Exhibit 10.13
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement dated as of May 19, 1993 (the
"Agreement") by and between NEON Systems, Inc., a Delaware corporation (the
"Company"), JMI Equity Fund, L.P., a Delaware limited partnership (the
"Purchaser") and Xxxxx Xxxxxxxxx (the "Founder"):
WITNESSETH:
WHEREAS, pursuant to the terms of a Series A Stock Purchase Agreement dated
the date hereof between the Company and the Purchaser (the "Purchase
Agreement"), the Purchaser is acquiring an aggregate of 500,000 shares (the
"Preferred Shares") of Series A Convertible Preferred Stock, par value $.01 per
share (the "Preferred Stock"), of the Company; and
WHEREAS, it is a condition to the obligations of the Purchaser under the
Purchase Agreement that this Agreement be entered into by the parties hereto,
and the parties desire to enter into this Agreement and to be bound by the
provisions hereof;
NOW, THEREFORE, in consideration of these premises and the mutual covenants
contained in this Agreement, the parties hereto agree as follows:
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.
"COMMON STOCK" shall mean the common stock, par value $.01 per share,
of the Company, as constituted as of the date of this Agreement.
"CONVERSION SHARES" shall mean shares of Common Stock issued or
issuable upon conversion of the Preferred Shares, and any shares of capital
stock received in respect thereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, 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.
"FOUNDER SHARES" shall mean the 400,000 shares of Common Stock held by
the Founder on the date hereof.
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"REGISTRATION EXPENSES" shall mean all expenses incurred in connection
with a registration statement, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for the Company, fees and
expenses (including counsel fees) incurred in connection with complying
with state securities or "blue sky" laws, fees of the National Association
of Securities Dealers, Inc., transfer taxes, fees of transfer agents and
registrars, costs of insurance, and fees and disbursements of one counsel
for the sellers of Restricted Stock, but excluding any Selling Expenses.
"RESTRICTED STOCK" shall mean (1) the Conversion Shares, excluding
Conversion shares which have been (a) registered under the Securities Act
pursuant to an effective registration statement filed thereunder and
disposed of in accordance with the registration statement covering them or
(b) publicly sold pursuant to Rule 144 under the Securities Act and (2)
except for Sections 4 and 6, the Founder Shares, excluding Founder Shares
which have been (a) registered under the Securities Act pursuant to an
effective registration statement filed thereunder and disposed of in
accordance with the registration statement covering them or (b) publicly
sold pursuant to Rule 144 under the Securities Act.
"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 and selling
commissions applicable to the sale of Restricted Stock which are incurred
in connection with a registration statement.
2. RESTRICTIVE LEGEND. Each certificate representing Preferred Shares,
Conversion Shares or Founder Shares shall, except as otherwise provided in this
Section 2 or in Section 3, be stamped or otherwise imprinted with a legend
substantially in the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE SECURITIES LAWS.
THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE MORTGAGED, PLEDGED, HYPOTHECATED OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION STATEMENT FOR SUCH
SECURITIES UNDER THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES
LAWS, OR THE AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS
OF THE SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS.
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A certificate shall not bear such legend if in the opinion of counsel
satisfactory to the Company (it being agreed that Xxxxx, Xxxxxxx & Xxxxxxxxx
shall be satisfactory) the securities being sold thereby may be sold without
registration under the Securities Act.
3. NOTICE OF PROPOSED TRANSFER. (a) Prior to any proposed transfer of any
Preferred Shares, Conversion Shares or Founder Shares (other than under the
circumstances described in Sections 4, 5 or 6), the holder thereof shall give
written notice to the Company of its intention to effect such transfer. Each
such notice shall describe the manner of the proposed transfer and, if requested
by the Company, shall be accompanied by an opinion of counsel satisfactory to
the Company (it being agreed that Xxxxx, Xxxxxxx & Xxxxxxxxx shall be
satisfactory) to the effect that the proposed transfer may be effected without
registration under the Securities Act, whereupon the holder of such stock shall
be entitled to transfer such stock in accordance with the terms of its notice;
PROVIDED, HOWEVER, that no such opinion of counsel shall be required for a
transfer to one or more partners of the transferor (in the case of a transferor
that is a partnership) or to a parent corporation, subsidiary corporation or to
a corporation which is under common control with a transferor (in the case of a
transferor that is a corporation).
