Exhibit 10.21
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WARRANT PURCHASE AGREEMENT
BY AND BETWEEN
HYBRID NETWORKS, INC.
AND
ALCATEL SEL AG
Dated as of November 3, 1997
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TABLE OF CONTENTS
ARTICLE 1 ISSUANCE OF WARRANT. . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1 Obligation to Issue Warrant . . . . . . . . . . . . . . . . 1
Section 1.2 Technical Support Agreement . . . . . . . . . . . . . . . . 2
Section 1.3 No Trademark License. . . . . . . . . . . . . . . . . . . . 6
Section 1.4 Registration Rights . . . . . . . . . . . . . . . . . . . . 6
ARTICLE II REPRESENTATIONS AND WARRANTIES OF THE COMPANY . . . . . . . . . . 7
Section 2.1 Organization, Good Standing and Qualification . . . . . . . 7
Section 2.2 Due Authorization, Execution and Delivery . . . . . . . . . 7
Section 2.3 Validation Issuance of Warrant. . . . . . . . . . . . . . . 7
Section 2.4 Registration Rights . . . . . . . . . . . . . . . . . . . . 7
Section 2.5 Consents, No Conflict . . . . . . . . . . . . . . . . . . . 8
Section 2.6 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.7 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 8
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE PURCHASER. . . . . . . . . 8
Section 3.1 Organization and Authority of the Purchaser . . . . . . . . 8
Section 3.2 Due Authorization, Execution and Delivery . . . . . . . . . 8
Section 3.3 Consents; No Conflict . . . . . . . . . . . . . . . . . . . 9
Section 3.4 Brokers . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3.5 Disclosure . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE IV INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 4.1 Indemnification by the Company. . . . . . . . . . . . . . . 9
Section 4.2 Indemnification by the Purchaser. . . . . . . . . . . . . . 10
Section 4.3 Limitation. . . . . . . . . . . . . . . . . . . . . . . . . 10
ARTICLE V MISCELLANEOUS. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.1 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 5.2 Fees and Expenses . . . . . . . . . . . . . . . . . . . . . 11
Section 5.3 Public Announcements . . . . . . . . . . . . . . . . . . . 11
Section 5.4 Entire Agreement . . . . . . . . . . . . . . . . . . . . . 11
Section 5.5 Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.6 Amendment . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.7 Benefits and Binding Effect . . . . . . . . . . . . . . . . 12
Section 5.8 Captions. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.9 Exhibits. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.10 Governing Law. . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.11 Counterparts . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.12 Severability . . . . . . . . . . . . . . . . . . . . . . . 12
Section 5.13 No Third Party Beneficiary . . . . . . . . . . . . . . . . 12
Section 5.14 Termination for Material Default . . . . . . . . . . . . . 12
Section 5.15 Termination for Change in Control. . . . . . . . . . . . . 13
WARRANT PURCHASE AGREEMENT
THIS WARRANT PURCHASE AGREEMENT (the "AGREEMENT") is made as of November
3, 1997, by and between HYBRID NETWORKS, INC., a Delaware corporation (the
"COMPANY"), and ALCATEL SEL AG, a corporation incorporated and existing under
the laws of Germany (the "PURCHASER").
W I T N E S S E T H:
WHEREAS, the Company is a broadband access equipment company that
designs, develops, manufactures and markets cable and wireless systems which
provide high speed access to the Internet and corporate intranets for both
businesses and consumers; and
WHEREAS, the Purchaser and its affiliates are engaged in the business of
manufacturing and selling telecommunications equipment; and
WHEREAS, in exchange for certain technical support to be provided to the
Company, the Purchaser desires to acquire from the Company a warrant to
purchase shares of the common stock of the Company on the terms and
conditions set forth in this Agreement; and
WHEREAS, the Company desires to issue such warrant to the Purchaser on
the terms and conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises, covenants,
representations and warranties contained herein and of the mutual benefits to
be derived herefrom, and intending to be legally bound, the parties hereto
agree as follows:
ARTICLE I
ISSUANCE OF WARRANT
Section 1.1 OBLIGATION TO ISSUE WARRANT. In exchange for the technical
support and license provided by the Purchaser pursuant to Section 1.2 below,
the Company shall issue to the Purchaser on the Issuance Date (as defined
below in this Section 1.1) a Warrant in the form of EXHIBIT A hereto (the
"WARRANT") evidencing the right of the Purchaser to purchase 458,295 shares
of the common stock of the Company, par value US $.001 per share (the "COMMON
STOCK"), at an exercise price of US $10.91 per share, for a period of five
(5) years from the Issuance Date. If the Company should take any corporate
action prior to the issuance of the Warrant (other than the 1 for 2.7 reverse
stock split of the Common Stock of the Company described in the Form S-1
Registration Statement of the Company currently on file with the Securities
and Exchange Commission (the "REVERSE STOCK SPLIT")) that would have the
effect of causing, under the terms of the Warrant, an adjustment to the
number of shares which the Purchaser would have the right to purchase upon
exercise of the Warrant, and to the exercise price per share of the Warrant,
if the Warrant had been issued on the date of this
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Agreement, then such number of shares and such exercise price in the Warrant
when issued shall be adjusted as if the Warrant had been issued on such date.
The Company shall use all commercially reasonable efforts to obtain (a) the
consent by the holders of a majority of the outstanding principal amount of
the Company's Convertible Subordinated Promissory Notes due 1998 (the
"Notes") to the issuance of the Warrant by the Company as provided herein, as
required under the terms of the Convertible Subordinated Promissory Note
Purchase Agreement dated September 18, 1997 among the Company and the
purchasers of the Notes and (b) the consent of the holders of a majority of
the Registrable Securities outstanding (i) to the Registration Rights
Amendment (defined in Section 1.4 below) and (ii) to the waiver by such
holders, with respect to the Warrant, of the rights provided for in Section
2.3 of the Registration Rights Agreement (defined in Section 1.4 below)
(collectively, the consents and waiver referred to in (a) and (b) above are
referred to herein as the "REQUIRED CONSENTS"). The Company shall furnish
copies of all Required Consents to the Purchaser immediately upon its receipt
thereof. The Company shall issue the Warrant to the Purchaser on the date
the Required Consents are obtained by the Company (the "ISSUANCE DATE");
provided that, if such Required Consents are not obtained within fifteen (15)
days from the date hereof, this Agreement and all rights and obligations of
the parties hereunder shall automatically terminate. The Company shall issue
and deliver the Warrant to the Purchaser free and clear of all liens and
encumbrances and duly executed by the appropriate officers of the Company.
Section 1.2 TECHNICAL SUPPORT AND LICENSE.
(a) In exchange for the Warrant, the Purchaser agrees to provide, or to
cause its affiliates to provide, to the Company, commencing on the Issuance
Date, the technical support described in EXHIBIT B hereto. The Company and
the Purchaser agree that the value of the foregoing technical support and
licenses to be provided below in Section 1.2(b)(i) and (ii) to the Company
will be approximately US $1,000,000.00. The Company and the Purchaser agree
to use commercially reasonable efforts to prepare as promptly as practical,
and in any event shall prepare within sixty (60) days after the Issuance
Date, a work schedule and plan for the Development provided for in EXHIBIT B
hereto (the earlier of the date on which such work schedule and plan are
prepared and the date on which such sixty (60) day period expires is referred
to herein as the "DEVELOPMENT COMMENCEMENT DATE").
The parties acknowledge that, except for the items described in Parts (a)
and (b) of the Section of EXHIBIT B entitled "CDMA", the form and extent of
the technical support that will be provided by the Purchaser in the areas of
CDMA and IP Telephony have not been agreed upon. The parties agree to use
commercially reasonable efforts to agree, prior to the Development
Commencement Date, upon the form and extent of the technical support that the
Purchaser will provide in the areas of CDMA and IP Telephony described in
EXHIBIT B.
Notwithstanding any other term of this Agreement to the contrary, the
Purchaser shall have no obligation to provide any technical support to the
Company pursuant to this Agreement after the expiration of one (1) year
following the Development Commencement Date.
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(b) LICENSES
(i) DEVELOPMENT LICENSE. Each party agrees not to assert any right
under such party's Background Patents, Separate Foreground Patents,
Background Proprietary Information, Separate Foreground Proprietary
Information, Background Copyrights, Separate Foreground Copyrights,
Background Works of Authorship or Separate Foreground Works of Authorship
against the other party for any activity solely confined to the
Development.
(ii) COMMERCIAL LICENSES.
(A) Each party grants to the other party and its affiliates under
the granting party's Delivered Works of Authorship, Separate Foreground
Proprietary Information, Separate Foreground Patents, Separate Foreground
Copyrights and Separate Foreground Works of Authorship a non-transferrable,
world-wide, fully paid up, non-exclusive license to make, have made,
manufacture, reproduce, market, distribute (itself or through resellers or
subdistributors), use, sell and allow end users to use any Products itself
or on its behalf. No such license shall include the right to grant
sublicenses (other than for the manufacture of a Product by a third party
solely on behalf of the person receiving such license).
(B) The Purchaser grants to the Company and its affiliates
(collectively, the "COMPANY LICENSEES") under Purchaser's Necessary
Background Patents, Purchaser's Background Proprietary Information,
Purchaser's Background Copyrights, and Purchaser's Background Works of
Authorship a non-transferrable, world-wide, fully paid up, non-exclusive
license to make, have made, manufacture, reproduce, market, distribute
(itself or through resellers or subdistributors), use, sell and allow end
users to use any Company Licensee Products themselves or on their sole
behalf. No such license shall include the right to grant sublicenses (other
than for the manufacture of a Product by a third party solely on behalf of
any Company Licensee) or the right to receive any license for Purchaser's
Background Patents other than Purchaser's Necessary Background Patents.
(C) The Company grants to the Purchaser and its affiliates
(collectively, the "PURCHASER LICENSEES") under the Company's Necessary
Background Patents a non-transferrable, world-wide, fully paid up,
non-exclusive license to make, have made, manufacture, reproduce, market,
distribute (itself or through resellers or subdistributors), use, sell
and allow end users to use any Purchaser Licensee Products themselves or on
their sole behalf. No such license shall include the right to grant
sublicenses (other than for the manufacture of a Product by a third party
solely on behalf of any Purchaser Licensee) or the right to receive any
license for the Company's Background Patents other than the Company's
Necessary Background Patents.
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(iii) OWNERSHIP OF SEPARATE INTELLECTUAL PROPERTY.
(A) Each party and its affiliates shall retain ownership of its
right, title and interest in and to the Background Proprietary Information,
the Background Patents, the Background Copyrights, the Background Works of
Authorship, the Separate Foreground Proprietary Information, the Separate
Foreground Patents, the Separate Foreground Copyrights and the Separate
Foreground Works of Authorship of such party and its affiliates.
(B) Provided, however, all Foreground Patents, Foreground
Copyrights and Foreground Proprietary Information relating to CDMA
Products and IP Telephony Products shall be considered the Separate
Foreground Patents, Separate Foreground Copyrights and Separate Foreground
Proprietary Information of Purchaser irrespective of whether they would
otherwise be considered the Separate or Joint Foreground Patents, Separate
or Joint Foreground Copyrights or Separate or Joint Foreground Proprietary
Information of the Company. In connection with their discussions pursuant
to Section 1.2(a) of this Agreement regarding the areas of CDMA and IP
Telephony, the parties will consider alternate ownership arrangements for
the foregoing Foreground Patents, Foreground Copyrights and Foreground
Proprietary Information relating to CDMA Products and IP Telephony Products
and will implement any such alternate ownership arrangements which are
agreed upon.
