EXHIBIT 10.14
SHAREHOLDER RIGHTS AGREEMENT
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This Shareholder Rights Agreement ("Agreement") is effective as of
December 22, 1992 by and between IMSL, Inc. (the "Company") and the investors
designated on Exhibit A attached hereto (the "Investors").
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1. Registration Rights.
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1.1 Certain Definitions. As used in this Agreement, the
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following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission or
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any other federal agency at the time administering the Securities Act of 1933,
as amended (the "Securities Act").
"Holder" shall mean any person acquiring Registrable Securities
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(including securities convertible into Registrable Securities) directly from the
Company and any person holding Registrable Securities to whom the rights under
this paragraph 1.1 have been transferred in accordance with paragraph 1.8
hereof.
"Registrable Securities" means (i) up to 236,282 shares of Class A
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Common Stock issued pursuant to the Agreement and Plan of Reorganization among
IMSL, Inc., IMSL Acquisition Corporation and Precision Visuals, Inc., dated as
of November 16, 1992, and (ii) any Common Stock of the Company issued or
issuable in respect of the shares listed in (i) above upon any stock split,
stock dividend, recapitalization, or similar event, provided, however, that
shares of Common Stock or other securities shall only be treated as Registrable
Securities if and so long as they have not been (A) sold to or through a broker
or dealer or underwriter in a public distribution or a public securities
transaction, or (B) sold (or are available for sale without volume restrictions
in the opinion of counsel to the Company) in a transaction exempt from the
registration and prospectus delivery requirements of the Securities Act so that
all transfer restrictions and restrictive legends with respect thereto are
removed upon the consummation of such sale.
The terms "register," "registered" and "registration" refer to a
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registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, except as
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otherwise stated below, incurred by the Company in complying with paragraph 1.2
hereof, including, without limitation, all registration, qualification and
filing fees, printing expenses, escrow fees, fees and disbursements of counsel
for the Company, blue sky fees and expenses, the expense of any special audits
incident to or required by any such registration and the fees and disbursements
of one counsel for the selling shareholders which counsel fees shall not exceed
$15,000 in any offering (but excluding the compensation of regular employees of
the Company which shall be paid in any event by the Company).
"Selling Expenses" shall mean all underwriting discounts, selling
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commissions and stock transfer taxes applicable to the securities registered by
the Holders.
1.2 Company Registration.
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(a) If, at any time or from time to time, the Company shall determine
to register any of its securities, either for its own account or the account of
a security holder or holders, other than (i) a registration relating solely to
employee benefit plans, or (ii) a registration relating solely to a Commission
Rule 145 transaction, the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within twenty (20) days after receipt of such written notice from
the Company, by any Holder.
(b) If the registration of which the Company gives notice is for a
registered public offering involving an underwriting, the Company shall so
advise the Holders as a part of the written notice given pursuant to paragraph
1.2(a)(i). In such event the right of any Holder to registration pursuant to
paragraph 1.2 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of Registrable Securities in the underwriting to
the extent provided herein. All Holders proposing to distribute their
securities through such underwriting shall (together with the Company and the
other holders distributing their securities through such underwriting) enter
into an underwriting agreement in customary form with the managing underwriter
selected for such underwriting by the Company. Notwithstanding any other
provision of this paragraph 1.2, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities or
other securities to be included in such registration. The Company shall so
advise all Holders and other holders distributing their securities through such
underwriting and the number of shares of Registrable Securities and other
securities that may be included in the registration and underwriting shall be
allocated among all Holders and such other holders in
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proportion, as nearly as practicable, to the respective amounts of Registrable
Securities and other securities (possessing registration rights) held by such
Holders and such other holders at the time of filing the registration statement.
