EXHIBIT 4.01
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "AGREEMENT") is made and entered
into as of July 15, 1999 by and among Integrated Systems, Inc., a California
corporation ("ACQUIRER") and the persons and entities listed on EXHIBIT A hereto
(collectively, the "SHAREHOLDERS" and each individually a "SHAREHOLDER") who are
shareholders of Software Development Systems, Inc., an Illinois corporation
("TARGET"). All terms not otherwise defined herein shall have the meaning forth
in the Plan (as defined below). This Agreement shall become effective upon the
Closing (as such term is defined in the Plan (as defined below)) and shall be of
no further force or effect if the Closing does not occur by July 31, 1999.
R E C I T A L S
A. Target, Acquirer and ISI Acquisition Corporation, an Illinois
corporation and a wholly owned subsidiary of Acquirer ("SUB"), have entered into
an Agreement and Plan of Reorganization (the "PLAN") dated as of July 15, 1999,
pursuant to which Target will merge with and into Sub in a forward triangular
merger with Sub to be the surviving corporation of the Merger (the "MERGER").
B. As a condition precedent to the consummation of the Merger, Section 1.5
of the Plan provides that the Shareholders shall be granted certain registration
rights with respect to the shares of Acquirer's Common Stock that are issued to
the Shareholders in the Merger (the "MERGER SHARES"), subject to the terms and
conditions set forth in this Agreement.
NOW, THEREFORE, in consideration of the above recitals and the mutual
covenants hereinafter set forth, the parties hereto hereby agree as follows:
1. REGISTRATION RIGHTS.
1.1 DEFINITIONS. For purposes of this Section 1:
(a) REGISTRATION. The terms "REGISTER," "REGISTERED," and
"REGISTRATION" refer to a registration effected by preparing and filing a
registration statement in compliance with the Securities Act of 1933, as amended
(the "1933 ACT"), and the declaration or ordering of effectiveness of such
registration statement.
(b) REGISTRABLE SECURITIES. The term "REGISTRABLE SECURITIES"
means: (1) all of the Merger Shares, and (2) any shares of Common Stock of
Acquirer issued as a dividend or other distribution with respect to, or in
exchange for or in replacement of, the Merger Shares; EXCLUDING in all cases,
however, (i) any Registrable Securities sold by a person in a transaction in
which rights under this Section 1 are not assigned in accordance with Section 2
of this Agreement, (ii) any Registrable Securities sold in a public offering
pursuant to a registration statement filed with the SEC or sold to the public by
the holders thereof pursuant to Rule 144
promulgated under the 1933 Act ("RULE 144"); or (iii) any Registrable Securities
which may be sold in the public market in a three-month period without
registration under the 1933 Act pursuant to Rule 144.
(c) PROSPECTUS. The term "PROSPECTUS" shall mean the prospectus
included in any Registration Statement filed pursuant to the provisions hereof
(including, without limitation, a prospectus that discloses information
previously omitted from a prospectus filed as part of an effective registration
statement in reliance upon Rule 430A promulgated under the 1933 Act), as amended
or supplemented by any prospectus supplement (including, without limitation, any
prospectus supplement with respect to the terms of the offering of any portion
of the Registrable Securities covered by such Registration Statement), and all
other amendments and supplements to the Prospectus, including post-effective
amendments, and all material incorporated by reference or deemed to be
incorporated by reference in such Prospectus.
(d) HOLDER. For purposes of this Agreement, the term "HOLDER" means any person
owning of record Registrable Securities.
(e) SEC. The term "SEC" or "COMMISSION" means the U.S. Securities and Exchange
Commission.
1.2 REGISTRATION.
(a) SHELF REGISTRATION. Acquirer shall prepare and file with the
SEC within ninety (90) days following the Closing (as defined in the Plan), and
use its best efforts to have declared effective as soon as practicable
thereafter, a registration statement on Form S-3 (a "REGISTRATION STATEMENT")
providing for the resale by the Holders of all of the Registrable Securities
then owned by the Holders. Acquirer shall use its best efforts to keep the
Registration Statement continuously effective, pursuant to the rules,
regulations or instructions under the 1933 Act applicable to Form S-3, for such
period (the "EFFECTIVENESS PERIOD") ending on the date that is two (2) years
after the date of the Closing or such shorter period ending when all of the
Registrable Securities cease to meet the definition of Registrable Securities
pursuant to Section 1.1(b). If any Shareholder intends to sell or otherwise
distribute the Registrable Securities covered by this Agreement, then each such
Shareholder shall so advise Acquirer, with a copy to its counsel, in writing
pursuant to the notice provisions set forth in Section 3.1 hereof. Such notice
must be received by Acquirer and its counsel no more than sixty (60) and no less
than two (2) business days prior to such intended sale or distribution.
