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EXHIBIT 10.5
PACKETVIDEO CORPORATION
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
MARCH 10, 2000
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TABLE OF CONTENTS
PAGE
SECTION 1. GENERAL...................................................................... 1
1.1 Definitions.................................................................. 1
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER....................................... 3
2.1 Restrictions on Transfer..................................................... 3
2.2 Demand Registration.......................................................... 4
2.3 Piggyback Registrations...................................................... 5
2.4 Form S-3 Registration........................................................ 7
2.5 Expenses of Registration..................................................... 7
2.6 Obligations of the Company................................................... 8
2.7 Termination of Registration Rights........................................... 9
2.8 Delay of Registration; Furnishing Information................................ 9
2.9 Indemnification.............................................................. 9
2.10 Assignment of Registration Rights............................................ 11
2.11 Amendment of Registration Rights............................................. 12
2.12 Limitation on Subsequent Registration Rights................................. 12
2.13 "Market Stand-Off" Agreement; Agreement to Furnish Information............... 12
2.14 Rule 144 Reporting and Form S-3.............................................. 13
SECTION 3. COVENANTS OF THE COMPANY..................................................... 13
3.1 Basic Financial Information and Reporting.................................... 13
3.2 Inspection Rights............................................................ 14
3.3 Reservation of Common Stock.................................................. 14
3.4 Stock Vesting................................................................ 14
3.5 Proprietary Information and Inventions Agreement............................. 15
3.6 Termination of Covenants..................................................... 15
SECTION 4. RIGHTS OF FIRST REFUSAL...................................................... 15
4.1 Subsequent Offerings......................................................... 15
4.2 Exercise of Rights........................................................... 15
4.3 Issuance of Equity Securities to Other Persons............................... 16
4.4 Termination and Waiver of Rights of First Refusal............................ 16
4.5 Transfer of Rights of First Refusal.......................................... 16
4.6 Excluded Securities.......................................................... 16
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TABLE OF CONTENTS
PAGE
SECTION 5. MISCELLANEOUS................................................................ 17
5.1 Governing Law................................................................ 17
5.2 Survival..................................................................... 17
5.3 Successors and Assigns....................................................... 17
5.4 Entire Agreement............................................................. 18
5.5 Severability................................................................. 18
5.6 Amendment and Waiver......................................................... 18
5.7 Delays or Omissions.......................................................... 18
5.8 Notices...................................................................... 18
5.9 Attorneys' Fees.............................................................. 19
5.10 Titles and Subtitles......................................................... 19
5.11 Additional Investors......................................................... 19
5.12 Counterparts................................................................. 19
5.13 Confidentiality and Non-Disclosure........................................... 19
5.14 Dispute Resolution........................................................... 20
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PACKETVIDEO CORPORATION
SECOND AMENDED AND RESTATED
INVESTOR RIGHTS AGREEMENT
THIS AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT (the "AGREEMENT") is
entered into as of the 10th day of March 2000 (the "Effective Date"), by and
among PACKETVIDEO Corporation, a Delaware corporation (the "COMPANY"), the
holders of the Company's Series A Preferred Stock, Series B Preferred Stock and
Series C Preferred Stock set forth on Exhibit A hereto, and the purchasers of
the Company's Series D Preferred Stock under that certain Series D Preferred
Stock Purchase Agreement of even date herewith (the "PURCHASE AGREEMENT") as set
forth on Exhibit A hereto. The holders of the Series A Preferred Stock, Series B
Preferred Stock, Series C Preferred Stock and the purchasers of the Series D
Preferred Stock shall collectively be referred to hereinafter as the "INVESTORS"
and each individually as an "INVESTOR."
RECITALS
WHEREAS, the undersigned Investors who hold Series A Preferred Stock and
Series B Preferred Stock and Series C Preferred Stock wish to accept the rights
created pursuant hereto in lieu of any other registration rights granted to
them;
WHEREAS, certain of the Investors are parties to the Purchase Agreement
pursuant to which the Company proposes to sell and issue up to one million four
hundred forty-three thousand five hundred sixty-nine (1,443,569) shares of its
Series D Preferred Stock;
WHEREAS, as a condition of completing the transactions contemplated by
the Purchase Agreement, the Investors have requested that the Company extend to
them certain registration rights, information rights and other rights as set
forth below; and
WHEREAS, the Company and certain of the Investors constitute the parties
necessary to amend the registration rights, information rights and other rights
given to them in the Amended and Restated Investor Rights Agreement dated
December 2, 1999 by replacing such rights in their entirety with the rights set
forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual promises,
representations, warranties, covenants and conditions set forth in this
Agreement and in the Purchase Agreement, the parties mutually agree as follows:
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms shall
have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
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"FORM S-3" means such form under the Securities Act as in effect
on the date hereof or any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"HOLDER" means any person owning of record Registrable Securities
that have not been sold to the public or any assignee of record of such
Registrable Securities in accordance with Section 2.10 hereof.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the Securities
Act.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of
effectiveness of such registration statement or document.
"REGISTRABLE SECURITIES" means (a) Common Stock of the Company
issued or issuable upon conversion of the Shares; and (b) any Common Stock of
the Company issued as (or issuable upon the conversion or exercise of any
warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, such
above-described securities. Notwithstanding the foregoing, Registrable
Securities shall not include any securities sold by a person to the public
either pursuant to a registration statement or Rule 144 or sold in a private
transaction in which the transferor's rights under Section 2 of this Agreement
are not assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the Company's
Common Stock that are Registrable Securities and either (a) are then issued and
outstanding or (b) are issuable pursuant to then exercisable or convertible
securities.
"REGISTRATION EXPENSES" shall mean all expenses incurred by the
Company in complying with Sections 2.2, 2.3 and 2.4 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for the Company, reasonable fees and disbursements of a
single special counsel for the Holders, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration
(but excluding underwriting discounts and commissions and the compensation of
regular employees of the Company which shall be paid in any event by the
Company).
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SELLING EXPENSES" shall mean, in connection with a registration
effected by the Company, all underwriting discounts and selling commissions
applicable to the sale.
"SHARES" shall mean the Company's Series A Preferred Stock,
Series B Preferred, Series C Preferred Stock and Series D Preferred Stock held
by the Investors listed on Exhibit A hereto and their permitted assigns.
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SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 RESTRICTIONS ON TRANSFER.