(iv) ENFORCEMENT AND CONTROL OF LICENSING. Consistent with Section
1.2(b)(iii) above, each party and its affiliates shall retain their rights
to (A) enforce their rights in the Background Proprietary Information, the
Background Patents, the Background Copyrights, the Background Works of
Authorship, the Separate Foreground Proprietary Information, the Separate
Foreground Patents the Separate Foreground Copyrights and the Separate
Foreground Works of Authorship of such party and its affiliates against
infringers or alleged infringers thereof and retain all recoveries in
connection therewith, and (B) grant licenses and/or sublicenses with
respect to the Background Proprietary Information, the Background Patents,
the Background Copyrights, the Background Works of Authorship, the Separate
Foreground Proprietary Information, the Separate Foreground Patents, the
Separate Foreground Copyrights and the Separate Foreground Works of
Authorship of such party and its affiliates in a manner consistent with
the other provisions of this Agreement.
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(v) CONFIDENTIALITY.
(A) Each party shall, and shall cause its affiliates to,
keep in confidence the Proprietary Information in the
Background Proprietary Information, Background Works of
Authorship (to the extent unpublished by the author), Separate
Foreground Proprietary Information and Separate Foreground
Works of Authorship (to the extent unpublished by author) of the
other party which is disclosed to the receiving party under
this Agreement. No disclosure to an affiliate of either party
of any of the foregoing items for the purposes set forth in
this Agreement shall be a violation of this Section
1.2(b)(v)(A). To be afforded such protection, the party seeking
the protection of this provision agrees to disclose such
Proprietary Information initially in written form conspicuously
marked as "confidential," "proprietary" or equivalent terms.
(B) The Company agrees that, notwithstanding anything to
the contrary contained in this Agreement, the Purchaser and its
affiliates may use the "Residuals" (as defined below) for the
benefit of the Purchaser and its affiliates for any purposes,
provided that this Section 1.2(b)(v)(B), by itself, will not be
deemed to grant to the Purchaser or its affiliates any rights
or licenses under any patent, copyright or mask work owned or
licensed by the Company nor will this Section 1.2(b)(v)(B)
operate to waive the obligations of confidentiality under
Section 1.2(b)(v)(A) herein. "RESIDUALS" means that information
in intangible form which may be retained in the memories of
those employees of the Purchaser or its affiliates who have had
rightful access to the Company's confidential information
and/or technology disclosed by the Company in the course of the
Development. Such employees of the Purchaser or its affiliates
may not memorize the Company's confidential information or
technology for the sole purpose of circumventing the
confidentiality obligations hereunder.
(c) RIGHTS REGARDING JOINT INTELLECTUAL PROPERTY. The terms of
Section 1.2(c) do not apply to those Joint Foreground Patents, Joint
Foreground Copyrights or Joint Foreground Proprietary Information which are to
be considered the Separate Foreground Patents, Separate Foreground Copyrights
and Separate Foreground Proprietary Information of Purchaser, pursuant to
Section 1.2(b)(iii)(B) above.
(i) JOINT PROPRIETARY INFORMATION AND JOINT COPYRIGHTS.
Irrespective of the ownership of Joint Foreground Proprietary
Information, Joint Foreground Copyrights and Joint Foreground Works
of Authorship, each party and its affiliates shall have the
unrestricted Right to Use for itself and for its affiliates, for any
purpose, such Joint Foreground Proprietary Information, Joint
Foreground Copyrights and Joint Foreground Works of Authorship and
the unrestricted right to grant nonexclusive license or sublicenses,
for any purpose, with respect to such Joint Foreground Proprietary
Information, Joint Foreground Copyrights, and Joint Foreground Works
of Authorship without any obligation of accounting by one joint
owner to the other.
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(ii) JOINT PATENTS. The parties shall specify on a
case-by-case basis the details of the first and further filings on
patent applications with respect to any Subject Inventions relating
to a Product which would constitute Joint Foreground Patents as well
as of the maintenance of such applications and any Joint Foreground
Patents granted thereon. Each party and its affiliates shall have
the following rights in respect of any application filed with
respect to any Joint Foreground Patent (without compensation to the
other party for having such rights), and irrespective of the
ownership of such patent application or patent:
(A) the unrestricted Right to Practice and to have
practiced, for itself and its affiliates, for any purpose; and
(B) if and as long as such party shares in an agreed upon
form in the cost of obtaining and maintaining such patent
application or patent, the unrestricted right to grant
nonexclusive licenses or sublicenses, for any purpose and for the
full term of such patent; and
(C) if and to the extent such party does not share in an
agreed upon form in the cost referred to under (B) above, the
right to grant non-exclusive sublicenses to know-how licensees
of its affiliates, provided that such sublicenses are limited in
scope to products designed by that party, or any of its
affiliates, and made by the know-how licensees using the
know-how obtained under such know-how licenses.
(d) If any Background Patents (other than Necessary Background
Patents) owned by a party and/or its affiliates are reasonably required by
the other party for such other party's exploitation of the licenses granted
above in Section 1.2(b)(i) and (ii), then the parties agree to use
commercially reasonable efforts to reach agreement on the terms and
conditions under which the party or its affiliates owning such Background
Patents will license to the other party or its affiliates on a non-exclusive
basis the right to use such patents to the extent reasonably necessary for
such exploitation.
(e) DEFINITIONS. EXHIBIT D contains defined terms referred to in
this Section 1.2.
Section 1.3 NO TRADEMARK LICENSE. This Agreement in no way creates
of conveys a license or permission of any kind for either party (or its
affiliates) to use the trademarks or corporate logo of the other party (or
its affiliates) and expressly prohibits the unauthorized use by either party
(or its affiliates) of such trademarks and corporate logo.
Section 1.4 REGISTRATION RIGHTS. On the Issuance Date, the Company
and the Purchaser shall execute and deliver an Amendment, in the form of
EXHIBIT C hereto (the "REGISTRATION RIGHTS AMENDMENT"), to that certain
Amended and Restated Investor Rights Agreement among the Company and several
investors in the Company dated September 18, 1997, as amended (the
"REGISTRATION RIGHTS AGREEMENT") pursuant to which the Purchaser will be
added as a party thereto.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to the Purchaser, as of the
date hereof and as of the Issuance Date, that:
Section 2.1 ORGANIZATION, GOOD STANDING AND QUALIFICATION. The Company
is a corporation duly organized, validly existing and in good standing under
the laws of the State of its incorporation and has all requisite corporate
power and authority to carry on its business as now conducted and as proposed
to be conducted by it, to own the assets owned by it and to lease the assets
held by it under lease. The Company is duly qualified to transact business
and is in good standing in each jurisdiction where the character of the
assets it owns, leases or operates, or the conduct of its business, requires
such qualification, other than in any jurisdiction where the failure to so
qualify would not have a material adverse effect on its business. The Company
has the corporate power and authority to enter into and perform its
obligations under this Agreement, the Registration Rights Amendment and the
Warrant. The Company has no subsidiaries. The Reverse Stock Split became
effective on October 21, 1997.
Section 2.2 DUE AUTHORIZATION, EXECUTION AND DELIVERY. The execution,
delivery and performance of this Agreement, the Registration Rights Amendment
and the Warrant by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby have been duly authorized by all
necessary corporate action on the part of the Company. This Agreement has
been, and the Warrant and the Registration Rights Amendment when issued and
entered into by the Company will be, duly executed and delivered by the
Company. This Agreement constitutes, and the Warrant and the Registration
Rights Amendment will, when executed and delivered by the Company,
constitute, the legal, valid and binding obligations of the Company
enforceable against the Company in accordance with their respective terms,
except that such enforcement (i) may be limited by bankruptcy, insolvency,
moratorium or similar laws affecting creditors' rights generally, and (ii) is
subject to the availability or equitable remedies, as determined in the
discretion of the court before which such a proceeding may be brought.
Section 2.3 VALID ISSUANCE OF WARRANT. The Common Stock issuable upon
exercise of the Warrant has been duly and validly reserved by the Company.
The Common Stock issuable upon exercise of the Warrant has been duly
authorized and, when issued in compliance with the terms of the Warrant, will
be duly and validly issued, fully paid and nonassessable, free and clear of any
preemptive right or other right to acquire and free and clear of all liens
and encumbrances. The Warrant and the Common Stock issuable upon the
exercise of the Warrant will be issued to the Purchaser by the Company
hereunder or thereunder in compliance with all applicable federal and state
securities laws.
Section 2.4 REGISTRATION RIGHTS. Except as provided in the
Registration Rights Agreement, the Company has not granted any registration
rights to any person which are currently outstanding, or agreed to grant any
such rights to any person subsequently to the date, hereof.
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Section 2.5 CONSENTS, NO CONFLICT. Except for the Required Consents,
the Company is not required to obtain the consent, authorization or approval
of any person, or any license, consent or approval from any governmental
authority, as a condition to the consummation of the transactions
contemplated by this Agreement by the Company. The execution and delivery of
this Agreement, the Warrant and the Registration Rights Amendment by the
Company and the consummation by the Company of the transactions contemplated
hereby and thereby will not conflict with, result in the termination of,
contravene or constitute a default under, or be an event which with the
giving of notice or passage of time or both will become a default under, or
give to others any rights of termination or cancellation of, or accelerate
the performance required by or maturity of, or result in the creation of any
material lien or loss of any rights with respect to the Company pursuant to
any of the terms, conditions or provisions of or under, any applicable law,
the certificate of incorporation or bylaws of the Company, or any contract or
agreement to which the Company is a party or which is otherwise binding upon
the Company or to which the assets of the Company are subject.
Section 2.6 BROKERS. No broker or other representative has acted on
behalf of the Company in connection with the transactions contemplated hereby
in such a manner as to give rise to any valid claim by any person against the
Purchaser for a finder's fee, brokerage commission or similar payment.
Section 2.7 DISCLOSURE. The representations and warranties of the
Company contained in this Agreement do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statement herein, in the light of the circumstances under which they were
made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser hereby represents and warrants to the Company, as of the
date hereof and as of the Issuance Date, that:
Section 3.1 ORGANIZATION AND AUTHORITY OF THE PURCHASER. The Purchaser
is a corporation duly organized, validity existing and in good standing under
the laws of Germany. The Purchaser has full corporate power and authority to
enter into and perform its obligations under this Agreement and the
Registration Rights Amendment.
Section 3.2 DUE AUTHORIZATION, EXECUTION AND DELIVERY. The execution,
delivery and performance of this Agreement by the Purchaser and the
consummation by the Purchaser of the transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Purchaser. This Agreement has been, and the Registration Rights Amendment
when entered into by the Purchaser will be, duly executed and delivered by
the Purchaser. This Agreement constitutes, and the Registration Rights
Amendment will, when executed and delivered by the Purchaser, constitute, the
legal, valid and binding obligations of the Purchaser enforceable against the
Purchaser in accordance with their respective terms, except that such
enforcement (i) may be limited by bankruptcy, insolvency, moratorium or
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similar laws affecting creditors' rights generally, and (ii) is subject to
the availability of equitable remedies, as determined in the discretion of
the court before which such a proceeding may be brought.
Section 3.3 CONSENTS: NO CONFLICT. The Purchaser is not required to
obtain the consent, authorization or approval of any person, or any license,
consent or approval from any governmental authority, as a condition to the
consummation of the transactions contemplated by this Agreement by the
Purchaser. The execution and delivery of this Agreement and the Registration
Rights Amendment by the Purchaser and the consummation by the Purchaser of
the transactions contemplated hereby and thereby will not conflict with,
result in the termination of, contravene or constitute a default under, or be
an event which with the giving of notice or passage of time or both will
become a default under, or give to others any rights of termination or
cancellation of, or accelerate the performance required by or maturity of, or
result in the creation of any material lien or loss of any rights with
respect to the Purchaser pursuant to any of the terms, conditions or
provisions of or under, any applicable law, the certificate of incorporation
or bylaws (or other organizational documents) of the Purchaser, or any
contract or agreement to which the Purchaser is a party or which is otherwise
binding upon the Purchaser or to which the assets of the Purchaser are
subject.
Section 3.4 BROKERS. No broker or other representative has acted on
behalf of the Purchaser in connection with the transactions contemplated
hereby in such manner as to give rise to any valid claim by any person
against the Company for a finder's fee, brokerage commission or similar
payment.
Section 3.5 DISCLOSURE. The representations and warranties of the
Purchaser contained in this Agreement do not contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make
the statements herein, in light of the circumstances under which they were
made, not misleading.
ARTICLE IV
INDEMNIFICATION
Section 4.1 INDEMNIFICATION BY THE COMPANY. The Company shall
indemnify and hold harmless the Purchaser from and against any and all
damages, fines, costs, fees, penalties, deficiencies, losses, amounts paid in
settlement and expenses (including without limitation interest, court costs,
fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or
assessment)("Losses") suffered or incurred by the Purchaser after the date
hereof as a result of or arising out of:
(a) the falsity or incorrectness of or breach of any representation or
warranty of the Company in this Agreement; or
(b) the failure by the Company to perform any covenant or agreement of
the Company under this Agreement.
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Section 4.2 INDEMNIFICATION BY THE PURCHASER. The Purchaser shall
indemnify and hold harmless the Company from and against any and all Losses
suffered or incurred by the Company after the date hereof as a result of or
arising out of:
(a) the falsity or incorrectness of or breach of any representation or
warranty of the Purchaser in this Agreement; or
(b) the failure by the Purchaser to perform any covenant or agreement
of Purchaser under this Agreement
Section 4.3 LIMITATION. ALL INFORMATION PROVIDED BY EITHER PARTY TO
THE OTHER PURSUANT TO SECTION 1.2 IS ON AN "AS IS" BASIS WITHOUT ANY WARRANTY
OF MERCHANTABILITY OR FITNESS FOR ANY PURPOSE, OR THAT, EXCEPT AS EXPRESSLY
PROVIDED BELOW, IT MAY BE USED WITHOUT LICENSE UNDER ANY INTELLECTUAL
PROPERTY RIGHTS OF ANY THIRD PARTY. MORE EXPLICITLY, NEITHER PARTY MAKES ANY
WARRANTY THAT THE INFORMATION SO PROVIDED MAY BE USED TO SUCCESSFULLY
MANUFACTURE OR SELL OR OPERATE ANY PRODUCT. Each party hereby warrants to the
other party that the warranting party has sufficient rights to grant to the
other party the license and other rights granted by the warranting party
hereunder and that the exercise of those rights as provided herein by such
other party will not infringe the Copyright of a third party, violate an
obligation of confidentiality owed to a third party by the warranting party or
be subject to any valid claim of misappropriation of a trade secret.
ARTICLE V
MISCELLANEOUS
Section 5.1 NOTICES. All notices, requests and other communications
hereunder shall be in writing and will be deemed to have been duly given (i)
when personally delivered, (ii) when sent by telefax to a party at the number
listed below for such party, (iii) three (3) business days after the day on
which the same has been delivered prepaid to an international courier service
or (iv) ten (10) business days after the deposit in the mail, registered or
certified, return receipt requested, postage prepaid, in each case addressed
to the party to whom such notice is to be given at the following address for
such party:
If to Purchaser: Alcatel SEC AG
Xxxxxxxxxxxxx 00
D-7000 Xxxxxxxxx 00
XXXXXXX
Attn: General Manager
Telefax No. 011-49-711-821-1534
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With copies to: Alcatel Alsthom
00, xxx Xxxxxxx
00000 Xxxxx
XXXXXX
Attn: General Counsel
Telefax No. 000-000-00000000
Alcatel SEL AG
Xxxxxxxxxxxxx 00
D-7000 Xxxxxxxxx 00
XXXXXXX
Attn: General Counsel
Telefax No. 011-49-711-821-1534
If to the Company: Hybrid Networks, Inc.
00000 Xxxx Xxxx
Xxxxxxxxx, XX 00000-0000
Attn: Chief Executive Officer
Telefax No.: (000) 000-0000
With copies to: Fenwick & West LLP
Xxx Xxxx Xxxx Xxxxxx
Xxxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxx
Telefax No.: (000) 000-0000
Either party from time to time may change its address, telefax number or
other information for the purpose of notices to that party by giving notice
specifying such change to the other party hereto.
Section 5.2 FEES AND EXPENSES. The Company and the Purchaser shall each
bear its own expenses in connection with the negotiation and preparation of
this Agreement, all documents and instruments contemplated hereby, and the
consummation of the transactions contemplated hereby, including without
limitation the fees and expenses of their respective counsel, accountants,
investment bankers and consultants.
Section 5.3 PUBLIC ANNOUNCEMENTS. Except as otherwise required by law,
neither the Company nor the Purchaser shall issue any press release or make
any other public announcement with respect to the transactions contemplated
hereby without the approval of the other party. In the event such press
release or other public announcement is required by law, the party obligated
to issue such press release or to make such announcement shall, prior
thereto, furnish a draft thereof to the other party and receive the input of
the other party thereon.
Section 5.4 ENTIRE AGREEMENT. This Agreement supersedes all prior
discussions and agreements between the parties with respect to the subject
matter hereof and contains the sole and entire agreement between the parties
hereto with respect to the subject matter hereof.
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Section 5.5 WAIVER. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but
no such waiver shall be effective unless set forth in a written instrument
duly executed by or on behalf of the party waiving such term or condition. No
waiver by either party of any term or condition of this Agreement, in any one
or more instances, shall be deemed to be or construed as a waiver of the same
or any other term or condition of this Agreement on any future occasion.
Section 5.6 AMENDMENT. This Amendment may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
Section 5.7 BENEFITS AND BINDING EFFECT. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by either party
hereto without the prior written consent of the other party hereto and any
attempt to do so will be void, provided that the Purchaser may assign any or
all rights or obligations of the Purchaser hereunder to any affiliate of the
Purchaser. Subject to the preceding sentence, this Agreement is binding
upon, inures to the benefit of and is enforceable by the parties hereto and
their respective successors and assigns.
Section 5.8 CAPTIONS. The captions used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
Section 5.9 EXHIBITS. All exhibits referred to in this Agreement and
any other attachments to this Agreement are hereby incorporated by reference
into this Agreement and are hereby made a part of this Agreement as if set
out in full herein.
Section 5.10 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Delaware applicable to
a contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
Section 5.11 COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.
Section 5.12 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
Section 5.13 NO THIRD PARTY BENEFICIARY. Except as expressly provided
herein, this Agreement shall not confer any rights or remedies upon any
person other than the parties hereto and their respective successors and
permitted assigns.
Section 5.14 TERMINATION FOR MATERIAL DEFAULT. Either party may
terminate Section 1.2 and EXHIBIT D of this Agreement in the event of a
material default by the other party, provided that:
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(a) The non-defaulting party gives the defaulting party at least
thirty (30) days prior written notice of the alleged material default
and of the non-defaulting party's intention to terminate; and
(b) For events of material default that are capable of being
remedied within the thirty (30) day period specified in subsection (a)
above, the defaulting party has not remedied the alleged material
default within said period.
For the purpose of this Section 5.14, "MATERIAL DEFAULT" shall mean
(i) party's insolvency or initiation of bankruptcy or receivership
proceedings, (ii) a party's breach of any material obligation of such
party under Section 1.2 of this Agreement, as determined by a court of
competent jurisdiction, or (iii) the execution by a party of an
assignment for the benefit of creditors or any other transfer or
assignment of a similar nature.
Section 5.15 TERMINATION FOR CHANGE IN CONTROL. Upon the
occurrence of a Change of Control of either party (the "AFFECTED
PARTY"), the other party (the "UNAFFECTED PARTY") shall have the right
to terminate Section 1.2 and EXHIBIT D of this Agreement by providing
written notice thereof to the Affected Party, at any time prior to the
expiration of sixty (60) days following the receipt by the Unaffected
Party of written notice of such Change of Control from the Affected
Party, if:
(a) such Change in Control of the Affected Party is accomplished,
directly or indirectly, by a competitor of the Unaffected Party or any
of its affiliates, or
(b) such Change in Control is not accomplished in the manner
provided in Section 5.15(a) and the Unaffected Party does not consent
thereto within a period of thirty (30) days thereafter which consent will
not be unreasonably withheld.
The Affected Party shall provide written notice to the Unaffected
Party of the occurrence of a Change of Control of the Affected Party
immediately thereafter. For purposes of this Section 5.15:
"CHANGE IN CONTROL" means the occurrence of any of the following
events: (a) any person or two or more persons acting in concert shall
acquire beneficial ownership, directly or indirectly, of, or shall have
acquired by contract or otherwise, or shall have entered into a contract
or arrangement that, upon consummation, will result in its or their
acquisition of, control over, Voting Stock of a party (or other
securities convertible in such Voting Stock) representing 50% or more of
the combined voting power of all Voting Stock of such party, (b)
Continuing Directors shall cease for any reason to constitute a majority
of the directors of a party then in office, or (c) any person or two or
more persons acting in concert shall acquire substantially all of the
assets of a party by purchase, merger, consolidation or otherwise. As
used in this Section 5.15, "beneficial ownership" shall have the meaning
provided in Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934.
"CONTINUING DIRECTORS" means individuals who are directors of a party
on the date hereof (together with any new director whose election by
such party's board of directors or
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whose nomination for election by such party's shareholders was approved
by a vote of at least a majority of the directors then still in office
who either were directors on the date hereof or whose election or
nomination for election was previously so approved).
"VOTING STOCK" means, with respect to a party, capital stock issued
by such party the holders of which are ordinarily, in the absence of
contingencies, entitled to vote for the election of directors (or persons
performing similar functions) of such party, even though the right to so
vote has been suspended by the happening of such a contingency.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
COMPANY:
HYBRID NETWORKS, INC.,
a Delaware corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
PURCHASER:
ALCATEL SEL AG,
a German corporation
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
By:
--------------------------------
Name:
------------------------------
Title:
-----------------------------
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LIST OF EXHIBITS
Exhibit A Form of Warrant
Exhibit B Terms and Conditions
Regarding Technology Support
Exhibit C Form of Amendment to Amended
and Restated Investor Rights Agreement
Exhibit D Definitions for Section 1.2
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EXHIBIT A
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND
NEITHER THIS WARRANT NOR THE SHARES ISSUABLE UPON EXERCISE OF THIS WARRANT
CAN BE SOLD OR TRANSFERRED UNLESS SUCH SALE OR OTHER TRANSFER HAS BEEN
REGISTERED UNDER SUCH ACT AND UNDER THE APPLICABLE STATE SECURITIES LAWS OR,
IN THE OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION, BOTH AS TO THE
IDENTITY OF THE COUNSEL AND AS TO THE FORM AND SUBSTANCE OF THE OPINION, IS
EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SUCH ACT AND LAWS.
No. A-1 Dated: _________, 1997
HYBRID NETWORKS, INC.
COMMON STOCK PURCHASE WARRANT
THIS IS TO CERTIFY THAT, for value received, Alcatel SEL AG, a
German corporation ("ALCATEL"), and its registered successors and permitted
assigns are entitled, subject to the terms and conditions set forth below, to
purchase from Hybrid Networks, Inc., a Delaware corporation (the
"CORPORATION"), at any time and from time to time after 9:00 A.M., Cupertino,
California time, on the Initial Exercise Date (as defined in Section 1 below)
and prior to 5:00 P.M., Cupertino, California time, on the Expiration Date
(as defined in Section 1 below), any or all of the Warrant Shares (as
defined in Section 1 below), at a purchase price per share equal to the
Exercise Price (as defined in Section 1 below). The number and character of
the Warrant Shares and the Exercise Price are subject to adjustment as
provided herein. All dollar amounts set forth herein refer to United States
dollars.
This Common Stock Purchase Warrant (this "WARRANT") is being issued
in connection with the Warrant Purchase Agreement between the Corporation and
Alcatel.
SECTION 1. DEFINITIONS. As used in this Warrant, the following
terms shall have the respective meanings set forth below or elsewhere in this
Warrant as referred to below:
"ADDITIONAL STOCK" shall have the meaning set forth in Section 4.3(f).
"ALCATEL" shall have the meaning set forth in the first paragraph
hereof.
"COMMON STOCK" shall mean shares of the Common Stock of the
Corporation, $.001 par value per share (as such par value may be amended from
time to time).
"CONVERSION FRACTION" shall have the meaning set forth in Section 2.3.
"CORPORATION" shall have the meaning set forth in the first
paragraph of this Warrant.
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"DERIVATIVE SECURITY" shall have the meaning set forth in Section
4.3(e).
"EFFECTIVE PRICE" shall have the meaning set forth in Section 4.3(a).
"EXERCISE DATE" shall have the meaning set forth in Section 2.4
hereof.
"EXERCISE PRICE" shall mean, as of the Initial Exercise Date and at
any time thereafter, the Initial Exercise Price, as adjusted from time to
time pursuant to the terms of this Warrant.
"EXPIRATION DATE" shall mean ____________, 2002.*
"FAIR MARKET VALUE" of a Warrant Share shall mean (i) in the case
of the exercise of this Warrant, in whole or in part, after the consummation
of an Initial Public Offering, the average of the last reported sale price
per share of Stock on the Nasdaq-NMS or any national securities exchange in
which such Stock is quoted or listed, as the case may be, for the three
trading days immediately preceding the Exercise Date, or (ii) in the case of
the exercise of this Warrant, in whole or in part, before the consummation of
an Initial Public Offering, the fair market value of a share of Stock, as
determined in good faith by the Board of Directors of the Corporation.
"HOLDER" shall mean, as applicable, (i) Alcatel, (ii) any successor
of Alcatel or (iii) any Person to whom this Warrant or any portion thereof
shall have been transferred in accordance with the provisions of Section 9
hereof.
"INITIAL EXERCISE DATE" shall mean the earlier to occur of (i) 180
days after the Issue Date, or (ii) the date of consummation of an Initial
Public Offering; PROVIDED, HOWEVER, that, in the event of any sale or
transfer, in a single transaction or a series of related transactions, of all
or substantially all of the Corporation's assets, or the merger,
consolidation, reorganization or dissolution of the Corporation, or the sale,
in a single transaction or a series of related transactions, of a majority of
the Corporation's voting capital stock (whether newly issued or from
treasury, or previously issued and then outstanding, or any combination
thereof) (any of such events, a "DISPOSAL EVENT") occurring at any time prior
to the earlier of (A) 180 days after the Issue Date or (B) the date of
consummation of an Initial Public Offering, then the Initial Exercise Date
shall be deemed to be the date that is five business days prior to the
earliest to occur of any such Disposal Event.**
"INITIAL EXERCISE PRICE" shall mean $10.91 per share *** (subject
to appropriate adjustment as provided in this Warrant).
"INITIAL PUBLIC OFFERING" shall mean the closing of an underwritten
public offering pursuant to an effective registration statement filed with
the Securities and Exchange Commission under the Securities Act covering the
offer and sale of shares of Common Stock or any other class of capital stock
of the Corporation.
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* Five years from the Issue Date.
** If this Warrant is issued after the Initial Public Offering, the Initial
Exercise Date will be the Issue Date.
*** This price reflects the Corporation's 1 for 2.7 reverse stock split which
has become effective.
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"INVESTOR RIGHTS AGREEMENT" shall mean that certain Hybrid Networks,
Inc. Amended and Restated Investor Rights Agreement, dated as of September
18, 1997, by and among the Corporation and certain holders of the
Corporation's securities, as amended pursuant to an amendment dated as of
October 16, 1997 and entered into by the Corporation, the Venture Banking
Group, a division of Cupertino National Bank, and holders of a majority of
the Registrable Securities outstanding (as defined in the Investor Rights
Agreement) and as amended pursuant to the subsequent amendment with respect
to this Warrant entered into by the Corporation, Alcatel and the holders of a
majority of the Registrable Securities outstanding (as defined in the
Investor Rights Agreement), and as further amended from time to time in
accordance with the terms thereof.
"ISSUE DATE" shall mean ______________, 1997.*
"PERSON" shall mean an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"REGISTRABLE SECURITIES" shall have the meaning ascribed to it in the
Investor Rights Agreement.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended.
"STOCK" shall mean (i) Common Stock, and/or (ii) to the extent that
the Holder is entitled to receive, or receives, upon exercise of this Warrant
any other capital stock of the Corporation (other than Common Stock), or of
any other Person or any other securities of the Corporation or of any other
Person, in lieu of or in addition to Common Stock (whether as a result of any
reclassification of Common Stock or any other Stock or reorganization,
reclassification, merger, consolidation or sale of substantially all the
assets of the Corporation or otherwise), such other capital stock or
securities.
"SUBJECT SHARES" shall have the meaning set forth in Section 2.3.
"WARRANT" shall have the meaning set forth in the second paragraph of
this Warrant.
"WARRANT SHARES" shall mean the shares of Common Stock, as adjusted as
provided in this Warrant, that are issuable upon the exercise of this Warrant.
SECTION 2. EXERCISE OF WARRANT.
SECTION 2.1 NUMBER OF WARRANT SHARES ISSUABLE UPON EXERCISE. Subject
to adjustment as provided herein, the maximum number of Warrant Shares issuable
upon exercise of this Warrant shall be 458,295.**
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* The Issue Date will be the date on which this Warrant is issued pursuant
to the Warrant Purchase Agreement.
** Reflects the Corporation's 1 for 2.7 reverse stock split which has become
effective.
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SECTION 2.2 METHOD OF EXERCISE. Subject to and upon all of the
terms and conditions set forth in this Warrant, the Holder may exercise this
Warrant, in whole or in part with respect to any Warrant Shares as to which
this Warrant is then currently exercisable, at any time and from time to time
during the period commencing on the Initial Exercise Date and ending on the
Expiration Date, by presentation and surrender of this Warrant to the
Corporation at its principal office (or such other office or agency as the
Corporation may designate by notice in writing to the Holder in accordance
with Section 10.4), together with (a) a properly completed and duly executed
subscription form, in the form attached hereto, which subscription form shall
specify the number of Warrant Shares for which this Warrant is then being
exercised, and (b) payment of the aggregate Exercise Price payable hereunder
in respect of the number of Warrant Shares for which this Warrant is then
being exercised. Payment of such aggregate Exercise Price shall be made
either (i) in cash or by money order, certified or bank cashier's check or
wire transfer (in each case in lawful currency of the United States of
America), or (ii) by conversion of this Warrant as provided in Section 2.3.
SECTION 2.3 CONVERSION OF WARRANT.
(a) The Holder shall have the right to convert this Warrant, in
whole or in part with respect to any Warrant Shares as to which this Warrant
is currently exercisable, at any time and from time to time during the period
commencing on the Initial Exercise Date and ending on the Expiration Date, by
the presentation and surrender of this Warrant to the Corporation at its
principal office (or such other office or agency as the Corporation may
designate by notice in writing to the Holder in accordance with Section
10.4), together with a properly completed and duly executed conversion form,
in the form attached hereto, which conversion form shall specify the number
of Warrant Shares as to which this Warrant is being converted (the "SUBJECT
SHARES"). Upon exercise of this conversion right, the Holder hereof shall be
entitled to receive that number of Warrant Shares equal to the quotient
obtained by dividing [ (A - B) (X) ] by (A), where:
A = the Fair Market Value of one Warrant Share on the date of
conversion of this Warrant.
B = the Exercise Price for one Warrant Share under this Warrant.
X = the number of Subject Shares as to which this Warrant is
being converted.
If the above calculation results in a negative number, then no shares of
Warrant Stock shall be issued or issuable upon conversion of this Warrant.
(b) Upon conversion of this Warrant in accordance with this Section
2.3, the Holder shall be entitled to receive a certificate for the number of
Warrant Shares acquired by the Holder as determined in accordance with the
foregoing, and a new Warrant in substantially identical form and dated as of
such conversion for the purchase of that number of Warrant Shares equal to
the difference, if any, between (i) the number of Warrant Shares subject to
issuance upon exercise of this Warrant immediately before such conversion and
(ii) the number of Subject Shares as to which the Holder exercised its
conversion right pursuant to this Section 2.3. No fractional shares may be
issued upon any conversion of this Warrant. If any conversion would result
in a fractional share (the "CONVERSION FRACTION"), then, at Holder's election
either (A) the number of shares issued upon the conversion will be rounded
down to the last whole share; or
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(B) the Holder will pay in cash an amount equal to the Exercise Price times a
fraction equal to 1 less the Conversion Fraction, in which event the number
of shares issued upon the conversion (plus the cash payment) will be rounded
up to the nearest whole share. For example, if the Fair Market Value is
$25.00 and the Exercise Price is $10.91, then, upon exercise of the
conversion right under this Section 2.3 with respect to 1,000 Subject Shares,
the Holder would receive, at the Holder's election, either (1) 563 Warrant
Shares without making any cash payment or (2) 564 Warrant Shares if the
Holder elected to pay $4.36 in cash (40% of the Exercise Price for the extra
share) and would receive a new Warrant for the number of Warrant Shares
subject to issuance upon exercise of this Warrant immediately before such
conversion less 1,000.
SECTION 2.4 EFFECTIVENESS OF EXERCISE; OWNERSHIP. Each exercise
of this Warrant by the Holder shall be deemed to have been effected
immediately prior to the close of business on the date upon which all of the
requirements of Sections 2.1 and 2.2 hereof with respect to such exercise
shall have been complied within in full (each such date, an "EXERCISE DATE").
On the applicable Exercise Date with respect to any exercise of this Warrant
by the Holder, the Corporation shall be deemed to have issued to the Holder,
and the Holder shall be deemed to have become the holder of record and legal
owner of, the number of Warrant Shares being purchased upon such exercise of
this Warrant, notwithstanding that the stock transfer books of the
Corporation shall then be closed or that certificates representing such
number of Warrant Shares being purchased shall not then be actually delivered
to the Holder.
SECTION 2.5 DELIVERY OF STOCK CERTIFICATES ON EXERCISE. As soon
as practicable after the exercise of this Warrant, and in any event within
ten days thereafter, the Corporation, at its expense, will cause to be issued
in the name of and delivered to the Holder, or as the Holder may direct
(subject in all cases, to the provisions of Section 9 hereof), a certificate
of certificates for the number of Warrant Shares purchased by the Holder on
such exercise.
SECTION 2.6 SHARES TO BE FULLY PAID AND NONASSESSABLE. All
Warrant Shares issued upon the exercise of this Warrant shall be validly
issued, fully paid and nonassessable, free of all liens, taxes, charges and
other encumbrances or restrictions on sale (other than those set forth
herein), and free and clear of all preemptive rights.
SECTION 2.7 FRACTIONAL SHARES. This Warrant may be exercised only
for whole Warrant Shares. No fractional Warrant Shares or scrip representing
fractional Warrant Shares shall be issued upon the exercise of this Warrant.
SECTION 2.8 ISSUANCE OF NEW WARRANTS; CORPORATION ACKNOWLEDGMENT.
Upon any partial exercise of this Warrant, the Corporation, at its expense,
will forthwith issue and deliver to the Holder a new warrant or warrants of
like tenor, registered in the name of the Holder, exercisable, in the
aggregate and subject to the limitations provided for in this Warrant, for
the then balance of the Warrant Shares with respect to which this Warrant has
not been exercised. Moreover, the Corporation shall, at the time of any
exercise of this Warrant, upon the request of the Holder, acknowledge in
writing its continuing obligation to afford to the Holder any rights to which
the Holder shall continue to be entitled after such exercise in accordance
with the provisions of this Warrant; PROVIDED, HOWEVER, that if the Holder
shall fail to make any such request, such failure shall not affect the
continuing obligation of the Corporation to afford to the Holder any such
rights.
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SECTION 2.9 PAYMENT OF TAXES. The Corporation shall pay any
transfer tax which may be payable in respect of any issuance of certificates
(if applicable) representing any Warrant Shares purchased upon exercise or
conversion of this Warrant. The Corporation shall not be required to pay any
tax or other charge imposed in connection with any transfer involved in the
issue of any certificate for Warrant Shares, or any new or replacement shares
in any name other than that of the Holder of this Warrant, and in such case
the Company shall not be required to issue or deliver any stock certificate
security or Warrant until such tax or other charge has been paid, or it has
been established to the Company's satisfaction that no tax or other charge is
due.
SECTION 2.10 EXPIRATION. This Warrant and the Holder's rights
hereunder, to the extent not previously exercised or converted, shall expire
as of 5:00 P.M., California time, on the Expiration Date.
SECTION 3. REGISTRATION RIGHTS. The Holder of this Warrant shall
have the benefit of the rights available to the parties to the Investor
Rights Agreement to cause the Corporation to register any and all Warrant
Shares under the Securities Act and under any blue sky or securities laws of
any jurisdiction within the United States, at the time and in the manner
specified in the Investor Rights Agreement, as provided in the amendment to
that agreement entered into by Alcatel, the Company and the holders of
majority of the Registrable Securities outstanding (as defined in the
Investor Rights Agreement), and any and all Warrant Shares shall be deemed to
be Registrable Securities for all purposes of and as provided in the Investor
Rights Agreement.
SECTION 4. ADJUSTMENTS. The number and character of Warrant
Shares issuable upon exercise or conversion of this Warrant (or any shares of
Stock or other assets at the time receivable or issuable upon exercise or
conversion of this Warrant) and the Exercise Price therefor, are subject to
adjustment upon occurrence of the following events:
SECTION 4.1 ADJUSTMENT FOR STOCK SPLITS, STOCK DIVIDENDS,
RECAPITALIZATIONS, ETC. The Exercise Price of this Warrant and the number of
Warrant Shares issuable upon exercise or conversion of this Warrant (or any
shares of Stock or other assets at the time issuable upon exercise of this
Warrant) shall each be proportionally adjusted to reflect any stock dividends
stock splits, reverse stock splits, combinations of shares,
reclassifications, recapitalizations or other similar events altering the
number of outstanding shares of Common Stock (or such other Stock or other
assets).
SECTION 4.2 ADJUSTMENT FOR CAPITAL REORGANIZATION, CONSOLIDATION,
MERGER, SALE OR CONVERSION. If any reorganization of the capital stock of the
Corporation, or any consolidation or merger of the Corporation with or into
another entity, or the sale of all or substantially all of the Corporation's
assets to another entity shall be effected in such a way that holders of
Common Stock will be entitled to receive stock, securities or assets with
respect to or in exchange for their Common Stock, then, in each such case,
the Holder, upon the exercise or conversion of this Warrant, at any time
after the consummation of such capital reorganization, consolidation, merger
or sale, shall receive, in lieu of the stock or other securities and property
receivable upon the exercise or conversion, as applicable, of this Warrant
prior to such consummation, the Stock or other assets to which the Holder
would have been entitled upon such consummation if the Holder had exercised
or converted, as applicable, this Warrant immediately prior thereto, all
subject to further adjustment as provided in this Section 4; and in each such
case, the terms of
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this Warrant shall be applicable to the shares of Stock or other assets
receivable upon the exercise or conversion, as applicable, of this Warrant
after such consummation.
SECTION 4.3 ADJUSTMENT FOR ISSUANCE FOR ADDITIONAL STOCK. The
Exercise Price of this Warrant and the number of Warrant Shares issuable upon
exercise or conversion of this Warrant shall be further subject to adjustment
from time to time as follows:
(a) Upon each issuance by the Corporation of any Additional Stock
(as defined below), after the Issue Date and before the consummation by the
Company of an Initial Public Offering, for a consideration per share less
than the Exercise Price in effect immediately prior to the issuance of such
Additional Stock (except as provided in Section 4.1 above), (i) the Exercise
Price in effect immediately prior to each such issuance shall forthwith
(except as otherwise provided in this Section 4.3) be adjusted to the
Effective Price (as defined below) at which the Additional Stock is issued,
and (ii) the number of Warrant Shares issuable upon exercise or conversion of
this Warrant shall forthwith be adjusted by dividing the number of Warrant
Shares into which this Warrant is exercisable immediately before the
adjustment provided for herein by a fraction the numerator of which shall be
the Effective Price and the denominator of which shall be the Exercise Price
immediately before the adjustment provided for herein. The "EFFECTIVE PRICE"
for any issuance of Additional Stock shall mean the lesser of $10.91 or the
quotient determined by dividing the total number of shares of Additional
Stock issued (or deemed issued pursuant to Section 4.3(e)) by the Corporation
in such issuance into the aggregate amount of consideration received by the
Corporation therefor, as provided in this Section 4.3.
(b) No adjustment of the Exercise Price shall be made in an amount
less than one cent per share, provided that any adjustments which are not
required to be made by reason of this sentence shall be carried forward and
shall be either taken into account in any subsequent adjustment made prior to
three years from the date of the event giving rise to the adjustment being
carried forward, or shall be made at the end of three years from the date of
the event giving rise to the adjustment being carried forward. Except to the
limited extent provided for in Section 4.3(e)(3) and 4.3(e)(4) below, no
adjustment of the Exercise Price pursuant to this Section 4.3(a) shall have
the effect of increasing the Exercise Price above the Exercise Price in
effect immediately prior to such adjustment.
(c) In the case of the issuance of Common Stock for cash, the
consideration shall be deemed to be the amount of cash paid therefor before
deducting any reasonable discounts, commissions or other expenses allowed,
paid or incurred by the Corporation for any underwriting or otherwise in
connection with the issuance and sale thereof.
(d) In the case of the issuance of the Common Stock for a
consideration in whole or in part other than cash, the consideration other
than cash shall be deemed to be the fair value thereof as determined by the
Board of Directors irrespective of any accounting treatment.
(e) In the case of the issuance (whether before, on or after the
Issue Date) of options to purchase or rights to subscribe for Common Stock,
securities that are by their terms convertible into or exchangeable for
Common Stock or options to purchase or rights to subscribe for such
convertible or exchangeable securities, the following provisions shall apply
for all purposes of this Section 4.3.
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(1) The aggregate maximum number of shares of Common Stock
deliverable upon exercise (assuming the satisfaction of any conditions to
exercisability, including without limitation, the passage of time, but
without taking into account potential antidilution adjustments) of such
options to purchase or rights to subscribe for Common Stock shall be deemed
to have been issued at the time such options or rights were issued and for a
consideration equal to the consideration (determined in the manner provided
in Sections 4.3(c) and 4.3(d), except as provided in subsection 4.3(e)(5)),
if any, received by the Corporation upon the issuance of such options or
rights plus the minimum exercise price provided in such options or rights
(without taking into account potential antidilution adjustments) for the
Common Stock covered thereby.
(2) The aggregate maximum number of shares of Common Stock
deliverable upon conversion of or in exchange for any such convertible or
exchangeable securities (assuming the satisfaction of any conditions to
convertibility or exchangeability, including without limitation, the passage
of time, but without taking into account potential antidilution adjustments)
or upon the exercise of options to purchase or rights to subscribe for such
convertible or exchangeable securities and subsequent conversion or exchange
thereof shall be deemed to have been issued at the time such securities were
issued or such options or rights were issued and for a consideration equal to
the consideration, if any, received by the Corporation for any such
securities and related options or rights (excluding any cash received on
account of accrued interest or accrued dividends), plus the minimum
additional consideration, if any, to be received by the Corporation (without
taking into account potential antidilution adjustments) upon the conversion
or exchange of such securities or the exercise of any related options or
rights (the consideration in each case to be determined in the manner
provided in Section 4.3(c) and 4.3(d), except as provided in subsection
4.3(e)(5)).
(3) In the event of any change in the number of shares of
Common Stock deliverable or in the consideration payable to the Corporation
upon exercise of such options or rights or upon conversion of or in exchange
for such convertible or exchangeable securities, including, but not limited
to, a change resulting from the antidilution provisions thereof, the Exercise
Price, to the extent in any way affected by or computed using such options,
rights or securities, shall be recomputed to reflect such change, but no
further adjustment shall be made for the actual issuance of Common Stock or
any payment of such consideration upon the exercise of any such options or
rights or the conversion or change of such securities.
(4) Upon the expiration of any such options or rights, the
termination of any such rights to convert or exchange or the expiration of
any options or rights related to such convertible or exchangeable securities,
the Exercise Price, to the extent in any way affected by or computed using
such options, rights or securities or options or rights related to such
securities, shall be recomputed to reflect the issuance of only the number of
shares of Common Stock (and convertible or exchangeable securities which
remain in effect) actually issued upon the exercise of such options or
rights, upon the conversion or exchange of such securities or upon the
exercise of the options or rights related to such securities; provided that
no such recomputation shall have the effect of increasing or decreasing the
Exercise Price to an amount other than the amount that would have existed on
the recomputation date had the unexercised options or rights never been
issued.
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(5) In determining the amount of consideration received by the
Corporation for or upon the issuance of any Additional Stock or other
securities for the purposes of this Section 4.3, the value of any options to
purchase or rights to subscribe for Common Stock, securities that are by
their terms convertible onto or exchangeable for Common Stock or options to
purchase or rights to subscribe for such convertible or exchangeable
securities (each a "DERIVATIVE SECURITY") issued by the Corporation shall be
deemed to be zero (so that the issuance itself of any such Derivative
Security shall not be deemed to increase or decrease the consideration
otherwise received by the Corporation under this Section 4.3, inasmuch as the
rights under such Derivative Security shall be deemed to have been exercised
immediately upon the issuance of such Derivative Security (as contemplated by
Sections 4.3(e)(1) and 4.3(e)(2)).
(f) "ADDITIONAL STOCK" shall mean any shares of Common Stock issued
(or deemed to have been issued pursuant to Section 4.3(e)) by the Corporation
after the Issue Date other than
(1) Common Stock issued pursuant to a transaction described
in Section 4.1 or 4.2 hereof:
(2) An aggregate of up to 250,000 shares of, and/or options or
rights to acquire shares of, Common Stock, issuable or issued to employees of
the Corporation pursuant to an existing stock option plan or restricted stock
plan of the Corporation; as provided in Section 4.3(e), the term "Additional
Stock" shall not include any shares of capital stock that are issued upon the
exercise of any options, warrants or rights excluded from the definition of
Additional Stock pursuant to this Section (2);
(3) Shares of Common Stock issued or issuable (i) upon
exercise or conversion of this Warrant, any options, warrants, convertible
securities or other securities of the Corporation outstanding as of the Issue
Date or (ii) upon conversion of shares of any series of Preferred Stock
issued as of the Issue Date.
(g) No fractional shares shall be issued upon conversion of this
Warrant or any portion thereof, and the number of Warrant Shares issuable as
a result of any adjustment provided for in this Section 4.3 shall be rounded
to the nearest whole share.
SECTION 5. OFFICER'S CERTIFICATE AS TO ADJUSTMENTS. In each case
of any adjustment or readjustment in the number and kind of Warrant Shares
(or other Stock or assets), issuable hereunder from time to time, or in the
Exercise Price, the Corporation, at its expense, will promptly cause an
officer of the Corporation to compute such adjustment or readjustment in
accordance with the terms of this Warrant and prepare a certificate setting
forth such adjustment or readjustment and showing the facts upon which such
adjustment or readjustment is based. The Corporation will forthwith send a
copy of each such certificate to the Holder in accordance with Section 10.4
below.
