REGISTRATION RIGHTS AGREEMENT
BY AND AMONG
YURIE SYSTEMS, INC.
AND
CERTAIN SHAREHOLDERS OF
DATA LABS, INC.
DATED AS OF DECEMBER 1, 1997
TABLE OF CONTENTS
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Page
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1. CERTAIN DEFINITIONS................................................ 1
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2. REGISTRATION RIGHTS................................................ 2
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2.1. Required Registration......................................... 2
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2.2. Piggyback Registrations....................................... 4
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2.3. Allocation of Securities Included in Registration Statement... 5
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2.4. Registration Procedures....................................... 6
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2.5. Registration Expenses......................................... 10
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2.6. Certain Limitations on Registration Rights.................... 10
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2.7. No Required Sale.............................................. 11
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2.8. Indemnification............................................... 11
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3. PIGGYBACK UNDERWRITTEN OFFERINGS................................... 14
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4. GENERAL............................................................ 15
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4.1. Recapitalizations, Exchanges, etc., Affecting Merger Shares... 15
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4.2. Rule 144...................................................... 15
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4.3. Nominees for Beneficial Owners................................ 16
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4.4. Amendments and Waivers........................................ 16
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4.5. Notices....................................................... 16
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4.6. Miscellaneous................................................. 17
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4.7. Prior Agreements.............................................. 18
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4.8. No Inconsistent Agreements.................................... 19
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4.9. Third-Party Beneficiaries..................................... 19
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4.10. Designation of Shareholder Counsel........................... 19
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REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement"), dated as of
December 1, 1997, by and between Yurie Systems, Inc., a Delaware corporation
(the "Company"), and certain shareholders of Data Labs, Inc., a Delaware
corporation ("Data Labs"), listed on Exhibit A hereto (collectively, the
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"Representative Shareholders").
WHEREAS, the Company has entered into a merger agreement, dated as of
December 1, 1997 (the "Merger Agreement") by and among the Company, Xxxxxx
Acquisition Corporation and Data Labs, pursuant to which the shareholders of
Data Labs listed on Exhibit B hereto (the "Shareholders") will receive shares of
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common stock of the Company; and
WHEREAS, it is a condition precedent to the consummation of the
transactions contemplated by the Merger Agreement that the Company enter into
this Agreement for the purpose of granting certain rights with respect to
registering under the Securities Act of 1933, as amended, the common stock and
common stock equivalents issuable pursuant to the Merger Agreement
NOW, THEREFORE, in consideration of these premises and the mutual
agreements, provisions and covenants contained in this Agreement, and certain
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereby agree as follows:
1. CERTAIN DEFINITIONS.
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As used in this Agreement, the following terms shall have the
following meanings:
"COMMISSION" means the Securities and Exchange Commission or any other
federal agency at the time administering the Securities Act.
"COMMON STOCK" means the Common Stock, $.01 par value per share, of
the Company and warrants to acquire shares of such Common Stock, and any equity
securities issued or issuable with respect to the Common Stock in connection
with a reclassification, recapitalization, merger, consolidation or other
reorganization of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, and the
rules and regulations of the Commission promulgated thereunder, all as the same
shall be in effect from time to time.
"MERGER SHARES" means any (i) shares of Common Stock issued in
connection with the Merger Agreement to any Shareholder for shares of stock of
Data Labs (including the shares of Common Stock placed in escrow pursuant to the
Merger Agreement), (ii) shares of Common Stock issued or issuable upon exercise
of any warrants to purchase shares of Common Stock held as of the Effective Date
by any Shareholder, and (iii) any shares of Common Stock issued or issuable,
directly or indirectly, with respect to the Common Stock referenced in clauses
(i) or (ii), above by way of stock dividend, stock split or combination of
shares. Such shares of Common Stock shall continue to be Merger Shares until
(x) such shares have been disposed of in accordance with a registration
statement made effective in accordance with the terms of this Agreement; (y)
such shares are eligible for disposition pursuant to Rule 144 (or any successor
provision to Rule 144), or (z) such shares have been otherwise transferred or
disposed of pursuant to an applicable exemption under the Securities Act and new
certificates for such shares that do not bear legends restricting further
transfer have been delivered by the Company or its transfer agent.
"PERSON" means any individual, corporation, limited liability company,
limited or general partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivisions thereof.
"RULE 144" means Rule 144 promulgated under the Securities Act or any
successor rule thereto or any complementary rule thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission thereunder, all as the same shall be in
effect from time to time.
2. REGISTRATION RIGHTS.
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2.1. Required Registration.
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(a) (i) Not later than January 15, 1998, the Company shall
file such amendments to its registration statement on Form S-1 under the
Securities Act or file a new registration statement on Form S-1, if required by
the rules promulgated pursuant to the Securities Act, which registration
statement shall be a shelf registration pursuant to Rule 415 of the Securities
Act providing for the registration of the Merger Shares for resale. On or after
February 5, 1998, the Company may convert such registration statement filed
pursuant to this Section 2.1 into a registration statement on Form S-3 under the
Securities Act, provided, however, that, to the extent permitted by the
securities laws, the Company shall not withdraw the registration statement filed
on Form S-1 until
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the new registration statement is effective (the registration statements on Form
S-1 and S-3 are collectively referred to herein as the "Registration
Statement").
