LIBERATE TECHNOLOGIES
STOCK PURCHASE AGREEMENT
June 30, 1999
TABLE OF CONTENTS
Page No.
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1. Purchase and Sale of Stock.............................................1
1.1 Sale and Issuance of Stock...................................1
1.2 The Closing..................................................1
2. Representations and Warranties of the Company..........................1
2.1 Organization and Good Standing...............................1
2.2 Authorization................................................2
2.3 Valid Issuance of Stock......................................2
2.4 Title to Property and Assets.................................2
2.5 Compliance with Other Documents..............................2
2.6 Registration Statement.......................................2
2.7 Capitalization...............................................3
2.8 Litigation...................................................3
2.9 Intellectual Property........................................3
2.10 Financial Statements........................................3
2.11 Changes.....................................................3
2.12 Taxes.......................................................3
3. Representations and Warranties of the Investor.........................3
3.1 Authorization................................................3
3.2 Investigation................................................4
3.3 Accredited Investor..........................................4
3.4 Purchase Entirely for Own Account............................4
3.5 Restricted Securities........................................4
4. Conditions to the Investor's Obligation at Closing.....................4
4.1 Representations and Warranties...............................4
4.2 Securities Laws..............................................4
4.3 Authorizations...............................................4
4.4 Initial Public Offering of Common Stock......................5
5. Conditions to the Company's Obligations at Closing.....................5
5.1 Representations and Warranties...............................5
5.2 Securities Laws..............................................5
5.3 Authorizations...............................................5
5.4 Initial Public Offering of Common Stock......................5
5.5 Payment of Purchase Price....................................5
6. Covenants of the Company and the Investor..............................5
6.1 Agreement Not to Transfer....................................5
6.2 Market Stand-Off.............................................6
6.3 Notice of Intention to Transfer..............................6
6.4 Registration of Stock........................................6
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6.5 Publicity....................................................6
7. Miscellaneous..........................................................6
7.1 Governing Law................................................6
7.2 Survival; Additional Securities..............................7
7.3 Successors and Assigns.......................................7
7.4 Entire Agreement.............................................7
7.5 Notices......................................................7
7.6 Amendments and Waivers.......................................7
7.7 Legal Fees...................................................7
7.8 Expenses.....................................................8
7.9 Titles and Subtitles.........................................8
7.10 Counterparts................................................8
7.11 Severability................................................8
7.12 Confidentiality.............................................8
1.3 Company Registration.........................................1
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STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT is made as of the 30th day of
June 1999, by and between Liberate Technologies, a Delaware corporation (the
"Company") and Lucent Technologies Inc., a Delaware corporation (the
"Investor").
WHEREAS, the Investor has indicated a desire to purchase the number of
shares of the Company's Common Stock obtained by dividing 12,500,000 by 96% of
the per share price paid by the public for the Company's Common Stock in the
Company's initial public offering (the "IPO").
WHEREAS, the Company has indicated a desire to sell the number of
shares of the Company's Common Stock obtained by dividing 12,500,000 by 96% of
the per share price paid by the public for the Company's Common Stock in the
Company's IPO to the Investor on the terms set forth herein.
WHEREAS, the Company and the Investor have agreed that this Agreement
shall constitute the entire understanding and agreement between the parties with
regard to the subject matter hereof.
NOW, THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
1. PURCHASE AND SALE OF STOCK.
1.1 SALE AND ISSUANCE OF STOCK. Subject to the terms and
conditions of this Agreement, the Company agrees to sell to the Investor and
the Investor agrees to purchase from the Company the number of shares of the
Company's Common Stock obtained by dividing 12,500,000 by 96% of the per share
price paid by the public for the Company's Common Stock in the Company's IPO
(the "Stock"), having the rights, preferences, privileges and restrictions set
forth in the form of Amended and Restated Certificate of Incorporation of the
Company (the "Restated Certificate") to be filed with the Delaware Secretary of
State upon the Closing (as defined below).
