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EXHIBIT 4.01
Shareholders' Agreement dated November 12, 1996 among Registrant,
Xxxxxx and the Xxxxxx Shareholders.
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Certain portions of this exhibit have been omitted based upon a
request for confidential treatment. Such nonpublic information has
been filed with the Securities and Exchange Commission.
SHAREHOLDERS' AGREEMENT
This Shareholders' Agreement (this "Agreement") is made and entered
into as of November 12, 1996 (the "Effective Date"), by and among Worldtalk
Communications Corporation, a Delaware corporation ("Worldtalk"), Xxxxxx
Software, Inc., a Washington corporation that is, or is to become, a wholly
owned subsidiary of Worldtalk ("Xxxxxx"), and the individual shareholders of
Xxxxxx listed on the signature page hereto (each a "Shareholder" and
collectively the "Shareholders").
A. Worldtalk and Xxxxxx have entered into an Agreement and Plan
of Reorganization dated as of November 9, 1996 (the "Plan of Reorganization"),
pursuant to which a wholly owned subsidiary of Worldtalk ("Newco") will merge
with and into Xxxxxx in a reverse triangular merger (the "Merger"), with Xxxxxx
to be the surviving corporation of the Merger, pursuant to the terms and
conditions set forth in the Plan of Reorganization, the Agreement of Merger to
be entered into by and between Xxxxxx and Newco pursuant to the Plan of
Reorganization (the "Agreement of Merger") and the applicable provisions of the
laws of the State of Washington. Upon the effectiveness of the Merger, all
outstanding capital stock of Xxxxxx will be converted into shares of Worldtalk
Common Stock or cash in the manner and on the basis set forth in the Plan of
Reorganization and in the Agreement of Merger.
B. The Shareholders constitute all of the shareholders of Xxxxxx.
C. One of the conditions precedent to the obligations of
Worldtalk to consummate the Merger under the Plan of Reorganization is that
each of the Shareholders shall have executed and entered into this Agreement
with Worldtalk. The Shareholders are therefore entering into this Agreement as
a material inducement to Worldtalk to issue the consideration to the
Shareholders in the Merger, and to effectuate the Merger pursuant to the Plan
of Reorganization.
NOW, THEREFORE, in consideration of the facts stated in the foregoing
recitals and the promises made herein, Worldtalk, Xxxxxx and the Shareholders
each hereby agrees as follows:
1. NON-COMPETITION COVENANTS
1.1 NON-COMPETITION. Each Shareholder hereby covenants
and agrees with Worldtalk and Xxxxxx that, during the Non-Competition Period
(as defined below), such Shareholder shall not, directly or indirectly, carry
on any business that is, directly or indirectly, competitive with the business
conducted by Worldtalk or any of its subsidiaries (including without limitation
Xxxxxx), as conducted on or before the effective date of the Merger or
following the effective date of the Merger to the date of termination of such
Shareholder's employment with Worldtalk, in any state, territory or possession
of the United States or any country in which Xxxxxx has conducted business, or
in which Worldtalk conducts, or has conducted business to the date of
termination of such Shareholder's employment with Worldtalk (including, without
limitation, any county, state, territory, possession or country in which any
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customer of Xxxxxx or Worldtalk is located or in which Xxxxxx or Worldtalk has
solicited business).
1.2 NON-COMPETITION PERIOD. For purposes of this
Agreement, the "NON-COMPETITION PERIOD" shall be that period of time beginning
on the effective date of the Merger and ending four (4) years after the
effective date of the Merger; provided that if Worldtalk terminates the
employment of any Shareholder, for any reason or no reason, with or without
cause, the Non-Competition Period will survive with respect to such Shareholder
until the earlier of two (2) years following the effective date of such
termination or the expiration of four (4) years after the date of the Merger.
1.3 SCOPE OF NON-COMPETITION COVENANTS.
(a) Carrying on a Business. For purposes of this
Agreement, each of the following activities, without limitation, shall be
deemed to constitute "carrying on any business": to engage in, work with, be
employed by, consult for, provide service to, invest in, have an interest in,
advise, lend money to, guarantee the debts or obligations of, contribute, sell
or license intellectual property to, or permit one's name or any part thereof
to be used in connection with, any enterprise or endeavor, either individually,
in partnership or in conjunction with any person, firm, association, company or
corporation, whether as principal, agent, shareholder, partner, director,
officer, employee, consultant, or in any other manner whatsoever. Nothing
contained in this Agreement shall prohibit Shareholder from being employed by
or serving as a consultant to Worldtalk or Xxxxxx (or any wholly owned
subsidiary of Worldtalk) or prohibit any Shareholder from acquiring or holding
at any one time less than one percent (1%) of the outstanding securities of any
publicly traded company.
