Exhibit 10.14
SECOND AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
This Second Amended and Restated Registration Rights Agreement
("Agreement") is made as of this 11th day of April, 2000 by and among DeskTalk
Systems, Inc., a California corporation (the "Company"), the parties whose names
are set forth on Schedule I (individually, an "Investor" and collectively, the
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"Investors") and the shareholders listed on Schedule II (individually, a
Shareholder and collectively, the Shareholders").
WHEREAS, the Company and the Shareholders are parties to an Amended and
Restated Registration Rights Agreement dated April 18, 1997, as further amended
on December 8, 1998;
WHEREAS, the Investors and the Company are parties to the Series D
Preferred Stock Purchase Agreement, dated the date hereof (the "Purchase
Agreement"), and in order to induce the Investors to enter into the Purchase
Agreement, the Company has agreed to provide the Investors the registration
rights set forth in this Agreement and the Company and the Shareholders have
agreed to amend and restate in its entirety the Amended and Restated
Registration Rights Agreement as set forth within.
NOW, THEREFORE, in consideration of the foregoing and of the agreements
contained herein, and intending to be legally bound hereby, the parties hereto
agree as follows:
SECTION 1
Restrictions on Transferability of Securities;
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Compliance with Securities Act
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1.1 Restrictions on Transferability. The Shares and the Common Stock
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issuable upon conversion of the Shares shall not be sold, assigned, transferred
or pledged except upon the conditions specified in the Agreement, which
conditions are intended to ensure compliance with provisions of the Securities
Act. Each Investor shall cause any proposed purchaser, assignee, transferee, or
pledgee of the Shares or such Common Stock held by an Investor to agree to take
and hold such securities subject to the provisions and upon the conditions
specified in this Agreement including without limitation those imposed upon
Holders (as defined below) under Section 1.13.
1.2 Certain Definitions. As used in this Agreement, the following terms
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shall have the following respective meanings:
"Affiliate" shall mean an entity controlling, controlled by or under
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common control with another entity.
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"Commission" shall mean the Securities and Exchange Commission or any
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other federal agency at the time administering the Securities Act.
"Holder" shall mean any Investor or Shareholder holding Registrable
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Securities and any person holding Registrable Securities to whom the rights
under this Agreement have been transferred in accordance with Section 1.12
hereof.
"Initiating Holders" shall mean either (a) any Holder or Holders who
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in the aggregate are Holders of not less than 25% of the Registrable
Securities and who request a registration pursuant to Section 1.5, or (b)
Holders of not less than 50% of the Series D Registrable Securities and who
request a registration pursuant to Section 1.5.
"Restricted Securities" shall mean the securities of the Company
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required to bear the legend set forth in Section 1.3 hereof.
"Registrable Securities" means (i) shares of the Company's Common
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Stock issued or issuable pursuant to the conversion of the Series B
Preferred Shares, Series C Preferred Shares and Series D Preferred Shares,
(ii) the Series A Conversion Shares and (iii) any shares of Common Stock
issued or issuable in respect of the Shares or in respect of the shares of
Common Stock or other securities issued or issuable pursuant to the
conversion of the Shares upon any stock split, stock dividend,
recapitalization or similar event; provided, however, that Registrable
Securities shall not include: (i) any such shares that have been sold
pursuant to Rule 144 under the Securities Act or to the public pursuant to
a registration statement filed under the Securities Act; and (ii) shares
held by a Holder who would be entitled to sell all such shares pursuant to
Rule 144 under the Securities Act in any 90-day period without limitation.
The terms "register," "registered" and "registration" refer to a
registration effected by preparing and filing a registration statement in
compliance with the Securities Act, and the declaration or ordering of the
effectiveness of such registration statement.
"Registration Expenses" shall mean all expenses incurred by the
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Company in complying with Sections 1.5, 1.6, and 1.7 hereof, including,
without limitation, all registration, qualification and filing fees,
printing expenses, escrow fees, fees and disbursements of counsel for the
Company, blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration (but excluding the
compensation of regular employees of the Company which shall be paid in any
event by the Company).
"Securities Act" shall mean the Securities Act or any similar federal
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statute and the rules and regulations of the Commission thereunder, all as
the same shall be in effect at the time.
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"Series A Conversion Shares" shall mean the issued and outstanding
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shares of Common Stock that were issued upon the conversion of the Series A
Preferred Stock of the Company.
"Series B Preferred Shares" shall mean all of the Company's Series B
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Preferred Stock purchased by Shareholders pursuant to that certain Series B
Preferred Stock Purchase Agreement dated April 18, 1997.
"Series C Preferred Shares" shall mean all of the Company's Series C
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Preferred Stock purchased by Shareholders pursuant to that certain Series C
Preferred Stock Purchase Agreement dated December 8, 1998.
