Document:

<PAGE>

                                                                  Execution Copy

August 31, 2000

Robert Smith

Re:  Sale Bonus Agreement

Dear Bob:

The following sets forth the agreement between you and The Grand Union Company,
a Delaware corporation (the "Company"), regarding the terms of the sale bonus
(the "Sale Bonus") that you may be eligible to receive in accordance with the
terms and conditions set forth below. This letter agreement (the "Letter
Agreement") is in addition to, and not in substitution for, any other agreements
between you and the Company, and the Sale Bonus is in addition to, and not in
substitution for, any other pay or benefits to which you are eligible to earn
from the Company.

1. Definitions. For purposes of this Letter Agreement, the following capitalized
words that are not otherwise defined in the text of the Letter Agreement shall
have the meanings set forth below:

   "Aggregate Consideration" shall mean an amount equal to the sum of the
   aggregate fair market value of any securities issued and any other non-cash
   consideration delivered, and any cash consideration paid to the Company or
   its security holders in connection with a Change in Control, plus the amount
   of all indebtedness for money borrowed and capitalized leases, net of excess
   cash, of the Company and its subsidiaries which is assumed or acquired by any
   Purchaser in connection with a Change in Control or retired or defeased in
   connection with such Change in Control. However, in the event that a Change
   in Control is effectuated through a bankruptcy proceeding, Aggregate
   Consideration shall not include capitalized leases assumed unless (i)
   payments to the Company's senior lenders in connection with the Change in
   Control equal or exceed the sum of pre-petition and post-petition amounts of
   indebtedness then-owing to such lenders or (ii) the Company's senior lenders
   agree in writing to accept a reduced amount of the then-owing debt ("Reduced
   Amount") in a pre-arranged or pre-packaged backruptcy, which Reduced Amount
   is subsequently paid. The fair market value of any securities issued and any
   other non-cash consideration delivered in connection with a Change in Control
   will be the value determined in good faith by the Board.

   "Board" shall mean the Board of Directors of the Company.

   "Cause" shall mean the termination of your employment based on (i) willful
   misconduct or gross negligence by you with regard to the Company or its
   business, assets or employees; (iii) the refusal by you to follow the proper
   direction of the Company or the Board; (iv) substantial and continuing
   refusal by you to attempt to perform the duties required of you in connection
   with your employment (other than any such failure resulting from incapacity
   due to physical or mental illness); (v) your being convicted of a felony or
   pleading nolo contendere to a felony (other than a felony involving a motor
   vehicle); (vi) the breach by you of any fiduciary duty owed by you to the
   Company; or (vii) your dishonesty, misappropriation or fraud with regard to
   the Company (other than good faith expense account disputes).

   "Change in Control" shall mean the consummation of a Triggering Event.

   "Effective Date" shall mean August 17, 2000, the date on which the
   Compensation Committee of the Board approved the Sale Bonus.

   The "Eligible Management Members" for the Sale Bonus are Gary Philbin,
   Jeffrey Freimark, Manouchehr Moslemi, Glenn Smith, Timothy Carnahan, Gary
   Duncan, James Santamarina, Richard Skelly and Robert Smith.

   "Good Reason" shall mean any of the following:

   (A) any reduction in your base salary or target bonus opportunity, or:

   (B) any change in your principal work location of more than 50 miles from
   your principal work location as of the Effective Date.

   "Individual Share" shall mean 5% of the Management Share.

<PAGE>

   "Involuntary Termination" shall mean (a) the termination of your employment
   by the Company other than for Cause, Death, Disability under the Company's
   Long Term Disability Plan, or retirement under the Company's Retirement Plan
   or (b) the resignation of your employment by you for Good Reason.

   "Management Share" shall mean the aggregate amount of compensation payable to
   Eligible Management Members in connection with the Sale Bonus. The Management
   Share shall be determined pursuant to the following grid:

               ------------------------------------------------------------
               Aggregate Consideration Paid    Management Share Percent
               ----------------------------    ------------------------
               ------------------------------------------------------------
               Below $240,000,000              0.00%
               ------------------------------------------------------------
               $240,000,000                    0.50%
               ------------------------------------------------------------
               $260,000,000                    0.60%
               ------------------------------------------------------------
               $280,000,000                    0.70%
               ------------------------------------------------------------
               $300,000,000                    0.90%
               ------------------------------------------------------------
               $310,000,000                    1.00%
               ------------------------------------------------------------
               $320,000,000                    1.10%
               ------------------------------------------------------------
               $330,000,000                    1.30%
               ------------------------------------------------------------
               $340,000,000                    1.50%
               ------------------------------------------------------------
               $350,000,000                    1.75%
               ------------------------------------------------------------
               $360,000,000 or more            2.00%
               ------------------------------------------------------------

   The Management Share shall be calculated from the first dollar of Aggregate
   Consideration paid. The percentage utilized to determine the Management Share
   shall be multiplied by the full amount of Aggregate Consideration paid.
   Moreover, in the event the Aggregate Consideration paid falls between two of
   the ranges in the above grid, the percentage to be utilized to determine the
   Management Share shall be interpolated on a straight line basis between the
   two ranges. Thus, for example, assuming the Aggregate Consideration paid is
   $335,000,000, the Management Share would be 1.40% times $335,000,000 or
   $4,690,000.

   "Purchaser" shall mean any person or entity that engages in a Change in
   Control transaction.

   "Sellers" shall mean the Company or, if applicable, the selling equity
   holders and/or selling debt holders of the Company.

