<PAGE>
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON NOVEMBER 4, 1996
REGISTRATION NO. 333-10241
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
AMENDMENT NUMBER 1 TO FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
STREAMLOGIC CORPORATION
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 95-3093858
(STATE OR OTHER JURISDICTION (IRS EMPLOYER
OF INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
21329 NORDHOFF STREET
CHATSWORTH, CALIFORNIA 91311
(818) 701-8400
(Address, including zip code, and telephone number, including area code, of
registrant's principal executive offices)
LEE N. HILBERT
CHIEF FINANCIAL OFFICER
21329 NORDHOFF STREET
CHATSWORTH, CALIFORNIA 91311
(818) 701-8400
(Name, address, including zip code, telephone number, including area code, of
agent for service)
COPY TO:
Brian G. Cartwright, Esq.
Latham & Watkins
633 West Fifth Street--Suite 4000
Los Angeles, California 90071
(213) 485-1234
---------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: From time to
time after this Registration Statement becomes effective.
If the only securities being registered on this form are being offered
pursuant to dividend reinvestment plans, please check the following box. [_]
If any of the securities being registered on this form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. [X]
CALCULATION OF REGISTRATION FEE
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TITLE OF EACH AMOUNT TO PROPOSED MAXIMUM PROPOSED MAXIMUM AMOUNT OF
CLASS OF SECURITIES BE OFFERING PRICE AGGREGATE OFFERING REGISTRATION
TO BE REGISTERED REGISTERED PER SECURITY (1) PRICE (1) FEE (1)(2)
- --------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Common Stock, par value
$1.00 per share..........2,636,123 $1.25 $3,295,154 $1,579.61
- --------------------------------------------------------------------------------
Common Stock Purchase
Rights (3) * * * *
- --------------------------------------------------------------------------------
</TABLE>
(1) Estimated solely for the purpose of calculating the registration fee. The
proposed Maximum Aggregate Offering Price was calculated pursuant to Rule
457(c) under the Securities Act of 1933, as amended, on the basis of the
average of the high and low prices reported in the consolidated reporting
system on November 1, 1996.
(2) Amount calculated pursuant to Section 6(b) under the Securities Act. Of such
amount, $1,056.88 was paid on August 15, 1996. $522.73 is being paid
concurrently herewith to cover the filing fees with respect to the
additional 1,380,000 shares added by this Amendment No. 1.
(3) The Common Stock Purchase Rights are initially carried and traded with the
Common Stock. The value attributable to the rights, if any, is reflected in
the value of the Common Stock. Accordingly, pursuant to Rule 457(o) under
the Securities Act, which permits the registration fee to be calculated on
the basis of the maximum offering price of all securities listed, the table
does not specify by Rights as to the amount to be registered, proposed
maximum offering price per security or proposed maximum aggregate offering
price.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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- --------------------------------------------------------------------------------
<PAGE>
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A +
+REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE +
+SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY +
+OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT +
+BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR +
+THE SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE +
+SECURITIES IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF +
+ANY SUCH STATE. +
++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS, DATED NOVEMBER 4, 1996
2,636,123 SHARES
STREAMLOGIC CORPORATION
COMMON STOCK
(PAR VALUE $1.00 PER SHARE)
-----------
All of the shares of Common Stock, par value $1.00 per share ("Common Stock"),
of StreamLogic Corporation, a Delaware corporation (the "Company"), offered
hereby (the "Shares") are being offered by a stockholder of the Company (the
"Selling Stockholder") as described more fully herein. The Company will not
receive any of the proceeds from the sale of the Shares offered hereby. See "Use
of Proceeds," "Selling Stockholder" and "Plan of Distribution."
The Common Stock is traded on the Nasdaq National Market under the symbol
"STLC." On November 1, 1996, the last reported sale price of the Common Stock on
the Nasdaq National Market was $1 3/16 per share.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
This Prospectus relates to 2,636,123 shares of Common Stock which were
originally issues by the Company to the Selling Stockholder in transactions
exempt from the requirements of the Securities Act of 1933, as amended.
1,256,123 of such shares were issued as of July 1, 1996 and the remaining
1,380,000 shares were issued as of November 4, 1996. The issuance of the
2,636,123 shares of Common Stock to such person was made in connection with the
Company's minority equity investment in FWB Software, LLC, a California limited
liability company. The Selling Stockholder, directly, through agents designated
from time to time, or through dealers or underwriters also to be designated, may
sell the Shares from time to time on terms to be determined at the time of sale.
To the extent required, the specific shares to be sold, public offering price,
the names of any such agent, dealer or underwriter and any applicable commission
or discount with respect to a particular offer will be set forth in an
accompanying Prospectus Supplement. See "Selling Stockholder" and "Plan of
Distribution."
THE DATE OF THIS PROSPECTUS IS NOVEMBER __, 1996
<PAGE>
Certain information incorporated by reference into this Prospectus under the
captions "Management's Discussion and Analysis of Financial Condition and
Results of Operations", "Business" and elsewhere include "forward-looking
statements" within the meaning of Section 27A of the Securities Act of 1933, as
amended, and is subject to the safe harbor created by that section. Certain
factors that could cause results to differ materially from those projected in
the forward-looking statements are set forth under the caption "Cautionary
Statement for Purposes of the 'Safe Harbor' Provisions of the Private Securities
Litigation Reform Act of 1995" incorporated by reference herein.
AVAILABLE INFORMATION
The Company is subject to the informational reporting requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and, in
accordance therewith, files reports, proxy statements and other information with
the Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information filed by the Company may be inspected and
copied at the public reference facilities of the Commission located at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, at the New York Regional
Office of the Commission, Seven World Trade Center, Suite 1300, New York, New
York 10048, and at the Chicago Regional Office of the Commission, Northwest
Atrium Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60621.
Copies of such material can also be obtained at prescribed rates from the Public
Reference Section of the Commission at 450 Fifth Street, N.W., Washington, D.C.
20549. The Common Stock is listed on the Nasdaq National Market System under the
symbol "STLC". Reports, proxy materials and other information concerning the
Company can also be inspected at the offices of the Nasdaq Stock Market, Inc.,
1735 K Street, NW, Washington, DC 20006-1500.
The Company has filed with the Commission a Registration Statement on Form S-3
(together with any and all amendments, the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act"), with respect to the
registration of the Common Stock and associated Rights offered hereby. This
Prospectus does not contain all of the information set forth in the Registration
Statement and the exhibits thereto, certain portions of which have been omitted
as permitted by the rules and regulations of the Commission. In addition,
certain documents filed by the Company with the Commission have been
incorporated herein by reference. See "Incorporation of Certain Documents by
Reference." For further information regarding the Company and the Common Stock
and associated Rights offered hereby, reference is made to the Registration
Statement, including the exhibits and schedules thereto and the documents
incorporated herein by reference.
The principal executive offices of the Company are located at 21329 Nordhoff
Street, Chatsworth, California 91311; (818) 701-8400.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission, are incorporated herein by reference: (i) the Company's Quarterly
Report on Form 10-Q for the quarter ended June 28, 1996 and Amendment Number 1
thereto on Form 10-Q/A filed on October 16, 1996; (ii) the Company's Transition
Report on Form 10-K for the transition period from December 30, 1995 to March
29, 1996, (iii) Current Reports on Form 8-K dated May 13, 1996 as amended on May
28, 1996 and dated August 15, 1996; (iv) the Company's Proxy Statement dated
April 23, 1996 related to the Annual Meeting of Stockholders held on May 22,
1996; (v) the Company's Proxy Statement dated October 7, 1996 related to the
proposed tender offer by the Company for its 6% Convertible Subordinated
Debentures due 2012, and the Supplement thereto dated November ___, 1996; (vi) a
Description of Capital Stock in Amendment No. 1 to a Registration Statement
filed on Form S-3 filed on April 17, 1991; and (vii) a Rights Agreement dated as
of May 18, 1989 between the Company and First Interstate Bank of California
(filed
<PAGE>
June 2, 1989) as amended by Amendment No. 1 to Rights Agreement dated October 3,
1995 (filed November 13, 1995), Amendment No. 2 to Rights Agreement dated March
26, 1996 (filed July 5, 1996) and Amendment No. 3 to Rights Agreement dated May
22, 1996 (filed August 12, 1996). In addition, each document filed by the
Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act
subsequent to the date of this Prospectus and prior to termination of the
offering of Shares shall be deemed to be incorporated by reference into this
Prospectus and to be a part hereof from the date such document is filed with the
Commission.
Any statement contained herein, or any document, all or a portion of which is
incorporated or deemed to be incorporated by reference herein, shall be deemed
to be modified or superseded for purposes of the Registration Statement and this
Prospectus to the extent that a statement contained herein, or in any
subsequently filed document that also is or is deemed to be incorporated by
reference herein, modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified or superseded,
to constitute part of the Registration Statement or this Prospectus.
The Company undertakes to provide without charge to each person to whom a copy
of this Prospectus has been delivered, upon written or oral request of any such
person, a copy of any or all of the documents incorporated by reference herein,
other than exhibits to such documents, unless such exhibits are specifically
incorporated by reference into the information that this Prospectus
incorporates. Written or oral requests for such copies should be directed to:
Lee N. Hilbert, Chief Financial Officer, StreamLogic Corporation, 21329 Nordhoff
Street, Chatsworth, California 91311, (818) 701-8400.
USE OF PROCEEDS
The proceeds from the sale of the shares of Common Stock offered hereby are
solely for the account of the Selling Stockholder. Accordingly, the Company will
receive none of the proceeds from sales thereof.
SELLING STOCKHOLDER
As of the date of this Prospectus, FWB Software, LLC, a California limited
liability company, (the "Selling Stockholder"), owns 2,636,123 shares of Common
Stock (approximately 12.9% of the Common Stock outstanding as of November 4,
1996). As of the date hereof, the Selling Stockholder owns no other shares of
StreamLogic Common Stock.
In connection with the issuance of the 2,636,123 Shares of Common Stock to the
Selling Stockholder, the Company agreed to file and use its best efforts to
cause to be declared effective the Registration Statement of which this
Prospectus is a part. The Company has also agreed to use its best efforts to
keep the Registration Statement effective until the earlier of (A) the first
anniversary of the effective date of the Registration Statement plus any
"blackout" periods imposed during such year, provided that the Selling
Stockholder shall use its best efforts to sell the Common Stock within the first
one hundred eighty (180) days following the effectiveness of the Registration
Statement plus any "blackout" periods imposed during such 180-day period and any
periods during which the Company's Common Stock is not listed on either the
Nasdaq Stock Market or any national securities exchange, (B) such time as all of
the Shares have been resold, and (C) such date as all of the Shares may be
resold under Rule 144 during a three month period. The Company has agreed to
indemnify the Selling Stockholder and each of its officers, directors,
employees, partners, legal counsel and accountants, and each person controlling
FWB Software,
<PAGE>
LLC, and each underwriter, if any, and each person who controls any such
underwriter, against certain expenses, claims, losses, damages and liabilities
(or action in respect thereof). The Company has agreed to pay its expenses of
registering the Shares under the Securities Act, including registration and
filing fees, blue sky expenses, printing expenses, administrative expenses and
its own counsel fees.
PLAN OF DISTRIBUTION
The Selling Stockholder may sell Shares in any of the following transactions:
(i) through dealers; (ii) through agents; or (iii) directly to one or more
purchasers. The distribution of the Shares by the Selling Stockholder may be
effected from time to time in one or more transactions in the over-the-counter
market, in the Nasdaq National Market or in privately negotiated transactions at
market prices prevailing at the time of sale, at prices related to such
prevailing market prices or at negotiated prices. The Selling Stockholder and
any underwriters, dealers or agents that participate in the distribution of the
Shares may be deemed to be underwriters within the meaning of Section 2(11) of
the Securities Act, and any profit on the sale of the Shares by them and any
discounts, concessions or commissions received by any such underwriters, dealers
or agents might be deemed to be underwriting discounts and commissions under the
Securities Act. At the time a particular offer of Shares is made, to the extent
required, a Prospectus Supplement will be distributed which will set forth the
aggregate number of Shares being offered and the terms of the offering,
including the name or names of any underwriters, dealers or agents, any
discounts, concessions or commissions and other items constituting compensation
from the Selling Stockholder and any discounts, commissions or concessions
allowed or reallowed or paid to dealers.
Certain of the underwriters, dealers or agents may have other business
relationships with the Company and its affiliates in the ordinary course of
business.
LEGAL MATTERS
The validity of the shares of Common Stock offered hereby has been passed upon
for the Company by Latham & Watkins, 633 West Fifth Street, Los Angeles,
California 90071.
EXPERTS
The consolidated financial statements of StreamLogic Corporation appearing in
StreamLogic Corporation's Transition Report on Form 10-K for the transition
period from December 30, 1995 to March 29, 1996, have been audited by Ernst &
Young LLP, independent auditors, as set forth in their report thereon included
therein and incorporated herein by reference. Such consolidated financial
statements are incorporated herein by reference in reliance upon such report
given upon the authority of such firm as experts in accounting and auditing.
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The following table sets forth the fees and expenses payable by the Company
in connection with the issuance and distribution of the securities being
registered hereunder, other than underwriting discounts and commissions. Except
for the SEC registration fee, all amounts are estimates.
<TABLE>
<S> <C>
SEC Registration Fee............................................. $ 1,579
Printing and Engraving Expenses.................................. 5,000
Legal Fees and Expenses.......................................... 10,000
Accounting Fees and Expenses..................................... 5,000
Registrar and Transfer Agent Fees and Expenses................... 1,000
Blue Sky Fees and Expenses....................................... 1,000
Miscellaneous Expenses........................................... 1,421
-------
Total.......................................................... $25,000
=======
</TABLE>
All of the costs identified above will be paid by the Company.
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 102(b)(7) of the General Corporation Law of Delaware ("Delaware Law")
enables a corporation in its original certificate of incorporation or an
amendment thereto to eliminate or limit the personal liability of a director to
a corporation or its stockholders for violations of the director's fiduciary
duty, except (i) for any breach of a director's duty of loyalty to the
corporation or its stockholders, (ii) for acts or omissions not in good faith or
which involve intentional misconduct or a knowing violation of law, (iii)
pursuant to Section 174 of the Delaware Law (providing for liability of
directors for unlawful payment of dividends or unlawful stock purchases or
redemptions, or (iv) for any transaction from which a director derived an
improper personal benefit. The Certificate of Incorporation of the Company, as
amended, provides in effect for the elimination of the liability of directors to
the extent permitted by Delaware Law.
Section 145 of the Delaware Law provides, in summary, that directors and
officers of Delaware corporations are entitled, under certain circumstances, to
be indemnified against all expenses and liabilities (including attorney's fees)
incurred by them as a result of suits brought against them in their capacity as
a director or officer, if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, if they had
no reasonable cause to believe their conduct was unlawful; provided, that no
indemnification may be made against expenses in respect of any claim, issue or
matter as to which they shall have been adjudged to be liable to the
corporation, unless and only to the extent that the court in which such action
or suit was brought shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case, they
are fairly and reasonably entitled to indemnity for such expenses which the
court shall deem proper. Any such indemnification may be made by the corporation
only as authorized in each specific
<PAGE>
case upon a determination by the stockholders or disinterested directors that
indemnification is proper because the indemnitee has met the applicable standard
of conduct. The Company's Bylaws entitle officers and directors of the Company
to indemnification to the fullest extent permitted by Delaware Law.
The Company has entered into an agreement with each of its directors and
certain officers which provide for indemnification by the Company against
certain liabilities, including liabilities under the Securities Act. In
addition, the Company maintains an insurance policy with respect to potential
liabilities of its directors and officers, including potential liabilities under
the Securities Act. Additionally, the Company has established an Indemnification
Trust for the benefit of directors and certain executive officers and has
deposited $500,000 in such trust to secure the indemnification obligations of
the Company to such persons.
See Item 17 of this Registration Statement regarding the opinion of the
Securities and Exchange Commission with respect to indemnification for
liabilities arising under the Securities Act.
ITEM 16. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES.
EXHIBIT
NUMBER DESCRIPTION OF EXHIBIT
------- ----------------------
5.1 Opinion of Latham & Watkins
10.1 OEM License Agreement, signed July 8, 1996 effective July 1, 1996
between StreamLogic Corporation and FWB Software, Inc.
10.2 Trademark License Agreement, signed July 8, 1996 effective July 1,
1996 between StreamLogic Corporation and FWB Software, Inc.
10.3 Assignment of Equipment Leases, signed July 8, 1996 effective July
1, 1996 between StreamLogic Corporation, FWB Software, Inc. and
FWB Software, LLC (a California limited liability company)
10.4 Assignment and Assumption Agreement, signed July 8, 1996 effective
July 1, 1996 between StreamLogic Corporation and FWB Software,
Inc.
10.5 Operating Agreement of FWB Software, LLC, signed July 8, 1996
effective July 1, 1996 among StreamLogic Software Corporation (a
Delaware corporation and wholly-owned subsidiary of StreamLogic
Corporation), FWB Software, Inc., and FWB Software, LLC
10.6 Company Rights Agreement, signed July 8, 1996 effective July 1,
1996 between StreamLogic Corporation and FWB Software, LLC
10.7 Rights Agreement, signed July 8, 1996 effective July 1, 1996 by
and among StreamLogic Software Corporation, FWB Software, Inc.
and FWB Software, LLC
10.8 Letter of Understanding regarding Operating Agreement of FWB
Software, LLC, dated November 1, 1996
23.1 Consent of Latham & Watkins (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP.
24.1* Powers of Attorney of certain directors and officers of the
Company
* previously filed
ITEM 17. UNDERTAKINGS.
Insofar as indemnification for liabilities arising under the Securities Act of
1933, as amended (the "Securities Act") may be permitted to directors, officers
and controlling persons of the registrant pursuant to the provisions described
under Item 15 above, or otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer, or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer of controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) To reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent post-
effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth
<PAGE>
in the registration statement;
(iii) To include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) do not apply if the
registration statement is on Form S-3, Form S-8 or Form F-3, and the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended
("Exchange Act") that are incorporated by reference in the registration
statement.
(2) That, for the purpose of determining any liability under the Securities
Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
The undersigned registrant hereby undertakes that, for purposes of determining
any liability under the Securities Act, each filing of the registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
<PAGE>
NO DEALER, SALESPERSON OR OTHER PERSON HAS BEEN AUTHORIZED TO GIVE ANY
INFORMATION OR TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS IN
CONNECTION WITH THIS OFFERING MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED
BY THE COMPANY OR BY THE SELLING STOCKHOLDER. THIS PROSPECTUS DOES NOT
CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF THE
SECURITIES OFFERED HEREBY BY ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR
SOLICITATION IS NOT AUTHORIZED OR IN WHICH THE PERSON MAKING SUCH OFFER OR
SOLICITATION IS NOT QUALIFIED TO DO SO OR TO ANY PERSON TO WHOM IT IS UNLAWFUL
TO MAKE SUCH OFFER OR SOLICITATION. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR
ANY SALE MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE AN IMPLICATION
THAT THE INFORMATION CONTAINED HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO
THE DATE OF THIS PROSPECTUS.
----------------
TABLE OF CONTENTS
PAGE
----
Available Information...................................................... 2
Incorporation of Certain Documents
by Reference.............................................................. 2
Use of Proceeds............................................................ 3
Selling Stockholder........................................................ 3
Plan of Distribution....................................................... 3
Legal Matters.............................................................. 3
Experts.................................................................... 3
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- -------------------------------------------------------------------------------
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
2,636,123 SHARES
STREAMLOGIC
CORPORATION
COMMON STOCK
(Par Value $1.00 per Share)
----------------
PROSPECTUS
----------------
November __, 1996
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
certifies that it has reasonable grounds to believe that it meets all of the
requirements for filing on Form S-3 and has duly caused this Amendment Number 1
to registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Los Angeles, State of California, on
November 4, 1996.
STREAMLOGIC CORPORATION
By /s/ Lee N. Hilbert
----------------------------------
(Lee N. Hilbert,
Chief Financial Officer)
Date November 4, 1996
--------------------------------
Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ J. Larry Smart Director and Principal November 4, 1996
- -------------------------------- Executive Officer
(J. Larry Smart)
/s/ Lee N. Hilbert Principal November 4, 1996
- -------------------------------- Financial Officer
(Lee N. Hilbert)
* November 4, 1996
- -------------------------------- Director
(Ericson M. Dunstan)
* Director November 4, 1996
- --------------------------------
(Chriss W. Street)
* November 4, 1996
- -------------------------------- Director
(Greg L. Reyes, Jr.)
* By Lee N. Hilbert, Attorney in Fact
/s/ Lee N. Hilbert
- --------------------------------
(Lee N. Hilbert)
</TABLE>
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- -------------------------------------------------------------------------------
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT SEQUENTIAL
NO. DESCRIPTION OF EXHIBIT PAGE NO.
- ------- ---------------------- ----------
<C> <S> <C>
5.1 Opinion of Latham & Watkins
10.1 OEM License Agreement, signed July 8, 1996 effective July 1, 1996
between StreamLogic Corporation and FWB Software, Inc.
10.2 Trademark License Agreement, signed July 8, 1996 effective July 1, 1996
between StreamLogic Corporation and FWB Software, Inc.
10.3 Assignment of Equipment Leases, signed July 8, 1996 effective July 1,
1996 between StreamLogic Corporation, FWB Software, Inc. and FWB
Software, LLC (a California limited liability company)
10.4 Assignment and Assumption Agreement, signed July 8, 1996 effective July
1, 1996 between StreamLogic Corporation and FWB Software, Inc.
10.5 Operating Agreement of FWB Software, LLC, signed July 8, 1996 effective
July 1, 1996 among StreamLogic Software Corporation (a Delaware
corporation and wholly-owned subsidiary of StreamLogic Corporation), FWB
Software, Inc., and FWB Software, LLC
10.6 Company Rights Agreement, signed July 8, 1996 effective July 1, 1996
between StreamLogic Corporation and FWB Software, LLC
10.7 Rights Agreement, signed July 8, 1996 effective July 1, 1996 by and
among StreamLogic Software Corporation, FWB Software, Inc. and FWB
Software, LLC
10.8 Letter of Understanding regarding Operating Agreement of FWB Software,
LLC, dated November 1, 1996
23.1 Consent of Latham & Watkins (included in Exhibit 5.1)
23.2 Consent of Ernst & Young LLP.
24.1* Powers of Attorney of certain directors and officers of
the Company
</TABLE>
* previously filed
<PAGE>
[LETTERHEAD OF LATHAM & WATKINS APPEARS HERE]
November 4, 1996
StreamLogic Corporation
21329 Nordhoff Street
Chatsworth, CA 91311
Re: 2,636,123 Shares of Common Stock
--------------------------------
Ladies and Gentlemen:
At your request, we have examined the registration statement on Form
S-3 (the "Registration Statement") being filed by you with the Securities and
Exchange Commission in connection with the registration, under the Securities
Act of 1933, as amended, of 2,636,123 shares of common stock, par value $1.00
per share (the "Shares").
In our capacity as your counsel in connection with such
registration, we are familiar with the proceedings taken by the Company in
connection with the authorization and issuance of the Shares. In addition, we
have made such legal and factual examinations and inquiries, including an
examination of originals or copies certified or otherwise identified to our
satisfaction of such documents, corporate records and instruments, as we have
deemed necessary or appropriate for purposes of this opinion.
In our examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals,
and the conformity to authentic original documents of all documents submitted
to us as copies.
