Exhibit 4.14
INVESTOR RIGHTS AGREEMENT
THIS INVESTOR RIGHTS AGREEMENT, dated as of July 18, 2001,
between RealNetworks, Inc., a Washington corporation (the "Purchaser"), and On2
Technologies, Inc., a Delaware corporation (the "Company").
WHEREAS, the parties hereto have entered into a Common Stock
Purchase Agreement, dated as of July 18, 2001 (the "Purchase Agreement"). Terms
not defined herein shall have the meanings ascribed to them in the Purchase
Agreement. Pursuant to the Purchase Agreement, the Purchaser has agreed to
purchase the Purchased Shares and Warrants;
WHEREAS, the Company desires to grant to the Purchaser the
registration rights set forth herein with respect to the Purchased Shares and
the Common Stock underlying the Warrants (collectively, the "Securities") and
the other rights set forth herein;
WHEREAS, the Company and the Purchaser have also entered into
a Licensing Agreement, dated the date hereof (the "Licensing Agreement").
WHEREAS, each of the parties hereto acknowledges and agrees
that the execution and delivery of the Purchase Agreement and the Licensing
Agreement by such party is a material term, condition and inducement to the
other party to enter into this Agreement.
NOW, THEREFORE, the parties hereto mutually agree as follows:
SECTION 1. REGISTRABLE SECURITIES. As used herein the term
"Registrable Security" means the Securities until (i) all Securities have been
disposed of pursuant to the Registration Statement (as defined herein), (ii) all
Securities have been sold under circumstances under which all of the applicable
conditions of Rule 144 (or any similar provision then in force) ("Rule 144")
under the Securities Act of 1933, as amended (the "Securities Act"), are met,
(iii) all Securities have been otherwise transferred to persons who may trade
such Securities without restriction under the Securities Act, and the Company
has delivered a new certificate or other evidence of ownership for such
Securities not bearing a restrictive legend or (iv) such time as, in the opinion
of counsel to the Company, all Securities may be sold without any time, volume
or manner limitations pursuant to Rule 144(k) (or any similar provision then in
effect) under the Securities Act. The term "Registrable Securities" means any
and/or all of the securities falling within the foregoing definition of a
"Registrable Security." In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be deemed to be made in the definition
of "Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
SECTION 2. RESTRICTIONS ON TRANSFER. The Purchaser
acknowledges and understands that in the absence of an effective Registration
Statement authorizing the resale of the Securities as provided herein, the
Securities are "restricted securities" as defined in Rule 144.
The Purchaser understands that no disposition or transfer of the Securities may
be made by Purchaser in the absence of (i) an opinion of counsel to the
Purchaser, in form and substance reasonably satisfactory to the Company, that
such transfer may be made without registration under the Securities Act or (ii)
such registration.
With a view to making available to the Purchaser the benefits
of Rule 144, the Company agrees to:
(a) comply with the provisions of paragraph (c)(1) of Rule
144; and
(b) file with the Securities and Exchange Commission (the
"Commission") in a timely manner all reports and other documents required to be
filed by the Company pursuant to Section 13 or 15(d) under the Exchange Act;
and, if at any time it is not required to file such reports but in the past had
been required to or did file such reports, it will, upon the request of the
Purchaser, make available other information as required by, and so long as
necessary to permit sales of, its Registrable Securities pursuant to Rule 144.
Each certificate representing the Securities shall be stamped
or otherwise imprinted with a legend substantially in the following form (in
addition to any legend required under applicable state securities laws or
otherwise):
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT
AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "SECURITIES
ACT"), NOR UNDER ANY STATE SECURITIES LAW AND SUCH SECURITIES MAY NOT BE
PLEDGED, SOLD, ASSIGNED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT
TO REGISTRATION UNDER THE SECURITIES ACT OR AN AVAILABLE EXEMPTION FROM
REGISTRATION.
THE SALE, ASSIGNMENT, TRANSFER, PLEDGE AND OTHER DISPOSITION OF THE SECURITIES
REPRESENTED BY THIS CERTIFICATE ARE RESTRICTED BY THE INVESTOR RIGHTS AGREEMENT
(THE "INVESTOR RIGHTS AGREEMENT"), DATED JULY 18, 2001. A COPY OF THE INVESTOR
RIGHTS AGREEMENT IS ON FILE WITH THE CORPORATE SECRETARY AT THE PRINCIPAL
EXECUTIVE OFFICES OF THE COMPANY. A COPY THEREOF MAY BE OBTAINED AT NO COST UPON
WRITTEN REQUEST THEREFOR MADE BY THE HOLDER OF RECORD OF THIS CERTIFICATE TO THE
CORPORATE SECRETARY AT THE PRINCIPAL OFFICES OF THE COMPANY.
