SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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SCHEDULE 13D
Under the Securities Exchange Act of 1934
8X8, INC.
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(Name of issuer)
Shares of Common Stock, par value $0.001 per share
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(Title of class of securities)
282912 10 4
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(CUSIP number)
STMicroelectronics N.V.
Route de Pre-Bois
ICC Bloc A
1215 Geneva 15
Switzerland
Telephone: 41-22-929-2929
(Name, address and telephone number of person authorized
to receive notices and communications)
With copies to:
John D. Wilson, Esq Michael J. Coleman, Esq.
Shearman & Sterling Shearman & Sterling
Broadgate West 555 California Street, Suite 2000
9 Appold St. San Francisco, CA 94104
London EC2A 2AP, England Telephone: (415) 616-1100
Telephone: (011-44-20) 7920-9000
February 22, 2000
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(Date of event which requires filing of this statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Page 1 of 50
CUSIP No. 282912 10 4
(1) Name of Reporting Person
S.S. or I.R.S. Identification No. of Above Person
STMicroelectronics N.V.
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(2) Check the Appropriate Box if a Member of a Group (See Instructions)
|_| (a)
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|X| (b)
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(3) SEC Use Only
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(4) Source of Funds (See Instructions) WC
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(5) Check if Disclosure of Legal Proceedings is Required Pursuant to Item
2(d) or 2(e) |_|
(6) Citizenship or Place of Organization
The Netherlands
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(7) Sole Voting Power 3,700,000
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Number of -------------------------------------------------------
Shares (8) Shared Voting Power 0
Beneficially -----------------------------------
Owned by -------------------------------------------------------
Each (9) Sole Dispositive Power 3,700,000
Reporting --------------------------------
Person -------------------------------------------------------
With (10) Shared Dispositive Power 0
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(11) Aggregate Amount Beneficially Owned by Each Reporting Person 3,700,000
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(12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares
(see instructions) |_|
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Page 2 of 50
(13) Percent of Class Represented by Amount in Row (11) 16.5%*
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(14) Type of Reporting Person (See Instructions) CO
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Item 1. Security and Issuer.
The class of equity securities to which this Statement on Schedule 13D
(this "Statement") relates is the shares of common stock, par value $0.001 per
share (the "Common Stock"), of 8x8, Inc. ("8x8"), a Delaware corporation. The
principal executive offices of 8x8 are located at 2445 Mission College
Boulevard, Santa Clara, California 95054.
Item 2. Identity and Background.
This Statement is being filed by STMicroelectronics N.V., a company
organized under the laws of The Netherlands ("STM"). The principal business of
STM is to design, develop, manufacture and market a broad range of semiconductor
integrated circuits and discrete devices used in a wide variety of
microelectronic applications, including automotive products, computer
peripherals, telecommunications systems, consumer products, industrial
automation and control systems. The addresses of the principal business offices
of STM are Technoparc du Pays de Gex -- B.P. 112, 165, rue Edouard Branly, 01637
Saint Genis Pouilly, France and Route de Pre-Bois, ICC Bloc A, 1215 Geneva 15,
Switzerland. Certain information regarding the directors and officers of STM is
set forth on Annex A hereto which is incorporated by reference herein.
During the last five years, none of STM or any of the persons named on
Annex A have been (i) convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or (ii) a party to a civil proceeding of a
judicial or administrative body of competent jurisdiction and as a result of
such proceeding were or are subject to a judgment, decree or final order
enjoining future violations of, or prohibiting or mandating activities subject
to, federal or state securities laws or finding any violation with respect to
such laws.
Item 3. Source and Amount of Funds or Other Consideration.
On February 22, 2000, STM acquired 3,700,000 shares of Common Stock
(the "Shares") from 8x8 for a price per share of $7.50, or an aggregate purchase
price of $27,750,000, pursuant to the Common Stock Purchase Agreement, dated
January 24, 2000, between 8x8 and STM (the "Purchase Agreement"). A copy of the
Purchase Agreement is
- --------
* Based on 18,687,179 shares of common stock of 8x8, Inc. outstanding as of
January 20, 2000, as reported by 8x8, Inc. to STMicroelectronics N.V.
Page 3 of 50
attached as Exhibit 1 to this Statement on Schedule 13D. STM used its own cash
resources for the purchase of the Shares.
Item 4. Purpose of Transaction.
STM acquired the Shares for the purpose of making an investment in 8x8.
STM from time to time intends to review its investment in 8x8 on the basis of
various factors, including 8x8's business, financial condition, results of
operations and prospects, general economic and industry conditions, the
securities markets in general and those for 8x8's securities in particular, as
well as other developments and other investment opportunities. Based upon such
review, STM will take such actions in the future as it may deem appropriate in
light of the circumstances existing from time to time. If STM believes that
further investment in 8x8 is attractive, whether because of the market price of
8x8's securities or otherwise, STM may acquire 8x8 securities either in the open
market or in privately negotiated transactions. Similarly, depending on market
and other factors, STM may determine to dispose of some or all of the 8x8
securities currently owned by it or otherwise acquired by it either in the open
market or in privately negotiated transactions.
Pursuant to the Purchase Agreement, STM has agreed not to acquire any
voting stock of 8x8, through market purchases or otherwise, except (i) until
February 22, 2001, STM may acquire shares of voting stock through market
purchases, provided STM's aggregate ownership of voting stock of 8x8 does not at
any time exceed 19.9% of the outstanding voting stock of 8x8, (ii) STM may at
any time acquire shares of voting stock pursuant to preemptive rights, (iii) if
STM is denied the ability to acquire shares of voting stock pursuant to
preemptive rights in a public offering, STM may acquire, through market
purchases, additional shares of Common Stock until its ownership percentage of
the outstanding shares of Common Stock is equal to its ownership percentage
prior to such offering and (iv) STM may acquire shares of voting stock in
certain other customary circumstances.
In addition to the Purchase Agreement, 8x8 and STM entered into an
Investor Rights Agreement, dated as of February 22, 2000 (the "Investor Rights
Agreement"), a copy of which is attached as Exhibit 2 to this Statement on
Schedule 13D. In accordance with the Investor Rights Agreement, effective as
closing of the purchase of the Shares, 8x8 shall cause one director designated
by STM to be appointed to the Board of Directors of 8x8. STM has not yet
designated such director. The Investor Rights Agreement provides that so long as
STM owns at least 10% of the outstanding Common Stock, STM shall have the right
to nominate one person to 8x8's board of directors whenever the Board of
Directors is subject to election.
Except as set forth in this Statement on Schedule 13D, STM has not
formulated any plans or proposals which relate to or would result in: (i) the
acquisition by any person of additional securities of 8x8 or the disposition of
securities of 8x8; (ii) an extraordinary corporate transaction involving 8x8 or
any of its subsidiaries; (iii) a sale or transfer of a
Page 4 of 50
material amount of the assets of 8x8 or any of its subsidiaries; (iv) any change
in the present board of directors or management of 8x8; (v) any material change
in 8x8's capitalization or dividend policy; (vi) any other material change in
8x8's business or corporate structure; (vii) any change in 8x8's charter or
bylaws or other instruments corresponding thereto or other action which may
impede the acquisition of control of 8x8 by any person; (viii) causing a class
of 8x8's securities becoming deregistered or delisted; (ix) a class of equity
securities of 8x8 becoming eligible for termination of registrations or (x) any
action similar to any of those enumerated above.
Item 5. Interest in Securities of Issuer.
(a) The number of Common Stock purchased pursuant to the Purchase
Agreement was 3,700,000. Based upon 18,687,179 shares of Common Stock being
outstanding as of January 20, 2000 (according to a representation of 8x8 in the
Purchase Agreement), such Common Stock represents approximately 16.5% of the
Common Stock outstanding after the issuance of such shares.
Except for STM, none of the other persons referred to in Item 2 above
own any interests in Common Stock.
(b) The number of shares of Common Stock with respect to which STM (i)
has sole voting power, (ii) shares voting power, (iii) has sole dispositive
power and (iv) shares dispositive power, are listed in the responses to Items 7,
8, 9 and 10, respectively, on the cover page filed herewith, and such responses
are incorporated by reference herein.
(c) Except as described in this Statement on Schedule 13D, none of STM
or any party referred to in Item 2 above, has acquired or disposed of, or
entered into any other transaction with respect to, any shares of Common Stock
during the past 60 days.
(d) None.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of Issuer.
On January 24, 2000, STM and 8x8 entered into the Purchase Agreement, a
copy of which is attached as Exhibit 1 to this Statement on Schedule 13D. On
February 22, 2000, pursuant to the Purchase Agreement, STM acquired from 8x8 the
Shares for a price per share of $7.50, or an aggregate purchase price of
$27,750,000. The Investor Rights Agreement is attached as Exhibit 2 to this
Statement on Schedule 13D.
Page 5 of 50
The Investor Rights Agreement (i) provides that 8x8 will file a
registration statement on Form S-3 with the Securities and Exchange Commission
upon the request of STM covering the resale of all of the Shares and (ii)
provides for additional registration rights for STM for a period of seven years
with respect to any other shares of Common Stock owned from time to time by STM.