"Series D Preferred Shares" shall mean all of the Company's Series D
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Preferred Stock purchased by Investors pursuant to that certain Series D
Preferred Stock Purchase Agreement dated April 11, 2000.
"Series D Registrable Securities" shall mean Registrable Securities
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resulting from the conversion of the Series D Preferred Stock and
Registrable Securities issued or issuable in respect of the Series D
Preferred Stock.
"Shares" shall mean the Series A Conversion Shares, the Series B
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Preferred Stock, the Series C Preferred Stock and Series D Preferred Stock.
"Selling Expenses" shall mean all underwriting discounts, selling
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commissions (including any non-accountable expense allowance of the
underwriters expressed as a fraction of the gross offering proceeds) stock
transfer taxes applicable to the securities registered by the Holders and
all fees and disbursements of counsel for the Holders.
1.3 Restrictive Legend. Each certificate representing (i) the Shares,
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(ii) the Company's Common Stock issued upon conversion of the Series B Preferred
Shares, Series C Preferred Shares and Series D Preferred Shares and (iii) any
other securities issued in respect of the Shares or Common Stock issued upon
conversion of the Shares upon any stock split, stock dividend, recapitalization,
merger, consolidation or similar event, shall (unless otherwise permitted by the
provisions of Section 1.4 below) be stamped or otherwise imprinted with a legend
in the following form (in addition to any legend required under applicable state
securities laws):
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR
INVESTMENT AND HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933.
SUCH SHARES MAY NOT BE SOLD OR TRANSFERRED IN THE ABSENCE OF SUCH
REGISTRATION OR AN EXEMPTION THEREFROM UNDER SAID ACT OR AS PROVIDED IN THE
AGREEMENT COVERING THE PURCHASE OF THESE SHARES AND RESTRICTING THEIR
TRANSFER. COPIES OF THE AGREEMENT MAY BE OBTAINED AT NO COST BY WRITTEN
REQUEST MADE BY THE HOLDER OF
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THIS CERTIFICATE TO THE SECRETARY OF THE CORPORATION AT ITS PRINCIPAL
OFFICE.
Each Investor consents to the Company's making a notation on its records
and giving instructions to any transfer agent of the Shares or the Common Stock
in order to implement the restrictions on transfer established in this
Agreement.
1.4 Notice of Proposed Transfers. The holder of each certificate
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representing Restricted Securities by acceptance thereof agrees to comply in all
respects with the provisions of this Section 1.4. Prior to any proposed sale,
assignment, transfer or pledge of any Restricted Securities, unless there is in
effect a registration statement under the Securities Act covering the proposed
transfer, the holder thereof shall give written notice to the Company of such
holder's intention to effect such transfer, sale, assignment or pledge. Each
such notice shall describe the manner and circumstances of the proposed
transfer, sale, assignment or pledge in sufficient detail, and shall be
accompanied at such holder's expense by either (i) an unqualified written
opinion of legal counsel who shall be, and whose legal opinion shall be,
reasonably satisfactory to the Company addressed to the Company, to the effect
that the proposed transfer of the Restricted Securities may be effected without
registration under the Securities Act, or (ii) a "no action" letter from the
Commission to the effect that the transfer of such securities without
registration will not result in a recommendation by the staff of the Commission
that action be taken with respect thereto, whereupon the holder of such
Restricted Securities shall be entitled to transfer such Restricted Securities
in accordance with the terms of the notice delivered by the holder to the
Company; provided, however, that the Company will not require such a legal
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opinion or "no action" letter (a) in any transaction in compliance with Rule
144, (b) in any transaction in which an Investor that is a partnership or
limited liability company distributes Shares or Common Stock issuable upon
conversion thereof solely to partners or members thereof for no consideration,
or transfers by gift, will or intestate succession to the spouse, siblings,
lineal descendants or ancestors of any partner, provided that each transferee
agrees in writing to be subject to the terms of this Section 1.4; or (c) any
transfer to an Affiliate of a Holder. Each certificate evidencing the
Restricted Securities transferred as above provided shall bear, except if such
transfer is made pursuant to Rule 144, the appropriate restrictive legend set
forth in Section 1.3 above, except that such certificate shall not bear such
restrictive legend if in the opinion of counsel for such Holder and the Company
such legend is not required in order to establish compliance with any provisions
of the Securities Act.
