EXHIBIT 10.1
to Agreement and Plan of
Merger and Reorganization
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT"), dated as of
November 2, 2000, is entered into by and among Sonus Networks, Inc., a Delaware
corporation (the "COMPANY"), and the persons and entities listed on the
signature pages hereto under the heading "Stockholders" (each individually, a
"STOCKHOLDER", and collectively, the "STOCKHOLDERS").
BACKGROUND
WHEREAS, as of the date hereof, the Company, Storm Merger Sub, Inc., a
Texas corporation and wholly-owned subsidiary of the Company ("MERGER SUB"), and
telecom technologies, inc., a Texas corporation ("TARGET"), have entered into an
Agreement and Plan of Merger and Reorganization (the "MERGER AGREEMENT"),
pursuant to the terms of which, among other things, the Merger Sub will be
merged with and into Target (the "MERGER") and the outstanding shares of
Target's Class A common stock, no par value, and Class B common stock, no par
value, will be converted into the right to receive shares of Common Stock (as
defined below); and
WHEREAS, it is a condition precedent to the obligations of the Company
and Target under the Merger Agreement that such parties execute and deliver this
Registration Rights Agreement;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and for other valuable consideration, receipt of
which is hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
As used in this Agreement, the following terms shall have the following
respective meanings:
"COMMISSION" means the United States Securities and Exchange
Commission, or any other federal agency at the time administering the Securities
Act.
"COMMON STOCK" means the common stock, $0.001 par value per
share, of the Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission issued under such Act,
as they each may, from time to time, be in effect.
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"ORIGINAL REGISTRATION RIGHTS AGREEMENT" shall mean the Third
Amended and Restated Investor Rights Agreement, dated as of March 9, 2000, among
the Company and the Purchasers and Founders named therein.
"REGISTRATION STATEMENT" means a registration statement filed
by the Company with the Commission for a public offering and sale of Common
Stock by the Company or holders of shares of Common Stock (other than a
registration statement on Form S-8 or Form S-4, or their successors, or any
other form for a similar limited purpose, or any registration statement covering
only securities proposed to be issued in exchange for securities or assets of
another corporation).
"REGISTRATION EXPENSES" means the expenses described in
Section 4 of Article II below.
"REGISTRABLE SHARES" means (i) the Shares, and (ii) any other
shares of Common Stock issued in respect of such Shares (because of stock
splits, stock dividends, reclassifications, recapitalizations, or similar
events); PROVIDED, HOWEVER, that shares of Common Stock that are Registrable
Shares shall cease to be Registrable Shares upon any sale of such shares
pursuant to a Registration Statement or Rule 144 or Rule 145 under the
Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended,
and the rules and regulations of the Commission issued under such Act, as they
each may, from time to time, be in effect.
"SHARES" means the shares of Common Stock issuable to the
Stockholders in the Merger.
ARTICLE II
REGISTRATION RIGHTS
1. INCIDENTAL REGISTRATIONS.
(a) Whenever the Company proposes to file a Registration
Statement at any time and from time to time, whether for its own account or the
account of other stockholders, it will, prior to such filing, give written
notice to each Stockholder of its intention to do so and, upon the written
request of any such Stockholder or Stockholders, given within ten 10 business
days after the Company provides such notice (which request shall state the
intended method of disposition of such Registrable Shares), the Company shall
use its reasonable best efforts to cause all Registrable Shares which the
Company has been requested by such Stockholder or Stockholders to register, to
be registered under the Securities Act to the extent necessary to permit their
sale or other disposition in accordance with the intended methods of
distribution specified in the request of such Stockholder or Stockholders;
PROVIDED, HOWEVER, that the Company shall have the right to postpone or withdraw
any registration effected pursuant to this Section 1 without obligation to any
Stockholder.
