EXHIBIT 99.4
SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT
This SECOND AMENDED AND RESTATED STOCKHOLDERS AGREEMENT (the
"Agreement") is made as of May 20, 2008 by and among Nuance Communications,
Inc., a corporation organized and existing under the laws of the State of
Delaware (the "Company"), Warburg Pincus Private Equity VIII, L.P., Warburg
Pincus Netherlands Private Equity VIII C.V. I, and WP-WPVIII Investors, L.P.
(collectively, the "Purchasers")
RECITALS
A. Immediately prior to the closing of the transactions contemplated
by the Purchase Agreement (as defined below), the Purchasers Beneficially Own an
aggregate of 42,277,057 shares of Voting Stock of the Company, including
warrants to purchase an aggregate of 7,066,538 shares of the Company Common
Stock;
B. The Purchasers are purchasing an additional 5,760,369 shares of
Company Common Stock and warrants to purchase an aggregate of 3,700,000 shares
of Company Common Stock (the "Warrants") pursuant to that certain Purchase
Agreement, dated as of April 7, 2008 (the "Purchase Agreement");
C. The Board of Directors of the Company (the "Board") has determined
that it is in the best interests of the Company and its stockholders to issue
and sell the shares of Company Common Stock and the Warrants to the Purchaser;
D. The Company and the Purchasers are parties to that certain Amended
and Restated Stockholders Agreement, dated as of May 5, 2005 (the "Prior
Agreement"); and
E. The Company and the Purchasers desire to amend and restate the
rights and obligations set forth in the Prior Agreement, in each case as set
forth herein.
NOW THEREFORE, in consideration of the covenants and promises set
forth herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereby agree as
follows:
AGREEMENT
1. Certain Definitions. Unless the context otherwise requires, the
following terms, for all purposes of this Agreement, shall have the meanings
specified in this Section 1:
"Additional Director Board Appointment Period" shall mean the period from
the date hereof and ending on the later of (i) the date that the Purchasers
shall cease to Beneficially Own at least 25,000,000 shares of Voting Stock (as
adjusted from time to time for any stock dividends, combinations,
recapitalizations and the like) or (ii) the date that the Purchasers' percentage
Beneficial Ownership of the Voting Stock is less than the quotient of (x) two
(2) divided by (y) the then authorized number of directors of the Company.
"Affiliate" shall have the meaning set forth in Rule 12b-2 of the rules and
regulations promulgated under the Exchange Act; provided, however, that for
purposes of this Agreement, the Purchasers and their Affiliates, on the one
hand, and the Company and its Affiliates, on the other, shall not be deemed to
be "Affiliates" of one another.
"Beneficially Own," "Beneficially Owned," or "Beneficial Ownership" shall
have the meaning set forth in Rule 13d-3 of the rules and regulations
promulgated under the Exchange Act.
"Closing Date" shall have the meaning ascribed to such term in the Purchase
Agreement.
"Company Common Stock" shall mean shares of the Common Stock of the
Company, $0.001 par value.
"Company Competitor" shall mean any person or entity (or any Affiliates of
such a person or entity) that (i) conducts material activities and operations
consisting of providing speech technology primarily for use in telephony-network
based services, mobile or embedded platforms, or desktop or server-based
dictation software applications, (ii) develops and licenses software that
incorporates document capture or image processing technology, (iii) has filed a
statement on Schedule 13D pursuant to Rule 13d-l(a) with the SEC that indicates
under Item 4 of such Schedule that the person has acquired or holds the
securities with a purpose or effect of changing or influencing control of the
Company, or in connection with or as a participant in any transaction having
that purpose or effect, or (iv) to the Purchasers' knowledge after a written
request, intends to file a statement on Schedule 13D with the SEC indicating
under Item 4 of such Schedule that the person has acquired or holds the
securities with a purpose or effect of changing or influencing control of the
Company, or in connection with or as a participant in any transaction having
that purpose or effect.
"Controlled Fund" shall mean any fund of which Warburg Pincus Partners LLC
is a general partner.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.
"Exchange Offer" shall mean a bona fide exchange offer subject to the
provisions of Rule 13e-3 promulgated under the Exchange Act.
"Fair Market Value" means, as of any date of determination, (i) in the case
of Company Common Stock, the average of the closing sale prices of Company
Common Stock during the 5 trading days immediately preceding such date of
determination on the principal U.S. or foreign securities exchange on which such
Company Common Stock is listed or, if such Company Common Stock is not listed or
primarily traded on any such exchange, the average of the closing sale prices or
the closing bid quotations of such security during the 5 day period preceding
such date of determination on Nasdaq or any comparable system then in use or, if
no such quotations are available, the fair market value of such security as of
such date of determination as determined in good faith by the Company and the
holders of a majority in interest of the shares of Company Common Stock then
held by the Purchasers and (ii) in the case of property other than cash or a
security, the fair market value of such property on such date of determination
as determined in good faith by the Company and the holders of a majority in
interest of the shares of Company Common Stock then held by the Purchasers;
provided, however, that if such parties are unable to reach agreement as to the
fair market value of such security pursuant to clause (i) above or such property
pursuant to clause (ii) above within a reasonable period of time, the fair
market value shall be determined in good faith by an independent investment
banking firm selected jointly by the Company and the holders of a majority in
interest of the shares
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of Company Common Stock then held by the Purchasers or, if that selection cannot
be made within 15 days, by an independent investment banking firm selected by
the American Arbitration Association in accordance with its rules. All costs and
expenses of such independent investment banking firm shall be borne 50% by the
Company and 50% by the Purchasers, pro rata based on the number of shares of
Company Common Stock then held by each.
