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EXHIBIT 4.2
SKYSTREAM CORPORATION
SECOND AMENDED AND RESTATED
RIGHTS AGREEMENT
February 5, 1999
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TABLE OF CONTENTS
PAGE
SECTION 1 Restrictions on Transferability; Registration Rights...............1
1.1 Certain Definitions............................................1
1.2 Restrictions...................................................3
1.3 Restrictive Legend.............................................3
1.4 Notice of Proposed Transfers...................................4
1.5 Requested Registration.........................................4
1.6 Company Registration...........................................6
1.7 Registration on Form S-3.......................................7
1.8 Limitations on Subsequent Registration Rights..................8
1.9 Expenses of Registration.......................................8
1.10 Registration Procedures........................................8
1.11 Indemnification................................................9
1.12 Information by Holder.........................................11
1.13 Rule 144 Reporting............................................11
1.14 Transfer of Registration Rights...............................11
1.15 Standoff Agreement............................................12
1.16 Termination of Rights.........................................12
SECTION 2 Right of Participation............................................12
2.1 Purchasers' Right of Participation............................12
2.2 Termination of Participation Right............................14
SECTION 3 Miscellaneous.....................................................14
3.1 Assignment....................................................14
3.2 Third Parties.................................................14
3.3 Governing Law.................................................15
3.4 Counterparts..................................................15
3.5 Notices.......................................................15
3.6 Severability..................................................15
3.7 Amendment and Waiver..........................................15
3.8 Effect of Amendment or Waiver.................................15
3.9 Rights of Holders.............................................15
3.10 Delays or Omissions...........................................16
3.11 Restatement of Former Agreement...............................16
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SECOND AMENDED AND RESTATED RIGHTS AGREEMENT
THIS SECOND AMENDED AND RESTATED RIGHTS AGREEMENT (the "Agreement") is
entered into as of the 5th day of February, 1999 by and among SkyStream
Corporation, a California corporation (the "Company"), the persons and
institutions listed on Exhibit A (the "Existing Shareholders") and the investors
listed on Exhibit B hereto (the "Purchasers").
RECITALS
WHEREAS, the Company and the Existing Shareholders are parties to an
Amended and Restated Rights Agreement dated March 25, 1998 (the "Former
Agreement").
WHEREAS, the parties to the Former Agreement desire to amend and restate
the agreement to read as set forth below and to include the Purchasers as set
forth on Exhibit B hereto.
WHEREAS, the Company and the Purchasers are entering into a Series C
Preferred Stock Purchase Agreement of even date herewith (the "Purchase
Agreement"), pursuant to which the Company shall sell, and the Purchasers shall
acquire, shares of the Company's Series C Preferred Stock (the "Preferred
Shares").
WHEREAS, in order to induce the Company to enter into the Purchase
Agreement and to induce the Purchasers to invest funds in the Company, the
parties desire that the Purchasers be granted registration rights and rights of
participation with respect to the Preferred Shares.
WHEREAS, the parties understand the Purchasers on Exhibit B represent
the participants in the first closing under the Purchase Agreement and that
additional participants may invest in one or more second closings to be held no
later than 60 days thereafter; provided, however, that the aggregate number of
shares of Series C Preferred sold to the Purchasers shall not exceed 2,000,000
shares. The Existing Shareholders agree that such additional Purchasers shall be
treated as Purchasers hereunder upon such party's execution of a supplemental
signature page to this Agreement and the addition of such person's name to
Exhibit B hereto. Thereafter, the participants in closings after the first
closing, but not later than 60 days thereafter, shall be Purchasers for purposes
of this Agreement.
NOW, THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth, the parties agree as follows:
SECTION 1
Restrictions on Transferability;
Registration Rights
1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:
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"Commission" shall mean the Securities and Exchange Commission or
any other federal agency at the time administering the Securities Act.
"Conversion Shares" means the Common Stock issued or issuable upon
conversion of the Preferred Shares as defined herein.
"Holder" shall mean any Purchaser holding Registrable Securities and
any person holding Registrable Securities to whom the rights under this
Agreement have been transferred in accordance with Section 1.14 hereof.