Subject to the foregoing and the other matters set forth herein, it
is our opinion that, as of the date hereof, the Shares are duly authorized
validly issued, fully paid and nonassessable.
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LATHAM & WATKINS
NOVEMBER 4, 1996
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We consent to your filing this opinion as an exhibit to the
Registration Statement and to the reference to our firm under the caption
"Legal Matters" in the prospectus included therein.
Very truly yours,
/s/Latham & Watkins
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EXHIBIT 10.1
OEM LICENSE AGREEMENT
This OEM License Agreement ("AGREEMENT") is entered into as of July 1,
1996 ("EFFECTIVE DATE"), by and between StreamLogic Corporation ("STREAMLOGIC"),
a Delaware corporation located at 21329 Nordhoff Street, Chatsworth, CA 91311,
and FWB Software, Inc. ("FWB"), a California corporation located at 1555 Adams
Drive, Menlo Park, California 94025.
RECITALS
A. StreamLogic and FWB are parties to an Asset Purchase Agreement,
dated June 9, 1996 (the "ASSET PURCHASE AGREEMENT"), under which StreamLogic is
purchasing FWB's assets and business related to the development and sale of
mass-storage devices and adapter cards that connect to mass-storage devices.
B. StreamLogic desires to obtain from FWB, and FWB is willing to
grant to StreamLogic, certain rights to distribute FWB's firmware and software
products for use with StreamLogic's products, in accordance with and subject to
the terms and conditions of this Agreement.
NOW THEREFORE, in consideration of the licenses, covenants and
obligations set forth below, the parties hereby agree as follows:
1. DEFINITIONS; RULES OF CONSTRUCTION
1.1 DEFINITIONS. For purposes of this Agreement, all capitalized
terms shall have the meanings set forth below or as defined elsewhere in this
Agreement.
(a) "FWB FIRMWARE" means the (i) executable object code and source
code for the version of FWB's firmware described in Exhibit A-1 as shipped by
FWB as of the Effective Date, and any bug-fix releases pursuant to Section 7.1
and (ii) executable object code for modified versions of FWB Firmware developed
by StreamLogic in accordance with this Agreement. FWB Firmware does not include
firmware developed pursuant to the Development Agreement between FWB and
Nakasuji Associates dated October 14, 1994 ("NAKASUJI FIRMWARE"). Rights to the
Nakasuji Firmware are governed by the Assignment and Assumption Agreement among
FWB, StreamLogic and Nakasuji Associates effective as of the Closing.
(b) "FWB SOFTWARE" means the (i) executable object code for FWB's
commercial releases of the software products described in Exhibit A-2 as shipped
by FWB as of the Effective Date, and any bug-fix releases pursuant to Section
7.1 and (ii) executable object code for modified versions of RAID ToolKit for
Windows 95 1.85 and RAID ToolKit for
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Windows NT 1.9 (Driver and Mounter) developed by StreamLogic in accordance with
this Agreement. FWB Software does not include source code, except FWB Software
Source.
(c) "FWB SOFTWARE SOURCE" means the source code for RAID ToolKit for
Windows 95 1.85 and RAID ToolKit for Windows NT 1.9 (Driver and Mounter) as
shipped by FWB as of the Effective Date.
(d) "DISTRIBUTOR(S)" means any entities who resell and distribute
StreamLogic Products directly or indirectly to End-Users.
(e) "DOCUMENTATION" means all collateral materials identified on
Exhibit A-3 which is generally provided by FWB to End Users for use of the FWB
Software as of the Effective Date.
(f) "END-USER" means a person or entity that acquires a Product for
use rather than resale or distribution.
(g) "END-USER AGREEMENT" means a written license agreement containing
the minimum terms attached hereto as Exhibit B.
(h) "FWB TRADEMARKS" means the trademarks, trade names and logos
used by FWB identified in Exhibit A-4.
(i) "LICENSED CODE" means FWB Firmware, FWB Software and FWB
Software Source.
(j) "TERRITORY" means all countries in the world except countries (a)
excluded as provided for in Section 4.6 to which export or re-export of any
Licensed Code or Documentation, or the direct products of any Licensed Code or
Documentation, is prohibited by the United States Export Administration Act and
Regulations, or any other law or regulation of the United States or other
governmental entity which may from time to time be in force.
(k) "STREAMLOGIC PRODUCTS" means mass-storage devices or arrays of
mass-storage devices sold by StreamLogic under a trademark owned by StreamLogic
and adapter cards that connect to mass-storage devices which adapter cards are
made by or for StreamLogic and sold by StreamLogic under a trademark owned by
StreamLogic.
1.2 RULES OF CONSTRUCTION. As used in this Agreement, (i) neutral
pronouns and any derivations thereof shall be deemed to include the feminine and
masculine and all terms used in the singular shall be deemed to include the
plural and vice versa, as the context may require; (ii) the words "HEREOF" and
"HEREUNDER" and other words of similar import refer to this Agreement as a
whole, including all exhibits and schedules as the same may be from time to time
amended or supplemented and not to any subdivision of this Agreement; (iii) the
words "PARTY" and "PARTIES" refer, respectively, to a party or to both of the
parties to this Agreement; (iv) the word "INCLUDING" is not intended to be
exclusive and means "INCLUDING WITHOUT LIMITATION"; (v) references to section,
subsection, attachment or exhibit refer to the appropriate section, subsection,
attachment or exhibit in or to this Agreement; and (vi) descriptive headings are
inserted for convenience of reference only
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and do not constitute a part of and shall not be utilized in interpreting this
Agreement. This Agreement shall be fairly interpreted in accordance with its
terms and without any strict construction in favor of or against either party.
2. DELIVERABLES
FWB will deliver the current version of the Licensed Code and
Documentation to StreamLogic within fourteen (14) days after the Effective Date.
FWB will provide StreamLogic with one copy of the FWB Software on master
diskettes or in another mutually agreeable computer readable form that can be
reproduced by StreamLogic, one copy of the FWB Firmware in flash software form,
and one copy of the Documentation in computer readable form. FWB will also
provide StreamLogic with the format for the labels to be applied to the CD ROMs
or diskettes containing the FWB Software.
3. LICENSE
3.1 RIGHTS GRANTED. Subject to the terms and conditions of this
Agreement, FWB grants StreamLogic, and StreamLogic accepts, a non-exclusive,
non-transferable, royalty-free license and right, under FWB's intellectual
property rights, to:
(a) use FWB Firmware in source code form at SteamLogic's facilities,
solely to modify FWB Firmware for use with StreamLogic Products;
(b) reproduce FWB Firmware, as furnished by FWB or as modified by
StreamLogic in accordance with paragraph (a) of this Section 3.1, in object code
form only on ROMs or other semiconductor devices for use with StreamLogic
Products, and distribute one such copy of such FWB Firmware as part of each
StreamLogic Product to End Users in the Territory and to Distributors for
distribution of such StreamLogic Product to End-Users in the Territory;
(c) use FWB Software Source at StreamLogic's facilities, solely to
modify RAID ToolKit for Windows 95 1.85 and RAID ToolKit for Windows NT 1.9
(Driver and Mounter) for use with StreamLogic Products;
(d) reproduce FWB Software in object code form only and Documentation
for use with StreamLogic Products, pre-install one copy of FWB Software and
Documentation on the primary mass-storage device of each StreamLogic Product,
and distribute such pre-installed copy, together with one copy of FWB Software
and Documentation on CD ROM or diskette, bundled with each StreamLogic Product
to End Users in the Territory and to Distributors for distribution to End-Users
in the Territory; and
(e) use the FWB Trademarks only in connection with the reproduction
and marketing of the FWB Software, printing of the Documentation, and
manufacture and distribution of the Products, in the manner specified in Section
6 below and as specified from time to time by FWB.
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3.2 RIGHTS RESERVED TO FWB. FWB reserves all rights in Licensed
Code, Documentation and FWB Trademarks except those expressly granted by this
Agreement. FWB does not grant StreamLogic any license or any other rights to
any source code to the Licensed Code, except as expressly provided in paragraphs
(a) and (c) of Section 3.1. Except as expressly permitted by this Agreement,
StreamLogic shall have no right to sublicense any of the licenses or rights
granted to it under this Agreement. Nothing herein shall be construed as
restricting FWB's right to sell, lease, license, modify, publish or otherwise
distribute the Licensed Code or Documentation, in whole or in part to any other
person. In order to protect the trade secrets contained in Licensed Code,
StreamLogic agrees not to decompile, disassembly or reverse engineer any of the
Licensed Code.
3.3 REPRODUCTION. StreamLogic agrees to apply labels to all CD ROMs
or diskettes containing the FWB Software or Documentation. Such labels shall
contain FWB's copyright and trademark notices as specified by FWB and may at
StreamLogic's option contain a StreamLogic brand name. The form of such labels
and packaging shall be mutually agreed upon by FWB and StreamLogic. StreamLogic
further agrees that all disks, CD ROMs or diskettes containing the FWB Software
or Documentation distributed by StreamLogic will not contain any viruses, date
bombs, time bombs, or other code that is specifically designed to cause the
Licensed Code to cease operating or to damage, interrupt, or interfere with any
End User's software or data ("COMPUTER VIRUSES").
3.4 SUBCONTRACTING. StreamLogic may subcontract to third parties
portions of the reproduction, printing, packaging, component assembly,
shrinkwrapping, and pre-installation of the FWB Firmware and FWB Software in
object code form and Documentation; provided, however, that all copies of such
FWB Firmware, FWB Software and Documentation are shipped to StreamLogic for
distribution, StreamLogic has entered into a written subcontracting agreement
with each such subcontractor that binds such StreamLogic subcontractor to the
terms of this Agreement, and StreamLogic remains primarily liable for and
guarantees the performance of any such subcontractor.
3.5 LICENSE FROM STREAMLOGIC. StreamLogic hereby grants to FWB, and
FWB accepts, an irrevocable, non-exclusive, worldwide, perpetual, fully paid,
royalty-free license (with unlimited rights to pass such license rights to its
customers and so on through the chain of distribution) to use, copy, modify and
prepare derivative works based upon, and market, distribute, sublicense and
otherwise transfer copies of any modifications to FWB Firmware and FWB Software
Source made or suggested by StreamLogic under Sections 3.1(a) and 3.1(c).
StreamLogic will provide FWB source code for such modifications at or before the
time StreamLogic products incorporating such modifications are made commercially
available.
4. DISTRIBUTION BY STREAMLOGIC
4.1 BUNDLED DISTRIBUTION. StreamLogic shall distribute FWB Firmware
and FWB Software and Documentation only as part of and bundled with a
StreamLogic Product in accordance with this Agreement. StreamLogic shall not
distribute, sell or otherwise dispose of FWB Firmware, FWB Software or
Documentation, or any copy or portion thereof, as a separate
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or stand-alone product. StreamLogic will ensure that a copy of the End-User
Agreement, together with an End User registration card, accompanies each copy of
the FWB Software distributed to End-Users in the manner specified by FWB from
time to time.
4.2 COMPLIANCE WITH U.S. EXPORT LAWS. StreamLogic acknowledges that
the export of the Licensed Code and Documentation is subject to compliance with
the Export Administration Act and Regulations of the Department of Commerce of
the United States, as amended, and other export controls of the United States
("EXPORT LAWS"), which restrict the export and re-export of software media,
technical data, and direct products of technical data. StreamLogic agrees, and
shall cause each of its Distributors, employees, agents, subcontractors and
representatives to agree, not to export or re-export, directly or indirectly,
any Licensed Code and Documentation, or technical data relating to the Licensed
Code and Documentation or direct products of the Licensed Code and Documentation
to any Prohibited Country in violation of the Export Laws. StreamLogic agrees
to indemnify FWB against any claim, demand, action, proceeding, investigation,
loss, liability, cost and/or expense, including, without limitation, attorney's
fees, suffered or incurred by FWB and arising out of or related to any violation
(whether intentional or unintentional) by StreamLogic, its employees, agents,
subcontractors and/or representatives of any of the warranties or covenants of
this Section 4.2.
4.3 COST OF DISTRIBUTION. All costs relating to reproduction,
printing, packaging, component assembly, shrinkwrapping, preinstallation, and
distribution of the FWB Firmware, FWB Software and Documentation by StreamLogic
shall be borne by StreamLogic.
4.4 COMPLIANCE WITH FOREIGN LAW. StreamLogic will comply with all
applicable international, national, state, regional and local laws and
regulations in performing its duties hereunder and in any of its dealings with
its Distributors and with End-Users with respect to the Licensed Code and
Documentation.
4.5 FOREIGN GOVERNMENT APPROVALS. For each country in which
StreamLogic intends to distribute FWB Firmware, FWB Software and Documentation,
StreamLogic shall, at its own expense, obtain and arrange for all foreign
government approvals, consents, licenses, authorizations, declarations, filings
and registrations as may be necessary or advisable for the distribution of such
code and Documentation in accordance with the terms and conditions of this
Agreement, including but not limited to, foreign exchange approvals, import
licenses, fair trade approvals, and customs clearance.
4.6 RIGHT TO RESTRICT SCOPE OF TERRITORY. FWB may, by written notice
to StreamLogic at least 60 days in advance, remove from the definition of
Territory any country where FWB has substantial reasons to believe that local
laws, regulations, treaties, or enforcement policies or practices will not
adequately protect FWB's copyright and/or other rights in and to the Licensed
Code and Documentation, or FWB's Trademarks. Such notice shall include a
statement setting forth the reasons for such exclusion.
4.7 REPORTS. Within thirty (30) days after the end of each calendar
quarter, StreamLogic will remit to FWB a written report specifying the number of
copies of each
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Licensed Code and Documentation that StreamLogic has distributed (separately for
distributions to Distributors and distributions directly to End Users) during
such quarter.
5. MOST FAVORED STATUS FOR DISTRIBUTION OF OTHER PRODUCTS AND CUSTOM
DEVELOPMENT SERVICES
5.1 LATER VERSIONS. If FWB commercially releases any subsequent
version of FWB Firmware, FWB Software or Documentation for general distribution
at any time during the period ending three (3) years after the Effective Date
(or a version of FWB Software or Documentation customized for use on new
StreamLogic products is developed pursuant to Section 5.2)("LATER VERSION"),
StreamLogic shall be entitled to be become a non-exclusive OEM distributor
during such three year period of such Later Version, on terms and conditions to
be negotiated in good faith by parties which terms and conditions will be at
least as favorable as those which FWB offers any other third party for the same
or comparable products in the United States. StreamLogic's purchase price for
such Later Versions shall be FWB's then applicable most favorable reseller price
for such Later Versions, provided that the purchase price for Later Versions
sold as upgrades to existing copies of FWB Software shall not exceed the
applicable end user upgrade price for such upgrades.
5.2 CUSTOM MODIFICATIONS TO FWB SOFTWARE. If StreamLogic desires to
have FWB customize FWB Software or Documentation to adapt FWB Software or
Documentation for use with new StreamLogic Products at any time during the
period ending three (3) years after the Effective Date, StreamLogic may so
notify FWB and FWB will offer to provide development services to StreamLogic to
create such customized version, at FWB's then current standard rates for custom
development services.
6. FWB TRADEMARKS
6.1 USE. StreamLogic agrees to use the FWB Trademarks only in
connection with distribution and marketing of FWB Software and Documentation in
the form furnished to StreamLogic by FWB under this Agreement and only in the
form and manner and with appropriate legends as prescribed by FWB. StreamLogic
agrees not to use any other trademark or service mark, including other FWB
trademarks or service marks, in connection with FWB Software and Documentation
without prior written approval of FWB. StreamLogic agrees to mark all
advertising and other uses of the FWB Trademarks with a legend indicating the
FWB Trademarks are the property of FWB and that they are being used under
license from FWB, together with any other legends or markings which may be
required by law. All use of the FWB Trademarks shall inure to the benefit of
FWB.
6.2 QUALITY CONTROL AND FWB REVIEW. StreamLogic agrees to maintain
the performance and quality of all software modified by StreamLogic as permitted
by this Agreement at a level at least equal to performance and quality of the
FWB Software furnished by FWB under this Agreement. From time to time as FWB
shall reasonably request, StreamLogic shall furnish to FWB for its examination
at no charge a copy of each version of FWB Software distributed by StreamLogic
and all packaging, diskette labels, and Documentation, as well as
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advertising, brochures, and other materials used in connection with the
marketing of the FWB Software under FWB Trademarks.
6.3 FAILURE TO OBTAIN TRADEMARK PROTECTION. In the event FWB is
unable to secure trademark registration in any country in the Territory, the
Territory shall be amended to exclude such country, and this Agreement shall
otherwise continue in full force and effect, and StreamLogic shall make no claim
whatsoever against FWB concerning such exclusion.
7. SUPPORT OBLIGATIONS
7.1 SUPPORT FOR STREAMLOGIC. During the first ninety (90) days after
the Effective Date, FWB will provide StreamLogic, without charge, technical
information, current maintenance documentation, and telephone assistance to
enable StreamLogic to effectively reproduce, package, distribute and support the
FWB Firmware, FWB Software and Documentation in accordance with this Agreement.
In addition, FWB will supply StreamLogic without charge any generally
distributed bug-fix releases of FWB Firmware and FWB Software.
7.2 SUPPORT FOR DISTRIBUTORS AND END USERS. FWB will be under no
obligation to provide Distributors or End Users any technical information,
maintenance documentation, telephone assistance, or any other support related to
the use of the Licensed Code or Documentation or anything else.
7.3 STREAMLOGIC PRODUCTS. StreamLogic shall provide FWB with a
sample of each StreamLogic Product, at no charge, within fourteen (14) days
following the commercial release thereof.
8. PROPRIETARY RIGHTS
8.1 PRESERVATION OF NOTICES. StreamLogic acknowledges and agrees
that, as between the parties, FWB owns all right, title and interest in the
Licensed Code and Documentation, FWB Trademarks, and all patent, copyright,
trade secret, trademark and other intellectual property rights therein
throughout the world. StreamLogic shall not remove, alter, cover or obfuscate
any copyright notice or other proprietary rights notice placed in or on the
Licensed Code or Documentation by FWB, whether in machine language or human
readable form.
8.2 RENAMING MODIFIED VERSIONS. If StreamLogic produces modified
versions of RAID ToolKit for Windows 95 1.85 or RAID ToolKit for Windows NT 1.9
per Section 3.1(c), the resulting software products shall be sold under a name
other than, and not confusingly similar to, RAID ToolKit or other FWB Trademark.
8.3 PROTECTION OF FWB SOURCE CODE. StreamLogic shall hold all FWB
source code to which it has access, including FWB Firmware source code and FWB
Software Source (including any modified versions thereof developed by
StreamLogic), in confidence and shall not disclose, publish or disseminate such
source code, or permit access to such source by any person except employees of
StreamLogic who need to have access in order to modify such code as provided in
Sections 3.1(a) and 3.1(c). Each such employee shall have signed a
nondisclosure
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agreement before being permitted access to FWB source code. The non-disclosure
agreement may be a standard form of agreement used by StreamLogic to protect its
own source code, provided that it is sufficient to protect the confidentiality
of source code in accordance with this Agreement. FWB source code shall be
maintained on only one computer and StreamLogic shall advise FWB of the serial
number of such computer prior to the delivery of FWB source code. Such computer
shall be accessible only by means of a secure password known only to StreamLogic
employees permitted access to FWB source code under this Section of the
Agreement. Any back-up copy or listing of source code shall be maintained in a
locked room or cabinet accessible only to such persons. StreamLogic shall
further use at least the same degree of care to avoid disclosure, publication,
dissemination or access to FWB source code as StreamLogic employs with its most
sensitive source code which it does not desire to disclose, publish or
disseminate.
9. WARRANTIES
9.1 DISCLAIMER OF WARRANTIES. STREAMLOGIC ACKNOWLEDGES AND AGREES
THAT LICENSED CODE AND DOCUMENTATION ARE LICENSED BY FWB ON A STRICTLY "AS IS"
BASIS. FWB MAKES NO WARRANTIES OF ANY KIND, WHETHER EXPRESS OR IMPLIED,
INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES OF MERCHANTABILITY OR FITNESS FOR
A PARTICULAR PURPOSE OR NON-INFRINGEMENT OF THIRD PARTY RIGHTS.
9.2 END USER WARRANTIES. StreamLogic is not authorized to make any
warranties on FWB's behalf.
10. LIMITATIONS ON LIABILITY AND REMEDIES.
STREAMLOGIC AGREES THAT FWB SHALL NOT BE LIABLE TO STREAMLOGIC FOR
INCIDENTAL, SPECIAL, INDIRECT OR CONSEQUENTIAL DAMAGES, INCLUDING ANY LOST
PROFITS OR LOST SAVINGS, EVEN IF FWB HAS BEEN ADVISED OF THE POSSIBILITY OF
THOSE DAMAGES.
11. TERM AND TERMINATION
11.1 TERM. This Agreement will be effective upon the Effective Date
and continue in effect indefinitely, unless terminated as provided herein.
11.2 TERMINATION. Either party may terminate this Agreement prior to
expiration in the event of:
(a) a material breach of the terms or conditions of this Agreement
(including any failure by StreamLogic to pay royalties hereunder) by the other
party which breach is not cured within thirty (30) days of written notice from
the party not in breach; or
(b) the insolvency of StreamLogic, or the commencement by or against
StreamLogic of any case or proceeding under any bankruptcy, reorganization,
insolvency or moratorium law, or any other law or laws for the relief of
debtors, or the appointment of any
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receiver, trustee or assignee to take possession of the properties of
StreamLogic, unless such petition or appointment is set aside or withdrawn or
ceases to be in effect within thirty (30) days from the date of said
commencement or appointment; or
(c) the liquidation or dissolution of StreamLogic, or the sale, lease
or other disposition of StreamLogic's business or assets as a whole or such as
constitutes a substantial portion thereof; or
(d) assignment by StreamLogic of this Agreement or its obligations
under this Agreement contrary to the terms of this Agreement without FWB's
written approval.
In addition to these rights of termination, each party will have the
right, in the event of an uncured breach by the other party, to avail itself of
all remedies or causes of action, in law or equity, for damages as a result of
such breach.
11.3 EFFECT OF TERMINATION. Upon termination of this Agreement for
any reason, StreamLogic will immediately and permanently cease all use,
reproduction and distribution of the Licensed Code, Documentation and FWB
Trademarks, and will promptly return to FWB, at StreamLogic 's expense, all
copies of Licensed Code and Documentation. The provisions of Sections 8
(Proprietary Rights); 9 (Warranties), 10 (Limitations of Liability and
Remedies), 11 (Term and Termination) and 12 (General Provisions) shall survive
the termination of the Agreement by either party for any reason. Termination of
this Agreement will not affect the rights of any End User, under the terms of an
End User Agreement for copies of FWB Software distributed in accordance with
this Agreement prior to termination.
12. GENERAL PROVISIONS
12.1 ASSIGNMENT. This Agreement may not be assigned by StreamLogic
or by operation of law to any other person, persons, firms, corporation or other
entity without the express written approval of FWB. This Agreement may not be
assigned by FWB except in connection with a merger, reorganization, or sale or
other transfer of FWB's business or assets related to FWB Software or FWB
Firmware.
12.2 NOTICES. All notices required or permitted under this Agreement
shall be in writing and shall be served by personal service or by U.S. by
certified or registered mail, return receipt requested, or by nationally-
recognized private express courier, to the following addresses:
If to FWB: Norman Fong
President
FWB Software, Inc.