"Form S-3" means such form under the Securities Act as in effect on the
date hereof or any successor or similar registration form under the Securities
Act subsequently adopted by the SEC that permits inclusion or incorporation of
substantial information by reference to other documents filed by the Company
with the SEC.
"Holder" means any person owning of record Registrable Securities that have
not been sold to the public or any transferee or assignee of record of such
Registrable Securities to which the registration rights conferred by this
Agreement have been transferred or assigned in accordance with Section 5.8
hereof.
"Permitted Amount" shall mean the sum of (i) up to a maximum of 5% of the
issued and outstanding Voting Stock of the Company as calculated immediately
following the Closing Date and (ii) any amount of shares of Voting Stock
acquired directly from the Company after the date of this Agreement pursuant to
an agreement with the Company.
"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.
"Registrable Securities" means (a) shares of Company Common Stock (i) held
by the Purchasers on the day immediately following the Closing Date or (ii)
acquired pursuant to open market purchases following the Closing Date, and any
Company Common Stock issued as (or issuable upon the conversion or exercise of
any warrant, right or other security which is issued as) a dividend or other
distribution with respect to, or in exchange for or in replacement of, any
Company Common Stock, warrant, right or other security held by the Purchasers.
Notwithstanding the foregoing, Registrable Securities shall not include any
securities of the Company sold by any person to the public either pursuant to a
registration statement under the Securities Act or Rule 144.
"Registration Expenses" shall mean all expenses incurred by the Company in
complying with Sections 5.1 and 5.2 hereof, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, Blue Sky fees and expenses and the expense of any
special audits incidental 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, and all underwriting discounts and commissions).
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"Representatives" shall mean the directors, officers, employees and
independent contractors, agents or advisors (including, without limitation,
attorneys, accountants, and investment bankers) of the specified party or any of
its Subsidiaries.
"Rule 144" means Rule 144 as promulgated by the SEC under the Securities
Act, as such rule may be amended from time to time, or any similar successor
rule that may be promulgated by the SEC.
"SEC" or "Commission" means the Securities and Exchange Commission or any
other federal agency at the time administering the Securities Act.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar successor federal statute and the rules and regulations thereunder, all
as the same shall be in effect from time to time.
"Selling Expenses" means all underwriting discounts, selling commissions
and stock transfer rates applicable to the sale of Registrable Securities and,
except as set forth in the definition of "Registration Expenses" above, all fees
and reimbursement of counsel for the Holders.
"Shelf Registration Period" shall mean the period beginning immediately
following the Closing Date and ending at 12:00 a.m. New York City time on the
365th day after the effectiveness of any registration statement filed pursuant
to the terms of Section 5.3, as such period may be extended.
"Standstill Period" shall mean the three (3) year period beginning on the
Closing Date and ending at 12:00 a.m. New York City time on the third
anniversary of the Closing Date.
"Subsidiaries" shall mean each corporation, limited liability company,
partnership, association, joint venture or other business entity of which any
party or any of its Affiliates owns, directly or indirectly, more than 50% of
the stock or other equity interest entitled to vote on the election of the
members of the board of directors or similar governing body.
"Third Party Tender Offer" shall mean a bona fide public tender offer
subject to the provisions of Regulation 14D when first commenced within the
meaning of Rule 14d-2(a) of the rules and regulations under the Exchange Act, by
a person or 13D Group (which is not made by and does not include any of the
Company or any Affiliate of the Company) to purchase or exchange for cash or
other consideration any Voting Stock and which consists of an offer to acquire
more than 10% of the Voting Power of the Company.
"13D Group" means any group of persons formed for the purpose of acquiring,
holding, voting or disposing of Voting Stock which would be required under
Section 13(d) of the Exchange Act, and the rules and regulations promulgated
thereunder, to file a statement on Schedule 13D pursuant to Rule 13d-l(a) or
Schedule 13G pursuant to Rule 13d-1(c) with the SEC as a "person" within the
meaning of Section 13(d)(3) of the Exchange Act if such group Beneficially Owned
Voting Stock representing more than 5% of any class of Voting Stock then
outstanding.
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"Voting Power" shall mean the number of votes entitled to then be cast by
the Voting Stock of the Company at any election of directors of the Company,
provided that, for the purpose of determining Voting Power, each share of
Preferred Stock of the Company, if any (the "Preferred Stock"), shall be deemed
to be entitled to the number of votes equal to the number of shares of Company
Common Stock into which such share of Preferred Stock could then be converted.
"Voting Stock" shall mean shares of the Company Common Stock and any other
securities of the Company having the ordinary power to vote in the election of
members of the Board of Directors of the Company and any securities convertible,
exchangeable for or otherwise exercisable to acquire voting securities.