1.5 Demand Registration.
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(a) Request for Registration. In case the Company shall receive
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from Initiating Holders a written request that the Company effect any
registration, qualification or compliance with respect to the Registrable
Securities, the anticipated aggregate offering price, net of underwriting
discounts and commissions, of which would exceed $5,000,000, the Company will:
(i) promptly give written notice of the proposed registration,
qualification or compliance to all other Holders; and
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(ii) as soon as practicable, use its best efforts to effect such
registration, qualification or compliance (including, without limitation, the
execution of an undertaking to file post-effective amendments, appropriate
qualification under applicable blue sky or other state securities laws and
appropriate compliance with applicable regulations issued under the Securities
Act and any other governmental requirements or regulations) as may be so
requested and as would permit or facilitate the sale and distribution of all or
such portion of such Registrable Securities as are specified in such request,
together with all or such portion of the Registrable Securities of any Holder or
Holders joining in such request as are specified in a written request received
by the Company within 30 days after receipt of such written notice from the
Company;
provided, however, that the Company shall not be obligated to take any action to
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effect any such registration, qualification or compliance pursuant to this
Section 1.5:
(A) in any particular jurisdiction in which the Company
would be required to execute a general consent to service of process in
effecting such registration, qualification or compliance unless the Company is
already subject to service in such jurisdiction and except as may be required by
the Securities Act;
(B) prior to the date six (6) months immediately following
the effective date of the registration statement pertaining to the initial
public offering of securities of the Company (other than a registration of
securities in a Rule 145 transaction or with respect to an employee benefit
plan);
(C) after the Company has effected two (2) such
registrations pursuant to this Section 1.5(a), such registrations have been
declared or ordered effective and the securities offered pursuant to such
registrations have been sold, except that until Holders who hold Series D
Registrable Securities have initiated two such registrations and sold at least
80% of the Registrable Securities requested to be registered by such Holders,
then such Holders shall continue to have the right to request registration
pursuant to this Section 1.5(a); or
(D) if the Company shall furnish to such Holders a
certificate signed by the President of the Company stating that in the good-
faith judgment of the Board of Directors it would be seriously detrimental to
the Company or its shareholders for a registration statement to be filed in the
near future, then the Company's obligation to use its best efforts to register,
qualify or comply under this Section 1.5 shall be deferred for a period not to
exceed 90 days; provided that the Company shall not exercise its right under
this clause to defer such obligation more than once in any twelve-month period.
Subject to the foregoing clauses (A) through (D), the Company shall file a
registration statement covering the Registrable Securities so requested to be
registered as soon as practicable, but in any event no later than 60 days, after
receipt of the request or requests of the Initiating Holders.
(b) Underwriting. The right of any Holder to registration pursuant
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to Section 1.5 shall be conditioned upon such Holder's participation in the
underwriting arrangements required by this Section 1.5 and the inclusion of such
Holder's Registrable
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Securities in the underwriting to the extent requested to the extent provided
herein. In any registration pursuant to Section 1.5, the Initiating Holders
(based on a majority of the Registrable Securities to be included therein) will
have the right to select the investment banker(s) and manager(s) to administer
the offering, subject to the approval of the Company, which shall not be
unreasonably withheld or delayed.
The Company shall (together with all Holders proposing to distribute their
securities through such underwriting) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by a
majority in interest of the Initiating Holders (which managing underwriter shall
be reasonably acceptable to the Company). Notwithstanding any other provision
of this Section 1.5, if the managing underwriter advises the Initiating Holders
in writing that marketing factors require a limitation of the number of shares
to be underwritten, then the Initiating Holders shall so advise all Holders of
Registrable Securities and the number of shares of Registrable Securities that
may be included in the registration and underwriting shall be allocated among
all Holders thereof in proportion, as nearly as practicable, to the respective
amounts of Registrable Securities requested to be registered by each such Holder
at the time of filing the registration statement. No Registrable Securities
excluded from the underwriting by reason of the underwriter's marketing
limitation shall be included in such registration.
If any Holder of Registrable Securities disapproves of the terms of the
underwriting, such person may elect to withdraw therefrom by written notice to
the Company, the managing underwriter and the Initiating Holders. The
Registrable Securities and/or other securities so withdrawn shall also be
withdrawn from registration, and such Registrable Securities shall not be
transferred in a public distribution prior to 120 days after the effective date
of such registration; provided, however, that, if by the withdrawal of such
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Registrable Securities a greater number of Registrable Securities held by other
Holders may be included in such registration (up to the maximum of any
limitation imposed by the underwriters), then the Company shall offer to all
Holders who have included Registrable Securities in the registration the right
to include additional Registrable Securities in the same proportion used in
determining the underwriter limitation in this Section 1.5(b).
