Exhibit 10.7
[EXECUTION COPY]
NETCOM SYSTEMS, INC.
REGISTRATION AGREEMENT
THIS AGREEMENT is made as of August 29, 1997, by and among Netcom
Systems, Inc., a California corporation (the "COMPANY"), the parties listed as
Investors on the SCHEDULE OF INVESTORS attached hereto (collectively, the
"INVESTORS") and the parties listed as Existing Shareholders on the SCHEDULE OF
EXISTING SHAREHOLDERS attached hereto (collectively, the "EXISTING
SHAREHOLDERS").
WHEREAS, the parties to this Agreement are parties to a
Recapitalization Agreement dated as of August 29, 1997 (as the same may be
amended and modified from time to time in accordance with its terms, the
"RECAPITALIZATION AGREEMENT");
WHEREAS, in order to induce the Investors to enter into the
Recapitalization Agreement, the Company has agreed to provide the registration
rights set forth in this Agreement;
WHEREAS, the execution and delivery of this Agreement is a condition
to the Closing under the Recapitalization Agreement; and
WHEREAS, unless otherwise provided in this Agreement, capitalized
terms used herein shall have the meanings set forth in paragraph 8 hereof.
NOW, THEREFORE, the parties hereto agree as follows:
1. DEMAND REGISTRATIONS.
(a) REQUESTS FOR REGISTRATION. At any time after the Closing under
the Recapitalization Agreement, the holders of at least 66 2/3% of the Investor
Registrable Securities may request registration under the Securities Act of all
or any portion of their Registrable Securities on Form S-1 or any similar
long-form registration ("LONG-FORM REGISTRATIONS"), and the holders of at least
25% of the Investor Registrable Securities may request registration under the
Securities Act of all or any portion of their Investor Registrable Securities on
Form S-2 or S-3 or any similar short-form registration ("SHORT-FORM
REGISTRATIONS") if the Company is eligible to use any such short form. All
registrations requested pursuant to this paragraph 1(a) are referred to herein
as "DEMAND REGISTRATIONS." Each request for a Demand Registration shall specify
the approximate number of Registrable Securities requested to be registered and
the anticipated per share price range for such offering. Within ten days after
receipt of a request for a Demand Registration, the Company shall give written
notice of such requested registration to all other holders of Registrable
Securities and, subject to paragraph 1(d) below, shall include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 20 days after the receipt
of the Company's notice.
(b) LONG-FORM REGISTRATIONS. The holders of Investor Registrable
Securities shall be entitled to request (i) four Long-Form Registrations in
which the Company shall pay all Registration Expenses ("COMPANY-PAID LONG-FORM
REGISTRATIONS") and (ii) an unlimited number of Long-Form Registrations in which
the holders of Investor Registrable Securities shall pay their share of the
Registration Expenses as set forth in paragraph 5 hereof; PROVIDED THAT the
aggregate offering value of the Registrable Securities requested to be included
in any Long-Form Registration must equal at least $3,000,000. A registration
shall not count as one of the permitted Company-paid Long-Form Registrations
until it has become effective, and neither the last nor any subsequent
Company-paid Long-Form Registration shall count as one of the permitted
Company-paid Long-Form Registrations unless the holders of Investor Registrable
Securities are able to register and sell at least 75% of the Investor
Registrable Securities requested to be included in such registration; PROVIDED
THAT in any event the Company shall pay all Registration Expenses in connection
with any registration initiated as a Company-paid Long-Form Registration whether
or not it has become effective and whether or not such registration has counted
as one of the permitted Company-paid Long-Form Registrations hereunder.
(c) SHORT-FORM REGISTRATIONS. In addition to the Long-Form
Registrations provided pursuant to paragraph 1(b) above, the holders of Investor
Registrable Securities shall be entitled to request an unlimited number of
Short-Form Registrations in which the Company shall pay all Registration
Expenses; PROVIDED THAT the aggregate offering value of the Registrable
Securities requested to be included in any Short-Form Registration must equal at
least $1,000,000. Demand Registrations shall be Short-Form Registrations
whenever the Company is permitted to use any applicable short form. After the
Company has become subject to the reporting requirements of the Securities
Exchange Act, the Company shall use its reasonable best efforts to make
Short-Form Registrations on Form S-3 available for the sale of Registrable
Securities. The Company shall pay all Registration Expenses in connection with
any registration initiated as a Short-Form Registration whether or not it has
become effective.