1555 Adams Drive
Menlo Park, CA 94025
With copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, CA 94111
Attention: Gary H. Moore
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If to StreamLogic: StreamLogic Corporation
21329 Nordhoff Street
Chatsworth, CA 91311
Attention: Chief Executive Officer
With copy to: Latham & Watkins
650 Town Center Drive
Costa Mesa, CA 92626-1925
Attention: David C. Flattum
All notices shall be deemed complete upon receipt.
12.3 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the substantive laws of the State of California.
12.4. RELATIONSHIP OF THE PARTIES. Each party is acting as an
independent contractor and not as an agent, partner, or joint venture with the
other party for any purpose. Except as provided in this Agreement, neither
party shall have any right, power, or authority to act or to create any
obligation, express or implied, on behalf of the other.
12.5 ALL AMENDMENTS IN WRITING. No provisions in either party's
purchase orders, or in any other business forms employed by either party will
supersede the terms and conditions of this Agreement, and no supplement,
modification, or amendment of this Agreement shall be binding, unless executed
in writing by a duly authorized representative of each party to this Agreement.
12.6 ENTIRE AGREEMENT. This Agreement, together with the Assert
Purchase Agreement and its attachments, constitutes the complete and entire
agreement of the parties and supersedes all previous communications, oral or
written, and all other communications between them relating to the license and
to the subject matter hereof. No representations or statements of any kind made
by either party, which are not expressly stated herein, shall be binding on such
party.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
day and year first written above.
STREAMLOGIC CORPORATION FWB SOFTWARE, INC.
Signed: /s/ Lee Hilbert Signed: /s/ Norman Fong
--------------------- -------------------
Name: Lee Hilbert Name: Norman Fong
Title: Chief Financial Officer Title: President
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EXHIBIT 10.2
TRADEMARK LICENSE AGREEMENT
This Trademark License Agreement ("AGREEMENT") is entered into as of July
1, 1996 ("EFFECTIVE DATE"), by and between StreamLogic Corporation
("STREAMLOGIC"), a Delaware corporation located at 21329 Nordhoff Street,
Chatsworth, CA 91311, and FWB Software, Inc. ("FWB"), a California corporation
located at 1555 Adams Drive, Menlo Park, CA 94025.
RECITALS
A. FWB and StreamLogic are parties to an Asset Purchase Agreement, dated
June 7, 1996 (the "ASSET PURCHASE AGREEMENT"), pursuant to which StreamLogic is
purchasing from FWB certain assets related to FWB's business.
B. In connection with StreamLogic's purchase of assets under the Asset
Purchase Agreement, StreamLogic wishes to obtain, and FWB is willing to grant to
StreamLogic, a limited license to use FWB's "FWB" brand name in connection with
StreamLogic's continued marketing and sale of the products of FWB's business
purchased by StreamLogic, subject to the terms and conditions of this Agreement.
NOW, THEREFORE, in consideration of the licenses and covenants set forth
below, the parties hereby agree as follows:
1. DEFINITIONS. For purposes of this Agreement, all capitalized terms
shall have the respective meanings set forth below or as elsewhere defined in
this Agreement:
1.1 "LICENSED PRODUCTS" means mass storage hardware products
currently produced and sold by FWB under its Hammer(R) mark including without
limitation its SledgeHammer line of Disk Arrays and its JackHammer line of
Accelerator Boards.
1.2 "LICENSED TRADEMARK" means the "FWB" brand name.
2. LICENSE GRANT. Subject to the terms and conditions and for the term of
this Agreement, FWB hereby grants to StreamLogic a non-transferable,
nonexclusive, royalty-free license and right to use the Licensed Trademark
solely in connection with the marketing, advertising, promotion, distribution
and sale of Licensed Products. All such use of the Licensed Trademark by
StreamLogic shall inure to the benefit of FWB. StreamLogic shall use the
Licensed Trademark only as a trademark (i.e. brand name) and not as a corporate
or trade name, whether alone or in conjunction with other words or symbols.
StreamLogic shall follow each usage of the Licensed Trademark with the TM symbol
and shall include a legend or notice in all marketing, advertising and
promotional material and on any documentation or labels which use the Licensed
Trademark stating that the Licensed Trademark is used under license from FWB.
StreamLogic shall not register the Licensed
<PAGE>
Trademark in any country, and shall cease use of the Licensed Trademark upon the
termination or expiration of this Agreement. The Licensed Trademark is licensed
hereunder on an AS IS basis without warranties of any kind.
3. QUALITY CONTROL. StreamLogic agrees that all Licensed Products in
connection with which the Licensed Trademark is used will be of a quality at
least as high as the equivalent products sold by FWB as of the Effective Date.
To ensure that the good will associated with the Licensed Trademark is
preserved, FWB may request from StreamLogic, upon reasonable prior written
notice, that StreamLogic provide FWB with the opportunity, without charge, to
review and test any Licensed Product bearing the Licensed Trademark to ensure
that it conforms with the required standards for quality. In the event that FWB
determines that StreamLogic is not in compliance with the required standards for
quality, FWB may so notify StreamLogic and StreamLogic shall, at FWBOs request,
cease to use the Licensed Trademark for any purpose until such time as
StreamLogic is once again found to be in compliance with such standards.
4. TERM AND TERMINATION.
4.1 TERM. The term of this Agreement shall commence upon the
Effective Date and end two (2) years thereafter, unless terminated sooner as
provided herein.
4.2 TERMINATION. FWB may terminate this Agreement upon the occurrence
of any of the following events:
(a) StreamLogic materially breaches any term or condition of this
Agreement and fails to remedy such breach within thirty (30) days after FWB
gives written notice of breach to StreamLogic; or
(b) the insolvency of StreamLogic, or the commencement by or against
StreamLogic of any case or proceeding under any bankruptcy, reorganization,
insolvency or moratorium law, or any other law or laws for the relief of
debtors, or the appointment of any receiver, trustee or assignee to take
possession of the properties of StreamLogic, unless such petition or
appointment is set aside or withdrawn or ceases to be in effect within thirty
(30) days from the date of said commencement or appointment; or
(c) the liquidation or dissolution of StreamLogic, or the sale, lease
or other disposition of StreamLogic's business or assets as a whole or such as
constitutes a substantial portion thereof; or
(d) assignment by StreamLogic of this Agreement or its obligations
under this Agreement contrary to the terms of this Agreement without FWB's
written approval.
5. GENERAL PROVISIONS.
5.1 ASSIGNMENT. This Agreement may not be assigned by StreamLogic
or by operation of law to any other person, persons, firms, corporation or other
entity without the express written approval of FWB.
2
<PAGE>
5.2 NOTICES. All notices and demands hereunder shall be in writing and
shall be served by personal service or by mail:
If to FWB:
FWB Software Inc.
1555 Adams Drive
Menlo Park, California 94025
Attention: President
If to StreamLogic:
StreamLogic Corporation
21329 Nordhoff Street
Chatsworth, California 91311
Attention: Chief Executive Officer
All notices or demands by mail shall be by certified or registered mail, return
receipt requested, or by nationally-recognized private express courier, and
shall be deemed complete upon receipt.
5.3 GOVERNING LAW. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of California.
5.4 RELATIONSHIP OF THE PARTIES. Each party is acting as an
independent contractor and not as an agent, partner, or joint venture with the
other party for any purpose. Except as provided in this Agreement, neither
party shall have any right, power, or authority to act or to create any
obligation, express or implied, on behalf of the other.
5.5 ALL AMENDMENTS IN WRITING. No provisions in either party's
purchase orders, or in any other business forms employed by either party will
supersede the terms and conditions of this Agreement, and no supplement,
modification, or amendment of this Agreement shall be binding, unless executed
in writing by a duly authorized representative of each party to this Agreement.
5.6 ENTIRE AGREEMENT. The parties have read this Agreement and agree
to be bound by its terms, and further agree that this document together with the
Asset Purchase Agreement and its attachments contains the entire agreement
between the parties with respect to the subject matter contained herein and
supersedes any previous understandings or commitments, oral or written.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
STREAMLOGIC CORPORATION FWB SOFTWARE, INC.
Signed: /s/ Lee Hilbert Signed: /s/ Norman Fong
--------------------------- ---------------------------
Name: Lee Hilbert Name: Norman Fong
Title: Chief Financial Officer Title: President
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<PAGE>
EXHIBIT 10.3
ASSIGNMENT OF EQUIPMENT LEASES
This Assignment of Equipment Leases ("AGREEMENT") dated as of July 1, 1996
is made by FWB Software, Inc., a California corporation ("SELLER"), and
StreamLogic Corporation, a Delaware corporation ("BUYER"). Any capitalized
terms not defined herein shall have the meaning ascribed thereto in the Purchase
Agreement (as defined below).
RECITALS
A. Seller and Buyer are parties to that certain Asset Purchase Agreement
dated as of June 7, 1996 (as amended, the "PURCHASE AGREEMENT"), pursuant to
which Seller agreed to sell, transfer and assign to Buyer and Buyer agreed to
purchase, acquire and assume from Seller certain assets relating to the hardware
business of Seller, including without limitation, certain equipment (the
"TRANSFERRED EQUIPMENT") held under those equipment leases which are listed in
Attachment 1 hereto (the "TRANSFERRED LEASES").
B. As a condition to the Closing, Buyer was to have obtained consents from
the lessors or their assignees (each, a "LESSOR" and together, the "LESSORS")
under the Transferred Leases by the Closing. Buyer has been unable to obtain
such consents by such date, and Seller is willing to waive the condition upon
the execution of this Agreement.
NOW THEREFORE, the parties hereby agree as follows:
SECTION 1. ASSIGNMENT. For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Seller hereby sells, conveys,
transfers and assigns to Buyer all of Seller's rights under all of the
Transferred Leases, effective as of the Closing, and Buyer hereby accepts the
foregoing assignment.
SECTION 2. ASSUMPTION. Buyer hereby assumes and agrees to perform the
liabilities and obligations of Seller to be performed under the Transferred
Leases from and after the Closing.
SECTION 3. INDEMNITIES.
(a) Seller agrees to indemnify, defend and hold Buyer harmless from any and
all claims, losses, costs, expenses or liabilities (collectively, "CLAIMS")
arising prior to July 1, 1996 from Seller's performance or nonperformance under
any of the Transferred Leases.
(b) Buyer agrees to indemnify, defend and hold Seller harmless from any and
all Claims arising on or after July 1, 1996 from Buyer's performance or
nonperformance under any of the Transferred Leases. In addition, Buyer
specifically agrees to indemnify, defend and hold harmless Norman Fong from any
and all Claims arising on or after July 1, 1996 which arise out of any guaranty
or similar agreement with any Lessor in connection with the Transferred Leases.
The indemnifications in this Section 3(b) by Buyer shall be limited to the
portion of such Claims attributable to the Transferred Equipment.
<PAGE>
SECTION 4. SUBLEASE. Buyer hereby subleases to FWB Software, LLC, a
California limited liability company ("LLC"), and LLC hereby subleases from
Buyer, all of the equipment identified on Attachment 2 hereto (the "SUBLEASED
EQUIPMENT"). For each Transferred Lease which includes any Subleased Equipment,
LLC shall pay to Buyer on each payment date identified in such Transferred Lease
that portion of the aggregate lease payment due from Buyer on such payment date
which is directly attributable to the Subleased Equipment under such Transferred
Lease. For each Transferred Lease, the sublease described herein shall continue
until the earlier to occur of (a) the date Buyer is able to perform its
obligations under Section 5(a)(i), and (b) the termination of the Transferred
Lease. LLC agrees to indemnify, defend and hold Buyer harmless from any and all
Claims arising on or after July 1, 1996 from LLC's sublease of the Subleased
Equipment.
SECTION 5. FURTHER OBLIGATIONS OF BUYER. Buyer hereby covenants to use
its best efforts to secure from each Lessor such Lessor's consent to, and to
present to Seller documentation acceptable to Seller memorializing, the
following:
(a) Either (i) a division of each Transferred Lease into two separate
leases, only one of which shall name LLC as lessee, which shall lease directly
from Lessor to LLC only the Subleased Equipment attributable to such Transferred
Lease; or (ii) an assignment of such Transferred Lease naming Buyer as lessee
under such Transferred Lease. For any Transferred Lease that is replaced by an
assignment, the sublease agreement contained in Section 4 shall continue to
apply with regard to the Subleased Equipment under such Transferred Lease until
the termination of the Transferred Lease as assigned to Buyer.
(b) With respect to any divided Transferred Lease under Section 5(a)(i)
above not executed by LLC, and to any assigned Transferred Lease under Section
5(a)(ii), a complete release of all obligations of Seller and of Norman Fong
under such Transferred Lease and under any related guaranty or similar agreement
with Lessor.
SECTION 6. ADDITIONAL REPRESENTATIONS. The covenants and indemnities of
Buyer and Seller with respect to the Transferred Leases set forth in this
Agreement are in addition to, and independent of, those set forth in the
Purchase Agreement.
SECTION 7. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California without regard to its
rules regarding conflicts of law.
SECTION 8. ENTIRE AGREEMENT. Except for the Purchase Agreement, this
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof, supersedes all prior and contemporaneous agreements,
representations and understandings of the parties with respect thereto, and may
not be modified, amended or otherwise changed in any manner except by a writing
executed by a duly authorized representative of the party to be charged.
SECTION 9. MISCELLANEOUS. In the event suit is brought to enforce this
Agreement, the prevailing party shall recover, as additional costs, reasonable
attorneys' fees and experts' fees and costs as determined by the court. Any
waiver by either party of a breach of any term, provision or condition of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of the same or any other term, provision or condition of this Agreement. No
provision of this Agreement shall be construed against any party on the ground
that such party drafted such provision.
2
<PAGE>
This Agreement may be executed in one or more counterparts, each of which shall
be an original and all of which shall together constitute one and the same
instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first indicated above.
FWB SOFTWARE, INC.,
a California corporation
By: /s/ Norman Fong
---------------------------------------
Norman Fong, President
STREAMLOGIC CORPORATION,
a Delaware corporation
By: /s/ Lee Hilbert
---------------------------------------
Lee Hilbert, Chief Financial Officer
FWB SOFTWARE, LLC,
a California limited liability corporation
By: FWB SOFTWARE, INC.
a California corporation, its Manager
By: /s/ Norman Fong
---------------------------------------
Norman Fong, President
3
<PAGE>
EXHIBIT 10.4
ASSIGNMENT AND ASSUMPTION AGREEMENT
This Assignment and Assumption Agreement ("Agreement") dated as of July 1,
1996 is made by FWB Software, Inc., a California corporation ("Seller"), and
StreamLogic Corporation, a Delaware corporation ("Buyer").
RECITALS
A. Seller and Buyer are parties to that certain Asset Purchase Agreement
dated as of June 7, 1996 (as amended, the "Purchase Agreement"), pursuant to
which Seller agreed to sell, transfer and assign to Buyer and Buyer agreed to
purchase, acquire and assume from Seller certain assets relating to the hardware
business of Seller (the "Assets"), including without limitation, those
agreements which are listed in Attachment 1 hereto (the "Transferred
Agreements").
B. In accordance with the terms of the Purchase Agreement, Seller is
executing and delivering this Agreement to Buyer for the purpose of transferring
to Buyer, its successors and assigns all of the Transferred Agreements. The
transfer of the Transferred Agreements described below is made subject to the
terms, provisions, representations and warranties of the Purchase Agreement.
C. Any capitalized terms not otherwise defined in this Agreement shall
have the meanings set forth in the Purchase Agreement.
NOW THEREFORE, the parties hereby agree as follows:
SECTION 1. ASSIGNMENT. For good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged, Seller hereby sells, conveys,
transfers and assigns to Buyer all of Seller's rights under all of the
Transferred Agreements, effective as of the Closing, and Buyer hereby accepts
the foregoing assignment.
SECTION 2. ASSUMPTION.
(a) Buyer hereby assumes and agrees to perform the liabilities and
obligations of Seller to be performed under the Transferred Agreements from and
after the Closing.
(b) Buyer hereby assumes and agrees to perform all of the debts,
obligations and liabilities described in Section 3.1 of the Purchase Agreement.
SECTION 3. INDEMNITIES.
(a) Seller agrees to indemnify, defend and hold Buyer harmless from any
and all claims, losses, costs, expenses or liabilities arising prior to or on
the Closing from Seller's performance or nonperformance under any of the
Transferred Agreements.
(b) Buyer agrees to indemnify, defend and hold Seller harmless from any
and all claims, losses, costs, expenses or liabilities arising from and after
the Closing from the failure of Buyer to pay or perform any debts, obligations
or liabilities expressly assumed by Buyer pursuant to this Agreement.
<PAGE>
SECTION 4. ADDITIONAL REPRESENTATIONS. The covenants and indemnities of
Buyer and Seller with respect to the Transferred Agreements set forth in this
Agreement are in addition to, and independent of, those set forth in the
Purchase Agreement.
SECTION 5. GOVERNING LAW. This Agreement shall be construed in accordance
with, and governed by, the laws of the State of California without regard to its
rules regarding conflicts of law.
SECTION 6. ENTIRE AGREEMENT. Except for the Purchase Agreement, this
Agreement constitutes the entire agreement between the parties with respect to
the subject matter hereof, supersedes all prior and contemporaneous agreements,
representations and understandings of the parties with respect thereto, and may
not be modified, amended or otherwise changed in any manner except by a writing
executed by a duly authorized representative of the party to be charged.
SECTION 7. MISCELLANEOUS. In the event suit is brought to enforce this
Agreement, the prevailing party shall recover, as additional costs, reasonable
attorneys' fees and experts' fees and costs as determined by the court. Any
waiver by either party of a breach of any term, provision or condition of this
Agreement shall not operate or be construed as a waiver of any subsequent breach
of the same or any other term, provision or condition of this Agreement. No
provision of this Agreement shall be construed against any party on the ground
that such party drafted such provision. This Agreement may be executed in one
or more counterparts, each of which shall be an original and all of which shall
together constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the date first indicated above.
FWB SOFTWARE, INC., a California
corporation
By: /s/ Norman Fong
------------------------------------
Norman Fong, President
STREAMLOGIC CORPORATION, a Delaware
corporation
By: /s/ Lee Hilbert
------------------------------------
Lee Hilbert, Chief Financial Officer
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<PAGE>
EXHIBIT 10.5
OPERATING AGREEMENT
OF
FWB SOFTWARE, LLC
This Operating Agreement of FWB Software, LLC, a California limited
liability company (the "COMPANY"), is entered into effective as of the 1st day
of July, 1996, among STREAMLOGIC SOFTWARE CORPORATION, a Delaware corporation
("SUB") and FWB SOFTWARE, INC., a California corporation ("FWB").
RECITALS
--------
Sub and FWB, as the initial Members of the Company, desire to form the
Company to acquire and operate the software business previously conducted by
FWB.
Therefore, Sub and FWB hereby agree to form a limited liability company
under the California Limited Liability Company Act (the "ACT") on the following
terms and conditions:
SECTION 1. FORMATION
1.1 FORMATION OF COMPANY. The Company has been organized as a California
limited liability company by the filing of Articles of Organization pursuant to
the Act with the California Secretary of State. A copy of the Articles is
attached to this Agreement as Exhibit A.
1.2 NAME. The name of the Company is "FWB Software, LLC" and all Company
business shall be conducted under that name or such other names that comply with
applicable law as the Manager may select from time to time.
1.3 PURPOSE AND SCOPE. Subject to the provisions of this Agreement and the
Articles, the purposes of the Company are to acquire the Software Business (as
hereinafter defined) from FWB, to operate the Software Business, and to do any
and all other acts or things that may be necessary, appropriate, proper,
advisable, incidental to or convenient for the furtherance and accomplishment of
the business of the Company.
1.4 TERM. The Company shall commence on the date the Articles are filed
and shall continue until the date set forth in the Articles, unless earlier
dissolved pursuant to the terms of this Agreement or the Act.
1.5 OFFICE; AGENT. The office of the Company required by the Act to be
maintained in the State of California shall be located at 1555 Adams Drive,
Menlo Park, California, or such other office (which need not be a place of
business of the Company) as the Manager may designate from time to time in the
manner provided by law. The name and address of the agent for service of process
of the Company shall be Norman Fong, 1555 Adams Drive, Menlo Park, California
94025. The Company may have such other offices as the Manager may designate from
time to time.
<PAGE>
1.6 DEFINED TERMS. As used in this Agreement, the following terms shall
have the following meanings:
(a) ACT. The California Limited Liability Company Act, as amended from
time to time.
(b) AFFILIATE. When used with reference to a specified Person, (i) any
Person that directly, or indirectly through one or more intermediaries, controls
or is controlled by or is under common control with the specified Person, (ii)
any Person that is an officer or director of, partner or trustee of, or serves
in a similar capacity with respect to, the specified Person or of which the
specified Person is an officer, director, partner, or trustee, or with respect
to which the specified Person serves in a similar capacity, (iii) any Person
that, directly or indirectly, is the beneficial owner of ten percent (10%) or
more of any class or voting securities of, or otherwise has a substantial
beneficial interest in, the specified Person or of which the specified Person
has a substantial beneficial interest, and (iv) any immediate family member or
spouse of the specified Person.
(c) AGREEMENT. This Operating Agreement, as originally executed and as
amended, modified, supplemented or restated from time to time in accordance with
its terms.
(d) ARTICLES. The Articles of Organization of the Company, as originally
filed and as amended or restated from time to time in accordance with this
Agreement and the Act.
(e) ASSET PURCHASE AGREEMENT. The Asset Purchase Agreement of even date
herewith between StreamLogic Corporation, as buyer, and FWB, as seller.
(f) ASSIGNEE. A Person who has acquired by assignment a Membership
Interest or an Economic Interest but who has not been admitted as a Member of
the Company.
(g) BANKRUPTCY. With respect to a Person, being the subject of an order
for relief under Title 11 of the United States Code, or any successor statute or
other statute in any foreign jurisdiction having like import or effect.
(h) CAPITAL ACCOUNT. As defined in Section 2.4.
(i) CLOSING. As defined in Section 2.2.
(j) CODE. The Internal Revenue Code of 1986 or any successor statute, as
amended from time to time.
(k) COMPANY. FWB Software, LLC, a California limited liability company.
(l) COMPANY RIGHTS AGREEMENT. The agreement of even date herewith, in the
form attached as Exhibit D to this Agreement.
(m) DISTRIBUTABLE CASH. Cash funds of the Company from any source which
the Manager determines to be available for distribution to Members.
(n) ECONOMIC INTEREST. A Person's right to share in the income, gains,
losses, deductions, credit, or similar items of, and to receive distributions
from, the Company, but such term does not
2
<PAGE>
include any other rights of a Member including, without limitation, the right to
vote or to participate in management, or, except as provided in Section 17106 of
the Act, any right to information concerning the business and affairs of the
Company.
(o) FISCAL YEAR. The taxable year of the Company, as determined under
Section 706 of the Code.
(p) INVESTED CAPITAL. The value of money or property contributed, or
services rendered, to the Company as capital by any Member in that Person's
capacity as a Member pursuant to this Agreement.
(q) MAJORITY VOTE. The vote of Members holding more than fifty percent
(50%) of the Percentage Interests.
(r) MANAGER. A Person elected by the Members to manage the Company, who
shall have the power and authority of a manager under the Act.
(s) MEMBER. A Person who (i) has been admitted to the Company
as a Member in accordance with this Agreement and (ii) has not resigned,
withdrawn, or been expelled as a Member or, if other than an individual, been
dissolved.
(t) MEMBERSHIP INTEREST. A Member's rights in the Company, collectively,
including the Member's Economic Interest, any right to vote or participate in
management, and any right to information concerning the business and affairs of
the Company provided by the Act.