(b) Each certificate for Preferred Shares, Conversion Shares or
Founder Shares transferred as provided in this Section 3 shall bear the legend
set forth in Section 2, except that such certificate shall not bear such legend
if (i) such transfer is in accordance with the provisions of Rule 144 or Rule
144A under the Securities Act (or any other rule permitting public sale without
registration under the Securities Act) or (ii) the opinion of counsel referred
to above is to the further effect that the transferee and any subsequent
transferee (other than an affiliate of the Company) would be entitled to
transfer such securities in a public sale without registration under the
Securities Act. The restrictions provided for in this Section 3 shall not apply
to securities which are not required to bear the legend prescribed by Section 2
in accordance with the provisions of Section 2.
4. REQUIRED REGISTRATION. (a) At any time after the Company's Initial
Public Offering, one or more holders of Restricted Stock constituting at least
40% of the total shares of Restricted Stock then outstanding may request the
Company to register under the Securities Act all or any portion of the shares of
Restricted Stock held by such requesting holder or holders for sale in the
manner specified in such notice, PROVIDED that the shares of Restricted Stock
for which registration has been requested shall constitute at least 20% of the
total shares of Restricted Stock originally issued if such holder or holders
shall request the registration of less than all shares of Restricted Stock then
held by such holder or holders (or any lesser percentage if the reasonably
anticipated aggregate price to the public of such public offering would exceed
$2,000,000). For purposes of this Section 4 and Sections 5, 6, 13(a) and 13(d),
the term "Restricted Stock" shall be deemed to include the number of shares of
Restricted Stock which would be issuable to a holder of Preferred Shares upon
conversion of all shares of Preferred Stock held by such holder at such time;
PROVIDED, HOWEVER, that the only securities which the
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Company shall be required to register pursuant hereto shall be shares of Common
Stock; and PROVIDED further that, in any underwritten public offering
contemplated by this Section 4 or Sections 5 and 6, the holders of Preferred
Shares shall be entitled to sell such Preferred Shares to the underwriters for
conversion and sale (in such public offering) of the shares of Common Stock
issued upon conversion thereof.
(b) Notwithstanding anything to the contrary contained in this
Section 4, no request may be made under this Section 4 within 90 days after the
effective date of a registration statement filed by the Company covering a firm
commitment underwritten public offering in which the holders of Restricted Stock
shall have been entitled to join pursuant to Sections 5 or 6 and in which there
shall have been effectively registered all shares of Restricted Stock as to
which registration shall have been requested.
(c) Further notwithstanding anything to the contrary contained in
this Section 4, if the Company shall furnish to the holders of Restricted Stock
requesting any registration pursuant to this Section 4 a certificate signed by
the President of the Company stating that, in the judgment of the Board of
Directors of the Company, it would be detrimental to the Company or its
shareholders for a registration statement to be filed in the near future, the
Company's obligation to effect such a registration shall be deferred for a
period not to exceed 90 days from the date of receipt by the Company of such
holders', request.
(d) Following receipt of any notice under this Section 4, the Company
shall immediately notify all holders of Restricted Stock from whom notice has
not been received, and such holders shall be entitled within 30 days thereafter
to request the Company to include in the requested registration all or any
portion of their shares of Restricted Stock. The Company shall use its best
efforts to register under the Securities Act, for public sale in accordance with
the method of disposition specified in the notice from requesting holders, the
number of shares of Restricted Stock specified in such notice (and in all
notices received by the Company from other holders within 30 days after the
giving of such notice by the Company). If such method of disposition shall be
an underwritten public offering, the holders of a majority of the shares of
Restricted Stock to be sold in such offering may designate the managing
underwriter of such offering, subject to the approval of the Company, which
approval shall not be unreasonably withheld or delayed.