(b) Businesses of Xxxxxx and Worldtalk. For
purposes of this Agreement, the business conducted by Xxxxxx shall be deemed to
include, but not be limited, to the business of developing, marketing,
distributing and/or supporting security software products and services. For
purposes of this Agreement, the business conducted by Worldtalk shall be deemed
to include, but not be limited to, the business of developing, marketing,
distributing and/or supporting software products and services relating to
application routing, electronic mail and groupware systems and Internet and
intranet access control.
2. NON-SOLICITATION COVENANTS
2.1 NON-SOLICITATION OF CUSTOMERS. Each Shareholder
hereby agrees with Worldtalk and Xxxxxx that, during the Non-Competition
Period, such Shareholder will not, either for himself or for any other person
or entity, directly or indirectly, solicit business from, or attempt to sell,
license or provide the same or similar products or services as are now provided
or proposed to be provided by Worldtalk or Xxxxxx to, any clients or customers
or potential clients or customers of Worldtalk or Xxxxxx. Each Shareholder
hereby acknowledges that the identities, addresses, and business needs of the
clients and customers of Worldtalk and Xxxxxx are confidential and proprietary
information and trade secrets of Worldtalk and Xxxxxx respectively, and that
this Agreement confers on such Shareholder a duty not to disclose such
information or use such information to the detriment of Worldtalk or Xxxxxx.
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2.2 NON-SOLICITATION OF EMPLOYEES. Each Shareholder
agrees with Worldtalk and Xxxxxx that, during the Non-Competition Period, such
Shareholder will not, either for himself or for any other person or entity,
directly or indirectly, solicit, induce or attempt to induce any employee of
Worldtalk or Xxxxxx to terminate his or her employment with Worldtalk or
Xxxxxx, respectively.
3. CONFIDENTIALITY. Each Shareholder agrees with Worldtalk and
Xxxxxx not to disclose, communicate, use to the detriment of Worldtalk, or any
affiliate of Worldtalk (including but not limited to Xxxxxx), or for the
benefit of any other person, or misuse in any way, any confidential information
or trade secrets of Worldtalk or any affiliate of Worldtalk (including but not
limited to confidential information and trade secrets of Xxxxxx acquired by
Worldtalk in the Merger), including, without limitation, personnel information,
secret processes, software, know-how, customer or supplier lists, formulae, or
other technical data. Each Shareholder acknowledges and agrees with Worldtalk
and Xxxxxx that all such confidential information and trade secrets previously
received or to be received by such Shareholder from Xxxxxx, Worldtalk or any
affiliate of Worldtalk or Xxxxxx, was or will be received by such Shareholder
in confidence and as a fiduciary. Nothing in this Section 3 will affect the
rights of any Shareholder to disclose, communicate or use any information that
is or becomes part of the public domain or is received by such Shareholder from
a third party without breach of nondisclosure obligation to the other party.
4. COVENANT NOT TO SELL.
4.1 AGREEMENT NOT TO TRANSFER OR ENCUMBER. Each
Shareholder hereby covenants and agrees not to pledge, sell, assign, transfer,
or otherwise encumber, including without limitation by operation of law, any
shares of Worldtalk Common Stock or any beneficial interest therein received by
him in or through the Merger (the "Merger Shares") for a period of 4 years
after the Closing (as defined in the Plan of Reorganization), subject to the
remaining terms and conditions of this Section 4. Notwithstanding anything to
the contrary in this Section 4, the following transfers of Merger Shares will
be exempt from the foregoing agreement and covenant under this Section 4.1 (the
"No- Sale Covenant"): (a) the transfer of any or all of the Merger Shares
during a Shareholder's lifetime by gift or on such Shareholder's death by will
or intestacy to such Shareholder's "immediate family" (as defined below) or to
a trust for the benefit of such Shareholder or such Shareholder's immediate
family, provided that each transferee or other recipient agrees in a writing
satisfactory to Worldtalk that the provisions of this Section will continue to
apply to the transferred Merger Shares in the hands of such transferee or other
recipient; and (b) any transfer of Merger Shares made pursuant to a statutory
merger or statutory consolidation of Worldtalk with or into another corporation
or corporations (except that this No-Sale Covenant will continue to apply
thereafter to such Merger Shares, in which case the surviving corporation of
such merger or consolidation shall succeed to the rights of Worldtalk under
this Section). As used herein, the term "immediate family" will mean a
Shareholder's spouse, the parent, grandparent, child, brother or sister,
adopted child or grandchild of the Shareholder or the Shareholder's spouse, or
the spouse of any child, adopted child, grandchild or adopted grandchild of the
Shareholder or the Shareholder's spouse.