(a) Each Holder agrees not to make any disposition of all or any
portion of the Shares or Registrable Securities unless and until:
(i) There is then in effect a registration statement under
the Securities Act covering such proposed disposition and such disposition is
made in accordance with such registration statement; or
(ii) (A) The transferee has agreed in writing to be bound
by the terms of this Agreement, (B) such Holder shall have notified the Company
of the proposed disposition and shall have furnished the Company with a
statement of the circumstances surrounding the proposed disposition, and (C) if
reasonably requested by the Company, such Holder shall have furnished the
Company with an opinion of counsel, reasonably satisfactory to the Company, that
such disposition will not require registration of such shares under the
Securities Act. It is agreed that the Company will not require opinions of
counsel for transactions made pursuant to Rule 144 except in unusual
circumstances.
(iii) Notwithstanding the provisions of paragraphs (i) and
(ii) above, no such registration statement or opinion of counsel shall be
necessary for a transfer by a Holder which is (A) a partnership to its partners
or former partners in accordance with partnership interests, (B) a corporation
to its stockholders in accordance with their interest in the corporation, (C) a
limited liability company to its members or former members in accordance with
their interest in the limited liability company, (D) a partnership, corporation,
limited liability company or similar entity, to its affiliates or (E) to the
Holder's family member or trust for the benefit of an individual Holder;
provided that in each case the transferee will be subject to the terms of this
Agreement to the same extent as if he were an original Holder hereunder.
(b) Each certificate representing Shares or Registrable
Securities shall, to the extent an opinion of counsel is required and unless
otherwise permitted by the provisions of this Agreement or applicable law, be
stamped or otherwise imprinted with a legend substantially similar to the
following (in addition to any legend required under applicable state securities
laws):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE "ACT")
AND MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED,
ASSIGNED, PLEDGED OR HYPOTHECATED UNLESS AND UNTIL
REGISTERED UNDER THE ACT OR UNLESS THE COMPANY HAS
RECEIVED AN OPINION OF COUNSEL REASONABLY SATISFACTORY
TO THE COMPANY AND ITS COUNSEL THAT SUCH REGISTRATION IS
NOT REQUIRED.
(c) The Company shall be obligated to reissue promptly unlegended
certificates at the request of any holder thereof if the holder shall have
obtained an opinion of
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counsel (which counsel may be counsel to the Company) reasonably acceptable to
the Company to the effect that the securities proposed to be disposed of may
lawfully be so disposed of without registration, qualification or legend or if
sold under Rule 144 in accordance with Section 2.1(a)(ii) above.
(d) Any legend endorsed on an instrument pursuant to applicable
state securities laws and the stop-transfer instructions with respect to such
securities shall be removed upon receipt by the Company of an opinion of counsel
reasonably satisfactory to the Company or if sold under Rule 144 in accordance
with Section 2.1(a)(ii) above.
2.2 DEMAND REGISTRATION.
(a) Subject to the conditions of this Section 2.2, if the Company
shall receive a written request from at least three (3) unaffiliated Holders of
an aggregate of at least twenty-five percent (25%) of the Registrable Securities
then outstanding (the "INITIATING HOLDERS") that the Company file a registration
statement under the Securities Act covering the registration of Registrable
Securities having an anticipated aggregate offering price to the public of not
less than $5,000,000 (or a lesser percent of the Holders if the anticipated
aggregate offering price, net of underwriting discounts and commissions, would
exceed $40,000,000), then the Company shall, within fifteen (15) days of the
receipt thereof, give written notice of such request to all Holders, and subject
to the limitations of this Section 2.2, use its best efforts to effect, as soon
as practicable (but in no event more than ninety (90) days), the registration
under the Securities Act of all Registrable Securities that such Holders (who
shall also be deemed to be "Initiating Holders" for the purposes of this Section
2) request to be registered.
(b) If the Initiating Holders intend to distribute the
Registrable Securities covered by their request by means of an underwriting,
they shall so advise the Company as a part of their request made pursuant to
this Section 2.2 or any request pursuant to Section 2.4 and the Company shall
include such information in the written notice referred to in Section 2.2(a) or
Section 2.4(a), as applicable. In such event, the right of any Holder to include
its Registrable Securities in such registration shall be conditioned upon such
Holder's participation in such underwriting and the inclusion of such Holder's
Registrable Securities in the underwriting to the extent provided herein. All
Holders proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by a majority in interest of the
Initiating Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). Notwithstanding any other provision of this Section
2.2 or Section 2.4, if the underwriter advises the Company that marketing
factors require a limitation of the number of securities to be underwritten
(including Registrable Securities) then the Company shall so advise all Holders
of Registrable Securities which would otherwise be underwritten pursuant hereto,
and the number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities on a pro rata basis
based on the number of Registrable Securities held by all such Holders
(including the Initiating Holders); provided, however, that (i) the number of
shares of Registrable Securities to be included in such underwriting and
registration shall not be reduced unless all other securities of the Company and
any other holders requesting inclusion in such registration are first entirely
excluded from the underwriting and registration and (ii) no such reduction shall
reduce the amount of securities of the selling Holders included in the
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registration below fifteen percent (15%) of the total amount of securities
requested by the Holders to be registered. Any Registrable Securities excluded
or withdrawn from such underwriting shall be withdrawn from the registration.
(c) The Company shall not be required to effect a registration
pursuant to this Section 2.2:
(i) prior to the earlier of (A) four (4) years from the
Effective Date of this Agreement or (B) one hundred eighty (180) days following
the effective date of the registration statement pertaining to the Initial
Offering;
(ii) after the Company has effected three (3)
registrations pursuant to this Section 2.2, and such registrations have been
declared or ordered effective;
(iii) during the period starting with the date of filing
of, and ending on the date one hundred eighty (180) days following the effective
date of the registration statement pertaining to a Company-initiated
registration statement pursuant to Section 2.3; provided that the Company makes
reasonable good faith efforts to cause such registration statement to become
effective (and such registration statement does in fact become effective) within
one hundred twenty (120) days of such filing;
(iv) if within fifteen (15) days of receipt of a written
request from Initiating Holders pursuant to Section 2.2(a), the Company gives
notice to the Holders of the Company's intention to file a Company-initiated
registration statement pursuant to Section 2.3 within sixty (60) days;
(v) if the Company shall furnish to Holders requesting a
registration statement pursuant to this Section 2.2, a certificate signed by the
Chairman of the Board stating that in the good faith judgment of the Board of
Directors of the Company, it would be seriously detrimental to the Company and
its stockholders for such registration statement to be effected at such time, in
which event the Company shall have the right to defer such filing for a period
of not more than ninety (90) days after receipt of the request of the Initiating
Holders; provided that such right to delay a request shall be exercised by the
Company not more than once in any twelve (12) month period; or
(vi) if the Initiating Holders propose to dispose of
shares of Registrable Securities that may be immediately registered on Form S-3
pursuant to a request made pursuant to Section 2.4 below.
