xxxxx Xxxxxxxx
(individually, a "Founder" and collectively, the "Founders").
RECITALS
A. The Company and the Series A Purchasers, the Series B Purchasers, the
Series C Purchasers and the Series D Purchasers are parties to that certain
Registration and Information Rights Agreement, dated as of December 10, 1997
(the "Prior Agreement") pursuant to which the Company granted certain
registration and other rights to the Series A Purchasers, the Series B
Purchasers, the Series C Purchasers and the Series D Purchasers;
B. The Series E Purchasers and the Company have entered into or
concurrently herewith are entering into a Series E Preferred Stock Purchase
Agreement (the "Series E Purchase Agreement"), pursuant to which such Series E
Purchasers are purchasing from the Company shares of its Series E Preferred
Stock;
C. The obligations of the Company and such Series E Purchasers under the
Series E Purchase Agreement are conditioned, among other things, upon the
execution and delivery of this Agreement by the Company, the Founders, the
Series A Purchasers, the Series B Purchasers, the Series C Purchasers, the
Series D Purchasers and the Series E Purchasers; and
D. The Company and GBC entered in to that certain Loan and Security
Agreement, dated May 21, 1998, as amended by the First Amendment to Loan and
Security Agreement, dated July 16, 1999 (the "General Bank Agreement"), pursuant
to which the Company issued to GBC a warrant to purchase up to 45,000 shares of
Series D Preferred Stock (the "General Bank Series D Warrant") and a warrant to
purchase up to 15,000 shares of Common Stock (the "General Bank Common
Warrant");
E. The Series E Purchasers and GBC desire to be granted the rights set
forth herein relating to registration rights and the Company, the Founders, the
Series A Purchasers, the Series B Purchasers, the Series C Purchasers, and the
Series D Purchasers desire that this Agreement supersede and cancel the Prior
Agreement relating to registration and information rights;
2
4
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the Company, the Founders, the Series A Purchasers, the
Series B Purchasers, the Series C Purchasers, the Series D Purchasers, the
Series E Purchasers and GBC agree as follows:
SECTION 1. CERTAIN DEFINITIONS.
As used in this Agreement, the following terms shall have the following
respective meanings:
"Commission" shall mean the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"Common Stock" shall mean the common stock of the Company, $0.002 par value
per share.
"Conversion Stock" shall mean the Series A Preferred, the Series B
Preferred, the Series C Preferred, the Series D Preferred (including the Series
C Preferred and Series D Preferred issuable upon exercise of outstanding
warrants to purchase Series C Preferred and Series D Preferred), the Series E
Preferred, and the Common Stock issued or issuable pursuant to the conversion of
the Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred, Series E Preferred and the General Bank Common Warrant.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"General Meeting" shall mean any general meeting of the shareholders of the
Company.
"Holders" shall mean (i) the Purchasers for so long as the Purchasers hold
Conversion Stock or Registrable Securities, (ii) the Founders for so long as the
Founders hold Registrable Securities, (iii) GBC for so long as GBC holds
Conversion Stock or Registrable Securities, and (iv) any person holding
Registrable Securities to whom the rights under this Agreement have been
transferred in accordance with Section 5.9 hereof.
"Initiating Holders" shall mean any Holder or Holders of more than 25% of
the Series A Preferred, the Series B Preferred, the Series C Preferred, the
Series D Preferred, the Series E Preferred and the General Bank Common Warrant
(and Registrable Securities issued upon conversion thereof) voting as a single
class, with each share of Preferred Stock entitled to the number of votes equal
to the number of shares of Common Stock into which such share would be converted
on the date of the vote.
"Preferred Stock" shall mean collectively the Series A Preferred, the
Series B Preferred, the Series C Preferred, the Series D Preferred and the
Series E Preferred.
"Series A Preferred" shall mean the Series A Preferred Stock of the Company
issued pursuant to the Series A Preferred Stock Purchase Agreement, dated April
26, 1995.
3
5
"Series B Preferred" shall mean the Series B Preferred Stock of the Company
issued pursuant to the Series B Preferred Stock Purchase Agreement, dated
October 19, 1995.
