1
EXHIBIT 10.10
FOURTH AMENDED INVESTORS' RIGHTS AGREEMENT
This Fourth Amended Investors' Rights Agreement (this "AGREEMENT") is
made and entered into as of March 1, 2000, by and among Chaparral Network
Storage, Inc., a Delaware corporation (the "COMPANY"), and the individuals and
entities listed on Exhibit A attached hereto (the "INVESTORS").
A. The Investors are party to that certain First Amended Investors'
Rights Agreement dated as of March 31, 1999 (the "FIRST AMENDED AGREEMENT") that
certain Second Amended Investors' Rights Agreement dated as of August 13, 1999
(the "SECOND AMENDED AGREEMENT") and that certain Third Amended Investors'
Rights Agreement dated as of October 16, 1999 (the "THIRD AMENDED AGREEMENT").
B. The Investors desire to amend the Third Amended Agreement in certain
respects.
NOW, THEREFORE, in consideration of the foregoing recitals and the
mutual promises hereinafter set forth, the parties hereto agree as follows:
1. INFORMATION RIGHTS.
1.1 Financial Information. The Company covenants and agrees
that, commencing on the date of this Agreement, for so long as any
Investor holds shares of Series A Preferred Stock, Series B Preferred
Stock or Series C Preferred Stock and/or shares of Common Stock of the
Company ("COMMON Stock") issued upon the conversion of such shares of
Series A Preferred Stock or Series B Preferred Stock or Series C
Preferred Stock ("CONVERSION STOCK") the Company will:
(a) Annual Reports. Furnish to such Investor, as soon
as practicable and in any event within 120 days after the end
of each fiscal year of the Company, a consolidated Balance
Sheet as of the end of such fiscal year, a consolidated
Statement of Income and a consolidated Statement of Cash Flows
of the Company and its subsidiaries for such year, setting
forth in each case in comparative form the figures from the
Company's previous fiscal year (if any), all prepared in
accordance with generally accepted accounting principles and
practices and audited by an independent certified public
accounting firm; and
(b) Quarterly Reports. Furnish to such Investor as
soon as practicable, and in any case within forty-five (45)
days after the end of each fiscal quarter of the Company
(except the last quarter of the Company's fiscal year),
quarterly unaudited financial statements, including an
unaudited Balance Sheet, an unaudited Statement of Income and
an unaudited Statement of Cash Flows, together with a
comparison to the Company's operating plan and budget and
statements of the Chief Financial Officer of the Company
explaining any significant differences in the statements from
the Company's operating plan and budget for the period and
stating that such statements fairly present the consolidated
financial position and consolidated financial results of the
Company for the fiscal quarter covered.
Each Investor agrees to hold all information received
pursuant to this Section in confidence, and not to use or disclose any
of such information to any third party, except to the extent such
information may be made publicly available by the Company.
1.2 Inspection Rights. The Company shall permit each Investor
holding shares of Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock and/or shares of Conversion Stock, or any
combination thereof, at such Investor's expense, to visit and inspect
the Company's properties, to examine its books of account and records
and to discuss the Company's affairs, finances and accounts with its
officers, all at such reasonable times as may be requested by such
Investor. Each Investor agrees to hold all information received from
such inspections in confidence, and not to use or disclose any of such
information to any third party, except to the extent such information
may be made publicly available by the Company.
1.3 Board Rights. The Company shall permit Adaptec to have one
(1) representative attend all meetings of the Company's Board of
Directors in a non-voting observer capacity and to receive any
communications directed to members of the Board of Directors in their
capacity as such. The Investors agree to hold all information received
from such meetings in confidence, and not to use or disclose any of
such information to any third party, except to the extent such
information may be made publicly available by the Company.
1.4 Termination of Certain Rights. The Company's obligations
under Sections 1.1, 1.2 and 1.3 above will terminate upon the closing
of the Company's initial public offering of Common Stock pursuant to an
effective registration statement filed under the U.S. Securities Act of
1933, as amended (the "SECURITIES ACT"), in which the gross proceeds
raised for the Company's account (calculated before deduction of
underwriters'
CONFIDENTIAL Page 1 of 14
2
discounts and omissions) exceeds $15,000,000 at a price greater than
$2.20 per share of Common Stock (such price to be proportionally
adjusted to reflect stock splits, stock dividends and the like).
2. REGISTRATION RIGHTS.
2.1 Definitions. For purposes of this Section 2:
(a) Registration. The terms "REGISTER,"
"REGISTRATION" and "REGISTERED" and refer to a registration
effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or
ordering of effectiveness of such registration statement.
(b) Registrable Securities. The term "REGISTRABLE
SECURITIES" means: (i) all the shares of Common Stock of the
Company issued or issuable upon the conversion of any shares
of Series A Preferred Stock, Series B Preferred Stock or
Series C Preferred Stock that are now owned or may hereafter
be acquired by the Investors or the Investors' permitted
successors and assigns and (ii) any shares of Common Stock of
the Company issued as (or issuable upon the conversion or
exercise of any warrant, right or other security which is
issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, all such shares of
Common Stock described in clause (i) of this subsection (b);
excluding in all cases, however, any Registrable Securities
sold by a person in a transaction in which rights under this
Section 2 are not assigned in accordance with this Agreement
or any Registrable Securities sold to the public or sold
pursuant to Rule 144 promulgated under the Securities Act.
(c) Registrable Securities Then Outstanding. The
number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING"
shall mean the number of shares of Common Stock which are
Registrable Securities and (i) are then issued and outstanding
or (ii) are then issuable pursuant to the exercise or
conversion of then outstanding and then exercisable options,
warrants or convertible securities.