(u) NET INCOME AND NET LOSS. As defined in Section 3.10.
(v) OFFICER. Any Person appointed by the Manager to be an officer of the
Company pursuant to Section 4.2.
(w) PERCENTAGE INTEREST. With respect to a Member, the number of Shares
owned by such Member expressed as a percentage of the total outstanding Shares.
The aggregate Percentage Interests shall at all times equal 100 percent.
(x) PERSON. An individual, partnership, limited partnership, trust,
estate, association, corporation, limited liability company, or other entity,
whether domestic or foreign.
(y) RIGHTS AGREEMENT. The agreement of even date herewith, in the form
attached as Exhibit E to this Agreement.
(z) SHARES. Ownership of the Company shall be divided into and represented
by Shares. The number of Shares issued to each Member shall be set forth in
Exhibit B to this Agreement.
(aa) SOFTWARE BUSINESS. FWB's business of developing, making and
distributing firmware for use with mass-storage solutions and software both for
use with mass-storage solutions and as standalone products, including its RAID
Toolkit, CD ROM Toolkit/TM/ and HardDisk Toolkit/TM/ products.
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<PAGE>
(bb) STREAMLOGIC CORPORATION. StreamLogic Corporation, a Delaware
corporation, the parent of Sub.
(cc) TAX DISTRIBUTION. As defined in Section 3.1.
(dd) TAX ITEMS. The income, gains, losses and deductions of the Company
for federal income tax purposes, as determined by the Company's accountants.
(ee) TAX MATTERS PARTNER. The Member designated as the Tax Matters Partner
pursuant to Section 7.4.
(ff) TREASURY REGULATIONS. Final and temporary income tax regulations
issued by the U. S. Treasury Department.
SECTION 2. CAPITALIZATION OF THE COMPANY.
2.1 INITIAL CONTRIBUTIONS
(a) FWB CONTRIBUTION. At the Closing, FWB shall transfer, assign and
deliver to the Company all of FWB's assets, properties and business remaining
after the sale of the Hardware Business (as such term is defined in the Asset
Purchase Agreement), except that FWB may retain the aggregate sum of up to
$2,400,000 in cash and accounts receivable. FWB's contribution shall be subject
to, and the Company shall assume, perform and carryout, and hold FWB harmless
against, all of the debts, obligations and liabilities of FWB, including FWB's
obligations under the Asset Purchase Agreement, other than the debts,
obligations and liabilities of FWB which are assumed by StreamLogic Corporation
under the Asset Purchase Agreement. At the Closing, FWB shall execute and
deliver the General Conveyance and Assumption of Liabilities in substantially
the form of Exhibit C. The Members agree that the net fair market value of FWB's
contribution to the Company and the number of Shares issued in exchange therefor
shall be as set forth in Exhibit B hereto.
(b) SUB CONTRIBUTION. At the Closing, Sub shall transfer, assign and
deliver to the Company One Million Two Hundred Fifty-Six Thousand One Hundred
Twenty-Three (1,256,123) shares of the common stock (the "COMMON STOCK") of
StreamLogic Corporation ("STREAMLOGIC"). The Members agree that the net fair
market value of Sub's contribution to the Company and the number of Shares
issued in exchange therefor shall be as set forth in Exhibit B hereto.
Notwithstanding the foregoing, at the Closing the Company may elect in writing
either of the following: (1) On the date 120 days after the Closing a
calculation of the then market value of the StreamLogic common stock is to be
made (based on the average of the closing sale prices for StreamLogic common
stock for the twenty (20) trading days immediately prior to such date (the
"AVERAGE PRICE")) and the Company either receives additional shares from Sub or
returns shares of the StreamLogic common stock to Sub to adjust the market value
(based on the Average Price) of the shares held by the Company to $7,500,000; or
(2) on the date 120 days after the Closing a calculation of the then market
value of the StreamLogic common stock is to be made (based on the Average Price)
and so long as the market value (based on the Average Price) is between
$6,000,000 and $9,000,000 no adjustment is made, but (A) if the market value
(based on the Average Price) is less than $6,000,000 the Company shall receive
additional shares of StreamLogic common stock from Sub to increase the market
value (based on the Average Price) to $6,000,000, and (B) if the market value
(based on the Average Price) is greater than $9,000,000 the Company shall return
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<PAGE>
shares of StreamLogic common stock to Sub to reduce the market value (based on
the Average Price) to $9,000,000. Any adjustment under the preceding sentence
shall not cause any adjustment in Sub's Invested Capital or its Capital Account.
2.2 CLOSING. The capitalization of the Company shall take place
concurrently with the closing of the transactions contemplated by the Asset
Purchase Agreement and the execution of the Rights Agreement and the Company
Rights Agreement (the "CLOSING"). All transactions at the Closing shall be
deemed to take place simultaneously and no party shall have any obligation to
deliver any document or take any action contemplated by this Agreement to be
delivered or taken at the Closing unless at the Closing there occurs
simultaneously each and every other transaction contemplated by this Agreement
to occur at the Closing.
2.3 ADDITIONAL CONTRIBUTIONS. At the discretion of the Manager, the
Company may issue additional Membership Interests in exchange for additional
contributions to the capital of the Company, on such terms as are determined by
the Manager, which may include priority over existing Membership Interests as to
Economic Interests, voting rights and participation in management. Without
limiting the generality of the preceding sentence, the Manager may grant options
to purchase Shares to employees of the Company or to other Persons, for such
amounts and on such terms as the Manager may determine in its discretion. This
Agreement may be amended by the signature of the Manager to reflect the sale of
the additional Membership Interests, the admission of additional Members and any
changes in allocations of Economic Interests, voting rights and participation in
management, and such amendment shall not require the approval of the Members.
2.4 CAPITAL ACCOUNTS. A separate Capital Account (a "CAPITAL ACCOUNT")
shall be maintained for each Member for the full term of this Agreement in
accordance with the capital accounting rules of section 1.704(b)(2)(iv) of the
Treasury Regulations. Each Member shall have only one Capital Account,
regardless of the number of Membership Interests in the Company owned by the
Member and regardless of the time or manner in which the Membership Interests
were acquired by the Member. Pursuant to the basic rules of section 1.704-
l(b)(2)(iv) of the Regulations, the balance in each Member's Capital Account
shall be:
(a) increased by the amount of money contributed by the Member (or
the Member's predecessor in interest) to the capital of the Company pursuant to
this Section 2 and decreased by the amount of money distributed to the Member
(or the Member's predecessor in interest) pursuant to Section 3 or Section 8
hereof;
(b) increased by the fair market value of each item of property
(determined without regard to section 7701(g) of the Code) contributed by the
Member (or the Member's predecessor in interest) to the capital of the Company
pursuant to this Section 2 (net of all liabilities secured by the property that
the Company is considered to assume or take subject to, under section 752 of the
Code) and decreased by the fair market value of each item of property
(determined without regard to section 7701(g) of the Code) distributed to the
Member (or the Member's predecessor in interest) by the Company pursuant to
Section 3 or Section 8 hereof (net of all liabilities secured by the property
that the Member is considered to assume or take subject to, under section 752 of
the Code);
(c) increased by the amount of Net Income and items of income or gain
allocated to the Member (or the Member's predecessor in interest) pursuant to
Section 3 hereof;
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<PAGE>
(d) decreased by the amount of Net Loss and items of loss or expense
allocated to the Member (or the Member's predecessor in interest) pursuant to
Section 3 hereof;
(e) to the extent that Company property is reflected in the Capital
Accounts and on the books of the Company at a book value that differs from the
adjusted tax basis of such property, adjusted in accordance with Treasury
Regulations Section 1.704-1(b)(2)(iv)(g) for allocations to Members of
depreciation, depletion, amortization, and gain or loss, as computed for book
purposes, with respect to such property; and
(f) otherwise adjusted in accordance with the other Capital Account
maintenance rules of section 1.704-l(b)(2)(iv) of the Treasury Regulations.
2.5 VALUATION OF COMPANY ASSETS. The book values of all Company assets
shall be adjusted to equal their respective fair market values (taking Code
Section 7701(g) into account), as reasonably determined by the Manager, upon the
occurrence of any of the following events: (i) a contribution of money or
property (other than a de minimis amount) to the Company by a new or existing
Member as consideration for a Membership Interest; (ii) a distribution of money
or property (other than a de minimis amount) by the Company to a Member as
consideration for a Membership Interest; and (iii) the liquidation of the
Company within the meaning of Treasury Regulations section 1.704-1(b)(2)(ii)(g);
provided, however, that the adjustments pursuant to clauses (i) and (ii) of this
sentence shall be made only if the Manager reasonably determines that such
adjustments are necessary or appropriate to reflect the relative economic
interest of the Members. Any such adjustments shall be reflected by
corresponding adjustments to the Capital Accounts which reflect the manner in
which the unrealized income, gain, loss, or deduction inherent in such property
(that has not been reflected in the Capital Accounts previously) would be
allocated among the Members if there were a taxable disposition of such assets
for such fair market values.
2.6 LOANS. The Manager, from time to time and in its reasonable judgment,
may obtain loans from third parties or Members to meet operating expenses and
capital expenditures of the Company, which loans may be unsecured or secured by
all or a portion of Company assets.
SECTION 3. DISTRIBUTIONS AND ALLOCATIONS
3.1 TAX DISTRIBUTIONS. For each Fiscal Year of the Company in which the
Company has taxable income (except the Fiscal Year in which the Company is
liquidated), the Company shall distribute an amount equal to the product of (i)
the Company's taxable income multiplied by (ii) the sum of (x) the highest
marginal federal income tax rate imposed on individual taxpayers plus (y) the
product of the highest marginal California income tax rate imposed on individual
taxpayers multiplied by the difference of 100 percent minus the federal marginal
income tax rate determined under clause (x) (the "TAX DISTRIBUTION"). For
example, if the highest marginal federal income tax rate is 39.6 percent and the
highest marginal California income tax rate is 11 percent, the effective tax
rate for purposes of the Tax Distribution would be 39.6% + [11% x (100% -
39.6%)], or 46.2 percent. The Company shall endeavor to make the Tax
Distribution in periodic distributions which conform to the deadlines for paying
estimated tax payments, and in any event the Tax Distribution shall be completed
not later than ninety (90) days after the end of the Fiscal Year in which the
Company has taxable income. Except as otherwise provided in the next sentence,
the Tax Distribution shall be distributed to those Members to whom the Company's
taxable income is
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allocated and in proportion to such allocations. If a Membership Interest (or an
Economic Interest) is assigned prior to the making of the Tax Distribution, the
full amount of the Tax Distribution attributable to such Membership Interest (or
Economic Interest) shall be distributed to the Person who holds such Membership
Interest (or Economic Interest) as of the time the Tax Distribution is made.
3.2 NONLIQUIDATING DISTRIBUTIONS. Except as otherwise provided in Sections
3.1 and 8.3, Distributable Cash shall be allocated and distributed to the
Members in proportion to their Percentage Interests as of the time the
distribution is made.
3.3 WITHHOLDINGS AS DISTRIBUTIONS. For California tax purposes, each
Member which is a nonresident of California shall execute and deliver to the
Manager the agreement of such nonresident Member required by Section 18633.5 of
the California Revenue and Taxation Code (the "NONRESIDENT TAX AGREEMENT") no
later than sixty (60) days after becoming a Member. If any nonresident Member
fails to deliver a Nonresident Tax Agreement, the Company shall be required to
make payments to the State of California pursuant to Section 18633.5 of the
California Revenue and Taxation Code and any such payments shall be treated as
distributions to such Member for all purposes under this Agreement. If such
payments exceed the amount of distributions such Member would otherwise have
received from the Company, such Member shall be obligated to return such excess
payments to the Company, plus interest at the Member Loan Rate from the date of
such excess payments.
3.4 ALLOCATION OF NET INCOME. After giving effect to the special
allocations set forth in Section 3.6, Net Income for any Fiscal Year or other
period shall be allocated among the Members as follows:
(a) First, to those Members who have received prior allocations of Net
Loss (including Net Loss allocated to a predecessor of a Member to the extent
such Net Loss has been reflected in the Member's Capital Account) until all such
prior allocations of Net Loss have been offset in full by allocations of Net
Income under this Section 3.4(a), in inverse order to the prior allocations of
Net Loss (i.e., the last dollar of Net Loss allocated shall be offset by the
next dollar of Net Income allocated);
(b) Thereafter, Net Income shall be allocated to the Members in proportion
to their Percentage Interests.
3.5 ALLOCATION OF NET LOSS. After giving effect to the special allocations
set forth in Section 3.6, Net Loss for any Fiscal Year or other period shall be
allocated among the Members as follows:
(a) First, to those Members who have received prior allocations of Net
Income (including Net Income allocated to a predecessor of a Member to the
extent such Net Income has been reflected in the Member's Capital Account) until
all such prior allocations of Net Income have been offset in full by allocations
of Net Loss under this Section 3.5(a), in inverse order to the prior allocations
of Net Income (i.e., the last dollar of Net Income allocated shall be offset by
the next dollar of Net Loss allocated);
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(b) Next, Net Loss shall be allocated to the Members in proportion to the
positive balances in their Capital Accounts, until each Member's Capital Account
balance has been reduced to zero; and
(c) Next, Net Loss shall be allocated to the Members in proportion to
their Percentage Interests, except that in no event shall Net Loss be allocated
to any Member if such allocation would reduce such Member's Capital Account
balance to less than a deficit amount equal to the amount such Member is deemed
obligated to restore to its Capital Account pursuant to the next to last
sentences of Treasury Regulations sections 1.704-2(g)(1) and (i)(5).
3.6 SPECIAL ALLOCATIONS. Prior to making the allocations described in
Sections 3.4 and 3.5, Company income, gain, loss and deduction shall be
allocated in accordance with the following provisions and applied in the
following order:
(a) Except as otherwise provided in section 1.704-2(f) of Regulations, if
there is a net decrease in Company Minimum Gain during any Company taxable year,
each Member shall be specially allocated items of Company income and gain for
the year (and, if necessary, subsequent years) in an amount equal to the portion
of the Member's share of the net decrease of Company Minimum Gain, determined in
accordance with Treasury Regulations section 1.704-2(g). Allocations pursuant to
the previous sentence shall be made in proportion to the respective amounts
required to be allocated to each Member pursuant thereto. The items to be so
allocated shall be determined in accordance with Treasury Regulations section
1.704-2(j)(2). This Section 3.6(a) is intended to comply with the "minimum gain
chargeback" requirements of Treasury Regulations section 1.704-2(f) and shall be
interpreted consistently therewith. "COMPANY MINIMUM GAIN" shall have the same
meaning as "partnership minimum gain" in Treasury Regulations section 1.704-
2(b)(2).
(b) Except as otherwise provided in section 1.704-2(i)(4) of the Treasury
Regulations, if there is a net decrease in Member Nonrecourse Debt Minimum Gain
attributable to Member Nonrecourse Debt during any Company taxable year, each
Member who has a share of the Member Nonrecourse Debt Minimum Gain attributable
to the Member Nonrecourse Debt, determined in accordance with Treasury
Regulations section 1.704-2(i)(5), shall be specially allocated items of Company
income and gain for the year (and, if necessary, subsequent years) in an amount
equal to the portion of each such Member's share of the net decrease in Member
Nonrecourse Debt Minimum Gain attributable to the Member Nonrecourse Debt,
determined in accordance with Treasury Regulations section 1.704-2(i)(4).
Allocations pursuant to the previous sentence shall be made in proportion to the
respective amounts required to be allocated to each Member pursuant to such
sentence. The items to be so allocated shall be determined in accordance with
Treasury Regulations section 1.704-2(j)(2). "MEMBER NONRECOURSE DEBT MINIMUM
GAIN" and "MEMBER NONRECOURSE DEBT" shall have the same meanings as "partner
nonrecourse debt minimum gain" and "partner nonrecourse debt," in Treasury
Regulations sections 1.704-2(i)(2) and (b)(4), respectively.
(c) If a Member unexpectedly receives an adjustment, allocation or
distribution of any item described in Treasury Regulations sections 1.704-
1(b)(2)(ii)(d)(4), (5) or (6), and the adjustment, allocation or distribution
creates a deficit balance in the Member's Capital Account in excess of the
amount the Member is deemed obligated to restore to its Capital Account pursuant
to the next to last sentences of Treasury Regulations sections 1.704-2(g)(1) and
(i)(5) (an "excess deficit"), items of
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income and gain shall be allocated to the Member in an amount and manner
sufficient to eliminate the excess deficit as soon as possible. Solely for
purposes of applying this Section 3.6(c), each Member's Capital Account shall be
reduced to the extent of adjustments, allocations or distributions described in
subparagraphs (4), (5) and (6) of Treasury Regulations section 1.704-
1(b)(2)(ii)(d) which are reasonably expected as of the end of the taxable year.
This Section 3.6(c) is intended to comply with the "qualified income offset"
provisions of Treasury Regulations section 1.704-1(b)(2)(ii)(d) and these
provisions shall be interpreted, and allocations hereunder shall be made, in
conformity with the regulations.
(d) Nonrecourse Deductions for any taxable year or other period shall be
allocated to the Members in proportion to their Percentage Interests. The term
"NONRECOURSE DEDUCTIONS" shall have the meaning set forth in Treasury
Regulations section 1.704-2(b)(1).
(e) Member Nonrecourse Deductions for any taxable year or other period
shall be specially allocated to the Member who bears the economic risk of loss
with respect to the Member Nonrecourse Debt to which the Member Nonrecourse
Deductions are attributable in accordance with Treasury Regulations section
1.704-2(i). The term "MEMBER NONRECOURSE DEDUCTIONS" shall have the same meaning
as "partner nonrecourse deductions" in Treasury Regulations section 1.704-
2(i)(2).
(f) The allocations set forth in Section 3.6(a) through Section 3.6(e),
inclusive (the "REGULATORY ALLOCATIONS") are intended to comply with certain
requirements of Treasury Regulations Section 1.704-1(b). The Regulatory
Allocations shall be taken into account in allocating other net profits, net
losses, and items of income, gain, loss and deduction among the Members so that,
to the extent possible, the net amount of the allocations of other net profits,
net losses, and other items and the Regulatory Allocations to each Member shall
be equal to the net amount that would have been allocated to each such Member if
the Regulatory Allocations had not occurred.
3.7 TAX ALLOCATIONS. Except as otherwise provided in the second sentence
of this Section 3.7, all items of Partnership taxable income, gain, loss and
deduction shall be allocated among the Members consistent with the allocations
of Net Income and Net Loss under Sections 3.4 and 3.5. If Company property is
reflected in the Capital Accounts and on the books of the Company at a book
value that differs from the adjusted tax basis of the property, then
depreciation, depletion, amortization, and gain or loss, as computed for tax
purposes, with respect to the property, shall be determined and allocated among
the Members, solely for tax purposes, so as to take account of the variation
between the adjusted tax basis and the book value of the property in any
reasonable method determined by the Manager and permitted under Section 704(c)
of the Code and Treasury Regulations thereunder.
3.8 OTHER ALLOCATION AND DISTRIBUTION RULES
(a) For purposes of determining Net Income or Net Loss, or any other items
allocable to any period, Net Income, Net Loss and any such other items shall be
determined on a daily, monthly, or other basis, as determined by the Manager
using any permissible method under Code Section 706 and Treasury Regulations
thereunder.
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(b) Any amounts withheld by the Company pursuant to the Code or any
provision of any state or local law with respect to any allocation or
distribution to a Member shall be treated as a distribution to the Member for
all purposes under this Agreement.
(c) No Member shall become entitled to any distribution from the Company
until such time as the distribution is actually paid by the Company. No Member
has any right to demand and receive any distribution from the Company in any
form other than money. No Member may be compelled to accept from the Company a
distribution of any asset in kind in lieu of a proportionate distribution of
money being made to other Members.
(d) If any asset of the Company is to be distributed in kind to one or
more Members (including upon dissolution of the Company under Section 8.3), such
asset shall be valued at its fair market value (taking Code section 7701(g) into
account) on the date of distribution, and the Capital Accounts of the Members
shall be adjusted to reflect the manner in which the unrealized income, gain,
loss, or deduction inherent in such asset (that has not been reflected in the
Capital Accounts previously) would be allocated among the Members if there were
a taxable disposition of such asset at its fair market value on the date of
distribution.
(e) No distribution shall be made by the Company if such distribution is
prohibited by Section 17254 of the Act. Any Member who receives a distribution
from the Company which is determined to have been prohibited by Section 17254 of
the Act shall, within thirty (30) days following notice, return such
distribution to the Company.
3.9 INTEREST ON CAPITAL. Except as otherwise expressly provided in this
Agreement, no Member shall receive any interest on its Invested Capital or its
Capital Account.
3.10 DETERMINING NET INCOME AND NET LOSS. "NET INCOME" and "NET LOSS"
shall mean, for each Fiscal Year or other period, an amount equal to the
Company's taxable income or loss for the year or period, determined in
accordance with Code section 703(a) (for this purpose, all items of income,
gain, loss, or deduction required to be stated separately pursuant to Code
section 703(a)(1) shall be included in taxable income or loss), with the
following adjustments:
(a) Any income that is exempt from federal income tax shall be added to
the Company's gross income;
(b) Any expenditures of the Company described in Code section 705(a)(2)(B)
(or treated by Treasury Regulations as if described in that section) shall be
treated as a deduction of the Company;
(c) Gain or loss from any disposition of Company property shall be
computed with reference to the book value of the property if its book value
differs from its adjusted tax basis;
(d) If the book value of any Company property differs from its adjusted
tax basis, depreciation, amortization, or other cost recovery deductions with
respect to the property shall be computed with reference to the book value;
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(e) Any items which are specially allocated pursuant to Section 3.6 hereof
shall be taken into account prior to computing, and shall be excluded from the
computation of, Net Income or Net Loss for purposes of this Section 3.10; and
(f) Any other adjustments which the Manager determines are necessary to
comply with Treasury Regulations section 1.704-1(b) shall be made.
SECTION 4. MANAGEMENT
4.1 MANAGER. The business and affairs of the Company shall be managed by
the Manager, who shall manage in its capacity as a Member. Except for situations
in which the approval of the Members is expressly required by this Agreement or
by nonwaivable provisions of applicable law, the Manager shall have full and
complete authority, power, and discretion to manage and control the business,
affairs, and properties of the Company.
The initial Manager of the Company shall be FWB. If FWB ceases to be the
Manager for any reason, a new Manager shall be elected by Majority Vote. The
Manager must be a Member of the Company and must own at least 20% of the
outstanding Shares. If at any time there is no Member who owns at least 20% of
the outstanding Shares, the Articles and this Agreement shall be amended to
increase the number of Managers (who must be Members) so that the Managers
collectively own at least 20% of the outstanding Shares. Any such amendment may
also provide for meetings of the Managers and their respective voting rights.
4.2 OFFICERS. The Manager may, from time to time, appoint one or more
individuals to be officers of the Company. Any officers so appointed shall have
such authority and perform such duties as the Manager may, from time to time,
delegate to them. Unless the Manager decides otherwise, if the title of an
officer is one commonly used for an officer of a business corporation formed
under the General Corporation Law, the use of such title shall constitute the
delegation to such officer of the authority and duties that are normally
associated with that office. Any number of offices may be held by the same
individual. The salaries or other compensation, if any, of the officers and
agents of the Company shall be fixed from time to time by the Manager. Any
officer may be removed as such, either with or without cause, by the Manager.