   A "Triggering Event" shall be deemed to have occurred on the date that any of
   the following shall have occurred:

   (A) the Company enters into one or more binding agreements with one or more
   Purchasers to directly acquire, in exchange for cash, stock, claims, or
   property, fifty percent or more of the aggregate equity securities of the
   Company;

   (B) the Company enters into one or more binding agreements providing for a
   merger, consolidation, reorganization or other business combination upon
   consummation of which one or more Purchasers would own or control fifty
   percent or more of either (i) the aggregate voting securities of the Company,
   (ii) the aggregate economic interest of the outstanding equity securities of
   the Company or (iii) the aggregate value of the assets of the Company;

   (C) the Company enters into a transaction upon consummation of which one or
   more Purchasers would acquire in exchange for cash, stock, claims or property
   fifty percent or more of either (i) the aggregate equity securities of the
   Company, or (ii) the Company's assets; or

                                       2
<PAGE>

   (D) the Company files a plan of reorganization or motion for relief in a case
   under title 11 of the United States Code for the purpose of implementing an
   agreement or transaction of the type described in any of the preceding
   clauses (A), (B) or (C); provided, however, that a Triggering Event shall not
   include any change of ownership resulting from a public offering of any of
   the securities of the Company pursuant to an effective registration statement
   under the Securities Act of 1933, as amended.

2. Term. The term of this Letter Agreement (the "Term") shall commence on the
Effective Date and shall continue until August 17, 2001.

3. Sale Bonus.

(a) General Terms. You will become entitled to receive the Sale Bonus in the
event that (i) a Triggering Event occurs during the Term, and (ii) a Change in
Control contemplated by such Triggering Event occurs thereafter. The amount of
the Sale Bonus shall be equal to your Individual Share multiplied by the
Management Share.

(b) Payment of Sale Bonus.

(i) Change in Control--No Post-Closing Adjustment. In the event that the
transaction resulting in a Change in Control does not include any provisions
either (A) for an earn-out with respect to which a part of the Aggregate
Consideration will be paid to the Sellers either in full or in part in one or
more installments after the Change in Control or any similar deferral of the
payment of the Aggregate Consideration or (B) that would potentially require the
Sellers to reimburse any portion of the Sale Price to the Purchaser or require
the Purchaser to pay to the Sellers any amount in addition to the Aggregate
Consideration, as a result of a post-closing adjustment or any other reason,
after the Change in Control (either (A) or (B), a "Post-Closing Adjustment"),
the Company shall pay to you the Sale Bonus within five days following the date
of such Change in Control; provided, however, that in no event shall the Sale
Bonus be payable to you until the full amount of the Aggregate Consideration has
been paid to the Sellers. The Board, however, shall have the discretion to make
pro-rata payments of the Sale Bonus to the extent that the Aggregate
Consideration is paid in installments.

(ii) Change in Control--Post-Closing Adjustment. In the event that the Change in
Control transaction includes provisions for any Post-Closing Adjustment, the
Company shall pay the Sale Bonus according to the terms of this Section
3(b)(ii).

   (A) In the event that the Change in Control transaction includes a
   Post-Closing Adjustment described in Section 3(b)(i)(A) above, the Company
   shall pay you a portion of the Sale Bonus within five days after the date of
   such Change in Control equal to your Individual Share multiplied by the
   Management Share multiplied by the portion of the Aggregate Consideration
   paid to the Sellers on or about the date of the Change in Control.
   Thereafter, within five days after any additional portion of the Aggregate
   Consideration is paid to the Sellers, the Company shall pay you the remaining
   portion of the Sale bonus in an amount equal to your Individual Share
   multiplied by the Management Share multiplied by the additional Aggregate
   Consideration.

   (B) In the event that the Change in Control transaction is a Post-Closing
   Adjustment described in Section 3(b)(i)(B) that would potentially require the
   Sellers to reimburse any portion of the Aggregate Consideration to the
   Purchaser after the Change in Control, within five days after the date of
   such Change in Control, the Company shall pay you a portion of the Sale Bonus
   determined in good faith by the Board immediately prior to the consummation
   of the Change in Control, less an amount that shall take into account the
   potential adjustment to the Sales Price (the "Withheld Amount"). As soon as
   practicable after the Sellers know with certainty the portion, if any, of the
   Sale Price that the Sellers must reimburse to the Purchaser and the Sellers
   make such reimbursement, if any, the Company shall pay to you a prorated
   portion of the Withheld Amount corresponding to the portion of the maximum
   potential amount that Sellers may have been required to reimburse to the
   Purchaser less the amount actually reimbursed.

   (C) In the event that the Change in Control transaction is a Post-Closing
   Adjustment described in Section 3(b)(i)(B) that would potentially require the
   Purchaser to pay to the Sellers any amount in addition to the Sale Price
   after the Change in Control, within five days after the date of such Change
   in

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   Control, the Company shall pay you the Sale Bonus. Thereafter, within five
   days after the Purchaser knows with certainty the additional amount that such
   Purchaser must pay to the Sellers, if any, and the Purchaser makes such
   payment to the Sellers, the Company shall pay to you an additional amount
   determined in good faith by the Board that shall take into account the
   additional payment made by the Purchaser to the Sellers.

(c) Determination of the Board Final. The determination of whether a Triggering
Event or Change in Control has occurred, the amount of the Aggregate
Consideration and the amount of any Sale Bonus shall be made in good faith by
the Board (unless otherwise required by applicable law) and, absent manifest
error, shall be final and binding on you, the Company and all other interested
parties.