"Series C Preferred" shall mean the Series C Preferred Stock of the Company
issued pursuant to the Series C Preferred Stock Purchase Agreement, dated
September 12, 1996 and the Series C Preferred Stock Purchase Agreement, dated
November 4, 1996.
"Series D Preferred" shall mean the Series D Preferred Stock of the Company
issued pursuant to the Series D Preferred Stock Purchase Agreement, dated
December 10, 1997, and the General Bank Series D Warrant.
"Series E Preferred" shall mean the Series E Preferred Stock of the Company
issued pursuant to the Series E Purchase Agreement.
"Registrable Securities" shall mean (i) shares of Common Stock of the
Company issued or issuable in respect of the Conversion Stock upon any stock
split, stock dividend, recapitalization, or similar event, or any Common Stock
otherwise issuable with respect to the Conversion Stock, (ii) shares of Common
Stock which are Conversion Stock, (iii) shares of Common Stock which are held by
the Founders; provided, however, that shares of Conversion Stock or other
securities shall only be treated as Registrable Securities if and so long as
they have not been sold to or through a broker or dealer or underwriter in a
public distribution or a public securities transaction.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as otherwise stated
below under "Selling Expenses", incurred by the Company in complying with
Sections 5.1, 5.2 and 5.3 hereof, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for the Company, blue sky fees and expenses,
the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the Company
which shall be paid in any event by the Company) and the reasonable fees and
disbursements of one counsel for all Holders as appointed by the Holders (other
than the Founders).
"Restricted Securities" shall mean the securities of the Company required
to bear the legend set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth under "Registration Expenses," all
reasonable fees and disbursements of counsel for any Holder.
4
6
SECTION 2. RESTRICTIONS ON TRANSFERABILITY. The Registrable Securities and
any other securities issued in respect of the Registrable Securities upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall not be sold, assigned, transferred or pledged except upon the
conditions specified in this Agreement, which conditions are intended to ensure
compliance with the provisions of the Securities Act. Each Purchaser will cause
any proposed purchaser, assignee, transferee, or pledgee of any such shares held
by such Purchaser to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
SECTION 3. RESTRICTIVE LEGEND. Each certificate representing (i) the
Registrable Securities and (ii) any other securities issued in respect of the
Registrable Securities upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 4 below) be stamped or otherwise imprinted with a legend
in substantially the following form (in addition to any legend required under
applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND
HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION
WITH, THE SALE OR DISTRIBUTION THEREOF. SUCH SHARES MAY NOT BE SOLD OR
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION UNLESS THE COMPANY RECEIVES
AN OPINION OF COUNSEL REASONABLY ACCEPTABLE TO IT STATING THAT SUCH SALE OR
TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY
REQUIREMENTS OF SAID ACT AND STATE SECURITIES LAWS. COPIES OF THE
AGREEMENTS COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER MAY BE OBTAINED AT NO COST BY WRITTEN REQUEST MADE BY THE HOLDER
OF RECORD OF THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICES OF THE CORPORATION.
Each Purchaser and each Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Preferred Stock
or the Common Stock in order to implement the restrictions on transfer
established in this Agreement.
SECTION 4. NOTICE OF PROPOSED TRANSFERS. The holder of each certificate
representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities (other than (i) a
transfer not involving a change in beneficial ownership, (ii) in transactions
involving the distribution without consideration of Restricted Securities
5
7
by any Purchaser to any of its partners, or retired partners, or to the estate
of any of its partners or retired partners, (iii) in transactions involving the
transfer without consideration of Restricted Securities by a Purchaser during
his or her lifetime by way of gift or on death by will or intestacy, or (iv) in
transactions in compliance with Rule 144), unless there is in effect a
registration statement under the Securities Act covering the proposed transfer,
the holder thereof shall give written notice to the Company of such holder's
intention to effect such transfer, sale, assignment or pledge. Each such notice
shall describe the manner and circumstances of the proposed transfer, sale,
assignment or pledge in sufficient detail, and shall be accompanied, at such
holder's expense, by either (A) an unqualified written opinion of legal counsel
who shall be, and whose legal opinion shall be, reasonably satisfactory to the
Company addressed to the Company, to the effect that the proposed transfer of
the Restricted Securities may be effected without registration under the
Securities Act and applicable state securities laws, or (B) a "no action" letter
from the Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. Each certificate evidencing the Restricted Securities transferred as
above provided shall bear, except if such transfer is made pursuant to Rule 144,
the appropriate restrictive legend set forth in Section 3 above, except that
such certificate shall not bear such restrictive legend if, in the opinion of
counsel for such holder and the Company, such legend is not required in order to
establish compliance with any provision of the Securities Act.
