EXHIBIT 4.2
HEADWAY HOLDINGS, INC.
REGISTRATION AND INFORMATION RIGHTS AGREEMENT
This Registration and Information Rights Agreement (the "Agreement") is
made effective as of February 4, 1997, by and among: Headway Holdings, Inc., a
Delaware corporation (the "Company"); and the purchasers (the "Purchasers") of
Series A Preferred Stock of the Company as set forth on Exhibit A hereto.
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RECITALS
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A. Further to the Series A Preferred Stock Purchase Agreement (the
"Purchase Agreement") entered into on February 4, 1997 between the Company and
the Purchasers, the Company and the Purchasers have agreed upon the execution
and delivery of this Agreement by the Company and the Purchasers as a condition
to the closing of the Purchase Agreement.
B. The Company wishes to grant the Purchasers the rights, and subject
the Purchasers to the obligations provided for herein.
AGREEMENT
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NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, all parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
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terms shall have the following respective meanings:
"Commission" means the Securities and Exchange Commission or any other
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Federal agency at the time administering the Securities Act.
"Conversion Stock" means the Common Stock issued or issuable pursuant
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to conversion of the Preferred Stock.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
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or any similar Federal rule or statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Holder" means any Purchaser holding Registrable Securities, or any
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person holding Registrable Securities to whom the rights under this Agreement
have been transferred in accordance with Section 5.10 hereof.
"Initiating Holders" means any Holder or Holders who, in the
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aggregate, hold not less than the required percentage of the Registrable
Securities then outstanding (the "Required Percentage"). The Required
Percentage shall be (i) 30% for the purposes of Section 5.1 or (ii) 20% for the
purposes of Section 5.3 hereof.
"Preferred Stock" shall mean the Series A Preferred Stock.
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"Registrable Securities" means (i) the Conversion Stock and (ii) any
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Common Stock of the Company issued or issuable in respect of any of the
foregoing upon any conversion, stock split, stock dividend, recapitalization, or
similar event; provided, however, that securities shall only be treated as
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Registrable Securities if and so long as (x) they have not been registered or
sold to or through a broker or dealer or underwriter in a public distribution or
a public securities transaction and (y) the registration rights with respect to
such securities have not terminated pursuant to Section 5.11.
The terms "register," "registered" and "registration" refer to a
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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
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stated below, 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).
"Restricted Securities" shall mean the securities of the Company
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required to bear the legends set forth in Section 3 hereof.
"Securities Act" shall mean the Securities Act of 1933, as amended, or
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any similar Federal rule or 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
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commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for any Holder.
2. Restrictions on Transferability. The Preferred Stock, the
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Conversion Stock, and any other securities issued in respect of such stock upon
any stock split, stock dividend, recapitalization, merger, 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 Holder or transferee will cause
any proposed purchaser, assignee, transferee, or pledgee of any such shares held
by the Holder or transferee to
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agree to take and hold such securities subject to the restrictions and upon the
conditions specified in this Agreement, including without limitation the
restrictions set forth in Section 8.
3. Restrictive Legend. Each certificate representing the Preferred Stock,
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the Conversion Stock or any other securities issued in respect of such stock
upon any stock split, stock dividend, recapitalization, merger, 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 legends required by agreement or by applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED, AND HAVE BEEN ACQUIRED FOR
INVESTMENT AND NOT WITH A VIEW TO, OR IN CONNECTION WITH, THE SALE OR
DISTRIBUTION THEREOF. SUCH SHARES GENERALLY 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.
THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO A LOCKUP PERIOD
OF 180-DAYS FOLLOWING THE EFFECTIVE DATE OF A REGISTRATION STATEMENT OF THE
COMPANY FILED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AS SET FORTH IN
AN AGREEMENT BETWEEN THE ISSUER AND THE ORIGINAL HOLDER OF THESE SHARES, A
COPY OF WHICH MAY BE OBTAINED AT THE PRINCIPAL OFFICE OF THE ISSUER. SUCH
LOCKUP PERIOD IS BINDING ON TRANSFEREES OF THESE SHARES.