(d) Sale Bonus Adjustment. The parties hereto acknowledge and agree that you
shall be entitled to receive an initial Sale Bonus under this Letter Agreement
which shall become payable in connection with the first Triggering Event that
occurs during the Term, which results in a Change in Control. Adjustments to the
initial Sale Bonus and additional Sale Bonuses ("Sale Bonus Adjustments") shall
be payable with respect to any additional transactions or asset sales that occur
during the Term that would have constituted part of the Triggering Event had
they occurred prior to the Change in Control. The Sale Bonus Adjustment shall
not be made for asset sales made in the ordinary course of business. The amount
of each Sale Bonus Adjustment shall be calculated in respect to the aggregate of
all such transactions made during the Term, including those previously resulting
in the Triggering Event.

4. Effect of Termination of Employment.

(a) Involuntary Termination. In the event of your Involuntary Termination during
the Term, you shall remain entitled to receive the Sale Bonus in the same manner
as if your employment with the Company had continued for the duration of the
Term. Thus, if following your Involuntary Termination during the term, a
subsequent Triggering Event occurs during the Term, which results in a Change in
Control at any time thereafter, you shall receive a your Sale Bonus at such
time.

(b) Other Termination. In the event that your employment terminates for any
reason other than an Involuntary Termination at any time during the Term, you
shall forfeit any right you may have to receive the Sale Bonus.

5. Notice. For the purpose of this Letter Agreement, notices and all other
communications provided for in this Letter Agreement shall be in writing and
shall be deemed to have been duly given when delivered by hand, sent by
telecopier or mailed by United States registered mail, return receipt requested,
postage prepaid, addressed to the Chief Executive Officer, The Grand Union
Company, 201 Willowbrook Blvd., Wayne, New Jersey 07470, telecopier: (973)
890-6012, with a copy to the General Counsel of the Company, or to you at the
address set forth on the first page of this Letter Agreement or to such other
address as either party may have furnished to the other in writing in accordance
herewith, except that notice of change of address shall be effective only upon
receipt.

6. Reduction of Payments if Reduction Would Result in Greater After-Tax Amount.
Notwithstanding anything herein to the contrary, if the payment of the Sale
Bonus and any other payments in connection with a Change in Control (together,
the "Payments") constitute a "parachute payment" (as defined in Section
280G(b)(2) of the Internal Revenue Code of 1986, as amended (the "Code")), and
the amount of the Payments net the excise tax (as described in Section 4999 of
the Code) payable with respect thereto is less than the amount to be paid to you
if the aggregate Payments to be made to you were three times your "base amount"
(as defined in Section 280G(b)(3) of the Code), less $1.00, then the aggregate
of the amounts of the Sale Bonus Payment constituting the parachute payment paid
pursuant to this Agreement shall be reduced to an amount that will equal three
times your base amount, less $1.00.

7. Miscellaneous.

(a) No Rights to Continued Employment. Neither this Letter Agreement nor any of
the rights or benefits evidenced hereby shall confer upon you any right to
continuance of employment by the Company or interfere in any way with the right
of the Company to terminate your employment, subject to the provisions of
Section 4 above, for any reason, with or without Cause.

                                       4
<PAGE>

(b) Amendments, Waivers. No provision of this Letter Agreement may be modified,
waived or discharged unless such waiver, modification or discharge is agreed to
in writing by the parties hereto. No waiver by either party hereto at any time
of any breach by the other party hereto of, or compliance with, any condition or
provision of this Letter Agreement to be performed by such other party shall be
deemed a waiver of similar or dissimilar provisions or conditions at the same or
at any prior or subsequent time.

(c) Counterparts. This Letter Agreement may be executed in counterparts, each of
which shall be deemed to be an original but all of which together will
constitute one and the same instrument.

(d) Withholding. Amounts paid to you hereunder shall be subject to all
applicable federal, state and local wage withholdings.

(e) Headings. The headings contained in this Letter Agreement are intended
solely for convenience of reference and shall not affect the rights of the
parties to this Letter Agreement.

(f) Governing Law. The validity, interpretation, construction and performance of
this Letter Agreement shall be governed by the laws of the State of New Jersey
applicable to contracts entered into and performed in such state.

If this Letter Agreement sets forth our agreement on the subject matter hereof,
kindly sign and return to the Company the enclosed copy of this letter, which
will then constitute our agreement on this subject.

                                    Sincerely,

                                    The Grand Union Company

                                    By: /s/ Gary M. Philbin
                                        -------------------
                                    Name:  Gary M. Philbin
                                    President and Chief Executive Officer

Agreed to as of this 31st day of August, 2000.

/s/ Robert Smith
----------------

Robert Smith

                                       5<PAGE>   1

                                                                    EXHIBIT 4.2

                                  TESSERA, INC.

            FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT

        THIS FIRST AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT (the
"Agreement") is made as of the 14th day of January, 2000 by and among Tessera,
Inc., a Delaware corporation (the "Company") and the persons and entities listed
on Exhibit A hereto (individually, a "Holder" and collectively, the "Holders").