1.2 THE CLOSING. The purchase and sale of the Stock shall be
held at the Company's offices immediately following the closing of the Company's
IPO or, if later, upon satisfaction or waiver of each of the conditions set
forth in Sections 4 and 5 (the "Closing"). At the Closing, the Company will
deliver the Stock to the Investor against payment of the purchase price therefor
by check payable to the order of the Company or by wire transfer. The per share
purchase price for the Stock shall be 96% of the per share price paid by the
public for the Company's Common Stock in the IPO.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
hereby represents and warrants to the Investor that:
2.1 ORGANIZATION AND GOOD STANDING. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Delaware
and has all requisite corporate power and authority to carry on its business
as now conducted. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which the failure to so qualify
would have a material adverse effect on its business or properties.
2.2 AUTHORIZATION. All corporate action on the part of the
Company, its officers, directors and stockholders necessary for the
authorization, execution and delivery of this Agreement, the performance of all
obligations of the Company hereunder, and the authorization, issuance, sale and
delivery of the Stock has been taken or will be taken prior to the Closing, and
this Agreement constitutes a valid and legally binding obligation of the
Company, enforceable in accordance with its terms, except (i) as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.3 VALID ISSUANCE OF STOCK. The Stock, when issued, sold and
delivered in accordance with the terms hereof for the consideration expressed
herein, will be duly and validly issued, fully paid and nonassessable and will
be free of restrictions on transfer other than restrictions on transfer under
this Agreement and under applicable state and federal securities laws. Subject
in part to the truth and accuracy of the Investor's representations set forth in
Section 3 of this Agreement, the offer, sale and issuance of the Stock as
contemplated by this Agreement are exempt from the registration requirements of
any applicable state and federal securities laws.
2.4 TITLE TO PROPERTY AND ASSETS. The Company owns its property
and assets free and clear of all mortgages, liens, loans and encumbrances,
except such encumbrances and liens that arise in the ordinary course of business
and do not materially impair the Company's ownership or use of such property or
assets. With respect to the property and assets it leases, the Company is in
compliance with such leases and, to the best of its knowledge, holds a valid
leasehold interest free of any liens, claims or encumbrances.
2.5 COMPLIANCE WITH OTHER DOCUMENTS. The execution and delivery
of this Agreement, consummation of the transactions contemplated hereby, and
compliance with the terms and provisions hereof will not conflict with or result
in a breach of the terms and conditions of, or constitute a default under the
Restated Certificate or Bylaws of the Company or of any contract or agreement to
which the Company is now a party, except where such conflict, breach or default
of any such contract or agreement, either individually or in the aggregate,
would not have a material adverse effect on the Company's business, financial
condition or results of operations.
2.6 REGISTRATION STATEMENT. The Company's registration
statement on Form S-1, as amended, (the "Registration Statement") shall not, at
the time the Registration Statement (including any amendments or supplements
thereto) is declared effective by the Securities and Exchange Commission
("SEC"), contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
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2.7 CAPITALIZATION. The Company's capitalization information
contained in the Registration Statement is complete and accurate as of the dates
specified therein.
2.8 LITIGATION. Except as disclosed in the Company's
Registration Statement, there are no actions, proceedings or investigations
pending against the Company, that, either in any case or in the aggregate, would
result in any material adverse change in the business, financial condition, or
results of operations of the Company.
2.9 INTELLECTUAL PROPERTY. Except as disclosed in the
Registration Statement, the Company owns, possesses or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collectively, "Intellectual Property Rights")
necessary to conduct the business now operated by it, or presently employed
by it, and has not received any notice of infringement of or conflict with
asserted rights of others with respect to any intellectual property rights
that, if determined adversely to the Company, would individually or in the
aggregate have a material adverse effect on the condition (financial or
other), business, properties or results of operations.
