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EXHIBIT 10.17
AMENDED AND RESTATED
REGISTRATION RIGHTS AGREEMENT
This AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT dated as of
August 2, 1999, by and among WITNESS SYSTEMS, INC., a Delaware corporation (the
"Company"), each of those current shareholders of the Company defined
hereinbelow as the "Founders" and the "Series A and B Shareholders," and those
certain parties to the Stock Purchase Agreement (defined below) who are
purchasing Series C Shares (defined below) coincident with the execution and
delivery of this Agreement and are identified hereinbelow as the Purchasers (the
"Purchasers").
WITNESSETH:
WHEREAS, the Company, the Founders and the Series A and B Shareholders
are parties to that certain Registration Rights Agreement dated as of March 18,
1997, as amended pursuant to Amendment No. 1 to Registration Rights Agreement
(the "Existing Registration Rights Agreement"), whereby the Founders and the
Series A and B Shareholders were granted certain registration rights with
respect to certain securities of the Company;
WHEREAS, pursuant to the terms of the Stock Purchase Agreement dated as
of the date hereof by and among the Company and the Purchasers (the "Stock
Purchase Agreement"), the Company is issuing to the Purchasers an aggregate of
up to 1,325,028 shares (the "Series C Shares") of the Company's Series C
Convertible Preferred Stock;
WHEREAS, as an inducement to the Purchasers to enter into the Stock
Purchase Agreement, the Company desires to grant to the Purchasers certain
registration rights with respect to the Series C Shares, and the Company, the
Founders and Series A and B Shareholders desire to amend and restate the
Existing Registration Rights Agreement;
NOW, THEREFORE, in consideration of the premises set forth herein, the
parties hereto agree as follows:
1. Certain Definitions. As used in this Agreement, the following
terms shall have the following respective meanings:
"Commission" shall mean the Securities and Exchange
Commission, or any other federal agency at the time administering the
Securities Act.
"Common Stock" shall mean the Common Stock, $.01 par value, of
the Company, as constituted as of the date of this Agreement.
"Conversion Shares" shall mean shares of Common Stock issued
or issuable upon conversion of the Preferred Shares, and any shares of
capital stock received in respect thereof.
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"Exchange Act" shall mean the Securities Exchange Act of 1934,
as amended, or any similar federal statute, and the rules and
regulations of the Commission thereunder, all as the same shall be in
effect at the time.
"Founders" shall mean Xxx Xxxxxx, Xxx Xxxxxx, Xxxxx Xxxxxxx
and Xxxx Xxxxx.
"Preferred Shares" shall mean shares of the Company's Series A
Convertible Preferred Stock, Series B Convertible Preferred Stock and
Series C Convertible Preferred Stock, each $.01 par value per share.
"Purchasers" as defined in the recitals to this Agreement.
"Registration Expenses" shall mean the expenses so described
in Section 8.
"Restricted Stock" shall mean (1) the Conversion Shares,
excluding Conversion Shares which have been (a) registered under the
Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration
statement covering them or (b) publicly sold pursuant to Rule 144 under
the Securities Act, and (2) for purposes of Section 5 hereof, up to
3,940,200 shares of Common Stock held by the Founders, but excluding
shares of Common Stock which have been (a) registered under the
Securities Act pursuant to an effective registration statement filed
thereunder and disposed of in accordance with the registration
statement covering them, or (b) publicly sold pursuant to Rule 144
under the Securities Act.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations
of the Commission thereunder, all as the same shall be in effect at the
time.
"Selling Expenses" shall mean the expenses so described in
Section 8.
"Series A and B Restricted Stock" means shares of Restricted
Stock constituting Conversion Shares issued or issuable upon conversion
of the Series A Convertible Preferred Stock or the Series B Convertible
Preferred Stock, or any shares of capital stock received in respect
thereof.
"Series A and B Shareholders" shall mean the holders of the
Company's Series A Convertible Preferred Stock and the holders of the
Company's Series B Convertible Preferred Stock.
"Series C Restricted Stock" means shares of Restricted Stock
constituting Conversion Shares issued or issuable upon conversion of
the Series C Convertible Preferred Stock, or any shares of capital
stock received in respect thereof.
2. Restrictive Legend. Each certificate representing Preferred
Shares, Conversion Shares or Restricted Stock shall, except as otherwise
provided in this Section 2 or in Section 3, be stamped or otherwise imprinted
with a legend substantially in the following form:
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"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933 OR APPLICABLE STATE
SECURITIES LAWS. THESE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND
NOT WITH A VIEW TO DISTRIBUTION OR RESALE, AND MAY NOT BE SOLD
MORTGAGED, PLEDGED, HYPOTHECATED OR OTHERWISE TRANSFERRED WITHOUT AN
EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS, OR THE
AVAILABILITY OF AN EXEMPTION FROM THE REGISTRATION PROVISIONS OF THE
SECURITIES ACT OF 1933 AND APPLICABLE STATE SECURITIES LAWS."