(ii) The Company may, at its option, register additional shares of
Common Stock on the Registration Statement (x) on behalf of shareholders of the
Company; or (y) in connection with a primary offering of Common Stock by the
Company; provided, however, that the inclusion of such additional shares will
not delay the filing of the Registration Statement or limit the Company's
obligations to the Shareholders under this Agreement.
(iii) The Company shall use its best efforts to cause the
Registration Statement to become effective as soon as possible, but not later
than the earlier of (x) February 20, 1998 and (y) the date on which the combined
financial results of the Company and Data Labs are filed pursuant to Section 5.3
of the Merger Agreement. The Company's obligation to maintain the effectiveness
of the Registration Statement shall terminate on December 7, 1998, or such
earlier time as there are no remaining Merger Shares.
(b) (i) If, after the Registration Statement becomes effective, the
Board of Directors of the Company, in its good faith judgment, determines that
any registration of Merger Shares should not be continued because it would
materially interfere with any underwritten offering by the Company or material
merger or acquisition (which merger or acquisition would be required to be
reported pursuant to Item 2 or Item 5 of Form 8-K) (a "Valid Business Reason"),
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the Company may cause the Registration Statement to be withdrawn and its
effectiveness terminated, or may postpone amending or supplementing such
Registration Statement until such Valid Business Reason no longer exists, but in
no event for more than one (1) month (such period of postponement or withdrawal,
the "Postponement Period"); and the Company shall give written notice of its
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determination to postpone or withdraw the Registration Statement and of the fact
that the Valid Business Reason for such postponement or withdrawal no longer
exists, in each case, promptly after the occurrence thereof; provided, however,
that (x) the Company shall not be permitted to postpone or withdraw a
registration statement within six (6) months after the expiration of any
Postponement Period, and (y) the Company must similarly postpone or withdraw all
registration statements for the resale of the Company's Common Stock by Persons
other than the Company.
(ii) Each Shareholder agrees that, upon receipt of any notice from
the Company that the Company has determined to withdraw the Registration
Statement pursuant to clause (b)(i) above, such Shareholder will discontinue any
disposition of Merger Shares pursuant to the Registration Statement and, if so
directed by the Company, will deliver to the Company (at the Company's expense)
all copies, other than permanent
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file copies, then in such Shareholder's possession of the prospectus covering
such Merger Shares that was in effect at the time of receipt of such notice.
(iii) If the Company shall give any notice of withdrawal or
postponement of the Registration Statement pursuant to clause (b)(i) above, the
Company shall, at such time as the Valid Business Reason that caused such
withdrawal or postponement no longer exists (but in no event later than one (1)
month after the date of the postponement or withdrawal), use its best efforts to
effect the registration under the Securities Act of the Merger Shares. If the
Company shall have withdrawn or prematurely terminated a registration statement
filed under Section 2.1 as a result of any stop order, injunction or other order
or requirement of the Commission or any other governmental agency or court, the
Company shall as soon as possible use its best efforts to effect the
registration under the Securities Act of Merger Shares covered by the withdrawn
or postponed registration statement in accordance with this Section 2.1.
2.2. Piggyback Registrations.
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(a) If, at any time prior to December 1, 1998 or the earlier
termination of the Company's obligations under Section 2.1(a)(iii), the Company
proposes or is required to register any of its equity securities under the
Securities Act (other than pursuant to (i) registrations on such form or similar
form(s) solely for registration of securities in connection with an employee
benefit plan or dividend reinvestment plan or a merger or consolidation or (ii)
a registration under Section 2.1) on a registration statement on Form S-1, Form
S-2 or Form S-3 (or an equivalent general registration form then in effect),
whether or not for its own account, the Company shall give prompt written notice
of its intention to do so to one (1) counsel for the Shareholders designated in
Section 4.11 hereof (the "Shareholder Counsel"). Upon the written request of
the Shareholder Counsel, made within 10 days following the receipt of any such
notice (which request shall specify each Shareholder who wishes to exercise
piggyback rights and the maximum number of Merger Shares intended to be disposed
of by each such Shareholder), the Company shall, subject to Sections 2.2(b), 2.3
and 2.6 hereof, use its best efforts to cause all Merger Shares identified in
the Shareholder Counsel's notice to be registered under the Securities Act (with
the securities which the Company at the time proposes to register) to permit the
sale or other disposition by such Shareholders of the Merger Shares to be so
registered. There is no limitation on the number of such piggyback
registrations pursuant to the preceding sentence which the Company is obligated
to effect. No registration effected under this Section 2.2(a) shall relieve the
Company of its obligations to cause the Registration Statement to become
effective.