(b) SUSPENSION. If Acquirer shall determine pursuant to the good
faith judgment of the Board of Directors of Acquirer, that it would be seriously
detrimental to Acquirer and its shareholders for resales of Registrable
Securities to be made pursuant to the Registration Statement, due to (A) the
existence of a material development or a material development that might
potentially occur, with respect to or involving Acquirer which Acquirer would be
obligated to disclose in the Prospectus contained in the Registration Statement,
which disclosure would in the good faith judgment of the Board of Directors of
Acquirer be premature or otherwise inadvisable at such time and would have a
material adverse affect upon Acquirer and its shareholders, or (B) the
occurrence of any event that makes any statement made in such
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Registration Statement or related Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
which requires the making of any changes in the Registration Statement or
Prospectus so that it will not contain any untrue statement of a material fact
required to be stated therein or necessary to make the statements therein not
misleading or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, then Acquirer shall deliver a
certificate in writing to the Holders to the effect of the foregoing and, upon
receipt of such certificate, the use of the Registration Statement and
Prospectus will be deferred or suspended and will not recommence until (1) such
Holder's receipt from Acquirer of copies of the supplemented or amended
Prospectus, or (2) such Holders are advised in writing by Acquirer that the
Prospectus may be used. Acquirer will use its best efforts to ensure that the
use of the Registration Statement and Prospectus may be resumed as soon as
practicable and, in the case of a pending development or event referred to in
(A) above, as soon, in the judgment of Acquirer, as disclosure of the material
information relating to such pending development would not have a materially
adverse effect on Acquirer's ability to consummate the transaction, if any, to
which such development relates. Notwithstanding the foregoing or any other
provision of this Agreement, (i) the Acquirer shall not restrict dispositions
under this section for a period exceeding forty-five (45) days unless the
Acquirer shall have delivered to the Holders a second notice in writing
extending the restriction period up to an additional fifteen (15) days (or such
shorter period of time as specified in the notice); (ii) in no event shall the
Acquirer be permitted to extend the restriction period under this section beyond
the sixty (60) day period, and the Acquirer shall not restrict sales under this
section on more than two separate occasions in any twelve-month period, and
(iii) the period during which Acquirer shall be required to maintain the
effectiveness of the Registration Statement shall be extended by one (1) day for
each full or partial day during which the use of such Registration Statement or
Prospectus is deferred or suspended by Acquirer in accordance with this Section
1.2(b).
(c) EXPENSES. All expenses, other than underwriting discounts and
brokers commissions, incurred in connection with the Registration Statement
shall be borne by Acquirer.
1.3 OBLIGATIONS OF ACQUIRER. Acquirer shall, as expeditiously as
reasonably possible:
(a) Prepare promptly and file with the SEC the Registration
Statement as provided in Section 1.2(a), which Registration Statement (including
any amendments or supplements thereto and prospectuses contained therein) shall
not contain any 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,
in light of the circumstances in which they were made, not misleading and use
its best efforts to cause such Registration Statement to become effective as
soon as practicable.
(b) Before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish, at least five (5) Business Days
prior to such filing, to the counsel selected by the holders of a majority of
the Registrable Securities, copies of all
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such documents proposed to be filed which documents will be subject to the
review of such counsel and which review shall be completed no later than two (2)
Business Days prior to the proposed filing date).
(c) As promptly as is practicable after an event identified in
paragraph (e) below, prepare a supplement or amendment to such Prospectus so
that, as thereafter delivered to the purchasers of such Registrable Securities,
such Prospectus will not contain an untrue statement of a material fact or omit
to state any fact necessary to make the statements therein not misleading.
(d) Use all commercially reasonable efforts to cause all such
Registrable Securities to be listed on the Nasdaq National Market.