A certificate shall not bear such legend if in the opinion of counsel reasonably
satisfactory to the Company (it being agreed that each of Xxxxx, Xxxxxxx &
Xxxxxxxxx, LLP, and Xxxxx, Day, Xxxxxx & Xxxxx shall be satisfactory) the
securities being sold thereby may be publicly sold without registration under
the Securities Act.
3. Notice of Proposed Transfer. Prior to any proposed transfer of
any Preferred Shares, Conversion Shares or Restricted Stock (other than under
the circumstances described in Sections 4, 5 or 6), the holder thereof shall
give written notice to the Company of its intention to effect such transfer.
Each such notice shall describe the manner of the proposed transfer and, if
requested by the Company, shall be accompanied by an opinion of counsel
reasonably satisfactory to the Company (it being agreed that each of Xxxxx,
Xxxxxxx & Xxxxxxxxx, LLP, and Xxxxx, Day, Xxxxxx & Xxxxx shall be satisfactory)
to the effect that the proposed transfer may be effected without registration
under the Securities Act, whereupon the holder of such stock shall be entitled
to transfer such stock in accordance with the terms of its notice; provided,
however, that no such opinion of counsel shall be required for a transfer to one
or more partners of the transferor (in the case of a transferor that is a
partnership), to one or more members of the transferor (in the case of a
transferor that is a limited liability company), or to an affiliated corporation
(in the case of a transferor that is a corporation). Each certificate for
Preferred Shares or Conversion Shares transferred as above provided shall bear
the legend set forth in Section 2, except that such certificate shall not bear
such legend if (i) such transfer is in accordance with the provisions of Rule
144 (or any other rule permitting public sale without registration under the
Securities Act) or (ii) the opinion of counsel referred to above is to the
further effect that the transferee and any subsequent transferee (other than an
affiliate of the Company) would be entitled to transfer such securities in a
public sale without registration under the Securities Act. The restrictions
provided for in this Section 3 shall not apply to securities which are not
required to bear the legend prescribed by Section 2 in accordance with the
provisions of that Section.
4. Required Registration.
(a) The holders of Series A and B Restricted Stock
constituting at least a majority of the total shares of Series A and B
Restricted Stock then outstanding may request the Company to register under the
Securities Act all or any portion of the shares of Series A and B Restricted
Stock held by such requesting holder or holders for sale in the manner specified
in such notice, provided that the shares of Series A and B Restricted Stock for
which registration has been requested shall constitute at least 20% of the total
shares of Series A and B Restricted Stock originally issued (or any lesser
percentage if the reasonably anticipated aggregate price to the public of such
public offering would exceed $5,000,000).
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(b) The holders of Series C Restricted Stock constituting
at least a majority of the total shares of Series C Restricted Stock then
outstanding may request the Company to register under the Securities Act all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders for sale in the manner specified in such notice.
(c) For purposes of this Section 4 and Sections 5, 6,
13(a) and 13(d), the term "Restricted Stock" shall be deemed to include the
number of shares of Restricted Stock which would be issuable to a holder of
Preferred Shares upon conversion of all shares of Preferred Stock held by such
holder at such time, provided, however, that the only securities which the
Company shall be required to register pursuant hereto shall be shares of Common
Stock, and provided, further, however, that, in any underwritten public offering
contemplated by this Section 4 or Sections 5 and 6, the holders of Preferred
Shares shall be entitled to sell such Preferred Shares to the underwriters for
conversion and sale of the shares of Common Stock issued upon conversion
thereof. Notwithstanding anything to the contrary contained herein, no request
may be made under this Section 4 within 120 days after the effective date of a
registration statement filed by the Company covering a firm commitment
underwritten public offering in which the holders of Restricted Stock shall have
been entitled to join pursuant to Sections 5 or 6.
(d) Following receipt of any notice under this Section 4,
the Company shall immediately notify all holders of Restricted Stock (including
the Founders) and Preferred Shares from whom notice has not been received and
such holders shall then be entitled within 30 days thereafter to request the
Company to include in the requested registration all or any portion of their
shares of Restricted Stock. The Company shall use its best efforts to register
under the Securities Act, for public sale in accordance with the method of
disposition specified in the notice from requesting holders described in
paragraph (a) above, the number of shares of Restricted Stock specified in such
notice (and in all notices received by the Company from other holders within 30
days after the giving of such notice by the Company). If such method of
disposition shall be an underwritten public offering, the holders of a majority
of the shares of Restricted Stock to be sold in such offering may designate the
managing underwriter of such offering, subject to the approval of the Company,
which approval shall not be unreasonably withheld or delayed. The Company shall
be obligated to register Restricted Stock pursuant to this Section 4 on two
occasions only in respect of requests by the holders of Series A and B Preferred
Stock, and on two occasions only in respect of requests by the holders of Series
C Preferred Stock, provided, however, that such obligation shall be deemed
satisfied only when a registration statement covering all shares of Restricted
Stock specified in notices received as aforesaid, for sale in accordance with
the method of disposition specified by the requesting holders, shall have become
effective and, if such method of disposition is a firm commitment underwritten
public offering, all such shares shall have been sold pursuant thereto.