(b) If, at any time after giving notice of its intention to register
any equity securities and prior to the effective date of the registration
statement filed in connection with such registration, the Company shall
determine for any reason not to register or to delay registration of such equity
securities, the Company may, at its election, give notice of such determination
to the Shareholder Counsel and (i) in the case of a determination not to
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register, shall be relieved of its obligation to register any Merger Shares in
connection with such abandoned registration, without prejudice, however, to the
rights of the Shareholders under Section 2.1, and (ii) in the case of a
determination to delay such registration of its equity securities, shall be
permitted to delay the registration of such Merger Shares requested by a
Shareholder to be included therein for the same period as the delay in
registering such other equity securities.
(c) Any Shareholder shall have the right to withdraw its request for
inclusion of its Merger Shares in any registration statement pursuant to this
Section 2.2 by giving written notice to the Company of its request to withdraw;
provided, however, that (i) such request must be made in writing prior to the
earlier of the execution of the underwriting agreement or the execution of the
custody agreement with respect to such registration and (ii) such withdrawal
shall be irrevocable and, after making such withdrawal, a Shareholder shall no
longer have any right to include Merger Shares in the registration as to which
such withdrawal was made.
2.3. Allocation of Securities Included in Registration Statement.
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If any registration pursuant to Section 2.2(a) involves an
underwritten offering, and the lead underwriter of such offering shall advise
the Company that, in its view, the number of securities requested to be included
in such registration by the Shareholders or by the Company exceeds the largest
number that can be sold in an orderly manner in such offering within a price
range acceptable to the Company, the Company shall include in such registration:
(a) first, all Common Stock that the Company proposes to register for
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its own account;
(b) second, all Common Stock requested to be registered by any
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shareholder(s) of the Company who have exercised their demand registration
rights under registration rights agreements with the Company;
(c) third, all Common Stock requested to be registered by any
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shareholders of the Company, other than the Shareholders, who have exercised
their piggyback registration rights with respect to such offering, in accordance
with the terms of the registration rights agreements pursuant to which such
registration rights are granted; and
(d) fourth, all Common Stock requested to be registered by the
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Shareholder, allocated on a pro rata basis among all Shareholders requesting
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that Merger
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Shares be included in such registration, based on the number of Merger Shares
then owned by each Shareholder requesting inclusion in relation to the number of
Merger Shares then owned by all Shareholders requesting inclusion.
2.4. Registration Procedures.
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If and whenever the Company is required by the provisions of this
Agreement to use its best efforts to effect or cause the registration of any
Merger Shares under the Securities Act as provided in this Agreement, the
Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement on
an appropriate registration form of the Commission for the disposition of such
Merger Shares, which form (i) shall be selected by the Company and (ii) shall be
available for the sale of the Merger Shares by the Shareholders, and such
registration statement shall comply as to form in all material respects with the
requirements of the applicable form and include all financial statements
required by the Commission to be filed therewith, and the Company shall use its
best efforts to cause such registration statement to become and remain effective
for the time periods set forth in subsection (b) of this Section 2.4; provided,
however, that before filing a registration statement or prospectus or any
amendments or supplements thereto, or comparable statements under securities or
blue sky laws of any jurisdiction, the Company will furnish to the Shareholder
Counsel copies of all such documents proposed to be filed (including all
exhibits thereto), which documents will be subject to the reasonable review and
reasonable comment of such counsel, and the Company shall not file any
registration statement or amendment thereto or any prospectus or supplement
thereto to which the Shareholder Counsel shall reasonably object in writing;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
a period not to exceed one (1) year and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all Merger
Shares covered by such registration statement in accordance with the intended
methods of disposition by the seller or sellers thereof set forth in such
registration statement;
(c) furnish, without charge, to each seller of such Merger Shares such
number of copies of such registration statement, each amendment and supplement
thereto (in each case including all exhibits), and the prospectus included in
such registration statement (including each preliminary prospectus, if any) in
conformity with the requirements of the Securities Act, and other documents, as
such seller may reasonably request in order to facilitate the public sale or
other disposition of the Merger Shares
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owned by such seller (the Company hereby consenting to the use in accordance
with applicable law of each such registration statement (or amendment or post-
effective amendment thereto) and each such prospectus (or preliminary
prospectus, if any, or supplement thereto) by each such seller of Merger Shares
in connection with the offering and sale of the Merger Shares covered by such
registration statement or prospectus);
(d) register or qualify the Merger Shares covered by such registration
statement under such other securities or "blue sky" laws of such jurisdictions
as any sellers of Merger Shares shall reasonably request, and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such sellers to consummate the disposition of the Merger Shares in such
jurisdictions, except that in no event shall the Company be required to qualify
to do business as a foreign corporation in any jurisdiction where it would not,
but for the requirements of this paragraph (d), be required to be so qualified,