(e) The Company shall be obligated to register Restricted Stock
pursuant to this Section 4, on only two (2)occasions; PROVIDED, HOWEVER, that
such obligation shall be deemed satisfied only when a only when a registration
statement covering all shares of Restricted Stock specified in notices received
as aforesaid, for sale in accordance with the method of disposition specified by
the requesting holders shall have become effective and, if such method of
disposition is a firm commitment underwritten public offering, all such shares
shall have been sold pursuant thereto.
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(f) The Company shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company for its own account, except as and to the extent that, in
the opinion of the managing underwriter (if such method of disposition shall be
an underwritten public offering), such inclusion would adversely affect the
marketing of the Restricted Stock to be sold.
(g) Except for registration statements on Forms X-0, X-0 or any
successor-forms thereto, and unless the Company has previously given the notice
referred to in Section 5, the Company will not file with the Commission any
other registration statement with respect to its Common Stock, whether for its
own account or that of other stockholders, from the date of receipt of a notice
from requesting holders pursuant to this Section 4 until the completion of the
period of distribution of the registration contemplated thereby.
5. INCIDENTAL REGISTRATION. (a) If the Company at any time (other than
pursuant to Section 4 or Section 6) proposes to register any of its securities
under the Securities Act for sale to the public, whether for its own account or
for the account of other security holders or both (except with respect to
registration statements on Forms X-0, X-0 or any successor forms thereto), each
such time it will give written notice to all holders of outstanding Restricted
Stock of its intention so to do. Upon the written request of any such holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of its Restricted Stock (which request shall state
the intended method of disposition thereof), the Company will use its best
efforts to cause the Restricted Stock as to which registration shall have been
so requested to be included in the securities to be covered by the registration
statement proposed to be filed by the Company, all to the extent required to
permit the sale or other disposition by the holder (in accordance with its
written request) of such Restricted Stock so registered.
(b) If any registration pursuant to this Section 5 shall be, in whole
or in part, an underwritten public offering of Common Stock, the number of
shares of Restricted Stock to be included in such an underwriting may be reduced
as follows: first from the Founder Shares, and then pro rata among the other
requesting holders based upon the number of shares of Restricted Stock owned by
such holders if and to the extent that the managing underwriter shall be of the
opinion that such inclusion would adversely affect the marketing of the
securities to be sold by the Company therein; PROVIDED, HOWEVER, that such
number of shares of Restricted Stock shall not be reduced if any shares are to
be included in such underwriting for the account of any person other than the
Company or requesting holders of Restricted Stock, and PROVIDED FURTHER that in
no event shall less than one-third of the total number of shares of Common Stock
to be included in such an underwriting be made available for shares of
Restricted Stock.
(c) Notwithstanding the foregoing provisions of this Section 5, the
Company may withdraw any registration statement referred to in this Section 5
without thereby incurring any liability to the holders of Restricted Stock.
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6. REGISTRATION ON FORM S-3. (a) If at any time (i) a holder or holders
of-Restricted Stock request that the Company file a registration statement on
Form S-3 or any successor thereto for a public offering of all or any portion of
the shares of Restricted Stock held by such requesting holder or holders, the
reasonably anticipated aggregate price to the public of which would exceed
$500,000, and (ii) the Company is a registrant entitled to use Form S-3 or any
successor thereto to register such shares, then the Company shall use its best
efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Stock specified in such
notice.)
(b) Whenever the Company is required by this Section 6 to use its
best efforts to effect the registration of Restricted Stock, each of the
procedures and requirements of Section 4 (including but not limited to the
requirement that the Company notify all holders of Restricted Stock from whom
notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration; PROVIDED,
HOWEVER, that there shall be no limitation on the number of registrations on
Form S-3 which may be requested and obtained under this Section 6; and PROVIDED
FURTHER that the requirements contained in the first sentence of Section 4(a)
shall not apply to any registration on Form S-3 which may be requested and
obtained under this Section 6.