(e) In the event of the issuance of any stop order suspending the
effectiveness of a Registration Statement, or of any order suspending or
preventing the use of any related Prospectus or suspending the qualification of
any common stock included in such Registration Statement for sale in any
jurisdiction, use all reasonable efforts promptly to obtain the withdrawal of
such order.
(f) Prepare promptly and file with the SEC such amendments and
supplements to such Registration Statement and the Prospectus used in connection
with such registration statement as may be necessary to comply with the
provisions of the 1933 Act with respect to the disposition of all securities
covered by such registration statement.
(g) Furnish to Holders such number of copies of a Prospectus,
including a preliminary Prospectus, in conformity with the requirements of the
1933 Act, and such other documents as reasonably requested in order to
facilitate the disposition of the Registrable Securities owned by it that are
included in such registration.
(h) Use its best efforts to register and qualify the securities
covered by such Registration Statement under such other securities or Blue Sky
laws of such jurisdictions as shall be reasonably requested by Holders, provided
that Acquirer shall not be required in connection therewith or as a condition
thereto to qualify to do business or to file a general consent to service of
process in any such states or jurisdictions.
(i) Notify Holders promptly (i) of any request by the SEC or any
other federal or state governmental authority during the period of effectiveness
of the Registration Statement for amendments or supplements to such Registration
Statement or related Prospectus or for additional information, (ii) of the
issuance by the SEC or any other federal or state governmental authority of any
stop order suspending the effectiveness of the Registration Statement or the
initiation of any proceedings for that purpose, (iii) of the receipt by Acquirer
of any notification with respect to the suspension of the qualification or
exemption from qualification of any of the Registrable Securities for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose, (iv) of the happening of any event which makes any statement made in
the Registration Statement or Prospectus or any document incorporated or deemed
to be incorporated therein by reference untrue in any material respect or which
requires
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the making of any changes in the Registration Statement or Prospectus so that it
will not contain any untrue statement of a material fact required to be stated
therein or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and (v) of Acquirer's
determination that a post-effective amendment to the Registration Statement
would be appropriate.
1.4 FURNISH INFORMATION. It shall be a condition precedent to the
obligations of Acquirer to take any action pursuant to Section 1.2 that each
Holder shall furnish to Acquirer such information regarding Holder, the
Registrable Securities held by Holder, and the intended method of disposition of
such securities as shall be legally required to be disclosed in the Prospectus.
1.5 INDEMNIFICATION
(a) BY ACQUIRER. To the fullest extent permitted by law, Acquirer will indemnify
and hold harmless each of the Holders, officers, directors, trustees,
fiduciaries, employees and agents of a Holder or underwriter (as defined in the
1933 Act) and each person, if any, who controls a Holder within the meaning of
the 1933 Act or the Securities Exchange Act of 1934 (the "1934 ACT")
(collectively, "HOLDER INDEMNIFIED PARTIES"), against any losses, claims,
damages, or liabilities (joint or several) to which they or any of them may
become subject under the 1933 Act, the 1934 Act or other federal or state law,
insofar as such losses, claims, damages, or liabilities (or actions in respect
thereof) arise out of or are based upon any of the following statements,
omissions or violations (collectively a "VIOLATION"):
(i) any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, including any
preliminary Prospectus or final Prospectus contained therein or in any
amendments or supplements thereto;
(ii) the omission or alleged omission to state in the
Registration Statement, including any preliminary Prospectus or final
Prospectus contained therein or in any amendments or supplements
thereto, a material fact required to be stated therein, or necessary
to make the statements therein not misleading; or
(iii) any violation or alleged violation by Acquirer of the 1933
Act, the 1934 Act, any federal or state securities law or any rule or
regulation promulgated under the 1933 Act, the 1934 Act or any federal
or state securities law in connection with the offering covered by
such Registration Statement.