Each Holder consents to the Company making a notation on its records
and giving instructions to any transfer agent of its capital stock in order to
implement the restrictions on transfer established in this Agreement.
4. Notice of Proposed Transfers. The holder of each certificate
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representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 4. Without in any way limiting the
immediately preceding sentence, no sale, assignment, transfer or pledge of
Restricted Securities shall be made by any holder thereof to any person unless
such person shall first agree in writing to be bound by the restrictions of this
Agreement including, without limitation, Section 8 and this Section 4. Prior to
any proposed sale, assignment, transfer or pledge of any Restricted Securities,
unless there is in effect a registration statement under the Securities Act
covering the proposed transfer, the holder thereof shall give written notice to
the Company of such holder's intention to effect such transfer, sale, assignment
or pledge. Each such notice shall describe
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the manner and circumstances of the proposed transfer, sale, assignment or
pledge in sufficient detail, and, if requested by the Company, the holder shall
also provide, at such holder's expense, either (i) a 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, or (ii) a "no action" letter from the Commission to the
effect that the transfer of such securities without registration will not result
in a recommendation by the staff of the Commission that action be taken with
respect thereto, whereupon the holder of such Restricted Securities shall be
entitled to transfer such Restricted Securities in accordance with the terms of
the notice delivered by the holder to the Company; provided, however, that the
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Company shall not request an opinion of counsel or "no action" letter with
respect to (i) a transfer not involving a change in beneficial ownership, (ii) a
transaction involving the distribution without consideration of Restricted
Securities by the holder to any of its constituent partners or members, or (iii)
a transaction involving the transfer without consideration of Restricted
Securities by an individual holder during such holder's lifetime by way of gift
or on death by will or intestacy. 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 counsel for the Company
such legend is not required in order to establish compliance with any provision
of the Securities Act. Notwithstanding the foregoing, each holder of Restricted
Securities agrees that it will not request that a transfer of the Restricted
Securities be made or that the legend set forth in Section 3 be removed from the
certificate representing the Restricted Securities, solely in reliance on Rule
144(k) if as a result thereof, the Company would be rendered subject to the
reporting requirements of the Exchange Act.
5. Registration.
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5.1 Requested Registration.
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(a) Request for Registration. In case the Company shall receive
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from Initiating Holders a written request that the Company effect any
registration with respect to shares of Registrable Securities, the Company will:
(i) promptly give written notice of the proposed
registration to all other Holders; and
(ii) as soon as practicable, use its best efforts to
effect such registration as part of a firm commitment underwritten public
offering with underwriters reasonably acceptable to the Initiating Holders and
the Company (including, without limitation, appropriate qualification under
applicable 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
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portion of the Registrable Securities of any Holder or Holders joining in such
request by delivering a written notice to such effect to the Company within 20
days after the date of such written notice from the Company.
Notwithstanding the foregoing, the Company shall not be obligated to take
any action to effect or complete any such registration pursuant to this Section
5.1:
(A) Prior to the earlier of (i) six months
after the effective date of the Company's first registered public offering of
its Stock and (ii) the second anniversary of the date of this Agreement;
(B) Unless the aggregate offering price of
all Registrable Securities sought to be registered by all Holders, net of
underwriting discounts and commissions, would exceed $10,000,000;
(C) 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), provided that the Company is actively employing in good
faith all reasonable efforts to cause such registration statement to become
effective;
(D) After the Company has effected two
registrations pursuant to this subparagraph 5.1(a), and such registrations has
been declared or ordered effective; or
(E) If the Company shall furnish to the
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 stockholders for a registration statement to
be filed in the near future. In such case, the Company's obligation to use its
best efforts to register, qualify or comply under this Section 5.1(a) shall be
deferred for a period not to exceed 120 days from the date of receipt of the
written request from the Initiating Holders, provided that the Company may not
exercise this deferral right more than once per twelve month period or twice
during the term of this Agreement.
