NETWORK COMPUTER, INC.
STOCKHOLDERS AGREEMENT
This Stockholders Agreement (the 'AGREEMENT') is made as of August
11, 1997 by and among Network Computer, Inc., a Delaware corporation (the
'COMPANY'), Oracle Corporation, a Delaware corporation ('ORACLE'), and the
parties listed on EXHIBIT A hereto (each a 'NAVIO STOCKHOLDER' and
collectively, the 'NAVIO STOCKHOLDERS'), each of which is presently a
stockholder of Navio Communications, Inc., a Delaware corporation ('NAVIO').
Oracle and the Navio Stockholders are sometimes collectively referred to
herein as the 'STOCKHOLDERS.'
RECITALS
A. The Company and Navio have entered into an Agreement and Plan
of Merger dated as of May 16, 1997 (the 'MERGER AGREEMENT') pursuant to which
Navio will be merged (the 'MERGER') with and into the Company upon and
subject to the terms and conditions set forth therein.
B. Oracle is the sole stockholder of the Company. Upon
consummation of the Merger, each of the Navio Stockholders will become
stockholders of the Company.
C. Certain parties hereto are also parties to a Put/Call and
Voting Agreement of even date herewith (the 'PUT/CALL AND VOTING AGREEMENT')
with certain other holders of equity interests in Navio, which agreement is
related in certain respects to this Agreement.
D. The Company and the Stockholders each desire to provide for
certain agreements and understandings with respect to the ownership and
transfer of shares of the Company's capital stock as well as for certain
agreements with respect to certain matters relating to the governance of the
Company following consummation of the Merger.
AGREEMENT
The parties hereby agree as follows:
1. REGISTRATION RIGHTS. The Company and the Stockholders
covenant and agree as follows:
1.1 DEFINITIONS. For purposes of this Agreement:
(a) All capitalized terms used in this Agreement and
not otherwise defined shall have the meanings given to them in the Merger
Agreement.
(b) The terms 'REGISTER,' 'REGISTERED' and
'REGISTRATION' refer to a registration effected by preparing and filing a
registration statement or similar document in
compliance with the Securities Act of 1933, as amended (the 'ACT'), and the
declaration or ordering of effectiveness of such registration statement or
document;
(c) The term 'REGISTRABLE SECURITIES' means (i) the
shares of Common Stock issuable or issued upon conversion of the Series A
Preferred Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series
C Preferred Stock or Series C-1 Preferred Stock, as the case may be (such
shares of Common Stock are collectively referred to hereinafter as the
'STOCK'), and (ii) any other shares of Common Stock of the Company issued as
(or issuable upon the conversion or exercise of any warrant, right or other
security that is issued as) a dividend or other distribution with respect to,
or in exchange for or in replacement of, the Stock; PROVIDED, HOWEVER, that
the foregoing definition shall exclude in all cases any Registrable
Securities sold by a person in a transaction in which his or her rights under
this Agreement are not assigned. Notwithstanding the foregoing, Common Stock
or other securities shall only be treated as Registrable Securities if and so
long as they have not been (A) sold to or through a broker or dealer or
underwriter in a public distribution or a public securities transaction, or
(B) sold in a transaction exempt from the registration and prospectus
delivery requirements of the Act under Section 4(1) thereof in which all
transfer restrictions, and restrictive legends with respect thereto, if any,
are removed upon the consummation of such sale;
(d) The term 'HOLDER' means any person that is a
Stockholder and who owns or has the right to acquire Registrable Securities
or any permitted assignee thereof;
(e) The term 'TEN PERCENT HOLDER' means any Holder
that as of the date of measurement beneficially owns, together with its
affiliates, ten percent or more of the Fully Diluted Equity of the Company;
(f) The term 'FIVE PERCENT HOLDER' means any Holder
that as of the date of measurement beneficially owns, together with its
affiliates, five percent or more of the Fully Diluted Equity of the Company;
(g) The term 'FULLY DILUTED EQUITY,' as of any date
of measurement, shall refer to (i) the number of shares of Common Stock
issued and outstanding as of such date, PLUS (ii) the number of shares of
Common Stock issuable upon conversion of any shares of Series A Preferred
Stock, Series A-1 Preferred Stock, Series B Preferred Stock, Series C
Preferred Stock and/or Series C-1 Preferred Stock issued and outstanding as
of such date, plus (iii) any shares of Common Stock issuable upon the
conversion or exercise of any warrant, option, right or other convertible
security issued and outstanding as of such date;
(h) The term 'FORM S-3' means such form under the
Act as in effect on the date hereof or any successor form under the Act; and
(i) The term 'SEC' means the Securities and Exchange
Commission.
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1.2 REQUEST FOR REGISTRATION.
(a) If the Company shall receive at any time after
June 30, 1998 and at such time as both of the following circumstances shall
exist: (i) the Company shall have generated total revenues of at least
$25,000,000 for the 12 consecutive month period ending on the last day of the
calendar month immediately prior to such time and (ii) the Company's income
from operations, calculated in accordance with generally accepted accounting
principles ('GAAP') and on a basis consistent with the Company's past
practices and procedures, shall have been greater than zero for the two most
recent fiscal quarters immediately prior to such time, a written request from
Holders of more than 20% percent of the Registrable Securities outstanding on
that date that the Company file a registration statement under the Act
covering the registration of at least thirty percent of the Registrable
Securities then outstanding, then the Company shall, within ten days of the
receipt thereof, give written notice of such request to all Holders and
shall, subject to the limitations of subsection 1.2(b), use its reasonable
efforts to effect as soon as practicable, and in any event within 90 days of
the receipt of such request, the registration under the Act of all
Registrable Securities which the Holders request to be registered within 20
days of the mailing of such notice by the Company in accordance with Section
3.6.
