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EXHIBIT 10.7
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SIMPLEX SOLUTIONS, INC.
FOURTH AMENDED AND RESTATED RIGHTS AGREEMENT
APRIL 6,1998
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TABLE OF CONTENTS
PAGE
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1. Waiver of Right of First Offer ...................................................3
2. Registration Rights ..............................................................3
2.1 Definitions ..................................................................3
2.2 Demand Registration ..........................................................4
2.3 Piggyback Registration .......................................................5
2.4 Form S-3 Registration ........................................................6
2.5 Obligations of the Company ...................................................7
2.6 Furnish Information ..........................................................8
2.7 Expenses of Registrations ....................................................8
2.8 Underwriting Requirements ....................................................9
2.9 Delay of Registration ........................................................9
2.10 Indemnification .............................................................9
2.11 Reports Under Securities Exchange Act of 1934 ..............................11
2.12 Assignment of Registration Rights ..........................................12
2.13 Limitations on Subsequent Registration Rights ..............................13
2.14 "Market Stand-Off" Agreement ...............................................13
2.15 Termination of Registration Rights .........................................13
3. Additional Rights ...............................................................14
3.1 Right of First Offer ........................................................14
3.2 Information Rights; Observer Rights .........................................16
3.3 Board Meetings; Expenses ....................................................18
4. Confidentiality .................................................................18
4.1 Non-Disclosure ..............................................................18
4.2 Permitted Disclosure ........................................................19
4.3 Permitted Disclosure to Government Authorities ..............................19
4.4 Third-Party Confidential Information ........................................21
4.5 Termination .................................................................21
5. Miscellaneous ...................................................................21
5.1 Assignment ..................................................................21
5.2 Governing Law ...............................................................21
5.3 Counterparts ................................................................21
5.4 Titles and Subtitles ........................................................21
5.5 Notices .....................................................................22
5.6 Attorney's Fees .............................................................22
5.7 Amendment and Waiver ........................................................22
5.8 Effect of Amendment or Waiver ...............................................23
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5.9 Severability ..................................................................23
5.10 Rights of Holders ............................................................23
5.11 Delays or Omissions ..........................................................23
5.12 Entire Agreement .............................................................23
5.13 Aggregation of Stock .........................................................24
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SIMPLEX SOLUTIONS, INC.
FOURTH AMENDED AND RESTATED RIGHTS AGREEMENT
This Fourth Amended and Restated Rights Agreement (the "AGREEMENT") is
entered into as of April 6, 1998, by and among Simplex Solutions, Inc., a
Delaware corporation (the "COMPANY"), and the individuals and entities set forth
on Exhibit A attached hereto (the "HOLDERS").
RECITALS
A. The Company and certain of the Holders have entered into a Series A
and B Preferred Stock Purchase Agreement (the "First Purchase Agreement") dated
July 14, 1995, pursuant to which the Company sold, and such Holders acquired,
shares of the Company's Series A Preferred Stock (the "Series A Shares").
B. The Company has granted to a Holder a warrant (the "SERIES B
WARRANT") for the purchase of up to 25,640 shares of Series B Preferred Stock
(the "SERIES B WARRANT SHARES").
C. The Company and certain of the Holders have entered into an Amendment
and Addendum to Series A and B Preferred Stock Purchase Agreement dated April 1,
1996 (the "ADDENDUM") pursuant to which the Company sold, and such Holders
acquired, shares of the Company's Series B Stock (the "SERIES B SHARES").
D. The Company and certain of the Holders have entered into a Series C
Preferred Stock Purchase Agreement (the "Second Purchase Agreement") dated June
27, 1996 pursuant to which the Company sold, and such Holders acquired, shares
of the Company's Series C Preferred Stock (the "SERIES C SHARES").
E. The Company has granted to a Holder a warrant (the "SERIES C
WARRANT") for the purchase of up to 20,000 shares of Series C Preferred Stock
(the "SERIES C WARRANT SHARES").
F. The Company and certain of the Holders have entered into a Series D
Preferred Stock Purchase Agreement (the "THIRD PURCHASE AGREEMENT") dated March
20, 1997 pursuant to which the Company sold, and such Holders acquired, shares
the Company's Series D Preferred Stock (the "SERIES D SHARES").
G. The Company has granted to certain Holders warrants (the "SERIES D
WARRANTS") for the purchase of up to 270,000 shares of Series D Preferred Stock
(the "SERIES D WARRANT SHARES").
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H. The Company and Computational Applications and System Integration,
Inc., an Illinois corporation ("CA&SI"), and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, all of whom are the currently existing
shareholders of CA&SI (the "CA&SI SHAREHOLDERS") have entered into a Software
License Agreement with CA&SI pursuant to which the Company issued to CA&SI
100,000 shares of the Company's Common Stock (the "COMMON STOCK CONSIDERATION").
I. The Company and certain of the Holders have entered into a Series E
Preferred Stock Purchase Agreement dated April 6, 1998 (the "FOURTH PURCHASE
AGREEMENT") pursuant to which the Holders agreed, under certain conditions
enumerated therein, to purchase shares of the Company's Series E Preferred Stock
(the "SERIES E SHARES" and collectively with the Series A Shares, Series B
Shares, Series C Shares and Series D Shares, the "SHARES").
J. The Company has also entered into a Software License and Technical
Cooperation Agreement with Intel Corporation (the "CORPORATE INVESTOR") dated
April 1, 1998 pursuant to which the Company has granted to Intel Corporation a
warrant (the "SERIES E WARRANT" and collectively with the Series B Warrant,
Series C Warrant and Series D Warrant, the "WARRANTS") for the purchase of up to
533,333 shares of Series E Preferred Stock, subject to certain conditions as set
forth in the Series E Warrant, (the "SERIES E WARRANT SHARES," together with the
Series B Warrant Shares, Series C Warrant Shares and Series D Warrant Shares,
the "WARRANT SHARES").
K. The Company and certain of the Holders have previously entered into a
Rights Agreement, dated July 14, 1995, as amended and restated April 1, 1996, as
subsequently amended and restated June 27, 1996, as subsequently amended and
restated March 20, 1997, and as amended May 1, 1997 (the "PRIOR RIGHTS
AGREEMENT").