4.3 LIABILITY OF MANAGERS. A Manager shall not be liable to the Company or
the Members for any mistake of fact or judgment or for the doing of any act or
the failure to do any act by the Manager in conducting the business, operations
and affairs of the Company, which may cause or result in any loss or damage to
the Company or the Members, unless such mistake, act or failure to act is the
result of the Manager's fraud, bad faith, gross negligence, or willful
misconduct. In performing his duties, a Manager shall be entitled to rely on
information, opinion, reports, or statements, including financial statements and
other financial information, prepared or provided by any attorney, independent
accountant, officer, employee or other agent of the Company, or other Person as
to matters which the Manager reasonably believes to be within such Person's
professional or expert competence, unless the Manager has knowledge concerning
the matter in question that would cause such reliance to be unwarranted under
the circumstances.
4.4 INDEMNIFICATION. The Company shall indemnify and hold harmless, to the
fullest extent permitted by law, (i) each Member, (ii) each current or former
Manager and (iii) each director,
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officer, agent, partner, employee, counsel and Affiliate of each Member, each
Manager and the Company, or of any of their Affiliates (individually, an
"INDEMNIFIED PARTY"), as follows:
(a) The Company shall indemnify and hold harmless, to the fullest extent
permitted by law, any Indemnified Party from and against any and all losses,
claims, damages, liabilities, expenses (including legal fees and expenses),
judgments, fines, settlements and other amounts ("INDEMNIFIED COSTS") arising
from all claims, demands, actions, suits or proceedings ("ACTIONS"), whether
civil, criminal, administrative or investigative, in which the Indemnified Party
may be involved, or threatened to be involved, as a party or otherwise arising
as a result of its status as (i) a Member of the Company, (ii) a Manager, or
(iii) a director, officer, agent, partner, employee, counsel or Affiliate of a
Manager, a Member or the Company or any of their Affiliates, regardless of
whether the Indemnified Party continues in the capacity at the time the
liability or expense is paid or incurred, and regardless of whether the Action
is brought by a third party, a Member, or by or in the right of the Company;
provided, however, no such Person shall be indemnified for any Indemnified Costs
- -------- -------
which proximately result from the Person's fraud, bad faith, gross negligence or
willful misconduct or the Person's material breach of this Agreement.
(b) The Company shall pay or reimburse, to the fullest extent allowed by
law and consistent with Section 4.4(a) above, in advance of the final
disposition of the proceeding, Indemnified Costs incurred by the Indemnified
Party in connection with any Action that is the subject of Section 4.4(a) above.
(c) Notwithstanding any other provision of this Section 4.4, the Company
shall pay or reimburse Indemnified Costs incurred by an Indemnified Party in
connection with such Person's appearance as a witness or other participation in
a proceeding involving or affecting the Company at a time when the Indemnified
Party is not a named defendant or respondent in the proceeding.
(d) The Manager may cause the Company to purchase and maintain insurance
or other arrangements on behalf of the Indemnified Parties against any liability
asserted against any Indemnified Party and incurred by any Indemnified Party in
that capacity, or arising out of the Indemnified Party's status in that
capacity, regardless of whether the Company would have the power to indemnify
the Indemnified Party against that liability under this Section 4.4. The
indemnification provided by this Section 4.4 shall be in addition to any other
rights to which the Indemnified Parties may be entitled under any agreement, any
vote of the Members, as a matter of law, or otherwise, and shall inure to the
benefit of the heirs, successors, assigns and administrators of the Indemnified
Party.
(e) An Indemnified Party shall not be denied indemnification in whole or
in part under this Section 4.4 because the Indemnified Party had an interest in
the transaction with respect to which the indemnification applies if the
transaction was otherwise permitted by the terms of this Agreement.
4.5 CONFIDENTIALITY. Each Member recognizes that in its capacity as a
Member, it will receive information about the Company and its operations which
is confidential and proprietary to the Company. Each Member agrees to keep all
information about the Company received in its capacity as a Member confidential
and to not disclose that information to any other person, including employees or
consultants of the Company, other than disclosures specifically authorized by
the Manager.
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SECTION 5. INTERESTS OF MEMBERS
5.1 ADMISSION OF MEMBERS.
(a) The initial Members of the Company are the Persons executing this
Agreement as of the date of this Agreement as Members, each of whom is admitted
to the Company as a Member effective upon the execution by such Person of this
Agreement.
(b) Persons who acquire Membership Interests pursuant to Section 2.3 of
this Agreement shall become Members upon satisfaction of the conditions set
forth in Section 5.5 below.
5.2 AUTHORITY OF MEMBERS. No Member, acting solely in the capacity of a
Member, is an agent of the Company and no Member (other than a Manager or an
Officer) can bind or execute any instrument on behalf of the Company.
5.3 VOTING RIGHTS OF MEMBERS. The Members shall have the right to vote on
the matters set forth in this Agreement, including the matters listed in this
Section 5.3. Except as otherwise provided in this Agreement or in the Act,
matters on which the Members may vote shall require the approval of a Majority
Vote. Members shall have the right to vote on the following matters:
(a) The election to continue the Company following the occurrence of an
event described in Section 8.1(d), which shall require the vote of Members as
specified in that Section;
(b) Except as otherwise provided in Section 2.3, any amendment of the
Articles or this Agreement; provided, however, that no amendment may require a
Member to contribute additional capital to the Company unless the Member has
approved the amendment;
(c) Removal of the Manager or election of a successor Manager;
(d) Any merger of the Company with or into another business entity;
(e) The dissolution of the Company pursuant to Section 8.1(b); and
(f) Such other matters as the Manager may from time to time elect to
submit to the vote of the Members, it being understood and agreed that the
Manager shall not be obligated to submit any other matters to the vote of the
Members.
5.4 WITHDRAWAL. No Member shall have the right or power to withdraw from
the Company as a Member.
5.5 TRANSFERS OF INTERESTS. Subject to the restrictions on transfer set
forth in the Rights Agreement, the Members may sell, transfer, pledge, encumber
or otherwise dispose of their Membership Interests or interests therein. Any
attempted sale, transfer, pledge, encumbrance or other disposition of a
Membership Interest or an interest therein which does not comply with the
requirements of the Rights Agreement shall be void and of no effect.
(a) Until the Assignee becomes a Member, the voting rights and rights to
participate in the management and affairs of the Company which are attributable
to the interest assigned shall be
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suspended and may not be exercised by the assignor or the Assignee. The Company
and the Manager shall be entitled to treat the record owner (as reflected on the
books of the Company) of any Membership Interest as the absolute owner thereof
in all respects, and shall incur no liability for distributions made in good
faith to such owner until such time as a written assignment of such interest has
been received by the Company. The effective date of an assignment shall be (i)
the date of receipt and acceptance by the Manager of the written notice of
assignment, or (ii) such later date as may be specified in the notice of
assignment. An Assignee shall be entitled to become a Member only upon the terms
and conditions set forth in Section 5.5(b).
(b) An Assignee may be admitted as a Member upon satisfaction of the
following conditions: (i) the filing with the Company of a duly executed written
instrument of assignment in a form approved by the Manager specifying the
interest being assigned and setting forth the intention of the assignor that the
Assignee succeed to the assignor's interest as a Member with respect to such
interest; and (ii) the execution and acknowledgment by the assignor (except in
the case of an assignment occurring by will, intestate succession, or otherwise
by operation of law) and Assignee of any other instruments reasonably required
by the Manager, including the acceptance and adoption by the Assignee of the
provisions of this Agreement.
5.6 DECEASED, INCOMPETENT OR DISSOLVED MEMBER. If a Member who is an
individual dies or is adjudged by a court of competent jurisdiction to be
incompetent to manage the Member's person or property, the Member's executor,
administrator, guardian, conservator, or other legal representative may exercise
all of the Member's rights for the purpose of settling the Member's estate or
administering the Member's property. If a Member is a corporation, trust, or
other entity and is dissolved or terminated, the powers of that Member may be
exercised by its legal representative or successor.
SECTION 6. MEETINGS OF MEMBERS
6.1 PLACE OF MEETINGS. Meetings of Members shall be held at any place
stated in any proper notice of meeting, provided that place is within the County
of San Mateo, State of California.
6.2 REGULAR MEETINGS. Regular meetings of the Members shall not be
required.
6.3 SPECIAL MEETINGS. Special meetings of Members may by called by any
Manager or by any Member or Members representing not less than 10 percent of the
Percentage Interests, for the purpose of addressing any matters on which the
Members may vote.
6.4 NOTICE OF MEETINGS.
(a) Whenever Members are required or permitted to take any action at a
meeting, a written notice of the meeting shall be given not less than 10 days
nor more than 60 days before the date of the meeting to each Member entitled to
vote at the meeting. The notice shall state the place, date and hour of the
meeting and the general nature of the business to be transacted. No other
business may be transacted at such meeting.
(b) Notice of a Members' meeting shall be given either personally or by
mail or other means of written communication, addressed to the Member at the
address of the Member appearing on the books of the Company or given by the
Member to the Company for the purpose of notice.
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The notice or report shall be deemed to have been given at the time when
delivered personally or deposited in the mail or sent by other means of written
communication.
(c) Upon written request to a Manager by any Person entitled to call a
meeting of Members, the Manager shall immediately cause notice to be given to
the Members entitled to vote that a meeting will be held at a time requested by
the Person calling the meeting, not less than 10 days nor more than 60 days
after the receipt of the request. If the notice is not given within 20 days
after receipt of the request, the Person entitled to call the meeting may give
the notice.
(d) When a Members' meeting is adjourned to another time or place, except
as provided in the last sentence of this paragraph, notice need not be given of
the adjourned meeting if the time and place thereof are announced at the meeting
at which the adjournment is taken. At the adjourned meeting, the Company may
transact any business that may have been transacted at the original meeting. If
the adjournment is for more than 45 days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each Member of record entitled to vote at the meeting.
6.5 QUORUM. Members holding a majority of the Percentage Interests
represented in person or by proxy shall constitute a quorum at a meeting of
Members. The Members present at a duly called or held meeting at which a quorum
is present may continue to transact business until adjournment, notwithstanding
the loss of a quorum, if any action taken after loss of a quorum, other than
adjournment, is approved by the requisite percentage of voting interests
specified in this Agreement or in the Act.
6.6 ACTION WITHOUT A MEETING. Any action that may be taken at any meeting
of the Members may be taken without a meeting if a consent in writing, setting
forth the action so taken, is signed and delivered to the Company by Members
having not less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all Members entitled to vote
thereon were present and voted.
Unless the consents of all Members entitled to vote have been solicited in
writing, (i) notice of any Member approval of an amendment to the Articles or
this Agreement, a dissolution of the Company as provided in Section 17350 of the
Act, or a merger of the Company as provided in Section 17551 of the Act, without
a meeting by less than unanimous written consent shall be given at least 10 days
before the consummation of the action authorized by such approval, and (ii)
prompt notice shall be given of the taking of any other action approved by
Members without a meeting by less than unanimous written consent, to those
Members entitled to vote who have not consented in writing.
Any Member giving a written consent, or the Member's proxyholder, may
revoke the consent by a writing received by the Company prior to the time that
written consents of Members having the minimum number of votes that would be
required to authorize the proposed action have been filed with the Company, but
may not do so thereafter. The revocation is effective upon its receipt at the
office of the Company required to be maintained pursuant to Section 17057 of the
Act.
6.7 TELEPHONIC MEETINGS. Members may participate in a meeting of the
Company through the use of conference telephones or similar communications
equipment, as long as all Members
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participating in the meeting can hear one another. Participation in a meeting
pursuant to this Section 6.7 constitutes presence in person at that meeting.
6.8 PROXIES. The use of proxies in connection with this Section 6 will be
governed in the same manner as in the case of corporations formed under the
California General Corporations Law.
6.9 RECORD DATE. In order that the Company may determine the Members of
record entitled to notices of any meeting or to vote, or entitled to receive any
distribution or to exercise any rights in respect of any other lawful action, a
Manager, or Members representing more than 10 percent of the Percentage
Interests, may fix, in advance, a record date, that is not more than 60 days nor
less than 10 days prior to the date of the meeting and not more than 60 days
prior to any other action. If no record date is fixed:
(a) The record date for determining Members entitled to notice of or to
vote at a meeting of Members shall be at the close of business on the business
day next preceding the day on which notice is given or, if notice is waived, at
the close of business on the business day next preceding the day on which the
meeting is held;
(b) The record date for determining Members entitled to give consent to
Company action in writing without a meeting shall be the day on which the first
written consent is given;
(c) The record date for determining Members for any other purpose shall
be at the close of business on the day on which the Manager adopts the
resolution relating to the other action, or the 60th day prior to the date of
the other action, whichever is later;
(d) The determination of Members of record entitled to notice of or to
vote at a meeting of Members shall apply to any adjournment of the meeting
unless a Manager or the Members who called the meeting fix a new record date for
the adjourned meeting, but the Manager or the Members who called the meeting
shall fix a new record date if the meeting is adjourned for more than 45 days
from the date set for the original meeting.
SECTION 7. ACCOUNTING MATTERS
7.1 MAINTENANCE OF RECORDS. The Company shall maintain at the office
referred to in Section 1.5 all of the following:
(a) A current list of the full name and last known business or residence
address of each Member and of each holder of an Economic Interest set forth in
alphabetical order, together with the contribution and share in profits and
losses of each Member and holder of an Economic Interest.
(b) A current list of the full name and business or residence address of
each Manager.
(c) A copy of the Articles of Organization and all amendments thereto,
together with any powers of attorney pursuant to which the Articles of
Organization or any amendments thereto were executed.
(d) Copies of the Company's federal, state and local income tax or
information returns and reports, if any, for the six most recent taxable years.
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(e) A copy of this Agreement and any amendments thereto, together with any
powers of attorney pursuant to which this Agreement or any amendments thereto
were executed.
(f) Copies of the financial statements of the Company, if any, for the six
most recent Fiscal Years.
(g) The books and records of the Company as they relate to the internal
affairs of the Company for at least the current and past four Fiscal Years.
7.2 DELIVERY TO MEMBERS AND INSPECTION.
(a) Upon the request of a Member or an Assignee, for purposes reasonably
related to the interest of that Person as a Member or an Assignee, a Manager
shall promptly deliver to the Member or Assignee, at the expense of the Company,
a copy of the information required to be maintained by paragraphs (a), (b) and
(d) of Section 7.1, and a copy of this Agreement.
(b) Each Member, Manager and Assignee has the right upon reasonable
request, for purposes reasonably related to the interest of that Person as a
Member, Manager, or Assignee, to each of the following:
(1) To inspect and copy during normal business hours any of the
records required to be maintained by Section 7.1.
(2) To obtain from a Manager promptly after becoming available, a
copy of the Company's federal, state, and local income tax or information
returns for each year.
(c) A Manager shall promptly furnish to a Member a copy of any amendment
to the Articles or this Agreement executed by a Manager pursuant to a power of
attorney from the Member.
(d) Any request, inspection, or copying by a Member or Assignee may be
made by that Person or by that Person's agent or attorney.
7.3 REPORTS.
(a) The Company shall send or cause to be sent to each Member or Assignee
as soon as practicable after the end of each Fiscal Year such information as is
necessary to complete federal and state income tax or information returns and,
if the Company has 35 or fewer Members, a copy of the Company's federal, state,
and local income tax or information returns for the year.
(b) If the Company has more than 35 Members:
(1) A Manager shall cause an annual report to be sent to each of the
Members not later than 120 days after the close of the Fiscal Year. That
report shall contain a balance sheet as of the end of the Fiscal Year and
an income statement and statement of changes in financial position for the
Fiscal Year.
(2) Members representing at least 5 percent of the voting interests
of the Members, or three or more Members, may make a written request to a
Manager for an income
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statement of the Company for the initial three-month, six-month, or nine-
month period of the current Fiscal Year ended more than 30 days prior to
the date of the request, and a balance sheet of the Company as of the end
of that period. The statement shall be delivered or mailed to the Members
within 30 days thereafter.
(3) The financial statements referred to in this paragraph (b) shall
be accompanied by the report thereon, if any, of the independent
accountants engaged by the Company or, if there is no report, the
certificate of a Manager that the financial statements were prepared
without audit from the books and records of the Company.
7.4 TAX AND ACCOUNTING MATTERS. The Company's taxable year and accounting
method for income tax purposes shall be as determined under the Code and
Treasury Regulations. The Company's accounting records shall be maintained in
accordance with generally accepted accounting practices for the Company's type
of business. FWB shall be the "tax matters partner" within the meaning of
Section 6231(a)(7) of the Code, unless and until another Member is appointed to
be the tax matters partner by the Manager. The tax matters partner shall have
all of the authority granted by the Code to a tax matters partner, provided that
the tax matters partner shall keep each Member informed as to the status of any
audit of the Company's tax affairs.
SECTION 8. DISSOLUTION AND LIQUIDATION
8.1 EVENTS OF DISSOLUTION. Except as otherwise provided in this Agreement,
the Company shall be dissolved and its affairs shall be wound up upon the
happening of the first to occur of the following:
(a) At the time specified in the Articles.
(b) Upon the Majority Vote of the Members to dissolve the Company.
(c) Upon the sale or other disposition of all or substantially all of the
assets and properties of the Company and distribution to the Members of the
proceeds of the sale or other disposition.
(d) Upon the death, withdrawal, expulsion, Bankruptcy, or dissolution of
a Member, unless the business of the Company is continued by a vote of a
majority of the Percentage Interests of the remaining Members within 90 days of
the happening of that event.
8.2 EFFECT OF DISSOLUTION. Upon any dissolution of the Company under this
Agreement or the Act, except as otherwise provided in this Agreement, the
continuing operation of the Company's business shall be confined to those
activities reasonably necessary to wind up the Company's affairs, discharge its
obligations, and liquidate its assets and properties in a businesslike manner.
Upon the occurrence of an event of dissolution, unless the business of the
Company is continued as provided herein, the Manager shall cause to be filed a
certificate of dissolution under Section 17356 of the Act.
8.3 LIQUIDATION AND TERMINATION
(a) If the Company is dissolved, then an accounting of the Company's
assets, liabilities and operations through the last day of the month in which
the dissolution occurs shall be made, and the
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affairs of the Company shall thereafter be promptly wound up and terminated. The
Manager will appoint one or more Persons to serve as the liquidating trustee of
the Company. The liquidating trustee will be responsible for winding up and
terminating the affairs of the Company and will determine all matters in
connection therewith (including, without limitation, the arrangements to be made
with creditors, to what extent and under what terms the assets of the Company
are to be sold, and the amount or necessity of cash reserves to cover contingent
liabilities) as the liquidating trustee deems advisable and proper; provided,
--------
however, that all decisions of the liquidating trustee will be made in
- -------
accordance with the fiduciary duty owed by the liquidating trustee to the
Company and each of the Members. The liquidating trustee will liquidate the
assets of the Company as promptly as is consistent with obtaining the fair
market value thereof, and the proceeds therefrom, to the extent sufficient
therefor, will be applied and distributed in the following order:
(1) To the payment and discharge of all of the Company's debts and
liabilities to creditors (including Members) in the order of priority as
provided by law, other than liabilities for distributions to Members; and
(2) The balance, if any, in proportion to the Members' positive
Capital Account balances as of the date of such distribution, as determined
after taking into account all Capital Account adjustments for the Fiscal
Year during which such liquidation occurs. Such distributions shall be made
by the end of the Fiscal Year in which the liquidation occurs or, if later,
within ninety (90) days after the date of such liquidation.
(b) After all of the assets of the Company have been distributed, the
Company shall terminate; however, if at any time thereafter any funds in any
cash reserve fund referred to in Section 8.3(a) are released because the need
for the cash reserve fund has ended, the funds shall be distributed to the
Members in the same manner as if the distribution had been made pursuant to
Sections 8.3(a)(1) and (2) above.
(c) Notwithstanding anything to the contrary in this Agreement, upon a
liquidation within the meaning of Regulation section 1.704-1(b)(2)(ii)(g), if
any Member has a deficit or negative balance in the Member's Capital Account
(after giving effect to all contributions, distributions, allocations, and other
Capital Account adjustments for all taxable years, including the year during
which such liquidation occurs), the Member shall have no obligation to make any
capital contribution to the Company, and the negative balance of the Member's
Capital Account shall not be considered a debt owed by the Member to the Company
or to any other Person for any purpose whatsoever.
8.4 CERTIFICATE OF CANCELLATION. Upon the completion of the winding up of
the affairs of the Company, the Manager shall prepare, execute and deliver to
the California Secretary of State a certificate of cancellation in accordance
with Section 17356 of the Act.
8.5 RECOURSE TO ASSETS. The Members shall look solely to the assets of the
Company for any profits or return of their capital contributions. If the assets
remaining after the payment or discharge of the debts and liabilities of the
Company are insufficient to return a Member's capital contributions or profits,
the Member shall have no recourse against the Company or the other Members.
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SECTION 9. DISPUTE RESOLUTION
9.1 DISPUTE RESOLUTION; CONFIDENTIALITY. Any controversy, dispute or claim
("CLAIM") between any Member and the Company, or between Members, arising out of
or relating to this Agreement or the Company, whether arising in contract or
tort, law or equity, shall be subject to a non-binding mediation, and if not
then resolved, shall be finally determined by a binding arbitration, both
conducted as set forth below. Each Member agrees that any Claim, and all matters
concerning any Claim, will be considered confidential, and will not be disclosed
to any person outside the Company except as provided below with respect to the
Mediation or Arbitration contemplated by Section 9.2 or Section 9.3 below.
9.2 MEDIATION.
(a) Any Claim shall first be the subject of a non-binding mediation
("MEDIATION"), conducted by a retired judge or other mediator who is a member of
Judicial Arbitration & Mediation Services, Inc./Endispute ("JAMS") or other
agreed upon mediator. Any Member or the Company may initiate the Mediation by
written notice to the other Member(s) involved in the Claim. The date the notice
is given is called the "MEDIATION INITIATION DATE."
(b) The mediator ("MEDIATOR") shall be a retired judge or other mediator,
selected by mutual agreement of the parties to the dispute, and if they cannot
so agree within thirty (30) days after the Mediation Initiation Date, the
Mediator shall be selected through such procedures as JAMS regularly follows.
(c) The Mediation shall be held within thirty (30) days after the Mediator
is selected, or such longer period as the parties to the dispute and the
Mediator mutually decide.
(d) The Company shall bear the cost of the Mediator's fees and expenses,
but each party to the dispute shall pay its own attorneys' and expert witness
fees and any other associated costs.
9.3 ARBITRATION.
(a) In the event any Claim is not fully resolved by mutual agreement of
the parties to the dispute at the Mediation, the Claim shall be finally
determined by a binding arbitration ("ARBITRATION"), conducted by a single
arbitrator chosen by the parties as described below. Any Member may initiate the
Arbitration by written notice to the other Member(s), to the Company and to the
"ARBITRATION TRIBUNAL," as defined below. The Company may initiate the
Arbitration by written notice to the Members and to the Arbitration Tribunal.
The date the notice is given is called the "ARBITRATION INITIATION DATE."
(b) Except as expressly modified herein, the Arbitration shall be
conducted in accordance with the provisions of Section 1280 et seq. of the
-- ---
California Code of Civil Procedure, or their successor sections ("CCP"), and
shall constitute the exclusive remedy for the determination of any Claim,
including whether the Claim is subject to arbitration. The Arbitration shall be
conducted under the procedures of the Arbitration Tribunal, except as modified
herein. The Arbitration Tribunal shall be JAMS, unless the parties to the
dispute cannot agree on a JAMS arbitrator, in which case the Arbitration
Tribunal shall be the San Francisco Office of the American Arbitration
Association ("AAA").