7. OBLIGATIONS OF THE COMPANY. If and whenever the Company is required
by the provisions of Section 4, 5 or 6 to use its best efforts to effect the
registration of any shares of Restricted Stock under the Securities Act, the
Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration statement
(which, in the case of an underwritten public offering pursuant to Section 4,
shall be on Form S-1 or other form of general applicability satisfactory to the
managing underwriter selected as therein provided) with respect to such
securities and use its best efforts to cause such registration statement to
become and remain effective for the period of the distribution contemplated
thereby (determined as hereinafter provided), except that the Company's
obligation to file a registration statement, or cause such registration
statement to become and remain effective, shall be suspended for a period not to
exceed 90 days in any 24-month period if there exists at the time material
nonpublic information relating to the Company which, in the reasonable opinion
of the Company, should not be disclosed;
(b) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in connection
therewith as may be necessary to keep such registration statement effective for
the period specified in Section 7(a) and comply with the provisions of the
Securities Act with respect to the disposition of all Restricted Stock covered
by such registration statement in accordance with the sellers, intended method
of disposition set forth in such registration statement for such period;
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(c) furnish to each seller of Restricted Stock and to each
underwriter such number of copies of the registration statement and the
prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its best efforts to register or qualify the Restricted Stock
covered by such registration statement under the securities or "blue sky" laws
of such jurisdictions as the sellers of Restricted Stock or, in the case of an
underwritten public offering, the managing underwriter reasonably shall request;
PROVIDED, HOWEVER, that the Company shall not for any such purpose be required
to qualify generally to transact business as a foreign corporation in any
jurisdiction where it is not so qualified or to consent to general service of
process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock covered by such
registration statement with any securities exchange on which the Common Stock of
the Company is then listed;
(f) immediately notify each seller of Restricted Stock and each
underwriter under 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 of which the Company has knowledge as a result of which
the prospectus contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading in light of the circumstances then existing;
(g) if the offering is underwritten and at the request of any seller
of Restricted Stock, use its best efforts to furnish on the date that Restricted
Stock is delivered to the underwriters for sale pursuant to such registration:
(i) an opinion dated such date of counsel representing the Company for the
purposes of such registration, addressed to the underwriters and to such seller,
stating that such registration statement has become effective under the
Securities Act and that (A) to the best knowledge of such counsel, no stop order
suspending the effectiveness thereof has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the Securities
Act, (B) the registration statement, the related prospectus and each amendment
or supplement thereof comply as to form in all material respects with the
requirements of the Securities Act (except that such counsel need not express
any opinion as to financial statements contained therein) and (C) to such other
effects as reasonably may be requested by counsel for the underwriters or by
such seller or its counsel, and (ii) a letter dated such date from the
independent public accountants retained by the Company, addressed to the
underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any
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amendment or supplement thereof, comply as to form in all material respects with
the applicable accounting requirements of the Securities Act, and such letter
shall additionally cover such other financial matters (including information as
to the period ending no more than five business days prior to the date of such
letter) with respect to such registration as such underwriters reasonably may
request; and
(h) make available for inspection by each seller of Restricted Stock,
any underwriter participating in any distribution pursuant to such registration
statement, and any attorney, accountant or other agent retained by such seller
or underwriter, all financial and other records, pertinent corporate documents
and properties of the Company, and cause the Company's officers, directors and
employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement.
For purposes of Sections 4(f), 7(a) and 7(b), the period of
distribution of Restricted Stock in a firm commitment underwritten public
offering shall be deemed to extend until each underwriter has completed the
distribution of all securities purchased by it, and the period of distribution
of Restricted Stock in any other registration shall be deemed to extend until
the earlier of the sale of all Restricted Stock covered thereby and 90 days
after the effective date thereof.