(d) PRIORITY ON DEMAND REGISTRATIONS. The Company shall not include
in any Demand Registration any securities which are not Registrable Securities
without the prior written consent of the holders of at least 66 2/3% of the
Investor Registrable Securities included in such registration. If a Demand
Registration is an underwritten offering and the managing underwriters advise
the Company in writing that in their opinion the number of Registrable
Securities and, if permitted hereunder, other securities requested to be
included in such offering exceeds the number of Registrable Securities and other
securities, if any, which can be sold in an orderly manner in such offering
within a price range acceptable to the holders of at least 66 2/3% of the
Investor Registrable Securities included in such registration, the Company shall
include in such registration (i) first, the Registrable Securities requested to
be included in such registration, pro rata among the holders of such Registrable
Securities on the basis of the number of Registrable Securities owned by each
such holder and (ii) second, any other securities requested to be included in
such registration; PROVIDED THAT, notwithstanding the foregoing, in connection
with the first two registrations of Investor Registrable Securities pursuant to
this Agreement (whether pursuant to a Demand Registration or a Piggyback
Registration), if any such registration is a Demand Registration, the Company
shall include (i) first, the Investor Registrable Securities requested to be
included in such registration, pro rata among the holders of such Investor
Registrable Securities on the basis of the number of Investor
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Registrable Securities owned by each such holder,(ii) second, the Other
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Other Registrable Securities on the basis of the
number of Other Registrable Securities owned by each such holder and (iii)
third, any other securities requested to be included in such registration (it
being understood, however, that neither the last nor any subsequent registration
subject to this proviso shall count as one of the two registrations subject to
this proviso unless the holders of Investor Registrable Securities are able to
register and sell at least 75% of the Investor Registrable Securities requested
to be included in such registration).
(e) EXPENSES. Any Persons other than holders of Registrable
Securities who participate in Demand Registrations which are not at the
Company's expense must pay their share of the Registration Expenses as provided
in paragraph 5 hereof.
(f) SELECTION OF UNDERWRITERS. The Company (acting through its Board
of Directors) shall select the investment banker(s) and manager(s) to administer
any offerings under this paragraph 1.
(g) OTHER REGISTRATION RIGHTS. Except as provided in this Agreement,
the Company shall not grant to any Persons the right to request the Company to
register any equity securities of the Company (whether as a demand registration
or piggyback registration), or any securities convertible or exchangeable into
or exercisable for such securities, without the prior written consent of the
holders of at least 66 2/3% of the Investor Registrable Securities; PROVIDED
THAT the Company may grant rights to other Persons to participate in Piggyback
Registrations so long as such rights are subordinate to the rights of the
holders of Investor Registrable Securities with respect to such Piggyback
Registrations.
(h) RESTRICTIONS ON DEMAND REGISTRATIONS. The Company shall not be
obligated to effect any Demand Registration within 180 days after the effective
date of the Company's initial public offering of Common Stock under the
Securities Act or within 90 days after the effective date of a previous Demand
Registration or a previous registration in which the holders of Investor
Registrable Securities were given piggyback rights pursuant to paragraph 2
hereof. The Company may postpone for up to 90 days (up to 60 days in the case
of clause (ii) below) the filing or the effectiveness of a registration
statement for a Demand Registration if the Company's Board of Directors
determines in its reasonable good faith judgment that such Demand Registration
would reasonably be expected to have (i) a material adverse effect on (or
require premature disclosure of) any proposal or plan by the Company or any of
its Subsidiaries to engage in any acquisition of assets (other than in the
ordinary course of business) or any merger, consolidation, tender offer,
reorganization or similar transaction or (ii) a material adverse effect on the
Company's business or stock price; PROVIDED THAT in such event, the holders of
Investor Registrable Securities initially requesting such Demand Registration
shall be entitled to withdraw such request and, if such request is withdrawn,
such Demand Registration shall not count as one of the permitted Demand
Registrations hereunder and the Company shall pay all Registration Expenses in
connection with such registration. The Company may delay a Demand Registration
hereunder only once in any twelve-month period.
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2. PIGGYBACK REGISTRATIONS.
(a) RIGHT TO PIGGYBACK. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to a Demand
Registration or a registration on Form S-4 or S-8 or any successor or similar
forms) and the registration form to be used may be used for the registration of
Registrable Securities (a "PIGGYBACK REGISTRATION"), the Company shall give
prompt written notice to all holders of Registrable Securities of its intention
to effect such a registration and, subject to paragraphs 2(c) and 2(d) below,
shall include in such registration all Registrable Securities with respect to
which the Company has received written requests for inclusion therein within 20
days after the receipt of the Company's notice.
(b) PIGGYBACK EXPENSES. The Registration Expenses of the holders of
Registrable Securities shall be paid by the Company in all Piggyback
Registrations whether or not such registration is consummated.
