REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT ("Agreement") is made and entered into
as of November 19, 1999, by and among ASK JEEVES, INC., a Delaware corporation
("Parent"), and the stockholders of NET EFFECT SYSTEMS, INC., a Delaware
corporation (the "Company"), identified on EXHIBIT A hereto (the
"Stockholders").
RECITALS
A. Parent, Neutral Acquisition Corp., a Delaware corporation and a
wholly owned subsidiary of Parent ("Merger Sub"), and the Company have entered
into an Agreement and Plan of Merger and Reorganization dated as of November 14,
1999 (the "Reorganization Agreement"), pursuant to which Merger Sub will merge
with and into the Company (the "Merger") and the Stockholders will have the
right to receive shares of common stock of Parent. Capitalized terms used in
this Agreement and not otherwise defined shall have the meanings given to them
in the Reorganization Agreement.
B. Parent has agreed to provide the Stockholders with certain
registration rights as more fully described herein.
AGREEMENT
The parties, intending to be legally bound, agree as follows:
SECTION 1. GENERAL
1.1 DEFINITIONS. As used in this Agreement the following terms
shall have the following respective meanings:
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"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
effectiveness of such registration statement or document.
"REGISTERABLE SHARES" means the shares of Parent Common Stock
issued to the Stockholders pursuant to the Reorganization Agreement and any
shares of Parent Common Stock issued in respect thereof as a result of any
stock split, stock dividend, share exchange, merger, consolidation or similar
recapitalization; PROVIDED, HOWEVER, that Registerable Shares shall cease to
be Registerable Shares when (i) a registration statement covering such
Registerable Shares shall have become effective under the Securities Act, and
such Registerable Shares shall have been disposed of in accordance with the
Registration Statement, or (ii) such Registerable Shares may be transferred
pursuant to Rule 144 under the 1933 Act, as such rule may be amended from
time to time, or any successor rule or regulation ("Rule 144") in any single
calendar quarter and PROVIDED FURTHER, that Registerable Shares shall include
all of the shares of Parent Common Stock held in any "Escrow Account"
pursuant to the Escrow Agreement dated of even date herewith
1.
among certain of the Stockholders, Parent, the Stockholders' Agent (as
defined therein) and State Street Bank and Trust Company of California, N.A.,
as escrow agent (the "Escrow Agreement"). The Stockholders desiring to sell
shares pursuant to Rule 144 shall provide such Rule 144 representation
letters and broker's letters as may reasonably be requested by Parent and its
transfer agent in order that such shares may be sold pursuant to Rule 144.
Parent shall cause its legal counsel to provide any legal opinions as may
reasonably be required by Parent's transfer agent to effect such sales
pursuant to Rule 144.
"REGISTRATION EXPENSES" shall mean all expenses incurred by
Parent in complying with Sections 2.1 and 2.3 hereof, including, without
limitation, all registration and filing fees, printing expenses, fees and
disbursements of counsel for Parent, reasonable fees and disbursements not to
exceed fifteen thousand dollars ($15,000) of a single special counsel for the
Stockholders, blue sky fees and expenses and the expense of any special
audits incident to or required by any such registration (including the
compensation of regular employees of Parent which shall be paid in any event
by Parent).
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
SECTION 2. REGISTRATION; RESTRICTIONS ON TRANSFER
2.1 REGISTRATION. No later than ten (10) days after the
date on which financial results covering at least thirty (30) days of
post-Merger combined operations of Parent and the Company have been published
by Parent (within the meaning of the applicable "pooling of interests"
accounting requirements) ("the "Proposed Filing Date"), Parent shall prepare
and file with the Securities and Exchange Commission ("SEC") a registration
statement (the "Registration Statement") covering the resale of the
Registerable Shares. Parent shall use its best efforts to cause the
Registration Statement to be declared effective as soon as practicable after
the filing. Subject to the terms of this Agreement, Parent shall use best
efforts to cause the Registration Statement to remain effective until the
earlier of (i) the date on which all Registerable Shares covered by the
Registration Statement have been sold to the public pursuant to the
Registration Statement or (ii) one year after the Closing Date (the
"Registration Effective Period"). The parties hereto acknowledge that Parent
may take such action as is necessary to register with the SEC the
Registerable Shares for resale on Form S-3 instead of Form S-1 at such time
as Parent becomes eligible to use Form S-3 for the registration of shares of
its capital stock.
2.2 EXPENSES OF REGISTRATION. Except as specifically
provided herein, all Registration Expenses incurred in connection with any
registration, qualification or compliance pursuant to Section 2.1 herein
shall be borne by Parent.