(b) If the Holders initiating the registration
request hereunder ('INITIATING HOLDERS') intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to this
Section 1.2 and the Company shall include such information in the written
notice referred to in subsection 1.2(a). The underwriter will be selected by
a majority in interest of the Initiating Holders (calculated based upon the
number of Registrable Securities beneficially owned by each Initiating Holder
at the time the request shall be made) and shall be reasonably acceptable to
the Company and Oracle. In such event, the right of any Holder to include
such Holder's Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities that are to be sold in such
offering in the underwriting (unless otherwise mutually agreed by a majority
in interest of the Initiating Holders and such Holder) to the extent provided
herein. All Holders proposing to distribute their securities through such
underwriting shall (together with the Company as provided in subsection
1.4(e)) enter into an underwriting agreement in customary form with the
underwriter or underwriters selected for such underwriting in accordance with
the foregoing. Notwithstanding any other provision of this Section 1.2, if
the underwriter advises the Company and the Initiating Holders in writing
that marketing factors require a limitation of the number of shares to be
underwritten, then the Company shall so advise all Holders of Registrable
Securities that would otherwise be underwritten pursuant hereto, and the
number of shares of Registrable Securities that may be included in the
underwriting shall be allocated among all Holders thereof, in each case in
proportion (as nearly as practicable) to the amount of Registrable Securities
of the Company owned by each Holder electing to participate in the
underwriting; provided, however, that the Registrable Securities to be
included in such Underwriting shall not be reduced unless all securities
(other than Registrable Securities) are first entirely excluded from the
underwriting.
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(c) Notwithstanding the foregoing, if the Company
shall furnish to Holders requesting a registration statement pursuant to this
Section 1.2, a certificate signed by the President of the Company stating
that in the good faith judgment of the Board of Directors of the Company it
would be seriously detrimental to the Company and its stockholders for such
registration statement to be filed and it is therefore essential to defer the
filing of such registration statement, the Company shall have the right to
defer such filing for a period of not more than 120 days after receipt of the
request of the Initiating Holders; PROVIDED, HOWEVER, that the Company may
not utilize this right more than once in any twelve-month period.
(d) In addition, the Company shall not be obligated
to effect, or to take any action to effect, any registration pursuant to this
Section 1.2:
(i) After the Company has effected one
registration pursuant to this Section 1.2 and such registration shall have
been declared or ordered effective; or
(ii) During the period starting with the date
60 days prior to the Company's good faith estimate of the date of filing of,
and ending on a date 180 days after the effective date of, a registration
subject to Section 1.3 hereof; PROVIDED that the Company is actively
employing in good faith all reasonable efforts to cause such registration
statement to become effective.
1.3 COMPANY REGISTRATION. If (but without any obligation
to do so) the Company proposes to register (including for this purpose a
registration effected by the Company for stockholders other than the Holders)
any of its capital stock under the Act in connection with the public offering
of such securities solely for cash (other than (i) a registration relating
solely to the sale of securities to participants in a Company stock plan or a
transaction covered by Rule 145 under the Act, (ii) a registration in which
the only stock being registered is Common Stock issuable upon conversion of
debt securities which are also being registered, or (iii) any registration on
any form which does not include substantially the same information as would
be required to be included in a registration statement covering the sale of
the Registrable Securities), the Company shall, at such time, promptly give
each Holder written notice of such registration. Upon the written request of
each Holder given within 20 days after mailing of such notice by the Company
in accordance with Section 3.6, the Company shall, subject to the provisions
of Section 1.8, cause to be registered under the Act all of the Registrable
Securities that each such Holder has requested to be registered.
1.4 OBLIGATIONS OF THE COMPANY. Whenever required under
this Section 1 to effect the registration of any Registrable Securities, the
Company shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and use its reasonable
efforts to cause such registration statement to become effective, and, upon
the request of the Holders of a majority of the Registrable Securities
registered thereunder, keep such registration statement effective for up to
120 days.
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(b) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply
with the provisions of the Act with respect to the disposition of all
securities covered by such registration statement for up to 120 days.
(c) Furnish to the Holders such numbers of copies of
a prospectus, including a preliminary prospectus, in conformity with the
requirements of the 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 efforts to register and
qualify the securities covered by such registration statement under such
other securities or Blue Sky laws of such jurisdictions as shall be
reasonably requested by the Holders, PROVIDED that the Company shall not be
required in connection therewith or as a condition thereto to qualify to do
business or to file a general consent to service of process in any such
states or jurisdictions.
(e) In the event of any underwritten public
offering, enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter
into and perform its obligations under such an agreement.
(f) Notify each Holder of Registrable Securities
covered by such registration statement at any time when a prospectus relating
thereto is required to be delivered under the 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, such obligation to continue for 120 days.
(g) Cause all such Registrable Securities registered
pursuant hereunder to be listed on the securities exchange or market chosen
by the Company and reasonably acceptable to Oracle.
(h) Provide a transfer agent and registrar for all
Registrable Securities registered pursuant hereunder and a CUSIP number for
all such Registrable Securities, in each case not later than the effective
date of such registration.