2.10 FINANCIAL STATEMENTS. The financial statements included in
the Registration Statement present fairly the financial position of the Company
as of the dates shown and its results of operations and cash flows for the
periods shown, and, except as otherwise disclosed in the Registration Statement,
such financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis.
2.11 CHANGES. Except as disclosed in the Registration Statement,
since the date of the latest audited financial statements included in the
Registration Statement there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in the
condition (financial or other), business, properties or results of operations of
the Company taken as a whole.
2.12 TAXES. The Company has filed on a timely basis all tax
returns and reports (including information returns and reports) as required by
law. These returns and reports are true and correct in all material respects
except to the extent that a reserve has been reflected on the Company's
financial statements in accordance with generally accepted accounting
principles. The Company has paid all taxes and other assessments due, except
those contested by it in good faith and except to the extent that a reserve has
been reflected on the Company's financial statements in accordance with
generally accepted accounting principles. The provision for taxes of the
Company as shown in the Company's financial statements is adequate for taxes due
or accrued as of the date thereof.
3. REPRESENTATIONS AND WARRANTIES OF THE INVESTOR. The Investor
hereby represents and warrants that:
3.1 AUTHORIZATION. This Agreement constitutes the valid and
legally binding obligation of the Investor, enforceable in accordance with its
terms, subject to laws of
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general application relating to bankruptcy, insolvency and the relief of
debtors and by general principles of equity.
3.2 INVESTIGATION. The Investor acknowledges that it has had an
opportunity to discuss the business, affairs and current prospects of the
Company with the Company's chief executive officer. The Investor further
acknowledges having had access to information about the Company that it has
requested or considers necessary for purposes of purchasing the Stock. The
foregoing, however, does not limit or modify the representations and warranties
of the Company in Section 2 of this Agreement or the right of the Investors to
rely thereon.
3.3 ACCREDITED INVESTOR. The Investor is an "accredited
investor" as such term is defined in Regulation D adopted by the SEC.
3.4 PURCHASE ENTIRELY FOR OWN ACCOUNT. This Agreement is made
with the Investor in reliance upon the Investor's representation to the Company,
which by the Investor's execution of this Agreement the Investor hereby
confirms, that the Stock will be acquired for investment for the Investor's own
account, not as a nominee or agent, and not with a view to the resale or
distribution of any part thereof, and that the Investor has no present intention
of selling, granting any participation in, or otherwise distributing the same.
3.5 RESTRICTED SECURITIES. Investor understands that the Stock
it is purchasing are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act, only in certain limited circumstances. In this connection, Investor
represents that it is familiar with SEC Rule 144, as presently in effect, and
understands the resale limitations imposed thereby and by the Act.
4. CONDITIONS TO THE INVESTOR'S OBLIGATION AT CLOSING. The
obligation of the Investor to purchase the Stock at the Closing is subject to
the fulfillment to the Investor's satisfaction on or prior to the Closing of the
following conditions:
4.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties made by the Company in Section 2 hereof shall be true and correct
when made, and shall be true and correct as of the Closing with the same force
and effect as if they had been made on and as of such date, subject to changes
contemplated by this Agreement. The Chief Executive Officer of the Company
shall deliver at the Closing a certificate stating that the condition specified
in the preceding sentence has been fulfilled.
4.2 SECURITIES LAWS. The offer and sale of the Stock to the
Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Act") and
qualification requirements of all applicable state securities laws.
4.3 AUTHORIZATIONS. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body that are required in
connection with the lawful
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issuance and sale of the Stock pursuant to this Agreement shall have been
duly obtained and shall be effective on and as of the Closing.
4.4 INITIAL PUBLIC OFFERING OF COMMON STOCK. The closing of the
initial public offering of the Company's Common Stock shall have occurred.