1.6 Piggyback Registration.
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(a) Notice of Registration. If at any time or from time to time, the
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Company shall determine to register any of its securities, either for its own
account or the account of a Holder or Holders exercising their respective demand
registration rights, other than (i) a registration relating solely to employee
benefit plans, or (ii) a registration relating solely to a Rule 145 transaction,
the Company will:
(i) promptly give to each Holder written notice thereof; and
(ii) include in such registration (and any related qualification
under blue sky laws or other compliance), and in any underwriting involved
therein, all the Registrable Securities specified in a written request or
requests, made within 30 days after receipt of such written notice from the
Company by any Holder, but only to the extent that such inclusion will not
diminish the number of securities included by the Company or by Holders of the
Company's
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securities who have demanded such registration (subject, however, to the rights
of the Holders, as set forth in Section 1.6(b)); provided, however,
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that if the registration that is subject to such requests was initiated by
holders of Series D Preferred Stock, then any reduction made in the number of
shares registered shall be made on a pro rata basis among the Initiating Holders
and the holders requesting inclusion, based on the number of shares of
Registrable Securities requested to be included in such registration by each
such holder.
(b) Underwriting. If the registration of which the Company gives
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notice is for a registered public offering involving an underwriting, the
Company shall so advise the Holders as a part of the written notice given
pursuant to Section 1.6(a)(i). In such event the right of any Holder to
registration pursuant to Section 1.6 shall be conditioned upon such Holder's
participation in such underwriting and the inclusion of Registrable Securities
in the underwriting to the extent provided herein. In the case of the Company
initiating a registration statement for the sale of shares for its own account,
the Board will have the right to select the investment banker(s) and manager(s)
to administer the offering, subject to the approval of a majority of the
Initiating Holders if the registration has been requested under Section 1.5(a)
hereof, which approval shall not be unreasonably withheld or delayed. All
Holders proposing to distribute their securities through such underwriting shall
(together with the Company and the other Holders distributing their securities
through such underwriting) enter into an underwriting agreement in customary
form with the managing underwriter selected for such underwriting by the Company
(or by the Holders who have demanded such registration). Notwithstanding any
other provision of this Section 1.6, if the managing underwriter determines that
marketing factors require a limitation of the number of shares to be
underwritten, the managing underwriter may limit the Registrable Securities to
be included in such registration, provided, however, that in the case of a
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public offering other than the Company's initial public offering in no event may
less than one-third of the total number of shares of Common Stock to be included
in such underwriting be made available for Registrable Securities, and provided,
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further, that, prior to any such reduction, the Company shall first exclude from
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such registration, in the following order, all shares of Common Stock sought to
be included therein by (i) any holder thereof not having any such contractual,
incidental registration rights, and (ii) any holder thereof having contractual,
incidental registration rights subordinate and junior to the rights of the
Holders of Registrable Securities. If a limitation of the number of shares is
still required, the number of shares that may be included in the registration
and underwriting shall be allocated among all Holders in proportion, as nearly
as practicable, to the respective amounts of Registrable Securities requested to
be registered by each such Holder pursuant to Section 1.6(a)(ii). If any Holder
or other Holder disapproves of the terms of any such underwriting, he may elect
to withdraw therefrom by written notice to the Company and the managing
underwriter. Any securities excluded or withdrawn from such underwriting shall
be withdrawn from such registration, and shall not be transferred in a public
distribution prior to 120 days after the effective date of the registration
statement relating thereto.
(c) Right to Terminate Registration. The Company shall have the right
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to terminate or withdraw any registration initiated by it for the sale of its
own shares under this Section 1.6 prior to the effectiveness of such
registration whether or not any Holder has elected to include securities in such
registration.
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1.7 Registration on Form S-3.
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(a) If any Holder or Holders requests that the Company file a
registration statement on Form S-3 (or any successor form to Form S-3) for a
public offering of shares of the Registrable Securities the reasonably
anticipated aggregate price to the public of which would exceed $1,000,000, and
the Company is a registrant entitled to use Form S-3 to register the Registrable
Securities for such an offering, the Company shall use its best efforts to cause
such Registrable Securities to be registered for the offering on such form;
provided, however, that the Company shall not be required to effect more than
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two registrations in any 12-month period pursuant to this Section 1.7. The
Company will (i) promptly give written notice of the proposed registration to
all other Holders, and (ii) as soon as practicable, use its best efforts to
effect such registration (including, without limitation, the execution of an
undertaking to file post-effective amendments, appropriate qualification under
applicable blue sky or other state securities laws and appropriate compliance
with applicable regulations issued under the Securities Act and any other
governmental requirements or regulations) as may be so requested and as would
permit or facilitate the sale and distribution of all or such portion of such
Registrable Securities as are specified in such request, together with all or
such portion of the Registrable Securities of any Holder or Holders joining in
such request as are specified in a written request received by the Company
within 30 days after receipt of such written notice from the Company. If the
registration is for a public offering involving an underwriting, the substantive
provisions of Section 1.5(c) shall be applicable to each registration initiated
under this Section 1.7.