L. The execution of this Agreement by the Company is a condition to the
obligations of the Holders under the Third Purchase Agreement.
M. The Company wishes to execute this Agreement and grant to the Holders
the rights contained herein in order to fulfill such condition.
N. The Company and the Holders executing this Agreement together
represent sufficient signatory authority to amend and restate the Prior Rights
Agreement and to waive the Right of First Offer contained in Section 3.1 of the
Prior Rights Agreement with respect to the issuance by the Company of up to
3,253,336 of the Series E Shares pursuant to the Fourth Purchase Agreement and
the issuance by the Company of the Series E Warrant and the Series E Shares
issuable upon exercise of the Series E Warrant.
In consideration of the mutual promises and covenants hereinafter set
forth, and for certain other valuable considerations, the receipt of which is
hereby acknowledged, the parties
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agree that the terms of the Prior Rights Agreement are hereby amended and
restated to read as follows:
1. Waiver of Right of First Offer. The parties to this Agreement,
constituting at least a majority of the Holders, hereby waive on behalf of all
Holders their Right of First Offer pursuant to Section 3.1 of the Prior Rights
Agreement with respect to the issuance by the Company of up to 3,253,336 of the
Series E Shares pursuant to the Fourth Purchase Agreement and the issuance by
the Company of the Series E Warrant and the Series E Shares issuable upon
exercise of the Series E Warrant.
2. Registration Rights.
2.1 Definitions. As used in this Agreement:
(a) The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "SECURITIES ACT") and the subsequent declaration or ordering of the
effectiveness of such registration statement.
(b) The term "REGISTRABLE SECURITIES" means:
(i) the shares of Common Stock issuable or
issued upon conversion of the Shares or the Warrant Shares (such shares of
Common Stock are referred to hereafter as the "Stock");
(ii) any other 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, the Stock, excluding
in all cases, however, any Registrable Securities sold by a person in a
transaction in which his or her rights under this Agreement are not assigned;
and
(iii) the shares of Common Stock Consideration
issued to CA&SI and/or the CA&SI Shareholders, as the case may be, except for
purposes of the registration rights set forth under Sections 2.2 and 2.4 to
which CA&SI and/or the CA&SI Shareholders shall not be entitled under this
Agreement.
provided, however, that 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(1) thereof so that all transfer restrictions, and restrictive legends
with respect thereto, if
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any, are removed upon the consummation of such sale.
(c) The number of shares of "REGISTRABLE SECURITIES THEN
OUTSTANDING" means the number of shares of Common Stock outstanding which are,
and the number of shares of Common Stock issuable pursuant to then exercisable
or convertible securities which are, Registrable Securities.
(d) The term "HOLDER" means any holder of any of the
Shares, any of the Warrants, or any of the Warrant Shares, or any holder of the
outstanding Registrable Securities who, in the case of Registrable Securities
only and subject to the limitations set forth in Section 2.13 below, acquired
such Registrable Securities in a transaction or series of transactions not
involving any registered public offering. For purposes of Section 3 herein
below, a Holder's Registrable Securities shall be aggregated with those of such
Holder's Affiliated Entities that also hold Registrable Securities hereunder.
(e) The term "AFFILIATED ENTITY" means any entity that
directly, or indirectly through one or more intermediaries, controls, or is
controlled by, or is under common control with, the Holder.
(f) The term "FORM S-3" means such form under Securities
Act as in effect on the date hereof or any registration form under the
Securities Act subsequently adopted by the Securities and Exchange Commission
("SEC") which permits inclusion or incorporation of substantial information by
reference to other documents filed by the Company with the SEC.
(g) The term "SERIES E REGISTRABLE SECURITIES" means
Registrable Securities issued or issuable solely in respect of the Series E
Shares and the Series E Warrant Shares.
(h) The term "NON-SERIES E REGISTRABLE SECURITIES" means
all Registrable Securities excluding the Series E Registrable Securities.
2.2 Demand Registration.
(a) If the Company shall receive at any time after six
(6) months after the effective date of the first registration statement for a
public offering of securities of the Company (other than a registration
statement relating either to the sale of securities solely to employees of the
Company pursuant to a stock option, stock purchase or similar plan or an SEC
Rule 145 transaction), a written request from the Holders of at least a majority
of the Non-Series E Registrable Securities then outstanding or forty percent
(40%) of the Series E Registrable Securities then outstanding that the Company
file a registration statement under the Securities Act, then the Company shall,
within ten (10) days of the receipt thereof, give written notice of such request
to all Holders and shall, subject to the limitations of subsection 2.2(b),
effect as
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soon as practicable, and in any event within ninety (90) days of the receipt of
such request, the registration under the Securities Act of all Registrable
Securities which the Holders request to be registered within thirty (30) days of
the effective date of such notice delivered by the Company in accordance with
Section 5.5.
(b) If the Holders initiating the registration request
hereunder ("INITIATING HOLDERS") intend to distribute the Registrable Securities
covered by their request by means of an underwriting, 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 (together with the Company as provided in subsection
2.5(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting by a majority in
interest of the Initiating Holders. Notwithstanding any other provision of this
Section 2.2, if the 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 which would otherwise be underwritten pursuant hereto, and the number
of shares of Registrable Securities that may be included in the underwriting
shall be allocated among all Holders thereof, including the Initiating Holders,
in proportion (as nearly as practicable) to the amount of Registrable Securities
of the Company issued or issuable to each Holder; provided, however, 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 such underwriting.
(c) The Company is obligated to effect only one
registration pursuant to this Section 2.2 requested by the Holders of at least a
majority of the Non-Series E Registrable Securities then outstanding, and two
registrations pursuant to this Section 2.2 requested by the Holders of at least
forty percent (40%) of the Series E Registrable Securities then outstanding.
(d) Notwithstanding the foregoing, if the Company shall
furnish to Holders requesting a registration statement pursuant to this Section
2.2, a certificate signed by the President 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, the Company shall have the right to defer such filing
for a period of not more than ninety (90) days after receipt of the request of
the Initiating Holders.