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4.2 RELEASE FROM NO-SALE COVENANT.
(a) First Year Milestones. Notwithstanding the
provisions of Section [**] of the [**](or such [**] pursuant
to [**] above) will be [**] at the end of the [**] the [**]
pursuant to Section [**] hereof) to the extent the [**] to
this Agreement [**] have been achieved, according to the
[**], provided that such [**] and the [**] of such [**].
(b) [**] Of the [**} on each of the second,
third and fourth anniversaries of the [**] (as defined in
the Plan of Reorganization), subject to [**] provided that
in the event [**]
(c) Additional Milestones. Notwithstanding
Section [**] in a [**] and the [**] as determined in such
[**] with respect to the [**] to the extent the [**] and
provided that [**] It is understood that [**] to the
extent [**].
(d) Examples. The following are examples of the
implementation of the provisions of this Section 4.2. They
assume that the [**] to the extent applicable:
(1) If [**] If, however, [**].
(2) If [**] If, however, [**].
(3) If [**].
5. SHAREHOLDER REPRESENTATIONS.
5.1 TAX FREE REORGANIZATION. Each Shareholder
understands and agrees that it is intended that the Merger will be treated as a
tax-free reorganization for federal income tax purposes and that such treatment
requires that a sufficient number of former Shareholders of Xxxxxx maintain a
meaningful continuing equity ownership interest in Worldtalk after the Merger.
Each Shareholder understands that the treatment of the Merger as a
"reorganization" for federal income tax purposes is dependent upon the accuracy
of the representations, warranties and covenants set forth herein, and that
such representations, warranties and covenants will be relied upon by Worldtalk
and Xxxxxx and their respective counsel and accounting firms and by the
Shareholders. Each Shareholder will rely on such Shareholder's own tax
advisers as to the tax attributes of the Merger to such Shareholder and
understands that neither Worldtalk, nor Worldtalk's counsel, Xxxxxx or Xxxxxx'x
counsel has guaranteed nor will guarantee to such Shareholder that the Merger
will be a tax-free reorganization. Each Shareholder understands that counsel
to Worldtalk and counsel to Xxxxxx have not acted as counsel for such
Shareholder with respect to any matter related to the Merger, and that such
Shareholder has not relied on Worldtalk or its counsel, or Xxxxxx or its
counsel, with respect to any legal matter related to the Merger or its tax
consequences, including, without limitation, any U.S. federal income tax
consequences.
5.2 SHAREHOLDER REPRESENTATIONS. Each Shareholder
represents, warrants and covenants that such Shareholder does not now have, and
as of the Effective Time of the Merger will not have, any present plan or
intention ("Plan of Transfer") to engage in a sale, exchange, transfer,
distribution, pledge, disposition or any other transaction which would result
in a direct or indirect disposition (a "Sale") of more than 25% of the shares
of Worldtalk Common Stock that such Shareholder may acquire in connection with
the Merger, or any securities that may be paid as a dividend or otherwise
distributed thereon or with respect thereto or issued or delivered in exchange
or substitution therefor or upon conversion thereof ("Derivative Securities").
Each Shareholder is not aware of, nor is such Shareholder participating in, any
Plan of Transfer to engage in a Sales of shares of Worldtalk Common Stock to be
issued in the Merger (including Derivative Securities) such that the aggregate
fair market value, as of the Effective Time of the Merger (as defined in the
Plan of Reorganization), of the shares subject to such Sales would exceed 25%
of the aggregate fair market value of all shares of outstanding Xxxxxx Common
Stock immediately prior to the Merger. For purposes of this representation,
shares of Xxxxxx Common Stock (or the portion thereof) (a) with respect to
which a Shareholder receives consideration in the Merger other than Worldtalk
Common Stock (including, without limitation, any Cash Payment received in the
Merger pursuant to Section
__________________________________
** Certain portions of this exhibit have been omitted based upon a
request for confidential treatment. Such nonpublic information has
been filed with the Securities and Exchange Commission.