(c) PRIORITY ON PRIMARY REGISTRATIONS. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
Registrable Securities owned by each such holder and (iii) third, any other
securities requested to be included in such registration; PROVIDED THAT,
notwithstanding the foregoing, in connection with the first two registrations of
Investor Registrable Securities pursuant to this Agreement (whether pursuant to
a Demand Registration or a Piggyback Registration), if any such registration is
to be made in connection with an underwritten primary registration on behalf of
the Company, the Company shall include (i) first, the securities the Company
proposes to sell,(ii) second, the Investor Registrable Securities requested to
be included in such registration, pro rata among the holders of such Investor
Registrable Securities on the basis of the number of Investor Registrable
Securities owned by each such holder,(iii) third, the Other Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Other Registrable Securities on the basis of the number of Other
Registrable Securities owned by each such holder and (iv) fourth, any other
securities requested to be included in such registration (it being understood,
however, that neither the last nor any subsequent registration subject to this
proviso shall count as one of the two registrations subject to this proviso
unless the holders of Investor Registrable Securities are able to register and
sell at least 75% of the Investor Registrable Securities requested to be
included in such registration).
(d) PRIORITY ON SECONDARY REGISTRATIONS. If a Piggyback Registration
is an underwritten secondary registration on behalf of holders of the Company's
securities (other than the holders of Investor Registrable Securities), and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities requested to be
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included therein by the holders requesting such registration and the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of securities owned by
each such holder and (ii)second, any other securities requested to be included
in such registration; PROVIDED THAT, notwithstanding the foregoing, in
connection with the first two registrations of Investor Registrable Securities
pursuant to this Agreement (whether pursuant to a Demand Registration or a
Piggyback Registration), if any such registration is to be made in connection
with an underwritten secondary registration on behalf of holders of the
Company's securities (other than the holders of Investor Registrable
Securities), the Company shall include (i) first, the securities requested to be
included therein by the holders requesting such registration and the Investor
Registrable Securities requested to be included in such registration, pro rata
among the holders of such securities on the basis of the number of securities
owned by each such holder, (ii) second, the Other Registrable Securities
requested to be included in such registration, pro rata among the holders of
such Other Registrable Securities on the basis of the number of Other
Registrable Securities owned by each such holder and (iii) third, any other
securities requested to be included in such registration (it being understood,
however, that neither the last nor any subsequent registration subject to this
proviso shall count as one of the two registrations subject to this proviso
unless the holders of Investor Registrable Securities are able to register and
sell at least 75% of the Investor Registrable Securities requested to be
included in such registration).
(e) WITHDRAWAL BY THE COMPANY. If, at any time after giving written
notice of its intention to register any of its securities as set forth in
paragraph 2(a) and prior to the effective date of such registration statement
filed in connection with such registration, the Company's board of directors
shall determine in its good faith judgment for any reason not to register such
securities, the Company may, at its election, give written notice of such
determination to each holder of Registrable Securities and thereupon shall be
relieved of its obligation to register any Registrable Securities in connection
with such registration (but not from its obligation to pay the Registration
Expenses in connection therewith as provided herein).
3. HOLDBACK AGREEMENTS.
(a) No holder of Registrable Securities shall effect any public sale
or distribution (including sales pursuant to Rule 144) of equity securities of
the Company, or any securities convertible into or exchangeable or exercisable
for such securities, during the seven days prior to and the 180-day period
beginning on the effective date of the Company's initial public offering of its
Common Stock under the Securities Act or during the seven days prior to and the
90-day period beginning on the effective date of the next registered public
offering of the Company's Common Stock (except as part of such underwritten
registration), unless the underwriters managing the registered public offering
otherwise agree in writing.
(b) The Company (i) shall not effect any public sale or distribution
of its equity securities, or any securities convertible into or exchangeable or
exercisable for such securities, during the seven days prior to and the 180-day
period beginning on the effective date of the Company's initial public offering
of its Common Stock under the Securities Act or during the seven days prior to
and the 90-day period beginning on the effective date of (A) the next registered
public
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offering of the Company's Common Stock and (B) any underwritten Demand
Registration or any underwritten Piggyback Registration in which Registrable
Securities are included (except as part of such underwritten registration or
pursuant to registrations on Form S-8 or any successor or similar form), unless
the underwriters managing the registered public offering otherwise agree, and
(ii) shall cause each holder of at least 2% of its Common Stock, or any
securities convertible into or exchangeable or exercisable for Common Stock,
purchased from the Company at any time after the date of this Agreement (other
than in a registered public offering) to agree not to effect any public sale or
distribution (including sales pursuant to Rule 144) of any such securities
during such periods (except as part of such underwritten registration, if
otherwise permitted), unless the underwriters managing the registered public
offering otherwise agree in writing.