(e) The Company (or at the option of the Company, the
holders of Common Stock) shall be entitled to include in any registration
statement referred to in this Section 4, for sale in accordance with the method
of disposition specified by the requesting holders, shares of Common Stock to be
sold by the Company or such other holders for its own account, except as and to
the extent that, in the opinion of the managing underwriter (if such method of
disposition shall be an underwritten public offering), such inclusion would
adversely affect the marketing of the Restricted Stock to be sold. Except for
registration statements on Form X-0, X-0 or any
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successor thereto, the Company will not file with the Commission any other
registration statement with respect to its Common Stock, whether for its own
account or that of other stockholders, from the date of receipt of a notice from
requesting holders pursuant to this Section 4 until the completion of the period
of distribution of the registration contemplated thereby.
(f) In respect of a request for registration pursuant to
Section 4(a) if in the opinion of the managing underwriter the inclusion of all
of the Restricted Stock requested to be registered under this Section would
adversely affect the marketing of such shares, after any shares to be sold by
the Company or other holders of Common Stock have been excluded, then Series C
Restricted Stock shall be next excluded to the extent so necessary, and then
shares to be sold by the remaining holders of Restricted Stock shall be excluded
in such manner that the shares to be sold shall be allocated among the selling
holders pro rata based on their ownership of Restricted Stock.
(g) In respect of a request for registration pursuant to
Section 4(b) if in the opinion of the managing underwriter the inclusion of all
of the Restricted Stock requested to be registered under this Section would
adversely affect the marketing of such shares, after any shares to be sold by
the Company or other holders of Common Stock have been excluded, then shares of
Restricted Stock other than Series C Restricted Stock shall be next excluded to
the extent necessary and then shares to be sold by the remaining holders of
Series C Restricted Stock shall be excluded in such manner that the shares to be
sold shall be allocated among such selling holders pro rata based on their
ownership of Restricted Stock.
5. Incidental Registration. If the Company at any time (other
than pursuant to Section 4 or Section 6) proposes to register any of its
securities under the Securities Act for sale to the public, whether for its own
account or for the account of other security holders or both (except with
respect to registration statements on Forms X-0, X-0 or another form not
available for registering the Restricted Stock for sale to the public), each
such time it will give written notice to all holders of outstanding Restricted
Stock of its intention so to do. Upon the written request of any such holder,
received by the Company within 30 days after the giving of any such notice by
the Company, to register any of its Restricted Stock, the Company will use its
best efforts to cause the Restricted Stock as to which registration shall have
been so requested to be included in the securities to be covered by the
registration statement proposed to be filed by the Company, all to the extent
requisite to permit the sale or other disposition by the holder (in accordance
with its written request) of such Restricted Stock so registered. In the event
that any registration pursuant to this Section 5 shall be, in whole or in part,
an underwritten public offering of Common Stock, the number of shares of
Restricted Stock to be included in such an underwriting may be reduced (pro rata
among the requesting holders based upon the number of shares of Restricted Stock
held by such requesting holders) if and to the extent that the managing
underwriter shall be of the opinion that such inclusion would adversely affect
the marketing of the securities to be sold by the Company therein, provided,
however, that such number of shares of Restricted Stock held by the Founders or
such other requesting holders of Restricted Stock shall not be reduced if any
shares are to be included in such underwriting for the account of any person
other than the Company, the Founders or such other requesting holders of
Restricted Stock, and, provided, further, that in no event shall the number of
shares of Restricted Stock included in the offering be reduced below twenty
percent (20%) of the total number of shares of Common Stock
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included in such offering, unless the offering is the Company's initial public
offering of the Company's securities in which case the number of shares of
Restricted Stock to be included by the holders may be reduced or eliminated
entirely as set forth above. Notwithstanding the foregoing provisions, the
Company may withdraw any registration statement referred to in this Section 5
without thereby incurring any liability to the holders of Restricted Stock.
6. Registration on Form S-3.
(a) Subject to the limit of two registrations hereunder
in any 12 month period, if at any time (i) a holder or holders of Series A and B
Restricted Stock then outstanding request that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering of all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders, the reasonably anticipated aggregate price to the public of which would
exceed $500,000, and (ii) the Company is a registrant entitled to use Form S-3
or any successor thereto to register such shares, then the Company shall use its
best efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Restricted Stock specified in such
notice.