"Initiating Holders" shall mean Holders in the aggregate of not less
than forty percent (40%) of the Registrable Securities.
"Preferred Shares" shall mean the Series A Preferred Stock, the
Series B Preferred Stock and the Series C Preferred Stock of the Company.
The terms "register," "registered" and "registration" refer to a
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 incurred by the
Company in complying with Sections 1.5, 1.6 and 1.7 of this Agreement,
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, and the expense of any special audits
incident to or required by any such registration (but excluding the compensation
of regular employees of the Company which shall be paid in any event by the
Company).
"Registrable Securities" means (i) the Conversion Shares; and (ii)
any Common Stock of the Company issued or issuable in respect of the Conversion
Shares or other securities issued or issuable with respect to the Conversion
Shares upon any stock split, stock dividend, recapitalization, or similar event,
or any Common Stock otherwise issued or issuable with respect to the Conversion
Shares: 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 in a transaction
exempt from the registration and prospectus delivery requirements of the
Securities Act under Section 4(l) thereof so that all transfer restrictions and
restrictive legends with respect thereto are removed upon the consummation of
such sale.
"Restricted Securities" shall mean the securities of the Company
required to bear the legend set forth in Section 1.3 of this Agreement.
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"Securities Act" shall mean the Securities Act of 1933, as amended,
or any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes applicable to the securities registered by
the Holders and all fees and disbursements of counsel for the Holders (except as
provided by Section 1.9).
1.2 Restrictions. The Preferred Shares and the Conversion Shares
shall not be sold, assigned, transferred or pledged except upon the conditions
specified in this Agreement, which conditions are intended to ensure compliance
with the provisions of the Securities Act. The Purchasers will cause any
proposed purchaser, assignee, transferee or pledgee of the Preferred Shares, or
the Conversion Shares to agree to take and hold such securities subject to the
provisions and upon the conditions specified in this Agreement.
1.3 Restrictive Legend. Each certificate representing (i) the
Preferred Shares, (ii) the Conversion Shares, and (iii) any other securities
issued in respect of the securities referenced in clauses (i) and (ii) upon any
stock split, stock dividend, recapitalization, merger, consolidation or similar
event, shall (unless otherwise permitted by the provisions of Section 1.4 below)
be stamped or otherwise imprinted with legends in the following form (in
addition to any legend required under applicable state securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. SUCH SHARES MAY NOT BE SOLD, TRANSFERRED OR PLEDGED IN THE ABSENCE
OF SUCH REGISTRATION OR UNLESS THE COMPANY RECEIVES AN OPINION OF
COUNSEL (WHICH MAY BE COUNSEL FOR THE COMPANY) REASONABLY ACCEPTABLE TO
IT STATING THAT SUCH SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION
AND PROSPECTUS DELIVERY REQUIREMENTS OF SAID ACT."
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
ACCORDANCE WITH THE TERMS OF AN AGREEMENT BETWEEN THE COMPANY AND THE
SHAREHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE
COMPANY."
Each Purchaser and Holder consents to the Company making a notation on
its records and giving instructions to any transfer agent of the Restricted
Securities in order to implement the restrictions on transfer established in
this Section 1.
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1.4 Notice of Proposed Transfers. The holder of each certificate
representing Restricted Securities, by acceptance thereof, agrees to comply in
all respects with the provisions of this Section 1. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company, addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company. The Company will not require such a legal opinion or "no action" letter
(a) in any transaction in compliance with Rule 144, (b) in any transaction in
which a Purchaser which is a corporation distributes Restricted Securities after
six (6) months after the purchase thereof solely to its majority-owned
subsidiaries or affiliates for no consideration, or (c) in any transaction in
which a Purchaser which is a partnership distributes Restricted Securities after
six (6) months after the purchase thereof solely to partners thereof for no
consideration, provided that each transferee agrees in writing to be subject to
the terms of this Section 1.4. Each certificate evidencing the Restricted
Securities transferred as above provided shall bear, except if such transfer is
made pursuant to Rule 144, the appropriate restrictive legend set forth in
Section 1.3 above, except that such certificate shall not bear such restrictive
legend if, in the opinion of counsel for such holder and the Company, such
legend is not required in order to establish compliance with any provisions of
the Securities Act.