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1.1.1 of the Plan of Reorganization and cash received in lieu of fractional
shares) and/or (b) with respect to which a Sale occurs during the period
beginning with the commencement of negotiations (whether formal or informal)
between Xxxxxx and Worldtalk regarding the Merger and ending on the Effective
Time of the Merger, shall be considered shares of outstanding Xxxxxx Common
Stock exchanged for Worldtalk Common Stock received in the Merger and then
disposed of pursuant to a Plan of Transfer.
6. S-3 REGISTRATION RIGHTS.
6.1 DEFINITIONS. For purposes of this Section 6:
(a) Registration. The terms "register,"
"registered," and "registration" refer to a registration effected by preparing
and filing a registration statement in compliance with the Securities Act of
1933, as amended (the "Securities Act"), and the declaration or ordering of
effectiveness of such registration statement.
(b) Registrable Securities. The term
"Registrable Securities" means: (1) such portion of the Merger Shares that have
been released from the No-Sale Covenant under Section 4.2 above with respect to
the first year following the Closing within one year following the Closing of
the Merger; provided that only Merger Shares that were issued in the Merger to
Shareholders who are employees of Worldtalk on the date the Form S-3 is
declared effective (including Merger Shares held by such Shareholders or a
permitted Holder) will be deemed Registrable Securities and (2) any shares of
Worldtalk 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, all such
Merger Shares described in clause (1) of this subsection (b); excluding in all
cases, however, any Registrable Securities sold by a person in a transaction in
which rights under this Section 6 are not assigned in accordance with this
Agreement or sold pursuant to Rule 144 promulgated under the Securities Act.
(c) Holder. For purposes of this Section 6 the
term "Holder" means any Shareholder owning of record Registrable Securities
that have not been sold pursuant to Rule 144 promulgated under the Securities
Act or any assignee of record of such Registrable Securities to whom rights
under this Section 6 have been duly assigned in accordance with this Agreement.
(d) Form S-3. The term "Form S-3" means such
form under the Securities Act as is in effect on the date hereof or any
successor registration form under the Securities Act subsequently adopted by
the SEC which permits inclusion or incorporation of substantial information by
reference to other documents filed by Worldtalk with the SEC.
(e) SEC. The term "SEC" means the U.S.
Securities and Exchange Commission.
(f) Securities Act. The term "Securities Act"
means the Securities Act of 1933, as amended.
6.2 FORM S-3 REGISTRATION. If all of the First Year
Milestones have been achieved within the first year following the Closing of
the Merger and Worldtalk receives from a
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Holder or Holders holding at least fifty percent (50%) of all Registrable
Securities a written request that Worldtalk effect a registration on Form S-3
and any related qualification or compliance with respect to the Registrable
Securities owned by such Holders, which request is received by Worldtalk on or
before October 1, 1997, then Worldtalk will:
(a) Notice. Promptly give written notice of the
proposed registration and the Holder's or Holders' request therefor, and any
related qualification or compliance, to all other Holders of Registrable
Securities; and
(b) Registration. Effect such registration and
all such qualifications and compliance as may be so requested and as would
permit or facilitate the sale and distribution of all of the Registrable
Securities within the periods described in Section 6.3 below; provided,
however, that Worldtalk shall not be obligated to effect any such registration,
qualification or compliance pursuant to this Section 6.2:
(1) if Form S-3 is not available for
such offering by the Holders as a result of acts or omissions of one or more of
the Holders;
(2) if Worldtalk shall furnish to the
Holders a certificate signed by the President or Chief Executive Officer of
Worldtalk stating that in the good faith judgment of the Board of Directors of
Worldtalk, it would be inadvisable from a liability standpoint for such Form
S-3 Registration to be effected at such time, in which event Worldtalk shall
have the right to defer the filing of the Form S-3 registration statement not
more than 180 days after receipt of the request of the Holder or Holders under
this Section 6.2;
(3) in any particular jurisdiction in
which Worldtalk would be required to qualify to do business or to execute a
general consent to service of process in effecting such registration,
qualification or compliance;
(4) if all of the First Year Milestones
have not been achieved in full for any reason; or
(5) with respect to any Merger Shares
issued in the Merger to a Shareholder who is not an employee of Worldtalk on
the date the Form S-3 is declared effective (whether such Merger Shares are
held by such Shareholders or any other Holder); or the number of Registrable
Securities is less than 10% of the total number of Merger Shares.
(c) Expenses. Subject to the foregoing,
Worldtalk shall file a Form S-3 registration statement covering the Registrable
Securities to be registered pursuant to this Section 6.2 as soon as practicable
after receipt of the request or requests of the Holders for such registration.