SECTION 5. REGISTRATION.
5.1 REQUESTED REGISTRATION.
(a) In case the Company shall receive from Initiating Holders a
written request that the Company effect any registration, qualification or
compliance with respect to shares of Registrable Securities with an anticipated
aggregate offering price, net of underwriting discounts and commissions, of ten
million dollars ($10,000,000), the Company will:
(i) promptly give written notice of the proposed
registration, qualification or compliance to all other Holders, except for the
Founders, who shall not be entitled to registration under this Section 5.1; and
(ii) as soon as practicable, use its best efforts to effect
such registration, qualification or compliance (including, without limitation,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
or such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 20 days after receipt of such written notice from the
Company.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5.1:
6
8
(i) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) Prior to the earlier to occur of: (x) December 31,
2001 and (y) six months after the effective date of the Company's first
registered public offering of shares of its Common Stock;
(iii) During the period starting with the date sixty (60)
days prior to the Company's estimated date of filing of, and ending on the date
six (6) months immediately following the effective date of, any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan, or any other registration which is not appropriate for the registration of
Registrable Securities), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(iv) After the Company has effected two such registrations
pursuant to this subparagraph 5.1(a), and such registrations have been declared
or ordered effective and remain effective until the earlier to occur of (x) 90
days or (y) the sale of all the securities offered pursuant to each such
registration;
(v) If the Company shall furnish to such Initiating
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors it would be seriously detrimental
to the Company or its shareholders for a registration statement to be filed in
the near future, then the Company's obligation to use its best efforts to
register, qualify or comply under this Section 5.1 shall be deferred for a
period not to exceed 90 days from the date of receipt of written request from
the Initiating Holders, provided that the Company may not exercise this deferral
right for more than 150 days in any one year period; or
(vi) If such registration, qualification or compliance is
proposed to be part of a firm commitment underwritten public offering with
underwriters not reasonably acceptable to the Company.
Subject to the foregoing clauses (i) through (vi), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(c) Underwriting. If the Initiating Holders intend to distribute
the Registrable Securities covered by their request in an underwritten offering,
they shall so advise the Company as a part of their request made pursuant to
this Section 5.1, and the Company shall advise the Holders as part of the notice
given pursuant to Section 5.l(a)(i) that the right of any Holder to registration
pursuant to Section 5.1 shall be conditioned upon such Holder's participation in
the underwriting arrangements required by this Section 5.1, and the inclusion of
such Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
7
9
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders, but subject to the Company's
reasonable approval. Notwithstanding any other provision of this Section 5.1, if
the managing underwriter advises the Initiating Holders in writing that
marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders desiring to register Registrable Securities in the underwriting in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by such Holders at the time of filing the registration
statement. No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.
To facilitate the allocation of shares in accordance with the above provisions,
the Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities so withdrawn shall also be withdrawn from registration,
and such Registrable Securities shall not be transferred in a public
distribution prior to 180 days after the effective date of such registration, or
such other shorter period of time as the underwriters may require.
5.2 COMPANY REGISTRATION.
(a) Notice of Registration. If at any time or from time to time
the Company shall determine to register any of its equity securities, either for
its own account or the account of a security holder or holders, other than (i) a
registration relating solely to employee benefit plans, (ii) a registration
relating solely to a Rule 145 transaction, or (iii) a registration in which the
only equity security being registered is capital stock issuable upon conversion
of convertible (or exchange of exchangeable) debt securities which are also
being registered, the Company will:
(i) promptly give to each Holder written notice thereof;
and
(ii) include in such registration (and any related
qualification under blue sky laws or other compliance), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within twenty (20) days after receipt of such written notice
from the Company, by any Holder.
(b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 5.2(a)(i). In such event, the right of any Holder to
registration pursuant to Section 5.2 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting shall be limited to the extent provided herein.
