EXHIBIT 10.44
SERIES D PREFERRED STOCKHOLDERS AGREEMENT
This SERIES D PREFERRED STOCKHOLDERS AGREEMENT (the "Agreement"), dated as
of August 13, 2003, by and among IPG PHOTONICS CORPORATION, a Delaware
corporation (the "Company"), and JDS UNIPHASE CORPORATION, a Delaware
corporation, and any permitted assignees or transferees thereof (each, a
"Stockholder" and collectively, the "Stockholders").
WHEREAS, it is a condition to the Subscription Agreement between the
Company and the Stockholder, dated as of August 13, 2003 (the "Subscription
Agreement") that the Stockholder enter into this Agreement with the Company.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises
of the parties herein contained, and for other good and valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Company and the
Stockholder hereby covenant and agree with each other as follows:
Section 1 Restrictions on Transfer.
1.1. Restrictions on Transfer. Without limiting any other restriction
contained in this Agreement, the Stockholder may not sell, assign, transfer,
pledge, bequeath, hypothecate, mortgage, grant any proxy with respect to, or in
any other way encumber or otherwise dispose of, directly or indirectly
(including any sale of the equity in an entity owning any shares of Series D
Preferred Stock) (collectively, a "Transfer") any shares of Series D Preferred
Stock or the shares of Common Stock, $.0001 par value per share ("Common
Stock"), of the Company issuable upon conversion of the Series D Preferred Stock
(such Series D Preferred Stock together with the Common Stock, the "Shares") or
the Convertible Promissory Note of the Company dated the date hereof (the
"Convertible Note"), for the period commencing the date hereof and ending on the
earlier of (i) the first anniversary date of the date of this Agreement or (ii)
one hundred eighty (180) days after the effective date of the registration
statement covering the Company's initial public offering of securities pursuant
to the Securities Act of 1933, as amended (the "Restricted Period"), except
pursuant to a Permitted Transfer, as defined in Section 1.2 hereof.
Notwithstanding anything herein to the contrary, the Stockholder may not
Transfer any Shares or the Convertible Note to any Person (other than the
Company), anywhere in the world, whose business, activities, products or
services are competitive with any of the business activities, products or
services conducted or offered by the Company and its subsidiaries, which
business, activities, products and services shall include in any event and
without limitation the business of manufacturing and testing of fiber
amplifiers, fiber lasers and fiber grating products and related products for the
telecommunications and industrial markets, or to any Affiliate (as defined
herein) of such Person. For the purposes of this Agreement, "Person" shall mean
any individual, corporation, partnership, limited liability company, joint
venture, association or other business entity.
1.2. Permitted Transfer. The terms and conditions of the first paragraph of
Section 1.1 hereof shall not apply to any Permitted Transfer by any Stockholder.
For purposes of this Agreement, "Permitted Transfer" means any transfer without
consideration by the Stockholder to any of its Affiliates, stockholders, members
or partners (any person to whom a Permitted Transfer is made being defined as a
"Permitted Transferee"); provided, that it shall be a condition of such Transfer
(A) that the Permitted Transferee agree to be bound by the terms and conditions
of this Agreement as a Stockholder, and execute a counterpart signature page of
this Agreement (in which case such Permitted Transferee shall be deemed a
Stockholder hereunder), and (B) voting control over the Shares to be transferred
shall be retained by the transferring Stockholder (to the extent possible). For
purposes of this Agreement, an "Affiliate" of a Stockholder or Person shall mean
a person that directly, or indirectly through one or more intermediaries,
controls, or its controlled by, or is under common control with, such
Stockholder or Person, respectively, and subject to the limitations of Sections
3 and 4 hereof.
1.3. General. The Shares and the Convertible Note may not be Transferred
except after compliance with the conditions specified in Section 1 hereof. Any
attempt by any Stockholder to transfer any Shares or the Convertible Note in
violation of any provision of this Agreement will be void. The Company will not
be required (a) to transfer on its books any Shares or the Convertible Note that
have been transferred in violation of this Agreement, or (b) to treat as owner
of such Shares or the Convertible Note, or to accord the right to vote or pay
dividends to any purchaser, donee or other transferee to whom such Shares or the
Convertible Note may have been so transferred.