5. CONDITIONS TO THE COMPANY'S OBLIGATIONS AT CLOSING. The
obligation of the Company to sell the Stock at the Closing is subject to the
fulfillment to the Company's satisfaction on or prior to the Closing of the
following conditions:
5.1 REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Investor contained in Section 3 hereof shall be true as of the
Closing with the same force and effect as if they had been made on and as of
such date, subject to changes contemplated by this Agreement.
5.2 SECURITIES LAWS. The offer and sale of the Stock to the
Investor pursuant to this Agreement shall be exempt from the registration
requirements of the Act qualification requirements of all applicable state
securities laws.
5.3 AUTHORIZATIONS. All authorizations, approvals or permits,
if any, of any governmental authority or regulatory body that are required in
connection with the lawful issuance and sale of the Stock pursuant to this
Agreement shall have been duly obtained and shall be effective on and as of the
Closing.
5.4 INITIAL PUBLIC OFFERING OF COMMON STOCK. The closing of the
initial public offering of the Company's Common Stock shall have occurred.
5.5 PAYMENT OF PURCHASE PRICE. The Investor shall have
delivered to the Company the purchase price for the Stock as set forth in
Section 1.2 hereof.
6. COVENANTS OF THE COMPANY AND THE INVESTOR.
6.1 AGREEMENT NOT TO TRANSFER.
(a) Prior to the first anniversary of the Closing, the
Investor shall not, directly or indirectly, Transfer or offer to Transfer any
shares of the Stock other than to affiliates who agree to be bound by the terms
of this Agreement, unless the Company consents to such Transfer and the
transferee agrees to be bound by this Agreement.
(b) In order to enforce the Transfer Restrictions, the
Company may impose stop transfer instructions with respect to the Stock until
the end of the restricted period.
(c) As used in this Agreement, the term "Transfer" shall
mean any sale, transfer, assignment, hypothecation, encumbrance or other
disposition, whether voluntary or involuntary, of shares of the Stock. In the
case of a hypothecation, the Transfer shall be deemed to occur both at the time
of the initial pledge and at any pledgee's sale or a sale by any secured
creditor or a retention by the secured creditor of the pledged shares of the
Stock
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in complete or partial satisfaction of the indebtedness for which the
shares of the Stock are security.
6.2 MARKET STAND-OFF. In addition to the Transfer
Restrictions (which shall in no way be limited by the following), in
connection with any underwritten public offering by the Company of its equity
securities pursuant to an effective registration statement filed under the
Act, the Investor shall not Transfer or offer to Transfer any shares of the
Stock without the prior written consent of the Company and its underwriters.
Such restriction (the "Market Stand-Off") shall be in effect for such period
of time from and after the effective date of the final prospectus for the
offering as may be requested by the Company or such underwriters; provided,
however, that (i) such Market Stand-Off shall not exceed one hundred eighty
(180) days, and (ii) the Investor shall be subject to the Market Stand-Off
only if the officers and directors of the Company are also subject to similar
restrictions. In order to enforce the Market Stand-Off, the Company may
impose stop-transfer instructions with respect to the Stock until the end of
the applicable stand-off period.
6.3 NOTICE OF INTENTION TO TRANSFER. In the event the Investor
plans to Transfer shares of the Stock in one or more transactions, the Investor
shall inform the Company of such intention to Transfer such shares fifteen (15)
days prior to such Transfer. Investor shall agree that any transfer, sale or
other disposition of the Company's Common Stock shall be through an orderly
disposition, including, at the request of the Company, through a broker-dealer
recommended by the Company.
6.4 REGISTRATION OF STOCK. The Company agrees that, with regard
to the Stock, the Investor shall have the registration rights described in
EXHIBIT A attached hereto. The Investor understands and agrees that (i) the
Stock will be characterized as "restricted securities" under the federal
securities laws inasmuch as it is being acquired from the Company in a
transaction not involving a public offering and that under such laws and
applicable regulations such securities may be resold without registration under
the Act only in certain limited circumstances, and (ii) each certificate
representing the Stock and any other securities issued in respect of the Stock
upon any stock split, stock dividend, recapitalization, merger or similar event
(unless no longer required in the opinion of counsel for the Company) shall be
stamped or otherwise imprinted with appropriate legends mandated by federal and
state securities laws.
