EXHIBIT 4.03
STOCKHOLDERS AGREEMENT
AGREEMENT, dated as of February 9, 1994, among FORMFACTOR, INC.,
a corporation organized under the laws of the State of Delaware (the
"Corporation"), ▇▇▇▇ ▇▇▇▇▇▇▇▇, having an address at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("IK"); ▇▇▇▇▇ ▇▇▇▇▇, having an address at ▇▇▇
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ("SB"; IK and SB are sometimes
hereinafter referred to collectively as the "Principal Stockholders"); and
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, having an address at ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇ (the "Other Stockholder"; the Principal Stockholders and the Other
Stockholder are sometimes hereinafter referred to collectively as the
"Stockholders").
W I T N E S S E T H:
WHEREAS, each of the Stockholders is the holder of the number of
shares of the Corporation's common stock, no par value (the "Common Stock"), set
forth on SCHEDULE A annexed hereto and made a part hereof; and
WHEREAS, the Stockholders desire to provide for continuity and
stability in the affairs of the Corporation and to impose certain restrictions
with respect to the transfer or other disposition of the Common Stock upon the
terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the premises, and the mutual
representations, warranties, covenants, and agreements contained herein, the
parties hereby agree as follows:
1. Restrictions on Disposition of Shares.
(a) The Other Stockholder shall not at any time during the period
after the date of this Agreement and prior to the second (2nd) anniversary of
the date of this Agreement (the "Initial Holding Period"), sell, assign,
transfer, grant a proxy to any person to vote or
otherwise act in respect of, grant a participation in, grant a security interest
in, pledge, encumber or otherwise dispose of, whether by operation of law or
otherwise (any of the foregoing being referred to hereinafter as .a
"Disposition"), any shares of Common Stock, now owned or hereafter acquired by
the Other Stockholder, other than to the Principal Stockholders or their
designee or to an Other Stockholder Affiliate (as defined in Section 1(c)
hereof), except with the Principal Stockholders, prior written consent.
(b) (i) At any time after the Initial Holding Period, the Other
Stockholder shall not, without the prior written consent of the Principal
Stockholders, effect a Disposition of any shares of Common Stock, now owned or
hereafter acquired by the Other Stockholder, other than to the Principal
Stockholders or their designee, or to the Corporation except upon the following
terms and conditions: Notwithstanding the foregoing, if at any time after the
expiration of the Initial Holding Period, the Other Stockholder desires to sell
all or any portion of the shares of Common Stock held by the Other Stockholder
(the "Offered Shares"), and the Other Stockholder shall have received an
irrevocable bona fide, arm's-length, written offer (the "Bona Fide Offer") for
the purchase of the Offered Shares, for cash, notes or other consideration, or
any combination thereof, from a prospective purchaser (the "Prospective
Purchaser"), the Other Stockholder shall give a notice in writing (the "Option
Notice") to each of the Corporation and the Principal Stockholders containing a
copy of the original executed Bona Fide Offer, setting forth the price and terms
and conditions of the proposed sale, the name and address of the Prospective
Purchaser, and the effective date of such Option Notice. For a period of 20
business days following the effective date of such Option Notice (the "Principal
Stockholders' Option Period"), the Principal Stockholders shall have an option,
on the terms and conditions set forth in this Section 1(b), to purchase all or
any portion of the
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Offered Shares. The Principal Stockholder's option may be exercised by giving a
written counter-notice (a "Notice of Exercise") to the other Stockholder within
the Principal Stockholders' Option Period, setting forth the number of the
Offered Shares with respect to which the Principal Stockholders' option is
exercised. If, upon the expiration of the Principal Stockholders' Option Period,
the Principal Stockholders have failed to exercise their option to purchase all
of the Offered Shares, then for a period of 15 business days following the
expiration of the Principal Stockholders' Option Period (the "Corporation's
Option Period"), the Corporation shall have an option on the terms and
conditions set forth in this Section 1(b), to purchase all of the remaining
Offered Shares.
The Corporation's option may be exercised by giving a Notice of
Exercise to the Other Stockholder within the Corporation's Option Period,
setting forth the number of the Offered Shares with respect to which the
Corporation's option is exercised.