To facilitate the allocation of shares in accordance with the above provisions,
the Company may round the number of shares allocated to any Holder or holder to
the nearest 100 shares. If any Holder or holder disapproves of the terms of any
such underwriting, he may elect to withdraw therefrom by written notice to the
Company and the managing underwriter. Any securities excluded or withdrawn from
such underwriting shall be withdrawn from such registration, and shall not be
transferred in a public distribution prior to 90 days after the effective date
of the registration statement relating thereto, or such other shorter period of
time as the underwriters may require.
(c) The Company shall have the right to terminate or withdraw any
registration initiated by it under this paragraph 1.2 prior to the effectiveness
of such registration whether or not any Holder has elected to include securities
in such registration.
1.3 Expenses of Registration. All Registration Expenses incurred in
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connection with paragraph 1.2 shall be borne by the Company. All Selling
Expenses relating to securities registered on behalf of the Holders shall be
borne by the Holders of such securities pro rata on the basis of the number of
shares so registered.
1.4 Registration Procedures. In the case of each registration,
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qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in writing as to the initiation of
each registration, qualification and compliance and as to the completion
thereof. At its expense the Company will:
(a) Prepare and file with the Commission a registration statement
with respect to such securities and use its best efforts to cause such
registration statement to become and remain effective for at least ninety (90)
days or until the distribution described in the registration statement has been
completed;
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
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(c) Furnish to the Holders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the securities
covered by such registration statement under such other securities or blue sky
laws of such jurisdictions as shall be reasonably requested by the Holders,
provided that the Company shall not be required in connection therewith or as a
condition thereto to qualify to do business or to file a general consent to
service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading in the light of the circumstances then
existing.
(g) Furnish on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a letter, dated such date, from
the independent accountants of the Company, in form and substance as is
customarily given by independent accountants to underwriters in an underwritten
public offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
1.5 Indemnification.
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(a) The Company will indemnify each Holder, each of its officers
and directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification
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or compliance has been effected pursuant to this Section 1, and each
underwriter, if any, and each person who controls any underwriter within the
meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
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, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, 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 therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company in
connection with any such registration, qualification or compliance, and the
Company will reimburse each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other expenses reasonably
incurred in connection with investigating, preparing or defending any such
claim, loss, damage, liability or action, provided that the Company will not be
liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by such Holder, controlling person or underwriter and stated to be
specifically for use therein.
(b) Each Holder will, if Registrable Securities held by such
Holder are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, each person who controls
the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers, directors and
partners and each person controlling such Holder within the meaning of Section
15 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 such
registration statement, prospectus, offering circular or other document, or any
omission (or alleged omission) to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
will reimburse the Company, such Holders, such directors, officers, persons,
underwriters or control persons for any legal or any other expenses reasonably
incurred in connection with investigating or defending any such claim, loss,
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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 Company by an instrument duly executed by such Holder and
stated to be specifically for use therein. Notwithstanding the foregoing, the
liability of each Holder under this subparagraph (b) shall be limited in an
amount equal to the public offering price of the shares sold by such Holder. A
Holder will not be required to enter into any agreement or undertaking in
connection with any registration under this Section 1 providing for any
indemnification or contribution on the part of such Holder greater than the
Holder's obligations under this paragraph 1.5(b).
(c) Each party entitled to indemnification under this paragraph
1.5 (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 counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
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 1 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
1.6 Information by Holder. The Holder or Holders of Registrable
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Securities included in any registration shall furnish to the Company such
information regarding such Holder or Holders, the Registrable Securities held by
them and the distribution proposed by such Holder or Holders as the Company may
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 1.
1.7 Rule 144 Reporting. With a view to making available the benefits
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of certain rules and regulations of the Commission which may at any time permit
the sale of the restricted securities
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to the public without registration, after such time as a public market exists
for the Common Stock of the Company, the Company agrees to use its best efforts
to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times
after the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended.
(b) Use its best efforts to file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended (at any time
after it has become subject to such reporting requirements).
(c) So long as a Holder owns any restricted securities to furnish
to the Holder forthwith upon request a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company for an offering of its securities to the general public), and of
the Securities Act and the Securities Exchange Act of 1934, as amended (at any
time after it has become subject to such reporting requirements), a copy of the
most recent annual or quarterly report of the Company, and such other reports
and documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing an Investor
to sell any such securities without registration.
1.8 Transfer of Registration Rights. The rights to cause the Company
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to register securities granted Holders under paragraph 1.2 may be assigned to a
transferee or assignee provided that: (i) such transfer may otherwise be
effected in accordance with applicable securities laws, and (ii) such assignee
or transferee acquires at least 50,000 shares of Class A Common Stock.
Notwithstanding the foregoing, the rights to cause the Company to register
securities may be assigned to any constituent partner of a Holder, without
compliance with item (ii) above, provided written notice thereof is promptly
given to the Company.
1.9 Standoff Agreement. Each Holder agrees that in connection with
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the Company's initial underwritten public offering of the Company's securities,
upon request of the Company or the underwriters managing such initial
underwritten public offering of the Company's securities, each Holder shall not
sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any securities of the Company (other than those included in
the registration) without the prior written
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consent of the Company or such underwriters, as the case may be, for such period
of time (not to exceed one hundred eighty (180) days) from the effective date of
such registration as may be requested by the underwriters.
1.10 Amendment of Registration Rights. With the written consent of
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the holders of more than 50% of the then outstanding Registrable Securities, the
Company may amend this Section 1.
2. Right of First Refusal.
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2.1 Grant of Right. Except as set forth in Section 2.5, the Company
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hereby grants to ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Advent IV Liquidating Trust, ▇▇▇▇▇▇▇
▇▇▇▇▇▇, Trustee the right of first refusal to purchase (i) in the case of ▇▇▇▇▇
▇. ▇▇▇▇▇▇, up to three-fourths (3/4) and (ii) in the case of Advent IV
Liquidating Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee up to one-fourth (1/4), of the total
of all or any part of the Investors' Pro Rata Share (as hereinafter defined) of
the New Securities (as defined in Section 2.2) which the Company may, from time
to time, propose to sell and issue. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and Advent IV Liquidating
Trust, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee may purchase said New Securities on the same
terms and at the same price at which the Company proposes to sell the New
Securities. The Pro Rata Share of the Investors, for purposes of this right of
first refusal, is the ratio of the total number of shares of Class A Common
Stock held by the Investors, to the total number of shares of Class A Common
Stock outstanding immediately prior to the issuance of the New Securities
(including any shares of Class A Common Stock into which outstanding shares of
Preferred Stock are convertible).
2.2 New Securities. "New Securities" shall mean any capital stock of
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the Company, whether now authorized or not, and any rights, options or warrants
to purchase said capital stock, and securities of any type whatsoever that are,
or may become, convertible into said capital stock; provided, however, that "New
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Securities" does not include (i) the Class A Common Stock issued pursuant to the
Agreement and Plan of Reorganization of even date herewith, (ii) securities
offered pursuant to a registration statement filed under the Securities Act,
(iii) securities issued pursuant to the acquisition of another corporation by
the Company by merger, purchase of substantially all of the assets or other
reorganization, (iv) all shares of Class A Common Stock hereafter issued or
issuable to officers, directors, employees or consultants of the Company
pursuant to any employee or consultant stock offering, plan or arrangement
approved by the Board of Directors of the Company and (v) capital stock issued
in connection with any stock split, stock dividend or recapitalization of the
Company.
2.3 Notice. In the event the Company proposes to undertake an
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issuance of New Securities, it shall give to the
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Investors written notice (the "Notice") of its intention, describing the type of
New Securities, number of shares, the price, the terms upon which the Company
proposes to issue the same, and a statement as to the number of days from
receipt of such Notice within which the Investors must respond to such Notice.