(b) Subject to the limit of two registrations hereunder
in any 12 month period, if at any time (i) a holder or holders of Series C
Restricted Stock then outstanding request that the Company file a registration
statement on Form S-3 or any successor thereto for a public offering of all or
any portion of the shares of Restricted Stock held by such requesting holder or
holders, the reasonably anticipated aggregate price to the public of which would
exceed $500,000, and (ii) the Company is a registrant entitled to use Form S-3
or any successor thereto to register such shares, then the Company shall use its
best efforts to register under the Securities Act on Form S-3 or any successor
thereto, for public sale in accordance with the method of disposition specified
in such notice, the number of shares of Series C Restricted Stock specified in
such notice.
(c) Whenever the Company is required by this Section 6 to
use its best efforts to effect the registration of Restricted Stock, each of the
procedures and requirements of Section 4 (including but not limited to the
requirement that the Company notify all holders of Restricted Stock from whom
notice has not been received and provide them with the opportunity to
participate in the offering) shall apply to such registration, provided,
however, that except as provided above there shall be no limitation on the
number of registrations on Form S-3 which may be requested and obtained under
this Section 6.
(d) Notwithstanding anything to the contrary set forth in
this Agreement, the Company's obligation under this Agreement to register
Restricted Stock under the Securities Act on registration statements
("Registration Statements") may, upon the reasonable determination of the Board
of Directors made only once during any 12-month period, be suspended in the
event and during such period as unforeseen circumstances (including without
limitation (i) an underwritten primary offering by the Company (which includes
no secondary offering) if the Company is advised in writing by its underwriters
that the registration of the Restricted Stock would have a material adverse
effect on the Company's offering, or (ii) pending negotiations relating to, or
consummation of, a transaction or the occurrence of an event which would require
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additional disclosure of material information by the Company in Registration
Statements or such other filings, as to which the Company has a bona fide
business purpose for preserving confidentiality or which renders the Company
unable to comply with Securities and Exchange Commission (the "SEC")
requirements) exist (such unforeseen circumstances being hereinafter referred to
as a "Suspension Event") which would make it impractical or unadvisable for the
Company to file the Registration Statements or such other filings or to cause
such to become effective. Such suspension shall continue only for so long as
such event is continuing but in no event for a period longer than ninety (90)
days. The Company shall notify the holders of Preferred Shares of the existence
and nature of any Suspension Event.
7. Registration Procedures. If and whenever the Company is
required by the provisions of Sections 4, 5 or 6 to use its best efforts to
effect the registration of any shares of Restricted Stock under the Securities
Act, the Company will, as expeditiously as possible:
(a) prepare and file with the Commission a registration
statement (which, in the case of an underwritten public offering pursuant to
Section 4, shall be on Form S-1 or other form of general applicability
satisfactory to the managing underwriter selected as therein provided) with
respect to such securities and use its best efforts to cause such registration
statement to become and remain effective for the period of the distribution
contemplated thereby (determined as hereinafter provided);
(b) prepare and file with the Commission such amendments
and supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration statement
effective for the period specified in paragraph (a) above and comply with the
provisions of the Securities Act with respect to the disposition of all
Restricted Stock covered by such registration statement in accordance with the
sellers' intended method of disposition set forth in such registration statement
for such period;
(c) furnish to each seller of Restricted Stock and to
each underwriter such number of copies of the registration statement and each
such amendment and supplement thereto (in each case including all exhibits) and
the prospectus included therein (including each preliminary prospectus) as such
persons reasonably may request in order to facilitate the public sale or other
disposition of the Restricted Stock covered by such registration statement;
(d) use its best efforts to register or qualify the
Restricted Stock covered by such registration statement under the securities or
"blue sky" laws of such jurisdictions as the sellers of Restricted Stock or, in
the case of an underwritten public offering, the managing underwriter reasonably
shall request, provided, however, that the Company shall not for any such
purpose be required to qualify generally to transact business as a foreign
corporation in any jurisdiction where it is not so qualified or to consent to
general service of process in any such jurisdiction;
(e) use its best efforts to list the Restricted Stock
covered by such registration statement with any securities exchange on which the
Common Stock of the Company is then listed;
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(f) immediately notify each seller of Restricted Stock
and each underwriter under such registration statement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event of which the Company has knowledge as a
result of which the prospectus contained in such registration statement, as then
in effect, includes an untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading in light of the circumstances then existing, and promptly
prepare and furnish to such seller a reasonable number of copies of a prospectus
supplemented or amended so that, as thereafter delivered to the purchasers of
such Restricted Stock, such prospectus shall not include an untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading in light of the
circumstances then existing;
(g) if the offering is underwritten and at the request of
any seller of Restricted Stock, use its best efforts to furnish on the date that
Restricted Stock is delivered to the underwriters for sale pursuant to such
registration: (i) an opinion dated such date of counsel representing the Company
for the purposes of such registration, addressed to the underwriters and to such
seller, to such effect as reasonably may be requested by counsel for the
underwriters or by such seller or its counsel, and (ii) a letter dated such date
from the independent public accountants retained by the Company, addressed to
the underwriters and to such seller, stating that they are independent public
accountants within the meaning of the Securities Act and that, in the opinion of
such accountants, the financial statements of the Company included in the
registration statement or the prospectus, or any amendment or supplement