Acquirer will reimburse each Holder Indemnified Party for any legal or
other expenses reasonably incurred by them, as incurred, in connection with
investigating or defending any such loss, claim, damage, liability or action;
PROVIDED HOWEVER, that the indemnity agreement contained in this subsection
1.5(a) shall not apply to amounts paid in settlement of any such loss, claim,
damage, liability or action if such settlement is effected without the consent
of Acquirer
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(which consent shall not be unreasonably withheld), nor shall Acquirer be liable
to a particular Holder or such Holder's Holder Indemnified Parties in any such
case for any such loss, claim, damage, liability or action to the extent that it
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in connection
with such registration by such Holder. Acquirer shall not consent to any
settlement or confess to any judgment against a Holder Indemnified Party unless
such settlement or judgment contains a full release of liability.
(b) BY HOLDERS. To the fullest extent permitted by law, each Holder will
indemnify and hold harmless Acquirer, each of its directors, each of its
officers who have signed the Registration Statement, each person, if any, who
controls Acquirer within the meaning of the 1933 Act, any other employee or
agent of Acquirer, each other Holder, each person, if any, who controls such
Holder within the meaning of the 1933 Act, and any other employee or agent of
such Holder, against any losses, claims, damages or liabilities (joint or
several) to which Acquirer or any such director, officer, or controlling person,
employee or agent may become subject under the 1933 Act, the 1934 Act or other
federal or state law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereto) arise out of or are based upon any Violation, in
each case to the extent (and only to the extent) that such Violation occurs in
reliance upon and in conformity with written information furnished by such
Holder expressly for use in connection with such Registration Statement; and
such Holder will reimburse any legal or other expenses reasonably incurred by
Acquirer or any such director, officer, or controlling person, employee or agent
in connection with investigating or defending any such loss, claim, damage,
liability or action; PROVIDED, HOWEVER, that the indemnity agreement contained
in this subsection 1.5(b) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is effected
without the consent of such Holder, which consent shall not be unreasonably
withheld; and PROVIDED FURTHER, that the total amounts payable in indemnity by
Holder under this Section 1.5(b) in respect of any Violation shall not exceed
the net proceeds received by Holder in the registered offering out of which such
Violation arises.
(c)` NOTICE. Promptly after receipt by an indemnified party under this Section
1.5 of notice of the commencement of any action (including any governmental
action), such indemnified party will, if a claim for indemnification in respect
thereof is to be made against any indemnifying party under this Section 1.5,
deliver to the indemnifying party a written notice of the commencement of such
an action and the indemnifying party shall have the right to participate in,
and, to the extent the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume the defense thereof with counsel
mutually satisfactory to the parties; PROVIDED, HOWEVER, that an indemnified
party shall have the right to retain its own counsel, with the fees and expenses
to be paid by the indemnifying party, if representation of such indemnified
party by the counsel retained by the indemnifying party would be inappropriate
due to actual or potential conflict of interests between such indemnified party
and any other party represented by such counsel in such proceeding. The failure
to deliver written notice to the indemnifying party within a reasonable time of
the commencement of any such action, if prejudicial to its ability to defend
such action, shall (to the extent of such prejudice) relieve such indemnifying
party of any liability to the indemnified party under this Section 1.5, but the
omission so to deliver written
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notice to the indemnifying party will not relieve it of any liability that it
may have to any indemnified party otherwise than under this Section 1.5.
(d) DEFECT ELIMINATED IN FINAL PROSPECTUS. The foregoing indemnity agreements of
Acquirer and such Holders are subject to the condition that, insofar as they
relate to any Violation made in a preliminary Prospectus but eliminated or
remedied in the amended Prospectus on file with the SEC at the time the
Registration Statement becomes effective or in the amended Prospectus filed with
the SEC pursuant to SEC Rule 424(b) (the "FINAL PROSPECTUS"), such indemnity
agreements shall not inure to the benefit of any person if a copy of the Final
Prospectus was furnished to the indemnified party and was not furnished to the
person asserting the loss, liability, claim or damage at or prior to the time
such action is required by the 1933 Act.