The Purchaser consents to the Company's making a notation on
its records and giving instructions to any transfer agent of the Securities in
order to implement the restrictions on transfer established in this Agreement.
SECTION 3. REGISTRATION RIGHTS WITH RESPECT TO THE SECURITIES.
(a) PIGGYBACK REGISTRATION.
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(i) NOTICE. If at any time or from time to time the Company
shall determine to register any shares of Common Stock for its own
account or the account of any person who holds securities of the
Company that are "restricted securities" under Rule 144, other than (A)
a registration on Form S-4 or S-8 or another form not generally
available for registering the Restricted Securities for sale to the
public or (B) any registration comprised in whole or in substantial
part of shares underlying stock options or restricted shares issued
under an incentive compensation plan that has been adopted by the
Company or its predecessor, the Company will give to the Purchaser
notice as soon as practicable prior to filing the registration
statement and include in such registration all Registrable Securities
specified in one or more written requests which have been made within
ten business days after receipt of such written notice from the Company
by the Purchaser, except as set forth in Section 3(a)(ii).
(ii) REGISTERED PUBLIC OFFERING INVOLVING AN UNDERWRITING. If
the registration of shares of Common Stock is for a registered public
offering involving an underwritten offering, the Company shall so
advise the Purchaser as a part of the written notice given pursuant to
Section 3(a)(i). In such event, the right of the Purchaser to
registration pursuant to this section shall be conditioned upon its
participation in such underwriting and the inclusion of its Registrable
Securities in the underwriting to the extent provided herein. If the
Purchaser proposes to distribute its securities through such
underwriting, the Purchaser shall (together with the Company and the
other holders of Common Stock distributing their securities through
such underwriting) enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such
underwriting by the Company. Notwithstanding any provision of Section
3(a)(ii), if the managing underwriter determines that marketing factors
require a limitation of the number of shares to be underwritten, the
managing underwriter may limit the number of Registrable Securities to
be included in the underwriting or may limit the number of Registrable
Securities to be included in such registration. The Company shall so
advise the Purchaser, and the number of shares of Registrable
Securities and other securities that may be included in the
registration and underwriting shall be allocated in the following
priority: (1) if the registration is a primary offering of Common Stock
by the Company, then first to the Company, and second, among the
Purchaser and all other holders of Common Stock that hold rights
granted by the Company to cause shares of Common Stock held by them to
be included in such registration or underwriting, in proportion, as
nearly as practicable, to the respective amounts of Registrable
Securities held by the Purchaser and each other such holder that are
requested to be included in the registration or underwriting and (2) if
the registration is an offering by holders of Common Stock exercising
their "demand" registration rights, then first to such holders of
Common Stock exercising such demand registration rights, and second,
among the Purchaser and all other holders of Common Stock that hold
rights granted by the Company to cause shares of Common Stock held by
them to be included in such registration or underwriting, in
proportion, as nearly as practicable, to the respective amounts of
Registrable Securities held by the Purchaser and each other such holder
that are requested to be included in the registration or underwriting.
To facilitate the allocation of shares in accordance with the above
provisions, the underwriter may round
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the number of shares allocated to the stockholders to the nearest one
hundred shares. If the Purchaser disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to
the Company. In the event of any such withdrawal, the Company will
include in any such registration in lieu thereof, on a pro rata basis,
any additional shares of Common Stock which were requested to be
included by any other piggyback right holders, which were excluded
pursuant to the above-described underwriter limitation, up to the
maximum set by such underwriter.
(b) DEMAND REGISTRATION
(i) NOTICE OF REGISTRATION. At any time after the date hereof,
the Purchaser may demand that a registration statement be filed with
the Commission within 30 days after the date on which the Company has
received such request, subject to the provisions of this Section 3(b)
and Section 3(e), or, unless, due to circumstances not within the
Company's direct control, the audit of the Company's financial
statements or of the financial statements of any entity or business
acquired or to be acquired by the Company is not complete, in which
case the Company shall have an additional period not to exceed 30 days.
Subject to the terms and conditions set forth below in this Section
3(b), Section 3(f) and Section 5, upon the Company's receipt from the
Purchaser of a written request that the Company effect a registration
under the Securities Act with respect to any of its Registrable
Securities, the Company will use its diligent best efforts to effect
any such registration (including, without limitation, the execution of
an undertaking to file post-effective amendments and appropriate
qualifications and approvals under the laws and regulations applicable
to the Company of any applicable governmental agencies and authorities,
including applicable blue sky or other state securities laws) as may be
so requested and as would permit or facilitate the sale and
distribution of all of the Registrable Securities as are specified in
such request, provided, that (a) the Purchaser may not make its request
within 180 days following the effectiveness of any registered public
offering of Common Stock, unless permitted by applicable securities
laws; (b) before filing any such registration statement or any
amendments or supplements thereto, the Company will (i) furnish to the
Purchaser copies of all such documents proposed to be filed, which
documents will be subject to the review of the Purchaser and its
counsel, and (ii) give the Purchaser and its representatives the
opportunity to conduct a reasonable investigation of the records and
business of the Company and to participate in the preparation of any
such registration statement or any amendments or supplements thereto;
and (c) the Company shall not be obligated to take any action to effect
such registration pursuant to this Section 3(b)(i) after the Company
has effected two such registrations pursuant to this Section 3(b)(i);
provided, that such registrations have been declared or ordered
effective by the Commission and, if the method of distribution is a
registered public offering involving an underwritten offering, all such
shares registered thereby shall have been sold pursuant thereto. With
respect to any registration requested pursuant to this Section 3(b)(i),
the Company may include in such registration any other shares of Common
Stock, subject to the restrictions set forth in Section 3(b)(ii), as to
which it is obligated to include such shares pursuant to agreements
requiring such registration.
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(ii) REGISTERED PUBLIC OFFERING INVOLVING AN UNDERWRITING. If
the Purchaser intends to distribute the Registrable Securities covered
by its request under Section 3(b)(i) by means of an underwriting, it
shall so advise the Company as a part of its request made pursuant to
Section 3(b)(i). In such event, the Purchaser shall negotiate in good
faith with a nationally recognized underwriter or underwriters selected
by the Purchaser and reasonably satisfactory to the Company with regard
to the underwriting of such requested registration. The Company shall
(together with the Purchaser and all holders of Common Stock proposing
to distribute their securities through such underwriting) enter into an
underwriting agreement in customary form with the underwriter or
underwriters selected pursuant to this Section 3(b)(ii).
Notwithstanding any other provision of this Section 3(b), if the
underwriter determines that marketing factors require a limitation on
the number of shares to be underwritten, the underwriter may (subject
to the allocation priority set forth below) limit the number of
Registrable Securities to be included in the registration and
underwriting. The Company shall so advise all holders of securities
requesting registration, and the number of shares of securities that
are entitled to be included in the registration and underwriting shall
be allocated in the following priority: first, among the Purchaser's
Registrable Securities; and second, among all other stockholders in
proportion, as nearly as practicable, to the respective amounts of
securities which they had requested to be included in such registration
at the time of filing the registration statement. To facilitate the
allocation of shares in accordance with the above provisions, the
underwriter may round the number of shares allocated to the
stockholders to the nearest one hundred shares.
(c) LOCKUP AGREEMENT. In consideration for the Company's
performance of its obligations under this Agreement, the Purchaser will, in
connection with any registration of any Restricted Securities in an underwritten
offering, at the request of the Company or the underwriters managing any
underwritten offering of the Company's securities, agree not to sell, make any
short sale of, loan, grant any option for the purchase of, or otherwise dispose
of any Restricted 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 90 days) from the effective
date of such registration as the Company and the underwriters may specify, so
long as all executive officers and directors of the Company and any other
stockholders similarly situated to the Purchaser are bound by a comparable
obligation.
(d) All fees, disbursements and out-of-pocket expenses and
costs incurred by the Company in connection with the preparation and filing of
the Registration Statement under subparagraphs 3(a) and 3(b) and in complying
with applicable securities and Blue Sky laws (including, without limitation, all
attorneys' fees of the Company) shall be borne by the Company. The Purchaser
shall bear the cost of underwriting and/or brokerage discounts, fees and
commissions, if any, applicable to the Securities being registered and the fees
and expenses of its counsel. The Purchaser and its counsel shall have a
reasonable period to review the proposed Registration Statement or any amendment
thereto, prior to filing with the Commission, and the Company shall provide the
Purchaser with copies of any comment letters received from the Commission with
respect thereto within two (2) business days of receipt thereof. The Company
shall make reasonably available for inspection by Purchaser, any
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underwriter participating in any disposition pursuant to the Registration
Statement, and any attorney, accountant or other agent retained by the Purchaser
or any such underwriter all relevant financial and other records, pertinent
corporate documents and properties of the Company and its subsidiaries, and
cause the Company's officers, directors and employees to supply all information
reasonably requested by the Purchaser or any such underwriter, attorney,
accountant or agent in connection with the Registration Statement, in each case,
as is customary for similar due diligence examinations; PROVIDED, HOWEVER, that
all records, information and documents that are designated in writing by the
Company, in good faith, as confidential, proprietary or containing any material
non-public information shall be kept confidential by the Purchaser and any such
underwriter, attorney, accountant or agent, unless such disclosure is made
pursuant to judicial process in a court proceeding (after first giving the
Company an opportunity promptly to seek a protective order or otherwise limit
the scope of the information sought to be disclosed) or is required by law, or
such records, information or documents become available to the public generally
or through a third party not in violation of an accompanying obligation of
confidentiality; and PROVIDED FURTHER that, if the foregoing inspection and
information gathering would otherwise disrupt the Company's conduct of its
business, such inspection and information gathering shall, to the maximum extent
possible, be coordinated on behalf of the Purchaser and the other parties
entitled thereto by one firm of counsel designated by and on behalf of the
majority in interest of Purchaser and other parties. The Company shall qualify
any of the securities for sale in such states as the Purchaser reasonably
designates and shall furnish indemnification in the manner provided in Section 6
hereof. However, the Company shall not be required to qualify in any state which
will require an escrow or other restriction relating to the Company and/or the
sellers, or which will require the Company to qualify to do business in such
state or require the Company to file therein any general consent to service of
process. The Company at its expense will supply the Purchaser with copies of the
Registration Statement and the prospectus included therein and other related
documents in such quantities as may be reasonably requested by the Purchaser.
(e) The Company shall not be required by this Section 3 to
include the Purchaser's Securities in any Registration Statement which is to be
filed if, in the opinion of counsel for both the Purchaser and the Company (or,
should they not agree, in the opinion of another counsel experienced in
securities law matters acceptable to counsel for the Purchaser and the Company)
the proposed offering or other transfer as to which such registration is
requested is exempt from applicable federal and state securities laws and would
result in all purchasers or transferees obtaining securities which are not
"restricted securities", as defined in Rule 144 under the Securities Act.
(f) The Company's obligation to file a registration statement
under Section 3(a) or Section 3(b), or to cause a registration statement to
become and remain effective under such sections, shall be suspended for a period
not to exceed 90 days (and for periods not exceeding, in the aggregate, 120 days
in any 12-month period) if there exists at the time material non-public
information relating to the Company which, in the reasonable opinion of the
Board of Directors of the Company, should not be disclosed.
SECTION 4. COOPERATION WITH COMPANY. The Purchaser will
cooperate with the Company in all respects in connection with this Agreement,
including timely supplying all
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information reasonably requested by the Company (which shall include all
information regarding the Purchaser and proposed manner of sale of the
Registrable Securities required to be disclosed in the Registration Statement)
and executing and returning all documents reasonably requested in connection
with the registration and sale of the Registrable Securities and entering into
and performing its obligations under any underwriting agreement, if the offering
is an underwritten offering, in usual and customary form, with the managing
underwriter or underwriters of such underwritten offering.
SECTION 5. REGISTRATION PROCEDURES. If and whenever the
Company is required by any of the provisions of this Agreement to effect the
registration of any of the Registrable Securities under the Securities Act, the
Company shall (except as otherwise provided in this Agreement), as expeditiously
as possible, subject to the Purchaser's assistance and cooperation as reasonably
required:
(a) prepare and file with the Commission, a registration
statement (on Form S-3 and/or S-1, or other appropriate form of registration
statement) under the Securities Act (the "Registration Statement"), so as to
permit a public offering and resale of the Registrable Securities under the
Securities Act by Purchaser. The Company shall use its best efforts to cause the
Registration Statement to become effective within ninety (90) days (or one
hundred twenty (120) days in the event of a "full review" by the Commission) of
the date such Registration Statement is filed or five (5) days after clearance
by the Commission and will within said five (5) days request acceleration of
effectiveness. The Company will notify Purchaser of the effectiveness of the
Registration Statement within one business day of such event. The Company will
maintain the Registration Statement or post-effective amendment filed under this
Section 5 hereof effective under the Securities Act until the earliest of (i)
the date that all of the Registrable Securities have been sold pursuant to the
Registration Statement, or (ii) 180 days after the effective date of such
Registration Statement.
(b) prepare and file with the Commission such amendments and
supplements to the Registration Statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective and
to comply with the provisions of the Securities Act with respect to the sale or
other disposition of all securities covered by such registration statement
whenever the Purchaser of such Registrable Securities shall desire to sell or
otherwise dispose of the same (including prospectus supplements with respect to
the sales of securities from time to time in connection with a registration
statement pursuant to Rule 415 promulgated under the Securities Act) and (ii)
take all lawful action such that each of (A) the Registration Statement and any
amendment thereto does not, when it becomes effective, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading and
(B) the prospectus forming part of the Registration Statement, and any amendment
or supplement thereto, does not at any time during the period that the
registration statement is effective on the date thereof include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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(c) prior to the filing with the Commission of any
Registration Statement (including any amendments thereto) and the distribution
or delivery of any prospectus (including any supplements thereto), provide draft
copies thereof to the Purchaser and reflect in such documents all such comments
as the Purchaser (and its counsel) reasonably may propose and (ii) furnish to
the Purchaser such numbers of copies of a prospectus including a preliminary
prospectus or any amendment or supplement to any prospectus, as applicable, in
conformity with the requirements of the Securities Act, and such other
documents, as the Purchaser may reasonably request in order to facilitate the
public sale or other disposition of the securities owned by the Purchaser;
(d) register and qualify the Registrable Securities covered by
the Registration Statement under state blue sky laws (subject to the limitations
set forth in Section 3(d) above), and do any and all other acts and things which
may be reasonably necessary or advisable to enable the Purchaser to consummate
the public sale or other disposition in such jurisdiction of the securities
owned by the Purchaser, except that the Company shall not for any such purpose
be required to qualify to do business as a foreign corporation in any
jurisdiction wherein it is not so qualified or to file therein any general
consent to service of process or to subject itself to taxation in any such
jurisdiction;
(e) list such Registrable Securities on the AMEX, and any
other exchange on which the Common Stock of the Company is then listed, if the
listing of such Registrable Securities is then permitted under the rules of such
exchange;
(f) notify the Purchaser at any time when a prospectus
relating thereto covered by the Registration Statement is required to be
delivered under the Securities Act, of the happening of any event of which it
has knowledge as a result of which the prospectus included in the Registration
Statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing, and the Company shall prepare and file a curative amendment under
Section 5(b) as quickly as commercially possible;
(g) as promptly as practicable after becoming aware of such
event, notify the Purchaser who holds Registrable Securities being sold (or, in
the event of an underwritten offering, the managing underwriters) of the
issuance by the Commission or any state authority of any stop order or other
suspension of the effectiveness of the Registration Statement at the earliest
possible time and take all lawful action to effect the withdrawal, recission or
removal of such stop order or other suspension;
(h) cooperate with the Purchaser to facilitate the timely
preparation and delivery of certificates for the Registrable Securities to be
offered pursuant to the Registration Statement and enable such certificates for
the Registrable Securities to be in such denominations or amounts, as the case
may be, as the Purchaser reasonably may request and registered in such names as
the Purchaser may request; and, within three (3) business days after a
Registration Statement which includes Registrable Securities is declared
effective by the Commission, deliver and cause legal counsel selected by the
Company to deliver to the transfer agent for the Registrable Securities (with
copies to the Purchaser whose Registrable Securities
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are included in such Registration Statement) an appropriate instruction and, to
the extent necessary, an opinion of such counsel;
(i) take all such other lawful actions reasonably necessary to
expedite and facilitate the disposition by the Purchaser of its Registrable
Securities in accordance with the intended methods therefor provided in the
prospectus which are customary for issuers to perform under the circumstances;
(j) in the event of an underwritten offering, promptly include
or incorporate in a prospectus supplement or post-effective amendment to the
Registration Statement such information as the managing underwriters reasonably
agree should be included therein and to which the Company does not reasonably
object and make all required filings of such prospectus supplement or
post-effective amendment as soon as practicable after it is notified of the
matters to be included or incorporated in such prospectus supplement or
post-effective amendment; and
(k) maintain a transfer agent for its Common Stock.
SECTION 6. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless the
Purchaser and its directors, officers, employees and agents and each person, if
any, who controls the Purchaser within the meaning of the Securities Act
(collectively, the "Purchaser Indemnified Parties") against any losses, claims,
damages or liabilities, joint or several (which shall, for all purposes of this
Agreement, include, but not be limited to, all reasonable costs of defense and
investigation and all reasonable attorneys' fees), to which the Purchaser
Indemnified Parties may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement, or any
related preliminary prospectus, final prospectus or amendment or supplement
thereto, in each case as of the respective dates thereof, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case as of the respective dates thereof; PROVIDED, HOWEVER,
that the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by the Purchaser Indemnified
Parties specifically for use in the preparation thereof. This indemnity
agreement will be in addition to any liability that the Company may otherwise
have.
(b) The Purchaser agrees that it will indemnify and hold
harmless the Company and its directors, officers, employees and agents and each
person, if any, who controls the Company within the meaning of the Securities
Act (collectively, the "Company Indemnified Parties"), against any losses,
claims, damages or liabilities (which shall, for all purposes of this Agreement,
include, but not be limited to, all reasonable costs of defense and
investigation and
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all reasonable attorneys' fees) to which the Company Indemnified Parties may
become subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon any untrue statement or alleged untrue statement of any material
fact contained in the Registration Statement, or any related preliminary
prospectus, final prospectus or amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, preliminary prospectus, final prospectus or
amendment or supplement thereto in reliance upon, and in conformity with,
written information furnished to the Company by the Purchaser specifically for
use in the preparation thereof. This indemnity agreement will be in addition to
any liability which the Purchaser may otherwise have. Notwithstanding anything
to the contrary herein, the Purchaser shall not be liable under this Section
6(b) for any amount in excess of the gross proceeds to the Purchaser as a result
of the sale of Registrable Securities pursuant to the Registration Statement.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party of the commencement thereof;
but the omission so to notify the indemnifying party will not relieve the
indemnifying party from any liability which it may have to any indemnified party
except to the extent of actual prejudice demonstrated by the indemnifying party.
In case any such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate in, and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, assume the defense
thereof, subject to the provisions herein stated and after notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party will not be liable to such indemnified
party under this Section 6 for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense thereof other than
reasonable costs of investigation, unless the indemnifying party shall not
pursue the action to its final conclusion. The indemnified party shall have the
right to employ separate counsel in any such action and to participate in the
defense thereof, but the fees and expenses of such counsel shall not be at the
expense of the indemnifying party if the indemnifying party has assumed the
defense of the action with counsel reasonably satisfactory to the indemnified
party; provided that the fees and expenses of such counsel shall be at the
expense of the indemnifying party if (i) the employment of such counsel has been
specifically authorized in writing by the indemnifying party, or (ii) the named
parties to any such action (including any impleaded parties) include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by such counsel that there may be one or more legal defenses
available to the indemnifying party different from or in conflict with any legal
defenses which may be available to the indemnified party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of the indemnified party, it being understood, however, that the
indemnifying party shall, in connection with any one such action or separate but
substantially similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances, be liable only for the reasonable
fees and expenses of one separate firm of
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attorneys for the indemnified party, which firm shall be designated in writing
by the indemnified party and be reasonably approved by the indemnifying party).
No settlement of any action against an indemnified party shall be made without
the prior written consent of the indemnified party, which consent shall not be
unreasonably withheld.
All fees and expenses of the indemnified party (including
reasonable costs of defense and investigation in a manner not inconsistent with
this section and all reasonable attorneys' fees and expenses) shall be paid to
the indemnified party, as incurred, within ten (10) business days of written
notice thereof and reasonable supporting documentation has been submitted to the
indemnifying party; provided, that the indemnifying party may require such
indemnified party to undertake to reimburse all such fees and expenses to the
extent it is finally judicially determined that such indemnified party is not
entitled to indemnification hereunder.
SECTION 7. CONTRIBUTION. In order to provide for just and
equitable contribution under the Securities Act in any case in which (i) the
indemnified party makes a claim for indemnification pursuant to Section 6 hereof
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 6 hereof provide for indemnification in such case, or (ii) contribution
under the Securities Act may be required on the part of any indemnified party,
then the Company Indemnified Parties and the Purchaser Indemnified Parties shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (which shall, for all purposes of this Agreement, include, but
not be limited to, all reasonable costs of defense and investigation and all
reasonable attorneys' fees), in either such case (after contribution from
others) on the basis of relative fault as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company Indemnified Parties on the one hand or the
Purchaser Indemnified Parties on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company Indemnified Parties and the Purchaser
Indemnified Parties agree that it would not be just and equitable if
contribution pursuant to this Section 7 were determined by pro rata allocation
or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 7. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this Section 7
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
Notwithstanding any other provision of this Section 7, in no
event shall the Purchaser be required to undertake liability to any person under
this Section 7 for any amounts in excess of the dollar amount of the gross
proceeds received by the Purchaser from the sale of the Purchaser's Registrable
Securities pursuant to any Registration Statement under which such Registrable
Securities are registered under the Securities Act.
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SECTION 8. RIGHT OF FIRST REFUSAL.
(a) For as long as the Purchaser owns at least 2.5% of the
Common Stock outstanding, in the event that the Company receives an offer to
purchase (i) all or substantially all of the assets of the Company or (ii) at
least 50% of the voting securities of the Company (in either case, such assets
or securities shall be referred to herein as the "Subject Securities") from a
third party who is not an affiliate of the Company (the "First Refusal Offeror")
which the Company wishes to accept (the "First Refusal Offer"), the Company
shall cause the First Refusal Offer to be reduced to writing and shall give
written notice (the "Offer Notice") to the Purchaser (the date of the notice
shall be referred to as the "Notice Date").
(b) The Offer Notice shall contain an irrevocable offer to
sell (in the manner set forth below), such Subject Securities at a purchase
price equal to the price contained in, and on the same terms and conditions as,
the First Refusal Offer, and shall be accompanied by a true copy of the First
Refusal Offer. Following receipt by Purchaser of the Offer Notice, Purchaser
shall have the right and option to purchase all of the Subject Securities
covered by the First Refusal Offer, at the same price and on the same terms and
conditions as set forth in the First Refusal Offer, by giving written notice to
the Company of its election within 15 business days after the Notice Date. If
the First Refusal Offer includes any consideration other than cash, then the
equivalent consideration shall be determined by Purchaser acting in good faith.
If the Company disagrees with the Purchaser's determination of equivalent
consideration, the Company shall notify the Purchaser in writing of any such
disagreement. The Company and the Purchaser shall use their respective best
efforts to resolve any such disagreement, and if no resolution is achieved
within 3 business days, the Company and the Purchaser shall mutually select an
independent appraiser whose determination of the equivalent consideration shall
be final and binding on the Purchaser and the Company.
(c) In the event that the Purchaser elects to purchase such
Subject Securities in accordance with the terms of the First Refusal Offer, such
acceptance shall be deemed to be a legal obligation of the Purchaser and the
Purchaser shall purchase such Subject Securities on such terms within 30 days of
its election to exercise its option provided that such legal obligation shall be
conditioned on the execution and delivery of a definitive purchase agreement by
both the Company and the Purchaser for the consummation of the transaction
contemplated by the First Refusal Offer during such 30-day period. Each of the
Company and the Purchaser shall negotiate in good faith the terms of such
definitive agreement, which shall, in addition to the sum and substance of the
terms contained in the First Refusal Offer, contain customary terms for
transactions of such nature, including customary representations, warranties,
covenants and indemnities. In the event that the Purchaser accepts its option
but does not purchase such Subject Securities within such 30-day period, then
this Section 8 shall automatically and immediately terminate. If the Purchaser
either declines in writing to exercise its option to purchase the Subject
Securities or fails to provide the Company with written notice of its intent to
exercise its option within the Offer Period, then the Company may during the
succeeding 180 day period (the "Sale Period") sell not less than all of the
Subject Securities covered by the First Refusal Offer to the First Refusal
Offeror at a price not less than that contained in the First Refusal Offer and
on other terms and conditions not materially different than those contained in
the First Refusal Offer. If at the end of the Sale Period the Company has
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not completed the sale of the Subject Securities, all of the restrictions on the
sale, transfer or assignment contained in this Section 8 shall be in effect with
respect to such Subject Securities. Notwithstanding the foregoing, in the event
that the terms and conditions of the transfer of such Subject Securities to the
First Refusal Offeror differ materially from the First Refusal Offer, then all
of the provisions of this Section 8 shall again apply to any proposed sale or
transfer by the Company with respect to the Subject Securities.
SECTION 9. ATTENDANCE AT BOARD MEETINGS. For as long as the
Purchaser owns at least 2.5% of the outstanding Common Stock of the Company, the
Company shall give the Purchaser notice of each meeting of its board of
directors at the same time and in the same manner as notice is given to the
directors, and the Company shall permit a representative of the Purchaser to
attend each such meeting as an observer. The representative of the Purchaser
shall be entitled to receive all written materials and other information given
to directors in connection with such meetings at the same time such materials
and information are given to the directors. The representative of the Purchaser
shall agree in writing to keep strictly confidential any and all confidential
and proprietary information of the Company and enter into a Non-disclosure
agreement with the Company with respect to any materials or other information
disclosed to such representative hereunder, if so requested by the Company. If
the Company proposes to take any action by written consent in lieu of a meeting
of its board of directors, the Company shall give written notice thereof to the
Purchaser prior to the effective date of such consent describing in reasonable
detail the nature and substance of such action. The Purchaser shall pay any and
all expenses of its representative in connection with attending such board
meetings.
SECTION 10. TERMINATION.
(a) Unless otherwise terminated in accordance with Section
10(b) hereof, the term of this Agreement shall be from the date hereof until the
fourth anniversary of the date hereof; PROVIDED, HOWEVER, that the termination
will not affect any obligations arising prior to the date of such termination.
(b) Either party may terminate this Agreement (i) if the other
party makes a general assignment for the benefit of creditors, file a voluntary
petition in bankruptcy or for reorganization or arrangement under the bankruptcy
laws, if a petition in bankruptcy is filed against such party, or if a receiver
or trustee is appointed for all or any part of its property or assets, or (ii)
by giving written notice to the other party in the event of a breach of a
material term or condition this Agreement, the License Agreement, the Warrants
or the Purchase Agreement by the other party, unless such breach may be, and is,
cured within thirty (30) days after the breaching party's receipt of notice of
breach from the nonbreaching party.
(c) In the event of termination by the Company or the
Purchaser, written notice thereof shall forthwith be given to the other party
and the transactions contemplated by this Agreement shall be terminated without
further action by either party. Nothing in this Section 10 shall be deemed to
release the Company or the Purchaser from any liability for any breach under
this Agreement, or to impair the rights of the Company and the Purchaser to
compel specific performance by the other party of its obligations under this
Agreement.
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SECTION 11. NOTICES. Any notice, demand, request, waiver or
other communication required or permitted to be given hereunder shall be in
writing and shall be effective (a) upon hand delivery or facsimile at the
address or number designated below (if delivered on a business day during normal
business hours where such notice is to be received), or the first business day
following such delivery (if delivered other than on a business day during normal
business hours where such notice is to be received) or (b) on the second
business day following the date of mailing by express courier service, fully
prepaid, addressed to such address, or upon actual receipt of such mailing,
whichever shall first occur. The addresses for such communications shall be:
If to the Company: 000 Xxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Chief Financial Officer
With a copy to: General Counsel
Tel: (000) 000-0000
Fax: (000) 000-0000
If to Purchaser: 0000 Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attention: Senior Vice President--Media Systems
With a copy to: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Any party hereto may from time to time change its address for notices by giving
written notice of such changed address to the other party hereto in accordance
herewith.
SECTION 12. ASSIGNMENT. Neither this Agreement nor any rights
of the Purchaser or the Company hereunder may be assigned by either party to any
other person without the other party's prior written consent.
SECTION 13. COUNTERPARTS/FACSIMILE. This Agreement may be
executed in two or more counterparts, each of which shall constitute an
original, but all of which, when together shall constitute but one and the same
instrument, and shall become effective when one or more counterparts have been
signed by each party hereto and delivered to the other party. In lieu of the
original, a facsimile transmission or copy of the original shall be as effective
and enforceable as the original.
SECTION 14. REMEDIES AND SEVERABILITY. The remedies provided
in this Agreement are cumulative and not exclusive of any remedies provided by
law. If any term, provision, covenant or restriction of this Agreement is held
by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that
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contemplated by such term, provision, covenant or restriction. It is hereby
stipulated and declared to be the intention of the parties that they would have
executed the remaining terms, provisions, covenants and restrictions without
including any of those that may be hereafter declared invalid, illegal, void or
unenforceable.
SECTION 15. HEADINGS. The headings in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York applicable to
contracts made in New York by persons domiciled in New York City and without
regard to its principles of conflicts of laws.
SECTION 17. WAIVERS. No waiver by either party of any default
with respect to any provision, condition or requirement of this Agreement shall
be deemed to be a continuing waiver in the future or a waiver of any other
provisions, condition or requirement hereof, nor shall any delay or omission of
any party to exercise any right hereunder in any manner impair the exercise of
any such right accruing to it thereafter.
SECTION 18. ENTIRE AGREEMENT; AMENDMENT. This Agreement,
together with the Purchase Agreement, the Warrants and the Licensing Agreement,
contains the entire understanding of the parties with respect to the matters
covered hereby and, except as specifically set forth herein, neither the Company
nor the Purchaser makes any representations, warranty, covenant or undertaking
with respect to such matters. No provision of this Agreement may be waived or
amended other than by a written instrument signed by the party against whom
enforcement of any such amendment or waiver is sought.
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IN WITNESS WHEREOF, the parties hereto have caused this
Investor Rights Agreement to be duly executed, on this ___ day of July, 2001.
ON2 TECHNOLOGIES, INC.
By:
-------------------------------------
Name:
Title:
REALNETWORKS, INC.
By:
-------------------------------------
Name:
Title:
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