REGISTRATION RIGHTS AGREEMENT dated as of March 8, 2005 among SMART MODULAR TECHNOLOGIES (WWH), INC. MODULAR, L.L.C. and CERTAIN OTHER PERSONS NAMED HEREIN
Exhibit 4.9
dated as of
March 8, 2005
among
SMART MODULAR TECHNOLOGIES (WWH), INC.
MODULAR, L.L.C.
and
CERTAIN OTHER PERSONS NAMED HEREIN
TABLE OF CONTENTS
| Page | ||||
ARTICLE 1 |
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Definitions |
||||
Section 1.01. Definitions |
1 | |||
ARTICLE 2 |
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Registration Rights |
||||
Section 2.01. Demand Registration |
5 | |||
Section 2.02. Piggyback Registration |
7 | |||
Section 2.03. Registration Procedures |
9 | |||
Section 2.04. Indemnification by the Company |
12 | |||
Section 2.05. Indemnification by Participating Shareholders |
13 | |||
Section 2.06. Conduct of Indemnification Proceedings |
14 | |||
Section 2.07. Contribution |
15 | |||
Section 2.08. Participation in Public Offering |
16 | |||
Section 2.09. Other Indemnification |
16 | |||
Section 2.10. Cooperation by the Company |
17 | |||
Section 2.11. No Transfer of Registration Rights |
17 | |||
ARTICLE 3 |
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Certain Covenants and Agreements |
||||
Section 3.01. Reports |
17 | |||
Section 3.02. Limitations on Subsequent Registration Rights |
18 | |||
Section 3.03. Conflicting Agreements |
18 | |||
ARTICLE 4 |
||||
Miscellaneous |
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Section 4.01. Binding Effect; Assignability; Benefit |
19 | |||
Section 4.02. Notices |
19 | |||
Section 4.03. Waiver; Amendment; Termination |
20 | |||
Section 4.04. Fees and Expenses |
20 | |||
Section 4.05. Governing Law |
20 | |||
Section 4.06. Jurisdiction |
20 | |||
Section 4.07. WAIVER OF JURY TRIAL |
21 | |||
Section 4.08. Specific Enforcement |
21 | |||
Section 4.09. Counterparts; Effectiveness |
21 | |||
Section 4.10. Entire Agreement |
21 | |||
| Page | ||||
Section 4.11. Captions |
21 | |||
Section 4.12. Severability |
21 | |||
Exhibit A: Joinder Agreement
ii
Registration Rights Agreement (this “Agreement”) dated as of March 8, 2005 among SMART
Modular Technologies (WWH), Inc., an exempted company organized under the laws of the Cayman
Islands (the “Company”), Modular, L.L.C., a Delaware limited liability company (“Modular”), and
such additional persons as may sign joinder agreements to this Agreement.
WITNESSETH:
WHEREAS, Modular is currently the owner of all of the Ordinary Shares of the Company;
WHEREAS, the parties hereto desire to enter into this Agreement to govern certain of
their rights, duties and obligations;
NOW, THEREFORE, in consideration of the covenants and agreements contained herein, the parties
hereto agree as follows:
ARTICLE 1
Definitions
Definitions
Section 1.01.
Definitions. (a) The following terms, as used herein, have the following
meanings:
“Affiliate” means, with respect to any Person, any other Person directly or indirectly
controlling, controlled by or under common control with such Person, provided that no
securityholder of the Company shall be deemed an Affiliate of any other securityholder solely by
reason of any investment in the Company. For the purpose of this definition, the term “control”
(including, with correlative meanings, the terms “controlling”, “controlled by” and “under common
control with”), as used with respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the management and policies of such
Person, whether through the ownership of voting securities, by contract or otherwise.
“Aggregate Ownership” means, with respect to any Shareholder or group of Shareholders, and
with respect to any class of Company Securities, the total amount of such class of Company
Securities “beneficially owned” (as such term is defined in Rule 13d-3 of the Exchange Act)
(without duplication) by such Shareholder or group of Shareholders as of the date of such
calculation, calculated on a Fully-Diluted basis.
“Business Day” means any day except a Saturday, Sunday or other day on which commercial banks
in San Francisco, California are authorized by law to close.
“Company Securities” means (i) the Ordinary Shares, (ii) securities convertible into or
exchangeable for Ordinary Shares, (iii) any other equity or equity-linked security issued by the
Company and (iv) options, warrants or other rights to acquire Ordinary Shares or any other equity
or equity-linked security issued by the Company.
“Exchange Act” means the Securities Exchange Act of 1934, as amended.
“First Public Offering” means the first Public Offering after the date hereof.
“Fully-Diluted” means, with respect to any class of Company Securities, all outstanding shares
and all shares issuable in respect of securities convertible into or exchangeable for such shares,
all stock appreciation rights, options, warrants and other rights to purchase or subscribe for such
Company Securities or securities convertible into or exchangeable for such Company Securities.
“LLC Agreement” means the Second Amended and Restated Limited Liability Company Agreement,
dated as of June 15, 2004, of Modular.
“NASD” means the National Association of Securities Dealers, Inc.
“Ordinary Shares” means the Ordinary Shares, par value $0.000166667 per share, of the Company
and any stock into which such Ordinary Shares may thereafter be converted or changed.
“Person” means an individual, corporation, limited liability company, partnership,
association, trust or other entity or organization, including a government or political subdivision
or an agency or instrumentality thereof.
“Public Offering” means an underwritten public offering of Registrable Securities of the
Company pursuant to an effective registration statement under the Securities Act.