2.3 Piggyback Registration. If (but without any obligation to do
so) the Company proposes to register (including for this purpose a registration
effected by the Company for stockholders other than the Holders) any of its
Common Stock or other securities under the
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Securities Act in connection with the public offering of such securities solely
for cash (other than a registration relating either to the sale of securities
solely to employees in a Company stock option, stock purchase or similar plan or
to an SEC Rule 145 transaction), the Company shall, at such time, promptly give
each Holder written notice of such registration. Upon the written request of
each Holder given within twenty (20) days after mailing of such notice by the
Company in accordance with Section 5.5, the Company shall, subject to the
provisions of Section 2.8, cause to be registered under the Securities Act all
of the Registrable Securities that each such Holder has requested to be
registered.
2.4 Form S-3 Registration. In case the Company shall receive from any
Holder or Holders owning in the aggregate at least thirty percent (30%) of the
Non-Series E Registrable Securities or thirty percent (30%) of the Series E
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, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) 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 15 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 by the Holders; (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 (net of any
underwriters' discounts or commissions) of less than $500,000; (iii) if the
Company shall furnish to the Holders a certificate signed by the President of
the Company stating that in the good faith judgment of the Board of Directors of
the Company, it would be seriously detrimental to the Company and its
stockholders for such Form S-3 Registration to be effected at such time, in
which event the Company shall have the right to defer the filing of the Form S-3
registration statement for a period of not more than ninety (90) days after
receipt of the request of the Holder or Holders under this Section 2.4.
(c) Subject to the foregoing, the Company shall file a
registration statement covering the Registrable Securities and other securities
so requested to be registered as soon as practicable after receipt of the
request or requests of the Holders. All expenses incurred in connection with a
registration requested pursuant to this Section 2.4, including (without
limitation) all registration, filing, qualification, printer's and accounting
fees and the reasonable fees and disbursements of counsel for the selling Holder
or Holders and counsel for the
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Company, shall be borne by the Company. Registrations effected pursuant to this
Section 2.4 shall not be counted as demands for registration or registrations
effected pursuant to Sections 2.2 or 2.3.
2.5 Obligations of the Company. Whenever required under this
Section 2 to effect the registration of any Registrable Securities, 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 its best 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 the earlier of one
hundred twenty, (120) days or until the distribution contemplated in the
registration statement has been completed.
(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 numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its best efforts to register and qualify the
securities covered by such registration statement under such other securities or
Blue Sky laws of such jurisdictions as shall be reasonably requested by the
Holders, provided that the Company shall not be required in connection therewith
or as a condition thereto to qualify to do business or to file a general consent
to service of process in any such states or jurisdictions.
(e) In the event of any underwritten public offering,
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, with the managing underwriter of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Notify each Holder of Registrable Securities covered
by such registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or necessary to
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make the statements therein not misleading in the light of the circumstances
then existing.
(g) Cause all such Registrable Securities registered
pursuant to this Section 2 to be listed on each securities exchange on which
similar securities issued by the Company are then listed.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant to this Section 2 and a CUSIP number
for all such Registrable Securities, in each case not later than the effective
date of such registration.
(i) Use its best efforts to furnish, at the request of
any Holder requesting registration of Registrable Securities pursuant to this
Section 2, on the date that such Registrable Securities are delivered to the
underwriters for sale in connection with a registration pursuant to this Section
2, 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 such date, of the counsel representing the Company for the
purposes of such registration, in form and substance as is customarily given to
underwriters in an underwritten public offering, addressed to the underwriters,
if any, and to the Holders requesting registration of Registrable Securities and
(ii) a "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 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 this Section 2
with respect to the Registrable Securities of any selling Holder that such
Holder shall furnish to the Company such information regarding itself, the
Registrable Securities held by it, and the intended method of disposition of
such securities as shall be required to effect the registration of such Holder's
Registrable Securities.
2.7 Expenses of Registrations. All expenses other than
underwriting discounts and commissions, incurred in connection with
registrations, filings or qualifications pursuant to Section 2.2 or 2.3,
including (without limitation), all registration, filing and qualification fees,
printers and accounting fees, fees and disbursements of counsel for the Company
and the fees and disbursements of one special counsel for the selling Holders,
shall be borne by the Company; provided, however, that the Company shall not be
required to pay for any expenses of any registration proceeding begun pursuant
to 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 (in which case all Participating Holders shall bear such expenses);
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 that was not known to the
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Holders at the time of their request, then the Holders shall not be required to
pay any of such expenses and shall retain their rights pursuant to Section 2.2.
2.8 Underwriting Requirements. In connection with any offering
involving an underwriting of shares being issued by the Company, the Company
shall not be required under Section 2.3 to include any of the Holders'
securities in such underwriting unless they accept the terms of the underwriting
as agreed upon between the Company and the underwriters selected by it, and then
only in such quantity as will not, in the opinion of the underwriters,
jeopardize the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters reasonably believe compatible with the success
of the offering, then the Company shall be required to include in the offering
only that number of such securities which the underwriters believe will not
jeopardize the success of the offering (the "SELLING STOCKHOLDER SECURITIES"),
provided, however. that the Selling Stockholder Securities shall first be
allocated among the requesting Holders pro rata according to the total amounts
of Registrable Securities held by such requesting Holders and then, if all of
the Registrable Securities requested to be included by such Holders have been
included, among all other holders of securities requesting and legally entitled
to include securities in such offering pro rata based on the total amount of
such securities entitled to be included in such offering by such holders and
provided, further, that (i) in no event shall the amount of Registrable
Securities of the selling Holders included in the offering be reduced below ten
percent (10%) of the total amount of securities included in such offering,
unless such offering is the initial public offering of the Company's securities,
in which case all of the Registrable Securities may be excluded if, in either
case, the underwriters make the determination described above and no other
stockholder's securities are included, and (ii) notwithstanding (i) above, any
shares being sold by a stockholder exercising a demand registration right
similar to that granted in Section 2.2 shall be included in such offering. For
purposes of the preceding proviso concerning apportionment, for any selling
stockholder which is a holder of Registrable Securities and which 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 "selling stockholder," and any pro rata reduction with
respect to such selling stockholder shall be based upon the aggregate amount of
shares carrying registration rights owned by all entities and individuals
included in such selling stockholders.
2.9 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.