2. Appointment of the Purchasers' Nominee(s) to the Board. The Company
hereby agrees that (a) until the date that the Purchasers cease to Beneficially
Own at least 10,000,000 shares of Voting Stock (as adjusted from time to time
for any stock dividends, combinations, splits, recapitalizations and the like),
the Board shall take such action as may be necessary to appoint one (1) member
of the Board who shall be designated by the holders of a majority in interest of
the shares of Company Common Stock then held by the Purchasers, and (b) until
the expiration of the Additional Director Board Appointment Period, the Board
shall take such action as may be necessary to appoint a second member of the
Board who shall be designated by Warburg Pincus Private Equity VIII, L.P. Each
nominee so designated shall be reasonably acceptable to, and approved by a
majority of the Board, which acceptance and approval shall not be unreasonably
withheld (such nominees from time to time so designated, each a "Purchaser
Nominee," and collectively, the "Purchaser Nominees." For as long as the
Purchaser Nominee(s) have a right to be appointed to the Board pursuant to this
Section 2, the Company shall nominate and take such action as may be necessary
to cause the Purchaser Nominee(s) to be elected or appointed to the Board. If at
any time during the period when the Purchaser Nominee(s) have a right to be
appointed to the Board pursuant to this Section 2, there shall occur a vacancy
in the Board seat previously occupied by a Purchaser Nominee by reason of
resignation, removal, death or incapacity, then such vacancy shall be filled by
another Purchaser Nominee designated in accordance with this Section 2.
3. Covenants of the Purchasers.
3.1 Standstill. During the Standstill Period, the Purchasers, Warburg
Pincus & Co., and Warburg Pincus Partners LLC, shall not, without the prior
written consent of the Company or its Board of Directors:
(a) acquire, offer, seek or propose to acquire, or agree to
acquire, directly or indirectly (including acquiring beneficial ownership as
defined in Rule 13d-3 under the Exchange Act), by purchase or otherwise, any
Voting Stock of the Company or direct or indirect rights to acquire any Voting
Stock of the Company, or of any successor to or person in control of the
Company, or any assets of the Company or any Subsidiary or division of the
Company or of any such successor or controlling person, provided, however, that
the Purchasers, Warburg Pincus & Co., and Warburg Pincus Partners LLC may
acquire in one or more transactions an aggregate number of shares of Voting
Stock equal to the Permitted Amount.
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(b) make, or in any way participate, directly or indirectly, in
any "solicitation" of "proxies" to vote (as such terms are used in the rules of
the SEC), or seek to advise or influence any person or entity with respect to
the voting of any Voting Stock of the Company (other than in such Purchaser's
Representatives' capacities as a member of the Company's Board of Directors in a
manner consist with his or her fiduciary duties);
(c) make any public announcement with respect to, or submit a
proposal for or offer of (with or without conditions) (including to the
Company's Board of Directors), any extraordinary transaction involving the
Company or any of its securities or assets;
(d) form, join or in any way participate in a 13D Group in
connection with any of the foregoing;
(e) otherwise act or seek to control or influence the management
or Board of Directors or policies of the Company, whether alone or in concert
with others (other than in such Purchaser's Representatives' capacities as a
member of the Company's Board of Directors in a manner consistent with his or
her fiduciary duties);
(f) take any action that could reasonably be expected to require
the Company to make a public announcement regarding the possibility of any of
the events described in clauses (a) through (e) above;
(g) request the Company or any of its Representatives, directly
or indirectly, to amend or waive any provision of this Section 3.1 in a manner
that would require public disclosure; or
(h) direct or instruct any of their respective Subsidiaries,
Representatives or Affiliates to take any such action.
Notwithstanding the foregoing, if, at any time during the
Standstill Period,
(i) any person or 13D Group (other than any person or 13D
Group which includes the Purchasers, their respective Subsidiaries or
Representatives) acquires Beneficial Ownership of Voting Stock of the Company
representing 40% or more of the then outstanding Voting Stock of the Company;
(ii) any person or 13D Group (other than any person or 13D
Group which includes the Purchasers, their respective Subsidiaries or
Representatives) announces or commences a tender or exchange offer to acquire
Voting Stock of the Company which, if successful, would result in such person or
13D Group owning, when combined with any other Voting Stock of the Company owned
by such person or 13D Group, 50% or more of the then outstanding Voting Stock of
the Company;
(iii) the Company enters into, or resolves to enter into,
any merger, sale or other business combination transaction pursuant to which the
outstanding shares of Common Stock would be converted into cash and/or
securities and/or property of another person or 13D Group (other than any person
or 13D Group which includes the Purchasers, their respective Subsidiaries or
Representatives) or 50% or more of the outstanding shares of
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Common Stock as of immediately prior to such transaction would be owned by
persons other than the then current holders of shares of Common Stock and any
person or 13D Group which includes the Purchasers, their respective Subsidiaries
or Representatives;
then, except as otherwise provided herein, the Standstill Period shall be
suspended and tolled during the pendency of any such event with respect to the
Purchasers, their respective Subsidiaries and Representatives and the provisions
of subparagraphs (a) through (g) shall not be applicable to the Purchasers,
their respective Subsidiaries and Representatives during the pendency of any
such event. For the avoidance of doubt, the Standstill Period shall resume and
be extended by an amount of time equal to the time during which such event was
pending, and the provisions of subparagraphs (a) through (g) shall resume to be
applicable to the Purchasers, their respective Subsidiaries and Representatives
in the event that the provisions of (i) through (iii) cease to be applicable,
such as, for example and without limitation, disposition of the Voting Stock of
the Company to below 40% by the person or 13D Group, withdrawal of the tender or
exchange offer by the person or 13D Group, or termination of merger, sale or
other business combination transaction.