6.5 PUBLICITY. Except as required by law, no press release,
public statement, advertisement or similar publicity from any party hereunder
with respect to the participation of the Investor in the transactions
contemplated hereby (or any other matter relating to the Company and the
Investor or its affiliates) shall be issued or made without the prior consent of
Investor. Notwithstanding the foregoing, the Company may disclose Investor's
investment in the Company and the terms thereof and such other information
previously approved by Investor as of the date hereof for inclusion in the
Registration Statement.
7. MISCELLANEOUS.
7.1 GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as applied to agreements among
California residents
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entered into and to be performed entirely within California, without regard
to the conflict of law provisions thereof.
7.2 SURVIVAL; ADDITIONAL SECURITIES. The representations and
warranties set forth in Sections 2 and 3 shall survive until the Closing. The
covenants and agreements set forth in Section 6 shall survive in accordance with
their terms. Any new, substituted or additional securities which are by reason
of any stock split, stock dividend, recapitalization or reorganization
distributed with respect to the Stock ("Stock Distributions") shall be
immediately subject to the covenants and agreements set forth in Section 6 to
the same extent the Stock is at such time covered by such provisions.
7.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the respective successors and assigns of the parties hereto.
Nothing in this Agreement, express or implied, is intended to confer upon any
party other than the parties hereto or their respective successors and assigns
any rights, remedies, obligations, or liabilities under or by reason of this
Agreement, except as expressly provided in this Agreement. Notwithstanding
anything to the contrary contained herein, the covenants set forth in Section 6
shall not be binding upon any entity (other than an affiliate of the Investor)
which acquires any shares of the Stock or a Stock Distribution in a transaction
permitted hereunder.
7.4 ENTIRE AGREEMENT. This Agreement constitutes the entire
understanding and agreement between the parties with regard to the subject
matter hereof.
7.5 NOTICES. Except as otherwise provided, all notices and
other communications required or permitted hereunder shall be in writing, shall
be effective when given, and shall in any event be deemed to be given upon
receipt or, if earlier, (i) five (5) days after deposit with the U.S. postal
service or other applicable postal service, if delivered by first class mail,
postage prepaid, (ii) upon delivery, if delivered by hand, (iii) one (1)
business day after the day of deposit with Federal Express or similar overnight
courier, freight prepaid, if delivered by overnight courier or (iv) one (1)
business day after the day of facsimile transmission, if delivered by facsimile
transmission with copy by first class mail, postage prepaid, and shall be
addressed, (a) if to the Investor, at the Investor's address set forth below its
signature, or at such other address as the Investor shall have furnished to the
Company in writing, or (b) if to the Company, at its address as set forth below
its signature, or at such other address as the Company shall have furnished to
the Investor in writing.
7.6 AMENDMENTS AND WAIVERS. Any term of this Agreement may be
amended and the observance of any term of the Agreement may be waived (either
generally or in a particular instance and either retroactively or prospectively)
only with the written consent of the Company and the Investor.
7.7 LEGAL FEES. In the event of any action at law, suit in
equity or arbitration proceeding in relation to this Agreement or the Stock or
any Stock Distribution, the prevailing party shall be paid by the other party a
reasonable sum for the attorneys' fees and expenses incurred by such prevailing
party.
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7.8 EXPENSES. Irrespective of whether the Closing is effected,
the Company and the Investor shall each pay their own costs and expenses
incurred with respect to the negotiation, execution, delivery and performance of
this Agreement.
7.9 TITLES AND SUBTITLES. The titles of the paragraphs and
subparagraphs of this Agreement are for convenience of reference only and are
not to be considered in construing this Agreement.