1.5 Requested Registration.
(a) Request for Registration. In case the Company shall receive from
Initiating Holders a written request that the Company effect any qualification,
compliance or registration (which, in connection with the Company's initial
public offering, must be for at least 20% of their Registrable Securities or
such lesser percentage which would reasonably anticipate an aggregate price to
the public net of underwriting discounts and commissions, exceeding $5,000,000):
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would
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permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 1.5:
(1) In any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(2) Prior to the earlier of (i) six (6) months following the
Company's initial public offering or (ii) February 7, 2001.
(3) During the period ending on the date three (3) months
immediately following the effective date of, any registration statement
pertaining to securities of the Company (other than a registration of securities
in a Rule 145 transaction or with respect to an employee benefit plan);
(4) After the Company has effected two (2) such
registrations pursuant to this subparagraph 1.5(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold; or
(5) If the Company shall furnish to such Holders a
certificate, signed by the President of the Company, stating that in the good
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a single period
not to exceed ninety (90) days from the date of receipt of written request from
the Initiating Holders.
Subject to the foregoing clauses (1) through (5), the Company shall file
a registration statement covering the Registrable Securities so requested to be
registered as soon as practicable after receipt of the request or requests of
the Initiating Holders.
(b) Underwriting. In the event that a registration pursuant to
Section 1.5 is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as part of the notice given pursuant to
Section 1.5(a)(i). The right of any Holder to registration pursuant to Section
1.5 shall be conditioned upon such Holder's participation in the underwriting
arrangements required by this Section 1.5 and the inclusion of such Holder's
Registrable Securities in the underwriting, to the extent requested, to the
extent provided in this Agreement.
The Company shall (together with all Holders proposing to distribute
their securities through
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such underwriting) enter into an underwriting agreement in customary form with
the managing underwriter selected for such underwriting by a majority in
interest of the Initiating Holders (which managing underwriter shall be
reasonably acceptable to the Company). Notwithstanding any other provision of
this Section 1.5, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders of Registrable
Securities and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated among all
Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities held by such Holders at the time of filing the
registration statement; provided, that the number of shares of Registrable
Securities to be included in such underwriting shall not be reduced unless all
other securities are first entirely excluded from the underwriting. No
Registrable Securities excluded from the underwriting by reason of the
underwriter's marketing limitation shall be included in such registration. To
facilitate the allocation of shares in accordance with the above provisions, the
Company or the underwriters may round the number of shares allocated to any
Holder to the nearest 100 shares.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to one hundred eighty (180) days
after the effective date of such registration.
1.6 Company Registration.
(a) Notice of Registration. 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 in
such registration, 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, but only to the extent that such inclusion will
not diminish the number of securities included by the Company or by holders of
the Company's securities who have demanded such registration.
(b) Underwriting. 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 Section 1.6(a)(i). In such event, the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided
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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 (or by the holders who have demanded such registration).
Notwithstanding any other provision of this Section 1.6, 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 to be included in such registration or exclude them entirely. The
Company shall so advise all Holders and the other holders distributing their
securities through such underwriting pursuant to piggyback registration rights
similar to this Section 1.6, and the number of shares of Registrable Securities
and other securities that may be included in the registration and underwriting
shall be first allocated among all Purchasers in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities held by such
Purchasers at the time of filing the registration statement, and after
satisfaction of the requirements of the Purchasers, the remaining shares that
may be included in the registration and underwriting shall be allocated among
the officers, directors and other shareholders of the Company in proportion, as
nearly as practicable, to the respective amounts of Registrable Securities held
by such officers and directors of the Company at the time of filing of the
registration statement. To facilitate the allocation of shares in accordance
with the above provisions, the Company or the underwriters may round the number
of shares allocated to any Holder or other holder to the nearest 100 shares.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 1.6 prior to the effectiveness of such registration, whether or not any
Holder has elected to include securities in such registration.