“Registrable Securities” means, at any time, any Ordinary Shares and any securities issued or
issuable in respect of such Ordinary Shares by way of conversion, exchange, stock dividend, split
or combination, recapitalization, merger, consolidation, other reorganization or otherwise until
(i) a registration statement covering such Ordinary Shares has been declared effective by the SEC
and such Ordinary Shares have been disposed of pursuant to such effective registration statement,
(ii) such Ordinary Shares are sold under circumstances in
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which all of the applicable conditions of Rule 144 (or any similar provisions then in force) under
the Securities Act are met or such securities may be sold pursuant to Rule 144(k) or (iii) such
Ordinary Shares are otherwise Transferred, the Company has delivered a new certificate or other
evidence of ownership for such Ordinary Shares not bearing the legend required pursuant to this
Agreement and such Ordinary Shares may be resold without subsequent registration under the
Securities Act.
“Registration Expenses” means any and all expenses incident to the performance of or
compliance with any registration or marketing of securities, including all (i) registration and
filing fees, and all other fees and expenses payable in connection with the listing of securities
on any securities exchange or automated interdealer quotation system, (ii) fees and expenses of
compliance with any securities or “blue sky” laws (including reasonable fees and disbursements of
counsel in connection with “blue sky” qualifications of the securities registered), (iii) expenses
in connection with the preparation, printing, mailing and delivery of any registration statements,
prospectuses and other documents in connection therewith and any amendments or supplements thereto,
(iv) security engraving and printing expenses, (v) internal expenses of the Company (including,
without limitation, all salaries and expenses of its officers and employees performing legal or
accounting duties), (vi) reasonable fees and disbursements of counsel for the Company and customary
fees and expenses for independent certified public accountants retained by the Company (including
the expenses relating to any comfort letters or costs associated with the delivery by independent
certified public accountants of any comfort letters requested pursuant to Section 2.03(h)), (vii)
reasonable fees and expenses of any special experts retained by the Company in connection with such
registration, (viii) reasonable fees, out-of-pocket costs and expenses of the Shareholders,
including one counsel for all of the Shareholders participating in the offering selected (A) by
Modular, in the case of any offering in which Modular participates, or (B) in any other case, by
the Shareholders holding the majority of the Registrable Securities to be sold for the account of
all Shareholders in the offering, (ix) fees and expenses in connection with any review by the NASD
of the underwriting arrangements or other terms of the offering, and all fees and expenses of any
“qualified independent underwriter,” including the fees and expenses of any counsel thereto, (x)
fees and disbursements of underwriters customarily paid by issuers or sellers of securities, but
excluding any underwriting fees, discounts and commissions attributable to the sale of Registrable
Securities, (xi) costs of printing and producing any agreements among underwriters, underwriting
agreements, any “blue sky” or legal investment memoranda and any selling agreements and other
documents in connection with the offering, sale or delivery of the Registrable Securities, (xii)
transfer agents’ and registrars’ fees and expenses and the fees and expenses of any other agent or
trustee appointed in connection with such offering, (xiii) expenses relating to any analyst or
investor presentations or any “road shows” undertaken
3
in connection with the registration, marketing or selling of the Registrable Securities, (xiv) fees
and expenses payable in connection with any ratings of the Registrable Securities, including
expenses relating to any presentations to rating agencies and (xv) all out-of pocket costs and
expenses incurred by the Company or its appropriate officers in connection with their compliance
with Section 2.03(m).
“Rule 144” means Rule 144 (or any successor provisions) under the Securities Act.
“SEC” means the Securities and Exchange Commission.
“Securities Act” means the
Securities Act of 1933, as amended.
“Shareholder” means at any time, any Person (other than the Company) who shall then be a
party to or bound by this Agreement, so long as such Person shall “beneficially own” (as such
term is defined in Rule 13d-3 of the Exchange Act) any Company Securities.
“Subsidiary” means, with respect to any Person, any entity of which securities or other
ownership interests having ordinary voting power to elect a majority of the board of directors or
other persons performing similar functions are at the time directly or indirectly owned by such
Person.
“Transfer” means, with respect to any Company Securities, (i) when used as a verb, to sell,
assign, dispose of, exchange, pledge, encumber, hypothecate or otherwise transfer such Company
Securities or any participation or interest therein, whether directly or indirectly, or agree or
commit to do any of the foregoing and (ii) when used as a noun, a direct or indirect sale,
assignment, disposition, exchange, pledge, encumbrance, hypothecation, or other transfer of such
Company Securities or any participation or interest therein or any agreement or commitment to do
any of the foregoing.