Worldtalk shall pay all expenses incurred in connection with the registration
requested pursuant to this Section 6.2, (excluding underwriters' or brokers'
discounts and commissions), including without limitation all filing,
registration and qualification, printers' and accounting fees and the
reasonable fees and disbursements of one counsel for the selling Holder or
Holders and counsel for Worldtalk.
6.3 OBLIGATIONS OF WORLDTALK. If Worldtalk is required
to effect the registration of any Registrable Securities under this Agreement,
Worldtalk shall:
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(a) Prepare and file with the SEC a registration
statement with respect to such Registrable Securities and, subject to the SEC's
review requirements, use its best efforts to cause such registration statement
to become effective on or before November 1, 1997 (or such later date as may be
determined under Section 6.2(b)(2)), and keep such registration statement
effective for ninety (90) days (the "Registration Period"); provided that
Worldtalk may terminate the registration statement during any period in which
Worldtalk's xxxxxxx xxxxxxx window ("Window"), as described in its Xxxxxxx
Xxxxxxx Policy dated April 26, 1996, as may be amended, is closed, and
Worldtalk will, as necessary to maintain an effective registration statement
under this Section 6.3 during the portions of the Registration Period in which
the Window is open, refile the registration statement with respect to such
Registrable Securities that have not yet been sold pursuant to a prior
registration statement filed under this Section 6.3 and use its best efforts to
cause such registration statement to become effective no later than the opening
of the Window and keep such registration statement effective for the duration
of the Registration Period.
(b) Prepare and file with the SEC such amendments
and supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to comply with
the provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish to the Holders such number of copies
of a prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as they may
reasonably request in order to facilitate the disposition of the Registrable
Securities owned by them that are included in such registration.
(d) Use its best efforts to register and qualify
the securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that Worldtalk shall not be required in
connection therewith or as a condition thereto to qualify to do business or to
file a general consent to service of process in any such states or
jurisdictions.
6.4 FURNISH INFORMATION. It shall be a condition
precedent to the obligations of Worldtalk to take any action pursuant to
Sections 6.2 that the selling Holders shall furnish to Worldtalk such
information regarding themselves, the Registrable Securities held by them, and
the intended method of disposition of such securities as shall be required to
timely effect the registration of their Registrable Securities.
6.5 DELAY OF REGISTRATION. No Holder shall have any
right to obtain or seek an injunction restraining or otherwise delaying any
such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Section 6.
6.6 INDEMNIFICATION. In the event any Registrable
Securities are included in a registration statement under Sections 6.2:
(a) By Worldtalk. To the extent permitted by
law, Worldtalk will indemnify and hold harmless each Holder, the partners,
officers and directors of each Holder, any underwriter (as defined in the
Securities Act) for such Holder and each person, if any, who controls such
Holder or underwriter within the meaning of the Securities Act or the
Securities
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Exchange Act of 1934, as amended, (the "1934 Act"), against any losses, claims,
damages, or liabilities (joint or several) to which they may become subject
under the Securities Act, the l934 Act or other federal or state law, insofar
as such losses, claims, damages, or liabilities (or actions in respect thereof)
arise out of or are based upon any of the following statements, omissions or
violations (collectively a "Violation"):
(1) any untrue statement or alleged
untrue statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein or
any amendments or supplements thereto;
(2) the omission or alleged omission to
state therein a material fact required to be stated therein, or necessary to
make the statements therein not misleading, or
(3) any violation or alleged violation
by Worldtalk of the Securities Act, the 1934 Act, any federal or state
securities law or any rule or regulation promulgated under the Securities Act,
the 1934 Act or any federal or state securities law in connection with the
offering covered by such registration statement;
and Worldtalk will reimburse each such Holder, partner, officer or director,
underwriter or controlling person for any legal or other expenses reasonably
incurred by them, as incurred, in connection with investigating or defending
any such loss, claim, damage, liability or action; provided however, that the
indemnity agreement contained in this subsection 6.6 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 Worldtalk (which consent shall
not be unreasonably withheld), nor shall Worldtalk be liable in any such case
for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder, partner, officer, director, underwriter
or controlling person of such Holder.
