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EXHIBIT 10.3.17
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STOCK PURCHASE AND CONTRIBUTION AGREEMENT
BY AND AMONG
CHAHAYA OPTRONICS, INC.,
THE INVESTORS NAMED HEREIN
AND
KOMAG, INCORPORATED
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November 27, 2000
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STOCK PURCHASE AND CONTRIBUTION AGREEMENT
THIS STOCK PURCHASE AND CONTRIBUTION AGREEMENT (this "Agreement") is
made and entered into as of November 27, 2000, by and among Chahaya Optronics,
Inc., a Delaware corporation (the "Company"), the Persons listed on the Schedule
of Investors attached hereto (each, an "Investor" and collectively, the
"Investors") and Komag, Incorporated, a Delaware corporation ("Komag"). The
Company, the Investors and Komag are sometimes collectively referred to herein
as the "Parties" and individually as a "Party."
WHEREAS, Komag desires to contribute certain assets and the
corresponding business to the Company in exchange for certain newly-issued
equity securities of the Company on the terms and subject to the conditions set
forth herein;
WHEREAS, the Investors desire to purchase certain newly-issued equity
securities of the Company on the terms and subject to the conditions set forth
herein; and
WHEREAS, capitalized terms used herein and not otherwise defined herein
have the meanings given to such terms in Section 9 below.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
understandings herein contained and intending to be legally bound, the Parties
hereby agree as follows:
SECTION 1. TRANSACTIONS.
1.A. AUTHORIZATION.
(i) The Company shall authorize the issuance and sale to Komag of an
aggregate of 12,000,000 shares (the "Komag Preferred Shares") of the Company's
Class A Convertible Preferred Stock, par value $0.01 per share (the "Class A
Preferred"), having the rights and preferences set forth in the Company's
Restated Certificate of Incorporation attached as Exhibit A hereto (the
"Restated Certificate of Incorporation"), in exchange for Komag's execution and
delivery of, and performance under, a Contribution Agreement in the form of
Exhibit B attached hereto (the "Contribution Agreement").
(ii) The Company shall authorize the issuance and sale to the Investors
of an aggregate of 13,000,000 shares (the "Investor Preferred Shares") of Class
A Preferred for a purchase price of $1.00 per share.
1.B. RESTATED CERTIFICATE OF INCORPORATION. Immediately prior to the
Closing, the Company shall duly file the Restated Certificate of Incorporation
with the Secretary of State of the State of Delaware. The Restated Certificate
of Incorporation shall be in full force and effect under the laws of the State
of Delaware as of the Closing.
1.C. CONTRIBUTION TRANSACTION. On the basis of the representations,
warranties, covenants and agreements set forth herein and subject to the
satisfaction or waiver of the conditions set forth in Section 3, the Company and
Komag agree to and shall consummate, at the Closing, the following transaction
(the "Contribution Transaction"): Komag and the
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Company shall enter into the Contribution Agreement, and Komag shall make the
asset contributions and other commitments to the Company contemplated by the
Contribution Agreement, and the Company shall issue the Komag Preferred Shares
to Komag.
1.D. INVESTMENT TRANSACTION. On the basis of the representations,
warranties, covenants and agreements set forth herein and subject to the
satisfaction or waiver of the conditions set forth in Section 2, each of the
Investors and the Company agrees to and shall consummate, at the Closing, the
following transaction (the "Investment Transaction"): the Company shall sell to
each Investor, and each Investor shall purchase from the Company, the number of
Investor Preferred Shares set forth opposite such Investor's name on the
Schedule of Investors attached hereto upon payment of immediately available
funds in the amount set forth opposite such Investor's name on the Schedule of
Investors attached hereto, payable in the manner set forth in Paragraph 1E(ii)
below. The aggregate purchase price for the Investor Preferred Shares shall be
equal to $12,200,000 (the "Investor Preferred Share Purchase Price").
1.E. CLOSING. The closing of each of the Contribution Transaction and
the Investment Transaction (the "Closing") shall take place at the offices of
▇▇▇▇▇▇ Godward LLP, Five Palo Alto Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, on November 30, 2000, or, if any of
the conditions to Closing set forth in Section 2 and Section 3 below have not
been satisfied or waived by the Party entitled to the benefit thereof on or
prior to such date, on the second business day following satisfaction or waiver
of such conditions, or at such other place or such other date as may be mutually
agreeable to the Investor Representatives and Komag (the "Closing Date"). At the
Closing, the Parties shall consummate the Contribution Transaction and the
Investment Transaction in the following manner and in the following order
(except that each of the transactions shall be deemed to have been consummated
simultaneously and none of the transactions described below shall be consummated
unless all of such transactions are consummated):
(i) Each of Komag and the Company shall execute and deliver to the other
the Contribution Agreement and any other documents or agreements provided for
therein, and Komag shall deliver to the Company a ▇▇▇▇ of sale and assignment
agreement (the "▇▇▇▇ of Sale and Assignment Agreement"), in a form reasonably
acceptable to the Parties, representing the conveyance, assignment, transfer and
delivery of the Contributed Assets to the Company.
(ii) Each Investor shall deliver to the Company such Investor's portion
of the Investor Preferred Share Purchase Price set forth opposite such
Investor's name on the Schedule of Investors attached hereto by wire transfer of
immediately available funds to an account designated by the Company.
(iii) The Company shall deliver to each Investor a stock certificate
representing the number of Investor Preferred Shares purchased by such Investor,
registered in such Investor's name, upon payment of such Investor's portion of
the Investor Preferred Share Purchase Price in the manner described in clause
(ii) above.
(iv) The Company shall deliver to Komag a stock certificate representing
8,000,000 of the Komag Preferred Shares and shall deliver to the Company, as
Escrow Agent, a stock certificate representing 4,000,000 of the Komag Preferred
Shares (which shares shall be
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governed by an Escrow Agreement having the terms set forth on Exhibit C attached
hereto (the "Escrow Agreement") to which Komag will be party.
1.F. SECOND CLOSING. The parties hereto acknowledge and agree that a
second closing for the sale up to 800,000 shares of Class A Preferred to one or
more investors selected by the Company (the "Second Closing") shall take place
at the offices of Cooley Godward LLP, Five Palo Alto Square, ▇▇▇▇ ▇▇ ▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, at 10:00 a.m., local time, on or before
December 15, 2000. At the Second Closing, the Company and the persons purchasing
such shares of Class A Preferred (the "Second Round Investors") shall enter into
an agreement with terms and conditions substantially similar to those set forth
in this Agreement, and each such Second Round Investor shall purchase for cash
the shares to be acquired by such Second Round Investor and shall execute and
deliver a counterpart to the Registration Agreement (becoming a holder of
Registrable Securities thereunder) and a counterpart to the Stockholders
Agreement (becoming an Investor thereunder). Each of the Parties hereby consents
to such transactions and to the sale of up to 800,000 shares of Class A
Preferred at the Second Closing.
SECTION 2. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT THE CLOSING. The
obligation of each Investor to purchase and pay for the Investor Preferred
Shares at the Closing is subject to the satisfaction as of the Closing of the
following conditions:
2.A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties contained in Sections 6 and 7 hereof shall be true and correct in all
material respects at and as of the date hereof and at and as of the Closing as
though then made and as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties (without taking
into account any disclosures made by the Company or Komag to the Investors
pursuant to ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇), and the Company and Komag shall have performed
in all material respects all of the covenants required to be performed by such
Parties hereunder prior to the Closing.
2.B. RESTATED CERTIFICATE OF INCORPORATION. The Restated Certificate of
Incorporation shall be in full force and effect under the laws of the State of
Delaware as of the Closing and shall not have been further amended or modified.
2.C. STOCKHOLDERS AGREEMENT. The Company, Komag and each other Investor
party thereto shall have executed and delivered a stockholders agreement in the
form of Exhibit D attached hereto (the "Stockholders Agreement"), and the
Stockholders Agreement shall be in full force and effect as of the Closing and
shall not have been amended or modified.
2.D. REGISTRATION AGREEMENT. The Company, Komag and each other Investor
party thereto shall have executed and delivered a registration agreement in the
form of Exhibit E attached hereto (the "Registration Agreement"), and the
Registration Agreement shall be in full force and effect as of the Closing and
shall not have been amended or modified.
2.E. OPINION OF COUNSEL. The Investors shall have received an opinion
from ▇▇▇▇▇▇ Godward LLP, counsel for the Company, which shall be addressed to
the Investors and dated as of the Closing Date and be in form and substance
reasonably satisfactory to the Investor
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Representatives, and an opinion from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, counsel
for Komag, which shall be addressed to the Investors and dated as of the Closing
Date and be in form and substance reasonably satisfactory to the Investor
Representatives.
2.F. CONTRIBUTION AGREEMENT. Each of Komag and the Company shall have
executed and delivered to the other the Contribution Agreement and performed all
actions required to be taken by it at or prior to the Closing thereunder, and
the Contribution Agreement shall be in full force and effect as of the Closing
and shall not have been amended or modified without the prior written consent of
the Investor Representatives.
2.G. FILINGS. Komag and the Company shall have made all filings required
to be made by them and shall have obtained all permits and other authorizations
required to be obtained by them under all applicable laws (including federal and
state securities laws) to consummate the transactions contemplated by this
Agreement and the Contribution Agreement in compliance with such laws (other
than any securities law filings required to be made after the Closing, which
filings shall be made promptly after the Closing).
2.H. THIRD PARTY CONSENTS AND APPROVALS. Komag and the Company shall
have received or obtained all third party consents and approvals that are
necessary for the consummation of the transactions contemplated by this
Agreement and the Contribution Agreement or that are required in order to
prevent a breach of or default under, a termination or modification of, or
acceleration of the terms of, any contract or agreement that is assigned by
Komag to the Company pursuant to the Contribution Agreement, and all Liens
(other than Permitted Encumbrances) on any of the Contributed Assets shall have
been fully released or satisfied.
2.I. GOVERNMENTAL CONSENTS AND APPROVALS. The Parties shall have
received or obtained all governmental and regulatory consents and approvals that
are necessary for the consummation of the transactions contemplated by this
Agreement (or the Contribution Agreement) and the conduct by the Company of its
business following the Closing, in each case on terms and conditions reasonably
satisfactory to the Investor Representatives, and the waiting period under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvement Act of 1976, as amended (the
"▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act"), shall have expired or been terminated (collectively,
the "Governmental Approvals").
2.J. OPTION PLAN. The Company shall have adopted an option plan
permitting the issuance of options exercisable for up to 12,000,000 shares of
Common Stock (inclusive of shares of restricted stock) to employees in a form
reasonably acceptable to the Investors (the "Option Plan"), and the Option Plan
shall be in full force and effect as of the Closing and shall not have been
amended or modified.
2.K. MATERIAL ADVERSE CHANGE. Since June 30, 2000, there shall have been
no change or development which is reasonably likely to have a Material Adverse
Effect on the business represented by the Contributed Assets following the
Closing, and since the date of formation of the Company, there has occurred no
fact, event or circumstance which has had or would reasonably be expected to
have a Material Adverse Effect.
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2.L. LITIGATION. No suit, action or other proceeding shall be pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit the transactions contemplated hereby
or that could reasonably be expected to have a Material Adverse Effect, and no
injunction, judgment, order, decree or ruling with respect thereto shall be in
effect.
2.M. OTHER AGREEMENTS WITH KOMAG. The Company and Komag shall have
entered into (i) a Manufacturing Services Agreement in the form attached to the
Contribution Agreement (the "Manufacturing Agreement"), (ii) a Facilities
Sharing and Services Agreement in the form attached to the Contribution
Agreement (the "Facilities Agreement"), and (iii) an Employee Matters Agreement
in the form attached to the Contribution Agreement, and each such agreement
shall be in full force and effect as of the Closing and shall not have been
amended or modified.
2.N. INDEMNIFICATION AGREEMENTS. The Company and each of its directors
shall have entered into an Indemnification Agreement in the form of Exhibit F
attached hereto (the "Indemnification Agreements"), and each such agreement
shall be in full force and effect as of the Closing and shall not have been
amended or modified.
2.O. EXPENSES. At the Closing, the Company shall have paid or reimbursed
the Investors for their fees and expenses as provided in Paragraph 11A below.
2.P. ESCROW AGREEMENT. At the Closing, each of the Company (including as
escrow agent) and Komag shall have executed and delivered the Escrow Agreement
and the Escrow Agreement shall be in full force and effect as of the Closing and
shall not have been amended or modified.
2.Q. CLOSING DOCUMENTS. At the Closing, Komag and/or the Company, as the
case may be, shall have delivered to the Investors all of the following
documents:
(i) a certificate of an officer of the Company, dated the Closing Date,
stating that the conditions specified in Section 1 and Paragraphs 2A through 2P,
inclusive, have been fully satisfied;
(ii) certified copies of the resolutions duly adopted by the Company's
board of directors and Komag's board of directors and the approvals duly
obtained from the Company's stockholders authorizing the execution, delivery and
performance of this Agreement and each of the other agreements contemplated
hereby and the consummation of the Contribution Transaction and the Investment
Transaction and the other transactions contemplated hereby;
(iii) copies of all Third Party Approvals and Governmental Approvals
(including all blue sky law filings and waivers of any rights of first refusal);
(iv) certified copies of the Restated Certificate of Incorporation and
the Company's bylaws in effect as of the Closing Date;
(v) good standing certificates of the Company and Komag from their
respective jurisdictions of incorporation or organization and each jurisdiction
in which the
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Company is qualified to do business as a foreign corporation, in each case dated
as of a recent date prior to the Closing Date; and
(vi) such other documents relating to the transactions contemplated by
this Agreement as the Investor Representatives or its special counsel may
reasonably request.
2.R. PROCEEDINGS. All corporate proceedings taken or required to be
taken by the Company and Komag at or prior to the Closing in connection with the
transactions contemplated hereby shall have been taken and all documents
incident thereto shall be reasonably satisfactory in form and substance to the
Investor Representatives and its special counsel.
2.S. WAIVER. Any condition specified in this Section 2 may be waived if
consented to in writing by the Investor Representatives.
SECTION 3. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AT THE CLOSING.
The obligation of the Company to consummate the transactions contemplated hereby
is subject to the satisfaction as of the Closing of the following conditions:
3.A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties contained in Sections 7 and 8 hereof shall be true and correct in all
material respects at and as of the date hereof and at and as of the Closing as
though then made and as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties (without taking
into account any disclosures made by the Investors or Komag to the Company
pursuant to ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇), and the Investors and Komag shall have
performed in all material respects all of the covenants required to be performed
by the Investors and Komag, respectively, hereunder prior to the Closing.
3.B. STOCKHOLDERS AGREEMENT. The Investors and Komag shall have executed
and delivered the Stockholders Agreement, and the Stockholders Agreement shall
be in full force and effect as of the Closing and shall not have been amended or
modified.
3.C. REGISTRATION AGREEMENT. The Investors and Komag shall have executed
and delivered the Registration Agreement, and the Registration Agreement shall
be in full force and effect as of the Closing and shall not have been amended or
modified.
3.D. LITIGATION. No suit, action or other proceeding shall be pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit the transactions contemplated hereby
and no injunction, judgment, order, decree or ruling with respect thereto shall
be in effect.
3.E. GOVERNMENTAL CONSENTS AND APPROVALS. The Parties shall have
received or obtained all Governmental Approvals that are necessary for the
consummation of the transactions contemplated hereby, and the waiting period
under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired or been terminated.
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3.F. INVESTMENT TRANSACTION. The Investors shall have simultaneously
purchased the Investor Preferred Shares and the Company shall have received
payment therefor in full, in the manner set forth in Paragraph 1E above.
3.G. CONTRIBUTION AGREEMENT. Komag shall have executed and delivered to
the Company the Contribution Agreement and performed all actions required to be
taken by it at or prior to the Closing thereunder, and the Contribution
Agreement shall be in full force and effect as of the Closing and shall not have
been amended or modified without the prior written consent of the Investor
Representatives.
3.H. THIRD PARTY CONSENTS AND APPROVALS. Komag and the Company shall
have received or obtained all Third Party Approvals, in each case on terms and
conditions reasonably satisfactory to Komag and the Company.
3.I. WAIVER. Any condition specified in this Section 3 may be waived if
consented to in writing by the Company.
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF KOMAG AT THE CLOSING. The
obligation of Komag to consummate the transactions contemplated hereby is
subject to the satisfaction as of the Closing of the following conditions:
4.A. REPRESENTATIONS AND WARRANTIES; COVENANTS. The representations and
warranties contained in Sections 6 and 8 hereof shall be true and correct in all
material respects at and as of the date hereof and at and as of the Closing as
though then made and as though the Closing Date was substituted for the date of
this Agreement throughout such representations and warranties (without taking
into account any disclosures made by the Investors or the Company to Komag
pursuant to ▇▇▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇), and the Company shall have performed in all
material respects all of the covenants required to be performed by the Company
hereunder prior to the Closing.
4.B. RESTATED CERTIFICATE OF INCORPORATION. The Restated Certificate of
Incorporation shall be in full force and effect under the laws of the State of
Delaware as of the Closing and shall not have been further amended or modified.
4.C. STOCKHOLDERS AGREEMENT. The Company and the Investors shall have
executed and delivered the Stockholders Agreement, and the Stockholders
Agreement shall be in full force and effect as of the Closing and shall not have
been amended or modified.
4.D. REGISTRATION AGREEMENT. The Company and the Investors shall have
executed and delivered the Registration Agreement, and the Registration
Agreement shall be in full force and effect as of the Closing and shall not have
been amended or modified.
4.E. OPINION OF COUNSEL. Komag shall have received an opinion from
▇▇▇▇▇▇ Godward LLP, counsel for the Company, which shall be addressed to Komag
and dated as of the Closing Date and be in form and substance reasonably
satisfactory to Komag.
4.F. CONTRIBUTION AGREEMENT. The Company shall have executed and
delivered to the other the Contribution Agreement and performed all actions
required to be taken
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by it at or prior to the Closing thereunder, and the Contribution Agreement
shall be in full force and effect as of the Closing.
4.G. FILINGS. The Company shall have made all filings required to be
made by them and shall have obtained all permits and other authorizations
required to be obtained by them under all applicable laws (including federal and
state securities laws) to consummate the transactions contemplated by this
Agreement and the Contribution Agreement in compliance with such laws (other
than any securities law filings required to be made after the Closing, which
filings shall be made promptly after the Closing).
4.H. THIRD PARTY CONSENTS AND APPROVALS. The Company shall have received
or obtained all third party consents and approvals that are necessary for the
consummation of the transactions contemplated by this Agreement and the
Contribution Agreement or that are required in order to prevent a breach of or
default under, a termination or modification of, or acceleration of the terms
of, any contract or agreement that is assigned by Komag to the Company pursuant
to the Contribution Agreement.
4.I. GOVERNMENTAL CONSENTS AND APPROVALS. The Parties shall have
received or obtained all Governmental Approvals that are necessary for the
consummation of the transactions contemplated by this Agreement (or the
Contribution Agreement) and the conduct by the Company of its business following
the Closing, in each case on terms and conditions reasonably satisfactory to
Komag, and the waiting period under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act shall have expired
or been terminated.
4.J. OPTION PLAN. The Company shall have adopted the Option Plan, and
the Option Plan shall be in full force and effect as of the Closing and shall
not have been amended or modified.
4.K. LITIGATION. No suit, action or other proceeding shall be pending
before any court or governmental or regulatory official, body or authority in
which it is sought to restrain or prohibit the transactions contemplated hereby
or that could reasonably be expected to have a Material Adverse Effect, and no
injunction, judgment, order, decree or ruling with respect thereto shall be in
effect.
4.L. OTHER AGREEMENTS WITH KOMAG. The Company shall have entered into
the Manufacturing Services Agreement, the Facilities Agreement and the Employee
Matters Agreement, and each such agreement shall be in full force and effect as
of the Closing and shall not have been amended or modified.
4.M. INDEMNIFICATION AGREEMENTS. The Company and each of its directors
shall have entered into an Indemnification Agreement, and each such agreement
shall be in full force and effect as of the Closing and shall not have been
amended or modified.
4.N. EXPENSES. At the Closing, the Company shall have paid or reimbursed
Komag for its fees and expenses as provided in Paragraph 11A below.
4.O. CLOSING DOCUMENTS. At the Closing, the Company shall have delivered
to Komag all of the following documents:
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(i) a certificate of an officer of the Company, dated the Closing Date,
stating that the conditions specified in Section 1 and Paragraphs 2A through 2P,
inclusive, have been fully satisfied;
(ii) certified copies of the resolutions duly adopted by the Company's
board of directors and the approvals duly obtained from the Company's
stockholders authorizing the execution, delivery and performance of this
Agreement and each of the other agreements contemplated hereby and the
consummation of the Contribution Transaction and the Investment Transaction and
the other transactions contemplated hereby;
(iii) copies of all Third Party Approvals and Governmental Approvals
(including all blue sky law filings and waivers of any rights of first refusal);
(iv) certified copies of the Restated Certificate of Incorporation and
the Company's bylaws in effect as of the Closing Date;
(v) good standing certificates of the Company from its jurisdictions of
incorporation or organization and each jurisdiction in which the Company is
qualified to do business as a foreign corporation, in each case dated as of a
recent date prior to the Closing Date; and
(vi) such other documents relating to the transactions contemplated by
this Agreement as Komag or its counsel may reasonably request;
4.P. PROCEEDINGS. All corporate proceedings taken or required to be
taken by the Company at or prior to the Closing in connection with the
transactions contemplated hereby shall have been taken and all documents
incident thereto shall be reasonably satisfactory in form and substance to Komag
and its counsel.
4.Q. INVESTMENT TRANSACTION. The Investors shall have simultaneously
purchased the Investor Preferred Shares and the Company shall have received
payment therefor in full, in the manner set forth in Paragraph 1E above.
4.R. WAIVER. Any condition specified in this Section 4 may be waived if
consented to in writing by Komag.
SECTION 5. PRE-CLOSING COVENANTS AND AGREEMENTS. Each of the Parties
agrees as follows with respect to the period between the date of this Agreement
and the Closing:
5.A. GENERAL. Each of the Parties shall use reasonable best efforts to
take all action and to do all things necessary, proper or advisable in order to
consummate and make effective the transactions contemplated by this Agreement
(including satisfaction, but not waiver, of the conditions set forth in Sections
2, 3 and 4 above). At the Closing, subject to the conditions set forth herein,
the applicable Parties shall execute and deliver the Stockholders Agreement, the
Registration Agreement, the Contribution Agreement, the Escrow Agreement and
each of the other agreements and instruments contemplated hereby to be executed
and delivered by the Parties at the Closing.
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5.B. MAINTENANCE OF BUSINESS. Komag shall (i) maintain the Contributed
Assets in good operating condition and repair (normal wear and tear excepted),
(ii) maintain reasonable levels of insurance on the Contributed Assets, (iii)
maintain inventory and supplies constituting Contributed Assets at customary
operating levels consistent with past practice and replace in accordance with
past practice any inoperable, worn out or obsolete assets with modern assets of
comparable quality, and (iv) maintain in full force and effect the existence of
all of its Intellectual Property Rights that could reasonably be expected to be
used in or otherwise necessary for the conduct of the Company's business.
5.C. THIRD PARTY NOTICES AND CONSENTS. Komag and the Company shall use
reasonable best efforts to give required notices to third parties and obtain any
required third party consents in connection with the matters contemplated by
this Agreement and the Contribution Agreement.
5.D. GOVERNMENTAL NOTICES AND CONSENTS. Each of the Parties shall give
any notices to, make any filings with, and use reasonable best efforts to
obtain, any authorizations, consents and approvals of governments and
governmental agencies in connection with the matters contemplated by this
Agreement. Without limiting the generality of the foregoing, each of the Parties
shall use reasonable best efforts to make any filings that may be necessary,
proper or advisable under the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Act and shall pay all filing
fees related thereto.
5.E. OPERATION OF BUSINESS. Komag shall operate the business represented
by the Contributed Assets only in the usual and ordinary course of business
consistent with past practice and use reasonable best efforts to preserve the
goodwill and organization of such business and the relationships with its
customers, suppliers, employees and other business relations. Without limiting
the generality of the foregoing, Komag shall not prior to the Closing:
(i) take or omit to take any action would be reasonably likely to result
in a breach of any of the representations, warranties or covenants made by the
Company or Komag in this Agreement or in the Contribution Agreement;
(ii) take any action or omit to take any action which act or omission
would reasonably be anticipated to have a Material Adverse Effect; or
(iii) (A) enter into any contract out of the ordinary course of business
or restricting in any material respect the conduct of the business represented
by the Contributed Assets, or (B) sell any assets that would constitute
Contributed Assets.
Notwithstanding the foregoing, nothing in this Paragraph 5E shall prohibit the
Komag from taking any action or omitting to take any action as required or as
reasonably contemplated by this Agreement.
5.F. FULL ACCESS. Komag and the Company shall afford, and cause their
respective officers, directors, employees, attorneys, accountants and other
agents to afford, to the Investors and their accounting, legal and other
representatives, as well as their respective officers, employees, affiliates and
other agents, full and complete access at all reasonable times and during normal
business hours to (i) in the case of the Company, its personnel and to business,
financial, legal, tax, compensation and other data and information concerning
its affairs
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and operations and (ii) in the case of Komag, its personnel and to business,
financial, legal, tax, compensation and other data and information, in each case
solely to the extent related to the Company or its business or the Contributed
Assets.
5.G. COMPLIANCE WITH AGREEMENTS AND LAWS. The Company shall and Komag
shall (solely to the extent related to the Contributed Assets) (i) comply with
all material obligations pursuant to any material contract or agreement, whether
oral or written, express or implied, and (ii) comply with all material
applicable laws, in each case relating to the Company or its business or the
Contributed Assets.
5.H. PAYMENT OF OBLIGATIONS. The Company shall pay and discharge when
payable all Taxes, assessments and governmental charges imposed upon its
properties or upon the income or profits therefrom (in each case before the same
becomes delinquent and before penalties accrue thereon unless contested in good
faith by appropriate proceedings), and Komag shall pay and discharge when
payable all Taxes, assessments and governmental charges imposed upon the
Contributed Assets or upon the income or profits therefrom (in each case before
the same becomes delinquent and before penalties accrue thereon unless contested
in good faith by appropriate proceedings).
5.I. NOTICE OF MATERIAL DEVELOPMENTS. Each Party shall give prompt
written notice to the other Parties of (i) any material variances in any of its
representations or warranties contained in Sections 6, 7 or 8 below, as the case
may be, (ii) any breach of any covenant hereunder by such Party and (iii) any
other material development affecting the ability of such Party to consummate the
transactions contemplated by this Agreement.
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. As a material
inducement to Komag and the Investors to enter into this Agreement and
consummate the transactions contemplated hereby, the Company hereby represents
and warrants to Komag and to the Investors as of the date hereof and as of the
Closing Date as follows (except that the representations and warranties set
forth in Paragraph 6I are made to the Investors only and not to Komag):
6.A. ORGANIZATION, CORPORATE POWER AND LICENSES. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware and is qualified to do business in every jurisdiction
in which its ownership of property or conduct of business requires it to
qualify, except where the failure to so qualify would not have a Material
Adverse Effect. The Company possesses all requisite corporate power and
authority necessary to own and operate its properties, to carry on its
businesses as now conducted and presently proposed to be conducted and to carry
out the transactions contemplated by this Agreement. The copies of the Restated
Certificate of Incorporation and other organizational documents that have been
furnished to the Investors' special counsel and to Komag's counsel reflect all
amendments made thereto as of the date of this Agreement and to be made prior to
the Closing and are correct and complete and will be in effect at the Closing in
such form and shall not have been amended or modified.
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6.B. CAPITAL STOCK AND RELATED MATTERS.
(i) As of the date of this Agreement, the Company has not issued any
shares of its capital stock. Immediately prior to the Closing, no shares of
capital stock of the Company shall be outstanding, other than 720,000 shares of
the Company's Common stock, par value $0.01 per share ("Common Stock"), that
will have been issued to ▇▇▇▇▇▇ ▇▇▇▇ pursuant to a Restricted Stock Purchase
Agreement in the form of Exhibit G attached hereto (the "Hall Purchase
Agreement"). Immediately following the Closing (and after giving effect to the
Contribution Transaction and the Investment Transaction but not to the Second
Closing), the authorized capital stock of the Company shall consist of (a)
37,000,000 shares of Common Stock, of which 720,000 will be outstanding and held
beneficially and of record by ▇▇▇▇▇▇ ▇▇▇▇ and 720,000 will be outstanding and
held beneficially and of record by Storm Ventures Fund II LLC, and of which
25,000,000 are reserved for issuance upon conversion of the Class A Preferred
and of which 10,560,000 are reserved for issuance upon the exercise of stock
options authorized pursuant to the Option Plan and (b) 25,000,000 shares of
Class A Preferred will be outstanding, of which 12,000,000 will be held by Komag
and 12,200,000 will be held of record by the Investors. Except as set forth in
the immediately preceding sentence, the Company does not have outstanding any
stock or other securities convertible into or exchangeable for any capital stock
or containing any profit participation features, nor any rights or options to
subscribe for or to purchase any capital stock or securities convertible into or
exchangeable for its capital stock or other equity interests or any appreciation
rights or phantom equity-type plans. The Company is not subject to any
obligation (contingent or otherwise) to repurchase or otherwise acquire or
retire any capital stock or any warrants, options or other rights to acquire its
capital stock, other than as expressly provided in or contemplated by this
Agreement. As of the Closing (and after giving effect to the Contribution
Transaction and the Investment Transaction), all of the Company's outstanding
capital stock shall be validly issued, fully paid and nonassessable and the
Company shall not have granted any option or other right to any other Person to
purchase or acquire any of its capital stock or any rights therein (other than
pursuant to the Stockholders Agreement).
(ii) There are no statutory or contractual preemptive rights or rights
of first refusal or other similar restrictions with respect to the issuance of
any of the Preferred Shares or the issuance of any shares of Common Stock upon
the conversion of any of the Preferred Shares. The Company has not violated any
applicable federal or state securities laws in connection with the offer, sale
or issuance of any of its capital stock and the offer, sale and issuance of the
Preferred Shares hereunder does not require registration under the Securities
Act or any applicable state securities laws. Except for the Stockholders
Agreement, there are no agreements or understandings between or among Komag, the
Investors or any other Persons with respect to the voting or transfer of the
Company's capital stock or with respect to any other aspect of the Company's
governance.
6.C. AUTHORIZATION. The execution, delivery and performance of this
Agreement and all of the other agreements and instruments contemplated hereby to
which the Company is a party, the issuance of the Komag Preferred Shares to
Komag in the Contribution Transaction, the offering, sale and issuance of the
Investor Preferred Shares hereunder and the consummation of all of the other
transactions contemplated hereby has been duly authorized by the Company and, to
the extent required, its stockholders. This Agreement and the Restated
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Certificate of Incorporation and all of the other agreements and instruments
contemplated hereby to which the Company is a party each constitute a valid and
binding obligation of the Company, enforceable in accordance with their
respective terms.
6.D. NONCONTRAVENTION. The execution and delivery by the Company of this
Agreement and all other agreements and instruments contemplated hereby to which
the Company is a party, the issuance of the Komag Preferred Shares to Komag in
the Contribution Transaction, the offering, sale and issuance of the Investor
Preferred Shares hereunder and the fulfillment of and compliance with the
respective terms hereof and thereof by the Company do not and shall not (i)
conflict with or result in a breach of the terms, conditions or provisions of,
(ii) constitute a default under (whether with or without the passage of time,
the giving of notice or both), (iii) result in the creation of any Lien upon the
Company's capital stock, the Contributed Assets or any other assets of the
Company pursuant to, (iv) give any third party the right to modify, terminate or
accelerate any obligation under, (v) result in a violation of, or (vi) require
any authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any third party or any court or administrative
or governmental body or agency pursuant to, the certificate of incorporation and
bylaws of the Company, or any law, statute, rule, regulation, order, judgment or
decree to which the Company or the Contributed Assets are subject, or any
material agreement or instrument to which the Company or the Contributed Assets
are subject. The Company is not a party to or bound by any written or oral
agreement or understanding with respect to any sale, reorganization,
recapitalization or other similar transaction involving the Company or the
Contributed Assets (other than this Agreement and the Contribution Agreement).
6.E. SUBSIDIARIES; INVESTMENTS. The Company does not own or hold the
right to acquire any shares of stock or any other security or interests in any
other Person, and as of the Closing (and after giving effect to the Contribution
Transaction), the Company shall not own or hold the right to acquire any shares
of stock or any other security or interests in any other Person. The Company
does not have and has never had any Subsidiaries or any obligation to make any
Investments in any Person, and as of the Closing (and after giving effect to the
Contribution Transaction) the Company shall not have any Subsidiaries or any
obligation to make Investments in any Person.
6.F. ABSENCE OF UNDISCLOSED LIABILITIES. Except for the obligations
specifically referred to herein or in the Contribution Agreement, the Company
does not have, and as of immediately following the Closing (after giving effect
to the Contribution Transaction) the Company will not have, any obligation or
liability (whether accrued, absolute, contingent, unliquidated or otherwise,
whether due or to become due and regardless of when or by whom asserted) arising
out of any transactions entered into at or prior to the date hereof, or any
action or inaction at or prior to the date hereof, or any state of facts
existing at or prior to the date hereof.
6.G. AFFILIATED TRANSACTIONS. Except for the agreements specifically
referred to herein or in the Contribution Agreement, to the Company's knowledge,
no officer, director, member, stockholder, employee or Affiliate of the Company
is a party to any agreement, contract, commitment or transaction with the
Company or has any material interest in any Contributed Assets (including any
Intellectual Property Rights). The Company has not paid any
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fees, expenses or costs of the type described in Paragraph 11A below that are to
be paid by the Company to or on behalf of any other Person in excess of the
limitations contained in Paragraph 11A below. No employee of the Company or
Komag is entitled to any bonus, additional compensation or payment in connection
with the consummation of the transactions contemplated hereby for which the
Company is or will be responsible.
6.H. NO MATERIAL ADVERSE EFFECT. Since the date of formation of the
Company, there has occurred no fact, event or circumstance which has had or
would reasonably be expected to have a Material Adverse Effect.
6.I. CONTRIBUTION AGREEMENT REPRESENTATIONS. The representations and
warranties made by Komag in Section 7 of the Contribution Agreement are true and
correct in all respects, in each case regardless of any limitation on survival
set forth in the Contribution Agreement.
6.J. CONDUCT OF BUSINESS PRIOR TO CLOSING. Prior to the Closing, neither
the Company nor any of its Subsidiaries has conducted any business, incurred any
obligations or liabilities (whether accrued, absolute, contingent, unliquidated
or otherwise, whether or not known to the Company and whether due or to become
due and regardless of when asserted) or entered into any contracts or agreements
(other than this Agreement or any of the other agreements contemplated hereby)
or incurred any expenses (other than immaterial expense incurred in preparation
of this Agreement and the other agreements contemplated hereby and for the
transactions contemplated hereby and thereby). In addition, prior to the
Closing, neither the Company nor any of its Subsidiaries has violated any laws
or governmental rules or regulations in any material respect. The Company has
not made an election to be taxed as an "S" corporation for federal, state or
local tax purposes.
6.K. BROKERAGE. There are and shall be no claims for brokerage
commissions, finders' fees or similar compensation in connection with the
transactions contemplated by this Agreement or the Contribution Agreement based
on any arrangement or agreement to which the Company is a party or to which the
Company is subject.
6.L. LITIGATION, ETC. There are no actions, suits, proceedings
(including any arbitration proceedings), orders, investigations or claims
pending or, to the Company's knowledge, threatened against or affecting the
Company in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the transactions contemplated hereby.
6.M. DISCLOSURE. Neither this Agreement nor any of the Exhibits or
Schedules attached hereto, when taken together as a whole, contain any untrue
statement of a material fact or omit a material fact necessary to make each
statement contained herein or therein, in light of the circumstances in which
they were made, not misleading. There is no fact which has not been disclosed in
this Agreement or on the Schedules attached hereto and of which any of executive
employees of the Company is aware which has had or would reasonably be expected
to have a Material Adverse Effect.
15.
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SECTION 7. REPRESENTATIONS AND WARRANTIES OF KOMAG. As a material
inducement to the Investors and the Company to enter into this Agreement and
consummate the transactions contemplated hereby, Komag hereby represents and
warrants to the Investors and the Company as of the date hereof and as of the
Closing Date as follows:
7.A. CAPACITY; POWER AND AUTHORITY. Komag possesses all requisite
capacity, power and authority necessary to enter into and carry out the
transactions contemplated by this Agreement and the Contribution Agreement.
7.B. AUTHORIZATION. This Agreement, the Contribution Agreement and all
other agreements contemplated hereby to which Komag is a party, when executed
and delivered by Komag in accordance with the terms hereof, shall each
constitute a valid and binding obligation of Komag, enforceable against Komag in
accordance with its terms.
7.C. NONCONTRAVENTION. The execution and delivery by Komag of this
Agreement, the Contribution Agreement and all other agreements contemplated
hereby to which Komag is a party, the contribution of assets by Komag to the
Company and the fulfillment of and compliance with the respective terms hereof
and thereof by any such Party, do not and shall not (i) conflict with or result
in a breach of the terms, conditions or provisions of, (ii) constitute a default
under (whether with or without the passage of time, the giving of notice or
both), (iii) result in the creation of any Lien upon any of the Contributed
Assets pursuant to, or (iv) require any authorization, consent, approval,
exemption or other action by notice or declaration to, or filing with, any court
or administrative or governmental body or agency pursuant to, any law, statute,
rule, regulation, order or decree to which Komag or the Contributed Assets are
subject, or any material agreement or instrument to which the Contributed Assets
are subject, or any agreement or instrument that Komag has filed or is required
to file with the SEC pursuant to the Securities Exchange Act of 1934, as
amended. Except as disclosed to the Company and the Investors prior to the date
hereof with respect to the certain real property and improvements thereon in
which the Company may operate, Komag is not a party to or bound by any written
or oral agreement or understanding with respect to any sale, reorganization,
recapitalization or other similar transaction of Komag or the Contributed Assets
(other than this Agreement and the Contribution Agreement).
7.D. BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement or the Contribution Agreement based on any arrangement or
agreement to which Komag is a party or to which Komag is subject.
7.E. LITIGATION, ETC. There are no actions, suits, proceedings
(including any arbitration proceedings), orders, investigations or claims
pending or, to Komag's knowledge, threatened against or affecting Komag in which
it is sought to restrain or prohibit or to obtain damages or other relief in
connection with the transactions contemplated hereby.
7.F. MATERIAL ADVERSE CHANGE. Since June 30, 2000, there shall have been
no change or development which is reasonably likely to have a Material Adverse
Effect on the business represented by the Contributed Assets following the
Closing.
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7.G. INVESTMENT REPRESENTATIONS.