(ii) Upon the timely giving of the Notice of Exercise by
the Principal Stockholders and/or the Corporation, the Principal Stockholders
and/or the Corporation, as the case may be, shall be obligated to purchase from
the Other Stockholder, and the Other Stockholder shall be obligated to sell to
the Principal Stockholders and/or the Corporation, as the case may be, the
number of the Offered Shares with respect to which each such party's option has
been exercised, at the price and on the terms and conditions specified in the
Bona Fide Offer; provided, however, that if the Principal Stockholders and/or
the Corporation do not give Notice(s) of Exercise setting forth their intention
to purchase all of the Offered Shares, then in such event any Notice(s) of
Exercise shall be null and void. If the Bona Fide Offer was for consideration
consisting of other than cash or notes (or a combination thereof), or for
consideration consisting in part of other than cash or notes (or a combination
thereof), then the
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consideration to be paid by the Principal Stockholders and/or the Corporation,
as the case may be, for the Offered Shares shall consist of cash or notes, to
the extent that the consideration in the Bona Fide Offer consisted of cash or
notes, and, to the extent such consideration consisted of other than cash or
notes, a cash consideration equal to the fair market value of such non-cash or
non-note consideration set forth in the Bona Fide Offer, which fair market value
shall promptly be determined by an investment banker mutually acceptable to the
Other Stockholder, the Principal Stockholders and the Corporation. If such
parties are unable to agree within 60 days after the expiration of the
Corporation's Option Period, the appraisal shall be conducted by an investment
banker designated, upon the application of the Other Stockholder, the Principal
Stockholders or the Corporation, by the American Arbitration Association in New
York, New York. The cost of the appraisal shall be borne equally by the Other
Stockholder, on the one hand, and the Principal Stockholders and/or the
Corporation, on the other hand (such share of the Principal Stockholders and/or
the Corporation to be borne by each of such parties in proportion to the number
of the Offered Shares with respect to which each such party's option has been
exercised). The decision of such investment banker shall be final and binding
upon the Other Stockholder, the Principal Stockholders and the Corporation, and
each of their respective heirs, legatees, administrators, executors, successors
and assigns.
(iii) If the Notice(s) of Exercise shall not have been
duly given as to all of the Offered Shares as aforesaid by the Principal
Stockholders and the Corporation, the Other Stockholder may, within a period of
60 days after the expiration of the Corporation's Option Period, sell the
Offered Shares to the Prospective Purchaser upon the terms and conditions, and
for a price not lower than the price, set forth in the Bona Fide Offer;
provided, however, that if the sale to the Prospective Purchaser is not
completed within such 60-day
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period, the Offered Shares shall continue to remain subject to all the
provisions of this Section 1(b). If the Other Stockholder obtains the right to
sell the Offered Shares to a Prospective Purchaser pursuant to this Section
1(b), such Prospective Purchaser shall, as a condition to such sale, be required
to execute and deliver a counterpart of this Agreement, whereby such Prospective
Purchaser agrees to be subject to and bound by all of the terms and provisions
of this Agreement to the same extent as the Stockholders party hereto.
(iv) The closing of any purchase by the Principal
Stockholders or the Corporation under this Section 1(b) shall take place at the
office of the Corporation or at such other place designated by the Corporation
or the Principal Stockholders, as the case may be, on a date designated by the
Corporation or the Principal Stockholders, as the case may be, which date shall
not be more than 30 days following the expiration of the Principal Stockholders'
or the Corporation's Option Period, as the case may be.
(c) Notwithstanding anything to the contrary contained herein,
the Other Stockholder and any Other Stockholder Affiliate shall have the right
at any time during the term of this Agreement and at any time during such
party's lifetime or upon such party's death to transfer, whether by sale, by
gift inter vivos, by will, or by laws of descent and distribution, or otherwise,
all or any portion of the shares of Common Stock of the Corporation then owned
by it to (i) the Other Stockholder's spouse, children or grandchildren, or (ii)
a trust for the benefit of the Other Stockholder's spouse, children or
grandchildren (each of the foregoing parties described in clauses (i)-(ii) above
being an "Other Stockholder Affiliate" and being deemed to be included in the
definition of the Other Stockholder for all purposes of this Agreement) and the
provisions of Section 1(b) hereof shall not apply to any such transfer. Any
permitted assignee or designee of the Other Stockholder or an Other Stockholder
Affiliate
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pursuant to this Section 1(c) shall, as a condition to such transfer, be
required to execute and deliver a counterpart of this Agreement, whereby such
party agrees to be subject to and bound by all of the terms and provisions of
this Agreement to the same extent as the Stockholders party hereto, and unless
such an agreement is so executed and delivered, such transfer shall be null and
void.
2. Certain Prohibited Transfers. Notwithstanding anything to the
contrary contained herein, the Other Stockholder shall not, at any time during
the term of this Agreement, effect a Disposition of any shares of Common Stock,
now owned or hereafter acquired by the Other Stockholder, to any person or
entity engaged in any business that is competitive with any business then
engaged in by the Corporation, or to any person or entity which directly or
indirectly controls, or is controlled by, or is under common control with, any
such person or entity.
3. Legend on Share Certificates. All certificates representing shares of
Common Stock now or hereafter issued by the Corporation to any Stockholder or to
any of such Stockholder's permitted assignees or designees shall be subject to
this Agreement and shall bear the following legends:
"The shares evidenced by this certificate or any
certificate issued in exchange or transfer therefor are and will
be subject to, and may not be transferred except in accordance
with, the terms of a certain Stockholders Agreement, dated as of
February 9, 1994 (as the same may be subsequently amended,
modified, restated or supplemented), by and among certain
stockholders of the Corporation and the Corporation, which
agreement provides, among other things, for restrictions on the
sale, transfer and disposition of the shares of the Corporation,
an executed copy of which agreement is on file at the principal
office of the Corporation."