The Investors shall have fifteen (15) days from the date of such Notice to
purchase any or all of the New Securities for the price and upon the terms
specified in the Notice by giving written notice to the Company and stating
therein the quantity of New Securities to be purchased and forwarding payment
for such New Securities to the Company if immediate payment is required by such
terms, or in any event no later than fifteen (15) days after the date of receipt
of the Notice.
2.4 Sale after Notice. If not all Investors elect to purchase their
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Pro Rata Share of the New Securities, then Investors who do so elect shall be
offered the right to acquire such non-participating Investors' Pro Rata Share.
If the Investors fail to exercise in full the right of first refusal within said
fifteen (15) day period, the Company shall have ninety (90) days thereafter to
sell or enter into an agreement (pursuant to which the sale of New Securities
covered thereby shall be closed, if at all, within thirty (30) days from the
date of said agreement) to sell the New Securities respecting which the
Investors' rights were not exercised, at a price and upon general terms no more
favorable than specified in the Notice. In the event the Company has not sold
the New Securities within said ninety (90) day period (or sold and issued New
Securities in accordance with the foregoing within thirty (30) days from the
date of said agreement), the Company shall not thereafter issue or sell any New
Securities without first offering such securities to the Investors in the manner
provided above.
2.5 Expiration. The right of first refusal granted under this
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Section 1 shall expire upon the date upon which a registration statement filed
by the Company under the Securities Act (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan) in
connection with an underwritten public offering of its securities first becomes
effective and the securities registered thereunder shall have been sold.
2.6 Assignment. The right of first refusal granted under this
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Section 2 is assignable by the Investors to any transferee of a minimum of Ten
Thousand (10,000) shares of Class A Common Stock (as adjusted for stock splits
and combinations).
2.7 Amendment of Right of First Refusal. With written consent of more
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than 50% of the Investors the Company may amend this Section 2.
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3. Miscellaneous Provisions.
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3.1 Notices. All notices and other communications required or
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permitted hereunder shall be in writing and, except as otherwise noted herein,
shall be deemed effectively given upon personal delivery, delivery by nationally
recognized courier or upon deposit with the United States Post Office, (by first
class mail, postage prepaid) addressed: (a) if to the Company, at ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (or at such other address
as the Company shall have furnished to the Holders in writing) attention of
President and (b) if to a Holder, at the latest address of such Holder shown on
the Company's records.
3.2 Descriptive Headings. The descriptive headings herein have been
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inserted for convenience only and shall not be deemed to limit or otherwise
affect the construction of any provisions hereof.
3.3 Governing Law. This Agreement shall be governed by and
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interpreted under the laws of the State of California as applied to agreements
among California residents, made and to be performed entirely within the State
of California.
3.4 Counterparts. This Agreement may be executed in one or more
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counterparts, each of which shall for all purposes be deemed to be an original
and all of which shall constitute the same instrument, but only one of which
need be produced.
3.5 Expenses. If any action at law or in equity is necessary to
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enforce or interpret the terms of this Agreement, the prevailing party shall be
entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
3.6 Entire Agreement. This Agreement constitutes the full and entire
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understanding and agreement between the parties with regard to the subject
matter of this Agreement.
3.7 Separability; Severability. Unless expressly provided in this
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Agreement, the rights of each Investor under this Agreement are several rights,
not rights jointly held with any other Investors. Any invalidity, illegality or
limitation on the enforceability of this Agreement with respect to any Investor
shall not affect the validity, legality or enforceability of this Agreement with
respect to the other Investors. If any provision of this Agreement is
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not be affected or
impaired.
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IN WITNESS WHEREOF, the parties have executed this Agreement on the day
and year first set forth above.
IMSL, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
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Title: PRESIDENT/CEO
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SHAREHOLDER SIGNATURE PAGE
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The undersigned shareholder hereby agrees to the provisions of the
Shareholder Rights Agreement dated December 22 , 1992.
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Dated: March 15, 1993
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/s/ signed by Shareholders
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(Signature)
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(Name)