8. OBLIGATIONS OF SELLING SHAREHOLDERS. In connection with each
registration hereunder, the sellers of Restricted Stock will furnish to the
Company in writing such information with respect to themselves and the proposed
distribution by them as reasonably shall be necessary to assure compliance with
federal and applicable state securities laws.
9. CERTAIN UNDERWRITING MATTERS. In connection with each registration
pursuant to Sections 4, 5 or 6 covering an underwritten public offering, the
Company and each seller agree to enter into a written agreement with the
managing underwriter selected in the manner herein provided in such form and
containing such provisions as are customary in the securities business for such
an arrangement between such underwriter and companies of the Company's size and
investment stature.
10. EXPENSES. (a) The Company will pay all Registration Expenses in
connection with each registration statement under Sections 4, 5 and 6, including
the Registration Expenses of the Purchaser and the Founder.
(b) All Selling Expenses in connection with each registration
statement under Sections 4, 5 or 6 shall be borne by the participating sellers
in proportion to the number of shares sold by each, or by such participating
sellers other than the Company (except to the extent the Company shall be a
seller) as they may agree.
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11. INDEMNIFICATION AND CONTRIBUTION. (a) In the event of a registration
of any of the Restricted Stock under the Securities Act pursuant to Sections 4,
5 or 6, the Company will and hereby does indemnify and hold harmless each seller
of such Restricted Stock thereunder, each underwriter of such Restricted Stock
thereunder and each other person, if any, who controls such seller or
underwriter within the meaning of the Securities Act, against any losses,
claims, damages or liabilities, joint or several, to which such seller,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such Restricted Stock was registered under the Securities Act
pursuant to Sections 4, 5 or 6, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof, or arise out of or
are based upon 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, and will reimburse each such seller, each such underwriter and each
such 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 Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the Restricted Stock
under the Securities Act pursuant to Sections 4, 5 or 6, each seller of such
Restricted Stock thereunder, severally and not jointly, will indemnify and hold
harmless the Company, each person, if any, who controls the Company within the
meaning of the Securities Act, each officer of the Company who signs the
registration statement, each director of the Company, each other seller of
Restricted Stock, each underwriter and each person who controls any underwriter
within the meaning of the Securities Act, against all losses, claims, damages or
liabilities, joint or several, to which the Company or such officer, director,
other seller, underwriter or controlling person may become subject under the
Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement under which such Restricted Stock was registered
under the Securities Act pursuant to Sections 4, 5 or 6, any preliminary
prospectus or final prospectus contained therein, or any amendment or supplement
thereof, or arise out of or are based upon 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, and will reimburse the Company and each
such officer, director, other seller, underwriter and 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 such seller will be liable hereunder in any such case if
and only to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue
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statement or alleged untrue statement or omission or alleged omission made in
reliance upon and in conformity with information pertaining to such seller, as
such, furnished in writing to the Company by such seller specifically for use in
such registration statement or prospectus, and PROVIDED FURTHER that the
liability of each seller hereunder shall not apply to amounts paid in settlement
without such seller's prior written consent. Not in limitation of the
foregoing, it is hereby understood and agreed that the indemnification
obligations of any seller hereunder pursuant to any underwriting agreement
entered into in connection herewith shall be limited to the obligations
contained in this Section 11(b).
(c) Promptly after receipt by an indemnified party hereunder of
notice of the commencement of any action, such indemnified party shall, if a
claim in respect thereof is to be made against the indemnifying party hereunder,
notify the indemnifying party in writing thereof, but the omission so to notify
the indemnifying party shall not relieve it from any liability which it may have
to such indemnified party other than under this Section 11 and shall only
relieve it from any liability which it may have to such indemnified party under
this Section 11 if and to the extent the indemnifying party is prejudiced by
such omission. In case any such action shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in and, to the extent it
shall wish, to assume and undertake the defense thereof with counsel
satisfactory to such indemnified party, and, after notice from the indemnifying
party to such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such indemnified
party under this Section 11 for any legal expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation and of liaison with counsel so selected, PROVIDED
HOWEVER, that, if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be reasonable defenses available to it which are
different from or additional to those available to the indemnifying party or if
the interests of the indemnified party reasonably may be deemed to conflict with
the interests of the indemnifying party, the indemnified party shall have the
right to select a separate counsel and to assume such legal defenses and
otherwise to participate in the defense of such action, with the expenses and
fees of such separate counsel and other expenses related to such participation
to be reimbursed by the indemnifying party as incurred.