"The shares evidenced by this certificate have not been
registered under the Securities Act of 1933, as amended, or the
securities laws of any state and may be offered and sold only if
so
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registered or if the Corporation has been furnished with an
opinion of counsel, reasonably satisfactory to the Corporation,
to the effect that an exemption from such registration is
available to the holder of the shares."
4. Term. The term of this Agreement shall commence as of the date first
above written and shall continue until the earliest to occur of (a) the tenth
(10th) anniversary of the date hereof; (b) the Corporation being adjudicated
bankrupt or insolvent, or an order being entered, remaining unstayed by appeal
or otherwise for 120 days, appointing a receiver or trustee for the Corporation,
or for substantially all of its property, or approving a petition seeking
reorganization or other similar relief under the bankruptcy or other similar
laws of the United States or of any state, or the Corporation filing a petition
seeking any of the foregoing or consenting thereto, or filing a petition to take
advantage of any debtors' acts, or making a general assignment for the benefit
of creditors, or admitting in writing its inability to pay its debts as they
mature; (c) the consummation of an underwritten public offering of equity
securities of the Corporation pursuant to an effective registration statement
under the Securities Act of 1933, as amended (the "Securities Act") that
provides gross proceeds to the Corporation of not less than $5,000,000; and (d)
the termination of this Agreement pursuant to a written agreement executed by
all of the parties hereto; provided, however, that the Stockholders' rights
under Section 9 hereof shall survive any termination of this Agreement; and
provided, further, however, that Section 1 of this Agreement shall terminate in
any event on the fifth (5th) anniversary of the date hereof.
5. Representations and Warranties of the Corporation. The Corporation
hereby acknowledges, represents and warrants to the Stockholders as follows:
(a) The Corporation is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware with full
corporate power and authority
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to enter into this Agreement and to consummate the transactions contemplated
hereby. The Corporation's authorized capital stock consists of One Thousand Five
Hundred (1,500) shares of Common Stock, of which 202.1147 shares are issued and
outstanding. True and correct copies of the Certificate of Incorporation and the
Restated By-laws of the Corporation are annexed hereto as SCHEDULES B and C,
respectively.
(b) The Corporation has full power and authority (corporate or
otherwise) to execute, deliver and perform this Agreement, and the execution,
delivery and performance of this Agreement will not result in (i) the breach of
or default under, with or without the giving of notice or passage of time, or
both, its Certificate of Incorporation, By-Laws, any mortgage, indenture,
contract, agreement or other arrangement to which it is a party or by which it
or its properties may be bound, (ii) the violation of any law, statute, rule,
decree, order, judgment or regulation binding upon it, or (iii) (except as
contemplated by this Agreement) the creation or imposition of any lien or
encumbrance on any of its properties or assets.
(c) This Agreement and all transactions contemplated hereby have
been duly authorized by all necessary corporate action on the part of the
Corporation and constitute a legal, valid and binding obligation of the
Corporation enforceable against it in accordance with its terms. The Board of
Directors of the Corporation has adopted appropriate resolutions authorizing the
Corporation to enter into this Agreement and undertaking to fulfill all the
terms of this Agreement.
(d) The Corporation owns of record the patent applications listed
on SCHEDULE D annexed hereto; provided, however, that the Corporation makes no
representation or warranty with respect to the patentability of any invention
claimed on such
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SCHEDULE D or the validity or enforceability of any patent that may be issued to
the Corporation.
6. Representations and Warranties of the Stockholders. Each of the
Stockholders hereby acknowledges, represents and warrants to the remaining
Stockholders and to the Corporation as follows:
(a) Such Stockholder owns the number of shares of the Common
Stock set forth on SCHEDULE A annexed hereto, free and clear of all liens,
claims, encumbrances, proxies, pledges, security interests, charges,
encumbrances, title retention agreements or any other liability, claim or
restriction on transferability of any nature whatsoever, other than pursuant to
this Agreement.
(b) Such Stockholder has full power and authority to execute,
deliver and perform this Agreement, and the execution, delivery and performance
of this Agreement will not result in (i) the breach of or default under, with or
without the giving of notice or passage of time, or both, any mortgage,
indenture, contract, agreement or other arrangement to which it is a party or by
which it or its properties may be bound, (ii) the violation of any law, statute,
rule, decree, order, judgment or regulation binding upon it, or (iii) (except as
contemplated by this Agreement) the creation or imposition of any lien or
encumbrance on any of its properties or assets.