Subject to the foregoing clauses (A) through (E), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event of a registration pursuant to
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Section 5.1, the Company shall advise the Holders as part of the notice given
pursuant to Section 5.1(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
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Holder's Registrable Securities in the underwriting to the extent requested
shall be limited to the extent provided herein.
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 requesting to be
included in the registration and underwriting and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all Holders requesting to be included in the
registration and underwriting in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by them 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.
5.2 Company Registration.
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(a) Notice of Registration. If at any time or from time to time
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the Company shall determine to register any of its equity securities, either for
its own account or the account of a Holder or other 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 Common Stock issuable upon conversion
of convertible 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
qualifications including compliance with Blue Sky laws), and in any underwriting
involved therein, all the Registrable Securities specified in a written request
or requests, made within 20 days after the date of such written notice from the
Company, by any Holder.
(b) Underwriting. If the registration of which the Company gives
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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.
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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 all shares to be included in
such offering. The Company shall so advise all Holders requesting to be
included in the registration and underwriting and the number of shares of
Registrable Securities that may be included in the registration and underwriting
shall be allocated among all the Holders requesting to be included in the
registration and underwriting in proportion, as nearly as practicable, to the
respective amounts of Registrable Securities held by them at the time of filing
the registration statement. To facilitate the allocation of shares in
accordance with the above provisions, the Company or the underwriters may round
the number of shares allocated to any Holder to the nearest 100 shares. If any
Holder disapproves of the terms of any such underwriting, such person may elect
to withdraw therefrom by written notice to the Company.
(c) Right to Terminate Registration. The Company shall have the right
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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.
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(a) Request for Registration. In case the Company shall receive
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from Initiating Holders a written 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 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,
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however, that the Company shall not be required to effect more than one
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registration pursuant to this Section 5.3 in any twelve (12) month period. If
such offer is to be an underwritten offer, the underwriters must be acceptable
to both the Initiating Holders and the Company. The Company shall inform the
other Holders of the proposed registration and offer them upon at least 20 days
written notice 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(b) 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:
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(i) If the Company, within ten (10) days of the receipt
of the request of the Initiating 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);
(ii) 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), provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective;
(iii) If the Company shall furnish to the 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 stockholders 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
120 days from the receipt of the request to file such registration by such
Initiating Holder or Holders, provided that the Company may not exercise this
deferral right more than once per twelve month period.
5.4 Limitations on Subsequent Registration Rights. The Company shall
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not enter into any agreement granting any holder or prospective holder of any
securities of the Company registration rights superior to or on a pari passu
basis with the rights granted the Holders hereunder without the written consent
of the holders of at least a majority-in-interest of the Registrable Securities.
5.5 Expenses of Registration. All Registration Expenses incurred in
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connection with (i) two registrations pursuant to Section 5.1, (ii) all
registrations pursuant to Section 5.2, and (iii) two registrations pursuant to
Section 5.3 shall be borne by the Company. Notwithstanding the foregoing, in
the event that Initiating Holders cause the Company to begin a registration
pursuant to Section 5.1 or Section 5.3, and the request for such registration is
subsequently withdrawn by the Initiating Holders or such registration is not
completed due to failure to meet the net proceeds requirement set forth in such
section or is otherwise not successfully completed due to no fault of the
Company, all Holders shall be deemed to have forfeited their right to a
registration under Section 5.1, or a registration at the expense of the Company
under Section 5.3, as applicable, unless the Initiating Holders pay for, or
reimburse the Company for, the Registration Expenses incurred in connection with
such withdrawn or incomplete registration. 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 or proposed to be so
registered.