2.3 PIGGYBACK REGISTRATIONS. The Company shall notify all Holders of
Registrable Securities in writing at least fifteen (15) days prior to the filing
of any registration statement under the Securities Act for purposes of a public
offering of securities of the Company for its own benefit or for the account of
others (including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding registration
statements relating to employee benefit plans or with respect to corporate
reorganizations or other transactions under Rule 145 of the Securities Act) and
will afford each such Holder an opportunity to include in such registration
statement all or part of such Registrable Securities held by such Holder. Each
Holder desiring to include in any such registration statement all or
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any part of the Registrable Securities held by it shall, within fifteen (15)
days after the above-described notice from the Company, so notify the Company in
writing. Such notice shall state the intended method of disposition of the
Registrable Securities by such Holder. If a Holder decides not to include all of
its Registrable Securities in any registration statement thereafter filed by the
Company, such Holder shall nevertheless continue to have the right to include
any Registrable Securities in any subsequent registration statement or
registration statements as may be filed by the Company with respect to offerings
of its securities, all upon the terms and conditions set forth herein.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.3 is for an underwritten offering, the
Company shall so advise the Holders of Registrable Securities. In such event,
the right of any such Holder to be included in a registration pursuant to this
Section 2.3 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders proposing to distribute
their Registrable Securities through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith that
marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated, first, to the Company; second, to the Holders on a pro rata
basis based on the total number of Registrable Securities held by the Holders;
and third, to any stockholder of the Company (other than a Holder) on a pro rata
basis. No such reduction shall (i) reduce the securities being offered by the
Company for its own account to be included in the registration and underwriting,
or (ii) reduce the amount of securities of the selling Holders included in the
registration below fifteen percent (15%) of the total amount of securities
requested by the Holders to be registered, unless such offering is the Initial
Offering and such registration does not include shares of any other selling
stockholders, in which event any or all of the Registrable Securities of the
Holders may be excluded in accordance with the immediately preceding sentence.
If any Holder disapproves of the terms of any such underwriting, such Holder may
elect to withdraw therefrom by written notice to the Company and the
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder which is a partnership, limited liability company,
corporation or similar entity, the partners, retired partners, stockholders and
affiliates of such Holder, or the estates and family members of any such
partners and retired partners and any trusts for the benefit of any of the
foregoing person shall be deemed to be a single "HOLDER", and any pro rata
reduction with respect to such "Holder" shall be based upon the aggregate amount
of shares carrying registration rights owned by all entities and individuals
included in such "Holder," as defined in this sentence.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.3 prior to the effectiveness of such registration whether or not any
Holder has elected to include securities in such registration. The Registration
Expenses of such withdrawn registration shall be borne by the Company in
accordance with Section 2.5 hereof.
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2.4 FORM S-3 REGISTRATION. In case the Company shall receive from any
Holder or Holders of Registrable Securities a written request or requests that
the Company effect a registration on Form S-3 (or any successor to Form S-3) or
any similar short-form registration statement and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned by
such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit or
facilitate the sale and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any other Holder or Holders
joining in such request as are specified in a written request given within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to effect any such
registration, qualification or compliance pursuant to this Section 2.4:
(i) if Form S-3 (or any successor or similar form) is not
available for such offering by the Holders;
(ii) if the Holders, together with the holders of any
other securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public of less than one million dollars ($1,000,000);
(iii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors of the Company
stating that in the good faith judgment of the Board of Directors of the
Company, it would be seriously detrimental to the Company and its stockholders
for such Form S-3 registration to be effected at such time, in which event the
Company shall have the right to defer the filing of the Form S-3 registration
statement for a period of not more than ninety (90) days after receipt of the
request of the Holder or Holders under this Section 2.4; provided, that such
right to delay a request shall be exercised by the Company not more than once in
any twelve (12) month period; or
(iv) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent to
service of process in effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file a Form S-3
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable (but in no event more than
sixty (60) days) after receipt of the request or requests of the Holders.
Registrations effected pursuant to this Section 2.4 shall not be counted as
demands for registration or registrations effected pursuant to Sections 2.2 or
2.3, respectively.
2.5 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration,
qualification or compliance pursuant to Section 2.2 or any registration under
Section 2.3 or Section 2.4 herein shall be borne
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by the Company. All Selling Expenses incurred in connection with any
registrations hereunder, shall be borne by the holders of the securities so
registered pro rata on the basis of the number of shares so registered. The
Company shall not, however, be required to pay for expenses of any registration
proceeding begun pursuant to Section 2.2, the request of which has been
subsequently withdrawn by the Initiating Holders unless (a) the withdrawal is
based upon material adverse information concerning the Company of which the
Initiating Holders were not aware at the time of such request or (b) the holders
of a majority of Registrable Securities held by the Initiating Holders agree to
forfeit their right to one requested registration pursuant to Section 2.2, as
applicable (in which event such right shall be forfeited by all Initiating
Holders). If such Initiating Holders are required to pay the Registration
Expenses, such expenses shall be borne by the Initiating Holders of securities
(including Registrable Securities) requesting such registration in proportion to
the number of shares for which registration was requested. If the Company is
required to pay the Registration Expenses of a withdrawn offering pursuant to
clause (a) above, then the Initiating Holders shall not forfeit their rights
pursuant to Section 2.2 to a demand registration.
2.6 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as expeditiously
as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable best efforts to
cause such registration statement to become effective, and, upon the request of
the Holders of a majority of the Registrable Securities registered thereunder,
keep such registration statement effective for up to 120 days or, if earlier,
until the Holder or Holders have completed the distribution related thereto.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with such
registration statement as may be necessary to comply with the provisions of the
Securities Act with respect to the disposition of all securities covered by such
registration statement for the period set forth in paragraph (a) above.
(c) Furnish to the Holders such number of copies of a prospectus,
including a preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents as they may reasonably request in order
to facilitate the disposition of Registrable Securities owned by them.
(d) Use its reasonable best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders; provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter(s) of such offering.