(i) Komag is acquiring the Komag Preferred Shares to be purchased by it
hereunder for its own account and Komag has no intention of distributing such
securities or any portion thereof in violation of the federal securities laws or
any applicable state securities laws.
(ii) Komag is an "accredited investor" as defined in Rule 501(a) under
the Securities Act.
(iii) Komag understands that (a) the Komag Preferred Shares to be
purchased by it hereunder have not been registered under the Securities Act on
the basis that the sale provided for in this Agreement is exempt from the
registration provisions thereof and that the Company's reliance on such
exemption is predicated in part upon the representations of Komag set forth
herein and (b) there is no public trading market for the Komag Preferred Shares,
that none may develop and that the Komag Preferred Shares must be held
indefinitely unless such Komag Preferred Shares are registered under the
Securities Act or an exemption from registration is available.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS. As a
material inducement to the Company and Komag to enter into this Agreement and
consummate the transactions contemplated hereby, each Investor (severally with
respect to itself only and not jointly with respect to any of the other
Investors) hereby represents and warrants to the Company and Komag as of the
date hereof and as of the Closing Date as follows:
8.A. ORGANIZATION, POWER AND AUTHORITY. Such Investor is duly organized,
validly existing and in good standing under the laws of its jurisdiction of
organization. Such Investor possesses all requisite power and authority
necessary to enter into and carry out the transactions contemplated by this
Agreement.
8.B. AUTHORIZATION. The execution, delivery and performance of this
Agreement and all of the other agreements contemplated hereby to which such
Investor is a party and the purchase of the Investor Preferred Shares by such
Investor have been duly authorized by such Investor. This Agreement and all
other agreements contemplated hereby to which such Investor is a party, when
executed and delivered by such Investor in accordance with the terms hereof,
shall each constitute a valid and binding obligation of such Investor,
enforceable in accordance with its terms.
8.C. NONCONTRAVENTION. The execution and delivery by such Investor of
this Agreement and all other agreements contemplated hereby to which such
Investor is a party, the purchase of the Investor Preferred Shares hereunder,
and the fulfillment of and compliance with the respective terms hereof and
thereof by such Investor, do not and shall not (i) conflict with or result in a
breach of the terms, conditions or provisions of, (ii) constitute a default
under (whether with or without the passage of time, the giving of notice or
both), (iii) give any third party the right to modify, terminate or accelerate
any obligation under, (iv) result in a violation of, or (v) require any
authorization, consent, approval, exemption or other action by or notice or
declaration to, or filing with, any court or administrative or governmental body
or agency
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pursuant to, the organizational documents of such Investor, or any material law,
statute, rule or regulation to which such Investor is subject, or any material
agreement, instrument, order, judgment or decree to which such Investor is
subject.
8.D. BROKERAGE. There are no claims for brokerage commissions, finders'
fees or similar compensation in connection with the transactions contemplated by
this Agreement based on any arrangement or agreement to which such Investor is a
party or to which such Investor is subject.
8.E. LITIGATION, ETC. There are no actions, suits, proceedings
(including any arbitration proceedings), orders, investigations or claims
pending or, to such Investor's knowledge, threatened against or affecting such
Investor in which it is sought to restrain or prohibit or to obtain damages or
other relief in connection with the transactions contemplated hereby.
8.F. INVESTMENT REPRESENTATIONS.
(i) Such Investor is acquiring the Investor Preferred Shares to be
purchased by it hereunder for its own account and such Investor has no intention
of distributing such securities or any portion thereof in violation of the
federal securities laws or any applicable state securities laws.
(ii) Such Investor is an "accredited investor" as defined in Rule 501(a)
under the Securities Act.
(iii) Such Investor understands that (a) the Investor Preferred Shares
to be purchased by it hereunder have not been registered under the Securities
Act on the basis that the sale provided for in this Agreement is exempt from the
registration provisions thereof and that the Company's reliance on such
exemption is predicated in part upon the representations of such Investor set
forth herein and (b) there is no public trading market for the Investor
Preferred Shares, that none may develop and that the Investor Preferred Shares
must be held indefinitely unless such Investor Preferred Shares are registered
under the Securities Act or an exemption from registration is available.
SECTION 9. DEFINITIONS. For the purposes of this Agreement, the
following terms have the meanings set forth below:
"Affiliate" of any particular Person means any other Person controlling,
controlled by or under common control with such particular Person, where
"control" means the possession, directly or indirectly, of the power to direct
the management and policies of a Person whether through the ownership of voting
securities, by contract or otherwise.
"Code" means the Internal Revenue Code of 1986, as amended, and any
reference to any particular Code section shall be interpreted to include any
revision of or successor to that section regardless of how numbered or
classified.
"Investment" as applied to any Person means (i) any direct or indirect
purchase or other acquisition by such Person of any notes, obligations,
instruments, stock, securities or
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ownership interests (including partnership, limited liability company and joint
venture interests) of any other Person and (ii) any capital contribution by such
Person to any other Person.
"Investor Representatives" means Summit Ventures V, L.P., a Delaware
limited partnership, and Storm Ventures Fund II, LLC, a Delaware limited
liability company.
"Lien" or "Liens" means any mortgage, pledge, security interest,
encumbrance, lien or charge of any kind (including any conditional sale or other
title retention agreement or lease in the nature thereof) or any filing or
agreement to file a financing statement as debtor under the Uniform Commercial
Code or any similar statute (other than to reflect ownership by a third party of
property leased to the Company under a lease which is not in the nature of a
conditional sale or title retention agreement).
"Material Adverse Effect" means a material and adverse effect upon the
Contributed Assets, taken as a whole, or the business, operations, or financial
condition, value, operating results or employee, customer or supplier relations
of the Company, taken as a whole.
"Permitted Encumbrances" shall mean (i) statutory liens for current
Taxes or other governmental charges not yet due and payable or the amount or
validity of which is being contested in good faith by appropriate proceedings by
the Company and for which appropriate reserves have been established in
accordance with generally accepted accounting principles, consistently applied;
(ii) mechanics', carriers', workers', repairers' and similar statutory liens
arising or incurred in the ordinary course of business for amounts which are not
delinquent and which are not, individually or in the aggregate, material to the
Company's business; (iii) zoning, entitlement, building and other land use
regulations imposed by governmental agencies having jurisdiction over leased
real property which are not violated by the current use and operation of such
leased real property; (iv) covenants, conditions, restrictions, easements and
other similar matters of record affecting title to leased real property which do
not materially impair the occupancy or use of such leased real property for the
purposes for which it is currently used in connection with the Company's
business; (v) Liens of landlords or lessors under leases arising by contract or
operation of law; and (vi) Liens arising from purchase money or capitalized
leases for capital assets used in Company's business and rights of lessors under
capital leases; provided that no such Liens shall extend to any assets of the
Company other than those financed by such purchase money obligation or capital
lease (and the proceeds thereof); and (vii) with respect to Contributed Assets
consisting of rights to use intellectual property not owned (but are validly
licensed) by the Company, the rights of the owners of such intellectual
property.
"Person" means an individual, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
"Preferred Shares" means the Komag Preferred Shares and the Investor
Preferred Shares collectively.
19.
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"Securities Act" means the Securities Act of 1933, as amended, or any
similar federal law then in force.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more of the other Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the partnership
or other similar ownership interests thereof is at the time owned or controlled,
directly or indirectly, by that Person or one or more Subsidiaries of that
Person or a combination thereof. For purposes hereof, a Person or Persons shall
be deemed to have a majority ownership interest in a limited liability company,
partnership, association or other business entity if such Person or Persons
shall be allocated a majority of the limited liability company, partnership,
association or other business entity gains or losses or shall be or control any
managing member or general partner of such limited liability company,
partnership, association or other business entity.
"Treasury Regulations" means the United States Treasury Regulations
promulgated under the Code, and any reference to any particular Treasury
Regulation section shall be interpreted to include any final or temporary
revision of or successor to that section regardless of how numbered or
classified.
SECTION 10. TERMINATION.
10.A. CONDITIONS OF TERMINATION. This Agreement may be terminated at any
time prior to the Closing:
(i) by the mutual written consent of the Parties;
(ii) by the Investor Representatives if there has been a material
misrepresentation, material breach of warranty or material breach of a covenant
by the Company or Komag in the representations and warranties or covenants set
forth in this Agreement or the Schedules and Exhibits attached hereto, which in
the case of any breach of covenant has not been cured within ten days after
written notification thereof by the Investor Representatives to the Company and
Komag;
(iii) by Komag if there has been a material misrepresentation, material
breach of warranty or material breach of covenant by the Investors in the
representations and warranties or covenants set forth in this Agreement or the
Schedules and Exhibits attached hereto, which in the case of any breach of
covenant has not been cured within ten days after written notification thereof
by Komag to the Investors; or
(iv) by the Investor Representatives, on the one hand, or Komag, on the
other hand, if the Closing shall not have occurred by December 5, 2000;
provided that the Party electing termination pursuant to clause (iv) of this
Paragraph 9A is not in breach in any material respect of any of its
representations, warranties, covenants or agreements
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contained in this Agreement or the Schedules and Exhibits attached hereto. In
the event of termination by either the Investor Representatives or Komag
pursuant to this Paragraph 10A, written notice thereof (describing in reasonable
detail the basis therefor) shall forthwith be delivered to the other Parties.
10.B. EFFECT OF TERMINATION. In the event of termination of this
Agreement by either the Investor Representatives as provided above, this
Agreement shall forthwith become void and of no further force and effect, except
that the covenants and agreements set forth in ▇▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇,
▇▇▇, ▇▇▇, 11E, ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇, ▇▇▇, 11M, 11N and 11O shall survive such
termination and shall not terminate, and except that nothing in Paragraph 10A or
this Paragraph 10B shall be deemed to release any Party from any liability for
any breach by such Party of the terms and provisions of this Agreement or to
impair the right of any Party to compel specific performance by another Party of
its obligations under this Agreement.
SECTION 11. MISCELLANEOUS.
11.A. FEES AND EXPENSES. At the Closing, the Company shall pay (or
reimburse the applicable Persons hereunder for) all of the reasonable fees and
expenses (including reasonable fees and expenses of legal counsel, accountants,
consultants and other representatives and due diligence and travel-related fees
and expenses) incurred by the Company, the Investors and Komag (other than any
brokerage fees incurred by any Party) in connection with this Agreement, the
Contribution Agreement and the other agreements contemplated hereby not to
exceed (provided that no unforeseen issues or conditions arise) $50,000 on the
part of the Investors and $50,000 on the part of Komag. In addition, the Company
shall pay, and shall hold Komag and each Investor harmless against liability for
the payment of, all stamp and other Taxes which may be payable in respect of the
execution and delivery of this Agreement or the issuance, delivery or
acquisition of any of the Preferred Shares or the issuance of any securities
upon conversion of any of the Preferred Shares. The Company shall also pay the
reasonable fees and expenses incurred by Komag or any Investor in any filing
with any governmental agency with respect to its investment in the Company or in
any other filing with any governmental agency with respect to the Company which
mentions such Person. If any legal action or other proceeding relating to this
Agreement, the other agreements contemplated hereby, the transactions
contemplated hereby or thereby or the enforcement of any provision of this
Agreement or the agreements contemplated hereby is brought against any Party,
the prevailing Party in such action or proceeding shall be entitled to recover
all reasonable expenses relating thereto (including attorneys' fees and
expenses) from the Party against which such action or proceeding is brought in
addition to any other relief to which such prevailing Party may be entitled.
11.B. REMEDIES. The Investors shall have all rights and remedies set
forth in this Agreement and the Restated Certificate of Incorporation and all
rights and remedies which the Investors have been granted at any time under any
other agreement or contract executed in connection with the transactions
contemplated hereby and, with respect to the additional rights the Investors may
have against the Company in connection with the transactions contemplated
hereby, all of the rights which the Investors or Komag have under applicable
law. Each of the Parties acknowledges and agrees that the Investors or Komag
would be damaged irreparably in the event any of the provisions of this
Agreement are not performed in accordance with their
21.
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specific terms or otherwise are breached. Accordingly, each of the Parties
agrees that the Investors or Komag shall be entitled to an injunction or
injunctions to prevent breaches of the provisions of this Agreement and to
enforce specifically this Agreement and the terms and provisions hereof in any
action instituted in any court of the United States or any state thereof having
jurisdiction over the Parties and the matter.
11.C. CONSENT TO AMENDMENTS. This Agreement may be amended, or any
provision of this Agreement may be waived; provided that any such amendment or
waiver shall be binding upon the Company only if set forth in a writing executed
by the Company, the Investor Representatives and Komag and referring
specifically to the provision alleged to have been amended or waived, any such
amendment or waiver shall be binding upon Komag only if set forth in a writing
executed by the Komag and referring specifically to the provision alleged to
have been amended or waived, and any such amendment or waiver shall be binding
upon the Investors only if set forth in a writing executed by the Investor
Representatives and referring specifically to the provision alleged to have been
amended or waived. No course of dealing between or among the Parties shall be
deemed effective to modify, amend or discharge any part of this Agreement or any
rights or obligations of any Party under or by reason of this Agreement.
11.D. SUCCESSORS AND ASSIGNS. This Agreement and all of the covenants
and agreements contained herein and all of the rights, interests and obligations
hereunder, by or on behalf of any of the Parties hereto, shall bind and inure to
the benefit of the respective successors and assigns of the Parties hereto
whether so expressed or not, except that neither this Agreement nor any of the
covenants and agreements herein or rights, interests or obligations hereunder
may be assigned or delegated by the Company without the prior written consent of
the Investor Representatives and Komag, or by Komag without the prior written
consent of the Investor Representatives, or by the Investors without the prior
written consent of Komag.
11.E. SEVERABILITY. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement or the application of any
such provision to any Person or circumstance shall be held to be prohibited by,
illegal or unenforceable under applicable law in any respect by a court of
competent jurisdiction, such provision shall be ineffective only to the extent
of such prohibition or illegality or unenforceability, without invalidating the
remainder of such provision or the remaining provisions of this Agreement.
11.F. COUNTERPARTS. This Agreement may be executed simultaneously in
counterparts (including by means of telecopied signature pages), any one of
which need not contain the signatures of more than one Party, but all such
counterparts taken together shall constitute one and the same Agreement.
11.G. DESCRIPTIVE HEADINGS; INTERPRETATION. The headings and captions
used in this Agreement and the table of contents to this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Any capitalized terms used in any Schedule or
Exhibit attached hereto and not otherwise defined therein shall have the
meanings set forth in this Agreement. The use of the word "including" herein
shall mean "including without limitation." The Parties intend that each
representation, warranty and covenant contained herein shall have independent
significance. If any Party has breached any
22.
23
representation, warranty or covenant contained herein in any respect, the fact
that there exists another representation, warranty or covenant relating to the
same subject matter (regardless of the relative levels of specificity) which the
Party has not breached shall not detract from or mitigate the fact that the
Party is in breach of the first representation, warranty or covenant. The
Parties agree that prior drafts of this Agreement shall be deemed not to provide
any evidence as to the meaning of any provision hereof or the intent of the
Parties with respect hereto.
11.H. ENTIRE AGREEMENT. This Agreement and the agreements and documents
referred to herein contain the entire agreement and understanding between the
Parties with respect to the subject matter hereof and supersede all prior
agreements and understandings (including that certain letter agreement,
effective October 12, 2000, by and among Summit Master Company, LLC, Storm
Ventures Fund II, LLC and Komag), whether written or oral, relating to such
subject matter in any way.
11.I. NO THIRD-PARTY BENEFICIARIES. This Agreement is for the sole
benefit of the Parties and their permitted successors and assigns and nothing
herein expressed or implied shall give or be construed to give any Person, other
than the Parties and such permitted successors and assigns, any legal or
equitable rights hereunder.
11.J. SCHEDULES. Nothing in any Schedule attached hereto shall be
adequate to disclose an exception to a representation or warranty made in this
Agreement unless such Schedule identifies the exception with particularity and
describes the relevant facts in reasonable detail. Without limiting the
generality of the foregoing, the mere listing (or inclusion of a copy) of a
document or other item shall not be adequate to disclose an exception to a
representation or warranty made in this Agreement, unless the representation or
warranty has to do with the existence of the document or other item itself.
11.K. COOPERATION ON TAX MATTERS. The Parties shall cooperate fully, as
and to the extent reasonably requested by each Party and at the requesting
Party's expense, in connection with any audit, litigation or other proceeding
with respect to Taxes. Such cooperation shall include the retention and (upon
any Party's request) the provision of records and information which are
reasonably relevant to any such audit, litigation or other proceeding and making
employees available on a mutually convenient basis to provide additional
information and explanation of any material provided hereunder.
11.L. GOVERNING LAW. All issues and questions concerning the
construction, validity, enforcement and interpretation of this Agreement and the
Schedules and Exhibits hereto shall be governed by, and construed in accordance
with, the laws of the State of California without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of California
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
11.M. NOTICES. All notices, demands or other communications to be given
or delivered under or by reason of the provisions of this Agreement shall be in
writing and shall be deemed to have been received when delivered personally to
the recipient, one business day after being sent to the recipient by reputable
overnight courier service (charges prepaid), upon
23.
24
machine-generated acknowledgment of receipt after transmittal by facsimile or
five days after being mailed to the recipient by certified or registered mail,
return receipt requested and postage prepaid. Such notices, demands and other
communications shall be sent to the Investors, the Company and Komag at the
addresses indicated below or to such other address or to the attention of such
other person as the recipient party has specified by prior written notice to the
sending party.
The Company:
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice to the Company)
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Komag:
Komag, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice to Komag)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
24.
25
The Investors or the Investor Representatives:
To the Investors at their respective addresses listed on the Schedule of
Investors attached hereto.
with copy to:
(which shall not constitute notice to the Investors)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
11.N. NO STRICT CONSTRUCTION. The Parties have participated jointly in
the negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties, and no presumption or burden of proof
shall arise favoring or disfavoring any Party by virtue of the authorship of any
of the provisions of this Agreement.
11.O. TREATMENT OF THE PREFERRED STOCK. The Company covenants and agrees
that (i) so long as federal income tax laws prohibit a deduction for
distributions made by the Company with respect to preferred stock, it shall
treat all distributions paid by it on any Preferred Shares as nondeductible
dividends on all of its Tax returns, (ii) it shall treat the Preferred Shares as
preferred stock in all of its financial statements and other reports and shall
treat all distributions paid by it on the Investor Preferred Shares as dividends
on preferred stock in such statements and reports.
25.
26
IN WITNESS WHEREOF, the parties hereto have executed this Stock Purchase
and Contribution Agreement on the day and year first above written.
CHAHAYA OPTRONICS, INC.
By:
--------------------------------------
Its:
-------------------------------------
KOMAG, INCORPORATED
By:
--------------------------------------
Its:
-------------------------------------
STORM VENTURES FUND II, LLC
By:
--------------------------------------
Its: Member
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:
--------------------------------------
Managing Member
SUMMIT VENTURES V COMPANION FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:
--------------------------------------
Managing Member
27
SUMMIT V ADVISORS (QP) FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:
--------------------------------------
Managing Member
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:
--------------------------------------
Managing Member
SUMMIT INVESTORS III, L.P.
By:
--------------------------------------
Authorized Signatory
▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS III
By:
--------------------------------------
Authorized Signatory
K&E INVESTMENT PARTNERS LLC-2000-B DIF
By:
--------------------------------------
Authorized Signatory
GC&H INVESTMENTS
By:
--------------------------------------
Authorized Signatory
-----------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇
29
SCHEDULE OF INVESTORS
NUMBER OF TOTAL PURCHASE PRICE FOR
NAME AND ADDRESS INVESTOR PREFERRED SHARES INVESTOR PREFERRED SHARE
---------------- ------------------------- ------------------------
Storm Ventures Fund II, LLC 6,000,000 6,000,000
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Summit Ventures V, L.P. 4,649,277 4,649,277
Summit V Advisors (QP) Fund, L.P. 307,922 307,922
Summit V Advisors Fund, L.P. 94,099 94,009
Summit Ventures V Companion Fund, L.P. 724,231 724,231
Summit Investors III, L.P. 224,471 224,471
c/o Summit Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (650) 321-1188
▇▇▇▇▇▇▇▇ Street Partners III 25,000 25,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
K&E Investment Partners LLC-2000-B DIF 25,000 25,000
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
GC&H Investments 100,000 100,000
c/o Cooley Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇ 50,000 50,000
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
========== ==========
12,200,000 12,200,000
30
TABLE OF CONTENTS
PAGE
----
SECTION 1. TRANSACTIONS..................................................................................2
1.A. Authorization......................................................................................2
1.B. Restated Certificate of Incorporation..............................................................2
1.C. Contribution Transaction...........................................................................2
1.D. Investment Transaction.............................................................................3
1.E. Closing............................................................................................3
1.F. Second Closing.....................................................................................4
SECTION 2. CONDITIONS OF THE INVESTORS' OBLIGATIONS AT THE CLOSING.......................................4
2.A. Representations and Warranties; Covenants..........................................................4
2.B. Restated Certificate of Incorporation..............................................................4
2.C. Stockholders Agreement.............................................................................4
2.D. Registration Agreement.............................................................................4
2.E. Opinion of Counsel.................................................................................4
2.F. Contribution Agreement.............................................................................5
2.G. Filings............................................................................................5
2.H. Third Party Consents and Approvals.................................................................5
2.I. Governmental Consents and Approvals................................................................5
2.J. Option Plan........................................................................................5
2.K. Material Adverse Change............................................................................5
2.L. Litigation.........................................................................................6
2.M. Other Agreements with Komag........................................................................6
2.N. Indemnification Agreements.........................................................................6
2.O. Expenses...........................................................................................6
2.P. Escrow Agreement...................................................................................6
2.Q. Closing Documents..................................................................................6
2.R. Proceedings........................................................................................7
2.S. Waiver.............................................................................................7
SECTION 3. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY AT THE CLOSING...................................7
3.A. Representations and Warranties; Covenants..........................................................7
i
31
3.B. Stockholders Agreement.............................................................................7
3.C. Registration Agreement.............................................................................7
3.D. Litigation.........................................................................................7
3.E. Governmental Consents and Approvals................................................................7
3.F. Investment Transaction.............................................................................8
3.G. Contribution Agreement.............................................................................8
3.H. Third Party Consents and Approvals.................................................................8
3.I. Waiver.............................................................................................8
SECTION 4. CONDITIONS OF THE OBLIGATIONS OF KOMAG AT THE CLOSING.........................................8
4.A. Representations and Warranties; Covenants..........................................................8
4.B. Restated Certificate of Incorporation..............................................................8
4.C. Stockholders Agreement.............................................................................8
4.D. Registration Agreement.............................................................................8
4.E. Opinion of Counsel.................................................................................8
4.F. Contribution Agreement.............................................................................8
4.G. Filings............................................................................................9
4.H. Third Party Consents and Approvals.................................................................9
4.I. Governmental Consents and Approvals................................................................9
4.J. Option Plan........................................................................................9
4.K. Litigation.........................................................................................9
4.L. Other Agreements with Komag........................................................................9
4.M. Indemnification Agreements.........................................................................9
4.N. Expenses...........................................................................................9
4.O. Closing Documents..................................................................................9
4.P. Proceedings.......................................................................................10
4.Q. Investment Transaction............................................................................10
4.R. Waiver............................................................................................10
SECTION 5. PRE-CLOSING COVENANTS AND AGREEMENTS.........................................................10
5.A. General...........................................................................................10
5.B. Maintenance of Business...........................................................................11
5.C. Third Party Notices and Consents..................................................................11
ii
32
5.D. Governmental Notices and Consents.................................................................11
5.E. Operation of Business.............................................................................11
5.F. Full Access.......................................................................................11
5.G. Compliance with Agreements and Laws...............................................................12
5.H. Payment of Obligations............................................................................12
5.I. Notice of Material Developments...................................................................12
SECTION 6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY................................................12
6.A. Organization, Corporate Power and Licenses........................................................12
6.B. Capital Stock and Related Matters.................................................................13
6.C. Authorization.....................................................................................13
6.D. Noncontravention..................................................................................14
6.E. Subsidiaries; Investments.........................................................................14
6.F. Absence of Undisclosed Liabilities................................................................14
6.G. Affiliated Transactions...........................................................................14
6.H. No Material Adverse Effect........................................................................15
6.I. Contribution Agreement Representations............................................................15
6.J. Conduct of Business Prior to Closing..............................................................15
6.K. Brokerage.........................................................................................15
6.L. Litigation, etc...................................................................................15
6.M. Disclosure........................................................................................15
SECTION 7. REPRESENTATIONS AND WARRANTIES OF KOMAG......................................................16
7.A. Capacity; Power and Authority.....................................................................16
7.B. Authorization.....................................................................................16
7.C. Noncontravention..................................................................................16
7.D. Brokerage.........................................................................................16
7.E. Litigation, etc...................................................................................16
7.F. Material Adverse Change...........................................................................16
7.G. Investment Representations........................................................................17
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE INVESTORS..............................................17
8.A. Organization, Power and Authority.................................................................17
8.B. Authorization.....................................................................................17
8.C. Noncontravention..................................................................................17
iii
33
8.D. Brokerage.........................................................................................18
8.E. Litigation, etc...................................................................................18
8.F. Investment Representations........................................................................18
SECTION 9. DEFINITIONS..................................................................................18
SECTION 10. TERMINATION..................................................................................20
10.A. Conditions of Termination.........................................................................20
10.B. Effect of Termination.............................................................................21
SECTION 11. MISCELLANEOUS................................................................................21
11.A. Fees and Expenses.................................................................................21
11.B. Remedies..........................................................................................21
11.C. Consent to Amendments.............................................................................22
11.D. Successors and Assigns............................................................................22
11.E. Severability......................................................................................22
11.F. Counterparts......................................................................................22
11.G. Descriptive Headings; Interpretation..............................................................22
11.H. Entire Agreement..................................................................................23
11.I. No Third-Party Beneficiaries......................................................................23
11.J. Schedules.........................................................................................23
11.K. Cooperation on Tax Matters........................................................................23
11.L. Governing Law.....................................................................................23
11.M. Notices...........................................................................................23
11.N. No Strict Construction............................................................................25
11.O. Treatment of the Preferred Stock..................................................................25
iv
34
EXHIBITS AND SCHEDULES
Exhibit A - Restated Certificate of Incorporation
Exhibit B - Contribution Agreement
Exhibit C - Escrow Agreement
Exhibit D - Stockholders Agreement
Exhibit E - Registration Agreement
Exhibit F - Form of Indemnification Agreement
Exhibit G - Restricted Stock Purchase Agreement
Schedules:
Schedule of Investors
Except for the obligations specifically referred to herein or in the
Contribution Agreement
1.
35
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
CHAHAYA OPTRONICS, INC.
▇▇▇▇▇▇ ▇▇▇▇ hereby certifies as follows:
ONE: The name of this company is Chahaya Optronics, Inc. (the
"Corporation") and the date of filing the original Certificate of Incorporation
of this Corporation with the Secretary of State of the State of Delaware was
November 14, 2000.
TWO: He is the duly elected and acting President of the Corporation.
THREE: The Certificate of Incorporation of this Corporation is hereby
amended and restated to read as follows:
I.
The name of this Corporation is Chahaya Optronics, Inc.
II.
The address of the registered office of the Corporation in the State of
Delaware is ▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ of Kent, and the name of
the Corporation's registered agent at said address is Amerisearch Corporate
Services, Inc.
III.
The purpose of the Corporation is to engage in any lawful act or
activity for which a corporation may be organized under the Delaware General
Corporation Law ("DGCL").
IV.
The total number of shares of capital stock which the Corporation has
authority to issue is 62,000,000 shares, consisting of:
(1) 25,000,000 shares of Class A Convertible Preferred Stock, par value
$0.01 per share (the "Class A Preferred"); and
(2) 37,000,000 shares of Common Stock, par value $0.01 per share (the
"Common Stock").
2.
36
CLASS A PREFERRED
SECTION 1. DIVIDENDS.
1.A. General Obligation. When and as declared by the Corporation's Board
of Directors and to the extent permitted under the General Corporation Law of
Delaware, the Corporation shall pay preferential dividends in cash to the
holders of the Class A Preferred as provided in this Section 1. Except as
otherwise provided herein, dividends on each share of the Class A Preferred (a
"Share") shall accrue on a daily basis at the rate of 8.0% per annum of the sum
of the Liquidation Value thereof plus all accumulated and unpaid dividends
thereon from and including the date of issuance of such Share to and including
the first to occur of (i) the date on which the Liquidation Value of such Share
(plus all accrued and unpaid dividends thereon) is paid to the holder thereof in
connection with the liquidation of the Corporation or the redemption of such
Share by the Corporation, (ii) the date on which such Share is converted into
shares of Conversion Stock hereunder or (iii) the date on which such share is
otherwise acquired by the Corporation. Such dividends shall accrue whether or
not they have been declared and whether or not there are profits, surplus or
other funds of the Corporation legally available for the payment of dividends,
and such dividends shall be cumulative (except as otherwise permitted in Section
3 below) such that all accrued and unpaid dividends shall be fully paid or
declared with funds irrevocably set apart for payment before any dividends,
distributions, redemptions or other payments may be made with respect to any
Junior Securities. The date on which the Corporation initially issues any Share
shall be deemed to be its "date of issuance" regardless of the number of times
transfer of such Share is made on the stock records maintained by or for the
Corporation and regardless of the number of certificates which may be issued to
evidence such Share.
1.B. Dividend Reference Dates. To the extent not paid on November 30th
of each year, beginning November 30, 2001 (the "Dividend Reference Dates"), all
dividends which have accrued on each Share outstanding during the one-year
period (or other period in the case of the initial Dividend Reference Date)
ending upon each such Dividend Reference Date shall be accumulated and shall
remain accumulated dividends with respect to such Share until paid to the holder
thereof.
1.C. Distribution of Partial Dividend Payments. Except as otherwise
provided herein, if at any time the Corporation pays less than the total amount
of dividends then accrued with respect to the Class A Preferred, such payment
shall be distributed pro rata among the holders thereof based upon the aggregate
Liquidation Value of the Shares (plus all accrued but unpaid dividends thereon)
held by each such holder.
1.D. Participating Dividends. In the event that the Corporation declares
or pays any dividends upon the Common Stock (whether payable in cash, securities
or other property) other than dividends payable solely in shares of Common
Stock, the Corporation shall also
37
declare and pay to the holders of the Class A Preferred at the same time that it
declares and pays such dividends to the holders of the Common Stock, the
dividends which would have been declared and paid with respect to the Common
Stock issuable upon conversion of the Class A Preferred had all of the
outstanding Class A Preferred been converted immediately prior to the record
date for such dividend, or if no record date is fixed, the date as of which the
record holders of Common Stock entitled to such dividends are to be determined.
1.E. Waiver of Rights. The holders of the Class A Preferred expressly
waive their rights, if any, as described in California Code Sections 502, 503
and 506, to the extent such sections apply, with respect to repurchases of
shares as are approved by the Corporation's Board of Directors upon termination
of employment or service as a consultant or director.
SECTION 2. LIQUIDATION.
Upon any liquidation, dissolution or winding up of the Corporation
(whether voluntary or involuntary), each holder of Class A Preferred shall be
entitled to be paid, before any distribution or payment is made upon any Junior
Securities, an amount in cash equal to the greater of (i) the aggregate
Liquidation Value of all Shares held by such holder (plus all accrued and unpaid
dividends thereon) or (ii) the amount that would be payable to such holder in
respect of the Conversion Stock issuable upon conversion of the Shares held by
such holder if all outstanding Class A Preferred were converted into Common
Stock immediately prior to such liquidation, dissolution or winding up. Upon
such payment, the holders of Class A Preferred shall not be entitled to any
further payment. If upon any such liquidation, dissolution or winding up of the
Corporation the amount payable pursuant to clause (i) above is greater than the
amount payable pursuant to clause (ii) above and the Corporation's assets to be
distributed among the holders of the Class A Preferred are insufficient to
permit payment to such holders of the aggregate amount which they are entitled
to be paid pursuant to clause (i) above, then the entire assets available to be
distributed to the Corporation's stockholders shall be distributed pro rata
among such holders based upon the aggregate Liquidation Value of the Shares
(plus all accrued and unpaid dividends thereon) held by each such holder. No
accrued and unpaid dividends with respect to the Class A Preferred shall be
declared for payment in connection with the liquidation, dissolution or winding
up of the Corporation, whether or not the Corporation possesses funds legally
available for the payment of dividends. Not less than 20 days prior to the
payment date stated therein, the Corporation shall mail written notice of any
such liquidation, dissolution or winding up to each record holder of Class A
Preferred, setting forth in reasonable detail the amount of proceeds to be paid
with respect to each Share and each share of Common Stock in connection with
such liquidation, dissolution or winding up. Neither the consolidation or merger
of the Corporation into or with any other entity or entities (whether or not the
Corporation is the surviving entity), nor the sale or transfer by the
Corporation of all or any part of its assets, nor the reduction of the capital
stock of the Corporation, nor any other form of recapitalization or
reorganization affecting the Corporation shall be deemed to be a liquidation,
dissolution or winding up of the Corporation within the meaning of this Section
2.
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SECTION 3. PRIORITY OF CLASS A PREFERRED ON DIVIDENDS AND REDEMPTIONS.
So long as any Class A Preferred remains outstanding, without the prior
written consent of the holders of a majority of the shares of Class A Preferred
outstanding at the time such action is taken, the Corporation shall not, nor
shall it permit any Subsidiary to, redeem, purchase or otherwise acquire
directly or indirectly any Junior Securities, nor shall the Corporation directly
or indirectly pay or declare any dividend or make any distribution upon any
Junior Securities; provided that the Corporation may (with the approval of the
board of directors) repurchase shares of Common Stock from present or former
employees of the Corporation and its Subsidiaries in accordance with the
provisions of employee stock purchase agreements that have been approved by the
board of directors.
REDEMPTIONS.
3.A. Redemptions upon Request. At any time after November 30, 2005, the
holders of a majority of the Class A Preferred then outstanding may request
redemption of all or any portion of the Shares of Class A Preferred by
delivering written notice of such request to the Corporation. Within five days
after such request to the Corporation, the Corporation shall give written notice
of such request to all other holders of Class A Preferred and such holders may
request redemption of all or any portion of their Shares of Class A Preferred by
delivering written notice to the Corporation within 10 days after receipt of the
Corporation's notice. The Corporation shall be required to redeem the Shares
with respect to which such redemption requests have been made at a price per
Share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon) within 30 days after receipt of the initial redemption
request.
3.B. Special Redemptions.
(i) If a Change in Ownership has occurred or the Corporation
obtains knowledge that a Change in Ownership is proposed to occur, the
Corporation shall give prompt written notice of such Change in Ownership
describing in reasonable detail the material terms and date of consummation
thereof to each holder of Class A Preferred, but in any event such notice shall
be given not later than five days after the occurrence of such Change in
Ownership, and the Corporation shall give each holder of Class A Preferred
prompt written notice of any material change in the terms or timing of such
transaction. The holder or holders of a majority of the Class A Preferred then
outstanding may elect to require the Corporation to redeem all or any portion of
the Class A Preferred owned by such holder or holders at a price per Share equal
to the Liquidation Value thereof (plus all accrued and unpaid dividends thereon)
by giving written notice to the Corporation of such election prior to the later
of (a) 15 days after receipt of the Corporation's notice and (b) ten days prior
to the consummation of the Change in Ownership (the "Expiration Date"). The
Corporation shall give prompt written notice of any such election to all other
holders of Class A Preferred within five days after the receipt thereof, and
each such
39
holder shall have until the later of (a) the Expiration Date or (b) five days
after receipt of such second notice to request redemption hereunder (by giving
written notice to the Corporation) of all or any portion of the Class A
Preferred owned by such holder. Upon receipt of such election(s), the
Corporation shall be obligated to redeem the aggregate number of Shares
specified therein on the later of (a) the occurrence of the Change in Ownership
or (b) five days after the Corporation's receipt of such election(s). If any
proposed Change in Ownership does not occur, all requests for redemption in
connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Class A Preferred may rescind such holder's request for redemption by giving
written notice of such rescission to the Corporation within five days following
receipt by such holder of the Corporation's notice regarding such material
change.
(ii) If a Fundamental Change is proposed to occur, the Corporation
shall give written notice of such Fundamental Change describing in reasonable
detail the material terms and date of consummation thereof to each holder of
Class A Preferred not more than 30 days nor less than 15 days prior to the
consummation of such Fundamental Change, and the Corporation shall give each
holder of Class A Preferred prompt written notice of any material change in the
terms or timing of such transaction. The holder or holders of a majority of the
Class A Preferred then outstanding may elect to require the Corporation to
redeem all or any portion of the Class A Preferred owned by such holder or
holders at a price per Share equal to the Liquidation Value thereof (plus all
accrued and unpaid dividends thereon) by giving written notice to the
Corporation of such election prior to the later of (a) ten days prior to the
consummation of the Fundamental Change or (b) ten days after receipt of notice
from the Corporation. The Corporation shall give prompt written notice of such
election to all other holders of Class A Preferred (but in any event within five
days prior to the consummation of the Fundamental Change), and each such holder
shall have until two days after the receipt of such notice to request redemption
(by written notice given to the Corporation) of all or any portion of the Class
A Preferred owned by such holder. Upon receipt of such election(s), the
Corporation shall be obligated to redeem the aggregate number of Shares
specified therein upon the consummation of such Fundamental Change. If any
proposed Fundamental Change does not occur, all requests for redemption in
connection therewith shall be automatically rescinded, or if there has been a
material change in the terms or the timing of the transaction, any holder of
Class A Preferred may rescind such holder's request for redemption by delivering
written notice thereof to the Corporation within five days following receipt by
such holder of the Corporation's notice regarding such material change.
3.C. Redemption Payments. For each Share which is to be redeemed
hereunder, the Corporation shall be obligated on the Redemption Date to pay to
the holder thereof (upon surrender by such holder at the Corporation's principal
office of the certificate representing such Share) an amount in cash equal to
the Liquidation Value of such Share (plus all accrued and unpaid dividends
thereon). If the funds of the Corporation legally available for
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redemption of Shares on any Redemption Date are insufficient to redeem the total
number of Shares to be redeemed on such date, those funds which are legally
available shall be used to redeem the maximum possible number of Shares pro rata
among the holders of the Shares to be redeemed based upon the aggregate
Liquidation Value of such Shares (plus all accrued and unpaid dividends thereon)
held by each such holder. At any time thereafter when additional funds of the
Corporation are legally available for the redemption of Shares, such funds shall
immediately be used to redeem the balance of the Shares which the Corporation
has become obligated to redeem on any Redemption Date but which it has not
redeemed.
3.D. Determination of the Number of Each Holder's Shares to be Redeemed.