7. Tag Along Rights.
(a) Subject to the provisions of Section 7(c) hereof, neither of
the Principal Stockholders shall, during the term of this Agreement, sell,
transfer or otherwise dispose of any of the shares of Common Stock either of
them beneficially owns in the Corporation to any party if such sale, transfer or
other disposition would cause the aggregate number of shares of
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Common Stock proposed to be sold and previously sold, transferred or otherwise
disposed of by the Principal Stockholders to any party or parties (other than a
Principal Stockholders Affiliate, as hereinafter defined) to exceed fifteen
(15%) percent of the aggregate number of shares of Common Stock in the
Corporation held by the Principal Stockholders on the date hereof as set forth
on SCHEDULE A hereof (subject to appropriate adjustment, upward or downward, to
reflect any subsequent stock dividend, stock split, combination of shares,
recapitalization or other similar event (collectively "Subsequent Events"))
unless the Principal Stockholders shall first notify the Other Stockholder in
writing of the terms and conditions of such proposed sale, transfer or other
disposition which, together with any shares of Common Stock previously sold,
transferred or otherwise disposed of by the Principal Stockholders, would cause
the Principal Stockholders to have disposed of more than 15% of the aggregate
number of shares of Common Stock in the Corporation held by the Principal
Stockholders on the date hereof as set forth on SCHEDULE A hereof (subject to
appropriate adjustment, upward or downward, to reflect Subsequent Events) and
shall obtain for the other Stockholder prior to any such sale, transfer or other
disposition, a put option for a period of at least 15 days to sell, transfer or
otherwise dispose to such person on the same per share terms and at the same per
share price as the proposed sale, transfer or other disposition by the Principal
Stockholders, up to that number of shares of Common Stock then owned by the
Other Stockholder that bears the same proportion to the total number of shares
of Common Stock at the time owned by the Other Stockholder as the number of
shares of Common Stock being sold, transferred or otherwise disposed of by the
Principal Stockholders bears to the total number of shares of Common Stock at
the time owned by the Principal Stockholders.
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(b) In order to exercise such put option, the other Stockholder
must, within 15 days after the giving of the notice of a proposed sale, transfer
or other disposition of the Common Stock by the Principal Stockholders referred
to in Section 6(a) hereof, deliver to the Principal Stockholders written notice
that the Other Stockholder has elected to sell, transfer or otherwise dispose of
the Other Stockholder's shares of Common Stock pursuant to this Section 7 upon
the same terms and at the same per share price as the proposed sale, transfer or
other disposition by the Principal Stockholders, whereupon such sale, transfer
or other disposition by the Other Stockholder shall be completed
contemporaneously with the proposed sale, transfer or other disposition by the
Principal Stockholders.
(c) Notwithstanding anything to the contrary contained in this
Section 7, either or both of the Principal Stockholders, or any Principal
Stockholders Affiliate, shall have the right at any time during the term of this
Agreement to transfer, whether by sale, by gift inter vivos, by will, or by laws
of descent and distribution, or otherwise, all or any portion of the shares of
Common Stock of the Corporation then owned by it to (i) any such party's spouse,
children or grandchildren, or (ii) a trust for the benefit of any such party or
such party's spouse, children or grandchildren (each of the foregoing parties
described in clauses (i)-(ii) above being a "Principal Stockholders Affiliate"
and being deemed to be included in the definition of the Principal Stockholders
for all purposes of this Agreement) and the provisions of Section 7(a) hereof
shall not apply to any such transfer. Any permitted assignee or designee of
either or both of the Principal Stockholders or any Principal Stockholders
Affiliate thereof pursuant to this Section 7(c) shall, as a condition to such
transfer, be required to execute and deliver a counterpart of this Agreement,
whereby such party agrees to be subject to and bound by all of the terms and
provisions of this Agreement to the same extent as the Stockholders
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party hereto, and unless such an agreement is so executed and delivered, such
transfer shall be null and void.
8. Drag Along. At any time prior to the time the Principal Stockholders
cease to own less than forty (40%) percent of the issued and outstanding shares
of Common Stock of the Corporation, the Principal Stockholders may, if they
elect (the "Drag Along Election") at any time during such period to sell all of
their shares of Common Stock to a bona fide third-party purchaser not related
to, controlled by or under common control with the Principal Stockholders, cause
a sale of all of the then issued and outstanding shares of Common Stock of the
Corporation owned by the Other Stockholder to be made to such third-party
purchaser in an arm's-length transaction for cash and/or registered, freely
marketable securities. Any such sale of all of the issued and outstanding shares
of the Corporation held by the Other Stockholder must be made on the same terms
and conditions, including the price per share, upon which the Principal
Stockholders have agreed to sell all of their shares of Common Stock to the
third-party purchaser. The Principal Stockholders can trigger a Drag Along
Election by providing a written notice of such election (the "Drag Along
Notice") to the Other Stockholder, such Drag Along Notice to include the price
per share being paid to the Principal Stockholders by such third-party purchaser
and the other material terms and conditions of such sale. Upon the Other
Stockholder's receipt of a Drag Along Notice, the Other Stockholder shall fully
cooperate with the Principal Stockholders and shall take all actions and steps
to effect such sale as the Principal Stockholders may deem necessary, desirable
or appropriate, including, without limitation, the prompt delivery to the
Principal Stockholders of duly endorsed stock powers with respect to all of the
shares of Common Stock at such time owned by the Other Stockholder.
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9. Registration Rights.
(a) As used in this Section 9, the following terms shall have the
following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Public Offering" shall mean a firm commitment underwritten
public offering of the Common Stock having aggregate minimum gross proceeds to
the Corporation of $5,000,000 (based upon the then current market price or fair
value estimated by the Corporation's underwriter or underwriters).