1.7 Registration on Form S-3.
(a) If the Initiating Holder requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities, the reasonably
anticipated aggregate price to the public of which, net of underwriting
discounts and commissions, would exceed $1,000,000, and the Company is a
registrant entitled to use Form S-3 to register the Registrable Securities for
such an offering, the Company shall use its best efforts to cause such
Registrable Securities to be registered for the offering on such form; provided,
however, that the Company shall not be required to effect more than two
registrations pursuant to this Section 1.7 in any twelve (12) month period. The
Company will (i) promptly give written notice of the proposed registration to
all other Holders, and (ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within twenty (20) days after receipt of such written notice from the
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Company. The substantive provisions of Section 1.5(b) shall be applicable to
each registration initiated under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act, (ii) during the period
ending on a date three (3) months following the effective date of, a
registration statement (other than with respect to a registration statement
relating to a Rule 145 transaction, an offering solely to employees or any other
registration which is not appropriate for the registration of Registrable
Securities), or (iii) if the Company shall furnish to such Holder a certificate
signed by the President of the Company stating that, in the good faith judgment
of the Board of Directors, it would be seriously detrimental to the Company or
its shareholders for registration statements to be filed in the near future,
then the Company's obligation to use its best efforts to file a registration
statement shall be deferred for a single period not to exceed ninety (90) days
from the receipt of the request to file such registration by such Holder or
Holders.
1.8 Limitations on Subsequent Registration Rights. From and after the
date of this Agreement, the Company shall not enter into any agreement granting
any holder or prospective holder of any securities of the Company registration
rights with respect to such securities unless such holder derives its rights as
an additional Holder hereunder, or such shares or securities are entitled to be
included in registrations only to the extent that the inclusion of such
securities will not diminish the amount of Registrable Securities that are
included.
1.9 Expenses of Registration. All Registration Expenses incurred in
connection with any registration pursuant to Section 1.5, 1.6 or 1.7 and the
reasonable fees and expenses (up to $30,000) of one special legal counsel to
represent all of the Holders together in any such registration shall be borne by
the Company, provided that the Company shall not be required to pay the
Registration Expenses of any registration proceeding begun pursuant to Section
1.5, the request of which has been subsequently withdrawn by the Initiating
Holders. In such case, the Holders of Registrable Securities to have been
registered shall bear all such Registration Expenses pro rata on the basis of
the number of shares to have been registered unless the Holders of a majority of
the Registrable Securities agree to forfeit their right to one demand
registration pursuant to Section 1.5. Notwithstanding the foregoing, however, if
at the time of the withdrawal, the Holders have learned of a material adverse
change in the condition, business or prospects of the Company from that known to
the Holders at the time of their request, and have withdrawn the request with
reasonable promptness following disclosure by the Company of such material
adverse change, then the Holders shall not be required to pay any of said
Registration Expenses or to forfeit the right to one demand registration.
1.10 Registration Procedures. In the case of each registration,
qualification or compliance effected by the Company pursuant to this Section 1,
the Company will keep each Holder advised in
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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 one hundred
eighty (180) days or until the distribution described in the registration
statement has been completed; and
(b) Furnish to the Holders participating in such registration and to
the underwriters of the securities being registered such reasonable number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such underwriters may reasonably request in order to
facilitate the public offering of such securities.
1.11 Indemnification.
(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 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 (i) 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 (ii)
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 (iii) any violation by
the Company of the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state securities
law 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
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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 and directors
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, in light of the circumstances in
which they were made, 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, 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; provided, however, that the liability of a Holder
for indemnification under this Section 1.11(b) shall not exceed the net proceeds
from the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 1.11
(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.
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.
(d) If the indemnification provided for in this Section 1.11 is held
by a court of competent jurisdiction to be unavailable to an indemnified party
with respect to any loss, liability, claim, damage, or expense referred to
therein, then the Indemnifying Party, in lieu of indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result such loss, liability, claim, damage or expense in
such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations;
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provided, that, in no event shall any contribution by a Holder under this
Subsection 1.11(d) exceed the net proceeds from the offering received by such
Holder. The relative fault of the indemnifying party and of the indemnified
party shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission to state a
material fact relates to information supplied by the Indemnifying Party or by
the Indemnified Party and the parties' relative intent, knowledge, access to
information, and opportunity to correct or prevent such statement or omission.