2.10 Indemnification. In the event any Registrable Securities
are included in a registration statement under this Section 2:
(a) To the extent permitted by law, the Company will
indemnify and
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hold harmless 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 1934 Act or other federal or state law; insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "VIOLATION"): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement, including
any preliminary prospectus or final prospectus contained therein or any
amendments or supplements thereto, (ii) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or (iii) any violation or alleged
violation by the Company of the 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; and the Company will
pay as incurred to each such Holder, underwriter or controlling person, any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or action;
provided, however, that the indemnity agreement contained in this subsection
2.10(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability, or action if such settlement is effected without the consent
of the Company (which consent shall not be unreasonably withheld), nor shall the
Company be liable in any such case for any such loss, claim, damage, liability,
or action to the extent that it arises out of or is based upon a Violation which
occurs in reliance upon and in conformity with written information furnished
expressly for use in connection with such registration by any such Holder,
underwriter or controlling person.
(b) 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 has signed the registration statement, each person, if any, who
controls the Company within the meaning of the Securities Act, any underwriter,
any other Holder selling securities in such registration statement and any
controlling person of any such underwriter or other Holder, against any losses,
claims, damages, or liabilities (joint or several) to which any of the foregoing
persons 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 pay, as incurred, any legal or other expenses reasonably incurred by
any person intended to be indemnified pursuant to this subsection 2.10(b), in
connection with investigating or defending any such loss, claim, damage,
liability, or action; provided, however, that the indemnity agreement contained
in this subsection 2.10(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, provided, further, that in no event shall any indemnity under this
Section 2.10(b) exceed the gross proceeds from the offering received by such
Holder.
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(c) Promptly after receipt by an indemnified party under
this Section 2.10 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 2.10, 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 differing interests between such indemnified party and any other
party represented by such counsel in such proceeding. The failure to deliver
written notice to the indemnifying party within a reasonable time of the
commencement of any such action, shall not relieve such indemnifying party of
any liability to the indemnified party under this Section 2.10 except to the
extent that the indemnifying party is prejudiced as a result thereof, 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 2.10.
(d) If the indemnification provided for in this Section
2.10 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, will contribute to the amount paid or payable by
such indemnified party as a result of such loss, liability, claim, damage, or
expense in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions that resulted in such loss,
liability, claim, damage, or expense as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party will 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.
(e) Notwithstanding the foregoing, to the extent that
the provisions on indemnification and contribution contained in the underwriting
agreement entered into in connection with the underwritten public offering are
in conflict with the foregoing provisions, the provisions in the underwriting
agreement will control.
(f) The obligations of the Company and Holders under
this Section 2.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 2, and otherwise.
2.11 Reports Under Securities Exchange Act of 1934. With a view
to making available to the Holders the benefits of Rule 144 promulgated under
the Securities Act and any
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15
other rule or regulation of the SEC that may at any time permit a Holder to sell
securities of the Company to the public without registration or pursuant to a
registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in SEC Rule 144, at all times after ninety (90)
days after the effective date of the first registration statement filed by the
Company for the offering of its securities to the general public;
(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the 1934 Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after the
end of the fiscal year in which the first registration statement filed by the
Company for the offering of its securities to the general public is declared
effective;
(c) file with the SEC in a timely manner all reports and
other documents required of the Company under the Securities Act and the 1934
Act; and
(d) furnish to any Holder, so long as the Holder owns
any Registrable Securities, forthwith upon request (i) a written statement by
the Company that it has complied with the reporting requirements of SEC Rule 144
(at any time after ninety (90) days after the effective date of the first
registration statement filed by the Company), the Securities Act and the 1934
Act (at any time after it has become subject to such reporting requirements), or
that it qualifies as a registrant whose securities may be resold pursuant to
Form S-3 (at any time after it so qualifies), (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports and documents
so filed by the Company, and (iii) such other information as may be reasonably
requested in availing any Holder of any rule or regulation of the SEC which
permits the selling of any such securities without registration or pursuant to
such form.
2.12 Assignment of Registration Rights. The rights to cause the
Company to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder only to a transferee or assignee acquiring the lesser of
(a) 100,000 shares of Registrable Securities (as adjusted for stock splits,
stock dividends, reverse stock splits and the like), or (b) all of the Holder's
shares of Registrable Securities, provided the Company is, within a reasonable
time after such transfer, furnished with written notice of the name and address
of such transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if (a) the transferee or assignee agrees to
be bound by the obligations of a Holder under this Agreement and (b) immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Securities Act.
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2.13 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 Series E 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 Sections 2.2, 2.3 or 2.4 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 Series E Registrable Securities of the Holders
which is included or (b) to make a demand or S-3 registration which could result
in such registration statement being declared effective prior to the date set
forth in subsection 2.2(a) or within one hundred twenty (120) days of the
effective date of any registration effected pursuant to Sections 2.2, 2.3 or
2.4.
2.14 "Market Stand-Off" Agreement. Each Holder hereby agrees for
such period of time as determined by the Company and the managing underwriter
(not to exceed one hundred-eighty (180) days) following the effective date of
the registration statement filed by the Company with respect to its initial
public offering under the Securities Act, it shall not, to the extent requested
by the Company and such underwriter, sell or otherwise transfer or dispose of
(other than to donees who agree to be similarly bound) any Common Stock of the
Company held by it at any time during such period except Common Stock for sale
included in such registration; provided, however, that the obligations under
this Section 2.14 are conditioned upon the officers and the directors of the
Company entering into similar agreements, and provided further, that the
obligations under this Section 2.14 shall not apply to any Common Stock of the
Company acquired by a Holder in such registration or thereafter in an open
market transaction provided such Holder is the beneficial owner of less than
five percent of any class of the Company's voting securities immediately prior
to such registration and is not an officer or director of the Company.
To enforce the foregoing covenant, the Company may impose stop transfer
instructions with respect to the Registrable Securities of the Purchaser (and
the shares or securities of every other person subject to the foregoing
restriction) until the end of such period.
2.15 Termination of Registration Rights. A Holder shall not be
entitled to exercise any right provided for under Section 2 of this Agreement
(a) after five (5) years following the consummation of the Company's initial
sale of its Common Stock in a bona fide, firm commitment underwriting pursuant
to a registration statement on Form S-1 under the Securities Act (other than a
registration statement relating either to the sale of securities to employees of
the Company pursuant to a stock option, stock purchase or similar plan or a SEC
Rule 145 transaction) (an "IPO") or (b) at such time following an IPO and for so
long as such Holder may sell all of such Holder's Registrable Securities (i)
under Rule 144(k) or (ii) in any one (1) three-month period pursuant to Rule 144
(or such successor rule as may be adopted).