The number of Shares of Class A Preferred to be redeemed from each holder
thereof in redemptions hereunder shall be the number of Shares determined by
multiplying the total number of Shares to be redeemed times a fraction, the
numerator of which shall be the total number of Shares then held by such holder
and the denominator of which shall be the total number of Shares then
outstanding.
3.E. Dividends After Redemption Date. No Share shall be entitled to any
dividends accruing after the date on which the Liquidation Value of such Share
(plus all accrued and unpaid dividends thereon) is paid to the holder of such
Share. On such date, all rights of the holder of such Share shall cease, and
such Share shall no longer be deemed to be issued and outstanding.
3.F. Redeemed or Otherwise Acquired Shares. Any Shares which are
redeemed or otherwise acquired by the Corporation shall be canceled and retired
to authorized but unissued shares and shall not be reissued, sold or
transferred.
3.G. Other Redemptions or Acquisitions. The Corporation shall not, nor
shall it permit any Subsidiary to, redeem or otherwise acquire any Shares of
Class A Preferred, except as expressly authorized herein or pursuant to a
purchase offer made pro rata to all holders of Class A Preferred on the basis of
the number of Shares owned by each such holder.
VOTING RIGHTS.
3.H. General. The holders of the Class A Preferred shall be entitled to
notice of all stockholders meetings in accordance with the Corporation's bylaws
and the holders of the Class A Preferred shall be entitled to vote on all
matters submitted to the stockholders for a vote together with the holders of
the Common Stock voting together as a single class with each share of Common
Stock entitled to one vote per share and each Share of Class A Preferred
entitled to one vote for each share of Common Stock issuable upon conversion of
the Class A Preferred as of the record date for such vote or, if no record date
is specified, as of the date of such vote.
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3.I. Protective Provisions. So long as any Class A Preferred remains
outstanding, the Corporation shall not, without the vote or written consent of
the holders of a majority of the Class A Preferred outstanding at the time such
action is taken:
(i) authorize, issue or enter into any agreement providing for the
issuance (contingent or otherwise) of, (a) any notes or debt securities
containing equity features (including, without limitation, any notes or debt
securities convertible into or exchangeable for capital stock or other equity
securities, any notes or debt securities issued in connection with the issuance
of capital stock or other equity securities), (b) any capital stock or other
equity securities (or any securities convertible into or exchangeable for any
capital stock or other equity securities) which are senior to or on a parity
with the Class A Preferred with respect to the payment of dividends, redemptions
or distributions upon liquidation, dissolution or winding up of the Corporation
or otherwise or (c) any additional shares of Class A Preferred;
(ii) sell or transfer or permit any Subsidiary to sell or transfer
more than 50% of the assets of the Corporation and its Subsidiaries on a
consolidated basis (computed on the basis of the greater of (a) book value in
accordance with generally accepted accounting principles consistently applied or
(b) fair market value determined in the reasonable good faith judgment of the
Corporation's Board of Directors) in any transaction or series of transactions
(including, without limitation, any sale or other disposition of capital stock
of any of the Corporation's Subsidiaries (whether by merger, consolidation or
otherwise), but excluding sales of inventory in the ordinary course of
business);
(iii) merge or consolidate with any Person, or permit any Subsidiary
to merge or consolidate with any Person (other than a merger or consolidation
between or among wholly-owned Subsidiaries);
(iv) liquidate, dissolve or effect a recapitalization or
reorganization in any form of transaction (including, without limitation, any
reorganization into a limited liability company, a partnership or any other
non-corporate entity which is treated as a partnership for federal income tax
purposes, and including any stock split, stock dividend, stock combination or
like event involving the Class A Preferred);
(v) increase the number of authorized shares of Class A Preferred or
alter, change or otherwise impair or adversely affect the rights, preferences or
powers or the relative preferences and priorities of the holders of the Class A
Preferred; or
(vi) make any amendment to the Corporation's Certificate of
Incorporation or Bylaws that establishes or authorizes any new class or series
of capital stock or that in any manner adversely affects the rights, preferences
or powers of the Class A Preferred.
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3.J. Cumulative Voting. No person entitled to vote at an election for
directors may cumulate votes to which such person is entitled, unless, at the
time of such election, the Company is subject to Section 2115 of the California
General Corporation Law ("CGCL"). During such time or times that the Company is
subject to Section 2115(b) of the CGCL, every stockholder entitled to vote at an
election for directors may cumulate such stockholder's votes and give one
candidate a number of votes equal to the number of directors to be elected
multiplied by the number of votes to which such stockholder's shares are
otherwise entitled, or distribute the stockholder's votes on the same principle
among as many candidates as such stockholder desires. No stockholder, however,
shall be entitled to so cumulate such stockholder's votes unless (i) the names
of such candidate or candidates have been placed in nomination prior to the
voting and (ii) the stockholder has given notice at the meeting, prior to the
voting, of such stockholder's intention to cumulate such stockholder's votes. If
any stockholder has given proper notice to cumulate votes, all stockholders may
cumulate their votes for any candidates who have been properly placed in
nomination. Under cumulative voting, the candidates receiving the highest number
of votes, up to the number of directors to be elected, are elected.
3.K. Removal.
(i) During such time or times that the Company is subject to
Section 2115(b) of the CGCL, the Board of Directors or any individual director
may be removed from office at any time without cause by the affirmative vote of
the holders of at least a majority of the outstanding shares entitled to vote;
provided, however, that unless the entire Board is removed, no individual
director may be removed when the votes cast against such director's removal, or
not consenting in writing to such removal, would be sufficient to elect that
director if voted cumulatively at an election which the same total number of
votes were cast (or, if such action is taken by written consent, all shares
entitled to vote were voted) and the entire number of directors authorized at
the time of such director's most recent election were then being elected.
(II) At any time or times that the Company is not subject to
Section 2115(b) of the CGCL and subject to any limitations imposed by law,
Section (d)(i) above shall not apply and the Board of Directors or any director
may be removed from office at any time (a) with cause by the affirmative vote of
the holders of a majority of the voting power of all then-outstanding shares of
capital stock of the Company entitled to vote generally at an election of
directors or (b) without cause by the affirmative vote of the holders of a
majority of the voting power of all then-outstanding shares of capital stock of
the Company, entitled to vote generally at an election of directors.
CONVERSION.
3.L. Conversion Events and Procedure.
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(i) At any time and from time to time, any holder of Class A
Preferred may convert all or any portion of the Class A Preferred (including any
fraction of a Share) held by such holder into a number of shares of Conversion
Stock computed by multiplying the number of Shares to be converted by $1.00 and
dividing the result by the Conversion Price then in effect.
(ii) All of the outstanding Class A Preferred shall convert
automatically into shares of Common Stock (based upon the Conversion Price then
in effect) (A) upon the effective time of a firm commitment underwritten Public
Offering (a "Qualified Public Offering") of shares of its Common Stock in which
(1) the aggregate net proceeds received by the Corporation for the shares shall
be at least $30,000,000, and (2) the price per share paid by the public for such
shares shall be at least 400% of the Conversion Price in effect immediately
prior to the closing of the sale of such shares pursuant to the Public Offering
or (B) upon the written consent of the holders of a majority of the Class A
Preferred then outstanding. The Corporation shall provide written notice of any
such automatic conversion to all holders of Class A Preferred at least three
business days prior to the effective date of such conversion. In the case of a
Qualified Public Offering, such conversion shall be conditioned upon the
consummation of such Qualified Public Offering and shall be deemed to be
effective immediately prior to the consummation thereof.
(iii) Except as otherwise provided herein, each conversion of Class
A Preferred shall be deemed to have been effected as of the close of business on
the date on which the certificate or certificates representing the Class A
Preferred to be converted have been surrendered for conversion at the principal
office of the Corporation. At the time any such conversion has been effected,
the rights of the holder of the Shares converted as a holder of Class A
Preferred shall cease and the Person or Persons in whose name or names any
certificate or certificates for shares of Conversion Stock are to be issued upon
such conversion shall be deemed to have become the holder or holders of record
of the shares of Conversion Stock represented thereby.
(iv) The conversion rights of any Share subject to redemption
hereunder shall terminate on the Redemption Date for such Share unless the
Corporation has failed to pay to the holder thereof the Liquidation Value of
such Share (plus all accrued and unpaid dividends thereon).
(v) Notwithstanding any other provision hereof, if a conversion of
Class A Preferred is to be made in connection with a Public Offering or other
transaction affecting the Corporation, the conversion of any Shares of Class A
Preferred may, at the election of the holder thereof, be conditioned upon the
consummation of such transaction, in which case such conversion shall not be
deemed to be effective until such transaction has been consummated.
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(vi) As soon as possible after a conversion has been effected (but
in any event within five business days in the case of subparagraph (a) below),
the Corporation shall deliver to the converting holder:
(a) a certificate or certificates representing the
number of shares of Conversion Stock issuable by reason of such
conversion in such name or names and such denomination or
denominations as the converting holder has specified; and
(b) a certificate representing any Shares of Class A
Preferred which were represented by the certificate or
certificates delivered to the Corporation in connection with
such conversion but which were not converted.
(vii) The issuance of certificates for shares of Conversion Stock
upon conversion of Class A Preferred shall be made without charge to the holders
of such Class A Preferred for any issuance tax in respect thereof or other cost
incurred by the Corporation in connection with such conversion and the related
issuance of shares of Conversion Stock. Upon conversion of each Share of Class A
Preferred, the Corporation shall take all such actions as are necessary in order
to insure that the Conversion Stock issuable with respect to such conversion
shall be validly issued, fully paid and nonassessable, free and clear of all
taxes, liens, charges and encumbrances with respect to the issuance thereof.
(viii) The Corporation shall not close its books against the
transfer of Class A Preferred or of Conversion Stock issued or issuable upon
conversion of Class A Preferred in any manner which interferes with the timely
conversion of Class A Preferred. The Corporation shall assist and cooperate with
any holder of Shares required to make any governmental filings or obtain any
governmental approval prior to or in connection with any conversion of Shares
hereunder (including, without limitation, making any filings required to be made
by the Corporation).
(ix) The Corporation shall at all times reserve and keep available
out of its authorized but unissued shares of Conversion Stock, solely for the
purpose of issuance upon the conversion of the Class A Preferred, such number of
shares of Conversion Stock issuable upon the conversion of all outstanding Class
A Preferred. All shares of Conversion Stock which are so issuable shall, when
issued, be duly and validly issued, fully paid and nonassessable and free from
all taxes, liens and charges. The Corporation shall take all such actions as may
be necessary to assure that all such shares of Conversion Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of Conversion
Stock may be listed (except for official notice of issuance which shall be
immediately delivered by the Corporation upon each such issuance). The
Corporation shall not take any action which would cause the number of authorized
but unissued shares of Conversion Stock to be less than the number of such
shares required to be reserved hereunder for issuance upon conversion of the
Class A Preferred.
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(x) If any fractional interest in a share of Conversion Stock
would, except for the provisions of this subparagraph, be delivered upon any
conversion of the Class A Preferred, the Corporation, in lieu of delivering the
fractional share therefor, shall pay an amount to the holder thereof equal to
the Market Price of such fractional interest as of the date of conversion.
3.M. Conversion Price.
(i) The initial Conversion Price shall be $1.00. In order to
prevent dilution of the conversion rights granted under this Section 6, the
Conversion Price shall be subject to adjustment from time to time pursuant to
this paragraph 6B.
(ii) If and whenever on or after the original date of issuance of
the Class A Preferred the Corporation issues or sells, or in accordance with
paragraph 6C is deemed to have issued or sold, any shares of its Common Stock
for a consideration per share less than the Conversion Price in effect
immediately prior to the time of such issue or sale, then immediately upon such
issue or sale or deemed issue or sale the Conversion Price shall be reduced to
the Conversion Price determined by dividing (a) the sum of (1) the product
derived by multiplying the Conversion Price in effect immediately prior to such
issue or sale by the number of shares of Common Stock Deemed Outstanding
immediately prior to such issue or sale, plus (2) the consideration, if any,
received by the Corporation upon such issue or sale, by (b) the number of shares
of Common Stock Deemed Outstanding immediately after such issue or sale.
(iii) Notwithstanding the foregoing, there shall be no adjustment
in the Conversion Price as a result of any issue or sale (or deemed issue or
sale) of (a) Common Stock to employees, directors or consultants of the
Corporation and its Subsidiaries pursuant to stock option plans and stock
ownership plans approved by the Corporation's Board of Directors or (b) any
other shares of Common Stock, the issuance or sale (or deemed issuance and sale)
of which have been approved by the Corporation's Board of Directors and the
holders of at least two-thirds of the Class A Preferred outstanding at the time
such action is taken.
3.N. Effect on Conversion Price of Certain Events. For purposes of
determining the adjusted Conversion Price under paragraph 6B, the following
shall be applicable:
(i) Issuance of Rights or Options. If the Corporation in any
manner grants or sells any Options and the price per share for which Common
Stock is issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such Options,
is less than the Conversion Price in effect immediately prior to the time of
the granting or sale of such Options, then the total maximum number of shares
of Common Stock issuable upon the exercise of such Options or upon conversion
or exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such
46
Options shall be deemed to be outstanding and to have been issued and sold by
the Corporation at the time of the granting or sale of such Options for such
price per share. For purposes of this paragraph, the "price per share for which
Common Stock is issuable" shall be determined by dividing (a) the total amount,
if any, received or receivable by the Corporation as consideration for the
granting or sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Corporation upon exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Corporation upon the issuance or sale of such Convertible
Securities and the conversion or exchange thereof, by (b) the total maximum
number of shares of Common Stock issuable upon the exercise of such Options or
upon the conversion or exchange of all such Convertible Securities issuable upon
the exercise of such Options. No further adjustment of the Conversion Price
shall be made when Convertible Securities are actually issued upon the exercise
of such Options or when Common Stock is actually issued upon the exercise of
such Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Corporation in any
manner issues or sells any Convertible Securities and the price per share for
which Common Stock is issuable upon conversion or exchange thereof is less than
the Conversion Price in effect immediately prior to the time of such issue or
sale, then the maximum number of shares of Common Stock issuable upon conversion
or exchange of such Convertible Securities shall be deemed to be outstanding and
to have been issued and sold by the Corporation at the time of the issuance or
sale of such Convertible Securities for such price per share. For the purposes
of this paragraph, the "price per share for which Common Stock is issuable"
shall be determined by dividing (a) the total amount received or receivable by
the Corporation as consideration for the issue or sale of such Convertible
Securities, plus the minimum aggregate amount of additional consideration, if
any, payable to the Corporation upon the conversion or exchange thereof, by (b)
the total maximum number of shares of Common Stock issuable upon the conversion
or exchange of all such Convertible Securities. No further adjustment of the
Conversion Price shall be made when Common Stock is actually issued upon the
conversion or exchange of such Convertible Securities, and if any such issue or
sale of such Convertible Securities is made upon exercise of any Options for
which adjustments of the Conversion Price had been or are to be made pursuant to
other provisions of this Section 6, no further adjustment of the Conversion
Price shall be made by reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. If the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into or exchangeable for Common
Stock changes at any time, the Conversion Price in effect at the time of such
change shall be immediately adjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional consideration
or conversion
47
rate, as the case may be, at the time initially granted, issued or sold;
provided that if such adjustment would result in an increase of the Conversion
Price then in effect, such adjustment shall not be effective until 30 days after
written notice thereof has been given by the Corporation to all holders of the
Class A Preferred.
(iv) Treatment of Expired Options and Unexercised Convertible
Securities. Upon the expiration of any Option or the termination of any right to
convert or exchange any Convertible Security without the exercise of any such
Option or right, the Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or termination,
never been issued; provided that if such expiration or termination would result
in an increase in the Conversion Price then in effect, such increase shall not
be effective until 30 days after written notice thereof has been given to all
holders of the Class A Preferred.
(v) Calculation of Consideration Received. If any Common Stock,
Option or Convertible Security is issued or sold or deemed to have been issued
or sold for cash, the consideration received therefor shall be deemed to be the
amount received by the Corporation therefor (net of discounts, commissions and
related expenses). If any Common Stock, Option or Convertible Security is issued
or sold for a consideration other than cash, the amount of the consideration
other than cash received by the Corporation shall be the fair value of such
consideration, except where such consideration consists of securities, in which
case the amount of consideration received by the Corporation shall be the Market
Price thereof as of the date of receipt. If any Common Stock, Option or
Convertible Security is issued to the owners of the non-surviving entity in
connection with any merger in which the Corporation is the surviving
corporation, the amount of consideration therefor shall be deemed to be the fair
value of such portion of the net assets and business of the non-surviving entity
as is attributable to such Common Stock, Option or Convertible Security, as the
case may be. The fair value of any consideration other than cash and securities
shall be determined jointly by the Corporation and the holders of a majority of
the outstanding Class A Preferred. If such parties are unable to reach agreement
within a reasonable period of time, the fair value of such consideration shall
be determined by an independent appraiser experienced in valuing such type of
consideration jointly selected by the Corporation and the holders of a majority
of the outstanding Class A Preferred. The determination of such appraiser shall
be final and binding upon the parties, and the fees and expenses of such
appraiser shall be borne by the Corporation.
(vi) Integrated Transactions. In case any Option is issued in
connection with the issue or sale of other securities of the Corporation,
together comprising one integrated transaction in which no specific
consideration is allocated to such Option by the parties thereto, the Option
shall be deemed to have been issued for a consideration of $0.01.
48
(vii) Treasury Shares. The number of shares of Common Stock
outstanding at any given time shall not include shares owned or held by or for
the account of the Corporation or any Subsidiary, and the disposition of any
shares so owned or held shall be considered an issue or sale of Common Stock.
(viii) Record Date. If the Corporation takes a record of the holders
of Common Stock for the purpose of entitling them (a) to receive a dividend or
other distribution payable in Common Stock, Options or in Convertible Securities
or (b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
3.O. Subdivision or Combination of Common Stock. If the Corporation at
any time subdivides (by any stock split, stock dividend, recapitalization or
otherwise) one or more classes of its outstanding shares of Common Stock into a
greater number of shares, the Conversion Price in effect immediately prior to
such subdivision shall be proportionately reduced, and if the Corporation at any
time combines (by reverse stock split or other-wise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
3.P. Reorganization, Reclassification, Consolidation, Merger or Sale.
Any recapitalization, reorganization, reclassification, consolidation, merger,
sale of all or substantially all of the Corporation's assets or other
transaction, in each case which is effected in such a manner that the holders of
Common Stock are entitled to receive (either directly or upon subsequent
liquidation) stock, securities or assets with respect to or in exchange for
Common Stock, is referred to herein as an "Organic Change". Prior to the
consummation of any Organic Change, the Corporation shall make appropriate
provisions (in form and sub-stance reasonably satisfactory to the holders of a
majority of the Class A Preferred then outstanding) to insure that each of the
holders of Class A Preferred shall thereafter have the right to acquire and
receive, in lieu of or in addition to (as the case may be) the shares of
Conversion Stock immediately theretofore acquirable and receivable upon the
conversion of such holder's Class A Preferred, such shares of stock, securities
or assets as such holder would have received in connection with such Organic
Change if such holder had converted its Class A Preferred immediately prior to
such Organic Change. In each such case, the Corporation shall also make
appropriate provisions (in form and substance satisfactory to the holders of a
majority of the Class A Preferred then outstanding) to insure that the
provisions of this Section 6 and Sections 7 and 8 hereof shall thereafter be
applicable to the Class A Preferred. The Corporation shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Corporation) resulting from consolidation or
merger or the entity purchasing such
49
assets assumes by written instrument (in form and substance satisfactory to the
holders of a majority of the Class A Preferred then outstanding), the obligation
to deliver to each such holder such shares of stock, securities or assets as, in
accordance with the foregoing provisions, such holder may be entitled to
acquire.
3.Q. Certain Events. If any event occurs of the type contemplated by the
provisions of this Section 6 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the
Corporation's Board of Directors shall make an appropriate adjustment in the
Conversion Price so as to protect the rights of the holders of Class A
Preferred; provided that no such adjustment shall increase the Conversion Price
as otherwise determined pursuant to this Section 6 or decrease the number of
shares of Conversion Stock issuable upon conversion of each Share of Class A
Preferred.
3.R. Notices.
(i) Immediately upon any adjustment of the Conversion Price, the
Corporation shall give written notice thereof to all holders of Class A
Preferred, setting forth in reasonable detail and certifying the calculation of
such adjustment.
(ii) The Corporation shall give written notice to all holders of
Class A Preferred at least 20 days prior to the date on which the Corporation
closes its books or takes a record (a) with respect to any dividend or
distribution upon Common Stock, (b) with respect to any pro rata subscription
offer to holders of Common Stock or (c) for determining rights to vote with
respect to any Organic Change, dissolution or liquidation.
(iii) The Corporation shall also give written notice to the holders
of Class A Preferred at least 20 days prior to the date on which any Organic
Change shall take place.
PURCHASE RIGHTS.
If at any time the Corporation grants, issues or sells any Options,
Convertible Securities or rights to purchase stock, warrants, securities or
other property pro rata to the record holders of any class of Common Stock (the
"Purchase Rights"), then each holder of Class A Preferred shall be entitled to
acquire, upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which such holder could have acquired if such holder had held
the number of shares of Conversion Stock acquirable upon conversion of such
holder's Class A Preferred immediately before the date on which a record is
taken for the grant, issuance or sale of such Purchase Rights, or if no such
record is taken, the date as of which the record holders of Common Stock are to
be determined for the grant, issue or sale of such Purchase Rights.
50
EVENTS OF NONCOMPLIANCE.
3.S. Definition. An Event of Noncompliance shall have occurred if:
(i) the Corporation fails to make any redemption payment with
respect to the Class A Preferred which it is required to make hereunder, whether
or not such payment is legally permissible or is prohibited by any agreement to
which the Corporation is subject;
(ii) the Corporation breaches or otherwise fails to perform or
observe any covenant or agreement in paragraph 5B above or any other material
covenant set forth herein; or
(iii) the Corporation or any material Subsidiary makes an
assignment for the benefit of creditors or admits in writing its inability to
pay its debts generally as they become due; or an order, judgment or decree is
entered adjudicating the Corporation or any material Subsidiary bankrupt or
insolvent; or any order for relief with respect to the Corporation or any
material Subsidiary is entered under the Federal Bankruptcy Code; or the
Corporation or any material Subsidiary petitions or applies to any tribunal for
the appointment of a custodian, trustee, receiver or liquidator of the
Corporation or any material Subsidiary or of any substantial part of the assets
of the Corporation or any material Subsidiary, or commences any proceeding
(other than a proceeding for the voluntary liquidation, dissolution or winding
up of a Subsidiary) relating to the Corporation or any material Subsidiary under
any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt,
dissolution or liquidation law of any jurisdiction; or any such petition or
application is filed, or any such proceeding is commenced, against the
Corporation or any material Subsidiary and either (a) the Corporation or any
such material Subsidiary by any act indicates its approval thereof, consent
thereto or acquiescence therein or (b) such petition, application or proceeding
is not dismissed within 60 days.
3.T. Consequences of Events of Noncompliance.
(i) If an Event of Noncompliance has occurred, the dividend rate on
the Class A Preferred shall increase immediately by an increment of two
percentage point(s). Thereafter, until such time as no Event of Noncompliance
exists, the dividend rate shall increase automatically at the end of each
succeeding 90-day period by an additional increment of two percentage point(s)
(but in no event shall the dividend rate exceed 14%). Any increase of the
dividend rate resulting from the operation of this subparagraph shall terminate
as of the close of business on the date on which no Event of Noncompliance
exists, subject to subsequent increases pursuant to this paragraph.
(ii) If an Event of Noncompliance (other than an Event of
Noncompliance of the type described in subparagraph 8A(iii)) has occurred, the
holder or
51
holders of a majority of the Class A Preferred then outstanding may demand (by
written notice delivered to the Corporation) immediate redemption of all or any
portion of the Class A Preferred owned by such holder or holders at a price per
Share equal to the Liquidation Value thereof (plus all accrued and unpaid
dividends thereon). The Corporation shall give prompt written notice of such
election to the other holders of Class A Preferred (but in any event within five
days after receipt of the initial demand for redemption), and each such other
holder may demand immediate redemption of all or any portion of such holder's
Class A Preferred by giving written notice thereof to the Corporation within
seven days after receipt of the Corporation's notice. The Corporation shall
redeem all Class A Preferred as to which rights under this paragraph have been
exercised within 15 days after receipt of the initial demand for redemption.
(iii) If an Event of Noncompliance of the type described in
subparagraph 8A(iii) has occurred, all of the Class A Preferred then outstanding
shall be subject to immediate redemption by the Corporation (without any action
on the part of the holders of the Class A Preferred) at a price per Share equal
to the Liquidation Value thereof (plus all accrued and unpaid dividends
thereon). The Corporation shall immediately redeem all Class A Preferred upon
the occurrence of such Event of Noncompliance.
(iv) If any Event of Noncompliance exists, each holder of Class A
Preferred shall also have any other rights which such holder is entitled to
under any contract or agreement at any time and any other rights which such
holder may have pursuant to applicable law.
REGISTRATION OF TRANSFER.
The Corporation shall keep at its principal office a register for the
registration of Class A Preferred. Upon the surrender of any certificate
representing Class A Preferred at such place, the Corporation shall, at the
request of the record holder of such certificate, execute and deliver (at the
Corporation's expense) a new certificate or certificates in exchange there-for
representing in the aggregate the number of Shares represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall represent such number of Shares as is requested by the holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate, and dividends shall accrue on the Class A Preferred
represented by such new certificate from the date to which dividends have been
fully paid on such Class A Preferred represented by the surrendered certificate.
REPLACEMENT
Upon receipt of evidence reasonably satisfactory to the Corporation (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing Shares
of Class A Preferred, and in the case of any such loss, theft or destruction,
upon receipt of indemnity reasonably satisfactory to the Corporation (provided
52
that if the holder is a financial institution or other institutional investor
its own agreement shall be satisfactory), or, in the case of any such mutilation
upon surrender of such certificate, the Corporation shall (at its expense)
execute and deliver in lieu of such certificate a new certificate of like kind
representing the number of Shares of such class represented by such lost,
stolen, destroyed or mutilated certificate and dated the date of such lost,
stolen, destroyed or mutilated certificate, and dividends shall accrue on the
Class A Preferred represented by such new certificate from the date to which
dividends have been fully paid on such lost, stolen, destroyed or mutilated
certificate.
SECTION 4. DEFINITIONS
"Change in Ownership" means any sale, transfer or issuance or series of
sales, transfers and/or issuances of shares of the Corporation's capital stock
by the Corporation or any holders thereof which results in any Person or group
of Persons (as the term "group" is used under the Securities Exchange Act of
1934, as amended), other than the holders of Common Stock and Class A Preferred
as of the date of the Stockholders Agreement, owning capital stock of the
Corporation possessing the voting power (under ordinary circumstances) to elect
a majority of the Corporation's Board of Directors.
"Common Stock" means, collectively, the Corporation's Common Stock and
any capital stock of any class of the Corporation hereafter authorized which is
not limited to a fixed sum or percentage of par or stated value in respect to
the rights of the holders thereof to participate in dividends or in the
distribution of assets upon any liquidation, dissolution or winding up of the
Corporation.
"Common Stock Deemed Outstanding" means, at any given time, the sum of
(i) the number of shares of Common Stock then outstanding, (ii) the number of
shares of Common Stock into which all of the then outstanding Class A Preferred
is convertible as of immediately prior to such given time and (iii) the number
of shares of Common Stock which would be obtained through the exercise or
conversion of all other Options and Convertible Securities outstanding at such
time that are then fully exercisable or convertible under ordinary
circumstances.
"Conversion Stock" means shares of Common Stock; provided that if there
is a change such that the securities issuable upon conversion of the Class A
Preferred are issued by an entity other than the Corporation or there is a
change in the type or class of securities so issuable, then the term "Conversion
Stock" shall mean one share of the security issuable upon conversion of the
Class A Preferred if such security is issuable in shares, or shall mean the
smallest unit in which such security is issuable if such security is not
issuable in shares.
"Convertible Securities" means any stock or securities directly or
indirectly convertible into or exchangeable for Common Stock.
53
"Fundamental Change" means (a) any sale or transfer of more than 50% of
the assets of the Corporation and its Subsidiaries on a consolidated basis
(computed on the basis of the greater of (i) book value in accordance with
generally accepted accounting principles consistently applied or (ii) fair
market value determined in the reasonable good faith judgment of the
Corporation's Board of Directors) in any transaction or series of related
transactions (other than sales of inventory in the ordinary course of business)
and (b) any merger or consolidation to which the Corporation is a party, except
for (x) a merger which is effected solely to change the state of incorporation
of the Corporation or (y) a merger in which the Corporation is the surviving
corporation, the terms of the Class A Preferred are not changed or altered in
any respect, the Class A Preferred is not exchanged for cash, securities or
other property, and after giving effect to such merger, the holders of Common
Stock and Class A Preferred as of the date of the Stockholders Agreement shall
continue to own the Corporation's outstanding capital stock possessing the
voting power (under ordinary circumstances) to elect a majority of the
Corporation's Board of Directors.
"Junior Securities" means any capital stock or other equity securities
of the Corporation, except for the Class A Preferred.
"Liquidation Value" of any Share as of any particular date shall be
equal to $1.00.
"Market Price" of any security means the average of the closing prices
of such security's sales on all securities exchanges on which such security may
at the time be listed, or, if there has been no sales on any such exchange on
any day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the
Corporation and the holders of a majority of the Class A Preferred. If such
parties are unable to reach agreement within a reasonable period of time, such
fair value shall be determined by an independent appraiser experienced in
valuing securities jointly selected by the Corporation and the holders of a
majority of the Class A Preferred then outstanding. The determination of such
appraiser shall be final and binding upon the parties, and the Corporation shall
pay the fees and expenses of such appraiser.
"Options" means any rights, warrants or options to subscribe for or
purchase Common Stock or Convertible Securities.
54
"Person" means an individual, a partnership, a corporation, a limited
liability company, a limited liability, an association, a joint stock company, a
trust, a joint venture, an unincorporated organization and a governmental entity
or any department, agency or political subdivision thereof.
"Public Offering" means any offering by the Corporation of its capital
stock or equity securities to the public pursuant to an effective registration
statement under the Securities Act of 1933, as then in effect, or any comparable
statement under any similar federal statute then in force; provided that a
Public Offering shall not include an offering made in connection with a business
acquisition or combination or an employee benefit plan.
"Redemption Date" as to any Share means the applicable date specified
herein as being the date of redemption of such Share; provided that no such date
shall be a Redemption Date unless the Liquidation Value of such Share (plus all
accrued and unpaid dividends thereon and any required premium with respect
thereto) is actually paid in full on such date, and if not so paid in full, the
Redemption Date shall be the date on which such amount is fully paid.
"Stockholders Agreement" means the Stockholders Agreement, dated as of
November 30, 2000, by and among the Corporation and certain investors, as such
agreement may from time to time be amended in accordance with its terms.
"Subsidiary" means, with respect to any Person, any corporation, limited
liability company, partnership, association or other business entity of which
(i) if a corporation, a majority of the total voting power of shares of stock
entitled (without regard to the occurrence of any contingency) to vote in the
election of directors, managers or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more of the other
Subsidiaries of that Person or a combination thereof, or (ii) if a limited
liability company, partnership, association or other business entity, a majority
of the partnership or other similar ownership interest thereof is at the time
owned or controlled, directly or indirectly, by any Person or one or more
Subsidiaries of that person or a combination thereof. For purposes hereof, a
Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be allocated a majority of limited liability
company, partner-ship, association or other business entity gains or losses or
shall be or control the managing general partner of such limited liability
company, partnership, association or other business entity.
AMENDMENT AND WAIVER.
No amendment, modification or waiver shall be binding or effective with
respect to any provision of Sections 1 to 13 hereof without the prior written
consent of the holders of a majority of the Class A Preferred outstanding at the
time such action is taken; provided that no change in the terms hereof may be
accomplished by merger or consolidation of the Corporation
55
with another corporation or entity unless the Corporation has obtained the prior
written consent of the holders of a majority of the Class A Preferred then
outstanding; and provided further that no amendment, modification or waiver with
respect to any provision of paragraph 6B shall be binding or effective without
the prior written consent of the holders of at least two-thirds of the Class A
Preferred outstanding at the time such action is taken.
NOTICES.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Corporation, at its principal executive offices and
(ii) to any stockholder, at such holder's address as it appears in the stock
records of the Corporation (unless otherwise indicated by any such holder).
V.
A. The liability of the directors of the Corporation for monetary
damages shall be eliminated to the fullest extent under applicable law.
B. The Corporation is authorized to provide indemnification of agents
(as defined in Section 317 of the CGCL) for breach of duty to the Corporation
and its shareholders through bylaw provisions or through agreements with the
agents, or through shareholder resolutions, or otherwise, in excess of the
indemnification otherwise permitted by Section 317 of the CGCL, subject, at any
time or times that the Corporation is subject to Section 2115(b) of the CGCL, to
the limits on such excess indemnification set forth in Section 204 of the CGCL.
C. Any repeal or modification of this Article V shall only be
prospective and shall not affect the rights under this Article V in effect at
the time of the alleged occurrence of any action or omission to act giving rise
to liability.
* * * *
FOUR: This Amended and Restated Certificate of Incorporation has been
duly approved by the Board of Directors of the Corporation.
FIVE: This Amended and Restated Certificate of Incorporation has been
duly adopted in accordance with the provisions of Sections 228, 242 and 245 of
the DGCL by the Board of Directors and the stockholders of the Corporation. The
total number of outstanding shares entitled to vote or act by written consent
was 720,000 shares of Common Stock. A majority of the outstanding shares of
Common Stock approved this Restated Certificate of Incorporation by written
consent in accordance with Section 228 of the DGCL and written notice of such
was given by the Corporation in accordance with said Section 228.
56
IN WITNESS WHEREOF, Chahaya Optronics, Inc. has caused this Amended and
Restated Certificate of Incorporation to be signed by its President this _______
day of November, 2000.
CHAHAYA OPTRONICS, INC.
Signature:
-------------------------------
Print Name:
------------------------------
Title:
-----------------------------------
57
EXHIBIT B
--------------------------------------------------------------------------------
CONTRIBUTION AGREEMENT
between:
KOMAG, INCORPORATED,
a Delaware corporation;
and
CHAHAYA OPTRONICS, INC.
a Delaware corporation
-----------------------------
Dated as of November 30, 2000
-----------------------------
--------------------------------------------------------------------------------
58
CONTRIBUTION AGREEMENT
THIS CONTRIBUTION AGREEMENT (the "Agreement") is entered into as of
November 30, 2000 (the "Effective Date"), by and between Komag, Incorporated, a
Delaware corporation ("Komag"), and Chahaya Optronics, Inc., a Delaware
corporation ("Chahaya"). Komag and Chahaya may be referred to herein
individually as "Party" and collectively as "Parties."
WHEREAS, pursuant to a Stock Purchase and Contribution Agreement, dated
as of November 27, 2000 by and among Chahaya, Komag and certain investors (the
"Stock Purchase Agreement"), and certain agreements attached hereto, Komag has
agreed to make the contributions and commitments to Chahaya described in this
Agreement in consideration of the issuance of Class A Convertible Preferred
Stock to Komag as described in the Stock Purchase Agreement.
NOW THEREFORE, the Parties hereby agree as follows:
SECTION 5. TRANSFER OF ASSETS.
5.A. TRANSFER OF ASSETS. Komag hereby transfers, assigns, conveys and
delivers to Chahaya all rights, title and interest in and to the tangible
personal property described in the ▇▇▇▇ of Sale attached hereto as EXHIBIT A
(the "Transferred Tangible Assets") and the intellectual property and related
patent and other intellectual property rights described in EXHIBIT B (the
"Transferred IP") and any and all goodwill associated with the foregoing. Komag
and its subsidiary, HMT Technology Corporation ("HMT"), are concurrently
executing and delivering the ▇▇▇▇ of Sale to further evidence and implement the
foregoing transfer of the Transferred Tangible Assets. The Transferred IP and
the Transferred Tangible Assets are collectively referred to herein as the
"Transferred Assets." Notwithstanding the foregoing, nothing in this Agreement
shall be construed as an attempt to assign to Chahaya any license or permit
which is by law or by its terms nonassignable, or the assignment of which would
constitute a violation of any Legal Requirement. However, the Parties agree to
use commercially reasonable efforts to cooperate both before and after the
Closing, in a mutually agreeable manner, to provide Chahaya with the benefit of
any such license or permit or to enable Chahaya to obtain a similar license or
permit.
5.B. FURTHER ACTIONS. Komag agrees to execute any other assignments
and instruments as may from time to time be reasonably requested by Chahaya to
implement, confirm or assure the foregoing contribution of the Transferred
Assets and to enable Chahaya to secure, maintain and defend patent and other
intellectual property rights relating thereto.
5.C. NO ASSUMPTION OF LIABILITIES. It is expressly understood and agreed that
Chahaya will not assume any contract or other obligation of Komag or become
liable for any Liability of Komag.
SECTION 6. FACILITIES SHARING AND SERVICES AGREEMENT. Komag agrees to provide
Chahaya with up to 60,000 square feet of space in Komag facilities located in
California and Malaysia on a rent free basis to support Chahaya's operations in
the fiber optics components, systems and subsystems manufacturing business (the
"Fiber Optics Business") until December 31, 2002 , as described in the
Facilities Sharing and Services
59
Agreement in the form attached hereto as EXHIBIT C, which is being executed and
delivered by the Parties concurrently with this Agreement.
SECTION 7. MANUFACTURING SERVICES. To facilitate and support the orderly and
efficient wind down of production of thin-film media by Komag in California and
the launch of Chahaya's Fiber Optics Business, Komag agrees to procure from
Chahaya and Chahaya agrees to provide to Komag thin-film media manufacturing
services as described in the Manufacturing Services Agreement in the form
attached hereto as EXHIBIT D, which is being executed and delivered by the
Parties concurrently with this Agreement.
SECTION 8. TRANSFER OF EMPLOYEES. The Parties intend that a number of people
currently employed by Komag will become employees of Chahaya and will be
employed by Chahaya in performing its obligations under the Manufacturing
Services Agreement and in pursuing its Fiber Optics Business. Komag (a) will use
commercially reasonable efforts to cooperate with Chahaya to encourage employees
of Komag mutually identified by Komag and Chahaya to accept employment with
Chahaya, and to facilitate the transfer of employment with respect to those
employees who accept employment with Chahaya (collectively, the "Transferred
Employees"), and (b) will agree to reimburse Chahaya for severance liabilities
to Transferred Employees who are subsequently terminated by Chahaya prior to a
specified date, in each case in accordance with the terms and conditions of the
Employee Matters Agreement in the form attached hereto as EXHIBIT E, which is
being executed and delivered by the Parties concurrently with this Agreement.