(b) Notwithstanding the foregoing, the Company shall not be obligated
to take any action pursuant to this Section 1.7: (i) in any particular
jurisdiction in which the Company would be required to execute a general consent
to service of process in effecting such registration, qualification or
compliance unless the Company is already subject to service in such jurisdiction
and except as may be required by the Securities Act; (ii) during the period
starting with the date sixty (60) days prior to the filing of, and ending on a
date six (6) months following the effective date of, a registration statement
(other than with respect to a registration statement relating to a Rule 145
transaction, an offering solely to employees or any other registration that is
not appropriate for the registration of Registrable Securities), provided that
the Company is actively employing, in good faith, all reasonable efforts to
cause such registration statement to become effective; or (iii) if the Company
shall furnish to such Holder a certificate signed by the President of the
Company stating that in the good-faith judgment of the Board of Directors it
would be seriously detrimental to the Company or its shareholders for
registration statements to be filed in the near future, then the Company's
obligation to use its best efforts to file a registration statement shall be
deferred for a period not to exceed 90 days from the receipt of the request to
file such registration by such Holder; provided, however, that the Company shall
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not exercise its right under this clause to defer such obligation more than once
in any twelve-month period.
1.8 Expenses of Registration. All Registration Expenses incurred in
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connection with any registration pursuant to Sections 1.5, 1.6 and up to two (2)
registrations pursuant to Section 1.7 and the reasonable cost of one special
legal counsel not to exceed $35,000 per registration pursuant to Section 1.7 to
represent all of the Holders together shall be borne by the Company (unless in
the reasonable opinion of the counsel for the Company it may represent the
Holders without conflict of interest), provided that the Company shall not be
required to pay the
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Registration Expenses of any registration proceeding begun pursuant to Section
1.5, the request of which has been subsequently withdrawn by the Initiating
Holders, unless the Holders of a majority of the Registrable Securities agree to
forfeit their right to one demand registration pursuant to Section 1.5. The
Holders of Registrable Securities to have been registered shall bear all such
Registration Expenses pro rata on the basis of the number of shares to have been
registered. Notwithstanding the foregoing, however, if, at the time of the
withdrawal, the Holders have learned of a material adverse change in the
condition, business or prospects of the Company from that known to the Holders
at the time of their request, of which the Company had knowledge at the time of
the request, then the Holders shall not be required to pay any of said
Registration Expenses and shall retain their rights pursuant to Section 1.5.
Unless otherwise stated, all other Selling Expenses relating to securities
registered on behalf of the Holders shall be borne by the Holders of the
registered securities pro rata on the basis of the number of shares so
registered.
1.9 Indemnification.
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(a) The Company will indemnify each Holder, each of its officers and
directors and partners, and each person controlling such Holder within the
meaning of Section 15 of the Securities Act, with respect to which registration,
qualification or compliance has been effected pursuant to this Agreement, and
each underwriter, if any, and each person who controls any underwriter within
the meaning of Section 15 of the Securities Act, against all expenses, claims,
losses, damages or liabilities (or actions in respect thereof), including any of
the foregoing incurred in settlement of any litigation, commenced or threatened,
arising out of or based on any untrue statement (or alleged untrue statement) of
a material fact contained in any registration statement, prospectus, offering
circular or other document, or any amendment or supplement thereto, incident to
any such registration, qualification or compliance, or based on any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading, or any violation by the Company of any
rule or regulation promulgated under the Securities Act applicable to the
Company in connection with any such registration, qualification or compliance,
and the Company will reimburse each such Holder, each of its officers and
directors, and each person controlling such Holder, each such underwriter and
each person who controls any such underwriter, for any legal and any other
expenses reasonably incurred in connection with investigating, preparing or
defending any such claim, loss, damage, liability or action, provided that the
Company will not be liable in any such case to the extent that any such claim,
loss, damage, liability or action arises out of or is based on any untrue
statement or omission or alleged untrue statement or omission, made in reliance
upon and in conformity with written information furnished to the Company by an
instrument duly executed by such Holder, controlling person or underwriter and
stated to be specifically for use therein.
(b) Each Holder, if Registrable Securities held by such Holder are
included in the securities as to which such registration, qualification or
compliance is being effected, will indemnify the Company, each of its directors
and officers, each underwriter, if any, of the Company's securities covered by
such a registration statement, each person who controls the Company or such
underwriter within the meaning of Section 15 of the Securities Act, and each
other such Holder, each of its officers and directors and each person
controlling such Holder within the meaning of Section 15 of the Securities Act,
against all claims, losses, damages and
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liabilities thereof) arising out of or based on any untrue statement (or alleged
untrue statement) of a material fact contained in any such registration
statement, prospectus, offering circular or other document, or any omission (or
alleged omission) to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and will reimburse
the Company, such Holders, such directors, officers, persons, underwriters or
control persons for any legal or any other expenses reasonably incurred in
connection with investigating or defending any claim, loss, damage, liability or
action, in each case to the extent, but only to the extent, that such untrue
statement (or alleged untrue statement) or omission (or alleged omission) is
made in such registration statement, prospectus, offering circular or other
document in reliance upon and in conformity with written information furnished
to the Company by an instrument duly executed by such Holder and stated to be
specifically for use therein; provided, however, that the liability of a Holder
for indemnity under this Section 1.9(b) shall not exceed the gross proceeds from
the offering received by such Holder.