thereof, comply as to form in all material respects with the applicable
accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five business days prior to the date of such letter)
with respect to such registration as such underwriters reasonably may request;
(h) make available for inspection by each seller of
Restricted Stock, any underwriter participating in any distribution pursuant to
such registration statement, and any attorney, accountant or other agent
retained by such seller or underwriter, reasonable access to all financial and
other records, pertinent corporate documents and properties of the Company, as
such parties may reasonably request, and cause the Company's officers, directors
and employees to supply all information reasonably requested by any such seller,
underwriter, attorney, accountant or agent in connection with such registration
statement;
(i) cooperate with the selling holders of Restricted
Stock and the managing underwriters, if any, to facilitate the timely
preparation and delivery of certificates representing Restricted Stock to be
sold, such certificates to be in such denominations and registered in such names
as such holders or the managing underwriters may request at least two business
days prior to any sale of Restricted Stock; and
(j) permit any holder of Restricted Stock which holder,
in the sole and exclusive judgment, exercised in good faith, of such holder,
might be deemed to be a controlling person of the Company, to participate in
good faith in the preparation of such registration or comparable statement and
to require the insertion therein of material, furnished to the Company in
writing, which in the reasonable judgment of such holder and its counsel should
be included.
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For purposes of Section 7(a) and 7(b) and of Section 4(c), the
period of distribution of Restricted Stock in a firm commitment underwritten
public offering shall be deemed to extend until each underwriter has completed
the distribution of all securities purchased by it, and the period of
distribution of Restricted Stock in any other registration shall be deemed to
extend until the earlier of the sale of all Restricted Stock covered thereby and
120 days after the effective date thereof.
In connection with each registration hereunder, the sellers of
Restricted Stock will furnish to the Company in writing such information
requested by the Company with respect to themselves and the proposed
distribution by them as reasonably shall be necessary in order to assure
compliance with federal and applicable state securities laws.
In connection with each registration pursuant to Sections 4, 5
or 6 covering an underwritten public offering, the Company and each seller agree
to enter into a written agreement with the managing underwriter selected in the
manner herein provided in such form and containing such provisions as are
customary in the securities business for such an arrangement between such
underwriter and companies of the Company's size and investment stature.
8. Expenses. All expenses incurred by the Company in complying
with Sections 4, 5 and 6, including, without limitation, all registration and
filing fees, printing expenses, fees and disbursements of counsel and
independent public accountants for the Company, fees and expenses (including
counsel fees) incurred in connection with complying with state securities or
"blue sky" laws, fees of the National Association of Securities Dealers, Inc.,
transfer taxes, fees of transfer agents and registrars, costs of any insurance
which might be obtained and fees and disbursements of one counsel for the
sellers of Restricted Stock, but excluding any Selling Expenses, are called
"Registration Expenses". "Selling Expenses" shall include (i) all underwriting
discounts and commissions applicable to the sale of Restricted Stock; and (ii)
expenses of any registration proceeding begun pursuant to Section 4 or 6, the
request of which has been subsequently withdrawn by all of the requesting
holders, in which case such expenses shall be borne by the holders of Restricted
Stock requesting or causing such withdrawal unless, such withdrawal is a result
of an adverse change or material development in the Company's business or
prospects or, with respect to registrations under Section 4, the holders of at
least two-thirds of the securities to be registered agree to forfeit their right
to one demand registration pursuant to Section 4.
The Company will pay all Registration Expenses in connection
with each registration statement under Sections 4, 5 or 6. All Selling Expenses
in connection with each registration statement under Sections 4, 5 or 6 shall be
borne by the participating sellers in proportion to the number of shares sold by
each, or by such participating sellers other than the Company (except to the
extent the Company shall be a seller) as they may agree.
9. Indemnification.
(a) In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, the
Company will indemnify and hold harmless each seller of such Restricted Stock
thereunder, its officers and directors, each underwriter of such Restricted
Stock thereunder and each other person, if any, who controls such seller or
underwriter
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within the meaning of the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which such seller, officer, director,
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in any registration
statement under which such Restricted Stock was registered under the Securities
Act pursuant to Sections 4, 5 or 6, any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof or 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, (ii)
any blue sky application or other document executed by the Company specifically
for that purpose or based upon written information furnished by the Company
filed in any state or other jurisdiction in order to qualify any or all of the
Restricted Stock under the securities laws thereof (any such application,
document or information herein called a "Blue Sky Application"), (iii) any
violation by the Company or its agents of any rule or regulation promulgated
under the Securities Act applicable to the Company or its agents and relating to
action or inaction required of the Company in connection with such registration,
or (iv) any failure to register or qualify the Restricted Stock in any state
where the Company or its agents has affirmatively undertaken or agreed in
writing that the Company (the undertaking of any underwriter chosen by the
Company being attributed to the Company) will undertake such registration or
qualification on the seller's behalf and will reimburse each such seller, and
such officer and director, each such underwriter and each such controlling
person for any reasonable legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action, provided, however, that the Company will not be liable in
any such case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission so made in conformity with information
furnished by any such seller, any such underwriter or any such controlling
person in writing specifically for use in such registration statement or
prospectus.