        WHEREAS, in connection with the sale and issuance of its Series D 10%
Cumulative Convertible Preferred Stock (the "Series D"), the Company entered
into that certain Registration Rights Agreement dated December 27, 1996 as
amended by several Additions of Holders, the last of which was executed as of
April 22, 1997 and as further amended by an instrument dated as of May 27, 1999
(as amended to date, the "Original Agreement") with the holders of the Series D
Preferred Stock (the "Series D Holders");

        WHEREAS, the Company and certain of the Holders (the "Series E Holders")
are parties to that certain Series E 10% Cumulative Convertible Preferred Stock
Purchase Agreement dated as of the date hereof (the "Purchase Agreement")
whereby the Company will sell, and the Series E Holders will buy, shares of the
Series E 10% Cumulative Convertible Preferred Stock of the Company (the "Series
E");

        WHEREAS, the obligations of the Company and the Series E Holders under
the Purchase Agreement are conditional, among other things, upon the execution
and delivery of this Agreement by the Company and the Holders;

        WHEREAS, Section 2.8 of the Original Agreement provides that the written
consent of the Company and the holders of a majority of the Registrable
Securities (as defined in the Original Agreement) is required to amend the
Original Agreement;

        WHEREAS, the Company and certain of the Holders who hold not less than a
majority of the Registrable Securities (as defined in the Original Agreement)
now desire to amend and restate the Original Agreement in its entirety in order
to add the Series E Holders as parties thereto and to make certain other changes
so that the Original Agreement shall be superceded in its entirety; and

        WHEREAS, pursuant to a Registration Rights Agreement as amended and
restated May 15, 1993 and as further amended by various Consents to be Bound,
with the last such Consent to be Bound dated as of June 19, 1996 (as amended to
date, the "Prior Registration Rights Agreement"), the Company has previously
granted to certain holders of its capital stock (collectively, the "Prior
Holders") certain registration rights which will continue in effect
notwithstanding the execution and delivery by the Company of this Agreement.

<PAGE>   2

        NOW, THEREFORE, in consideration of the foregoing and for other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company and the Holders agree as follows:

                                    SECTION 1

                 RESTRICTIONS ON TRANSFERABILITY OF SECURITIES;
                         COMPLIANCE WITH SECURITIES ACT

        1.1 Certain Definitions. As used in this Agreement, the following terms
shall have the following respective meanings:

        "Commission" shall mean the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.

        "Conversion Shares" shall mean with respect to any Holder, the shares of
the Company's Common Stock issued or issuable pursuant to conversion of the
Series D or Series E, and, with respect to Investor Investments AB or any of its
permitted transferees (as determined in Section 1.10 hereof), the shares of the
Company's Common Stock issued or issuable pursuant to conversion of the Series C
10% Cumulative Convertible Preferred Stock ("Series C") of the Company.

        "Holder" shall mean any holder of Registrable Securities, including any
person holding Registrable Securities to whom the rights under this Section 1
have been transferred in accordance with Section 1.10 hereof. Exhibit A lists
each Holder as of the date hereof, along with the number of shares of Series C,
Series D and/or Series E held by such Holder as of the date hereof.

        "Initiating Holders" shall mean any Holder or Holders of an aggregate of
at least fifty percent (50%) of the Registrable Securities.

        "Restricted Securities" shall mean the Series D, the Series E and the
Conversion Shares.

        The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act and the declaration or ordering of the
effectiveness of such registration statement.

        "Registrable Securities" means at any time with respect to any Holder
(i) Conversion Shares; and (ii) any Common Stock of the Company issued or
issuable in respect to such shares upon any stock split, stock dividend,
recapitalization or similar event or any Common Stock otherwise issued with
respect to the such shares, in each case owned by such Holder until (i) a
registration statement covering such securities has been declared effective by
the SEC and such securities have been disposed of pursuant to such effective
registration statement; (ii) such securities are sold under circumstances in
which all of the applicable conditions of Rule 144 (or any similar provisions
then in force) under the Securities Act are met or such securities may be sold
pursuant to Rule 144(k); or (iii) such securities are otherwise transferred, the
Company has delivered a new

                                      -2-
<PAGE>   3

certificate or other evidence of ownership for such securities not bearing the
legend required pursuant to this Agreement, and such securities may be resold
without subsequent registration under the Securities Act.

        "Registration Expenses" shall mean all expenses incurred by the Company
in complying with Sections 1.2, 1.3 and 1.4 hereof, including, without
limitation, fees and disbursements of counsel for the Company, all registration,
qualification and filing fees, printing expenses, escrow fees, blue sky fees and
expenses, and the expense of any special audits incident to or required by any
such registration (but excluding the compensation of regular employees of the
Company which shall be paid in any event by the Company). In addition,
"Registration Expenses" shall include fees and disbursements of up to one
counsel for the Holders participating in one offering commenced pursuant to
Section 1.2 hereof.

        "Securities Act" shall mean the Securities Act of 1933, as amended, or
any similar federal statute and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.

        "Selling Expenses" shall mean all underwriting discounts, selling
commissions and stock transfer taxes attributable to the Registrable Securities
sold by any of the Holders and all fees and disbursements of counsel for such
Holders participating in any offering commenced pursuant to Section 1.3 or
Section 1.4 hereof.