(e) CONTRIBUTION. In order to provide for just and equitable contribution to
joint liability under the 1933 Act in any case in which either (i) Holder
(and/or any Holder Indemnified Party who may be indemnified under Section
1.5(a)), makes a claim for indemnification pursuant to this Section 1.5 but it
is judicially determined (by the entry of a final judgment or decree by a court
of competent jurisdiction and the expiration of time to appeal or the denial of
the last right of appeal) that such indemnification may not be enforced in such
case notwithstanding the fact that this Section 1.5 provides for indemnification
in such case, or (ii) contribution under the 1933 Act may be required on the
part of such Holder (and/or any Holder Indemnified Party who may be indemnified
under Section 1.5 (a)) in circumstances for which indemnification is provided
under this Section 1.5; then, and in each such case, Acquirer and such Holder
(and/or such other indemnified person) will contribute to the aggregate losses,
claims, damages or liabilities to which they may be subject (after contribution
from others) in proportion to their relative fault as determined by a court of
competent jurisdiction; PROVIDED HOWEVER, that in no event, except in instances
of intentional fraud by the Holder in which case there is no limitation, (i)
shall any Holder be responsible for more than the portion represented by the
percentage that the public offering price of its Registrable Securities offered
by and sold under the Registration Statement bears to the public offering price
of all securities offered by and sold under such Registration Statement or (ii)
shall a Holder be required to contribute any amount in excess of the public
offering price of all such Registrable Securities offered and sold by such
Holder pursuant to such Registration Statement; and in any event, no person or
entity guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the 1933 Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(f) SURVIVAL. The obligations of Acquirer and such Holder under this Section 1.5
shall survive the completion of any offering of Registrable Securities in a
registration statement, and otherwise.
1.6 PIGGYBACK REGISTRATIONS
(a) RIGHT TO PIGGYBACK. So long as any Registrable Security remains outstanding,
whenever the Acquirer proposes to register any of its Common Stock under the
Securities Act for sale in an underwritten public offering, other than pursuant
to a registration statement on Form S-8 or Form S-4, or any other form which in
the future may be approved by the SEC in lieu of such forms for
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the same purposes (a "PIGGYBACK REGISTRATION"), the Acquirer will give prompt
written notice to all holders of Registrable Securities of its intention to
effect such a registration and will, subject to Sections 1.6(b) and 1.6(c),
include in such registration all Registrable Securities with respect to which
the Acquirer has received written requests for inclusion therein within 15 days
after the receipt of the Acquirer's notice.
(b) PRIORITY IN PRIMARY REGISTRATIONS. If a Piggyback Registration is an
underwritten primary registration on behalf of the Acquirer, and the managing
underwriters advise the Acquirer in writing that in their opinion the number of
securities requested to be included in such registration exceeds the number
which can be sold in such offering without adversely affecting the marketability
of the offering, the Acquirer will include securities in such registration in
the following order of priority: (i) first, the securities the Acquirer proposes
to sell, (ii) second, the securities requested to be included in such
registration by any stockholders of the Acquirer having demand registration
rights, and (iii) third, the Registrable Securities requested to be included by
the Shareholders and all Common Stock requested to be included in such
registration by other holders of Common Stock (the "OTHER COMMON STOCK"),
pro-rata based on the respective number of shares of Common Stock held by each
Shareholder and other holder of Common Stock.
(c) PRIORITY IN SECONDARY REGISTRATIONS. If a Piggyback Registration is an
underwritten secondary registration on behalf of holders of the Acquirer's
securities, and the managing underwriters advise the Acquirer in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering without
adversely affecting the marketability of the offering, the Acquirer will include
securities in such registration in the following order of priority: (i) first,
the securities requested to be included in such registration by the holders
requesting such registration, (ii) second, the Registrable Securities requested
to be included in such registration by the Shareholders and all Other Common
Stock requested to be included in such registration by the holders of such Other
Common Stock, pro-rata based on the respective number of shares of Common Stock
held by each Shareholder and other holder of Common Stock, and (iii) third,
additional securities of the Acquirer requested to be included in such
registration.
1.7 PARTICIPATION IN UNDERWRITTEN REGISTRATIONS. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Acquirer (provided that all such
arrangements are applied consistently to all selling stockholders, directors and
executive officers) and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of such underwriting arrangements.