(b) Each of the following terms is defined in the Section set forth opposite such
term:
| Term | Section | |||
Company |
Preamble | |||
Confidential Information |
3.01 | (b) | ||
Damages |
2.04 | |||
Demand Registration |
2.01 | (a) | ||
Indemnified Party |
2.06 | |||
Indemnifying Party |
2.06 | |||
Inspectors |
2.03 | (g) | ||
Lock-Up Period |
2.03 | |||
4
| Term | Section | |||
Maximum Offering Size |
2.01 | (e) | ||
Modular |
Preamble | |||
Piggyback Registration |
2.02 | (a) | ||
Records |
2.03 | (g) | ||
Registering Shareholders |
2.01 | (a) | ||
Representatives |
3.01 | (b) | ||
Requesting Shareholder |
2.01 | (a) | ||
ARTICLE 2
Registration Rights
Registration Rights
Section 2.01. Demand Registration, (a) If at any time following the earlier of (x) 180 days
after the effective date of the registration statement for the First Public Offering, (y) the
expiration of the period during which the managing underwriters for the First Public Offering shall
prohibit the Company from effecting any other public sale or distribution of Company Securities,
and (z) one year after the date of this Agreement, the Company shall receive a request from Modular
(Modular shall be referred to herein as the “Requesting Shareholder”) that the Company effect the
registration under the Securities Act of all or any portion of such Requesting Shareholder’s
Registrable Securities, and specifying the intended method of disposition thereof, then the Company
shall promptly give notice of such requested registration (each such request shall be referred to
herein as a “Demand Registration”) at least 15 Business Days prior to the anticipated filing date
of the registration statement relating to such Demand Registration to the other Shareholders and
thereupon shall use its best efforts to effect, as expeditiously as possible, the registration
under the Securities Act of:
(i) all Registrable Securities for which the Requesting Shareholder has
requested registration under this Section 2.01, and
(ii) subject to the restrictions set forth in Sections 2.01(e) and 2.02, all
other Registrable Securities of the same class as those requested to be registered by the
Requesting Shareholder that any Shareholders with rights to request registration under
Section 2.02 (all such Shareholders, together with the Requesting Shareholder, the
“Registering Shareholders”) have requested the Company to register by request received by
the Company within 15 Business Days after such Shareholders receive the Company’s notice
of the Demand Registration,
all to the extent necessary to permit the disposition (in accordance with the intended methods
thereof as aforesaid) of the Registrable Securities so to be registered, provided that the Company
shall not be obligated to effect a Demand
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Registration unless the aggregate gross proceeds expected to be received from the sale of the
Registrable Securities requested to be included in such Demand Registration equals or exceeds (x)
$25,000,000, if such Demand Registration would constitute a First Public Offering, or (y)
$5,000,000, in all other cases. In no event shall the Company be required to effect more than one
Demand Registration hereunder within any ninety day period.
(b) Promptly after the expiration of the 15-Business Day-period referred to in Section
2.01(a)(ii), the Company will notify all Registering Shareholders of the identities of the other
Registering Shareholders and the number of shares of Registrable Securities requested to be
included therein. At any time prior to the effective date of the registration statement relating to
such registration, the Requesting Shareholders may revoke such request, without liability to any of
the other Registering Shareholders, by providing a notice to the Company revoking such request.
(c) The Company shall be liable for and pay all Registration Expenses in connection with any
Demand Registration, regardless of whether such Registration is effected.
(d) A Demand Registration shall not be deemed to have occurred:
(i) unless the registration statement relating thereto (A) has become effective
under the Securities Act and (B) has remained effective for a period of at least 180 days
(or such shorter period in which all Registrable Securities of the Registering
Shareholders included in such registration have actually been sold thereunder), provided
that such registration statement shall not be considered a Demand Registration if, after
such registration statement becomes effective, (1) such registration statement is
interfered with by any stop order, injunction or other order or requirement of the SEC or
other governmental agency or court and (2) less than 75% of the Registrable Securities
included in such registration statement have been sold thereunder; or
(ii)
if the Maximum Offering Size is reduced in accordance with Section 2.01(e)
such that less than 662/3% of the Registrable Securities of the Requesting
Shareholders sought to be included in such registration are included.
(e) If a Demand Registration involves an underwritten Public Offering and the managing
underwriter advises the Company and the Requesting Shareholders that, in its view, the number of
shares of Registrable Securities requested to be included in such registration (including any
securities that the Company proposes to be included that are not Registrable Securities) exceeds
the largest number of shares that can be sold without having an adverse effect on such
6
offering,
including the price at which such shares can be sold (the
“Maximum Offering Size”),
the Company shall include in such registration, in the priority listed below, up to the
Maximum Offering Size:
(i) first, all Registrable Securities requested to be registered by Modular,
(ii) second, all Registrable Securities requested to be included in such
registration by any other Registering Shareholder (allocated, if necessary for the offering
not to exceed the Maximum Offering Size, pro rata among such other Shareholders on the
basis of the relative number of Registrable Securities so requested to be included in such
registration by each such Shareholder), and
(iii) third, any securities proposed to be registered by the Company.
(f) Upon notice to each Requesting Shareholder, the Company may postpone effecting a
registration pursuant to this Section 2.01 on one occasion during any period of twelve consecutive
months for a reasonable time specified in the notice but not exceeding 90 days (which period may
not be extended or renewed), if (i) an investment banking firm of recognized national standing
shall advise the Company and the Requesting Shareholders in writing that effecting the registration
would materially and adversely affect an offering of securities of such Company the preparation of
which had then been commenced or (ii) the Company is in possession of material non-public
information the disclosure of which during the period specified in such notice the Company
reasonably believes would not be in the best interests of the Company.
Section 2.02. Piggyback Registration. (a) If at any time the Company proposes to register any
Company Securities under the Securities Act (other than a registration on Form S-8 or S-4, or any
successor forms, relating to Ordinary Shares issuable upon exercise of employee stock options or in
connection with any employee benefit or similar plan of the Company or in connection with a direct
or indirect acquisition by the Company of another Person), whether or not for sale for its own
account, the Company shall each such time give prompt notice at least 30 Business Days prior to the
anticipated filing date of the registration statement relating to such registration to each
Shareholder, which notice shall set forth such Shareholder’s rights under this Section 2.02 and
shall offer such Shareholder the opportunity to include in such registration statement the number
of Registrable Securities of the same class or series as those proposed to be registered as each
such Shareholder may request (a “Piggyback Registration”), subject to the provisions of Section
2.02(b). Upon the request of any such Shareholder made within 15 Business Days after the receipt of
notice from the Company (which request shall specify the number of Registrable Securities
7
intended to be registered by such Shareholder), the Company shall use its best efforts to effect
the registration under the Securities Act of all Registrable Securities that the Company has been
so requested to register by all such Shareholders, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that (i) if such
registration involves an underwritten Public Offering, all such Shareholders requesting to be
included in the Company’s registration must sell their Registrable Securities to the underwriters
selected as provided in Section 2.03(f)(i) on the same terms and conditions as apply to the Company
or the Requesting Shareholders, as applicable, and (ii) if, at any time after giving notice of its
intention to register any Company Securities pursuant to this Section 2.02(a) and prior to the
effective date of the registration statement filed in connection with such registration, the
Company shall determine for any reason not to register such securities, the Company shall give
notice to all such Shareholders and, thereupon, shall be relieved of its obligation to register any
Registrable Securities in connection with such registration. No registration effected under this
Section 2.02 shall relieve the Company of its obligations to effect a Demand Registration to the
extent required by Section 2.01. The Company shall pay all Registration Expenses in connection with
each Piggyback Registration.