        1.2 Requested Registration.

           (a) In case the Company shall receive from any Initiating Holder a
written request that the Company effect any registration, qualification or
compliance with respect to an underwritten offering of Registrable Securities,
the Company will:

               (i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and

               (ii) use its commercially reasonable efforts to file, as soon as
practicable, such registration, qualification or compliance (including, without
limitation, the execution of an undertaking to file post-effective amendments,
appropriate qualification under applicable blue sky or other state securities
laws and appropriate compliance with applicable regulations issued under the
Securities Act and any other governmental requirements or regulations) as may be
so requested and as would permit or facilitate the sale and distribution of all
of the Registrable Securities as are specified in such request, together with
all or such portion of the Registrable Securities of any Holder joining in such
request as are specified in a written request received by the Company within
fifteen (15) days after receipt of such written notice from the Company;
provided, however, that the Company shall not be obligated to take any action to
effect any such registration, qualification or compliance pursuant to this
Section 1.2:

                   (A) In any particular jurisdiction in which the Company would
be required to execute a general consent to service of process in effecting such
registration,

                                      -3-
<PAGE>   4

qualification or compliance unless the Company is already subject to service in
such jurisdiction and except as may be required by the Securities Act;

                   (B) during the ninety (90) days immediately following the
effective date of the registration statement initiated by the Company;

                   (C) if (i) an investment banking firm of recognized national
standing shall advise the Company and the Holders in writing that effecting the
registration would materially and adversely affect an offering of the securities
of the Company the preparation of which has then been commenced; or (ii) the
Company is in possession of material non-public information the disclosure of
which during the period specified in such notice the Company believes would not
be in the best interest of the Company, provided that the Company's obligation
to use its commercially reasonable efforts to register, qualify or comply under
this Section 1.2 shall be deferred for a period not to exceed ninety (90) days,
and provided, further, that the Company shall not exercise its right under this
clause to defer such obligation more than once in any twelve (12) month period;

                   (D) after the Company has effected two such registrations
pursuant to this Section 1.2(a), such registrations have been declared or
ordered effective and all of the Registrable Securities requested by the
Initiating Holders to be registered have been sold.

           (b) Underwriting. The right of any Holder to registration pursuant to
this Section 1.2(a) shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 1.2(b).

           The Company and all Holders proposing to distribute their securities
in the underwritten registration shall, upon request by the managing underwriter
selected for such underwriting by the Initiating Holders (which managing
underwriter shall be reasonably acceptable to the Company), enter into an
underwriting agreement in customary form with the managing underwriter in
connection with the offering. Notwithstanding any other provision of this
Section 1.2, if the managing underwriter advises the Initiating Holders in
writing that marketing factors require a limitation of the number of shares to
be underwritten, then the Company shall so advise all Holders who have requested
to participate in such offering, and the number of shares of Registrable
Securities that may be included in the registration and underwriting shall be
allocated among all such Holders thereof in proportion, as nearly as
practicable, to the respective amounts of Registrable Securities requested by
such Holders to be included in such registration in the priority listed below,
up to the aggregate maximum number of shares that, in the view of such managing
underwriter, can be included: (i) first, all Registrable Securities requested to
be registered by any Initiating Holders; (ii) second, all Registrable Securities
requested to be included in such registration by any other Holder; and (iii)
third, any Common Stock proposed to be registered by the Company and any Common
Stock proposed to be registered by other holders as a result of rights existing
in favor of such other holders pursuant to the Prior Registration Rights
Agreement. No Registrable Securities excluded from the underwriting by reason of
the underwriter's marketing limitation shall be included in such registration.

                                      -4-
<PAGE>   5

        If any Holder disapproves of the terms of the underwriting, such Holder
may elect to withdraw therefrom by written notice to the Company, the managing
underwriter and the Initiating Holders. The Registrable Securities so withdrawn
shall also be withdrawn from registration, and such Registrable Securities shall
not be transferred in a public distribution prior to ninety (90) days after the
effective date of such registration; provided, however, that, if by the
withdrawal of such Registrable Securities a greater number of Registrable
Securities held by other Holders may be included in such registration (up to the
maximum of any limitation imposed by the underwriters), then the Company shall
offer to all Holders who have included Registrable Securities in the
registration the right to include additional Registrable Securities in the same
proportion and manner used in determining the underwriter limitation in this
Section 1.2(b).

        1.3 Company Registration.

            (a) Piggy-Back Registration Rights. On each occasion, if any,
following the date hereof that the Company contemplates filing with the
Commission a registration statement under the Securities Act relating to the
sale of shares of Common Stock other than (i) a registration relating solely to
employee benefit plans; or (ii) a registration relating solely to a Commission
Rule 145 transaction, the Company shall so notify the Holders in writing of its
intention to do so at least thirty (30) days prior to the filing of each such
registration statement. Each Holder that gives written notice to the Company,
within fifteen (15) days of receipt of such notice from the Company, of such
Holder's desire to have any of its Registrable Securities included in such
registration statement, may, subject to the provisions of this Section 1.3, have
its Registrable Securities so included.

            (b) Underwriting. If the registration of which the Company gives
notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.3(a). In such event, the right of any Holder to
registration pursuant to Section 1.3 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. All Holders proposing to
distribute their securities through such underwriting shall (together with the
Company and the Prior Holders distributing their securities through such
underwriting) enter into an underwriting agreement in customary form with the
managing underwriter selected for such underwriting by the Company.
Notwithstanding any other provision of this Section 1.3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit or exclude the
Registrable Securities to be included in such registration prior to the
exclusion from such registration of any securities to be sold by the Company;
provided, however, that if any exclusion or limitation of Registrable Securities
is so required, such exclusion or limitation shall be allocated among the
Holders of Registrable Securities participating in such registration and the
Prior Holders that have elected to participate in such registration in
proportion to the number of shares of the Company's Common Stock (or equivalents
thereof) requested by such Holders and Prior Holders to be included in such
offering. If any Holder or Prior Holder disapproves of the terms of any such
underwriting, such party may elect to withdraw therefrom by written notice to
the Company and the managing underwriter.