"Register", "registered" and "registration" shall refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the applicable rules and regulations
promulgated thereunder, and the applicable rules and regulations promulgated
thereunder, and the declaration or ordering of the effectiveness of such
registration statement.
"Registration Expenses" shall mean all of the costs, fees and
expenses incurred by the Corporation in compliance with this Section 9,
including, without limitation, all registration and filing fees, printing
expenses, fees and disbursements of counsel for the Corporation (but not counsel
for any Stockholder participating in the registration), blue sky fees and the
expense of any audits incident to or required by any such registration.
(b) Piggyback Registrations.
(i) Right to Piggyback. Whenever the Corporation proposes
to effectuate a Public Offering or to otherwise register any of its securities
under the Securities
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Act (other than a registration (A) on Form S-8 or S-4 or any successor or
similar form, (B) relating to Common Stock issuable upon exercise of employee
stock options or in connection with any employee benefit or similar plan of the
Corporation, or (C) in connection with a direct or indirect acquisition by the
Corporation of another company in a manner which would permit registration of
Common Stock for sale to the public under the Securities Act) and the
registration form to be used may be used for the registration of the shares of
Common Stock of the Corporation (a "Piggyback Registration"), the Corporation
will give prompt written notice (the "Piggyback Registration Notice") to each
Stockholder and the other stockholders of the Corporation, if any, who may have
similar piggyback registration rights of its intention to effect such a
registration and will, subject to Section 9(b)(ii) hereof, use its best efforts
to include in such registration all of the shares of Common Stock with respect
to which the Corporation has received written requests from any Stockholder and
such other stockholders of the Corporation for inclusion therein within 45 days
after the date of the Corporation's Piggyback Registration Notice to the
Stockholders and such other stockholders.
(ii) Priority on Piggyback Registrations. Notwithstanding
any provision to the contrary contained herein, if a Piggyback Registration is
an underwritten primary registration on behalf of the Corporation, and the
Corporation's underwriter or underwriters advise the Corporation in writing that
the number of securities requested to be included in such registration by the
Corporation and the Stockholders and other stockholders of the Corporation
exceeds the number of securities which in the estimation of such underwriter or
underwriters can reasonably be expected to be sold in such offering, or if such
underwriter determines that the sale of shares by selling stockholders in such
offering would in any way adversely affect the offering by the Corporation, the
Corporation will include in such
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registration (1) first, the securities the Corporation proposes to sell, and (2)
second, if and only if additional shares of Common Stock can be included in such
registration in the estimation of the Corporation's underwriter or underwriters,
the shares of Common Stock, if any, which were requested by the Stockholders and
the other stockholders to be included in such registration, on a pro rata basis
with respect to each such Stockholder and other stockholders based upon its
respective percentage ownership of the aggregate number of shares of Common
Stock requested to be included in such registration by all of the stockholders
of the Corporation electing to participate in such registration. No such
reduction shall reduce the securities being offered by the Corporation for its
own account to be included in the registration and underwriting. If any
Stockholder or any other stockholder disapproves of the terms of any such
underwriting, it may elect to withdraw therefrom by written notice to the
Corporation and the Corporation's underwriter, delivered at least 25 days prior
to the effective date of the registration statement. Any shares of Common Stock
excluded or withdrawn from such underwriting shall be withdrawn from the
registration. All Stockholders and other stockholders proposing to distribute
their shares of Common Stock through such underwriting shall enter into an
underwriting agreement in customary form with the underwriter or underwriters
selected by the Corporation for such underwriting.
(c) Registration Expenses. In the event of a Piggyback
Registration, the Corporation shall bear all of the Registration Expenses except
that each Stockholder and each of the other stockholders of the Corporation
participating in a Piggyback Registration shall be responsible for (i) its own
legal fees and expenses in connection with such registration and (ii) its
proportionate share of all fees and commissions payable to brokers and
underwriters in connection with such registration, such proportionate share to
be equal to a fraction the
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numerator of which is the number of shares of Common Stock being so registered
by such Stockholder or other stockholder, as the case may be, and the
denominator of which is the aggregate number of shares of Common Stock being
registered by the Corporation and all of the stockholders of the Corporation
(including the Stockholders) participating in such registration.