8
10
All Holders proposing to distribute their securities through such
underwriting shall (together with the Company and the other holders distributing
their securities through such underwriting) enter into an underwriting agreement
in customary form with the managing underwriter selected for such underwriting
by the Company. Notwithstanding any other provision of this Section 5.2, if the
managing underwriter determines that marketing factors require a limitation of
the number of shares to be underwritten, the managing underwriter may limit the
Registrable Securities to be included in such registration (i) in the case of
the Company's initial public offering, to zero, and (ii) in the case of any
other offering, to an amount no less than 25% of the total number of shares to
be sold in the offering, provided that in each such case no shares held by any
Holder other than the Founders shall be so excluded from such registration until
all shares held by the Founders are excluded from such registration. The number
of shares of Registrable Securities that may be included in the registration and
underwriting shall be allocated among all the Holders desiring to register
Registrable Securities in the underwriting in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Holders at the time of filing the Registration Statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or holder to the nearest 100
shares.
If any of the Holders disapproves of the terms of any such underwriting,
such Holder may elect to withdraw therefrom by written notice to the Company and
the managing underwriter. Any securities excluded or withdrawn from such
underwriting shall be withdrawn from such registration.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 5.2 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
5.3 REGISTRATION ON FORM S-3.
(a) If any of the Holders (excluding the Founders) request that
the Company file a registration statement on Form S-3 (or any successor form to
Form S-3) for a public offering of shares of the Registrable Securities the
reasonably anticipated aggregate price to the public of which, net of
underwriting discounts and commissions, would exceed $1,000,000, and the Company
is a registrant entitled to use Form S-3 to register the Registrable Securities
for such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form and to
cause such Registrable Securities to be qualified in such jurisdictions as such
Holder or Holders may reasonably request; provided, however, that the Company
shall not be required to effect more than one registration pursuant to this
Section 5.3 in any six (6) month period. The Company shall inform other Holders
(excluding the Founders) of the proposed registration and offer them the
opportunity to participate. In the event the registration is proposed to be part
of a firm commitment underwritten public offering, the substantive provisions of
Section 5.1(c) shall be applicable to each such registration initiated under
this Section 5.3.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 5.3:
9
11
(i) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance, unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(ii) if the Company, within ten (10) days of the receipt of
the request of the Holders, gives notice of its bona fide intention to effect
the filing of a registration statement with the Commission within ninety (90)
days of receipt of such request (other than with respect to a registration
statement relating to a Rule 145 transaction, an offering solely to employees,
or any other registration which is not appropriate for the registration of
Registrable Securities);
(iii) during the period starting with the date sixty (60)
days prior to the Company's estimated date of filing of, and ending on the date
six (6) months immediately following, the effective date of any registration
statement pertaining to securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan, or any other registration which is not appropriate for the registration of
Registrable Securities), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective; or
(iv) if the Company shall furnish to such Holder or Holders
a certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for registration statements to be filed in the
near future, then the Company's obligation to use its best efforts to file a
registration statement shall be deferred for a period not to exceed 90 days from
the receipt of the request to file such registration by such Holder or Holders,
provided that the Company may not exercise this deferral right for more than 150
days in any one year period.
5.4. EXPENSES OF REGISTRATION. All Registration Expenses incurred in
connection with (i) the two registrations pursuant to Section 5.1, (ii) all
registrations pursuant to Section 5.2, and (iii) three registrations pursuant to
Section 5.3 shall be borne by the Company. Unless otherwise stated, all Selling
Expenses relating to securities registered on behalf of the Holders and all
other registration expenses shall be borne by the Holders of such securities pro
rata on the basis of the number of shares so registered.