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(b) In connection with any registration under this Section 1
involving an underwriting, the Company shall not be required to include any
Registrable Shares in such registration unless the holders thereof accept the
terms of the underwriting as agreed upon between the Company and the
underwriters selected by it. If in the opinion of the managing underwriter it is
desirable because of marketing factors to limit the number of Registrable Shares
to be included in the offering, then the Company shall be required to include in
the registration only that number of Registrable Shares, if any, which the
managing underwriter believes should be included therein; PROVIDED, HOWEVER,
that no persons or entities other than the Company, the Stockholders and other
persons or entities holding registration rights (including those persons holding
registration rights under the Original Registration Rights Agreement) shall be
permitted to include securities in the offering. If the number of Registrable
Shares to be included in the offering in accordance with the foregoing is less
than the total number of shares which the holders of Registrable Shares have
requested to be included, then the holders of Registrable Shares who have
requested registration and other holders of securities entitled to include them
in such registration shall participate in the registration pro rata based upon
their total ownership of shares of Common Stock (giving effect to the conversion
into Common Stock of all securities convertible thereinto). If any holder would
thus be entitled to include more securities than such holder requested to be
registered, then the excess shall be allocated among other requesting holders
pro rata in the manner described in the preceding sentence.
2. REGISTRATION PROCEDURES. If and whenever the Company is
required by the provisions of this Agreement to effect the registration of any
of the Registrable Shares under the Securities Act, the Company shall:
(a) file with the Commission a Registration Statement with
respect to such Registrable Shares and use its best efforts to cause that
Registration Statement to become effective;
(b) as expeditiously as possible prepare and file with the
Commission any amendments and supplements to the Registration Statement and the
prospectus included in the Registration Statement as may be necessary to keep
the Registration Statement effective, in the case of a firm commitment
underwritten public offering, until each underwriter has completed the
distribution of all securities purchased by it and, in the case of any other
offering, until the earlier of the sale of all Registrable Shares covered
thereby or two years after the effective date thereof;
(c) as expeditiously as possible furnish to each selling
Stockholder such reasonable numbers of copies of the prospectus, including a
preliminary prospectus, in conformity with the requirements of the Securities
Act, and such other documents as the selling Stockholder may reasonably request
in order to facilitate the public sale or other disposition of the Registrable
Shares owned by the selling Stockholder; and
(d) as expeditiously as possible use its best efforts to
register or qualify the Registrable Shares covered by the Registration Statement
under the securities or Blue Sky laws of such states as the selling Stockholder
shall reasonably request, and do any and all other acts and things that may be
necessary or desirable to enable the selling Stockholder to consummate
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the public sale or other disposition in such states of the Registrable Shares
owned by the selling Stockholder; PROVIDED, HOWEVER, that the Company shall not
be required in connection with this paragraph (d) to qualify as a foreign
corporation or execute a general consent to service of process in any
jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
selling Stockholders and after having done so the prospectus is amended to
comply with the requirements of the Securities Act, the Company shall promptly
notify the selling Stockholders and, if requested, the selling Stockholder shall
immediately cease making offers of Registrable Shares and return all
prospectuses to the Company. The Company shall promptly provide each selling
Stockholder with revised prospectuses and, following receipt of the revised
prospectuses, the selling Stockholder shall be free to resume making offers of
the Registrable Shares.
As set forth in the next paragraph, notwithstanding the foregoing, each
selling Stockholder shall cease making offers or sales pursuant to a "shelf"
Registration Statement during any period (with the total of such periods not to
exceed ninety (90) days in any 12 calendar month period) in which the Company
determines, by notice to each selling Stockholder, that it is in possession of
material non-public information that, for valid business reasons, it wishes to
keep confidential.
If, after a Registration Statement becomes effective, the Company
becomes engaged in any activity which, in the good faith determination of the
Company's Board of Directors, involves information that would have to be
disclosed in the Registration Statement but which the Company desires to keep
confidential for valid business reasons, then the Company may at its option, by
notice to such Stockholders, require that the Stockholders who have included
Shares in such Registration Statement cease sales of such Shares under such
Registration Statement for a period of time not to exceed 90 days and with the
total of such periods not to exceed ninety (90) days in any twelve (12) calendar
month period. If, in connection therewith, the Company considers it appropriate
for such Registration Statement to be amended, the Company shall so amend such
Registration Statement as promptly as practicable and such Stockholders shall
suspend any further sales of their Shares until the Company advises them that
such Registration Statement has been amended (subject to the same time
restrictions set forth in the preceding sentence). The time periods referred to
herein during which such Registration Statement must be kept effective shall be
extended for an additional number of days equal to the number of days during
which the right to sell shares was suspended pursuant to this paragraph.