7.10 COUNTERPARTS. This Agreement may be executed in
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
7.11 SEVERABILITY. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, such provision shall be
excluded from this Agreement and the balance of the Agreement shall be
interpreted as if such provision were so excluded and shall be enforceable in
accordance with its terms.
7.12 CONFIDENTIALITY. The parties hereto agree that, except with
the prior written permission of the other party, it shall at all times keep
confidential and not divulge, furnish, or make accessible to anyone any
confidential information, knowledge, or data concerning or relating to the
business or financial affairs of such other party to which said party has been
or shall become privy by reason of this Agreement, discussions or negotiations
relating to this Agreement, or the performance of its obligations hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year hereinabove first written.
LIBERATE TECHNOLOGIES
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive Officer
Address: ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: General Counsel
LUCENT TECHNOLOGIES INC.
By:
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Title:
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Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT A
1. REGISTRATION RIGHTS. The Company covenants and agrees as
follows:
1.1 DEFINITIONS. For purposes of this EXHIBIT A, capitalized
terms used herein and not otherwise defined shall have the meanings ascribed to
them in the Stock Purchase Agreement between the Company and the Investor to
which this EXHIBIT A is attached. In addition, the following terms used herein
shall have the following meanings: (a) the term "Form S-3" means such form under
the Act as in effect on the date hereof or any registration form under the Act
subsequently adopted by the SEC which permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC; (b) the term "1934 Act" means the Securities Exchange Act of 1934,
as amended; and (c) the term "register", "registered," and "registration" refer
to a registration effected by preparing and filing a registration statement or
similar document in compliance with the Act, and the declaration or ordering of
effectiveness of such registration statement or document.
1.2 COMPANY REGISTRATION.
(a) If, at any time 180 days after the Registration
Statement is declared effective by the SEC, the Company proposes to register any
of its stock or other securities under the Act in connection with the public
offering of such securities (other than a registration relating solely to the
sale of securities to participants in a Company stock plan, a registration
relating to a corporate reorganization or other transaction under Rule 145 of
the Act, a registration on any form that does not include substantially the same
information as would be required to be included in a registration statement
covering the sale of the Stock, or a registration in which the only Common Stock
being registered is Common Stock issuable upon conversion of debt securities
that are also being registered), the Company shall, at such time, promptly give
Investor written notice of such registration. Upon the written request of
Investor given within twenty (20) days after mailing of such notice by the
Company, the Company shall, subject to the provisions of Section 1.2(c) below,
use all reasonable efforts to cause to be registered under the Act all of the
Stock that each Investor has requested to be registered. Nothing contained in
this Section 1.2 obligates the Company to register any of its stock or other
securities under the Act.
(b) The Company shall have the right to terminate or
withdraw any registration initiated by it under this Section 1.2 prior to the
effectiveness of such registration whether or not Investor has elected to
include securities in such registration.
(c) In connection with any offering involving an
underwriting of shares of the Company's capital stock, the Company shall not be
required under this Section 1.2 to include any of the Investor's securities in
such underwriting unless Investor accepts the terms of the underwriting as
agreed upon between the Company and the underwriters selected by it (or by other
persons entitled to select the underwriters) and enter into an underwriting
agreement in customary form with an underwriter or underwriters selected by the
Company, and then only in such quantity as the underwriters determine in their
sole discretion will not jeopardize the success of the offering by the Company.
If the total amount of securities, including share of the Stock, requested by
stockholders to be included in such offering exceeds
E-1
the amount of securities sold other than by the Company that the underwriters
determine in their sole discretion is compatible with the success of the
offering, then the Company shall be required to include in the offering only
that number of such securities, including shares of the Stock, that the
underwriters determine in their sole discretion will not jeopardize the
success of the offering. In no event shall shares of the Stock be included
in such registration unless all shares of Registrable Securities (as defined
in the Stockholders Agreement described below) that request registration
pursuant to Section 1.3 of that certain Stockholders Agreement dated August
11, 1997, as amended, are first included in such registration.