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(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Use its best efforts to furnish, on the date that such
Registrable Securities are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of such
date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to underwriters in
an underwritten public offering, addressed to the underwriters, if any, and (ii)
a letter dated as of such date, from the independent certified public
accountants of the Company, in form and substance as is customarily given by
independent certified public accountants to underwriters in an underwritten
public offering addressed to the underwriters. A copy of each of the foregoing
shall be provided to the Holders upon request.
2.7 TERMINATION OF REGISTRATION RIGHTS. All registration rights granted
under this Section 2 shall terminate and be of no further force and effect three
(3) years after the date of the Company's Initial Offering. In addition, a
Holder's registration rights shall expire if (a) the Company has completed its
Initial Offering and is subject to the provisions of the Securities Act of 1934,
as amended from time to time, and (b) all Registrable Securities held by and
issuable to such Holder (and its affiliates, partners, former partners, members
and former members) may be sold under Rule 144 during any ninety (90) day
period.
2.8 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the result
of any controversy that might arise with respect to the interpretation or
implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.2, 2.3 or 2.4 that the selling
Holders shall furnish to the Company such information regarding themselves, the
Registrable Securities held by them and the intended method of disposition of
such securities as shall be required to effect the registration of their
Registrable Securities.
2.9 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.2, 2.3 or 2.4:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers, stockholders, affiliates
and directors of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or underwriter
within the meaning of the Securities Act or the Exchange Act, against any
losses, claims, damages, or liabilities (joint or several) to which they may
become subject under the Securities Act, the Exchange Act or other federal or
state law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are
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based upon any of the following statements, omissions or violations
(collectively a "VIOLATION") by the Company: (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading in light of the circumstances under
which they were made, or (iii) any violation or alleged violation by the Company
of the Securities Act, the Exchange Act, any state securities law or any rule or
regulation promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement; and the Company will pay as incurred to each such Holder, partner,
stockholder, affiliate, officer, director, underwriter or controlling person for
any legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided however, that the indemnity agreement contained in this Section 2.9(a)
shall not apply to amounts paid in settlement of any such loss, claim, damage,
liability or action if such settlement is effected without the consent of the
Company, which consent shall not be unreasonably withheld, nor shall the Company
be liable in any such case for any such loss, claim, damage, liability or action
to the extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly for
use in connection with such registration by such Holder, partner, stockholder,
affiliate, officer, director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities as to
which such registration qualifications or compliance is being effected,
indemnify and hold harmless the Company, each of its directors, its officers and
each person, if any, who controls the Company within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors or
officers or any person who controls such Holder, against any losses, claims,
damages or liabilities (joint or several) to which the Company or any such
director, officer, controlling person, underwriter or other such Holder, or
partner, director, officer or controlling person of such other Holder may become
subject under the Securities Act, the Exchange Act or other federal or state
law, insofar as such losses, claims, damages or liabilities (or actions in
respect thereto) arise out of or are based upon any Violation, in each case to
the extent (and only to the extent) that such Violation occurs in reliance upon
and in conformity with written information furnished by such Holder under an
instrument duly executed by such Holder and stated to be specifically for use in
connection with such registration; and each such Holder will pay as incurred any
legal or other expenses reasonably incurred by the Company or any such director,
officer, controlling person, underwriter or other Holder, or partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action if
it is judicially determined that there was such a Violation; provided, however,
that the indemnity agreement contained in this Section 2.9(b) shall not apply to
amounts paid in settlement of any such loss, claim, damage, liability or action
if such settlement is effected without the consent of the Holder, which consent
shall not be unreasonably withheld; provided further, that in no event shall any
indemnity under this Section 2.9 exceed the proceeds from the offering received
by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.9 of notice of the commencement of any action (including any
governmental action), such
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indemnified party will, if a claim in respect thereof is to be made against any
indemnifying party under this Section 2.9, deliver to the indemnifying party a
written notice of the commencement thereof and the indemnifying party shall have
the right to participate in, and, to the extent the indemnifying party so
desires, jointly with any other indemnifying party similarly noticed, to assume
the defense thereof with counsel mutually satisfactory to the parties; provided,
however, that an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if materially prejudicial to its ability to defend such action, shall
relieve such indemnifying party of any liability to the indemnified party under
this Section 2.9, but the omission so to deliver written notice to the
indemnifying party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.9.
(d) If the indemnification provided for in this Section 2.9 is
held by a court of competent jurisdiction to be unavailable to an indemnified
party with respect to any losses, claims, damages or liabilities referred to
herein, the indemnifying party, in lieu of indemnifying such indemnified party
thereunder, shall to the extent permitted by applicable law contribute to the
amount paid or payable by such indemnified party as a result of such loss,
claim, damage or liability in such proportion as is appropriate to reflect the
relative fault of the indemnifying party on the one hand and of the indemnified
party on the other in connection with the Violation(s) that resulted in such
loss, claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission; provided, that in no event shall any contribution by a
Holder hereunder exceed the proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section
2.9 shall survive completion of any offering of Registrable Securities in a
registration statement and the termination of this agreement. No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation.
2.10 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be assigned by
a Holder to a transferee or assignee of Registrable Securities which (a) is a
subsidiary, parent, general partner, limited partner, retired partner,
affiliate, member or retired member of a Holder, (b) is a Holder's family member
or trust for the benefit of an individual Holder, or (c) is also a Holder and
after such transfer or assignment, holds at least one hundred thousand (100,000)
shares of Registrable Securities (as adjusted for stock splits and
combinations); provided, however, (i) the transferor
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shall, within ten (10) days after such transfer, furnish to the Company written
notice of the name and address of such transferee or assignee and the securities
with respect to which such registration rights are being assigned and (ii) such
transferee shall agree to be subject to all restrictions set forth in this
Agreement.
2.11 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2
may be amended and the observance thereof may be waived (either generally or in
a particular instance and either retroactively or prospectively), only with the
written consent of the Company and the Holders of at least a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 2.11 shall be binding upon each Holder and the
Company. By acceptance of any benefits under this Section 2, Holders of
Registrable Securities hereby agree to be bound by the provisions hereunder.
2.12 LIMITATION ON SUBSEQUENT REGISTRATION RIGHTS. After the date of
this Agreement, the Company shall not, without the prior written consent of the
Holders of at least a majority of the Registrable Securities then outstanding,
enter into any agreement with any holder or prospective holder of any securities
of the Company that would grant such holder registration rights; provided,
however, that with only the written consent of the Company, and for a period of
sixty (60) days following the Effective Date of this Agreement, this Agreement
may be amended to add additional holders of shares of the Company's Preferred
Stock authorized and designated as such as of the Effective Date of this
Agreement as "Investors," "Holders" and parties hereto and to designate such
shares as "Shares" for purposes of this Agreement.