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3. Additional Rights.
3.1 Right of First Offer. Subject to the terms and conditions
specified in this Section 3.1, the Company hereby grants to each Holder, so long
as such Holder holds not less than 100,000 shares of Registrable Securities (as
adjusted for subsequent stock splits, stock dividends or recapitalizations) held
thereby (the "RIGHTHOLDER"), a right of first offer with respect to future sales
by the Company of its New Securities (as hereinafter defined). For purposes of
this Section 3.1, the term Rightholder includes any partners, stockholders or
affiliates of the Rightholder. The Rightholder shall be entitled to apportion
the right of first offer hereby granted among itself and its partners,
stockholders and affiliates in such proportions as it deems appropriate.
(a) In the event the Company proposes to issue New
Securities, it shall give the Rightholder written notice (the "NOTICE") of its
intention stating (i) a description of the New Securities it proposes to issue,
(ii) the number of shares of New Securities it proposes to offer, (iii) the
price per share at which, and other terms on which, it proposes to offer such
New Securities and (iv) the number of shares that the Rightholder has the right
to purchase under this Section 3.1, based on the Rightholder's Percentage (as
defined in Subsection 3.1(d)(ii)).
(b) Within forty-five (45) days after the Notice is
given (in accordance with Section 5.5), the Rightholder may elect to purchase,
at the price specified in the Notice, up to the number of shares of the New
Securities proposed to be issued that the Rightholder has the right to purchase
as specified in the Notice. An election to purchase shall be made in writing and
must be given to the Company within such forty-five (45) day period (in
accordance with Section 5.5). The closing of the sale of New Securities by the
Company to the participating Rightholder upon exercise of its rights under this
Section 3.1 shall take place simultaneously with the closing of the sale of New
Securities to third parties.
(c) The Company shall have ninety (90) days after the
last date on which the Rightholder's right of first offer lapsed to enter into
an agreement (pursuant to which the sale of New Securities covered thereby shall
be closed, if at all, within forty-five days from the execution thereof) to sell
the New Securities which the Rightholder did not elect to purchase under this
Section 3.1, at or above the price and upon terms not materially more favorable
to the purchasers of such securities than the terms specified in the initial
Notice given in connection with such sale. In the event the Company has not
entered into an agreement to sell the New Securities within such ninety day
period (or sold and issued New Securities in accordance with the foregoing
within forty-five days from the date of said agreement), the Company shall not
thereafter issue or sell any New Securities without first offering such New
Securities to the Rightholder in the manner provided in this Section 3.1.
(d) (i) "NEW SECURITIES" shall mean any shares of, or
securities convertible into or exercisable for any shares of, any class of the
Company's capital stock; provided that "New Securities" does not include: (A)
securities issued pursuant to the acquisition
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of another business entity by the Company by merger, purchase of substantially
all of the assets of such entity, or other reorganization whereby the Company
owns not less than a majority of the voting power of such entity; (B) up to
7,553,200 shares, or options to purchase shares, of the Company's Common Stock
and the shares of Common Stock issuable upon exercise of such options, issued
pursuant to any arrangement approved by the Board of Directors to employees,
officers and directors of, or consultants, advisors or other persons performing
services for, the Company (net of shares reissued under a Company plan after the
issuance and return of such shares to such Company plan, and excluding 4,337,200
shares issued prior to the Company's adoption of its 1995 Stock Plan and any
shares reissued in respect thereof); (C) shares of the Company's Common Stock or
Preferred Stock of any series issued in connection with any stock split, stock
dividend or recapitalization of the Company; (D) Common Stock issued upon
exercise of warrants, options or convertible securities if the issuance of such
warrants, options or convertible securities was a result of the exercise of the
right of first offer granted under this Section 3.1 or was subject to the right
of first offer granted under this Section 3.1; (E) capital stock or warrants or
options for the purchase of shares of capital stock issued by the Company to a
lender in connection with any loan or lease financing or technology acquisition
transaction approved by the Board of Directors of the Company; and (F)
securities sold to the public in an offering pursuant to a registration
statement filed with the Securities and Exchange Commission under the Securities
Act.
(ii) The applicable "Percentage" for the
Rightholder shall be the number of shares of New Securities calculated by
dividing (A) the total number of shares of Common Stock owned by the Rightholder
(assuming conversion or exercise of all outstanding options, warrants and other
convertible securities, including without limitation, the Shares and the
Warrants) by (B) the total number of shares of Common Stock outstanding at the
time the Notice is given (assuming conversion of all outstanding options,
warrants and other convertible securities including without limitation, the
Preferred Stock).
(e) The right of first offer granted under this Section
3.1 shall not apply to and shall expire upon the consummation of an IPO.
(f) The right of first offer granted under this section
may be assigned by the Rightholder to a transferee or assignee of the
Rightholder's shares of the Company's stock acquiring at least 100,000 of the
Rightholder's shares of the Company's Common Stock (treating all shares of
Preferred Stock for this purpose as though converted into Common Stock) (as
adjusted for stock splits, stock dividends or recapitalizations). In the event
that the Rightholder shall assign its right of first offer pursuant to this
Section 3.1 in connection with the transfer of less than all of its shares of
the Company's stock, the Rightholder shall also retain its right of first offer
to the extent that such Rightholder still holds 100,000 shares of Registrable
Securities (as adjusted for stock splits, stock dividends or recapitalizations).