to subject itself to taxation in any such jurisdiction or to consent to general
service of process in any such jurisdiction;
(e) promptly notify the Shareholder Counsel: (i) when the
registration statement, any pre-effective amendment, the prospectus or any
prospectus supplement related thereto or post-effective amendment to the
registration statement has been filed and, with respect to the registration
statement or any post-effective amendment, when the same has become effective;
(ii) of any request by the Commission or state securities authority for
amendments or supplements to the registration statement or the prospectus
related thereto or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the registration
statement or the initiation of any proceedings for that purpose; (iv) of the
receipt by the Company of any notification with respect to the suspension of the
qualification of any Merger Shares for sale under the securities or blue sky
laws of any jurisdiction or the initiation of any proceeding for such purpose;
(v) of the existence of any fact of which the Company becomes aware which
results in the registration statement, the prospectus related thereto or any
document incorporated therein by reference containing an untrue statement of a
material fact or omitting to state a material fact required to be stated therein
or necessary to make any statement therein not misleading; and (vi) if at any
time the representations and warranties contemplated by Section 3 below cease to
be true and correct in any material respect; and, if the notification relates to
an event described in clause (v), the Company shall promptly prepare and furnish
to each such seller a reasonable number of copies of a prospectus supplemented
or amended so that, as thereafter delivered to the purchasers of such Merger
Shares, such prospectus shall not include an untrue statement of a material fact
or omit to state 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;
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(f) comply with the Exchange Act, the Securities Act and all
applicable rules and regulations of the Commission, and make generally available
to its security holders, as soon as reasonably practicable after the effective
date of the registration statement, an earnings statement (which need not be
audited) covering the period of at least twelve consecutive months beginning
with the first day of the Company's first calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(g) (i) cause all such Merger Shares covered by such registration
statement to be listed or qualified on the principal securities market or
exchange on which similar securities issued by the Company are then listed (if
any), if the listing or qualification of such Merger Shares is then permitted
under the rules of such market or exchange, or (ii) if no similar securities are
then so listed, to either cause all such Merger Shares to be listed on a
national securities exchange or to secure designation of all such Merger Shares
as a Nasdaq "national market system security" within the meaning of Rule 11Aa2-1
of the Commission or, failing that, secure Nasdaq authorization for such shares
and, without limiting the generality of the foregoing, take all actions that may
be required by the Company as the issuer of such Merger Shares in order to
facilitate the managing underwriter's arranging for the registration of at least
two market makers as such with respect to such shares with the National
Association of Securities Dealers, Inc. (the "NASD");
(h) provide and cause to be maintained a transfer agent and registrar
for all such Merger Shares covered by such registration statement not later than
the effective date of such registration statement;
(i) if required, obtain an opinion from the Company's counsel and a
"cold comfort" letter from the Company's independent public accountants in
customary form and covering such matters as are customarily covered by such
opinions and "cold comfort" letters, which opinion and letter shall be
reasonably satisfactory to the Shareholder Counsel;
(j) deliver promptly to the Shareholder Counsel copies of all
correspondence between the Commission and the Company, its counsel or auditors
and all memoranda relating to discussions with the Commission or its staff with
respect to the registration statement, and, upon receipt of such confidentiality
agreements as the Company may reasonably request, make reasonably available for
inspection by any seller of such Merger Shares covered by such registration
statement participating in any disposition to be effected pursuant to such
registration statement and by any attorney, accountant or other agent retained
by any such seller, all pertinent financial and other records, pertinent
corporate documents and properties of the Company, and cause all of
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the Company's officers, directors and employees to supply all information
reasonably requested by any such seller, attorney, accountant or agent in
connection with such registration statement;
(k) use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement;
(l) within a reasonable time prior to the filing of any registration
statement, any related prospectus, any amendment to such a registration
statement or amendment or supplement to such a prospectus, provide copies of
such document to the Shareholder Counsel; invite the Shareholder Counsel to
attend drafting sessions (if any) with respect to such documents, make such
reasonable changes in any such document prior to or after the filing thereof as
the Shareholder Counsel may reasonably request, provided that such changes shall
not (x) unreasonably delay the filing of such document or (y) unreasonably
interfere with the good faith judgment of the Company and its counsel with
respect to disclosures made in such documents about the Company, and make
available for discussion of such document such of the representatives of the
Company as shall be reasonably requested by the Shareholder Counsel;
(m) upon request, at least one (1) day prior to the filing of any
document which is to be incorporated by reference into the registration
statement or the prospectus (after the initial filing of such registration
statement) provide copies of such document to the Shareholder Counsel, and make
the Company's representatives reasonably available for discussion of such
document;
(n) cooperate with the selling holders of Merger Shares to facilitate
the timely preparation and delivery of certificates not bearing any restrictive
legends representing the Merger Shares to be sold, and cause such Merger Shares
to be issued in such denominations and registered in such names in accordance
with the written instructions of the selling holders of Merger Shares at least
three (3) business days prior to any sale of Merger Shares; and
(o) take all such other commercially reasonable actions the Company
deems necessary or advisable in order to expedite or facilitate the disposition
of such Merger Shares.