2.13 "MARKET STAND-OFF" AGREEMENT; AGREEMENT TO FURNISH INFORMATION.
Each Holder hereby agrees that such Holder shall not sell, 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 such Holder (other than those
included in the registration) for a period specified by the representative of
the underwriters of Common Stock (or other securities) of the Company not to
exceed one hundred eighty (180) days following the effective date of a
registration statement of the Company filed under the Securities Act; provided
that:
(i) such agreement shall apply only to the Company's Initial
Offering; and
(ii) all officers and directors of the Company and all
stockholders holding 1% or more of the Company's
outstanding equity securities enter into similar
agreements.
Each Holder agrees to execute and deliver such other agreements as may
be reasonably requested by the Company or the underwriter which are consistent
with the foregoing or which are necessary to give further effect thereto. In
addition, if requested by the Company or the representative of the underwriters
of Common Stock (or other securities) of the Company, each Holder shall provide,
within ten (10) days of such request, such information as may be required by the
Company or such representative in connection with the completion of any public
offering of the Company's securities pursuant to a registration statement filed
under the Securities Act. The obligations described in this Section 2.13 shall
not apply to a registration relating solely to
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employee benefit plans on Form S-8 or a similar form that may be promulgated in
the future, or a registration relating solely to a Commission Rule 145
transaction on Form S-4 or similar forms that may be promulgated in the future.
The Company may impose stop-transfer instructions with respect to the shares of
Common Stock (or other securities) subject to the foregoing restriction until
the end of said one hundred eighty (180) day period.
Nothing in this Section 2.13 shall affect, impair or diminish any
Holder's right to sell, transfer or assign any or all of its Registrable
Securities to such Holder's subsidiary, parent, affiliate or partner.
2.14 RULE 144 REPORTING AND FORM S-3. With a view to making available to
the Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without registration
or pursuant to a registration statement on Form S-3, the Company agrees to use
its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date of
the first registration filed by the Company for an offering of its securities to
the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act; and
(c) So long as a Holder owns any Registrable Securities, furnish
to such Holder forthwith upon request: a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 of the
Securities Act, and of the Exchange Act (at any time after it has become subject
to such reporting requirements); a copy of the most recent annual or quarterly
report of the Company; and such other reports and documents as a Holder may
reasonably request in availing itself of any rule or regulation of the SEC
allowing it to sell any such securities without registration or pursuant to a
registration statement on Form S-3.
SECTION 3. COVENANTS OF THE COMPANY
3.1 BASIC FINANCIAL INFORMATION AND REPORTING.
(a) The Company will maintain true books and records of account
in which full and correct entries will be made of all its business transactions
pursuant to a system of accounting established and administered in accordance
with generally accepted accounting principles consistently applied, and will set
aside on its books all such proper accruals and reserves as shall be required
under generally accepted accounting principles consistently applied.
(b) As soon as practicable after the end of each fiscal year of
the Company, and in any event within ninety (90) days thereafter, the Company
will furnish each Investor holding at least 200,000 Shares (a "Major Investor")
a balance sheet of the Company, as at the end of such fiscal year, and a
statement of income and a statement of cash flows of the Company, for such year,
all prepared in accordance with generally accepted accounting principles
consistently applied and setting forth in each case in comparative form the
figures for the previous fiscal year, all in reasonable detail. Such financial
statements shall be accompanied by
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a report and opinion thereon by independent public accountants of national
standing selected by the Company's Board of Directors.
(c) The Company will furnish each Major Investor, as soon as
practicable after the end of the first, second and third quarterly accounting
periods in each fiscal year of the Company, and in any event within forty-five
(45) days after each such period, a balance sheet of the Company as of the end
of each such quarterly period, and a statement of income and a statement of cash
flows of the Company for such period and for the current fiscal year to date,
prepared in accordance with generally accepted accounting principles, with the
exception that no notes need be attached to such statements and year-end audit
adjustments may not have been made.
(d) The Company will furnish each Major Investor (i) at least
thirty (30) days following the end of each fiscal year an annual budget and
operating plans for the then-current fiscal year (and as soon as available, any
subsequent revisions thereto); and (ii) as soon as practicable after the end of
each month, and in any event within forty-five (45) days thereafter, a balance
sheet of the Company as of the end of each such month, and a statement of income
and a statement of cash flows of the Company for such month and for the current
fiscal year to date, prepared in accordance with generally accepted accounting
principles consistently applied, with the exception that no notes need be
attached to such statements and year-end audit adjustments may not have been
made.
(e) Following the Initial Offering (to the extent requested by
each holder of Common Stock issued upon conversion of the Shares), the Company
will furnish each such holder copies of the Company's 10-K's, 10-Q's, 8-K's and
Annual Reports promptly after such documents are filed with the SEC.
3.2 INSPECTION RIGHTS. So long as any Shares remain outstanding, and
subject to Section 5.13 ("Confidentiality and Non-Disclosure"), each Major
Investor shall have the right to visit and inspect any of the properties of the
Company or any of its subsidiaries, and to discuss the affairs, finances and
accounts of the Company or any of its subsidiaries with its officers, and to
review such information as is reasonably requested all at such reasonable times
and as often as may be reasonably requested; provided, however, that the Company
shall not be obligated under this Section 3.2 with respect to a competitor of
the Company.
3.3 RESERVATION OF COMMON STOCK. The Company will at all times reserve
and keep available, solely for issuance and delivery upon the conversion of the
Preferred Stock, all Common Stock issuable from time to time upon such
conversion.
3.4 STOCK VESTING. Unless otherwise unanimously approved by the Board of
Directors, all stock options and other stock equivalents issued after the date
of this Agreement to employees, directors, consultants and other service
providers shall be subject to vesting as follows: (a) twenty-five percent (25%)
of such stock shall vest at the end of the first year following the earlier of
the date of issuance or such person's services commencement date with the
company, and (b) seventy-five percent (75%) of such stock shall vest monthly
over the remaining three (3) years. With respect to any shares of stock
purchased by any such person, the Company's repurchase option shall provide that
upon such person's termination of employment
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or service with the Company, with or without cause, the Company or its assignee
(to the extent permissible under applicable securities laws and other laws)
shall have the option to purchase at cost any unvested shares of stock held by
such person.
3.5 PROPRIETARY INFORMATION AND INVENTIONS AGREEMENT. The Company shall
require all officers and employees to execute and deliver a Proprietary
Information and Inventions Agreement in the form attached to the Purchase
Agreement. The Company shall require all consultants to execute and deliver the
Company's standard form of independent consultant agreement containing
substantially similar terms with respect to ownership of intellectual property.
3.6 TERMINATION OF COVENANTS. All covenants of the Company contained in
Section 3 of this Agreement shall expire and terminate as to each Investor upon
the earlier of (i) the effective date of the registration statement pertaining
to the Initial Offering (except for Section 3.1(e)) or (ii) upon (a) the sale,
lease or other disposition of all or substantially all of the assets of the
Company or (b) an acquisition of the Company by another corporation or entity by
consolidation, merger or other reorganization in which the holders of the
Company's outstanding voting stock immediately prior to such transaction own,
immediately after such transaction, securities representing less than fifty
percent (50%) of the voting power of the corporation or other entity surviving
such transaction (a "CHANGE IN CONTROL"); provided that this Section 3.6(ii)(b)
shall not apply to a merger effected exclusively for the purpose of changing the
domicile of the Company.
SECTION 4. RIGHTS OF FIRST REFUSAL
4.1 SUBSEQUENT OFFERINGS. Each Investor shall have a right of first
refusal to purchase its pro rata share of all Equity Securities, as defined
below, that the Company may, from time to time, propose to sell and issue after
the date of this Agreement, other than the Equity Securities excluded by Section
4.6 hereof. Each Investor's pro rata share is equal to the ratio of (a) the
number of shares of the Company's Common Stock (including all shares of Common
Stock issued or issuable upon conversion of the Shares) which such Investor is
deemed to be a holder of immediately prior to the issuance of such Equity
Securities to (b) the total number of shares of the Company's outstanding Common
Stock (including all shares of Common Stock issued or issuable upon conversion
of the Shares or upon the exercise of any outstanding warrants or options)
immediately prior to the issuance of the Equity Securities. The term "EQUITY
SECURITIES" shall mean (i) any Common Stock, Preferred Stock or other security
of the Company, (ii) any security convertible, with or without consideration,
into any Common Stock, Preferred Stock or other security (including any option
to purchase such a convertible security), (iii) any security carrying any
warrant or right to subscribe to or purchase any Common Stock, Preferred Stock
or other security or (iv) any such warrant or right.
4.2 EXERCISE OF RIGHTS. If the Company proposes to issue any Equity
Securities, it shall give each Investor written notice of its intention,
describing the Equity Securities, the price and the terms and conditions upon
which the Company proposes to issue the same. Each Investor shall have fifteen
(15) days from the giving of such notice to agree to purchase its pro rata share
of the Equity Securities for the price and upon the terms and conditions
specified in the notice by giving written notice to the Company and stating
therein the quantity of Equity
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Securities to be purchased. Notwithstanding the foregoing, the Company shall not
be required to offer or sell such Equity Securities to any Investor who would
cause the Company to be in violation of applicable federal securities laws by
virtue of such offer or sale.
4.3 ISSUANCE OF EQUITY SECURITIES TO OTHER PERSONS. If one or more of
the Investors elect not to purchase their pro rata share of the Equity
Securities, then the Company shall promptly notify in writing the Investors who
do so elect and shall offer such Investors the right to acquire such
unsubscribed shares. The Investors shall have five (5) days after receipt of
such notice to notify the Company of its election to purchase all or their pro
rata share of the unsubscribed shares. If the Investors fail to exercise in full
the rights of first refusal, the Company shall have sixty (60) days thereafter
to sell the Equity Securities in respect of which the Investor's rights were not
exercised, at a price and upon general terms and conditions materially no more
favorable to the purchasers thereof than specified in the Company's notice to
the Investors pursuant to Section 4.2 hereof. If the Company has not sold such
Equity Securities within such sixty (60)-day period, the Company shall not
thereafter issue or sell any Equity Securities without first offering such
securities to the Investors in the manner provided above.
4.4 TERMINATION AND WAIVER OF RIGHTS OF FIRST REFUSAL. The rights of
first refusal established by this Section 4 shall not apply to, and shall
terminate upon the earlier of (i) the effective date of the registration
statement pertaining to the Company's Initial Offering or (ii) a Change in
Control. The rights of first refusal established by this Section 4 may be
amended, or any provision waived with the written consent of Investors holding a
majority of the Registrable Securities held by all Investors, or as permitted by
Section 5.6.
4.5 TRANSFER OF RIGHTS OF FIRST REFUSAL. The rights of first refusal of
each Investor under this Section 4 may be transferred to the same parties,
subject to the same restrictions as any transfer of registration rights pursuant
to Section 2.10.
4.6 EXCLUDED SECURITIES. The rights of first refusal established by this
Section 4 shall have no application to any of the following Equity Securities:
(a) shares of Common Stock (and/or options, warrants or other
Common Stock purchase rights issued pursuant to such options, warrants or other
rights) as adjusted for any stock dividends, combinations, splits,
recapitalizations and the like issued previously or to be issued after the
Series D Original Issue Date (as defined in the Company's Certificate of
Incorporation) to employees, officers or directors of, or consultants or
advisors to the Company or any subsidiary, pursuant to stock purchase or stock
option plans or other arrangements that are approved by the Board of Directors;
(b) stock issued pursuant to any rights or agreements outstanding
as of the date of this Agreement, options and warrants outstanding as of the
date of this Agreement, and stock issued pursuant to any such rights or
agreements granted after the date of this Agreement; provided that the rights of
first refusal established by this Section 4 shall apply with respect to the
initial sale or grant by the Company of such rights or agreements;
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(c) any Equity Securities issued for consideration other than
cash pursuant to a merger, consolidation, acquisition or similar business
combination approved by the Board of Directors;
(d) shares of Common Stock issued in connection with any stock
split, stock dividend or similar recapitalization by the Company;
(e) shares of Common Stock issued upon conversion of any of the
Company's convertible preferred stock;
(f) any Equity Securities issued pursuant to any equipment
leasing or loan arrangement, or debt financing from a bank or similar financial
or lending institution unanimously approved by the Board of Directors and that
are for other than equity financing purposes;
(g) any Equity Securities that are issued by the Company pursuant
to a registration statement filed under the Securities Act pertaining to the
Company's Initial Offering;
(h) additional shares of Series D Preferred Stock authorized and
designated as such as of the Series D Original Issue Date and issued subsequent
to the date of this Agreement; and
(i) shares of the Company's Common Stock or Preferred Stock
issued in connection with strategic transactions involving the Company and other
entities, including (i) joint ventures, manufacturing, marketing or distribution
arrangements or (ii) technology transfer or development arrangements; provided
that such strategic transactions and the issuance of shares therein, have been
unanimously approved by the Company's Board of Directors and that are for other
than equity financing purposes.
SECTION 5. MISCELLANEOUS
5.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of California as applied to agreements among
California residents entered into and to be performed entirely within
California, without regard to any state's conflict of laws principles.
5.2 SURVIVAL. The representations and warranties made herein shall
survive any investigation made by any Holder and the closing of the transactions
contemplated hereby until the earlier of (i) the effective date of the
registration statement pertaining to the Initial Offering or (ii) twelve months
from the date hereof. All statements as to factual matters contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant hereto in connection with the transactions contemplated hereby shall be
deemed to be representations and warranties by the Company hereunder solely as
of the date of such certificate or instrument.
5.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
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provided, however, that prior to the receipt by the Company of adequate written
notice of the transfer of any Registrable Securities specifying the full name
and address of the transferee, the Company may deem and treat the person listed
as the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price.
5.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and Schedules hereto,
the Purchase Agreement and the other documents delivered pursuant thereto
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and no party shall be liable or bound to any
other in any manner by any representations, warranties, covenants and agreements
except as specifically set forth herein and therein. The Company's Investor
Rights Agreement dated May 21, 1999 and the Company's Amended and Restated
Investor Rights Agreement dated December 2, 1999 are hereby null and void and
superseded in full by the rights and obligations set forth in this Agreement.
5.5 SEVERABILITY. In the event one or more of the provisions of this
Agreement should, for any reason, be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions of this Agreement, and this Agreement
shall be construed as if such invalid, illegal or unenforceable provision had
never been contained herein.
5.6 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified, either prospectively or retroactively, only upon the
written consent of the Company and the holders of at least a majority of the
Registrable Securities.
(b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be waived
only with the written consent of the holders of at least a majority of the
Registrable Securities.
5.7 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any breach,
default or noncompliance of the Company under this Agreement shall impair any
such right, power, or remedy, nor shall it be construed to be a waiver of any
such breach, default or noncompliance, or any acquiescence therein, or of any
similar breach, default or noncompliance thereafter occurring. It is further
agreed that any waiver, permit, consent or approval of any kind or character on
any Holder's part of any breach, default or noncompliance under the Agreement or
any waiver on such Holder's part of any provisions or conditions of this
Agreement must be in writing and shall be effective only to the extent
specifically set forth in such writing. All remedies, either under this
Agreement, by law, or otherwise afforded to Holders, shall be cumulative and not
alternative.
5.8 NOTICES. Except as may be otherwise provided herein, 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 at
the address and number set forth on the signature page; (c) three business days
after deposit in the U.S. mail with first class or certified mail receipt
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requested postage prepaid and addressed to the other party as set forth on the
signature page; or (d) the next business day after deposit with a national
overnight delivery service, postage prepaid, addressed to the parties as set
forth on the signature page with next-business-day delivery guaranteed, provided
that the sending party receives a confirmation of delivery from the service
provider.
5.9 ATTORNEYS' FEES. In the event that any suit or action is instituted
to enforce any provision in this Agreement, the prevailing party in such dispute
shall be entitled to recover from the losing party all fees, costs and expenses
of enforcing any right of such prevailing party under or with respect to this
Agreement, including without limitation, such reasonable fees and expenses of
attorneys and accountants, which shall include, without limitation, all fees,
costs and expenses of appeals.
5.10 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
5.11 ADDITIONAL INVESTORS. Notwithstanding anything to the contrary
contained herein, if the Company shall issue additional shares of its Series D
Preferred Stock pursuant to the Purchase Agreement, any purchaser of such shares
of Series D Preferred Stock may become a party to this Agreement by executing
and delivering an additional counterpart signature page to this Agreement and
shall be deemed an "INVESTOR" hereunder.
5.12 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument. Facsimile signatures are deemed equivalent to
original signatures for purposes of this Agreement.
5.13 CONFIDENTIALITY AND NON-DISCLOSURE.
(a) DISCLOSURE OF TERMS. The terms and conditions of this
Agreement, the Purchase Agreement and the Right of First Refusal and Co-Sale
Agreement (collectively, the "Financing Terms"), including their existence,
shall be considered confidential information and shall not be disclosed by any
party hereto to any third party except in accordance with the provisions set
forth below.
(b) PRESS RELEASES. Within sixty (60) days of the Closing, the
Company may issue a press release disclosing that the Investors have invested in
the Company; provided that the release does not disclose any of the Financing
Terms and the final form of the press release is approved in advance in writing
by each Investor mentioned in such press release. The Company may reuse this
press release without further approval from the Investors. No other announcement
regarding any Investor in a press release, conference, advertisement,
announcement, professional or trade publication, mass marketing materials or
otherwise to the general public may be made without such Investor's prior
written consent. To the extent one or more Investor has entered into written
agreements with the Company setting forth additional or alternative requirements
related to press releases and other public disclosures, such additional or
alternative requirements shall apply in lieu of (and not in addition to) the
foregoing Section 5.13(b) with regards to Company disclosures related to such
Investor.
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(c) PERMITTED DISCLOSURES. Notwithstanding the foregoing, (i) any
party may disclose any of the Financing Terms to its current or bona fide
prospective investors, employees, investment bankers, lenders, accountants and
attorneys, in each case only where such persons or entities are under
appropriate nondisclosure obligations; and (ii) each Investor may disclose its
investment in the Company to third parties or to the public at its sole
discretion and without the requirement of obtaining the consent of any other
Investor, but without disclosure of the Financing Terms (except under
appropriate non-disclosure obligation) or the identity of other Investors in the
Company not previously disclosed to the public (except with the prior consent of
such other Investors); provided, however, that if it does so, the other parties
hereto shall have the right to disclose to third parties any such information
disclosed in a press release or other public announcement by such Investor.
(d) LEGALLY COMPELLED DISCLOSURE. In the event that any party is
requested or becomes legally compelled (including without limitation, pursuant
to securities laws and regulations) to disclose the existence of this Agreement,
the Purchase Agreement and the Right of First Refusal and Co-Sale Agreement or
any of the Financing Terms hereof in contravention of the provisions of this
Section 5.13, such party (the "Disclosing Party") shall provide the other
parties (the "Non-Disclosing Parties") with prompt written notice of that fact
so that the appropriate party may seek (with the cooperation and reasonable
efforts of the other parties) a protective order, confidential treatment or
other appropriate remedy. In such event, the Disclosing Party shall furnish only
that portion of the information which is legally required and shall exercise
reasonable efforts to obtain reliable assurance that confidential treatment will
be accorded such information to the extent reasonably requested by any
Non-Disclosing Party.