3.2 Transfer Restrictions.
(a) The Purchasers shall not (and shall not permit any Affiliate
to), directly or indirectly:
(i) Sell, transfer, pledge, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell, grant
any option, right or warrant to purchase, transfer the economic risk of
ownership of, or otherwise dispose of (each, a "Transfer") any Voting Stock or
Voting Power to any person or group that is conducting, is participating or has
participated in a solicitation of proxies in opposition to the recommendation or
proposal of the Board, or has proposed or otherwise solicited stockholders of
the Company for approval of one or more stockholder proposals;
(ii) Transfer five percent (5%) or more of the Voting Stock
or Voting Power (in one or a series of transactions) in response to a Third
Party Tender Offer or an Exchange Offer with respect to which the Board shall
not have recommended that stockholders of the Company accept such offer, unless
prior to such Transfer, the Purchasers have complied with the provisions of
Section 3.3 below; or
(iii) Transfer five percent (5%) or more of the Voting Stock
or Voting Power (in one or a series of transactions that have not been approved
by a majority of the Board) to a Company Competitor who has made a bona fide
written offer to acquire such securities, unless prior to such Transfer, the
Purchasers have complied with the provisions of Section 3.3 below.
(b) Prior to the date that is one hundred eighty (180) days
following the Closing Date, no Purchaser will, directly or indirectly, Transfer
any shares of Voting Stock (it being understood that Transfers of, or other
transactions with respect to direct or indirect ownership interests in a
Purchaser the purpose of which is not to Transfer shares of Voting Stock
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shall not be considered to be direct or indirect Transfers of shares of Voting
Stock) except for the following:
(i) Transfers to other Purchasers;
(ii) Transfers in connection with a bona fide pledge to, or
similar arrangement in connection with a bona fide borrowing from a financial
institution;
(iii) Transfers in a transaction approved by a majority of
the Board, excluding the Purchaser Nominees; or
(iv) Transfers in connection with a tender offer, merger,
sale of all or substantially all the Company's assets or any similar transaction
involving the Company approved and/or recommended by a majority of the Board,
excluding the Purchaser Nominees.
3.3 The Company's Right of First Refusal.
(a) Prior to the Purchasers effecting any Transfer of Voting
Stock or Voting Power that is subject to the restrictions set forth in Section
3.2(a), the Company shall have a first refusal right to purchase such Voting
Stock or Voting Power on the following terms and conditions:
(i) The Purchasers shall give prior notice (the "Transfer
Notice") to the Company in writing of such intention, specifying the name of the
proposed purchaser or transferee, the amount of Voting Stock or Voting Power
proposed to be the subject of such Transfer, the proposed price therefor and the
other material terms upon which such disposition is proposed to be made
(including, if any, a copy of a bona fide written offer).
(ii) The Company shall have the right, exercisable by
written notice given by the Company to the Purchasers within (i) 72-hours with
respect to a Transfer addressed in Section 3.2(b) above, and (ii) twenty (20)
business days with respect to a Transfer addressed in Sections 3.2(a) or (c)
above, after receipt of such Transfer Notice (the "Response Notice"), to
purchase all or any portion of the Voting Stock or Voting Power specified in
such Transfer Notice for cash at the price per share specified in the Transfer
Notice or, if consideration other than cash is specified in the Transfer Notice,
in an amount equal to the Fair Market Value of such non-cash consideration.
(iii) If the Company exercises its right of first refusal
hereunder, the closing of the purchase of the Voting Stock or Voting Power with
respect to which such right has been exercised shall take place within thirty
(30) calendar days after the Company gives the Response Notice to the Purchasers
or, if later, within five (5) business days of the determination of the Fair
Market Value of any non-cash consideration. Upon exercise of its right of first
refusal, the Company and the Purchasers shall be legally obligated to consummate
the purchase and sale contemplated thereby and shall use their commercially
reasonable efforts to secure any approvals required in connection therewith.
(iv) If the Company does not exercise its right of first
refusal hereunder within the time specified for such exercise in subparagraph
(ii) above with respect to
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all of the Voting Stock or Voting Power specified in such Transfer Notice, the
Purchasers shall be free, during the period of ninety (90) calendar days
following the expiration of such time for exercise, to Transfer or tender for
Transfer the Voting Stock or Voting Power specified in such Transfer Notice with
respect to which the Company has not exercised its first refusal rights to the
proposed purchaser or transferee specified in such Transfer Notice and on terms
not materially less favorable to the Purchasers than the terms specified in such
Transfer Notice. After the expiration of such 90-day period, except as otherwise
provided herein, the Purchasers may not Transfer the Voting Stock or Voting
Power specified in such Transfer Notice without first complying with the
provisions of this Section 3.3.
(e) The Company may assign its right of first refusal under this
Section 3.3 to any other person or persons; provided, however, that the Company
shall be liable for the timely performance of any obligations in this Section
3.3 by such assignee.
3.4 Other Transfers. Except as provided in this Section 3, this
Agreement does not, and is not intended to, restrict the Purchasers ability to
Transfer any Voting Stock or Voting Power.
4. Prohibited Transfer. Any purchase which causes the Purchasers to be in
violation of the terms of Section 3 above ("Prohibited Transfer") shall not be
effected by the Company and shall be voidable at the option of the Company by
their giving written notice to the transferor, his transferee and the
Purchasers. Each certificate representing Voting Stock held by the Purchasers
shall be endorsed by the Company with a legend reading as follows:
"THE SHARES EVIDENCED HEREBY ARE SUBJECT TO A STOCKHOLDERS AGREEMENT BY AND
BETWEEN THE COMPANY AND THE HOLDER HEREOF (A COPY OF WHICH MAY BE OBTAINED
FROM THE COMPANY), AND NO TRANSFER OF THE SHARES EVIDENCED HEREBY SHALL BE
EFFECTIVE EXCEPT IN COMPLIANCE WITH THE TERMS THEREOF."