                                      -5-
<PAGE>   6

            (c) Right to Terminate Registration. The Company shall have the
right to terminate or withdraw any registration initiated by the Company under
this Section 1.3 prior to the effectiveness of such registration whether or not
any Holder has elected to include securities in such registration.

        1.4 Registration on Form S-3.

            (a) If any Holder requests that the Company file a registration
statement on Form S-3 (or any successor form to Form S-3) for an underwritten
public offering of shares of the Registrable Securities the anticipated
aggregate offering price of which is not less than $1,000,000, and the Company
is a registrant entitled to use Form S-3 to register the Registrable Securities
for such an offering, the Company shall use its reasonably commercial efforts to
cause such Registrable Securities to be registered in such underwritten offering
on such form; provided, however, that the Company shall not be required to
effect more than one such registration pursuant to this Section 1.4 in any
six-month period. The Company will (i) promptly give written notice of the
proposed registration to all other Holders (and to all Prior Holders if such
registration is to relate in part to the primary offer and sale of shares of the
Common Stock); and (ii) as soon as practicable, use its reasonably commercial
efforts to effect such registration (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders (or, if the registration is to relate in part to the primary offer and
sale of shares of Common Stock, of any Prior Holder) joining in such request as
are specified in a written request received by the Company within fifteen (15)
days after receipt of such written notice from the Company. The substantive
provisions of Section 1.2(b) shall be applicable to each registration initiated
under this Section 1.4.

            (b) Notwithstanding the foregoing, the Company shall not be
obligated to take any action pursuant to this Section 1.4: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) during the ninety (90)
days immediately following the effective date of the registration statement
pertaining to the initial public offering of securities of the Company; or (iii)
if (a) an investment banking firm of recognized national standing shall advise
the Company and the Holders in writing that effecting the registration would
materially and adversely affect an offering of the securities of the Company the
preparation of which has then been commenced; or (b) the Company is in
possession of material non-public information the disclosure of which during the
period specified in such notice the Company believes would not be in the best
interest of the Company, provided that the Company's obligation to use its
commercially reasonable efforts to register, qualify or comply under this
Section 1.2 shall be deferred for a period not to exceed ninety (90) days, and
provided, further, that the Company shall not exercise its right under this
clause to defer such obligation more than once in any twelve (12) month period.

                                      -6-
<PAGE>   7

        1.5 Expenses of Registration.

            (a) All Registration Expenses incurred in connection with (i) one
registration pursuant to Section 1.2; (ii) all registrations pursuant to Section
1.3; and (iii) one registration pursuant to Section 1.4, shall be borne by the
Company. The Company shall not be required to pay the Registration Expenses of
any registration proceeding begun pursuant to Section 1.2, the request of which
has been subsequently withdrawn by the Initiating Holders. Notwithstanding the
foregoing, if prior to such withdrawal the Holders have learned of a material
adverse change in the condition, business or prospects of the Company from that
known to the Holders at the time of their request, of which the Company had
knowledge at the time of the request, then the Holders shall not be required to
pay any of said Registration Expenses or to forfeit the right to one demand
registration.

            (b) All Selling Expenses incurred in connection with any
registration hereunder shall be borne pro-rata by the Holders (and, if
applicable, Prior Holders) participating in such registration according to the
number of Registrable Securities sold by such participating Holder (or, if
applicable, Prior Holder) in such registration.

            (c) Notwithstanding the provisions of Section 1.5(a), if, as a
condition of registration or qualification of any offering in any state or
jurisdiction in which the Company or any underwriter determines in good faith
that it wishes to offer securities registered in an offering to which this
Agreement applies, it is required that offering expenses be allocated in a
manner different from that provided in Section 1.5(a), the offering expenses
shall be allocated in whatever permitted manner is most nearly in compliance
with the provisions of this Agreement, so long as such allocation does not
materially reduce the net proceeds received by any Holder.

        1.6 Indemnification.

            (a) To the extent permitted by law, the Company will indemnify each
Holder, each of its officers and directors and partners, and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
with respect to which 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 or liabilities (or
actions in respect thereof), including any of the foregoing incurred in
settlement of any litigation, commenced or threatened, arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any registration statement, prospectus, offering circular or other
document, or any amendment or supplement thereto, incident to any such
registration, qualification or compliance, or based on any omission (or alleged
omission) to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading, or any violation (or alleged violation) by the
Company of the Securities Act or any rule or regulation promulgated under the
Securities Act applicable to the Company in connection with any such
registration, qualification or compliance, and the Company will reimburse or pay
for the account of each such Holder, each of its officers and directors, and
each person controlling such Holder, each such underwriter and each person who
controls any such underwriter, for any legal and any other

                                      -7-
<PAGE>   8

expenses reasonably incurred (as and when incurred) in connection with
investigating, preparing or defending any such claim, loss, damage, liability or
action; provided, however, that the Company will not be liable in any such case
to the extent that any such claim, loss, damage, liability or expense arises out
of or is based on any untrue statement or omission or alleged untrue statement
or omission, made in reliance upon and in conformity with written information
furnished to the Company by an instrument duly executed by such Holder,
controlling person or underwriter and stated to be specifically for use therein.