5.5. REGISTRATION PROCEDURES. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each of the Holders advised in writing as to the
initiation of each registration, qualification and compliance and as to the
completion thereof. At its expense the Company will:
(a) prepare and file with the Commission a registration
statement with respect to such securities and use its reasonable best efforts to
cause such registration statement to become and remain effective for at least
ninety (90) days or until the distribution described in the registration
statement has been completed, whichever first occurs; and
(b) furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the
10
12
registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
5.6 INDEMNIFICATION.
(a) The Company will indemnify each Holder of securities, each
of its officers, directors and partners, and each person controlling such Holder
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Agreement, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages and liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation (commenced or threatened), arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading, and will reimburse each such Holder, each of its officers,
directors, general partners and each person controlling such Holder, each such
underwriter and each person who controls any such underwriter, for any legal and
any other expenses reasonably incurred, as such expenses are incurred, in
connection with investigating, preparing or defending any such claim, loss,
damage, liability or action; provided that the Company will not be liable in any
such case to the extent that any such claim, loss, damage, liability or expense
arises out of or is based on any untrue statement or omission or alleged untrue
statement or omission, made in reliance upon and in conformity with written
information furnished to the Company by such Holder, controlling person or
underwriter specifically for use therein; provided, however, that the foregoing
indemnity agreement is subject to the condition that, insofar as it relates to
any such untrue statement, alleged untrue statement, omission or alleged
omission made in a preliminary prospectus on file with the Commission at the
time the registration statement becomes effective or the amended prospectus
filed with the Commission pursuant to Rule 424(b) (the "Final Prospectus"), such
indemnity agreement shall not inure to the benefit of: (1) any Holder, (i) if
there is no underwriter, and a copy of the Final Prospectus was not furnished to
the person asserting the loss, liability, claim or damage at or prior to the
time such action is required by the Securities Act and the Final Prospectus
would have cured the defect giving rise to the loss, liability, claim or damage
(to the extent that such Holder was obligated by law to provide a copy of the
Final Prospectus to such person), or (ii) to the extent that such untrue
statement, alleged untrue statement, omission or alleged omission is made in
reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; or (2) any underwriter, (i) if a copy of the Final
Prospectus was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities Act
and the Final Prospectus would have cured the defect giving rise to the loss,
liability, claim or damage, or (ii) to the extent that such untrue statement,
alleged untrue statement, omission or alleged omission is made in reliance on
and in conformity with written information furnished to the Company by an
instrument duly executed by such underwriter and stated to be specifically for
use therein.
11
13
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all expenses, claims, losses, damages and liabilities
(or actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation (commenced or threatened), arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any amendment or supplement thereto, incident to such
registration, qualification or compliance, or any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, and will reimburse the Company, such Holders, such
directors, officers, persons, underwriters or control persons for any legal and
any other expenses reasonably incurred, as such expenses are incurred, in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by such Holder specifically for use therein.
Notwithstanding the foregoing, the liability of each Holder under this
subsection 5.6(b) shall be limited in an amount equal to the net proceeds
received by such Holder from the sale of shares in such registration, unless
such liability arises out of or is based on willful misconduct by such Holder.
(c) Each party entitled to indemnification under this Section
5.6 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld) and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement, unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action,
and provided further that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation.
5.7 INFORMATION BY HOLDERS. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such
12
14
Holder or Holders as the Company may request in writing and as shall be required
in connection with any registration, qualification or compliance referred to in
this Agreement.
5.8 RULE 144 REPORTING. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock, the Company agrees to
use all reasonable efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as any of the Holders owns any Restricted
Securities, to furnish to such Holders forthwith upon request a written
statement by the Company as to its compliance with the reporting requirements of
said Rule 144 (at any time after 90 days after the effective date of the first
registration statement filed by the Company for an offering of its securities to
the general public), and of the Securities Act and the Exchange Act (at any time
after it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as such Holders may reasonably request in
availing itself of any rule or regulation of the Commission allowing the Holders
to sell any such securities without registration.
5.9 TRANSFER OF REGISTRATION RIGHTS. Any rights to cause the Company
to register securities granted to the Holders under Sections 5.1, 5.2 and 5.3
may be assigned to a transferee or assignee in connection with any transfer or
assignment of Registrable Securities by a Purchaser or Founder, to the extent of
the rights of such transferor, only if such transferee or assignee, as
appropriate, acquires at least 50,000 shares (as adjusted for stock splits,
stock dividends, recapitalizations and the like) of Common Stock or Conversion
Stock, provided written notice thereof is promptly given to the Company and the
transferee agrees to be bound by the provisions of this Agreement.