(d) Registration Procedures. In connection with any Piggyback
Registration, the Corporation will use its best efforts to effect the
registration and the sale of the securities offered thereby and the Corporation
will as expeditiously as possible:
(i) prepare and file with the Commission a registration
statement with respect to such securities, which registration statement will
state that the Stockholders and other stockholders covered thereby may sell
their shares of Common Stock under such registration statement 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 Corporation will furnish to the counsel selected by a
majority of the selling stockholders covered by such registration statement
copies of all such documents proposed to be filed, which documents will be
subject to the review of such counsel);
(ii) prepare and file with the 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 the period set forth in subparagraph (d)(vi) hereof and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement during such period;
(iii) furnish to each stockholder participating in such
registration such number of copies of such registration statement, each
amendment and supplement thereto, the
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prospectus included in such registration statement (including each preliminary
prospectus) and such other documents as such stockholder may reasonably request
in order to facilitate the public offering of the securities covered by such
registration statement;
(iv) use its best efforts to register or qualify the
shares of Common Stock offered pursuant to such registration by the Stockholders
under such other securities or blue sky laws of such jurisdictions as any
Stockholder reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable each Stockholder to
consummate the disposition in such jurisdictions of the shares of Common Stock
owned by such Stockholder (provided that the Corporation will not be required to
(1) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (2) subject itself
to taxation in any such jurisdiction, or (3) consent to general service of
process in any such jurisdiction, and provided further that notwithstanding any
provision to the contrary contained herein, if any jurisdiction in which such
shares of Common Stock shall be qualified shall require that expenses in that
jurisdiction be borne by the stockholders participating in the registration
rather than the Corporation, then such expenses shall be payable by the
stockholders participating in the registration pro rata (based upon the
percentage ownership of each stockholder of shares of Common Stock being
registered with respect to all of the shares of Common Stock being registered by
all of the stockholders), to the extent required by such jurisdiction);
(v) notify each stockholder selling shares of Common
Stock, 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 to state any fact necessary to
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make the statements contained therein not misleading, and, at the request of any
such stockholder, the Corporation will prepare a supplement or amendment to such
prospectus so that, as thereafter delivered to the purchasers of such
securities, such prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein not
misleading; and
(vi) keep such registration effective for a period of 90
days or until the selling stockholders have completed the distribution described
in the registration statement relating thereto, whichever first occurs.
(e) Indemnification.
(i) The Corporation will indemnify each Stockholder, if
participating in a Piggyback Registration, and each of its agents, employees,
controlling persons within the meaning of the Securities Act, officers,
directors and partners and each underwriter, if any, participating in such
registration and each person which controls any such underwriter within the
meaning of the Securities Act, against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on any
untrue statement (or alleged untrue statement) of a material fact contained in
any registration statement, prospectus, offering circular or other document
incident to any such registration or based on any omission (or alleged omission)
to state therein a material fact required to be stated therein or necessary to
make the statements contained therein not misleading, or any violation by the
Corporation of the Securities Act or any rule or regulation thereunder
applicable to the Corporation in connection with any such registration and will
reimburse such Stockholder, each of its agents, employees, officers, directors
and partners, and each person controlling such Stockholder and each such
underwriter and each person which controls any such underwriter, for any legal
and any other expenses
-18-
reasonably incurred by any such party in connection with investigating or
defending any such claim, loss, damage, liability or action; provided, however,
that the Corporation will not be liable in any such case to the extent that any
such claim, loss, damage, liability, action or expense arises out of or is based
on any untrue statement or omission based upon written information furnished to
the Corporation by such Stockholder, or any such agent, employee, officer,
director, partner or controlling person or any underwriter or controlling person
thereof and stated to be specifically for use therein.
(ii) Each Stockholder will, if shares of Common Stock held
by it are included in the securities as to which a Piggyback Registration is
being effected, indemnify the Corporation and each of its employees, agents,
controlling persons within the meaning of the Securities Act, directors,
partners and officers and each underwriter, if any, participating in such
registration and each person which controls any such underwriter within the
meaning of the Securities Act, and each other stockholder participating in such
registration and each of their agents, employees, controlling persons within the
meaning of the Securities Act, officers, directors and partners, against all
claims, losses, damages and liabilities (or actions in respect thereof) arising
out of or based on any untrue statement (or alleged untrue statement) of a
material fact contained in any registration statement, prospectus, offering
circular or other document incident to such registration or based on any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading, or any violation by such Stockholder of the Securities Act or any
rule or regulation thereunder applicable to such Stockholder in connection with
any such registration and will reimburse the Corporation and such other
stockholders and each of their agents, employees, directors, officers, partners,
underwriters and control persons for any legal
-19-
or any other expenses reasonably incurred by any such party in connection with
investigating or defending any such claim, loss, damage, liability or action, in
each case to the extent, but only to the extent, that such untrue statement (or
alleged untrue statement) or omission (or alleged omission) is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to the
Corporation by such Stockholder or any agent, employee, officer, director,
partner or controlling person thereof and stated to be specifically for use
therein; provided, however, that the obligations of each Stockholder hereunder
are several only and not joint and the aggregate obligations of each Stockholder
hereunder shall be limited to an amount equal to the gross proceeds received by
such Stockholder from the offering of the shares of Common Stock registered by
such Stockholder.