(d) Holder. For purposes of this Section 2 and
Sections 3 and 4 hereof, the term "HOLDER" means any person
owning of record Registrable Securities that have not been
sold to the public or pursuant to Rule 144 promulgated under
the Securities Act or any assignee of record of such
Registrable Securities to whom rights under such Sections have
been duly assigned in accordance with this Agreement;
provided, however, that for purposes of this Agreement, a
record holder of the Warrant or shares of Series A Stock,
Series B Stock or Series C Stock convertible into such
Registrable Securities shall be deemed to be the Holder of
such Registrable Securities; and provided, further, that the
Company shall in no event be obligated to register the Warrant
or shares of Series A Stock, Series B Stock, or Series C Stock
and that Holders of Registrable Securities will not be
required to convert the Warrant or their shares of Series A
Stock, Series B Stock or Series C Stock into Common Stock in
order to exercise the registration rights granted hereunder,
until immediately before the closing of the offering to which
the registration relates.
(e) Form S-3. The term "FORM S-3" means such form
under the Securities Act as is in effect on the date hereof or
any successor registration form under the Securities Act
subsequently adopted by the SEC which permits inclusion or
incorporation of substantial information by reference to other
documents filed by the Company with the SEC.
(f) SEC. The term "SEC" or "COMMISSION" means the
U.S. Securities and Exchange Commission.
(g) Series A Stock. The term "SERIES A STOCK" shall
mean the Company's Series A Preferred Stock, par value $0.001
per share.
(h) Series B Stock. The term "SERIES B STOCK" shall
mean the Company's Series B Preferred Stock, par value $0.001
per share.
(i) Series C Stock. The term "SERIES C STOCK" shall
mean the Company's Series C Preferred Stock, par value $0.001
per share.
2.2 Demand Registration.
(a) Request by Holders. If the Company shall receive
at any time after six (6) months after the effective date of
the Company's initial public offering of its securities
pursuant to a registration filed under the Securities Act, a
written request from the Holders of at least two-thirds of the
Registrable Securities then outstanding that the Company file
a registration statement under the Securities Act covering the
registration of Registrable Securities pursuant to this
Section 2.2, then the Company shall, within twenty (20) days
after the receipt of such written request, give written notice
of
CONFIDENTIAL Page 2 of 14
3
such request ("REQUEST NOTICE") to all Holders, and effect, as
soon as practicable, the registration under the Securities Act
of all Registrable Securities which Holders request to be
registered and included in such registration by written notice
given by such Holders to the Company within twenty (20) days
after receipt of the Request Notice, subject only to the
limitations of this Section 2; provided that the Registrable
Securities requested by all Holders to be registered pursuant
to such request must be at least twenty-five percent (25%) of
all Registrable Securities then outstanding.
(b) Underwriting. If the Holders initiating the
registration request under this Section 2.2 ("INITIATING
HOLDERS") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, then
they shall so advise the Company as a part of their request
made pursuant to this Section 2.2 and the Company shall
include such information in the written notice referred to in
subsection 2.2(a). In such event, the right of any Holder to
include his Registrable Securities in such registration shall
be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable
Securities in the underwriting (unless otherwise mutually
agreed by a majority in interest of the Initiating Holders and
such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such
underwriting shall enter into an underwriting agreement in
customary form with the managing underwriter or underwriters
selected for such underwriting by the Company. Notwithstanding
any other provision of this Section 2.2, if the underwriter(s)
advise(s) the Company in writing that marketing factors
require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of
Registrable Securities that would otherwise be registered and
underwritten pursuant hereto, and the number of Registrable
Securities that may be included in the underwriting shall be
reduced as required by the underwriter(s) and allocated among
the Holders of Registrable Securities on a pro rata basis
according to the number of Registrable Securities then
outstanding held by each Holder requesting registration
(including the Initiating Holders); provided, however, that
the number of shares of Registrable Securities to be included
in such underwriting and registration shall not be reduced
unless all other securities of the Company are first entirely
excluded from the underwriting and registration. Any
Registrable Securities excluded and withdrawn from such
underwriting shall be withdrawn from the registration.
(c) Maximum Number of Demand Registrations. The
Company is obligated to effect only two (2) such registrations
pursuant to this Section 2.2.
(d) Deferral. Notwithstanding the foregoing, if the
Company shall furnish to Holders requesting the filing of a
registration statement pursuant to this Section 2.2, a
certificate signed by the President or Chief Executive Officer
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
registration statement to be filed and it is therefore
essential to defer the filing of such registration statement,
then the Company shall have the right to defer such filing for
a period of not more than one hundred twenty (120) days after
receipt of the request of the Initiating Holders; provided,
however, that the Company may not utilize this right more than
once in any twelve (12) month period.
(e) Expenses. All expenses incurred in connection
with a registration pursuant to this Section 2.2, including
without limitation all registration and qualification fees,
printers' and accounting fees, fees and disbursements of
counsel for the Company, and the reasonable fees and
disbursements of one counsel for the selling Holders (but
excluding underwriters' discounts and commissions), shall be
borne by the Company. Each Holder participating in a
registration pursuant to this Section 2.2 shall bear such
Holder's proportionate share (based on the total number of
shares sold in such registration other than for the account of
the Company) of all discounts, commissions or other amounts
payable to underwriters or brokers in connection with such
offering. Notwithstanding the foregoing, the Company shall not
be required to pay for any expenses of any registration
proceeding begun pursuant to this Section 2.2 if the
registration request is subsequently withdrawn at the request
of the Holders of a majority of the Registrable Securities to
be registered, unless the Holders of a majority of the
Registrable Securities then outstanding agree to forfeit their
right to one (1) demand registration pursuant to this Section
2.2 (in which case such right shall be forfeited by all
Holders of Registrable Securities); provided, further,
however, that if at the time of such withdrawal, the Holders
have learned of a material adverse change in the condition,
business, or prospects of the Company not known to the Holders
at the time of their request for such registration and have
withdrawn their request for registration with reasonable
promptness after learning of such material adverse change,
then the Holders shall not be required to pay any of such
expenses and shall retain their rights pursuant to this
Section 2.2.
