EXHIBIT 10.3
eMachines, Inc.
AMENDED AND RESTATED
RIGHTS AND RESTRICTIONS AGREEMENT
This AMENDED AND RESTATED RIGHTS AND RESTRICTIONS AGREEMENT(the
"Agreement") is entered into as of August 18, 1999, by and among eMachines,
Inc., a Delaware corporation (the "Company"), the holders of Series A Preferred
Stock identified as such on Schedule A attached hereto (the "Investors"), the
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holders of shares ("Shares") of Common Stock of the Company ("Common Stock")
identified as such on Schedule A attached hereto (the "Founders", and the
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Investors and the Founders, the "Shareholders"), and such holders of other
securities of the Company who have registration or other rights with respect to
such securities or to the securities of the Company issuable upon exercise or
conversion thereof (the "Additional Rightsholders") identified as such from time
to time on Schedule A attached hereto. The Investors are acquiring their shares
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of Series A Preferred Stock contemporaneously herewith or at a later date, in
each case pursuant to a Series A Preferred Stock Purchase Agreement dated as of
August 18, 1999 (the "Stock Purchase Agreement").
R E C I T A L S
A. The Company was incorporated on September 18, 1998 as a corporation
under the laws of the State of Delaware, United States of America. The Company
and the Founders are party to that certain Shareholders Agreement dated as of
June 10, 1999 (the "Shareholders Agreement").
B. Each of the Investors and the Founders owns, and each Additional
Rightsholder that shall enter into this Agreement owns, (i) that number of
outstanding shares of the Company"s Series A Preferred Stock ("Series A
Preferred") or Shares of Common Stock (Common Stock and Series A Preferred,
collectively, the "Equity Securities") and (ii) such warrants and/or options
with respect to the Equity Securities, in each case, as is set forth opposite
his, her, or its name on Schedule A hereto.
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C. The Company, the Investors and the Founders have reached an
understanding concerning various aspects of their relationships among themselves
and the organization and operation of the Company and its business. This
Agreement sets forth this understanding, terminates the Shareholders Agreement
and amends, restates and supersedes in its entirety that certain Rights and
Restrictions Agreement dated as of June 10, 1999, by and among the Company and
the Founders (the "Initial Rights Agreement").
D. The Investors acknowledge and agree, and each Additional Rightsholder
that shall enter into this Agreement acknowledges and agrees, that as a
condition to purchasing their Equity Securities, they are subject to certain
rights and restrictions as enumerated herein.
NOW, THEREFORE IT IS AGREED:
1. Prior Rights; Definitions
1.1 Termination of Prior Rights.
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(a) Upon execution of this Agreement by the Company, the
Founders and the Investors, the Shareholders Agreement shall be terminated in
its entirety and the Initial Rights Agreement shall be terminated and superseded
entirely by this Agreement. Execution of this Agreement by each Founder shall
constitute the consent of such Founder referred to in Section 8 of the Initial
Rights Agreement to the preferential registration rights granted to the
Investors hereunder.
(b) Upon execution of this Agreement by the Company and an
Additional Rightsholder, all rights relating to the registration or
qualification of the Company"s securities, under the Securities Act of 1933, as
amended (the "1933 Act"), or other applicable state and federal securities laws
that such Additional Rightsholder has under any warrant, stock option, or other
security or agreement (other than this Agreement) shall be terminated, and the
Company shall be required to include securities of the Company held by such
Additional Rightsholder (or any transferee or assignee thereof) in a
registration statement filed by the Company under the 1933 Act only if and upon
the terms and conditions set forth in this Agreement.
(c) Upon execution of this Agreement by a party to the Initial
Rights Agreement, such party hereby waives the Shareholders" Maintenance Right
pursuant to Section 17 of the Initial Rights Agreement with regard to the
issuance by the Company of its Series A Preferred Stock, the AOL Warrant (as
defined in the Stock Purchase Agreement) and the Shares of Common Stock
underlying the AOL Warrant, and the 419,538 Shares of Common Stock ("KDS
Common") issued to Korea Data Systems America, Inc. ("KDS") pursuant to the
Agreement (amending Trademark Assignment) dated as of August 16, 1999 between
the Company and KDS. Upon execution of this Agreement by a majority of the
outstanding Shares of Common Stock held by the Founders, as such term was
defined in the Initial Rights Agreement, entitled to the Shareholders"
Maintenance Right pursuant to Section 17 of the Initial Rights Agreement, such
Shareholders" Maintenance Right shall be deemed waived as to all Founders with
respect to the issuance and sale of the Series A Preferred, the AOL Warrant, the
Shares of Common Stock underlying the AOL Warrant, and the KDS Common. Execution
of this Agreement by each Founder shall constitute the waiver of such Founder of
the written notice to which it was entitled under such Section of the issuance
and sale of Series A Preferred, the AOL Warrant, the Shares of Common Stock
underlying the AOL Warrant, and the KDS Common.
1.3 Certain Definitions. As used in this Agreement, the
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following terms shall have the following meanings (such meanings to be equally
applicable to both singular and plural forms of the terms defined herein):
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"Change in Control" shall mean the occurrence of (i) the sale of all or
substantially all the assets of the Company; or (ii) consummation of any
acquisition, consolidation or merger of the Company other than an acquisition,
consolidation or merger of the Company in which the holders of Common Stock
immediately prior to the acquisition, consolidation or merger have, directly or
indirectly, at least a majority of the total voting power in the aggregate of
all classes of capital stock of the continuing or surviving corporation
immediately after the acquisition, consolidation or merger.
"Commission" shall mean the Securities and Exchange Commission of the
United States or any other federal agency at the time administering the
Securities Act.
"Excluded Registration Statement" shall mean a registration statement
relating to a Rule 145 transaction, an offering solely to employees or a
registration on any form which does not permit secondary sales or does not
include substantially the same information as would be required to be included
in a registration statement covering the sale of the Registrable Securities.
"Founder Registrable Securities" means (i) the Shares owned of record by
the Founders on the date hereof, and (ii) any shares of the Company issued or
issuable in respect of such Shares upon any stock split, stock dividend,
recapitalization, or similar event, (iii) the Shares of Common Stock (other than
Investor Registrable Securities) issued to the Industrial Investor pursuant to
the warrants issued and to be issued to the Industrial Investor by the Company
in connection with the Industrial Investor's purchase of shares of Series A
Preferred, and (iv) any other shares of Common Stock held by persons holding the
securities described in clauses (i) and (ii) of this paragraph; provided,
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however, that Founder Registrable Securities shall not include (A) securities
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that have been sold to or through a broker or dealer or underwriter in a public
distribution or a public securities transaction, (B) securities that have been
sold or made available for sale in the opinion of counsel to the Company in a
transaction exempt from the registration and prospectus delivery requirements of
the Securities Act so that all transfer restrictions and restrictive legends
with respect thereto are or shall be removed upon the consummation of such sale
or (C) any securities if such securities constitute all of the securities of a
Holder or its affiliate and all such securities may be sold by the Holder
thereof (or by such affiliate) within a three month period following the
Company"s initial public offering pursuant to Rule 144 promulgated under the
Securities Act, or any successor rule.
"Holder" shall mean any Shareholder holding Registrable Securities and any
person holding Registrable Securities to whom the rights under this Agreement
have been transferred in compliance with Section 2 hereof. Without limiting the
generality of the foregoing, no Additional Rightsholder shall be a Holder
hereunder except with respect to any Registrable Securities that such Additional
Rightsholder may hold at any time or from time to time.
"Industrial Investor" shall mean America Online, Inc., a Delaware
corporation. Except as otherwise noted herein, the Industrial Investor shall be
an Investor for all purposes hereof to the extent that it shall hold Investor
Registrable Securities and a Founder for all purposes hereof to the extent that
it shall hold any Shares of Common Stock (other than Investor Registrable
Securities).
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"Initiating Holders" shall mean any Holder or Holders of not less than
fifty percent (50%) of the then outstanding Investor Registrable Securities.
"Investor Registrable Securities" means (i) the Shares of Common Stock
issued or issuable upon conversion of shares of Series A Preferred owned of
record by any Investor on the effective date of this Agreement with respect to
such Investor, (ii) any shares of the Company issued or issuable in respect of
the shares of Series A Preferred (or in respect of any Shares of Common Stock
issued or issuable upon conversion of shares of Series A Preferred) upon any
stock split, stock dividend, recapitalization, or similar event, and (iii) any
other Shares of Common Stock held by persons holding the securities described in
clauses (i) and (ii) of this paragraph; provided, however, that Investor
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Registrable Securities shall not include (A) securities that have been sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, (B) securities that have been sold or made
available for sale in the opinion of counsel to the Company in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act so that all transfer restrictions and restrictive legends with
respect thereto are or shall be removed upon the consummation of such sale, or
(C) any securities if such securities constitute all of the securities of a
Holder or its affiliate and all such securities may be sold by the Holder
thereof (or by such affiliate) within a three month period following the
Company"s initial public offering pursuant to Rule 144 promulgated under the
Securities Act, or any successor rule.
"IPO" shall mean the declaration of the Commission of the effectiveness of
a registration statement filed by the Company in connection with a firmly
underwritten public offering with an aggregate price to the public exceeding
$30,000,000.
"New Securities" shall have the meaning set forth in Section 17.1.
"Registrable Securities" shall mean, collectively, the Investor Registrable
Securities, the Founder Registrable Securities, and the Rightsholder Registrable
Securities.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Sections 5 and 6 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
and the expense of any special audits incident to or required by any such
registration (but excluding the compensation of regular employees of the
Company, which shall be paid in any event by the Company, and Selling Expenses).
"Restricted Securities" shall mean the securities of the Company required
to bear the legend set forth in Section 2 hereof.