(iii) Each party entitled to indemnification under this
Section 9(e) (the "Indemnified Party") shall give notice to the party required
to provide indemnification (the "Indemnifying Party") promptly after such
Indemnified Party has actual knowledge of any claim as to which indemnity may be
sought, and shall permit the Indemnifying Party to assume the defense of any
such claim or any litigation resulting therefrom; provided that the Indemnified
Party may participate in such defense at such Indemnified Party's expense, and
provided further that the failure of any Indemnified Party to give notice as
provided herein shall not relieve the Indemnifying Party of its obligations
under this Section 9(e). The parties to this Agreement reserve any rights to
make a claim under this Agreement for damages actually incurred by reason of any
failure of the Indemnified Party to give prompt notice of a claim. To the extent
counsel for the Indemnifying Party shall have a conflict in representing both an
Indemnified Party and the Indemnifying Party or if an Indemnifying Party does
not
-20-
assume the defense of any such claim or litigation, the Indemnified Party shall
be entitled to separate counsel at the expense of the Indemnifying Party. No
Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the prior 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 and the
acknowledgement by the claimant or plaintiff to such Indemnified Party that
there was no wrongdoing or culpability on the part of the Indemnified Party in
respect to such claim or litigation. Each Indemnified Party shall furnish such
information regarding itself or the claim in question as an Indemnifying Party
may reasonably request in writing and as shall be reasonably required in
connection with the defense of such claim and litigation resulting therefrom.
(f) Information Provided by Stockholders. Each Stockholder
holding shares of Common Stock included in any Piggyback Registration shall
furnish to the Corporation such information regarding such Stockholder and the
intended method of disposition of its shares of Common Stock proposed by such
Stockholder as the Corporation may reasonably request in writing and as shall be
reasonably required in connection with any such Piggyback Registration. Each
Stockholder agrees to sell its securities in accordance with the terms of any
underwriting arrangements approved pursuant to Section 9(g) hereof and shall
complete and execute all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably and customarily required
under the terms of such underwriting arrangements.
(g) Selection of Underwriters. The Corporation shall have the
right, in its sole discretion, to select the investment banker(s) and manager(s)
in connection with any
-21-
Piggyback Registration (such banker(s) and manager(s) to be a firm or firms of
nationally recognized standing), to administer the offering of any such
registration of securities of the Corporation pursuant to this Section 9.
(h) Holdback Agreements. Each Stockholder hereby agrees that it
shall not, to the extent requested by the Corporation or any underwriter of
securities of the Corporation, sell or otherwise transfer or dispose of any
shares of Common Stock for a period of up to 180 days following the effective
date of a registration statement of the Corporation filed under the Securities
Act.
(i) Delay of Registration. No Stockholder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any registration
of the securities of the Corporation as the result of any controversy that might
arise with respect to the interpretation or implementation of this Section 9.
10. Preemptive Rights of the Other Stockholder.
(a) If at any time during the term of this Agreement the
Corporation proposes to offer, issue, sell or otherwise dispose of shares of the
Common Stock or any other class or series of common stock or preferred stock of
the Company, or options, rights, warrants, conversion rights or appreciation
rights relating thereto, or any other type of equity security that the
Corporation may lawfully issue (collectively, the "Equity Securities") to any
person or entity, (i) the Corporation shall, prior to any such issuance or sale,
give written notice (a "Preemptive Notice") to the Other Stockholder setting
forth the purchase price of such Equity Securities, the type and aggregate
number of Equity Securities to be so offered, issued, sold or otherwise disposed
of, the terms and conditions of such offer, issuance, sale or other disposition
and the rights, powers and duties inhering in such additional Equity Securities
-22-
and (ii) the Other Stockholder shall have the right (the "Preemptive Right") to
acquire the percentage of such Equity Securities proposed to be so offered,
issued, sold or otherwise disposed of equal to the number of shares of Common
Stock then held by the Other Stockholder (other than shares of Common Stock
acquired through the exercise of stock options) divided by the aggregate number
of shares of the Corporation's Common Stock and Preferred Stock outstanding
immediately prior to such offer, issuance, sale or other disposition of Equity
Securities; provided, however, that the terms and conditions of this Section 10
shall not apply to any offer, issuance, sale or other disposition of (i) Equity
Securities or rights to acquire Equity Securities to any person or entity (other
than the Principal Stockholders) pursuant to a stock option plan established by
the Corporation for the benefit of its employees, officers, directors, agents or
consultants, or otherwise granted to an employee of the Corporation (other than
the Principal Stockholders) in connection with such person or entity's
employment by the Corporation; (ii) Equity Securities or rights to acquire
Equity Securities to a person or entity (other than the Principal Stockholders,
or entities controlled by any of them) in connection with the acquisition by the
Corporation of all or a substantial portion of the stock, assets or business of
such person or entity; (iii) Equity Securities or rights to acquire Equity
Securities to a financial institution in connection with the making of, or the
agreement to make, loans to, or other financial arrangements with, the
Corporation by such financial institution; (iv) Equity Securities or rights to
acquire Equity Securities to a person or entity (other than the Principal
Stockholders) in connection with license arrangements or other arm's-length
business arrangements, so long as the aggregate number of Equity Securities
issued in one or more transactions pursuant to this clause (iv) does not exceed
twenty (20%) percent of the outstanding Equity Securities of the Company at any
time; and (v) Equity Securities or
-23-
rights to acquire Equity Securities pursuant to any underwritten public offering
of Equity Securities of the Corporation pursuant to an effective registration
statement under the Securities Act.