SECTION 9. LICENSE GRANT. Komag, on behalf of itself and its subsidiaries,
hereby grants to Chahaya a perpetual, non-exclusive royalty free right and
license under any inventions, software, trade secrets, and know-how and any
Intellectual Property Rights therein owned or controlled by Komag on the date
hereof, or at any time prior to December 31, 2000 (the "Licensed Intellectual
Property"), to make, have made, use, import, offer for sale and sell (i)
products for Komag, and (ii) fiber optics components, systems and subsystems.
Such license shall include the right to grant sublicenses under the Licensed
Intellectual Property other than the patent rights of Komag and its
subsidiaries, as to which sublicenses may not be granted.
SECTION 10. RESTRICTION ON COMPETITION. In connection with the transfer of the
Transferred Assets relating to the Fiber Optics Business to Chahaya, and for
good and valuable consideration, Komag agrees that for the period beginning on
the Effective Date and ending on December 31, 2004 (the "Noncompetition Period")
Komag shall not, directly or indirectly through a subsidiary, without the prior
written consent of Chahaya, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of any
business or enterprise engaged in any business which is competitive with the
Fiber Optics Business which will be conducted by Chahaya after the Closing,
within each of the geographical units which are listed below (the "Territory").
Generally, Territory means any foreign country or territory in which the
business of Chahaya is carried on, or in which Chahaya intends to carry on its
Fiber Optics Business, and, more specifically, includes all states and
territories of the United States of America, and all states, provinces or
territories of Malaysia. Komag expressly acknowledges and agrees that any breach
or threatened breach of this Article 6 may cause immediate and irreparable harm
to Chahaya which may not be adequately compensated
2.
60
by damages. Komag therefor agrees that in the event of such breach or threatened
breach and in addition to any remedies available at law, Chahaya shall have the
right to secure equitable and injunctive relief, without bond, in connection
with such a breach or threatened breach.
SECTION 11. REPRESENTATIONS AND WARRANTIES OF KOMAG. Komag represents and
warrants, to and for the benefit of Chahaya, as follows:
11.A. DUE ORGANIZATION; AUTHORITY. Komag is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Komag has all necessary corporate power and authority to enter into
this Agreement and perform its obligations hereunder. The execution, delivery
and performance of this Agreement have been duly authorized by all necessary
corporate action on the part of Komag. This Agreement constitutes the legal,
valid and binding obligation of Komag, enforceable against Komag in accordance
with its terms.
11.B. NON-CONTRAVENTION; CONSENTS. The execution and delivery by
Komag of this Agreement and the performance by Komag of its obligations
hereunder will not directly or indirectly (with or without notice or lapse of
time): (a) in any material respect contravene, conflict with or result in a
violation of, or give any Governmental Body or other Person the right to
challenge any of this Agreement or to exercise any remedy or obtain any relief
under, any legal requirement or any Order to which Komag, or any of the
Transferred Assets, is subject; or (b) contravene, conflict with or result in a
violation or breach of, or result in a default under, any provision of any
contract or arrangement that Komag has filed or is required to file with the SEC
pursuant to the Securities Exchange Act of 1934, as amended, to which Komag is a
party or by which it is bound. Komag is not and will not be required to make any
filing with or give any notice to, or to obtain any Consent from, any Person in
connection with the execution, delivery and performance of this Agreement.
11.C. THIRD PARTY CLAIMS/ACTIONS. To Komag's knowledge, there are no
adverse third party actions or claims pending against Komag in any court or by
or before any Governmental Entity with respect to the Transferred Assets, and no
such actions or claims have been served on Komag. To Komag's knowledge, there
are no other actions, suits, proceedings, claims or investigations pending or
threatened against Komag, nor has Komag received notice of any of the foregoing,
with respect to the transactions contemplated hereby or materially affecting the
value of the Transferred Assets or which, if adversely determined, would prevent
Komag from consummating the transactions contemplated hereby.
11.D. TAX LIABILITIES. Komag has duly paid all taxes and other
governmental charges, if any, due and payable based on Komag's ownership or use
of the Transferred Assets prior to the date hereof. Neither the Internal Revenue
Service nor any other taxing authority has in the past asserted or is now
asserting, or to Komag's knowledge, is threatening to assert against Komag, any
deficiency or claim for additional taxes or interest thereon or penalties in
connection therewith with respect to the Transferred Assets.
11.E. THIRD PARTY CONTRACTS. There are no outstanding contracts,
leases, instruments, obligations, commitments, understandings or agreements,
whether written or oral, to which Komag is a party and to which the Transferred
Assets will be subject subsequent to the
3.
61
Closing. Komag has no agreement with any third party that will obligate Chahaya
to make any payments or perform any other obligations to any third parties with
respect to the Transferred Assets.
11.F. TITLE TO TRANSFERRED ASSETS. Komag or HMT owns all right, title
and interest in and to the Transferred Assets, free and clear of any security
interests, claims, liens and other encumbrances and has all necessary right and
authority to transfer ownership of the Transferred Assets to Chahaya as
contemplated hereby. Without limiting the foregoing, Komag represents and
warrants that it has not granted, transferred, conveyed or assigned to any party
other than Chahaya any interest in or license to the Transferred IP. Upon
execution and delivery of this Agreement and the ▇▇▇▇ of Sale, Chahaya will
obtain and hold valid title to the Transferred Assets, free and clear of any
security interests, claims, liens and other encumbrances. All of the tangible
Transferred Assets are, in all material respects, in good operating condition
and state of repair (ordinary wear and tear excepted). To the knowledge of Komag
the Transferred IP and the reproduction, use and distribution thereof do not
infringe, misappropriate or violate the patents, copyright, trade secret rights
or other intellectual property or proprietary rights of any person or entity.
Komag has not received any communication from any third party alleging any such
infringement, misappropriation or violation
11.G. SUFFICIENCY OF TRANSFERRED ASSETS. The Transferred Assets and
the Licensed Intellectual Property constitute in all material respects all of
the assets currently used by Komag for the Fiber Optics Business.
11.H. ORDERS, WRITS. Neither the execution and delivery of this
Agreement by Komag nor the consummation of the transactions contemplated hereby
by Komag will (i) conflict with the certificate of incorporation or by-laws of
Komag; (ii) violate any order, writ, injunction or decree applicable to Komag;
(iii) violate any provision of any material laws, rules or regulations to which
Komag is subject; or (iv) violate, conflict with or result in any breach of or
default under any material mortgage, indenture, contract, agreement, license,
permit, instrument or trust to which Komag is a party or by which its properties
are bound.
SECTION 12. REPRESENTATIONS AND WARRANTIES OF CHAHAYA. Chahaya represents and
warrants to Komag as follows:
12.A. DUE ORGANIZATION; AUTHORITY. Chahaya is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Chahaya has all necessary corporate power and authority to enter into
this Agreement and perform its obligations hereunder. The execution, delivery
and performance of this Agreement have been duly authorized by all necessary
corporate action on the part of Chahaya. This Agreement constitutes the legal,
valid and binding obligation of Chahaya, enforceable against Chahaya in
accordance with its terms.
12.B. ORDERS, WRITS. Neither the execution and delivery of this
Agreement by Chahaya nor the consummation of the transactions contemplated
hereby by Chahaya will (i) conflict with the certificate of incorporation or
by-laws of Chahaya; (ii) violate any order, writ, injunction or decree
applicable to Chahaya; (iii) violate any provision of any material laws, rules
or regulations to which Chahaya is subject; or (iv) violate, conflict with or
result in any breach of
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or default under any material mortgage, indenture, contract, agreement, license,
permit, instrument or trust to which Chahaya is a party or by which its
properties are bound.
12.C. NON-CONTRAVENTION; CONSENTS. The consummation or performance by
Chahaya of this Agreement will not directly or indirectly (with or without
notice or lapse of time): (a) contravene, conflict with or result in a violation
of, or give any Governmental Body or other Person the right to challenge this
Agreement or to exercise any remedy or obtain any relief under any Legal
Requirement or any Order to which Chahaya is subject; or (b) contravene,
conflict with or result in a violation or breach of, or result in a default
under, any provision of any contract to which Chahaya is a party or by which
Chahaya is bound. Chahaya is not and will not be required to make any filing
with or give any notice to, or to obtain any Consent from, any Person in
connection with the consummation or performance by Chahaya of this Agreement.
SECTION 13. INDEMNIFICATION.
Komag and Chahaya each agree to defend, indemnify and hold harmless the
other from and against any and all losses, damages, claims, liabilities,
obligations and expenses (including reasonable attorneys' fees), which the
indemnified Party may suffer or incur as a result of any breach of any
representation, warranty or covenant by the indemnifying Party. Komag further
agrees to so indemnify and hold Chahaya harmless from and against any
Liabilities of Komag; and Chahaya further agrees to so indemnify and hold Komag
harmless from and against any Liabilities of Chahaya arising from Chahaya's
conduct of the Fiber Optics Business or the use by Chahaya of the Transferred
Assets or the Licensed Intellectual Property. It shall be a condition to the
foregoing indemnification obligations that the indemnified Party (a) give the
indemnifying Party prompt written notice of any claim or action in respect of
which indemnification will be sought hereunder, (b) give the indemnifying Party
sole control over the defense and settlement of such claim or action; provided,
however, that in the event that the indemnified Party reasonably determines in
good faith that such Party's interests with respect to such claim or action
cannot appropriately be represented by the indemnifying Party, such indemnified
Party shall have the right to assume control of the defense of such claim or
action (or applicable portion thereof) and to have such indemnified Party's
reasonable expenses reimbursed promptly with respect to such claim; and
provided, further, that in the event that the indemnifying Party, within a
reasonable time after notice of any such claim or action, fails to defend the
indemnified Party, such indemnified Party (upon further notice to the
indemnifying Party) will have the right to undertake the defense of such claim
or action for the account of the indemnifying Party and to have such indemnified
Party's reasonable expenses reimbursed promptly with respect to such claim or
action, and (c) cooperate with the indemnifying Party, at the indemnifying
Party's expense. In the defense and settlement of such claim or action. The
indemnifying Party shall not be liable for any settlement agreed to without its
prior written consent, not to be unreasonably withheld.
SECTION 14. CONFIDENTIALITY.
14.A. By virtue of the Stock Purchase Agreement, this Agreement and
the agreements attached hereto (the "Related Agreements"), each Party may be
exposed to or provided with certain confidential and proprietary information of
the other Party ("Confidential Information"). Confidential Information shall be
designated as confidential in writing or, if disclosed orally, designated as
confidential at the time of disclosure.
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14.B. Each Party will protect the other's Confidential Information
from unauthorized dissemination and use with the same degree of care that each
such Party uses to protect its own like information. No Party will use another's
Confidential Information for purposes other than those expressly permitted under
this Agreement and the Related Agreements. No Party will disclose to third
parties another's Confidential Information without prior written consent of such
other Party, except as required by law or by a Governmental Body, provided that,
the Party that is so required to disclose the other Party's Confidential
Information shall use reasonable efforts to notify the other Party in advance of
such disclosure and to limit, through protective order or otherwise, the extent
of such disclosure.
14.C. The term "Confidential Information" shall not be deemed to
include information which: (i) is now, or hereafter becomes, through no act or
failure to act on the part of Receiving Party, generally known or available;
(ii) is known by the Receiving Party at the time of receiving such information
as evidenced by its records; (iii) is hereafter furnished to the Receiving Party
by a third party, as a matter of right and without restriction or disclosure; or
(iv) is the subject of a written permission to disclose provided by the
Disclosing Party.
14.D. The Parties expressly acknowledge and agree that any breach or
threatened breach of this Article 10 may cause immediate and irreparable harm to
the Disclosing Party which may not be adequately compensated by damages. Each
Party therefore agrees that in the event of such breach or threatened breach and
in addition to any remedies available at law, the Disclosing Party shall have
the right to secure equitable and injunctive relief, without bond, in connection
with such a breach or threatened breach.
SECTION 15. DEFINITIONS OF CERTAIN TERMS.
11.1 CONSENT. "Consent" shall mean any approval, consent, ratification,
permission, waiver or authorization (including any Governmental Authorization).
11.2 CONTRACT. "Contract" shall mean any written, oral, implied or other
agreement, contract, understanding, arrangement, instrument, note, guaranty,
indemnity, representation, warranty, deed, assignment, power of attorney,
certificate, purchase order, work order, insurance policy, benefit plan,
commitment, covenant, assurance or undertaking of any nature.
11.3 ENTITY. "Entity" shall mean any corporation (including any
non-profit corporation), general partnership, limited partnership, limited
liability partnership, limited liability company, joint venture, estate, trust,
cooperative, foundation, society, political party, union, company (including any
limited liability company or joint stock company), firm or other enterprise,
association, organization or entity.
11.4 GOVERNMENTAL AUTHORIZATION. "Governmental Authorization" shall mean
any: (a) permit, license, certificate, franchise, concession, approval, consent,
ratification, permission, clearance, confirmation, endorsement, waiver,
certification, designation, rating, registration, qualification or authorization
issued, granted, given or otherwise made available by or under the authority of
any Governmental Body or pursuant to any Legal Requirement; or (b) right under
any Contract with any Governmental Body.
11.5 GOVERNMENTAL BODY. "Governmental Body" shall mean any: (a) nation,
principality, state, commonwealth, province, territory, county, municipality,
district or other
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jurisdiction of any nature; (b) federal, state, local, municipal, foreign or
other government; (c) governmental or quasi-governmental authority of any nature
(including any governmental division, subdivision, department, agency, bureau,
branch, office, commission, council, board, instrumentality, officer, official,
representative, organization, unit, body or Entity and any court or other
tribunal); (d) multi-national organization or body; or (e) individual, Entity or
body exercising, or entitled to exercise, any executive, legislative, judicial,
administrative, regulatory, police, military or taxing authority or power of any
nature.
11.6 INTELLECTUAL PROPERTY RIGHTS. "Intellectual Property Rights" shall
mean worldwide, patents and all applications, continuations,
continuations-in-part and extensions with respect thereto; copyrights and all
other right of authorship, including all modifications, enhancements and
improvements, and all applications, registrations and renewals with respect
thereto; trade secrets; trademarks, service marks, logos and product names; and
all other intellectual property rights and all rights to ▇▇▇ for and remedies
against past, present and future infringements or misappropriations of the
foregoing.
11.7 LEGAL REQUIREMENT. "Legal Requirement" shall mean any federal,
state, local, municipal, foreign or other law, statute, legislation,
constitution, principle of common law, resolution, ordinance, code, edict,
decree, proclamation, treaty, convention, rule, regulation, ruling, directive,
pronouncement, requirement, specification, determination, decision, opinion or
interpretation issued, enacted, adopted, passed, approved, promulgated, made,
implemented or otherwise put into effect by or under the authority of any
Governmental Body.
11.8 LIABILITY. "Liability" shall mean any debt, obligation, duty or
liability of any nature (including any unknown, undisclosed, unmatured,
unaccrued, unasserted, contingent, indirect, conditional, implied, vicarious,
derivative, joint, several or secondary liability), regardless of whether such
debt, obligation, duty or liability would be required to be disclosed on a
balance sheet prepared in accordance with generally accepted accounting
principles and regardless of whether such debt, obligation, duty or liability is
immediately due and payable.
11.9 ORDER. "Order" shall mean any: (a) order, judgment, injunction,
edict, decree, ruling, pronouncement, determination, decision, opinion, verdict,
sentence, subpoena, writ or award issued, made, entered, rendered or otherwise
put into effect by or under the authority of any court, administrative agency or
other Governmental Body or any arbitrator or arbitration panel; or (b) Contract
with any Governmental Body entered into in connection with any Proceeding.
15.J. PERSON. "Person" shall mean any individual, Entity or
Governmental Body.
15.K. PROCEEDING. "Proceeding" shall mean any action, suit,
litigation, arbitration, proceeding (including any civil, criminal,
administrative, investigative or appellate proceeding and any informal
proceeding), prosecution, contest, hearing, inquiry, inquest, audit, examination
or investigation commenced, brought, conducted or heard by or before, or
otherwise involving, any Governmental Body or any arbitrator or arbitration
panel.
SECTION 16. MISCELLANEOUS PROVISIONS.
16.A. SURVIVAL OF REPRESENTATIONS.
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(i) Any other provision hereof to the contrary
notwithstanding, the parties agree that the representations and warranties of
the Parties contained in Sections 7.3, 7.4, 7.6 and 7.8 of this Agreement shall
survive in perpetuity after the Closing. All other representations and
warranties contained in this Agreement and in any certificates delivered
pursuant to this Agreement shall survive after Closing for a period of two (2)
years regardless of any investigation made by either party prior to the date
hereof or prior to the Closing.
(ii) Except for the representations and warranties set forth
in this Agreement, NEITHER KOMAG NOR CHAHAYA MAKES ANY OTHER REPRESENTATION OR
WARRANTY OF ANY KIND, WHETHER EXPRESS, IMPLIED, STATUTORY, OR OTHERWISE,
INCLUDING BUT NOT LIMITED TO ANY IMPLIED WARRANTIES OR CONDITIONS OF
MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE. IN PARTICULAR, KOMAG MAKES
NO REPRESENTATION OR WARRANTY CONCERNING THE VALUE OR USEFULNESS OF THE
TRANSFERRED ASSETS OR THE LICENSED INTELLECTUAL PROPERTY FOR THE FIBER OPTICS
BUSINESS OR THE VALIDITY OR ENFORCEABILITY OF THE INTELLECTUAL PROPERTY RIGHTS
INCLUDED THEREIN. KOMAG SHALL NOT BE LIABLE FOR ANY DIRECT OR INDIRECT DAMAGES
ARISING IN ANY WAY OUT OF CHAHAYA'S USE OF THE TRANSFERRED ASSETS OR SUCH
LICENSED INTELLECTUAL PROPERTY, INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOST
PROFIT, LOST REVENUE, COST OF REPLACEMENT OR INFRINGEMENT OF ANY THIRD PARTY
INTELLECTUAL PROPERTY RIGHTS.
16.B. ASSIGNMENT. 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. This Agreement may not be
assigned by either party without the prior written consent of the other party;
provided; however, that Chahaya shall have the right to assign its interest in
this Agreement without the written consent of Komag, to any successor in
interest to Chahaya's business that utilizes the Transferred Assets. 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.
16.C. GOVERNING LAW. This Agreement shall be governed by and
construed under the laws of the State of California (excluding rules governing
conflicts of laws).
16.D. 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.
16.E. NOTICES. All notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party; (b) when received when sent by facsimile, with a confirmation receipt, at
the address and number set forth below; (c) three business days after deposit in
the U.S. mail with first class or certified mail receipt requested postage
prepaid and addressed to the other party as set forth below; or (d) the next
business day after deposit with a national overnight delivery service, postage
prepaid. addressed to the parties as set forth below
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with next business day delivery guaranteed, provided that the sending party
receives a confirmation of delivery from the delivery service provider.
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If to Chahaya:
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attention: President
Telephone: (510)
Facsimile: (510)
With a copy to:
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Komag:
Komag, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 7.4 by giving the other party written
notice of the new address in the manner set forth above.
16.F. ATTORNEY'S FEES. Each party shall bear its own expenses in
connection with the negotiation, execution and delivery of this Agreement. If
any action at law or in equity is necessary to enforce or interpret the terms of
this Agreement, the prevailing party shall be
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entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
16.G. ENFORCEABILITY. 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.
16.H. ENTIRE AGREEMENT. This Agreement, the Exhibits hereto and the
documents referred to herein constitute the entire agreement among the parties
and no party shall be liable or bound to any other party in any manner by any
warranties, representations or covenants except as specifically set forth herein
or therein.
12.9 AMENDMENT. No amendment of this Agreement shall be binding unless
it is in writing and is signed by authorized representatives of both Parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
CHAHAYA OPTRONICS, INC. KOMAG, INCORPORATED
By: By:
--------------------------------- ---------------------------------
Title: Title:
------------------------------ ------------------------------
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Address: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
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EXHIBIT A
▇▇▇▇ OF SALE
Komag, Incorporated, a Delaware corporation, ("Komag"), and its
subsidiary, HMT Technology Corporation, a Delaware corporation, for good and
valuable consideration given pursuant to the Stock Purchase and Contribution
Agreement, dated as of November 27, 2000, by and between Komag, Chahaya
Optronics, Inc., a Delaware corporation ("Chahaya") and certain investors, and
the Contribution Agreement, dated as of November 30, 2000, by and between Komag
and Chahaya, does hereby assign, transfer, convey and deliver to Chahaya all of
Komag's right, title and interest in and to the tangible personal property (the
"Transferred Tangible Assets") described on EXHIBIT A hereto.
Date: November 29, 2000
KOMAG, INCORPORATED, A DELAWARE CORPORATION
By:
-----------------------------------------
Title: Chief Executive Officer, President
-------------------------------------
HMT TECHNOLOGY CORPORATION, A DELAWARE CORPORATION
By:
-----------------------------------------
Title: Chief Executive Officer, President
-------------------------------------
71
STATE OF CALIFORNIA )
) ss.
COUNTY OF santa ▇▇▇▇▇ )
I certify that I know or have satisfactory evidence that Thian Hoo Tan
is the person who appeared before me, and said person acknowledged that said
person signed this ▇▇▇▇ of Sale, on oath stated that said person was authorized
to execute this ▇▇▇▇ of Sale and acknowledged it as the Chief Executive Officer
and President of Komag, Incorporated to be the free and voluntary act of such
entity for the uses and purposes mentioned in this ▇▇▇▇ of Sale.
Dated this 29th day of November, 2000.
-----------------------------------------
(Signature of Notary Public)
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------------
(legibly Print or Stamp Name of Notary)
Notary public in and for the State of California
My appointment expires April 18, 2001
2.
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EXHIBIT B
TRANSFERRED IP
Any and all inventions, trade secrets and know-how developed or acquired by
Komag, Incorporated ("Komag") in the course of its activities in the Fiber
Optics Business, including but not limited to, know-how designed and developed
by Komag for one-channel to 48-channel fiber array connectors consisting of
V-grooves etched into silicon to ensure accurate positioning of active fiber
cores, fiber handling for proper alignment, and bonding techniques to ensure a
consistent and reliable assembly. Such know-how includes tooling concepts and
processes to mechanize and automate assembly processes.
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EXHIBIT C
FACILITIES SHARING AND SERVICES AGREEMENT
THIS FACILITIES SHARING AND SERVICES AGREEMENT (the "Agreement") is
entered into as of November 30, 2000 (the "EFFECTIVE DATE"), by and between
KOMAG, INCORPORATED, a Delaware corporation ("KOMAG"), and CHAHAYA OPTRONICS,
INC., a Delaware corporation ("CHAHAYA").
WHEREAS, this Agreement is entered into in connection with the issuance
of Series A Preferred Stock to Komag and a group of investors under that certain
Stock Purchase and Contribution Agreement dated as of November 21, 2000 and in
accordance with the requirements of Section 2 of the Contribution Agreement of
even date herewith by and between the parties.
NOW, THEREFORE, the parties hereby agree as follows:
SECTION 17. FACILITIES.
17.A. SPACE COMMITMENT. During the Term of this Agreement (as defined
below), Komag agrees to provide Chahaya and its affiliates with access to and
the exclusive right to occupy and use in the conduct of its fiber optics
components, systems and subsystems manufacturing business a combined aggregate
of up to 60,000 square feet of space in Komag's owned or leased facilities in
Fremont, California and Malaysia (the "Chahaya Space"). The initial allocation
of space and subsequent adjustments shall be determined by mutual agreement from
time to time between the parties, provided that at least fifty percent (50%) of
the space shall be in Malaysia unless otherwise agreed. Komag agrees to use
reasonable efforts to accommodate any specific space requests of Chahaya that
are reasonably needed for Chahaya to meet its business objectives. Komag may
from time to time relocate the Chahaya Space upon at least ninety (90) days
written notice to Chahaya; provided, however, that Komag shall pay all
relocation expenses incurred by Chahaya. The Chahaya Space will be provided to
Chahaya free of any rent or other charges.
17.B. FACILITIES SERVICES. Komag shall be responsible for all normal
basic facilities operations, including but not limited to utilities, telephone
service, network access, insurance, security, maintenance and janitorial
services. Such services will be provided at no cost to Chahaya.
17.C. COMMON SPACE. It is understood that the parties may share door
access, reception, cafeteria, parking and other common areas. Chahaya agrees to
abide by the reasonable rules and procedures of Komag and the rules and
procedures of its landlord, if applicable, in the use of such spaces, which will
be provided free of any rent or other charge to Chahaya.
17.D. LEASE COMPLIANCE. Chahaya agrees to comply with the
requirements of any lease agreement between Komag and its lessor governing the
use of applicable space, as
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necessary to prevent a breach of such lease agreement. Komag agrees to secure
any required landlord consent under any such lease agreement.
17.E. ADDITIONAL DOCUMENTS. If requested by Komag, its landlord or
its lenders, Chahaya shall execute such other agreements, instruments and
acknowledgements as any of them may reasonably request, to the extent the
foregoing documents are necessary to carry out the transaction contemplated in
this Agreement. Komag agrees to provide similar documentary accommodations if
and as reasonably requested by Chahaya
SECTION 18. OTHER SERVICES.
18.A. EQUIPMENT. During the Term, Komag agrees to make available to
Chahaya for use in connection with its business access to specialized testing
equipment and Komag's computing infrastructures that Komag presently maintains
for its own business. Such access and use will be provided in a manner that does
not disrupt or interfere with the ongoing operations of Komag but at no charge
to Chahaya.
18.B. CORPORATE. Komag also agrees to provide at no charge to
Chahaya, reasonable transitional corporate and administrative services in such
areas as accounting and human resources during the period reasonably necessary
(not to exceed six (6) months) for Chahaya to establish its own corporate
infrastructure capabilities. Such services to be provided will be as agreed to
from time to time by the parties.
SECTION 19. TERM.
This Agreement will become effective on the Effective Date and will
continue in effect until December 31, 2002 (the "Term").
SECTION 20. NO WARRANTY.
All services provided by Komag hereunder are provided as is, with no
warranty, express, implied or statutory, of any kind. Except for the express
obligations undertaken by Komag herein, Komag disclaims all warranties as to the
nature or quality of such services. Chahaya assumes sole responsibility for
determining whether such services are appropriate for Chahaya's requirements.
KOMAG SHALL NOT BE RESPONSIBLE FOR ANY SPECIAL, INCIDENTAL, CONSEQUENTIAL,
INDIRECT OR PUNITIVE DAMAGES ARISING IN ANY WAY OUT OF THE USE OF SUCH SERVICES,
INCLUDING, WITHOUT LIMITATION, DAMAGES OR LOST PROFIT, LOST REVENUE, LOSS OF
USE, LOSS OF DATA, COSTS OF RECREATING LOST DATA, THE COST OF SUBSTITUTE
SERVICES, OR CLAIMS BY ANY THIRD PARTY.
SECTION 21. GENERAL.
21.A. GOVERNING LAW. This Agreement will be governed and construed in
accordance with the laws of the State of California without giving effect to
conflict of laws principles.
21.B. INDEPENDENT CONTRACTORS. The parties are independent
contractors, and no agency, partnership, franchise, joint venture or employment
relationship is intended or created
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by this Agreement. Neither party shall make any warranties or representations on
behalf of the other party.
21.C. ASSIGNMENT AND SUCCESSORS. Neither party may assign its rights
or delegate its duties hereunder (except to an affiliated company, or to a
successor in interest in the event of a merger, sale of assets of the business
to which this Agreement is related, or consolidation) without the other party's
prior written consent, and any purported attempt to do so is null and void.
Subject to the above, this Agreement will bind and inure to the successors and
assigns of Komag and Chahaya.
21.D. SEVERABILITY AND SEPARABILITY. If any provision of this
Agreement shall be declared or held invalid or unenforceable by a court of
competent jurisdiction, such invalidity or unenforceability shall not invalidate
or render unenforceable the entirety of this Agreement, but rather, unless a
failure of consideration would result, the entirety of this Agreement shall be
construed as if not containing the particular invalid or unenforceable
provision, and the rights and obligations of the parties shall be construed and
enforced accordingly. No term or condition shall be dependent upon any other
term or condition unless so expressed herein.
21.E. FORCE MAJEURE. Neither party shall be liable to the other
party, its members, customers or any other third party for any failure of
performance hereunder due to causes beyond its reasonable control, including,
but not limited to: acts of God, fire, explosion, vandalism, cable cut, storm or
other similar catastrophes; any law, order, regulation, direction, action or
request of the United States government, or of any other government, including
state and local governments having jurisdiction over either of the parties, or
of any department, agency, commission, court, bureau, corporation or other
instrumentality of any one or more of said governments, or of any civil or
military authority; national emergencies; insurrections; riots; wars; or
strikes, lock outs, work stoppages or other labor difficulties. If any such
event shall occur, Komag agrees to use commercially reasonable efforts to
minimize the effect of such event on its performance under this Agreement and to
fully restore its ability to perform as quickly as possible and, if such event
has also affected Komag's other operations, to give no greater priority to its
own affected operations than it gives to Chahaya's.
21.F. NOTICES. All notices, requests, waivers and other
communications made pursuant to this Agreement shall be in writing and shall be
conclusively deemed to have been duly given (a) when hand delivered to the other
party; (b) when received when sent by facsimile, with a confirmation receipt, at
the address and number set forth below; (c) three business days after deposit in
the U.S. mail with first class or certified mail receipt requested postage
prepaid and addressed to the other party as set forth below; or (d) the next
business day after deposit with a national overnight delivery service, postage
prepaid. addressed to the parties as set forth below with next business day
delivery guaranteed, provided that the sending party receives a confirmation of
delivery from the delivery service provider.
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If to Chahaya:
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attention: President
Telephone: (510)
Facsimile: (510)
With a copy to:
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Komag:
Komag , Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 4.5 by giving the other party written
notice of the new address in the manner set forth above.
21.G. ENTIRE AGREEMENT. This Agreement sets forth the entire
understanding and agreement of the parties, and supersedes any and all oral or
written agreements or
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understandings between the parties, as to the subject matter of the Agreement.
This Agreement may be changed only by a writing signed by both parties.
21.H. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
any number of counterpart copies, each of which shall be deemed an original, but
which taken together shall constitute a single instrument. The parties expressly
authorize the use of facsimile counterparts, as a valid method of execution;
however, the parties agree to cooperate in good faith to provide each other with
a fully executed original of this Agreement within four (4) business days of any
facsimile counterpart execution.
21.I. HEADINGS. All paragraph and section headings and captions used
herein are for the convenience of the parties only and shall not be part of the
text hereof or deemed in any way to limit or affect the meaning of this
Agreement.
21.J. WAIVERS AND FAILURE TO ASSERT RIGHT. Either party may at any
time waive any of the provisions of this Agreement, but any such waivers shall
be reduced to writing and duly executed and delivered by authorized
representatives of the parties. The failure of either party to enforce at any
time any of the provisions of this Agreement shall not constitute or be
construed to be a waiver of such provisions or of the right of such party
thereafter to enforce any such provisions.
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IN WITNESS WHEREOF, Komag and Chahaya have caused this Agreement to be
executed by their respective duly authorized representatives as of the day and
year first above written.
CHAHAYA OPTRONICS, INC. KOMAG, INCORPORATED
By: By:
------------------------------- -------------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
---------------------------- ----------------------------
[Facilities Sharing and Services Agreement Signature Page]
EXHIBIT D
9.
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EXHIBIT D
MANUFACTURING SERVICES AGREEMENT
THIS MANUFACTURING SERVICES AGREEMENT (the "AGREEMENT"), dated as of
November , 2000 (the "EFFECTIVE DATE"), is entered into by and between KOMAG,
INCORPORATED, a Delaware corporation ("KOMAG"), and CHAHAYA OPTRONICS, INC., a
Delaware corporation ("CHAHAYA"). The parties hereto are also referred to in
this Agreement individually as a "Party" and collectively as the "Parties."
WHEREAS, this Agreement is entered into in connection with the issuance
by Chahaya of Series A Preferred Stock to Komag and a group of investors under
that certain Stock Purchase and Contribution Agreement dated as of November 21,
2000 pursuant to the requirements of Section 2 of the Contribution Agreement of
even date herewith by and between the Parties.
NOW, THEREFORE, the Parties hereby agree as follows:
1. MANUFACTURING SERVICES. Komag hereby agrees to engage Chahaya, and Chahaya
hereby agrees to provide to Komag, manufacturing services for the production of
finished thin-film media ("Disks") as described and on the terms and conditions
set forth below.
1.1 SCOPE OF SERVICES. Chahaya will provide direct labor and materials
procurement services (the "Manufacturing Services") that are necessary and
sufficient to support the production for Komag of approximately 2,400,000 Disks
during the calendar quarter ending March 31, 2001 and approximately 2,400,000
Disks during the calendar quarter ending June 30, 2001. The Manufacturing
Services will be performed using the production equipment owned and currently
operated by Komag in Komag's manufacturing facilities in Fremont, California and
polished nickel substrates to be provided by Komag. The Manufacturing Services
will include routine, day-to-day maintenance of Komag's production equipment,
which will remain the property of Komag, but any necessary repairs or
replacements will be the sole responsibility of Komag. Komag will also be
directly responsible for all facilities-related expenses, including but not
limited to utilities, environmental health and safety, janitorial and security
expenses.
1.2 COORDINATION AND SUPERVISION. The Parties agree to coordinate
scheduling for the Manufacturing Services in a manner that ensures the
continuous and efficient production of Disks consistent with the present
intention of Komag to discontinue the production of Disks in its California
facilities on or about June 30, 2001. Chahaya will perform the Manufacturing
Services utilizing the production processes and procedures that are currently
used by Komag in Disk production, subject to such modifications and changes as
Komag may reasonably require in written instructions to Chahaya. Based on its
utilization of former employees of Komag to be transferred to Chahaya pursuant
to the Employee Matters Agreement of even date hereof, Chahaya will use
commercially reasonable efforts to provide the Manufacturing Services at a level
of quality and professionalism that is reasonably consistent with the manner in
which such activities are currently performed by Komag.
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1.3 LIMITATIONS. Subject to the foregoing, Chahaya makes no
representation or warranty with respect to the Manufacturing Services or the
volume or quality of Disks that are produced using the Manufacturing Services
and assumes no obligation or liabilities to any customers of Komag under Komag's
customer contracts or otherwise.
2. PRICE AND PAYMENT. In consideration of performance of the Manufacturing
Services, Komag shall compensate Chahaya as follows:
2.1 COST REIMBURSEMENT. Komag shall reimburse Chahaya, promptly after
demand by Chahaya, for one hundred percent (100%) of the direct costs it incurs
in the performance of the Manufacturing Services under this Agreement. Such
costs will consist of Chahaya's direct labor (including allocable overhead) and
materials costs. Komag shall reasonably cooperate with Chahaya so that
reimbursement to Chahaya is made on or about the date such costs are incurred by
Chahaya. Following the end of each month, Komag and Chahaya shall conduct a
review and reconciliation of costs actually incurred in such month to confirm
the accuracy of, and if necessary, to adjust the reimbursements made by Komag to
Chahaya during such month.
2.2 SERVICE FEE. In addition to the foregoing, Komag will pay to Chahaya
a manufacturing services fee of Four Million Dollars ($4,000,000) which shall be
payable in installments as follows: (i) one installment of Two Million Dollars
($2,000,000) on or before June 30, 2001 and (ii) one installment of Two Million
Dollars ($2,0000,000) on or before December 31, 2001.
3. INDEMNIFICATION; DISCLAIMERS AND LIMITATIONS.
3.1 INDEMNIFICATION. Komag hereby agrees to defend, indemnify and hold
harmless Chahaya, its employees, officers, directors, shareholders, successors,
affiliates and assigns from and against any and all expenses, costs, losses or
damages that arise out of any claim, action or cause of action ("Claim") brought
by any third party based on any damages or injuries to property or persons
relating to or arising out of the performance of the Manufacturing Services,
except to the extent that such Claims are attributable to the gross negligence
or willful misconduct of Chahaya or its employees, officers, directors,
shareholders, successors, affiliates or assigns, provided that: (a) Chahaya
gives Komag reasonable notice of any Claim; and (b) Chahaya provides Komag with
the assistance, information and authority necessary to perform the above. Komag
shall reimburse reasonable out-of-pocket expenses incurred by Chahaya in
providing such assistance. Chahaya shall have the right to participate, at its
own expense, in any Komag defense and/or settlement of any Claim. Chahaya hereby
agrees to defend, indemnify and hold harmless Komag, its employees, officers,
directors, shareholders, successors, affiliates and assigns from and against any
and all expenses, costs, losses or damages that arise out of any Claim brought
by any third party based on any damages or injuries to property or persons
relating to or arising out of the performance of the Manufacturing Services and
attributable to the gross negligence or willful misconduct of Chahaya or its
employees, officers, directors, shareholders, successors, affiliates or assigns,
provided that: (a) Komag gives Chahaya reasonable notice of any Claim; and (b)
Komag provides Chahaya with the assistance, information and authority necessary
to perform the above. Chahaya shall reimburse reasonable out-of-pocket expenses
incurred by Komag in providing such assistance. Komag shall have the right to
participate, at its own expense, in any Chahaya defense and/or settlement of any
Claim.
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3.2 DISCLAIMER OF IMPLIED WARRANTY. CHAHAYA MAKES NO WARRANTY,
REPRESENTATION OR PROMISE NOT EXPRESSLY SET FORTH IN THIS AGREEMENT WITH RESPECT
TO THE DISKS OR MANUFACTURING SERVICES. CHAHAYA EXPRESSLY DISCLAIMS AND EXCLUDES
ANY AND ALL IMPLIED WARRANTIES OF MERCHANTABILITY OR FITNESS OF THE DISKS FOR A
PARTICULAR PURPOSE.
3.3 LIMITATION OF LIABILITY. CHAHAYA SHALL NOT BE LIABLE FOR ANY
SPECIAL, INCIDENTAL, CONSEQUENTIAL, INDIRECT OR PUNITIVE DAMAGES ARISING IN ANY
WAY OUT OF THE USE OF THE DISKS, THE MANUFACTURING SERVICES OR THIS AGREEMENT,
INCLUDING WITHOUT LIMITATION, DAMAGES FOR LOST PROFIT, LOST REVENUE, LOSS OF
USE, LOSS OF DATA, COSTS OF RECREATING LOST DATA, THE COST OF ANY SUBSTITUTE
EQUIPMENT, PROGRAM, OR DATA, OR CLAIMS BY ANY THIRD PARTY. NOTWITHSTANDING
ANYTHING TO THE CONTRARY CONTAINED HEREIN, THE LIMITATIONS ON LIABILITY
CONTAINED HEREIN SHALL NOT APPLY TO CHAHAYA'S INDEMNIFICATION OBLIGATIONS
HEREUNDER OR TO LIABILITY ARISING FROM CHAHAYA'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT.