2.3 OBLIGATIONS OF PARENT. Whenever required to effect the
registration of the Registerable Shares pursuant to Section 2.1, Parent
shall, as expeditiously as reasonably possible:
(a) Prepare and file with the SEC such amendments and
supplements to the Registration Statement and the prospectus used in
connection with the Registration
2.
Statement as may be necessary to comply with the provisions of the Securities
Act with respect to the disposition of all securities covered by the
Registration Statement for the period set forth in paragraph 2.1 above.
(b) Furnish to the Stockholders such number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of Registerable
Shares owned by them.
(c) Use its best efforts to register and qualify the
securities covered by the Registration Statement under such other securities
or Blue Sky laws of such jurisdictions as shall be reasonably requested by
the Stockholders; PROVIDED that Parent shall not be required in connection
therewith or as a condition thereto to qualify to do business or to file a
general consent to service of process in any such states or jurisdictions.
(d) Use its best efforts to periodically amend such
registration statement to include such information as may be necessary
(including quarterly financial results for periods after the date such
Registration Statement becomes effective) to maintain the effectiveness of
the Registration Statement and cause it to contain current information.
(e) Use its best efforts to periodically amend such
registration statement to include such information as may be necessary
(including quarterly financial results for periods after the date such
Registration become effective) to maintain the effectiveness of Registration
Statement and cause it to contain current information.
(f) Notify each Stockholder covered by the
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 the 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. Immediately thereafter Parent shall use
commercially reasonable efforts to prepare and file with the SEC and furnish
to each Stockholder as promptly as possible a reasonable number of copies of
a supplement to or an amendment of such prospectus as may be necessary so
that, as thereafter delivered to the purchasers of such Registerable Shares,
such prospectus shall not include an 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 not misleading in the light of the circumstances
then existing.
(g) Use its best efforts to furnish, on the date that
such Registerable Shares are delivered to the underwriters for sale, if such
securities are being sold through underwriters, (i) an opinion, dated as of
such date, of the counsel representing Parent for the purposes of such
registration, in form and substance as is customarily given to underwriters
in an underwritten public offering, addressed to the underwriters, if any,
and (ii) a letter dated as of such date, from the independent certified
public accountants of Parent, in form and substance as is customarily given
by independent certified public accountants to underwriters in an
underwritten public offering addressed to the underwriters.
3.
(h) To the extent not already covered by the
Registration Statement, use commercially reasonable efforts to promptly amend
the registration Statement to cover, or prepare and file with the SEC a
registration statement covering, the resale of any shares issued to the
Stockholders' Agent as payment for fees and expenses incurred by the
Stockholders' Agent under the Escrow Agreement.
2.4 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Stockholder shall have any right to obtain or
seek an injunction restraining or otherwise delaying any such registration as
the result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the
obligations of Parent to take any action pursuant to Section 2.1 that the
Stockholders shall furnish to Parent such information regarding themselves,
the Registerable Shares held by them and the intended method of disposition
of such securities as shall be required to effect the registration of their
Registerable Shares.
2.5 INDEMNIFICATION. In the event any Registerable Shares
are included in a registration statement under Section 2.1:
(a) To the extent permitted by law, Parent will
indemnify and hold harmless each Stockholder, the partners, officers and
directors of each Stockholder, any underwriter (as defined in the Securities
Act) for such Stockholder and each person, if any, who controls such
Stockholder or underwriter within the meaning of the Securities Act or the
Exchange Act, against any losses, claims, damages, or liabilities (joint or
several) to which they may become subject under the Securities Act, the
Exchange Act or other federal or state law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are
based upon any of the following statements, omissions or violations
(collectively a "Violation") by Parent: (i) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto, (ii) the omission or alleged omission
to state therein a material fact required to be stated therein, or necessary
to make the statements therein not misleading, or (iii) any violation or
alleged violation by Parent of the Securities Act, the Exchange Act, any
state securities law or any rule or regulation promulgated under the
Securities Act, the Exchange Act or any state securities law in connection
with the offering covered by the Registration Statement; and Parent will pay
as incurred to each such Stockholder, partner, officer, director, underwriter
or controlling person for any legal or other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
damage, liability or action; PROVIDED HOWEVER, that the indemnity agreement
contained in this Section 2.5(a) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of Parent, which consent shall not
be unreasonably withheld, nor shall Parent be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished
4.
expressly for use in connection with such registration by such Stockholder,
partner, officer, director, underwriter or controlling person of such
Stockholder.