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned to any constituent partner or retired partner of a
Holder which is a partnership, or an affiliate of a Holder which is a
corporation, or a family member or trust for the benefit of a Holder who is an
individual, provided written notice thereof is promptly given to the Company and
the transferee agrees to be bound by the provisions of this Agreement.
5.10 TERMINATION OF REGISTRATION RIGHTS. The rights granted pursuant
to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate on the five year
anniversary of the Company's initial public offering pursuant to an effective
registration statement under the Securities Act, or as to any Holder at such
time as such Holder is able to sell all such Registrable
13
15
Securities as are held by such Holder under Rule 144 promulgated under the
Securities Act within a 90-day period.
SECTION 6. FINANCIAL INFORMATION AND INSPECTION RIGHTS.
(a) The Company will provide the following reports and rights to
each Purchaser for so long as such Purchaser continues to hold at least 75,000
shares of Conversion Stock (as adjusted for stock splits, stock dividends,
recapitalizations and the like):
(i) As soon as practicable after the end of each fiscal
year, and in any event within 120 days thereafter and at least seven days prior
to any General Meeting at which the Financial Information (as defined below) is
to be considered, consolidated balance sheets of the Company and its
subsidiaries, if any, as of the end of such fiscal year, and consolidated
statements of operations and consolidated statements of cash flows and
shareholders' equity of the Company and its subsidiaries, if any, for such year,
prepared in accordance with generally accepted accounting principles and setting
forth in each case in comparative form the figures for the previous fiscal year,
all in reasonable detail and audited by independent public accountants of
national standing selected by the Company (the "Financial Information"), and a
capitalization table in reasonable detail for such fiscal year;
(ii) As soon as practicable after the end of the first,
second, and third quarterly accounting periods in each fiscal year of the
Company and in any event within 60 days thereafter, a consolidated balance sheet
of the Company and its subsidiaries, if any, as of the end of each such
quarterly period, and consolidated statements of operations and, to the extent
prepared for the Board of Directors of the Company, consolidated statements of
cash flows of the Company and its subsidiaries for such period and for the
current fiscal year to date, prepared in accordance with generally accepted
accounting principles (other than for accompanying notes), subject to changes
resulting from year-end audit adjustments, in reasonable detail and signed by
the principal financial or accounting officer of the Company; and
(iii) The Company shall permit each such Purchaser, at such
Purchaser's expense, to visit and inspect the Company's properties, to examine
its books of account and records, and to discuss the Company's affairs, finances
and accounts with its officers, all at such reasonable times as may be requested
by such Purchaser; provided, however, that the Company shall not be obligated
pursuant to this clause (iii) to provide access to any information that it
reasonably considers to be a trade secret or similar confidential information.
(b) The rights granted pursuant to this Section 6 may be assigned to
a transferee or assignee in connection with any transfer or assignment of
Conversion Stock by any such Purchaser only if such transferee or assignee, as
appropriate, acquires at least 75,000 shares (as adjusted for stock splits,
stock dividends, recapitalizations and the like) of the Conversion Stock,
provided written notice thereof is promptly given to the Company.
(c) Each of the Purchasers acknowledge and agree that any information
obtained pursuant to this Section 6 which may be considered "inside" non-public
information will not be utilized by any Purchaser in connection with purchases
or sales of the Company's securities except in compliance with applicable state
and federal securities laws.
14
16
(d) The covenants set forth in this Section 6 shall terminate and be
of no further force or effect upon the consummation of a firm commitment
underwritten public offering or at such time as the Company is required to file
reports pursuant to Section 13 or 15(d) of the Exchange Act, whichever shall
occur first.
SECTION 7. STANDOFF AGREEMENT. In connection with any public offering of
the Company's securities in connection with an effective registration statement
under the Securities Act, each Holder agrees, upon the request of the Company or
the underwriters managing any underwritten offering of the Company's securities,
not to sell, make any short sale of, loan, grant any option for the purchase of,
or otherwise dispose of any securities of the Company (other than those included
in the registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time, not to exceed one
hundred eighty (180) days for the Company's initial public offering registration
and not to exceed ninety (90) days in the case of any subsequent registration
(or such lesser period as officers, directors or 1% shareholders of the voting
power of the Company are so restricted with respect to the transfer of shares of
capital stock of the Company held by them) after the effective date of the
registration statement relating thereto provided that, should the underwriters
release from such transfer restricted shares held by any officer, director or 1%
shareholder, then such Holder shall similarly be released from such restriction.