4. MISCELLANEOUS PROVISIONS.
4.1 NOTICES. All notices, requests, waivers and other communications
made pursuant to this Agreement shall be in writing and shall be conclusively
deemed to have been duly given (a) when hand delivered to the other Party; (b)
when received when sent by facsimile, with a confirmation receipt, at the
address and number set forth below; (c) three business days after deposit in the
U.S. mail with first class or certified mail receipt requested postage prepaid
and addressed to the other Party as set forth below; or (d) the next business
day after deposit with a national overnight delivery service, postage prepaid
addressed to the Parties as set forth below with next business day delivery
guaranteed, provided that the sending Party receives a confirmation of delivery
from the delivery service provider.
If to Chahaya:
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attention: President
Telephone: (510)
Facsimile: (510)
4.
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With a copy to:
Cooley Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Komag:
Komag , Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Each person making a communication hereunder by facsimile shall promptly
confirm by telephone to the person to whom such communication was addressed each
communication made by it by facsimile pursuant hereto but the absence of such
confirmation shall not affect the validity of any such communication. A Party
may change or supplement the addresses given above, or designate additional
addresses, for purposes of this Section 4.1 by giving the other Party written
notice of the new address in the manner set forth above.
4.2 GOVERNING LAW. This Agreement, and the application or interpretation
hereof, shall be governed exclusively by its terms and by the laws of the State
of California (without giving effect to principles of conflicts of laws).
4.3 ENTIRE AGREEMENT. This Agreement, together with the Contribution
Agreement and the Stock Purchase and Contribution Agreement, and attachments to
the foregoing, constitutes the entire Agreement between the Parties hereto. No
modification of this Agreement shall be binding unless it is in writing and is
signed by authorized representatives of both Parties.
4.4 WAIVERS. No waiver of any right under this Agreement shall be deemed
effective unless contained in a writing signed by a duly authorized
representative of the Party
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waiving such right, and no waiver of any past or present right arising from any
breach or failure to perform shall be deemed to be a waiver of any future right
arising under this Agreement.
4.5 ASSIGNMENT. Neither Party may assign its rights or delegate its
duties under this Agreement (except to an affiliated company, or to a successor
in interest in the event of a merger, sale of assets of the business to which
this Agreement is related, or consolidation) without the prior written consent
of the other Party, which consent shall not be unreasonably withheld, and any
attempt to do so is null and void. Subject to the above, this Agreement will be
binding upon, shall inure to the benefit of, and shall be enforceable by the
respective successors and permitted assigns of each of the Parties.
4.6 SEVERABILITY. If any provision of this Agreement is invalid or
unenforceable, that provision shall be construed, limited, modified or, if
necessary, severed, to the extent necessary to eliminate its invalidity or
unenforceability, and the other provisions of this Agreement shall remain in
full force and effect.
4.7 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original but all of which shall constitute one and
the same instrument.
4.8 FORCE MAJEURE. If by reason of labor disputes, strikes, lockouts,
riots, war, inability to obtain labor or materials, earthquake, fire or other
action of the elements, accidents, governmental restrictions, appropriation or
other causes beyond the control of Chahaya hereto (each, a "Force Majeure
Event"), Chahaya is unable to perform in whole or in part its obligations as set
forth in this Agreement, then Chahaya shall be relieved of those obligations to
the extent it is so unable to perform, and such inability to perform shall not,
to such extent, make Chahaya liable to Komag.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in triplicate by their duly authorized representatives as of the
Effective Date.
KOMAG, INCORPORATED CHAHAYA OPTRONICS, INC.
By: By:
------------------------------- -------------------------------
Name: Name:
----------------------------- -----------------------------
Title: Title:
---------------------------- ----------------------------
7.
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EXHIBIT E
--------------------------------------------------------------------------------
EMPLOYEE MATTERS AGREEMENT
between:
KOMAG INCORPORATED,
a Delaware corporation;
and
CHAHAYA OPTRONICS, INC.
a Delaware corporation
-----------------------------
Dated as of November 30, 2000
----------------------------
--------------------------------------------------------------------------------
8.
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EMPLOYEE MATTERS AGREEMENT
THIS EMPLOYEE MATTERS AGREEMENT (this "Agreement") is entered into on
November 30, 2000, between Komag Incorporated, a Delaware corporation ("KOMAG"),
and Chahaya Optronics, Inc., a Delaware corporation ("Chahaya"). Capitalized
terms used herein and not otherwise defined, shall have the respective meanings
assigned to them in Article I hereof.
WHEREAS, the Board of Directors of KOMAG has determined that it is in
the best interests of KOMAG and its stockholders to make certain contributions
of capital and to facilitate the transfer of certain employees to the Chahaya
Business; and
WHEREAS, in furtherance of the foregoing, KOMAG and Chahaya have agreed
to enter into this Agreement addressing certain matters of employee
compensation;
NOW, THEREFORE, in consideration of the foregoing and the covenants and
agreements set forth below, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
Wherever used in this Agreement, the following terms shall have the
meanings indicated below, unless a different meaning is plainly required by the
context. The singular shall include the plural, unless the context indicates
otherwise. Headings of sections are used for convenience of reference only, and
in case of conflict, the text of this Agreement, rather than such headings,
shall control:
1.1 AFFILIATE. "Affiliate" means, with respect to KOMAG, any entity
in which KOMAG holds at least fifty percent (50%) ownership, and
with respect to Chahaya, any entity in which Chahaya holds at
least fifty percent (50%) ownership.
1.2 AGREEMENT. "Agreement" means this Employee Matters Agreement and
all amendments made hereto from time to time.
1.3 ANCILLARY AGREEMENTS. "Ancillary Agreements" means all of the
underlying agreements, documents and instruments referred to,
contemplated by, or made a part of the Contribution Agreement.
1.4 CHAHAYA BUSINESS. "Chahaya Business" means the business and
operations of the Chahaya Group following the Date of this
Agreement.
1.5 CHAHAYA EMPLOYEE. "Chahaya Employee" or "Chahaya Transferred
Employee" means any individual who is: (a) either actively
employed by, or on an approved leave of absence from, the
Chahaya Group on the Payroll Date; or (b) any other employee or
group of employees designated as Chahaya Employees (as of the
date specified therein) by KOMAG and Chahaya by mutual
agreement. Notwithstanding the foregoing,
1.
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"Chahaya Employee" or "Chahaya Transferred Employee" shall not
include, unless otherwise expressly provided to the contrary in
this Agreement, (i) an individual who is a KOMAG Employee at the
Payroll Date, (ii) an individual who was not employed by the
KOMAG Group prior to the Payroll Date, or (iii) an individual
who was a KOMAG Terminated Employee as of the Payroll Date and
who is subsequently hired by any member of the Chahaya Group.
1.6 CHAHAYA GROUP. "Chahaya Group" means Chahaya and each Subsidiary
and Affiliate of Chahaya as of or after the Payroll Date, or
that becomes a Subsidiary or Affiliate of Chahaya after the
Payroll Date, but only during the time that such Person is a
Subsidiary or Affiliate of Chahaya.
1.7 CHAHAYA. "Chahaya" means Chahaya Optronics, Inc., a Delaware
corporation. In all such instances in which Chahaya is referred
to in this Agreement, it shall also be deemed to include a
reference to each member of the Chahaya Group, unless it
specifically provides otherwise.
1.8 CODE. "Code" means the Internal Revenue Code of 1986, as
amended.
1.9 CONTRIBUTION AGREEMENT. "Contribution Agreement" means the
Contribution Agreement to which this Agreement is an Exhibit.
1.10 CONTRIBUTION. "Contribution" means the contribution and transfer
of assets from KOMAG to Chahaya, as detailed in the Contribution
Agreement.
1.11 DOL. "DOL" means the United States Department of Labor.
1.12 ERISA. "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended from time to time.
1.13 FMLA. "FMLA" means the Family and Medical Leave Act of 1993, as
amended from time to time.
1.14 IRS. "IRS" means the United States Internal Revenue Service.
1.15 KOMAG EMPLOYEE. "KOMAG Employee" means an individual who, at and
subsequent to the Payroll Date, is: (a) either actively employed
by, or on an approved leave of absence from, the KOMAG Group;
(b) a KOMAG Terminated Employee; or (c) an employee or group of
employees designated in writing as KOMAG Employees by KOMAG and
Chahaya, by mutual agreement.
1.16 KOMAG GROUP. "KOMAG Group" means KOMAG and each Subsidiary and
Affiliate of KOMAG (or any predecessor organization thereof).
1.17 KOMAG TERMINATED EMPLOYEE. "KOMAG Terminated Employee" means any
individual who is a former employee of the KOMAG Group and who,
on the Payroll Date, is not a Chahaya Transferred Employee.
2.
88
1.18 KOMAG. "KOMAG" means Komag Incorporated, a Delaware corporation.
In all such instances in which KOMAG is referred to in this
Agreement, it shall also be deemed to include a reference to
each member of the KOMAG Group, unless it specifically provides
otherwise; KOMAG shall be solely responsible to Chahaya for
ensuring that each member of the KOMAG Group complies with the
applicable terms of this Agreement.
1.19 LIABILITIES. "Liabilities" means all debts, liabilities,
guarantees, assurances, commitments, and obligations, whether
fixed, contingent or absolute, asserted or unasserted, matured
or unmatured, liquidated or unliquidated, accrued or not
accrued, known or unknown, due or to become due, whenever or
however arising (including, without limitation, whether arising
out of any Contract or tort based on negligence or strict
liability) and whether or not the same would be required by
generally accepted principles and accounting policies to be
reflected in financial statements or disclosed in the notes
thereto. "Contract" means any contract, agreement, lease,
license, sales order, purchase order, instrument or other
commitment that is binding on any Person or any part of its
property under applicable law.
1.20 MATERIAL FEATURE. "Material Feature" means any feature of a Plan
that could reasonably be expected to be of material importance
to the sponsoring employer or the participants (or their
dependents or beneficiaries) (in the aggregate) of that Plan,
which could include, depending on the type and purpose of the
particular Plan, the class or classes of employees eligible to
participate in such Plan, the nature, type, form, source, and
level of benefits provided under such Plan, the amount or level
of contributions, if any, required to be made by participants
(or their dependents or beneficiaries) to such Plan, and the
cost, administrative responsibilities, and other obligations of
the Plan's sponsor or Participating Company.
1.21 OPTION. "Option," when immediately preceded by "KOMAG," means an
option to purchase KOMAG common stock pursuant to a Stock Plan.
When immediately preceded by "Chahaya," "Option" means an option
to purchase Chahaya common stock pursuant to a Stock Plan.
1.22 PARTICIPATING COMPANY. "Participating Company" means: (a) KOMAG;
(b) any Person (other than an individual) that KOMAG has
approved for participation in, has accepted participation in,
and which is participating in, a Plan sponsored by KOMAG; or (c)
any Person (other than an individual) which, by the terms of
such Plan, participates in such Plan or any employees of which,
by the terms of such Plan, participate in or are covered by such
Plan.
1.23 PAYROLL DATE. "Payroll Date" means January 1, 2001, or such
other date mutually selected by Chahaya and KOMAG on which
Chahaya Employees are added to Chahaya's payroll.
1.24 PERSON. "Person" means an individual, a partnership, a
corporation, a limited liability company, an association, a
joint stock company, a trust, a joint venture, an
3.
89
unincorporated organization, and a governmental entity or any
department, agency or political subdivision thereof.
1.25 PLAN. "Plan" means any plan, policy, program, payroll practice,
arrangement, contract, trust, insurance policy, or any agreement
or funding vehicle providing compensation or benefits to
employees, former employees or directors of KOMAG or Chahaya.
1.26 SEC. "SEC" means the United States Securities and Exchange
Commission.
1.27 SECTION 401(k) PLAN. "Section 401(k) Plan," when immediately
preceded by "KOMAG," means any 401(k) plan sponsored by the
KOMAG Group (including the former HMT Technology Corporation
401(k) plan). When immediately preceded by "Chahaya," "Section
401(k) Plan" means the defined contribution plan to be
established by Chahaya pursuant to Section 2.2 and Article III.
1.28 SEVERANCE PLAN. "Severance Plan," when immediately preceded by
"KOMAG," means the KOMAG Severance Plan. When immediately
preceded by "Chahaya," "Severance Plan" means the severance plan
to be established by Chahaya pursuant to Sections 2.2 and
Article IV that corresponds to the KOMAG Severance Plan.
1.29 STOCK PLAN. "Stock Plan," when immediately preceded by "KOMAG,"
means any plan, program or arrangement, pursuant to which
employees and other service providers hold Options, KOMAG
restricted stock, or other KOMAG equity incentives. When
immediately preceded by "Chahaya," "Stock Plan" means plans,
programs or arrangements to be established by Chahaya pursuant
to Section 2.2.
1.30 SUBSIDIARY. "Subsidiary" means, with respect to any specified
Person, any corporation, any limited liability company, any
partnership or other legal entity of which such Person or its
Subsidiaries owns, directly or indirectly, more than fifty
percent (50%) of the stock or other equity interest entitled to
vote on the election of the members of the board of directors or
similar governing body.
ARTICLE II
GENERAL PRINCIPLES
2.1 KOMAG LIABILITIES. Except as specified otherwise in this
Agreement, or as mutually agreed upon by Chahaya and KOMAG from
time to time, KOMAG agrees to pay, perform, fulfill and
discharge any and all Liabilities to or relating to each Chahaya
Employee, arising out of or resulting from his or her employment
by the KOMAG Group before becoming a Chahaya Employee (including
Liabilities arising under or relating to KOMAG Plans).
2.2 ESTABLISHMENT OF CHAHAYA PLANS.
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(a) SEVERANCE PLAN. Except as specified otherwise in this
Agreement, effective as of the Payroll Date or such
other date(s) as KOMAG and Chahaya may mutually agree,
Chahaya shall adopt the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Plan.
(b) SECTION 401(k) PLAN. Except as specified otherwise in
this Agreement, effective as of the Payroll Date or such
other date(s) as KOMAG and Chahaya may mutually agree,
Chahaya shall adopt the Chahaya Section 401(k) Plan.
(c) EQUITY AND OTHER COMPENSATION. Except as specified
otherwise in this Agreement, effective on or before the
Payroll Date or such other date(s) as KOMAG and Chahaya
may mutually agree, Chahaya shall adopt the Chahaya
Stock Plan.
(d) OTHER PLANS. Except as specified otherwise in this
Agreement, Chahaya shall have the absolute discretion to
adopt other Plans that are directly associated with
Chahaya's payroll system or as otherwise may be
determined to be appropriate.
(e) CHAHAYA UNDER NO OBLIGATION TO MAINTAIN PLANS. Except as
specified otherwise in this Agreement, nothing in this
Agreement shall preclude Chahaya, at any time after the
Payroll Date, from amending, merging, modifying,
terminating, eliminating, reducing, or otherwise
altering in any respect any Chahaya Plan, any benefit
under any Chahaya Plan or any trust, or funding vehicle
related to any Chahaya Plan (to the extent permitted by
law).
2.3 CHAHAYA'S PARTICIPATION IN KOMAG PLANS.
(a) PARTICIPATION IN KOMAG PLANS. KOMAG and Chahaya may
mutually agree in writing, effective as of the Payroll
Date, that Chahaya shall become a Participating Company
in any of the KOMAG Plans in effect as of the Payroll
Date.
(b) KOMAG'S GENERAL OBLIGATIONS AS PLAN SPONSOR. To the
extent that Chahaya is a Participating Company in any
KOMAG Plan(s), KOMAG shall continue to administer, or
cause to be administered, in accordance with their terms
and applicable law, such KOMAG Plan(s). KOMAG shall not,
without first consulting with Chahaya, amend any
Material Feature of any KOMAG Plan in which Chahaya is a
Participating Company, except to the extent such
amendment would not affect any benefits of Chahaya
Employees under such Plan or as may be necessary or
appropriate to comply with applicable law.
(c) CHAHAYA'S GENERAL OBLIGATIONS AS PARTICIPATING COMPANY.
Chahaya shall perform with respect to its participation
in the KOMAG Plans, the duties of a Participating
Company as set forth in each such Plan or any procedures
adopted pursuant thereto, including (without
limitation): (i) assisting in the administration of
claims, to the extent requested by the claims
administrator of the applicable KOMAG Plan; (ii)
cooperating fully with KOMAG Plan auditors, benefit
personnel and benefit vendors; (iii) preserving the
confidentiality of all financial arrangements KOMAG has
or may have with any vendors, claims administrators,
trustees or any other entity or individual with whom
KOMAG has entered into an agreement relating to the
KOMAG Plans; and (iv) preserving the confidentiality of
participant information (including, without limitation,
5.
91
health information in relation to FMLA leaves) to the
extent not specified otherwise in this Agreement.
Chahaya shall reimburse KOMAG for the costs of Chahaya's
participation in the KOMAG Plans promptly upon demand
from KOMAG.
2.4 TERMS OF PARTICIPATION BY CHAHAYA TRANSFERRED EMPLOYEES IN
CHAHAYA PLANS. As of the Payroll Date or such later date that
applies to the particular Chahaya Plan established thereafter,
the Chahaya Plans shall not provide benefits that duplicate
benefits provided by, the corresponding KOMAG Plans. KOMAG and
Chahaya shall agree on methods and procedures, including
amending the respective Plan documents, to prevent Chahaya
Transferred Employees from receiving duplicate benefits from the
KOMAG Plans and the Chahaya Plans.
ARTICLE III
SECTION 401(k) PLAN
3.1 SECTION 401(k) PLAN AND TRUST. Effective as of the Payroll Date,
Chahaya shall establish, or cause to be established, a separate
retirement benefits plan and trust, which plan is intended to be
qualified under Code Section 401(a), which trust is intended to
be exempt from federal income taxation under Code Section
501(a)(1), and forming the Chahaya Section 401(k) Plan.
3.2 SECTION 401(k) PLAN: TRANSFER OF ASSETS. Effective as of the
Payroll Date: (i) KOMAG shall use its commercially reasonable
best efforts to cause the accounts of the Chahaya Transferred
Employees under the KOMAG Section 401(k) Plan(s) that are held
by its related trust(s) as of the Payroll Date to be transferred
to the Chahaya Section 401(k) Plan and its related trust, and
(ii) Chahaya shall cause such transferred accounts to be
accepted by such plan and its related trust. The Chahaya
Transferred Employees participating in the KOMAG Section 401(k)
Plan on the Payroll Date automatically shall be enrolled in the
Chahaya Section 401(k) Plan. All elections or other decisions by
Chahaya Transferred Employees in effect as of the Date of this
Agreement under the KOMAG Section 401(k) Plan shall be effective
under the Chahaya Section 401(k) Plan. As soon as reasonably
practicable after the Date of this Agreement, Chahaya shall use
its commercially reasonable best efforts to enter into
agreements satisfactory to Chahaya to accomplish such assumption
and transfer, the maintenance of the necessary participant
records, the appointment of an initial trustee under the Chahaya
Section 401(k) Plan, and the engagement of an initial
recordkeeper under the Chahaya Section 401(k) Plan. Chahaya and
KOMAG each agree to use their commercially reasonable best
efforts to accomplish this transfer.
ARTICLE IV
SEVERANCE PLAN
4.1 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ PLAN. Effective as of the Payroll Date,
Chahaya shall establish, or cause to be established, the ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ Plan for the benefit of Chahaya Transferred Employees.
6.
92
4.2 ALLOCATION OF EXPENSES. Except as otherwise provided in this
Agreement or in any underlying service level agreement between
KOMAG and Chahaya relating to the Contribution, all costs and
expenses incurred by Chahaya prior to August 16, 2001, in
connection with benefits paid under the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Plan
to Chahaya Transferred Employees shall be reimbursed by KOMAG.
KOMAG shall reimburse Chahaya as promptly as possible for any
and all costs and expenses incurred by Chahaya prior to August
16, 2001, under the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Plan.
4.3 REIMBURSEMENT EXCEPTION. KOMAG and Chahaya agree that KOMAG will
not be obligated to reimburse Chahaya for any amounts paid under
the ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Plan to the individuals listed on Schedule
4.3 of this Agreement or (ii) any employee of Chahaya who is not
a Chahaya Transferred Employee.
ARTICLE V
EQUITY COMPENSATION
5.1 CHAHAYA OPTION GRANTS.
(a) Chahaya shall grant to each Chahaya Transferred
Employee, a Chahaya Option under the Chahaya Stock Plan.
(b) Each Chahaya Option shall provide for the purchase of a
number of shares of Chahaya common stock established by
the Chahaya Board of Directors.
(c) The per-share exercise price of each Chahaya Option
shall be established by the Chahaya Board of Directors.
5.2 TERMINATION OF KOMAG OPTIONS. Komag Options held by Chahaya
Transferred Employees shall terminate in accordance with each
such Komag Option's terms.
ARTICLE VI
ADMINISTRATIVE PROVISIONS
6.1 SHARING OF PARTICIPANT INFORMATION. KOMAG and Chahaya shall
share, or cause to be shared, all participant information that
is necessary or appropriate for the efficient and accurate
administration of each of the KOMAG Plans and the Chahaya Plans.
KOMAG and Chahaya and their respective authorized agents shall,
subject to applicable laws of confidentiality and data
protection, be given reasonable and timely access to, and may
make copies of, all information relating to the subjects of this
Agreement in the custody of the other party or its agents, to
the extent necessary or appropriate for such administration.
6.2 REPORTING AND DISCLOSURE COMMUNICATIONS TO PARTICIPANTS. While
Chahaya is a Participating Company in the KOMAG Plans, Chahaya
shall take, or cause to be taken, all actions necessary or
appropriate to facilitate the Contribution of all KOMAG
Plan-
7.
93
related communications and materials to employees, participants
and beneficiaries, including (without limitation) summary plan
descriptions and related summaries of material modification(s),
summary annual reports, investment information, prospectuses,
notices and enrollment material for the KOMAG Plans and Chahaya
Plans.
6.3 BENEFICIARY DESIGNATIONS. All beneficiary designations made by
Chahaya Employees for the KOMAG Plans shall be transferred to
and be in full force and effect under the corresponding Chahaya
Plans until such beneficiary designations are replaced or
revoked by the Chahaya Transferred Employee who made the
beneficiary designation.
6.4 REQUESTS FOR IRS AND DOL OPINIONS. KOMAG and Chahaya shall make
such applications to regulatory agencies, including the IRS and
DOL, as may be necessary or appropriate. Chahaya and KOMAG shall
cooperate fully with one another on any issue relating to the
transactions contemplated by this Agreement for which KOMAG
and/or Chahaya elects to seek a determination letter or private
letter ruling from the IRS or an advisory opinion from the DOL.
6.5 FIDUCIARY MATTERS. KOMAG and Chahaya each acknowledge that
actions contemplated to be taken pursuant to this Agreement may
be subject to fiduciary duties or standards of conduct under
ERISA or other applicable law, and no party shall be deemed to
be in violation of this Agreement if such party fails to comply
with any provisions hereof based upon such party's good faith
determination that to do so would violate such a fiduciary duty
or standard.
6.6 CONSENT OF THIRD PARTIES. If any provision of this Agreement is
dependent on the consent of any third party (such as a vendor)
and such consent is withheld, KOMAG and Chahaya shall use their
commercially reasonable best efforts to implement the applicable
provisions of this Agreement. If any provision of this Agreement
cannot be implemented due to the failure of such third party to
consent, KOMAG and Chahaya shall negotiate in good faith to
implement the provision in a mutually satisfactory manner.
ARTICLE VII
EMPLOYMENT-RELATED MATTERS
7.1 TERMS OF CHAHAYA EMPLOYMENT. Except as specified otherwise in
this Agreement, nothing in this Agreement shall preclude
Chahaya, from altering in any respect, the terms and conditions
of employment of any Chahaya Transferred Employee, including,
without limitation, his or her pay and benefits in the
aggregate. Chahaya Transferred Employees shall be required to
execute a new agreement regarding confidential information and
proprietary developments in a form approved by Chahaya. In
addition, nothing in the Contribution Agreement, this Agreement,
or any Ancillary Agreement should be construed to change the
at-will status of any of the employees of the KOMAG Group or the
Chahaya Group.
8.
94
7.2 NON-SOLICITATION OF EMPLOYEES. KOMAG and Chahaya each agree not
to directly solicit or recruit the other party's employees for a
period of two (2) years following the Payroll Date, if such
solicitation or recruitment would be disruptive or damaging or
would interfere with the operation or business of the other
party. Notwithstanding the foregoing, this prohibition on
solicitation does not apply to actions taken by a party either:
(a) as a result of an employee's affirmative response to a
general recruitment effort carried out through a public
solicitation or general solicitation, or (b) as a result of an
employee's initiative, or (c) following termination of an
employee's employment with KOMAG or Chahaya, as the case may be.
7.3 U.S. WORK VISAS. KOMAG and Chahaya shall use their commercially
reasonable best efforts to ensure that the work visas for
Chahaya Employees who, on the Payroll Date, are employed in the
U.S. pursuant to a work or training visa which authorizes
employment only by the KOMAG Group, is amended or a new visa is
granted to authorize employment by the Chahaya Group.
7.4 CONFIDENTIALITY AND PROPRIETARY INFORMATION. No provision of
this Agreement, the Contribution Agreement or any Ancillary
Agreement shall be deemed to release any individual for any
violation of the KOMAG non-competition guidelines or any
agreement or policy pertaining to confidential or proprietary
information of any member of the KOMAG Group, or otherwise
relieve any individual of his or her obligations under such
non-competition guideline, agreement, or policy.
7.5 PAYROLL AND WITHHOLDING.
(a) INCOME REPORTING, WITHHOLDING. KOMAG and Chahaya will
use their commercially reasonable best efforts to cause
the KOMAG payroll system either to be split into two
separate systems on the Payroll Date or to transfer
relevant data to a third party identified by Chahaya.
Chahaya shall perform the income reporting and
withholding function under its own employer
identification number for Chahaya Employees and other
service providers, commencing with service periods
beginning on or after the Payroll Date. KOMAG shall
perform the income reporting and withholding function
for KOMAG Employees and other service providers.
(b) DELIVERY OF, AND ACCESS TO, DOCUMENTS AND OTHER
INFORMATION. Prior to the Payroll Date or as promptly
thereafter as practicable, KOMAG shall cause to be
delivered to Chahaya, the employee information set forth
on all Forms W-4 executed by KOMAG Employees designated
as Chahaya Employees as of the Payroll Date.
(c) CONSISTENCY OF TAX POSITIONS; DUPLICATION. KOMAG and
Chahaya shall individually and collectively make
commercially reasonable best efforts to avoid
unnecessarily duplicated federal, state or local payroll
taxes, insurance or workers' compensation contributions,
or unemployment contributions arising on or after the
Payroll Date. KOMAG and Chahaya shall take consistent
reporting and withholding positions with respect to any
such taxes or contributions.
9.
95
7.6 PERSONNEL AND PAY RECORDS. KOMAG shall make reasonably available
to Chahaya, subject to applicable laws on confidentiality and
data protection, all current and historic forms, documents or
information, no matter in what format stored, relating to
pre-Payroll Date personnel, medical records, and payroll
information. Such forms, documents or information may include,
but is not limited to: (a) information regarding a Chahaya
Employee's ranking or promotions; (b) the existence and nature
of garnishment orders or other judicial or administrative
actions or orders affecting an employee's or service provider's
compensation; and (c) performance evaluations.
ARTICLE VIII
GENERAL PROVISIONS
8.1 RELATIONSHIP OF PARTIES. Nothing in this Agreement shall be
deemed or construed by the parties or any third party as
creating the relationship of principal and agent, partnership or
joint venture between the parties, the understanding and
agreement being that no provision contained herein, and no act
of the parties, shall be deemed to create any relationship
between the parties other than the relationship set forth
herein.
8.2 GOVERNING LAW. To the extent not preempted by applicable federal
law, this Agreement shall be governed by, construed and
interpreted in accordance with the laws of the State of
California, irrespective of the choice of law principles of the
State of California, as to all matters, including matters of
validity, construction, effect, performance and remedies.
8.3 SEVERABILITY. If any term or other provision of this Agreement
is determined to be invalid, illegal or incapable of being
enforced by any rule of law or public policy, all other
conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal
substance of the transactions contemplated hereby is not
affected in any manner materially adverse to either party. Upon
such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible and in
an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the fullest possible extent.
8.4 AMENDMENT. The Board of Directors of Chahaya and KOMAG may
mutually agree to amend the provisions of this Agreement at any
time or times, either prospectively or retroactively, to such
extent and in such manner as the Boards mutually deem advisable.
Each Board may delegate its amendment power, in whole or in
part, to one or more Persons or committees as it deems
advisable. Accordingly, each Board hereby gives its Vice
President, Human Resources the full power and authority to
mutually adopt an amendment to this Agreement (subject to each
of their authority to amend Plans).
10.
96
8.5 TERMINATION. This Agreement may be terminated at any time after
the Payroll Date by mutual consent of KOMAG and Chahaya. In the
event of termination pursuant to this Section, no party shall
have any liability of any kind to the other party.
8.6 CONFLICT. In the event of any conflict between the provisions of
this Agreement and the Contribution Agreement, any Ancillary
Agreement, or Plan, the provisions of this Agreement shall
control.
8.7 COUNTERPARTS. This Agreement may be executed in two or more
counterparts each of which shall be deemed to be an original,
but all of which together shall constitute but one and the same
Agreement.
IN WITNESS WHEREOF, each of the parties have caused this Agreement to be
executed on its behalf by its officers thereunto duly authorized on the day and
year first above written.
KOMAG, INCORPORATED
By:
------------------------------------------
Name:
----------------------------------------
Title: President and Chief Executive Officer
CHAHAYA OPTRONICS, INC.
By:
------------------------------------------
Name:
----------------------------------------
Title: President and Chief Executive Officer
11.
97
SCHEDULE 4.3
REIMBURSEMENT EXCEPTIONS
1. ▇▇▇▇ ▇▇▇▇
2. ▇▇▇ ▇▇▇▇▇
3. Andreas Judas
4. ▇▇▇ ▇▇▇▇▇▇▇▇▇
5. ▇▇▇▇▇ ▇▇▇▇▇▇
6. ▇▇▇ ▇▇▇▇
7. ▇▇▇ ▇▇
8. ▇▇▇ Frusescu
9. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇. ▇▇ ▇▇
11. ▇▇▇▇▇ ▇▇▇▇▇▇
12. ▇▇▇ ▇▇▇▇▇▇▇▇
13. ▇▇▇▇▇▇▇▇ ▇▇▇▇
14. ▇▇▇▇ ▇▇▇ (non-exempt)
15. ▇▇▇ ▇▇▇▇ (non-exempt)
16. [To be agreed upon with the consent of Komag (which shall not be
unreasonably withheld); wages of employee are less than $30.00 per hour - see
note below].
17. [To be agreed upon with the consent of Komag (which shall not be
unreasonably withheld); wages of employee are less than $30.00 per hour - see
note below].
18. [To be agreed upon with the consent of Komag (which shall not be
unreasonably withheld); wages of employee are less than $30.00 per hour - see
note below].
19. [To be agreed upon with the consent of Komag (which shall not be
unreasonably withheld); wages of employee are less than $30.00 per hour - see
note below].
98
20. [To be agreed upon with the consent of Komag (which shall not be
unreasonably withheld); wages of employee are less than $30.00 per hour - see
note below].
*NOTE: ANY FIVE TECHS TO BE NAMED LATER. SEVERANCE LIABILITY NOT TO EXCEED
$135,000.00
99
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.....................................................................1
1.1 Affiliate............................................................................1
1.2 Agreement............................................................................1
1.3 Ancillary Agreements.................................................................1
1.4 Chahaya Business.....................................................................1
1.5 Chahaya Employee.....................................................................1
1.6 Chahaya Group........................................................................2
1.7 Chahaya..............................................................................2
1.8 Code.................................................................................2
1.9 Contribution Agreement...............................................................2
1.10 Contribution.........................................................................2
1.11 DOL..................................................................................2
1.12 ERISA................................................................................2
1.13 FMLA.................................................................................2
1.14 IRS..................................................................................2
1.15 KOMAG Employee.......................................................................2
1.16 KOMAG Group..........................................................................2
1.17 KOMAG Terminated Employee............................................................2
1.18 KOMAG................................................................................3
1.19 Liabilities..........................................................................3
1.20 Material Feature.....................................................................3
1.21 Option...............................................................................3
1.22 Participating Company................................................................3
1.23 Payroll Date.........................................................................3
1.24 Person...............................................................................3
1.25 Plan.................................................................................4
1.26 SEC..................................................................................4
1.27 Section 401(k) Plan..................................................................4
1.28 Severance Plan.......................................................................4
1.29 Stock Plan...........................................................................4
1.30 Subsidiary...........................................................................4
i.
100
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE II GENERAL PRINCIPLES..............................................................4
2.1 Komag Liabilities....................................................................4
2.2 Establishment of Chahaya Plans.......................................................4
2.3 Chahaya's Participation in KOMAG Plans...............................................5
2.4 Terms of Participation by Chahaya Transferred Employees in Chahaya Plans.............5
ARTICLE III SECTION 401(K) PLAN.............................................................6
3.1 Section 401(k) Plan and Trust........................................................6
3.2 Section 401(k) Plan: Transfer of Assets..............................................6
ARTICLE IV SEVERANCE PLAN..................................................................6
4.1 ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ Plan...............................................................6
4.2 Allocation of Expenses...............................................................6
4.3 Reimbursement Exception..............................................................7
ARTICLE V EQUITY COMPENSATION.............................................................7
5.1 Chahaya Option Grants................................................................7
5.2 Termination of KOMAG Options.........................................................7
ARTICLE VI ADMINISTRATIVE PROVISIONS.......................................................7
6.1 Sharing of Participant Information...................................................7
6.2 Reporting and Disclosure Communications to Participants..............................7
6.3 Beneficiary Designations.............................................................7
6.4 Requests for IRS and DOL Opinions....................................................8
6.5 Fiduciary Matters....................................................................8
6.6 Consent of Third Parties.............................................................8
ARTICLE VII EMPLOYMENT-RELATED MATTERS......................................................8
7.1 Terms of Chahaya Employment..........................................................8
7.2 Non-Solicitation of Employees........................................................8
7.3 U.S. Work Visas.....................................................................8
7.4 Confidentiality and Proprietary Information..........................................9
7.5 Payroll and Withholding..............................................................9
7.6 Personnel and Pay Records............................................................9
ii.
101
TABLE OF CONTENTS
(CONTINUED)
PAGE
----
ARTICLE VIII GENERAL PROVISIONS..............................................................9
8.1 Relationship of Parties..............................................................9
8.2 Governing Law.......................................................................10
8.3 Severability........................................................................10
8.4 Amendment...........................................................................10
8.5 Termination.........................................................................10
8.6 Conflict............................................................................10
8.7 Counterparts........................................................................10
iii.
102
1.1 Transfer of Assets...................................................................1
1.3 No Assumption of Liabilities.........................................................1
2. Facilities Sharing and Services Agreement.......................................1
3. Manufacturing Services..........................................................2
4. Transfer of Employees...........................................................2
5. License Grant...................................................................2
6. Restriction on Competition......................................................2
7. Representations and Warranties of Komag.........................................3
7.1 Due Organization; Authority..........................................................3
7.2 Non-Contravention; Consents..........................................................3
7.3 Third Party Claims/Actions...........................................................3
7.4 Tax Liabilities......................................................................3
7.5 Third Party Contracts................................................................3
7.6 Title to Transferred Assets..........................................................4
7.7 Sufficiency of Transferred Assets....................................................4
7.8 Orders, Writs........................................................................4
8. Representations and Warranties of Chahaya.......................................4
8.1 Due Organization; Authority..........................................................4
8.2 Orders, Writs........................................................................4
8.3 Non-Contravention; Consents..........................................................4
9. Indemnification.................................................................5
10. Confidentiality.................................................................5
11. Definitions of Certain Terms....................................................6
12. Miscellaneous Provisions........................................................7
12.1 Survival of Representations..........................................................7
12.2 Assignment...........................................................................8
12.3 Governing Law........................................................................8
12.4 Counterparts.........................................................................8
12.5 Notices..............................................................................8
12.6 Attorney's Fees......................................................................9
12.7 Enforceability......................................................................10
12.8 Entire Agreement....................................................................10
i.
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Exhibits
--------
Exhibit A: ▇▇▇▇ of Sale
Exhibit B: Transferred IP
Exhibit C: Facilities Sharing and Services Agreement
Exhibit D: Manufacturing Services Agreement
Exhibit E: Employee Matters Agreement
1.
104
EXHIBIT C
REPURCHASE OPTION AND
ESCROW AGREEMENT
THIS REPURCHASE OPTION AND ESCROW AGREEMENT (the "AGREEMENT"), dated as of
November , 2000 (the "EFFECTIVE DATE"), is entered into by and between KOMAG,
INCORPORATED, a Delaware corporation ("KOMAG"), and CHAHAYA OPTRONICS, INC., a
Delaware corporation ("CHAHAYA"). The parties hereto are also referred to in
this Agreement individually as a "Party" and collectively as the "Parties."
WHEREAS, this Agreement is entered into in connection with the issuance by
Chahaya of Class A Preferred Stock to Komag and a group of investors under that
certain Stock Purchase and Contribution Agreement dated as of November 27, 2000;
and
WHEREAS, the Parties have entered into a Manufacturing Services Agreement dated
as of November 21, 2000 pursuant to which Komag has agreed to pay a
manufacturing services fee of Four Million Dollars ($4,000,000) in installments
as follows: (i) one installment of Two Million Dollars ($2,000,000) on or before
June 30, 2001 (the "June Payment") and (ii) one installment of Two Million
Dollars ($2,000,000) on or before December 31, 2001 (the "December Payment" and
collectively referred to as the "Scheduled Payments").
NOW, THEREFORE, the Parties hereby agree as follows:
1. REPURCHASE OPTION. In the event Komag fails to make the June Payment in
full by July 15, 2001, then Chahaya shall have the irrevocable option
(the "June Option"), for a period of sixty (60) days after such failure,
to repurchase from Komag, at a price per share of $1.00 (as adjusted for
splits, reclassifications, recapitalizations and the like) (the "Stock
Price"), shares of Class A Preferred Stock ("Stock") held by Komag
having an aggregate purchase price equal to Two Million Dollars
($2,000,000), less any amount paid by Komag to Chahaya in respect of the
June payment. In the event Komag fails to make the December Payment in
full by January 15, 2002, then Chahaya shall have the irrevocable option
(the "December Option"), for a period of sixty (60) days after such
failure, to repurchase from Komag at the Stock Price shares of Class A
Preferred Stock held by Komag having an aggregate purchase price equal
to Two Million Dollars ($2,000,000), less any amount paid by Komag to
Chahaya in respect of the December payment. The June Option and the
December Option are together referred to herein as the "Repurchase
Options."