CONFIDENTIAL Page 3 of 14
4
2.3 Piggyback Registrations. The Company shall notify all
Holders of Registrable Securities in writing at least thirty (30) days
prior to filing any registration statement under the Securities Act for
purposes of effecting a public offering of securities of the Company
(including, but not limited to, registration statements relating to
secondary offerings of securities of the Company, but excluding
registration statements relating to any registration under Section 2.2
or Section 2.4 of this Agreement or to any employee benefit plan or a
corporate reorganization) and will afford each such Holder an
opportunity to include in such registration statement all or any part
of the Registrable Securities then held by such Holder. Each Holder
desiring to include in any such registration statement all or any part
of the Registrable Securities held by such Holder shall, within twenty
(20) days after receipt of the above-described notice from the Company,
so notify the Company in writing, and in such notice shall inform the
Company of the number of Registrable Securities such Holder wishes to
include in such registration statement. If a Holder decides not to
include all of its Registrable Securities in any registration statement
thereafter filed by the Company, such Holder shall nevertheless
continue to have the right to include any Registrable Securities in any
subsequent registration statement or registration statements as may be
filed by the Company with respect to offerings of its securities, all
upon the terms and conditions set forth herein.
(a) Underwriting. If a registration statement under
which the Company gives notice under this Section 2.3 is for
an underwritten offering, then the Company shall so advise the
Holders of Registrable Securities. In such event, the right of
any such Holder's Registrable Securities to be included in a
registration pursuant to this Section 2.3 shall be conditioned
upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the
underwriting to the extent provided herein. All Holders
proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement
in customary form with the managing underwriter or
underwriter(s) selected for such underwriting. Notwithstanding
any other provision of this Agreement, if the managing
underwriter determine(s) in good faith that marketing factors
require a limitation of the number of shares to be
underwritten, then the managing underwriter(s) may exclude
shares (including Registrable Securities) from the
registration and the underwriting, and the number of shares
that may be included in the registration and the underwriting
shall be allocated, first, to stockholders exercising any
demand registration rights, second to the Company, and third,
to each of the Holders requesting inclusion of their
Registrable Securities in such registration statement on a pro
rata basis based on the total number of Registrable Securities
then held by each such Holder; provided however, that the
right of the underwriters to exclude shares (including
Registrable Securities) from the registration and underwriting
as described above shall be restricted so that: (i) the number
of Registrable Securities included in any such registration is
not reduced below twenty-five percent (25%) of the shares
included in the registration, except for a registration
relating to the Company's initial public offering or an
offering solely by stockholders of the Company exercising
demand registration rights, from which all Registrable
Securities may be excluded, and (ii) all shares that are not
Registrable Securities and are held by persons who are
employees or directors of the Company (or any subsidiary of
the Company) shall first be excluded from such registration
and underwriting before any Registrable Securities are so
excluded. If any Holder disapproves of the terms of any such
underwriting, such Holder may elect to withdraw therefrom by
written notice to the Company and the underwriter, delivered
at least twenty (20) days prior to the effective date of the
registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and
withdrawn from the registration. For any Holder that is a
partnership or corporation, the partners, retired partners and
stockholders of such Holder, or the estates and family members
of any such partners and retired partners and any trusts for
the benefit of any of the foregoing persons shall be deemed to
be a single "Holder," and any pro rata reduction with respect
to such "Holder" shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and
individuals included in such "Holder," as defined in this
sentence.
(b) Expenses. All expenses incurred in connection
with a registration pursuant to this Section 2.3 (excluding
underwriters' and brokers' discounts and commissions),
including, without limitation all federal and "blue sky"
registration and qualification fees, printers' and accounting
fees, fees and disbursements of counsel for the Company and
reasonable fees and disbursements of one counsel for the
selling Holders shall be borne by the Company.
2.4 Form S-3 Registration. In case the Company shall receive
from any Holder or Holders of at least twenty-five percent (25%) of all
Registrable Securities then outstanding a written request or requests
that the Company effect a registration on Form S-3 and any related
qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holder or Holders, then the
Company will:
CONFIDENTIAL Page 4 of 14
5
(a) Notice. Promptly give written notice of the
proposed registration and the Holder's or Holders' request
therefor, and any related qualification or compliance, to all
other Holders of Registrable Securities; and
(b) Registration. As soon as practicable, effect such
registration and all such qualifications and compliances as
may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Holder's or
Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable
Securities of any other Holder or Holders joining in such
request as are specified in a written request given within
twenty (20) days after receipt of such written notice from the
Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or
compliance pursuant to this Section 2.4:
(i) if Form S-3 is not available for such
offering;
(ii) if the Holders, together with the
holders of any other securities of the Company
entitled to inclusion in such registration, propose
to sell Registrable Securities and such other
securities (if any) at an aggregate price to the
public of less than $1,000,000;
(iii) if the Company shall furnish to the
Holders a certificate signed by the President or
Chief Executive Officer 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 no more
than once during any twelve month period for a period
of not more than 120 days after receipt of the
request of the Holder or Holders under this Section
2.4;
(iv) if the Company has, within the twelve
(12) month period preceding the date of such request,
already effected two (2) registrations on Form S-3
for the Holders pursuant to this Section 2.4; or
(v) 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) Expenses. Subject to the foregoing, the Company
shall file a Form S-3 registration statement covering the
Registrable Securities and other securities so requested to be
registered pursuant to this Section 2.4 as soon as practicable
after receipt of the request or requests of the Holders for
such registration. The Company shall pay all expenses incurred
in connection with each registration requested pursuant to
this Section 2.4, (excluding underwriters' or brokers'
discounts and commissions), including without limitation all
filing, registration and qualification, printers' and
accounting fees and the reasonable fees and disbursements of
one counsel for the selling Holder or Holders and counsel for
the Company.