1.8 REPORTS UNDER EXCHANGE ACT. With a view to making available to the
holders of the Registrable Securities the benefits of Rule 144 and any other
rule or regulations of the Securities and Exchange Commission that may at any
time permit a holder to sell securities of the Acquirer to the public without
registration, the Acquirer agrees to use its best efforts to:
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(a) make and keep public information available as contemplated in Rule 144, at
all times;
(b) file with the SEC in a timely manner all reports and other documents
required of the Acquirer under the Securities Act and the Exchange Act; and
(c) furnish to any holder, so long as such holder owns any of the Registrable
Securities, forthwith upon request a written statement by the Acquirer that it
has complied with the reporting requirements of Rule 144, the Securities Act and
the Exchange Act (at any time after it has become subject to such report
requirements), a copy of the most recent annual or quarterly report of the
Acquirer and such other reports and documents so filed with the Securities and
Exchange Commission by the Acquirer as may be reasonably requested in availing
any holder, under any rule or regulation of the Securities and Exchange
Commission, of the right to sell any such Registrable Securities without
registrations.
1.9 TERMINATION OF THE COMPANY'S OBLIGATIONS. The Company shall have
no obligations pursuant to Sections 1.2 and 1.6 with respect to any Registrable
Securities proposed to be sold by a Holder in a registration pursuant to Section
1.2 or 1.6 if, in the opinion of counsel to the Company, all such Registrable
Securities proposed to be sold by a Holder may be sold in a three-month period
without registration under the Securities Act pursuant to Rule 144 under the
Securities Act; provided, however, if James E. Challenger is not an employee of
Acquirer and holds more than one percent (1%) of the outstanding Common Stock of
Acquirer, the obligations of Acquirer pursuant to Section 1.6 shall not
terminate until his holdings fall below one percent (1%) of the outstanding
Common Stock of Acquirer.
2. ASSIGNMENT.
2.1 ASSIGNMENT. Notwithstanding anything herein to the contrary, the
registration rights of a Holder under Section 1 hereof may be assigned only to
(i) a family member of such Holder or a trust, partnership or similar estate
planning entity created for the benefit of such Holder and/or such Holder's
family members or a qualified entity under Section 501(c)(3) of the Internal
Revenue Code or (ii) a Person acquires from Holder at least Fifty Thousand
(50,000) shares of Common Stock that constitute the original number of
Registrable Securities (or, if such Holder holds less than 50,000 shares of
Common Stock that constitute at least ten percent (10%) of such Holder's
original Registrable Securities, all of such Holder's shares of Common Stock)
(as such number may be adjusted to reflect subdivisions, combinations and stock
dividends of Acquirer's Common Stock) or as a distribution made by a Holder
which is a partnership to the partners of such Holder of Registrable Securities;
PROVIDED, HOWEVER that no party may be assigned any of the foregoing rights
until Acquirer is given written notice by the assigning party at the time of
such assignment stating the name and address of the assignee and identifying the
securities of Acquirer as to which the rights in question are being assigned;
PROVIDED, FURTHER that any such assignee shall receive such assigned rights
subject to all the terms and conditions of this Agreement, including without
limitation the provisions of this Section 2.
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3. GENERAL PROVISIONS.
3.1 NOTICES. Any notice, request or other communication required or
permitted hereunder shall be in writing and shall be deemed to have been duly
given if personally delivered or if deposited in the U.S. mail by registered or
certified mail, return receipt requested, postage prepaid, sent by telecopier or
by nationally recognized express courier service as follows:
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(a) if to Acquirer, at:
Integrated Systems, Inc.
201 Moffett Park Drive
Sunnyvale, CA 94089
Attention: Chief Financial Officer
Facsimile: (408) 542-1959
with a copy to:
Fenwick & West LLP
Two Palo Alto Square
Palo Alto, CA 94306
Attention: Fred Greguras, Esq.
Facsimile: (650) 494-1417
(b) If to Holders:
To the address set forth on Exhibit A hereto
with a copy to:
Sachnoff & Weaver LLP
30 South Wacker Drive
Chicago, IL 60606
Attention: Seth Hemming, Esq.
Facsimile: (312) 207-6400
Any party hereto (and such party's permitted assigns) may by notice so given
provide and change its address for future notices hereunder. Notice shall
conclusively be deemed to have been given when personally delivered or three
business days after being deposited in the mail in the manner set forth above.
3.2 ENTIRE AGREEMENT. This Agreement and the Plan constitute and
contains the entire agreement and understanding of the parties with respect to
the subject matter hereof and supersede any and all prior negotiations,
correspondence, agreements, understandings, duties or obligations between the
parties respecting the subject matter hereof.