1.4. Legend.
(a) Each certificate representing Shares shall (unless otherwise
permitted by the provisions of Section 1.6 hereof) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN
ACQUIRED FOR INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS.
THESE SECURITIES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF
SUCH REGISTRATION OR AN EXEMPTION THEREFROM UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS."
(b) Each certificate representing Shares shall (unless otherwise
permitted by the provisions of Section 1.6 hereof) be stamped or otherwise
imprinted with a legend in substantially the following form:
"THE TRANSFER AND OTHER MATTERS PERTAINING TO THESE SECURITIES
ARE SUBJECT TO THE CONDITIONS SPECIFIED IN THE SERIES D PREFERRED
STOCKHOLDERS AGREEMENT, DATED AS OF AUGUST 13, 2003, AMONG IPG
PHOTONICS CORPORATION (THE "COMPANY"), AND THE SERIES D PREFERRED
STOCKHOLDERS OF THE COMPANY, AS AMENDED FROM TIME TO TIME, AND NO
TRANSFER OF THESE
SECURITIES SHALL BE VALID OR EFFECTIVE UNTIL SUCH CONDITIONS HAVE
BEEN FULFILLED. COPIES OF SUCH AGREEMENT MAY BE OBTAINED AT NO
COST BY WRITTEN REQUEST MADE BY THE HOLDER OF RECORD OF THIS
CERTIFICATE TO THE SECRETARY OF THE COMPANY."
1.5. Procedures for Transferring. Upon request by the Company, if the
Stockholder desires to Transfer Shares, it shall first give notice to the
Company describing such Transfer and furnish to the Company, at the
Stockholder's expense, either (i) an opinion, reasonably satisfactory to counsel
for the Company, of Winston & ▇▇▇▇▇▇, or other counsel skilled in securities
matters (selected by the Stockholder and reasonably satisfactory to the Company)
to the effect that the proposed sale or transfer may be made without
registration under the Securities Act of 1933, as amended (the "Securities
Act"), or (ii) an interpretive letter from the staff of the Securities and
Exchange Commission to the effect that no enforcement action will be recommended
if the proposed sale or transfer is made without registration under the
Securities Act, in either case accompanied by evidence that such transfer will
be in compliance with applicable state securities ("blue sky") laws; provided,
however, that the foregoing shall not apply with respect to (1) any Transfer
pursuant to an effective registration statement under the Securities Act, or (2)
any Transfers between the Stockholder and any Affiliate of the Stockholder for
its own account. Each certificate or other instrument evidencing the securities
issued upon the Transfer of any Shares (and each certificate or other instrument
evidencing any untransferred balance of such Shares) shall bear the legends set
forth in Section 1.4 hereof.
1.6. Termination of Restrictions.
(a) If (i) any Shares are Transferred pursuant to an effective
registration statement under the Securities Act or in a transaction contemplated
by Section 1.5 hereof which does not require that the Shares so transferred bear
the legend set forth in Section 1.4(a) hereof or (ii) the holder of Shares has
met the requirements for Transfer of such Registrable Shares under Rule 144(k)
under the Securities Act (subject to the delivery of opinions as set forth
above), then the holder of such Shares shall be entitled to receive from the
Company, without expense, a new certificate in the name of the Stockholder not
bearing the restrictive legend set forth in Section 1.4(a) hereof.
(b) In accordance with the termination provisions set forth in Section
5.1 hereof, the holders of Shares shall be entitled to receive from the Company,
without expense, new certificates in the name of the Stockholder not bearing the
restrictive legend set forth in Section 1.4(b) hereof.
Right to Participate in Certain Sales of Additional Securities.