(b) By Selling Holders. To the extent permitted
by law, each selling Holder will indemnify and hold harmless Worldtalk, each of
its directors, each of its officers who have signed the registration statement,
each person, if any, who controls Worldtalk within the meaning of the
Securities Act, any underwriter and any other Holder selling securities under
such registration statement or any of such other Holder's partners, directors
or officers or any person who controls such Holder within the meaning of the
Securities Act or the 1934 Act, against any losses, claims, damages or
liabilities (joint or several) to which Worldtalk or any such director,
officer, controlling person, underwriter or other such Holder, partner or
director, officer or controlling person of such other Holder may become subject
under the Securities Act, the 1934 Act or other federal or state law, insofar
as such losses, claims, damages or liabilities (or actions in respect thereto)
arise out of or are based upon any Violation, in each case to the extent (and
only to the extent) that such Violation occurs in reliance upon and in
conformity with written information furnished by such Holder expressly for use
in connection with such registration; and each such Holder will reimburse any
legal or other expenses reasonably incurred by Worldtalk or any such director,
officer, controlling person, underwriter or other Holder, partner, officer,
director or controlling person of such other Holder in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the indemnity agreement contained in this subsection
6.6(b) shall not apply to amounts paid in settlement of
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any such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Holder, which consent shall not be
unreasonably withheld; and provided further, that the total amounts payable in
indemnity by a Holder under this Section 6.6(b) in respect of any Violation
shall not exceed the net proceeds received by such Holder in the registered
offering out of which such Violation arises.
(c) Notice. Promptly after receipt by an
indemnified party under this Section 6.6 of notice of the commencement of any
action (including any governmental action), such indemnified party will, if a
claim in respect thereof is to be made against any indemnifying party under
this Section 6.6, deliver to the indemnifying party a written notice of the
commencement thereof and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume the defense
thereof with counsel mutually satisfactory to the parties; provided, however,
that an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if representation
of such indemnified party by the counsel retained by the indemnifying party
would be inappropriate due to actual or potential conflict of interests between
such indemnified party and any other party represented by such counsel in such
proceeding. The failure to deliver written notice to the indemnifying party
within a reasonable time of the commencement of any such action, if prejudicial
to its ability to defend such action, shall relieve such indemnifying party of
any liability to the indemnified party under this Section 6.6, but the omission
so to deliver written notice to the indemnifying party will not relieve it of
any liability that it may have to any indemnified party otherwise than under
this Section 6.6.
(d) Defect Eliminated in Final Prospectus. The
foregoing indemnity agreements of Worldtalk and Holders are subject to the
condition that, insofar as they relate to any Violation made in a preliminary
prospectus but eliminated or remedied in the amended prospectus on file with
the SEC at the time the registration statement in question becomes effective or
the amended prospectus filed with the SEC pursuant to SEC Rule 424(b) (the
"Final Prospectus"), such indemnity agreement shall not inure to the benefit of
any person if a copy of the Final Prospectus was furnished to the indemnified
party and was not furnished to the person asserting the loss, liability, claim
or damage at or prior to the time such action is required by the Securities
Act.
(e) Contribution. In order to provide for just
and equitable contribution to joint liability under the Securities Act in any
case in which either (1) any Holder exercising rights under this Agreement, or
any controlling person of any such Holder, makes a claim for indemnification
pursuant to this Section 6.6 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 6.6 provides for indemnification in such case, or (2)
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 Section 6.6; then, and in each such
case, Worldtalk 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
Registrable Securities offered by and sold under the registration statement
bears to the public offering price of all securities
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offered by and sold under such registration statement, and Worldtalk and other
selling Holders are responsible for the remaining portion; provided, however,
that, in any such case, (A) no such Holder will be required to contribute any
amount in excess of the public offering price of all such Registrable
Securities offered and sold by such Holder pursuant to such registration
statement; and (B) 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.
(f) Survival. The obligations of Worldtalk and
Holders under this Section 6.6 shall survive the completion of any offering of
Registrable Securities in a registration statement, and otherwise.
6.7 NO OTHER REGISTRATION RIGHTS. By approving this
Agreement, each Shareholder accepts the rights granted in this Section 6 in
lieu of, and hereby waives, any other registration rights such Shareholder may
have under any agreements with Xxxxxx, other than the registration rights
granted under the Second Amendment to the Third Amended and Restated
Registration Rights Agreement dated as of November 8, 1996 between Worldtalk
and certain of its stockholders (the "Second Amendment").
7. SEVERABILITY. The scope and effect of the covenants contained
in this Agreement shall be as broad in time (but not, as regards the covenants
contained in Sections 1 and 2 of this Agreement, beyond the Non-Competition
Period), geography and in all other respects as is permitted by applicable law.