SECTION 6. NOTICES OF RECORD DATE, ETC. In the event of
(a) any taking by the Corporation of a record of the holders of
Stock for the purpose of determining the holders thereof who are entitled to
receive any shares of Stock as a dividend or other distribution or pursuant
to a stock split, or
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(b) any reorganization of the Corporation, or any sale or transfer,
in a single transaction or a series of related transactions, of all or
substantially all the assets of the Corporation to, or the consolidation or
merger of the Corporation with or into, any other Person, or
(c) any voluntary or involuntary dissolution, liquidation or
winding-up of the Corporation, or
(d) any sale, in a single transaction or a series of related
transactions, of a majority of the Corporation's voting stock (whether newly
issued, or from treasury, previously issued and then outstanding, or any
combination thereof),
then and in each such event the Corporation will mail or cause to be mailed
to the Holder a notice specifying (i) the date on which any such record is to
be taken for the purpose of such dividend, distribution or stock split, and
stating the amount and character of such dividend, distribution or stock
split, or (ii) the date on which any such reorganization, transfer,
consolidation, merger, dissolution, liquidation or winding-up is to take
place, and the time, if any is to be fixed, as of which the holders of record
of any one or more classes of Stock shall be entitled to exchange their
shares of Stock for securities or other property deliverable on such
reorganization, transfer, consolidation, merger, dissolution, liquidation or
winding-up or (iii) the date on which any such sale of a majority of the
Corporation's voting stock is to take place and the material terms thereof,
as the case may be. Such notice shall be mailed at least 15 days prior to
the date specified in such notice on which any such action is to be taken.
SECTION 7. EXCHANGE OF WARRANT. Subject to the provisions of
Section 9 hereof (if and to the extent applicable), this Warrant shall be
exchangeable, upon the surrender hereof by the Holder at the principal office
of the Corporation, for new warrants of like tenor, each registered in the
name of the Holder or in the name of such other Persons as they may direct,
subject to Sections 9 and 10.5 (upon payment by the Holder of any applicable
transfer taxes). Each of such new warrants shall be exercisable for such
number of Warrant Shares as the Holder shall direct, PROVIDED that all of
such new warrants shall represent, in the aggregate, the right to purchase
the same number of Warrant Shares and cash, securities or other property, if
any, which may be purchased by the Holder upon exercise of this Warrant at
the time of its surrender.
SECTION 8. REPLACEMENT OF WARRANT. On receipt of evidence
reasonably satisfactory to the Corporation of the loss, theft, destruction or
mutilation of this Warrant and, in the case of any such loss, theft or
destruction of this Warrant, on delivery of an indemnity agreement or
security reasonably satisfactory in form and amount to the Corporation or, in
the case of any such mutilation, on surrender and cancellation of this
Warrant, the Corporation at its expense will execute and deliver, in lieu
thereof, a new warrant of like tenor.
SECTION 9. TRANSFER PROVISIONS, ETC. By accepting this Warrant,
Holder makes the representations set forth in 9.1, 9.2, 9.3 and 9.4 below and
agrees to the restrictions set forth in 9.5, 9.6, 9.7 and 9.8 below, and, by
exercising or converting this Warrant in whole or in part, the Holder agrees
that Holder will then represent and will be deemed to represent that such
representations are true and complete as of the date of such exercise or
conversion.
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SECTION 9.1 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Warrant is,
and any Warrant Shares received by the Holder upon exercise or conversion of
this Warrant will be, acquired for investment for Holder's own account, not
as a nominee or agent, and not with a view to the resale or distribution of
any part thereof, and the Holder has no present intention of selling,
granting any participation in, or otherwise distributing any such securities.
The Holder does not have any contract, undertaking, agreement or arrangement
with any person to sell, transfer or grant participations to such person or
to any third person, with respect to any of such securities.
SECTION 9.2 INVESTMENT EXPERIENCE. The Holder is an investor in
securities of companies in the development stage and acknowledges that the
Holder is able to fend for itself, can bear the economic risk of the Holder's
investment and has such knowledge and experience in financial or business
matters that the Holder is capable of evaluating the merits and risks of the
investment in this Warrant and the Warrant Shares.
SECTION 9.3 ACCREDITED INVESTOR. The Holder is an "accredited
investor" within the meaning of Rule 501 of Regulation D under the Securities
Act, as presently in effect.
SECTION 9.4 RESTRICTED SECURITIES. The Holder understands that
this Warrant and the Warrant Shares are characterized as restricted
securities under the federal securities laws and applicable state securities
laws inasmuch as such securities are being (or will be) acquired from the
Corporation in a transaction not involving a public offering and that under
such laws and applicable regulations such securities may be resold without
registration under the Securities Act, only in certain limited circumstances.
SECTION 9.5 TRANSFER RESTRICTIONS. Without in any way limiting
the representations set forth above, the Holder agrees not to make any
transfer of all or any portion of this Warrant or the Warrant Shares unless
and until (a) such transfer is registered under the Securities Act and all
applicable state securities laws, or (ii) Holder shall have notified the
Corporation of the proposed transfer and shall have furnished the Corporation
with a detailed statement of the circumstances surrounding the proposed
transfer, and, if the Corporation requests, Holder shall have furnished the
Corporation with an opinion of counsel, reasonably satisfactory to the
Corporation, that such transfer will not require registration of such shares
under the Securities Act and applicable state securities laws.
SECTION 9.6 LEGENDS.
(a) Each certificate representing any Warrant Shares issued upon
exercise of this Warrant shall bear the legend set forth below, or a legend
substantially equivalent thereto:
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE AND MAY NOT BE OFFERED, SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, HYPOTHECATED OR DISPOSED OF UNLESS
THEY ARE SO REGISTERED OR UNLESS, IN THE OPINION OF COUNSEL
SATISFACTORY TO THE CORPORATION, BOTH AS TO THE IDENTITY OF COUNSEL
AND AS TO THE FORM AND SUBSTANCE OF SUCH OPINION, AN EXEMPTION FROM
SUCH REGISTRATION IS AVAILABLE."
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(b) Each certificate representing any shares of Stock issued from time
to time upon exercise of this Warrant shall also bear any legend required
under any applicable state securities or blue sky laws.
(c) The Corporation may issue appropriate "stop transfer" instructions
and may take such other steps as it may deem appropriate to cause the
restrictions referred to in this Section 9 to be complied with.
SECTION 9.7 SURVIVAL. The obligations of the Holder (and/or of
any transferee of this Warrant or any Warrant Shares issued from time to time
upon exercise of this Warrant) under this Section 9 shall, with respect to
any Warrant Shares issued from time to time upon exercise of this Warrant,
survive the exercise, expiration or other termination, or transfer, of this
Warrant indefinitely.
SECTION 9.8 MECHANICS OF TRANSFER. Subject to the terms and
conditions of this Warrant and subject to compliance with all applicable
securities laws, any transfer of all or any portion of this Warrant, or of
any interest therein, that is otherwise in compliance with applicable law
shall be effected by surrendering this Warrant to the Corporation at its
principal office, together with (i) a duly executed form of assignment, in
the form attached hereto, (ii) payment of all applicable transfer taxes, if
any. In the event of any such transfer of this Warrant, in whole, the
Corporation shall issue a new warrant of like tenor to the transferee,
representing the right to purchase the same number of Warrant Shares, and
cash, securities or other property, if any, which were purchasable by the
Holder upon exercise of this Warrant at the time of its transfer. In the
event of any such transfer of any portion of this Warrant, (i) the
Corporation shall issue a new warrant of like tenor to the transferee,
representing the right to purchase the same number of Warrant Shares, and
cash, securities or other property, if any, which were purchasable by the
Holder upon exercise of the transferred portion of this Warrant at the time
of such transfer, and (ii) the Corporation shall issue a new warrant of like
tenor to the Holder, representing the right to purchase the number of Warrant
Shares, and cash, securities or other property, if any, purchasable by the
Holder upon exercise of the portion of this Warrant not transferred to such
transferee. Until this Warrant or any portion thereof is transferred on the
books of the Corporation, the Corporation may treat the Holder as the
absolute holder of this Warrant and all right, title and interest therein for
all purposes, notwithstanding any notice to the contrary. Notwithstanding
the foregoing, neither this Warrant nor any rights hereunder may be
transferred unless such transfer complies with all applicable securities laws
and the provisions of this Section 9.
SECTION 10. GENERAL.
SECTION 10.1 AUTHORIZED SHARES; RESERVATION OF SHARES FOR
ISSUANCE. At all times while this Warrant is outstanding, the Corporation
shall maintain its corporate authority to issue, and shall have authorized
and reserved for issuance upon exercise of this Warrant, such number of
shares of Common Stock as shall be sufficient to perform its obligations
under this Warrant (after giving effect to any and all adjustments to the
number and kind of Warrant Shares purchasable upon exercise of this Warrant).
SECTION 10.2 NO IMPAIRMENT. The Corporation will not, by
amendment of its Certificate of Incorporation or through any reorganization,
transfer of assets, consolidation,
A-12
merger, dissolution, issuance or sale of securities, sale or other transfer
of any of its assets or properties, or any other voluntary action, avoid or
seek to avoid the observance or performance of any of the terms of this
Warrant, but will at all times in good faith assist in the carrying out of
all such terms and in the taking of all such action as may be necessary or
appropriate in order to protect the rights of the Holder hereunder against
impairment. Without limiting the generality of the foregoing, the
Corporation (a) will not increase the par value of any shares of Stock
receivable upon the exercise of this Warrant above the amount payable
therefor on such exercise, and (b) will take all action that may be necessary
or appropriate in order that the Corporation may validly and legally issue
fully paid and nonassessable shares of Stock on the exercise of this Warrant.
SECTION 10.3 NO RIGHTS AS STOCKHOLDER. The Holder shall not be
entitled to vote or to receive dividends or to be deemed the holder of Stock
that may at any time be issuable upon exercise of this Warrant for any
purpose whatsoever, nor shall anything contained herein be construed to
confer upon the Holder any of the rights of a stockholder of the Corporation
or any right to vote for the election of directors or upon any matter
submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issuance
or reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger or conveyance or otherwise), or to receive
notice of meetings (except to the extent otherwise provided in this Warrant),
or to receive dividends or subscription rights, until the Holder shall have
become the holder of record and legal owner of Warrant Shares in accordance
with the provisions of Section 2.4 hereof.
SECTION 10.4 NOTICES. All notices, demands, requests,
certificates or other communications under this Warrant shall be in writing
and shall be either mailed by first class mail, postage prepaid, in which
case such notice, demand, request, certificate or other communication shall
be deemed to have been given three business days after the date on which it
is first deposited in the mails, or hand delivered or sent by facsimile
transmission, by tested or otherwise authenticated telex or cable or by
private expedited courier for overnight delivery with signature required, in
each such case, such notice, demand, request, certificate or other
communication being deemed to have been given upon delivery or receipt, as
the case may be:
(i) if to the Corporation, at 00000 Xxxx Xxxx, Xxxxxxxxx,
Xxxxxxxxxx 00000 Attention: Chief Financial Officer, or at such other address
as the Corporation may have furnished in writing to the Holder; and
(ii) if to the Holder, at the Holder's address appearing in the
books maintained by the Corporation.
SECTION 10.5 ASSIGNMENT. Notwithstanding anything contained
herein to the contrary, this Warrant and all rights hereunder are assignable
or transferable (subject to the legend set forth in the heading on the first
page hereof), in whole or in part, by Alcatel to affiliates of Alcatel.
SECTION 10.6 AMENDMENT AND WAIVER. No failure or delay of the
Holder in exercising any power or right hereunder shall operate as a waiver
thereof, nor shall any single or partial exercise of any such right or power,
or any abandonment or discontinuance of steps to enforce such a right or
power, preclude any other or further exercise thereof or the exercise of any
other right or power. The rights and remedies of the Holder are cumulative
and not exclusive of
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any rights or remedies which it would otherwise have. The provisions of this
Warrant may be amended, modified or waived with (and only with) the written
consent of the Corporation and the Holder.