"Rightsholder Registrable Securities" means (i) the Shares of Common Stock
issued or issuable upon exercise or conversion or (consecutive exercises or
conversions) of any warrant,
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option, right or other security of the Company owned of record by any Additional
Rightsholder on the date of signature of this Agreement by such Additional
Rightsholder, and (ii) any Shares of the Company issued or issuable in respect
of such securities (or in respect of any Shares of Common Stock issued or
issuable upon single or multiple exercise or conversion of such securities) upon
any stock split, stock dividend, recapitalization, or similar event, and (iii)
any other Shares of Common Stock held by, or issuable upon exercise or
conversion of other securities held by, persons holding the securities described
in clauses (i) and (ii) of this paragraph; provided, however, that Rightsholder
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Registrable Securities shall not include (A) securities that have been sold to
or through a broker or dealer or underwriter in a public distribution or a
public securities transaction, (B) securities that have been sold or made
available for sale in the opinion of counsel to the Company in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act so that all transfer restrictions and restrictive legends with
respect thereto are or shall be removed upon the consummation of such sale, or
(C) any securities if such securities constitute all of the securities of a
Holder or its affiliate and all such securities may be sold by the Holder
thereof (or by such affiliate) within a three month period following the
Company"s initial public offering pursuant to Rule 144 promulgated under the
Securities Act, or any successor rule.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and, except as set forth in Section 9.3, all reasonable fees and
disbursements of counsel for any Holder.
"Selling Holder" shall have the meaning set forth in Section 16.
Certain other defined terms used herein have the meanings set forth in
Section 16 and Section 17 of this Agreement.
2. Restrictions on Transferability; Restrictive Legend; Notice of
Proposed Transfers.
2.1 The Shares and shares of Series A Preferred shall not be sold,
assigned, transferred or pledged except upon satisfaction of the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. Each Shareholder will cause any
proposed purchaser, assignee, transferee, or pledgee of the Shares or shares of
Series A Preferred held by such Shareholder to agree to take and hold such
securities subject to the provisions and upon the conditions specified in this
Agreement. Each Additional Rightsholder will cause any proposed purchaser,
assignee, transferee, or pledgee of the Shares or shares of Series A Preferred
held by such Additional Rightsholder (or issuable upon conversion or exercise of
the securities held by such Additional Rightsholder) to agree to take and hold
such securities subject to the provisions and upon the conditions specified in
this Agreement.
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2.2 Each certificate representing (i) the Shares or shares of Series
A Preferred and (ii) any other securities issued in respect of the Shares or
such shares upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event shall (unless otherwise permitted by the
provisions of Section 2.3 below) be stamped or otherwise imprinted with the
following legend (in addition to any legend required by any other agreement or
under applicable state securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") OR ANY
STATE SECURITIES LAWS. SUCH SHARES MAY NOT BE SOLD OR
OFFERED FOR SALE IN THE ABSENCE OF SUCH REGISTRATION OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY AND ITS
COUNSEL THAT SUCH REGISTRATION IS NOT REQUIRED UNDER THE
ACT. COPIES OF THE AGREEMENTS COVERING THE PURCHASE OF THESE
SHARES AND RESTRICTING THEIR TRANSFER MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT THE
PRINCIPAL EXECUTIVE OFFICE OF THE CORPORATION.
Each Shareholder and Additional Rightsholder consents to the Company making
a notation on its records and giving instructions to any transfer agent of the
Shares or shares of Series A Preferred in order to implement the restrictions on
transfer established in this Agreement.
2.3 The holder of each certificate representing Shares or shares of
Series A Preferred by acceptance thereof agrees to comply in all respects with
the provisions of this Agreement, including, without limitation, Section 16
hereof. Prior to any proposed sale, assignment, transfer or pledge of any Shares
or shares of Series A Preferred (other than a transfer not involving a change in
beneficial ownership), the holder thereof shall give written notice to the
Company of such holder"s intention to effect such transfer, sale, assignment or
pledge. Each such notice shall describe the manner and circumstances of the
proposed transfer, sale, assignment or pledge in sufficient detail, including
the information required by Section 16.1 to the extent the provisions of Section
16 are still in effect, and shall be accompanied, at such holder"s expense by
either (i) an unqualified written opinion of legal counsel who shall, 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 this Agreement and of the
notice delivered by the holder to the Company. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144 or pursuant to an effective registration
statement, the appropriate restrictive legend set forth in Section 2.2 above,
except that such certificate shall not bear such restrictive legend if in the
opinion of counsel for such holder that
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is acceptable to the Company such legend is not required in order to establish
compliance with any provision of the Securities Act.
3. Financial Information
3.1 For so long as any Shareholder owns separately (and not
aggregated together with any of its affiliates for purposes of Section 19.12
hereof) 125,000 or more Shares of Common Stock or shares of Preferred Stock, on
an as if converted basis (adjusted for stock splits, combinations, and the
like), the Company will furnish the following reports to such Shareholder:
(a) As soon as practicable after the end of each fiscal year of
the Company, and in any event within ninety (90) days thereafter, a consolidated
balance sheet of the Company and its subsidiaries, if any, as at the end of such
fiscal year, and consolidated statements of income and cash flows of the Company
and its subsidiaries, if any, for such year, prepared in accordance with
generally accepted accounting principles ("GAAP") consistently applied, all in
reasonable detail and certified by the Chief Financial Officer or Chief
Executive Officer of the Company; and
(b) 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 forty-five (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 income and cash flows of the
Company and its subsidiaries for such period, prepared in accordance with GAAP
consistently applied, subject to changes resulting from year-end audit
adjustments and the absence of notes, all in reasonable detail and certified by
the Chief Financial Officer or Chief Executive Officer of the Company.
Anything in this Section 3 to the contrary notwithstanding, no Shareholder
by reason of this Agreement shall have access to any trade secrets or classified
information of the Company. Each Shareholder hereby agrees to hold in confidence
and trust and not to misuse or disclose any confidential or proprietary
information provided to such Shareholder pursuant to this Section 3. Each
Shareholder further acknowledges and understands that any information so
obtained which may be considered "inside" non-public information will not be
utilized by such Shareholder in connection with purchases and/or sales of the
Company"s securities except in compliance with applicable state and federal
anti-fraud statutes. The Company shall not be required to comply with this
Section 3 in respect of any Shareholder whom the Company reasonably determines
to be a competitor of the Company or an officer, employee, director or greater
than ten percent (10%) stockholder of such competitor. The Industrial Investor
shall not be considered to be a competitor of the Company unless reasonably
determined by the Board of Directors of the Company, in good faith and after due
deliberation, to be a direct competitor of the Company.
4. Share Allocation
4.1 Subject to any applicable legal and regulatory limitations, the
Company shall, and shall cause all underwriters that it shall engage to, offer
in the Share Allocation to each of the
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holders of Series A Preferred that shall exercise its option to do so out of the
Shares of Common Stock registered with the SEC in connection with the IPO ("IPO
Shares") such holder"s Pro Rata Share of the IPO Shares included in the Share
Allocation. Such offer shall be made to each such holder at the gross public
offering price set forth on the cover page of the final Prospectus included as a
part of the Company"s Registration Statement. The participation of any holder of
Series A Preferred in the Share Allocation shall be conditioned in all cases on
that holder"s compliance with all applicable federal and state securities laws,
in particular without limiting the generality of the foregoing on its compliance
with applicable disclosure requirements and Rule IM-2110-1 in the Manual of the
National Association of Securities Dealers, Inc.
4.2 The "Share Allocation" shall mean the offer of certain IPO Shares
to the holders of Series A Preferred in accordance with the terms and conditions
of this Section 4, and shall include the number of IPO Shares calculated by
dividing $10,000,000 by the gross per Share offering price in the IPO as set
forth on the cover page of the final Prospectus included as a part of the
Company"s Registration Statement. As set forth in this Section 4, a Series A
Preferred holder"s "Pro Rata Share" at any time shall mean a fraction the
numerator of which is the number of shares of Series A Preferred then held by
such holder and the denominator of which is the total number of shares of Series
A Preferred then outstanding.
4.3 The Company shall transmit to each holder of Series A Preferred
at its address as set forth in the shareholders register of the Company (or of
its transfer agent, if any) within five business days after the date of the
preliminary prospectus with respect to the IPO (and within five business days
after the date of any later preliminary prospectus with respect to the IPO if
the IPO shall be abandoned for any reason at any time or from time to time) a
copy of such preliminary prospectus together with the Company"s calculation
based on its shareholder register (or the shareholders register of its transfer
agent, if any) of each such holder"s Pro Rata Share. Each holder of Series A
Preferred that shall desire to exercise its option to purchase IPO Shares in the
Share Allocation shall respond to the "Indication of Interest" form that it
shall receive from or on behalf of the underwriters of the IPO within the delay
specified therein, effecting a "Holder"s Notification". A holder of Series A
Preferred may exercise its option as aforesaid with respect to all or some of
the IPO Shares offered to it in the Share Allocation. Any holder of Series A
Preferred that shall not have notified the Company of its exercise of such
option within the aforesaid delay shall be deemed not to have exercised its
option hereunder. Neither the Company nor any underwriter engaged by the Company
shall have any liability under this Section 4 to any holder of Series A
Preferred whose address is not correct on the books of the Company (or of its
transfer agent) or who for any other reason shall not effect its Holder"s
Notification in a timely manner or with respect to all of the IPO Shares which
it may be entitled to purchase under this Section 4.
4.4 Each Holder"s Notification shall state (i) how many IPO Shares of
its Pro Rata Share it desires to purchase (and may state "all" or "one half" of
its Pro Rata Share or comparable summary description) and (ii) if it shall
desire to purchase all of its Pro Rata Share, whether in addition it shall
desire to purchase any of its Pro Rata Share of the IPO Shares offered to other
holders of shares of Series A Preferred in the Share Allocation who shall not
have exercised their option to purchase all of the IPO Shares offered them in
the Program. Settlement of the purchase
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and sale of the IPO Shares shall occur on the same terms and conditions as shall
be offered to the public in the IPO.