(b) To the extent permitted by law, each Stockholder
will indemnify and hold harmless Parent, each of its directors, its officers
and each person, if any, who controls Parent within the meaning of the
Securities Act, any underwriter and any other Stockholder selling securities
under such registration statement or any of such other Stockholder's
partners, directors or officers or any person who controls such Stockholder,
against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange Act or
other federal or state law, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any Violation, in each case to the extent (and only to the extent) that such
Violation occurs in reliance upon and in conformity with written information
furnished by such Stockholder under an instrument duly executed by such
Stockholder and stated to be specifically for use in connection with such
registration; and each such Stockholder will pay as incurred any legal or
other expenses reasonably incurred by Parent or any such director, officer,
controlling person, underwriter or other Stockholder, or partner, officer,
director or controlling person of such other Stockholder in connection with
investigating or defending any such loss, claim, damage, liability or action
if it is judicially determined in a final, non-appealable decision that there
was such a Violation; PROVIDED, HOWEVER, that the indemnity agreement
contained in this Section 2.5(b) shall not apply to amounts paid in
settlement of any such loss, claim, damage, liability or action if such
settlement is effected without the consent of the Stockholder, which consent
shall not be unreasonably withheld; PROVIDED FURTHER, that in no event shall
any indemnity under this Section 2.5 exceed the net proceeds from the
offering received by such Stockholder.
(c) Promptly after receipt by an indemnified party
under this Section 2.5 of notice of the commencement of any action (including
any governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section 2.5,
deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with
counsel mutually satisfactory to both the indemnifying party and the
indemnified party; 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
to deliver written notice to the indemnifying party within a reasonable time
of the commencement of any such action, if materially prejudicial to its
ability to defend such action, shall relieve such indemnifying party of any
liability to the indemnified party under this Section 2.5, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 2.5.
(d) If the indemnification provided for in this
Section 2.5 is held by a court of competent jurisdiction to be unavailable to
an indemnified party with respect to any
5.
losses, claims, damages or liabilities referred to herein, the indemnifying
party, in lieu of indemnifying such indemnified party thereunder, 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 Violation(s) 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 Stockholder hereunder exceed the net proceeds from the
offering received by such Stockholder.
(e) The obligations of Parent and Stockholders under
this Section 2.5 shall survive completion of any offering of Registerable
Shares in a registration statement and the termination of this agreement. 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.
2.6 RULE 144 REPORTING. With a view to making available to
the Stockholders the benefits of certain rules and regulations of the SEC
which may permit the sale of the Registerable Shares to the public without
registration, Parent agrees to:
(a) Make and keep public information available, as
those terms are understood and defined in SEC Rule 144 or any similar or
analogous rule promulgated under the Securities Act, at all times after the
effective date of the first registration filed by Parent for an offering of
its securities to the general public;
(b) File with the SEC, in a timely manner, all
reports and other documents required of Parent under the Exchange Act; and
(c) So long as a Stockholder owns any Registerable
Shares, furnish to such Stockholder forthwith upon request: a written
statement by Parent as to its compliance with the reporting requirements of
said Rule 144 of the Securities Act, and of 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 Parent; and such other reports and
documents as a Stockholder may reasonably request in availing itself of any
rule or regulation of the SEC allowing it to sell any such securities without
registration.
2.7 CESSATION OF OFFERING. Upon receipt of any notice from
Parent of the happening of any event of the kind described in Section 2.3(e),
each Stockholder shall immediately discontinue disposition of the
Registerable Shares pursuant to the Registration Statement covering such
shares until the Stockholders' receipt of the copies of the supplemented
6.
or amended prospectus contemplated by Section 2.3(e), and, if so directed by
Parent, deliver to Parent all copies of the prospectus covering such
Registerable Shares in such Stockholder's possession at the time of receipt
of such notice.
SECTION 3. MISCELLANEOUS
3.1 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.
3.2 SURVIVAL. The representations, warranties, covenants,
and agreements made herein shall survive any investigation made by any
Stockholder and the closing of the transactions contemplated hereby. All
statements as to factual matters contained in any certificate or other
instrument delivered by or on behalf of Parent pursuant hereto in connection
with the transactions contemplated hereby shall be deemed to be
representations and warranties by Parent hereunder solely as of the date of
such certificate or instrument.
3.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly
provided herein, the provisions hereof shall inure to the benefit of, and be
binding upon, the successors, assigns, heirs, executors, and administrators
of the parties hereto and shall inure to the benefit of and be enforceable by
each person who shall be a holder of Registerable Shares from time to time;
PROVIDED, HOWEVER, that prior to the receipt by Parent of adequate written
notice of the transfer of any Registerable Shares specifying the full name
and address of the transferee, Parent may deem and treat the person listed as
the holder of such shares in its records as the absolute owner and holder of
such shares for all purposes, including the payment of dividends or any
redemption price. The obligations contained in this Agreement shall be
assumed by any successor in interest of Parent.