(d) Not Demand Registration. Form S-3 registrations
shall not be deemed to be demand registrations as described in
Section 2.2 above.
2.5 Obligations of the Company. Whenever required to effect
the registration of any Registrable Securities under this Agreement,
the Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use
reasonable, diligent efforts to cause such registration
statement to become effective, and, upon the request of the
Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up
to ninety (90) days.
(b) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus
used in connection with such registration statement as may be
necessary to comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by
such registration statement.
(c) Furnish to the Holders such number of copies of a
prospectus, including a preliminary prospectus, in conformity
with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to
facilitate the disposition of the Registrable Securities owned
by them that are included in such registration.
(d) Use reasonable, diligent 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
CONFIDENTIAL Page 5 of 14
6
therewith or as a condition thereto to qualify to do business
or to file a general consent to service of process in any such
states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing
underwriter(s) of such offering. 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, at the request of any Holder requesting
registration of Registrable Securities, on the date that such
Registrable Securities are delivered to the underwriters for
sale, if such securities are being sold through underwriters,
or, if such securities are not being sold through
underwriters, on the date that the registration statement with
respect to such securities becomes effective, (i) an opinion,
dated as of such date, of the counsel representing the Company
for the purposes of such registration, in form and substance
as is customarily given to underwriters in an underwritten
public offering and reasonably satisfactory to a majority in
interest of the Holders requesting registration, addressed to
the underwriters, if any, and to the Holders requesting
registration of Registrable Securities and (ii) a "comfort"
letter dated as of such date, from the independent certified
public accountants of the Company, in form and substance as is
customarily given by independent certified public accountants
to underwriters in an underwritten public offering and
reasonably satisfactory to a majority in interest of the
Holders requesting registration, addressed to the
underwriters, if any, and to the Holders requesting
registration of Registrable Securities.
2.6 Furnish Information. It shall be a condition precedent to
the obligations of the Company to take any action pursuant to Sections
2.2, 2.3 or 2.4 that the selling Holders shall furnish to the Company
such information regarding themselves, the Registrable Securities held
by them, and the intended method of disposition of such securities as
shall be required to timely effect the registration of their
Registrable Securities.
2.7 Delay of Registration. No Holder shall have any right to
obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 2.
2.8 Indemnification. In the event any Registrable Securities
are included in a registration statement under Sections 2.2, 2.3 or
2.4:
(a) By the Company. To the extent permitted by law,
the Company will indemnify and hold harmless each Holder, the
partners, officers and directors of each Holder, any
underwriter (as defined in the Securities Act) for such Holder
and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the
Securities Exchange Act of 1934, as amended, (the "1934 ACT"),
against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities
Act, the l934 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,
"VIOLATIONS" and, individually, 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 Securities Act, the 1934 Act, any
federal or state securities law or any rule or
regulation promulgated under the Securities Act, the
1934 Act or any federal or state securities law in
connection with the offering covered by such
registration statement; and the Company will
reimburse each such Holder, partner, officer or
director, underwriter or controlling person for any
legal or other expenses reasonably incurred by them,
as incurred, in connection with investigating or
defending any such loss, claim, damage, liability or
action; provided however, that the indemnity
agreement contained in this subsection 2.8(a) shall
not apply to amounts paid in
CONFIDENTIAL Page 6 of 14
7
settlement of any such loss, claim, damage, liability
or action if such settlement is effected without the
consent of the Company (which consent shall not be
unreasonably withheld), nor shall the Company be
liable in any such case for any such loss, claim,
damage, liability or action to the extent that it
arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with
written information furnished expressly for use in
connection with such registration by such Holder,
partner, officer, director, underwriter or
controlling person of such Holder.
(b) By Selling Holders. To the extent permitted by
law, each selling Holder will indemnify and hold harmless the
Company, each of its directors, each of its officers who have
signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act,
any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's
partners, directors or officers or any person who controls
such Holder within the meaning of the Securities Act or the
1934 Act, against any losses, claims, damages or liabilities
(joint or several) to which the Company or any such director,
officer, controlling person, underwriter or other such Holder,
partner or director, officer or controlling person of such
other Holder may become subject under the Securities Act, the
1934 Act or other federal or state law, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereto) arise out of or are based upon any Violation, in each
case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with
written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder
will reimburse any legal or other expenses reasonably incurred
by the Company or any such director, officer, controlling
person, underwriter or other Holder, partner, officer,
director or controlling person of such other Holder in
connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that
the indemnity agreement contained in this subsection 2.8(b)
shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent
shall not be unreasonably withheld; and provided further, that
the total amounts payable in indemnity by a Holder under this
Section 2.8(b) in respect of any Violation shall not exceed
the net proceeds received by such Holder in the registered
offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an indemnified
party under this Section 2.8 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 2.8,
deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the
right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party
similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; provided, however, that
an indemnified party shall have the right to retain its own
counsel, with the fees and expenses to be paid by the
indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would
be inappropriate due to actual or potential conflict of
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 2.8, but the omission so
to deliver written notice to the indemnifying party will not
relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.8.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of the Company and Holders are
subject to the condition that, insofar as they relate to any
Violation made in a preliminary prospectus but eliminated or
remedied in the amended prospectus on file with the SEC at the
time the registration statement in question becomes effective
or the amended prospectus filed with the SEC pursuant to SEC
Rule 424(b) (the "FINAL PROSPECTUS"), such indemnity agreement
shall not inure to the benefit of any person if a copy of the
Final Prospectus was furnished to the indemnified party and
was not furnished to the person asserting the loss, liability,
claim or damage at or prior to the time such action is
required by the Securities Act.