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(c) The arbitrator ("ARBITRATOR") shall be a retired judge or other
arbitrator employed by JAMS selected by the same procedures as described above
for selecting the Mediator. If the parties to the dispute are unable to mutually
select a JAMS arbitrator, then the arbitrator shall be selected from the Large
and Complex Case Project ("LCCP") panel of the AAA, by mutual agreement of the
parties to the dispute. If the parties to the dispute cannot agree on an
arbitrator within sixty (60) days after the Arbitration Initiation Date, the
Arbitrator shall be selected by the AAA, from its LCCP panel, through such
procedures as the AAA regularly follows. If for any reason the AAA does not so
act, the Company or any Member who is a party to the dispute may apply to the
Superior Court in and for the City and County of San Francisco, California, for
the appointment of a single arbitrator.
(d) No party shall have the right to conduct discovery in connection with
the Arbitration proceeding except for (i) the pre-hearing production of relevant
documents, (ii) one deposition of each opposing party, and (iii) one deposition
of an expert witness.
(e) The Arbitrator shall try any and all issues of law or fact and make
the award within thirty (30) days after the close of evidence in the
Arbitration. The Arbitrator shall issue an award at the close of the arbitration
proceeding which shall dispose of all of the claims of the Members and of the
Company that are the subject of the Arbitration. The Arbitrator shall be
empowered to (i) enter equitable as well as legal relief, (ii) provide all
temporary and/or provisional remedies, and (iii) enter equitable orders that
will be binding upon the Company and the Members.
(f) Judgment upon the award rendered by the Arbitrator may be entered in
any court having jurisdiction thereof. The following time periods set forth in
the CCP shall be shortened as follows: Section 1288 - from four years to 90
days, and from 100 days to 30 days; Section 1288.2 - from 100 days to 30 days.
(g) The fees and expenses of the Arbitrator shall be shared by the parties
to the Arbitration as determined by the Arbitrator.
SECTION 10. SHARE CERTIFICATES
10.1 CERTIFICATES. Every Member shall be entitled to have a certificate,
signed by the Manager or by the President or a Vice President and the Treasurer
or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the
Company, certifying the number of Shares owned by the Member.
10.2 REPLACEMENT CERTIFICATES. The Members may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the Company alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificates of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the Members may, in their discretion
and as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates to give the Company a bond
in such sum as it may direct as indemnity against any claim that may be made
against the Company with respect to the certificates alleged to have been lost,
stolen or destroyed.
10.3 TRANSFERS. Upon surrender to the Company of a certificate for Shares
duly endorsed or accompanied by proper evidence of succession, assignation or
authority to transfer, it shall be the
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duty of the Company, provided that the transfer is in compliance with the terms
of this Agreement, to issue a new certificate to the person entitled thereto,
cancel the old certificate and record the transaction upon its books.
SECTION 11. REPRESENTATIONS AND WARRANTIES OF SUB
Except as set forth otherwise in Schedule 11 hereto, Sub represents and
warrants as of the Closing that:
11.1 ORGANIZATION AND STANDING OF SUB. Sub is a duly organized and validly
existing corporation in good standing under the laws of the state of its
incorporation and has the corporate power and authority to enter into and
perform this Agreement and to consummate the transaction contemplated hereby.
11.2 CORPORATE ACTION. Sub has the corporate power and will, prior to the
Closing, have taken all necessary corporate action required to authorize,
execute, deliver and perform this Agreement and any other agreements and
instruments executed in connection herewith and therewith. When executed and
delivered by Sub, this Agreement and any other agreement and instrument executed
in connection herewith and therewith will constitute the valid and binding
obligations of Sub, enforceable in accordance with their terms.
11.3 GOVERNMENT APPROVALS. Except for the filings to be made, if any, to
comply with exemptions from registration or qualification under federal and
state securities laws, no authorization, consent, approval, license, exemption
of or filing or registration with any court or governmental agency or
instrumentality is necessary for the offer, sale, execution or delivery by Sub,
or for the performance by it of its obligations under, this Agreement.
11.4 LITIGATION. There is no litigation or governmental proceeding or
investigation pending, or, to Sub's knowledge, threatened against Sub affecting
any of its properties or assets that, if decided adversely to Sub, will result
in any material adverse change in the business, operations, affairs, prospects
or conditions of Sub or that, if decided adversely to Sub, will call into
question the validity of this Agreement, nor, to Sub's knowledge, has there
occurred any event or does there exist any condition on the basis of which any
litigation, proceeding or investigation might properly be instituted.
11.5 FILED REPORTS. The common stock of StreamLogic Corporation is
registered under Section 12 of the Securities Exchange Act of 1934, as amended
(the "EXCHANGE ACT") and quoted on the Nasdaq Stock Market. Sub or StreamLogic
Corporation has delivered to FWB copies of StreamLogic Corporation's (a) Annual
Report on Form 10-K for the fiscal year ended March 29, 1996 (the "FORM 10-K
REPORT") as filed with the Securities and Exchange Commission (the "COMMISSION")
and (b) all proxy statements relating to StreamLogic Corporation's meetings of
stockholders (whether annual or special) during 1996 as filed with the
Commission. Sub or StreamLogic Corporation has made available to FWB upon its
request all other reports, registration statements and other documents filed by
StreamLogic Corporation with the Commission under the Exchange Act and the
Securities Act of 1933, as amended (the "SECURITIES ACT"), for the past three
fiscal years. All such documents described in the first two sentences of this
Section 11.5 are collectively referred to as "STREAMLOGIC CORPORATION'S FILED
REPORTS". StreamLogic Corporation
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has during the last three fiscal years timely filed all reports, registration
statements and other documents (including StreamLogic Corporation's Filed
Reports) required to be filed with the Commission under the rules and
regulations of the Commission, and all of StreamLogic Corporation's Filed
Reports complied as to form with the Securities Act or the Exchange Act, as the
case may be. As of their respective date, StreamLogic Corporation's Filed
Reports (including any exhibits or schedules thereto or documents incorporated
therein by reference) did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
11.6 SECURITIES ACT OF 1933. Sub has complied and will comply with all
applicable federal or state securities laws in connection with the transfer to
the Company of the StreamLogic Corporation common stock.
11.7 NO BROKERS OR FINDERS. Sub owes no commission, fee or other
compensation to any Person as a finder or broker as a result of the transactions
contemplated by this Agreement.
11.8 CAPITALIZATION; STATUS OF CAPITAL STOCK. The authorized capital stock
of StreamLogic Corporation is as set forth on StreamLogic Corporation's Filed
Reports. All of the issued and outstanding shares of capital stock of
StreamLogic Corporation as of March 29, 1996 are set forth on the Form 10-K
Report. All of the outstanding shares of capital stock of StreamLogic
Corporation have been duly authorized, are validly issued and are fully paid and
nonassessable, and no holder thereof is entitled to preemptive rights. Between
the date hereof and the Closing, there shall have been no material change in the
outstanding capital stock of StreamLogic Corporation. Except as set forth in
StreamLogic Corporation's Filed Reports, there are no options, warrants or
rights to purchase shares of its capital stock or other securities authorized,
issued or outstanding, nor is StreamLogic Corporation obligated in any manner to
issue shares of its capital stock or other securities.
11.9 ABSENCE OF CHANGES. Since March 29, 1996, no event has occurred or
failed to occur that would be required to be disclosed in the footnotes of
StreamLogic Corporation's financial statements for such statements to be
prepared in accordance with generally accepted accounting principles, and to the
best knowledge of Sub, there has been no other event or condition of any
character specifically relating to StreamLogic Corporation which specifically
pertains to and materially adversely affects its business, properties or
condition, financial or otherwise.
11.10 INVESTMENT REPRESENTATIONS BY SUB. Sub represents that:
(a) Sub has been advised that the Shares have not been registered under
the Securities Act nor qualified under any state securities laws on the grounds
that no distribution or public offering of the Shares is to be effected, and
that in this connection the Company is relying in part on the representations of
Sub set forth herein.
(b) It is Sub's intention to acquire the Shares for its own account and
that the Shares are being and will be acquired for the purpose of investment and
not with a view to distribution or resale thereof.
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(c) Sub is able to bear the economic risk of an investment in the Shares
acquired by Sub pursuant to this Agreement and can afford to sustain a total
loss on such investment.
(d) Sub is an experienced and sophisticated investor, able to fend for
itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that Sub is capable
of evaluating the risks and merits of acquiring the Shares.
(e) Sub, by reason of its business or financial experience, has the
capacity to protect its own interests in connection with the purchase of the
Shares.
(f) Sub acknowledges that the certificate representing the Shares, when
issued, shall contain a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (I) IN A
TRANSACTION REGISTERED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS OR
(II) IN A TRANSACTION FOR WHICH AN EXEMPTION FROM REGISTRATION UNDER SAID
ACT AND SUCH LAWS IS AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION
OF COUNSEL TO SUCH EFFECT REASONABLY SATISFACTORY TO IT.
(g) Sub represents that it is an "accredited investor," as that term is
defined in Rule 501 of Regulation D under the Securities Act.
SECTION 12. REPRESENTATIONS AND WARRANTIES OF FWB
Except as set forth otherwise in Schedule 12 hereto, FWB represents and
warrants as of the Closing that:
12.1 ORGANIZATION AND STANDING OF FWB. FWB is a duly organized and validly
existing corporation in good standing under the laws of the State of California
and has the corporate power and authority to enter into and perform this
Agreement and to consummate the transaction contemplated hereby.
12.2 CORPORATE ACTION. FWB has the corporate power and will, prior to the
Closing, have taken all necessary corporate action required to authorize,
execute, deliver and perform this Agreement and any other agreements and
instruments executed in connection herewith and therewith. When executed and
delivered by FWB, this Agreement and any other agreement and instrument executed
in connection herewith and therewith will constitute the valid and binding
obligations of FWB, enforceable in accordance with their terms.
12.3 GOVERNMENTAL APPROVALS. No authorization, consent, approval, license,
exemption of or filing or registration with any court or governmental agency or
instrumentality is necessary for the execution or delivery by FWB, or for the
performance by it of its obligations under, this Agreement.
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12.4 LITIGATION. There is no litigation or governmental proceeding or
investigation pending, or, to FWB's knowledge, threatened against FWB affecting
any of its properties or assets that might result in any material adverse change
in the business, operations, affairs, prospects or conditions of FWB or that
might call into question the validity of this Agreement, nor, to FWB's
knowledge, has there occurred any event or does there exist any condition on the
basis of which any litigation, proceeding or investigation might properly be
instituted.
12.5 NO BROKERS OR FINDERS. Except for amounts due to Needham & Co., FWB
owes no commission, fee or other compensation to any Person as a finder or
broker as a result of the transactions contemplated by this Agreement.
12.6 ABSENCE OF CHANGES. Since March 30, 1996, except as disclosed in
Schedule 12 (including disclosures therein with respect to FWB's recent
financial results and proposed tax and special distributions to FWB's
shareholders and a proposed loan from FWB's shareholders), no event has occurred
or failed to occur that would be required to be disclosed in the footnotes of
FWB's financial statements for such statements to be prepared in accordance with
generally accepted accounting principles, and to the best knowledge of FWB,
there has been no other event or condition of any character specifically
relating to FWB which specifically pertains to and materially adversely affects
its business, properties or condition, financial or otherwise.
12.7 INVESTMENT REPRESENTATIONS BY FWB. FWB represents that:
(a) FWB has been advised that the Shares have not been registered under
the Securities Act nor qualified under any state securities laws on the grounds
that no distribution or public offering of the Shares is to be effected, and
that in this connection the Company is relying in part on the representations of
FWB set forth herein.
(b) It is FWB's intention to acquire the Shares for its own account and
that the Shares are being and will be acquired for the purpose of investment and
not with a view to distribution or resale thereof.
(c) FWB is able to bear the economic risk of an investment in the Shares
acquired by FWB pursuant to this Agreement and can afford to sustain a total
loss on such investment.
(d) FWB is an experienced and sophisticated investor, able to fend for
itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that FWB is capable
of evaluating the risks and merits of acquiring the Shares.
(e) FWB, by reason of its business or financial experience, has the
capacity to protect its own interests in connection with the purchase of the
Shares.
(f) FWB acknowledges that the certificate representing the Shares, when
issued, shall contain a legend in substantially the following form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (I) IN A
TRANSACTION
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REGISTERED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS OR (II) IN A
TRANSACTION FOR WHICH AN EXEMPTION FROM REGISTRATION UNDER SAID ACT AND
SUCH LAWS IS AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION OF
COUNSEL TO SUCH EFFECT REASONABLY SATISFACTORY TO IT.
(g) FWB represents that it is an "accredited investor," as that term is
defined in Rule 501 of Regulation D under the Securities Act.
12.8 INVESTMENT REPRESENTATIONS OF FWB AS MANAGER OF THE COMPANY: FWB as
Manager of the Company represents that:
(a) The Company has been advised that the Common Stock has not been
registered under the Act nor qualified under any state securities laws on the
grounds that no distribution or public offering of the Common Stock is to be
effected, and that in this connection you are relying in part on the
representations of the Company set forth herein.
(b) It is the Company's intention to acquire the Common Stock for its own
account and that the Common Stock is being and will be acquired for the purpose
of investment and not with a view to distribution or resale thereof.
(c) The Company is able to bear the economic risk of an investment in the
Common Stock acquired by the Company pursuant to this Agreement and can afford
to sustain a total loss on such investment.
(d) The Company is an experienced and sophisticated investor, able to fend
for itself in the transactions contemplated by this Agreement, and has such
knowledge and experience in financial and business matters that the Company is
capable of evaluating the risks and merits of acquiring the Common Stock.
(e) The Company, by reason of its business or financial experience, has
the capacity to protect its own interests in connection with the purchase of the
Common Stock.
(f) The Company acknowledges that the stock certificate representing the
Common Stock, when issued, shall contain a legend in substantially the following
form:
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933 OR ANY STATE SECURITIES LAWS AND ANY SALE,
TRANSFER, PLEDGE OR OTHER DISPOSITION THEREOF MAY BE MADE ONLY (I) IN A
TRANSACTION REGISTERED UNDER SAID ACT AND SUCH STATE SECURITIES LAWS OR
(II) IN A TRANSACTION FOR WHICH AN EXEMPTION FROM REGISTRATION UNDER SAID
ACT AND SUCH LAWS IS AVAILABLE AND THE CORPORATION HAS RECEIVED AN OPINION
OF COUNSEL TO SUCH EFFECT REASONABLY SATISFACTORY TO IT.
(g) The Company represents that it is an "accredited investor," as that
term is defined in Rule 501 of Regulation D under the Securities Act.
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SECTION 13. REGISTRATION RIGHTS
At the Closing, the Company and StreamLogic Corporation shall execute and
deliver the Company Rights Agreement in the form of Exhibit D hereto. Also at
the Closing, the Company and Sub shall execute and deliver the Rights Agreement
in the form of Exhibit E hereto.
SECTION 14. GENERAL PROVISIONS
14.1 GOVERNING LAW. This Agreement and the rights of the parties hereunder
will be governed by, interpreted, and enforced in accordance with the laws of
the State of California.
14.2 ATTORNEYS' FEES. If any legal action or other proceeding is commenced
to enforce or interpret any provision of, or otherwise relating to, this
Agreement, the losing party or parties shall pay the prevailing party's or
parties' actual expenses incurred in the investigation of any claim leading to
the proceeding, preparation for and participation in the proceeding, any appeal
or other post judgment motion, and any action to enforce or collect the judgment
including without limitation contempt, garnishment, levy, discovery and
bankruptcy. For this purpose "expenses" include, without limitation, court or
other proceeding costs and experts' and attorneys' fees and their expenses. The
phrase "prevailing party" shall mean the party who is determined in the
proceeding to have prevailed or who prevails by dismissal, default or otherwise.
14.3 BINDING EFFECT. This Agreement will be binding upon and inure to the
benefit of the Members, and their respective distributees, successors and
assigns; provided, however, nothing contained in this Section 14.3 shall limit
-------- -------
the effectiveness of any restriction on transfers of Membership Interests.
14.4 TERMS. Any reference to the Act, the Code or other statutes or laws
will include all amendments, modifications, or replacements of the specific
sections and provisions concerned. The parties mutually acknowledge that they
and their attorneys have participated in the preparation and negotiation of this
Agreement. In cases of uncertainty this Agreement shall be construed without
regard to which of the parties caused the uncertainty to exist.
14.5 HEADINGS. All headings are inserted only for convenience and ease of
reference and are not to be considered in the construction or interpretation of
any provision of this Agreement.
14.6 SEVERABILITY. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under the present or future laws effective
during the term of this Agreement, the provision will be fully severable; this
Agreement will be construed and enforced as if the illegal, invalid, or
unenforceable provision had never comprised a part of this Agreement; and the
remaining provisions of this Agreement will remain in full force and effect and
will not be affected by the illegal, invalid or unenforceable provision or by
its severance from this Agreement. Furthermore, in lieu of the illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a provision as similar in terms to the illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
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14.7 MULTIPLE COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and counterpart
signature pages may be assembled to form a single original document.
14.8 ADDITIONAL DOCUMENTS AND ACTS. Each Member agrees to execute and
deliver such additional documents and instruments and to perform such additional
acts as may be necessary or appropriate to effectuate, carry out and perform all
of the terms, provisions and conditions of this Agreement and the transactions
contemplated by this Agreement.
14.9 NO THIRD PARTY BENEFICIARY. This Agreement is made solely and
specifically among and for the benefit of the parties, and their respective
successors and assigns subject to the express provisions relating to successors
and assigns, and no other Person will have any rights, interest or claims or be
entitled to any benefits under or on account of this Agreement as a third party
beneficiary or otherwise.
14.10 NOTICES. All notices, consents, requests, demands or other
communications to or upon the respective parties shall be in writing and shall
be effective for all purposes upon receipt on any business day before 5:00 PM
local time and on the next business day if received after 5:00 PM or on other
than a business day, including without limitation, in the case of (i) personal
delivery, (ii) delivery by messenger, express or air courier or similar courier,
(iii) delivery by United States first class certified or registered mail,
postage prepaid and (iv) transmittal by telecopier or facsimile, addressed to
the addresses set forth in Exhibit B to this Agreement.
In this section "business days" means days other than Saturdays, Sundays,
and federal and state legal holidays. Either party may change its address by
written notice to the other in the manner set forth above. Receipt of
communications by United States first class or registered mail will be
sufficiently evidenced by return receipt. In the case of illegible or otherwise
unreadable facsimile transmissions, the receiving party shall promptly notify
the transmitting party of any transmission problem and the transmitting party
shall promptly resend any affected pages.
14.11 AMENDMENTS.
(a) AMENDMENTS TO AGREEMENT. Except as otherwise provided in Section 2.3,
this Agreement may be amended in whole or in part only as provided in Section
5.3. Except as otherwise provided in Section 2.3, any amendment shall be in
writing, dated and signed by the Members who have approved it. If any conflict
arises between the provisions of the amendment, or amendments, and the terms
hereof, the most recent provisions shall govern and control.
(b) AMENDMENTS TO ARTICLES. The Articles shall be amended whenever
required by the provisions of this Agreement or by the Act. Any such amended
Articles shall be filed for record by the Members as required by the Act, and
this Agreement shall also be amended as necessary to reflect such change.
14.12 TITLE TO COMPANY PROPERTY. Legal title to all property of the
Company will be held and conveyed in the name of the Company.
14.13 WAIVER. No waiver of any obligations under this Agreement will be
enforceable or admissible unless set forth in a writing signed by the party
against which enforcement or admission
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is sought. No delay or failure to require performance of any provision of this
Agreement shall constitute a waiver of that provision as to that or any other
instance. Any waiver granted shall apply solely to the specific instance
expressly stated.
14.14 ENTIRE AGREEMENT. This Agreement and the Exhibits contain the entire
understanding between the Members and supersede any prior written or oral
agreements between them regarding the same subject matter. There are no
representations, agreements, arrangements or understandings, oral or written,
between the Members relating to the subject matter of this Agreement which are
not fully expressed in this Agreement.
14.15 NO STATE LAW PARTNERSHIP. The Members intend that the Company not be
a partnership (including, without limitation, a limited partnership) or joint
venture, and that no Member be an agent, partner or joint venturer of any other
Member, for any purposes other than federal and state tax purposes, and this
Agreement shall not be construed to suggest otherwise.
14.16 COMPANY COUNSEL. The Members understand that this Agreement has been
prepared by McCutchen, Doyle, Brown & Enersen ("MCCUTCHEN") on behalf of FWB,
and that McCutchen has not represented any other Member in connection with the
preparation of this Agreement. The other Members recognize that by signing this
Agreement they will be bound by provisions relating to, among other things, the
obligation to contribute capital, the rights to distributions, and restrictions
on the transferability of their Membership Interests. Each of the other Members
also recognizes that it has the right to retain independent legal counsel to
represent it in connection with its review, negotiation, and execution of this
Agreement, and it has made its own determination whether to retain such
independent legal counsel before signing this Agreement. Furthermore, the
Company may select McCutchen as legal counsel for the Company. In the event of
disputes between the Members and/or the Company, the Members and the Company
agree that McCutchen may withdraw from representing the Company and continue to
represent FWB.
14.17 EXHIBITS. The following Exhibits attached to this Agreement shall
be deemed to be a part of this Agreement and are fully incorporated herein by
this reference:
<TABLE>
<C> <S>
Exhibit A Articles of Organization
Exhibit B Initial Capital Contributionsand Share Ownership
Exhibit C General Conveyance andAssumption of Liabilities
Exhibit D Company RightsAgreement
Exhibit E Rights Agreement
</TABLE>
The Members have executed this Agreement as of the date set forth above, or
if earlier, as of the date the Articles are accepted for filing by the
California Secretary of State.
STREAMLOGIC SOFTWARE FWB SOFTWARE, INC., a California
CORPORATION, a Delaware corporation corporation
By /s/ Lee Hilbert By /s/ Norman Fong
------------------------------------ -----------------------------
Lee Hilbert, Chief Financial Officer Norman Fong, President
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EXHIBIT 10.6
COMPANY RIGHTS AGREEMENT
THIS COMPANY RIGHTS AGREEMENT (the "AGREEMENT") is made to be effective
July 1, 1996 (the "CLOSING DATE"), by and between StreamLogic Corporation, a
Delaware corporation ("STREAMLOGIC"), and FWB Software, LLC, a California
limited liability company (the "COMPANY").
R E C I T A L S
- - - - - - - -
WHEREAS, the Company is acquiring 1,256,123 shares of the common stock of
StreamLogic (the "COMMON STOCK") and in connection therewith StreamLogic desires
to grant the Company the rights set forth herein.
NOW, THEREFORE, in consideration of the mutual promises and agreements
herein, and subject to the terms and conditions hereinafter set forth, the
parties hereby agree as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES OF STREAMLOGIC
Except as set forth otherwise in Schedule 1.0 hereto, StreamLogic
represents and warrants as of the Closing Date that:
1.1 ORGANIZATION AND STANDING OF STREAMLOGIC. StreamLogic is a duly
organized and validly existing corporation in good standing under the laws of
the State of Delaware and has the corporate power and authority to enter into
and perform this Agreement and to consummate the transaction contemplated
hereby.