(c) Each party entitled to indemnification under this Section 1.9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld), and the Indemnified Party may participate in such defense at such
party's expense, and provided further that the failure of any Indemnified Party
to give notice as provided herein shall not relieve the Indemnifying Party of
its obligations under this Agreement unless the failure to give such notice is
materially prejudicial to an Indemnifying Party's ability to defend such action.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of each Indemnified Party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such Indemnified Party
of a release from all liability in respect to such claim or litigation. An
Indemnified Party shall have the right to retain one separate counsel, with the
reasonable fees and expenses to be paid by the Indemnifying Party, if
representation of such Indemnified Party would be inappropriate due to actual
differing interests between such Indemnified Party and the Indemnifying Party;
provided, however, that all Indemnified Parties with the same actual differing
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interests from the Indemnifying Party shall be entitled to payment for only one
counsel collectively.
(d) The indemnity agreements contained in Sections 1.9(a) and 1.9(b)
shall not apply to amounts paid in settlement of any claim, loss, damage,
liability or action if such settlement is effected without the consent of the
Indemnifying Party.
1.10 Information by Holder; Copies of Prospectus. The Holder or Holders
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of Registrable Securities included in any registration shall furnish to the
Company such information regarding such Holder or Holders, the Registrable
Securities held by them and the distribution proposed by such Holder or Holders
as the Company may request in writing and as shall be required in connection
with any registration, qualification or compliance referred to in this
Agreement. In connection with any such registration, the Company shall furnish
to such Holder or Holders such numbers of copies as it or they may reasonably
request, in order to facilitate the
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disposition of Registrable Securities owned by them, of any prospectus or
preliminary prospectus prepared in conformity with the Securities Act.
1.11 Rule 144 Reporting. With a view to making available the benefits of
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certain rules and regulations of the Commission which may at any time permit the
sale of the Restricted Securities to the public without registration, or
registration on Form S-3, after such time as a public market exists for the
Common Stock of the Company, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act, at all times after
the effective date that the Company becomes subject to the reporting
requirements of the Securities Act or the Exchange Act;
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements); and
(c) Furnish to the Holder, so long as the Holder owns any Restricted
Securities, forthwith upon request (i) a written statement by the Company as to
its compliance with the reporting requirements of said Rule 144 (at any time
after 90 days after the effective date of the first registration statement filed
by the Company for an offering of its securities to the general public), the
Securities Act and the Exchange Act (at any time after it has become subject to
such reporting requirements), (ii) a copy of the most recent annual or quarterly
report of the Company and such other reports and documents so filed by the
Company and (iii) such other information in the possession of or reasonably
obtainable by the Company as a Holder may reasonably request in availing itself
of any rule or regulation of the Commission allowing a Holder to sell any such
securities without registration.
1.12 Transfer of Registration Rights. The rights to cause the Company to
-------------------------------
register securities granted to the Shareholders and the Investors under Sections
1.5, 1.6 and 1.7 may be assigned to a transferee or assignee ("Right Holder") in
connection with any transfer or assignment of Registrable Securities by a
Shareholder or Investor (together with any affiliate), provided that (a) such
transfer may otherwise be effected in accordance with applicable securities
laws, (b) the Shareholder or Investor effecting such transfer shall comply with
the requirements of Section 1.4 of this Agreement, (c) the transferee shall
agree to be bound by all of the provisions of this Agreement, and (d) such
transferee or assignee (i) is a majority-owned subsidiary or constituent partner
(including limited partners) of such Shareholder or Investor or otherwise an
Affiliate thereof , or a transferee pursuant to Section 1.4(b), as applicable,
or (ii) acquires from such Shareholder or Investor at least 200,000 Shares (or
shares of Common Stock issuable upon conversion thereof or a combination of such
Shares and shares of Common Stock, as appropriately adjusted for stock splits
and the like).
1.13 Lock-Up Agreement. Each Holder agrees, if requested by the Company
-----------------
and the managing underwriter of Common Stock of the Company, in connection with
the registration and sale thereof, not to sell or otherwise transfer or dispose
of, whether in privately negotiated or open market transactions, any Common
Stock of the Company held by it: (a) during the 180-day
11
period following the effective date of a registration statement of the Company
filed under the Securities Act for the first underwritten registered public
offering of the Company, and (b) during the 90-day period following the
effective date of a registration statement of the Company filed under the
Securities Act for any later underwritten registered public offering of the
Company. The Company shall use all reasonable efforts to obtain similar
agreements from all officers, directors and key employees of the Company and all
other holders and option holders of at least 1% of the Company's voting
securities on an as-converted basis.
Such agreement shall be in writing and in form and substance reasonably
satisfactory to the Company, such Holder and such underwriter. The Company may
impose stop-transfer instructions with respect to the shares (or securities)
subject to the foregoing restriction until the end of such period.
1.14 Limitations on Subsequent Registration Rights. From and after the
---------------------------------------------
date of this Agreement, the Company shall not, without the prior written consent
of the Holders of a majority of the outstanding Registrable Securities and a
majority of the outstanding Series D Registrable Securities, enter into any
agreement with any shareholder or prospective shareholder of any securities of
the Company that would allow such shareholder or prospective shareholder (i) to
include such securities in any registration filed under Section 1.5 hereof,
unless, under the terms of such agreement such shareholder or prospective
shareholder may include such securities in any such registration only to the
extent that the inclusion of his securities will not reduce the amount of the
Registrable Securities of the Holders that is included or (ii) to make a demand
registration that could result in such registration statement being declared
effective prior to the earlier of the date set forth in Section 1.5(a)(ii)(B)
hereof or within 120 days prior to the effective date of any registration
effected pursuant to Section 1.5.
SECTION 2
Miscellaneous
-------------
2.1 Governing Law. This Agreement shall be governed by and construed in
-------------
accordance with the substantive laws of the State of California.
2.2 Successors and Assigns. The terms and conditions of this Agreement
----------------------
shall inure to the benefit of and be binding upon the respective successors and
assigns of the parties. Nothing in this Agreement, express or implied, is
intended to confer upon any party other than the parties hereto or their
respective successors and assigns any rights, remedies, obligations, or
liabilities under or by reason of this Agreement, except as expressly provided
in this Agreement.
2.3 Amendment. Any provision of this Agreement may be amended and the
---------
observance thereof may be waived (either generally or in a particular instance
and either retroactively or prospectively) only with the written consent of the
Company and Holders of at least 51% in interest of the Registrable Securities
and 51% of the Series D Registrable Securities. Any amendment or waiver
effected in accordance with this paragraph shall be binding upon each Holder of
any Registrable Securities at the time outstanding, each future Holder of
Registrable Securities and the Company.
12
2.4 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.
2.5 Titles and Subtitles. The titles and subtitles used in this Agreement
--------------------
are used for convenience only and are not to be considered in construing or
interpreting this Agreement.
2.6 Notices. Any notices and other communications required or permitted
--------
under this Agreement shall be effective if in writing and delivered personally
or sent by telecopier, Federal Express or other commercial overnight delivery
service, or registered or certified mail, postage prepaid, addressed as follows:
(a) if to a Series B Purchaser, at such address as such Series B Purchaser shall
have furnished to the Company in writing, (b) if to any other Holder of any
Shares or Common Stock of the Company, at such address as such Holder shall have
furnished to the Company in writing, or, until such Holder so furnishes an
address to the Company, then at the address of the last Holder of such shares
who has so furnished an address to the Company, or (c) if to the Company, then
at its address set forth on the first page of the Series B Preferred Stock
Purchase Agreement of even date herewith and addressed to the attention of the
Secretary, or at such other address as the Company shall have furnished to the
Purchaser.
Unless otherwise specified herein, such notices or other communications
shall be deemed effective (a) on the date delivered, if delivered personally,
(b) two business days after being sent, if sent by Federal Express or other
commercial overnight delivery service, (c) one business day after being sent, if
sent by telecopier with confirmation of good transmission and receipt, and (d)
three business days after being sent, if sent by registered or certified mail.
Each of the parties herewith shall be entitled to specify another address by
giving notice as aforesaid to each of the other parties hereto.
2.7 Expenses. Each party shall bear its own expenses incurred in
--------
connection with this Agreement. If any action at law or in equity is necessary
to enforce or interpret the terms of this Agreement, the prevailing party shall
be entitled to reasonable attorney's fees, costs and necessary disbursements in
addition to any other relief to which such party may be entitled.
2.8 Damages. The Company recognizes and agrees that the Holders of
-------
Registrable Securities will not have an adequate remedy if the Company fails to
comply with this Agreement and that damages may not be readily ascertainable,
and the Company expressly agrees that, in the event of such failure, it shall
not oppose an application by a Holder of Registrable Securities requiring
specific performance of any and all provisions hereof or enjoining the Company
from continuing to commit any such breach of this Agreement.
2.9 Entire Agreement. This Agreement constitutes the entire agreement
----------------
among the parties with respect to the subject matter hereof and supersedes all
prior oral and written agreements and understandings between them or any of them
as to such subject matter.