5. Registration Rights.
5.1 Demand Registration.
(a) Subject to the conditions of this Section 5.1, if the Company
shall receive a written request from the Holders holding not less than a
majority of the Registrable Securities then outstanding that that the Company
file a registration statement with respect to all or part of the Registrable
Securities under the Securities Act with an anticipated aggregate offering price
of at least $10,000,000, then the Company shall, within ten (10) calendar days
of the receipt thereof, give written notice of such request to all Holders, and,
subject to the limitations of this Section 5.1, use its commercially reasonable
efforts to effect, as expeditiously as reasonably possible, the registration
under the Securities Act of all Registrable Securities that all Holders request
to be registered pursuant to and in accordance with this Agreement (a "Demand
Registration").
(b) Notwithstanding the foregoing, if the Company shall furnish
to the Holders requesting a registration statement pursuant to this Section 5.1,
a certificate signed by
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the President or Chief Executive Officer of the Company stating that in the
Board's good faith judgment it would be seriously detrimental to the Company and
its stockholders for such a registration statement to be filed in the near
future, the Company shall have the right to defer such filing for a period of
not more than ninety (90) days after receipt of the request of the Holders
specified in Section 5.1(a); provided, however, that the Company may not utilize
this right more than twice in any twelve-month period.
(c) The Company shall not be required to effect or take any
action to effect a registration pursuant to this Section 5.1:
(i) prior to the commencement of the Shelf Registration
Period;
(ii) after the Company has effected four Demand
Registrations pursuant to this Section 5.1, and such registrations have been
declared or ordered effective (which, for the avoidance of doubt, shall mean
that the registrations shall have been effective for an aggregate of ninety (90)
calendar days, or until all Registrable Securities covered thereby have been
sold, if earlier);
(iii) if the Holders making the request provided for in
Section 5.1(a) propose to dispose of Registrable Securities that could be
disposed of in a single ordinary brokerage transaction under the quantity
limitation of Rule 144; or
(iv) if the Holders making the request provided for in
Section 5.1(a) propose to dispose of Registrable Securities that may be
registered on Form S-3 pursuant to a request made pursuant to Section 5.2 below.
5.2 Form S-3 Registration. If at any time following the commencement
of the Shelf Registration Period, the Company shall receive from the Holders
holding not less than a majority of the Registrable Securities then outstanding
a written request that the Company effect a registration on Form S-3 and any
related qualification or compliance with respect to all or a part of the
Registrable Securities owned by such Holders, the Company will:
(a) within ten (10) calendar days after receipt of such notice,
give written notice of the proposed registration, and any related qualification
or compliance, to all other Holders of Registrable Securities; and
(b) as soon as reasonably practicable, effect such registration
(a "S-3 Registration") and all such qualifications and compliances as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of any
other Holder or Holders joining in such request as are specified in a written
request given within fifteen (15) calendar days after receipt of such written
notice from the Company; provided, however, that the Company shall not be
obligated to effect any such registration, qualification or compliance pursuant
to this Section 5.2, (i) if Form S-3 is not available to the Company for such
offering, (ii) if the aggregate proceeds from the sale of Registrable Securities
proposed to be sold pursuant to a Form S-3 registration statement will not
exceed $10,000,000, (iii) if, the Company has effected two S-3 Registrations
pursuant to this
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Section 5.2, and such registrations have been declared or ordered effective
(which, for the avoidance of doubt, shall mean that the registrations shall have
been effective for an aggregate of ninety (90) calendar days, or until all
Registrable Securities covered thereby have been sold, if earlier), or (iv) if
the Holders propose to dispose of Registrable Securities that could be disposed
of in a single ordinary brokerage transaction under the quantity limitation of
Rule 144.
(c) Notwithstanding the foregoing, if the Company shall furnish
to the Holders requesting a registration statement pursuant to this Section 5.2,
a certificate signed by the President or Chief Executive Officer of the Company
stating that in the Board's good faith judgment it would be seriously
detrimental to the Company and its stockholders for such a registration
statement to be filed in the near future, the Company shall have the right to
defer such filing for a period of not more than ninety (90) days after receipt
of the request of the Holders specified in this Section 5.2; provided, however,
that the Company may not utilize this right more than twice in any twelve-month
period.
Registrations effected pursuant to this Section 5.2 shall be counted
as demands for registration effected pursuant to Section 5.1, and in no event
shall the Company be required to effect more than two (2) S-3 Registrations.