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5.6 Registration Procedures. In the case of each registration
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effected by the Company pursuant to this Agreement, the Company will keep each
Holder advised in writing as to the initiation of such registration and as to
the completion thereof. The Company will:
(a) Prepare and file with the Commission a registration
statement and such amendments and supplements as may be necessary and use its
best efforts to cause such registration statement to become and remain effective
for at least 90 days or until the distribution described in the registration
statement has been completed, whichever first occurs;
(b) Furnish to the Holders participating in such registration
and to the underwriters of the securities being registered such reasonable
number of copies of the registration statement, preliminary prospectus, final
prospectus and such other documents as such underwriters may reasonably request
in order to facilitate the public offering of such securities.
5.7 Indemnification.
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(a) The Company will indemnify each Holder, each of its officers
and directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration
has been effected pursuant to this Agreement, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, or based on any omission (or alleged omission) to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances in which they were made, not
misleading, or any violation by the Company of the Securities Act, the
Securities Exchange Act of 1934, as amended, state securities law or any rule or
regulation promulgated under the such laws applicable to the Company in
connection with any such registration, and the Company will reimburse each such
Holder, each of its officers and directors, and each person controlling such
Holder, 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 an instrument
duly executed by such Holder or controlling person, and stated to be
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 any Holder, if a copy of the Final
Prospectus was not furnished to the person asserting the loss,
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liability, claim or damage at or prior to the time such action is required by
the Securities Act, and if the Final Prospectus would have cured the defect
giving rise to the loss, liability, claim or damage.
(b) Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration is being effected,
indemnify the Company, each of its directors and officers, of the Company's
securities covered by such a registration statement, each person who controls
the Company within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and liabilities (or actions in respect
thereof) arising out of or based on any untrue statement (or alleged untrue
statement) of a material fact contained in any such registration statement,
prospectus, offering circular or other document, or any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse the
Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred, as such
expenses are incurred, in connection with investigating or defending any such
claim, loss, damage, liability or action, but in the case of the Company or the
other Holders or their officers, directors or controlling persons, 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 information
furnished to the Company by such Holder. Notwithstanding the foregoing, the
liability of each Holder under this subsection 5.7(b) shall be limited in an
amount equal to the initial public offering price of the shares sold by such
Holder, unless such liability arises out of or is based on willful misconduct by
such Holder.
(c) Each party entitled to indemnification under this Section 5.7
(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 there are 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 (whose
consent shall not be unreasonably withheld), consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such Indemnified Party of a
release from all liability in respect to such claim or litigation.
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5.8 Information by Holder. The Holder or Holders of Registrable
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Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration
referred to in this Agreement.
5.9 Rule 144 Reporting. With a view to making available the benefits
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of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use 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 a Holder owns any Restricted Securities, to
furnish to the Holder 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 the Holder may reasonably request in availing itself of any rule
or regulation of the Commission allowing the Holder to sell any such securities
without registration.
5.10 Transfer of Registration Rights. The rights to cause the Company
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to register securities granted 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 the Holder provided that: (i) such
transfer is otherwise effected in accordance with applicable securities laws and
the terms of this Agreement, (ii) such assignee or transferee acquires at least
1.43% (as adjusted for stock splits, stock dividends, stock combinations and the
like) of Registrable Securities (including Preferred Stock convertible into
Registrable Securities), (iii) written notice is promptly given to the Company,
(iv) the Board of Directors of the Company reasonably determines that such
transferee is not an actual or potential competitor of the Company; and (v) such
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 without compliance with item (ii) above to (x) any
constituent partner or member of a Holder which is a partnership or limited
liability company, or
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an affiliate (as such term is defined in Rule 405 of the Securities Act) of a
Holder which is a corporation or (y) a family member or trust for the benefit of
a Holder who is an individual, or a trust for the benefit of a family member of
such a Holder.
5.11 Termination of Registration Rights. The rights granted pursuant
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to Sections 5.1, 5.2 and 5.3 of this Agreement shall terminate as to any Holder
upon the earlier of (i) the date seven (7) years after the effective date of the
Company's initial public offering and (ii) such time as a public market for the
Company's Common Stock exists and the Holder may sell all Registrable Securities
held by the Holder within two successive three-month periods under Rule 144.