4.5 Each holder of Series A Preferred that shall participate in the
Share Allocation agrees, upon request of the Company or the underwriters
managing any underwritten offering of the Company"s securities, not to sell,
make any short sale of, loan, grant any option for the purchase of, or otherwise
dispose of any IPO Shares that it shall acquire pursuant to the Share Allocation
without the prior written consent of the Company or such underwriters, as the
case may be, for such period of time (not to exceed one hundred eighty (180)
days) from the date of the IPO or for such period of time (not to exceed ninety
(90) days) from the effective date of any subsequent registration statement
after the IPO (other than an Excluded Registration Statement) as may be
requested by the underwriters, and if so requested by the Company or such
underwriters, to enter into a lockup agreement to the foregoing effect and in a
form satisfactory to the Company and such underwriters; provided however, that
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holders of shares of Series A Preferred shall not be so obligated not to dispose
of their IPO Shares, and shall not be required to enter into such a lock-up
agreement with respect thereto, unless: (A) in the case of the IPO, (i) all
executive officers and 1% shareholders of the Company agree to the same lock-up
and (ii) such agreement shall provide that any discretionary waiver or
termination of the restrictions of any such lock-up agreements by the Company or
representatives of the underwriters shall apply to all persons subject to such
agreements pro rata based on the number of shares subject to such agreements;
and (B) in the case of a registration statement subsequent to the IPO, (i) all
executive officers agree to the same lock-up and (ii) the holders have the
ability to sell not less than 25% of the Shares registered in any such
subsequent offering. The obligations of the holders of Series A Preferred set
forth in this Section 4.5 shall expire on the date that is the second
anniversary of the IPO of the Company"s securities.
4.6 In lieu of participating in the Share Allocation pursuant to this
Section 4, each holder of the Series A Preferred who originally purchased the
Series A Preferred from the Company may enter into an agreement with the Company
providing for the purchase by such holder of a number of shares of Common Stock
equal to such holder"s Pro Rata Share times 755,179 at a per share price equal
to the gross offering price of the Common Stock in the IPO concurrently with the
closing of the IPO (or, at the Company"s option, promptly thereafter), provided
that a binding agreement in form and substance reasonably acceptable to the
Company and the holder with respect to such purchase has been entered into prior
to the initial filing of the Company of a Registration Statement with respect to
the IPO. Any holder electing to exercise its rights under this Section 4.6 shall
not be entitled to any rights under Sections 4.1 through 4.4. The Company will
use reasonable efforts to provide each holder of Series A Preferred with advance
notice of the initial filing of the Company"s Registration Statement at least
one day in advance of such filing (unless such filing is made within one week of
the date hereof, in which case no further notice will be required). Each holder
purchasing shares pursuant to this Section 4.6 will be required to make
representations, warranties and agreements comparable to those set forth in
Section 3 of the Stock Purchase Agreement with respect to such purchase and to
enter into an appropriate amendment to this Agreement to entitle such shares to
the registration rights and subject such shares to the restrictions and
obligations and on the same terms and conditions set forth herein as if the
Common Stock issuable under this Section 4.6 was Series A Preferred. All of the
parties to this Agreement agree to
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enter to such an amendment promptly following a written request by the Company
following the exercise by an Purchaser of Series A Preferred of its right to
purchase shares pursuant to this Section 4.6. Shares purchased pursuant to this
Section 4.6 will be subject to the lock-up obligations set forth in Section 4.5
as if they were IPO Shares, subject to the conditions set forth therein.
Notwithstanding any provision to the contrary in this Agreement, for purposes of
this Section 4.6, "Pro Rata Share" is to be calculated as though each Investor
purchasing Series A Preferred at a Later Closing (as defined in the Stock
Purchase Agreement) shall have purchased all such Series A Preferred at the
Closing (as defined in the Stock Purchase Agreement) and was a holder thereof at
the time of such calculation.
5. Requested Registration.
5.1 Notice of Registration; Registration. In case the Company shall
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receive from Initiating Holders a written request that the Company effect any
registration, qualification or compliance (other than a registration on Form S-3
or any successor form) that would result in an aggregate offering of at least
$15,000,000, the Company will:
(a) promptly give written notice of the proposed registration to
all other Holders; and
(b) subject to Section 5.3, use its reasonable efforts to effect,
as soon as practicable, such registration, qualification or compliance
(including, without limitation, the execution of an undertaking to file post-
effective amendments, appropriate qualification under applicable blue sky or
other state securities laws and appropriate compliance with applicable
regulations issued under the Securities Act) 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 (i) all
or such portion of the Registrable Securities of any Holder or Holders joining
in such request as are specified in a written request given within ten (10)
business days after receipt of such written notice from the Company, and (ii)
such additional securities as the Company may desire to register, including, but
not limited to, securities of the Company which are held by officers or
directors of the Company or which are held by persons who, by virtue of
agreements with the Company, are entitled to include their securities in any
such registration; provided that the Company shall not be obligated to take any
action to effect any such registration, qualification or compliance pursuant to
this Section 5:
(i) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance or subject the Company
to taxation in such jurisdiction unless the Company is already subject to
service in such jurisdiction or taxation in such jurisdiction, respectively, and
except as may be required by the Securities Act;
(ii) After the Company has effected one (1) registration
pursuant to this Section 5 and such registration has been declared or ordered
effective and the securities offered pursuant to such registration have been
sold;
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(iii) If at the time of the request to register Registrable
Securities the Company gives notice within thirty (30) days of such request that
it is engaged or has fixed plans to engage within thirty (30) days of the time
of the request in a firmly underwritten registered public offering as to which
the Holders may include Registrable Securities pursuant to Section 6 or 7
hereof; or
(iv) Prior to six (6) months following the closing of the
IPO.
Subject to the foregoing clauses (i) through (iv) and to Section 5.3, 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 of the Initiating Holders.
5.2 Underwriting. If the Initiating Holders intend to distribute the
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Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
Section 5 and the Company shall include such information in the written notice
referred to in Section 5.1. The right of any Holder to registration pursuant to
Section 5 shall be conditioned upon such Holder"s participation in such
underwriting and the inclusion of such Holder"s Registrable Securities in the
underwriting to the extent requested (unless otherwise mutually agreed by a
majority in interest of the Initiating Holders and such Holder) to the extent
provided herein. If officers or directors of the Company shall request inclusion
of securities of the Company other than Registrable Securities in any
registration pursuant to this Section 2.1, or if holders of securities of the
Company who are entitled by contract with the Company (other than this
Agreement) to have securities included in such a registration (such officers,
directors, and other shareholders being collectively referred to as the "Other
Shareholders") request such inclusion, such securities of the Other Shareholders
may be included in the underwriting, provided that such Other Shareholders
accept the further applicable provisions of this Agreement.
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 underwriter or underwriters selected for such
underwriting by a majority in interest of the Initiating Holders and consented
to by the Company, which consent shall not be unreasonably denied.
Notwithstanding any other provision of this Section 5, if the underwriter
determines that marketing factors require a limitation of the number of shares
to be underwritten and so advises the Initiating Holders in writing, then the
Company shall so advise all Holders and Other Shareholders who have indicated to
the Company their decision to distribute any of their Registrable Securities
through such underwriting and the number of shares of Registrable Securities
that may be included in the registration and underwriting shall be allocated
among all Holders and Other Shareholders as follows: first, an equal aggregate
number of shares of Registrable Securities of each of the Investors (as a group)
and the Founders (as a group); and second, among the Other Shareholders.
Registrable Securities are to be allocated within each group as aforesaid in
proportion, as nearly as practicable, to the respective amounts of Registrable
Securities held by the Investors, the Founders, or the Other Shareholders, as
applicable, at the time of filing the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, the Company may
round the number of shares allocated to any Holder or Other Shareholder to the
nearest 100 shares. No Registrable Securities excluded from
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the underwriting by reason of the underwriter"s marketing limitation shall be
included in such registration.
If any Holder disapproves of the terms of the underwriting, such person may
elect to withdraw therefrom by written notice to the Company, the underwriter
and the Initiating Holders. The Registrable Securities and/or other securities
so withdrawn from such underwriting shall also be withdrawn from such
registration; provided, however, that, if by the withdrawal of such Registrable
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Securities a greater number of Registrable Securities held by other Holders may
be included in such registration (up to the maximum of any limitation imposed by
the underwriters), then the Company shall offer to all Holders who have included
Registrable Securities in the registration the right to include additional
Registrable Securities in the same proportions used above in determining the
underwriter limitation.
If the underwriter has not limited the number of Registrable Securities to
be underwritten, the Company may include securities for its own account or the
account of others in such registration if the underwriter so agrees and if the
number of Registrable Securities which would otherwise have been included in
such registration and underwriting will not thereby be limited.
5.3 Delay of Registration. 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 of the Company, it
would not be in the best interests of the Company and its shareholders for such
registration statement to be filed on or before the date filing would be
required and it is therefore appropriate to defer the filing of such
registration statement, then the Company may direct that such request for
registration be delayed for a period not in excess of one hundred twenty (120)
days, such right to delay a request to be exercised by the Company not more than
once in any twelve month period.
6. Company Registration.
6.1 Notice of Registration. If at any time or from time to time
----------------------
the Company shall determine to register any of its Common Stock on Form S-1 or
Form S-3 (or any successor form under the Securities Act) (other than with
respect to a shelf registration statement), for its own account in connection
with the public offering of such securities solely for cash, the Company will:
(a) promptly give to each Holder written notice thereof; and
(b) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within ten (10) business days after receipt of such written
notice from the Company, by any Holder.
Notwithstanding the foregoing, no registrations of securities by the
Company on an Excluded Registration Statement shall give rise to the rights of
the Holders set forth in this Section.
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6.2 Underwriting. If the registration of which the Company gives
------------
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 6.1(a). In such event the right of any Holder to
registration pursuant to this Section 6 shall be conditioned upon such Holder"s
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the Other Shareholders 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 6, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit all or any
portion of the Registrable Securities to be included in such registration. The
Company shall so advise all Holders and Other Shareholders distributing their
securities through such underwriting and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated as follows: first, an equal aggregate number of shares of Registrable
Securities of each of the Investors (as a group) and the Founders (as a group);
and second, among the Other Shareholders. Registrable Securities are to be
allocated within each group as aforesaid in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by the
Investors, the Founders, or the Other Shareholders, as applicable, at the time
of filing the registration statement. To facilitate the allocation of shares in
accordance with the above provisions, the Company may round the number of shares
allocated to any Holder or Other Shareholder to the nearest 100 shares. If any
Holder or Other Shareholder disapproves of the terms of any such underwriting,
he or she may elect to withdraw therefrom by written notice to the Company and
the managing underwriter.