Should a court or other body of competent jurisdiction determine that any term
or provision of this Agreement is excessive in scope or duration, then such
term or provision shall be modified so as to be enforceable (rather than
voided), in accordance with the purposes stated in the preceding sentence and
with applicable law, and all other terms and provisions of this Agreement shall
be deemed valid and enforceable to the fullest extent possible. The parties
intend that the non-competition and non-solicitation provisions of this
Agreement shall be deemed to be a series of separate covenants, one for each
and every county of each and every state of the United States of America and
each and every political subdivision of each and every country outside the
United States of America where this provision is intended to be effective.
8. REMEDIES. The restrictions contained in this Agreement are
necessary for the protection of the business and goodwill of Worldtalk and
Xxxxxx and are considered by each Shareholder to be reasonable for such
purpose. Each Shareholder acknowledges and agrees with Worldtalk and Xxxxxx
that damages would not adequately compensate Worldtalk or Xxxxxx if such
Shareholder were to breach any of covenants of such Shareholder contained in
this Agreement. Consequently, each Shareholder agrees that in the event of any
such breach, Worldtalk and Xxxxxx shall be entitled, in addition to any other
remedies, to enforce this Agreement by means of an injunction or other
equitable relief.
9. ASSIGNMENT.
9.1 ASSIGNMENT. Notwithstanding anything herein to the
contrary, the registration rights of a Holder under Section 6 hereof may be
assigned only to a party to whom a Shareholder may transfer Merger Shares
pursuant to Section 4.1; provided, however that no party may be assigned any of
the foregoing rights unless Worldtalk is given written notice by the
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12
assigning party at the time of such assignment stating the name and address of
the assignee and identifying the securities of Worldtalk as to which the rights
in question are being assigned; and provided further that any such assignee
shall receive such assigned rights subject to all the terms and conditions of
this Agreement, including without limitation the provisions of this Section 9.
Except as set forth in this Section 9.1, no Shareholder may assign or transfer
its rights or obligations under this Agreement. Subject to the foregoing, this
Agreement and the obligations and rights hereunder will be binding upon and
will inure to the benefit of the parties' successors, representatives, heir and
permitted assigns.
9.2 AMENDMENT AND WAIVER OF REGISTRATION RIGHTS. Any
provision of Section 6 of this Agreement may be amended and the observance
thereof may be waived (either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of Worldtalk,
Xxxxxx and Shareholders (and/or any of their permitted successors or assigns)
holding Merger Shares representing a majority of all the shares of Merger Stock
then held by all such Shareholders (and any of their permitted successors or
assigns). Any amendment or waiver effected in accordance with this Section 9.2
shall be binding upon each Shareholder, each Holder, each permitted successor
or assignee of such Shareholder or Holder and Worldtalk.
9.3 OTHER AMENDMENTS AND WAIVERS. Except as set forth in
Section 9.2. any term or provision of this Agreement may be amended, and the
observance of any term of this Agreement may be waived (either generally or in
a particular instance and either retroactively or prospectively) only by a
writing signed by the party to be bound thereby. The waiver by a party of any
breach hereof or default in the performance hereof will not be deemed to
constitute a waiver of any other default or any succeeding breach or default.
10. GENERAL PROVISIONS.
10.1 GOVERNING LAW. The internal laws of the State of
Washington (irrespective of its choice of law principles) will govern the
validity of this Agreement, the construction of its terms and the
interpretation and enforcement of the rights and duties of the parties hereto.
10.2 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which will be an original as regards any party
whose signature appears thereon and all of which together will constitute one
and the same instrument. This Agreement will become binding when one or more
counterparts hereof, individually or taken together, will bear the signatures
of both parties reflected thereon as signatories.
11.3 NO WAIVER. The failure of any party to enforce any
of the provisions hereof will not be construed to be a waiver of the right of
such party thereafter to enforce such provisions.
11.4 NOTICES. Any notice or other communication required
or permitted to be given under this Agreement will be in writing, will be
delivered personally or by certified mail, postage prepaid, return receipt
requested, and will be deemed given upon delivery, if delivered personally, or
three days after deposit in the mails, if mailed, to the following addresses:
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13
If to Worldtalk or Xxxxxx:
Worldtalk Communications Corporation
0000 Xxx Xxxxxxxxx Xxxxx
Xxxxx Xxxxx, Xxxxxxxxxx 00000
Attention: President
with copy to:
Fenwick & West LLP
Two Xxxx Xxxx Xxxxxx, Xxxxx 000
Xxxx Xxxx, Xxxxxxxxxx 00000
Attention Xxxx X. Xxxxxx, Esq.