1.12 Information by Holder. The Holder or Holders of Registrable
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.
1.13 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 Restricted 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 that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports and
other documents required of the Company under the Securities Act and the
Exchange Act (at any time after it has become subject to such reporting
requirements); and
(c) So long as a Purchaser owns any Restricted Securities, to
furnish to the Purchaser 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 Exchange Act (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 Purchaser may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Purchaser
to sell any such securities without registration.
1.14 Transfer of Registration Rights. The rights to cause the Company to
register Registrable Securities granted under this Section 1 may be assigned by
a Holder to a transferee or assignee who acquires (i) at least 500,000 of the
Registrable Securities held by such Holder or, if less, (ii) all of the
Registrable Securities then held by such Holder, provided in either case, the
Company is, within a reasonable time prior to such transfer, furnished with
written notice of the
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name and address of such proposed transferee or assignee and the securities with
respect to which such registration rights are being assigned; provided further
that such assignment shall be effective only if the transferee enters into a
written agreement providing that such transferee shall be bound by the
provisions of Section 1 of this Agreement. Notwithstanding the foregoing or any
other provision contained herein to the contrary, the right to cause the Company
to register Registerable Securities may be assigned by a Holder to any
constituent partner of a partnership Holder and any subsidiary or parent of a
corporate Holder provided that such transferee agrees in writing to be bound by
the terms and conditions of this Agreement.
1.15 Standoff Agreement. Each Holder agrees in connection with the
initial registration of the Company's securities that, upon request of the
Company or the underwriters managing any underwritten initial public offering of
the Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or otherwise dispose of any Registrable Securities
(other than those included in the registration) without the prior written
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, or such longer period as may be agreed to by the holders of a
majority of the outstanding Registrable Securities) as may be requested by the
Company or such managing underwriters; provided, however, that all officers and
directors of the Company, all one-percent securityholders, and all other persons
with registration rights (whether or not pursuant to this Agreement) enter into
similar agreements with respect to securities of the Company held by them.
1.16 Termination of Rights. No Holder shall be entitled to exercise any
right provided for in this Section 1:
(a) after five (5) years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under the
Act in connection with the initial firm commitment underwritten offering of its
securities to the general public, or
(b) on or after the closing of a public offering of the Common Stock
of the Company, initiated by the Company, when all shares of the Holder's
Registrable Securities may be sold under Rule 144 during any 90-day period.
SECTION 2
Right of Participation
2.1 Purchasers' Right of Participation.
(a) Right of Participation. Subject to the terms and conditions
contained in this Section 2.1, the Company hereby grants to each Purchaser who
is the Holder of not less than 1,500,000 shares of Registrable Securities, the
right of participation to purchase its Pro Rata Portion
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of any New Securities (as defined in subsection 2.1(b)) which the Company may,
from time to time, propose to sell and issue. A Holder's "Pro Rata Portion" for
purposes of this Section 2.1 is the ratio that (x) the sum of the number of
shares of the Company's Common Stock then held by such Purchaser and the number
of shares of the Company's Common Stock issuable upon conversion of the
Preferred Stock then held by such Holder, bears to (y) the sum of the total
number of shares of the Company's Common Stock then outstanding and the number
of shares of the Company's Common Stock issuable upon conversion of the then
outstanding Preferred Stock.
(b) Definition of New Securities. Except as set forth below, "New
Securities" shall mean any shares of capital stock of the Company, including
Common Stock and Preferred Stock, whether authorized or not, and rights, options
or warrants to purchase said shares of Common Stock or Preferred Stock, and
securities of any type whatsoever that are, or may become, convertible into said
shares of Common Stock or Preferred Stock. Notwithstanding the foregoing, "New
Securities" does not include (i) the Preferred Shares or the Conversion Shares,
(ii) securities offered to the public generally pursuant to a registration
statement 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 shares or other reorganization whereby the
Company or its shareholders own not less than a majority of the voting power of
the surviving or successor corporation, (iv) shares of the Company's Common
Stock or related options or warrants convertible into or exercisable for such
Common Stock issued to employees, officers and directors of, and consultants to,
the Company, pursuant to any arrangement approved by the Board of Directors of
the Company, (v) shares of the Company's Common Stock or related options
convertible into or exercisable for such Common Stock issued to banks,
commercial lenders, lessors and other financial institutions in connection with
the borrowing of money or the leasing of equipment by the Company approved by
the Board of Directors of the Company, (vi) stock issued pursuant to any rights
or agreements, including, without limitation, convertible securities, options
and warrants, provided that the Company shall have complied with the rights of
participation established by this Section 2.1 with respect to the initial sale
or grant by the Company of such rights or agreements, or (vii) stock issued in
connection with any stock split, stock dividend or recapitalization by the
Company.