3. ALLOCATION OF EXPENSES. The Company will pay all Registration
Expenses of all registrations under this Agreement. For purposes of this Section
4, the term "Registration Expenses" shall mean all expenses incurred by the
Company in complying with Article II, Section 1, including, without limitation,
all registration and filing fees, exchange listing fees, printing expenses, fees
and expenses of one counsel to represent the selling Stockholder(s), state Blue
Sky fees and expenses, and the expense of any special audits incident to or
required by any such registration, but excluding underwriting discounts, selling
commissions and the fees and expenses of selling Stockholders' own counsel.
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4. INDEMNIFICATION AND CONTRIBUTION.
(a) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, the Company will
indemnify and hold harmless the seller of such Registrable Shares, each
underwriter of such Registrable Shares, and each other person, if any, who
controls such seller or underwriter within the meaning of the Securities Act or
the Exchange Act against any losses, claims, damages or liabilities, joint or
several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or Blue Sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any Registration
Statement under which such Registrable Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in the
Registration Statement, or any amendment or supplement to such Registration
Statement, or arise out of or are based upon the omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading; and the Company will reimburse such seller,
underwriter and each such controlling person for any legal or any other expenses
reasonably incurred by such seller, underwriter or controlling person in
connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the Company will not be liable in
any such case to a seller, underwriter or controlling person to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission made in such Registration Statement, preliminary
prospectus or final prospectus, or any such amendment or supplement, in reliance
upon and in conformity with information furnished to the Company, in writing, by
or on behalf of such seller, underwriter or controlling person specifically for
use in the preparation thereof.
(b) In the event of any registration of any of the Registrable
Shares under the Securities Act pursuant to this Agreement, each seller of
Registrable Shares, severally and not jointly, will indemnify and hold harmless
the Company, each of its directors and officers and each underwriter (if any)
and each person, if any, who controls the Company or any such underwriter within
the meaning of the Securities Act or the Exchange Act, against any losses,
claims, damages or liabilities, joint or several, to which the Company, such
directors and officers, underwriter or controlling person may become subject
under the Securities Act, Exchange Act, state securities or Blue Sky laws or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Registration Statement
under which such Registrable Shares were registered under the Securities Act,
any preliminary prospectus or final prospectus contained in the Registration
Statement, or any amendment or supplement to the Registration Statement, or
arise out of or are based upon any omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if the statement or omission was made in reliance upon
and in conformity with information relating to such seller furnished in writing
to the Company by or on behalf of such seller specifically for use in connection
with the preparation of such Registration Statement, prospectus, amendment or
supplement; PROVIDED, HOWEVER, that the obligations of each such Stockholder
hereunder shall be limited to an amount equal to the net proceeds to such
Stockholder of Registrable Shares sold in connection with such registration.
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(c) Each party entitled to indemnification under this Article
II, Section 5 (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 be
unreasonably withheld); 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 Article II, Section 5, unless
and except to the extent that the Indemnifying Party is prejudiced by the
failure of the Indemnified Party to provide timely notice. The Indemnified Party
may participate in such defense at such party's expense; PROVIDED, HOWEVER, that
the Indemnifying Party shall pay such expense if representation of such
Indemnified Party by the counsel retained by the Indemnifying Party would be
inappropriate due to actual or potential differing interests between the
Indemnified Party and any other party represented by such counsel in such
proceeding. No Indemnifying Party, in the defense of any such claim or
litigation shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect of such claim or
litigation, and no Indemnified Party shall consent to entry of any judgment or
settle such claim or litigation without the prior written consent of the
Indemnifying Party.