(e) Contribution. In order to provide for just and
equitable contribution to joint liability under the Securities
Act in any case in which either (i) any Holder exercising
rights under this Agreement, or any controlling person of any
such Holder, makes a claim for indemnification pursuant to
this Section 2.8 but it is judicially determined (by the entry
of a final judgment or decree by a court of competent
jurisdiction and the expiration of time to appeal or the
denial of the last right of appeal) that such indemnification
may not be enforced in such case notwithstanding the fact that
this Section 2.8 provides for indemnification in such case, or
(ii) contribution under the Securities Act may be required
CONFIDENTIAL Page 7 of 14
8
on the part of any such selling Holder or any such controlling
person in circumstances for which indemnification is provided
under this Section 2.8; then, and in each such case, the
Company and such Holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be
subject (after contribution from others) in such proportion so
that such Holder is responsible for the portion represented by
the percentage that the public offering price of its
Registrable Securities offered by and sold under the
registration statement bears to the public offering price of
all securities offered by and sold under such registration
statement, and the Company and other selling Holders are
responsible for the remaining portion; provided, however,
that, in any such case, (A) no such Holder will be required to
contribute any amount in excess of the public offering price
of all such Registrable Securities offered and sold by such
Holder pursuant to such registration statement; and (B) no
person or entity guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
(f) Survival. The obligations of the Company and
Holders under this Section 2.8 shall survive the completion of
any offering of Registrable Securities in a registration
statement, and otherwise.
2.9 "Market Stand-Off" Agreement. Each Holder hereby agrees
that it shall not, to the extent requested by the Company or an
underwriter of securities of the Company, sell or otherwise transfer or
dispose of any Registrable Securities or other shares of stock of the
Company then owned by such Holder (other than to donees or partners of
the Holder who agree to be similarly bound) for up to one hundred
eighty (180) days following the effective date of a registration
statement of the Company filed under the Securities Act; provided,
however, that:
(a) such agreement shall be applicable only to the
first such registration statement of the Company which covers
securities to be sold on its behalf to the public in an
underwritten offering but not to Registrable Securities sold
pursuant to such registration statement; and
(b) all officers and directors of the Company then
holding Common Stock of the Company enter into similar
agreements.
In order to enforce the foregoing covenant, the Company shall
have the right to place restrictive legends on the certificates
representing the shares subject to this Section and to impose stop
transfer instructions with respect to the Registrable Securities and
such other shares of stock of each Holder (and the shares or securities
of every other person subject to the foregoing restriction) until the
end of such period.
2.10 Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may
at any time permit the sale of the Registrable Securities to the public
without registration, after such time as a public market exists for the
Common Stock of the Company, the Company agrees 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 of the
first registration under the Securities Act filed by the
Company for an offering of its securities to the general
public;
(b) Use reasonable, diligent 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 1934
Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Holder owns any Registrable
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
ninety (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 1934 Act (at any time after it has become subject
to the reporting requirements of the 1934 Act), a copy of the
most recent annual or quarterly report of the Company, and
such other reports and documents of the Company as a Holder
may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Holder to sell any
such securities without registration (at any time after the
Company has become subject to the reporting requirements of
the 1934 Act).
2.11 Termination of the Company's Obligations. The Company
shall have no obligations pursuant to Sections 2.2 through 2.4 with
respect to any request or requests for registration made by any Holder
on a date more than five (5) years after the closing date of the
Company's initial public offering. Notwithstanding anything to the
contrary contained in Section 2.2 or 2.4, if any Holder is eligible to
sell Registrable Securities pursuant Rule 144(k) or any successor
provision under the Securities Act (an "Excluded Holder"), the
CONFIDENTIAL Page 8 of 14
9
Registrable Securities of such Excluded Holder shall be disregarded in
determining the requisite percentage of Registrable Securities that are
required to initiate a registration pursuant to Section 2.2 or 2.4
(i.e., a registration under Section 2.2 must be initiated by persons
holding at least two-thirds of the Registrable Securities held by all
Holders who are not Excluded Holders and a registration under Section
2.4 must be initiated by persons holding at least 25% of the
Registrable Securities held by all Holders who are not Excluded
Holders). After a registration has been requested pursuant to Section
2.2 or 2.4, as the case may be, by the requisite percentage of shares
held by Holders who are not Excluded Holders, all Holders (including
Excluded Holders) shall be entitled to include their Registrable
Securities in such registration subject to the terms and conditions of
this Agreement.
2.12 Limitations on Subsequent Registration Rights. From and
after the date of this Agreement, the Company shall not, without the
prior written consent of the Holders of a majority of the Registrable
Securities then outstanding, enter into any agreement with any holder
or prospective holder of any securities of the Company which would
allow such holder or prospective holder (a) to include such securities
in any registration filed under Section 2.2 hereof, unless under the
terms of such agreement, such holder or prospective holder may include
such securities in any such registration only to the extent that the
inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders which is included, or (b) to make
a demand registration which could result in such registration statement
being declared effective prior to the earlier of either of the dates
set forth in subsection 2.2(a), or within one hundred twenty (120) days
of the effective date of any registration effected pursuant to Section
2.2.
3. PRE-EMPTIVE RIGHTS.
3.1 General. Each Holder (as defined in Section 2.1(d)) and
any party to whom such Holder's rights under this Section 3 have been
duly assigned in accordance with Section 4.1(b) (each such Holder or
assignee being hereinafter referred to as a "RIGHTS HOLDER") has the
right of first refusal to purchase such Rights Holder's Pro Rata Share
(as defined below), of all (or any part) of any "New Securities" (as
defined in Section 3.2) that the Company may from time to time issue
after the date of this Agreement. A Rights Holder's "PRO RATA SHARE"
for purposes of this right of first refusal is the ratio of (a) the
number of Registrable Securities as to which such Rights Holder is the
Holder (and/or is deemed to be the Holder under Section 2.1(d)), to (b)
a number of shares of Common Stock of the Company equal to the sum of
(i) the total number of shares of Common Stock of the Company then
outstanding plus (ii) the total number of shares of Common Stock of the
Company into which all then outstanding shares of Preferred Stock of
the Company are then convertible.