(b) If a Piggyback Registration involves an underwritten Public Offering (other than any
Demand Registration, in which case the provisions with respect to priority of inclusion in such
offering set forth in Section 2.01(e) shall apply) and the managing underwriter advises the Company
that, in its view, the number of Ordinary Shares that the Company and such Shareholders intend to
include in such registration exceeds the Maximum Offering Size, the Company shall include in such
registration, in the following priority, up to the Maximum Offering Size:
(i) first, so much of the Company Securities proposed to be registered for the
account of the Company as would not cause the offering to exceed the Maximum Offering
Size,
(ii) second, so much of the Company Securities proposed to be included in such
registration by Modular as would not cause the offering to exceed the Maximum Offering
size, and
(iii) third, all Registrable Securities requested to be included in such
registration by any other Shareholders pursuant to Section 2.02 (allocated, if necessary
for the offering not to exceed the Maximum Offering Size, pro rata among such Shareholders
on the basis of the relative number of shares of Registrable Securities so requested to be
included in such registration by each).
8
Section 2.03. Registration Procedures. Whenever Shareholders request that any Registrable
Securities be registered pursuant to Section 2.01 or 2.02, subject to the provisions of such
Sections, the Company shall use its best efforts to effect the registration and the sale of such
Registrable Securities in accordance with the intended method of disposition thereof as quickly as
practicable, and, in connection with any such request:
(a) The Company shall as expeditiously as possible prepare and file with the SEC a
registration statement on any form for which the Company then qualifies or that counsel for the
Company shall deem appropriate and which form shall be available for the sale of the Registrable
Securities to be registered thereunder in accordance with the intended method of distribution
thereof, and use its best efforts to cause such filed registration statement to become and remain
effective for a period of not less than 180 days, or in the case of a shelf registration statement,
one year (or such shorter period in which all of the Registrable Securities of the Registering
Shareholders included in such registration statement shall have actually been sold thereunder).
(b) Prior to filing a registration statement or prospectus or any amendment or supplement
thereto, the Company shall, if requested, furnish to each participating Shareholder and each
underwriter, if any, of the Registrable Securities covered by such registration statement copies of
such registration statement as proposed to be filed, and thereafter the Company shall furnish to
such Shareholder and underwriter, if any, such number of copies of such registration statement,
each amendment and supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such registration statement
(including each preliminary prospectus and any summary prospectus) and any other prospectus filed
under Rule 424 or Rule 430A under the Securities Act and such other documents as such Shareholder
or underwriter may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such Shareholder. Each Shareholder shall have the right to request that the
Company modify any information contained in such registration statement, amendment and supplement
thereto pertaining to such Shareholder and the Company shall use its best efforts to comply with
such request, provided, however, that the Company shall not have any obligation so to modify any
information if the Company reasonably expects that so doing would cause the prospectus to contain
an untrue statement of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) After the filing of the registration statement, the Company shall (i) cause the related
prospectus to be supplemented by any required prospectus supplement, and, as so supplemented, to be
filed pursuant to Rule 424 under the Securities Act, (ii) comply with the provisions of the
Securities Act with respect
9
to the disposition of all Registrable Securities covered by such registration statement during the
applicable period in accordance with the intended methods of disposition by the Registering
Shareholders thereof set forth in such registration statement or supplement to such prospectus and
(iii) promptly notify each Registering Shareholder holding Registrable Securities covered by such
registration statement of any stop order issued or threatened by the SEC or any state securities
commission and take all reasonable actions required to prevent the entry of such stop order or to
remove it if entered.
(d) The Company shall use its best efforts to (i) register or qualify the Registrable
Securities covered by such registration statement under such other securities or “blue sky” laws of
such jurisdictions in the United States as any Registering Shareholder holding such Registrable
Securities reasonably (in light of such Shareholder’s intended plan of distribution) requests and
(ii) cause such Registrable Securities to be registered with or approved by such other governmental
agencies or authorities as may be necessary by virtue of the business and operations of the Company
and do any and all other acts and things that may be reasonably necessary or advisable to enable
such Shareholder to consummate the disposition of the Registrable Securities owned by such
Shareholder, provided that the Company shall not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify but for this
Section 2.03(d), (B) subject itself to taxation in any such jurisdiction or (C) consent to general
service of process in any such jurisdiction.
(e) The Company shall immediately notify each Registering Shareholder holding such 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 occurrence of an event requiring the
preparation of a supplement or amendment to such prospectus so that, as thereafter delivered to the
purchasers of such Registrable Securities, such prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein or necessary to
make the statements therein not misleading and promptly prepare and make available to each such
Shareholder and file with the SEC any such supplement or amendment.
(f) (i) Modular shall have the right, in its sole discretion, to select an underwriter or
underwriters in connection with any Public Offering resulting from the exercise by Modular of a
Demand Registration, which underwriter or underwriters may include any Affiliate of Modular and
(ii) the Company shall select an underwriter or underwriters in connection with any other Public
Offering, which underwriter or underwriters shall be reasonably acceptable to Modular. In
connection with any Public Offering, the Company shall enter into customary agreements (including
an underwriting agreement in customary form)
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and take such all other actions as are required in order to expedite or facilitate the disposition
of such Registrable Securities in any such Public Offering, including the engagement of a
“qualified independent underwriter” in connection with the qualification of the underwriting
arrangements with the NASD.