(b) In the event of a registration of any of the
Restricted Stock under the Securities Act pursuant to Sections 4, 5 or 6, each
seller of such Restricted Stock thereunder, severally and not jointly, will
indemnify and hold harmless the Company, each person, if any, who controls the
Company within the meaning of the Securities Act, each officer of the Company
who signs the registration statement, each director of the Company, each other
seller of Restricted Stock, each underwriter and each person who controls any
underwriter within the meaning of the Securities Act, against all losses,
claims, damages or liabilities, joint or several, to which the Company or such
officer, director, other seller, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the registration statement under which such Restricted Stock was
registered under the Securities Act pursuant to Sections 4, 5 or 6, any
preliminary prospectus or final prospectus contained therein or arise out of or
are based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or any amendment or supplement thereof, or any Blue Sky Application
and will reimburse the Company and each such officer, director, other seller,
underwriter and controlling person for any reasonable legal or other
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expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action, provided, however,
that such seller will be liable hereunder in any such case if and only to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in reliance upon and in conformity with information pertaining to
such seller, as such, furnished in writing to the Company by such seller
specifically for use in such registration statement or prospectus, and provided,
further, however, that the liability of each seller shall not exceed the
proceeds received by such seller from the sale of Restricted Stock covered by
such registration statement.
(c) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party hereunder, notify the indemnifying party in writing thereof, but the
omission so to notify the indemnifying party shall not relieve it from any
liability which it may have to such indemnified party other than under this
Section 9 and shall only relieve it from any liability which it may have to such
indemnified party under this Section 9 if and to the extent the indemnifying
party is prejudiced by such omission. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate in
and, to the extent it shall wish, to assume and undertake the defense thereof
with counsel satisfactory to such indemnified party, and, after notice from the
indemnifying party to such indemnified party of its election so to assume and
undertake the defense thereof, the indemnifying party shall not be liable to
such indemnified party under this Section 9 for any legal expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation and of liaison with counsel so selected,
provided, however, that, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have reasonably concluded that the interests of the indemnified party reasonably
may be deemed to conflict with the interests of the indemnifying party, the
indemnified party shall have the right to select a separate counsel and to
assume such legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other expenses
related to such participation to be reimbursed by the indemnifying party as
incurred.
(d) The indemnities provided in this Section 9 shall
survive the transfer of any Restricted Stock by such holder.
10. Changes in Common Stock or Preferred Stock. If, and as often
as, there is any change in the Common Stock or the Preferred Stock by way of a
stock split, stock dividend, combination or reclassification, or through a
merger, consolidation, reorganization or recapitalization, or by any other
means, appropriate adjustment shall be made in the provisions hereof so that the
rights and privileges granted hereby shall continue with respect to the Common
Stock or the Preferred Stock as so changed.
11. Rule 144 Reporting. With a view to making available the
benefits of certain rules and regulations of the Commission which may at any
time permit the sale of the Restricted Stock to the public without registration,
at all times after 90 days after any registration statement
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covering a public offering of securities of the Company under the Securities Act
shall have become effective, the Company agrees to:
(a) make and keep public information available, as those
terms are understood and defined in Rule 144 under the Securities Act;
(b) use its best efforts to file with the Commission in a
timely manner all reports and other documents required of the Company under the
Securities Act and the Exchange Act; and
(c) furnish to each holder of Restricted Stock forthwith
upon request a written statement by the Company as to its compliance with the
reporting requirements of such Rule 144 and of the Securities Act and the
Exchange Act, a copy of the most recent annual or quarterly report of the
Company, and such other reports and documents so filed by the Company as such
holder may reasonably request in availing itself of any rule or regulation of
the Commission allowing such holder to sell any Restricted Stock without
registration.
12. Representations and Warranties of the Company. The Company
represents and warrants to the Series A and B Shareholders and to the Purchasers
as follows:
(a) The execution, delivery and performance of this
Agreement by the Company have been duly authorized by all requisite corporate
action and will not violate any provision of law, any order of any court or
other agency of government, the Charter or By-laws of the Company or any
provision of any indenture, agreement or other instrument to which it or any or
its properties or assets is bound, conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any such
indenture, agreement or other instrument or result in the creation or imposition
of any lien, charge or encumbrance of any nature whatsoever upon any of the
properties or assets of the Company.