SECTION 10.7 GOVERNING LAW. This Warrant shall be governed by,
and construed and enforced in accordance with, the laws of California.
SECTION 10.8 COVENANTS TO BIND SUCCESSOR AND ASSIGNS. All
covenants, stipulations, promises and agreements in this Warrant contained by
or on behalf of the Corporation shall bind its successors and assigns,
whether so expressed or not.
SECTION 10.9 SEVERABILITY. In case any one or more of the
provisions contained in this Warrant shall be invalid, illegal or
unenforceable in any respect, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. The parties shall endeavor in good faith negotiations to
replace the invalid, illegal or unenforceable provisions with valid
provisions the economic effect of which comes as close as possible to that of
the invalid, illegal or unenforceable provisions.
SECTION 10.10 CONSTRUCTION. The definitions of this Warrant shall
apply equally to both the singular and the plural forms of the terms defined.
Wherever the context may require, any pronoun shall include the corresponding
masculine, feminine and neuter forms. The section and paragraph headings
used herein are for convenience of reference only, are not part of this
Warrant and are not to affect the construction of or be taken into
consideration in interpreting this Warrant.
SECTION 10.11 REMEDIES. The Holder and the Corporation, in
addition to being entitled to exercise all rights granted by law, including
recovery of damages, will each be entitled to specific performance of its
rights under this Warrant. The Holder and the Corporation each agrees that
monetary damages would not be adequate compensation for any loss incurred by
reason of a breach by it of the provisions of this Warrant and hereby agrees
to waive the defense in any action for specific performance that a remedy at
law would be adequate. In any action or proceeding brought to enforce any
provision of this Warrant or where any provision hereof is invalidly asserted
as a defense, the successful party to such action or proceeding shall be
entitled to recover reasonable attorneys' fees in addition to any other
available remedy.
[rest of page intentionally left blank]
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IN WITNESS WHEREOF, the Corporation has caused this Warrant to be
executed in its corporate name by one of its officers thereunto duly
authorized, all as of the day and year first above written.
HYBRID NETWORKS, INC.
By:
---------------------------
Xxxx X. Xxxxxxxxx
Chief Executive Officer
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FORM OF SUBSCRIPTION
(To be executed upon exercise of Warrant)
To: HYBRID NETWORKS, INC.
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the attached Warrant for, and to purchase
thereunder, ________ shares of Common Stock, $.001 par value per share
("COMMON STOCK"), of Hybrid Networks, Inc., a Delaware corporation, and
tenders herewith payment of $________, representing the aggregate purchase
price for such shares based on the price per share provided for in such
Warrant. The undersigned hereby confirms that the representations set forth
in Section 9 of the Warrant are true and complete with respect to the
undersigned as of the date hereof.
Please issue a certificate or certificates for such shares of
Common Stock in the following name or names and denominations and deliver
such certificate or certificates to the person or persons listed below at
their respective addresses set forth below:
If said number of shares of Common Stock shall not be all the
shares of Common Stock issuable upon exercise of the attached Warrant, a new
Warrant is to be issued in the name of the undersigned for the balance
remaining of such shares of Common Stock less any fraction of a share of
Common Stock paid in cash.
Dated: _____________, 19__
-----------------------------------
(Name of Holder)
By:
--------------------------------
Its:
--------------------------------
Address:
---------------------------
NOTE: The above signature
should correspond exactly with
the name on the face of the
attached Warrant.
NOTICE OF CONVERSION
To: Hybrid Networks, Inc.
(1) The undersigned hereby elects to convert that portion of the
attached Warrant representing the right to purchase __________ shares of
Common Stock of Hybrid Networks, Inc. into such number of shares of Common
Stock of Hybrid Networks, Inc. as is determined pursuant to Section 2.3 of
such Warrant, which conversion shall be effected pursuant to the terms of
such Warrant.
(2) The undersigned represents that the aforesaid shares are being
acquired for the account of the undersigned for investment and not with a
view to, or for resale in connection with, the distribution thereof and that
the undersigned has no present intention of distributing or reselling such
shares, except in compliance with applicable federal and state securities
laws. The undersigned hereby confirms that the representations set forth in
Section 9 of the Warrant are true and complete with respect to the
undersigned as of the date hereof.
(3) The undersigned accepts such shares subject to the terms
relating to registration rights under the Investor Rights Agreement (as
defined in the Warrant).
-----------------------------
(Date)
-----------------------------------
(Name of Holder)
By:
--------------------------------
Its:
--------------------------------
Address:
---------------------------
Note: The above signature should
correspond exactly with the name
on the face of the attached
Warrant.
FORM OF ASSIGNMENT
For value received, ____________________________ hereby sells, assigns
and transfers unto _____________________________ (the "TRANSFEREE") the
attached Warrant [__% of the attached Warrant], together with all right,
title and interest therein, and does hereby irrevocably constitute and
appoint ____________________________ attorney to transfer said Warrant
[said percentage of said Warrant] on the books of Hybrid Networks, Inc., a
Delaware corporation, with full power of substitution in the premises.
The Transferee, by signing below, hereby confirms that the
representations set forth in Section 9 of the Warrant are true and complete
with respect to the Transferee as of the date hereof, and that the Transferee
agrees to be bound by the restrictions of Section 9 of the Warrant.
If not all of the attached Warrant is to be so transferred, a new
Warrant is to be issued in the name of the undersigned for the balance of
said Warrant.
Dated: _____________, 19__
-----------------------------------
(Name of the Holder)
By:
--------------------------------
Its:
--------------------------------
NOTE: The above signature
should correspond exactly with
the name on the face of the
attached Warrant.
AGREED TO AND ACCEPTED
-------------------------------------
Name of Transferee
BY:
-------------------------------------
ITS:
-------------------------------------
ADDRESS:
-------------------------------------
-------------------------------------
EXHIBIT B
QPSK
Purchaser and/or its affiliates own and have developed a significant amount
of practical knowledge and experience in the characterization and
implementation of a QPSK upstream modulation technology in European hybrid
fiber coax plant. Company requires this knowledge in order to finalize its
QPSK product offering. In that context, Purchaser agrees to provide (or to
cause its appropriate affiliates to provide) Company systems and network
documentation pertaining to the implementation of QPSK in a typical cable TV
network. In this connection, Purchaser will provide to Company a network
engineering manual and 12 months of engineering consulting. The engineering
consulting will in part consist of inputs to the quality assurance test plan
and the alpha and beta test plans. The manual will be delivered no later than
1/1/98 and the engineering consultancy will commence as soon as practical.
SNMP
Company and Purchaser require an HP Open View network management product for
implementation in joint customer networks.
Purchaser will provide modules in the Purchaser product that would have the
Company data capability implemented into the same network management system
(which modules Purchaser and/or its affiliates own and have developed).
Interfaces required for this joint management system will be jointly agreed
upon by an Alcatel/Company technical team that will be established as soon as
practical. The interface to be agreed upon will be based on SNMP traps and
the HP Open View System. Purchaser will provide 12 man months of development
effort for this team.
AS to the QPSK and SNMP areas referred to above, it is the purpose of the
referred-to technical assistance to allow Company to employ Purchaser's
disclosed preexisting know-how in Purchaser's Access Division and the new
technical results of the collaboration between them in the course of that
assistance in the Company's products (as they may evolve or are modified) in
the field of internet access via CATV and in the field of wireless internet
access systems. Purchaser would be allowed to benefit from the use of the new
developments as well for its products.
CDMA
Whereas Purchaser and Company agree that a next generation physical layer for
cable return, such as CDMA, may reduce the cost of conditioning the cable
plant compared to QPSK, and whereas Purchaser and/or its affiliates have
begun to research a new CDMA upstream modulation technology, Purchaser agrees
to share:
B-1
a) detail of the cost justification for CDMA technology.
b) the preliminary design information available for a CDMA return
channel (Purchaser and/or its affiliates have been developing such
information).
IP TELEPHONY
Whereas both companies agree that IP telephony is an evolving technology and
that the Company's patented intellectual property portfolio lends itself well
to the development of a telephony over IP product. Purchaser and Company
agree to explore the opportunity to work together in the development,
refinement and exploitation of IP telephony over broadband networks.
B-2
EXHIBIT C
HYBRID NETWORKS, INC.
AMENDMENT TO
AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
The Amended and Restated Investor Rights Agreement dated as of September
18, 1997 among Hybrid Networks, Inc. (the "COMPANY") and certain holders of
securities of the Company, as amended by the amendment dated as of October
16, 1997 (the "ORIGINAL AGREEMENT"), is hereby amended by this amendment
(this "AMENDMENT") dated as of November 6, 1997 among the Company, Alcatel
SEL AG ("ALCATEL"), and the holders of a majority of the Registrable
Securities outstanding immediately prior to this Amendment. Except as
provided otherwise herein, the terms used in this Amendment that are defined
in the Original Agreement have the same meanings as those terms have in the
Original Agreement.
1. The Original Agreement is hereby amended as follows:
(a) Alcatel will have the same registration rights (including,
without limitation, the right to transfer or assign such registration rights)
under the Original Agreement as amended by this Amendment (the "AGREEMENT"),
with respect to the shares of Common Stock of the Company issued or issuable
upon exercise of the warrant issued by the Company to Alcatel pursuant to
that certain Warrant Purchase Agreement between the Company and Alcatel dated
November 3, 1997 (the "ALCATEL WARRANTS"), as the Note Warrant Investors
have with respect to the shares of Common Stock that are issued or issuable
upon exercise of the Note Warrants.
(b) The definition of "Registrable Securities" in Section 1.1(b) of
the Original Agreement is amended to include (i) shares of Common Stock of
the Company issuable or issued upon exercise of any Alcatel Warrants and (ii)
any Common Stock of the Company issued as (or issuable upon conversion or
exercise of any warrant, right or other security which is issued as) a
dividend or other distribution with respect to, or in exchange for or in
replacement of, any Alcatel Warrants or Common Stock described in (i).
(c) Alcatel will have, with respect to Alcatel Warrants or shares
of Common Stock of the Company that have been issued upon exercise of any
Alcatel Warrants, the same right as any Note/Warrant Holder has to
participate in the one demand shelf-registration provided for in Section
1.10(b) of the Original Agreement (including, without limitation, the same
right to transfer or assign such right to participate).
(d) As signatory of this Amendment, Alcatel will be bound by the
provisions of Section 1.12 of the Original Agreement (Market Stand-Off
Agreement).
(e) The Company shall deliver financial statements to Alcatel as
provided in Sections 2.1 and 2.2 of the Original Agreement.
2. Except as amended as provided in Section 1 above, the Original
Agreement continues in full force and effect.
3. This Amendment may be executed in two or more counterparts, each of which
will be deemed an original but, all of which together will constitute one and
the same instrument.
C-1
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
TUDOR BVI FUTURES, LTD.
By: Tudor Investment Corporation,
Investment Adviser
By:
---------------------------------
Xxxxxx X. Xxxxxxxx,
Vice President
Address: c/o Tudor Global Trading, Inc.
00 Xxxxx Xxxxx
Xxxxxx, XX 00000
Facsimile No.: x/x Xxxxxxx, Xxxx & Xxxxx LLP
(000) 000-0000
Attn: Xxxxxx X. Xxxx, Esq.
TUDOR ARBITRAGE PARTNERS, L.P.
By: Tudor Global Trading, Inc.,
General Partner
By:
-------------------------------------
Xxxxxx X. Xxxxxxxx,
Vice President
Address and facsimile no. same as immediately above
RAPTOR GLOBAL FUND, LTD.
By: Tudor Investment Corporation,
Investment Adviser
By:
---------------------------------------
Xxxxxx X. Xxxxxxxx,
Vice President
Address and facsimile no. same as immediately above
RAPTOR GLOBAL FUND, L.P.