(c) Notice of Right. In the event the Company proposes to undertake
an issuance of New Securities, it shall give each Purchaser written notice of
its intention, describing the type of New Securities and the price and terms
upon which the Company proposes to issue the same. Each Purchaser shall have
twenty (20) days from the date of receipt of any such notice to agree to
purchase shares of such New Securities (up to the amount referred to in
subsection 2.1(a)), 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.
(d) Exercise of Right. If any Purchaser exercises its right of
participation under this Agreement, the closing of the purchase of the New
Securities with respect to which such right has been exercised shall take place
within ninety (90) calendar days after the Purchaser gives notice of such
exercise, which period of time shall be extended in order to comply with
applicable laws and regulations. Upon exercise of such right of participation,
the Company and the Purchaser shall be
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legally obligated to consummate the purchase contemplated thereby and shall use
their best efforts to secure any approvals required in connection therewith.
(e) Lapse and Reinstatement of Right. In the event a Purchaser fails
to exercise the right of participation provided in this Section 2.1 within said
twenty (20) 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 sixty (60) days from the date
of said agreement) to sell the New Securities not elected to be purchased by
such Purchaser at the price and upon the terms no more favorable to the
purchasers of such securities than specified in the Company's notice. In the
event the Company has not sold the New Securities or entered into an agreement
to sell the New Securities within said ninety (90) day period (or sold and
issued New Securities in accordance with the foregoing within sixty (60) 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 Purchasers in
the manner provided above.
(f) Assignment. The right of the Purchasers to purchase any part of
the New Securities may be assigned in whole or in part to any partner,
subsidiary, affiliate or shareholder of a Purchaser, or other persons or
organizations who acquire the lesser of (i) 20% or more shares of Registrable
Securities (as adjusted for stock splits and the like) or (ii) all of the
Restricted Securities then owned by such Purchaser.
2.2 Termination of Participation Right. The rights of participation
granted under Section 2.1 of this Agreement shall terminate on and be of no
further force or effect upon the earlier of (i) the consummation of the
Company's sale of its Common Stock in an underwritten public offering pursuant
to an effective registration statement filed under the Securities Act
immediately subsequent to which the Company shall be obligated to file annual
and quarterly reports with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act or (ii) the registration by the Company of a class of its equity
securities under Section 12(b) or 12(g) of the Exchange Act.
SECTION 3
Miscellaneous
3.1 Assignment. Except as otherwise provided in this Agreement, the
terms and conditions of this Agreement shall inure to the benefit of and be
binding upon the respective successors and assigns of the parties to this
Agreement.
3.2 Third Parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party, other than the parties to this Agreement, and
their respective successors and assigns, any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
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3.3 Governing Law. This Agreement shall be governed by and construed
under the laws of the State of California in the United States of America
without giving effect to the conflicts of laws principles thereof.
3.4 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.
3.5 Notices. Any notice required or permitted by this Agreement shall be
in writing and shall be sent by prepaid registered or certified mail return
receipt requested, or otherwise delivered by hand or by messenger addressed to
the other party at the address shown below or at such other address for which
such party gives notice under this Agreement. Such notice shall be deemed to
have been given when delivered if delivered personally, or, if sent by mail, at
the earlier of its receipt or three (3) days after deposit in the mail.
3.6 Severability. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, portions of such provisions, or such
provisions in their entirety, to the extent necessary, shall be severed from
this Agreement, and the balance of this Agreement shall be enforceable in
accordance with its terms.