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19
3.2 Information Rights: Observer Rights.
(a) So long as the Corporate Investor holds at least
100,000 shares of Registrable Securities, or any other Holder holds at least
500,000 shares of Registrable Securities (each as adjusted for stock splits,
stock dividends or recapitalizations) (other than with respect to subparagraph
(i) below, which shall apply to all Holders of Registrable Securities) or any
shares of Series E Registrable Securities, the Company shall deliver to the
Corporate Investor or such Holder, respectively:
(i) as soon as practicable, but in any event
within ninety (90) days after the end of each fiscal year of the Company, an
income statement for such fiscal year, a balance sheet of the Company as of the
end of such year, and a schedule as to the sources and applications of fiends
for such year, such year-end financial reports to be in reasonable detail,
prepared in accordance with generally accepted accounting principles ("GAAP"),
and audited and certified by independent public accountants of nationally
recognized standing selected by the Company;
(ii) if prepared by the Company, within
forty-five (45) days after the end of each of the first three (3) quarters of
each fiscal year of the Company, an unaudited profit or loss statement, a
statement of cash flows for such fiscal quarter and an unaudited balance sheet
as of the end of such fiscal quarter;
(iii) within thirty (30) days of the end of each
month, an unaudited income statement and schedule as to the sources and
application of funds and balance sheet and comparison to budget for and as of
the end of such month, in reasonable detail, including year-to-date financial
statements through the end of such month;
(iv) as soon as practicable, a budget for the
next fiscal year promptly following preparation and in no event later than
forty-five (45) days after the end of the preceding fiscal year;
(v) such other information relating to the
financial condition, business, prospects or corporate affairs of the Company as
the Holder or any assignee of the Holder may from time to time request,
provided, however, that the Company shall not be obligated to provide
information which a majority of the Company's independent directors deems in
good faith that access to such information would materially and adversely affect
the Company; and
(vi) as soon as practicable after filing with
the SEC, a copy of the Company's reports on Form 10-K, 10-Q and 8-K under the
Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and a copy of the
Company's annual reports, proxy statement
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and other proxy solicitation materials under Section 14(a) of the Exchange Act.
(b) The Company shall permit each Holder holding not
less than 500,000 shares of Registrable Securities (as adjusted for stock
splits, stock dividends or recapitalizations) or any shares of Series E
Registrable Securities, at such Holder'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 Holder; provided, however, that the
Company shall not be obligated pursuant to this subsection 3.2(b) to provide
access to any information which it reasonably considers to be a trade secret or
similar confidential information.
(c) The Company shall grant to each Holder holding not
less than 500,000 shares of Non-Series E Registrable Securities and to the
Corporate Investor, so long as it holds at least 100,000 shares of Registrable
Securities, (each as adjusted for stock splits, stock dividends or
recapitalizations) the right to have a single representative reasonably
acceptable to the Company attend all meetings of the Company's Board of
Directors and committees thereof in a non-voting observer capacity and, in this
respect, the Company shall give such representative, whether or not present at
such meetings, copies of all notices, minutes, consents and other materials that
it provides to its directors at the same time it provides such materials to its
directors; provided, however, (i) that, except with respect to the Corporate
Investor the rights and obligations of which are set forth in a letter agreement
dated April 6, 1998, such representative shall agree to hold in confidence and
trust and to act in a fiduciary manner with respect to all information so
provided; (ii) that the Company reserves the right to withhold any information
and to exclude such representative from any meeting, or portion thereof, if (A)
in the case of representatives, excluding the Corporate Investor's
representative, a majority of the Company's directors determine in good faith
that access to such information or attendance at such meeting could materially
and adversely affect the Company or materially inhibit deliberations by the
Board of Directors or a committee thereof, whether by way of adversely affecting
the attorney-client privilege between the Company and its counsel, based on the
advice of the Company's counsel, or otherwise, and (B) in the case of the
Corporate Investor's representative, where (I) the Board of Directors or
committee thereof is discussing proprietary matters directly relating to the
Corporate Investor or one of the Corporate Investor's principal competitors, as
determined in good faith by the Board, and a majority of the Company's
independent directors determine in good faith that access to such information or
attendance at such meeting would materially and adversely affect the Company or
materially inhibit deliberations by the Board of Directors; (II) access to such
information or attendance at such meeting could adversely affect the
attorney-client privilege between the Company and its counsel, based on the
advice of the Company's counsel; or (III) where the Board of Directors or
committee thereof is discussing a Corporate Transaction (as defined in Section
6.2 of the Fourth Purchase Agreement), and (iii) that in no event shall the
failure to provide the notice described above invalidate in any way any action
taken at a meeting of the Company's Board of Directors. Such representative may
be changed at any time upon notice to the Company by each such respective
Holder. Each such representative shall bear its own costs associated with such
attendance.
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(d) The covenants set forth in this Section 3.2 shall
terminate as to all Holders and be of no further force or effect immediately
upon the consummation of an IPO or at such time as the Company becomes subject
to the reporting requirements of the Exchange Act. Notwithstanding the
foregoing, the covenants set forth in Section 3.2(a)(vi) shall terminate on the
third anniversary of an IPO.
(e) The information rights granted pursuant to Sections
3.2(a) and (b) may be assigned by a Holder only to a transferee or assignee
acquiring at least 100,000 and 500,000 shares of Registrable Securities (as
adjusted for stock splits, stock dividends, recapitalizations and the like),
respectively, provided the Company is, within a reasonable time after such
transfer, furnished with written notice of the name and address of such
transferee or assignee and the securities with respect to which such
registration rights are being assigned; and provided, further, that such
assignment shall be effective only if the transferee or assignee agrees to be
bound by the obligations of a Holder under this Agreement. The observation
rights granted pursuant to Section 3.2(c) may not be assigned by a Holder
without the prior written consent of the Company.
3.3 Board Meetings; Expenses. The Company shall reimburse the
reasonable coach class airfare and other travel and lodging expenses incurred by
its nonemployee directors in attending any duly held regular or special meeting
of the Board of Directors.
4. Confidentiality.
4.1 Non-Disclosure.
(a) Except to the extent required by law or judicial or
administrative order or except as provided in this Section 4 or as provided in
the Software License and Technical Cooperation Agreement dated April 1, 1998
between the Company and the Corporate Investor (the "SOFTWARE LICENSE"), each
party to this Agreement will hold the Confidential Information (as defined in
the next paragraph) in confidence and, in the case of each party (excluding the
Company and the Corporate Investor) will not disclose the Confidential
Information without the prior written consent of the Company and the Corporate
Investor. In the case of the Company, the Company will not disclose the
Confidential Information without the prior written consent of the Corporate
Investor. In the case of the Corporate Investor, the Corporate Investor will not
disclose the Confidential Information without the prior written consent of the
Company. Furthermore, each party will: (i) use the same degree of care to
prevent unauthorized disclosure or use of the Confidential Information that it
uses with its own information of like nature (but in no event less than
reasonable care), and (ii) advise its employees, agents and contractors of the
confidential nature of the Confidential Information and of its obligations under
this Agreement. The Company and the Corporate Investor acknowledge and agree
that they are bound by the terms of that certain Corporate Non-Disclosure
Agreement dated August 17, 1997 (CDNA #98057), which continues to govern such
parties on matters of confidentiality, other than with respect to Confidential
Information (as defined below), with
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respect to which the provisions of this Section 4 govern. Notwithstanding any
provision of this Section 4 to the contrary, the Company and the Corporate
Investor agree to make public, through a mutually agreed upon press release or
other mutually agreed upon publicity mechanism, the identity of Intel
Corporation as the "corporate investor," and the existence and the intent of the
Software License, within thirty (30) days of the date of this Agreement.
(b) For purposes of this Agreement, the term
"CONFIDENTIAL INFORMATION" refers to the following items: (i) the existence of
the Fourth Purchase Agreement, this Agreement, the Series E Warrant and the
Software License, each of even date herewith, between the Company and the
Corporate Investor (collectively, the "TRANSACTION AGREEMENTS") and (ii) the
terms and provisions of the Transaction Agreements. "Confidential Information"
will not include, even if marked as confidential, material or information which:
(i) is or becomes public knowledge through no wrongful act of the disclosing
party, its agent, employees or affiliates, including material or information
publicly disclosed to or through a government authority pursuant to and in
accordance with Section 4.3 below or (ii) is approved in writing for release by
the Company and the Corporate Investor. Each ▇▇▇▇▇ shall cause each employee or
contractor of such party having access to the Confidential Information to sign a
non-disclosure agreement protecting the Confidential Information if not already
bound by such a non-disclosure agreement.
4.2 Permitted Disclosure to Third Parties. Notwithstanding any
other provision to the contrary in this Section 4, the Company and the other
parties to this Agreement may disclose the existence of the Transaction
Agreements, and the names of the parties and the amount of the amount of the
investment made by each party thereunder, to the Company's lenders, investors,
partners and advisors, and to bona fide prospective lenders, investors, partners
and advisors, in each case only where such persons or entities have entered into
a non-disclosure agreement with the Company (where the Corporate Investor is a
third party beneficiary thereof) protecting the Confidential Information.
4.3 Permitted Disclosure to Government Authorities. Furthermore,
the parties may disclose any Transaction Agreement, or the terms thereof, to the
extent required by law or judicial or administrative order, provided that if
such disclosure is pursuant to judicial or administrative order, the disclosing
party will notify the Company and the Corporate Investor promptly before such
disclosure and will cooperate with the Company and the Corporate Investor, to
seek confidential treatment with respect to the disclosure if requested by the
Company or the Corporate Investor, as the case may be, and provided further that
if such disclosure is required pursuant to law or the rules and regulations of
any federal, state or local governmental authority or any regulatory body, the
parties will cooperate to seek confidential treatment to the maximum extent
possible under law. Notwithstanding the foregoing provisions or any other
provision to the contrary in this Section 4.3, the Company agrees that, except
to the extent required by judicial or administrative order, which the Company
shall use all reasonable efforts to resist, or previously disclosed pursuant to
this Section 4.3, the Company will not disclose the identity of the Corporate
investor hereunder or describe the Corporate Investor other
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than as a "corporate investor" in any public filing, advertisement, news release
or professional or trade publication or in any other manner without the
Corporate Investor's prior written consent (which consent generally will not be
granted) and will not file any of the Transaction Agreements (the "EXHIBIT
FILING") with any governmental authority or any regulatory body; provided,
however, that (A) in connection with any offering of securities by the Company
for which registration is sought under the Securities Act, the Company may
describe the Corporate Investor other than as a "corporate investor" or disclose
the identity of the Corporate Investor in the prospectus filed with the SEC with
respect to such offering or in any document incorporated by reference into such
prospectus, and describe, in a manner reasonably acceptable to the Corporate
Investor, the principal terms of the Transaction Agreements in the prospectus
filed with the SEC to the extent required by Regulation S-K of the Securities
Act or other similar or applicable rule or regulation, if the Corporate Investor
is the beneficial owner of more than five percent of any class of the Company's
voting securities; and provided, further, that (B) if the Corporate Investor is
the beneficial owner of less than five percent of any class of the Company's
voting securities or in the case of making the Exhibit Filing, the Company may
describe the Corporate Investor other than as a "corporate investor" or disclose
the identity of the Corporate Investor in the prospectus filed with the SEC with
respect to such offering or in any document incorporated by reference into such
prospectus and describe the principal terms of the Transaction Agreements in the
prospectus filed with the SEC and/or make the Exhibit Filing if and only if (i)
the Company is instructed to include such disclosure in such prospectus or
incorporated documents and/or to make the Exhibit Filing by the SEC in a written
comment provided to the Company as a part of its review of the offering, (ii)
the Company provides the Corporate Investor with a copy of such comment promptly
following receipt, (iii) the Company uses its reasonable efforts to persuade the
SEC to withdraw its comment or, in the case of the disclosure in the prospectus
of the identity of the Corporate Investor, to allow disclosure that does not
identify the Corporate Investor other than as a "corporate investor," (iv) the
Company provides the Corporate Investor a reasonable opportunity to comment to
the Company on the Company's responses to the SEC, provided that with respect to
the SEC's first written comments, the Corporate Investor shall be given two
business days in which to provide comments to the Company on the Company's
proposed first written response to the SEC; and with respect to all SEC comments
thereafter, the Corporate Investor shall be given no more than 24-hours notice
in which to provide comments to the Company on the Company's proposed response
to the SEC, and may be given less than 24-hours notice if reasonably determined
by the Company that such shorter notice period is necessary to meet its
anticipated schedule for effectiveness of the registration statement, or to meet
a response deadline requested by the SEC (the "MINIMUM NOTICE"), (v) the Company
provides the Corporate Investor a reasonable opportunity with Minimum Notice to
meet in person or by phone with the staff of the SEC, and if deemed necessary by
the Corporate Investor in good faith, a reasonable opportunity with Minimum
Notice to meet one time with the next highest authority of the SEC examiner
responsible for the Company's registration statement to assist the Company in
responding to the SEC's comments, and (vi) the staff of the SEC persists in its
requirement that such disclosure and/or Exhibit Filing be made by the Company.
Except as otherwise provided in this Section 4.3, the Company agrees that it
will provide the Corporate Investor with drafts of any documents, press releases
or other filings in which any Transaction Agreement or the transactions
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contemplated thereby are disclosed at least two (2) business days prior to the
filing or disclosure thereof, and that, unless permitted by the terms of this
Section 4.3, it will not disclose or file any such documents, press releases or
other filings to which the Corporate Investor has objected. The Corporate
Investor acknowledges that the public offering process is time sensitive and
dependent on the cooperation of the SEC and the conditions of the public equity
markets, and agrees to cooperate with the Company in good faith. The Corporate
Investor further acknowledges that the Company shall not have failed to provide
a "reasonable opportunity" to the Corporate Investor as provided under this
Section 4.3 if the Corporate Investor fails to respond or make itself available
to the Company or the SEC as contemplated under this Section 4.3.
4.4 Third-Party Confidential Information. No party will be
required to disclose to any other party any confidential information of any
third party without having first obtained such third party's prior written
consent.
4.5 Termination. The provisions of this Section 4 shall survive
for a period of five (5) years from the date on which the Corporate Investor
ceases to have any rights under Sections 2 and 3 of this Agreement.
5. Miscellaneous.
5.1 Assignment. Subject to the transfer restrictions set forth
above, 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.
Nothing in this Agreement, express or implied, is intended to confer upon any
party, other than the parties hereto, 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.
5.2 Governing Law. This Agreement shall be governed by and
construed under the laws of the State of California as applied to agreements
entered into solely between residents of, and to be performed entirely within,
such state.
5.3 Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
5.4 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
5.5 Notices.
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(a) All notices, requests, demands and other
communications under this Agreement or in connection herewith shall be given to
or made upon (i) such Holders to their respective addresses as set forth under
their name on Exhibit A attached hereto, (ii) to the Company at ▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, (▇▇▇) ▇▇▇-▇▇▇▇ (telephone), (▇▇▇) ▇▇▇-▇▇▇▇
(telefax), Attention: President, with a copy to Venture Law Group, ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇.
(b) All notices, requests, demands and other
communications given or made in accordance with the provisions of this Agreement
shall be in writing, and shall be sent by airmail, return receipt requested, or
by telex or telecopy (facsimile) with confirmation of receipt, and shall be
deemed to be given or made when receipt is so confirmed.
(c) Any party may, by written notice to the other, alter
its address or respondent, and such notice shall be considered to have been
given five (5) days after the airmailing, telexing or telecopying thereof.
5.6 Attorney's Fees. If any action at law or in equity
(including arbitration) is necessary to enforce or interpret the terms of this
Agreement, the prevailing party shall be entitled to reasonable attorney's fees,
costs and necessary disbursements in addition to any other relief to which such
party may be entitled.
5.7 Amendment and Waiver. Any provision of this Agreement may be
amended, waived, discharged or terminated with the written consent of the
Company, the Holders of at least a majority of the outstanding shares of Series
E Registrable Securities and the Holders of at least a majority of the
outstanding shares of Non-Series E Registrable Securities. Any amendment or
waiver effected in accordance with the foregoing sentence shall be binding upon
each Holder, and the Company. Any term of this Agreement may also be waived by a
written instrument signed by the party against whom enforcement of such waiver
is sought. Notwithstanding the foregoing, Section 4 of this Agreement may be
amended, waived, discharged or terminated only if the written consent of the
Corporate Investor is obtained. 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.
Notwithstanding the foregoing, purchasers of shares of the Company's Series E
Shares under the Fourth Purchase Agreement or an addendum thereto after the date
of this Agreement may be subsequently added as a party to this Agreement as a
Holder and shall be bound by and entitled to the terms, benefits and conditions
herein by the execution of a signature page to this Agreement.
5.8 Effect of Amendment or Waiver. Each Holder and its
successors and assigns acknowledge that by the operation of Sections 1 and 5.7
hereof the Holders of a majority
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of the outstanding shares of Series E Registrable Securities, and the holders of
at least a majority of the outstanding shares of Non-Series E Registrable
Securities acting in conjunction with the Company, will have the right and power
to diminish or eliminate all rights pursuant to this Agreement.
5.9 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 interpreted as if
such provision were so excluded and shall be enforceable in accordance with its
terms.
5.10 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.
5.11 Delays or Omissions. No delay or omission to exercise any right,
power or remedy accruing to any holder of any of the Stock, upon any breach or
default of the Company under this Agreement, shall impair any such right, power
or remedy of such Holder 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 holder of any breach or default under
this Agreement, or any waiver on the part of any holder 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.
5.12. Entire Agreement. This Agreement and the documents referred to
herein constitute the entire agreement between the parties hereto pertaining to
the subject matter hereof, and any all other written or oral agreements existing
between the parties hereto are expressly canceled; provided, however, that
nothing in this Agreement shall be deemed to terminate or supersede the
provisions of any confidentiality and nondisclosure agreements executed by the
parties hereto prior to the date hereof, which agreements shall continue in full
force and effect until terminated in accordance with their respective terms.
5.13 Aggregation of Stock. All Registrable Securities 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.
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IN WITNESS WHEREOF, this Fourth Amended and Restated Rights Agreement is
hereby executed as of the date first above written.
THE COMPANY: SIMPLEX SOLUTIONS, INC.
By: [SIGNATURE ILLEGIBLE]
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Title: CEO & PRESIDENT
-------------------------------
(print)
HOLDERS: INTEL CORPORATION
By:
----------------------------------
Title:
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(print)
▇▇▇▇▇▇▇▇ VII
A California Limited Partnership
By: ▇▇▇▇▇▇▇▇ VII Management Partners,
A California Limited Partnership,
its General Partner
By:
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Name:
--------------------------------
(print)
0289573.04
[SIGNATURE PAGE TO SIMPLEX SOLUTIONS, INC. FOURTH AMENDED AND RESTATED RIGHTS
AGREEMENT]