(d) In order to provide for just and equitable contribution to joint
liability under the Securities Act in any case in which either (i) any holder of
Restricted Stock exercising rights under this Agreement, or any controlling
person of any such holder, makes a claim for indemnification pursuant to this
Section 11 but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 11 provides for
indemnification in such case, or (ii) contribution under the Securities Act may
be required on the part of any such selling holder or any such controlling
person in circumstances for which indemnification is provided under this
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Section 11; then, and in each such case, the Company and such holder will
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (after contribution from others) in such proportion so that such
holder is responsible for the portion represented by the percentage that the
public offering price of its Restricted Stock offered by the registration
statement bears to the public offering price of all securities offered by such
registration statement, and the Company is responsible for the remaining
portion; PROVIDED HOWEVER, that, in any such case, no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) will be entitled to contribution from any person or entity who
was not guilty of such fraudulent misrepresentation.
12. CHANGES IN COMMON STOCK OR PREFERRED STOCK. If, and as often as,
there is any change in the Common Stock or the Preferred Stock by way of a stock
split, stock dividend, combination or reclassification, or through a merger,
consolidation, reorganization or recapitalization, or by any other means,
appropriate adjustment shall be made in the provisions hereof so that the rights
and privileges granted hereby shall continue with respect to the Common Stock or
the Preferred Stock as so changed.
13. RULE 144 REPORTING. With a view to making available the benefits of
certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Stock to the public without registration, at all times
after 90 days after any registration statement covering a public offering of
securities of the Company under the Securities Act shall have become effective,
the Company agrees to:
(a) make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to 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; and
(c) furnish to each holder of Restricted Stock forthwith upon request
a written statement by the Company as to its compliance with the reporting
requirements of such Rule 144 and of the Securities Act and the Exchange Act, a
copy of the most recent annual or quarterly report of the Company, and such
other reports and documents so filed by the Company as such holder may
reasonably request in availing itself of any rule or regulation of the
Commission allowing such holder to sell any Restricted Stock without
registration.
14. TRANSFERABILITY OF REGISTRATION RIGHTS. The rights conferred herein
on the holders of Preferred Shares or Conversion Shares shall only inure to the
benefit of a transferee of Preferred Shares or Conversion Shares if (i) there is
transferred to such transferee at least 10,000 of the Preferred Shares or
Conversion Shares or (ii) such transferee is a partner of the transferor (in the
case of a transferor that is a partnership) or such transferee is a shareholder,
parent
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corporation, subsidiary corporation or a corporation which is under common
control with a transferor (in the case of a transferor that is a corporation).
15. "MARKET STAND-OFF" AGREEMENT. If requested in writing by the
underwriters for the Company's Initial Public Offering, each holder of
Restricted Stock who is a party to this Agreement shall agree not to sell
publicly any shares of Restricted Stock or any other shares of Common Stock
(other than shares of Restricted Stock or other shares of Common Stock being
registered in such offering), without the consent of such underwriters, for a
period of not more than 90 days following the effective date of the registration
statement relating to such offering; PROVIDED HOWEVER, that all persons entitled
to registration rights with respect to shares of Common Stock whether or not
they are parties to this Agreement, all other persons selling shares of Common
Stock in such offering and all executive officers and directors of the Company
shall also have agreed not to sell publicly their Common Stock under the
circumstances and pursuant to the terms set forth in this Section 15.
16. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The company represents
and warrants to the Purchaser as follows:
(a) The execution, delivery and performance of this Agreement by the
Company have been duly authorized by all requisite corporate action and will not
violate any provision of law, any order of any court or other agency of
government, the Certificate of Incorporation or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered by the
Company and constitutes the legal, valid and binding obligation of the Company,
enforceable in accordance with its terms.
17. MISCELLANEOUS.
(a) BINDING EFFECT; ASSIGNMENT. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto (including without limitation transferees of any Preferred Shares
or Conversion Shares), whether so expressed or not.
(b) NOTICES. All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by certified or
registered mail, return receipt requested, postage prepaid, or telexed, in the
case of non-U.S. residents, addressed as follows:
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if to the Company or any other party hereto, at the address of such
party set forth in the Purchase Agreement;
if to any subsequent holder of Preferred Shares or Restricted Stock,
to it at such address as may have been furnished to the Company in writing by
such holder;
in any case, at such other address or addresses as shall have been furnished in
writing to the Company (in the case of a holder of Preferred Shares or
Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in
the case of the Company) in accordance with the provisions of this paragraph.
(c) NO WAIVER; CUMULATIVE REMEDIES. No failure or delay on the part
of any party to this Agreement in exercising any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right, power or remedy preclude any other or further
exercise thereof or the exercise of any other right, power or remedy hereunder.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
(d) AMENDMENTS, WAIVERS AND CONSENTS. This Agreement may not be
amended or modified, and no provision hereof may be waived, without the written
consent of the Company and the holders of at least a majority of the outstanding
shares of Restricted Stock.
(e) TERMINATION. The obligations of the Company to register shares
of Restricted Stock under Sections 4, 5 or 6 shall terminate on the tenth
anniversary of the completion of an underwritten public offering of shares of
Common Stock in which the net proceeds to the Company shall be at least
$10,000,000.
(f) LIMITATION ON GRANT OF OTHER REGISTRATION RIGHTS. The Company
shall not grant any registration rights more favorable than any of those
contained herein, so long as any of the registration rights under this Agreement
remains in effect.
(g) SEVERABILITY. If any provision of this Agreement shall be held
to be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
(h) GOVERNING LAW. 'THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH AND GOVERNED BY THE GENERAL CORPORATION LAW OF THE STATE OF
DELAWARE AS TO MATTERS WITHIN THE SCOPE THEREOF AND AS TO ALL OTHER MATTERS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS,
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WITHOUT GIVING EFFECT TO THE PRINCIPLES OF THE CONFLICTS OF LAWS THEREOF.
(i) INJUNCTIVE RELIEF. The Company recognizes that the rights of the
Purchasers under this Agreement are unique and, accordingly, the Purchasers
shall, in addition to such other remedies as may be available to them at law or
in equity, have the right to enforce their rights hereunder by actions for
injunctive relief and specific performance to the extent permitted by law. This
Agreement is not intended to limit or abridge any rights of the Purchasers which
may exist apart from this Agreement.
(j) COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
[The Remainder of This Page Intentionally Left Blank.]
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- IN WITNESS WHEREOF, this Agreement has been executed as of the date and
year first above written.
NEON SYSTEMS, INC.
By: /s/ Xxxxx Xxxxxxxxx
-------------------
Xxxxx Xxxxxxxxx
President
: Address: 0000 Xxxxx Xxxxx Xxxxx 0000
Xxxxxxx, Xxxxx 00000
JMI EQUITY FUND, L.P.
By: JMI Partners, L.P. Its General
Partner
By: /s/ Xxxxxxx X. Xxxxx
--------------------
Xxxxxxx X. Xxxxx
A General Partner
Address: 00000 Xxxxxxxxx Xxxxxxx,
Xxxxx 0000
Xxxxx Xxxx, Xxxxx 00000
/s/ Xxxxx Xxxxxxxxx
-------------------
Xxxxx Xxxxxxxxx
Address:
