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EXHIBIT 4.3
ANDA NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
MARCH 27, 2000
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TABLE OF CONTENTS
Page
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1. Registration Rights......................................................................1
1.1 Definitions....................................................................1
1.2 Request for Registration.......................................................3
1.3 Company Registration...........................................................4
1.4 Form S-3 Registration..........................................................5
1.5 Obligations of the Company.....................................................6
1.6 Information from Holder........................................................7
1.7 Expenses of Registration.......................................................7
1.8 Delay of Registration..........................................................8
1.9 Indemnification................................................................8
1.10 Reports Under Securities Exchange Act of 1934.................................10
1.11 Assignment of Registration Rights.............................................11
1.12 "Market Stand-Off" Agreement..................................................11
1.13 Termination of Registration Rights............................................12
1.14 Limitations on Subsequent Registration Rights.................................12
2. Covenants of the Company................................................................12
2.1 Delivery of Financial Statements..............................................12
2.2 Inspection....................................................................13
2.3 Termination of Information and Inspection Covenants...........................13
2.4 Right of First Offer..........................................................13
2.5 Right to Participate in Initial Public Offering...............................15
2.6 Board of Directors............................................................16
2.7 Proprietary Agreements........................................................16
2.8 Directors' Liability and Indemnification......................................17
2.9 Employees.....................................................................17
2.10 Stock Vesting.................................................................17
2.11 Termination of Certain Covenants..............................................17
3. Miscellaneous...........................................................................17
3.1 Successors and Assigns........................................................17
3.2 Governing Law.................................................................17
3.3 Counterparts..................................................................18
3.4 Titles and Subtitles..........................................................18
3.5 Notices.......................................................................18
3.6 Expenses......................................................................18
3.7 Entire Agreement: Amendments and Waivers......................................18
3.8 Severability..................................................................19
3.9 Aggregation of Stock..........................................................19
3.10 Additional Parties............................................................19
3.11 Prior Agreement...............................................................19
3.12 Agreement to Vote on Certain Change of Control Transactions...................19
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3.13 Exculpation; Rights of Investors..............................................20
Schedule A Schedule of Investors
Schedule B Holders of Common Stock
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INVESTORS' RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT is made as
of March 27, 2000, by and among Anda Networks, Inc., a Delaware corporation (the
"Company"), the investors listed on Schedule A hereto, each of which is herein
referred to individually as an "Investor" and collectively as the "Investors,"
and the holders of Common Stock listed on Schedule B hereto, each of which is
herein referred to individually as a "Common Holder" and collectively as the
"Common Holders."
RECITALS
WHEREAS, certain of the Investors (the "Existing Investors") and
certain of the Common Holders possess certain registration rights, information
rights and other rights pursuant to that certain Investors' Rights Agreement
dated as of March 25, 1999 (the "Prior Agreement");
WHEREAS, certain of the Investors (the "Series D Investors") are
parties to the Series D Preferred Stock Purchase Agreement of even date herewith
(the "Series D Agreement") among the Company and the investors listed on the
Schedule of Investors attached thereto, pursuant to which the Series D Investors
are purchasing shares of Series D Preferred Stock of the Company;
WHEREAS, in order to induce the Company to enter into the Series
D Agreement and to induce the Series D Investors to invest funds in the Company
pursuant to the Series D Agreement, the Existing Investors and the Common
Holders agree unconditionally to waive their rights under the Prior Agreement,
and the Investors, the Common Holders and the Company hereby agree that this
Agreement shall govern the rights of the Investors and the Common Holders to
cause the Company to register shares of Common Stock issued or issuable to such
persons, and certain other matters as set forth herein;
WHEREAS, the Company has agreed to make certain of the Common
Holders and Investors parties to this Agreement; and
WHEREAS, the Series D Investors and the Company have agreed,
pursuant to the Series D Agreement, to enter into this Agreement;
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. Registration Rights. The Company covenants and agrees as
follows:
1.1 Definitions. For purposes of this Section 1:
(a) The term "Act" means the Securities Act of
1933, as amended.
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(b) The term "Form S-3" means such form under the
Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
(c) The term "Holder" means any person owning or
having the right to acquire Registrable Securities or any assignee thereof in
accordance with Section 1.11 hereof; provided, however, that the Common Holders
shall not be deemed to be Holders for purposes of Section 1.2, 1.4 and 3.7.
(d) The term "Initial Offering" means the Company's
first firm commitment underwritten public offering of its Common Stock under the
Act.
(e) The term "1934 Act" means the Securities
Exchange Act of 1934, as amended.
(f) The term "register," "registered," and
"registration" refer to a registration effected by preparing and filing a
registration statement or similar document in compliance with the Act, and the
declaration or ordering of effectiveness of such registration statement or
document.
(g) The term "Registrable Securities" means (i) the
Common Stock issuable or issued upon conversion of the Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock and Series D Preferred Stock,
(ii) the shares of Common Stock issued to the Common Holders as of the date
hereof; provided, however, that such shares of Common Stock shall not be deemed
Registrable Securities for the purposes of Section 1.2, 1.4 and 3.7, and (iii)
any Common Stock of the Company issued as (or issuable upon the 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,
the shares referenced in (i) and (ii) above, excluding in all cases, however,
any Registrable Securities sold by a person in a transaction in which his rights
under this Section 1 are not assigned.
(h) The number of shares of "Registrable
Securities" outstanding shall be determined by the number of shares of Common
Stock outstanding that are, and the number of shares of Common Stock issuable
pursuant to then exercisable or convertible securities that are, Registrable
Securities.
(i) The term "SEC" shall mean the Securities and
Exchange Commission.
(j) The term "Series C Investors" shall mean those
investors who purchased shares of the Company's Series C Preferred Stock
pursuant to that certain Series C Preferred Stock Purchase Agreement among the
Company and the investors listed on Schedule A thereto, dated March 25, 1999.
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1.2 Request for Registration.
(a) Subject to the conditions of this Section 1.2,
if the Company shall receive at any time after the earlier of (i) September 27,
2002 or (ii) six (6) months after the effective date of the Initial Offering, a
written request from the Holders of at least a majority of the Registrable
Securities then outstanding (the "Initiating Holders") that the Company file a
registration statement under the Act covering the registration of at least fifty
percent (50%) of the Registrable Securities or a lesser percent if the
anticipated aggregate offering price (net of underwriting discounts and
commissions) would be at least $7,500,000, then the Company shall, within twenty
(20) days of the receipt thereof, give written notice of such request to all
Holders, and subject to the limitations of this Section 1.2, use all reasonable
efforts to effect, as soon as practicable, the registration under the Act of all
Registrable Securities that the Holders request to be registered in a written
request received by the Company within twenty (20) days of the mailing of the
Company's notice pursuant to this Section 1.2(a).
(b) If the Initiating Holders intend to distribute
the Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 1.2 and the Company shall include such information in the written
notice referred to in Section 1.2(a). In such event the right of any Holder to
include its Registrable Securities in such registration shall be conditioned
upon such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and such Holder) to
the extent provided herein. All Holders proposing to distribute their securities
through such underwriting shall enter into an underwriting agreement in
customary form with the underwriter or underwriters selected for such
underwriting by the Company (which underwriter or underwriters shall be
reasonably acceptable to a majority in interest of the Initiating Holders).
Notwithstanding any other provision of this Section 1.2, if the underwriter
advises the Company that marketing factors require a limitation of the number of
securities underwritten (including Registrable Securities), then the Company
shall so advise all Holders of Registrable Securities that would otherwise be
underwritten pursuant hereto, and the number of shares that may be included in
the underwriting shall be allocated to the Holders of such Registrable
Securities on a pro rata basis based on the number of Registrable Securities
held by all such Holders (including the Initiating Holders). Any Registrable
Securities excluded or withdrawn from such underwriting shall be withdrawn from
the registration.
(c) The Company shall not be required to effect a
registration pursuant to this Section 1.2:
(i) in any particular jurisdiction in which
the Company would be required to execute a general consent to service of process
in effecting such registration, unless the Company is already subject to service
in such jurisdiction and may be required under the Act; or
(ii) after the Company has effected two (2)
registrations pursuant to this Section 1.2, and such registrations have been
declared or ordered effective; or
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(iii) during the period starting with the
date sixty (60) days prior to the Company's good faith estimate of the date of
the filing of, and ending on a date one hundred eighty (180) days following the
effective date of, a Company-initiated registration subject to Section 1.3
below, provided that the Company is actively employing in good faith all
reasonable efforts to cause such registration statement to become effective; or
(iv) if the Initiating Holders propose to
dispose of Registrable Securities that may be registered on Form S-3 pursuant to
a request made under Section 1.4 hereof; or
(v) if the Company shall furnish to Holders
requesting a registration statement pursuant to this Section 1.2, a certificate
signed by the Company's President stating that in the good faith judgment of the
Board of Directors of the Company, it would be seriously detrimental to the
Company and its stockholders for such registration statement to be effected at
such time, in which event the Company shall have the right to defer such filing
for a period of not more than one hundred twenty (120) days after receipt of the
request of the Initiating Holders, provided that such right to delay a request
shall be exercised by the Company not more than once in any twelve (12)-month
period.
1.3 Company Registration.
(a) If (but without any obligation to do so) the
Company proposes to register (including for this purpose a registration effected
by the Company for stockholders other than the Holders) any of its stock or
other securities under the Act in connection with the public offering of such
securities (other than a registration relating solely to the sale of securities
to participants in a Company stock plan, a registration relating to corporate
reorganization or other transaction under Rule 145 of the Act, a registration on
any form that does not include substantially the same information as would be
required to be included in a registration statement covering the sale of the
Registrable Securities or a registration in which the only Common Stock being
registered is Common Stock issuable upon conversion of debt securities that are
also being registered), the Company shall, at such time, promptly give each
Holder written notice of such registration. Upon the written request of each
Holder given within twenty (20) days after mailing of such notice by the Company
in accordance with Section 3.5, the Company shall, subject to the provisions of
Section 1.3(c), use all reasonable efforts to cause to be registered under the
Act all of the Registrable Securities that each such Holder has requested to be
registered.
(b) Right to Terminate Registration. The Company
shall have the right to terminate or withdraw any registration initiated by it
under this Section 1.3 prior to the effectiveness of such registration, whether
or not any Holder has elected to include securities in such registration. The
expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 1.7 hereof.
(c) Underwriting Requirements. In connection with
any offering involving an underwriting of shares of the Company's capital stock,
the Company shall not be required under this Section 1.3 to include any of the
Holders' securities in such
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underwriting unless they accept the terms of the underwriting as agreed upon
between the Company and the underwriters selected by it (or by other persons
entitled to select the underwriters) and enter into an underwriting agreement in
customary form with an underwriter or underwriters selected by the Company, and
then only in such quantity as the underwriters determine in their sole
discretion will not jeopardize the success of the offering by the Company. If
the total amount of securities, including Registrable Securities, requested by
stockholders to be included in such offering exceeds the amount of securities
sold other than by the Company that the underwriters determine in their sole
discretion is compatible with the success of the offering, then the Company
shall be required to include in the offering only that number of such
securities, including Registrable Securities, that the underwriters determine in
their sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling Holders
according to the total amount of securities entitled to be included therein
owned by each selling Holder or in such other proportions as shall mutually be
agreed to by such selling Holders) but in no event shall the amount of
securities of the selling Holders included in the offering be reduced below
twenty-five percent (25%) of the total amount of securities included in such
offering, unless such offering is the initial public offering of the Company's
securities, in which case the selling Holders may be excluded if the
underwriters make the determination described above and no other stockholder's
securities are included. For purposes of the preceding parenthetical concerning
apportionment, for any selling stockholder that is a Holder of Registrable
Securities and that is a partnership or corporation, the partners, retired
partners and stockholders of such Holder, or the estates and family members of
any such partners, and retired partners, and any trusts for the benefit of any
of the foregoing persons shall be deemed to be a single "selling Holder," and
any pro rata reduction with respect to such "selling Holder" shall be based upon
the aggregate amount of Registrable Securities owned by all such related
entities and individuals.
1.4 Form S-3 Registration. In case the Company shall
receive from the Holders of Registrable Securities a written request or requests
that the Company effect a registration on Form S-3 and any related qualification
or compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, the Company shall:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other Holders;
and
(b) use all reasonable efforts to effect, as soon
as practicable, such registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale and distribution
of all or such portion of such Holders' Registrable Securities as are specified
in such request, together with all or such portion of the Registrable Securities
of any other Holders joining in such request as are specified in a written
request given within fifteen (15) days after receipt of such written notice from
the Company, provided, however, that the Company shall not be obligated to
effect any such registration, qualification or compliance, pursuant to this
section 1.4:
(i) if Form S-3 is not available for such
offering by the Holders;
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(ii) if the Holders, together with the
holders of any other securities of the Company entitled to inclusion in such
registration, propose to sell Registrable Securities and such other securities
(if any) at an aggregate price to the public (net of any underwriters' discounts
or commissions) of less than $1,000,000;
(iii) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in the
good faith judgment of the Board of Directors of the Company, it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall have
the right to defer the filing of the Form S-3 registration statement for a
period of not more than one hundred twenty (120) days after receipt of the
request of the Holder or Holders under this Section 1.4, provided, however, that
the Company shall not utilize this right more than once in any twelve month
period;
(iv) if the Company has, within the twelve
(12)-month period preceding the date of such request, already effected two (2)
registrations on Form S-3 for the Holders pursuant to this Section 1.4; or
(v) in any particular jurisdiction in which
the Company would be required to qualify to do business or to execute a general
consent to service of process in effecting such registration, qualification or
compliance.
(c) Subject to the foregoing, the Company shall
file a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt of
the request or requests of the Holders. Registrations effected pursuant to this
Section 1.4 shall not be counted as requests for registration effected pursuant
to Sections 1.2.
1.5 Obligations of the Company. Whenever required under
this Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use all reasonable
efforts to cause such registration statement to become effective, and, upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred fifty (150) consecutive days or, if earlier, until the distribution
contemplated in the Registration Statement has been completed;
(b) prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Act with respect to the disposition of all securities
covered by such registration statement;
(c) furnish to the Holders such numbers of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act,
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and such other documents as they may reasonably request in order to facilitate
the disposition of Registrable Securities owned by them;
(d) use all reasonable efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions;
(e) in the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering;
(f) notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the Act or the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing;
(g) cause all such Registrable Securities
registered pursuant hereunder to be listed on each securities exchange on which
similar securities issued by the Company are then listed; and
(h) provide a transfer agent and registrar for all
Registrable Securities registered hereunder and a CUSIP number for all such
Registrable Securities, in each case not later than the effective date of such
registration.
1.6 Information from Holder. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to this
Section 1 with respect to the Registrable Securities of any selling Holder that
such Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
1.7 Expenses of Registration. All expenses (other than
underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Sections 1.2, 1.3 and 1.4),
including (without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the Company
and the reasonable fees and disbursements of one counsel for the selling Holders
shall be borne by the Company. Notwithstanding the foregoing, the Company shall
not be required to pay for any expenses of any registration proceeding begun
pursuant to Section 1.2 or Section 1.4 if the registration request is
subsequently withdrawn at the request of the Holders of a majority of the
Registrable Securities to be registered (in which case all participating Holders
shall bear such expenses pro rata based upon the number of Registrable
Securities that were to be registered in the withdrawn registration), unless, in
the case of a registration requested under Section 1.2 or
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Section 1.4, the Holders of a majority of the Registrable Securities agree to
forfeit their right to one demand registration pursuant to Section 1.2,
provided, however, that if at the time of such withdrawal, the Holders have
learned of a material adverse change in the condition, business, or prospects of
the Company from that known to the Holders at the time of their request and have
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Holders shall not be required
to pay any of such expenses and shall retain their rights pursuant to Section
1.2 or 1.4.
1.8 Delay of Registration. No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect to
the interpretation or implementation of this Section 1.
1.9 Indemnification. In the event any Registrable
Securities are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company
will indemnify and hold harmless each Holder, the partners or officers,
directors and stockholders of each Holder, legal counsel and accountants for
each Holder, any underwriter (as defined in the Act) for such Holder and each
person, if any, who controls such Holder or underwriter within the meaning of
the Act or the 1934 Act, against any losses, claims, damages, or liabilities
(joint or several) to which they may become subject under the Act, the 1934 Act
or any state securities laws, insofar as such losses, claims, damages, or
liabilities (or actions in respect thereof) arise out of or are based upon any
of the following statements, omissions or violations (collectively a
"Violation"): (i) any untrue statement or alleged untrue statement of a material
fact contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements thereto, (ii) the omission or alleged omission to state therein a
material fact required to be stated therein, or necessary to make the statements
therein not misleading, or (iii) any violation or alleged violation by the
Company of the Act, the 1934 Act, any state securities laws or any rule or
regulation promulgated under the Act, the 1934 Act or any state securities laws;
and the Company will reimburse each such Holder, underwriter or controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection l.9(a) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability, or action if such settlement is effected without
the consent of the Company (which consent shall not be unreasonably withheld),
nor shall the Company be liable in any such case for any such loss, claim,
damage, liability, or action to the extent that it arises out of or is based
upon a Violation which occurs in reliance upon and in conformity with written
information furnished expressly for use in connection with such registration by
any such Holder, underwriter or controlling person; provided further, however,
that the foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Holder or underwriter, or any
person controlling such Holder or underwriter, from whom the person asserting
any such losses, claims, damages or liabilities purchased shares in the offering
(the "Shares"), if a copy of the prospectus (as then amended or supplemented if
the Company shall have furnished any amendments or
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supplements thereto) was not sent or given by or on behalf of such Holder or
underwriter to such person, if required by law so to have been delivered, at or
prior to the written confirmation of the sale of the Shares to such person, and
if the prospectus (as so amended or supplemented) would have cured the defect
giving rise to such loss, claim, damage or liability.
(b) To the extent permitted by law, each selling
Holder, severally and not jointly, will indemnify and hold harmless the Company,
each of its directors, each of its officers who has signed the registration
statement, each person, if any, who controls the Company within the meaning of
the Act, legal counsel and accountants for the Company, any underwriter, any
other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons may become subject, under the Act, the 1934 Act or any state securities
laws, insofar as such losses, claims, damages, or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder expressly
for use in connection with such registration; and each such Holder will
reimburse any person intended to be indemnified pursuant to this subsection
l.9(b), any legal or other expenses reasonably incurred by in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
l.9(b) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of the Holder (which consent shall not be unreasonably withheld) provided, that,
in no event shall any indemnity under this subsection l.9(b) exceed the net
proceeds from the offering received by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.9 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.9,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel
(and one local counsel, to the extent necessary), with the fees and expenses to
be paid by the indemnifying party, if representation of such indemnified party
by the counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and any
other party represented by such counsel in such proceeding. The failure to
deliver written notice to the indemnifying party within a reasonable time of the
commencement of any such action, if prejudicial to its ability to defend such
action, shall relieve such indemnifying party of any liability to the
indemnified party under this Section 1.9, but the omission so to deliver written
notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.9.
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(d) If the indemnification provided for in this
Section 1.9 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to therein, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission. Notwithstanding the foregoing, in the event the
indemnifying party is a Holder, the indemnity obligation of such Holder pursuant
to this subsection (c) shall not exceed the net proceeds from the offering
received by such Holder.
(e) The obligations of the Company and Holders
under this Section 1.9 shall survive the completion of any offering of
Registrable Securities in a registration statement under this Section 1, and
otherwise.
1.10 Reports Under Securities Exchange Act of 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any time
permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times after the
effective date of the Initial Offering;
(b) file with the SEC in a timely manner all
reports and other documents required of the Company under the Act and the 1934
Act; and
(c) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written statement
by the Company that it has complied with the reporting requirements of SEC Rule
144 (at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Act and the 1934 Act (at any
time after it has become subject to such reporting requirements), or that it
qualifies as a registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most recent annual or
quarterly report of the Company and such other reports and documents so filed by
the Company, and (iii) such other information as may be reasonably requested in
availing any Holder of any rule or regulation of the SEC which permits the
selling of any such securities without registration or pursuant to such form.
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1.11 Assignment of Registration Rights. The rights to
cause the Company to register Registrable Securities pursuant to this Section 1
may be assigned (but only with all related obligations) by a Holder to (i) a
partner, former partner, member, former member, shareholder or affiliate of the
transferring Holder, or (ii) to any entity under common investment management or
control with the transferring Holder, or (iii) to a transferee or assignee of
such securities that after such assignment or transfer, holds at least 100,000
shares of Registrable Securities (subject to appropriate adjustment for stock
splits, stock dividends, combinations and other recapitalizations and as such
number may be determined pursuant to Section 3.9 below), provided: (a) the
Company is, within a reasonable time after such transfer, furnished with written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned; (b) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, including without limitation the provisions of
Section 1.12 below; and (c) such assignment shall be effective only if
immediately following such transfer the further disposition of such securities
by the transferee or assignee is restricted under the Act.
1.12 "Market Stand-Off" Agreement. Each Holder hereby
agrees that it will not, without the prior written consent of the
representatives of the underwriters, during the period commencing on the date of
the final prospectus relating to the Company's initial public offering and
ending on the date specified by the Company and the representatives of the
underwriters (such period not to exceed one hundred eighty (l80) days) (i)
offer, pledge, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or (ii) enter into any swap or other arrangement
that transfers to another, in whole or in part, any of the economic consequences
of ownership of the Common Stock, whether any such transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing provisions of this Section
1.12 shall not apply to the sale of any shares to an underwriter pursuant to an
underwriting agreement, securities purchased in the initial public offering or
securities purchased in open market transactions. The underwriters in connection
with the Company's initial public offering are intended third party
beneficiaries of this Section 1.12 and shall have the right, power and authority
to enforce the provisions hereof as though they were a party hereto.
Notwithstanding the foregoing, no Holder shall be bound by this Section 1.12
unless all entities owning three percent (3%) or more of the then outstanding
common stock of the Company (assuming full conversion of all outstanding equity
securities of the Company convertible into such common stock) are bound by this
Section 1.12 or are otherwise contractually restricted from undertaking any
action restricted by this Section 1.12.
In order to enforce the foregoing covenant, the Company may
impose stop-transfer instructions with respect to the Registrable Securities of
each Holder (and the shares or securities of every other person subject to the
foregoing restriction) until the end of such period.
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1.13 Termination of Registration Rights. No Holder shall
be entitled to exercise any right provided for in this Section 1 after four (4)
years following the consummation of the Initial Offering or, as to any Holder,
such earlier time at which all Registrable Securities held by such Holder (and
any affiliate of the Holder with whom such Holder must aggregate its sales under
Rule 144) can be sold in any three (3)-month period without registration in
compliance with Rule 144 of the Act.
1.14 Limitations on Subsequent Registration Rights. From
and after the date of this Agreement, the Company shall not, without the prior
written consent of the Holders of a majority of the outstanding Registrable
Securities, enter into any agreement with any holder or prospective holder of
any securities of the Company which would allow such holder or prospective
holder (a) to include such securities in any registration filed under Section
1.2 hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such registration only to the extent
that the inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders which is included or (b) to make a demand
registration which could result in such registration statement being declared
effective prior to the earlier of either of the dates set forth in subsection
1.2(a) or within one hundred twenty (120) days of the effective date of any
registration effected pursuant to Section 1.2.
2. Covenants of the Company.
2.1 Delivery of Financial Statements. The Company shall
deliver to each Investor:
(a) as soon as practicable, but in any event within
ninety (90) days after the end of each fiscal year of the Company, an income
statement for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash flows
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(b) so long as such Investor holds at least 250,000
shares of Preferred Stock (either in the form of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
or Common Stock issued upon conversion thereof, and as adjusted for subsequent
stock splits, recontributions or reclassifications), as soon as practicable, but
in any event within forty-five (45) days after the end of each of the first
three (3) quarters of each fiscal year of the Company, an unaudited income
statement, statement of cash flows for such fiscal quarter and an unaudited
balance sheet for and as of the end of such fiscal quarter, in reasonable
detail;
(c) so long as such Investor holds at least 250,000
shares of Preferred Stock (either in the form of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
or Common Stock issued upon conversion thereof, and as adjusted for subsequent
stock splits, recontributions or reclassifications), as soon as practicable, but
in any event at least thirty (30) days prior to the end of each fiscal year, a
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budget and business plan for the next fiscal year, prepared on a monthly basis,
including balance sheets and statements of cash flows for such months; and
(d) so long as such Investor holds at least 250,000
shares of Preferred Stock (either in the form of Series A Preferred Stock,
Series B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock
or Common Stock issued upon conversion thereof, and as adjusted for subsequent
stock splits, recontributions or reclassifications), such other information
relating to the financial condition, business, prospects or corporate affairs of
the Company as the Investor or any assignee of the Investor may from time to
time request; provided, however, that the Company shall not be obligated under
this subsection (d) or any other subsection of Section 2.1 or Section 2.2 to
provide information or inspection rights which it deems in good faith to be a
trade secret or similar confidential information.
2.2 Inspection. So long as such Investor holds at least
250,000 shares of Preferred Stock (either in the form of Series A Preferred
Stock, Series B Preferred Stock, Series C Preferred Stock or Series D Preferred
Stock or Common Stock issued upon conversion thereof, and as adjusted for
subsequent stock splits, recontributions or reclassifications), the Company
shall permit each Investor, at such Investor's expense, to visit and inspect the
Company's properties, to examine its books of account and records and to discuss
the Company's affairs, finances and accounts with its officers, all at such
reasonable times as may be requested by the Investor; provided, however, that
the Company shall not be obligated pursuant to this Section 2.2 to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
2.3 Termination of Information and Inspection Covenants.
The covenants set forth in Sections 2.1 and 2.2 shall terminate as to Investors
and be of no further force or effect when the sale of securities pursuant to a
registration statement filed by the Company under the Act in connection with the
firm commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic reporting
requirements of Sections 12(g) or 15(d) of the 1934 Act, whichever event shall
first occur.
2.4 Right of First Offer. Subject to the terms and
conditions specified in this paragraph 2.4, the Company hereby grants to each
Major Investor (as hereinafter defined) a right of first offer with respect to
future sales by the Company of its Shares (as hereinafter defined). For purposes
of this Section 2.4, a Major Investor shall mean any Investor or transferee that
holds at least 250,000 shares of Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock or Series D Preferred Stock (or the Common Stock
issued upon conversion thereof) (as adjusted for stock splits, stock dividends,
combinations and other recapitalizations). For purposes of this Section 2.4,
Investor includes any general partners and affiliates of an Investor. An
Investor shall be entitled to apportion the right of first offer hereby granted
it among itself and its partners, former partners and affiliates in such
proportions as it deems appropriate.
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Each time the Company proposes to offer any shares of, or
securities convertible into or exchangeable or exercisable for any shares of,
any class of its capital stock ("Shares"), the Company shall first make an
offering of such Shares to each Major Investor in accordance with the following
provisions.
(a) The Company shall deliver a notice in
accordance with Section 3.5 ("Notice") to the Major Investors stating (i) its
bona fide intention to offer such Shares, (ii) the number of such Shares to be
offered, and (iii) the price and terms upon which it proposes to offer such
Shares.
(b) By written notification received by the
Company, within twenty (20) calendar days after receipt of the Notice, the Major
Investor may elect to purchase or obtain, at the price and on the terms
specified in the Notice, up to that portion of such Shares that equals the
proportion that the number of shares of Common Stock issued and held, or
issuable upon conversion of the Series A Preferred Stock, Series B Preferred
Stock, Series C Preferred Stock and Series D Preferred Stock then held, by such
Major Investor bears to the total number of shares of Common Stock of the
Company then outstanding (assuming full conversion, exercise and exchange of all
outstanding convertible, exercisable and exchangeable securities of the
Company). The Company shall promptly, in writing, inform each of Venrock
Associates, Crimson Investments, Ltd., InveStar Burgeon Venture Capital, Inc.,
Highland Capital Partners L.P., ▇▇▇▇▇▇ Capital Management, LLC, Amerindo
Technology Growth Fund II, Inc., Franklin ▇▇▇▇▇▇▇▇▇ and ▇▇▇ ▇▇▇▇▇▇▇ Capital
Management (and the funds affiliated with the foregoing entities) that elects to
purchase all the shares available to it (each such entity, together with its
affiliated funds and other entities, a "Fully-Exercising Investor"), of any
other Major Investor's failure to do likewise. During the ten (10) day period
commencing after such information is given, each Fully-Exercising Investor may
elect to purchase that portion of the Shares for which Major Investors were
entitled to subscribe but which were not subscribed for by the Major Investors
that is equal to fifty percent (50%) of the proportion that the number of shares
of Common Stock issued and held, or issuable upon conversion of Series A
Preferred Stock, Series B Preferred Stock, Series C Preferred Stock and Series D
Preferred Stock then held, by such Fully-Exercising Investor bears to the total
number of shares of Common Stock issued and held, or issuable upon conversion of
the Series A Preferred Stock, Series B Preferred Stock, Series C Preferred Stock
and Series D Preferred Stock then held, by all Fully-Exercising Investors who
wish to purchase some of the unsubscribed shares.
(c) If all Shares that Investors are entitled to
obtain pursuant to subsection 2.4(b) are not elected to be obtained as provided
in subsection 2.4(b) hereof, the Company may, during the ninety (90) day period
following the expiration of the period provided in subsection 2.4(b) hereof,
offer the remaining unsubscribed portion of such Shares to any person or persons
at a price not less than, and upon terms no more favorable to the offeree than
those specified in the Notice. If the Company does not enter into an agreement
for the sale of the Shares within such period, or if such agreement is not
consummated within ninety (90) days of the execution thereof, the right provided
hereunder shall be deemed to be revived and such Shares shall not be offered
unless first reoffered to the Major Investors in accordance herewith.
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(d) The right of first offer in this paragraph 2.4
shall not be applicable to (i) the issuance or sale of shares of Common Stock
(or options therefor) to employees, directors and consultants for the primary
purpose of soliciting or retaining their services; (ii) the issuance of
securities pursuant to a bona fide, firmly underwritten public offering of
shares of Common Stock, registered under the Act in which all shares of the
Company's outstanding Preferred Stock have been or are converted into shares of
the Company's Common Stock, (iii) the issuance of securities pursuant to the
conversion or exercise of outstanding convertible or exercisable securities,
(iv) the issuance of securities in connection with a bona fide business
acquisition of or by the Company, whether by merger, consolidation, sale of
assets, sale or exchange of stock or otherwise or (v) the issuance of stock,
warrants or other securities or rights to persons or entities with which the
Company has business relationships provided such issuances are for other than
primarily equity financing purposes and such issuance is approved by the Board
of Directors including the approval of a majority of the directors elected by
the holders of the Company's Preferred Stock.
2.5 Right to Participate in Initial Public Offering. In
connection with the Initial Offering, the Company shall use its best efforts to
allow the Series C Investors to invest up to $10,000,000 (the "Series C
Investment Amount"), and each Series D Investor then holding at least 500,000
shares of Series D Preferred Stock to invest, together with all other Series D
Investors then holding at least 500,000 shares of Series D Preferred Stock, up
to an aggregate of $5,000,000 (the "Series D Investment Amount," together with
the Series C Investment Amount, the "Total Investment Amount") in the Company's
Initial Offering at a price equal to the gross price per share negotiated by the
Company with the underwriters as reflected on the final prospectus so long as
such investment will not, in the opinion of the Company's Board of Directors,
adversely affect the Initial Offering, in accordance with the following
provisions:
(a) Notwithstanding the foregoing, the
participation of the Series C Investors and the eligible Series D Investors in
the Initial Offering shall be subject to the approval of the lead underwriter
(the "Lead Underwriter") in the Company's Initial Offering and shall be subject
to such terms and conditions as the Lead Underwriter shall require, including
appropriate lock-up provisions. The Total Investment Amount may be partially or
completely reduced to the extent deemed necessary to the success of the Initial
Offering by the Lead Underwriter in its opinion. Any such reduction in the Total
Investment Amount shall be allocated proportionately between the Series C
Investment Amount and the Series D Investment Amount based on the proportion
that each of the Series C Investment Amount or Series D Investment Amount,
whichever the case may be, bears to the Total Investment Amount.
(b) The rights set forth in this Section 2.5 shall
only be applicable to the Initial Offering.
(c) The participating Series C Investors and the
Series D Investors shall comply with all requirements and procedures required by
the Lead Underwriter of purchasers participating in a directed share program, if
any, or of purchasers in the Initial Offering generally. Furthermore, the
participating Series C Investors and the Series D Investors
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agree to furnish upon request to the Company and Lead Underwriter such further
information, to execute and deliver to the Company and Lead Underwriter such
other documents, and to do such other acts and things, all as the Company and
Lead Underwriter may request for the purpose of carrying out the intent of this
section.
(d) The participating Series C Investment Amount
and the Series D Investment Amount shall each be allocated ratably among the
Series C Investors and the Series D Investors, whichever the case may be, based
on the number of shares of Common Stock issuable or issued upon conversion of
shares of Series C Preferred Stock and Series D Preferred Stock then held by
each such Series C Investor or Series D Investor.
2.6 Board of Directors.
(a) With respect to the member of the Company's
Board of Directors that the Restated Certificate of Incorporation provides is to
be elected by the holders of Common Stock (the "Common Board Member"), the
Common Holders and the Investors hereby agree to vote all of their shares of
Common Stock now owned or hereafter acquired so that the Common Board Member
elected is the Company's Chief Executive Officer (or, if there is no Chief
Executive Officer, the President).
(b) So long as entities affiliated with Highland
Capital Partners ("HCP") own not less than a majority of the shares of Series C
Preferred Stock HCP purchased under the Series C Agreement, with respect to the
member of the Company's Board of Directors that the Restated Certificate of
Incorporation provides is to be elected by the holders of Series C Preferred
Stock voting together as a single class (the "Series C Board Member"), the
Investors hereby agree to vote all of their shares of Series C Preferred Stock
now owned or hereafter acquired so that the Series C Board Member elected is a
designee of HCP.
(c) Should the provisions of this Section 2.5 be
construed to constitute the granting of proxies, such proxies shall be deemed
coupled with an interest and are irrevocable for the term of this Agreement. It
is agreed and understood that monetary damages would not adequately compensate
an injured party for the breach of this Section 2.5 by any party, that this
Section 2.5 shall be specifically enforceable, and that any breach or threatened
breach of this Section 2.5 shall be the proper subject of a temporary or
permanent injunction or restraining order. Further, each party hereto waives any
claim or defense that there is an adequate remedy at law for such breach or
threatened breach.
2.7 Proprietary Agreements. The Company shall use
commercially reasonable efforts to ensure that each officer, employee and
consultant of the Company executes the Company's standard form of non-disclosure
and proprietary information agreements prior to disclosing any proprietary
information to any such officer, employee and consultant. The Company will use
reasonable efforts to prevent any employee from violating the confidentiality
and proprietary information agreement entered into between the Company and each
of its officers, employees and consultants.
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2.8 Directors' Liability and Indemnification. The
Company's Certificate of Incorporation and Bylaws shall provide (a) for
elimination of the liability of director to the maximum extent permitted by law
and (b) for indemnification of directors for acts on behalf of the Company to
the maximum extent permitted by law.
2.9 Employees. The Company shall use reasonable efforts to
ensure that the Company's employees, during the term of their employment with
the Company, do not engage in activities which would result in a conflict of
interest with the Company. The Company's obligations hereunder include, but are
not limited to, requiring that the Company's employees devote their primary
productive time, ability and attention to the business of the Company,
preventing the Company's employees from engaging or participating in any
business that is in competition with the business of the Company, and preventing
any employee or consultant from violating his, her or its Proprietary
Information and Inventions Agreement.
2.10 Stock Vesting. Unless otherwise approved by the Board
of Directors, all stock options and other stock equivalents issued after the
date of this Agreement to employees, directors, consultants and other service
providers shall be subject to vesting as follows: (a) twenty-five percent (25%)
of such stock shall vest at the end of the first year following the date of
issuance, and (b) seventy-five percent (75%) of such stock shall vest monthly
over the remaining three (3) years. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide that
upon such person's termination of employment or service with the Company, with
or without cause, the Company or its assignee (to the extent permissible under
applicable securities laws and other laws) shall have the option to purchase at
cost any unvested shares of stock held by such person.
2.11 Termination of Certain Covenants. The covenants set
forth in Sections 2.4 through Section 2.9 shall terminate and be of no further
force or effect immediately prior to the consummation of the sale of securities
pursuant to a bona fide, firmly underwritten public offering of shares of common
stock, registered under the Act in which all shares of the Company's outstanding
Preferred Stock have been or are converted into shares of the Company's Common
Stock.
3. Miscellaneous.
3.1 Successors and Assigns. Except as otherwise provided
herein, the terms and conditions of this Agreement shall inure to the benefit of
and be binding upon the respective successors and assigns of the parties
(including transferees of any shares of Registrable Securities). Nothing in this
Agreement, express or implied, is intended to confer upon any party other than
the parties hereto or their respective successors and assigns any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided in this Agreement.
3.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
among California residents entered into and to be performed entirely within
California.
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3.3 Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
3.4 Titles and Subtitles. The titles and subtitles used in
this Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
3.5 Notices. Unless otherwise provided, any notice
required or permitted under this Agreement shall be given in writing and shall
be deemed effectively given upon delivery by confirmed facsimile or delivery by
nationally recognized overnight courier service or personal delivery to the
party to be notified or deposit with the United States Post Office, by
registered or certified mail, postage prepaid and addressed to the party to be
notified at the address indicated for such party on the signature page hereof,
or at such other address as such party may designate by ten (10) days' advance
written notice to the other parties.
3.6 Expenses. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
3.7 Entire Agreement: Amendments and Waivers. (a) This
Agreement (including the Exhibits hereto, if any) constitutes the full and
entire understanding and agreement among the parties with regard to the subjects
hereof and thereof. Any term of this Agreement may be amended and the observance
of any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the Registrable
Securities; provided, however, that in the event that such amendment or waiver
adversely affects the obligations and/or rights of the Common Holders in a
different manner than the other Holders, such amendment or waiver shall also
require the written consent of the holders of a majority of the shares of Common
Stock held by the Common Holders then employed by the Company, and also provided
that in the event that such amendment or waiver adversely affects the
obligations and/or rights of the holders of the Series D Preferred Stock in a
different manner than the other Investors (it being understood that, without
limiting the foregoing, holders of Preferred Stock shall not be affected
differently because of proportional differences that arise out of differences in
the original issue price for each series of Preferred Stock), such amendment or
waiver shall also require the written consent of the holders of a majority of
the shares of Series D Preferred Stock (or shares of Common Stock issued upon
conversion thereof) then outstanding (calculated on an as-converted basis). Any
amendment or waiver effected in accordance with this paragraph shall be binding
upon each holder of any Registrable Securities each future holder of all such
Registrable Securities, and the Company.
(b) In addition to the provisions of paragraph 3.7(a) above, and without
limiting the foregoing, (i) Section 1.12 of this Agreement may be amended or
waived only with the written consent of the Company and the holders of a
majority of the Series D Preferred Stock (or shares of
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Common Stock issued upon conversion thereof) then outstanding, (ii) Section 2.4
of this Agreement may be amended or waived only with the written consent of the
Company and a majority of the following Investors: Venrock Associates (and its
affiliated funds and other affiliated entities), Crimson Investments, Ltd. (and
its affiliated funds and other affiliated entities), InveStar Burgeon Venture
Capital, Inc. (and its affiliated funds and other affiliated entities), Highland
Capital Partners L.P. (and its affiliated funds and other affiliated entities),
▇▇▇▇▇▇ Capital Management, LLC (and its affiliated funds and other affiliated
entities), Amerindo Technology Growth Fund II, Inc. (and its affiliated funds
and other affiliated entities), Franklin ▇▇▇▇▇▇▇▇▇ (and its affiliated funds and
other affiliated entities) and ▇▇▇ ▇▇▇▇▇▇▇ Capital Management (and its
affiliated funds and other affiliated entities); provided that for purposes of
this Section 3.7(b)(ii) each of the foregoing entities together with its
affiliated funds and other affiliated entities shall be counted as a single
Investor; (iii) the rights granted to the Series C Investors pursuant to Section
2.5 of this Agreement may be amended or waived only with the written consent of
the Company and the holders of a majority of the Series C Preferred Stock (or
shares of Common Stock issued upon conversion thereof), and (iv) the rights
granted to the Series D Investors pursuant to Section 2.5 of this Agreement may
be amended or waived only with the written consent of the Company and the
holders of a majority of the Series D Preferred Stock (or shares of Common Stock
issued upon conversion thereof) then held by all Series D Investors.
3.8 Severability. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, such provision
shall be excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
3.9 Aggregation of Stock. All shares of Registrable
Securities held or acquired by partners of a Holder, former partners of a
Holder, entities or persons affiliated with a Holder shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement. Entities under common investment management and control with a
Holder shall, for purposes hereunder, be considered affiliated entities.
3.10 Additional Parties. In the event of a subsequent
closing with an investor as provided for in Section 1.3 of the Series D
Agreement, such investor shall become a party to this Agreement as an "Investor"
upon receipt from such investor of a fully executed signature page hereto.
3.11 Prior Agreement. The Prior Agreement is hereby
superseded in its entirety and shall be of no further force or effect.
3.12 Agreement to Vote on Certain Change of Control
Transactions. PairGain Technologies, Inc. ("PairGain") shall take such action as
may be required so that all securities of the Company entitled to vote with
respect to the election of any directors of the Company (the "Voting
Securities") beneficially owned by PairGain and/or any affiliated entity are
voted on all Corporate Transactions (as defined below) in not less than the same
proportion as the votes cast by the other holders of Voting Securities of the
Company with respect to such
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matters. For purposes of this Section 3.12, Corporate Transaction shall mean the
acquisition of the Company by another entity by means of any transaction or
series of related transactions that results in the transfer of fifty percent
(50%) or more of the outstanding voting power of the Company or a sale of all or
substantially all of the assets of the Company. PairGain and its affiliated
entities, as holders of shares of Voting Securities, shall be present, in person
or by proxy, at all meetings of stockholders of the Company so that all shares
of Voting Securities beneficially owned by PairGain and/or its affiliated
entities may be counted for the purposes of determining the presence of a quorum
at such meetings. Neither PairGain nor any affiliated entity shall deposit any
Voting Securities in a voting trust or subject any Voting Securities to any
arrangement or agreement with respect to the voting of such Voting Securities.
Any provision of this Section 3.12 may be amended and the observance thereof may
be waived (either generally or in a particular instance and either retroactively
or prospectively) only with the written consent of the Company and PairGain.
3.13 Exculpation; Rights of Investors. Subject to any
limitations or agreements set forth elsewhere, the Investors shall have the
right to exercise or refrain from exercising any rights that such holder may
have by reason of this Agreement, the Series D Agreement, the Co-Sale Agreement
or the Company's Restated Certificate of Incorporation (including without
limitation, the right to consent to the waiver of any obligation of the Company
under this Agreement, the Series D Agreement, the Co-Sale Agreement or the
Company's Restated Certificate of Incorporation and to enter into an agreement
with the Company for the purpose of amending or supplementing, in accordance
with their respective terms, this Agreement, the Series D Agreement, the Co-Sale
Agreement or the Company's Restated Certificate of Incorporation), and neither
any such holder nor any of its controlling persons, officers, directors,
partners, agents or employees shall incur any liability to any other holder as a
result of such holder's exercising or refraining from exercising any such right.
Each Investor acknowledges to each other Investor that it is not relying on any
person, firm, partnership, corporation or other entity other than the Company,
its officers and directors in making its decision to invest in the Company.
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IN WITNESS WHEREOF, the parties have executed this Agreement as
of the date first above written.
COMPANY:
ANDA NETWORKS, INC.
By:
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▇▇▇▇▇▇▇ Kenmore,
President and Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
25
INVESTOR:
Investor Name:
---------------------------------------
By:
------------------------------------
Name:
----------------------------------
Address:
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Telephone:
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Facsimile:
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SIGNATURE PAGE TO ANDA NETWORKS, INC.
AMENDED AND RESTATED INVESTORS' RIGHTS AGREEMENT
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SCHEDULE A
SCHEDULE OF INVESTORS
INVESTORS
Acorn Venture Partners
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Chens, LLC
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Crimson Investments Ltd.
Crimson Asia Capital Ltd., L.P.
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Forefront Venture Partners L.P.
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Highland Capital Partners IV, L.P.
Highland Entrepreneurs' Fund IV, L.P.
InveStar Excelsus Venture Capital (Int'l) Inc., LDC
InveStar Burgeon Venture Capital, Inc
InveStar Datspring Venture Capital, Inc
Rueiming Jamp
PairGain Technologies, Inc.
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Venrock Associates
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Venrock Associates II, L.P.
Spinnaker Crossover Institutional Fund, LP
Spinnaker Crossover Fund, LP
Spinnaker Clipper Fund, LP
Amerindo Technology Growth Fund II, Inc.
Pivotal Partners, L.P.
Vertex Capital II LLC
Vertex Capital III LLC
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Aurora Technology Fund LLC
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▇▇▇ ▇▇▇▇▇▇▇ Crossover Fund, ▇▇
▇▇▇ ▇▇▇▇▇▇▇ Capital Partners, ▇▇
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Franklin California Growth Fund
▇. ▇▇▇▇▇ Partners, L.P.
C. ▇▇▇▇▇ Partners II, L.P.
C. ▇▇▇▇▇ Fund, LTD.
Essex Private Placement Fund III - A, Limited
Partnership
Essex Private Placement Fund III - B, Limited
Partnership
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Ocean Avenue Investors, LLC - Redstone Fund
Ocean Avenue Investors, LLC - Anacapa Fund I
▇▇▇▇ ▇▇▇▇▇ Capital Inc.
▇▇▇▇ ▇▇▇▇▇ Capital Ventures, L.P.
▇▇▇▇ ▇▇▇▇▇ Capital, L.P.
▇▇▇▇ ▇▇▇▇▇ Capital International
BayView 2000, ▇▇
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H&Q Employee Venture Fund 2000, L.P.
Access Technology Partners, L.P.
Access Technology Partners Brokers Fund, L.P.
Banc of America Securities LLC
▇▇▇▇▇▇ Asset Management
▇▇▇▇▇▇ Partners, L.P.
G&H Partners, L.P.
US Bancorp ▇▇▇▇▇ ▇▇▇▇▇▇▇ ECM Fund I, LLC
Trigon Technology Group
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▇▇▇▇▇▇▇▇ Art
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The ▇▇▇▇▇▇▇▇▇ 1980 Revocable Trust
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Tor ▇▇▇▇▇▇
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Armitel Co., Inc.
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SCHEDULE B
HOLDERS OF COMMON STOCK
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Chens, LLC
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Rueiming Jamp
▇▇▇▇▇▇▇ Kenmore
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