In accordance with the Investor Rights Agreement, effective as closing of the
purchase of the Shares, 8x8 shall cause one director designated by STM to be
appointed to the Board of Directors of 8x8. The Investor Rights Agreement
provides that so long as STM owns at least 10% of the outstanding Common Stock,
STM shall have the right to nominate one person to 8x8's board of directors
whenever the Board of Directors is subject to election. In addition, pursuant to
the Investor Rights Agreement, 8x8 has agreed to provide STM preemptive rights
to purchase shares of Common Stock in certain circumstances.
Item 7. Material to Be Filed as Exhibits.
Exhibit
Number Description Page
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1 Common Stock Purchase Agreement, dated January 24, 2000, 16
between 8x8, Inc. and STMicroelectronics N.V.
2 Investor Rights Agreement, dated February 22, 2000,
between 8x8, Inc. and STMicroelectronics N.V. 37
Page 6 of 50
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this Statement is true,
complete and correct.
February 29, 2000 STMICROELECTRONICS N.V.
By: /s/ Pasquale Pistorio
--------------------------------------------
Name: Pasquale Pistorio
Title: President and Chief Executive Officer
Page 7 of 50
ANNEX A
Set forth below are the names, present principal occupations
and primary business (if other than STMicroelectronics N.V.) of each of the
directors and executive officers of STMicroelectronics N.V.
DIRECTORS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Jean-Pierre Noblanc Position: General Manager of the Components Sector of
CEA Industrie
Address: 31-33, rue de Federation
75752 Paris Cedex 15, France
Citizenship: French
Bruno Steve Position: President of the board of statutory auditors of
Alitalia S.p.A. and Iritecna S.p.a. in liquidazione
and member of statutory auditors of Alitalia
Express S.p.A. and Stretto di Messina S.p.A.
Address: Finmeccanica S.p.A.
Via di Villa Emiliani, 10
00197 Rome, Italy
Citizenship: Italian
Tom de Waard Position: Partner of Stibbe Simont Monahan Duhot
Address: Stibbe Simont Monahan Duhot
Prinses Irenestraat 43
1077 WV Amsterdam, The Netherlands
Citizenship: Dutch
Remy Dullieux Position: France Telecom Executive Manager for the
Northern and Eastern areas of France
Address: France Telecom
6, place d'Alleray
75015 Paris, France
Citizenship: French
Page 8 of 50
DIRECTORS
Name Current Principal Occupation, Address and Citizenship
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Riccardo Gallo Position: Associate Professor of Industrial Economics at
the Engineering Faculty of "La Sapienza"
University in Rome
Address: Universita La Sapienza
Nuova Autovox
Viale XXI Aprile, 81
00162 Rome, Italy
Citizenship: Italian
Francis Gavois Position: Chairman of the Board of Oddo & Cie
Address: Oddo & Cie
12, bld de la Madeleine
75009 Paris, France
Citizenship: French
Alessandro Ovi Position: Chief Executive Officer of Tecnitel S.p.A., a
subsidiary of Telecom Italia Group
Address: Tecnitel
via Abruzzi, 3
00187 Rome, Italy
Citizenship: Italian
Robert M. White Position: University Professor and Department Head at
Carnegie Mellon University
Address: Carnegy Mellon University
5000 Forbes Avenue
Pittsburgh, PA 15213, USA
Citizenship: American
EXECUTIVE OFFICERS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Pasquale Pistorio Position: President and Chief Executive Officer
Citizenship: Italian
Address: Route de Pre-Bois, 20
ICC Bloc A
1215 Geneva 15
Switzerland
Page 9 of 50
EXECUTIVE OFFICERS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Georges Auguste Position: Corporate Vice President, Total Quality and
Environmental Management
Citizenship: French
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Laurent Bosson Position: Corporate Vice President, Front-end
Manufacturing
Citizenship: French
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Carlo Bozotti Position: Corporate Vice President, Memory Products
Group
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Salvatore Castorina Position: Corporate Vice President, Discrete and Standard
ICs Group
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Page 10 of 50
EXECUTIVE OFFICERS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Alain Dutheil Position: Corporate Vice President, Strategic Planning and
Human Resources
Citizenship: French
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Philippe Geyres Position: Corporate Vice President, Consumer and
Microcontroller Group
Citizenship: French
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Maurizio Ghirga Position: Corporate Vice President, Chief Financial Officer
Citizenship: Italian
Address: Route de Pre-Bois, 20
ICC Bloc A
1215 Geneva 15
Switzerland
Jean-Claude Marquet Position: Corporate Vice President, Asia/Pacific Region
Citizenship: French
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Page 11 of 50
EXECUTIVE OFFICERS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Pier Angelo Martinotti Position: Corporate Vice President, New Ventures Group
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Joel Monnier Position: Corporate Vice President, Central Research and
Development
Citizenship: French
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Piero Mosconi Position: Corporate Vice President, Treasurer
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Carmelo Papa Position: Corporate Vice President, Region Five
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Page 12 of 50
EXECUTIVE OFFICERS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Richard Pieranunzi Position: Corporate Vice President, Americas Region
Citizenship: American
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Aldo Romano Position: Corporate Vice President, Telecommunications,
Peripherals and Automotive Group
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Giordano Seragnoli Position: Corporate Vice President, Back-end
Manufacturing and Subsystems Products Group
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Keizo Shibata Position: Corporate Vice President, Japan Region
Citizenship: Japanese
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Page 13 of 50
EXECUTIVE OFFICERS
Name Current Principal Occupation, Address and Citizenship
- ---- -----------------------------------------------------
Enrico Villa Position: Corporate Vice President, European Region
Citizenship: Italian
Address: STMicroelectronics N.V.
World Trade Center Amsterdam
Tower B - 17th Floor
Strawinskylaan 1725
1077 XX Amsterdam
The Netherlands
Page 14 of 50
EXHIBIT INDEX
Exhibit
Number Description Page
- ------ ----------- ----
1 Common Stock Purchase Agreement, dated January 24, 2000, 16
between 8x8, Inc. and STMicroelectronics N.V.
2 Form of Investor Rights Agreement, dated February 22, 2000, 37
between 8x8, Inc. and STMicroelectronics N.V.
Page 15 of 50
Exhibit 1
COMMON STOCK PURCHASE AGREEMENT
Page 16 of 50
COMMON STOCK PURCHASE AGREEMENT
THIS COMMON STOCK PURCHASE AGREEMENT (the "Agreement") is made as of
January 24, 2000, by and between 8x8, Inc. a Delaware corporation (the
"Company"), and STMicroelectronics NV, a company organized under the laws of the
Netherlands, having an office at ICC Bloc A, Route Pre-bois, 1215 Geneve,
Switzerland (the "Investor").
RECITALS
A. The Investor wishes to purchase from the Company 3,700,000 shares of
the common stock of the Company, par value $0.001 per share (the "Common
Stock"), and the Company wishes to issue and sell such Common Stock to the
Investor, on the terms set forth in this Agreement at the Closing (as defined
herein).
B. Effective as of the Closing, the Investor and the Company shall
execute an Investor Rights Agreement ("Rights Agreement"), substantially in the
forms attached hereto as Exhibit A, to promote their mutual interests by
providing for certain rights and imposing certain restrictions on the rights,
privileges and preferences of the Investor as a holder of the capital stock of
the Company.
C. STMicroelectronics, Inc. and the Company have executed a license
agreement (the "License Agreement") and a development agreement (the
"Development Agreement"), respectively, which shall become effective upon the
Closing, to promote this mutual interest by providing for the licensing and
co-development of certain technology by the Investor and the Company. The
Agreement, the Rights Agreement, and the License Agreement and Development
Agreement are collectively hereafter referred to as the "Transactional
Agreements."
AGREEMENT
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein, each of the Investors and the Company, intending to be legally bound,
agree as follows:
1. Purchase and Sale of Stock
1.1 Sale and Issuance of Common Stock
Subject to the terms and conditions of this Agreement, the
Investor agrees to purchase at the Closing (as defined herein) and the Company
agrees to sell, issue and deliver to the Investor at the Closing, 3,700,000
shares of the Company's Common Stock (the "Shares") at a purchase price of $7.50
per share, or the aggregate purchase price of $27,750,000 (the "Aggregate
Purchase Price").
Page 17 of 50
1.2 Closings and Deliveries
(a) The Closing. The purchase and sale of the Shares
shall take place at a closing (the "Closing") at the offices of Wilson Sonsini
Goodrich & Rosati, P.C., 650 Page Mill Road, Palo Alto, California, at 10:00
a.m., on the third business day following (i) the expiration or early
termination of the applicable waiting period under the Hart-Scott-Rodino
Antitrust Improvement Act of 1976, as amended (the "HSR Act"), or other receipt
of clearance under the HSR Act and (ii) satisfaction or waiver of all other
conditions to the obligations of the parties set forth in Articles 4 and 5, or
at such other time and place as the Company and the Investor mutually agree upon
orally or in writing (the date of the Closing being the "Closing Date").
(b) Deliveries. At the Closing, the Company shall
deliver to the Investor (i) a certificate representing the Common Stock that the
Investor is purchasing against payment of the purchase price therefor by wire
transfer, as directed by the Company and (ii) any other documents and agreements
required hereunder to be delivered by the Company. In the event that payment by
the Investor is made, in whole or in part, by cancellation of indebtedness, then
such Investor shall surrender to the Company for cancellation at the Closing any
evidence of such indebtedness or shall execute an instrument of cancellation in
form and substance acceptable to the Company.