(i) Use its reasonable efforts to furnish, at the
request of any Holder requesting registration of Registrable Securities
pursuant to this Section 1, on the date that such Registrable Securities are
delivered to the underwriters for sale in connection with a registration
pursuant to this Section 1, if such securities are being sold through
underwriters, or, if such securities are not being sold through underwriters,
on the date that the registration statement with respect to such securities
becomes effective, (i) an opinion, dated such date, of the counsel
representing the Company for the purposes of such registration, in form and
substance as is customarily given to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities and (ii) a
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letter dated such date, from the independent certified public accountants of
the Company, in form and substance as is customarily given by independent
certified public accountants to underwriters in an underwritten public
offering, addressed to the underwriters, if any, and to the Holders
requesting registration of Registrable Securities.
1.5 FURNISH INFORMATION. It shall be a condition
precedent to the obligations of the Company to take any action pursuant to
this Section 1 with respect to the Registrable Securities of any selling
Holder that such Holder shall furnish to the Company such information
regarding itself, the Registrable Securities held by it, and the intended
method of disposition of such securities as shall be required in the judgment
of counsel to the Company to effect the registration of such Holder's
Registrable Securities. The Company shall have no obligation with respect to
any registration requested pursuant to Section 1.2 of this Agreement if, as a
result of the application of the preceding sentence, the number of
Registrable Securities to be included in the registration does not equal or
exceed the number of shares required to originally trigger the Company's
obligation to initiate such registration as specified in subsection 1.2(a).
1.6 EXPENSES OF DEMAND REGISTRATION. All expenses other
than underwriting discounts and commissions incurred in connection with
registrations, filings or qualifications pursuant to Section 1.2, including
(without limitation) all registration, filing and qualification fees,
printers' and accounting fees, fees and disbursements of counsel for the
Company, and the reasonable fees and disbursements of one counsel for the
selling Holders selected by them with the approval of the Company, which
approval shall not be unreasonably withheld, shall be borne by the Company;
PROVIDED, HOWEVER, that the Company shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 1.2 if the
registration request is subsequently withdrawn at the request of the Holders
of a majority of the Registrable Securities to be registered (in which case
all participating Holders shall bear such expenses), unless the Holders of at
least 25% of the then outstanding Registrable Securities beneficially owned
by Holders other than Oracle agree to forfeit their right to one demand
registration pursuant to Section 1.2.
1.7 EXPENSES OF COMPANY REGISTRATION. The Company shall
bear and pay all expenses incurred in connection with any registration,
filing or qualification of Registrable Securities with respect to the
registrations pursuant to Section 1.3 for each Holder (which right may be
assigned as provided in Section 1.13), including (without limitation) all
registration, filing, and qualification fees, printers' and accounting fees
relating or apportionable thereto and the reasonable fees and disbursements
of one counsel for the selling Holders selected by them with the approval of
the Company, which approval shall not be unreasonably withheld, but excluding
underwriting discounts and commissions relating to Registrable Securities.
1.8 UNDERWRITING REQUIREMENTS. In connection with any
offering involving an underwriting of shares of the Company's capital stock,
the Company shall not be required under Section 1.3 to include any of the
Holders' securities in such underwriting unless they accept the terms of the
underwriting as agreed upon between the Company and the underwriters selected
by it (or by other persons entitled to select the underwriters), and then
only in such quantity as the underwriters determine in their sole discretion
will not jeopardize
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the success of the offering by the Company. If the total amount of
securities, including Registrable Securities, requested by stockholders to be
included in such offering exceeds the amount of securities sold other than by
the Company that the underwriters determine in their sole discretion is
compatible with the success of the offering, then the Company shall be
required to include in the offering only that number of such securities,
including Registrable Securities, which the underwriters determine in their
sole discretion will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among the selling
stockholders according to the total amount of securities entitled to be
included therein owned by each selling stockholder or in such other
proportions as shall mutually be agreed to by such selling stockholders) but
in no event shall (i) the amount of securities of the selling Holders
included in the offering be reduced below 25% of the total amount of
securities included in such offering, unless such offering is the initial
public offering of the Company's securities in which case the selling
stockholders may be excluded if the underwriters make the determination
described above and no other stockholder's securities are included or (ii)
notwithstanding (i) above, any shares being sold by a stockholder exercising
a demand registration right similar to that granted in Section 1.2 be
excluded from such offering. For purposes of the preceding parenthetical
concerning apportionment, for any selling stockholder which is a holder of
Registrable Securities and which is a partnership or corporation, the
partners, retired partners and stockholders of such holder, or the estates
and family members of any such partners and retired partners and any trusts
for the benefit of any of the foregoing persons shall be deemed to be a
single 'SELLING STOCKHOLDER,' and any pro-rata reduction with respect to such
'selling stockholder' shall be based upon the aggregate amount of shares
carrying registration rights owned by all entities and individuals included
in such 'selling stockholder,' as defined in this sentence.
1.9 DELAY OF REGISTRATION. No Holder shall have any right
to obtain or seek an injunction restraining or otherwise delaying any such
registration as the result of any controversy that might arise with respect
to the interpretation or implementation of this Section 1.
1.10 INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under this Section 1:
(a) To the extent permitted by law, the Company will
indemnify and hold harmless each Holder, any underwriter (as defined in the
Act) for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Act or the Securities Exchange Act of
1934, as amended (the 'EXCHANGE ACT'), against any losses, claims, damages,
or liabilities (joint or several) to which they may become subject under the
Act, the Exchange Act or other federal or state law, insofar as such losses,
claims, damages, or liabilities (or actions in respect thereof) arise out of
or are based upon any of the following statements, omissions or violations
(collectively a 'VIOLATION'): (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (iii) any violation or
alleged violation by the Company of the Act, the Exchange Act, any state
securities law or any
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rule or regulation promulgated under the Act, the Exchange Act or any state
securities law; and the Company will pay to each such Holder, underwriter or
controlling person, as incurred, any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability, or action; PROVIDED, HOWEVER, that the indemnity
agreement contained in this subsection 1.10(a) shall not apply to amounts
paid in settlement of any such loss, claim, damage, liability, or action if
such settlement is effected without the consent of the Company (which consent
shall not be unreasonably withheld), nor shall the Company be liable in any
such case for any such loss, claim, damage, liability, or action to the
extent that it arises out of or is based upon a Violation which occurs in
reliance upon and in conformity with written information furnished expressly
for use in connection with such registration by any such Holder, underwriter
or controlling person.