(g) Upon execution of confidentiality agreements in form and substance reasonably
satisfactory to the Company, the Company shall make available for inspection by any Registering
Shareholder and any underwriter participating in any disposition pursuant to a registration
statement being filed by the Company pursuant to this Section 2.03 and any attorney, accountant or
other professional retained by any such Shareholder or underwriter (collectively, the
“Inspectors”), all financial and other records, pertinent corporate documents and properties of the
Company (collectively, the “Records”) as shall be reasonably necessary or desirable to enable them
to exercise their due diligence responsibility, and cause the Company’s officers, directors and
employees to supply all information reasonably requested by any Inspectors in connection with such
registration statement. Records that the Company determines, in good faith, to be confidential and
that it notifies the Inspectors are confidential shall not be disclosed by the Inspectors unless
(i) the disclosure of such Records is necessary to avoid or correct a misstatement or omission in
such registration statement or (ii) the release of such Records is ordered pursuant to a subpoena
or other order from a court of competent jurisdiction. Each Registering Shareholder agrees that
information obtained by it as a result of such inspections shall be deemed confidential and shall
not be used by it or its Affiliates as the basis for any market transactions in the Company
Securities unless and until such information is made generally available to the public. Each
Registering Shareholder further agrees that, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, it shall give notice to the Company and allow the
Company, at its expense, to undertake appropriate action to prevent disclosure of the Records
deemed confidential.
(h) The Company shall furnish to each Registering Shareholder and to each such
underwriter, if any, a signed counterpart, addressed to such Shareholder or underwriter, of (i) an
opinion or opinions of counsel to the Company and (ii) a comfort letter or comfort letters from the
Company’s independent public accountants, each in customary form and covering such matters of the
kind customarily covered by opinions or comfort letters, as the case may be, as a majority of such
Shareholders or the managing underwriter therefor reasonably requests.
(i) The Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC, and make available to its security holders, as soon as reasonably
practicable, an earnings statement or such other document covering a period of 12 months, beginning
within three months after
11
the effective date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder.
(j) The Company may require each such Registering Shareholder promptly to furnish in
writing to the Company such information regarding the distribution of the Registrable Securities as
the Company may from time to time request and such other information as may be legally required in
connection with such registration.
(k) Each such Registering Shareholder agrees that, upon receipt of any notice from the
Company of the happening of any event of the kind described in Section 2.03(e), such Shareholder
shall forthwith discontinue disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Shareholder’s receipt of the copies of
the supplemented or amended prospectus contemplated by Section 2.03(e), and, if so directed by the
Company, such Shareholder shall deliver to the Company all copies, other than any permanent file
copies then in such Shareholder’s possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. If the Company shall give such
notice, the Company shall extend the period during which such registration statement shall be
maintained effective (including the period referred to in Section 2.03(a)) by the number of days
during the period from and including the date of the giving of notice pursuant to Section 2.03(e)
to the date when the Company shall make available to such Shareholder a prospectus supplemented or
amended to conform with the requirements of Section 2.03(e).
(l) The Company shall use its best efforts to list all Registrable Securities covered by
such registration statement on any securities exchange or quotation system on which any of the
Registrable Securities are then listed or traded.
(m) The Company shall have appropriate officers of the Company (i) prepare and make
presentations at any “road shows” and before analysts and rating agencies, as the case may be, (ii)
take other actions to obtain ratings for any Registrable Securities and (iii) otherwise use their
best efforts to cooperate as reasonably requested by the underwriters in the offering, marketing or
selling of the Registrable Securities.
Section 2.04. Indemnification by the Company. The Company agrees to indemnify and hold
harmless each Registering Shareholder holding Registrable Securities covered by a registration
statement, its officers, directors, employees, partners and agents, and each Person, if any, who
controls such Shareholder within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act from and against any and all losses, claims, damages, liabilities and
12
expenses (including reasonable expenses of investigation and reasonable attorneys’ fees and
expenses) (“Damages”) caused by or relating to any untrue statement or alleged untrue statement of
a material fact contained in any registration statement or prospectus relating to the Registrable
Securities (as amended or supplemented if the Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus, or caused by or relating to any omission or
alleged omission to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such Damages are caused by or related
to any such untrue statement or omission or alleged untrue statement or omission so made based upon
information furnished in writing to the Company by such Shareholder or on such Shareholder’s behalf
expressly for use therein, provided that, with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, or in any prospectus, as
the case may be, the indemnity agreement contained in this paragraph shall not apply to the extent
that any Damages result from the fact that a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) was not sent or given to the Person asserting any such
Damages at or prior to the written confirmation of the sale of the Registrable Securities concerned
to such Person if it is determined that the Company has provided such prospectus to such
Shareholder and it was the responsibility of such Shareholder to provide such Person with a current
copy of the prospectus (or such amended or supplemented prospectus, as the case may be) and such
current copy of the prospectus (or such amended or supplemented prospectus, as the case may be)
would have cured the defect giving rise to such Damages. The Company also agrees to indemnify any
underwriters of the Registrable Securities, their officers and directors and each Person who
controls such underwriters within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act on substantially the same basis as that of the indemnification of the Shareholders
provided in this Section 2.04.