(b) This Agreement has been duly executed and delivered
by the Company and constitutes the legal, valid and binding obligation of the
Company, enforceable in accordance with its terms, except to the extent the
indemnification provisions herein may be deemed not enforceable.
13. Miscellaneous.
(a) All covenants and agreements contained in this
Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
(including without limitation transferees of any Preferred Shares or Restricted
Stock), whether so expressed or not, provided, however, (i) that registration
rights conferred herein on the holders of shares of Series A Convertible
Preferred Stock and Series B Convertible Preferred Stock or Series A and B
Restricted Stock shall only inure to the benefit of a transferee of such shares
if there is transferred to such transferee at least 20% of the total shares of
Restricted Stock originally issued pursuant to the Stock Purchase Agreements in
respect of the Series A Convertible Preferred Stock and Series B Convertible
Preferred Stock, dated March 18, 1997 and September 24, 1998, respectively, to
the direct or indirect transferor of such transferee
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or such transferee is a party hereto or a partner, member, shareholder or
affiliate of a party hereto and (ii) that registration rights conferred herein
on the holders of Series C Convertible Preferred Stock or Series C Restricted
Stock shall only inure to the benefit of a transferee of such shares if there is
transferred to such transferee the total shares of Restricted Stock originally
issued pursuant to the Stock Purchase Agreement in respect of the Series C
Convertible Preferred Stock of even date herewith, to the direct or indirect
transferor of such transferee or 20% of such total shares, whichever is less, or
such transferee is a party hereto or a partner, member, shareholder or affiliate
of a party hereto.
(b) All notices, requests, consents and other
communications hereunder shall be in writing and shall be mailed by certified or
registered mail, return receipt requested, postage prepaid, or telexed, in the
case of non-U.S. residents, addressed as follows:
if to the Company or any other party hereto, at the address of
such party set forth in the Purchase Agreement or in a certain
Stockholders' Agreement by and among the parties hereto dated as of the
date hereof;
if to any subsequent holder of Preferred Shares or Restricted
Stock, to it at such address as may have been furnished to the Company
in writing by such holder;
or, in any case, at such other address or addresses as shall have been furnished
in writing to the Company (in the case of a holder of Preferred Shares or
Restricted Stock) or to the holders of Preferred Shares or Restricted Stock (in
the case of the Company) in accordance with the provisions of this paragraph.
(c) This Agreement shall be construed and enforced in
accordance with and governed by the General Corporation Law of the State of
Delaware as to matters within the scope thereof, and as to all other matters
shall be governed by and construed in accordance with the internal laws of the
State of Georgia.
(d) This Agreement may not be amended or modified, and no
provision hereof may be waived, without the written consent of the Company and
the holders of at least sixty-six and two-thirds percent (66-2/3%) of the
outstanding shares of Restricted Stock, which in every event must include the
holders of at least sixty-six and two-thirds percent (66-2/3%) in interest of
the outstanding Conversion Shares. Notwithstanding the foregoing, no such
amendment or modification shall be effective if and to the extent that such
amendment or modification either (a) creates any additional affirmative
obligations to be complied with by any or all of the Purchasers or (b) grants to
any one or more Purchasers any rights more favorable than any rights granted to
all other Purchasers or otherwise treats any one or more Purchasers differently
than all other Purchasers.
(e) 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.
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(f) The obligations of the Company to register shares of
Series A and B Restricted Stock under Sections 4, 5 or 6 shall terminate five
years after completion of an underwritten public offering of shares of Common
Stock in which the net proceeds received by the Company shall be at least $10
million and the price paid by the public for such shares shall be at least $8.58
per share (appropriately adjusted to reflect any subdivision or combination of
Common Stock). The obligations of the Company to register shares of Series C
Restricted Stock under Sections 4, 5 or 6 shall terminate 5 years after
completion of an underwritten public offering of shares of Common Stock in which
the net proceeds received by the Company shall be at least $30 million and the
price paid by the public for such shares shall be at least $12.60 per share if
the public offering is closed on or prior to the first anniversary of the date
hereof and $18.90 per share thereafter (appropriately adjusted to reflect any
subdivision or combination of Common Stock).
(g) If requested in writing by the underwriters for the
initial underwritten public offering of securities of the Company, each holder
of Restricted Stock who is a party to this Agreement shall agree not to sell
publicly any shares of Restricted Stock or any other shares of Common Stock
(other than shares of Restricted Stock or other shares of Common Stock being
registered in such offering), without the consent of such underwriters, for a
period of not more than 180 days following the effective date of the
registration statement relating to such offering; provided, however, that all
persons entitled to registration rights with respect to shares of Common Stock
who are not parties to this Agreement, all executive officers and directors of
the Company and all other holders of more than one percent (1%) of the voting
securities of the Company shall also have agreed not to sell publicly their
Common Stock under the circumstances and pursuant to the terms set forth in this
Section 13(g).