1.7. Subject to Section 2.3 hereof, the Company agrees it will not, without
the approval of the Majority Interest (as defined below in this Section 2.1(a),
sell or issue for cash (a) any shares of capital stock of the Company or (b)
debt or securities convertible into or exercisable or exchangeable for capital
stock of the Company, unless the Company first submits a written notice to the
Stockholder identifying the terms of the proposed sale (including price, number
or aggregate principal amount of
securities and all other material terms), and offers to the Stockholder the
opportunity to purchase its Pro Rata Allotment (as hereinafter defined) of the
securities on terms and conditions, including price, not less favorable than
those on which the Company proposes to sell such securities to a third party or
parties. The Stockholder's Pro Rata Allotment of such securities shall be based
on the ratio which the number of Shares owned by the Stockholder (including any
convertible securities) bears to all of the issued and outstanding shares of
Common Stock (including all shares of Common Stock then issuable upon conversion
of (i) all series of preferred stock, (ii) other securities of the Company that
are convertible into Common Stock pursuant to then exercisable rights of
conversion, and (iii) options and warrants to purchase Common Stock of the
Company which are exercisable, in each case as of the date of such written
offer. The Company's offer pursuant to this Section 2 may be given
simultaneously with the other similar notices given by the Company and shall
remain open and irrevocable for a period of thirty (30) calendar days following
receipt by the Stockholder of such written notice, and the Stockholder shall
elect to purchase the securities so offered by giving written notice thereof to
the Company within such 30-day period, including therein the maximum number of
shares of capital stock or other securities of the Company which the Stockholder
wishes to purchase. Any securities so offered which are not purchased by the
Stockholder pursuant to such offer may be sold by the Company, but only on the
terms and conditions set forth in the initial offer, at any time within 120
calendar days following the termination of the above-referenced 35-day period,
but may not be sold to any other Person or on terms and conditions, including
price, that are more favorable to the purchaser than those set forth in such
offer or after such 120-day period without renewed compliance with this Section
2. In no event shall the Stockholder's right to purchase pursuant to this
Section 2 permit it to acquire in any offering more than 2% of the Company's
issued and outstanding shares of common stock on a fully diluted basis at the
time of such issuance (including all convertible securities and outstanding
options). "Majority Interest" shall mean the Stockholders holding not less than
a majority interest in the outstanding Shares.
1.8. Notwithstanding the foregoing, the right to purchase granted under
this Section 2 shall be inapplicable with respect to (i) the issuance of shares
of Common Stock issued or issuable in connection with, or upon the exercise of,
options or other awards granted or to be granted to employees, officers,
directors or consultants of the Company pursuant to the Company's 2000 Incentive
Compensation Plan as amended from time to time or any other equity incentive
plan or award duly approved by the Board of Directors of the Company ("Excluded
Shares"), plus such number of Excluded Shares that are repurchased by the
Company from such Persons in accordance with the certificate of incorporation of
the Company, as in effect from time to time, pursuant to contractual rights held
by the Company and at repurchase prices not exceeding the respective original
purchase prices (appropriately adjusted (i) for any stock split, stock dividend,
combination, recapitalization, anti-dilution right and the like) paid by such
Persons to the Company therefore, (ii) securities issued as a result of any
stock split, stock dividend, reclassification or reorganization or similar event
with respect to the Shares or other securities of the Company, (iii) securities
issued pursuant to the anti-dilution rights of any holder of equity securities
or securities exercisable for or exchangeable or convertible into equity
securities of the Company; (iv) securities issued pursuant to the closing of a
Qualified IPO (as defined in the certificate of designations of the certificate
of incorporation of the Company pertaining to the Series D Preferred Stock, as
amended from time to time); (v) securities issued in connection with a
strategic alliance or other corporate partnering transaction; (vi) securities
issued in exchange for the stock or assets of another company in connection with
the acquisition of or merger into such company; (vii) exercise or conversion of
convertible securities outstanding on the date hereof; or (viii) shares of
Common Stock issued upon conversion of, or as a dividend on (W) the Series A
Convertible Preferred Stock, par value $.0001, of the Company, (X) the Series B
Convertible Preferred Stock, par value $.0001, of the Company (the "Series B
Preferred Stock"), and (Y) the Series D Convertible Preferred Stock.