Section 2.05. Indemnification by Participating Shareholders. Each Registering Shareholder
holding Registrable Securities included in any registration statement agrees, severally but not
jointly, to indemnify and hold harmless the Company, its officers, directors and agents and each
Person, if any, who controls the Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the
Company to such Shareholder, but only (i) with respect to information furnished in writing by such
Shareholder or on such Shareholder’s behalf expressly for use in any registration statement or
prospectus relating to the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus or (ii) to the extent that any Damages result from the fact that a current
copy of the prospectus (or such amended or supplemented prospectus, as the case may be) was not
sent or given to the Person asserting any such Damages at or prior to the written confirmation of
the sale of the Registrable
13
Securities concerned to such Person if it is determined that it was the responsibility of
such Shareholder to provide such Person with a current copy of the prospectus (or such amended or
supplemented prospectus, as the case may be) and such current copy of the prospectus (or such
amended or supplemented prospectus, as the case may be) would have cured the defect giving rise to
such loss, claim, damage, liability or expense. Each such Shareholder also agrees to indemnify and
hold harmless underwriters of the Registrable Securities, their officers and directors and each
Person who controls such underwriters within the meaning of either Section 15 of the Securities Act
or Section 20 of the Exchange Act on substantially the same basis as that of the indemnification of
the Company provided in this Section 2.05. As a condition to including Registrable Securities in
any registration statement filed in accordance with Article 2, the Company may require that it
shall have received an undertaking reasonably satisfactory to it from any underwriter to indemnify
and hold it harmless to the extent customarily provided by underwriters with respect to similar
securities. No Registering Shareholder shall be liable under this Section 2.05 for any Damages in
excess of the net proceeds realized by such Shareholder in the sale of Registrable Securities of
such Shareholder to which such Damages relate.
Section 2.06. Conduct of Indemnification Proceedings. If any proceeding (including any
governmental investigation) shall be instituted involving any Person in respect of which indemnity
may be sought pursuant to this Article 2, such Person (an “Indemnified Party”) shall promptly
notify the Person against whom such indemnity may be sought (the “Indemnifying Party”) in writing
and the Indemnifying Party shall assume the defense thereof, including the employment of counsel
reasonably satisfactory to such Indemnified Party, and shall assume the payment of all fees and
expenses, provided that the failure of any Indemnified Party so to notify the Indemnifying Party
shall not relieve the Indemnifying Party of its obligations hereunder except to the extent that the
Indemnifying Party is materially prejudiced by such failure to notify. In any such proceeding, any
Indemnified Party shall have the right to retain its own counsel, but the fees and expenses of such
counsel shall be at the expense of such Indemnified Party unless (i) the Indemnifying Party and the
Indemnified Party shall have mutually agreed to the retention of such counsel or (ii) in the
reasonable judgment of such Indemnified Party representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between them. It is
understood that, in connection with any proceeding or related proceedings in the same jurisdiction,
the Indemnifying Party shall not be liable for the reasonable fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel) at any time for all such Indemnified
Parties, and that all such fees and expenses shall be reimbursed as they are incurred. In the case
of any such separate firm for the Indemnified Parties, such firm shall be designated in writing by
the Indemnified Parties. The Indemnifying Party shall not be liable for any settlement of any
proceeding effected without its
14
written consent, but if settled with such consent, or if there be a final judgment for the
plaintiff, the Indemnifying Party shall indemnify and hold harmless such Indemnified Parties from
and against any loss or liability (to the extent stated above) by reason of such settlement or
judgment. Without the prior written consent of the Indemnified Party, no Indemnifying Party shall
effect any settlement of any pending or threatened proceeding in respect of which any Indemnified
Party is or could have been a party and indemnity could have been sought hereunder by such
Indemnified Party, unless such settlement includes an unconditional release of such Indemnified
Party from all liability arising out of such proceeding.
Section 2.07. Contribution. If the indemnification provided for in this Article 2 is
unavailable to the Indemnified Parties in respect of any Damages, then each such Indemnifying
Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or
payable by such Indemnified Party as a result of such Damages (i) as between the Company and the
Registering Shareholders holding Registrable Securities covered by a registration statement on the
one hand and the underwriters on the other, in such proportion as is appropriate to reflect the
relative benefits received by the Company and such Shareholders on the one hand and the
underwriters on the other, from the offering of the Registrable Securities, or if such allocation
is not permitted by applicable law, in such proportion as is appropriate to reflect not only the
relative benefits but also the relative fault of the Company and such Shareholders on the one hand
and of such underwriters on the other in connection with the statements or omissions that resulted
in such Damages, as well as any other relevant equitable considerations and (ii) as between the
Company on the one hand and each such Shareholder on the other, in such proportion as is
appropriate to reflect the relative fault of the Company and of each such Shareholder in connection
with such statements or omissions, as well as any other relevant equitable considerations. The
relative benefits received by the Company and such Shareholders on the one hand and such
underwriters on the other shall be deemed to be in the same proportion as the total proceeds from
the offering (net of underwriting discounts and commissions but before deducting expenses) received
by the Company and such Shareholders bear to the total underwriting discounts and commissions
received by such underwriters, in each case as set forth in the table on the cover page of the
prospectus. The relative fault of the Company and such Shareholders on the one hand and of such
underwriters on the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company and such Shareholders or by such
underwriters. The relative fault of the Company on the one hand and of each such Shareholder on the
other shall be determined by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a material fact
15
relates to information supplied by such party, and the parties’ relative intent,
knowledge, access to information and opportunity to correct or prevent such statement or
omission.
The Company and the Registering Shareholders agree that it would not be just and equitable if
contribution pursuant to this Section 2.07 were determined by pro rata allocation (even if the
underwriters were treated as one entity for such purpose) or by any other method of allocation that
does not take account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party as a result of the Damages referred
to in the immediately preceding paragraph shall be deemed to include, subject to the limitations
set forth above, any legal or other expenses reasonably incurred by such Indemnified Party in
connection with investigating or defending any such action or claim. Notwithstanding the provisions
of this Section 2.07, no underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Registrable Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any Damages that such
underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission, and no Registering Shareholder shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable Securities of such
Shareholder were offered to the public (less underwriters’ discounts and commissions) exceeds the
amount of any Damages that such Shareholder has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission. No Person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent misrepresentation. Each
Registering Shareholder’s obligation to contribute pursuant to this Section 2.07 is several in the
proportion that the proceeds of the offering received by such Shareholder bears to the total
proceeds of the offering received by all such Registering Shareholders and not joint.