2. EXERCISE OF REPURCHASE OPTIONS. The Repurchase Options shall be
exercised by written notice signed by an officer of Chahaya or by any
assignee or assignees of Chahaya and delivered or mailed as provided in
Section 9.9. Such notice shall identify the number of shares of Stock to
be purchased and shall notify Komag of the time, place and date for
settlement of such purchase, which shall be scheduled by Chahaya within
the
2.
105
term of the applicable Repurchase Option set forth in Section 1 above.
Chahaya shall be entitled to pay for any shares of Stock purchased
pursuant to its Repurchase Option at Chahaya's option in cash or by
offset against the amount of the June Payment or the December Payment,
as the case may be, then owing to Chahaya by Komag under the
Manufacturing Services Agreement, or by a combination of both. Upon
delivery of such notice and payment of the purchase price in any of the
ways described above, Chahaya shall become the legal and beneficial
owner of the stock being repurchased and all rights and interests
therein or related thereto, and Chahaya shall have the right to transfer
to its own name the stock being repurchased by Chahaya, without further
action by Komag.
3. ADJUSTMENTS TO STOCK. If, from time to time, during the term of the
Repurchase Options there is any change affecting Chahaya's outstanding
Common Stock as a class that is effected without the receipt of
consideration by Chahaya (through merger, consolidation, reorganization,
reincorporation, stock dividend, dividend in property other than cash,
stock split, liquidating dividend, combination of shares, change in
corporation structure or other transaction not involving the receipt of
consideration by Chahaya), then any and all new, substituted or
additional securities or other property to which Komag is entitled by
reason of Komag's ownership of Stock shall be immediately subject to the
Repurchase Options and be included in the word "Stock" for all purposes
of the Repurchase Options with the same force and effect as the shares
of the Stock presently subject to the Repurchase Options, but only to
the extent the Stock is, at the time, covered by such Repurchase
Options. While the total price per share paid by Purchaser for such
stock (the "Option Price") shall remain the same after each such event,
the Option Price per share of Stock upon exercise of the Repurchase
Options shall be appropriately adjusted.
4. CORPORATE TRANSACTION. In the event of (a) a sale of substantially all
of the assets of Chahaya; (b) a merger or consolidation in which Chahaya
is not the surviving corporation (other than a merger or consolidation
in which shareholders immediately before the merger or consolidation
have, immediately after the merger or consolidation, greater stock
voting power); or (c) a reverse merger in which Chahaya is the surviving
corporation but the shares of Chahaya's common stock outstanding
immediately preceding the merger are converted by virtue of the merger
into other property, whether in the form of securities, cash or
otherwise (other than a reverse merger in which shareholders immediately
before the merger have, immediately after the merger, greater stock
voting power); or (d) any transaction or series of related transactions
in which in excess of 50% of Chahaya's voting power is transferred,
other than the sale by Chahaya of stock in transactions the primary
purpose of which is to raise capital for Chahaya's operations and
activities ((a) through (d) being collectively referred to herein as a
"Corporate Transaction"), then the Repurchase Options may be assigned by
Chahaya to any successor of Chahaya (or the successor's parent) in
connection with such Corporate Transaction. To the extent that the
Repurchase Options remain in effect following such a Corporate
Transaction, they shall apply to the new capital stock or other property
received in exchange for the Stock in consummation of the Corporate
Transaction, but only to the extent the Stock is at the time covered by
such right. Appropriate adjustments shall be made to the price per share
payable upon exercise of the Repurchase Options to
3.
106
reflect the effect of the Corporate Transaction upon Chahaya's capital
structure; provided, however, that the aggregate Option Price shall
remain the same.
5. ESCROW OF STOCK. As security for Komag's faithful performance of the
terms of this Agreement and to insure the availability for delivery of
Komag's Stock upon exercise of the Repurchase Options herein provided
for, Komag agrees, upon execution of this Agreement, to deliver to and
deposit with Chahaya (in that capacity the "Escrow Agent"), as Escrow
Agent in this transaction, two (2) stock assignments duly endorsed (with
date and number of shares blank) in the form attached hereto as EXHIBIT
A, together with a certificate or certificates evidencing all of the
Stock subject to the Repurchase Options; said documents are to be held
by the Escrow Agent and delivered by said Escrow Agent pursuant to the
escrow instructions of Chahaya and Komag set forth in Section 9. Komag
hereby acknowledges that Chahaya is so appointed as the escrow holder
with the foregoing authorities as a material inducement to make this
Agreement and that said appointment is coupled with an interest and is
accordingly irrevocable. Komag agrees that Escrow Agent shall not be
liable to any party hereof (or to any other party). Escrow Agent may
rely upon any letter, notice or other document executed by any signature
purported to be genuine and may resign at any time. Komag agrees that if
Chahaya resigns as Escrow Agent for any or no reason, the Board of
Directors of Chahaya shall have the power to appoint a successor to
serve as Escrow Agent pursuant to the terms of this Agreement. The
successor Escrow Agent shall be approved by Komag (which approval shall
not be unreasonably withheld).
6. RIGHTS OF KOMAG. Subject to the provisions of Sections 1 and 7 herein,
Komag shall exercise all rights and privileges of a stockholder of
Chahaya with respect to the Stock deposited in escrow. Komag shall be
deemed to be the holder for purposes of receiving any dividends that may
be paid with respect to such shares of Stock and for the purpose of
exercising any voting rights relating to such shares of Stock.
7. LIMITATIONS ON TRANSFER. In addition to any other limitation on transfer
created by applicable securities laws or by agreement, Komag shall not
assign (except by operation of law), hypothecate, donate, encumber or
otherwise dispose of any interest in the Stock while the Stock is
subject to the Repurchase Options. After any Stock has been released
from the Repurchase Options, Komag shall not assign, hypothecate,
donate, encumber or otherwise dispose of any interest in the Stock
except in compliance with the provisions of the Stockholders Agreement,
dated of even date herein by and among Chahaya, Komag, certain investors
and other parties thereto, and applicable securities laws.
8. RESTRICTIVE LEGENDS. All certificates representing the Stock that is
subject to the Repurchase Options shall have endorsed thereon a legend
in substantially the following form (in addition to any other legend
which may be required by other agreements between the parties hereto):
"THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION SET
FORTH IN AN AGREEMENT BETWEEN CHAHAYA AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE
PRINCIPAL OFFICE OF CHAHAYA. ANY
4.
107
TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT TO SUCH OPTION IS
VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF CHAHAYA."
9. MISCELLANEOUS INSTRUCTIONS AND PROVISIONS.
9.1 In the event Chahaya or an assignee shall elect to exercise a
Repurchase Option pursuant to Section 2 of this Agreement, Chahaya will give to
Komag a written notice specifying the number of shares of Stock to be purchased,
the purchase price, and the time for a closing hereunder at the principal office
of Chahaya. Komag hereby irrevocably authorizes and directs the Escrow Agent to
close the transaction contemplated by such notice in accordance with the terms
of said notice.
9.2 At the closing the Escrow Agent is directed (a) to date any stock
assignments necessary for the transfer in question, (b) to fill in the number of
shares being transferred, and (c) to deliver the same, together with the
certificate evidencing the shares of Stock to be transferred to Chahaya, against
the delivery to Komag of the purchase price (which may include suitable
acknowledgment of cancellation of any obligation being offset) of the number of
shares of stock being purchased pursuant to the exercise of the applicable
Repurchase Option.
9.3 Komag irrevocably authorizes Chahaya to deposit with the Escrow
Agent any certificates evidencing shares of Stock subject to the Repurchase
Options to be held by the Escrow Agent hereunder and any additions and
substitutions to said shares as specified in this Agreement. Komag does hereby
irrevocably constitute and appoint the Escrow Agent as Komag's attorney-in-fact
and agent for the term of this Agreement to execute with respect to such
securities and other property all documents of assignment and/or transfer and
all stock certificates necessary or appropriate to make all securities
negotiable and complete any Repurchase Option herein contemplated.
9.4 This Agreement shall terminate upon the earlier of expiration of the
December Option or payment in full of the December Payment.
9.5 If at the time of termination of this Agreement, Chahaya or the
Escrow Agent should have in its possession any documents, securities, or other
property belonging to Komag, Chahaya or the Escrow Agent shall deliver all of
same to Komag and shall be discharged of all further obligations hereunder.
9.6 This Agreement may be amended only by means of a written instrument
executed by all of the parties hereto.
9.7 If Chahaya or the Escrow Agent reasonably requires other or further
instruments in connection with this Agreement or obligations in respect hereto,
Komag shall join in furnishing such instruments.
9.8 It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities, the Escrow Agent is authorized and directed to retain in its
possession without liability to anyone all or any part of said securities until
such dispute shall have been settled either by mutual written agreement of the
parties
5.
108
concerned or by a final order, decree or judgment of a court of competent
jurisdiction after the time for appeal has expired and no appeal has been
perfected.
9.9 Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery, including delivery
by express courier or five days after deposit in the United States Post Office,
by registered or certified mail with postage and fees prepaid, addressed to each
of the other parties hereunto entitled at the following addresses, or at such
other addresses as a party may designate by ten days' advance written notice to
each of the other parties hereto:
If to Komag:
Komag, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
If to Chahaya of the Escrow Agent:
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇
Attention: President
Telephone: (510)
Facsimile: (510)
With a copy to:
Cooley Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
6.
109
9.10 This Agreement shall be governed by and interpreted and determined
in accordance with the laws of the State of California, as such laws are applied
by California courts to contracts made and to be performed entirely in
California by residents of that state.
7.
110
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in triplicate by their duly authorized representatives as of the
Effective Date.
KOMAG: CHAHAYA AND ESCROW AGENT:
KOMAG, INCORPORATED CHAHAYA OPTRONICS, INC.
By: By:
----------------------------- -------------------------------------
Name: Name:
--------------------------- -----------------------------------
Title: Title:
-------------------------- ----------------------------------
8.
111
EXHIBIT A
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, KOMAG INCORPORATED hereby sells, assigns and
transfers unto CHAHAYA OPTRONICS, INC., a Delaware corporation (the "Company"),
pursuant to the Repurchase Option under that certain Repurchase Option and
Escrow Agreement, dated November 30, 2000, by and between the undersigned and
the Company (the "Agreement") _________ shares of Series A Preferred Stock of
the Company standing in the undersigned's name on the books of the Company
represented by Certificate No _________ and does hereby irrevocably constitute
and appoint the Company's Secretary attorney to transfer said stock on the books
of the Company with full power of substitution in the premises. This Assignment
may be used only in accordance with and subject to the terms and conditions of
the Agreement, in connection with the repurchase of shares of Series A Preferred
Stock issued to the undersigned pursuant to the Agreement, and only to the
extent that such shares remain subject to the Company's Repurchase Option under
the Agreement.
Dated:
-------------------
KOMAG, INCORPORATED
---------------------------------------
(Signature)
---------------------------------------
(By)
---------------------------------------
(Print Name)
9.
112
EXHIBIT D
CHAHAYA OPTRONICS, INC.
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (this "Agreement") is made and
entered into as of November 30, 2000, by and among Chahaya Optronics, Inc., a
Delaware corporation (the "Company"), each of the Persons listed on the Schedule
of Investors attached hereto (each, individually, an "Investor" and
collectively, the "Investors"), Komag, Incorporated, a Delaware corporation
("Komag"), and each of the Persons listed on the Schedule of Other Stockholders
attached hereto or that subsequently become parties to this Agreement in
connection with their initial acquisition of capital stock of the Company (each,
individually, an "Other Stockholder" and collectively, the "Other
Stockholders"). The Investors, Komag and the Other Stockholders are collectively
referred to herein as the "Stockholders" and individually as a "Stockholder."
Except as otherwise provided herein, capitalized terms used herein are defined
in paragraph 6 hereof.
WHEREAS, each of the Investors and Komag will acquire shares of
the Company's Class A Convertible Preferred Stock, par value $0.01 per share
(the "Class A Preferred"), pursuant to that certain Stock Purchase and
Contribution Agreement, dated as of the date hereof, by and among the Company,
the Investors and Komag (as the same may be amended or modified from time to
time in accordance with its terms, the "Purchase Agreement");
WHEREAS, the Company and the Stockholders desire to enter into
this Agreement for the purposes, among others, of (i) establishing the
composition of the Company's board of directors (the "Board"), (ii) assuring
continuity in the management and ownership of the Company and (iii) limiting the
manner and terms by which the Company's capital stock may be transferred;
WHEREAS, capitalized terms used and not otherwise defined herein
shall have the respective meanings ascribed to such terms in the Purchase
Agreement; and
WHEREAS, the execution and delivery of this Agreement is a
condition to the Closing under the Purchase Agreement.
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties to this Agreement
hereby agree as follows:
1. Board of Directors.
(a) From and after the Closing and until the provisions of this
paragraph 1 cease to be effective, each holder of Stockholder Shares shall vote
all of his, her or its Stockholder Shares which are voting shares and any other
voting securities of the Company over which such holder has voting control and
shall take all other necessary or desirable actions
113
within his, her or its control (whether in his, her or its capacity as a
stockholder, director, member of a board committee or officer of the Company or
otherwise, and including attendance at meetings in person or by proxy for
purposes of obtaining a quorum and execution of written consents in lieu of
meetings), and the Company shall take all necessary or desirable actions within
its control (including calling special board and stockholder meetings), so that:
(i) the authorized number of directors on the Board shall
be established at five (5) directors and shall thereafter be maintained
at (A) five (5), six (6) or seven (7) directors (as described more fully
in paragraph 1(d) below) or (B) at such greater number as the holders of
a majority of all Stockholder Shares may from time to time determine by
written consent;
(ii) during such time as the authorized number of
directors on the Board is five (5), the following representatives shall
be elected to the Board:
(A) two representatives designated by Komag (the
"Komag Directors"), with T. H. Tan and ▇▇▇▇▇ ▇▇▇▇ serving as the
Komag Directors immediately following the Closing; provided that
the right of Komag to designate directors shall cease in the
event that Komag ceases to hold at least 10% of the Underlying
Common Stock held by Komag immediately following the Closing; and
(B) three representatives designated by the
Investors (determined by a vote of the Investors holding a
majority of the Underlying Common Stock held by all of the
Investors) (the "Investor Directors"), with ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇ serving as the Investor
Directors immediately following the Closing; provided that the
right of the Investors to designate directors shall cease in the
event that the Investors cease to hold at least 10% of the
Underlying Common Stock held by the Investors immediately
following the Closing;
(iii) during such time as the authorized number of
directors on the Board is six (6), the following representatives shall
be elected to the Board:
(A) two representatives designated by Komag (the
"Komag Directors"); provided that the right of Komag to designate
directors shall cease in the event that Komag ceases to hold at
least 10% of the Underlying Common Stock held by Komag
immediately following the Closing;
(B) three representatives designated by the
Investors (determined by a vote of the Investors holding a
majority of the Underlying Common Stock held by all of the
Investors) (the "Investor Directors"); provided that the right of
the Investors to designate directors shall cease in the event
that the Investors cease to hold at least 10% of the Underlying
Common Stock held by the Investors immediately following the
Closing; and
114
(C) a representative acceptable to Komag and the
Investors (determined by a vote of Persons holding a majority of
the Underlying Common Stock held by all of them); provided that
such representative shall not be any officer or employee of the
Company, Komag or any Investor (the "Other Director");
(iv) during such time as the authorized number of
directors on the Board is seven (7), the following representatives shall
be elected to the Board:
(A) two representatives designated by Komag (the
"Komag Directors"); provided that the right of Komag to designate
directors shall cease in the event that Komag ceases to hold at
least 10% of the Underlying Common Stock held by Komag
immediately following the Closing;
(B) three representatives designated by the
Investors (determined by a vote of the Investors holding a
majority of the Underlying Common Stock held by all of the
Investors) (the "Investor Directors"); provided that the right of
the Investors to designate directors shall cease in the event
that the Investors cease to hold at least 10% of the Underlying
Common Stock held by the Investors immediately following the
Closing;
(C) the individual, if any, then serving as the
Chief Executive Officer of the Company (the "CEO"); and
(D) a representative acceptable to Komag and the
Investors (determined by a vote of Persons holding a majority of
the Underlying Common Stock held by all of them); provided that
such representative shall not be any officer or employee of the
Company, Komag or any Investor (the "Other Director");
(v) the composition of the board of directors or
equivalent body of each of the Company's Subsidiaries (a "Sub Board")
shall be determined by the Board;
(vi) (A) a Compensation Committee of the Board shall be
established that will be comprised of the CEO (if a CEO is then serving)
and one of the Investor Directors (it being understood that such
Compensation Committee's authority and duties shall be to make
recommendations to the Board regarding (1) the compensation (including
salary, bonuses and other forms of current and deferred compensation) to
be paid to each of the Company's executive employees (other than the
CEO, whose compensation shall be considered and established by the
Board) and (2) the administration of (and exercise of any rights or
powers under) the Option Plan and any other equity-based incentive plans
adopted by the Board) and (B) an Audit Committee of the Board shall be
established and shall include at least one Investor Director;
(vii)(A) the removal from the Board (with or without
cause) of any Komag Director shall be at the written request of Komag,
but only upon such written request and under no other circumstances,
during such time as Komag is entitled to designate such representative
as provided in subparagraphs (ii)(A), (iii)(A) and (iv)(A)
115
above, and (B) the removal from the Board (with or without cause) of any
Investor Director shall be at the written request of the Investors
(determined by a vote of the Investors holding a majority of the
Underlying Common Stock held by all of the Investors), but only upon
such written request and under no other circumstances, during such time
as the Investors are entitled to designate such representative as
provided in subparagraphs (ii)(B), (iii)(B) and (iv)(B) above, (C) the
removal from the Board of a person serving as CEO shall occur at the
effective time that such person ceases to serve as CEO, and (D) the
removal from the Board (with or without cause) of the Other Director, if
any, shall be at the written request of the holders of a majority of the
Underlying Common Stock held by Komag and all of the Investors, but only
upon such written request and under no other circumstances; and
(viii) (A) in the event that any Komag Director ceases to
serve as a member of the Board during his or her term of office, the
resulting vacancy on the Board shall be filled by a representative
designated as provided in subparagraphs (ii)(A), (iii)(A) and (iv)(A)
above, and (B) in the event that any Investor Director ceases to serve
as a member of the Board during his or her term of office, the resulting
vacancy on the Board shall be filled by a representative designated as
provided in subparagraphs (ii)(B), (iii)(B) and (iv)(B) above, and (C)
in the event that any Other Director ceases to serve as a member of the
Board during his or her term of office, the resulting vacancy on the
Board shall be filled by a representative designated as provided in
subparagraphs (iii)(C) and (iv)(D) above.
(b) The Company shall pay the reasonable out-of-pocket expenses
incurred by each director in connection with attending the meetings of the Board
and any committees thereof. The Company's Certificate of Incorporation and
bylaws shall provide for indemnification and exculpation of its directors to the
fullest extent permitted under applicable law.
(c) If any party or parties fail to designate a representative to
fill a position on the Board pursuant to the terms of this paragraph 1, the
individual previously holding such position shall be elected to such position,
or if such individual fails or declines to serve, such position shall remain
vacant until filled in accordance with the terms of this paragraph 1, and to the
extent any party or parties are no longer entitled to designate a representative
to fill a position on the Board pursuant to the terms of this paragraph 1, the
appointment or election of an individual to such directorship shall thereafter
be accomplished in accordance with the Company's bylaws and applicable law.
(d) It is the intent of the Stockholders that the number of
authorized directors of the Board be increased to six (6) as soon as reasonably
practicable after the date of this Agreement when an acceptable person to serve
as the Other Director has been identified and selected. Immediately following
such selection, the number of authorized directors of the Board shall increase
to six (6) (with such person being elected to serve as the Other Director), and
the number of authorized directors shall thereafter be maintained at six (6),
subject only to the immediately following sentence and to clause (B) of
subparagraph 1(a)(i) above. During such time (or from time to time) after the
number of authorized directors has been increased to six (6) that a CEO is
employed by the Company, the number of authorized directors shall be increased
to seven (7) (with such CEO serving as one of the directors) and shall
thereafter be maintained at
116
seven (7), except in the event that such CEO ceases to be employed by the
Company and is not immediately replaced (in which case the number of authorized
directors shall be reduced to six (6), unless and until a new CEO begins to
serve), subject in each case to clause (B) of subparagraph 1(a)(i) above.
(e) The provisions of this paragraph 1 shall terminate
automatically and shall be of no further force and effect upon the consummation
of a Sale of the Company or a Qualified Public Offering. No modification or
amendment of any provision of this paragraph 1 shall be effective against the
Company or the Stockholders unless such modification or amendment is approved in
writing by the Company, Komag and Investors holding a majority of the Underlying
Common Stock then held by the Investors.
2. Representations and Warranties; Agreements. Each Stockholder
represents and warrants as of the date hereof that (i) this Agreement has been
duly authorized, executed and delivered by such Stockholder and constitutes the
valid and binding obligation of such Stockholder, enforceable in accordance with
its terms, and (ii) such Stockholder has not granted and is not a party to any
proxy, voting trust or other agreement which is inconsistent with, conflicts
with or violates any provision of this Agreement. No holder of Stockholder
Shares shall grant any proxy or become party to any voting trust or other
agreement which is inconsistent with, conflicts with or violates any provision
of this Agreement.
3. Certain Transfer Restrictions.
(a) No Other Stockholder shall sell, transfer, assign, pledge or
otherwise dispose of (whether with or without consideration and whether
voluntarily or involuntarily or by operation of law) any interest in any
Stockholder Shares (a "Transfer"), except pursuant to a Public Sale or a Sale of
the Company (an "Exempt Transfer") or the provisions of this paragraph 3. Prior
to making any Transfer other than an Exempt Transfer, the Other Stockholder
transferring any Stockholder Shares (a "Transferring Stockholder") shall deliver
a written notice (a "Sale Notice") to the Company and to Komag and each of the
Investors (collectively, the "Significant Stockholders"). The Sale Notice shall
disclose in reasonable detail the identity of the prospective transferee(s), the
number of Stockholder Shares to be transferred and the terms and conditions of
the proposed Transfer.
(b) The Company may elect to purchase all or any portion of the
Transferring Stockholder's Stockholder Shares to be transferred upon the same
terms and conditions as those set forth in the Sale Notice by delivering a
written notice of such election to such Transferring Stockholder and the
Significant Stockholders within 20 days after the Sale Notice has been delivered
to the Company. If the Company does not elect to purchase all or any portion of
the Transferring Stockholder Shares to be transferred, the Significant
Stockholders shall have the right to elect to purchase all or any portion of the
remaining Transferring Stockholder's Stockholder Shares to be transferred upon
the same terms and conditions as those set forth in the sale notice by
delivering written notice of such election to such Transferring Stockholder on
or before the 30th day after the delivery of the Sale Notice to the Company (the
"Final Election Date"). If more than one of the Significant Stockholders elects
to purchase such Stockholder Shares, the Stockholder Shares available to be sold
shall be allocated among the Significant Stockholders pro rata according to the
number of shares of Underlying Common Stock held by
117
each such Significant Stockholders. If the Significant Stockholders have not so
elected to purchase all of the Stockholder Shares specified in the Sale Notice,
such Transferring Stockholder may Transfer all of the Stockholder Shares
specified in the Sale Notice (subject to the provisions of subparagraph (c)
below) and not purchased by the Significant Stockholders at a price and on terms
no more favorable to the transferee(s) thereof than specified in the Sale Notice
during the 60-day period immediately following the Final Election Date. Any such
Stockholder Shares not transferred within such 60-day period shall be subject to
the provisions of this paragraph 3 upon subsequent Transfer. If the Company
and/or the Significant Stockholders have elected to purchase all or any portion
of the Stockholder Shares to be transferred pursuant to this right of first
refusal, the Transfer of such Stockholder Shares shall be consummated as soon as
practical after the delivery of the election notice(s) to the Transferring
Stockholder, but in any event within 15 days after the Final Election Date.
(c) If any Stockholder proposes to make any Transfer (other than
an Exempt Transfer) of Stockholder Shares, such Stockholder (the "Proposing
Stockholder") shall deliver a written notice (a "Proposed Sale Notice") to each
Significant Stockholder, which Proposed Sale Notice shall disclose in reasonable
detail the identity of the prospective transferee(s), the number of Stockholder
Shares to be transferred and the terms and conditions of the proposed Transfer.
Each such Significant Stockholder may elect to participate in the contemplated
Transfer by delivering written notice to the Proposing Stockholder and the
Company within 20 days after receipt by such Person of the Proposed Sale Notice.
If a Proposing Stockholder has elected to participate in such Transfer, the
Proposing Stockholder and the Significant Stockholders so electing to
participate shall be entitled to sell in the contemplated Transfer, at the same
price and on the same terms and conditions contained in the Proposed Sale
Notice, a number of Stockholder Shares equal to the product of (i) the quotient
determined by dividing the percentage of Stockholder Shares held by such
Significant Stockholder by the aggregate percentage of Stockholder Shares held
by the Proposing Stockholder and all electing Significant Stockholders, and (ii)
the number of Stockholder Shares to be sold in the contemplated Transfer (and,
for avoidance of doubt in the case of a Transfer of Common Stock, a number of
shares of Underlying Common Stock held by such Significant Stockholder equal to
the product of (i) the quotient determined by dividing the percentage of Common
Stock that the Underlying Common Stock held by such Significant Stockholder
represents by the sum of the aggregate percentage of Common Stock (on a
fully-diluted basis) held by the Proposing Stockholder and the aggregate
percentage of Common Stock that the Underlying Common held by all electing
Significant Stockholders represents and (ii) the number of shares of Common
Stock to be sold in the contemplated Transfer).
For example, if the Sale Notice contemplated a sale of 100 Stockholder
Shares, and if the Proposing Stockholder was at such time the holder of
30% of all Stockholder Shares and if one Investor elected to participate
and such Investor held 20% of all Stockholder Shares, the Proposing
Stockholder would be entitled to sell 60 Stockholder Shares (30% / 50% x
100 Stockholder Shares) and the electing Investor would be entitled to
sell 40 Stockholder Shares (20% / 50% x 100 Stockholder Shares).
The Proposing Stockholder shall use his, her or its best efforts to obtain the
agreement of the prospective transferee(s) to the participation of the
Significant Stockholders in the contemplated
118
Transfer and shall not Transfer any Stockholder Shares to the prospective
transferee(s) if such transferee(s) refuses to allow the participation of the
Significant Stockholders.
(d) Komag agrees that it shall not, prior to the termination of
the restrictions contained in this paragraph 3 as set forth in subparagraph (f)
below, Transfer any interest in any Stockholder Shares to any of the holders of
its capital stock or other equity securities, without the prior written consent
of the Board (with the Komag Directors not participating in such decision).
Additionally, Komag agrees that it shall not, prior to the second anniversary of
the date of this Agreement, Transfer any interest in any Stockholder Shares to
any Person, without the prior written consent of the Board (with the Komag
Directors not participating in such decision).
(e) The restrictions contained in this paragraph 3 shall not
apply with respect to any Transfer of Stockholder Shares by any Other
Stockholder (i) in the case of any Other Stockholder that is an individual,
pursuant to applicable laws of descent and distribution or among such Other
Stockholder's Family Group, (ii) in the case of Komag, to any Person approved in
accordance with subparagraph (d) above, or (iii) in the case of any Investor, to
any other Investor or any Affiliate of any Investor (the permitted recipients in
the foregoing clauses (i) and (ii) being referred to herein collectively as
"Permitted Transferees"); provided that such restrictions shall continue to be
applicable to the Stockholder Shares after any such Transfer and the transferees
of such Stockholder Shares shall agree in writing to be bound by the provisions
of this Agreement affecting the Stockholder Shares so transferred (and execute a
Consent and Community Property Waiver (in the form attached hereto), in the case
of any individual that resides in California or another community property
State) as a condition precedent to any such Transfer. For purposes of this
Agreement, "Family Group" means an individual's spouse and descendants (whether
natural or adopted) or any trust established solely for the benefit of such
individual and/or such individual's spouse and/or descendants (but only so long
as such Stockholder retains the power to vote and dispose of the Stockholder
Shares held by any such trust and, if such power is not retained or is lost, any
such Transfer shall be subject to the restrictions set forth in this paragraph
3).
(f) The restrictions set forth in this paragraph 3 shall continue
with respect to each Stockholder Share following any Transfer thereof (other
than a Transfer pursuant to a Public Sale); provided that all such restrictions
shall terminate upon the consummation of a Sale of the Company or a Qualified
Public Offering. No modification or amendment of any provision of paragraph 3(a)
or 3(b) shall be effective against the Company or the Stockholders unless such
modification or amendment is approved in writing by the Company, Other
Stockholders holding a majority of the Common Stock then held by Other
Stockholders and the holders of a majority of the Underlying Common Stock then
held by Komag and the Investors. No modification or amendment of any provision
of paragraph 3(c) or 3(d) shall be effective against the Company or the
Stockholders unless such modification or amendment is approved in writing by
Investors holding a majority of the Underlying Common Stock then held by the
Investors and Komag.
4. Certain First Refusal Rights.
(a) Except for (i) issuances of Common Stock (w) to the Company's
and any of its Subsidiaries' employees pursuant to options granted under the
Option Plan that are recommended by the Compensation Committee and approved by
the Board, (x) in connection
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with the acquisition of another company or business as approved by the Board,
(y) pursuant to a Qualified Public Offering, or (z) in connection with a stock
split or a dividend solely of shares of Common Stock and (ii) issuances of
Securities (as defined below) as approved by the Board to parties providing the
Company with loans, leases, guaranties or strategic alliances, if the Company
authorizes the issuance or sale of any shares of Common Stock or any securities
(including debt securities) containing options or rights to acquire any shares
of Common Stock (other than as a dividend on the outstanding shares of Common
Stock) or any securities exchangeable for or convertible into Common Stock
(collectively, "Securities") the Company shall first offer to sell to Komag and
each Investor a portion of such Securities equal to the quotient determined by
dividing (1) the total number of shares of Underlying Common Stock held by such
Person by (2) the total number of shares of outstanding Common Stock (including
all Underlying Common Stock) then held by all of the Stockholders. Each such
Person shall be entitled to purchase such securities at the most favorable price
and on the most favorable terms as such securities are to be offered or sold to
any other Persons; provided that if all Persons entitled to purchase or receive
such securities are required to also purchase other securities of the Company,
each Person exercising its rights pursuant to this paragraph shall also be
required to purchase the same strip of securities (on the same terms and
conditions) that such other Persons are required to purchase. The purchase price
for all securities to be purchased hereunder shall be payable in cash or, to the
extent otherwise consistent with the terms offered to any other Persons,
installments over time.
(b) In order to exercise its purchase rights hereunder, Komag and
each Investor must within 20 days after receipt of written notice from the
Company describing in reasonable detail the Securities being offered, the
purchase price therefor, the payment terms and such Person's percentage
allotment, deliver a written notice to the Company describing its election
hereunder. If all of the Securities offered to Komag and the Investors are not
fully subscribed by such Persons, the remaining securities shall be reoffered by
the Company to all of such Persons purchasing their full allotment upon the
terms set forth in this paragraph 4, except that such holders must exercise
their purchase rights within five days after receipt of such reoffer.
(c) Upon the expiration of the offering periods described above,
the Company shall be entitled to sell such securities that Komag and the
Investors have not elected to purchase during the 60 days following such
expiration on terms and conditions no more favorable to the purchaser thereof
than those offered to Komag and the Investors. Any securities offered or sold by
the Company after such 60-day period must be reoffered to Komag and the
Investors pursuant to the terms of this paragraph 4.
(d) The rights of Komag and the Investors under this paragraph 4
shall terminate upon the consummation of a Sale of the Company or a Qualified
Public Offering. No modification or amendment of any provision of this paragraph
4 shall be effective against the Company or the Stockholders unless such
modification or amendment is approved in writing by the Company and the holders
of a majority of the Underlying Common Stock then held by Komag and the
Investors (and Komag, but only if such modification or amendment would
materially and adversely affect Komag in a manner differently from the
Investors).
5. Distributions Upon Sale of the Company. In the event of a Sale
of the Company, each Stockholder shall receive in exchange for each share of
capital stock held by
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such Stockholder the same portion of the aggregate consideration from such
transaction that such Stockholder would have received if such aggregate
consideration had been distributed by the Company in complete liquidation
pursuant to the rights and preferences set forth in the Certificate of
Incorporation as in effect immediately prior to such sale or exchange. The
provisions of this paragraph 5 shall terminate upon the consummation of a
Qualified Public Offering.
6. Transfers; Future Sales. Prior to any Stockholder Transferring
any Stockholder Shares (other than pursuant to an Exempt Transfer) to any Person
and prior to the Company issuing any Common Stock (other than pursuant to a
Qualified Public Offering) or any options or other rights to acquire Common
Stock or any securities convertible into or exchangeable for such Common Stock
to any Person, such Stockholder or the Company, as the case may be, shall cause
the prospective transferee to be bound by this Agreement and to execute and
deliver to the Company and the other Stockholders a counterpart of this
Agreement (and execute a Consent and Community Property Waiver (in the form
attached hereto), in the case of any individual that resides in California or
another community property State). Transferees of Stockholder Shares held by
Investors (other than the Other Stockholders or their Permitted Transferees, all
of whom shall be deemed to be Other Stockholders hereunder) shall be deemed to
be Investors hereunder. Transferees of Stockholder Shares held by Other
Stockholders (other than the Investors or their Affiliates and their designees,
all of whom shall be deemed to be Investors hereunder) and transferees of Common
Stock (or options or other rights to acquire Common Stock or securities
convertible into or exchangeable for such Common Stock) issued by the Company
(other than the Investors and/or their Affiliates and designees, all of whom
shall be deemed to be Investors hereunder) shall be deemed to be Other
Stockholders hereunder (and Transferees of Komag shall be subject to the
obligations of Komag hereunder). The provisions of this paragraph 6 shall
terminate upon the consummation of a Qualified Public Offering or a Sale of the
Company.
7. Definitions.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by or under common control with
such Person and any direct or indirect partner or member of such Person if such
Person is a partnership or limited liability company.
"Certificate of Incorporation" has the meaning set forth in the
Purchase Agreement (after giving effect to the amendment thereof contemplated by
the Purchase Agreement in connection with the Closing, and as the same may be
amended or modified from time to time thereafter in accordance with its terms).
"Other Stockholders" means those Persons identified on the
Schedule of Other Stockholders attached hereto and such other Persons as may
become "Other Stockholders" hereunder from time to time under the circumstances
described in paragraph 6 above.
"Person" means an individual, a partnership, a corporation, a
limited liability company, an association, a joint stock company, a trust, a
joint venture, an unincorporated organization and a governmental entity or any
department, agency or political subdivision thereof.
121
"Public Sale" means any sale of Stockholder Shares to the public
pursuant to an offering registered under the Securities Act or to the public
through a broker, dealer or market maker pursuant to the provisions of Rule 144
adopted under the Securities Act (or any similar provision then in force).
"Qualified Public Offering" has the meaning set forth in the
Certificate of Incorporation.
"Sale of the Company" means a sale of the Company pursuant to
which one or more Persons acquire (i) all or substantially all of the capital
stock of the Company (whether by merger, consolidation or sale or transfer of
the Company's capital stock or otherwise) or (ii) all or substantially all of
the Company's assets determined on a consolidated basis.
"Securities Act" means the Securities Act of 1933, as amended
from time to time.
"Securities Exchange Act" means the Securities Exchange Act of
1934, as amended from time to time.
"Stockholder Shares" means (i) any Common Stock and any other
capital stock of the Company purchased or otherwise acquired or held by any
Stockholder, (ii) any Common Stock and any other capital stock of the Company
issued or issuable directly or indirectly upon the conversion, exercise or
exchange of any securities purchased or otherwise acquired by any Stockholder
which are convertible into or exercisable or exchangeable for Common Stock or
any other capital stock of the Company (including any options to purchase Common
Stock granted by the Company) and (iii) any other equity securities issued or
issuable directly or indirectly with respect to the securities referred to in
clauses (i) or (ii) above by way of a dividend or stock split or in connection
with a combination of shares, recapitalization, merger, consolidation or other
reorganization. As to any particular securities constituting Stockholder Shares
hereunder, such Stockholder Shares shall cease to be Stockholder Shares when
they have been (x) effectively registered under the Securities Act and disposed
of in accordance with the registration statement covering them or (y) sold to
the public through a broker, dealer or market maker pursuant to Rule 144 (or any
similar provision then in force) under the Securities Act.
"Securities and Exchange Commission" means the U.S. Securities
and Exchange Commission or any successor thereto.
"Subsidiary" means, with respect to any Person, any corporation,
limited liability company, partnership, association or other business entity of
which (i) if a corporation, a majority of the total voting power of shares of
stock entitled (without regard to the occurrence of any contingency) to vote in
the election of directors or trustees thereof is at the time owned or
controlled, directly or indirectly, by that Person or one or more Subsidiaries
of that Person or a combination thereof, or (ii) if a limited liability company,
partnership, association or other business entity, a majority of the limited
liability company, partnership or other similar ownership interest thereof is at
the time owned or controlled, directly or indirectly, by that Person or one or
more Subsidiaries of that Person or a combination thereof. For purposes hereof,
a Person or Persons shall be deemed to have a majority ownership interest in a
limited liability company, partnership, association or other business entity if
such Person or Persons shall be
122
allocated a majority of the limited liability company, partnership, association
or other business entity gains or losses or shall be or control the managing
member, general partner or managing director of such limited liability company,
partnership, association or other business entity.
"Underlying Common Stock" means (i) the Common Stock issued or
issuable upon conversion of any outstanding Class A Preferred and (ii) any
Common Stock issued or issuable with respect to the securities referred to in
clause (i) above by way of stock dividend or stock split or in connection with a
contribution of shares, recapitalization, merger, consolidation or other
reorganization.
8. Financial Statements and Other Information. Until such time as
the Company has consummated a Qualified Public Offering or Sale of the Company,
the Company shall deliver to each Significant Stockholder:
(a) Not later than 30 days prior to the last day of each fiscal
year, capital and operating expense budgets, projections of sources and
applications of funds and profit and loss projections (prepared in accordance
with generally accepted accounting principles, consistently applied) for the
Company and its Subsidiaries on a consolidated basis for each month of the next
succeeding fiscal year, all itemized in reasonable detail and prepared by
Company. Any material revisions made in such budgets or projections shall be
furnished promptly to such Stockholder;
(b) As soon as available and in any event within 90 days after
the end of each fiscal year, audited financial statements of the Company and its
Subsidiaries on a consolidated and consolidating basis, including a balance
sheet as at the end of such fiscal year, statements of income and retained
earnings and a related statement of cash flows for such fiscal year and the
figures for the preceding year, together with all notes thereto, prepared in
reasonable detail and in accordance with generally accepted accounting
principles consistently applied and accompanied by the report thereon of an
accounting firm of recognized national standing as selected by the Board;
(c) As soon as available and in any event within 45 days after
the end of each fiscal quarter, unaudited financial statements of the Company
and its Subsidiaries on a consolidated and consolidating basis, including a
balance sheet as at the end of the preceding fiscal quarter, statements of
income and retained earnings and a related statement of cash flows for such
quarter (prepared in accordance with generally accepted accounting principles,
consistently applied), such figures for the corresponding fiscal quarter of the
preceding fiscal year and comparisons to the budget for such fiscal quarter.
Such financial statements shall be certified by the chief financial officer of
the Company to be complete and accurate, to fairly present the financial
condition of the Company and its Subsidiaries and to be prepared in accordance
with generally accepted accounting principles, consistently applied;
(d) As soon as available and in any event within 30 days after
the end of each month, monthly financial statements of the Company and its
Subsidiaries on a consolidated basis, including a balance sheet as at the end of
the preceding calendar month and statements of income and retained earnings and
a related statement of cash flows for such month (prepared in accordance with
generally accepted accounting principles, consistently applied), such figures
for the corresponding month of the preceding fiscal year and comparisons to the
budget for such month. Such financial statements shall be certified by the chief
financial officer of the Company
123
to be complete and accurate, to fairly present the financial condition of the
Company and its Subsidiaries and to be prepared in accordance with generally
accepted accounting principles, consistently applied;
(e) As soon as available and in any event within 30 days after
the end of each month, a statement signed by the chief financial officer of the
Company, setting forth in reasonable detail a consolidated report providing
operational data reasonably requested by the Investors;
(f) Promptly, and in no event more than ten days after receipt
thereof, copies of all audit reports, so-called "management letters" and other
communications and reports submitted to the Company or any of its Subsidiaries
by independent certified public accountants in connection with each interim or
special audit of the Company or any of its Subsidiaries made by such
accountants; and
(g) Promptly, but in any event within ten days after the Company
has knowledge thereof (i) written notice of any actual or anticipated material
adverse change in the operations or financial condition of the Company or any of
its Subsidiaries, and (ii) copies of any report of any Person with respect to
the condition of the Company or any Subsidiary citing any material adverse
condition at the Company or such Subsidiary.
9. Certain Additional Transfer Restrictions.
(a) Stockholder Shares are transferable only pursuant to (i)
public offerings registered under the Securities Act, (ii) Rule 144 or Rule 144A
of the Securities and Exchange Commission (or any similar rule or rules then in
force) if such rule is available and (iii) subject to the conditions specified
in subparagraph (b) below, any other legally available means of transfer.
(b) In connection with the Transfer of any Stockholder Shares
(other than a Transfer described in clause (i) or (ii) of subparagraph (a)
above), the holder thereof shall, in addition to complying with the other
applicable provisions of this Agreement, deliver written notice to the Company
describing in reasonable detail the Transfer or proposed Transfer, together with
an opinion of ▇▇▇▇▇▇▇▇ & Ellis, Wilson, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ or ▇▇▇▇▇▇
Godward LLP or other counsel which (to the Company's reasonable satisfaction) is
knowledgeable in securities law matters to the effect that such Transfer of
Stockholder Shares may be effected without registration of such Stockholder
Shares under the Securities Act. In addition, if the holder of the Stockholder
Shares delivers to the Company an opinion of ▇▇▇▇▇▇▇▇ & Ellis, Wilson, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ or ▇▇▇▇▇▇ Godward LLP or such other counsel that no subsequent
Transfer of such Stockholder Shares shall require registration under the
Securities Act, the Company shall promptly upon such contemplated Transfer
deliver new certificates for such Stockholder Shares which do not bear the
Securities Act legend set forth in subparagraph (e) below.
(c) Upon the request of a holder of Stockholder Shares, the
Company shall promptly supply to such holder or such holder's prospective
transferees all information regarding the Company required to be delivered in
connection with a Transfer pursuant to Rule 144A of the Securities and Exchange
Commission.
124
(d) If any Stockholder Shares become eligible for sale pursuant
to Rule 144(k), the Company shall, upon the request of the holder of such
Stockholder Shares, remove the legend set forth in subparagraph (e) below from
the certificates representing such Stockholder Shares.
(e) Each certificate (if any) representing Stockholder Shares
shall be imprinted with a legend in substantially the following form:
"The securities represented hereby have not been registered under the
Securities Act of 1933, as amended. The transfer of the securities
represented hereby is subject to the conditions specified in that
certain Stockholders Agreement, dated as of November 30, 2000, by and
among the issuer (the "Company") and certain stockholders, and the
Company reserves the right to refuse the transfer of such securities
until such conditions have been fulfilled with respect to such transfer.
A copy of such conditions shall be furnished by the Company to the
holder hereof upon written request and without charge."
10. Inspection of Property. The Company shall permit any
representatives designated by a Significant Stockholder, upon reasonable notice
and during normal business hours, to (i) visit and inspect any of the properties
of the Company and its Subsidiaries, (ii) examine the corporate and financial
records of the Company and its Subsidiaries and make copies thereof or extracts
therefrom and (iii) discuss the affairs, finances and accounts of Company and
its Subsidiaries with the directors, officers, key employees and independent
accountants of the Company and its Subsidiaries. The presentation of an executed
copy of this Agreement by any such Stockholder to the Company's independent
accountants shall constitute the Company's permission to its independent
accountants to participate in discussions with such Persons. The provisions of
this Section 10 shall terminate upon the consummation of a Qualified Public
Offering or a Sale of the Company.
11. Current Public Information. At all times after the Company
has filed a registration statement with the Securities and Exchange Commission
pursuant to the requirements of either the Securities Act or the Securities
Exchange Act, the Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act and the rules and
regulations adopted by the Securities and Exchange Commission thereunder and
shall take such further action as any Stockholder may reasonably request, all to
the extent required to enable such Stockholder to sell Stockholder Shares
pursuant to (a) Rule 144 adopted by the Securities and Exchange Commission under
the Securities Act (as such rule may be amended from time to time) or any
similar rule or regulation hereafter adopted by the Securities and Exchange
Commission or (b) a registration statement on Form S-2 or S-3 or any similar
registration form hereafter adopted by the Securities and Exchange Commission.
Upon request, the Company shall deliver to any Stockholder a written statement
as to whether it has complied with such requirements.
12. Purchase Agreement, etc. The Company shall enforce the
provisions of the Purchase Agreement, the Registration Agreement and the
Contribution Agreement and shall exercise all of its rights and remedies
thereunder unless it is otherwise directed by Stockholders holding a majority of
the Underlying Common Stock held by all of the Stockholders.
125
13. Key Man Life Insurance. No later than 120 days after the date
of this Agreement, the Company shall obtain key-man life insurance on the life
of ▇▇▇▇▇▇ ▇▇▇▇ in the face amount of $1,000,000, and the Company shall
thereafter maintain such policy in full force and effect. Such insurance policy
shall name the Company as sole beneficiary.
14. Transfers in Violation of Agreement. Any Transfer or
attempted Transfer of any Stockholder Shares in violation of any provision of
this Agreement shall be void, and the Company shall not record such Transfer on
its books or treat any purported transferee of such Stockholder Shares as the
owner of such Stockholder Shares for any purpose.
15. Amendment and Waiver. Except as otherwise provided herein, no
modification or amendment of any provision of this Agreement shall be effective
against the Company or the Stockholders unless such modification or amendment is
approved in writing by the Company, Komag and Investors holding a majority of
the Underlying Common Stock then held by the Investors and Other Stockholders
holding a majority of the Common Stock then held by the Other Stockholders, but
only if such modification or amendment would materially and adversely affect the
Other Stockholders in a manner differently from the Investors (with it being
understood that (x) the addition of parties to this Agreement as contemplated in
paragraph 6, (y) a change in any provision relating to the manner in which
decisions of the Investors are to be made or (z) a change in any other provision
relating to amendments and waivers that does not, as of the date of this
Agreement, provide for the Other Stockholders to participate in such decision
shall in no event require the approval of the Other Stockholders). No waiver of
any provisions of this Agreement shall be effective unless such waiver is
approved in writing by the party against whom this waiver is sought to be
enforced (and the Board shall have sole authority to determine whether or not
the Company waives any such provision). The failure of any party to enforce any
of the provisions of this Agreement shall in no way be construed as a waiver of
such provisions and shall not affect the right of such party thereafter to
enforce each and every provision of this Agreement in accordance with its terms.
16. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be invalid,
illegal or unenforceable in any respect under any applicable law or rule in any
jurisdiction, such invalidity, illegality or unenforceability shall not affect
the validity, legality or enforceability of any other provision of this
Agreement in such jurisdiction or affect the validity, legality or
enforceability of any provision in any other jurisdiction, but this Agreement
shall be reformed, construed and enforced in such jurisdiction as if such
invalid, illegal or unenforceable provision had never been contained herein.
17. Entire Agreement. Except as otherwise expressly set forth
herein, this Agreement embodies the complete agreement and understanding among
the parties hereto with respect to the subject matter hereof and supersedes and
preempts any prior understandings, agreements or representations by or among the
parties, written or oral, which may have related to the subject matter hereof in
any way.
18. Successors and Assigns. Except as otherwise expressly
provided herein, this Agreement shall bind and inure to the benefit of and be
enforceable by the Company and its successors and assigns and the Stockholders
and any subsequent holders of Stockholder Shares
126
and the respective successors and assigns of each of them, so long as they hold
Stockholder Shares.
19. Counterparts. This Agreement may be executed in multiple
counterparts (including by means of telecopied signature pages), each of which
shall be an original and all of which taken together shall constitute one and
the same agreement.
20. Remedies. The parties hereto shall be entitled to enforce
their rights under this Agreement specifically, to recover damages by reason of
any breach of any provision of this Agreement and to exercise all other rights
existing in their favor. The parties hereto agree and acknowledge that money
damages would not be an adequate remedy for any breach of the provisions of this
Agreement and that the Company and any Stockholder may in its sole discretion
apply to any court of law or equity of competent jurisdiction for specific
performance and/or injunctive relief (without posting a bond or other security)
in order to enforce or prevent any violation of the provisions of this
Agreement.
21. Notices. Any notice provided for in this Agreement shall be
in writing and shall be either personally delivered, mailed first class mail
(postage prepaid), sent by reputable overnight courier service (charges prepaid)
or sent by facsimile to the Company and to Komag at their respective addresses
set forth below and to any other recipient at the address indicated on the
schedules hereto and to any subsequent holder of Stockholder Shares subject to
this Agreement at such address as indicated by the Company's records, or at such
address or to the attention of such other Person as the recipient party has
specified by prior written notice to the sending party. Notices shall be deemed
to have been received hereunder when delivered personally, five days after
deposit in the U.S. mail, one business day after deposit with a reputable
overnight courier service (charges prepaid) or upon machine-generated
acknowledgment of receipt after being transmitted by facsimile.
The Company's address is: Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice to the Company)
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
Komag's address is: Komag, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ________________
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice to Komag)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
22. Governing Law. The corporate law of the State of Delaware
shall govern all issues and questions concerning the relative rights of the
Company and its stockholders. All other issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement and the
exhibits and schedules hereto shall be governed by, and construed in accordance
with, the laws of the State of California without giving effect to any choice of
law or conflict of law rules or provisions (whether of the State of California
or any other jurisdiction) that would cause the application of the laws of any
jurisdiction other than the State of California.
23. Business Days. If any time period for giving notice or taking
action hereunder expires on a day which is a Saturday, Sunday or legal holiday
in the state in which the Company's chief executive office is then located, the
time period shall automatically be extended to the business day immediately
following such Saturday, Sunday or legal holiday.
24. Descriptive Headings, etc. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement. The use of the term "including" herein shall mean "including without
limitation."
25. No Strict Construction. The parties hereto have participated
jointly in the negotiation and drafting of this Agreement. In the event an
ambiguity or question or intent or interpretation arises, this Agreement shall
be construed as it was drafted jointly by the parties hereto, and no presumption
or burden of proof shall arise favoring or disfavoring any party hereto by
virtue of the authorship of any of the provisions of this Agreement. The parties
hereto intend that each covenant contained herein shall have independent
significance. If any party has breached any covenant contained herein in any
respect, the fact that there exists another covenant relating to the same or
similar subject matter (regardless of the relative levels of speciality) which
the party has not breached shall not detract from or mitigate the fact that the
party is in breach of the first covenant.
26. Stockholder Consent. Each Stockholder hereby consents to the
consummation of the transactions contemplated by the Purchase Agreement.
* * * * *
128
IN WITNESS WHEREOF, the parties hereto have executed this
Stockholders Agreement on the day and year first above written.
CHAHAYA OPTRONICS, INC.
By:______________________________________
Its:_____________________________________
STORM VENTURES FUND II, LLC
By:______________________________________
Member
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
SUMMIT VENTURES V COMPANION FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
[Signature Page to Stockholders Agreement]
129
SUMMIT V ADVISORS (QP) FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
SUMMIT INVESTORS III, L.P.
By:______________________________________
Authorized Signatory
KOMAG, INCORPORATED
By:______________________________________
Its:_____________________________________
[Signature Page to Stockholders Agreement]
130
U.S. VENTURES PARTNERS
By:______________________________________
Its:_____________________________________
[Signature Page to Stockholders Agreement]
131
VENROCK ASSOCIATES
By:______________________________________
Its:_____________________________________
[Signature Page to Stockholders Agreement]
132
_________________________________________
▇▇▇▇▇▇ ▇▇▇▇
[Signature Page to Stockholders Agreement]
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS III
By:______________________________________
Authorized Signatory
K&E INVESTMENT PARTNERS LLC-2000-B DIF
By:______________________________________
Authorized Signatory
GC&H INVESTMENTS
By:______________________________________
Authorized Signatory
_________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
[Signature Page to Stockholders Agreement]
134
Consent and Community Property Waiver
The undersigned hereby acknowledges that the undersigned has read
this Agreement and understands its contents. The undersigned is aware that this
Agreement provides for certain restrictions on Stockholder Shares owned by the
undersigned's spouse. The undersigned hereby acknowledges and agrees that the
interest of the undersigned's spouse in such Stockholder Shares is subject to
this Agreement and any interest the undersigned may have in such Stockholder
Shares shall be irrevocably bound by this Agreement and further that the
undersigned's community property interest, if any, shall be similarly bound by
this Agreement. The undersigned has sought legal advice with respect to such
waiver and has determined after carefully reviewing this Agreement that the
undersigned will waive such community property right.
_________________________________________
By: [SPOUSE OF ANY CALIFORNIA RESIDENT]
Witness
135
SCHEDULE OF INVESTORS
Storm Ventures Fund II, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
* * * * *
Summit Ventures V, L.P.
Summit Ventures V Companion Fund, L.P.
Summit V Advisors (QP) Fund, L.P.
Summit V Advisors Fund, L.P.
Summit Investors III, L.P.
In each case:
c/o Summit Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice to any of the Investors)
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇, Esq.
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (312) 861-2200
* * * * *
▇▇▇▇▇▇▇▇ Street Partners III
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
136
K&E Investment Partners LLC-2000-B DIF
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
GC&H Investments
c/o Cooley Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
* * * * *
Venrock Associates
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn:
With a copy to:
(which shall not constitute notice to any of the Investors)
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
* * * * *
U.S. Venture Partners VII, L.P.
2180 Associates Fund VII, ▇.▇.
▇▇▇▇ Entrepreneur Partners VII-A, ▇.▇.
▇▇▇▇ Entrepreneur Partners VII-B, L.P.
In each case:
c/o U.S. Venture Partners
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
137
SCHEDULE OF OTHER STOCKHOLDERS
▇▇▇▇▇▇ ▇▇▇▇
138
EXHIBIT E
CHAHAYA OPTRONICS, INC.
REGISTRATION AGREEMENT
THIS REGISTRATION AGREEMENT is made as of November 30, 2000, by
and among Chahaya Optronics, Inc., a Delaware corporation (the "Company"), and
the Persons listed as Purchasers on the Schedule of Purchasers attached hereto
(collectively, the "Purchasers"). Unless otherwise provided in this Agreement,
capitalized terms used herein shall have the meanings set forth in paragraph 8
hereof.
WHEREAS, the parties to this Agreement are parties to a Stock
Purchase and Contribution Agreement, dated as of the date of this Agreement (the
"Purchase Agreement");
WHEREAS, in order to induce the Purchasers to enter into the
Purchase Agreement and consummate the transactions contemplated thereby, the
Company has agreed to provide the registration rights set forth in this
Agreement; and
WHEREAS, the execution and delivery of this Agreement is a
condition to the Closing under the Purchase Agreement.
NOW, THEREFORE, the parties hereto hereby agree as follows:
1. Demand Registrations.
(a) Requests for Registration. At any time after the earlier to
occur of (i) the six-month anniversary of the effective date of the Company's
initial public offering of its securities registered under the Securities Act
and (ii) the first anniversary of the date of this Agreement, the holders of a
majority of the Registrable Securities may request registration under the
Securities Act of all or any portion of their Registrable Securities on Form S-1
or any similar long-form registration statement ("Long-Form Registrations") or
Form S-2 or S-3 or any similar short-form registration statement ("Short-Form
Registrations"), if the Company is eligible to use any such short form. All
registrations requested pursuant to this paragraph 1(a) are referred to herein
as "Demand Registrations." Each request for a Demand Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within ten days after
receipt of a request for a Demand Registration, the Company shall give written
notice of such requested registration to all other holders of Registrable
Securities and (subject to paragraph 1(d) below) shall include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice.
(b) Long-Form Registrations. The holders of Registrable
Securities shall be entitled to request two (2) Long-Form Registrations in which
the Company shall pay all Registration Expenses; provided that the aggregate
offering value of the Registrable Securities requested to be registered in any
Long-Form Registration must equal at least $5,000,000. A registration shall not
count as one of the permitted Long-Form Registrations until it has become
effective and unless the holders of Registrable Securities who requested such
registration are
139
able to register and sell at least 80% of the Registrable Securities requested
to be included in such registration; provided that in any event the Company
shall pay all Registration Expenses in connection with any registration
initiated as a Long-Form Registration whether or not it has become effective and
whether or not such registration has counted as one of the permitted Long-Form
Registrations hereunder.
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to paragraph 1(b) above, the holders of
Registrable Securities shall each be entitled to request an unlimited number of
Short-Form Registrations in which the Company shall pay all Registration
Expenses (including Short-Form Registrations pursuant to Rule 415 under the
Securities Act); provided that the aggregate offering value of the Registrable
Securities requested to be registered in any Short-Form Registration must equal
at least $5,000,000. The Company shall pay all Registration Expenses in
connection with any registration initiated as a Short-Form Registration whether
or not it has become effective and whether or not such registration is
consummated. Demand Registrations shall be Short-Form Registrations whenever the
Company is permitted to use any applicable short form. After the Company has
become subject to the reporting requirements of the Securities Exchange Act, the
Company shall use best efforts to make Short-Form Registrations on Form S-3
available for the sale of Registrable Securities.
(d) Priority on Demand Registrations. The Company shall not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of a majority of the
Registrable Securities included in such registration. If a Demand Registration
is an underwritten offering and the managing underwriters advise the Company in
writing that in their opinion the number of Registrable Securities and, if
permitted hereunder, other securities requested to be included in such offering
exceeds the number of Registrable Securities and other securities, if any, which
can be sold in an orderly manner in such offering within a price range
acceptable to the holders of a majority of the Registrable Securities included
in such registration, the Company shall include in such registration prior to
the inclusion of any securities which are not Registrable Securities the number
of Registrable Securities requested to be included which in the opinion of such
underwriters can be sold in an orderly manner within the price range of such
offering, pro rata among the respective holders thereof on the basis of the
number of Registrable Securities requested to be included therein.
(e) Selection of Underwriters. If any Demand Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities requested to be registered.
(f) Restrictions on Demand Registrations. The Company shall not
be obligated to effect any Demand Registration within 180 days after the
effective date of the Company's initial public offering of Common Stock under
the Securities Act or within 90 days after the effective date of a previous
Demand Registration. The Company shall not grant to any Persons the right to
request the Company to register any equity securities of the Company, or any
securities convertible or exchangeable into or exercisable for such securities
(whether as a demand registration or piggyback registration), without the prior
written consent of the holders of a majority of the Registrable Securities;
provided that the Company may grant rights to other
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140
Persons to participate in Piggyback Registrations so long as such rights are
subordinate to the rights of the holders of Registrable Securities with respect
to such Piggyback Registrations.
2. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to a Demand
Registration, but including a registration for stockholders other than the
Purchasers) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and (subject to paragraphs 2(c) and 2(d)
below) shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 20 days after the receipt of the Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders
of Registrable Securities shall be paid by the Company in all Piggyback
Registrations whether or not such registration is consummated.
(c) Priority on Primary Registrations. If a Piggyback
Registration is an underwritten primary registration on behalf of the Company,
and the managing underwriters advise the Company in writing that in their
opinion the number of securities requested to be included in such registration
exceeds the number which can be sold in such offering without adversely
affecting the marketability of the offering, the Company shall include in such
registration (i) first, the securities the Company proposes to sell, (ii)
second, the Registrable Securities requested to be included in such
registration, pro rata among the holders of such Registrable Securities on the
basis of the number of Registrable Securities requested to be included therein
and (iii) third, any other securities requested to be included in such
registration.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of securities requested to be included
in such registration exceeds the number which can be sold in such offering
without adversely affecting the marketability of the offering, the Company shall
include in such registration (i) first, the securities requested to be included
therein by the holders requesting such registration and the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of securities owned by
each such holder and (ii) second, any other securities requested to be included
in such registration.
(e) Other Registrations. If the Company has previously filed a
registration statement with respect to Registrable Securities pursuant to
paragraph 1 or pursuant to this paragraph 2, and if such previous registration
has not been withdrawn or abandoned, the Company shall not file or cause to be
effected any other registration of any of its equity securities or securities
convertible or exchangeable into or exercisable for its equity securities under
the Securities Act (except on Form S-8 or any successor form), whether on its
own behalf
-38-
141
or at the request of any holder or holders of such securities, until a period of
at least 90 days has elapsed from the effective date of such previous
registration.
3. Holdback Agreements.
(a) No holder of Registrable Securities shall effect any public
sale or distribution (including sales pursuant to Rule 144) of equity securities
of the Company, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of the Company's initial public offering
of its Common Stock under the Securities Act (except as part of such
underwritten registration), unless the underwriters managing the registered
public offering otherwise agree, and no holder of Registrable Securities shall
effect any public sale or distribution (including sales pursuant to Rule 144) of
equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the period (not to exceed 90 days), if any, beginning on the effective date
of any other underwritten public offering of its Common Stock under the
Securities Act (except as part of such underwritten registration) to which the
Investor Representatives agree with the underwriters managing the registered
public offering.
(b) The Company (i) shall not effect any public sale or
distribution of its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and the 180-day period beginning on the effective date of the Company's initial
public offering of its Common Stock under the Securities Act or during the
90-day period beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or any
successor form), unless the underwriters managing the registered public offering
otherwise agree in writing, and (ii) shall cause each holder of at least 2% (on
a fully-diluted basis) of its Common Stock, or any securities convertible into
or exchangeable or exercisable for Common Stock, purchased from the Company at
any time after the date of this Agreement (other than in a registered public
offering or pursuant to a deferred closing under the Purchase Agreement) to
agree not to effect any public sale or distribution (including sales pursuant to
Rule 144) of any such securities during such period (except as part of such
underwritten registration, if otherwise permitted), unless the underwriters
managing the registered public offering otherwise agree in writing.
4. Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof, and pursuant thereto the Company shall
as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission
a registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; provided
that before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall furnish to up to two counsel selected by
the holders of a majority of the Registrable Securities covered by
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142
such registration statement copies of all such documents proposed to be filed,
which documents shall be subject to the review and comment of such counsel;
(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of either (i) not less than 180 days or, if such registration statement relates
to an underwritten offering, such longer period as in the opinion of counsel for
the underwriters a prospectus is required by law to be delivered in connection
with sales of Registrable Securities by any underwriter or dealer (with any such
period being extended during any period in which a stop order is in effect or
during any period described in subparagraph (e) below) or (ii) such shorter
period as will terminate when all of the securities covered by such registration
statement have been disposed of in accordance with the intended methods of
disposition by the seller or sellers thereof as set forth in such registration
statement (but in any event not before the expiration of any longer period
required under the Securities Act), and to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement until such time as all such securities have been disposed
of in accordance with the intended methods of disposition by the seller or
sellers thereof set forth in such registration statement and the prospectus used
in connection therewith;
(c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller (including any underwriter) reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; provided that the Company shall not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;
(e) notify each seller of such Registrable Securities, at any
time when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed,
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143
to be listed on the NASD automated quotation system and, if listed on the NASD
automated quotation system, use its best efforts to secure designation of all
such Registrable Securities covered by such registration statement as a NASDAQ
"national market system security" within the meaning of Rule 11Aa2-1 of the
Securities and Exchange Commission or, failing that, to secure NASDAQ
authorization for such Registrable Securities and, without limiting the
generality of the foregoing, to arrange for at least two market makers to
register as such with respect to such Registrable Securities with the NASD;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other customary actions as the
holders of a majority of the Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including effecting a stock split or
a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all necessary financial and other records,
pertinent corporate documents and properties of the Company, and cause the
Company's officers, directors, employees and independent accountants to supply
all information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) permit any holder of Registrable Securities which holder, in
its sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common securities included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities in the United States or any political
subdivisions thereof as may be necessary to enable the sellers thereof to
consummate the disposition of such Registrable Securities; and
-41-
144
(n) obtain a cold comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters.
5. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions payable with respect to Registrable Securities, which shall be paid
by the holders of such Registrable Securities) and other Persons retained by the
Company (all such expenses being herein called "Registration Expenses"), shall
be borne by the Company, and the Company shall also pay its internal expenses
(including, without limitation, all salaries and expenses of its officers and
employees performing legal or accounting duties), the expense of any annual
audit or quarterly review, the expense of any liability insurance and the
expenses and fees for listing the securities to be registered on each securities
exchange on which similar securities issued by the Company are then listed or on
the NASD automated quotation system.
(b) In connection with each Demand Registration and each
Piggyback Registration, the Company shall reimburse the holders of Registrable
Securities included in such registration for the reasonable fees and
disbursements of up to two counsel chosen by the holders of a majority of the
Registrable Securities included in such registration.
6. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by
law, each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by, or
relating to any action or proceeding arising out of or based upon, any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with
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any such registration statement or prospectus and, to the extent permitted by
law, shall indemnify the Company, its directors and officers and each Person who
controls the Company (within the meaning of the Securities Act) against any
losses, claims, damages, liabilities and expenses resulting from any untrue or
alleged untrue statement of material fact contained in the registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such untrue statement or omission is
contained in any information or affidavit so furnished in writing by such
holder; provided that the obligation to indemnify shall be individual, not joint
and several, for each holder and shall be limited to the net amount of proceeds
received by such holder from the sale of Registrable Securities pursuant to such
registration statement.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give such prompt
notice shall not impair any Person's right to indemnification hereunder to the
extent such failure has not prejudiced the indemnifying party) and (ii) unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the
indemnification provided for herein is unavailable for any reason.
7. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements; provided that no
holder of Registrable Securities included in any underwritten registration shall
be required to make any representations or warranties to the Company or the
underwriters (other than representations and warranties regarding such holder
and such holder's intended method of distribution) or to undertake any
indemnification obligations to the Company or the underwriters with respect
thereto, except as otherwise provided in paragraph 6 hereof.
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8. Definitions.
(a) "Registrable Securities" means (i) any Common Stock issued or
issuable upon conversion of the Company's Class A Convertible Preferred Stock,
par value $0.01 per share ("Class A Preferred"), issued to any of the Purchasers
pursuant to the Purchase Agreement, (ii) any securities issued or issuable with
respect to the Common Stock referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization and (iii) any
other shares of Common Stock held by Persons holding securities described in
clauses (i) or (ii) above. As to any particular Registrable Securities held by
any of the Purchasers that are partnerships or limited liability companies, such
securities shall cease to be Registrable Securities when they have been
distributed by any of such Purchasers to any of their partners or members (but
only if the Purchaser making the distribution advises the Company in writing of
its desire to exclude the securities so distributed from the definition of
"Registrable Securities" hereunder). For purposes of this Agreement, a Person
shall be deemed to be a holder of Registrable Securities, and the Registrable
Securities shall be deemed to be in existence, whenever such Person has the
right to acquire directly or indirectly such Registrable Securities (upon
conversion or exercise in connection with a transfer of securities or otherwise,
but disregarding any restrictions or limitations upon the exercise of such
right), whether or not such acquisition has actually been effected, and such
Person shall be entitled to exercise the rights of a holder of Registrable
Securities hereunder. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities when they have been
distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act (or any similar rule then in
force) or repurchased by the Company or any Subsidiary.
(b) Unless otherwise provided herein, other capitalized terms
contained herein have the meanings set forth in the Purchase Agreement.
9. Miscellaneous.
(a) No Inconsistent Agreements. The Company shall not hereafter
enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(b) Adjustments Affecting Registrable Securities. The Company
shall not take any action, or permit any change to occur, with respect to its
securities which would materially and adversely affect the ability of the
holders of Registrable Securities to include such Registrable Securities in a
registration undertaken pursuant to this Agreement or which would materially and
adversely affect the marketability of such Registrable Securities in any such
registration (including, without limitation, effecting a stock split or a
combination of shares).
(c) Remedies. Any Person having rights under any provision of
this Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that, in addition to any other
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147
rights and remedies existing in its favor, any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided herein,
the provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and the holders of a majority of the Registrable
Securities.
(e) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(f) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(g) Counterparts. This Agreement may be executed simultaneously
in two or more counterparts (including by means of telecopied signature pages),
any one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
(h) Descriptive Headings. The descriptive headings of this
Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(i) Governing Law. All issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
California, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California.
(j) Notices. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been received when delivered
personally to the recipient, one business day after being sent to the recipient
by reputable overnight courier service (charges prepaid), upon machine-generated
acknowledgment of receipt after transmittal by facsimile or five days after
being mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
shall be sent to the Company at the address indicated below, to each Purchaser
at the address indicated on the Schedule of Purchasers attached hereto:
To the Company:
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Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice to the Company)
▇▇▇▇▇▇ Godward LLP
Five Palo Alto Square
▇▇▇▇ ▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
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IN WITNESS WHEREOF, the parties hereto have executed this
Registration Agreement on the day and year first above written.
CHAHAYA OPTRONICS, INC.
By:______________________________________
Its:_____________________________________
STORM VENTURES FUND II, LLC
By:______________________________________
Managing Member
SUMMIT VENTURES V, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
SUMMIT VENTURES V COMPANION FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
[Signature Page to Stockholders Agreement]
150
SUMMIT V ADVISORS (QP) FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
SUMMIT V ADVISORS FUND, L.P.
By: Summit Partners V, L.P.
its General Partner
By: Summit Partners, LLC
its General Partner
By:______________________________________
Managing Member
SUMMIT INVESTORS III, L.P.
By:______________________________________
Authorized Signatory
KOMAG, INCORPORATED
By:______________________________________
Its:_____________________________________
[Signature Page to Stockholders Agreement]
▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ PARTNERS III
By:______________________________________
Authorized Signatory
K&E INVESTMENT PARTNERS LLC-2000-B DIF
By:______________________________________
Authorized Signatory
GC&H INVESTMENTS
By:______________________________________
Authorized Signatory
_________________________________________
▇▇▇▇▇ ▇. ▇▇▇▇
[Signature Page to Stockholders Agreement]
152
SCHEDULE OF PURCHASERS
Storm Ventures Fund II, LLC
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
and
Summit Ventures V, L.P.
Summit Ventures V Companion Fund, L.P.
Summit V Advisors Fund, L.P.
Summit V Advisors (QP) Fund, L.P.
Summit Investors III, L.P.
In each case:
c/o Summit Partners, L.P.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice thereto):
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
1.
153
Komag, Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
(which shall not constitute notice thereto)
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (650) 493-6811
* * * * *
▇▇▇▇▇▇▇▇ Street Partners III
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
K&E Investment Partners LLC-2000-B DIF
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
GC&H Investments
c/o Cooley Godward LLP
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Phone: (▇▇▇) ▇▇▇-▇▇▇▇
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
2.
154
EXHIBIT F
INDEMNITY AGREEMENT
THIS AGREEMENT is made and entered into this ___ day of November, 2000 by and
between Chahaya Optronics, Inc., a Delaware corporation (the "Corporation"), and
__________ ("Agent"). References to "Agent" shall include, in addition to Agent,
Summit Ventures V, L.P., Summit V Advisors Fund (QP), L.P., Summit Ventures V
Companion Fund, L.P., Summit V Advisors Fund, L.P., Summit Investors III, L.P.,
Summit Partners, L.P., Storm Ventures Fund II, LLC and their respective direct
and indirect managers, members, stockholders, partners, officers, directors,
employees, agents and affiliates.
RECITALS
WHEREAS, Agent performs a valuable service to the Corporation in
__________ capacity as __________ of the Corporation;
WHEREAS, the stockholders of the Corporation have adopted bylaws (the
"Bylaws") providing for the indemnification of the directors, officers,
employees and other agents of the Corporation, including persons serving at the
request of the Corporation in such capacities with other corporations or
enterprises, as authorized by the Delaware General Corporation Law, as amended
(the "Code");
WHEREAS, the Bylaws and the Code, by their non-exclusive nature, permit
contracts between the Corporation and its agents, officers, employees and other
agents with respect to indemnification of such persons; and
WHEREAS, in order to induce Agent to continue to serve as __________ of
the Corporation, the Corporation has determined and agreed to enter into this
Agreement with Agent;
NOW, THEREFORE, in consideration of Agent's continued service as
__________ after the date hereof, the parties hereto agree as follows:
AGREEMENT
1. SERVICES TO THE CORPORATION. Agent will serve, at the will of the
Corporation or under separate contract, if any such contract exists, as
__________ of the Corporation or as a director, officer or other fiduciary of an
affiliate of the Corporation (including any employee benefit plan of the
Corporation) faithfully and to the best of his ability so long as he is duly
elected and qualified in accordance with the provisions of the Bylaws or other
applicable charter documents of the Corporation or such affiliate; provided,
however, that Agent may at any time and for any reason resign from such position
(subject to any contractual obligation that Agent
3.
155
may have assumed apart from this Agreement) and that the Corporation or any
affiliate shall have no obligation under this Agreement to continue Agent in any
such position.
2. INDEMNITY OF AGENT. The Corporation hereby agrees to hold harmless
and indemnify Agent to the fullest extent authorized or permitted by the
provisions of the Bylaws and the Code, as the same may be amended from time to
time (but, only to the extent that such amendment permits the Corporation to
provide broader indemnification rights than the Bylaws or the Code permitted
prior to adoption of such amendment).
3. ADDITIONAL INDEMNITY. In addition to and not in limitation of the
indemnification otherwise provided for herein, and subject only to the
exclusions set forth in Section 4 hereof, the Corporation hereby further agrees
to hold harmless and indemnify Agent:
(a) against any and all expenses (including attorneys' fees), witness fees,
damages, judgments, fines and amounts paid in settlement and any other
amounts that Agent becomes legally obligated to pay because of any claim
or claims made against or by him in connection with any threatened,
pending or completed action, suit or proceeding, whether civil,
criminal, arbitrational, administrative or investigative (including an
action by or in the right of the Corporation) to which Agent is, was or
at any time becomes a party, or is threatened to be made a party, by
reason of the fact that Agent is, was or at any time becomes a director,
officer, employee or other agent of Corporation, or is or was serving or
at any time serves at the request of the Corporation as a director,
officer, employee or other agent of another corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise
(collectively, hereinafter "Expenses"); and
(b) otherwise to the fullest extent as may be provided to Agent by the
Corporation under the applicable provisions of the Code and Section 43
of the Bylaws.
4. LIMITATIONS ON ADDITIONAL INDEMNITY. No indemnity pursuant to Section
3 hereof shall be paid by the Corporation:
(a) on account of any claim against Agent solely for an accounting of
profits made from the purchase or sale by Agent of securities of the
Corporation pursuant to the provisions of Section 16(b) of the
Securities Exchange Act of 1934 and amendments thereto or similar
provisions of any federal, state or local statutory law;
(b) on account of Agent's conduct that is established by a final judgment as
knowingly fraudulent or deliberately dishonest or that constituted
willful misconduct;
(c) on account of Agent's conduct that is established by a final judgment as
constituting a breach of Agent's duty of loyalty to the Corporation or
resulting in any personal profit or advantage to which Agent was not
legally entitled;
(d) for which payment is actually made to Agent under a valid and
collectible insurance policy or under a valid and enforceable indemnity
clause, bylaw or agreement, except in respect of any excess beyond
payment under such insurance, clause, bylaw or agreement;
4.
156
(e) if indemnification is not lawful (and, in this respect, both the
Corporation and Agent have been advised that the Securities and Exchange
Commission believes that indemnification for liabilities arising under
the federal securities laws is against public policy and is, therefore,
unenforceable and that claims for indemnification should be submitted to
appropriate courts for adjudication); or
(f) in connection with any proceeding (or part thereof) initiated by Agent,
or any proceeding by Agent against the Corporation or its directors,
officers, employees or other agents, unless (i) such indemnification is
expressly required to be made by law, (ii) the proceeding was authorized
by the Board of Directors of the Corporation, (iii) such indemnification
is provided by the Corporation, in its sole discretion, pursuant to the
powers vested in the Corporation under the Code, or (iv) the proceeding
is initiated pursuant to Section 9 hereof.
5. CONTINUATION OF INDEMNITY. All agreements and obligations of the
Corporation contained herein shall continue during the period Agent is a
director, officer, employee or other agent of the Corporation (or is or was
serving at the request of the Corporation as a director, officer, employee or
other agent of another corporation, partnership, joint venture, trust, employee
benefit plan or other enterprise) and shall continue thereafter so long as Agent
shall be subject to any possible claim or threatened, pending or completed
action, suit or proceeding, whether civil, criminal, arbitrational,
administrative or investigative, by reason of the fact that Agent was serving in
the capacity referred to herein.
6. PARTIAL INDEMNIFICATION. If Agent is entitled under any provision of
this Agreement to indemnification by the Corporation for any portion of Expenses
incurred in connection with any Claim, but not, however, for all of the total
amount thereof, the Corporation shall nevertheless indemnify Agent for the
portion of such Expenses to which Agent is entitled.
7. NOTIFICATION AND DEFENSE OF CLAIM. Not later than thirty (30) days
after receipt by Agent of notice of the commencement of any action, suit or
proceeding, Agent will, if a claim in respect thereof is to be made against the
Corporation under this Agreement, notify the Corporation of the commencement
thereof; but the omission so to notify the Corporation will not relieve it from
any liability which it may have to Agent otherwise than under this Agreement, or
under this Agreement, except to the extent the Corporation is prejudiced by
Agent's failure to notify the Corporation of such claim. With respect to any
such action, suit or proceeding as to which Agent notifies the Corporation of
the commencement thereof:
(a) the Corporation will be entitled to participate therein at its own
expense;
(b) except as otherwise provided below, the Corporation may, at its option
and jointly with any other indemnifying party similarly notified and
electing to assume such defense, assume the defense thereof, with
counsel reasonably satisfactory to Agent. After notice from the
Corporation to Agent of its election to assume the defense thereof, the
Corporation will not be liable to Agent under this Agreement for any
legal or other expenses subsequently incurred by Agent in connection
with the defense thereof except for reasonable costs of investigation or
otherwise as provided below. Agent shall have the right to employ
separate counsel in such action, suit or proceeding but the fees and
5.
157
expenses of such counsel incurred after notice from the Corporation of
its assumption of the defense thereof shall be at the expense of Agent
unless (i) the employment of counsel by Agent has been authorized by the
Corporation, (ii) Agent shall have reasonably concluded, and so notified
the Corporation, that there is an actual conflict of interest between
the Corporation and Agent in the conduct of the defense of such action
or (iii) the Corporation shall not in fact have employed counsel to
assume the defense of such action, in each of which cases the fees and
expenses of Agent's separate counsel shall be at the expense of the
Corporation. The Corporation shall not be entitled to assume the defense
of any action, suit or proceeding brought by or on behalf of the
Corporation or as to which Agent shall have made the conclusion provided
for in clause (ii) above; and
(c) the Corporation shall not be liable to indemnify Agent under this
Agreement for any amounts paid in settlement of any action or claim
effected without its written consent, which shall not be unreasonably
withheld. The Corporation shall be permitted to settle any action except
that it shall not settle any action or claim in any manner which would
impose any penalty, limitation or additional settlement payments on
Agent without Agent's written consent, which may be given or withheld in
Agent's sole discretion.
8. EXPENSES. The Corporation shall advance, prior to the final
disposition of any proceeding, promptly following request therefor, all Expenses
incurred by Agent in connection with such proceeding upon receipt of an
undertaking by or on behalf of Agent to repay said amounts if it shall be
determined ultimately that none of the provisions of this Agreement, the Bylaws,
the Code or any other applicable law entitles Agent to be indemnified.
9. ENFORCEMENT. Any right to indemnification or advances granted by this
Agreement to Agent shall be enforceable by or on behalf of Agent in any court of
competent jurisdiction if (i) the claim for indemnification or advances is
denied, in whole or in part, or (ii) no disposition of such claim is made within
ninety (90) days of request therefor. Agent, in such enforcement action, if
successful in whole or in part, shall be entitled to be paid also the expense of
prosecuting his claim. It shall be a defense to any action for which a claim for
indemnification is made under Section 3 hereof (other than an action brought to
enforce a claim for expenses pursuant to Section 8 hereof, provided that the
required undertaking has been tendered to the Corporation) that Agent is not
entitled to indemnification because of the limitations set forth in Section 4
hereof. Neither the failure of the Corporation (including its Board of Directors
or its stockholders) to have made a determination prior to the commencement of
such enforcement action that indemnification of Agent is proper in the
circumstances, nor an actual determination by the Corporation (including its
Board of Directors or its stockholders) that such indemnification is improper
shall be a defense to the action or create a presumption that Agent is not
entitled to indemnification under this Agreement or otherwise.
10. SUBROGATION. In the event of payment under this Agreement, the
Corporation shall be subrogated to the extent of such payment to all of the
rights of recovery of Agent, who shall execute all documents required and shall
do all acts that may be necessary to secure such rights and to enable the
Corporation effectively to bring suit to enforce such rights.
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11. NON-EXCLUSIVITY OF RIGHTS. The rights conferred on Agent by this
Agreement shall not be exclusive of any other right which Agent may have or
hereafter acquire under any statute, provision of the Corporation's Certificate
of Incorporation or Bylaws, agreement, vote of stockholders or directors, or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding office.
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12. SURVIVAL OF RIGHTS.
(a) The rights conferred on Agent by this Agreement shall continue after
Agent has ceased to be a director, officer, employee or other agent of
the Corporation or to serve at the request of the Corporation as a
director, officer, employee or other agent of another corporation,
partnership, joint venture, trust, employee benefit plan or other
enterprise and shall inure to the benefit of Agent's heirs, executors
and administrators.
(b) The Corporation shall require any successor (whether direct or indirect,
by purchase, merger, consolidation or otherwise) to all or substantially
all of the business or assets of the Corporation, expressly to assume
and agree to perform this Agreement in the same manner and to the same
extent that the Corporation would be required to perform if no such
succession had taken place.
13. SEPARABILITY. Each of the provisions of this Agreement is a separate
and distinct agreement and independent of the others, so that if any provision
hereof shall be held to be invalid for any reason, such invalidity or
unenforceability shall not affect the validity or enforceability of the other
provisions hereof. Furthermore, if this Agreement shall be invalidated in its
entirety on any ground, then the Corporation shall nevertheless indemnify Agent
to the fullest extent provided by the Bylaws, the Code or any other applicable
law.
14. GOVERNING LAW. This Agreement shall be interpreted and enforced in
accordance with the laws of the State of Delaware.
15. AMENDMENT AND TERMINATION. No amendment, modification, termination
or cancellation of this Agreement shall be effective unless in writing signed by
both parties hereto.
16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one or
more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute but one and the same
Agreement. Only one such counterpart need be produced to evidence the existence
of this Agreement.
17. HEADINGS. The headings of the sections of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction hereof.
18. NOTICES. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed to have been duly given (i)
upon delivery if delivered by hand to the party to whom such communication was
directed or (ii) upon the third business day after the date on which such
communication was mailed if mailed by certified or registered mail with postage
prepaid:
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(a) If to Agent, at the address indicated on the signature page hereof.
(b) If to the Corporation, to:
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
or to such other address as may have been furnished to Agent by the Corporation.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
and as of the day and year first above written.
CHAHAYA OPTRONICS, INC.
By:______________________________________
Its:_____________________________________
AGENT
_________________________________________
Address:
_________________________________________
_________________________________________
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EXHIBIT G
CHAHAYA OPTRONICS, INC.
FOUNDER STOCK PURCHASE AGREEMENT
THIS FOUNDER STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
the 27th day of November, 2000, by and between CHAHAYA OPTRONICS, INC., a
Delaware corporation (the "Company"), and __________ ("Purchaser").
WHEREAS, the Company desires to issue, and Purchaser desires to acquire,
stock of the Company as herein described, on the terms and conditions
hereinafter set forth;
WHEREAS, the issuance of common stock hereby is in connection with a
compensatory benefit plan for the employees, directors, officers, advisers or
consultants of the Company and is intended to comply with the provisions of Rule
701 or Rule 506 promulgated by the Securities and Exchange Commission under the
Securities Act of 1933, as amended (the "Act").
NOW, THEREFORE, IT IS AGREED between the parties as follows:
1. PURCHASE AND SALE OF STOCK. Purchaser hereby agrees to purchase from the
Company, and the Company hereby agrees to sell to Purchaser, an aggregate of
Seven Hundred Twenty Thousand (_________) shares of the Common Stock of the
Company (the "Stock") at $0.01 per share, for an aggregate purchase price of
$_______, payable as follows:
Cash.............................................................$______
The closing hereunder, including payment for and delivery of the Stock
shall occur at the offices of the Company immediately following the execution of
this Agreement, or at such other time and place as the parties may mutually
agree.
2. REPURCHASE OPTION
(a) In the event Purchaser's relationship with the Company (or a parent
or subsidiary of the Company) terminates for any reason (including death or
disability), or for no reason, with or without cause, such that after such
termination Purchaser is no longer an employee of, or consultant to, the Company
(and regardless of whether or not Purchaser is then serving as a director of the
Company), then the Company shall have an irrevocable option (the "Repurchase
Option"), for a period of ninety (90) days after said termination, or such
longer period as may be agreed to by the Company and the Purchaser, to
repurchase from Purchaser or Purchaser's personal representative, as the case
may be, at the original price per share indicated above paid by Purchaser for
such Stock ("Option Price"), up to but not exceeding the number of shares of
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Stock that have not vested in accordance with the provisions of Section 2(b)
below as of such termination date.
(b) One hundred percent (100%) of the Stock shall initially be subject
to the Repurchase Option. On the date one (1) year from the Vesting Commencement
Date (as set forth on the signature page to this Agreement) (the "Vesting
Anniversary Date") twenty-five percent (25%) (One Hundred Eighty Thousand
(180,000) shares) of the Stock subject to the Repurchase Option shall vest and
be released from the Repurchase Option. Thereafter, 1/48th of the Stock shall
vest and be released from the Repurchase Option on a monthly basis measured from
the Vesting Anniversary Date, until all the Stock is released from the
Repurchase Option (provided in each case that Purchaser remains an employee of,
or a consultant to, the Company (or a parent or subsidiary of the Company) as of
the date of such release).
Notwithstanding the foregoing, if the Company undergoes a Corporate
Transaction (as defined in Section 5 below), the continuing or surviving entity
shall be assigned the Repurchase Option as set forth in Section 5 below,
provided however, that if within thirteen (13) months of such Corporate
Transaction, one of the following events occurs: (i) Purchaser is terminated
without Cause (as defined below); or (ii) Purchaser voluntarily terminates his
employment following a material reduction in Purchaser's responsibilities and
duties without Cause; then the vesting of the Stock subject to Repurchase Option
shall be accelerated by twelve (12) months.
For purposes of the Repurchase Option, "Cause" shall mean misconduct,
including: (i) conviction of any felony or any crime involving moral turpitude
or dishonesty; (ii) participation in a fraud or act of dishonesty against the
Company; (iii) willful and material breach of the Company's policies; (iv)
intentional and material damage to the Company's property; (v) material breach
of your Proprietary Information and Inventions Agreement; or (vi) death or
severe physical or mental disability.
3. EXERCISE OF REPURCHASE OPTION. The Repurchase Option shall be exercised by
written notice signed by an officer of the Company or by any assignee or
assignees of the Company and delivered or mailed as provided in Section 17(a).
Such notice shall identify the number of shares of Stock to be purchased and
shall notify Purchaser of the time, place and date for settlement of such
purchase, which shall be scheduled by the Company within the term of the
Repurchase Option set forth in Section 2(a) above. The Company shall be entitled
to pay for any shares of Stock purchased pursuant to its Repurchase Option at
the Company's option in cash or by offset against any indebtedness owing to the
Company by Purchaser (including without limitation any Note given in payment for
the Stock), or by a combination of both. Upon delivery of such notice and
payment of the purchase price in any of the ways described above, the Company
shall become the legal and beneficial owner of the Stock being repurchased and
all rights and interest therein or related thereto, and the Company shall have
the right to transfer to its own name the Stock being repurchased by the
Company, without further action by Purchaser.
4. ADJUSTMENTS TO STOCK. If, from time to time, during the term of the
Repurchase Option there is any change affecting the Company's outstanding Common
Stock as a class that is effected without the receipt of consideration by the
Company (through merger, consolidation, reorganization, reincorporation, stock
dividend, dividend in property other than cash, stock split, liquidating
dividend, combination of shares, change in corporation structure or other
transaction
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not involving the receipt of consideration by the Company), then any and all
new, substituted or additional securities or other property to which Purchaser
is entitled by reason of Purchaser's ownership of Stock shall be immediately
subject to the Repurchase Option and be included in the word "Stock" for all
purposes of the Repurchase Option with the same force and effect as the shares
of the Stock presently subject to the Repurchase Option, but only to the extent
the Stock is, at the time, covered by such Repurchase Option. While the total
Option Price shall remain the same after each such event, the Option Price per
share of Stock upon exercise of the Repurchase Option shall be appropriately
adjusted.
5. CORPORATE TRANSACTION. In the event of (a) a sale of substantially all of the
assets of the Company; (b) a merger or consolidation in which the Company is not
the surviving corporation (other than a merger or consolidation in which
shareholders immediately before the merger or consolidation have, immediately
after the merger or consolidation, greater stock voting power); or (c) a reverse
merger in which the Company is the surviving corporation but the shares of the
Company's common stock outstanding immediately preceding the merger are
converted by virtue of the merger into other property, whether in the form of
securities, cash or otherwise (other than a reverse merger in which shareholders
immediately before the merger have, immediately after the merger, greater stock
voting power); or (d) any transaction or series of related transactions in which
in excess of 50% of the Company's voting power is transferred, other than the
sale by the Company of stock in transactions the primary purpose of which is to
raise capital for the Company's operations and activities ((a) through (d) being
collectively referred to herein as a "Corporate Transaction"), then the
Repurchase Option may be assigned by the Company to any successor of the Company
(or the successor's parent) in connection with such Corporate Transaction. To
the extent that the Repurchase Option remains in effect following such a
Corporate Transaction, it shall apply to the new capital stock or other property
received in exchange for the Stock in consummation of the Corporate Transaction,
but only to the extent the Stock is at the time covered by such right.
Appropriate adjustments shall be made to the price per share payable upon
exercise of the Repurchase Option to reflect the effect of the Corporate
Transaction upon the Company's capital structure; provided, however, that the
aggregate Option Price shall remain the same.
6. TERMINATION OF REPURCHASE OPTION. Sections 2, 3, 4 and 5 of this Agreement
shall terminate upon the exercise in full or expiration of the Repurchase
Option, whichever occurs first.
7. ESCROW OF UNVESTED STOCK. As security for Purchaser's faithful performance of
the terms of this Agreement and to insure the availability for delivery of
Purchaser's Stock upon exercise of the Repurchase Option herein provided for,
Purchaser agrees, at the closing hereunder, to deliver to and deposit with the
Secretary of the Company or the Secretary's designee ("Escrow Agent"), as Escrow
Agent in this transaction, three (3) stock assignments duly endorsed (with date
and number of shares blank) in the form attached hereto as Exhibit B, together
with a certificate or certificates evidencing all of the Stock subject to the
Repurchase Option; said documents are to be held by the Escrow Agent and
delivered by said Escrow Agent pursuant to the Joint Escrow Instructions of the
Company and Purchaser set forth in Exhibit A attached hereto and incorporated by
this reference, which instructions shall also be delivered to the Escrow Agent
at the closing hereunder. Purchaser hereby acknowledges that the Secretary of
the Company, or the Secretary's designee, is so appointed as the escrow holder
with the
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foregoing authorities as a material inducement to make this Agreement and that
said appointment is coupled with an interest and is accordingly irrevocable.
Purchaser agrees that Escrow Agent shall not be liable to any party hereof (or
to any other party). Escrow Agent may rely upon any letter, notice or other
document executed by any signature purported to be genuine and may resign at any
time. Purchaser agrees that if the Secretary of the Company, or the Secretary's
designee, resigns as Escrow Agent for any or no reason, the Board of Directors
of the Company shall have the power to appoint a successor to serve as Escrow
Agent pursuant to the terms of this Agreement. Purchaser agrees that if the
Secretary of the Company resigns as Secretary, the successor Secretary shall
serve as Escrow Agent pursuant to the terms of this Agreement.
8. RIGHTS OF PURCHASER. Subject to the provisions of Sections 7, 10, 13 and 15
herein, Purchaser shall exercise all rights and privileges of a shareholder of
the Company with respect to the Stock deposited in escrow. Purchaser shall be
deemed to be the holder for purposes of receiving any dividends that may be paid
with respect to such shares of Stock and for the purpose of exercising any
voting rights relating to such shares of Stock, even if some or all of such
shares of Stock have not yet vested and been released from the Repurchase
Option.
9. LIMITATIONS ON TRANSFER. In addition to any other limitation on transfer
created by applicable securities laws, Purchaser shall not assign, hypothecate,
donate, encumber or otherwise dispose of any interest in the Stock while the
Stock is subject to the Repurchase Option. After any Stock has been released
from the Repurchase Option, Purchaser shall not assign, hypothecate, donate,
encumber or otherwise dispose of any interest in the Stock except in compliance
with the provisions herein and applicable securities laws. Furthermore, the
Stock shall be subject to any right of first refusal in favor of the Company or
its assignees that may be contained in the Company's Bylaws.
10. RESTRICTIVE LEGENDS. All certificates representing the Stock shall have
endorsed thereon legends in substantially the following forms (in addition to
any other legend which may be required by other agreements between the parties
hereto):
(a) "THE SHARES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO AN OPTION
SET FORTH IN AN AGREEMENT BETWEEN THE COMPANY AND THE REGISTERED HOLDER, OR SUCH
HOLDER'S PREDECESSOR IN INTEREST, A COPY OF WHICH IS ON FILE AT THE PRINCIPAL
OFFICE OF THE COMPANY. ANY TRANSFER OR ATTEMPTED TRANSFER OF ANY SHARES SUBJECT
TO SUCH OPTION IS VOID WITHOUT THE PRIOR EXPRESS WRITTEN CONSENT OF THE
COMPANY."
(b) "THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 AS AMENDED. THEY MAY NOT BE SOLD, OFFERED FOR
SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION
STATEMENT AS TO THE SECURITIES UNDER SAID ACT OR AN OPINION OF COUNSEL
SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS NOT REQUIRED."
(c) "THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED. THE
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TRANSFER OF THE SECURITIES REPRESENTED HEREBY IS SUBJECT TO THE CONDITIONS
SPECIFIED IN THAT CERTAIN STOCKHOLDERS AGREEMENT, DATED AS OF NOVEMBER 30, 2000,
BY AND AMONG THE ISSUER (THE "COMPANY") AND CERTAIN STOCKHOLDERS, AND THE
COMPANY RESERVES THE RIGHT TO REFUSE THE TRANSFER OF SUCH SECURITIES UNTIL SUCH
CONDITIONS HAVE BEEN FULFILLED WITH RESPECT TO SUCH TRANSFER. A COPY OF SUCH
CONDITIONS SHALL BE FURNISHED BY THE COMPANY TO THE HOLDER HEREOF UPON WRITTEN
REQUEST AND WITHOUT CHARGE."
(d) Any legend required by appropriate blue sky officials.
11. INVESTMENT REPRESENTATIONS. In connection with the purchase of the Stock,
Purchaser represents to the Company the following:
(a) Purchaser is aware of the Company's business affairs and financial
condition and has acquired sufficient information about the Company to reach an
informed and knowledgeable decision to acquire the Stock. Purchaser is
purchasing the Stock for investment for Purchaser's own account only and not
with a view to, or for resale in connection with, any "distribution" thereof
within the meaning of the Act.
(b) Purchaser understands that the Stock has not been registered under
the Act by reason of a specific exemption therefrom, which exemption depends
upon, among other things, the bona fide nature of Purchaser's investment intent
as expressed herein.
(c) Purchaser further acknowledges and understands that the Stock must
be held indefinitely unless the Stock is subsequently registered under the Act
or an exemption from such registration is available. Purchaser further
acknowledges and understands that the Company is under no obligation to register
the Stock. Purchaser understands that the certificate evidencing the Stock will
be imprinted with a legend which prohibits the transfer of the Stock unless the
Stock is registered or such registration is not required in the opinion of
counsel for the Company.
(d) Purchaser is familiar with the provisions of Rules 144 and 701,
under the Act, as in effect from time to time, which, in substance, permit
limited public resale of "restricted securities" acquired, directly or
indirectly, from the issuer thereof (or from an affiliate of such issuer), in a
non-public offering subject to the satisfaction of certain conditions. Rule 701
provides that if the issuer qualifies under Rule 701 at the time of issuance of
the securities, such issuance will be exempt from registration under the Act. In
the event the Company becomes subject to the reporting requirements of Section
13 or 15(d) of the Securities Exchange Act of 1934, the securities exempt under
Rule 701 may be sold by Purchaser ninety (90) days thereafter, subject to the
satisfaction of certain of the conditions specified by Rule 144 on the market
stand-off provision described in Section 12 below.
In the event that the sale of the Stock does not qualify under Rule 701
at the time of purchase, then the Stock may be resold by Purchaser in certain
limited circumstances subject to the provisions of Rule 144, which requires,
among other things: (i) the availability of certain public information about the
Company and (ii) the resale occurring following the required
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holding period under Rule 144 after the Purchaser has purchased, and made full
payment of (within the meaning of Rule 144), the securities to be sold.
(e) Purchaser further understands that at the time Purchaser wishes to
sell the Stock there may be no public market upon which to make such a sale, and
that, even if such a public market then exists, the Company may not be
satisfying the current public information requirements of Rule 144 or 701, and
that, in such event, Purchaser would be precluded from selling the Stock under
Rule 144 or 701 even if the minimum holding period requirement had been
satisfied.
(f) Purchaser represents that Purchaser is an "accredited investor" as
that term is defined in Rule 501 of Regulation D promulgated by the Securities
and Exchange Commission under the Securities Act of 1933, as amended.
(g) Purchaser further warrants and represents that Purchaser has either
(i) preexisting personal or business relationships, with the Company or any of
its officers, directors or controlling persons, or (ii) the capacity to protect
his own interests in connection with the purchase of the Stock by virtue of the
business or financial expertise of himself or of professional advisors to
Purchaser who are unaffiliated with and who are not compensated by the Company
or any of its affiliates, directly or indirectly.
12. MARKET STAND-OFF AGREEMENT. Purchaser shall not sell, dispose of, transfer,
make any short sale of, grant any option for the purchase of, or enter into any
hedging or similar transaction with the same economic effect as a sale, any
Common Stock or other securities of the Company held by Purchaser, including the
Stock (the "Restricted Securities"), for a period of time specified by the
managing underwriter (not to exceed one hundred eighty (180) days) following the
effective date of a registration statement of the Company filed under the Act.
Purchaser agrees to execute and deliver such other agreements as may be
reasonably requested by the Company and/or the managing underwriter which are
consistent with the foregoing or which are necessary to give further effect
thereto. In order to enforce the foregoing covenant, the Company may impose
stop-transfer instructions with respect to Purchaser's Restricted Securities
until the end of such period. The underwriters of the Company's stock are
intended third party beneficiaries of this Section 12 and shall have the right,
power and authority to enforce the provisions hereof as though they were a party
hereto.
13. SECTION 83(B) ELECTION. Purchaser understands that Section 83(a) of the
Internal Revenue Code of 1986, as amended (the "Code"), taxes as ordinary income
the difference between the amount paid for the Stock and the fair market value
of the Stock as of the date any restrictions on the Stock lapse. In this
context, "restriction" includes the right of the Company to buy back the Stock
pursuant to the Repurchase Option set forth in Section 2(a) above. Purchaser
understands that Purchaser may elect to be taxed at the time the Stock is
purchased, rather than when and as the Repurchase Option expires, by filing an
election under Section 83(b) (an "83(b) Election") of the Code with the Internal
Revenue Service within thirty (30) days from the date of purchase. Even if the
fair market value of the Stock at the time of the execution of this Agreement
equals the amount paid for the Stock, the 83(b) Election must be made to avoid
income under Section 83(a) in the future. Purchaser understands that failure to
file such an 83(b) Election in a timely manner may result in adverse tax
consequences for Purchaser. Purchaser
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further understands that an additional copy of such 83(b) Election is required
to be filed with his or her federal income tax return for the calendar year in
which the date of this Agreement falls. Purchaser acknowledges that the
foregoing is only a summary of the effect of United States federal income
taxation with respect to purchase of the Stock hereunder, and does not purport
to be complete. Purchaser further acknowledges that the Company has directed
Purchaser to seek independent advice regarding the applicable provisions of the
Code, the income tax laws of any municipality, state or foreign country in which
Purchaser may reside, and the tax consequences of Purchaser's death. Purchaser
assumes all responsibility for filing an 83(b) Election and paying all taxes
resulting from such election or the lapse of the restrictions on the Stock.
14. REFUSAL TO TRANSFER. The Company shall not be required (a) to transfer on
its books any shares of Stock of the Company which shall have been transferred
in violation of any of the provisions set forth in this Agreement or (b) to
treat as owner of such shares or to accord the right to vote as such owner or to
pay dividends to any transferee to whom such shares shall have been so
transferred.
15. NO EMPLOYMENT RIGHTS. This Agreement is not an employment contract and
nothing in this Agreement shall affect in any manner whatsoever the right or
power of the Company (or a parent or subsidiary of the Company) to terminate
Purchaser's employment for any reason at any time, with or without cause and
with or without notice.
16. MISCELLANEOUS.
(a) NOTICES. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery or sent
by telegram or fax or upon deposit in the United States Post Office, by
registered or certified mail with postage and fees prepaid, addressed to the
other party hereto at his address hereinafter shown below its signature or at
such other address as such party may designate by ten (10) days' advance written
notice to the other party hereto.
(b) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the benefit of
the successors and assigns of the Company and, subject to the restrictions on
transfer herein set forth, be binding upon Purchaser, Purchaser's successors,
and assigns. The Repurchase Option of the Company hereunder shall be assignable
by the Company at any time or from time to time, in whole or in part.
(c) ATTORNEYS' FEES; SPECIFIC PERFORMANCE. Purchaser shall reimburse the
Company for all costs incurred by the Company in enforcing the performance of,
or protecting its rights under, any part of this Agreement, including reasonable
costs of investigation and attorneys' fees. It is the intention of the parties
that the Company, upon exercise of the Repurchase Option and payment of the
Option Price, pursuant to the terms of this Agreement, shall be entitled to
receive the Stock, in specie, in order to have such Stock available for future
issuance without dilution of the holdings of other shareholders. Furthermore, it
is expressly agreed between the parties that money damages are inadequate to
compensate the Company for the Stock and that the Company shall, upon proper
exercise of the Repurchase Option, be entitled to specific enforcement of its
rights to purchase and receive said Stock.
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(d) GOVERNING LAW; VENUE. This Agreement shall be governed by and
construed in accordance with the laws of the State of California. The parties
agree that any action brought by either party to interpret or enforce any
provision of this Agreement shall be brought in, and each party agrees to, and
does hereby, submit to the jurisdiction and venue of, the appropriate state or
federal court for the district encompassing the Company's principal place of
business.
(e) FURTHER EXECUTION. The parties agree to take all such further action
(s) as may reasonably be necessary to carry out and consummate this Agreement as
soon as practicable, and to take whatever steps may be necessary to obtain any
governmental approval in connection with or otherwise qualify the issuance of
the securities that are the subject of this Agreement.
(f) INDEPENDENT COUNSEL. Purchaser acknowledges that this Agreement has
been prepared on behalf of the Company by ▇▇▇▇▇▇ Godward LLP, counsel to the
Company and that ▇▇▇▇▇▇ Godward LLP does not represent, and is not acting on
behalf of, Purchaser. Purchaser has been provided with an opportunity to consult
with Purchaser's own counsel with respect to this Agreement.
(g) ENTIRE AGREEMENT; AMENDMENT. This Agreement constitutes the entire
agreement between the parties with respect to the subject matter hereof and
supersedes and merges all prior agreements or understandings, whether written or
oral. This Agreement may not be amended, modified or revoked, in whole or in
part, except by an agreement in writing signed by each of the parties hereto.
(h) SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, the parties agree to renegotiate such
provision in good faith. In the event that the parties cannot reach a mutually
agreeable and enforceable replacement for such provision, then (i) such
provision shall be excluded from this Agreement, (ii) the balance of the
Agreement shall be interpreted as if such provision were so excluded and (iii)
the balance of the Agreement shall be enforceable in accordance with its terms.
(i) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original and all of which
together shall constitute one instrument.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
CHAHAYA OPTRONICS, INC.
By:______________________________________
Title: Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇. ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
2 HEREOF IS EARNED ONLY BY CONTINUING SERVICE AS AN EMPLOYEE OR CONSULTANT AT
THE WILL OF THE COMPANY. PURCHASER FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING
IN THIS AGREEMENT SHALL CONFER UPON PURCHASER ANY RIGHT WITH RESPECT TO
CONTINUATION OF SUCH EMPLOYMENT OR CONSULTING RELATIONSHIP WITH THE COMPANY, NOR
SHALL IT INTERFERE IN ANY WAY WITH PURCHASER'S RIGHT OR THE COMPANY'S RIGHT TO
TERMINATE PURCHASER'S EMPLOYMENT OR CONSULTING RELATIONSHIP AT ANY TIME, WITH OR
WITHOUT CAUSE.
PURCHASER:
_________________________________________
Address:_________________________________
_________________________________________
VESTING COMMENCEMENT
DATE: November 27, 2000
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ATTACHMENTS:
SPOUSAL CONSENT
Exhibit A -- Joint Escrow Instructions
Exhibit B -- Stock Assignment Separate from Certificate
Exhibit C -- Section 83(b) Election
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SPOUSAL CONSENT
I am married to__________, the Purchaser pursuant to the attached
Founder Stock Purchase Agreement. I acknowledge that I have read the foregoing
Founder Stock Purchase Agreement and that I know its contents. I am aware that
by its provisions my spouse agrees to sell all his Shares of the Company,
including my community property interest in them, if any, on the occurrence of
certain events and that I must agree to sell Shares transferred to me in certain
circumstances. I hereby consent to such sale, approve of the provisions of the
Agreement, and agree that those Shares and my interest in them are subject to
the provisions of the Agreement and that I will take no action at any time to
hinder operation of the Agreement on those Shares or my interest in them.
Dated: November 27, 2000
_________________________________________
(Signature of Spouse)
1.
173
EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _____________hereby sells, assigns and transfers
unto CHAHAYA OPTRONICS, INC., a Delaware corporation (the "Company"), pursuant
to the Repurchase Option under that certain Founder Stock Purchase Agreement,
dated November 27, 2000, by and between the undersigned and the Company (the
"Agreement" _________ shares of Common Stock of the Company standing in the
undersigned's name on the books of the Company represented by Certificate No
_________ and does hereby irrevocably constitute and appoint the Company's
Secretary attorney to transfer said stock on the books of the Company with full
power of substitution in the premises. This Assignment may be used only in
accordance with and subject to the terms and conditions of the Agreement, in
connection with the repurchase of shares of Common Stock issued to the
undersigned pursuant to the Agreement, and only to the extent that such shares
remain subject to the Company's Repurchase Option under the Agreement.
Dated:________________
_________________________________________
(Signature)
_________________________________________
(Print Name)
2.
174
EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _________________hereby sells, assigns and transfers
unto CHAHAYA OPTRONICS, INC., a Delaware corporation (the "Company"), pursuant
to the Repurchase Option under that certain Founder Stock Purchase Agreement,
dated November 27, 2000, by and between the undersigned and the Company (the
"Agreement" _________ shares of Common Stock of the Company standing in the
undersigned's name on the books of the Company represented by Certificate No
_________ and does hereby irrevocably constitute and appoint the Company's
Secretary attorney to transfer said stock on the books of the Company with full
power of substitution in the premises. This Assignment may be used only in
accordance with and subject to the terms and conditions of the Agreement, in
connection with the repurchase of shares of Common Stock issued to the
undersigned pursuant to the Agreement, and only to the extent that such shares
remain subject to the Company's Repurchase Option under the Agreement.
Dated:________________
_________________________________________
(Signature)
_________________________________________
(Print Name)
3.
175
EXHIBIT B
STOCK ASSIGNMENT SEPARATE FROM CERTIFICATE
FOR VALUE RECEIVED, _____________hereby sells, assigns and transfers
unto CHAHAYA OPTRONICS, INC., a Delaware corporation (the "Company"), pursuant
to the Repurchase Option under that certain Founder Stock Purchase Agreement,
dated November 27, 2000, by and between the undersigned and the Company (the
"Agreement" _________ shares of Common Stock of the Company standing in the
undersigned's name on the books of the Company represented by Certificate No
_________ and does hereby irrevocably constitute and appoint the Company's
Secretary attorney to transfer said stock on the books of the Company with full
power of substitution in the premises. This Assignment may be used only in
accordance with and subject to the terms and conditions of the Agreement, in
connection with the repurchase of shares of Common Stock issued to the
undersigned pursuant to the Agreement, and only to the extent that such shares
remain subject to the Company's Repurchase Option under the Agreement.
Dated:________________
_________________________________________
(Signature)
_________________________________________
(Print Name)
4.
176
EXHIBIT A
JOINT ESCROW INSTRUCTIONS
Secretary
Chahaya Optronics, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
As Escrow Agent for both CHAHAYA OPTRONICS, INC., a Delaware corporation
("Corporation") and __________("Purchaser"), you are hereby authorized and
directed to hold the documents delivered to you pursuant to the terms of that
certain Founder Stock Purchase Agreement dated as of November 27, 2000
("Agreement") , to which a copy of these Joint Escrow Instructions is attached
as Exhibit A, in accordance with the following instructions:
1. In the event Corporation or an assignee shall elect to exercise the
Repurchase Option set forth in the Agreement, the Corporation or its assignee
will give to Purchaser and you a written notice specifying the number of shares
of stock to be purchased, the purchase price, and the time for a closing
thereunder at the principal office of the Corporation. Purchaser and the
Corporation hereby irrevocably authorize and direct you to close the transaction
contemplated by such notice in accordance with the terms of said notice.
2. At the closing, you are directed (a) to date the stock assignments
necessary for the transfer in question, (b) to fill in the number of shares
being transferred, and (c) to deliver the same, together with the certificate
evidencing the shares of stock to be transferred, to the Corporation against the
simultaneous delivery to you of the purchase price (which may include suitable
acknowledgment of cancellation of indebtedness) for the number of shares of
stock being purchased pursuant to the exercise of the Repurchase Option.
3. Purchaser irrevocably authorizes the Corporation to deposit with you
any certificates evidencing shares of stock to be held by you hereunder and any
additions and substitutions to said shares as specified in the Agreement.
Purchaser does hereby irrevocably constitute and appoint you as his
attorney-in-fact and agent for the term of this escrow to execute with respect
to such securities all documents necessary or appropriate to make such
securities negotiable and complete any transaction herein contemplated,
including but not limited to any appropriate filing with state or government
officials or bank officials. Subject to the provisions of this paragraph 3,
Purchaser shall exercise all rights and privileges of a shareholder of the
Corporation while the stock is held by you.
4. This escrow shall terminate upon the exercise in full or expiration
of the Repurchase Option, whichever occurs first.
5.
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5. If at the time of termination of this escrow you should have in your
possession any documents, securities, or other property belonging to Purchaser,
you shall deliver all of the same to Purchaser and shall be discharged of all
further obligations hereunder; provided, however, that if at the time of
termination of this escrow you are advised by the Corporation that any property
subject to this escrow is the subject of a pledge or other security agreement,
you shall deliver all such property to the pledgeholder or other person
designated by the Corporation.
6. Except as otherwise provided in these Joint Escrow Instructions, your
duties hereunder may be altered, amended, modified or revoked only by a writing
signed by all of the parties hereto.
7. You shall be obligated only for the performance of such duties as are
specifically set forth herein and may rely and shall be protected in relying or
refraining from acting on any instrument reasonably believed by you to be
genuine and to have been signed or presented by the proper party or parties. You
shall not be personally liable for any act you may do or omit to do hereunder as
Escrow Agent or as attorney-in-fact for Purchaser while acting in good faith and
in the exercise of your own good judgment, and any act done or omitted by you
pursuant to the advice of your own attorneys shall be conclusive evidence of
such good faith.
8. You are hereby expressly authorized to disregard any and all warnings
given by any of the parties hereto or by any other person or corporation,
excepting only orders or process of courts of law, and are hereby expressly
authorized to comply with and obey orders, judgments or decrees of any court. In
case you obey or comply with any such order, judgment or decree of any court,
you shall not be liable to any of the parties hereto or to any other person,
firm or corporation by reason of such compliance, notwithstanding any such
order, judgment or decree being subsequently reversed, modified, annulled, set
aside, vacated or found to have been entered without jurisdiction.
9. You shall not be liable in any respect on account of the identity,
authorities or rights of the parties executing or delivering or purporting to
execute or deliver the Agreement or any documents or papers deposited or called
for hereunder.
10. You shall not be liable for the outlawing of any rights under any
statute of limitations with respect to these Joint Escrow Instructions or any
documents deposited with you.
11. Your responsibilities as Escrow Agent hereunder shall terminate if
you shall cease to be Secretary of the Corporation or if you shall resign by
written notice to each party. In the event of any such termination, the
Secretary of the Corporation shall automatically become the successor Escrow
Agent unless the Corporation shall appoint another officer or assistant officer
of the Corporation as successor Escrow Agent, and Purchaser hereby confirms the
appointment of such successor as his attorney-in-fact and agent to the full
extent of your appointment.
12. If you reasonably require other or further instruments in connection
with these Joint Escrow Instructions or obligations in respect hereto, the
necessary parties hereto shall join in furnishing such instruments.
13. It is understood and agreed that should any dispute arise with
respect to the delivery and/or ownership or right of possession of the
securities held by you hereunder, you are
6.
178
authorized and directed to retain in your possession without liability to anyone
all or any part of said securities until such dispute shall have been settled
either by mutual written agreement of the parties concerned or by a final order,
decree or judgment of a court of competent jurisdiction after the time for
appeal has expired and no appeal has been perfected, but you shall be under no
duty whatsoever to institute or defend any such proceedings.
14. Any notice required or permitted hereunder shall be given in writing
and shall be deemed effectively given upon personal delivery, including delivery
by express courier, or five (5) days after deposit in the United States Post
Office, by registered or certified mail with postage and fees prepaid, addressed
to each of the other parties entitled to such notice at the following addresses,
or at such other addresses as a party may designate by ten days' advance written
notice to each of the other parties hereto.
CORPORATION: CHAHAYA OPTRONICS, INC.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
PURCHASER:
ESCROW AGENT: COOLEY GODWARD LLP
3000 El Camino Real
Five ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
15. By signing these Joint Escrow Instructions, you become a party
hereto only for the purpose of said Joint Escrow Instructions; you do not become
a party to the Agreement.
16. You shall be entitled to employ such legal counsel and other experts
(including, without limitation, the firm of ▇▇▇▇▇▇ Godward LLP) as you may deem
necessary properly to advise you in connection with your obligations hereunder.
You may rely upon the advice of such counsel, and you may pay such counsel
reasonable compensation therefor. The Corporation shall be responsible for all
fees generated by such legal counsel in connection with your obligations
hereunder.
17. This instrument shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and permitted assigns. It is
understood and agreed that references to "you" and "your" herein refer to the
original Escrow Agents. It is understood and agreed that the Corporation may at
any time or from time to time assign its rights under the Agreement and these
Joint Escrow Instructions.
7.
179
18. This Agreement shall be governed by and interpreted and determined
in accordance with the laws of the State of California, as such laws are applied
by California courts to contracts made and to be performed entirely in
California by residents of that state.
Very truly yours,
CHAHAYA OPTRONICS, INC.
By_______________________________________
▇▇▇▇▇▇ ▇▇▇▇
PURCHASER
ESCROW AGENT:
____________________________________
▇▇▇▇▇▇ GODWARD LLP
8.