3.4 ENTIRE AGREEMENT. This Agreement, the Exhibits and
Schedules hereto, the Purchase Agreement and the other documents delivered
pursuant thereto constitute the full and entire understanding and agreement
between the parties with regard to the subjects hereof and no party shall be
liable or bound to any other in any manner by any representations,
warranties, covenants and agreements except as specifically set forth herein
and therein.
3.5 SEVERABILITY. In case any provision of the Agreement
shall be invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
3.6 AMENDMENT AND WAIVER.
(a) Any provision of this Agreement may be amended
and the observance thereof may be waived (either generally or in a particular
instance and either retroactively or prospectively), only with the written
consent of Parent and the Stockholders owning of record at least a majority
of the Registerable Shares then outstanding. Any amendment or waiver
effected in accordance with this Section 3.6 shall be binding upon each
Stockholder and Parent; provided, however, that no such amendment or waiver
shall
7.
disproportionately affect a Stockholder adversely without such Stockholder's
consent. By acceptance of any benefits under this Agreement, the
Stockholders hereby agree to be bound by the provisions hereunder.
(b) Except as otherwise expressly provided, the
obligations of Parent and the rights of the Stockholders under this Agreement
may be waived only with the written consent of the holders of at least a
majority of the Registerable Shares.
3.7 NOTICES. All notices required or permitted hereunder
shall be in writing and shall be deemed effectively given: (a) upon personal
delivery to the party to be notified, (b) when sent by confirmed telex or
facsimile if sent during normal business hours of the recipient; if not, then
on the next business day, (c) five (5) days after having been sent by
registered or certified mail, return receipt requested, postage prepaid, or
(d) one (1) day after deposit with a nationally recognized overnight courier,
specifying next day delivery, with written verification of receipt. All
communications shall be sent to the party to be notified at the address as
set forth on the signature pages hereof or Exhibit A hereto or at such other
address as such party may designate by ten (10) days advance written notice
to the other parties hereto.
3.8 ATTORNEYS' FEES. In the event that any dispute among
the parties to this Agreement should result in litigation, the prevailing
party in such dispute shall be entitled to recover from the losing party all
fees, costs and expenses of enforcing any right of such prevailing party
under or with respect to this Agreement, including without limitation, such
reasonable fees and expenses of attorneys and accountants, which shall
include, without limitation, all fees, costs and expenses of appeals.
3.9 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.
3.10 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.
8.
This Registration Rights Agreement has been executed and delivered as of
the date first stated above.
ASK JEEVES, INC.
By:
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Name:
-----------------------------
Title:
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SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
STOCKHOLDER:
By:
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Name:
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Title:
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SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT
EXHIBIT A
STOCKHOLDERS
631465 Alberta Ltd.
A Xxxxxx Xxxxxx and Jo Xxx Xxxxxx, Trustees of the Xxxxxx Living Trust
dated 1/21/98
Xxxx Xxxxxxx
Xxxxxxx X. Xxxxxxxx
Greylock IX Limited Partnership
Xxxxx Xxxxx
Xxxxxx X. Xxxxxxx
The R.E.K. Profit-Sharing Trust FBO Xxxxxx X. Xxxx
King Living Trust U/A/D June 19, 1989 - Xxxxxx Xxxxx Xxxx, Xxxxxxx Xxxxx
Xxxx, Trustees
X. Xxxxxxxx Xxxx
Xxxx X. Xxxxxxx
Xxxxxxx X. XxXxxx
Xxxxx Xxxxxx and Company
Xxxxxx X. X'Xxxxx Custodian Connor O'Brien Under CA Uniform Transfers
To Minors Act Until Age 21
Xxxxxx X. X'Xxxxx Custodian Xxxxxx X'Xxxxx Under CA Uniform Transfers
To Minors Act Until Age 21
Xxxxxxxx X. X'Xxxxx and Xxxxxx Xxxxx X'Xxxxx, Trustees of the O'Brien Family
Trust
U/T/A dtd. 7/1/92
Old Dominion University
Q Financial Group, LLC
San Francisco International Investors
Xxxx X. Xxxxxxxx
Stanford University
Xxxx Xxxxxxx
Xxxxxxxxx X. Xxxxxxxx
XX Ventures III Interfund L.P.
TL Ventures III Offshore L.P.
TL Ventures III L.P.
Trinity Ventures V, L.P.
Trinity V Side by Side Fund, L.P.
Xxxxxxx Xxx Xxxxxxx Trust - Xxxxxxx Xxx Xxxxxxx, Trustee
WS Investment 99A
WS Investment Company 97B
Xxxxxx Xxxx