1.2 CORPORATE ACTION. StreamLogic has the corporate power and will, prior
to the Closing Date, have taken all necessary corporate action required to
authorize, execute, deliver and perform this Agreement and any other agreements
and instruments executed in connection herewith and therewith, and to issue,
sell and deliver the Common Stock. When executed and delivered by StreamLogic,
this Agreement and any other agreement and instrument executed in connection
herewith and therewith will constitute the valid and binding obligations of
StreamLogic, enforceable in accordance with their terms.
1.3 GOVERNMENTAL APPROVALS. Except for the filings to be made, if any, to
comply with exemptions from registration or qualification under federal and
state securities laws, no authorization, consent, approval, license, exemption
of or filing or registration with any court or governmental agency or
instrumentality is necessary for the offer, issuance, sale, execution or
delivery by StreamLogic, or for the performance by it of its obligations under,
this Agreement.
<PAGE>
1.4 LITIGATION. There is no litigation or governmental proceeding or
investigation pending, or, to StreamLogic's knowledge, threatened against
StreamLogic affecting any of its properties or assets that, if decided adversely
to StreamLogic, will result in any material adverse change in the business,
operations, affairs, prospects or conditions of StreamLogic or that, if decided
adversely to StreamLogic, will call into question the validity of this
Agreement, nor, to StreamLogic's knowledge, has there occurred any event or does
there exist any condition on the basis of which any litigation, proceeding or
investigation might properly be instituted.
1.5 FILED REPORTS. The common stock of StreamLogic is registered under
Section 12 of the Securities Exchange Act of 1934, as amended (the "EXCHANGE
ACT") and quoted on the Nasdaq Stock Market. StreamLogic has delivered to the
Company copies of StreamLogic's (a) Annual Report on Form 10-K for the fiscal
year ended March 29, 1996 (the "FORM 10-K REPORT") as filed with the Securities
and Exchange Commission (the "COMMISSION") and (b) all proxy statements relating
to StreamLogic's meetings of stockholders (whether annual or special) during
1996 as filed with the Commission. StreamLogic has made available to the
Company upon its request all other reports, registration statements and other
documents filed by StreamLogic with the Commission under the Exchange Act and
the Securities Act of 1933, as amended (the "SECURITIES ACT"), for the past
three fiscal years. All such documents described in the first two sentences of
this Section 1.5 are collectively referred to as "STREAMLOGIC'S FILED REPORTS".
StreamLogic has during the last three fiscal years timely filed all reports,
registration statements and other documents (including StreamLogic's Filed
Reports) required to be filed with the Commission under the rules and
regulations of the Commission, and all of StreamLogic's Filed Reports complied
as to form with the Securities Act or the Exchange Act, as the case may be. As
of their respective date, StreamLogic's Filed Reports (including any exhibits or
schedules thereto or documents incorporated therein by reference) did not
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
1.6 SECURITIES ACT OF 1933. StreamLogic has complied and will comply with
all applicable federal or state securities laws in connection with the issuance
and sale of the Common Stock to the Company.
1.7 NO BROKERS OR FINDERS. StreamLogic owes no commission, fee or other
compensation to any individual, corporation, partnership, joint venture, trust,
or unincorporated organization or other entity (each of which is hereinafter
referred to as a "PERSON") as a finder or broker as a result of the transactions
contemplated by this Agreement.
1.8 CAPITALIZATION; STATUS OF CAPITAL STOCK. The authorized capital stock
of StreamLogic is as set forth on StreamLogic's Filed Reports. All of the
issued and outstanding shares of capital stock of StreamLogic as of March 29,
1996 are set forth on the Form 10-K Report. All of the outstanding shares of
capital stock of StreamLogic have been duly authorized, are validly issued and
are fully paid and nonassessable, and no holder thereof is entitled to
preemptive rights. Between March 29, 1996 and the Closing Date, there has been
no material change in the outstanding capital stock of StreamLogic. Except as
set forth in StreamLogic's Filed Reports, there are no options, warrants or
rights to purchase shares of its capital stock or other securities authorized,
issued or outstanding, nor is StreamLogic obligated in any manner to issue
shares of its capital stock or other securities.
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1.9 ABSENCE OF CHANGES. Since March 29, 1996, no event has occurred or
failed to occur that would be required to be disclosed in the footnotes of
StreamLogic's financial statements for such statements to be prepared in
accordance with generally accepted accounting principles, and to the best
knowledge of StreamLogic, there has been no other event or condition of any
character specifically relating to StreamLogic which specifically pertains to
and materially adversely affects its business, properties or condition,
financial or otherwise.
SECTION 2. REGISTRATION RIGHTS
2.1 REGISTRATION.
(a) No later than forty-five (45) days after the Closing Date,
StreamLogic shall prepare and file an S-3 registration statement with the
Securities and Exchange Commission (the "COMMISSION") under the Securities Act
to register the resale of the Common Stock by the Company (the "REGISTRATION
STATEMENT") and shall use its reasonable best efforts, including the filing of
one or more subsequent registration statements or amendments or supplements to
the Registration Statement, to obtain effectiveness of the Registration
Statement under the Securities Act.
(b) StreamLogic shall pay all Registration Expenses (as defined below) in
connection with any registration, qualification or compliance hereunder, and
the Company shall pay all Selling Expenses (as defined below) and other
expenses that are not Registration Expenses relating to the Common Stock
resold by the Company. "REGISTRATION EXPENSES" shall mean all expenses,
except for Selling Expenses, incurred by StreamLogic in complying with the
registration provisions herein described, including, without limitation, all
registration, qualification and filing fees, printing expenses, escrow fees,
fees and disbursements of counsel for StreamLogic, blue sky fees and expenses
and the expense of any special audits incident to or required by any such
registration. "SELLING EXPENSES" shall mean all selling commissions,
underwriting fees and stock transfer taxes applicable to the Common Stock, and
all other expenses incurred by the Company or any transferee of the Company in
connection with sales of the Common Stock.
(c) StreamLogic shall use its best efforts to: (i) keep such
Registration Statement effective until the earlier of (A) the first
anniversary of the effectiveness of the Registration Statement plus any
"blackout" periods imposed during such year, provided, that the Company shall
use its best efforts to sell the Common Stock within the first one hundred
eighty (180) days following the effectiveness of the Registration Statement
plus any "blackout" periods imposed during such 180-day period and any periods
during which StreamLogic's Common Stock is not listed on either the Nasdaq
Stock Market or any national securities exchange, (B) such date as all of the
Common Stock have been resold, and (C) such date as all of the shares of
Common Stock may be resold under Rule 144 during a three month period
(collectively, the "Registration Process"); (ii) prepare and file with the
Commission such amendments and supplements to the Registration Statement and
the prospectus used in connection with the Registration Statement as may be
necessary to comply with the provisions of the Securities Act with respect to
the disposition of all Common Stock covered by the Registration Statement;
(iii) furnish such number of prospectuses and other documents incident
thereto, including any amendment of, or
3
<PAGE>
supplement to, the prospectus as the Company from time to time may reasonably
request; (iv) cause all Common Stock registered as described herein to be
listed on each securities exchange and quoted on each quotation service on
which similar securities issued by StreamLogic are then listed or quoted; (v)
provide a transfer agent and registrar for all Common Stock registered
pursuant to the Registration Statement and a CUSIP number for all such Common
Stock; (vi) otherwise use its best efforts to comply with all applicable rules
and regulations of the Commission; and (vii) file the documents required of
StreamLogic and otherwise use its reasonable best efforts to maintain
requisite blue sky clearance in all United States jurisdictions specified in
writing by the Company; provided, however, that StreamLogic shall not be
required to qualify to do business or consent to service of process in any
state in which it is not now so qualified or has not so consented. StreamLogic
may impose "blackouts" during the effectiveness of the Registration Statement
during which the Company may not sell any of the shares of Common Stock under
the Registration Statement. StreamLogic may impose a "blackout" only in
circumstances where the Board of Directors of StreamLogic determines in good
faith that a material event is occurring or is reasonably expected to occur
with respect to StreamLogic which StreamLogic has not yet disclosed to the
public or in any other case where the Board has in good faith determined that
such action is necessary for the protection of StreamLogic or its shareholders
or to comply with applicable law. However, a "blackout" period may not last
more than three (3) weeks and StreamLogic may not impose more than three (3)
"blackout" periods during the Registration Process. A "blackout" period shall
not be effective and binding upon the Company until one (1) day after the
Company has received a written communication from StreamLogic by facsimile
informing the Company that StreamLogic is imposing a "blackout."
(d) StreamLogic shall furnish to the Company upon request a reasonable
number of copies of a supplement to or an amendment of such prospectus as may
be necessary in order to facilitate the public sale or other disposition of
all or any of the Common Stock held by the Company.
(e) With a view to making available to the Company the benefits of
certain rules and regulations of the Commission which at any time permit the
sale of the Common Stock to the public without registration, StreamLogic
agrees to:
(1) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act ("RULE 144"),
at all times after the effective date of the first registration statement
under the Securities Act filed by StreamLogic for an offering of its
securities to the general public;
(2) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of StreamLogic under the
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and
(3) So long as a the Company owns any unregistered Common Stock,
furnish to the Company upon request a written statement by StreamLogic as
to its compliance with the reporting requirements of said Rule 144 (at any
time after 90 days after the effective date of the first registration
statement filed by FWB for an
4
<PAGE>
offering of its securities to the general public), and of the Securities
Act and the Exchange Act (at any time after it has become subject to such
reporting requirements), a copy of the most recent annual or quarterly
report of FWB, and such other reports and documents of FWB as such
Shareholder may reasonably request in availing itself of any rule or
regulation of the Commission allowing a Shareholder to sell any such
securities without registration.
(f) StreamLogic will indemnify the Company, each of its officers,
directors, employees, partners, legal counsel and accountants, and each person
controlling the Company within the meaning of section 15 of the Securities Act
of 1933, as amended (the "SECURITIES ACT"), with respect to which any
registration, qualification or compliance has been effected pursuant to this
Agreement, 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 and liabilities (or action 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 thereof, 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 not misleading, or any violation by StreamLogic of
any rule or regulation promulgated under the Securities Act, the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT") or state securities laws
applicable to StreamLogic and relating to action or inaction required of
StreamLogic in connection with any such registration, qualification or
compliance and will reimburse the Company, each of its officers, directors,
employees, partners, legal counsel and accountants, and each person
controlling the Company, 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 StreamLogic 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 made in
reliance upon and in conformity with written information furnished to
StreamLogic by an instrument duly executed by or on behalf of the Company or
underwriter and stated to be specifically for use therein, and further
provided that there shall be no liability if StreamLogic provided to the
Company, a reasonable period before the sale, a prospectus correcting any such
untrue statement or omission but such prospectus was not delivered to the
purchaser.
(g) The Company will, if any of the Common Stock held by the Company is
included in the securities as to which such registration, qualification or
compliance is being effected, indemnify StreamLogic, each of its directors,
officers, employees, partners, legal counsel and accountants, each
underwriter, if any, of such Common Stock covered by such a registration
statement, each person who controls StreamLogic 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 of a material fact contained in any such
registration statement, prospectus, offering circular or other document, or
any omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will reimburse
StreamLogic,
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such directors, officers, employees, partners, legal counsel, accountants,
persons, underwriters or control persons for any legal or any other 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 omission is made in such
registration statement, prospectus, offering circular or other document in
reliance upon and in conformity with written information furnished to
StreamLogic by an instrument duly executed by or on behalf of the Company and
stated to be specifically for use therein.
(h) Each party entitled to indemnification under this Section 2.1 (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, provided further, that if any Indemnified
Party shall have reasonably concluded that there may be one or more legal
defenses available to the Indemnifying Party, or that such claim or litigation
involves or could have an effect upon matters beyond the scope of the
indemnity agreement provided in this Section 2.1, the Indemnifying Party shall
not have the right to assume the defense of such action on behalf of such
Indemnified Party, and such Indemnifying Party shall not be required to
reimburse such Indemnified Party and any person controlling such Indemnified
Party for that portion of the fees and expenses of any counsel retained by the
Indemnified Party which are related to such different or additional defenses
or which are beyond the scope of the indemnity agreement provided in this
Section 2.1, 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 Agreement, unless such failure is prejudicial to the
Indemnifying Party in defending such claim or litigation. 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.
(i) If the indemnification provided for in this Section 2.1 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
thereunder, 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 which resulted in such loss, liability,
claim, damage or expense as well as any other relevant equitable
considerations. The relative fault of the Indemnifying Party and of the
Indemnified Party 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
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Party and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(j) Notwithstanding the foregoing, to the extent that the provisions on
indemnification and contribution contained in the underwriting agreement
entered into in connection with an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling.
(k) The obligations of StreamLogic and the Company under this Section 2.1
shall be in addition to any liability which StreamLogic and the Company may
otherwise have and shall extend, upon the same terms and conditions, to each
person, if any, who controls StreamLogic or the Company within the meaning of
the Securities Act.
(l) The Company shall not have any right to take any action to restrain,
enjoin or otherwise delay any registration pursuant to this Section 2.1 as a
result of any controversy that may arise with respect to the interpretation or
implementation of this Agreement.
(m) The rights and obligations of this Section 2.1 shall be binding upon
and available to subsequent transferees of the Common Stock; provided,
however, that there shall be no more than ten (10) transferees of the Common
Stock without StreamLogic's prior written consent, which shall not be
unreasonably withheld.
2.2 RESTRICTIONS ON PUBLIC SALE; INCONSISTENT AGREEMENTS.
(a) LOCK-UP. Notwithstanding any registration of the Common Stock pursuant
to Section 2.1, the holder(s) of the Common Stock agree not to effect any sale
or distribution of any of the Common Stock in a transaction not exempt from the
registration requirements of the Securities Act except as follows: one-third
(1/3) may be resold immediately upon effectiveness of the Registration
Statement, one-third (1/3) may be resold 60 days after the shares are registered
and the final one-third (1/3) may be resold 60 days later. StreamLogic may
impose a stop-transfer instruction with respect to the shares (or other
securities) subject to the foregoing restriction until the end of such period.
(b) NO DISTRIBUTION. StreamLogic agrees (i) without the written consent of
the Company, which may not be unreasonably withheld, not to effect any public or
private sale or distribution of its common equity securities or any security
convertible into or exchangeable or exercisable for any equity security of
StreamLogic, including a sale pursuant to Regulation D under the Securities Act,
during the Company's or its transferees' Registration Process (except (A) as
part of such underwritten registration or pursuant to registrations on Form S-8
or any successor form or (B) equity securities issued pursuant to the conversion
or exchange of any securities convertible into or exchangeable for StreamLogic's
common equity securities and which were outstanding prior to the commencement of
such Registration Process), and (ii) to use its reasonable efforts to cause each
holder of its privately placed securities purchased from StreamLogic at any time
on or after the date of this Agreement to agree not to effect any public sale or
distribution of any such securities during such period, including a sale
pursuant to Rule 144 (except as part of such underwritten registration, if
permitted), other than pursuant to any tender offer by StreamLogic to holders of
its currently outstanding subordinated debt securities.
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SECTION 3. MISCELLANEOUS
3.1 NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part of
any party in exercising any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy hereunder. The remedies herein provided are
cumulative and not exclusive of any remedies provided by law.
3.2 ADDRESSES FOR NOTICES, ETC. All notices, requests, demands and other
communications provided for hereunder shall be in writing (including telegraphic
communication) and mailed, by certified or registered mail, or telegraphed or
delivered to the applicable party at the addresses indicated below:
If to StreamLogic: StreamLogic Corporation
21329 Nordhoff Street
Chatsworth, California 91311
Attention: Chief Executive Officer
with copy to: Latham & Watkins
650 Town Center Drive
Costa Mesa, California 92626-1925
Attention: David C. Flattum
If to the Company: FWB Software, LLC
1555 Adams Drive
Menlo Park, California 94025
Attention: President
with copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attention: Gary H. Moore
Either party to this Agreement may change its address by a written notice
to the other party complying as to delivery with the terms of this Section. All
such notices, requests, demands and other communications shall, when mailed or
telegraphed, respectively, be effective when deposited in the mails or delivered
to the telegraph company, respectively, addressed as aforesaid.
3.3 BINDING EFFECT; ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of each party and its respective successors and assigns,
except that neither of the parties shall have the right to assign its rights
hereunder or any interest herein without the prior written consent of the other,
which shall not be unreasonably withheld.
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3.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations and
warranties made in this Agreement, or any other instrument or document delivered
in connection herewith, shall survive the execution and delivery hereof or
thereof until one year from the Closing Date.
3.5 PRIOR AGREEMENTS. This Agreement constitutes the entire agreement
between the parties and supersedes any prior understandings or agreements
concerning the subject matter hereof.
3.6 SEVERABILITY. The invalidity or unenforceability of any provision
hereto shall in no way affect the validity or enforceability of any other
provision.
3.7 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California.
3.8 HEADINGS. Article, Section and Subsection headings in this Agreement
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose.
3.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
3.10 FURTHER ASSURANCES. From and after the date of this Agreement, upon
the reasonable request of either party, the other party shall execute and
deliver such instruments, documents and other writings as may be reasonably
necessary or desirable to confirm and carry out and to effectuate fully the
intent and purposes of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
STREAMLOGIC CORPORATION
By: /s/ Lee Hilbert
------------------------------------
Lee Hilbert, Chief Financial Officer
FWB SOFTWARE, LLC
By: FWB Software, Inc., its Manager
By: /s/ Norman Fong
-----------------------------------
Norman Fong, President
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EXHIBIT 10.7
RIGHTS AGREEMENT
THIS RIGHTS AGREEMENT is entered into this 1st day of July, 1996 by and
among FWB SOFTWARE, LLC, a California limited liability company (including any
successor corporation, the "COMPANY"), StreamLogic Software Corporation, a
Delaware corporation ("SUB"), and FWB Software, Inc., a California corporation
("FWB").
RECITALS
WHEREAS, Sub is acquiring shares of the Company and in connection therewith
the Company and FWB desire to grant Sub the rights set forth herein.
AGREEMENT
SECTION 1 REGISTRATION RIGHTS.
1.1 DEFINITIONS. For purposes of this Agreement, the following definitions
shall apply:
(a) "COMPANY" shall refer to the Company or any corporation to which it
may be converted by merger, asset sale, or other means.
(b) "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.
(c) "SHARES" means the 1,100,000 shares of the Company evidencing the
member interest issued to Sub pursuant to the Operating Agreement (the
"OPERATING AGREEMENT"), any other equity securities or member interests
issued as a dividend or other distribution with respect to or in
replacement of such shares and any shares of any equity securities issued
or issuable upon conversion of the Company into a corporation.
(d) "SHAREHOLDER(S)" means the purchaser of the Shares pursuant to the
Operating Agreement and any transferees of such Shares and related
registration rights, pro rata purchase rights and co-sale rights.
(e) "APPROVAL OF THE SHAREHOLDER" means the approval of the holder(s) of a
majority of the Shares.
<PAGE>
1.2 DEMAND TO "GO PUBLIC." After June 30, 2001, if the Company receives a
written request from Shareholders who own at least 75% of the Shares, the
Company will convert into a corporation taxed as a "C Corporation" (effective
as of the time its initial public offering is declared effective by the
Securities and Exchange Commission) and as soon as practicable after receipt
of such written request (and not more than 150 days thereafter) the Company
will use its best efforts to effect an initial registered underwritten public
offering, provided that the Company has been profitable in each of the four
quarters prior to such demand being made and has had cumulative revenue of at
least $20 million during such period. The Company will have the sole right to
select the underwriters for such registration. Such underwriters shall be
nationally-recognized. The Shareholders shall be entitled to sell their
Shares in the offering, provided, however, the underwriters may limit the
amount of securities to be included in the registration, as provided below.
If the underwriters decide that it is necessary for the successful completion
of the public offering to limit the amount of the securities to be sold in the
offering to less than 100% of the Shares requested to be included, the number
of Shares that may be included shall be allocated pro rata among all selling
shareholders in proportion, as nearly as practicable, based upon their
relative ownership of the Company. Notwithstanding the foregoing, in the
event that the underwriters selected by the Company determine that it would
not be practicable or advisable due to market conditions or other reasons for
the Company to effect an initial public offering at the time requested by the
Shareholder pursuant to this Section, then the Company may delay such public
offering until such time as the Company's underwriters determine that it would
be practicable and advisable for the Company to proceed with such initial
public offering, but such delay shall not exceed an aggregate of six months.
1.3 SHAREHOLDER DEMAND.
(a) Demand. At any time more than six months after the closing date of the
------
initial registered underwritten public offering of the Company's
securities, if the Company receives a written request from Shareholders who
own at least 75% of the Shares, the Company will as soon as practicable use
its best efforts to effect an underwritten public offering. This right may
be exercised only once, except as provided in subsection 1.3(e) below.
(b) Notice. After the Company receives a request under subsection 1.3(a),
------
the Company will (i) promptly give each Shareholder written notice, and
(ii) include in such registration all Shares specified by any Shareholder
in a written response made within fifteen (15) days after the date of such
written notice from the Company, subject to cutback by the underwriters.
(c) Underwriting. The Company will have the sole right to select the
------------
underwriters for this registration. Such underwriters shall be nationally-
recognized. The right of any Shareholder to register its Shares is
conditioned upon such Shareholder's participation in the underwriting. The
Company and all Shareholders including shares in the registration shall
enter into an underwriting agreement in customary form with the
underwriters.
(d) Cutbacks. The Shareholders will have first priority to include up to
--------
100% of their Shares in the offering. However, the underwriters may limit
the amount of securities to be included in the registration. If the
underwriters decide to limit the amount of the securities to be sold in the
offering to less than 100% of the Shares requested to be included, the
number of Shares that may be included shall be allocated pro rata among the
Shareholders in
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proportion, as nearly as practicable, to the respective amounts of Shares
requested to be sold by each of them at the time of filing of the
registration statement.
(e) Additional Demand After Cutback. If under subsection 1.3(d) the
-------------------------------
underwriters limit the amount of securities to less than 80% of the Shares
requested to be included in the offering, the Shareholder shall have the
right to one additional demand registration under the terms of this Section
1.3. This right may not be exercised within one year after the closing
date of the prior demand registration completed by the Company under this
Section 1.3.
1.4 PIGGYBACK REGISTRATION.
(a) Notice. If, after the Company's initial registered public offering,
------
the Company decides to register any of its securities in an underwritten
offering or in a "shelf" registration, the Company will (i) promptly give
each Shareholder written notice, and (ii) include in such registration all
Shares specified by any Shareholder in a written response made within
fifteen (15) days after the date of such written notice from the Company,
subject to cutback by the underwriters.
(b) Underwriting. As applicable, the Company will have the sole right to
------------
select the managing underwriters. Such underwriters shall be nationally-
recognized. The right of any Shareholder to register its Shares is
conditioned upon participation in the underwriting and all Shareholder
including shares in the registration shall enter into an underwriting
agreement in customary form with the underwriters.
(c) Cutbacks. If they consider it necessary for the successful completion
--------
of the public offering, the underwriters may limit the amount of securities
to be included in the registration by the Company's shareholders; provided,
however, that the number of Shares to be included in such registration
shall not be reduced to less than 25% of the aggregate securities included
in the registration. In the event of such reduction, the number of Shares
that may be included in the registration shall be allocated among the
Shareholder who requested to include shares in proportion, as nearly as
practicable, to the respective amounts of such shares held by each such
Shareholder at the time of filing of the registration statements.
1.5 COMPANY DELAY OF REGISTRATION. The Company shall file and use its best
efforts to cause to be effective a registration statement as soon as
practicable after receipt of a request specified in Section 1.3 and not more
than 90 days thereafter; however, if in the good faith judgment of the Manager
(as defined in the Operating Agreement) or board of directors, as applicable,
of the Company it would be seriously detrimental to the Company and its
shareholders for such registration statement to be filed promptly, the Company
shall have the right to defer such filing for a period of not more than one
hundred eighty (180) days.