The Company may require as a condition precedent to the Company's
obligations under this Section 2.4 that each seller of Merger Shares as to which
any registration is being effected furnish the Company such information
regarding such seller and the distribution of such securities as required by the
Securities Act and as the Company may from time to time reasonably request
provided that such information shall be used only in connection with such
registration.
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Each Shareholder agrees that promptly after receipt of any notice from
the Company of the happening of any event of the kind described in clause (v) of
paragraph (e) of this Section 2.4, such Shareholder will discontinue its
disposition of Merger Shares pursuant to the registration statement covering
such Merger Shares until such Shareholder's receipt of the copies of the
supplemented or amended prospectus contemplated by paragraph (e) of this Section
2.4 and, if so directed by the Company, will deliver to the Company (at the
Company's expense) all copies, other than permanent file copies, then in such
Shareholder's possession of the prospectus covering such Merger Shares that was
in effect at the time of receipt of such notice. In the event the Company shall
give any such notice, the applicable period mentioned in paragraph (b) of this
Section 2.4 shall be extended by the number of days during such period from and
including the date of the giving of such notice to and including the date when
each seller of any Merger Shares covered by such registration statement shall
have received the copies of the supplemented or amended prospectus contemplated
by paragraph (e) of this Section 2.4.
2.5. Registration Expenses.
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All expenses incurred by the Company in complying with this
Article 2, including, without limitation, all registration and filing fees
(including all expenses incident to filings with the Nasdaq or other exchange),
fees and expenses of complying with securities and blue sky laws, printing
expenses, fees and expenses of the Company's counsel and accountants, and the
fees and disbursements of all independent public accountants (including the
expenses of any audit and/or "cold comfort" letter) shall be paid by the
Company; provided, however, that (i) all underwriting discounts and selling
commissions applicable to the Merger Shares, shall be borne by the seller or
sellers thereof, in proportion to the number of Merger Shares sold by such
seller or sellers, and (ii) each seller of Merger Shares shall pay the
attorneys' fees and expenses of any attorney retained by such seller in
connection with the registration.
2.6. Certain Limitations on Registration Rights.
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In the case of a registration under Section 2.2 if the Company
has determined to enter into an underwriting agreement in connection therewith,
all securities to be included in such registration shall be subject to an
underwriting agreement and no Person may participate in such registration unless
such Person agrees to sell such Person's securities on the basis provided
therein and completes and executes all reasonable questionnaires and other
documents (including custody agreements and powers of attorney) which must be
executed in connection therewith, and provides such other information to the
Company or the underwriter as may be necessary to register such Person's
securities.
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2.7. No Required Sale.
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Nothing in this Agreement shall be deemed to create an
independent obligation on the part of any Shareholder to sell any Merger Shares
pursuant to any effective registration statement.
2.8. Indemnification.
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(a) In the event of any registration of any securities of the
Company under the Securities Act pursuant to this Article 2, the Company will,
and hereby does, indemnify and hold harmless, to the fullest extent permitted by
law, each seller of Merger Shares, its directors, officers, fiduciaries,
employees and shareholders or general and limited partners (and the directors,
officers, employees, shareholders and partners thereof), in the sale of such
securities, and each other Person, if any, who controls such seller within the
meaning of the Securities Act, against any and all losses, claims, damages or
liabilities, joint or several, actions or proceedings (whether commenced or
threatened) in respect thereof ("Claims") and expenses (including reasonable
fees of counsel and any amounts paid in any settlement effected with the
Company's consent, which consent shall not be unreasonably withheld) to which
each such indemnified party may become subject under the Securities Act,
Exchange Act or otherwise, insofar as such Claims or expenses arise out of or
are based upon (i) any untrue statement or alleged untrue statement of a
material fact contained in any registration statement, together with the
documents incorporated by reference therein, under which such securities were
registered under the Securities Act or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, (ii) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary, final or summary
prospectus or any amendment or supplement thereto, together with the documents
incorporated by reference therein, or the omission or alleged omission to state
therein a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, or (iii) any violation by the Company or its
affiliates of any federal, state or common law, rule or regulation applicable to
the Company or its affiliates and relating to action required of or inaction by
the Company or its affiliates in connection with any such registration, and the
Company will promptly reimburse any such indemnified party for any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such Claim as such expenses are incurred;
provided, however, that the Company shall not be liable to any such indemnified
party in any such case to the extent such Claim or expense arises out of or is
based upon any untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact made in such registration
statement or amendment thereof or supplement thereto or in any such prospectus
or any preliminary,
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final or summary prospectus in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
such indemnified party specifically for use therein. Such indemnity and
reimbursement of expenses shall remain in full force and effect regardless of
any investigation made by as on behalf of such indemnified party and shall
survive the transfer of such securities by such seller.