3.2 New Securities. "NEW SECURITIES" shall mean any Common
Stock or Preferred Stock of the Company, whether now authorized or not,
and rights, options or warrants to purchase such Common Stock or
Preferred Stock, and securities of any type whatsoever that are, or may
become, convertible or exchangeable into such Common Stock or Preferred
Stock; provided, however, that the term "New Securities" does not
include:
(a) up to 8,000,000 shares of the Company's Common Stock
(and/or options or warrants therefor) issued to employees,
officers, directors, contractors, advisors or consultants of
the Company pursuant to incentive agreements or plans approved
by the Board of Directors of the Company;
(b) any shares of Series A Stock, Series B Preferred Stock
or Series C Preferred Stock set forth in Exhibit A hereto (the
"ISSUED PREFERRED STOCK");
(c) any securities issuable upon conversion of or with
respect to any then outstanding shares of Series A Stock,
Series B Stock or Series C Stock of the Company or Common
Stock or other securities issuable upon conversion thereof;
(d) any securities issuable upon exercise of any options,
warrants or rights to purchase any securities of the Company
outstanding on the date of this Agreement ("WARRANT
SECURITIES") and any securities issuable upon the conversion
of any Warrant Securities or upon the exercise or conversion
of any securities, if such securities were first offered to
the Rights Holders hereunder;
(e) shares of the Company's Common Stock or Preferred
Stock issued in connection with any stock split or stock
dividend;
(f) securities offered by the Company to the public
pursuant to a registration statement filed under the
Securities Act;
(g) up to 125,000 shares of the Company's Common Stock or
Preferred Stock (and/or options or warrants therefor) issued
or issuable to parties providing the Company with equipment
leases, real property leases, loans, credit lines, guaranties
of indebtedness, cash price reductions or similar financing
such number of shares being subject to proportional adjustment
to reflect
CONFIDENTIAL Page 9 of 14
10
subdivisions, combinations and stock dividends affecting the
number of outstanding shares of such stock;
(h) securities issued pursuant to the acquisition of
another corporation or entity by the Company by consolidation,
merger, purchase of all or substantially all of the assets, or
other reorganization in which the Company acquires, in a
single transaction or series of related transactions, all or
substantially all of the assets of such other corporation or
entity or fifty percent (50%) or more of the voting power of
such other corporation or entity or fifty percent (50%) or
more of the equity ownership of such other entity; or
(i) up to 3,000,000 shares of the Company's Common Stock
(and/or options or warrants therefor) issued or issuable in
connection with strategic alliances or partnering arrangements
approved by the Board of Directors of the Company.
3.3 Procedures. In the event that the Company proposes to
undertake an issuance of New Securities, it shall give to each Rights
Holder written notice of its intention to issue New Securities (the
"NOTICE"), describing the type of New Securities and the price and the
general terms upon which the Company proposes to issue such New
Securities. Each Rights Holder shall have ten (10) days from the date
of mailing of any such Notice to agree in writing to purchase such
Rights Holder's Pro Rata Share of such New Securities for the price and
upon the general terms specified in the Notice by giving written notice
to the Company and stating therein the quantity of New Securities to be
purchased (not to exceed such Rights Holder's Pro Rata Share). If any
Rights Holder fails to so agree in writing within such ten (10) day
period to purchase such Rights Holder's full Pro Rata Share of an
offering of New Securities (a "NONPURCHASING HOLDER"), then such
Nonpurchasing Holder shall forfeit the right hereunder to purchase that
part of his Pro Rata Share of such New Securities that he did not so
agree to purchase and the Company shall promptly give each Rights
Holder who has timely agreed to purchase his full Pro Rata Share of
such offering of New Securities (a "PURCHASING HOLDER") written notice
of the failure of any Nonpurchasing Holder to purchase such
Nonpurchasing Rights Holder's full Pro Rata Share of such offering of
New Securities (the "OVERALLOTMENT NOTICE"). Each Purchasing Holder
shall have a right of overallotment such that such Purchasing Holder
may agree to purchase a portion of the Nonpurchasing Holders'
unpurchased Pro Rata Shares of such offering on a pro rata basis
according to the relative Pro Rata Shares of the Purchasing Rights
Holders, at any time within five (5) days after receiving the
Overallotment Notice.
3.4 Failure to Exercise. In the event that the Rights Holders
fail to exercise in full the right of first refusal within such ten
(10) plus five (5) day period, then the Company shall have 120 days
thereafter to sell the New Securities with respect to which the Rights
Holders' rights of first refusal hereunder were not exercised, at a
price and upon general terms not materially more favorable to the
purchasers thereof than specified in the Company's Notice to the Rights
Holders. In the event that the Company has not issued and sold the New
Securities within such 120-day period, then the Company shall not
thereafter issue or sell any New Securities without again first
offering such New Securities to the Rights Holders pursuant to this
Section 3.
3.5 Termination. This right of first refusal shall terminate
(a) immediately before the closing of the first underwritten sale of
Common Stock of the Company to the public pursuant to a registration
statement filed with, and declared effective by, the SEC under the
Securities Act, covering the offer and sale of Common Stock to the
public at an offering price of at least $2.20 per share (such offering
price being subject to proportional adjustment to reflect subdivisions,
combinations, stock dividends and similar transactions affecting the
number of outstanding shares of Common Stock) for an aggregate gross
public offering price (calculated before deduction of underwriters'
discounts and commissions) of at least $15,000,000 or (b) upon (i) the
acquisition of all or substantially all the assets of the Company or
(ii) an acquisition of the Company by another corporation or entity by
consolidation, merger or other reorganization in which the holders of
the Company's outstanding voting stock immediately prior to such
transaction own, immediately after such transaction, securities
representing less than fifty percent (50%) or more of the voting power
of the corporation or other entity surviving such transaction.
3.6 Waiver. Each Rights Holder hereby confirms its waiver of
any right of first refusal it may have had to purchase such Rights
Holder's Pro Rata Share of the Issued Preferred Stock.
4. ASSIGNMENT AND AMENDMENT.
4.1 Assignment. Notwithstanding anything herein to the
contrary:
(a) Information Rights. The rights of an Investor
under Section 1.1 or 1.2 or 1.4 hereof may be assigned only to
(i) a party who acquires from an Investor (or an Investor's
permitted assigns) at least 200,000 shares of Series A Stock,
Series B Stock or Series C Stock subject to this Agreement
and/or 100,000 shares (on an as-converted basis) of
Registrable Securities issued upon conversion
CONFIDENTIAL Page 10 of 14
11
thereof or (ii) a partner, member or stockholder of an
Investor who acquires at least 100,000 shares of Series A
Stock, Series B Stock, or Series C Stock subject to this
Agreement and/or 50,000 shares (on an as-converted basis) of
Registrable Securities issued upon conversion.
(b) Registration Rights; Refusal Rights. The
registration rights of a Holder under Section 2 hereof and the
rights of first refusal of a Rights Holder under Section 3
hereof may be assigned only to (i) a party who acquires at
least 200,000 shares of Series A Stock, Series B Stock or
Series C Stock subject to this Agreement and/or 100,000 shares
(on an as-converted basis) of Registrable Securities issued
upon conversion thereof or (ii) any partner, member or
shareholder of an Investor or permitted transferee thereof;
provided, however that no party may be assigned any of the
foregoing rights unless the Company is given written notice by
the assigning party at the time of such assignment stating the
name and address of the assignee and identifying the
securities of the Company as to which the rights in question
are being assigned; and provided further that any such
assignee shall receive such assigned rights subject to all the
terms and conditions of this Agreement, including without
limitation the provisions of this Section 4.
4.2 Amendment of Rights. Any provision of this Agreement may
be amended and the observance thereof may be waived (either generally
or in a particular instance and either retroactively or prospectively),
only with the written consent of the Company and Investors (and/or any
of their permitted successors or assigns) holding shares of Series A
Stock, Series B Stock, Series C Stock and/or Conversion Stock
representing and/or convertible into a majority of all the Investors'
Shares (as defined below). As used herein, the term "INVESTORS' SHARES"
shall mean the shares of Common Stock then issuable upon conversion of
all then outstanding shares of Series A Stock, Series B Stock and
Series C Stock subject to this Agreement plus all then outstanding
shares of Conversion Stock that were issued upon the conversion of any
shares of Series A Stock, Series B Stock or Series C Stock subject to
this Agreement. Any amendment or waiver effected in accordance with
this Section 4.2 shall be binding upon each Investor, each Holder, each
permitted successor or assignee of such Investor or Holder and the
Company.
5. GENERAL PROVISIONS.
5.1 Notices. Any notice, request or other communication
required or permitted hereunder shall be in writing and shall be deemed
to have been duly given if personally delivered or if deposited in the
U.S. mail by registered or certified mail, return receipt requested,
postage prepaid, as follows:
(a) if to the Investors, at the addresses set forth on
Exhibit A.
(b) if to the Company, at ββββ β. βββββββ ββββββ, ββββββββ,
ββββββββ βββββ.
Any party hereto (and such party's permitted assigns) may by
notice so given change its address for future notices hereunder. Notice
shall conclusively be deemed to have been given when personally
delivered or when deposited in the mail in the manner set forth above.
5.2 Entire Agreement. This Agreement, together with all the
Exhibits hereto, constitutes and contains the entire agreement and
understanding of the parties with respect to the subject matter hereof
and supersedes any and all prior negotiations, correspondence,
agreements, understandings, duties or obligations between the parties
respecting the subject matter hereof.
5.3 Governing Law. This Agreement shall be governed by and
construed exclusively in accordance with the internal laws of the State
of Colorado as applied to agreements among Colorado residents entered
into and to be performed entirely within Colorado, excluding that body
of law relating to conflict of laws and choice of law.
5.4 Severability. If one or more provisions of this Agreement
are held to be unenforceable under applicable law, then such
provision(s) shall be excluded from this Agreement and the balance of
this Agreement shall be interpreted as if such provision(s) were so
excluded and shall be enforceable in accordance with its terms.
5.5 Third Parties. Nothing in this Agreement, express or
implied, is intended to confer upon any person, other than the parties
hereto and their successors and assigns, any rights or remedies under
or by reason of this Agreement.
5.6 Successors And Assigns. Subject to the provisions of
Section 4.1, the provisions of this Agreement shall inure to the
benefit of, and shall be binding upon, the successors and permitted
assigns of the parties hereto.
5.7 Captions. The captions to sections of this Agreement have
been inserted for identification and reference purposes only and shall
not be used to construe or interpret this Agreement.
CONFIDENTIAL Page 11 of 14
12
5.8 Counterparts. This Agreement may be executed in
counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
5.9 Costs And Attorneys' Fees. In the event that any action,
suit or other proceeding is instituted concerning or arising out of
this Agreement or any transaction contemplated hereunder, the
prevailing party shall recover all of such party's costs and attorneys'
fees incurred in each such action, suit or other proceeding, including
any and all appeals or petitions therefrom.
5.10 Adjustments for Stock Splits, Etc. Wherever in this
Agreement there is a reference to a specific number of shares of Common
Stock or Preferred Stock of the Company of any class or series, then,
upon the occurrence of any subdivision, combination or stock dividend
of such class or series of stock, the specific number of shares so
referenced in this Agreement shall automatically be proportionally
adjusted to reflect the affect on the outstanding shares of such class
or series of stock by such subdivision, combination or stock dividend.
5.11 Aggregation of Stock. All shares held or acquired by
affiliated entities or persons shall be aggregated together for the
purpose of determining the availability of any rights under this
Agreement.
5.12 Arbitration Any disputes between the Company and the
Investors with respect to this Agreement shall be settled by binding,
final arbitration in accordance with the commercial arbitration rules
of the American Arbitration Association then in effect (the "AAA
Rules"). Any arbitration proceeding shall be conducted in Denver, CO.
The following arbitration provisions shall govern over any conflicting
rules which may now or hereafter be contained in the AAA Rules. Any
judgment upon the award rendered by the arbitrator may be entered in
any court having jurisdiction over the subject matter thereof. The
arbitrator shall have the authority to grant any equitable and legal
remedies that would be available.
(a) Any such arbitration shall be conducted before a
single arbitrator who shall be compensated for his or her
services at a rate to be determined by the parties or by the
American Arbitration Association, but based upon reasonable
hourly or daily consulting rates for the arbitrator in the
event the parties are not able to agree upon his or her rate
of compensation.
(b) The AAA Rules for the selection of the arbitrator
shall be followed.
(c) Each party to such arbitration shall each advance an
equal portion of the initial compensation to be paid to the
arbitrator in any such arbitration and an equal portion of the
costs of transcripts and other normal and regular expenses of
the arbitration proceedings; provided, however, that the
arbitrator shall have the discretion to grant to the
prevailing party in any arbitration an award of attorneys'
fees and costs, and all costs of arbitration.
(d) The parties shall be entitled to conduct discovery
proceedings in accordance with the provisions of the Federal
Rules of Civil Procedure, subject to any limitation imposed by
the arbitrator.
(e) For any claim submitted to arbitration, the burden of
proof shall be as it would be if the claim were litigated in a
judicial proceedings.
(f) Upon the conclusion of any arbitration proceeding
hereunder, the arbitrator shall render findings of fact and
conclusions of law and a written opinion setting forth the
basis and reasons for any decision reached by him or her and
shall deliver such documents to each party to this Agreement
along with a signed copy of the award.
(g) The arbitrator chosen in accordance with these
provisions shall not have the power to alter, amend or
otherwise affect the terms of these arbitration provisions or
the provisions of this Agreement.
(h) The parties acknowledge that, except as specifically
provided in this Agreement, no other action need be taken by
either party before proceeding directly in accordance with the
provisions of this Section.
(i) The arbitration provisions set forth in this Section
5.12 are intended by the parties to be exclusive for all
purposes and applicable to each and every controversy, dispute
and/or claim in any manner arising out of or relating to this
Agreement, the meaning, application and/or interpretation of
this Agreement, any breach hereof and/or any voluntary or
involuntary termination of this Agreement with or without
cause, including, without limitation, any such controversy,
dispute and/or claim which, if pursued through any state or
federal court or administrative agency, would arise at law, in
equity and/or pursuant to statutory, regulatory and/or common
law rules, regardless of whether any such dispute, controversy
and/or claim would arise in and/or from contract, tort or any
other legal and/or equitable theory or basis. The prevailing
party in any action instituted pursuant to this Section
5.13(i),
CONFIDENTIAL Page 12 of 14
13
or in any appeal from any arbitration conducted pursuant to
this Section 5.13, shall be entitled to recover from the other
party its reasonable attorneys' fees and other expenses
incurred in such litigation.
5.13 Effectiveness; Termination of the Original Agreement This
Agreement shall become effective upon its execution by (a) holders of
at least a majority of the Registrable Securities as defined in the
Third Amended Agreement, and (b) the Company. Upon effectiveness of
this Agreement, the Third Amended Agreement shall be terminated and
shall be of no further force or effect.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the date first above written.
THE COMPANY:
CHAPARRAL NETWORK STORAGE, INC.,
a Delaware corporation
/s/ ββββ β. βββββββ
----------------------------------------
ββββ β. βββββββ, Chairman & CEO
THE INVESTORS:
Adaptec, Inc.,
a Delaware corporation
By: /s/ J. βββββ ββββββββ
-------------------------------------
Name: J. βββββ ββββββββ
Title: Vice President and Treasurer
/s/ ββββ β. βββββββ
----------------------------------------
ββββ β. βββββββ
/s/ βββββββ β. Childs
----------------------------------------
βββββββ β. Childs
/s/ ββββ βββββ
----------------------------------------
ββββ βββββ
/s/ F. βββββ βββββββ
----------------------------------------
F. βββββ βββββββ
/s/ ββββββ ββββββ
----------------------------------------
ββββββ ββββββ
Harvest Storage Technology Group LLC,
a Delaware limited liability company
By: /s/ ββββββ ββββββ
-------------------------------------
Name: ββββββ ββββββ
Title: Manager
Woodcarvers LLC,
a Delaware limited liability company
By: /s/ ββββββ ββββββ
-------------------------------------
Name: ββββββ ββββββ
Title: Manager
/s/ βββ βββββββ
----------------------------------------
βββ βββββββ
CONFIDENTIAL Page 13 of 14
14
/s/ βββββ βββββββ
----------------------------------------
βββββ βββββββ: Trustee
The Linde Company
By: /s/ βββ β. βββββ
-------------------------------------
Name: βββ β. βββββ
Title: Partner
Ohio Valley Venture Fund L.P.
OSF Ltd, its general partner
By: /s/ ββββ ββββββββ
-------------------------------------
Name: ββββ ββββββββ
Title: President
/s/ ββββ ββββββ
----------------------------------------
ββββ ββββββ
CONFIDENTIAL Page 14 of 14