5.3 Shelf Registration. During the Shelf Registration Period, if the
Company shall receive from the Holders holding not less than a majority of the
Registrable Securities then outstanding a written request that the Company
effect a registration on Form S-3 with respect to all or part of the Registrable
Securities owned by such Purchasers, the Company will as soon as reasonably
practicable, effect such registration (a "Shelf Registration Statement") and all
such qualifications and compliances as may be so requested and as would permit
or facilitate the distribution of all or such portion of such Holders'
Registrable Securities as are specified in such request exclusively to partners,
limited partners, retired partners, retired limited partners, members, retired
members and stockholders of such Holders; provided, however, that the Company
shall not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 5.3, if Form S-3 is not available to the
Company for such offering. The Company shall use its commercially reasonable
efforts to keep the Shelf Registration Statement effective, current and
available for use by the Purchasers during the Shelf Registration Period. While
the Shelf Registration Statement remains in effect, the Company may at any time
and from time to time deliver to the Holders written notice to the effect that
distributions may not be effected under the Shelf Registration Statement for a
period of time (a "Blackout Period") because of the existence of material facts
not disclosed or incorporated by reference in such Shelf Registration Statement
and in the then-current prospectus included therein; provided, however, that the
duration of any Blackout Period shall not exceed ninety (90) days. Upon receipt
of any such notice, the Holders shall refrain from distributing Registrable
Securities under such Shelf Registration Statement until the Holders have
received notice from the Company to the effect that such distributions may then
be effected. The Company shall as promptly as reasonably possible update the
Shelf Registration Statement and the prospectus included therein in order to
permit Registrable Securities to be distributed, and the Shelf Registration
Period shall automatically be extended by the aggregate number of days during
which the Holders were instructed to refrain from distributing Registrable
Securities during all Blackout Periods, without duplication.
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5.4 Expenses of Registration. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration effected
pursuant to Section 5.1, Section 5.2 or Section 5.3 herein shall be borne by the
Company. All Selling Expenses incurred in connection with any registrations
effected pursuant to Section 5.1 or Section 5.2 shall be borne by the holders of
the securities so registered pro rata on the basis of the number of shares so
registered. The Company shall not, however, be required to pay for expenses of
any registration proceeding begun, the request of which has been subsequently
withdrawn by the Holders initiating such registration unless a majority of the
Holders of Registrable Securities agree to forfeit their right to one Demand
Registration or S-3 Registration, as the case may be, pursuant to Section 5.1 or
Section 5.2 (in which event such right shall be forfeited by all Holders of
Registrable Securities). If such Holders are required to pay the Registration
Expenses, such expenses shall be borne by the holders of securities (including
Registrable Securities) initiating such registration in proportion to the number
of shares for which registration was requested.
5.5 Underwriting. If the Company determines in its sole discretion
that the registration statement under which the Company gives notice under
Section 5.1 or Section 5.2 will be for an underwritten offering, the Company
shall so advise the Holders of Registrable Securities. In such event, the right
of any such Holder to be included in such registration shall be conditioned upon
such Holder's participation in such underwriting and the inclusion of such
Holder's Registrable Securities in the underwriting to the extent provided
herein. All Holders proposing to distribute their Registrable Securities through
such underwriting shall enter into an underwriting agreement in customary form
with the underwriter or underwriters selected for such underwriting by the
Company. Notwithstanding any other provision contained in this Agreement, if the
managing underwriter determines in good faith that marketing factors require a
limitation of the number of shares to be underwritten (including Registrable
Securities), the number of shares that may be included in the underwriting shall
be allocated first to requesting Holders on a pro rata basis based on the total
number of Registrable Securities then held by all such requesting Holders, then
to any other shareholders on a pro rata basis based on the number of shares of
Company Common Stock then held by such other shareholders. If any Holder
disapproves of the terms of any such underwriting, such Holder may elect to
withdraw therefrom by written notice to the Company and the managing
underwriter, delivered at least ten (10) business days prior to the effective
date of the registration statement. Any Registrable Securities excluded or
withdrawn from such underwriting shall be excluded and withdrawn from the
registration. For any Holder that is a partnership, limited partnership, limited
liability company or corporation, the partners, limited partners, retired
partners, retired limited partners, members, retired members and stockholders of
such Holder, or the estates and family members of any such partners, limited
partners, retired partners, retired limited partners, members, retired members
and any trusts for the benefit of any of the foregoing persons shall be deemed
to be collectively a single "Holder," and any pro rata reduction with respect to
such "Holder" shall be based upon the aggregate amount of shares carrying
registration rights owned by all entities and individuals included in such
"Holder," as defined in this sentence.
5.6 Furnishing Information. It shall be a condition precedent to the
obligations of the Company to take any action pursuant to Sections 5.1 and 5.2
above that the selling Holders shall furnish to the Company such information
regarding themselves, the Registrable Securities held by them and the intended
method of disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
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5.7 Indemnification.
(a) The Company will indemnify and hold harmless each Holder,
each of its officers, directors and partners, legal counsel, and accountants 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 Section 5, and each underwriter, if any, and each
person who controls within the meaning of Section 15 of the Securities Act any
underwriter, against all expenses, claims, losses, damages, and liabilities (or
actions, proceedings or settlements in respect thereof) arising out of or based
on (i) any untrue statement or alleged untrue statement of a material fact
contained in any prospectus, free-writing prospectus, offering circular, or
other document, including any related registration statement, notification or
the like, incident to any such registration, qualification or compliance, (ii)
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
(iii) any violation by the Company of the Securities Act or any rule or
regulation thereunder 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 Holder, each of its
officers, directors, partners, legal counsel, and accountants and each person
controlling such Holder, each such underwriter and each person who controls any
such underwriter, for any legal and any other expenses reasonably incurred in
connection with investigating and defending or settling 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 based upon written information furnished to the Company by such Holder
or underwriter. It is agreed that the indemnity agreement contained in this
Section 5.7(a) shall not apply to amounts paid in settlement of any such loss,
claim, damage, liability, or action if such settlement is effected without the
consent of the Company.