(b) Each Representative Shareholder that holds Merger Shares
that are registered in a registration statement pursuant to Section 2.1 or 2.2
of this Agreement shall, severally and not jointly, indemnify and hold harmless
(in the same manner and to the same extent as set forth in paragraph (a) of this
Section 2.8) to the extent permitted by law the Company, its officers,
directors, fiduciaries, employees and shareholders, and each Person controlling
the Company within the meaning of the Securities Act and all other prospective
sellers and their directors, officers and respective controlling Persons, with
respect to any untrue statement or alleged untrue statement of any material fact
in, or omission or alleged omission of any material fact from, such registration
statement, any preliminary, final or summary prospectus contained therein, or
any amendment or supplement thereto, if such statement or alleged statement or
omission or alleged omission was made in reliance upon and in conformity with
information furnished to the Company or its representatives by or on behalf of
such Shareholder specifically for use therein and reimburse such indemnified
party for any legal or other expenses reasonably incurred in connection with
investigating or defending any such Claim as such expenses are incurred;
provided, however, that the aggregate amount which any such seller of Merger
Shares shall be required to pay pursuant to this Section 2.8 shall in no case be
greater than the amount of the net proceeds received by such Person upon the
sale of the Merger Shares pursuant to the registration statement giving rise to
such claim. Such indemnity and reimbursement of expenses shall remain in full
force and effect regardless of any investigation made by or on behalf of such
indemnified party and shall survive the transfer of such securities by such
seller of Merger Shares.
(c) Indemnification similar to that specified in the preceding
paragraphs (a) and (b) of this Section 2.8 (with appropriate modifications)
shall be given by the Company and each seller of Merger Shares with respect to
any required registration or other qualification of securities under any state
securities and "blue sky" laws.
(d) Any Person entitled to indemnification under this Agreement
shall notify promptly the indemnifying party in writing of the commencement of
any action or proceeding with respect to which a claim for indemnification may
be made pursuant to this Section 2.8, but the failure of any indemnified party
to provide such notice shall not relieve the indemnifying party of its
obligations under the preceding paragraphs of this Section 2.8, except to the
extent the indemnifying party is materially prejudiced thereby
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and shall not relieve the indemnifying party from any liability which it may
have to any indemnified party otherwise than under this Article 2. In case any
action or proceeding is brought against an indemnified party and it shall notify
the indemnifying party of the commencement thereof, the indemnifying party shall
be entitled to participate therein and, unless in the reasonable opinion of
outside counsel to the indemnified party a conflict of interest between such
indemnified and indemnifying parties may exist in respect of such claim, to
assume the defense thereof jointly with any other indemnifying party similarly
notified, to the extent that it chooses, with counsel reasonably satisfactory to
such indemnified party, and after notice from the indemnifying party to such
indemnified party that it so chooses, the indemnifying party shall not be liable
to such indemnified party for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that (i) if the
indemnifying party fails to take reasonable steps necessary to defend diligently
the action or proceeding within 20 days after receiving notice from such
indemnified party that the indemnified party believes it has failed to do so; or
(ii) if such indemnified party who is a defendant in any action or proceeding
which is also brought against the indemnifying party reasonably shall have
concluded that there may be one or more legal defenses available to such
indemnified party which are not available to the indemnifying party; or (iii) if
representation of both parties by the same counsel is otherwise inappropriate
under applicable standards of professional conduct, then, in any such case, the
indemnified party shall have the right to assume or continue its own defense as
set forth above (but with no more than one firm of counsel for all indemnified
parties in each jurisdiction, except to the extent any indemnified party or
parties reasonably shall have concluded that there may be legal defenses
available to such party or parties which are not available to the other
indemnified parties or to the extent representation of all indemnified parties
by the same counsel is otherwise inappropriate under applicable standards of
professional conduct) and the indemnifying party shall be liable for any
expenses therefor. No indemnifying party shall, without the written consent of
the indemnified party, effect the settlement or compromise of, or consent to the
entry of any judgment with respect to, any pending or threatened action or claim
in respect of which indemnification or contribution may be sought hereunder
(whether or not the indemnified party is an actual or potential party to such
action or claim) unless such settlement, compromise or judgment (A) includes an
unconditional release of the indemnified party from all liability arising out of
such action or claim and (B) does not include a statement as to or an admission
of fault, culpability or a failure to act, by or on behalf of any indemnified
party.
(e) If for any reason the foregoing indemnity is unavailable or
is insufficient to hold harmless an indemnified party under Sections 2.8(a), (b)
or (c), then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of any Claim in such proportion as
is appropriate to reflect
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the relative fault of the indemnifying party, on the one hand, and the
indemnified party, on the other hand, with respect to such offering of
securities. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such untrue statement or omission. If, however, the allocation provided
in the second preceding sentence is not permitted by applicable law, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party in such proportion as is appropriate to reflect not only such
relative faults but also the relative benefits of the indemnifying party and the
indemnified party as well as any other relevant equitable considerations. The
parties hereto agree that it would not be just and equitable if contributions
pursuant to this Section 2.8(e) were to be determined by pro rata allocation or
by any other method of allocation which does not take account of the equitable
considerations referred to in the preceding sentences of this Section 2.8(e).
The amount paid or payable in respect of any Claim shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such Claim. No Person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any Person who was not
guilty of such fraudulent misrepresentation. Notwithstanding anything in this
Section 2.8 to the contrary, no indemnifying party (other than the Company)
shall be required pursuant to this Section 2.8 to contribute any amount in
excess of the net proceeds received by such indemnifying party from the sale of
the Merger Shares in the offering to which the Claims of the indemnified parties
relate, less the amount of any indemnification payment made by such indemnifying
party pursuant to Sections 2.8(b) and (c).
(f) The indemnity agreements contained herein shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made or
omitted by or on behalf of any indemnified party and shall survive the
disposition of Merger Shares by any Shareholder.
(g) The indemnification and contribution required by this
Section 2.8 shall be made by periodic payments of the amount thereof during the
course of the investigation or defense, as and when bills are received or
expense, loss, damage or liability is incurred.
3. PIGGYBACK UNDERWRITTEN OFFERINGS.
--------------------------------
In the case of a registration pursuant to Section 2.2 hereof, if the
Company shall have determined to enter into an underwriting agreement in
connection therewith, all of
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the Merger Shares to be included in such registration shall be subject to such
underwriting agreement. Any Shareholder participating in such registration may,
at its option, require that any or all of the representations and warranties by,
and the other agreements on the part of, the Company to and for the benefit of
such underwriters shall also be made to and for the benefit of such Shareholders
and that any or all of the conditions precedent to the obligations of such
underwriters under such underwriting agreement be conditions precedent to the
obligations of such Shareholders. Such underwriting agreement shall also contain
such representations and warranties by the participating Shareholders as are
customary in agreements of that type.
4. GENERAL.
--------
4.1. Recapitalizations, Exchanges, etc., Affecting Merger Shares
-----------------------------------------------------------
The provisions of this Agreement shall, to the extent reasonably
practicable, apply, to the full extent set forth herein with respect to the
Merger Shares, to any and all securities or capital stock (of the Company or any
successor to the Company and/or any other issuer thereof) which may be issued in
respect of, in exchange for, or in substitution of such Merger Shares, by reason
of, and shall be appropriately adjusted to reflect, any stock dividend, stock
split, reverse stock split, combination, recapitalization, reclassification,
merger, consolidation or otherwise. The adjustments contemplated by this
paragraph shall be made cumulative with respect to all such transactions
contemplated by this Section that occur from time to time. Any issuer of any
such securities other than the Company shall be required to assume in writing,
to the extent relevant, the Company's obligations with respect to the
registration rights granted hereunder or enter into a registration rights
agreement substantially similar to this Agreement and giving effect to the
allocations and adjustments contemplated by this Section, in connection with any
such transaction pursuant to which the Shareholders shall receive securities of
such issuer, as contemplated by this Section.
4.2. Rule 144.
--------
The Company covenants that (i) so long as it remains subject to the
reporting provisions of the Exchange Act, it will timely file the reports
required to be filed by it under the Securities Act or the Exchange Act
(including, but not limited to, the reports under Sections 13 and 15(d) of the
Exchange Act referred to in subparagraph (c)(1) of Rule 144 under the Securities
Act), and (ii) will take such further action as any Shareholder may reasonably
request, all to the extent required from time to time to enable such Shareholder
to sell Merger Shares without registration under the Securities Act within the
limitation of the exemptions provided by (A) Rules 144 and 145 under the
Securities Act, as such Rules may be amended from time to time, or (B) any
similar rule or regulation hereafter adopted by the Commission. Upon the
request of any Shareholder,
-15-
the Company will deliver to such Shareholder a written statement as to whether
it has complied with such requirements.
4.3. Nominees for Beneficial Owners.
------------------------------
If Merger Shares are held by a nominee for the beneficial owner
thereof, the beneficial owner thereof may, at its option, be treated as the
holder of such Merger Shares for purposes of any request or other action by any
Shareholder pursuant to this Agreement (or any determination of any number or
percentage of shares constituting Merger Shares held by any Shareholder(s)
contemplated by this Agreement), provided that the Company shall have received
assurances reasonably satisfactory to it of such beneficial ownership.
4.4. Amendments and Waivers.
----------------------
This Agreement may be amended, modified, supplemented or waived only
upon the written agreement of the Company and the Representative Shareholders.
4.5. Notices.
-------
All notices, demands, requests or other communications that may be or
are required to be given, served or sent by any party to any other party
pursuant to this Agreement shall be in writing (and shall be deemed to have been
duly given upon receipt) and shall be mailed by first-class, overnight,
registered or certified mail, return receipt requested, postage prepaid, or
transmitted by hand delivery or facsimile transmission, addressed as follows:
(i) if to the Company:
Yurie Systems, Inc.
0000 Xxxxxxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxx 00000
Attn: Xxxx X. XxXxxxxxx, Esq.
Facsimile: 000-000-0000
with a copy to:
Fried, Frank, Harris, Xxxxxxx & Xxxxxxxx
0000 Xxxxxxxxxxxx Xxx., X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxxxxx X. Xxxxxxxxxxxx, Esq.
Facsimile: 000-000-0000
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(ii) if to any of the Shareholders, to the
addresses set forth on Exhibit B.
----------
with a copy to:
Xxxxxx, Flyer & Xxxxx
0000 X Xx., X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx, Esq.
(iii) if to the Shareholder Counsel:
Xxxxxx, Flyer & Xxxxx
0000 X Xx., X.X.
Xxxxx 000
Xxxxxxxxxx, X.X. 00000
Attn: Xxxx X. Xxxxx, Esq.
Each party may designate by notice in writing a new address to which any notice,
demand, request or communication may thereafter be so given, served or sent.
Each notice, demand, request or communication that is mailed, delivered or
transmitted in the manner described above shall be deemed sufficiently given,
served, sent and received for all purposes at such time as it is delivered to
the addressee (with the return receipt, the delivery receipt or the affidavit of
messenger being deemed conclusive evidence of such delivery) or at such time as
delivery is refused by the addressee upon presentation.
4.6. Miscellaneous.
-------------
(a) This Agreement shall be binding upon and inure to the benefit of
and be enforceable by the parties hereto and the respective successors, personal
representatives and assigns of the parties hereto, whether so expressed or not;
provided, however, that the registration rights granted pursuant to this
Agreement shall not be transferred with the transfer of shares of Common Stock
held by the Shareholders unless: (i) such shares of Common Stock are Merger
Shares; (ii) the transferee of such Merger Shares agrees in writing to be bound
by the provisions of this Agreement; and (iii) for the purposes any notice
provision contained in this Agreement, notice to the Shareholder Counsel or, if
required, to the persons at the addresses listed on Exhibits A and B hereto
shall constitute any notice that such transferee may be entitled to under this
Agreement.
-17-
(b) This Agreement and the Merger Agreement (with the documents
referred to herein or therein or delivered pursuant hereto or thereto) embody
the entire agreement and understanding between the parties hereto and supersede
all prior agreements and understandings relating to the subject matter hereof.
(c) This Agreement shall be construed and enforced in accordance with
and governed by the laws of the State of Delaware without giving effect to the
conflicts of law principles thereof.
(d) The headings in this Agreement are for convenience of reference
only and shall not limit or otherwise affect the meaning hereof. All section
references are to this Agreement unless otherwise expressly provided.
(e) 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.
(f) Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms and provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
(g) The parties hereto acknowledge that there would be no adequate
remedy at law if any party fails to perform any of its obligations hereunder,
and accordingly agree that each party, in addition to any other remedy to which
it may be entitled at law or in equity, shall be entitled to injunctive relief,
including specific performance, to enforce such obligations without the posting
of any bond, and, if any action should be brought in equity to enforce any of
the provisions of this Agreement, none of the parties hereto shall raise the
defense that there is an adequate remedy at law.
(h) Each party hereto shall do and perform or cause to be done and
performed all such further acts and things and shall execute and deliver all
such other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
4.7. Prior Agreements.
----------------
Each of the Shareholders agrees that any agreement previously entered
into by it pursuant to which Data Labs granted to any Shareholder any
registration rights shall
-18-
be superseded by this Agreement and each such agreement shall be null and void
and no longer in effect.
4.8. No Inconsistent Agreements.
--------------------------
Neither the Company nor any Shareholder will, on or after the date of
this Agreement, enter into any agreement with respect to its securities which is
inconsistent with the rights granted in this Agreement or may delay the
effectiveness of the Registration Statement or otherwise conflicts with the
provisions hereof. Notwithstanding the foregoing, the Company may grant
registration rights to future shareholders in future registration rights
agreements.
4.9. Third-Party Beneficiaries.
-------------------------
Nothing expressed or implied in this Agreement is intended or shall
be construed to confer upon or give any person, firm or corporation other than
the parties hereto and their permitted successors or assigns any rights or
remedies under or by reason of this Agreement, provided, however, that the
Shareholders listed on Exhibit B hereto shall be third-party beneficiaries to
---------
this Agreement.
4.10. Designation of Shareholder Counsel.
----------------------------------
Each of the Shareholders designates Xxxxxx, Flyer & Xxxxx as
Shareholder Counsel for purposes of this Agreement until such later time as a
majority of the holders of the Merger Shares designate different counsel.
-19-
IN WITNESS WHEREOF, the undersigned have executed this Registration Rights
Agreement as of the date set forth above.
YURIE SYSTEMS, INC.
By:
------------------------------
Name:
Title:
XXXXX XX
-----------------------------------
EDISON VENTURE FUND III, L.P.
By: EDISON PARTNERS III, L.P.
General Partner
By:
------------------------------
BESSEMER VENTURE PARTNERS IV, L.P.
By: DEER IV & CO. LLC
General Partner
By:
------------------------------
-20-
EXHIBIT A
Xxxxx Xx
Edison Venture Fund III, L.P.
Bessemer Venture Partners IV, L.P.
-21-
EXHIBIT B
-22-