1.3 FORM S-3 REGISTRATION.
(a) If the Company shall receive a written request from
the Investor that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to the Stock, then the
Company shall promptly commence preparation of such registration statement,
and as expeditiously as reasonably possible when the Company is eligible to
use Form S-3, effect the registration of all, but not less than all, such
Stock on Form S-3 and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all
of the Stock. The Company shall have no obligation to effect any
registration of less than all of the Stock.
(b) Notwithstanding anything to the contrary in this
Section 1.3, the Company shall not be obligated to effect any such registration,
qualification or compliance, pursuant to this section 1.3: (i) if the Company
shall furnish to the Investor a certificate signed by the Chief Executive
Officer or Chairman of the Board of the Company stating that in the good faith
judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company and its stockholders for such Form S-3 Registration
to be effected at such time, in which event the Company shall have the right to
defer the filing of the Form S-3 registration statement for a period of not more
than one hundred twenty (120) days after receipt of the request of the Investor
under this Section 1.3; or (ii) 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) The Company shall not be obligated to effect, or to
take any action to effect, any registration pursuant to this Section 1.3 after
the earlier to occur of the following events: (i) the Company has effected one
(1) registration pursuant to this Section 1.3, and such registration has been
declared or ordered effective and otherwise satisfies and continues to satisfy
the terms and conditions of this Section 1.3; (ii) the Company has voluntarily
effected the registration of all of the Stock without having first received a
request for such registration pursuant to this Section 1.3 (a "Voluntary
Registration"), and such Voluntary Registration has been declared or ordered
effective and otherwise satisfies and continues to satisfy the terms and
conditions of this Section 1.3; or (iii) if Form S-3 is not available for such
offering by the Investor.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under Section
1.3 to effect the registration on Form S-3 of the Stock, the Company shall, as
expeditiously as reasonably possible:
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(a) Prepare and file with the SEC a Form S-3 with respect
to such Stock and use its best efforts to cause such registration statement to
become effective as soon as reasonably practicable after the mailing of the
request for such registration but in no event later than ninety (90) days after
such mailing. The Company shall keep such registration statement effective
until the earlier of (i) two (2) years after the Closing, (ii) the distribution
of all of the Stock as contemplated in the registration statement has been
completed, and (iii) the date which all shares of the Stock held by the Investor
may immediately be sold under Rule 144 during any 90-day period.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Act with respect to the disposition of all securities covered
by such registration statement.
(c) Furnish to the Investor such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Act, and such other documents as the Investor may reasonably
request in order to facilitate the disposition of the Stock.
(d) Use its 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
Investor; 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) Notify the Investor covered by such registration
statement at any time when a prospectus relating thereto is required to be
delivered under the 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.
(f) Cause all such Stock registered pursuant hereunder to
be listed on each securities exchange on which similar securities issued by the
Company are then listed.
(g) Provide a transfer agent and registrar for all of the
Stock registered pursuant hereunder and a CUSIP number for all such Stock, in
each case not later than the effective date of such registration.
1.5 INVESTOR OBLIGATION TO FURNISH INFORMATION. It shall be a
condition precedent to the obligations of the Company to take any action
pursuant hereto with respect to the Stock that the Investor shall furnish to the
Company such information regarding itself, the Stock, and the intended method of
disposition of such securities as shall be required to effect the registration
of such Stock.