If to a Shareholder:
At the address set forth opposite such Shareholder's
name on Attachment 2
or to such other address as a party may have furnished to the other parties in
writing pursuant to this Section 11.4.
11.5 CONSTRUCTION OF AGREEMENT. This Agreement has been
negotiated by the respective parties hereto and their attorneys and the
language hereof will not be construed for or against either party. A reference
to a Section or an exhibit will mean a Section in, or exhibit to, this
Agreement unless otherwise explicitly set forth. The titles and headings
herein are for reference purposes only and will not in any manner limit the
construction of this Agreement, which will be considered as a whole.
11.6 FURTHER ASSURANCES. Each party agrees to cooperate
fully with the other parties and to execute such further instruments, documents
and agreements and to give such further written assurances as may be reasonably
requested by any other party to evidence and reflect the transactions described
herein and contemplated hereby and to carry into effect the intents and
purposes of this Agreement.
11.7 ABSENCE OF THIRD PARTY BENEFICIARY RIGHTS. No
provisions of this Agreement are intended, nor will be interpreted, to provide
or create any third party beneficiary rights or any other rights of any kind in
any client, customer, affiliate, shareholder or partner of any party hereto or
any other person or entity unless specifically provided otherwise herein, and,
except as so provided, all provisions hereof will be personal solely among the
parties to this Agreement.
11.8 ENTIRE AGREEMENT. This Agreement, the Attachments
hereto and the Second Amendment constitute the entire understanding and
agreement of the parties hereto with respect to the subject matter hereof and
supersede all prior and contemporaneous agreements or understandings,
inducements or conditions, express or implied, written or oral, between the
parties with respect hereto. The express terms hereof control and supersede
any course of performance or usage of the trade inconsistent with any of the
terms hereof.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, each Shareholder, Worldtalk and Xxxxxx have
executed this Agreement as of the date set forth in the first paragraph of this
Agreement.
WORLDTALK COMMUNICATIONS SHAREHOLDERS
CORPORATION
By: /s/ Xxxx X. Xxxx /s/ Xxxxxx X. Xxxxxxxx
------------------------------- -------------------------------------
XXXXXX X. XXXXXXXX
Name: Xxxx X. Xxxx
-----------------------------
/s/ Xxxxxx X. Xxxxxxxxx, III
-------------------------------------
Title: President XXXXXX X. XXXXXXXXX, III
and Chief Executive Officer
----------------------------
/s/ Xxxxx X. Xxxxx, Xx.
-------------------------------------
XXXXX X. XXXXX, XX.
XXXXXX SOFTWARE, INC.
/s/ Xxxxx X. Xxxxxxxx
-------------------------------------
XXXXX X. XXXXXXXX
By: Xxxx X. Xxxx
-------------------------------
Name: Xxxx X. Xxxx
-----------------------------
Title: President
----------------------------
Attachments
-----------
Attachment 1: Milestones for First Year
Attachment 2: Names and Addresses of Shareholders
[SIGNATURE PAGE FOR SHAREHOLDERS' AGREEMENT]
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15
Worldtalk/Xxxxxx Milestones - Attachment 1
(11/7/96)
The milestones for [**] are as follows: On plan performance for [**] of up to
[**] of the [**] from the [**].
-- Complete [**] with the following features:
- [**] on [**] as [**]
- [**], including
[**] for [**]
- [**] including
[**]
- [**] including
- [**] over certain [**]
- Minimum set of [**] includes: [**]
- [**] include: [**].
- [**] should be of the appropriate [**] based upon the [**].
- should include: [**].
- [**]
-- Complete FCS of [**]
"FCS" means that product is production quality and that Worldtalk can ship
product to customers and recognize the resultant revenue.
[**]
-- Release to [**] of [**]
- [**]
- Optional [**] allows for [**] of [**]
(works in conjunction with [**])
- [**] added to [**] list on [**]
- [**]
- Release to [**] of [**]
** Confidential treatment has been requested for this portion.
16
ATTACHMENT 2
SHAREHOLDER NAMES
AND ADDRESSES
Xxxxxx X. Xxxxxxxx
00000 XX 00xx Xxxxxx
Xxxxxxx, XX 00000
Xxxxxx X. Xxxxxxxxx, III
00000 XX 00xx Xxxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxxx, Xx.
0000 X. 00xx Xxxxxx
Xxxxxxx, XX 00000
Xxxxx X. Xxxxxxxx
X.X. Xxx 0000
Xxxxxxxx, XX 00000