2.10 Severability. If one or more provisions of this Agreement are held
------------
to be unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if such
provision were so excluded and shall be enforceable in accordance with its
terms.
13
The next page is the signature page.
14
IN WITNESS WHEREOF, the parties have executed this Second Amended and
Restated Registration Rights Agreement as of the date first above written.
COMPANY DESKTALK SYSTEMS, INC.,
a California corporation
By: /s/ XXXXX X. XXXXXXX
_______________________________
Name: Xxxxx X. Xxxxxxx
Title: Chief Executive Officer
INVESTORS DTALK ACQUISITION CORP.
a Delaware corporation
By: /s/ XXXXX XXXXXXXX
_______________________________
Name: Xxxxx Xxxxxxxx
________________________
Title: Vice President
_______________________
SIGNAL EQUITY PARTNERS, L.P.
a Delaware limited partnership
By: /s/ XXXXXXX X. XXXX XX
_______________________________
Name: Xxxxxxx X. Lake
________________________
Title: VP
_______________________
SERIES A CONVERSION STOCK THE XXXX X. XXXXXXX AND
XXXXXXX X. XXXXXXX 1980 FAMILY
SHAREHOLDERS TRUST DATED 2/12/81
By: /s/ XXXX X. XXXXXXX
_______________________________
Name: Xxxx X. Xxxxxxx
Title: Trustee
By: /s/ XXXXXXX X. XXXXXXX
_______________________________
Name: Xxxxxxx X. Xxxxxxx
Title: Trustee
15
SERIES B PREFERRED STOCK GEOCAPITAL IV, L.P.
PURCHASERS
By: GEOCAPITAL IV MANAGEMENT, L.P.
By: /s/ XXXXXXX XXXXXXXX
_______________________________
General Partner
XXXXX XXXXXX, AS NOMINEE FOR
THE BROADVIEW PARTNERS GROUP
/s/ XXXXX XXXXXX
__________________________________
Name: Xxxxx Xxxxxx
Title: Nominee for the Broadview Partners
Group
XXXXXXX AND XXXXXX XXXXXX
FAMILY TRUST DATED 11/17/95
By: /s/ XXXXXXX XXXXXX
_______________________________
Name:
Title:
By:_______________________________
Name:
Title:
XXXXXX XXXXXX
/s/ XXXXXX X. XXXXXX
___________________________________
XXXX XXXXXX
/s/ XXXX XXXXXX
___________________________________
16
XXXX XXXXXX & ASSOCIATES
RETIREMENT TRUST
By: /s/ XXXX XXXXXX
_______________________________
Name:
Title:
17
SCHEDULE I
----------
INVESTORS
---------
Name and Address
----------------
DTalk Acquisition Corp.
c/o The Bear Xxxxxxx Companies Inc.
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxx X. Xxxxxx
Signal Equity Partners, L.P.
00 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Xxxxxxx Xxxxxxx
18
SCHEDULE II
------------
SHAREHOLDERS
------------
Name and Address
----------------
Series A Conversion Stock
-------------------------
Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx, Trustees of
The Xxxx X. Xxxxxxx and Xxxxxxx X. Xxxxxxx 1980 Family
Trust Dated 2/12/81
000 Xxx Xxxxx
Xxxxx Xxxxxx Xxxxxxx, XX 00000
Series B Preferred Stock
------------------------
Geocapital IV, L.P.
Xxx Xxxxxx Xxxxx
Xxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
Broadview Partners Group
(Xxxxx Xxxxxx, as Nominee)
Broadview Associates
Xxx Xxxxxx Xxxxx
Xxxxx Xxxxx
Xxxx Xxx, XX 00000
Xxxxxx X. Xxxxxx
00 Xxxx Xxxx Xxxx
Xxxxxx, XX 00000-0000
Xxxxxxx Xxxxxx and Xxxxxx Xxxxxx, Trustees, or
their Successor, under the Xxxxxxx and Xxxxxx
Xxxxxx Family Trust dated 11/17/95
00000 Xxxxxx Xxxxx Xxxxx
Xxxxxx Xxxxx Xxxxxx, XX 00000
Xxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
Xxxx Xxxxxx as Trustee of the Xxxx Xxxxxx &
Associates Retirement Trust
000 Xxxxx Xxxxxx
Xxxxxxx Xxxxx, XX 00000
19
Series C Preferred Stock
------------------------
Law Department
Nortel Networks NA Inc.
0000 Xxxxx Xxxxxxx Xxxxxxx
XX XX 0-00
Xxxxx Xxxxx, XX 00000
Fax: (000) 000-0000
Geocapital IV, L.P.
Xxx Xxxxxx Xxxxx
Xxxxx Xxxxx
Xxxx Xxx, Xxx Xxxxxx 00000
Attn: Xxxxxxx X. Xxxxxxxx
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