3.7 Amendment and Waiver. Any provision of this Agreement may be amended
or waived with the written consent of the Company and the Holders of at least a
majority of the outstanding shares of the Registrable Securities, so long as the
effect is to treat all Holders equally. Any amendment or waiver effected in
accordance with this paragraph shall be binding upon each Holder of Registrable
Securities and the Company. In addition, the Company may waive performance of
any obligation owing to it, as to some or all of the Holders of Registrable
Securities, or agree to accept alternatives to such performance, without
obtaining the consent of any Holder of Registrable Securities. In the event that
an underwriting agreement is entered into between the Company and any Holder,
and such underwriting agreement contains terms differing from this Agreement, as
to any such Holder the terms of such underwriting agreement shall govern.
3.8 Effect of Amendment or Waiver. The Purchasers and their successors
and assigns acknowledge that by the operation of Section 3.7 of this Agreement
the holders of a majority of the outstanding Registrable Securities, acting in
conjunction with the Company, will have the right and power to diminish or
eliminate any or all rights or increase any or all obligations pursuant to this
Agreement.
3.9 Rights of Holders. Each holder of Registrable Securities shall have
the absolute right to exercise or refrain from exercising any right or rights
that such holder may have by reason of this Agreement, including, without
limitation the right to consent to the waiver or modification of any obligation
under this Agreement, and such holder shall not incur any liability to any other
holder of any securities of the Company as a result of exercising or refraining
from exercising any such right or rights.
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3.10 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any party to this Agreement, upon any breach or
default of the other party, shall impair any such right, power or remedy of such
non-breaching party nor shall it be construed to be a waiver of any such breach
or default, or an acquiescence therein, or of or in any similar breach or
default thereafter occurring; nor shall any waiver of any single breach or
default be deemed a waiver of any other breach or default theretofore or
thereafter occurring. Any waiver, permit, consent or approval of any kind or
character on the part of any party of any breach or default under this
Agreement, or any waiver on the part of any party of any provisions or
conditions of this Agreement, must be made in writing and shall be effective
only to the extent specifically set forth in such writing. All remedies, either
under this Agreement, or by law or otherwise afforded to any holder, shall be
cumulative and not alternative.
3.11 Restatement of Former Agreement. Through their execution of this
Agreement, the Company and all of the Existing Shareholders agree to terminate
the Former Agreement and restate the terms thereof through this Agreement, with
the result that this Agreement shall constitute the sole agreement among the
parties hereto with respect to the registration of Registrable Securities.
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19
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
COMPANY: EXISTING SHAREHOLDERS:
SKYSTREAM CORPORATION ββββββββ VIII,
a California corporation A CALIFORNIA LIMITED
PARTNERSHIP
By: ββββββββ VIII MANAGEMENT, L.L.C.
A DELAWARE LIMITED LIABILITY
COMPANY, its General Partner
By: /s/ βββββ β. βββββ By: /s/ β. βββ βββββ
------------------------------ -----------------------------------
βββββ β. βββββ, President βββββββ βββ βββββ,
Managing Member
ββββββββ ASSOCIATES FUND III,
A CALIFORNIA LIMITED
PARTNERSHIP
By: ββββββββ VIII MANAGEMENT, L.L.C.
A DELAWARE LIMITED LIABILITY
COMPANY, its General Partner
By: /s/ β. β. βββ βββββ
----------------------------------
βββββββ βββ βββββ,
Managing Member
INSTITUTIONAL VENTURE PARTNERS
VII
By Its General Partner
Institutional Venture Management VII
By: /s/ ββββββββ β. ββββ
----------------------------------
ββββββββ β. ββββ
General Partner
[Second Amended and Restated Rights Agreement]
20
INSTITUTIONAL VENTURE
MANAGEMENT VII
By: /s/ ββββββββ β. ββββ
----------------------------------
ββββββββ β. ββββ
General Partner
IVP FOUNDERS FUND I, L.P.
By Its General Partner
Institutional Venture Management
VI, L.P.