Section 2.08. Participation in Public Offering. No Person may participate in any Public
Offering hereunder unless such Person (a) agrees to sell such Person’s securities on the basis
provided in any underwriting arrangements approved by the Persons entitled hereunder to approve
such arrangements and (b) completes and executes all questionnaires, powers of attorney,
indemnities, underwriting agreements and other documents reasonably required under the terms of
such underwriting arrangements and the provisions of this Agreement in respect of registration
rights.
Section 2.09. Other Indemnification. Indemnification similar to that specified herein (with
appropriate modifications) shall be given by the Company and each Registering Shareholder
participating therein with respect to any
16
required registration or other qualification of securities under any federal or state law or
regulation or governmental authority other than the Securities Act.
Section 2.10. Cooperation by the Company. If any Shareholder shall transfer any Registrable
Securities pursuant to Rule 144, the Company shall cooperate, to the extent commercially
reasonable, with such Shareholder and shall provide to such Shareholder such information as such
Shareholder shall reasonably request.
Section 2.11. No Transfer of Registration Rights. None of the rights of Shareholders under
this Article 2 shall be assignable by any Shareholder to any Person acquiring Securities in any
Public Offering or pursuant to Rule 144.
ARTICLE 3
Certain Covenants and Agreements
Section 3.01. Reports. The Company agrees to furnish Modular, for so long as Modular owns
any Company Securities:
(a) as soon as practicable and, in any event within 20 days after the end
of each month, the unaudited consolidated balance sheet of the Company and its
Subsidiaries as at the end of such month and the related unaudited statement of
operations and cash flow for such month, and for the portion of the fiscal year
then ended, in each case prepared in accordance with GAAP, setting forth in
comparative form the figures for the corresponding month and portion of the
previous fiscal year, and the figures for the corresponding month and portion of
the then current fiscal year as in the Company’s annual operating budget,
(b) as soon as practicable and, in any event, within 45 days after the end
of each of the first three fiscal quarters, the unaudited consolidated balance sheet
of the Company and its Subsidiaries as at the end of such quarter and the related
unaudited statement of operations and cash flow for such quarter and for the
portion of the fiscal year then ended, in each case prepared in accordance with
GAAP,
(c) as soon as practicable and, in any event, within 90 days after the end
of each fiscal year, (i) the audited consolidated balance sheet of the Company and
its Subsidiaries as at the end of such fiscal year and the related audited statement
of operations and cash flow for such fiscal year, and for the portion of the fiscal
year then ended, in each case prepared in accordance with GAAP and certified by
KPMG or another firm of independent public accountants of nationally
recognized standing, together with a comparison of the figures in such financial
17
statements with the figures for the previous fiscal year and the figures in the Company’s
annual operating budget, (ii) any management letters or other correspondence from such accountants
and (iii) the Company’s annual operating budget for the coming fiscal year,
(d) promptly following the preparation thereof, a copy of any revisions
to the annual operating budget delivered pursuant to clause (c) above,
(e) promptly upon their becoming available, copies of (i) all financial
statements, reports, notices and proxy statements sent or made generally available
by the Company to any of its security holders, (ii) all regular and periodic reports
and all registration statements and prospectuses filed by the Company with any
securities exchange or with the SEC and (iii) all press releases and other
statements made generally available by the Company to the public,
(f) as soon as practicable and, in any event, within five Business Days
after any officer of the Company obtains knowledge thereof, notice (with a
description in reasonable detail, and stating the action that the Company is taking
or proposes to take with respect thereto) of (i) the commencement of any material
litigation, investigation or other proceeding to which the Company or any of its
Subsidiaries is a party before any court or arbitrator or any governmental body,
agency or official or (ii) the existence of any material default or breach under this
Agreement or any other material contract or agreement to which the Company or
any of its Subsidiaries is a party, and
(g) as promptly as reasonably practicable, such other information with
respect to the Company or any of its Subsidiaries as may reasonably be requested
by Modular.
Section 3.02. Limitations on Subsequent Registration Rights. The Company agrees that it shall
not enter into any agreement with any holder or prospective holder of any securities of the Company
(a) that would allow such holder or prospective holder to include such securities in any Demand
Registration or Piggyback Registration 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
their inclusion would not reduce the amount of the Registrable Securities of the Shareholders
included therein or (b) on terms otherwise more favorable than this Agreement. The Company also
represents and warrants to each Shareholder that it has not previously entered into any agreement
with respect to any of its securities granting any registration rights to any Person.
Section 3.03. Conflicting Agreements. The Company represents and agrees that it shall not (a)
grant any proxy or enter into or agree to be bound by any voting trust or agreement with respect to
the Company Securities, except as expressly contemplated by this Agreement, (b) enter into any
agreement or
18
arrangement of any kind with any Person with respect to its Company Securities inconsistent
with the provisions of this Agreement or for the purpose or with the effect of denying or reducing
the rights of any other Shareholder under this Agreement, including agreements or arrangements with
respect to the Transfer or voting of its Company Securities or (c) act, for any reason, as a member
of a group or in concert with any other Person in connection with the Transfer or voting of its
Company Securities in any manner that is inconsistent with the provisions of this Agreement.
ARTICLE 4
Miscellaneous
Section 4.01. Binding Effect; Assignability; Benefit. (a) This Agreement shall inure to
the benefit of and be binding upon the parties hereto and their respective heirs, successors, legal
representatives and permitted assigns.