1.9. Series B Preferred Rights. Notwithstanding anything herein to the
contrary, the preemptive rights granted to the Stockholder pursuant to this
Section 2 shall be pari passu with the preemptive rights granted to holders of
Series B Preferred Stock pursuant to the Stockholders Agreement, dated August
30, 2000, as amended from time to time, by and among the Company, the Founders
(as defined therein), IP Fibre Devices, Ltd. and those individuals identified on
the signature pages thereto as "Investors".
Section 2 Financial Information. The Company will maintain a system of accounts
in accordance with U.S. generally accepted accounting principles, keep full and
complete financial records and furnish to each Purchaser all of the financial
reports of the Company that are supplied to the holders of the Series B
Preferred Stock (in their capacity as holders of Series B Preferred Stock), in
the same frequency and manner. The Company shall also provide to the Company a
copy of financial information (e.g., income statements, balance sheets and cash
flows) submitted to the members of the Board of Directors of the Company, except
for information which contain or reveal competitive, marketing, pricing or
strategy information and except for information and communications which may be
privileged; provided that this right shall terminate if JDS Uniphase Corporation
shall Transfer more than 50% of the shares it is issued as of the date of this
Agreement to an Person which is not an Affiliate and which continues to be an
affiliate of JDS Uniphase Corporation.
Section 3 Confidentiality.
3.1. Each Stockholder acknowledges and agrees that any oral, written or
digital information obtained pursuant to this Agreement or the Registration
Rights Agreement between the Company and JDS Uniphase Corporation, after the
date hereof, that contains or otherwise reflects non-public information
concerning the Company, its employees, clients, business markets, products,
know-how, technology, prospects, strategies, finances or other business matters
furnished by the Company (collectively, the "Confidential Information") was
received in confidence.
3.2. The Stockholder agrees that it will maintain the strict
confidentiality of the Confidential Information provided to it or any of its
officers, directors, employees, attorneys, accountants or financial advisors
(collectively, the "Representatives") and will not disclose, divulge or make use
of the Confidential Information. The Stockholder agrees to inform all recipients
of Confidential Information of the Stockholder's obligations under this Section
4 prior to disclosure to them. In addition, the Stockholder agrees that it will
adopt effective procedures to ensure that the Confidential Information it will
acquire in the future has been or continues to be disclosed only to and
maintained only by the Stockholder's ExecutiveManagement and/or Corporate
Business Development personnel, is not
disclosed to any other Representative or Affiliate of Stockholder, including the
Active Components Business Unit and the Commercial Laser Division or any
successor units thereto, and will be used solely for the purpose of evaluating
an investment in the Company and in no way detrimental to the Company or its
stockholders. Not less than annually, the Stockholder shall confirm to the
Company in a certificate executed by an executive officer of the Stockholder
that they have complied with this covenant and maintained such procedures, which
shall be briefly described in such certificate.
3.3. If the Stockholder or any of its Representatives becomes required by
law or applicable legal process (by deposition, interrogatory, request for
documents, subpoena, civil investigative demand or similar process) to disclose
any Confidential Information furnished by the Company, it will provide the
Company with prompt prior written notice of such requirement and the terms of
and circumstances surrounding such requirement so that the Company may seek an
appropriate protective order or other remedy, or waive compliance with the terms
of the Subscription Agreement, and such party will provide such cooperation with
respect to obtaining a protective order or other remedy as the Company may
reasonably request. If such protective order or other remedy is not obtained, or
if the Company is required to waive compliance with the provisions hereof, the
Stockholder and its Representatives will furnish only that portion of the
Confidential Information which, as it is advised by its counsel, is legally
required to furnish and will exercise all reasonable efforts to obtain an order
or other reasonable assurance that confidential treatment, if available, will be
accorded such Confidential Information.