(b) To the extent permitted by law, each selling
Holder will indemnify and hold harmless the Company, each of its directors,
each of its officers who has signed the registration statement, each person,
if any, who controls the Company within the meaning of the Act, any
underwriter, any other Holder selling securities in such registration
statement and any controlling person of any such underwriter or other Holder,
against any losses, claims, damages, or liabilities (joint or several) to
which any of the foregoing persons may become subject, under the Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereto) arise out of or are
based upon any Violation, in each case to the extent (and only to the extent)
that such Violation occurs in reliance upon and in conformity with written
information furnished by such Holder expressly for use in connection with
such registration; and each such Holder will pay, as incurred, any legal or
other expenses reasonably incurred by any person intended to be indemnified
pursuant to this subsection 1.10(b), in connection with investigating or
defending any such loss, claim, damage, liability, or action; PROVIDED,
HOWEVER, that the indemnity agreement contained in this subsection 1.10(b)
shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the
consent of the Holder, which consent shall not be unreasonably withheld;
PROVIDED FURTHER that, in no event shall any indemnity under this subsection
1.10(b) exceed the net proceeds from the offering received by such Holder,
except in the case of willful fraud by such Holder.
(c) Promptly after receipt by an indemnified party
under this Section 1.10 of notice of the commencement of any action
(including any governmental action), such indemnified party will, if a claim
in respect thereof is to be made against any indemnifying party under this
Section 1.10, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; PROVIDED, HOWEVER,
that an indemnified party (together with all other indemnified parties which
may be represented without conflict by one counsel) shall have the right to
retain one separate counsel, with the reasonable fees and expenses to be paid
by the indemnifying party, if representation of such indemnified party by the
counsel retained by the indemnifying party would be inappropriate due to
actual or potential differing interests between such indemnified party and
any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the
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indemnifying party within a reasonable time of the commencement of any such
action, if prejudicial to its ability to defend such action, shall relieve
such indemnifying party of any liability to the indemnified party under this
Section 1.10 to the extent its defense has been prejudiced, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 1.10.
(d) If the indemnification provided for in this
Section 1.10 is held by a court of competent jurisdiction to be unavailable
to an indemnified party with respect to any loss, liability, claim, damage,
or expense referred to therein, then the indemnifying party, in lieu of
indemnifying such indemnified party hereunder, shall contribute to the amount
paid or payable by such indemnified party as a result of such loss,
liability, claim, damage, or expense in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of
the indemnified party on the other in connection with the statements or
omissions that resulted in such loss, liability, claim, damage, or expense as
well as any other relevant equitable considerations; PROVIDED, that in no
event shall any contribution by a Holder under this Subsection 1.10(d) exceed
the net proceeds from the offering received by such Holder, except in the
case of willful fraud by such Holder. The relative fault of the indemnifying
party and of the indemnified party shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material
fact or the omission to state a material fact relates to information supplied
by the indemnifying party or by the indemnified party and the parties'
relative intent, knowledge, access to information, and opportunity to correct
or prevent such statement or omission.
(e) Notwithstanding the foregoing, to the extent
that the provisions on indemnification and contribution contained in the
underwriting agreement entered into in connection with the underwritten
public offering are in conflict with the foregoing provisions, the provisions
in the underwriting agreement shall control.
(f) The obligations of the Company and Holders under
this Section 1.10 shall survive the completion of any offering of Registrable
Securities in a registration statement under this Section 1, and otherwise.
1.11 REPORTS UNDER SECURITIES EXCHANGE ACT OF 1934. With a
view to making available to the Holders the benefits of Rule 144 promulgated
under the Act and any other rule or regulation of the SEC that may at any
time permit a Holder to sell securities of the Company to the public without
registration or pursuant to a registration on Form S-3, the Company agrees to:
(a) make and keep public information available, as
those terms are understood and defined in SEC Rule 144, at all times after 90
days after the effective date of the first registration statement filed by
the Company for the offering of its securities to the general public so long
as the Company remains subject to the periodic reporting requirements under
Sections 13 or 15(d) of the Exchange Act;
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(b) take such action, including the voluntary
registration of its Common Stock under Section 12 of the Exchange Act, as is
necessary to enable the Holders to utilize Form S-3 for the sale of their
Registrable Securities, such action to be taken as soon as practicable after
the end of the fiscal year in which the first registration statement filed by
the Company for the offering of its securities to the general public is
declared effective;
(c) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and the Exchange
Act; and
(d) furnish to any Holder, so long as the Holder
owns any Registrable Securities, forthwith upon request (i) a written
statement by the Company that it has complied with the reporting requirements
of SEC Rule 144 (at any time after 90 days after the effective date of the
first registration statement filed by the Company), the Act and the Exchange
Act (at any time after it has become subject to such reporting requirements),
or that it qualifies as a registrant whose securities may be resold pursuant
to Form S-3 (at any time after which it so qualifies), (ii) a copy of the
most recent annual or quarterly report of the Company and such other reports
and documents so filed by the Company, and (iii) such other information as
may be reasonably requested in availing any Holder of any rule or regulation
of the SEC which permits the selling of any such securities without
registration or pursuant to such form.