1.6 EXPENSES OF REGISTRATION. All expenses incurred in
connection with registrations, filings or qualifications pursuant hereto,
including (without limitation) all
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registration, filing and qualification fees, printers' and accounting fees,
fees and disbursements of counsel for the Company (including fees and
disbursements of counsel for the Company in its capacity as counsel to the
Investor hereunder but excluding the fees and disbursements of any other
counsel for the Investor) shall be borne by the Company; provided, however,
that the Company shall not be required to pay for any expenses of any
registration proceeding begun pursuant hereto if the registration request is
subsequently withdrawn at the request of the Investor unless Investor agrees
to forfeit its right of registration under Section 1.3; provided further,
however, that if at the time of such withdrawal, the Investor has learned of
a material adverse change in the condition, business, or prospects of the
Company from that known to the Investor at the time of its request and has
withdrawn the request with reasonable promptness following disclosure by the
Company of such material adverse change, then the Investor shall not be
required to pay any of such expenses and shall retain its right of
registration pursuant to Section 1.3.
1.7 INDEMNIFICATION. In the event any Stock is included in a
registration statement under Sections 1.2 or 1.3:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless the Investor, any underwriter (as defined in the
Act) for the Investor and each person, if any, who controls the Investor or
underwriter within the meaning of the Act or the 1934 Act, against any losses,
claims, damages, or liabilities (joint or several) to which they may become
subject under the Act, the 1934 Act or other federal or state law, insofar as
such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"): (i) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the Act, the 1934 Act, any state securities law or
any rule or regulation promulgated under the Act, the 1934 Act or any state
securities law; and the Company will pay to the Investor, or such underwriter or
controlling person, as incurred, any legal or other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
damage, liability, or action; provided, however, that the indemnity agreement
contained in this subsection (a) shall not apply to amounts paid in settlement
of any such loss, claim, damage, liability, or action if such settlement is
effected without the consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be liable in any such case for any
such loss, claim, damage, liability, or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in conformity
with written information furnished expressly for use in connection with such
registration by any such Investor, underwriter or controlling person.
(b) To the extent permitted by law, the Investor will
indemnify and hold harmless the Company, each of its directors, each of its
officers who has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Act, any underwriter, and any
controlling person of any such underwriter, against any losses, claims, damages,
or liabilities (joint or several) to which any of the foregoing persons may
become subject, under the Act, the 1934 Act or other federal or state law,
insofar as such losses,
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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 Investor expressly for use in
connection with such registration; and each such Investor will pay, as
incurred, any legal or other expenses reasonably incurred by any person
intended to be indemnified pursuant to this subsection (b), in connection
with investigating or defending any such loss, claim, damage, liability, or
action; provided, however, that the indemnity agreement contained in this
subsection (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 Investor, which consent shall not be unreasonably
withheld; provided, that, in no event shall any indemnity under this
subsection (b) exceed the gross proceeds from the offering received by the
Investor.
(c) Promptly after receipt by an indemnified party
under this Section 1.7 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 1.7,
deliver to the indemnifying party a written notice of the commencement thereof
and the indemnifying party shall have the right to participate in, and, to the
extent the indemnifying party so desires, jointly with any other indemnifying
party similarly noticed, to assume the defense thereof with counsel mutually
satisfactory to the parties; provided, however, that an indemnified party
(together with all other indemnified parties which may be represented without
conflict by one counsel) shall have the right to retain one separate counsel,
with the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential differing
interests between such indemnified party and any other party represented by such
counsel in such proceeding. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this Section
1.7, but the omission so to deliver written notice to the indemnifying party
will not relieve it of any liability that it may have to any indemnified party
otherwise than under this Section 1.7.
(d) If the indemnification provided for in this
Section 1.7 is held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any loss, liability, claim, damage, or expense
referred to there in, then the indemnifying party, in lieu of indemnifying such
indemnified party hereunder, shall contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
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(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in an underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement shall control.
(f) The obligations of the Company and the Investor
under this Section 1.7 shall survive the completion of any offering of the Stock
in a registration statement pursuant hereto, and otherwise.
1.8 TERMINATION. The Company's obligation to register the Stock
pursuant to this agreement shall terminate on the earlier of (i) the third
anniversary of the Closing and (ii) the date on which all shares of the Stock
held by the Investor may immediately be sold under Rule 144 during any 90-day
period.
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