3.3 AMENDMENT OF RIGHTS. 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
prior written consent of Acquirer and Holders of a majority of all Registrable
Securities then outstanding. Any amendment or waiver effected in accordance with
this Section 3.3 shall be binding upon each Holder, each permitted successor or
assignee of such Holder and Acquirer.
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3.4 GOVERNING LAW. This Agreement shall be governed by and construed
exclusively in accordance with the laws of the State of California, excluding
that body of law relating to conflict of laws.
3.5 SEVERABILITY. If one or more provisions of this Agreement are held
to be unenforceable under applicable law, then such provision(s) shall be
excluded from this Agreement and the balance of this Agreement shall be
interpreted as if such provision(s) were so excluded and shall be enforceable in
accordance with its terms.
3.6 THIRD PARTIES. Nothing in this Agreement, express or implied, is
intended to confer upon any person, other than the parties hereto and their
successors and assigns, any rights or remedies under or by reason of this
Agreement.
3.7 SUCCESSORS AND ASSIGNS. Subject to the provisions of Section 2.1,
the provisions of this Agreement shall inure to the benefit of, and shall be
binding upon, the successors and permitted assigns of the parties hereto.
3.8 CAPTIONS. The captions to sections of this Agreement have been
inserted for identification and reference purposes only and shall not be used to
construe or interpret this Agreement.
3.9 COUNTERPARTS. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
3.10 COSTS AND ATTORNEYS' FEES. In the event that any action, suit or
other proceeding is instituted concerning or arising out of this Agreement or
any transaction contemplated hereunder, the prevailing party shall recover all
of such party's costs and attorneys' fees incurred in each such action, suit or
other proceeding, including any and all appeals or petitions therefrom.
3.11 LEGENDS.
Each Holder understands that prior to the effectiveness of the
Registration Statement certificates or other instruments representing any of the
Registrable Securities acquired by Holder will bear legends substantially
similar to the following, in addition to any other legends required by federal
or state laws:
THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE
SECURITIES LAWS. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM.
12
THE ISSUER OF THESE SECURITIES MAY REQUIRE AN OPINION OF COUNSEL IN
FORM AND SUBSTANCE REASONABLY SATISFACTORY TO THE ISSUER TO THE EFFECT
THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS.
Each Holder agrees that, in order to ensure and enforce compliance
with the restrictions imposed by applicable law and those referred to in the
foregoing legends, or elsewhere herein, Acquirer may, prior to the effectiveness
of the Registration Statement issue appropriate "stop transfer" instructions to
its transfer agent, if any, with respect to any certificate or other instrument
representing Registrable Securities, or if Acquirer transfers its own
securities, that it may make appropriate notations to the same effect in
Acquirer's records.
Each Holder also understands that subsequent to the effectiveness of
the Registration Statement, upon the written request of a Holder, the Holder may
surrender the certificates or other instruments representing any of the
Registrable Securities and Acquirer will, as promptly as practicable, cause the
legend described above to be replaced with a legend substantially similar to the
following (in addition to any other legends required by state laws):
THE RESALE OF THE SHARES REPRESENTED HEREBY MAY BE MADE ONLY PURSUANT
TO THE PLAN OF DISTRIBUTION SET FORTH IN THE REGISTRATION STATEMENT
FILED PURSUANT TO THE TERMS OF A REGISTRATION RIGHTS AGREEMENT BETWEEN
ISSUER AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE
SECRETARY OF THE ISSUER.
(a) The Holders hereby acknowledge and agree that the Registrable
Securities may not be transferred except pursuant to (i) a registered offering
under the Securities Act, including without limitation, the Registration
Statement contemplated hereunder, (ii) Rule 144 promulgated pursuant to the
Securities Act (or any similar rule or rules then in force) if available, or
(ii) subject to the conditions specified in subparagraph (b) below, any other
legally available means of transfer.