1.12 FORM S-3 REGISTRATION. In case the Company shall
receive from any Holder or Holders a written request or requests that the
Company effect a registration on Form S-3 and any related qualification or
compliance with respect to all or a part of the Registrable Securities owned
by such Holder or Holders, the Company will:
(a) promptly give written notice of the proposed
registration, and any related qualification or compliance, to all other
Holders; and
(b) as soon as practicable, effect such registration
and all such qualifications and compliances as may be so requested and as
would permit or facilitate the sale and distribution of all or such portion
of such Holder's or Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within 15 days after receipt of such written notice
from the Company; provided, however, that the Company shall not be obligated
to effect any such registration, qualification or compliance, pursuant to
this Section 1.12: (1) if Form S-3 is not available for such offering by the
Holders; (2) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration, propose
to sell Registrable Securities and such other securities (if any) at an
aggregate price to the public (net of any underwriters' discounts or
commissions) of less than $1,000,000; (3) if the Company shall furnish to the
Holders a certificate signed by the President of the Company stating that in
the good faith judgment of the Board of Directors of the Company it would be
seriously detrimental to the Company and its stockholders for such Form S-3
Registration to be effected at such time, in which event the Company shall
have the right to defer the filing of the Form S-3 registration statement for
a period of not more than 60 days after receipt of the request of the Holder
or Holders under this Section 1.12; provided, how-
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ever, that the Company shall not utilize this right more than once in any
twelve month period; (4) if the Company has, within the 12 month period
preceding the date of such request, already effected two registrations on
Form S-3 for the Holders pursuant to this Section 1.12; or (5) in any
particular jurisdiction in which the Company would be required to qualify to
do business or to execute a general consent to service of process in
effecting such registration, qualification or compliance.
(c) Subject to the foregoing, the Company shall file
a registration statement covering the Registrable Securities and other
securities so requested to be registered as soon as practicable after receipt
of the request or requests of the Holders. All expenses incurred in
connection with a registration requested pursuant to Section 1.12, including
(without limitation) all registration, filing, qualification, printers' and
accounting fees and the reasonable fees and disbursements of counsel for the
selling Holder or Holders and counsel for the Company, but excluding any
underwriters' discounts or commissions associated with Registrable
Securities, shall be borne by the Company. Registrations effected pursuant to
this Section 1.12 shall not be counted as demands for registration or
registrations effected pursuant to Sections 1.2 or 1.3, respectively.
1.13 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to
cause the Company to register Registrable Securities pursuant to this Section
1 may be assigned (but only with all related obligations) by a Holder to a
transferee or assignee of Registrable Securities who, immediately following
such transfer or assignment, is the beneficial owner of at least five percent
(5%) of the Fully Diluted Equity of the Company, or by a Holder of the
Company's Series B Preferred Stock in connection with the transfer to a
single third party of all shares of Series B Preferred Stock held by such
Holder as of the date of such transfer, provided the Company is, within a
reasonable time after such transfer, furnished with written notice of the
name and address of such transferee or assignee and the securities with
respect to which such registration rights are being assigned; and provided
further, that such assignment shall be effective only if immediately
following such transfer the further disposition of such securities by the
transferee or assignee is restricted under the Act. For the purposes of
determining the number of shares of Registrable Securities held by a
transferee or assignee, the holdings of transferees and assignees of a
partnership who are partners or retired partners of such partnership
(including spouses and ancestors, lineal descendants and siblings of such
partners or spouses who acquire Registrable Securities by gift, will or
intestate succession) shall be aggregated together and with the partnership;
provided that all assignees and transferees who would not qualify
individually for assignment of registration rights shall have a single
attorney-in-fact for the purpose of exercising any rights, receiving notices
or taking any action under Section 1.
1.14 LIMITATIONS ON SUBSEQUENT REGISTRATION RIGHTS. From
and after the date of this Agreement, the Company shall not, without the
prior written consent of Oracle and the Holders of at least 25% of the then
outstanding Registrable Securities beneficially owned by Holders other than
Oracle, enter into any agreement with any holder or prospective holder of any
securities of the Company which would allow such holder or prospective holder
(i) to include such securities in any registration filed under Section 1.2
hereof, unless under the terms of such agreement, such holder or prospective
holder may include such securities in any such
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registration only to the extent that the inclusion of such holder's
securities will not reduce the amount of the Registrable Securities of the
Holders which is included or (ii) to make a demand registration which could
result in such registration statement being declared effective prior to the
earlier of the trigger dates contemplated by subsection 1.2(a) or within 180
days of the effective date of any registration effected pursuant to Section
1.2.
1.15 'MARKET STAND-OFF' AGREEMENT. Each Holder hereby
agrees that, during the period of duration (up to, but not exceeding, 180
days) specified by the Company and an underwriter of Common Stock or other
securities of the Company, following the date of the final prospectus
distributed in connection with a registration statement of the Company filed
under the Act, it shall not, to the extent requested by the Company and such
underwriter, directly or indirectly sell, offer to sell, contract to sell
(including, without limitation, any short sale), grant any option to purchase
or otherwise transfer or dispose of (other than to donees who agree to be
similarly bound) any securities of the Company held by it at any time during
such period except Common Stock included in such registration; PROVIDED,
HOWEVER, that:
(a) such agreement shall be applicable only to
offerings commenced during the one year period following the date of the
final prospectus distributed pursuant to the first such registration
statement of the Company that covers Common Stock (or other securities) to be
sold on its behalf to the public in an underwritten offering; and
(b) all officers and directors of the Company, all
holders of at least two percent the Fully Diluted Equity of the Company at
such time, and all other persons with registration rights (whether or not
pursuant to this Agreement) enter into similar agreements.