2. Representations and Warranties of the Company
The Company hereby represents and warrants to the Investor as follows,
except as set forth in written disclosure to the Investor which specifically
identifies the relevant subsection hereof:
2.1 Organization and Standing
The Company is a corporation duly organized and validly
existing under, and by virtue of, the laws of the State of Delaware and is in
good standing as a domestic corporation under the laws of said state. The
Company has all requisite corporate power and authority to carry on its business
as now conducted and as proposed to be conducted. The Company is duly qualified
as a foreign corporation to transact business and is in good standing in each
jurisdiction in which the nature of its business or the location of its
properties requires such qualification and in which the failure to so qualify
would have a material adverse effect on its business or properties. The Company
has provided Investor with correct and complete copies of its Certificate of
Incorporation and Bylaws, each as in effect on the date hereof and as will be in
effect on the Closing Date. The Company is not in violation or default of any
provisions of its Certificate of Incorporation or Bylaws. Except as set forth in
written disclosure to the Investor, the Company does not own, of record or
beneficially, any direct or indirect equity or other interest, or any right
(contingent or otherwise) to acquire the same, in any corporation, partnership,
joint venture, association or other entity and the Company is not a member of
(nor
Page 18 of 50
is any part of the Company's business conducted through) any partnership, nor is
the Company a participant in any joint venture or similar arrangement.
2.2 Corporate Power; Authorization
The Company has all requisite legal and corporate power to
execute and deliver this Agreement and the other Transactional Agreements, to
sell and issue the Shares and to carry out and perform all of its obligations
under this Agreement and the other Transactional Agreements. The execution and
delivery by the Company of this Agreement and the other Transactional Agreements
and the performance by the Company of its obligations hereunder and thereunder,
including, without limitation, the issuance and delivery of the Shares, have
been duly authorized by all requisite action on the part of the Company and its
directors, officers and stockholders. The Board of Directors of the Company has
approved the transactions contemplated by this Agreement. No approval of
stockholders of the Company is required in connection with the execution and
delivery of this Agreement and the other Transactional Agreements or the
consummation of the transactions contemplated hereby or thereby. This Agreement
has been, and the other Transactional Agreements will be, duly executed and
delivered by the Company. This Agreement constitutes, and upon their execution
and delivery the other Transactional Agreements will constitute, legal, valid
and binding obligations of the Company, enforceable in accordance with their
terms, except (i) as limited by applicable bankruptcy, insolvency,
reorganization or similar laws relating to or affecting the enforcement of
creditors' rights generally and (ii) as limited by equitable principles
generally. The execution and delivery of this Agreement and the other
Transactional Agreements do not, and the performance of this Agreement and the
other Transactional Agreements and the compliance with the provisions hereof and
thereof and the issuance, sale and delivery of the Shares by the Company will
not, (i) conflict with, or result in a breach or violation of the terms,
conditions or provisions of, or constitute a default under (with or without the
passage of time or giving of notice), or result in the creation or imposition of
any material lien pursuant to the terms of, the Certificate of Incorporation or
Bylaws of the Company or to the Company's knowledge, any statute, law, rule or
regulation or any state or federal order, judgment or decree or (ii) materially
conflict with, or result in a material breach or violation of the terms,
conditions or provisions of, or constitute a material default under (with or
without the passage of time or giving of notice), or result in the creation or
imposition of any material lien pursuant to the terms of, any indenture,
mortgage, lease or other material agreement or instrument to which the Company
or any of its properties is subject.
2.3 Issuance and Delivery of the Shares
The Shares, when issued and paid for in accordance with the
provisions of this Agreement, will be validly issued and outstanding, fully paid
and nonassessable. The issuance and delivery of the Shares is not subject to
preemptive or any other similar rights of the stockholders of the Company or any
liens or encumbrances. Assuming the accuracy of the representations of the
Investor in this Agreement, the Shares will be issued in compliance with
Page 19 of 50
all applicable federal and state securities laws. The Shares shall be free of
any liens or encumbrances; provided, however, that the Shares may be subject to
restrictions on transfer under state and/or federal securities laws or in this
Agreement or the Rights Agreement. Neither the offer nor the issuance or sale of
the Shares constitutes or will constitute an event under any capital stock or
convertible security or any anti-dilution or similar provision of any agreement
or instrument to which the Company is a party or by which it is bound or
affected, which shall either increase the number of shares of capital stock
issuable upon conversion of any securities or upon exercise of any warrant or
right to subscribe to or purchase any stock or similar security, or decrease the
consideration per share of capital stock to be received by the Company upon such
conversion or exercise.
2.4 SEC Documents; Financial Statements
The Company has delivered to the Investor its Annual Report on
Form 10-K for the year ended March 31, 1999 (the "10-K"), and its Quarterly
Reports on Form 10-Q for the periods ended June 30, 1999 and September 30, 1999
(the "10-Qs"). The Company has filed in a timely manner all documents that the
Company was required to file with the SEC under Sections 13, 14(a) and 15(d) of
the Securities Exchange Act of 1934, as amended (the "Exchange Act"), since
December 31, 1998. As of their respective filing dates, all documents filed by
the Company with the Securities and Exchange Commission (the "SEC" or the
"Commission") since March 31, 1999 (the "SEC Documents") complied in all
material respects with the requirements of the Exchange Act or the Securities
Act of 1933, amended (the "Securities Act"), as applicable. None of the SEC
Documents as of their respective dates contained any untrue statement of
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements made therein, in light of the circumstances
under which they were made, not misleading. The financial statements of the
Company included in the SEC Documents (the "Financial Statements") comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto. The
Financial Statements have been prepared in accordance with generally accepted
accounting principles consistently applied and fairly present the consolidated
financial position of the Company and any subsidiaries at the dates thereof and
the consolidated results of their operations and consolidated cash flows for the
periods then ended (subject, in the case of unaudited statements, to normal,
recurring adjustments, the absence of footnote disclosure and the condensed
presentation of such statements).
2.5 Government Consents
To the Company's knowledge, no consent, approval, order or
authorization of, or registration, qualification, designation, declaration or
filing with, any federal, state, or local governmental authority on the part of
the Company is required in connection with the consummation of the transactions
contemplated by this Agreement and the other Transactional Agreements except for
(a) clearance under the HSR Act, (b) such filings as have been made prior to the
Closing or such post-closing filings as may be required under applicable state
Page 20 of 50
securities laws, which will be timely filed within the applicable periods
therefor, and (c) the filing of the Nasdaq National Market Notification Form
with the Nasdaq National Market.
2.6 No Material Adverse Change
Except as otherwise disclosed herein or in filings with the SEC
prior to the date of this Agreement or as set forth in written disclosure to the
Investor since March 31, 1999, there have not been any changes in the assets,
liabilities, financial condition, business prospects or operations of the
Company which, in the aggregate are materially adverse to the Company taken as a
whole.
2.7 Authorized Capital Stock
The authorized capital stock of the Company consists of
40,000,000 shares of Common Stock and 5,000,000 shares of preferred stock, par
value $0.001 per share ("Preferred Stock"). As of January 20, 2000, 18,687,179
shares of Common Stock were issued and outstanding, all of which are validly
issued, fully paid and nonassessable, and no shares of Preferred Stock were
outstanding. Except as set forth in written disclosure to the Investor, and
except for the grant of options to purchase a total of 4,200,612 shares of
Common Stock, as of January 20, 2000, there are no outstanding options, warrants
or other securities exercisable for, or convertible into, or commitments to
issue securities exercisable for or convertible into, capital stock of the
Company, or other commitments to issue any capital stock of the Company. None of
the issued and outstanding shares of capital stock of the Company was issued in
violation of any preemptive rights. There are no voting trusts, stockholder
agreements, proxies or other agreements in effect with respect to the voting or
transfer of shares of Common Stock. Since January 20, 2000, the Company has not
issued or agreed to issue, or granted options to purchase, more than 40,000
shares of Common Stock in the aggregate.
2.8 No Dividends
The Company has not declared or paid any dividends, or
authorized or made any distribution or established any record date for the
issuance of any dividend or other distribution upon or with respect to any class
or series of its capital stock.
2.9 Litigation and Compliance with Laws
There is no litigation, suit, claim, action, proceeding or
investigation pending or, to the knowledge of the Company, threatened against
the Company, or any property or asset of the Company, before any court,
arbitrator or governmental entity, domestic or foreign. Neither the Company nor
any property or asset of the Company is subject to any continuing order of,
consent decree, settlement agreement or other similar written agreement with,
or, to the knowledge of the Company, continuing investigation by, any
governmental entity or any
Page 21 of 50
order, writ, judgment, injunction, decree, determination or award of any
governmental entity or arbitrator. The Company is conducting, and has conducted,
its business in compliance in all material respects with all applicable laws and
regulations.
2.10 Intellectual Property
Except as disclosed in written disclosure to the Investor, to
the knowledge, of the Company, the Company owns or possesses adequate licenses
or other valid rights to use all patents, patent rights, trademarks, trademark
rights, trade names, trade dress, trade name rights, copyrights, service marks,
trade secrets, applications for trademarks and for service marks, know?how and
other proprietary rights and information used or held for use in connection with
the business of the Company as currently conducted and as proposed to be
conducted, and the Company has no knowledge of any assertion or claim
challenging the validity of any of the foregoing. To the knowledge of the
Company the conduct of the business of the Company as currently conducted does
not infringe upon any valid intellectual property rights of other persons. To
the knowledge of the Company, no other persons are materially infringing upon
any material proprietary rights owned by or licensed by or to the Company.
2.11 Taxes
The Company has timely filed or will timely file all returns
and reports required to be filed by them with any taxing authority with respect
to taxes. All taxes shown to be payable on such returns or reports have been
paid or will be paid.
2.12 Title to Property and Assets
The Company has good and marketable title to its property and
assets, free and clear of all mortgages, liens, loans and encumbrances, except
such encumbrances and liens that arise in the ordinary course of business and do
not materially impair the Company's ownership or use of such property or assets.
With respect to the property and assets that it leases, the Company is in
compliance with such leases and, to the knowledge of the Company, holds a valid
leasehold interest free of any liens, claims or encumbrances.
2.13 Material Contracts
The Company is not in material default under any material
contract or agreement, nor has the Company received notice that any third party
does not intend to renew any material contract it currently has with the
Company, or that any third party intends to terminate any material contract
currently in place with the Company. To the knowledge of the Company, no other
party to any material contract is in material default thereunder.
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3. Representations, Warranties and Covenants of the Investor
The Investor hereby represents and warrants to the Company and
agrees in favor of the Company, as follows:
3.1 Authorization
The Investor represents and warrants to the Company that: (i)
the Investor has been duly formed and is validly existing under the laws of the
jurisdiction of its formation; (ii) the Investor has all requisite legal and
corporate or other power and capacity and has taken all requisite corporate or
other action to execute and deliver this Agreement, to purchase the Shares to be
purchased by it and to carry out and perform all of its obligations under this
Agreement; and (iii) this Agreement constitutes the legal, valid and binding
obligation of the Investor, enforceable in accordance with its terms, except (a)
as limited by applicable bankruptcy, insolvency, reorganization, or similar laws
relating to or affecting the enforcement of creditors' rights generally and (b)
as limited by equitable principles generally.
3.2 Independent Investment Decision
The Investor understands that no United States federal or state
agency has passed on, reviewed or made any recommendation or endorsement of the
Shares. In making the decision to purchase the Shares in accordance with this
Agreement, the Investor has relied solely upon independent investigations made
by it and not upon any representations made by the Company other than those made
pursuant to this Agreement.
3.3 Investment Intent
The Investor is purchasing the Shares for its own account, for
investment purposes only, and not with a view to a distribution thereof. The
Investor further understands that its acquisition of the Shares has not been
registered under the Securities Act or registered or qualified under any state
securities law in reliance on specific exemptions therefrom, which exemptions
may depend upon, among other things, the bona fide nature of the Investors'
investment intent as expressed herein.
3.4 Registration or Exemption Requirements
The Investor further acknowledges and understands that the
Shares have not been registered under the Securities Act and may not be resold
or otherwise transferred except in a transaction registered under the Securities
Act or unless an exemption from such registration is available.
Page 23 of 50
3.5 Legends
To the extent applicable, each certificate or other document
evidencing any of the Shares shall be endorsed with the legends set forth in
Sections 3.5(a) and (b) below and the Purchaser covenants that, except to the
extent such restrictions are waived by the Company, the Purchaser shall not
transfer the shares represented by any such certificate without complying with
the restrictions on transfer described in the legends endorsed on such
certificate:
(a) "THE SECURITIES REPRESENTED BY THIS INSTRUMENT
HAVE BEEN ACQUIRED FOR INVESTMENT PURPOSES ONLY AND NOT WITH A VIEW TO
OR IN CONNECTION WITH THE SALE THEREOF. SUCH SECURITIES HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR QUALIFIED
UNDER THE APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY NOT BE
SOLD, TRANSFERRED, OR ASSIGNED IN THE ABSENCE OF SUCH REGISTRATION OR
QUALIFICATION, WITHOUT AN OPINION OF COUNSEL FOR THE HOLDER, CONCURRED
IN BY COUNSEL FOR THE COMPANY, STATING THAT SUCH SALE, TRANSFER, OR
ASSIGNMENT IS EXEMPT FROM THE REGISTRATION REQUIREMENTS OF SAID ACT.
THIS CERTIFICATE MUST BE SURRENDERED TO THE CORPORATION OR ITS TRANSFER
AGENT AS A CONDITION PRECEDENT TO THE TRANSFER OF ANY INTEREST IN THE
SECURITIES REPRESENTED BY THIS CERTIFICATE."
(b) Any other additional legends required by Delaware
law or other applicable state blue sky laws.
The Company need not register a transfer of any Shares, and may
also instruct its transfer agent not to register the transfer of such shares,
unless the conditions specified in this Agreement are satisfied.
4. Conditions of Investor's Obligations at Closing
The obligations of the Investor to purchase the Shares is
subject to the satisfaction or waiver on or before the Closing of each of the
following conditions:
4.1 Representations and Warranties
The representations and warranties of the Company contained in
Section 2 shall be true on and as of the date hereof and shall be true and
correct on and as of the Closing Date except as would not be in the aggregate
materially adverse to the Company taken as a whole.
Page 24 of 50
4.2 Covenants
The Company shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by it on or before the Closing Date.
4.3 Qualifications
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required as of the Closing in connection with the lawful issuance and
sale of the Shares pursuant to this Agreement shall have been duly obtained and
shall be effective as of the date hereof, including expiration or termination of
the waiting period under the HSR Act.
4.4 Execution of Investor Rights Agreement
The Company and the Investor have executed the Investors'
Rights Agreement, attached as Exhibit A.
4.5 License Agreement and Development Agreement
The License Agreement and the Development Agreement shall not
have been terminated.
4.6 Board of Directors
On nominee of the Investor shall have been appointed to the
Board of Directors of the Company effective as of the Closing, provided that
Investor has proposed a nominee reasonably acceptable to the Company prior to
the Closing.
4.7 Closing Deliveries
The Investor shall have received (i) a certificate of the
President of the Company dated the Closing Date certifying that the conditions
specified in Sections 4.1 and 4.2 have been fulfilled, (ii) a certificate of the
Secretary of the Company dated the Closing Date attaching correct and complete
copies of (A) the Certificate of Incorporation and Bylaws of the Company as in
effect as of the Closing, and (B) the resolutions adopted by the Board of
Directors of the Company in connection with the transactions contemplated by
this Agreement and the other Transactional Agreements and (iii) an opinion dated
the Closing Date of Wilson Sonsini Goodrich & Rosati in a form reasonably
satisfactory to the parties hereto.
Page 25 of 50
5. Conditions of the Company's Obligations at Closing
The obligations of the Company to sell the Shares to the Investor is
subject to the satisfaction or waiver on or before the Closing of each of the
following conditions:
5.1 Representations and Warranties
The representations and warranties of the Investor contained in
Section 3 shall be true on and as of the date hereof and shall be true and
correct in all material respects on and as of the Closing Date.
5.2 Covenants
The Investor shall have performed and complied with all
agreements, obligations and conditions contained in this Agreement that are
required to be performed or complied with by the Investor on or before the
Closing Date.
5.3 Qualifications
All authorizations, approvals, or permits, if any, of any
governmental authority or regulatory body of the United States or of any state
that are required as of the Closing Date in connection with the lawful issuance
and sale of the Shares pursuant to this Agreement shall have been duly obtained
and shall be effective as of the Closing Date, including termination of the
waiting period under the HSR Act.
6. Covenants of the Investor and of the Company
6.1 HSR Clearance
Each of the Company and the Investor hereby covenants to
prepare and file, as soon as practicable hereafter, a notification and Report
Form for Mergers and Acquisitions as required under the HSR Act, in connection
with the purchase and sale of Common Stock under this Agreement. Each party will
use commercially reasonable efforts to obtain early termination of the waiting
period under the HSR Act and any other requisite governmental clearance in
connection with the transactions contemplated by this Agreement.
6.2 Conduct of Business of the Company.
During the period from the date of this Agreement and
continuing until the earlier of the termination of this Agreement or the Closing
Date, the Company agrees (except to the extent that the Investor shall otherwise
consent in writing), to carry on its business in the usual, regular and ordinary
course in substantially the same manner as heretofore conducted. The Company
shall promptly notify the Investor of any event or occurrence not in the
ordinary
Page 26 of 50
course of business of the Company which could have a material adverse effect on
the Company. Without limiting the generality of the foregoing and with the
exceptions as set forth in written disclosure to the Investor, without the prior
written consent of the Investor, the Company will not during the period from the
date of this Agreement and continuing until the earlier of the termination of
this Agreement or the Closing Date:
(a) redeem any of the capital stock of the Company or
declare, make or pay any dividends or distributions (whether in cash, securities
or other property) to the holders of capital stock of the Company or otherwise;
(b) merge or consolidate with or acquire an interest
of five percent (5%) or more in any person or entity or acquire a substantial
portion of the assets or business of any person or entity or any division of
line of business thereof, or otherwise acquire any material assets other than in
the ordinary course of business consistent with past practice;
(c) sell, transfer, lease, sublease, license or
otherwise dispose of any properties or assets, other than in the ordinary course
of business consistent with past practice;
(d) issue or sell any capital stock, notes, bonds or
other securities, or any option, warrant or other right to acquire the same, of,
or any other interest in, the Company except in the ordinary course of business;
(e) incur any indebtedness for borrowed money in
excess of $500,000;
(f) make any change in any method of accounting or
accounting practice or policy used by the Company, other than such changes
required by U.S. generally accepted accounting principles;
(g) amend, modify or consent to the termination of
any material contract of the Company or the Company's rights thereunder; or
(h) amend or restate the Certificate of Incorporation
or the Bylaws of the Company.
6.3 Use of Proceeds
The Company shall use a portion of the proceeds of the sale of
the Shares to fund its obligations under the Development Agreement.
7. Right of First Refusal
Page 27 of 50
7.1 Company's Right of First Refusal
Before any voting rights or value of the Common Stock may be
sold or otherwise transferred by the Investor, the Company shall have a right of
first refusal (the "Right of First Refusal") to purchase such shares (the
"Offered Securities").
7.2 Notice of Proposed Transfer
Before any transfer of any Offered Securities, the Investor
shall deliver to the Company a written notice (the "Transfer Notice") stating:
(i) the Investor's bona fide intention to sell or otherwise transfer such
Offered Securities; (ii) the name of each proposed purchaser or other transferee
(a "Proposed Transferee"); (iii) the number of Offered Securities to be
transferred to each Proposed Transferee; and (iv) the bona fide cash price or
other consideration for which the Investor proposes to transfer the Offered
Securities (the "Offered Price").
7.3 Exercise of Right of First Refusal
At any time within 20 days after receipt of the Transfer Notice
(the "Offer Period"), the Company may, by giving written notice to the Investor,
elect to purchase all, or such lesser amount as desired, of the Offered
Securities proposed to be transferred to any one or more of the Proposed
Transferees, at the purchase price determined in accordance with subsection 7.4
below. Failure of the Company to give such a notice within such time period will
be deemed an election by it not to exercise its option.
7.4 Purchase Price
The purchase price for the Offered Securities so purchased by
the Company shall be the Offered Price, or such other amount agreed to in
writing by the Company and the Investor (the "Company Purchase Price").
7.5 Payment
Payment of the Company Purchase Price shall be made by wire
transfer (or such other form of consideration mutually agreed to by the Company
and the Investor) within 20 days after such Company Purchase Price is agreed
upon between the Company and the Investor.
7.6 Right to Transfer.
If all of the Offered Securities proposed in the Transfer
Notice to be transferred are not purchased by the Company, then the Investor may
sell or otherwise transfer all Offered Securities originally covered in the
Transfer Notice to the Proposed Transferee(s) at the
Page 28 of 50
Offered Price or at a higher price, provided that such sale or other transfer is
consummated within 50 days after the date of the Transfer Notice and provided
further that any such sale or other transfer is effected in accordance with any
applicable securities laws and the Investor agrees in writing that the
provisions of this Section 7 shall continue to apply to the Offered Securities
that are transferred to such Proposed Transferee. If the Offered Securities
described in the Transfer Notice are not transferred to the Proposed
Transferee(s) within such 50-day period, the Investor will not transfer any
Offered Securities unless such securities are first re-offered to the Company in
accordance herewith.
8. Restrictions on Transfer
In no event shall the Investor transfer any shares of Common Stock
except:
(a) through a sale pursuant to Rule 144 under the
Securities Act, provided that such sale complies with the manner of sale
provisions under paragraph (f) of Rule 144 or is of securities representing 5%
or less of the Company's outstanding voting stock (on an as converted basis) and
is not made to any person or group which has theretofore filed a Schedule 13D
reflecting ownership in excess of 5% of the Company's outstanding voting stock
(including shares issuable upon conversion of convertible securities) or any
person or group that has announced or commenced an unsolicited offer for the
Company voting stock or proxy contest with respect to the Company;
(b) pursuant to a bona fide underwritten public
offering registered under the Securities Act;
(c) pursuant to any private sale exempt from the
registration requirements of the Securities Act, provided that such sale would
not result in a transferee having beneficial ownership in the Company in excess
of 5% of the Company's outstanding voting stock (including shares issuable upon
conversion of convertible securities) unless such transferee is a financial
institution holding exclusively for investment purposes in which case such five
percent (5%) threshold shall be ten percent (10%);
(d) to a wholly owned subsidiary of Investor
(provided such entity agrees to take such securities subject to the restrictions
set forth herein);
(e) pursuant to a merger, exchange offer or tender
offer or other change of control transaction;
(f) as a bona fide pledge to an institutional lender
or lenders to secure a loan, credit facility or other indebtedness of Investor,
with the Company's prior consent (which shall not be unreasonably withheld or
delayed), provided that each such lender agrees to take such securities subject
to the restrictions set forth below in Sections 9 and 10; or
Page 29 of 50
(g) with the Company's prior consent.
9. Standstill Agreement
The Investor agrees not to acquire any voting stock of the Company,
through market purchases or otherwise, except that (i) until the first
anniversary of the Closing, but not thereafter, Investor may acquire shares of
voting stock through market purchases, provided that (a) at no time shall
Investor's aggregate ownership of voting stock of the Company exceed 19.9% of
the outstanding voting stock of the Company, and (b) the acquisition of such
additional shares shall be in compliance with applicable laws, including the HSR
Act, (ii) Investor may at any time acquire shares of voting stock pursuant to a
stock split, dividend or similar event, (iii) Investor may at any time acquire
shares of voting stock pursuant to preemptive rights and (iv) in the event the
company authorizes the offer or sale of any shares of Common Stock pursuant to a
public offering in which Investor is denied preemptive rights pursuant to the
terms of Section 3.2 of the Investor Rights Agreement, Investor may acquire,
through market purchases, additional shares of Common Stock until its ownership
percentage of the outstanding shares of Common Stock is equal to its ownership
percentage prior to such offering. The foregoing restrictions will terminate
upon the occurrence of any of the following:
(a) the acquisition by any person or entity, or group
of persons or entities, of beneficial ownership of voting securities of the
Company representing ten percent (10%) or more of the then outstanding voting
securities of the Company;
(b) the announcement or commencement by any person or
entity, or group of persons or entities, of a tender or exchange offer to
acquire voting securities of the Company which, if successful, would result in
such person or entity, or group of persons or entities, owning, when combined
with any other voting securities of the Company owned by such person or entity,
or group of persons or entities, ten percent (10%) or more of the then
outstanding voting securities of the Company; or
(c) the Company enters into, or otherwise determines
to seek to enter into, any merger, sale or other business combination
transaction pursuant to which the outstanding shares of Common Stock would be
converted into cash or securities of another person or entity, or group of
persons or entities, or fifty percent (50%) or more of the then outstanding
shares of Common Stock would be owned by persons or entities other than the then
current holders of Common Stock, or which would result in a substantial portion
of the Company's assets being sold to any person or entity, or group of persons
or entities.
10. Lock-up Agreement
The Investor agrees in connection with any underwritten offering of the
Company's securities, not to sell, make any short sale of, loan, grant any
option for the purchase of, or
Page 30 of 50
otherwise dispose of any of its Shares (other than those included in the
registration) without the prior written consent of the Company or such
underwriter, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) (the "Lockup Period") during the effectiveness of
such registration statement relating to such offering, provided that such
agreement shall not apply to Shares included in the registration statement. In
order to enforce the provisions of this Section 10, the Company may impose
stop-transfer instructions with respect to the securities of the Company held by
the Investor not included in the registration statement until the end of the
Lockup Period.
11. Termination
The parties hereto shall be entitled to terminate this Agreement as
follows, provided that no such termination shall limit or terminate any
liability of one party to another for any breach hereof:
11.1 Mutual Consent
The parties hereto may terminate this Agreement by mutual
written consent at any time.
11.2 Investor Termination
Investor may terminate this Agreement by written notice to the
Company on or prior to the Closing Date if (A) the Company shall have breached
in any material respect any representation, warranty or covenant contained in
this Agreement and failed to cure the same within ten (10) days after written
notice thereof from the Investor; or (b) the consummation of the transactions
contemplated hereby has not occurred within ninety (90) days of the date hereof
due to the failure of any condition set forth in Section 4 above to have been
satisfied on or before such date.
11.3 Company Termination
The Company may terminate this Agreement by written notice to
the Investor on or prior to the Closing Date if (A) the Investor shall have
breached in any material respect any representation, warranty or covenant
contained in this Agreement and failed to cure the same within ten (10) days
after written notice thereof from the Investor; or (B) the consummation of the
transactions contemplated hereby has not occurred within ninety (90) days of the
date hereof, due to the failure of any condition set forth in Section 5 above to
have been satisfied on or before such date.
Page 31 of 50
11.4 Termination Due to Governmental Action
Any party may terminate this Agreement by written notice to the
other parties hereto on or prior to the Closing Date if any court or other
governmental instrumentality of competent jurisdiction shall have issued an
order, decree or ruling or taken any other action restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement.
12. Indemnification
12.1 Survival of Representations and Warranties
The representations, warranties, covenants and agreements of
the Company and the Investor contained in this Agreement shall survive the
execution and delivery of this Agreement and the Closing, subject to the
limitations set forth in Section 12.2 below, and shall in no way be affected by
any investigation of the subject matter thereof made by or on behalf of the
Investor or the Company.
12.2 Indemnification by the Company
Without prejudice to any other rights or remedies that Investor
may have, the Company shall indemnify and hold the Investor, its directors,
officers, employees and agents (collectively, the "Investor Indemnified
Parties") harmless from and against, and agree promptly to defend any such
Investor Indemnified Party from and reimburse any such Investor Indemnified
Party for, any and all material losses, costs, expenses, damages, diminution in
value, taxes, penalties, fines, charges, demands, liabilities, obligations and
claims of any kind (including interest, penalties and reasonably attorney's
fees, expenses and disbursements) ("Losses") which any Investor Indemnified
Party may suffer or incur, or become subject to, arising out of or resulting
from, without duplication: (i) any material breach or inaccuracy of any of the
representations or warranties made by the Company in this Agreement, or (ii) any
material failure of the Company to carry out, perform, satisfy or discharge any
of its respective covenants, agreements, undertakings, liabilities or
obligations under this Agreement. Any reimbursement for such Losses shall be
offset by any recovery by Investor under any federal, state or local securities
laws for the same cause of action. Reimbursement under this Section 12.2 shall
be limited to $10,000,000.
12.3 Termination of Indemnification
Rights to make claims for indemnification under Section 12.2(i)
above shall terminate one (1) year from the Closing Date. Rights to make claims
for indemnification under Section 12.2(ii) shall terminate seven (7) years from
the Closing Date.
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13. Miscellaneous
13.1 Transaction Expenses
(a) Irrespective of whether the Closing is effected,
each party to this Agreement shall pay all costs and expenses that it incurs
with respect to the negotiation, execution, delivery and performance of this
Agreement and the Transactional Agreements.
(b) Each of the Company and the Investor shall pay
one-half of the $45,000 filing fee under the HSR Act.
13.2 Successors and Assigns; No Third-Party Beneficiary
Status
(a) Except as otherwise provided herein, the terms
and conditions of this Agreement shall inure to the benefit of and be binding
upon the respective successors and assigns of the parties (including transferees
of any Shares).
(b) Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
13.3 Governing Law
This Agreement is to be construed in accordance with and
governed by the laws of the State of California, without giving effect to any
choice of law rule that would cause the application of the laws of any
jurisdiction other than the State of California to the rights and duties of the
parties.
13.4 Counterparts
This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
13.5 Titles and Subtitles
The titles and subtitles used in this Agreement are used for
convenience only and are not to be considered in construing or interpreting this
Agreement.
Page 33 of 50
13.6 Notices
Any notice or other communication required or permitted to be
delivered to any party under this Agreement shall be in writing and shall be
deemed properly delivered, given and received when delivered (by hand, by
registered mail, by courier or express delivery service or by facsimile during
business hours) to the address or telecopier number for each party set forth on
the signature page hereof (or to such other address or telecopier number as such
party shall have specified in a written notice given to the other parties
hereto).
13.7 Finder's Fee
Each party represents that it neither is nor will be obligated
for any finders' fee or commission in connection with this transaction. The
Investor agrees to indemnify and to hold harmless the Company from any liability
for any commission or compensation in the nature of a finders' fee (and the
costs and expenses of defending against such liability or asserted liability)
for which the Investor or any of its officers, partners, employees, or
representatives is responsible.
The Company agrees to indemnify and hold harmless the Investor
from any liability for any commission or compensation in the nature of a
finders' fee (and the costs and expenses of defending against such liability or
asserted liability) for which the Company or any of its officers, employees or
representatives is responsible.
13.8 Amendments and Waivers
Any term of this Agreement may be amended and the observance of
any term of this Agreement may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of the Company and the holders of a majority of the Common Stock issued
pursuant to this Agreement that have not subsequently been sold in the public
market. Any amendment or waiver effected in accordance with this paragraph shall
be binding upon each holder of any securities purchased under this Agreement at
the time outstanding (including securities into which such securities are
convertible) each future holder of all such securities and the Company.
13.9 Severability
If one or more provisions of this Agreement are held to be
unenforceable under applicable law, so long as the economic or legal substance
of the transactions contemplated hereby are not affected in any manner
materially adverse to any party such provision shall be excluded from this
Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
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13.10 Construction
For purposes of this Agreement, whenever the context requires:
the singular number shall include the plural, and vice versa; the masculine
gender shall include the feminine and neuter genders; the feminine gender shall
include the masculine and neuter genders; and the neuter gender shall include
the masculine and feminine genders.
13.11 Entire Agreement
This Agreement and the Transactional Agreements constitute the
entire agreement among the parties with regard to the subject matter hereof and
thereof, and supercede any and all prior negotiations, correspondence,
understandings and agreements between the parties regarding the subject matter
hereof and thereof. No party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants, except as specifically
set forth in this Agreement or the Transactional Agreements.
13.12 Press Releases
The parties shall cooperate as to the timing and contents of
any press release or public announcement relating to this Agreement or the
transactions contemplated hereby. Notwithstanding the foregoing, the parties may
make any filings with governmental agencies relating to this Agreement or the
transactions contemplated hereby, as required by law.
Page 35 of 50
IN WITNESS WHEREOF, the parties have executed this Common Stock
Purchase Agreement as of the date first above written.
THE COMPANY 8X8, INC.
A DELAWARE CORPORATION
2445 MISSION COLLEGE BLVD.
SANTA CLARA, CA 95054
FACSIMILE: (408) 933-0234
By: /s/ Paul Voois
-----------------------------------
Paul Voois
Chairman and CEO
THE INVESTOR ST MICROELECTRONICS NV
TECHNOPARC DU PAYS DE GEX
165 RUE EDOUARD BRANLY
B.P. 11201637
ST. GENIS POUILLY CEDEX (FRANCE)
ATTENTION: GENERAL COUNSEL
By: /s/ FranHois Guibert
----------------------------------------
FranHois Guibert
Group Vice President, Business Planning
& Development
Page 36 of 50
Exhibit 2
INVESTOR RIGHTS AGREEMENT
Page 37 of 50
INVESTOR RIGHTS AGREEMENT
This Investor Rights Agreement (this "Agreement") is made as of
February 22, 2000, by and between 8x8, Inc., a Delaware corporation (the
"Company"), and ST Microelectronics NV, a company organized under the laws of
The Netherlands, having an office at ICC Bloc A, 20 Route Pre-bois, 1215 Geneve,
Switzerland ("the Investor").
Recitals
WHEREAS, the Company desires to sell to the Investor shares of
the Company's Common Stock (the "Shares") pursuant to a certain Common Stock
Purchase Agreement dated January 24, 2000 by and between the Company and the
Investor (the "Stock Purchase Agreement"); and
WHEREAS, the Company desires to grant the Investor certain
rights, in order to induce the Investor to purchase the Shares;
NOW, THEREFORE, in consideration of the above and of the mutual
promises set forth herein, the parties hereto agree that, subject to the closing
of the purchase of the Shares by the Investor pursuant to the Stock Purchase
Agreement, the Company hereby grants to the Investor the rights set forth below:
SECTION 1
Definitions 1.1 Certain Definitions. Hereafter, in this Agreement
the following terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange Commission
or any other federal agency at the time administering the Securities Act.
"Registrable Securities" means shares of Common Stock of the
Company held by the Investor which are purchased pursuant to the Stock Purchase
Agreement provided that the Shares have not be sold, assigned, transferred or
pledged by the Investor to any third party (other than affiliates of the
Investor).
The terms "register," "registered" and "registration" refer to
a registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses, other than
Selling Expenses, incurred by the Company in complying with Section 2 hereof,
including, without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and
Page 38 of 50
disbursements of counsel for the Company, NASD fees and expenses, and the
expense of any special audits incident to or required by any such registration.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Selling Expenses" shall mean all underwriting discounts,
selling commissions and stock transfer taxes applicable to the securities
registered by the Investor and all reasonable fees and disbursements of counsel
for the Investor.
Unless otherwise defined in this Agreement or unless the context
requires otherwise, capitalized terms used herein shall have the same meaning as
in the Stock Purchase Agreement.
SECTION 2
Registration Rights
2.1 Company Registration.
(a) Notice of Registration. If at any time after six months
following the Closing Date the Company shall determine to register any of its
securities, either for its own account or the account of a security holder or
the Investor, other than (i) a registration relating solely to an acquisition,
(ii) a registration relating solely to employee benefit plans, or (iii) a
registration relating solely to a Commission Rule 145 transaction, the Company
will:
(i) promptly, and in any event at least 30 days prior
to the filing of any such registration statement, give to the Investor written
notice thereof; and
(ii) include in such registration and in any
underwriting involved therein, all the Registrable Securities specified in a
written request by the Investor, made within 20 days after receipt of such
written notice from the Company.
(b) Underwriting. If the registration of which the Company
gives notice is for a registered public offering involving an underwriting, the
Company shall so advise the Investor as a part of the written notice given
pursuant to Section 2.1(a)(i). In such event the right of the Investor to
registration pursuant to Section 2.1 shall be conditioned upon the Investor's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. The Investor shall (together
with the Company and the other shareholders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the
Company. Notwithstanding any other provision of this Section 2.1, if the
managing underwriter determines that marketing factors require a limitation of
the number of
Page 39 of 50
shares to be underwritten, the managing underwriter may limit the Registrable
Securities to be included in such registration. The Company shall so advise the
Investor and other shareholders entitled to include their securities in the
registration and the number of shares of Registrable Securities that may be
included in the registration and underwriting shall be allocated, (i) first, to
the Company, and (ii) second, among the Investor and such other shareholders
entitled to include their securities in the registration in proportion, as
nearly as practicable, to the respective amounts of shares of Common Stock held
the Investor and such other shareholders at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any holder
of shares of Common Stock to the nearest 100 shares. If the Investor disapproves
of the terms of any such underwriting, it may elect to withdraw therefrom by
written notice to the Company and the managing underwriter. Any securities
excluded or withdrawn from such underwriting shall be withdrawn from such
registration, and shall not be transferred in a public distribution prior to 90
days after the effective date of the registration statement relating thereto, or
such other shorter period of time as the underwriters may require.
(c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.1 prior to the effectiveness of such registration whether or not the
Investor has elected to include securities in such registration.
2.2 Registration on Form S-3.
(a) If the Investor requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) under the
Securities Act with respect to shares of the Registrable Securities, and at the
time of such request the Company is a registrant entitled to use Form S-3 to
register the Registrable Securities for such an offering, the Company shall use
its best efforts to cause such Registrable Securities to be registered for the
offering on such form, and (i) thereafter cause the registration statement to be
declared effective by the Commission as to resales by the Investor; (ii) cause
the registration statement to remain effective for the period ending on the
earlier of (i) the date all shares of Registrable Securities have been sold
pursuant thereto or (ii) 12:00 a.m. EST on the last day of the third calendar
year after the date of effectiveness of the registration statement. The Company
shall not be required to effect such a registration prior to the first
anniversary of this Agreement.
(b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 2.2: (i) if the Company,
within ten (10) days of the receipt of the request of the Investor, gives notice
of its bona fide intention to effect the filing of a registration statement with
the Commission within forty-five (45) days of receipt of such request in which
Registrable Securities will be included (other than with respect to a
registration statement relating to a Rule 145 transaction, an offering solely to
employees or any other registration which is not appropriate for the
registration of Registrable Securities) and the
Page 40 of 50
Company files such registration statement including Registrable Securities
within such 45-day period; or (ii) during the period ending on the date six (6)
months immediately following the effective date of any registration statement
pertaining to securities of the Company in which Registrable Securities were or
could have been included (other than a registration of securities in a Rule 145
transaction or with respect to an employee benefit plan).
(c) In addition, the Company shall not be required to take any
action with respect to the registration or the declaration or continuation of
effectiveness of the registration statement (i) during the Company's customary
black-out periods which start the first day of the third calendar month of any
fiscal quarter (March 1, June 1, September 1 and December 1) and continue until
the 2nd trading day following the Company's earning announcement for the
quarter, and (ii) following notice to the Investor from the Company (a
"Suspension Notice") of the existence of any state of facts or the happening of
any event (including, without limitation pending negotiations relating to, or
the consummation of, a transaction, or the occurrence of any event which in the
opinion of the Company might require additional disclosure of material,
non-public information by the Company in the registration statement as which the
Company believes it has a bona fide business purpose for preserving
confidentiality or which renders the Company unable to comply with the published
rules and regulations of the Commission promulgated under the Securities Act or
the 1934 Act, as in effect at any relevant time) which might reasonably result
in (1) the registration statement, any amendment or post-effective amendment
thereto, or any document incorporated therein by reference containing an untrue
statement of a material fact or omitting to state a material fact required to be
stated therein or necessary to make the statement therein not misleading, or (2)
the prospectus issued under the registration statement, any prospectus
supplement, or any document incorporated therein by reference including an
untrue statement of material fact or omitting to state a material fact necessary
in order to make the statement therein, in the light of the circumstances under
which they were made, not misleading (provided that for the continuous thirty
(30) day period beginning on the first trading day after the registration
statement is declared effective, no Suspension Notice shall be issued or in
effect with respect to such shares; and the Company shall not issue a Suspension
Notice for any period during which the Company's executive officers are not
similarly restrained from disposing of shares of the Company's Common Stock).
Upon receipt of a Suspension Notice from the Company, the Investor will
forthwith discontinue disposition of all such shares pursuant to the
registration statement until receipt from the Company of copies of prospectus
supplements or amendments prepared by or on behalf of the Company, together with
the notification that the Suspension Notice is no longer in effect, and, if so
directed by the Company, the Investor will deliver to the Company all copies in
their possession of the prospectus covering such shares current at the time of
receipt of any Suspension Notice.
The aggregate number of days that the Company may postpone,
prohibit or suspend any registration or sale of Registrable Securities by the
Investor pursuant to this Section 2.2(c) shall not exceed the number of days in
the Company's customary black-out periods plus thirty (30) days in any 365 day
period.
Page 41 of 50
2.3 Expenses of Registration. All Registration Expenses incurred
pursuant to Sections 2.1 and 2.2 shall be borne by the Company. All Selling
Expenses incurred in connection with securities registered on behalf of the
Investor pursuant to Sections 2.1 and 2.2 shall be borne by the Investor.
2.4 Indemnification.
(a) The Company will indemnify the Investor, each of its
officers and directors and partners, and each person controlling the Investor
within the meaning of Section 15 of the Securities Act, with respect to which
registration, qualification or compliance has been effected pursuant to this
Section 2, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any omission (or alleged omission) to
state therein a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances in which they were made,
not misleading, or any violation by the Company of the Securities Act or any
Rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse the Investor, each of its officers and directors,
and each person controlling the Investor, each such underwriter and each person
who controls any such underwriter, for any legal and any other expenses
reasonably incurred in connection with investigating, preparing or defending any
such claim, loss, damage, liability or action, provided that the Company will
not be liable in any such case to the extent that any such claim, loss, damage,
liability or expense arises out of or is based on any untrue statement or
omission or alleged untrue statement or omission, made in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by the Investor, controlling person or underwriter and stated to
be specifically for use therein.
(b) The Investor will, if Registrable Securities held by the
Investor are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its directors and officers, each underwriter, if any, of the Company's
securities covered by such a registration statement, and each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such directors, officers, persons, underwriters or control persons
for any legal or any other
Page 42 of 50
expenses reasonably incurred in connection with investigating or defending any
such claim, loss, damage, liability or action, in each case to the extent, but
only to the extent, that such untrue statement (or alleged untrue statement) or
omission (or alleged omission) is made in such registration statement,
prospectus, offering circular or other document in reliance upon and in
conformity with written information furnished to the Company by an instrument
duly executed by the Investor and stated to be specifically for use therein.
Notwithstanding the foregoing, the liability of the Investor under this
subsection (b) and subsection (d) shall be limited in an amount equal to the net
proceeds received by the Investor from sales of Registrable Securities pursuant
to such registration statement, unless such liability arises out of or is based
on willful misconduct by the Investor.
(c) Each party entitled to indemnification under this Section
2.4 (the "Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Section 2 unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action
and provided further, that the Indemnifying Party shall not assume the defense
for matters as to which there is a conflict of interest or separate and
different defenses. No Indemnifying Party, in the defense of any such claim or
litigation, shall, except with the consent of each Indemnified Party, consent to
entry of any judgment or enter into any settlement which does not include as an
unconditional term thereof the giving by the claimant or plaintiff to such
Indemnified Party of a release from all liability in respect to such claim or
litigation.
(d) Investor and the Company agree that if, for any reason, the
indemnification provisions contemplated by Section 2.4(a) or 2.4(b) hereof are
unavailable to or are insufficient to hold harmless and indemnified party in
respect of any all expenses, claims, losses, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such all expenses, claims, losses, damages or liabilities (or actions in
respect thereof) in such proportion as is appropriate to reflect the relative
fault of, and benefits derived by, the indemnifying party and the indemnified
party, as well as any other relevant equitable considerations. The relative
fault of such indemnifying party and indemnified party shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or omission or alleged omission to state a material fact
relates to information supplied by such indemnifying party or by such
indemnified party, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The parties hereto agree that it would not be just and equitable if
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contributions pursuant to this Section 2.4(d) were determined (i) by pro rata
allocation (even if the Investor or any agents for, or underwriters of, the
Registrable Securities, or all of them, were treated as one entity for such
purpose); or (ii) by any other method of allocation which does not take account
of the equitable considerations referred to in this Section 2.4(d). The amount
paid or payable by an indemnified party as a result of the expenses, claims,
losses, damages or liabilities (or actions in respect thereof) referred to above
shall be deemed to include (subject to the limitations set forth in Section
2.4(b) hereof) any legal or other fees or expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action,
proceeding or claim. 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.
2.5 Termination of Registration Rights. The rights granted pursuant
to this Agreement shall terminate at such time as Rule 144 will permit the
Investor to sell all the shares held by it in a single 90 day period or seven
(7) years after the date of this Agreement, whichever occurs first.
2.6 Information by Holder. The Investor shall furnish to the Company
such information regarding the Investor, the Registrable Securities held by it
and the distribution proposed by the Investor as the Company may reasonably
request in writing and as shall be required in connection with any registration,
qualification or compliance referred to in this Section 2.