1.6 EXPENSES OF REGISTRATION. All Registration Expenses relating to
securities registered by the Shareholders shall be borne by the Company. All
Selling Expenses relating to securities registered by the Shareholders shall
be borne by the Shareholders participating in the offering pro rata based on
the number of Shares being sold. "Registration Expenses" means all expenses
incurred by the Company in complying with this Section 1, including all
registration,
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qualification and filing fees, printing expenses, escrow fees, fees and
disbursements of counsel for the Company, blue sky fees and expenses and the
expense of any special audits incident to or required by any such registration.
"Selling Expenses" means all underwriting discounts and selling commissions and
fees and disbursements of special counsel for the Shareholders applicable to
the sale of the Shares.
1.7 REGISTRATION PROCEDURES. In the case of each registration effected
pursuant to this Section 1, the Company will, upon request, inform each
Shareholder as to the status of each such registration. At its expense the
Company will:
(a) Keep such registration, and any qualification or compliance under state
securities laws which the Company determines to obtain, effective for a
period of one hundred eighty (180) days or until the Shareholders have
completed the distribution described in the registration statement relating
thereto, whichever first occurs;
(b) Furnish such number of prospectuses and other documents incident
thereto as a Shareholder from time to time may reasonably request;
(c) Supply to each Shareholder who is named in the prospectus and who is or
will be the beneficial owner of five percent (5%) or more of any class of
the Company's voting securities as of the effective date of the
registration statement, drafts of the registration statement for its review
and each such Shareholder shall have the right to approve the portions of
the registration statement which relate to such Shareholder, provided that
such approval is not to be unreasonably withheld;
(d) Use its best efforts to register and qualify the securities covered by
such registration statement under such other securities or Blue Sky laws of
such jurisdictions as shall be reasonably requested by the Shareholder,
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 sates or jurisdictions; and
(e) Notify each Shareholder who owns Shares covered by such registration
statement, when a prospectus relating thereto is required to be delivered
under the Securities Act, at any time that the Company becomes aware 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.
1.8 DELAY OF REGISTRATION. No Shareholder shall have any right to take any
action to restrain, enjoin or otherwise delay any registration pursuant to
subsection 1.2, 1.3 or 1.4 hereof as a result of any controversy that may
arise with respect to the interpretation or implementation of this Agreement.
1.9 INDEMNIFICATION.
(a) The Company will indemnify each Shareholder, each of its officers,
directors, employees, partners, legal counsel and accountants, and each
person controlling such
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Shareholder within the meaning of section 15 of the Securities Act of 1933,
as amended (the "Securities Act"), with respect to which any registration,
qualification or compliance has been effected pursuant to this Agreement,
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 and liabilities (or action 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 thereof, 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 not misleading, or any violation by the
Company of any rule or regulation promulgated under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act") or state
securities laws applicable to the Company and relating to action or
inaction required of the Company in connection with any such registration,
qualification or compliance and will reimburse each such Shareholder, each
of its officers, directors, employees, partners, legal counsel and
accountants, and each person controlling such Shareholder, 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 made
in reliance upon and in conformity with written information furnished to
the Company by an instrument duly executed by or on behalf of such
Shareholder or underwriter and stated to be specifically for use therein.
(b) Each Shareholder will, if Shares held by such Shareholder are included
in the securities as to which such registration, qualification or
compliance is being effected, indemnify the Company, each of its directors,
officers, employees, partners, legal counsel and accountants, each
underwriter, if any, of the Company's securities covered by such a
registration statement, each person who controls the Company or such
underwriter within the meaning of section 15 of the Securities Act, and
each other such Shareholder, each of its officers, directors, employees,
partners, legal counsel and accountants, and each person controlling such
Shareholder 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 of a material fact
contained in any such registration statement, prospectus, offering circular
or other document, or any 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 Shareholder, such
directors, officers, employees, partners, legal counsel, accountants,
persons, underwriters or control persons for any legal or any other
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 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 or on behalf of
such Shareholder and stated to be specifically for use therein.
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<PAGE>
(c) Each party entitled to indemnification under this subsection 1.l9 (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, provided further, that
if any Indemnified Party shall have reasonably concluded that there may be
one or more legal defenses available to the Indemnifying Party, or that
such claim or litigation involves or could have an effect upon matters
beyond the scope of the indemnity agreement provided in this Section 1, the
Indemnifying Party shall not have the right to assume the defense of such
action on behalf of such Indemnified Party, and such Indemnifying Party
shall not be required to reimburse such Indemnified Party and any person
controlling such Indemnified Party for that portion of the fees and
expenses of any counsel retained by the Indemnified Party which are related
to such different or additional defenses or which are beyond the scope of
the indemnity agreement provided in this Section 1, 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
Agreement, unless such failure is prejudicial to the Indemnifying Party in
defending such claim or litigation. 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) If the indemnification provided for in this subsection 1.9 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 thereunder, 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 which resulted in such loss, liability, claim, damage or expense
as well as any other relevant equitable considerations. The relative fault
of the Indemnifying Party and of the Indemnified Party 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 an underwritten public offering are in
conflict with the foregoing provisions, the provisions in the underwriting
agreement shall be controlling.
1.10 LOCKUP AGREEMENT. In consideration for the Company agreeing to its
obligations under this Section 1, each Shareholder agrees in connection with
the initial registration of the
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Company's securities, upon the request of the Company or the underwriters, not
to sell, make any short sale of, loan, grant any option for the purchase of, or
otherwise dispose of any Shares without the prior written consent of the
Company or underwriters, as the case may be, for such period of time beginning
with written notice from the Company of its intent to file a registration
statement and ending on a date not later than 180 days after the effective date
of such registration; provided, however, that the Shareholder shall have no
obligation to enter into the agreement described herein unless all executive
officers, directors of the Company and all owners of 20% or more of the total
combined voting power of all classes of securities of the Company enter into
similar agreements.
1.11 INFORMATION BY SHAREHOLDER. As a condition to the inclusion of their
Shares, the Shareholder who own any Shares included in any registration shall
furnish to the Company such information regarding them and the distribution
proposed by them as the Company may request in writing and as shall be
required in connection with any registration referred to in subsection 1.2,
1.3 or 1.4 of this Agreement.
1.12 RULE 144 REPORTING. With a view to making available to the Shareholder
the benefits of certain rules and regulations of the Commission which at any
time permit the sale of the Shares to the public without registration, the
Company agrees 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
after the effective date of the first registration statement under the
Securities Act filed by the Company for an offering of its securities to
the general public;
(b) Use its best efforts to then file with the Commission in a timely
manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act (at any time after it has become
subject to such reporting requirements); and
(c) So long as a Shareholder owns any unregistered Shares, furnish to such
Shareholder upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144 (at any time
after 90 days after the effective date of the first registration statement
filed by the Company for an offering of its securities to the general
public), and of the Securities Act and the Exchange Act (at any time after
it has become subject to such reporting requirements), a copy of the most
recent annual or quarterly report of the Company, and such other reports
and documents of the Company as such Shareholder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a
Shareholder to sell any such securities without registration.
1.13 TRANSFER OF REGISTRATION RIGHTS. The rights granted to the Shareholder
by the Company under this Section 1 may be assigned proportionately by the
Shareholder in connection with a sale of the Shares; provided that there are
no more than ten (10) transferees in the aggregate at any one time; and
provided, that the assignee also assumes the obligations under this Section 1
and that the Company is given written notice by the Shareholder at the time of
or within a reasonable time after said transfer, stating the name and address
of said transferee or assignee and identifying the securities with respect to
which such registration rights are being assigned.
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1.14 TERMINATION OF REGISTRATION RIGHTS. The obligations of the Company
pursuant to this Section 1 shall terminate upon the earliest to occur of (i)
June 30, 2004, or (ii) with respect to each Shareholder, when all of the
Shares of the Shareholder may be sold under Rule 144 in a three-month period
after the initial public offering of the Company's securities.
SECTION 2 PRO RATA PURCHASE RIGHTS.
2.1 RIGHT OF PRO RATA PURCHASE. If the Company decides to issue any
additional membership interests or other securities, including (upon any
conversion to a corporation taxed as a "C Corporation") common stock or any
other security exercisable for or convertible or exchangeable into common
stock or other otherwise give any rights to acquire any of such securities
(all such securities being hereinafter referred to as "Common Stock
Equivalents"), it will give the Shareholder the right to purchase their pro
rata share of such Common Stock Equivalents based upon the respective
percentage ownership of the Company of such holders on the terms set forth in
Section 2.2. The rights granted to the Shareholder by the Company under this
Section 2.1 may be assigned proportionately by the Shareholder in connection
with a sale of the Shares; provided that there are no more than ten (10)
transferees in the aggregate at any one time.
2.2 PROCEDURE. In the event the Company proposes to issue any Common Stock
Equivalents, it shall give the Shareholder written notice of the proposed
terms ("the Company's Notice"). The Shareholder shall have twenty-one (21)
days after receipt of the Company's Notice to notify the Company in writing
that it agrees to purchase its pro rata share of such Common Stock Equivalents
and it shall thereafter complete such purchase at the same time as the closing
of the sale of the remainder of the Common Stock Equivalents. If a
Shareholder declines to exercise or fails to give notice to the Company within
twenty-one (21) days of receipt of the Company's Notice, the Company shall
have one hundred eighty (180) days thereafter to sell the Common Stock
Equivalents upon terms no more favorable to the purchasers thereof than
specified in the Company's Notice.
2.3 EXCEPTIONS. The pro rata purchase rights set forth in this Section 2
shall not apply to (i) the issuance by the Company of Common Stock Equivalents
(in an amount not to exceed 15% of the Common Stock Equivalents without the
Approval of the Shareholder) to directors, officers, employees or consultants
of the Company other than owners of 10% or more of the Company's stock on a
fully diluted basis pursuant to any stock option or stock purchase plans or
similar agreements approved by the Company's Manager or board of directors as
applicable, (ii) the issuance of Common Stock Equivalents upon exercise or
conversion of any option, warrant or other security, into common stock, (iii)
the issuance of Common Stock Equivalents pursuant to any merger, acquisition,
or similar transaction, or (iv) common stock offered to the public pursuant to
the Company's first registered underwritten offering.
2.4 TERMINATION. The rights set forth in this Section 2 shall terminate
upon the earliest to occur of (i) the closing of the Company's first
registered underwritten public offering, (ii) June 30, 2001 or (iii) when Sub
no longer owns any Shares.
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SECTION 3 CO-SALE RIGHTS.
FWB (or a gratuitous transferee of FWB's membership interests) will not sell,
transfer or exchange ("transfer") any of its membership interests (or other
securities) of the Company for consideration without first giving the
holder(s) of the Shares the opportunity to participate pro rata in such
transfer based upon their relative percentage ownership of the Company. FWB
shall give written notice to the holder(s) of the Shares of the terms of the
proposed transfer. The holder(s) of the Shares shall give written notice to
FWB of the election to participate in such transfer in accordance with the
proposed terms within twenty-one (21) days after receipt of the notice. To
the extent the holder(s) of any Shares do not elect to participate, FWB shall
be entitled to sell a proportionate amount of the securities of the Company
specified in, and according to the terms of, the notice within ninety (90)
days from the date of the sending of the notice. The rights granted to the
Shareholder by the Company under this Section 3 may be assigned by the
Shareholder in connection with a sale of the Shares; provided that there are
no more than ten (10) transferees in the aggregate at any one time. Any
proposed Transfer by FWB to a different transferee, or on terms and conditions
materially different from those described in the written notice, as well as
any subsequent proposed transfer by FWB, shall again be subject to the Co-Sale
Right. This covenant shall terminate upon the earliest to occur of (i) June
30, 2001, or (ii) upon the closing of the Company's registered initial public
offering ("IPO").
SECTION 4 NO ISSUANCES BELOW FAIR MARKET VALUE.
The Company shall not issue any securities to its existing security holders at
a price lower than the fair market value of such securities as determined in
good faith by the Manager of the Company or board of directors as applicable,
except to employees, officers and directors other than owners of ten (10)
percent or more of the securities of the Company on a fully-diluted basis
pursuant to stock option or purchase plans approved by the Manager of the
Company which meet the criteria of Section 2.3. The parties agree that any
legal remedy for violation of this Section 4 would be insufficient and that a
potentially aggrieved party would have the right to cause specific performance
of this Section 4.
SECTION 5 RIGHT OF FIRST REFUSAL, STANDSTILL.
5.1 RIGHT OF REFUSAL.
(a) RIGHT TO PURCHASE. In the event a Shareholder proposes to transfer,
assign or otherwise dispose of any Shares (the "TRANSFER STOCK") in a bona
fide transaction, the Company shall have a right of first refusal (the
"RIGHT OF REFUSAL") to purchase all, but not less than all, of the Transfer
Stock in accordance with the terms of this Agreement.
(b) TRANSFER NOTICE. The Shareholder shall first give written notice of
any proposed transfer (the "TRANSFER NOTICE") to the Company. The Transfer
Notice shall name the proposed transferee and state the number of shares of
Transfer Stock to be transferred, whether the transfer is voluntary or
involuntary, the price per share, and all other terms of the proposed
transaction.
(c) TERMS AND PROCEDURE BEFORE IPO. The following terms and procedures
shall apply to the Right of Refusal:
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(1) EXERCISE PERIOD. Within forty-five (45) days of receipt of the
Transfer Notice, the Company will give the Shareholder written notice
of its election to purchase the Transfer Stock.
(2) PRICE. The per share purchase price for shares of Transfer Stock
purchased by the Company pursuant to the Right of Refusal shall be the
price per share agreed to be paid by the proposed transferee.
(3) PAYMENT OF PURCHASE PRICE. Payment of the purchase price for the
Transfer Stock will be made to the Shareholder in cash or such other
consideration as is offered by the proposed transferee by the Company
within sixty (60) days after the notice from the Company of its
election to exercise its Right of Refusal (see subsection 5.1(c)(1)).
During the period after such notice and until payment of the purchase
price, the Shareholder will vote its Shares as directed by the Company
for any financing arrangements reasonably proposed by the Company for
the purpose of financing its purchase of the Transfer Stock.
(4) FAILURE TO EXERCISE. If the Company fails to exercise in full its
Right of Refusal within the period set forth in subsection 5.1(c)(1)),
the Shareholder may, during the one hundred eighty (180) days
following such period, conclude a transfer of the shares of Transfer
Stock on the terms and conditions described in the Transfer Notice.
Any proposed transfer by the Shareholder to a different transferee, or
on terms and conditions materially different from those described in
the Transfer Notice, as well as any subsequent proposed transfer by
the Shareholder, shall again be subject to the Right of Refusal.
(d) RESTRICTION ON TRANSFEREES. All transferees of Transfer Stock (except
transferees under subsection 5.1(d)(5)), as a condition of such transfer
must agree in writing (in a form satisfactory to the Company) that they
will receive and hold such Transfer Stock subject to the provisions of this
Agreement, including the Right of Refusal. Any sale or transfer of any
Transfer Stock or any interest in such shares shall be void unless the
provisions of this Section 5.1 are met.
(e) TERMINATION. The Right of Refusal under this Section 5.1 shall
terminate on the earlier of (i) June 30, 2004, and (ii) the closing of an
IPO. This Section 5.1 shall not apply to transfers between Shareholders
and their parent corporations or wholly owned subsidiaries.
5.2 STANDSTILL. Unless the prior written approval of the Company's Manager
has been obtained, a Shareholder will not:
(a) ACQUISITION. Acquire by purchase or otherwise, any securities
(whether debt or equity, including options and warrants) of the Company; or
(b) PARTICIPATION. At such time and for so long as the Company is subject
to the reporting requirements under Section 13(a) or Section 15(d) of the
Exchange Act,
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(1) become a "participant" in a "solicitation" of proxies, as those
terms are defined in Rule 14a-11 and Rule 14a-1, respectively, of
Regulation 14A under the Exchange Act in respect of any voting
securities of the Company that may be outstanding and entitled to vote
at any time during such period;
(2) form any group for the purpose of voting, purchasing or disposing
of the Company's securities; or
(3) deposit any securities of the Company in a voting trust or
subject them to a voting agreement or other arrangement of similar
effect.
(c) TERMINATION. The provisions of this Section 5.2 will terminate on
June 30, 2006.
5.3 LEGEND. To assist in effectuating the provisions of this Section 5, the
Shareholder hereby consents to the placement of the following legend on all
certificates certifying ownership of any securities issued hereunder until such
securities have been sold, transferred or disposed of pursuant to the
requirements of this Agreement:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE PROVISIONS
OF AN AGREEMENT BETWEEN THE HOLDER AND FWB SOFTWARE, INC., AND MAY NOT BE
SOLD, TRANSFERRED, PLEDGED, OR OTHERWISE DISPOSED OF EXCEPT IN ACCORDANCE
THEREWITH. A COPY OF SAID AGREEMENT IS ON FILE AT THE OFFICE OF THE SECRETARY
OF FWB SOFTWARE, INC."
SECTION 6 MISCELLANEOUS.
6.1 WAIVERS AND AMENDMENTS. No amendment or waiver of any provision of this
Agreement will be effective except as follows:
(a) No waiver of any rights under this Agreement shall be effective except
as to the particular parties who have consented to such waiver in writing.
(b) No amendment to this Agreement shall be effective without the written
consent of the Company and FWB and the Approval of the Shareholder.
6.2 GOVERNING LAW. This Agreement shall be governed in all respects by the
laws of the State of California as such laws are applied to agreements between
California residents entered into and to be performed entirely within
California.
6.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided herein,
the rights and obligations under this Agreement may be assigned only with the
prior written consent of the Company. In the event of a merger, acquisition
or similar transaction involving the Company that does not cause a termination
of this Agreement under Section 6.10, all rights and obligations under this
Agreement shall apply to the respective successors and assigns of the parties
hereto.
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6.4 ENTIRE AGREEMENT. This Agreement and the Exhibits to this Agreement
constitute the full and entire understanding and agreement between the parties
with regard to the subjects hereof and thereof.
6.5 NOTICES. All notices and other communications required or permitted
hereunder shall be in writing and shall be given by personal service,
overnight delivery service, or by certified or registered mail, postage
prepaid, to the address indicated below:
If to Sub: StreamLogic Software Corporation
21329 Nordhoff Street
Chatsworth, California 91311
Attention: Chief Executive Officer
with copy to: Latham & Watkins
650 Town Center Drive
Costa Mesa, California 92626-1925
Attention: David C. Flattum
If to the Company: FWB Software, LLC
1555 Adams Drive
Menlo Park, California 94025
Attention: President
with copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attention: Gary H. Moore
If to FWB: FWB Software, Inc.
1555 Adams Drive
Menlo Park, California 94025
Attention: President
with copy to: McCutchen, Doyle, Brown & Enersen
Three Embarcadero Center
San Francisco, California 94111
Attention: Gary H. Moore
or at such other address as such party shall have furnished to the others.
Such notices shall be deemed received upon the earlier of actual receipt, the
day after dispatch by overnight delivery, or three business days after the
date of mailing.
6.6 SEPARABILITY. In case any provision of this Agreement shall be declared
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions shall not in any way be affected or impaired
thereby.
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6.7 TITLES AND SUBTITLES. The titles of the sections and subsections of
this Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
6.8 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
6.9 DELAYS OR OMISSIONS. No delay or omission to exercise any right, power
or remedy accruing to any party, upon any breach or default of the Company
under this Agreement, shall impair any such right, power or remedy, nor shall
it be construed to be a waiver of any such breach or default, or any
acquiescence therein, or of or in any similar breach or default thereafter
occurring.
6.10 TERMINATION. This Agreement (except Section 1, which shall terminate in
accordance with Section 1.14) shall terminate upon the acquisition or merger of
the Company or any similar transaction where the security holders of the
Company own less than 50% of the voting securities of the surviving
corporation.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first set forth above.
FWB SOFTWARE, LLC STREAMLOGIC SOFTWARE CORPORATION
By: FWB Software, Inc., its Manager By /s/ Lee Hilbert
-------------------------------------
Lee Hilbert, Chief Financial Officer
By /s/ Norman Fong
-------------------------------
Norman Fong, President
FWB SOFTWARE, INC.
By /s/ Norman Fong
-------------------------------
Norman Fong, President
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EXHIBIT 10.8
November 1, 1996
J. Larry Smart
Chief Executive Officer
StreamLogic Corporation
Re: FWB Software LLC
Dear Larry:
This will confirm the understanding reached between StreamLogic Corporation
("StreamLogic"), StreamLogic Software Corporation ("Sub") and FWB Software
LLC("FWB") relating to certain outstanding issues under the FWB Software LLC
Operating Agreement ("Operating Agreement").
Under the terms of the Operating Agreement Sub is required to deliver to FWB
approximately 2,760,000 additional shares of common stock of StreamLogic. FWB
is willing to accept 1,380,000 additional shares of common stock of StreamLogic
and waive the requirement that Sub deliver the remaining shares in consideration
of the following agreements by Sub and StreamLogic:
1. On November 4, 1996, Sub shall deliver to FWB a certificate for 1,380,000
shares of common stock of StreamLogic ("Additional Shares").
2. On November 4, 1996, StreamLogic shall deliver to FWB $500,000 in cash by
wire transfer.
3. Sub's membership interest in FWB shall be reduced from 1,100,000 shares to
750,000 shares, and Sub shall execute such additional documents as are necessary
to effect such reduction. On November 4, 1996, Sub shall deliver to FWB a
promissory note, in form satisfactory to FWB and StreamLogic, in the principal
amount of One Million Two Hundred Fifty Thousand Dollars ($1,250,000), which
shall be payable in eight equal quarterly installments of $156,250 commencing
February 1, 1997, which note shall bear interest at Bank of America's reference
rate plus 2% and be secured by a security interest in form satisfactory to FWB
and StreamLogic in Sub's remaining 750,000 shares in FWB.
4. StreamLogic agrees to waive the lock-up provisions contained in Section
2.2(a) of the Company Rights Agreement, dated as of July 1, 1996, between FWB
and StreamLogic and agrees that FWB shall be free to sell or otherwise dispose
of all shares of StreamLogic immediately (subject to applicable securities
laws).
5. StreamLogic shall by November 4, 1996 at its expense amend its pending S-3
registration statement for the original shares of StreamLogic common stock
delivered to
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FWB under the Operating Agreement to include the Additional Shares and shall use
its best efforts to expedite completion and effectiveness of that registration.
The foregoing shall be effective if signed and returned by FWB by telecopy to
Larry Smart no later than midnight November 1, 1996, unless earlier withdrawn by
FWB.
Sincerely yours,
FWB Software LLC
By /s/ Norman Fong
-----------------------------
Norman Fong
President
StreamLogic Corporation StreamLogic Software Corporation
By /s/ J. Larry Smart By /s/ J. Larry Smart
----------------------------- -----------------------------
J. Larry Smart Name: J. Larry Smart
Chief Executive Officer Title
<PAGE>
EXHIBIT 23.2
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-3) and related Prospectus of StreamLogic
Corporation for the registration of 2,636,123 shares of its common stock and to
the incorporation by reference therein of our report dated June 28, 1996,
with respect to the consolidated financial statements of StreamLogic Corporation
included in its Transition Report (Form 10-K) for the period from December 30,
1995 to March 29, 1996, filed with the Securities and Exchange Commission.
Ernst & Young LLP
Los Angeles, California
November 4, 1996