In order to enforce the foregoing covenant, the Company
may impose stop-transfer instructions with respect to the Registrable
Securities of each Holder (and the shares or securities of every other person
subject to the foregoing restriction) until the end of such period, and each
Holder agrees that, if so requested, such Holder will execute an agreement in
the form provided by the underwriter containing terms which are essentially
consistent with the provisions of this Section 1.15.
Notwithstanding the foregoing, the obligations described
in this Section 1.15 shall not apply to a registration relating solely to
employee benefit plans on Form S-1 or Form S-8 or similar forms which may be
promulgated in the future, or a registration relating solely to an SEC Rule
145 transaction on Form S-4 or similar forms which may be promulgated in the
future.
1.16 TERMINATION OF REGISTRATION RIGHTS. No Holder shall
be entitled to exercise any right provided for in this Section 1 after the
earlier of (i) five years following the consummation of the sale of
securities pursuant to a registration statement filed by the Company under
the Act in connection with the initial firm commitment underwritten offering
of its securities to the general public, or (ii) such time (and for so long)
as Rule 144 or another similar exemption under the Act is available for the
sale of all of such Holder's shares during a three (3)-month period without
registration.
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1.17 TERMINATION OF PRIOR AGREEMENTS. The parties hereto
agree that any agreement providing for registration rights for shares of
capital stock of the Company or Navio similar to those contemplated by this
Agreement entered into prior to the date hereof between Oracle and the
Company and between Navio and one or more of the Navio Stockholders, as the
case may be, will upon consummation of the Merger be terminated in its
entirety and that at such time the terms of such agreement will be entirely
superseded by the terms of this Agreement.
1.18 APPROVAL OF SUBSEQUENT OFFERINGS. Oracle agrees that
between the date hereof and December 31, 1999 it will support as a
stockholder of the Company a registered public offering by the Company of the
Company's securities at any time during which the Company has satisfied the
performance conditions provided for in clauses (i) and (ii) of Section
1.2(a); provided, that such support is at no material cost to Oracle and
provided, further, that nothing in this Section 1.18 shall obligate any
Director of the Company designated by Oracle to vote for or otherwise support
such offering.
2. COVENANTS OF THE COMPANY.
2.1 DELIVERY OF FINANCIAL STATEMENTS. The Company shall
deliver to each Five Percent Holder and each Holder of at least 250,000
shares of the Company's Series B Preferred Stock:
(a) as soon as practicable, but in any event within
90 days after the end of each fiscal year of the Company, an income statement
for such fiscal year, a balance sheet of the Company and statement of
stockholder's equity as of the end of such year, and a statement of cash
flows for such year, such year-end financial reports to be in reasonable
detail, prepared in accordance with GAAP and audited and certified by an
independent public accounting firm of nationally recognized standing selected
by the Company; and
(b) as soon as practicable, but in any event within
45 days after the end of each of the first three quarters of each fiscal year
of the Company, an unaudited income statement, a statement of cash flows for
such fiscal quarter and an unaudited balance sheet as of the end of such
fiscal quarter.
2.2 RIGHT TO MAINTAIN INTEREST. Subject to the terms and
conditions specified in this Section 2.2, the Company hereby grants to each
Ten Percent Holder and each Holder of at least 250,000 shares of the
Company's Series B Preferred Stock (a 'Series B Holder') a right to maintain
interest with respect to future sales by the Company of its Shares (as
hereinafter defined). A Ten Percent Holder who chooses to exercise its right
to maintain interest may designate as purchasers under such right itself or
its partners or affiliates in such proportions as it deems appropriate.
Each time the Company proposes to offer any shares of, or
securities convertible into or exercisable for any shares of, any class of
its capital stock ('SHARES'), the Company shall first make an offering of
such Shares to each Ten Percent Holder and each Series B Holder in accordance
with the following provisions:
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(a) The Company shall deliver a notice in accordance
with Section 3.6 hereof ('NOTICE') to the Ten Percent Holders and Series B
Holders stating (i) its bona fide intention to offer such Shares, (ii) the
number of such Shares to be offered, and (iii) the price and terms, if any,
upon which it proposes to offer such Shares.
(b) Within 15 calendar days after delivery of the
Notice, the Ten Percent Holder or Series B Holder may elect to purchase or
obtain, at the price and on the terms specified in the Notice, up to that
portion of such Shares which equals the proportion that the number of shares
of Common Stock issued and held, or issuable upon conversion and exercise of
all convertible or vested and exercisable securities then held, by such Ten
Percent Holder or Series B Holder bears to the total number of shares of
Common Stock then outstanding (assuming full conversion and exercise of all
convertible or vested and exercisable securities).
(c) The Company may, during the 45-day period
following the expiration of the period provided in subsection 2.2(b) hereof,
offer the remaining unsubscribed portion of the Shares to any person or
persons at a price not less than, and upon terms no more favorable to the
offeree than, those specified in the Notice. If the Company does not enter
into an agreement for the sale of the Shares within such period, or if such
agreement is not consummated within 60 days of the execution thereof, the
right to maintain interest provided hereunder shall be deemed to be revived
and such Shares shall not be offered unless first reoffered to the Ten
Percent Holders and Series B Holders in accordance herewith.