(h) Notwithstanding the provisions of Section 7(a), the
Company's obligation to file a registration statement, or cause such
registration statement to become and remain effective, shall be suspended for a
period not to exceed 90 days in any 24-month period if there exists at the time
material non-public information relating to the Company which, in the reasonable
opinion of the Company, should not be disclosed.
(i) The Company shall not grant to any third party any
registration rights more favorable than any of those contained herein, so long
as any of the registration rights under this Agreement remains in effect.
(j) If any provision of this Agreement shall be held to
be illegal, invalid or unenforceable, such illegality, invalidity or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid or unenforceable any other provision of this
Agreement, and this Agreement shall be carried out as if any such illegal,
invalid or unenforceable provision were not contained herein.
This Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and supercedes all prior agreements and
understandings between them or any of them as to such subject matter, including
without limitation, the Existing Registration Rights Agreement.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
THE COMPANY:
WITNESS SYSTEMS, INC.
By: /s/ Xxx X. Xxxxxx
-------------------------------------
Name: Xxx X. Xxxxxx
Title: Chief Financial Officer
FOUNDERS:
/s/ W. Xxxxxx Xxxxxx
-------------------------------------
W. Xxxxxx Xxxxxx
/s/ Xxxxx X. Xxxxxx, Xx.
-------------------------------------
Xxxxx X. Xxxxxx, Xx.
/s/ Xxxxxx Xxxxxxx
-------------------------------------
Xxxxxx Xxxxxxx
/s/ Xxxx Xxxxx
-------------------------------------
Xxxx Xxxxx
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SERIES A AND B SHAREHOLDERS:
BATTERY VENTURES IV, L.P.
By: Battery Partners IV, LLC
By: /s/ Xxxxxx X. Xxxxxx
-------------------------
Member Manager
[SIGNATURES CONTINUED ON NEXT PAGE]
16
17
[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
BATTERY INVESTMENT
PARTNERS IV, LLC
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Member Manager
/s/ Xxxx Xxxxxxx
----------------------------------
Xxxx Xxxxxxx
PURCHASERS:
NORO-XXXXXXX PARTNERS IV, L.P.
By: MKFJ-IV, L.L.C., General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Member
NORO-XXXXXXX PARTNERS IV-B, L.P.
By: MKFJ-IV, L.L.C., General Partner
By: /s/ Xxxxx X. Xxxxxxx
-----------------------------
Member
XXXXXXXXX & XXXXX CALIFORNIA,
a California corporation
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director-Attorney-in-Fact
[SIGNATURES CONTINUED ON NEXT PAGE]
17
18
[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
XXXXXXXXX & XXXXX EMPLOYEE
VENTURE FUND, X.X. XX, a
Delaware limited partnership
By: H&Q VENTURE MANAGEMENT,
L.L.C., a Delaware limited liability
company, its General Partner
By: /s/ Xxxxxx X. Xxxxxx
------------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director-Attorney-in-Fact
ACCESS TECHNOLOGY PARTNERS, L.P., a Delaware
limited partnership
By: ACCESS TECHNOLOGY
MANAGEMENT, L.L.C., a Delaware
limited liability company, its General Partner
By: H&Q VENTURE MANAGEMENT,
L.L.C., a Delaware limited liability
ompany, its Managing Member
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director-Attorney-in-Fact
ACCESS TECHNOLOGY PARTNERS BROKERS FUND, L.P.
By: H&Q VENTURE MANAGEMENT, L.L.C.,
a Delaware limited liability company, its
General Partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director-Attorney-in-Fact
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
H&Q WITNESS SYSTEMS INVESTORS, LP, a
California limited partnership
By: H&Q VENTURE ASSOCIATES,
a California corporation, its
General Partner
By: /s/ Xxxxxx X. Xxxxxx
----------------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Tax Director-Attorney-in-Fact
THE PRODUCTIVITY FUND IV, L.P., a
Delaware limited partnership
By: FIRST ANALYSIS MANAGEMENT
COMPANY IV, LLC, a Delaware limited
liability company, its General Partner
By: FIRST ANALYSIS
CORPORATION, a Delaware
Corporation, Member
By: /s/ Xxxx Xxxxxxxxxxx
-------------------------------------
Name: Xxxx Xxxxxxxxxxx
Title:
[SIGNATURES CONTINUED ON NEXT PAGE]
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[SIGNATURES TO AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT]
THE PRODUCTIVITY FUND IV ADVISORS
FUND, L.P., a Delaware limited partnership
Delaware limited partnership
By: FIRST ANALYSIS MANAGEMENT
COMPANY IV, LLC, a Delaware limited
liability company, its General Partner
By: FIRST ANALYSIS
CORPORATION, a Delaware
Corporation, Member
By: /s/ Xxxx Xxxxxxxxxxx
-----------------------------------
Name: Xxxx Xxxxxxxxxxx
Title:
/s/ Xxxx X. Implay, Jr.
-----------------------------------------------------
XXXX X. XXXXX XX.
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