By: Tudor Investment Corporation,
General Partner
By:
---------------------------------------
Xxxxxx X. Xxxxxxxx,
Vice President
Address and facsimile no. same as immediately above
C-2
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
ALEX. XXXXX & SONS INCORPORATED
By:
---------------------------------
Xxxxxx X. Xxxxxxxx, Principal
Address: 000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
C-3
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
X.X. XXXX CO., INC.,
By:
---------------------------------
Xxxxxx Xxxx, Xx.
Address: 000 Xxxx Xxxxxx Xxxx
P. O. Xxx 000
Xxxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
C-4
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
OSCCO III, L.P.
By:
---------------------------------
Xxxxxxx X. Xxxxxxx
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
C-5
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
----------------------------
Xxxx X. Xxxxxx
Address: 00 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000
C-6
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
AT&T VENTURE COMPANY, L.P.
By: AT&T Venture Partners,
Its: General Partner
By:
----------------------------
Its:
----------------------------
Address: 0000 Xxxx Xxxx Xxxx
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
C-7
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
SEQUOIA CAPITAL VI
By:
----------------------------------
Its:
----------------------------------
Address: 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
SEQUOIA TECHNOLOGY PARTNERS VI
By:
----------------------------------
Its:
----------------------------------
Address: 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
SEQUOIA XXIV
By:
----------------------------------
Its:
----------------------------------
Address: 0000 Xxxx Xxxx Xxxx,
Xxxxxxxx 0, Xxxxx 000
Xxxxx Xxxx, XX 00000
Facsimile Number: (000) 000-0000
C-8
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
ACCEL IV L.P. ACCEL KEIRETSU L.P.
By: Accel IV Associates L.P. By: Accel Partners & Co.,Inc.
Its: General Partner Its: General Partner
By: By:
------------------------------ -------------------------------
Its: Its:
----------------------------- -----------------------------
Address: One Xxxxxx Square Address: Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000 Facsimile Number: (000) 000-0000
ACCEL INVESTORS '95 X.X. XXXXXXX X. XXXXXXXXX PARTNERS
By: By:
------------------------------ -------------------------------
Its: Its:
----------------------------- -----------------------------
Address: One Xxxxxx Square Address: Xxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000 Xxxxxxxxx, XX 00000
Facsimile Number: (000) 000-0000 Facsimile Number: (000) 000-0000
C-9
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
INTEL CORPORATION
By:
-------------------------------
Its:
-------------------------------
Address: 0000 Xxxxxxx Xxxxxxx Xxxx.
Xxxxx Xxxxx, XX 00000-0000
Facsimile Number: (000) 000-0000
C-10
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
ITOCHU Corporation
By:
-------------------------------
Its:
-------------------------------
Address: 5-1, Xxxx-Xxxxxx 0-xxxxx
Xxxxxx-XX, Xxxxx 000-00
Xxxxx
Facsimile Number: 011-81-3-3497-3131
C-11
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
BG SERVICES LIMITED
By:
-------------------------------
Its:
-------------------------------
Address: x/x Xxxxxx Xxxxx
0 Xxxxxx Xxxxx
Xx. Helier
Jersey, Channel Islands
Attention: Xxx Xxxxx
Facsimile Number: (0) 0000-000000
C-12
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
----------------------------------
Xxxxxx X. Xxxxxxx
Address: P. O. Xxx 000
Xxxxxxxxxx, XX 00000
Facsimile No.: (000) 000-0000
C-13
SIGNATURE PAGE
DATED AS OF NOVEMBER 6, 1997 TO THE HYBRID NETWORKS, INC.
CONSENT, WAIVER AND AMENDMENT REGARDING AMENDED AND
RESTATED INVESTOR RIGHTS AGREEMENT
------------------------------------------------------------------------------
VENTURE BANKING GROUP, a division
of Cupertino National Bank
By:
-------------------------------
Its:
-------------------------------
Address: Three Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, XX 00000
Attention: Xxx Xxxxxxxx
Facsimile Number: (000) 000-0000
C-14
EXHIBIT D
As used in Section 1.2 of this Agreement, the following terms have the
meanings indicated below, provided that the definition of "affiliate" shall
apply for all purposes of this Agreement:
"AFFILIATE" (i) when referring to an affiliate of the Purchaser, shall
mean Alcatel Alsthom, S.A. and any company, corporation or other entity more
than 50% of whose voting securities are controlled, directly or indirectly,
by Alcatel Alsthom, S.A., and (ii) when referring to an affiliate of the
Company, shall mean any company, corporation or other entity more that 50% of
whose voting securities are controlled, directly or indirectly, by the
Company.
"BACKGROUND COPYRIGHTS" shall mean (i) in the case of Purchaser, all
Copyrights in the possession of Purchaser's Access Division which would be
infringed by the Use of a Foreground Work of Authorship, Delivered Work of
Authorship or Foreground Copyright, such as the copyright in an underlying
work with respect to its derivative work, and which are disclosed to the
Company pursuant to the technical support referred to in EXHIBIT B, and (ii)
in the case of the Company, all Copyrights which would be infringed by the
Use of a Foreground Work of Authorship, Delivered Work of Authorship or
Foreground Copyright, such as the copyright in an underlying work with
respect to its derivative work, and which are disclosed to the Purchaser
pursuant to the technical support referred to in EXHIBIT B.
"BACKGROUND PATENTS" shall mean all Patents which are not Foreground
Patents.
"BACKGROUND PROPRIETARY INFORMATION" shall mean (i) in the case of
Purchaser, all Proprietary Information in the possession of Purchaser's
Access Division and which Purchaser has a right to disclose and license
without payment to a third party which is not Foreground Proprietary
Information, and which is transferred to Company pursuant to the technical
support referred to in EXHIBIT B, and (ii) in the case of the Company, all
Proprietary Information which the Company has a right to disclose and license
without payment to a third party which is not Foreground Proprietary
Information, and which is transferred to Purchaser pursuant to the technical
support referred to in EXHIBIT B.
"BACKGROUND WORKS OF AUTHORSHIP" shall mean (i) in the case of
Purchaser, all Works of Authorship in the possession of Purchaser's Access
Division and which Purchaser has a right to disclose and license without
payment to a third party which are not Foreground Works of Authorship and
which are disclosed to the Company pursuant to the technical support referred
to in EXHIBIT B, and (ii) in the case of the Company, all Works of Authorship
which the Company has a right to disclose and license without payment to a
third party which are not Foreground Works of Authorship and which are
disclosed to Purchaser pursuant to the technical support referred to in
EXHIBIT B.
"COPYRIGHT" shall mean, with respect to a Work of Authorship, in the
case of the United States, the rights relating to such Product under Title 17
of the United States Code, as amended, and, in the case of other countries,
rights relating to such Work of Authorship under similar forms of protection.
D-1
"DELIVERED WORK OF AUTHORSHIP" shall mean a Work of Authorship, other
than a Foreground Work of Authorship, delivered by one party to the other
party pursuant to the Development; provided, however, that in the case of the
Purchaser such Delivered Work of Authorship shall be limited to those in the
possession of the Purchaser's Access Division.
"DEVELOPMENT" shall mean that activity that is carried out by either
party, either independently or together with its affiliates, or jointly by
both parties, under this Agreement in the course of the technical support
hereunder and identified in EXHIBIT B.
"FOREGROUND COPYRIGHT" shall mean a Copyright of any Foreground Work of
Authorship.
"FOREGROUND PATENTS" shall mean all Patents based on Subject Inventions.
"FOREGROUND PROPRIETARY INFORMATION" shall mean all Proprietary
Information which is generated in the course of the Development.
"FOREGROUND WORK OF AUTHORSHIP" shall mean any Work of Authorship first
fixed in whole or in part in a tangible medium of expression in the course of
the Development.
"INFORMATION" shall mean all data and information, including, without
limitation, data and information of a technical nature including writings,
drawings, sound recordings, computer programs, pictorial representations and
graphs, and works of authorship protectable under copyright or similar forms
of protection and also including inventions whether or not patentable.
"INVENTION" shall mean any invention, discovery, improvement or
innovation, of more than a trifling or routine nature, whether or not
patentable.
"JOINT FOREGROUND COPYRIGHTS" shall mean any Copyright on a Joint
Foreground Work of Authorship.
"JOINT FOREGROUND PATENTS" shall mean the Foreground Patents covering
Subject Inventions jointly made or conceived by one or more employees of a
party or its affiliates and one or more employees of the other party or its
affiliates.
"JOINT FOREGROUND PROPRIETARY INFORMATION" shall mean the Foreground
Proprietary Information generated in direct collaborative participation
between one or more employees of one party or its affiliates and one or more
employees of the other party or its affiliates in the course of the
Development.
"JOINT FOREGROUND WORK OF AUTHORSHIP" shall mean any Foreground Work of
Authorship considered jointly authored by the parties under Title 17 of the
United States Code, as amended.
D-2
"NECESSARY BACKGROUND PATENTS" shall mean (i) in the case of the
Purchaser, the Purchaser's Background Patents whose claims would be infringed
by the Practice of the Purchaser's Foreground Patents or the Use (except
modification) of the Purchaser's Foreground Copyrights, Foreground
Proprietary Information, Foreground Works of Authorship, Background
Proprietary Information or Delivered Works of Authorship, and (ii) in the
case of the Company, the Company's Background Patents whose claims would be
infringed by the Practice of the Company's Foreground Patents or the Use
(except modification) of the Company's Foreground Copyrights, Foreground
Proprietary Information, Foreground Works of Authorship or Delivered Works of
Authorship or by the Practice of those of Company's Separate or Joint
Foreground Patents which become the Separate Foreground Patents of Purchaser
by operation of Section 1.2(b)(iii)(B) or by the Use (except modification) of
those of Company's Separate and Joint Foreground Copyrights or Separate or
Joint Foreground Proprietary Information which become the Purchaser's
Separate Foreground Copyrights or Separate Foreground Proprietary Information
by operation of Section 1.2(b)(iii)(B).
"PATENT" shall mean a patent for an invention or a similar form of
statutory protection such as a utility model or registered design.
"PRACTICE" shall mean to make, have made, import, sell or offer to sell
any items or carry out any method that is within the scope of a Patent.
"PRODUCT" shall mean a product of either party or its affiliates which
may incorporate Purchaser's Background Proprietary Information or either
party's Delivered Works of Authorship, Foreground Works of Authorship,
Subject Inventions or Foreground Proprietary Information, a Product may be a
QPSK Product, a SNMP Product, a CDMA Product or an IP Telephony Product.
"PROPRIETARY INFORMATION" shall mean information owned or controlled by
a party and not available without restrictions to third parties.
"RIGHT TO USE" shall mean the right of a party to do or have done on its
behalf the following: to copy, duplicate, reproduce and otherwise use and,
with respect to a copyrighted Work of Authorship, to perform any act which
the owner of any Copyright therein may prohibit under Title 17 of the United
States Code, as amended, and similar laws of other jurisdictions, and
including, with respect to any Product, the right to incorporate Foreground
Proprietary Information or Background Proprietary Information into such
Product and to manufacture and sell the same.
"SEPARATE FOREGROUND COPYRIGHTS" shall mean the Foreground Copyrights
which are not Joint Foreground Copyrights.
"SEPARATE FOREGROUND PATENTS" shall mean the Foreground Patents which
are not Joint Foreground Patents.
"SEPARATE FOREGROUND PROPRIETARY INFORMATION" shall mean the Foreground
Proprietary Information which is not Joint Foreground Proprietary Information.
D-3
"SEPARATE FOREGROUND WORKS OF AUTHORSHIP" shall mean the Foreground
Works of Authorship which are not Joint Foreground Works of Authorship.
"SUBJECT INVENTIONS" shall mean Inventions first conceived in the course
of the Development.
"USE" shall mean the exercise of any Right to Use.
"WORK OF AUTHORSHIP" shall mean any work, including derivative works
fixed in a more-than-transitory form, perceivable either directly or
indirectly with the aid of a machine or device and includes, but is not
limited to, those works protectable under copyright or similar forms of
protection.
D-4