(d) The right to maintain interest in this Section
2.3 shall not be applicable to (i) the issuance or sale of Common Stock (or
options therefor) to employees, consultants and directors, pursuant to plans
or agreements approved by the Board of Directors for the primary purpose of
soliciting or retaining their services, (ii) consummation of a bona fide,
firmly underwritten public offering of shares of Common Stock, registered
under the Act pursuant to a registration statement on Form S-1 with proceeds
of greater than $20,000,000; (iii) the issuance of securities pursuant to the
conversion or exercise of convertible or exercisable securities; (iv) the
issuance of securities in connection with a bona fide business acquisition of
or by the Company, whether by merger, consolidation, sale of assets, sale or
exchange of stock or otherwise; (v) to the issuance of securities to
financial institutions or lessors in connection with commercial credit
arrangements, equipment financings, or similar transactions; (vi) to the
issuance or sale of securities in connection with the consummation of the
Merger; (vii) to the issuance of securities that with unanimous approval of
the Board of Directors of the Company are not offered to any existing
stockholder of the Company; (viii) the issuance after the date hereof of up
to 42,909,091 shares of Series A-1 Preferred Stock (less any shares of Series
A-1 Preferred Stock issued to Oracle prior to the date hereof), at a purchase
price of $1.10 per share; or (ix) the issuance of shares of Series A-1
Preferred Stock pursuant to Oracle's right to purchase Series A-1 Preferred
upon the exercise by any Navio stockholder of dissenters' rights.
2.3 CO-SALE RIGHTS.
(a) Subject to the terms of subsection 2.3(c) below,
in the event that any Stockholder (the 'SELLING STOCKHOLDER') may desire to
sell any shares of Company
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capital stock held by it, the Selling Stockholder shall first notify all
other Stockholders in writing of the proposed sale, at least 30 days prior to
the proposed date thereof, which notice shall contain all material terms of
the proposed sale, including, without limitation, the name and address of the
prospective purchaser, the purchase price and terms of payment, the date of
the proposed sale, and the number of shares to be sold. Within 30 days after
mailing the notice to the Stockholders, each Stockholder may notify the
Selling Stockholder of its desire to sell to the prospective purchaser (or at
such Stockholder's option and demand, to the Selling Stockholder, who hereby
agrees to purchase in the event that a direct sale from the Selling
Stockholder to the prospective purchaser is consummated) all or any part of
the shares of Company capital stock which such Stockholder then holds,
subject to the next sentence, on the same terms as those on which the Selling
Stockholder proposed to sell its Company capital stock to the prospective
purchaser. The maximum number of shares which any Stockholder electing to
participate in the sale shall be entitled to sell hereunder shall be equal to
that number obtained by multiplying the total number of shares of Company
capital stock (on an as-converted basis) being sold by the Selling
Stockholder by a fraction, the numerator of which is the total number of
shares of Company capital stock (on an as-converted basis) held by such
Stockholder at such time, and the denominator of which is the total number of
such shares held by all Stockholders (on an as-converted basis) at such time.
If a Stockholder elects to sell to the prospective purchaser, then the
Selling Stockholder shall assign as much of its interest in the agreement of
sale with the prospective purchaser as any Stockholder electing to
participate in the sale shall be entitled to and shall accept hereunder. If
within 30 days after receipt by the Stockholders of notice from the Selling
Stockholder of such stockholder's intention to sell to a prospective
purchaser the Stockholders do not send notice as set forth above, then the
Selling Stockholder shall be free to sell the stock to such prospective
purchaser, but only at the time and on the same terms and conditions as
outlined in the notice sent to the Stockholders; PROVIDED that in the event
such shares are not sold within 120 days of the date of the notice, they
shall once again be subject to the right of co-sale provided herein.
(b) The provisions of subsection (a) above shall not
pertain to or apply to (i) any bona fide pledge of shares of stock made by a
Stockholder which creates a mere security interest, or (ii) any transfer made
by a Stockholder which is a partnership to its constituent partners, or by a
Stockholder which is a corporation to its shareholders, to its parent
corporation or to a wholly-owned subsidiary corporation, (iii) any bona fide
transfer to an inter vivos trust for the benefit of the transferring
Stockholder, or (iv) any bona fide gift to a spouse or direct lineal
descendant of a Stockholder or a trust for their benefit.
(c) The parties hereto acknowledge that the terms of
this Section 2.3 are subordinate to the rights contemplated by Section 1 of
the Put/Call and Voting Agreement and subordinate to the rights contemplated
by Section 4 of the Put/Call and Voting Agreement. To the extent a
Stockholder does not elect to have a portion of his or her equity interest in
the Company purchased under Section 1 of the Put/Call and Voting Agreement
and to the extent the Ten Percent Holders do not elect to acquire all of the
shares of Company capital stock being offered by the Stockholder under
Section 4 of the Put/Call and Voting Agreement, then and only then shall the
co-sale right contemplated by this Section 2.3 be effective. The
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notice provisions contemplated in this Section 2.3 may be satisfied
concurrently with and in tandem with the notice provisions contemplated in
the Put/Call and Voting Agreement.
2.4 LIMITED APPROVAL RIGHTS. So long as Oracle shall
beneficially own at least a majority in interest of the Fully Diluted Equity
of the Company, the approval of Oracle shall be required for the Company or
any of its subsidiaries to do or effect any of the following:
(a) any incurrence, assumption or issuance by the
Company or any of its subsidiaries of any indebtedness for borrowed money
that when aggregated with the principal amount of all other indebtedness of
borrowed money of the Company and its subsidiaries at such time exceeds
$1,000,000; or
(b) the incurrence or entering into by the Company
or any of its subsidiaries of any operating or capital property or equipment
lease with a minimum term in excess of two years or which requires the
Company or its subsidiaries, as the case may be, to make minimum aggregate
payments thereunder in excess of $ 1,000,000.