(b) Neither this Agreement nor any right, remedy, obligation or liability
arising hereunder or by reason hereof shall be assignable by any party hereto
pursuant to any Transfer of Company Securities or otherwise, except that, at the
sole written election of Modular, Persons to whom Modular has Transferred
Company Securities may (unless already bound hereby) execute and deliver to the
Company an agreement to be bound by this Agreement in the form of Exhibit A
hereto and shall thenceforth be a “Shareholder” for purposes of this Agreement.
(c) Nothing in this Agreement, expressed or implied, is intended to
confer on any Person other than the parties hereto, and their respective heirs,
successors, legal representatives and permitted assigns, any rights, remedies,
obligations or liabilities under or by reason of this Agreement.
Section 4.02. Notices. All notices, requests and other communications to any party shall be in
writing and shall be delivered in person, mailed by certified or registered mail, return receipt
requested, or sent by facsimile transmission,
if to the Company to:
SMART Modular Technologies (WWH), Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax:(▇▇▇)▇▇▇-▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President
Fax:(▇▇▇)▇▇▇-▇▇▇▇
19
if to Modular in accordance with Section 12.10 of the LLC Agreement.
All notices, requests and other communications shall be deemed received on the date of receipt
by the recipient thereof if received prior to 5:00 p.m. in the place of receipt and such day is a
Business Day in the place of receipt. Otherwise, any such notice, request or communication shall be
deemed not to have been received until the next succeeding Business Day in the place of receipt.
Any notice, request or other written communication sent by facsimile transmission shall be
confirmed by certified or registered mail, return receipt requested, posted within one Business
Day, or by personal delivery, whether courier or otherwise, made within two Business Days after the
date of such facsimile transmissions.
Any Person that becomes a Shareholder shall provide its address and fax number to the Company.
Section 4.03. Waiver; Amendment; Termination. (a) No provision of this Agreement may be
waived except by an instrument in writing executed by the party against whom the waiver is to be
effective. No provision of this Agreement may be amended or otherwise modified except by an
instrument in writing executed by the Company and Modular.
Section 4.04. Fees and Expenses. The Company shall pay all out-of-pocket costs and expenses of
Modular, including the reasonable fees and expenses of counsel, incurred in connection with the
preparation of this Agreement, or any amendment or waiver hereof, and the transactions contemplated
hereby and all matters related hereto.
Section 4.05. Governing Law. This Agreement shall be governed by, and construed in accordance
with, the laws of the State of California, without regard to the conflicts of laws rules of such
state.
Section 4.06. Jurisdiction. The parties hereby agree that any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in connection with,
this Agreement or the transactions contemplated hereby shall be brought in the United States
District Court for the Northern District of California or any California State court sitting in San
Jose, California, so long as one of such courts shall have subject matter jurisdiction over such
suit, action or proceeding, and that any case of action arising out of this Agreement shall be
deemed to have arisen from a transaction of business in the State of California, and each of the
parties hereby irrevocably consents to the jurisdiction of such courts (and of the appropriate
appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the
fullest extent permitted by law, any objection that it may now or hereafter have to the laying of
the venue of any such suit, action or proceeding in any such court or that any such suit, action or
proceeding which is brought in any such court has been brought in an
20
inconvenient form. Process in any such suit, action or proceeding may be served on any party
anywhere in the world, whether within or without the jurisdiction of any such court. Without
limiting the foregoing, each party agrees that service of process on such party as provided in
Section 4.02 shall be deemed effective service of process on such party.
Section 4.07. WAIVER OF JURY TRIAL. EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY WAIVES ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY.
Section 4.08. Specific Enforcement. Each party hereto acknowledges that the remedies at law of
the other parties for a breach or threatened breach of this Agreement would be inadequate and, in
recognition of this fact, any party to this Agreement, without posting any bond, and in addition to
all other remedies that may be available, shall be entitled to obtain equitable relief in the form
of specific performance, a temporary restraining order, a temporary or permanent injunction or any
other equitable remedy that may then be available.
Section 4.09. Counterparts; Effectiveness. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement shall become effective
when each party hereto shall have received counterparts hereof signed by all of the other parties
hereto.
Section 4.10. Entire Agreement. This Agreement and the Subscription Agreement constitute the
entire agreement among the parties hereto and supersede all prior and contemporaneous agreements
and understandings, both oral and written, among the parties hereto with respect to the subject
matter hereof and thereof.
Section 4.11. Captions. The captions herein are included for convenience of reference only and
shall be ignored in the construction or interpretation hereof.
Section 4.12. Severability. If any term, provision, covenant or restriction of this Agreement
is held by a court of competent jurisdiction or other authority to be invalid, void or
unenforceable, the remainder of the terms, provisions, covenants and restrictions of this Agreement
shall remain in full force and effect and shall in no way be affected, impaired or invalidated so
long as the economic or legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such a determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of the parties as
closely as possible in an acceptable manner so that the
21
transactions contemplated hereby be consummated as originally contemplated to the fullest
extent possible.
22
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.
| SMART MODULAR TECHNOLOGIES (WWH), INC. | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | |||
| Title: | President | |||
| MODULAR, L.L.C. | ||||
| By: | ||||
| Name: | ▇▇▇▇ ▇▇▇▇▇▇ | |||
| Title: | Board Member | |||
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first above written.
| SMART MODULAR TECHNOLOGIES (WWH), INC. | ||||
| By: | ||||
| Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ | ||||
| Title: President | ||||
| MODULAR, L.L.C. | ||||
| By: | /s/ ▇▇▇▇ ▇▇▇▇▇▇ | |||
| Name: ▇▇▇▇ ▇▇▇▇▇▇ | ||||
| Title: Board Member | ||||