            (b) To the extent permitted by law, each Holder will, if Registrable
Securities held by such Holder are included in the securities as to which such
registration, qualification or compliance is being effected, indemnify the
Company, each of its directors and officers, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Holder, each of its officers and directors
and each person controlling such Holder within the meaning of Section 15 of the
Securities Act, against all claims, losses, damages and liabilities (or actions
in respect thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
or pay for the account of the Company, such Holders, such directors, officers,
persons, underwriters or control persons for any legal or any other expenses
reasonably incurred (as and when incurred) in connection with investigating or
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such-registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Holder and stated to be specifically for use therein;
provided, however, that the liability of a Holder for indemnification under this
Section 1.6(b) shall not exceed the net proceeds from the offering received by
such Holder, unless such liability arises out of or is based on willful
misconduct of such Holder.

            (c) Each party entitled to indemnification under this Section 1.6
(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, further, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (which approval shall not
unreasonably be withheld), and the Indemnified Party may participate in such
defense at such party's expense; provided, however, that an Indemnified Party
shall have the right to retain its own counsel, with the fees and expenses to be
paid by the Indemnifying Party, if representation of such Indemnified Party by
the counsel retained by the Indemnifying Party would be inappropriate due to
actual or potential differing interests between such Indemnified Party and any
other party represented by such counsel in such proceeding. The failure of any
Indemnified Party to give notice as provided herein shall not relieve the

                                      -8-
<PAGE>   9

Indemnifying Party of its obligations hereunder except to the extent that the
failure to give such notice is materially prejudicial to an Indemnifying Party's
ability to defend such action. 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 that 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. No Indemnifying Party shall be liable for indemnification
hereunder with respect to any settlement or consent to judgment in connection
with any claim or litigation to which these indemnification provisions apply,
that has been entered into without the prior consent of the Indemnifying Party
(which consent will not be unreasonably withheld).

            (d) If the indemnification provided for in this Section 1.6 is held
by a court of competent jurisdiction to be unavailable to an Indemnified Party
with respect to any losses, claims, damages or liabilities referred to herein,
the Indemnifying Party, in lieu of indemnifying such Indemnified Party
hereunder, shall to the extent permitted by applicable law, contribute to the
amount paid or payable by such Indemnified Party as a result of such loss,
claim, damage or liability 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 untrue statement (or alleged untrue
statement) or omission (or alleged omission) that resulted in such loss, claim,
damage or liability, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and of the Indemnified Party shall be
determined by a court of law 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;
provided, that in no event shall any contribution by a Holder hereunder exceed
the net proceeds from the offering received by such Holder. Each Holder's
obligation to contribute pursuant to this Section 1.6 is several and not joint.

            (e) The obligations of the Company and the Holders under this
Section 1.6 shall survive the completion of any offering of Registrable
Securities in a registration statement pursuant to this Agreement.

        1.7 Information of Holder; Copies of Prospectus. The Holder or Holders
of Registrable Securities included in any registration shall furnish to the
Company such information regarding such Holder or Holders, the Registrable
Securities held by them and the distribution proposed by such Holder or Holders
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to herein. In
connection with any such registration, the Company shall furnish to such Holder
or Holders such numbers of copies as may be reasonably requested in order to
facilitate the disposition of Registrable Securities owned by such Holder of any
prospectus or preliminary prospectus prepared in conformity with the Securities
Act.

                                      -9-
<PAGE>   10

        1.8 Obligations of the Company. Whenever required under this Agreement
to effect the registration of any Registrable Securities, the Company shall, as
soon as practicable:

            (a) Prepare and file with the Commission a registration statement
with respect to such Registrable Securities and use its commercially reasonable
efforts to cause such registration statement to become effective, and upon the
request of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for a period of up to one
hundred eighty (180) days or until the distribution contemplated in the
Registration Statement has been completed.

            (b) Prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.

            (c) Use its commercially reasonable efforts to register and qualify
the securities covered by such registration statement under such other
securities or blue sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company shall not be required in
connection therewith or as a condition thereto to file a general consent to
service of process in any such states or jurisdictions.

            (d) Notify each Holder of Registrable Securities covered by such
registration statement at any time when a prospectus relating thereto is
required to be delivered under the Securities Act of the happening of any event
as a result of which the prospectus included in such registration statement, as
then in effect, includes an untrue statement of a material fact or omits to
state a material fact 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.

            (e) Furnish to the Holders participating in such registration and,
if applicable, to the underwriters of the securities being registered, such
reasonable number of copies of the registration statement, preliminary
prospectus, final prospectus, and such other documents as such underwriters may
reasonably request in order to facilitate the public offering of such
securities.

            (f) Enter into and perform its obligations under an underwriting
agreement, in usual and customary form, with the managing underwriter of such
offering. Each Holder participating in such underwriting shall also enter into
and perform its obligations under such an agreement.

        1.9 Rule 144 Reporting. With a view to making available the benefits of
certain rules and regulations of the Commission, which may permit the sale of
the Restricted Securities to the public without registration, after such time as
a public market exists for the Common Stock of the Company, the Company agrees
to use its commercially reasonable efforts to:

            (a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act at all times after
the effective date that the

                                      -10-
<PAGE>   11

Company becomes subject to the reporting requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act");

            (b) 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;

            (c) So long as a Holder owns any Restricted Securities, furnish to
the Holder forthwith upon request a written statement by the Company as to its
compliance with the reporting requirements of said Rule 144, a copy of the most
recent annual or quarterly report of the Company and such other reports and
documents of the Company and other information in the possession of or
reasonably obtainable by the Company as a Holder may reasonably request in
availing itself of any rule or regulation of the Commission allowing a Holder to
sell any such securities without registration; and

            (d) Take such action, including the voluntary registration of its
Common Stock under Section 12 of the Exchange Act, as is necessary to enable the
Holders to utilize Form S-3 for the sale of their Registrable Securities, such
action to be taken as soon as practicable after the end of the fiscal year in
which the first registration statement filed by the Company for the offering of
its securities to the general public is declared effective.