2.5 RESTRICTIVE LEGENDS. The Stockholders and the Company
agree that all certificates of stock evidencing the capital stock of the
Company issued to the Stockholders shall prior to their issuance be endorsed
as follows for so long as this Agreement shall remain in effect:
THE SHARES OF STOCK REPRESENTED BY THIS CERTIFICATE ARE
SUBJECT TO AND MAY BE TRANSFERRED ONLY IN COMPLIANCE WITH THE
TERMS OF A STOCKHOLDERS AGREEMENT DATED AS OF [CLOSING DATE]
BETWEEN THE COMPANY AND CERTAIN STOCKHOLDERS OF THE COMPANY,
COPIES OF WHICH ARE ON FILE AT THE OFFICES OF THE COMPANY.
2.6 TERMINATION OF CERTAIN COVENANTS. The covenants set
forth in Section 2 shall terminate as to Stockholders and be of no further
force or effect when the sale of securities pursuant to a registration
statement filed by the Company under the Act in connection with the firm
commitment underwritten offering of its securities to the general public is
consummated or when the Company first becomes subject to the periodic
reporting requirements of Sections 13 or 15(d) of the Exchange Act, whichever
event shall first occur.
2.7 AGREEMENT TO BE BOUND. As a condition to the
consummation of any purported transfer of any of the Company's capital stock,
which transfer complies in all respects with the terms of this Section 2 and
the Put/Call and Voting Agreement, the transferee of such shares of capital
stock shall have agreed in writing to be bound by the terms of this Section 2
and by the terms of the Put/Call and Voting Agreement. The transferor and
transferee of such shares shall give prompt notice of the transfer and
deliver a copy of the agreement to be bound to the Company in advance of the
actual date of transfer.
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3. MISCELLANEOUS.
3.1 EFFECTIVENESS OF AGREEMENT. This Agreement shall
only become effective at the Effective Time (as defined in the Merger
Agreement).
3.2 SUCCESSORS AND ASSIGNS. 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 permitted assigns of the
parties. 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.
3.3 GOVERNING LAW. This Agreement and all acts and
transactions pursuant hereto shall be governed, construed and interpreted in
accordance with the laws of the State of Delaware, without giving effect to
principles of conflicts of laws. All actions and proceedings arising out of
or relating to this Agreement shall be heard and determined exclusively in
any California state or federal court sitting in either of San Mateo or San
Francisco counties.
3.4 COUNTERPARTS. This Agreement may be executed in two
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
3.5 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.
3.6 NOTICES. Unless otherwise provided, any notice
required or permitted by this Agreement shall be in writing and shall be
deemed sufficient upon delivery, when delivered personally or by overnight
courier or sent by telegram or fax, or forty-eight (48) hours after being
deposited in the U.S. mail, as certified or registered mail, with postage
prepaid, and addressed to the party to be notified at such party's address as
set forth below or on EXHIBIT A hereto or as subsequently modified by written
notice.
3.7 EXPENSES. If any action at law or in equity is
necessary to enforce or interpret the terms of this Agreement, the prevailing
party shall be entitled to reasonable attorneys' fees, costs and necessary
disbursements in addition to any other relief to which such party may be
entitled.
3.8 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, Oracle and
Holders of at least 25% of the then outstanding Registrable Securities
beneficially owned by Holders other than Oracle. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each holder
of any Registrable Securities then outstanding, each future holder of all
such Registrable Securities, and the Company.
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3.9 SEVERABILITY. If one or more provisions of this
Agreement are held to be unenforceable under applicable law, the parties
agree to renegotiate such provision in good faith. In the event that the
parties cannot reach a mutually agreeable and enforceable replacement for
such provision, then (x) such provision shall be excluded from this
Agreement, (y) the balance of the Agreement shall be interpreted as if such
provision were so excluded and (z) the balance of the Agreement shall be
enforceable in accordance with its terms.
3.10 AGGREGATION OF STOCK. All shares of Company capital
stock held or acquired by affiliated entities or persons shall be aggregated
together for the purpose of determining the availability of any rights under
this Agreement.
3.11 OWNERSHIP OF SHARES. Each Navio Stockholder
represents and warrants that such stockholder is the record and beneficial
owner of each of the shares of Navio capital set forth opposite the name of
the stockholder on EXHIBIT A hereto and that such stockholder is not the
owner of record or beneficially of any shares of Navio other than those
provided for on such exhibit.
[Signature Page Follows]
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The parties have executed this Stockholders Agreement as of the date first
above written.
STOCKHOLDERS:
NETWORK COMPUTER, INC. -----------------------------------
(Stockholder)
By: By:
----------------------------------- --------------------------------
Name: Name:
--------------------------------- ------------------------------
(print)
Title: Title:
-------------------------------- -----------------------------
ORACLE CORPORATION
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
+
EXHIBIT A
STOCKHOLDERS
NAME/ADDRESS NO. OF SHARES
------------ -------------
Netscape Communications Corporation 12,777,778
Wei Yen 8,333,334
Sony Corporation 2,222,222
Acer America Corporation 740,741
All Holdings Corporation 370,370
Sega Enterprises, Ltd. 1,111,111
Nintendo Co., Ltd. 1,111,111
NEC Corporation 1,111,111
Stockholders Agreement - Network Computer Inc., Oracle Corp. and Navio Communications Inc.
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