(d) In order to provide for just and equitable contribution to
joint liability under the Securities Act in any case in which either (i) any
holder of Registrable Shares exercising rights under this Agreement, or any
controlling person of any such holder, makes a claim for indemnification
pursuant to this Article II, Section 5 but it is judicially determined (by the
entry of a final judgment or decree by a court of competent jurisdiction and the
expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that this Article II, Section 5 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required on the part of any
such selling Stockholder or any such controlling person in circumstances for
which indemnification is provided under this Article II, Section 5; then, in
each such case, the Company and such Stockholder will contribute to the
aggregate losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportions so that such holder is
responsible for the portion represented by the percentage that the public
offering price of its Registrable Shares offered by the Registration Statement
bears to the public offering price of all securities offered by such
Registration Statement, and the Company is responsible for the remaining
portion; PROVIDED, HOWEVER, that, in any such case, (A) no such holder will be
required to contribute any amount in excess of the net proceeds to it of all
Registrable Shares sold by it pursuant to such Registration Statement, and (B)
no person or entity guilty of fraudulent misrepresentation, within the meaning
of Section 11(f) of the Securities Act, shall be entitled to contribution from
any person or entity who is not guilty of such fraudulent misrepresentation.
5. INFORMATION BY STOCKHOLDER. Each Stockholder including Registrable
Shares in any registration shall furnish to the Company such information
regarding such Stockholder and
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the distribution proposed by such Stockholder as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement.
6. "STAND-OFF" AGREEMENT. Each Stockholder, if requested by the Company
and the managing underwriter of an offering of Common Stock or other securities
of the Company pursuant to a Registration Statement, shall agree not to sell
publicly or otherwise transfer or dispose of any Registrable Shares held by such
Stockholder for a specified period of time (not to exceed 90 days) following the
effective date of such Registration Statement, subject to customary exceptions
and other customary terms; PROVIDED:
(a) the Company provides notice to each Stockholder no less than 7
days from the Closing and such period terminates no later than 180
days from the Closing that such limitations on transfer are being
requested by the Company (the "STAND-OFF NOTICE"), which such
Stand-Off Notice shall (i) include a representation by the Company
that it has used its reasonable best efforts to obtain the
agreement of the managing underwriter of such offering that such
limitations on transfers by the Stockholders are not necessary for
the completion of the offering; and (ii) be delivered to each
Stockholder no more than 20 days prior to the reasonably
anticipated effectiveness of such Registration Statement and which
such limitations called for therein shall take effect no earlier
than 10 trading days following the delivery of such Stand-Off
Notice; and
(b) all executive officers, directors, and holders of shares of Common
Stock who have acquired such shares directly from the Company in a
transaction that was not registered under the Securities Act and
hold as many or more shares of Common Stock as were originally
issued to such Stockholder in the Merger (collectively with
respect to such Stockholder, the "Covered Persons") of the Company
have agreed to limitations on transfers with respect to their
shares of Common Stock or other securities of the Company at least
as extensive as those set forth called for by such Stand-Off
Notice, which such agreement the Company shall certify in the
Stand-Off Notice sent to each Stockholder;
and, PROVIDED, FURTHER, that (i) in the event that any Stockholder other than
Xxxxxxxx Xxxxxx or Xxxxx Xxxxxx requests the inclusion of fifty percent (50%) or
more of the Registrable Securities then owned by it in the offering in
accordance with Section 1(a), and the Company is unable to include at least
fifty percent (50%) of the Registrable Shares held by such Stockholder, any
lock-up or similar agreement entered into by such Stockholder pursuant to this
Section 6 shall immediately terminate; (ii) in the case of Xxxxxxxx Xxxxxx or
Xxxxx Xxxxxx, the Company shall comply with its registration obligations set
forth herein; and (iii) if the Company releases any Covered Person from its
limitations under the agreements described in (c) above, such release shall
apply the same extent to each Stockholder, and the Company shall promptly inform
each Stockholder thereof.
7. LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. The Company shall
not, without the prior written consent of Stockholders holding 66 2/3% of the
Registrable Shares held by all
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Stockholders, enter into any agreement (other than this Agreement), or amend any
outstanding agreements with any holder or prospective holder of any securities
of the Company which would allow such holder or prospective holder to include
securities of the Company in any Registration Statement upon terms which are
more favorable to such holder or prospective holder than the terms on which
holders of Registrable Shares may include shares in such registration, PROVIDED,
HOWEVER, that nothing in this Agreement shall be deemed to limit the existing
rights and obligations of the Company and the Purchasers and Founders named
therein under the Original Registration Rights Agreement.
8. RULE 144 REQUIREMENTS. Until such time that there shall no longer be
any Registrable Securities, the Company agrees to:
(i) comply with the requirements of Rule 144(c) under the
Securities Act with respect to current public information about the Company;
(ii) use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements); and
(iii) furnish to any holder of Registrable Shares upon request (A)
a written statement by the Company as to its compliance with the requirements of
said Rule 144(c), and the reporting requirements of the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements), (B) a copy of the most recent annual or quarterly report of the
Company, and (C) such other reports and documents of the Company as such holder
may reasonably request to avail itself of any similar rule or regulation of the
Commission allowing it to sell any such securities without registration.
ARTICLE III
GENERAL
1. NO TRANSFER OF RIGHTS.
This Agreement, and the rights and obligations of the Stockholders
and the Company hereunder, may not be assigned by any party hereunder.
2. SEVERABILITY. The provisions of this Agreement are severable, so
that the invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other term or provision of this
Agreement, which shall remain in full force and effect.
3. GOVERNING LAW. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Delaware
(without reference to the conflicts of law provisions thereof).
4. NOTICES. All notices, requests, consents, and other communications
under this Agreement shall be in writing and shall be delivered by hand, sent
via a reputable nationwide
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overnight courier service or mailed by first class certified or registered mail,
return receipt requested, postage prepaid:
If to the Company, at Sonus Networks, Inc., 0 Xxxxxxxx Xxx, Xxxxxxxx,
XX 00000, Attn: President, or at such other address or addresses as may have
been furnished in writing by the Company to the Purchasers, with a copy to
Xxxxxxx Xxxx LLP, 000 Xxxxxxx Xxxxxx, Xxxxxx, XX 00000, Attn: Xxxxx X. Xxxxx,
Esq. and Xxxxx X. Xxxxxxx, Esq.;
If to a Stockholder, at its address as set forth the signature pages
hereto, or at such other address or addresses as may have been furnished to the
Company in writing by such Stockholder, with a copy to Wachtell, Lipton, Xxxxx &
Xxxx, 00 Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000, Attn: Xxxxxx X. Xxxxxxxx, Esq.;
or
Notices provided in accordance with this Article III, Section 4 shall
be deemed delivered upon personal delivery, one (1) business day after being
sent via a reputable nationwide overnight courier service, or five (5) business
days after deposit in the mail.
5. COMPLETE AGREEMENT; AMENDMENTS.
(a) This Agreement constitutes the full and complete agreement of
the parties hereto with respect to the subject matter hereof.
(b) This Agreement may be amended and the observance of any term of
this Agreement may be waived (either generally or in a particular instance and
either retroactively or prospectively) at any time by a written instrument
signed by the Company and Stockholders holding at least 66 2/3% of the
Registrable Shares. No waivers of or exceptions to any term, condition or
provision of this Agreement, in any one or more instances, shall be deemed to
be, or construed as, a further or continuing waiver of any such term, condition
or provision.
6. PRONOUNS. Whenever the content may require, any pronouns used in
this Agreement shall include the corresponding masculine, feminine or neuter
forms, and the singular form of nouns and pronouns shall include the plural, and
vice versa.
7. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one Agreement binding on all the parties hereto.
8. CAPTIONS. Captions of sections have been added only for
convenience and shall not be deemed to be a part of this Agreement.
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IN WITNESS WHEREOF, this Agreement has been executed as an instrument
under seal as of the date first above written.
COMPANY
By: ____________________________________
President
STOCKHOLDERS:
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