(b) In connection with the transfer of any Registrable Securities
(other than a transfer pursuant to a registered public offering), the holder
thereof shall deliver written notice to Acquirer describing in reasonable detail
the transfer or proposed transfer, together with an opinion of securities
counsel (with such opinion and such counsel being reasonably satisfactory to
Acquirer) to the effect that such transfer of Registrable Securities may be
effected without registration of such Registrable Securities under the
Securities Act or any applicable state securities law. In addition, if the
holder of Registrable Securities delivers to Acquirer such an opinion that
concludes that no subsequent transfer of such Registrable Securities will
require registration under the Securities Act or any applicable state securities
law, Acquirer shall promptly upon such contemplated transfer deliver new
certificates for such Registrable Securities which do not bear the restrictive
legend set forth in this Agreement. If the Holder's broker delivers a
certificate in connection with any registered sale of Registrable Securities
that such
13
sale has been effected in accordance with the plan of distribution set forth in
the applicable Registration Statement, then Acquirer shall promptly upon such
contemplated transfer deliver new certificates for such Registrable Securities
which do not bear the restrictive legend set forth in this Agreement.
[REST OF THIS PAGE INTENTIONALLY LEFT BLANK]
14
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date and year first above written.
INTEGRATED SYSTEMS, INC.
By: /s/ Charles M. Boesenberg
-----------------------------------
Name: Charles M. Boesenberg
-----------------------------------
Its: President & CEO
-----------------------------------
SHAREHOLDERS:
James E. Challenger, Jr. 1994 GST Trust
U/A 12/30/94
/s/ James E. Challenger, Jr. By: /s/ James E. Challenger, Jr.
- ---------------------------------------- ----------------------------------------
James E. Challenger, Jr. James E. Challenger, Jr., Trustee
/s/ Robert M. Zieserl /s/ Anthony D. Skiba
- ---------------------------------------- --------------------------------------------
Robert M. Zieserl Anthony D. Skiba
Robert M. Zieserl Irrevocable Gift Trust Robert M. Zieserl Irrevocable Gift Trust
f/b/o John William Zieserl, dated March f/b/o Charles Moran Zieserl, dated March
19, 1999 19, 1999
By: /s/ James F. Shaw, Jr. By: /s/ James F. Shaw, Jr.
----------------------------------- ----------------------------------------
James F. Shaw, Jr., Trustee James F. Shaw, Jr., Trustee
John William Zieserl Minority Trust Charles Moran Zieserl Minority Trust
dated 12/23/98 dated 12/23/98
By: /s/ James F. Shaw, Jr. By: /s/ James F. Shaw, Jr.
----------------------------------- ----------------------------------------
James F. Shaw, Jr., Trustee James F. Shaw, Jr., Trustee
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
15
EXHIBIT A
LIST OF SHAREHOLDERS
NUMBER OF SHARES OF ACQUIRER COMMON STOCK
NAME AND ADDRESS HELD AFTER THE EFFECTIVE TIME OF THE MERGER
- ---------------- -------------------------------------------
Anthony Skiba 429,868
c/o Drew Kornreich
Sachnoff & Weaver LLP
30 South Wacker Drive
Chicago, IL 60606
James E. Challenger, Jr. 429,868
777 Prospect
Winnetka, IL 60093
James E. Challenger, Jr. 429,868
1994 GST Trust U/A
12-30-94
777 Prospect
Winnetka, IL 60093
Robert M. Zieserl as Trustee 86,515
for Robert M. Zieserl Declaration
of Trust Dated February 18, 1999
John William Zieserl Minority Trust 5,372
Agreement Dated December 23, 1998
1001 Gran Bay Road, Suite 316
Chicago, IL 60093
Charles Moran Zieserl Minority Trust 21,492
Agreement Dated December 23, 1998
1001 Gran Bay Road, Suite 316
Chicago, IL 60093
Robert M. Zieserl Irrevocable Gift 5,372
Trust f/b/o John William Zieserl
Dated March 19, 1999
1001 Gran Bay Road, Suite 316
Chicago, IL 60093
EXHIBIT A
LIST OF SHAREHOLDERS (CONT'D)
NUMBER OF SHARES OF ACQUIRER COMMON STOCK
NAME AND ADDRESS HELD AFTER THE EFFECTIVE TIME OF THE MERGER
- ---------------- -------------------------------------------
Robert M. Zieserl Irrevocable Gift 21,492
Trust f/b/o Charles Moran Zieserl
Dated March 19, 1999
1001 Gran Bay Road, Suite 316
Chicago, IL 60093
Jeffrey Barth 190
745 Frenchman's Road
Stanford, CA 94305