(e) RELATIONSHIP TO NON-DISCLOSURE AGREEMENTS. Additional
disclosures and exchange of confidential information between the Company and any
Investor (including without limitation, any exchanges of information with any
board observer designated by such Investor) shall be governed by the separate
confidentiality terms, if any, under any separate written agreement in effect
between such Investor and the Company.
(f) All notices required under this section shall be made
pursuant to Section 5.8 of this Agreement.
5.14 DISPUTE RESOLUTION. The Company and the Investors agree to
negotiate in good faith to resolve any dispute between them regarding the terms
and conditions of this Investor Rights Agreement, the Purchase Agreement and the
Right of First Refusal and Co-Sale Agreement. If the negotiations do not resolve
the dispute to the reasonable satisfaction of the Company and the Investor or
Investors involved in such dispute (the "Involved Investor(s)"), then the
Company and such Involved Investors shall nominate one senior officer of the
rank of Vice President or higher as its representative. These representatives
shall, within thirty (30) days of a written request to call such a meeting, meet
in person and alone (except for one assistant for each party) and shall attempt
in good faith to resolve the dispute. If such dispute cannot be resolved by such
senior managers in such meeting, the Company and such Involved Investors agree
that they shall, if requested in writing by the Company or any Involved
Investors, meet within thirty (30) days after such written notification for one
day with an impartial mediator and consider dispute resolution alternatives
other than litigation. If an alternative method of dispute resolution is not
agreed upon within thirty (30) days after such one day mediation, then either
the
20.
24
Company or any Involved Investors may begin litigation proceedings. This
procedure shall be a prerequisite before taking any additional action hereunder.
21.
25
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
COMPANY:
PACKETVIDEO CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Chairman of the Board
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
26
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
PHILIPS VENTURE CAPITAL FUND, B.V.
By: /s/ [illegible]
-------------------------------
Print Name: [illegible]
-----------------------
Title: Member Group Management Committee
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
27
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
SONERA OYJ
By: /s/ [illegible]
-------------------------------
Print Name: [illegible]
-----------------------
Title: Vice President
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
28
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
TIME WARNER ENTERTAINMENT COMPANY, L.P.
By: /s/ [illegible]
------------------------------
Print Name:
-----------------------
Title: Vice President
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
29
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
TEXAS INSTRUMENTS INCORPORATED
By: /s/ GILLES DEL FASSY
---------------------------------
Print Name: Gilles Del Fassy
-----------------------
Title: V.P. Wireless Communications
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
30
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
CREDIT SUISSE FIRST BOSTON VENTURE FUND I, L.P.
By: QBB Management I, LLC, its General Partner
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------
Title: Member
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
31
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
INTEL CORPORATION
By: /s/ ▇▇▇▇ ▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇ ▇▇▇▇
-----------------------
Title: Assistant Treasurer
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
32
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
SIEMENS INFORMATION AND COMMUNICATIONS NETWORKS, INC.
By:/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇
-------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇
-----------------------
Title: Member of the Group Board
Siemens Information and Communication Networks
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
33
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
INTERVU, INC.
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
34
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
INFINEON TECHNOLOGIES AG
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
35
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
ROCKEFELLER & CO., INC.
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
36
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
▇▇▇▇▇▇ PARTNERS LLC
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
37
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
NEXUS CAPITAL PARTNERS II, L.P.
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
38
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
SONY CORPORATION OF AMERICA
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
39
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
Print Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------
Title: Executive Vice President and CFO
----------------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
40
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
INVESTOR:
REUTERS HOLDINGS SWITZERLAND SERIES A
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
41
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
THE ▇▇▇▇▇▇▇▇ LIVING TRUST
U/D/T DATED AS OF 11/1/95
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
42
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
KEMSLEY REVOCABLE FAMILY LIVING TRUST
DATED MARCH 26, 1986
By:
--------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
43
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
GUARANTEE & TRUST CO. TTEE FBO ▇▇▇ ▇. ▇▇▇▇▇▇
GTC ▇▇▇ ACCOUNT #714-90005
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST U/A DTD 12/24/92
FBO ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
By:
--------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ TRUST U/A DTD 12/24/92
FBO ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
By:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ TRUST U/A DTD 12/24/92
FBO ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
By:
---------------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
44
IN WITNESS WHEREOF, the parties hereto have executed this SECOND AMENDED
AND RESTATED INVESTOR RIGHTS AGREEMENT as of the date set forth in the first
paragraph hereof.
▇▇▇.▇▇▇, INC.
By:
-------------------------------
Print Name:
-----------------------
Title:
-----------------------------
SECOND AMENDED AND RESTATED INVESTOR RIGHTS AGREEMENT
SIGNATURE PAGE
45
EXHIBIT A
SCHEDULE OF INVESTORS
SERIES A INVESTORS:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Trustee
Guarantee & Trust Co., TTEE F/B/O ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Trustee
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Trustee
▇▇▇.▇▇▇, Inc
SERIES B INVESTORS:
Intel Corporation
Siemens Services, Inc.
SERIES C INVESTORS:
Intel Corporation
Siemens Services, Inc.
InterVu, Inc.
Infineon Technologies ▇▇
▇▇▇▇▇▇▇▇▇▇▇ & Co., Inc.
Credit Suisse First Boston Venture Fund I, L.P.
Nexus Capital Partners II, L.P.
Sony Corporation of America
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
Reuters Holdings Switzerland Series A
SERIES D INVESTORS:
Philips Venture Capital Fund, B.V.
Texas Instruments Incorporated
Credit Suisse First Boston Venture Fund I, ▇.▇.
▇▇▇▇▇▇ OYJ
Time Warner Entertainment Company, L.P.
46
EXHIBIT E
CAPITALIZATION TABLE
DESCRIPTION AUTHORIZED ISSUED
----------- ---------- ------
Common 60,000,000 24,224,352
(Reserved for issuance pursuant 6,832,002 N/A
to 1998 Equity Incentive Plan
Series A Preferred 5,139,996 5,139,996
Series B Preferred 8,955,225 8,955,225
Series C Preferred 4,375,000 4,375,000
Series D Preferred 1,443,569 1,443,569
Total Preferred 19,913,790 19,913,790