Section 4 Miscellaneous.
4.1. Termination. Section 1 (other than Sections 1.1 (the first paragraph
only), 1.2, 1.3, 1.4 and 1.6, which provisions shall survive if the Restricted
Period has not otherwise ended) and 2, 3 and 4 hereof, shall terminate and be of
no further force or effect from and after the conversion of all of the Series D
Preferred Stock.
4.2. Injunctive Relief. It is acknowledged that it will be impossible to
measure the damages that would be suffered by the parties if a party fails to
comply with the provisions of this Agreement and that in the event of any such
failure, the non-breaching parties will not have an adequate remedy at law. The
parties shall, therefore, be entitled to obtain specific performance of such
breaching party's obligations hereunder and to obtain immediate injunctive
relief. The breaching party shall not argue, as a defense to any proceeding for
such specific performance or injunctive relief, that the non-breaching parties
have an adequate remedy at law.
4.3. Assignment.
(a) The Company and the Stockholder shall cause any person or entity
who acquires Series D Preferred Stock from the Stockholder to become a
Stockholder hereunder.
(b) Execution of a counterpart of this Agreement by any person or
entity who acquires Series D Preferred Stock and an amendment adding the name of
such person or entity shall be a condition of any acquisition of such shares by
such person or entity.
4.4. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company and the Stockholder and, subject to Section 5.3, their
respective successors and assigns.
4.5. Entire Agreement. This Agreement contains the entire agreement among
the parties with respect to the subject matter hereof and supersedes all prior
arrangements or understandings with respect hereto.
4.6. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument and shall be deemed to have been duly given when delivered in
person, by telecopier, by a nationally-recognized overnight courier, or by first
class registered or certified mail, postage prepaid, addressed to such party at
the address previously provided or such other address as may hereafter be
designated in writing by the addressee as follows: (a) if to the Stockholder, at
the address and telecopier numbers previously provided and (b) if to the
Company, to the attention of General Counsel at the address previously provided.
All such notices, requests, consents and other communications shall be deemed to
have been delivered (a) in the case of personal delivery or delivery by
telecopy, on the date of such delivery, (b) in the case of nationally-recognized
overnight courier, on the next business day and (c) in the case of mailing, on
the third business day following such mailing if sent by certified mail, return
receipt requested.
4.7. Modifications; Amendments; Waivers. Any party may waive any provision
hereof intended for its benefit in writing. No failure or delay on the part of
any party hereto in exercising any right, power or remedy hereunder shall
operate as a waiver thereof. This Agreement may be amended with the prior
written consent of the Company and a Majority Interest. Any consent given as
provided in the preceding sentence shall be binding on all Stockholders and
Permitted Transferees, and no Stockholder or Permitted Transferee shall have any
cause of action against any other person for any action taken by such erson in
reliance upon such consent.
4.8. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
4.9. Headings. The headings of the various sections of this Agreement have
been inserted for convenience of reference only and shall not be deemed to be a
part of this Agreement.
4.10. Severability. It is the desire and intent of the parties that the
provisions of this Agreement be enforced to the fullest extent permissible under
the law and public policies applied in each jurisdiction in which enforcement is
sought. Accordingly, if any provision of this Agreement would be held in any
jurisdiction to be invalid, prohibited or unenforceable for any reason, such
provision, as to such jurisdiction, shall be ineffective, without invalidating
the remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction. Notwithstanding the
foregoing, if such provision could be more narrowly drawn so as not to be
invalid, prohibited or unenforceable in such jurisdiction, it shall, as to such
jurisdiction, be so narrowly drawn, without invalidating the remaining
provisions of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
4.11. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to
principles governing conflicts of laws.
[The next page is the signature page]
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first set forth above.
THE COMPANY: IPG PHOTONICS CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Title: Chairman & CEO
STOCKHOLDER: JDS UNIPHASE CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior VP