(b) The Other Stockholder may exercise such Preemptive Right, in
whole or in part, on the terms and conditions and for the purchase price set
forth in the Preemptive Notice, by giving to the Corporation notice to such
effect, within 20 days after the giving of the Preemptive Notice. After the
expiration of such 20-day period, the Corporation shall have the power to offer,
issue, sell and otherwise dispose of any or all of the Equity Securities
referred to in the applicable Preemptive Notice as to which no Preemptive Right
has been exercised but only upon the terms and conditions, and for a purchase
price not lower than the purchase price, set forth in the Preemptive Notice. If
the Corporation does not offer, issue, sell or otherwise dispose of the Equity
Securities referred to in the applicable Preemptive Notice on the terms and
conditions set forth in such Preemptive Notice within 120 days after the
expiration of such 20-day period, then any subsequent proposal by the
Corporation to offer, issue, sell or otherwise dispose of Equity Securities
shall be subject to this Section 10.
11. Notices. All notices, offers and acceptances ("Notices") hereunder
shall be in writing, signed by the party giving or making the same, and shall be
delivered personally or sent by internationally recognized courier service or by
telex or facsimile transmission to each party entitled to receive the same, at
such party's last known address on the books of the Corporation, unless such
party shall have previously notified in writing the party sending such Notice of
a change of address, in which case it shall be sent to the new address. A copy
of each such Notice shall also be sent in similar fashion to the Corporation and
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ Constant & ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
-24-
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq. All Notices shall be deemed given when
delivered, sent or transmitted in accordance herewith.
12. Miscellaneous.
(a) This Agreement contains the entire understanding of the
parties hereto concerning the subject matter hereof and supersedes any and all
prior agreements made by the parties with respect thereto and may not be
amended, terminated or discharged, except by an instrument in writing, signed by
the party to be charged.
(b) The provisions of this Agreement shall apply, to the full
extent set forth herein with respect to the shares of Common Stock now or
hereinafter owned by each Stockholder, to any and all securities of the Company
or any successor or assign of the Company (whether by merger, consolidation or
otherwise) that may be issued in respect of, in exchange for, or in substitution
of such shares of Common Stock, and shall be appropriately adjusted for any
stock dividends, stock splits, reverse splits, combinations, recapitalizations
and the like occurring after the date hereof.
(c) This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective heirs, legatees,
distributees, executors, administrators, successors and permitted assigns. This
Agreement shall be binding upon any person to whom shares of Common Stock are
transferred in violation of the provisions hereof, and the successors, assigns,
heirs, legatees, distributees, executors and administrators of such transferee
and the Corporation may refuse to permit the transfer of such stock on its
books.
(d) Each of the parties agrees to execute and deliver any and all
documents or other instruments and shall do or cause to be done all such acts or
things as may reasonably be necessary or proper to carry out the purposes of
this Agreement.
-25-
(e) This Agreement may be executed in counterparts, each of which
shall be deemed an original, but which shall together constitute a single
instrument.
(f) The parties hereto irrevocably consent that any suit, legal
action or proceeding with respect to any of the rights or obligations arising
directly or indirectly under or relating to this Agreement may be brought in any
New York State or United States federal court located in the Borough of
Manhattan, City and State of New York, and by execution and delivery of this
Agreement each party hereby irrevocably submits to and accepts with regard to
any such suit, legal action or proceeding, for itself and in respect of its
property, generally and unconditionally, the jurisdiction of the aforesaid
courts. Each party irrevocably consents to the service of process in any such
suit, legal action or proceeding by the mailing of copies thereof by registered
or certified mail, postage prepaid, return receipt requested, to it at its
address set forth herein. The foregoing shall not limit the right of any party
to serve process in any other manner permitted by law. Each party hereby
irrevocably waives any objection which it may now or hereafter have to the
laying of venue of any suit, legal action or proceeding arising directly or
indirectly under or relating to this Agreement in any court located in the
Borough of Manhattan, City and State of New York is not a convenient forum for
any such suit, legal action or proceeding. Each party hereby (i) irrevocably
waives any right it may have under the laws of any jurisdiction to commence by
publication any suit, legal action or proceeding with respect to this Agreement,
and (ii) irrevocably agrees that any suit, legal action or proceeding commenced
by it with respect to any rights or obligations arising directly or indirectly
under or relating to this Agreement shall be brought exclusively in any New York
State or United States federal court located in the Borough of Manhattan, City
and State of New York.
-26-
(g) This Agreement shall be governed by the laws of the State of
New York applicable to contracts made and wholly performed within that State.
(h) All captions and headings contained in this Agreement are for
the convenience of the parties only and shall not affect the interpretation or
construction of this Agreement.
IN WITNESS WHEREOF, the parties have signed and sealed this
Agreement.
FORMFACTOR, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
of the Board, Chief Executive Officer
and President
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇
/s/ ▇▇▇▇▇ ▇▇▇▇▇
----------------------------------------
▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-27-
SCHEDULE A
Stockholders' Ownership of
Common Stock of FormFactor, Inc.
No. of Shares of
Stockholder Common Stock Owned
----------- ------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇ 100
▇▇▇▇▇ ▇▇▇▇▇ 100
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 2.1147