(b) 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, legal counsel and accountants, and 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, each other such Holder and each of its
officers and directors, and each person controlling such other Holder, against
all claims, losses, damages and liabilities (or actions in respect thereof)
arising out of or based on (i) any untrue statement or alleged untrue statement
of a material fact by such Holder contained in any such registration statement,
prospectus, free-writing prospectus offering circular or other document, or (ii)
any omission or alleged omission to state therein by such Holder a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and will reimburse the Company and such Holders, directors,
officers, 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
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 such Holder; provided, however, that the obligations of such Holder
hereunder shall not apply to amounts paid in settlement of any such claims,
losses, damages or liabilities (or actions in
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respect thereof) if such settlement is effected without the consent of such
Holder; and provided that in no event shall any indemnity under this Section
5.7(b) exceed the net proceeds from the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 5.7
(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 such claim or any
litigation resulting therefrom; provided, however, that legal counsel for the
Indemnifying Party, who shall conduct the defense of such claim or any
litigation resulting therefrom, shall be approved by the Indemnified Party
(whose approval shall not be unreasonably withheld), and the Indemnified Party
may participate in such defense at such party's expense; and, provided further,
however, that the failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under this
Section 5.7(c), to the extent such failure is not prejudicial. Consent by the
Indemnifying Party to entry of any judgment or entry into any settlement shall
not bind the Indemnified Party without the Indemnified Party's written consent,
unless such settlement includes as an unconditional term thereof the giving by
the claimant or plaintiff to the Indemnified Party of a release from all
liability with respect to such claim or litigation. Each Indemnified Party shall
furnish such information regarding itself or the claim in question as the
Indemnifying Party may reasonably request in writing and as shall be reasonably
required in connection with defense of such claim and litigation resulting
therefrom.
(d) If the indemnification provided for in this Section 5.7 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
herein, then the Indemnifying Party, in lieu of . indemnifying such Indemnified
Party hereunder, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such loss, liability, claim, damage or expense
in such proportion as is appropriate to reflect the relative fault of the
Indemnifying Party on the one hand and of the Indemnified Party on the other in
connection with the statements or omissions that resulted in such loss,
liability, claim, damage or expense as well as any other relevant equitable
considerations. 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 to parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omissions.
(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 of the
Company's securities are in conflict with the foregoing provisions, the
provisions in the underwriting agreement shall control.
5.8 Transfer or Assignment of Registration Rights. The rights to cause
the Company to register Registrable Securities pursuant to this Section 5 may
not be transferred or assigned by a Holder without the prior written consent of
the Company.
-14-
5.9 Amendment of Registration Rights. Any provision of this Section 5
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 the Company and the holders of at least a majority of the
Registrable Securities then outstanding. Any amendment or waiver effected in
accordance with this Section 5.9 shall be binding upon each Holder and the
Company.
6. Management Rights.
6.1 For so long as any Purchaser owns 1,000,000 shares of Voting
Stock, the Company covenants that:
(a) if any Purchaser is not represented on the Board, such
Purchaser shall be entitled to consult with and advise management of the Company
on significant business issues, including management's proposed annual operating
plans, and management will meet with the Purchaser regularly during each year at
the Company's facilities at mutually agreeable times for such consultation and
advice and to review progress in achieving said plans;
(b) each Purchaser may examine the books and records of the
Company and inspect its facilities and may request information at reasonable
times and intervals concerning the general status of the Company's financial
condition and operations, provided that access to highly confidential
proprietary information and facilities need not be provided; and
(c) if any Purchaser is not represented on the Board, the Company
shall, concurrently with delivery to the Board, give a representative of such
Purchaser copies of all notices, minutes, consents and other material that the
Company provides to its directors, except that the representative may be
excluded from access to any material or meeting or portion thereof if the Board
determines in good faith, upon advice of counsel, that such exclusion is
reasonably necessary to preserve the attorney-client privilege, to protect
highly confidential proprietary information, or for other similar reasons,
provided that, upon reasonable notice, at a scheduled meeting of the Board or
such other time, if any, as the Board may determine in its sole discretion, such
representative may address the Board with respect to such Purchaser's concerns
regarding significant business issues facing the Company.
7. Miscellaneous.
7.1 Governing Law; Jurisdiction. This Agreement shall be governed by
and construed and enforced in accordance with the internal laws of the State of
Delaware without giving effect to the principles of conflicts of laws. Any legal
action or other legal proceeding relating to this Agreement or the enforcement
of any provision of this Agreement may be brought or otherwise commenced in any
state or federal court located in the State of Delaware. Each party hereto
agrees to the entry of an order to enforce any resolution, settlement, order or
award made pursuant to this Section 7.1 by the state and federal courts located
in the State of Delaware and in connection therewith hereby waives, and agrees
not to assert by way of motion, as a defense, or otherwise, any claim that such
resolution, settlement, order or award is inconsistent with or violative of the
laws or public policy of the laws of the State of Delaware or any other
jurisdiction.
-15-
7.2 Successors and Assigns. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successor and assigns of the parties hereto.
7.3 Entire Agreement; Amendment. This Agreement, the Purchase
Agreement and the Warrants constitute the full and entire understanding and
agreement between the parties with regard to the subjects hereof and thereof.
Any previous agreements among the parties relative to the specific subject
matter hereof, including but not limited to the Prior Agreement, are superseded
by this Agreement. Neither this Agreement nor any provision hereof may be
amended, changed, waived, discharged or terminated other than by a written
instrument signed by the party against who enforcement of any such amendment,
change, waiver, discharge or termination is sought.