2.7 Rule 144 Reporting. With a view to making available the benefits
of certain rules and regulations of the Commission which may at any time permit
the sale of the Registrable Securities to the public without registration, the
Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in Rule 144 under the Securities Act, at all times;
(b) Use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Securities Exchange Act of 1934, as amended; and
(c) So long as the Investor owns any Registrable Securities to
furnish to the Investor forthwith upon request a written statement by the
Company as to its compliance with the reporting requirements of said Rule 144,
and of the Securities Act and the Securities Exchange Act of 1934, a copy of the
most recent annual or quarterly report of the Company, and such other reports
and documents of the Company and other information in the possession of or
reasonably obtainable by the Company as the Investor may reasonably request in
availing itself of any Rule or regulation of the Commission allowing a Investor
to sell any such securities without registration.
Page 44 of 50
2.8 Transfer of Registration Rights. The rights to cause the Company
to register securities granted to the Investor under Sections 2.1 and 2.2 may be
not be transferred or assigned, except to any affiliate or affiliates of the
Investor in connection with the transfer or assignment of the related
Registrable Securities to such affiliate or affiliates.
2.9 Obligations of the Company. Whenever required under this Section
2 to effect the registration of any Registrable Securities, the Company shall,
as expeditiously as reasonably possible:
(a) Prepare and file with the Commission a registration
statement with respect to such securities and use its diligent best efforts to
cause such registration statement to become effective and to keep such
registration statement effective for such period of time as otherwise specified
in this Agreement.
(b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Investor such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registrable
Securities owned by them.
(d) Use its reasonable commercial efforts to register and
qualify the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Investor, provided that the Company shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
(e) In the event of any underwritten public offering, enter
into and perform its obligations under an underwriting agreement, in usual and
customary form, with the managing underwriter of such offering. The Investor
shall also enter into and perform its obligations under such an agreement.
(f) Notify the Investor when an amended prospectus relating
thereto is required to be delivered under the Securities Act of the happening of
any event as a result of which the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material fact or
omits to state a material fact required to be stated therein or necessary to
make the statements therein not misleading in the light of the circumstances
then existing.
Page 45 of 50
(g) Furnish, at the request of the Investor, on the date that
such securities are delivered to the underwriters for sale in connection with a
registration pursuant to this Section 2, if such securities are being sold
through underwriters, on the date that the registration statement with respect
to such securities becomes effective, (i) a copy of the opinion given to the
underwriters if the registration of the Investor's securities was underwritten
and (ii) a letter dated such date, from the independent accountants of the
Company, in form and substance as is customarily given by independent
accountants to underwriters in an underwritten public offering, addressed to the
underwriters, if any, and to the Investor requesting registration of securities.
SECTION 3
Other Rights
3.1 Board Representation. Effective as of the date of the Closing,
the Company will cause a designee of the Investor to be appointed to the Board
of Directors of the Company. For so long as the Investor owns at least ten
percent (10%) of the outstanding shares of Common Stock, the Investor shall have
the right to nominate one director to the Board of Directors of the Company at
each election of directors. Such right shall be in addition to any other voting
rights that the Investor may have, from time to time, with respect to its shares
of Common Stock. The Company shall include as a nominee for the Board of
Directors recommended by the Board of Directors the person designated by the
Investor in accordance with this section and shall nominate such person and use
its reasonable best efforts to cause the election of such person, unless the
Board of Directors, in the exercise of its fiduciary duties, reasonably shall
determine that such person is not qualified to serve on the Board of Directors.
If the Board of Directors reasonably determines that such designee is not so
qualified, the Investor shall have the opportunity to specify one additional
designee who shall be so included as a nominee subject to the qualification set
forth in the immediately preceding sentence. In the event that a vacancy is
created at any time by the death, disability, resignation or removal of a
director nominated by the Investor, the Investor shall have the right to
designate a replacement director to fill such vacancy (provided that the
Investor would be entitled at that time to nominate a director pursuant to this
section) and the Company agrees to take such actions within its control as are
necessary to implement the agreements set forth in this sentence.
3.2 Preemptive Rights.
(a) If the Company authorizes the offer or sale of any shares
of Common Stock ("New Shares") or of options or rights to acquire shares of
Common Stock ("New Rights"), (i) in a private placement, then the Company shall
first offer to the Investor the number of such New Shares or New Rights equal to
the product of (A) the total number of such New Shares or New Rights and (B) a
fraction, the numerator of which shall be the number of shares of Common Stock
then owned by the Investor at such time and the
Page 46 of 50
denominator of which shall be the total number of shares of Common Stock issued
and outstanding at such time. The Investor shall be entitled to purchase all of
a portion of the New Shares or New Rights offered to it at the same price and on
the same terms and conditions as such New Shares or New Rights are to be offered
to any other persons or entities. The Investor must exercise its purchase rights
hereunder within 20 days after written notice from the Company describing in
reasonable detail the New Shares or New Rights being offered, the purchase price
thereof and the payment terms thereof.
(b) During the 90 days following the expiration of the offering
period described above, the Company shall be free to sell any New Shares or New
Rights that the Investor has not elected to purchase on terms and conditions no
more favorable to the purchasers thereof than those offered to the Investor. If
any New Shares or New Rights are not sold during such 90-day period in
accordance with this Section 3.2(b), then the provisions of this Section 3.2
shall automatically and immediately be reinstated, and shall automatically and
immediately reapply to the offer or sale of such New Shares or New Rights.
(c) With respect to public offerings of Common Stock, the
parties will cooperate to allow the Investor to purchase its pro rata portion of
the shares of Common Stock offered in such offering unless in the good faith
judgment of the Board of Directors of the Company, after consultation with their
legal advisors and the underwriters for such offering, including the Investor is
such offering would be reasonably likely to negatively affect the pricing of,
costs associated with, the timing of or the risk of consummation of such
offering. To the extent that the Investor has not been able to participate in a
public offering, the Investor shall be permitted to purchase additional shares
of Common Stock until its ownership percentage of the outstanding shares of
Common Stock is equal to its ownership percentage prior to such offering.
(d) The provisions of this Section 3.2 shall not apply to the
issuance and sale of New Shares or New Rights to employees, officers or
directors of the Company pursuant to an employee benefits plan.
(e) The rights of the Investor under this Section 3.2 may be
waived in writing in any specific instance by the Investor.
(f) The rights of the Investor under this Section 3.2 shall
terminate on the later of (i) such date when the amount of Common Stock held by
the Investor is less than 10% of the outstanding capital stock of the Company,
and (ii) three years from the Closing Date.
3.3 Nasdaq Listing. The Company agrees to make application to the
Nasdaq Stock Market National Market for the listing of the Shares.
Page 47 of 50
SECTION 4
Miscellaneous
4.1 Governing Law. This Agreement shall be governed and construed in
all respects in accordance with the laws of the State of California as applied
to agreements made and performed in California by residents of the State of
California.
4.2 Entire Agreement; Amendment. This Agreement constitutes the full
and entire understanding and agreement between the parties with regard to the
subjects hereof, and no party shall be liable or bound to any other party in any
manner by any warranties, representations or covenants except or specifically
set forth herein. Except as expressly provided herein, neither this Agreement
nor any term hereof may be amended, waived, discharged or terminated other than
by a written instrument signed by the party against whom enforcement of any such
amendment, waiver, discharge or termination is sought.
4.3 Notices, etc. All notices and other communications required or
permitted hereunder shall be in writing and shall be mailed by registered or
certified mail, postage prepaid, or otherwise delivered by hand or by messenger,
addressed as follows:
(i) if to the Investor:
Technoparc du pays de Gex
165 Rue Edouard Branly
B.P. 112 01637
ST GENIS POUILLY CEDEX (France)
Attention: General Counsel;
with a copy to:
Michael J. Coleman, Esq.
Shearman & Sterling
555 California Street
20th Floor
San Francisco, CA 94104
(ii) if to the Company:
Paul Voois, CEO
8x8, Inc.
12445 Mission College Blvd.
Santa Clara, CA 95054
Page 48 of 50
or by facsimile to:
Paul Voois, CEO
8x8, Inc.
(408) 933-0234
with a copy to:
Blair W. Stewart, Esq.
Wilson Sonsini Goodrich & Rosati
650 Page Mill Road
Palo Alto, CA 94304
Each such notice or other communication shall for all purposes
of this Agreement be treated as effective or having been given when delivered if
delivered personally, or, if sent by mail, at the earlier of its receipt or 72
hours after the same has been deposited in a regularly maintained receptacle for
the deposit of the United States mail, addressed and mailed as aforesaid.
4.4 Severability. In the event that any provision of this Agreement
becomes or is declared by a court of competent jurisdiction to be illegal,
unenforceable or void, this Agreement shall continue in full force and effect
without said provision; provided that no such severability shall be effective if
it materially changes the economic benefit of this Agreement to any party.
4.5 Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not considered in construing or
interpreting this Agreement.
4.6 Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be enforceable against the parties actually
executing such counterparts, and all of which together shall constitute one
instrument.
Page 49 of 50
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
8X8, INC.
a Delaware corporation
By: /s/ Paul Voois
------------------------------
Paul Voois, Chairman and CEO
ST MICROELECTRONICS NV
a company organized
under the laws of the
Netherlands, having an
office at ICC Bloc A,
20 Route Pre-bois,
1215 Geneve,
Switzerland
By: /s/ FranHois Guibert
------------------------------
FranHois Guibert, Group Vice
President Business Planning &
Development
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