By: /s/ ββββββββ β. ββββ
----------------------------------
ββββββββ β. ββββ
General Partner
WS INVESTMENTS 97A
WS INVESTMENTS 98A
By: /s/ ββββββ β. βββββ
----------------------------------
βββββ FAMILY TRUST
By: /s/ ββββββ β. βββββ
----------------------------------
/s/ ββββββββ β. βββββββ
--------------------------------------
ββββββββ β. βββββββ
[Second Amended and Restated Rights Agreement]
21
/s/ βββββββ ββββββ
--------------------------------------
βββββββ ββββββ
/s/ βββββ ββββββββ
--------------------------------------
βββββ ββββββββ
/s/ βββββ E. M.L β'ββββββ
--------------------------------------
βββββ β. ββββββββββ β'ββββββ
--------------------------------------
ββββ βββββββ ββββββββββ
PURCHASERS:
BROADCAST TRUST
By: /s/ [SIGNATURE ILLEGIBLE]
----------------------------------
βββββββ β. & βββββ β. βββ βββββ, TTEEs,
The βββββββ β. & βββββ β. βββ βββββ
Trust U/D/T 09/17/75
By: /s/ β. β. βββ βββββ
----------------------------------
[Second Amended and Restated Rights Agreement]
22
PURCHASERS (continued):
ββββββββ VIII,
A CALIFORNIA LIMITED PARTNERSHIP
By: ββββββββ VIII MANAGEMENT, L.L.C.
A DELAWARE LIMITED LIABILITY
COMPANY, its General Partner
By: /s/ β. β. βββ βββββ
----------------------------------
βββββββ βββ βββββ, Managing Member
ββββββββ ASSOCIATES FUND III,
A CALIFORNIA LIMITED PARTNERSHIP
By: ββββββββ VIII MANAGEMENT, L.L.C.
A DELAWARE LIMITED LIABILITY
COMPANY, its General Partner
By: /s/ β. β. βββ βββββ
----------------------------------
βββββββ βββ βββββ, Managing Member
INSTITUTIONAL VENTURE PARTNERS VII
By Its General Partner
Institutional Venture Management VII
By: /s/ ββββββββ β. ββββ
----------------------------------
ββββββββ β. ββββ, General Partner
INSTITUTIONAL VENTURE
MANAGEMENT VII
By: /s/ ββββββββ β. ββββ
----------------------------------
ββββββββ β. ββββ, General Partner
[Second Amended and Restated Rights Agreement]
23
PURCHASERS (continued):
IVP BROADBAND FUND I, L.P.
By Its General Partner
IVP Broadband Management, LLC
By Its Managing Director
Institutional Venture Management
VIII, LLC
By: /s/ ββββββββ β. ββββ
----------------------------------
ββββββββ β. ββββ, Managing Director
NORWEST VENTURE PARTNERS VII, LP
By: Itasca VC Partners VII, LLP
Its General Partner
By: /s/ ββββββ βββββ
----------------------------------
ββββββ βββββ, General Partner
βββββ FAMILY TRUST
By: /s/ ββββββ β. βββββ
----------------------------------
ββββββ β. βββββ, Trustee
/s/ β. β. ββββββββββ
----------------------------------
βββ β. ββββββββββ
[Second Amended and Restated Rights Agreement]
24
EXHIBIT A
EXISTING SHAREHOLDERS
ββββββββ VIII, a California Limited Partnership
ββββββββ Associates Fund III, A California Limited Partnership
Institutional Venture Partners VII
Institutional Venture Management VII
IVP Founders Fund I, L.P.
WS Investments 97A
WS Investments 98A
βββββ Family Trust
ββββββββ β. βββββββ
βββββ ββββββββ*
βββββββ ββββββ*
βββββ β. ββββββββββ β'ββββββ*
ββββ βββββββ ββββββββββ*
----------------------------------------------------
* Holders of Warrants to purchase Series B Preferred.
25
EXHIBIT B
PURCHASERS
Broadcast Trust
βββββββ β. & βββββ β. βββ βββββ, TTEEs,
The βββββββ β. & βββββ β. βββ βββββ Trust U/D/T 09/17/75
ββββββββ VIII
ββββββββ Associates Fund III
Institutional Venture Partners VII
Institutional Venture Management VIII
IVP Broadband Fund I, L.P.
Norwest Venture Partners VII, ββ
βββββ Family Trust
βββ β. ββββββββββ