7.4 Notices, etc. All notices and other communications required or
permitted hereunder shall be effective upon receipt and shall be in writing and
may be delivered in person, by telecopy, electronic mail, express delivery
service or U.S. mail, in which event it may be mailed by first-class, certified
or registered, postage prepaid, addressed, to the party to be notified, at the
respective addresses set forth below, or at such other address which may
hereinafter be designated in writing:
(a) If to the Purchasers, to:
Warburg Pincus Private Equity VIII, X.X.
Xxxxxxx Xxxxxx Netherlands Private Equity VIII, C.V. I
WP-WPVIII Investors, L.P.
c/o Warburg Pincus LLC
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxx
Fax No. 000-000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx LLP
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No. 000-000-0000
(b) If to the Company, to:
Nuance Communications, Inc.
0 Xxxxxxx Xxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Executive Officer
General Counsel
Phone: 000-000-0000
Fax: 000-000-0000
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with a copy to:
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
000 Xxxx Xxxx Xxxx
Xxxx Xxxx, XX 00000
Attention: Xxxxxxxxx X. Xxxxxx, Esq.
Fax No. 000-000-0000
Xxxxxx Xxxxxxx Xxxxxxxx & Xxxxxx
0000 X Xxxxxx, XX
Xxxxx Xxxxx
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx, Esq.
Fax No.: 000-000-0000
7.5 Severability. If any provision of this Agreement shall be
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions shall not in any way be
affected or impaired thereby.
7.6 Titles and Subtitles. The titles of the Articles and Sections of
this Agreement are for convenience of reference only and in no way define,
limit, extend, or describe the scope of this Agreement or the intent of any of
its provisions.
7.7 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.
7.8 Delays or Omissions. It is agreed that no delay or omission to
exercise any right, power or remedy accruing to any party upon any breach or
default of any other party 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 any similar breach or default
thereafter occurring; nor shall any waiver of any single breach or default be
deemed a waiver of any other breach or default theretofore or thereafter
occurring. It is further agreed that any waiver, permit, consent or approval of
any kind or character of any breach or default under this Agreement, or any
waiver of any provisions or conditions of this Agreement must be in writing and
shall be effective only to the extent specifically set forth in writing, and
that all remedies, either under this Agreement, by law or otherwise, shall be
cumulative and not alternative.
7.9 Consents. Any permission, consent, or approval of any kind or
character under this Agreement shall be in writing and shall be effective only
to the extent specifically set forth in such writing.
7.10 SPECIFIC PERFORMANCE. THE PARTIES HERETO AGREE THAT IRREPARABLE
DAMAGE WOULD OCCUR IN THE EVENT THAT ANY OF THE
-17-
PROVISIONS OF THIS AGREEMENT WERE NOT PERFORMED IN ACCORDANCE WITH ITS SPECIFIC
INTENT OR WERE OTHERWISE BREACHED. IT IS ACCORDINGLY AGREED THAT THE PARTIES
SHALL BE ENTITLED TO AN INJUNCTION OR INJUNCTIONS, WITHOUT BOND, TO PREVENT OR
CURE BREACHES OF THE PROVISIONS OF THIS AGREEMENT AND TO ENFORCE SPECIFICALLY
THE TERMS AND PROVISIONS HEREOF, THIS BEING IN ADDITION TO ANY OTHER REMEDY TO
WHICH THEY MAY BE ENTITLED BY LAW OR EQUITY, AND ANY PARTY SUED FOR BREACH OF
THIS AGREEMENT EXPRESSLY WAIVES ANY DEFENSE THAT A REMEDY IN DAMAGES WOULD BE
ADEQUATE.
7.11 Construction of Agreement. No provision of this Agreement shall
be construed against either party as the drafter thereof.
7.12 Section References. Unless otherwise stated, any reference
contained herein to a Section or subsection refers to the provisions of this
Agreement.
7.13 Variations of Pronouns. All pronouns and all variations thereof
shall be deemed to refer to the masculine, feminine, or neuter, singular or
plural, as the context in which they are used may require.
[Remainder of Page Intentionally Left Blank]
-18-
IN WITNESS WHEREOF, the parties have caused this Second Amended and
Restated Stockholders Agreement to be duly executed and delivered by their
proper and duly authorized officers as of the day and year first written above.
NUANCE COMMUNICATIONS, INC.
By: /s/ Xxxxx X. Xxxxxx, Xx.
----------------------------------------
Name: Xxxxx X. Xxxxxx, Xx.
Title: Chief Financial Officer
PURCHASERS
WARBURG PINCUS PRIVATE EQUITY VIII, L.P.
By: Warburg Pincus Partners LLC,
its General Partner
By: Warburg Pincus & Co.,
its Managing Member
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Partner
WARBURG PINCUS NETHERLANDS
PRIVATE EQUITY VIII, C.V. I
By: Warburg Pincus Partners LLC,
its General Partner
By: Warburg Pincus & Co.,
its Managing Member
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Partner
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WP-WPVIII Investors, L.P.
By: Warburg Pincus Partners LLC,
its General Partner
By: Warburg Pincus & Co.,
its Managing Member
By: /s/ Xxxxxxx Xxxxxxxx
----------------------------------------
Name: Xxxxxxx Xxxxxxxx
Title: Partner
-20-