        1.10 Transfer of Registration Rights. The rights to cause the Company to
register securities granted to Holders under Sections 1.2, 1.3, and 1.4 may be
assigned or otherwise conveyed to a transferee or assignee in connection with
any transfer or assignment of Registrable Securities by a Holder (together with
any affiliate) provided that: (i) such transfer may otherwise be effected in
accordance with applicable securities laws; (ii) the transferee shall agree to
be bound by all of the provisions of this Agreement and the Right of First
Refusal Agreement; (iii) such transfer does not violate any agreements by and
among the Company and such Holders (including without limitation the Right of
First Refusal Agreement); and (iv) such transferee or assignee (a) is a wholly
owned subsidiary, constituent partner (including retired and limited partners)
or affiliate of such Holder, (b) is any family member of any individual Holder,
(c) is a trust for the benefit of any individual Holder, or (d) acquires from
such Holder at least 1,200,000 shares of the Company's Registrable Securities
subject to this Agreement (as adjusted for any stock split, combination or the
like), or a lesser amount provided such transferee or assignee acquires all of
the shares of the Company's capital stock subject to this Agreement then held by
such Holder. Notwithstanding the foregoing, no transfer shall be effective
hereunder unless the Company is given written notice by such transferee at the
time of said transfer stating the name and address of said transferee, setting
forth the facts underlying said transferee's compliance with this Section 1.10,
and setting forth said transferees agreement to be bound by this Agreement and
the Right of First Refusal Agreement.

        1.11 Standoff Agreement. Each Holder agrees in connection with the
initial underwritten public offering of the Company's securities, upon request
of the Company or the underwriters managing any such offering, not to sell, make
any short sale of, loan, grant any option for the purchase of or otherwise
dispose of any Registrable Securities (other than those included in the
registration) without the prior written consent of the Company or such
underwriters, as the case may be, for such period of time (not to exceed one
hundred eighty (180) days) from the effective date of

                                      -11-
<PAGE>   12

such registration as may be requested by the Company or such managing
underwriters; provided, however, that each of the Company's officers and
directors shall have agreed to be bound by the same restrictions.

        1.12 Additional Holders. Any purchaser of Series E subsequent to the
date hereof, shall be entitled to be a party to this Agreement. The Company
shall amend Exhibit A here to reflect such subsequent purchasers, and shall
deliver a copy thereof to the other parties to this Agreement. Such subsequent
purchasers, upon execution and delivery of a counterpart signature page to this
Agreement, shall be included herein as "Holders" and the Series E purchased by
such subsequent purchasers shall be included herein as "Registrable Securities."

                                   SECTION 2

                                  MISCELLANEOUS

        2.1 Transfer; Successors and Assigns. Except as the transferability of
rights is expressly limited herein, the terms and conditions of this Agreement
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.

        2.2 Governing Law. This Agreement shall be governed by and construed
under the laws of the state of California as applied to agreements among
California residents entered into and to be performed entirely within
California.

        2.3 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.

        2.4 Notices. All notices and other communications required or permitted
hereunder shall be in writing and shall be mailed by registered or certified
mail, postage prepaid, or otherwise delivered by hand or by messenger, addressed
(a) if to a Holder, at such address as such Holder shall have furnished to the
Company in writing, or (b) if to the Company, at 3099 Orchard Drive, San Jose,
California 95134 to the attention of the President. A notice shall be effective
when actually delivered by hand or messenger, or five (5) business days after
deposit, postage prepaid, in the mail.

        2.5 Termination. This Agreement shall terminate with respect to any
Holder when such Holder may sell all of its Registrable Securities under Rule
144(k).

        2.6 Severability. If any provision of this Agreement, or the application
thereof, will for any reason and to any extent be invalid or unenforceable, the
remainder of this Agreement and application of such provision to other persons
or circumstances will be interpreted so as to reasonably effect the intent of
the parties hereto. The parties further agree to replace such void or
unenforceable provision of this Agreement with a valid and enforceable provision
that will achieve,

                                      -12-
<PAGE>   13

to the extent possible, the economic, business and other purposes of the void or
unenforceable provision.

        2.7 Entire Agreement. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subjects
hereof.

        2.8 Modifications and Amendments. This Agreement may be modified or
amended only with the written consent of the Company and the Holders holding at
least a majority of the Registrable Securities then subject to this Agreement.
Each Holder acknowledges that by the operation of this Section 2.8 the Holders
of a majority of the Registrable Securities may have the right and power to
diminish or eliminate all rights of such Holder under this Agreement. Each
Holder agrees that its consent to amend this Agreement shall not be unreasonably
withheld in the event the Company desires to amend this Agreement (i) to include
in the definition of Holder additional purchasers of Registrable Securities of
the Company who acquire such shares in a transaction subsequent to the date of
this Agreement; and (ii) to grant to those Holders who acquire such Registrable
Securities in a subsequent transaction rights similar to those granted to the
Holders hereunder. Each Holder also acknowledges and agrees that the purchasers
of up to an aggregate of 5,000,000 shares of the Series E will become parties to
this Agreement by the execution and delivery of a counterpart signature page
hereto and by and amendment to Exhibit A to include the name or names of such
purchasers thereon.

                  [Remainder of Page Intentionally Left Blank]

                                      -13-

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