4. REGISTRATION PROCEDURES. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, 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, and pursuant thereto the Company shall
as expeditiously as possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
best efforts to cause such registration statement to become effective; PROVIDED
THAT before filing a registration statement or prospectus or any amendments or
supplements thereto, the Company shall (if requested) furnish to the counsel
selected by the holders of at least 66 2/3% of the Investor Registrable
Securities covered by such registration statement copies of all such documents
proposed to be filed, which documents shall be subject to the review and comment
of such counsel;
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of either
(i) not less than 120 days or, if such registration statement relates to an
underwritten offering, such longer period as in the opinion of counsel for the
underwriters a prospectus is required by law to be delivered in connection with
sales of Registrable Securities by any underwriter or dealer or (ii) such
shorter period as will terminate when all of the securities covered by such
registration statement have been disposed of in accordance with the intended
methods of disposition by the seller or sellers thereof as set forth in such
registration statement (but in any event not before the expiration of any longer
period required under the Securities Act), and to comply with the provisions of
the Securities Act with respect to the disposition of all securities covered by
such registration statement until such time as all such securities have been
disposed of in accordance with the intended methods of disposition by the seller
or sellers thereof set forth in such registration statement and the prospectus
used in connection therewith;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such
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registration statement (including each preliminary prospectus) and such other
documents as such seller may reasonably request in order to facilitate the
disposition of the Registrable Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller (including any underwriter) reasonably requests and do any and all
other acts and things which may be reasonably necessary or advisable to enable
such seller to consummate the disposition in such jurisdictions of the
Registrable Securities owned by such seller; PROVIDED THAT the Company shall not
be required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction;
(e) notify each seller of such Registrable Securities, 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 contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system and, if listed on the NASD automated quotation system, use its best
efforts to secure designation of all such Registrable Securities covered by such
registration statement as a NASDAQ "national market system security" within the
meaning of Rule 11Aa2-1 of the Securities and Exchange Commission or, failing
that, to secure NASDAQ authorization for such Registrable Securities and,
without limiting the generality of the foregoing, to arrange for at least two
market makers to register as such with respect to such Registrable Securities
with the NASD;
(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
at least 66 2/3% of the Investor Registrable Securities being sold or the
underwriters, if any, reasonably request in order to expedite or facilitate the
disposition of such Registrable Securities (including effecting a stock split or
a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney,
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accountant or other agent retained by any such seller or underwriter, all
necessary financial and other records, pertinent corporate documents and
properties of the Company, and cause the Company's officers, directors,
employees and independent accountants to supply all information reasonably
requested by any such seller, underwriter, attorney, accountant or agent in
connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after 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;
(k) permit any holder of Registrable Securities which holder, in its
sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order;
(m) use its best efforts to cause such Registrable Securities covered
by such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the sellers
thereof to consummate the disposition of such Registrable Securities; and
(n) obtain a cold comfort letter from the Company's independent
public accountants in customary form and covering such matters of the type
customarily covered by cold comfort letters as the holders of at least 66 2/3%
of the Investor Registrable Securities being sold reasonably request.
5. REGISTRATION EXPENSES.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration
and filing fees, fees and expenses of compliance with securities or blue sky
laws, printing expenses, messenger and delivery expenses, fees and disbursements
of custodians, and fees and disbursements of counsel for the Company and all
independent certified public accountants, underwriters (excluding discounts and
commissions payable with respect to Registrable Securities, which shall be paid
by the holders of such Registrable Securities) and other Persons retained by the
Company (all such expenses being herein called "REGISTRATION EXPENSES"), shall
be borne as provided in this Agreement, except that the Company
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shall, in any event, pay its internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), the expense of any annual audit or quarterly review, the
expense of any liability insurance and the expenses and fees for listing the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of at least 66 2/3% of the Investor Registrable
Securities included in such registration.
(c) To the extent Registration Expenses are not required to be paid
by the Company, each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be borne by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
6. INDEMNIFICATION.
(a) The Company agrees to indemnify, to the extent permitted by law,
each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, damages, liabilities and expenses caused by, or
relating to any action or proceeding arising out of or based upon, any untrue or
alleged untrue statement of material fact contained in any registration
statement, prospectus or preliminary prospectus or any amendment thereof or
supplement thereto or any omission or alleged omission of a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are caused by or contained in any
information furnished in writing to the Company by such holder expressly for use
therein or by such holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after the
Company has furnished such holder with a sufficient number of copies of the
same. In connection with an underwritten offering, the Company shall indemnify
such underwriters, their officers and directors and each Person who controls
such underwriters (within the meaning of the Securities Act) to the same extent
as provided above with respect to the indemnification of the holders of
Registrable Securities, except with respect to any information supplied by any
underwriter for use in such registration statement, prospectus or other offering
document and except that with respect to any untrue statement or omission or
alleged untrue statement or omission made in any preliminary prospectus, the
indemnity agreement contained in this paragraph 6(a) shall not inure to the
benefit of the underwriter from whom the Person asserting any such losses,
claims, damages, liabilities or expenses purchased shares concerned (or to the
benefit of any Person controlling such underwriter) to the extent that any such
loss, claim, damage, liability or expense of the underwriter or controlling
Person results from an untrue statement or omission in the preliminary
prospectus which was corrected in the prospectus if a copy of the prospectus was
not sent or given to such Person as required by the Securities Act.
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(b) In connection with any registration statement in which a holder
of Registrable Securities is participating, each such holder shall furnish to
the Company in writing such information and affidavits as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, shall indemnify the Company, its
directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; PROVIDED THAT the obligation to indemnify
shall be individual, not joint and several, for each holder and shall be limited
to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i) give
prompt written notice to the indemnifying party of any claim with respect to
which it seeks indemnification (PROVIDED THAT the failure to give such prompt
notice shall not impair any Person's right to indemnification hereunder to the
extent such failure has not prejudiced the indemnifying party) and (ii) unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim shall not be obligated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to such
claim.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. Each
indemnifying party also agrees to make such provisions, as are reasonably
requested by any indemnified party, for contribution to such party in the event
the indemnification provided for herein is unavailable for any reason.
7. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (i) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (ii) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
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8. DEFINITIONS.
(a) "INVESTOR REGISTRABLE SECURITIES" means (i) any Common Stock
issued or issuable upon conversion of the Convertible Preferred Stock issued
pursuant to the Recapitalization Agreement, (ii) any securities issued or
issuable with respect to the securities referred to in clause (i) above by way
of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization and
(iii) any other shares of Common Stock held by Persons holding securities
described in clauses (i) or (ii) above.
(b) "OTHER REGISTRABLE SECURITIES" means (i) any Common Stock held by
the Existing Shareholders and (ii) any Common Stock issued or issuable with
respect to the Common Stock referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization. As to any
particular Other Registrable Securities held by any Existing Shareholder, such
securities shall cease to be Other Registrable Securities when the aggregate
number of Other Registrable Securities held by such Person does not exceed one
percent of the number of shares of Common Stock then outstanding as shown by the
most recent report or statement published by the Company and such Person has
held such securities for at least one year.
(c) "REGISTRABLE SECURITIES" means, collectively, the Investor
Registrable Securities and the Other Registrable Securities. As to any
particular Registrable Securities, such securities shall cease to be Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or sold to the public through a broker,
dealer or market maker in compliance with Rule 144 under the Securities Act (or
any similar rule then in force) or repurchased by the Company or any Subsidiary.
For purposes of this Agreement, a Person shall be deemed to be a holder of
Registrable Securities, and the Registrable Securities shall be deemed to be in
existence, whenever such Person has the right to acquire directly or indirectly
such Registrable Securities (upon conversion or exercise in connection with a
transfer of securities or otherwise, but disregarding any restrictions or
limitations upon the exercise of such right), whether or not such acquisition
has actually been effected, and such Person shall be entitled to exercise the
rights of a holder of Registrable Securities hereunder (it being understood,
however, that any Registrable Securities which are not shares of Common Stock
shall be converted into or exercised for shares of Common Stock immediately
prior to the closing of any registration pursuant to which such Common Stock is
to be sold).
(d) Unless otherwise stated, other capitalized terms contained herein
have the meanings set forth in the Recapitalization Agreement.
9. MISCELLANEOUS.
(a) NO INCONSISTENT AGREEMENTS. Except as provided for herein, the
Company shall not hereafter enter into any agreement with respect to its
securities which is inconsistent with or violates the rights granted to the
holders of Registrable Securities in this Agreement.
-11-
(b) REMEDIES. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(c) AMENDMENTS AND WAIVERS. Except as otherwise provided herein, the
provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company, the holders of at least 66 2/3% of the Investor
Registrable Securities and the holders of a majority of the Other Registrable
Securities (but only to the extent that the holders of Other Registrable
Securities would be adversely affected by such amendment or waiver).
(d) SUCCESSORS AND ASSIGNS. All covenants and agreements in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities.
(e) SEVERABILITY. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(f) COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Agreement.
(g) DESCRIPTIVE HEADINGS. The descriptive headings of this Agreement
are inserted for convenience only and do not constitute a part of this
Agreement.
(h) GOVERNING LAW. All issues and questions concerning the
construction, validity, interpretation and enforcement of this Agreement shall
be governed by, and construed in accordance with, the laws of the State of
California, without giving effect to any choice of law or conflict of law rules
or provisions (whether of the State of California or any other jurisdiction)
that would cause the application of the laws of any jurisdiction other than the
State of California.
(i) NOTICES. All notices, demands or other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by
-12-
reputable overnight courier service (charges prepaid) or five days after being
mailed to the recipient by certified or registered mail, return receipt
requested and postage prepaid. Such notices, demands and other communications
shall be sent to each Investor at the address indicated on the SCHEDULE OF
INVESTORS attached hereto and to each Existing Shareholder at the address
indicated on the SCHEDULE OF EXISTING SHAREHOLDERS attached hereto and to the
Company at the address indicated below:
TO THE COMPANY:
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Attn: Chief Executive Officer
WITH A COPY TO:
(which shall not constitute notice to the Company)
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304-1050
Attn: Steven E. Bochner, Esq.
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
* * * * *
-13-
IN WITNESS WHEREOF, the parties have executed this Registration
Agreement as of the date first written above.
NETCOM SYSTEMS, INC.
By:
-----------------------------------------
Its:
-----------------------------------------
SUMMIT VENTURES IV, L.P.
By: Summit Partners IV, L.P., its General
Partner
By: Stamps, Woodsum & Co. IV, its General
Partner
By:
-----------------------------------------
General Partner
SUMMIT INVESTORS III, L.P.
By:
--------------------------------
Authorized Signatory
NATIONSBANC CAPITAL CORP.
By:
-----------------------------------------
Todd A. Binkowski, its
Authorized Signatory
NORTHSTAR INVESTORS, LLC
By:
-----------------------------------------
Its:
----------------------------------------
[Signature Page to Registration Agreement]
SPITFIRE CAPITAL PARTNERS,
L.P.
By: MS Spitfire LLC, its General Partner
By:
-----------------------------------------
William B. Bunting
Its:
----------------------------------------
PETER MOONEY, AS NOMINEE FOR
THE BROADVIEW PARTNERS GROUP
By:
-----------------------------------------
Its:
----------------------------------------
BAIN SECURITIES, INC.
By:
-----------------------------------------
Leonard C. Banos, its Vice President
WS INVESTMENT COMPANY 97B
By:
-----------------------------------------
Its:
----------------------------------------
WSGR PROFIT SHARING TRUST FBO
STEVEN E. BOCHNER
By:
-----------------------------------------
Its:
----------------------------------------
--------------------------------------------
Steven E. Bochner
--------------------------------------------
Nevan C. Elam
--------------------------------------------
Todd Cleary
[Signature Page to Registration Agreement]
-15-
--------------------------------------------
Marc Hamon
--------------------------------------------
Henri Hamon
--------------------------------------------
James Jordan
--------------------------------------------
Warren B. Phelps III
--------------------------------------------
Jing Zhang
--------------------------------------------
Stephane Johnson
--------------------------------------------
Richard Bass
[Signature Page to Registration Agreement]
SCHEDULE OF INVESTORS
Summit Ventures IV, L.P. WS Investment Company 97B
499 Hamilton Avenue c/o Wilson Sonsini Goodrich & Rosati
Palo Alto, California 94301 650 Page Mill Road
Attn.: Mr. Walter G. Kortschak Palo Alto, California 94304
Attn: Steven E. Bochner, Esq.
Summit Investors III, L.P.
499 Hamilton Avenue WSGR Profit Sharing Trust FBO
Palo Alto, California 94301 Steven E. Bochner
Attn: Mr. Walter G. Kortschak c/o Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
NationsBanc Capital Corp. Palo Alto, California 94304
NationsBank Corporate Center Attn: Steven E. Bochner, Esq.
10th Floor
100 North Tryon Steven E. Bochner
Charlotte, North Carolina 28255 c/o Wilson Sonsini Goodrich & Rosati
Attn: Mr. Robert H. Sheridan III 650 Page Mill Road
Palo Alto, California 94304
Northstar Investors, LLC
c/o Montgomery Securities Nevan C. Elam
600 Montgomery Street c/o Wilson Sonsini Goodrich & Rosati
San Francisco, California 94111 650 Page Mill Road
Attn: Mr. Derek Lemke Palo Alto, California 94304
Spitfire Capital Partners, L.P. Todd Cleary
c/o Montgomery Securities c/o Wilson Sonsini Goodrich & Rosati
600 Montgomery Street 650 Page Mill Road
San Francisco, California 94111 Palo Alto, California 94304
Attn: Mr. William B. Bunting
WITH A COPY TO:
Peter Mooney as nominee for (which shall not constitute notice to the
the Broadview Partners Group Investors)
c/o Broadview Associates
950 Tower Lane Kirkland & Ellis
18th Floor 200 East Randolph Drive
Foster City, California 94404 Chicago, Illinois 60601
Attn: Mr. Stephen S. Smith Attn: Ted H. Zook, Esq.
Bain Securities, Inc. Fennebresque, Clark, Swindell & Hay
c/o Bain & Company, Inc. NationsBank Corporate Center
Two Copley Place 29th Floor
Boston, Massachusetts 02116 100 North Tryon Street
Attn: Leonard C. Banos Charlotte, North Carolina 28202
Attn: John S. Chinuntdet, Esq.
SCHEDULE OF EXISTING SHAREHOLDERS
Marc Hamon
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Henri Hamon
Netcom Systems Europe
4, rue de Galilee
Immeuble Le Bellevue
ZAC du Moulin a vent 78280
Guyancourt, France
James Jordan
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Warren B. Phelps III
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Jing Zhang
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Stephane Johnson
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Richard Bass
Point of View, Inc.
410 Boylston Street
5th Floor
Boston, Massachusetts 02116
With a Copy to:
- --------------
(which shall not constitute notice to the Existing Shareholders)
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, California 94304
Attn: Steven E Bochner, Esq.
NETCOM SYSTEMS, INC.
AMENDMENT NO. 1 TO REGISTRATION AGREEMENT
THIS AMENDMENT NO. 1 TO REGISTRATION AGREEMENT (this "AMENDMENT") is
made as of September 25, 1997, by and among Netcom Systems, Inc., a California
corporation (the "COMPANY"), the parties listed as Investors on the SCHEDULE OF
INVESTORS attached hereto (collectively, the "INVESTORS"), the parties listed as
Existing Shareholders on the SCHEDULE OF EXISTING SHAREHOLDERS attached hereto
(collectively, the "EXISTING SHAREHOLDERS") and Richard Moley ("MOLEY").
WHEREAS, the Company, the Investors and the Existing Shareholders are
parties to that certain Registration Agreement dated as of August 29, 1997 (the
"AGREEMENT").
WHEREAS, Moley is purchasing shares of the Company's Class A
Redeemable Preferred Stock and Class B Convertible Preferred Stock pursuant to a
Preferred Stock Purchase Agreement, dated as of the date hereof, by and between
the Company and Moley (the "PURCHASE AGREEMENT").
WHEREAS, the Company, the Existing Shareholders and the Investors
desire to enter into this Amendment for the purposes of making Moley a party to
the Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. INVESTOR. For all purposes of the Agreement (as amended by this
Amendment), the term "INVESTOR" shall include Moley.
2. INVESTOR REGISTRABLE SECURITIES. For all purposes of the
Agreement (as amended by this Amendment), the term "INVESTOR REGISTRABLE
SECURITIES" shall include (i) any Common Stock of the Company issued or issuable
upon conversion of the Class B Convertible Preferred Stock of the Company issued
pursuant to the Purchase Agreement, (ii) any securities issued or issuable with
respect to the securities referred to in clause (i) above by way of a stock
dividend or stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or other reorganization and (iii) any
other shares of Common Stock held by Persons (as such term is defined in the
Agreement) holding securities described in clauses (i) or (ii) above.
3. SEVERABILITY. Whenever possible, each provision of this
Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Amendment.
4. COUNTERPARTS. This Amendment may be executed simultaneously in
two or more counterparts (including by means of telecopied signature pages), any
one of which need not contain the signatures of more than one party, but all
such counterparts taken together shall constitute one and the same Amendment.
5. DESCRIPTIVE HEADINGS. The descriptive headings of this Amendment
are inserted for convenience only and do not constitute a part of this
Amendment.
6. GOVERNING LAW. All issues and questions concerning the
construction, validity, interpretation and enforcement of this Amendment shall
be governed by, and construed in accordance with, the laws of the
-1-
State of California, without giving effect to any choice of law or conflict of
law rules or provisions (whether of the State of California or any other
jurisdiction) that would cause the application of the laws of any jurisdiction
other than the State of California.
7. NOTICES. All notices and other communications to Moley provided
for or permitted under the Agreement (as amended by this Amendment) shall be
made at the address of Moley set forth in the Company's books and records.
8. FULL FORCE AND EFFECT. Except as amended hereby, the Agreement
shall remain in full force and effect.
* * * * *
-2-
IN WITNESS WHEREOF, the parties have executed this Amendment No. 1 to
Registration Agreement as of the date first written above.
NETCOM SYSTEMS, INC.
By:
-----------------------------------------
Its:
----------------------------------------
SUMMIT VENTURES IV, L.P.
By: Summit Partners IV, L.P., its General
Partner
By: Stamps, Woodsum & Co. IV, its General
Partner
By:
-----------------------------------------
General Partner
SUMMIT INVESTORS III, L.P.
By:
-----------------------------------------
Authorized Signatory
NATIONSBANC CAPITAL CORP.
By:
-----------------------------------------
Todd A. Binkowski, its
Authorized Signatory
NORTHSTAR INVESTORS, LLC
By:
-----------------------------------------
Its:
----------------------------------------
[Amendment No. 1 to Registration Agreement]
SPITFIRE CAPITAL PARTNERS, L.P.
By: MS Spitfire LLC, its General Partner
By:
-----------------------------------------
William B. Bunting
Its:
----------------------------------------
PETER MOONEY, AS NOMINEE FOR
THE BROADVIEW PARTNERS GROUP
By:
-----------------------------------------
Its:
----------------------------------------
BAIN SECURITIES, INC.
By:
-----------------------------------------
Leonard C. Banos, its Vice President
WS INVESTMENT COMPANY 97B
By:
-----------------------------------------
Its:
----------------------------------------
WSGR PROFIT SHARING TRUST FBO
STEVEN E. BOCHNER
By:
-----------------------------------------
Its:
----------------------------------------
--------------------------------------------
Steven E. Bochner
--------------------------------------------
Nevan C. Elam
--------------------------------------------
Todd Cleary
[Amendment No. 1 to Registration Agreement]
--------------------------------------------
Marc Hamon
--------------------------------------------
Henri Hamon
--------------------------------------------
James Jordan
--------------------------------------------
Warren B. Phelps III
--------------------------------------------
Jing Zhang
--------------------------------------------
Stephane Johnson
--------------------------------------------
Richard Bass
--------------------------------------------
Richard Moley
[Amendment No. 1 to Registration Agreement]
SCHEDULE OF INVESTORS
Summit Ventures IV, L.P. WS Investment Company 97B
499 Hamilton Avenue c/o Wilson Sonsini Goodrich & Rosati
Palo Alto, California 94301 650 Page Mill Road
Attn.: Mr. Walter G. Kortschak Palo Alto, California 94304
Attn: Steven E. Bochner, Esq.
Summit Investors III, L.P.
499 Hamilton Avenue WSGR Profit Sharing Trust FBO
Palo Alto, California 94301 Steven E. Bochner
Attn: Mr. Walter G. Kortschak c/o Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
NationsBanc Capital Corp. Palo Alto, California 94304
NationsBank Corporate Center Attn: Steven E. Bochner, Esq.
10th Floor
100 North Tryon Steven E. Bochner
Charlotte, North Carolina 28255 c/o Wilson Sonsini Goodrich & Rosati
Attn: Mr. Robert H. Sheridan III 650 Page Mill Road
Palo Alto, California 94304
Northstar Investors, LLC
c/o Montgomery Securities Nevan C. Elam
600 Montgomery Street c/o Wilson Sonsini Goodrich & Rosati
San Francisco, California 94111 650 Page Mill Road
Attn: Mr. Derek Lemke Palo Alto, California 94304
Spitfire Capital Partners, L.P. Todd Cleary
c/o Montgomery Securities c/o Wilson Sonsini Goodrich & Rosati
600 Montgomery Street 650 Page Mill Road
San Francisco, California 94111 Palo Alto, California 94304
Attn: Mr. William B. Bunting
Peter Mooney as nominee for
the Broadview Partners Group
c/o Broadview Associates
950 Tower Lane
18th Floor
Foster City, California 94404
Attn: Mr. Stephen S. Smith
Bain Securities, Inc.
c/o Bain & Company, Inc.
Two Copley Place
Boston, Massachusetts 02116
Attn: Leonard C. Banos
SCHEDULE OF EXISTING SHAREHOLDERS
Marc Hamon
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Henri Hamon
Netcom Systems Europe
4, rue de Galilee
Immeuble Le Bellevue
ZAC du Moulin a vent 78280
Guyancourt, France
James Jordan
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Warren B. Phelps III
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Jing Zhang
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Stephane Johnson
Netcom Systems, Inc.
20550 Nordhoff Street
Chatsworth, California 91311
Richard Bass
Point of View, Inc.
410 Boylston Street
5th Floor
Boston, Massachusetts 02116