6. Financial Information and Inspection Rights.
-------------------------------------------
(a) The Company will provide the following reports to each
Holder who continues to hold at least 1.43% of the Registrable Securities:
(i) As soon as practicable after the end of the fiscal
year ending December 28, 1997 and each fiscal year thereafter, and in any event
within 120 days after the end of each such fiscal year, 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 stockholders' 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 (except that no such comparative data from the fiscal
year ended December 29, 1996 need be provided), all in reasonable detail and
audited by independent public accountants of national standing selected by the
Company, 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 45 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 consolidated statements of
cash flows of the Company and its subsidiaries, if any, for such period and for
the current fiscal year to date, prepared in accordance with generally accepted
accounting principles (other than 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 a
capitalization table in reasonable detail for such quarterly period; and
(iii) At least 30 days prior to the beginning of each
fiscal year, commencing with the fiscal year beginning December 29, 1997, a
budget as adopted by the Company's Board of Directors for the fiscal year.
(b) The Company will afford to each Holder who continues to hold
at least 1.43% of the Registrable Securities (as adjusted for stock splits,
stock dividends, stock combinations
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and the like) reasonable access during normal business hours to the Company's
accounting books and records and minutes of proceedings of the stockholders and
the Board of Directors and committees of the Board of Directors, and all
information distributed to the Board of Directors, for a purpose reasonably
related to such Holder's interests as a stockholder of the Company. The Company
shall not be required to disclose details of transactions where to do so would
violate confidentiality obligations of the Company. The Company will afford to
each Holder who continues to hold at least 1.43% of the Registrable Securities
(as adjusted for stock splits, stock dividends, stock combinations and the like)
the right to meet periodically with the Company's executive officers during
normal business hours to discuss and make recommendations regarding the conduct
of the Company's business and affairs.
(c) For purposes of determining the minimum holdings pursuant to
this Section 6, any Holder which is a partnership or limited liability company
shall be deemed to hold any Registrable Securities originally purchased by such
Holder and subsequently distributed to constituent partners or members of such
Holder, but which have not been resold by such partners or members. If the
partnership or limited liability company is still in existence, the Company may
satisfy any obligation to distribute reports to individual partners of the
partnership or members of a limited liability company by delivering a single
copy of each report to the partnership or limited liability company as agent for
the constituent partners or members.
(d) The rights granted pursuant to Section 6 may be assigned to
any transferee in accordance with the provisions of Section 5.10 hereof with
respect to the transfer of Registration Rights.
(e) Each Holder or transferee of rights under this Section 6
acknowledges and agrees that any information obtained pursuant to this Section 6
which may be considered nonpublic information will be maintained in confidence
by such Holder or transferee and will not be utilized by such Holder or
transferee in connection with purchases or sales of the Company's securities
except in compliance with applicable state and Federal securities laws.
(f) The rights of a Holder as set forth in this Section 6 shall
not be subject to amendment under Section 9 hereof or otherwise without the
express consent of the Holder whose rights would be affected by any proposed
amendment of this Section 6.
7. Termination of Covenants. The covenants of the Company set forth
------------------------
above in Section 6 shall terminate and be of no further force or effect upon the
closing 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.
8. Lockup Agreement. Each Holder and transferee hereby agrees that,
----------------
in connection with the first registration of the offering of any securities of
the Company under the Securities Act for the account of the Company, if so
requested by the Company or any representative of the underwriters (the
"Managing Underwriter"), such Holder or transferee shall not sell or otherwise
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transfer any securities of the Company during the period specified by the
Company's Board of Directors at the request of the Managing Underwriter, with
such period not to exceed 180 days, (the "Market Standoff Period") following the
effective date of a registration statement of the Company filed under the
Securities Act. The Company may impose stop-transfer instructions with respect
to securities subject to the foregoing restrictions until the end of such Market
Standoff Period. The Company shall use its reasonable best efforts to place
similar contractual lockup restrictions on all capital stock issued now or
hereafter to officers, directors, employees and consultants of the Company, and
holders of registration rights with respect to capital stock of the Company,
unless determined otherwise by the Company's Board of Directors.
Notwithstanding the foregoing, the provisions of this Section 8 shall not apply
to a registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms which may be promulgated in the future, or a registration
relating solely to a transaction within Rule 145 of the Securities Act on Form
S-4 or similar form which may be promulgated in the future.
9. Amendment. Except as otherwise provided above, 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-in-interest of the Registrable Securities then outstanding, provided,
--------
however, that such amendment or waiver is designed only to, and does effect all-
-------
of the holders of the Registrable Securities equally. Any amendment or waiver
effected in accordance with Section 5.4 or Section 9, as applicable, shall be
binding upon each Purchaser or Holder of Registrable Securities at the time
outstanding, each future holder of any of such securities, and the Company.
10. Governing Law. This Agreement shall be governed in all respects by the
-------------
internal laws of the State of Delaware without regard to conflict of laws
provisions.
11. Entire Agreement. This Agreement constitutes the full and entire
----------------
understanding and Agreement among the parties regarding the matters set forth
herein. 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.
12. Notices, etc. All notices and other communications required or
------------
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by facsimile
transmission, by hand or by messenger, addressed:
(a) if to a Holder, at such Holder's address as set forth in Exhibit
-------
A, or at such other address as such Holder shall have furnished to the Company.
-
-14-
(b) if to the Company, to:
Headway Holdings, Inc.
000 Xxxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
Fax: (000) 000-0000
Attn: Chief Executive Officer
or at such other address as the Company shall have furnished to the Holders.
Each such notice or other communication shall for all purposes of this
Agreement be treated as effective or having been given when delivered if
delivered personally or by facsimile transmission, or, if sent by mail, at the
earlier of its receipt or 72 hours after the same has been deposited in a
regularly maintained receptacle for the deposit of mail, addressed and mailed as
aforesaid.
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.
-15-
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date written below.
Headway Holdings, Inc. HanTech Venture Capital Corporation
a Delaware corporation
By: _____________________________ By: ________________________________
Name:____________________________ Name: ______________________________
Title: __________________________ Title: _____________________________
Date: ___________________________ Date: ______________________________
Asia Pacific Growth Fund II, L.P. Maxtor Corporation
By: _____________________________
its General Partner
By: _____________________________ By: ________________________________
Name:____________________________ Name: ______________________________
Title: __________________________ Title: _____________________________
Date: ___________________________ Date: ______________________________
China Dynamic Growth Fund L.P. U.S. Venture Partners V, L.P.
By: ______________________________ By: ________________________________
its General Partner its General Partner
By: _____________________________ By: ________________________________
Name:____________________________ Name: ______________________________
Title: __________________________ Title: _____________________________
Date: ___________________________ Date: ______________________________
H & Q Philippines Ventures II, Inc. USVP V International, L.P.
By: Presidio Management Group V,
L.L.C.
its General Partner
By: _____________________________ By: ________________________________
Name:____________________________ Name: ______________________________
Title: __________________________ Title: _____________________________
Date: ___________________________ Date: ______________________________
Western Digital (Tuas-Singapore) pte Ltd. 2180 Associates Fund V
By: Presidio Management Group V,
L.L.C.
its General Partner
By: _____________________________ By: ________________________________
Name:____________________________ Name: ______________________________
Title: __________________________ Title: _____________________________
Date: ___________________________ Date: ______________________________
EXHIBIT A
---------
SCHEDULE OF PURCHASERS
(to the Registration and Information Rights Agreement)
Asia Pacific Growth Fund II, L.P.,
China Dynamic Growth Fund L.P.,
HanTech Venture Capital Corporation
H & Q Philippines Ventures II, Inc.
Western Digital (Tuas-Singapore) pte Ltd.
U.S. Venture Partners V, L.P.
USVP V International, L.P.
2180 Associates Fund V
Maxtor Corporation