Each of the Purchasers and each Holder agrees that the Company may instruct its
transfer agent to place stop-transfer notations in its records to enforce the
provisions of this Section 7.
SECTION 8. ADDITIONAL PARTIES. The parties hereto agree that additional
holders of Preferred Stock may, with the consent only of the Company, be added
as parties to this Agreement with respect to any or all securities of the
Company held by them, and shall thereupon be deemed for all purposes
"Purchasers" hereunder; provided, however, that from and after the date of this
Agreement, the Company shall not without the prior written consent of each
Purchaser, enter into any agreement with any holder or prospective holder of any
securities of the Company providing for the grant to such holder of rights
superior to those granted herein. Any additional party added pursuant to this
Section 8 shall execute a counter-part of this Agreement, and upon execution by
such additional party and by the Company, shall be considered a Purchaser for
purposes of this Agreement.
SECTION 9. AMENDMENT. Any provision of this Agreement may be amended or the
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively), only with the written consent of the
Company and the Holders of a majority of each of: (i) the Founders and (ii) the
Holders of Series A Preferred, Series B Preferred, Series C Preferred, Series D
Preferred, Series E Preferred and the General Bank Warrant, voting together as a
single class, with each share of Preferred Stock entitled to the number of votes
equal to the number of shares of Common Stock into which such share would be
converted on the date of the vote; provided that, no such amendment shall impose
or increase any liability or obligation or impair any right of a Holder without
the consent of such Holder. Any amendment or waiver effected in accordance with
this Section 9 shall be binding upon each Holder of Registrable Securities at
the time outstanding (including securities into which such securities are
convertible), each future Holder of all such securities, and the Company.
15
17
SECTION 10. GOVERNING LAW. This Agreement and the legal relations between
the parties arising hereunder shall be governed by and interpreted in accordance
with the internal laws of Bermuda.
SECTION 11. ENTIRE AGREEMENT. This Agreement constitutes the full and
entire understanding and agreement between the parties hereto regarding the
matters set forth herein, and supersedes in their entirety all prior agreements
and understandings among the parties relative to the subject matter hereof. Upon
execution of this Agreement by the parties required to amend the Prior
Agreement, the Prior Agreement shall be rendered null and void and be of no
further force or effect. Except as otherwise expressly provided herein, the
provisions hereof shall inure to the benefit of, and be binding upon the
successors, assigns, heirs, executors and administrators of the parties hereto.
SECTION 12. NOTICES, ETC. All notices and other communications required or
permitted hereunder shall be in writing and shall be deemed effectively given
upon personal delivery to the party to be notified or three (3) days after
deposit with the United States mail, by registered or certified mail, postage
prepaid, addressed (a) if to a Purchaser, at the address of such Purchaser on
the records of the Company, or at such other address as the Purchaser shall have
furnished to the Company in writing in accordance with this Section 12, (b) if
to GBC, at the address set forth on the General Bank Agreement, (c) if to a
Founder, at the address of such Founder on the records of the Company, or at
such other address as the Founder shall have furnished to the Company in writing
in accordance with this Section 12, (d) if to any other holder of Conversion
Stock, at such address as such holder shall have furnished the Company in
writing in accordance with this Section 12, or, until any such holder so
furnishes an address to the Company, then to and at the address of the last
holder thereof who has so furnished an address to the Company, or (e) if to the
Company, at its principal office, or that of Marvell Semiconductor, Inc., its
subsidiary.
SECTION 13. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
[Signature pages follow]
16
18
The foregoing agreement is hereby executed as of the date first above
written.
"COMPANY"
MARVELL TECHNOLOGY GROUP LTD.
a Bermuda corporation
By: /s/ XXXXX XXXXXXXX
-------------------------------
Xxxxx Xxxxxxxx, President
and Chief Executive Officer
[Signature page to Investor Rights Agreement dated September 10, 1999]
[Shareholder signature pages intentionally omitted]