6.3 Right to Terminate Registration. The Company shall have the
-------------------------------
right to terminate or withdraw any registration initiated by it under this
Section 6 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration.
6.4 Termination of Rights. The rights to cause the Company to
---------------------
register Registrable Securities pursuant to this Section 6 shall terminate three
(3) years after the IPO.
7. Registration on Form S-3.
7.1 If any Holder or Holders holding in the aggregate not less than
25% of the then outstanding Registrable Securities 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 Registrable Securities the reasonably anticipated
aggregate price to the public of which, net of underwriting discounts and
commissions, would exceed $2,500,000, and the Company is at the time of such
request a registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, the Company shall use its reasonable 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 the Holder or Holders may reasonably request; provided, however, that the
Company shall not be required to effect more than two such registrations
pursuant to this Section 7 in any twelve (12) month period or more than a total
of three registrations under this Section 7. The
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substantive provisions of Section 5.2 shall be applicable to each registration
initiated under this Section 7.
7.2 Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance or subject the Company to taxation in such jurisdiction unless the
Company is already subject to service in such jurisdiction or taxation in such
jurisdiction, respectively, and except as may be required by the Securities Act;
(ii) if the Company, within ten (10) days of the receipt of the request of the
Holders, gives notice of its bona fide intention to effect the filing of a
registration statement (other than an Excluded Registration Statement) with the
Commission within ninety (90) days of receipt of such request; (iii) during the
period starting with the date sixty (60) days prior to the Company"s estimated
date of filing of, and ending on the date six (6) months immediately following,
the effective date of any registration statement pertaining to securities of the
Company (other than an Excluded Registration Statement), provided that the
Company is actively employing in good faith all reasonable efforts to cause such
registration statement to become effective; or (iv) if the Company shall furnish
to such Holder a certificate signed by the President of the Company stating that
in the good faith judgment of the Board of Directors it would be seriously
detrimental to the Company or its shareholders for registration statements to be
filed in the near future, then the Company"s obligation to use its reasonable
efforts to file a registration statement shall be deferred for a period not to
exceed one hundred twenty (120) days from the receipt of the request to file
such registration by such Holder; provided, however, that such right to delay a
filing may not be exercised by the Company more than once in any twelve month
period.
8. Limitations on Subsequent Rights. From and after the date of this
Agreement, the Company shall not, without the consent of Holders of a majority
of the Registrable Securities and of TCV III (Q), L.P. ("TCV"), enter into any
agreement granting any holder or prospective holder of any securities of the
Company registration rights with respect to such securities unless (i) such new
registration rights and related obligations, including standoff obligations, are
on a pari passu basis with those rights of the Investors and the Founders
---- -----
hereunder (it being understood that pari passu shall be determined with
---- -----
reference to the relative pro rata effect, if any, of the granting of the
--- ----
additional registration rights on the Founders (as a group) and the Investors
(as a group)); or (ii) such new registration rights are junior to the
registration rights granted the Investors and the Founders hereunder and the
related obligations, including standoff obligations, are equally or more
burdensome than the obligations of the Holders hereunder.
9. Expenses of Registration.
9.1 All Registration Expenses and Selling Expenses incurred in
connection with a registration pursuant to Section 7 shall be borne pro rata by
the Holder or Holders requesting the registration according to the number of
Registrable Securities included in such registration.
9.2 All Registration Expenses incurred in connection with all
registrations pursuant to Sections 5 or 6 shall be borne by the Company.
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9.3 All Selling Expenses relating to securities registered on behalf
of the Holders shall be borne by the Holders of such securities pro rata on the
basis of the number of shares so registered. In connection with any registration
pursuant to Sections 5 or 6, if the participating Holders elect to be
represented by counsel for the Company, the Company will pay the fees and
disbursements of its counsel incurred in so representing such participating
Holders and such fees and disbursements will not constitute Selling Expenses.
10. Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Agreement,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use all reasonable efforts to
cause such registration statement to become and remain effective until the
earlier of the expiration of one hundred eighty (180) days or completion of the
distribution described in the Registration Statement;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all Registrable
Securities covered by such registration statement
(c) 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.
11. Indemnification.
11.1 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,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages 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, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in the light of the circumstances
in which they were made, not misleading, or any violation by the Company of the
Securities Act or any rule or regulation promulgated under the Securities Act
applicable to the Company in connection with any such registration,
qualification or compliance, and the Company will reimburse each such Holder,
each of its officers and directors, and each person controlling such Holder,
each such underwriter and each person who controls any such underwriter,
-15-
for any legal and any other expenses reasonably 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,
controlling person or underwriter and stated to be for use therein.
11.2 Each Holder will, if Registrable Securities held by such Holder
are included in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors and
officers, each underwriter, if any, of the Company's securities covered by such
a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all 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 in
connection with investigating or defending any such claim, loss, damage,
liability or action, in each case to the extent, but only to the extent, that
such untrue statement (or alleged untrue statement) or omission (or alleged
omission) is made in such registration statement, prospectus, offering circular
or other document in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
maximum liability of each Holder under this Section 11.2 shall be limited in an
amount equal to the net proceeds received by such Holder in such offering,
unless such liability arises out of or is based solely on willful misconduct by
such Holder.
11.3 Each party entitled to indemnification under this Section 11
(the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does
-16-
not include the giving by the claimant or plaintiff to such Indemnified Party of
an unconditional release from all liability in respect to such claim or
litigation.
12. Information by Holder. The Holder or Holders of Registrable
Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Agreement. At any time during
the effectiveness of any registration statement covering Registrable Securities
offered by a Holder, if such Holder becomes aware of any change materially
affecting the accuracy of the information contained in such registration
statement or the prospectus (as then amended or supplemented) relating to such
Holder, it shall immediately notify the Company of such change.
13. Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Restricted Securities to the public without registration, after
such time as a public market exists for the Common Stock of the Company, the
Company agrees to use its 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 date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) Use its reasonable 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 Securities Exchange Act of 1934, as amended (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 ninety (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
so filed by the Company with the Commission on a non-confidential basis as a
Holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing a Holder to sell any such securities without
registration; provided, however, that no such copies shall need to be provided
-------- -------
by the Company if such reports or documents are available from the Commission's
internet XXXXX database.
14. Transfer of Rights. The rights to cause the Company to register
securities granted Holders under Sections 5, 6 and 7, and the first refusal and
maintenance rights granted Holders under Sections 16 and 17 hereof, may be
assigned to any affiliate of a Holder (including without limitation any former
partner in any Holder that is a partnership or former member in a Holder that is
a limited liability company) or to a transferee or assignee reasonably
acceptable to the Company in connection
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in each case with any transfer or assignment of Registrable Securities by a
Holder (but may not be otherwise assigned or transferred) provided that: (i)
such transfer complies with Section 2 hereof and otherwise with applicable
securities laws; (ii) in the case of an assignment of the rights granted under
Sections 5, 6 and 7 hereof, such assignee or transferee acquires an aggregate of
at least 150,000 Shares (as may be appropriately adjusted upon any stock split,
stock dividend, recapitalization, merger, consolidation or similar event) or
shares of Series A Preferred (counted on an as-converted into Common Stock
basis); (iii) in the case of an assignment of the rights granted under Section
16 or 17 hereof, such assignee or transferee acquires an aggregate of at least
250,000 Shares (as may be appropriately adjusted upon any stock split, stock
dividend, recapitalization, merger, consolidation or similar event) or shares of
Series A Preferred (counted on an as-converted into Common Stock basis); and
(iv) such assignee or transferee becomes a party to this Agreement and assumes
all of the obligations of the transferring Holder hereunder.
15. Standoff Agreement. Each Shareholder and Additional Rightsholder
agrees, upon request of the Company or the underwriters managing any
underwritten offering of the Company's securities, not to sell, make any short
sale of, loan, grant any option for the purchase of, or otherwise dispose of any
Registrable Securities (other than those included in the registration) without
the prior written consent of the Company or such underwriters, as the case may
be, for such period of time (not to exceed one hundred eighty (180) days) from
the date of the IPO or for such period of time (not to exceed ninety (90) days)
from the effective date of any subsequent registration statement after the IPO
(other than an Excluded Registration Statement) as may be requested by the
underwriters, and if so requested by the Company or such underwriters, to enter
into a lockup agreement to the foregoing effect and in a form satisfactory to
the Company and such underwriters; provided however, that holders of shares of
----------------
Series A Preferred shall not be so obligated not to dispose of their Registrable
Securities, and shall not be required to enter into such a lock-up agreement
with respect thereto, unless: (A) in the case of the IPO, (i) all executive
officers and 1% shareholders of the Company agree to the same lock-up and (ii)
such agreement shall provide that any discretionary waiver or termination of the
restrictions of any such lock-up agreements by the Company or representatives of
the underwriters shall apply to all persons subject to such agreements pro rata
based on the number of shares subject to such agreements; and (B) in the case of
a registration statement subsequent to the IPO, (i) all executive officers agree
to the same lock-up and (ii) the holders have the ability to sell not less than
25% of the Shares registered in any such subsequent offering. The obligations
of the Shareholders and Additional Rightsholders set forth in this Section 15
shall expire on the date that is the second anniversary of the IPO of the
Company"s securities.
16. Right of First Refusal. Before any Shares or other securities of
the Company held by a Shareholder or any transferee (either being sometimes
referred to herein as the "Selling Shareholder") may be sold or otherwise
transferred (including transfer by gift or operation of law), the remaining
Shareholders and the Company shall have a right of first refusal to purchase
such securities on the terms and conditions set forth in this Section 16 (the
"Right of First Refusal").
16.1 First Refusal Notice. If a Shareholder desires to transfer
--------------------
any securities of the Company owned by it ("Sale Shares"), then at least 60 days
prior to such transfer, other than a
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transfer exempt pursuant to Section 16.7, such Selling Shareholder must give
notice (the "First Refusal Notice") to the Company and other Shareholders of its
intention to effect such transfer. The First Refusal Notice must set forth (a)
the number and class of Sale Shares to be sold by the Shareholder, (b) the date
or proposed date of such transfer and the name and address of the transferee
(the "Proposed Transferee"), and (c) the principal terms of such transfer,
including the cash or other property or consideration to be received upon such
transfer.
16.2 Purchase Price. The purchase price for the Sale Shares and other
--------------
securities purchased by the Shareholders or the Company under this Section 16
("First Refusal Price") shall be the bona fide cash price or other consideration
for which the Selling Shareholder proposes to transfer the Sale Shares as set
forth in the First Refusal Notice. If the First Refusal Price includes
consideration other than cash, the cash equivalent value of the non-cash
consideration shall be determined in good faith by the Board of Directors of the
Company.
16.3 Company's Option. The Company shall have the option, but not the
----------------
obligation, to purchase all, but not less than all, of the Sale Shares at the
First Refusal Price. Within 20 days after the date the First Refusal Notice is
given, the Company shall give written notice to the Selling Shareholder and the
other Shareholders stating its intention to exercise such option, and a date and
time for consummation of the purchase not less than 60 days nor more than 90
days after the date the First Refusal Notice was given. Failure by the Company
to give such notice within such time period shall be deemed an election by it
not to exercise its option.
16.4 Shareholders" Option.
--------------------
(a) If the Company fails to exercise the option with respect to
all of the Sale Shares, each of the other Shareholders shall have the option,
but not the obligation, to purchase all but not less than all of the Sale Shares
on the same terms, including the First Refusal Price, as specified in the First
Refusal Notice. After the expiration of the 20 day period in Section 16.3
hereof, but within 30 days after the First Refusal Notice is given, any electing
Shareholder shall give written notice to the transferring Selling Shareholder
and the Company stating that it elects to exercise its option and a date and
time for consummation of the purchase not more than 90 days after the date the
First Refusal Notice is given. Failure by a Shareholder to give such notice
within such time period shall be deemed an election by it not to exercise its
option. If more than one Shareholder exercises this option, the number of Sale
Shares that each such Shareholder shall be entitled to purchase shall be equal
to such Shareholder"s Pro Rata Share.
(b) "Pro Rata Share" of a Shareholder for purposes of this
Section 16 shall be calculated as of the date of the First Refusal Notice and
shall be determined by dividing:
(i) the sum of (A) the number of outstanding shares of
Common Stock then held by such Shareholder, plus (B) the number of shares of
Common Stock issuable upon conversion in full of all shares of outstanding
preferred stock, if any, then held by such Shareholder; by
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(ii) the sum of (A) the number of outstanding shares of
Common Stock then held by all Shareholders exercising their option under this
Section 16.4 with respect to the securities to be sold pursuant to such First
Refusal Notice (the "Purchasing Shareholders"), plus (B) the number of shares of
Common Stock issuable upon conversion in full of all outstanding shares of
preferred stock, if any, then held by all Purchasing Shareholders.
16.5 Payment. Payment of the First Refusal Price shall be made in
-------
cash, by check, or, in the case of a sale to the Company, by cancellation of all
or a portion of any outstanding indebtedness of the Selling Shareholder to the
Company, or by any appropriate combination thereof.
16.6 Selling Shareholder's Right to Transfer. If all of the Sale
---------------------------------------
Shares proposed in the First Refusal Notice to be transferred to a given
Proposed Transferee are not purchased by either the Shareholders or the Company,
then the Selling Shareholder may sell or otherwise transfer such Sale Shares and
other securities to that Proposed Transferee at the First Refusal Price or at a
higher price, provided that such sale or other transfer is consummated within
120 days after the date of the First Refusal Notice and provided further that
any such sale or other transfer is effected in accordance with any applicable
securities laws and the Proposed Transferee agrees in writing that the
provisions of this Agreement shall continue to apply to the Sale Shares and such
other securities if applicable in the hands of such Proposed Transferee. If the
Sale Shares and other securities described in the First Refusal Notice are not
transferred to the Proposed Transferee within such period, a new First Refusal
Notice shall be given to the Company and the Shareholders, and the Shareholders
and the Company shall again be offered the Right of First Refusal in accordance
with this Section 16 before any Shares held by the Selling Holder may be sold or
otherwise transferred.
16.7 Exception for Certain Transfers. Anything to the contrary
-------------------------------
contained in this Section 16 notwithstanding, (i) in the case of a Selling
Shareholder that is an individual, the transfer of any or all of the Shares or
other securities of the Company during the Selling Shareholder's lifetime or on
the Selling Shareholder's death by will or intestacy to the Selling
Shareholder"s immediate family or a trust for the benefit of the Selling
Shareholder"s immediate family shall be exempt from the provisions of this
Section 16 and (ii) in the case of a Selling Shareholder that is a corporation,
partnership or other business entity, the transfer of any or all of the Shares
or other securities of the Company to any controlled or controlling corporate,
partnership or other business entity of such Selling Shareholder (or any
corporate, partnership or other business entity under common control with such
Selling Shareholder) shall be exempt from the provisions of this Section 10.
"Immediate Family" as used herein shall mean spouse, lineal descendant or
antecedent, father, mother, brother or sister. In such case, the transferee or
other recipient shall receive and hold the Shares so transferred subject to the
provisions of this Section 16, and there shall be no further transfer of such
Shares or other securities except in accordance with the terms of this Section
16.
16.8 Transfers Void. Any attempted transfer in violation of the terms
--------------
of this Section 16 shall be ineffective to vest in any Proposed Transferee any
interest held by the transferring Selling Shareholder in the shares. Without
limiting the foregoing, any purported transfer in violation hereof shall be
ineffective as against the Company, and the Company and the Shareholders shall
have a continuing right and option (but not an obligation), until the
restrictions
-20-
contained in this Section 16 terminate, to purchase the securities purported to
be transferred by the Selling Shareholder in violation of this Section 16 for a
price and on terms provided for herein.
16.9 Termination or Waiver of Right of First Refusal. The Right of
-----------------------------------------------
First Refusal shall terminate upon the earlier of (i) the IPO, (ii) the
dissolution of the Company, or (iii) the effective date of a Change in Control.
17. Maintenance Right. In the event that the Company shall offer for sale
New Securities (as defined below) after the date of this Agreement, each Major
Shareholder (as hereafter defined) shall be entitled to purchase its Pro Rata
Share (as hereafter defined) of the New Securities, on the same terms and
conditions and at the same price as that offered to third parties. A "Major
Shareholder" is a Shareholder that shall hold on the date of the notice referred
to in Section 17.3 below more than 125,000 Shares (as may be appropriately
adjusted upon any stock split, stock dividend, recapitalization, merger,
consolidation or similar event occurring between the date hereof and the date of
such Notice), calculated by adding the number of outstanding Shares then held by
such Shareholder to the number of Shares issuable upon conversion in full of all
shares of outstanding Series A Preferred then held by such Shareholder.
The "Pro Rata Share" of a Shareholder, for purposes of this Section, shall
be calculated as of the date of the relevant notice referred to in Section 17.3
and shall be determined by dividing:
(i) the sum of (A) the number of outstanding Shares then
held by such Shareholder plus (B) the number of Shares issuable upon conversion
in full of all shares of outstanding Series A Preferred then held by such
Shareholder; by
(ii) the sum of (A) the total number of Shares then
outstanding, plus (B) the total number of Shares issuable upon conversion in
full of all Series A Preferred then outstanding.
17.2 Maintenance Right. This maintenance right (the "Maintenance
-----------------
Right") shall be subject to the following provisions:
"New Securities" shall mean any Shares of Common Stock or any series of the
Company's preferred stock convertible into Common Stock and rights, options or
warrants to purchase such Shares or share of preferred stock, and securities of
any type whatsoever (including, without limitation, convertible debt securities)
that are, or may become, convertible into Shares of Common Stock. However, "New
Securities" does not include:
(a) Common Stock issuable pursuant to any outstanding
securities;
(b) securities issued in a firm commitment underwritten public
offering, pursuant to an effective registration statement under the Securities
Act, covering the offer and sale of equity securities for the Company's account;
-21-
(c) securities issued pursuant to any acquisition, merger,
purchase, reorganization, or consolidation;
(d) securities issued to employees, officers, or directors of,
or consultants to, the Company, pursuant to stock purchase or stock option plans
or other arrangements approved by the Company's Board of Directors or pursuant
to the terms of such securities;
(e) securities issued to effect any stock split, stock dividend
or recapitalization or similar event by the Company;
(f) securities issued to vendors, customers, lenders, or in
connection with other principally non-equity financing arrangements; provided
that, if any such vendor, customer or lender is Korea Data Systems Co., Ltd. or
Trigem Computer, Inc., or any person or entity in control thereof , under common
control therewith or controlled thereby, such securities issuance shall have
been approved by the director nominated by the Series A Preferred;
(g) issuances to non-affiliates for non-cash consideration; or
(h) Series A Preferred Stock issued pursuant to the Stock
Purchase Agreement.
17.3 Notice. In the event the Company proposes to undertake issuance
------
of New Securities, it shall give each Major Shareholder written notice of its
intention, describing the type of New Securities, and the price and terms upon
which the Company proposes to issue the same and providing each Shareholder, at
such Shareholder's request, with all information provided to prospective
purchasers of such New Securities. Each Major Shareholder shall have twenty (20)
days from the date of receipt of any such notice to agree to purchase up to its
Pro-Rata Share of such New Securities for the price and upon the terms specified
in the notice by giving written notice to the Company and stating therein the
quantity of New Securities it elects to purchase. The Company shall inform each
Major Shareholder that has elected to purchase New Securities of the date and
place of the closing of the sale of New Securities pursuant to Section 17.4
below (a "New Securities Closing") and at such closing each such Shareholder
will purchase and pay for the New Securities it elected, and is entitled, to
purchase.
17.4 Company's Right to Sell New Securities. The Company shall have
--------------------------------------
ninety (90) days thereafter to sell or enter into an agreement (pursuant to
which the sale of New Securities covered thereby shall be closed, if at all,
within sixty (60) days from the date of such agreement) to sell the New
Securities respecting which the foregoing Maintenance Rights were not exercised,
at the price and upon the terms no more favorable to the purchasers of such
securities than specified in the Company's notice. In the event the Company has
not, within such ninety (90) day period, sold the New Securities or entered into
an agreement to sell the New Securities (or sold and issued New Securities in
accordance with the foregoing within sixty (60) days from the date of such
agreement), the Company shall not thereafter issue or sell any New Securities
without first offering such securities to the Shareholders in the manner
provided above.
-22-
17.5 Termination or Waiver of Shareholders Maintenance Right. The
-------------------------------------------------------
Maintenance Right granted pursuant to this Section 17 shall terminate upon the
earlier of (i) the IPO, (ii) the dissolution of the Company, or (iii) the
effective date of a Change in Control.
18. Board of Directors: Voting Agreement.
18.1 Agreement to Vote. Subject to Section 18.6 below, the Investors,
-----------------
the Founders and any Additional Rightsholder that shall then be a Holder
(collectively, the "Voting Holders") agree to vote the Shares of Common Stock
and shares of Series A Preferred then held by them at any regular or special
meeting of shareholders of the Company, or, in lieu of any such meeting, to give
their written consent, as provided in Section 18.2 below. As used in this
Section 18, the term "vote" shall have the meaning set forth in Section 194 of
the California Corporations Code (the "Code").
18.2 Board of Directors. As is more fully elaborated in the Amended
------------------
and Restated Certificate of Incorporation of the Company, the Board of Directors
shall consist of seven (7) members, elected as set forth therein. During the
respective periods set forth in the Restated Certificate, two of the Directors
shall be elected by TriGem Corporation ("TriGem"), two shall be elected by Korea
Data Systems America, Inc. ("KDS"), one shall be elected by Xxxxxxx X. Xxxxxx,
one shall be elected by the holders of shares of Series A Preferred and one
shall be elected by the holders of the outstanding shares of Series A Preferred
and Shares of Common Stock, voting together as a class. A director may be
removed from the Board of Directors, and any vacancy in the Board of Directors
shall be filled, in each case as set forth in the Restated Certificate. With
respect to any proposal concerning the election of either director who is to be
elected by TriGem, the Voting Holders hereby covenant and agree that each Voting
Holder shall vote its shares of Series A Preferred and Shares of Common Stock to
nominate, appoint and elect as such director the nominee of TriGem. With respect
to any proposal concerning the election of either director who is to be elected
by KDS, the Voting Holders hereby covenant and agree that each Voting Holder
shall vote its shares of Series A Preferred and Shares of Common Stock to
nominate, appoint and elect as such director the nominee of KDS. With respect to
any proposal concerning the election of the director who is to be Xxxxxxx X.
Xxxxxx, the Voting Holders hereby covenant and agree that each Voting Holder
shall vote its shares of Series A Preferred and Shares of Common Stock to
nominate, appoint and elect as such initial director Xxxxxxx X. Xxxxxx. With
respect to any proposal concerning the election of the director who is to be
elected by the holders of a majority of the outstanding shares of the Series A
Preferred and Shares of Common Stock, voting together as a class, the Voting
Holders hereby covenant and agree that each Voting Holder shall vote its shares
of Series A Preferred and Shares of Common Stock to nominate, appoint and elect
as the initial such director Xxxxxx Xxxxxx. With respect to any proposal
concerning the election of the director who is to be elected by the holders of a
majority of the outstanding shares of the Series A Preferred, voting together as
a class, the Voting Holders hereby covenant and agree that each Voting Holder
shall vote its shares of Series A Preferred and Shares of Common Stock to
nominate, appoint and elect as such director the nominee of TCV, and as such
initial director to nominate, appoint and elect X. Xxxx Xxxxx III.
18.3 No Revocation. The voting agreements contained herein are
-------------
coupled with an interest and may not be revoked during the term of this Section
18.
-23-
18.4 Stock Splits, Stock Dividends, etc. In the event of any stock
----------------------------------
split, stock dividend, recapitalization, reorganization, or the like, any
securities issued as a result thereof with respect to the Voting Holders" Shares
or shares of Series A Preferred shall become Voting Holders" Shares or shares of
Series A Preferred, as the case may be, for purposes of this Section 18 and
shall be endorsed with the legend set forth in Section 2 hereof.
18.5 Waivers. Any term hereof may be amended and the observance of
-------
any term hereof may be waived either generally or in a particular instance and
either retroactively or prospectively only with the written consent of the
Company and the holders of a majority of the outstanding Shares of Common Stock
and a majority of the outstanding shares of Series A Preferred, voting as
separate classes. No term hereof with respect to the director who is to be
elected by the holders of a majority of the outstanding shares of the Series A
Preferred, voting together as a class, shall be amended without the written
consent of TCV.
18.6 Board Observer Rights. For so long as the Industrial Investor
---------------------
owns at least 1,000,000 Shares of Common Stock, on an as if converted basis
(adjusted for stock splits, combinations and the like), the Industrial Investor
shall be entitled to designate, upon written notice to the Company, one (1)
individual reasonably acceptable to the Company (such designee, the "Observer")
who shall be entitled to notice of, to attend, and to any documentation
distributed to the directors before, during or after, all meetings (including
any action to be taken by written consent) of the Board and all committees
thereof; provided, however, that the Company reserves the right to withhold any
information and to exclude such Observer from any meeting or portion thereof if
access to such information or attendance at such meeting could
(i) in the judgment of the Company's outside counsel, adversely affect the
attorney-client privilege between the Company and its counsel or cause
the Board to breach its fiduciary duties, or
(ii) in the good faith determination of a majority of the Board, result in
a conflict between the interests of the Company and those of such
Observer, the Industrial Investor or any of their affiliates.
The Observer shall not be permitted to vote at any meeting of the Board or be
counted for purposes of determining whether there is sufficient quorum for the
Board to conduct its business. The Industrial Investor and Observer shall
maintain the confidentiality of all financial, confidential and proprietary
information of the Company obtained by them as a result of the rights granted
pursuant to this Section 18.6. By designating an Observer, the Industrial
Investor agrees to cause such Observer upon the Company's request to execute an
agreement providing for nondisclosure of the Company's proprietary information
consistent with such agreements signed by the Company's employees. The parties
hereto hereby acknowledge and agree that, except as set forth in this Section
18.6, an Observer shall not owe any fiduciary or other duties to the
shareholders of the Company or otherwise have any directorial or other duties or
liabilities to the Company or its shareholders as a result of the Observer's
exercise of his rights hereunder. The Industrial Investor shall designate, and
may replace, its Observer with or without cause in its sole discretion by
providing written notice to the Company at least five (5) business days prior to
any such action taking effect. In addition to the
-24-
events of termination set forth in Section 18.7, any rights granted to an
Observer under this Section 18.6 shall immediately terminate if the Industrial
Investor no longer owns at least 1,000,000 shares of Common Stock, on an as if
converted basis (adjusted for stock splits, combinations and the like). Exercise
of the observer rights granted in this Section 18.6 shall not be transferable to
a transferee or assignee of shares of the Company's capital stock.
Notwithstanding anything contained herein to the contrary, the Company's failure
to comply with any provision of this Section 18.6 shall not affect the validity
of any action taken (whether at a meeting or by written consent) by the Board,
or any committee thereof, or by any or all of the Company's stockholders.
18.7 Termination. All parties" rights under this Section 18 will
-----------
terminate upon the earliest to occur of (i) the IPO, (ii) the dissolution of the
Company, or (iii) the effective date of a Change of Control.
19. Miscellaneous.
19.1 Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE
-------------
WITH, AND GOVERNED IN ALL RESPECTS BY, THE LAWS OF THE STATE OF CALIFORNIA, AS
APPLIED TO AGREEMENTS ENTERED INTO, AND TO BE PERFORMED ENTIRELY IN SUCH STATE,
BETWEEN RESIDENTS OF SUCH STATE. THE PARTIES HERETO (I) AGREE TO SUBMIT TO THE
JURISDICTION OF THE FEDERAL AND STATE COURTS SITTING IN THE COUNTIES OF ORANGE,
SANTA XXXXX OR SAN FRANCISCO OF THE STATE OF CALIFORNIA WITH RESPECT TO THE
BREACH OR INTERPRETATION OF THIS AGREEMENT OR THE ENFORCEMENT OF ANY AND ALL
RIGHTS, DUTIES, LIABILITIES, OBLIGATIONS, POWERS, AND OTHER RELATIONS BETWEEN
THE PARTIES ARISING UNDER THIS AGREEMENT, (II) WAIVE, TO THE FULLEST EXTENT EACH
MAY EFFECTIVELY DO SO, ANY OBJECTION EACH PARTY MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF ANY SUCH PROCEEDING AND (III) SUBMIT TO THE EXCLUSIVE
JURISDICTION OF SUCH COURTS IN ANY SUCH SUIT, ACTION OR PROCEEDING. THE PARTIES
HERETO IRREVOCABLY WAIVE ANY IMMUNITY TO JURISDICTION TO WHICH THEY MAY
OTHERWISE BE ENTITLED OR BECOME ENTITLED (INCLUDING SOVEREIGN IMMUNITY, IMMUNITY
TO PRE-JUDGMENT ATTACHMENT, POST-JUDGMENT ATTACHMENT AND EXECUTION) IN ANY LEGAL
SUIT, ACTION OR PROCEEDING ARISING OUT OF OR BASED ON THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY WHICH IS INSTITUTED IN ANY CALIFORNIA COURT.
19.2 Survival. The representations, warranties, covenants and
--------
agreements made herein shall survive any investigation made by any Shareholder
and the closing of the transactions contemplated hereby.
19.3 Successors and Assigns. Except as otherwise 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.
-25-
19.4 Entire Agreement. This Agreement and the other agreements
----------------
referenced herein constitute the full and entire understanding and agreement
between the parties with regard to the subject matter hereof and thereof.
19.5 Amendment. Except as expressly provided herein, neither this
---------
Agreement nor any provision hereof may be amended, waived, discharged or
terminated other than by written consent of the Company, of Investors holding at
least a majority of Series A Preferred (voting on an as if converted basis) and
Shares issued on conversion of Series A Preferred, and of Holders holding at
least a majority of the Shares of Common Stock, except in the case of the
provisions of Sections 16, 17 and 18.6 of this Agreement, each of which may only
be amended, waived, discharged or modified with the written consent of the
Company and the Holders of at least 80% of the Shares (excluding Shares issued
upon conversion of shares of Series A Preferred) then outstanding and at least
80% of the sum of the shares of Series A Preferred (voting on an as-if-converted
basis) then outstanding and the Shares of Common Stock then outstanding and
issued upon conversion of the Series A Preferred. Notwithstanding the foregoing:
(i) any amendment hereto that would adversely affect the holders of a specific
class or series of the Company's capital stock in a manner different than the
holders of other shares of capital stock shall also require the consent of the
holders of a majority of the shares of such class or series so affected; and
(ii) any amendment that would adversely affect any of the Investors, Founders,
or Additional Rightsholders in a manner different than the holders of other
shares of capital stock shall also require the consent of, if the Investors are
so affected, the Investors (or their assignees to whom Investors have expressly
assigned their rights in compliance with Section 14 hereof) who then hold at
least fifty percent (50%) of the Investor Registrable Securities then held by
persons entitled to registration rights hereunder and, if the Founders are so
affected, the Founders (or their assignees to whom they have expressly assigned
their rights in compliance with Section 14 hereof) who then hold at least fifty
percent (50%) of the Founder Registrable Securities then held by persons
entitled to registration rights hereunder and, if the Additional Rightsholders
are so affected, the Additional Rightsholders (or their assignees to whom
Additional Rightsholders have expressly assigned their rights in compliance with
Section 14 hereof) who then hold at least fifty percent (50%) of the Additional
Registrable Securities then held by persons entitled to registration rights
hereunder; provided, however, that any Investor, Founder, or Additional
------------------
Rightsholder, or any such assignee thereof may waive hereunder any of such
holder's rights or the Company's obligations hereunder without obtaining the
consent of any other Investor, Founder, Additional Rightsholder or assignee. Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each party hereto or upon each Holder of shares of the consenting class or
series of capital stock or upon each Investor, Founder, Additional Rightsholder
or assignee, as the case may be; provided, however, that no such amendment or
-----------------
waiver shall reduce the percentage of Shares (excluding Shares issued upon
conversion of shares of Series A Preferred) necessary to amend this Agreement
without the consent of the holders of at least 80% of the Shares (excluding
Shares issued upon conversion of shares of Series A Preferred), and no such
amendment or waiver shall reduce the percentage of shares of Series A Preferred
(voting on an as-if-converted basis) and Shares of Common Stock then outstanding
issued upon conversion of the Series A Preferred without the consent of all
shares of Series A Preferred (voting on an as-if-converted basis) and all Shares
of Common Stock then outstanding issued upon conversion of the Series A
Preferred.
-26-
19.6 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 hand or by messenger,
addressed (a) if to a Shareholder, at such person's address as set forth on
Schedule A, or at such other address as such person shall have furnished to the
----------
Company in writing, or (b) if to any other Shareholder of any Shares, at such
address as such Shareholder shall have furnished the Company in writing, or,
until any such Shareholder so furnishes an address to the Company, then to and
at the address of the last Shareholder of such Shares who has so furnished an
address to the Company, or (c) if to the Company, one copy should be sent to its
address set forth below and addressed to the attention of the Corporate
Secretary, or at such other address as the Company shall have furnished to the
Shareholders.
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, 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 the United States mail, addressed and mailed as aforesaid.
19.7 Delays or Omissions. Except as expressly provided herein, no
-------------------
delay or omission to exercise any right, power or remedy accruing to any
Shareholder of any Shares, upon any breach or default of the Company under this
Agreement, shall impair any such right, power or remedy of such Shareholder nor
shall it be construed to be a waiver of any such breach or default, or an
acquiescence therein, or of or in any similar breach or default thereafter
occurring; nor shall any waiver of any single breach or default be deemed a
waiver of any other breach or default theretofore or thereafter occurring. Any
waiver, permit, consent or approval of any kind or character on the part of any
Shareholder of any breach or default under this Agreement, or any waiver on the
part of any Shareholder of any provisions or conditions of this agreement, must
be in writing and shall be effective only to the extent specifically set forth
in such writing. All remedies, either under this Agreement or by law or
otherwise afforded to any Shareholder, shall be cumulative and not alternative.
19.8 Expenses. Except as otherwise provided in Section 9, the Company
--------
and each Shareholder shall bear their own respective expenses incurred on their
behalf with respect to this Agreement and the transactions contemplated hereby.
19.9 Counterparts. This Agreement may be executed in any number of
------------
counterparts, each of which may be executed by less than all of the
Shareholders, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument. Upon execution of a counterpart of this Agreement by an Additional
Rightsholder, such Additional Rightsholder shall become a party hereto for all
purposes, and this Agreement shall be enforceable against such Additional
Rightsholder in all respects.
19.10 Severability. In the event that any provision of this Agreement
------------
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
-27-
19.11 Titles and Subtitles. The titles and subtitles used in this
--------------------
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
19.12 Aggregation. All shares of capital stock of the Company held or
-----------
acquired by affiliated persons or entities shall be aggregated together for
purposes of determining the availability of rights under this Agreement, except
as otherwise set forth herein.
-28-
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of the
day and year first set forth above.
eMachines, Inc.
By: /s/ Xxxxxx X. Xxxxxx
_______________________________________
Name: Xxxxxx X. Xxxxxx
Title: Vice President and Chief Financial
Officer
FOUNDERS
TriGem Corporation
By: /s/ Joong Xxx Xxx
_______________________________________
Name: Joong Xxx Xxx
Title: President and Chief Executive Officer
Korea Data Systems America, Inc.
By: /s/ Xxxxx Xxx Park
_______________________________________
Name: Xxxxx Xxx Park
Title: President
/s/ Xxxx Xxxxx
__________________________________________
Xxxx Xxxxx
/s/ Xxxxxxx X. Xxxxxx
__________________________________________
Xxxxxxx X. Xxxxxx
/s/ Lap Xxxx Xxx
__________________________________________
Lap Xxxx Xxx
/s/ Dae Soo Koh
__________________________________________
Dae Soo Koh
/s/ Xxxx Xxx
__________________________________________
Xxxx Xxx
/s/ Hong Soon Xxx
__________________________________________
Hong Soon Xxx
/s/ Xxxx Xxx Xxx
__________________________________________
Xxxx Xxx Xxx
INVESTORS:
AMERICA ONLINE, INC.
a Delaware corporation
By: /s/ Xxxxxxx Xxxxxxx
________________________
Name: Xxxxxxx Xxxxxxx
Title: President, AOL Investments
TCV III (GP)
a Delaware General Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
_____________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV III, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
_____________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV III (Q), L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
_____________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
TCV III Strategic Partners, L.P.
a Delaware Limited Partnership
By: Technology Crossover Management III, L.L.C.,
Its: General Partner
By: /s/ Xxxxxx X. Xxxxxx
_____________________________________
Name: Xxxxxx X. Xxxxxx
Title: Chief Financial Officer
FRANKLIN SMALL CAP GROWTH FUND
By: /s/ Xxxxxxx X. XxXxxxxx
_____________________________________
Name: Xxxxxxx X. XxXxxxxx
Title: Portfolio Manager/Analyst
FRANKLIN CALIFORNIA GROWTH FUND
By: /s/ Xxxxxxx X. XxXxxxxx
_____________________________________
Name: Xxxxxxx X. XxXxxxxx
Title: Portfolio Manager/Analyst
FRANKLIN AGGRESSIVE GROWTH FUND
By: /s/ Xxxxxxx X. XxXxxxxx
_____________________________________
Name: Xxxxxxx X. XxXxxxxx
Title: Portfolio Manager/Analyst
HIKARI TSUSHIN, INC.
By: /s/ Xxxxxxxx Xxxxx
_____________________________________
Xxxxxxxx Xxxxx, Director
XXX XXXXXXX CAPITAL
By: /s/ Xxxxxx Xxx Xxxxxxx
_____________________________________
Name: Xxxxxx Xxx Xxxxxxx
Title: President
ATGF II
By: /s/ Xxxx X. Xxxxxx
______________________________________
Name: Xxxx X. Xxxxxx
Title: Director
VERTEX CAPITAL II LLC
By: /s/ Xxxxxxx X. Xxxxxxxxxxx
_____________________________________
Name: Xxxxxxx X. Xxxxxxxxxxx
Title: Manager
XXXXXXX XXXXXXXX
/s/ Xxxxxxx Xxxxxxxx
________________________________________
XXXXX XXXXXXXXXX
/s/ Xxxxx Xxxxxxxxxx
________________________________________
XXXXXX MASTER TRUST
By: /s/ Xxxx X. Xxxxxx
_____________________________________
Name: Xxxx X. Xxxxxx
Title: Attorney in fact
XXXXXXX XXXXXX-XXXXXXX
/s/ Xxxxxxx Xxxxxx-Xxxxxxx
________________________________________
NEW MILLENNIUM PARTNERS - EMACHINES, L.P.
By: New Millennium Venture Partners, LLC
Its: General Partner
By: /s/ Xxxxxx Xxxxxx
_____________________________________
Xxxxxx Xxxxxx, Managing Member
RHO MANAGEMENT TRUST I
By: RHO MANAGEMENT COMPANY, INC.
as Investment Adviser
By: [signature illegible]
_____________________________________
Name:
Title:
RRE INVESTORS, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
_____________________________________
Xxxxxx X. Xxxxxxx, General Partner
RRE INVESTORS FUND, L.P.
By: /s/ Xxxxxx X. Xxxxxxx
_____________________________________
Xxxxxx X. Xxxxxxx, General Partner
PARIBAS NORTH AMERICA, INC.
By: /s/ Xxxxxxxx Xxx
_____________________________________
Xxxxxxxx Xxx, Assistant Controller
OMEGA VENTURES III, L.L.C.
By: RS Omega III Holdings, L.L.C., Authorized Signatory
By: /s/ Xxxxxxx Xxxxx
_____________________________________
Managing Member
RS & CO. OFFSHORE OMEGA VENTURES III
By: RS Omega III Holdings, L.L.C., Authorized Signatory
By: /s/ Xxxxxxx Xxxxx
_____________________________________
Managing Member
OMEGA BAYVIEW, L.L.C.
By: [signature illegible]
_____________________________________
Authorized Signatory
CROSSOVER FUND II, L.P.
By: Crossover Investment Management, L.L.C.,
Its: General Partner
By: /s/ Xxxxxxx Xxxxx
_____________________________________
Xxxxxxx X. Xxxxx, Managing Member
XXXXXXX XXXXX XXXX 1993 TRUST
By: /s/ Xxxxxxx Xxxxx Xxxx
_____________________________________
Xxxxxxx Xxxxx Xxxx, Trustee
STANDARD GLOBAL EQUITY PARTNERS LP
By: Standard Pacific Capital LLC
Its: General Partner
By: /s/ Xxxxx X. Xxxx, Xx.
_____________________________________
Xxxxx X. Xxxx, Xx., Chief Financial Officer
SCORPION OFFSHORE INVESTMENT FUND LTD.
By: Standard Pacific Capital LLC
Its: Investment Advisor
By: /s/ Xxxxx X. Xxxx, Xx.
_____________________________________
Xxxxx X. Xxxx, Xx., Chief Financial Officer
STANDARD PACIFIC CAPITAL OFFSHORE
INVESTMENT FUND LTD.
By: Standard Pacific Capital LLC
Its: Investment Advisor
By: /s/ Xxxxx X. Xxxx, Xx.
_____________________________________
Xxxxx X. Xxxx, Xx., Chief Financial Officer
AB&T SALES CORP
a Delaware corporation
By: /s/ X. Xxxxxxx Monarch
_____________________________________
Name: X. Xxxxxxx Monarch
Title: V.P. Operations
BNK INVESTMENT INC.
By: /s/ Xxxxx Xx
_____________________________________
Name: Xxxxx Xx
Title:
MERCHANT CAPITAL, INC.
By: /s/ Xxxx X. Xxxxxxx
_____________________________________
Xxxx X. Xxxxxxx
Vice President
W.I. XXXXXX GROUP
By: /s/ Xxxxx Xxx
_____________________________________
Xxxxx Xxx, Chairman
Schedule A
----------
Shareholders
Name Common Stock Series A Preferred Options
--------------------------------------------------------------------------------
TriGem Corporation
00000 Xxxxxx Xxxx
Xxxxxx, XX 00000 29,200,000
Korea Data Systems America, Inc.
00000 Xxxxxx Xxx
Xxxxxx Xxxxx, XX 00000 28,819,538
Xxxxxxx X. Xxxxxx
0000 Xxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000 8,000,000 227,897
Lap Xxxx Xxx
00000 Xxxxxx Xxx
Xxxxxx Xxxxx, XX 1,600,000
Xxxx Xxx
Korea Xxxxx Xxxxx Xxxxxx Xxxx.
Xx. #000
000, Xxxxxxx-xxxx
Xxxxxxx-xx
Xxxxx,
XXXXX 2,400,000
Dae Soo Koh
Korea World Xxxxx Xxxxxx Xxxx.
Xx. #000
000, Xxxxxxx-xxxx
Xxxxxxx-xx
Xxxxx,
XXXXX 1,600,000
Hong Soon Xxx
00-0 XXXXX
Xxxxxxxxxxxx,
Xxxxx
XXXXX 2,400,000
Name Common Stock Series A Preferred Options
--------------------------------------------------------------------------------
Xxxx Xxxxx
00-0 XXXXX
Xxxxxxxxxxxx, Xxxxx
XXXXX 2,400,000
Xxxx Xxx Xxx
00-0 XXXXX
Xxxxxxxxxxxx,
Xxxxx
XXXXX 1,600,000
America Online, Inc. 7,832,079
00000 XXX Xxx (2,271,303 at Closing,
Xxxxxx, XX 00000 5,560,776 at Second
Attention: Xxx Xxxxx AOL Closing)
Phone: (000) 000-0000
with a copy to:
Xxxxxx, Xxxxxxxxxx & Xxxxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxxxxx, Esq.
TCV III (GP) 26,161
TCV III, L.P. 124,263
TCV III (Q), L.P. 3,302,768
TCV III Strategic Partners, L.P. 149,565
Technology Crossover Ventures
00 Xxxx Xxxxxx, Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (973) 467-532
Name Common Stock Series A Preferred Options
--------------------------------------------------------------------------------
With a copy to:
Technology Crossover Ventures
000 Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: X. Xxxx Xxxxx III
Phone: (000) 000-0000
Fax: (000) 000-0000
Franklin Small Cap Growth Fund 1,378,446
Franklin California Growth Fund 783,208
Franklin Aggressive Growth Fund 31,328
Franklin Xxxxxxxxx Group
000 Xxxxxxx'x Xxxxxx Xxxx., 0/xx/ Xxxxx
Xxx Xxxxx, XX 00000
Attention: Xxxx XxXxxxxx
Phone: (000) 000-0000
Hikari Tsushin, Inc. 2,192,982
Ohtemachi Xxxxxx Xxxx. 0-0-0
Xxxxxxxxx, Xxxxxxx-xx, Xxxxx, 000-0000
Attention: Xxxxxxxx Xxxxx, Director
Phone: (000) 000-0000
Xxx Xxxxxxx Capital 2,192,982
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxx Xxxxxxx
Phone: (000) 000-0000
ATGF II 800,208
Amerindo Investment Advisors Inc.
000 Xxxx Xxxxxx
00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Vertex Capital II LLC 15,664
0000 Xxxxx Xxxxxx Xxxxx
Xxxxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxxxxxxx
Name Common Stock Series A Preferred Options
--------------------------------------------------------------------------------
Xxxxxxx Xxxxxxxx 783
c/o Amerindo Investment Advisors Inc.
000 Xxxx Xxxxxx
00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Xxxxx Xxxxxxxxxx 3,760
c/o Amerindo Investment Advisors Inc.
00 Xxxxx Xxxxxxxxx Xxxxxx
Xxxxxx XXX0XX
Xxxxxxx Xxxxxx-Xxxxxxx 1,880
Amerindo Investment Advisors Inc.
000 Xxxx Xxxxxx
00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Xxxxxx Master Trust 195,802
Amerindo Investment Advisors Inc.
000 Xxxx Xxxxxx
00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxxxx
New Millennium Partners, L.P. 783,208
New Millennium Partners "emachines, L.P.
000 Xxxxx Xxxx Xxxxx, Xxxxx 00,
Xxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Rho Management 783,208
Rho Management Trust
000 0/xx/ Xxxxxx, 00/xx/ Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxx Xxxx, Xxxx Xxxx
Phone: (000) 000-0000
Name Common Stock Series A Preferred Options
--------------------------------------------------------------------------------
RRE Investors, L.P. 505,118
RRE Investors Fund, L.P. 278,090
000 Xxxx 00/xx/ Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
Phone: (000) 000-0000
Paribas North America Inc. 626,566
The Equitable Tower
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxx X. Xxxxxxxx
Phone: (000) 000-0000
With a copy to:
Paribas Affaires Industrielles
0, xxx X'XXXXX
00000 Xxxxx
XXXXXX
Attention: Xxxx-Xxxx XXXXXXXXXX and Xxxxxx XXXXXX
Phone: 0 00 00 00 00
Omega Ventures III, L.L.C. 159,119
RS & Co. Offshore Omega Ventures III 248,131
Omega Bayview, L.L.C. 21,938
Crossover Fund II, L.P. 40,736
Mailing Address:
Omega Venture Partners
c/o Xxxxxxx Xxxxx
000 Xxxxxxxxxx Xx., Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
with a copy to:
Omega Venture Partners
c/o Xxxxxxx Xxxxxxx
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, XX 00000
Name Common Stock Series A Preferred Options
------------------------------------------------------------------------------------------------------------------------------
Xxxx Xxxx 313,283
Xxxxxxx Xxxxx Xxxx 1993 Trust
c/o Xxxx Xxxx
00000 Xxxxxxxx Xxxx
Xxx Xxxxxxx, XX 00000
Standard Global Equity Partnership 153,629
Scorpion Offshore Investment Fund Ltd. 61,458
Standard Pacific Capital Offshore Investment Fund Ltd. 98,196
Mailing Address:
Standard Pacific Capital LLC
000 Xxxxxxxxxx Xxxxxx , 00/xx/ Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxx X. Xxxx, Xx.
Phone: (000) 000-0000
AB&T Sales Corp. 78,320
0000X Xxxxxx Xxx.
Xxxxxxxxxxxx, XX 00000
Attention: Xxxxx Xxxxxxx
(000) 000-0000
BNK Investment Inc. 156,641
00 Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxx X0X 0X0
Attention: Ky Ho
Phone: (000) 000-0000
Merchant Capital, Inc. 156,641
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx Xxxxxxx
Phone: (000) 000-0000
International Network Capital Corp. 46,993
International Network Capital LDC 31,328
Bejing Technology Development Fund 469,925
(Cayman) LDC
S.Y. Ltd. 234,962
Name Common Stock Series A Preferred Options
--------------------------------------------------------------------------------
Mailing Address For:
International Network Capital Corp.
International Network Capital LDC
Bejing Technology Development Fund (Cayman) LDC
S.Y. Ltd.
Attention: Xxxxx Xxx
00 Xxxxxxxxxx Xx., Xxx. 0000
Xxx Xxxxxxxxx, XX 00000
