EX-10.60 7 a2043237zex-10_60.txt EXHIBIT 10.60 EXHIBIT 10.60 REGISTRATION RIGHTS AGREEMENT THIS REGISTRATION RIGHTS AGREEMENT is made and entered into as of the 28th day of December, 2000, by and between NETWORK COMPUTING SERVICES, INC., a Delaware corporation (the "COMPANY"), and DR. GUENTHER E. PFAFF, an individual (the "HOLDER"). ARTICLE I BACKGROUND WHEREAS, the Holder of certain Convertible Preferred shares converted into, and Warrants to purchase, Common Stock, par value $.001 per share ("STOCK") of the Company; and WHEREAS, the parties desire to provide for the registration of the shares of Stock issuable or issued to the Holder upon conversion of the Convertible Preferred Shares on exercise of the Warrants. ARTICLE II DEFINITIONS SECTION 2.1 DEFINITIONS. For purposes of this Agreement, the following capitalized terms have the respective meanings set forth below: (a) The term "Form S-3" means such form under the Securities Act as in effect on the date hereof or any successor form under the Securities Act. (b) The term "GAAP" means U.S. generally accepted accounting principles consistently applied. (c) The term "EQUITY EQUIVALENTS" means warrants, options or other rights to purchase Stock, or any debt, shares or other securities convertible into or exchangeable for Stock. (d) The term "HOLDER" means any person, including Dr. Guenther E. Pfaff., owning or having the right to acquire Registrable Securities or any assignee thereof in accordance with this Agreement. (e) The term "REGISTER," "REGISTERED," and "REGISTRATION" refers to a registration effected by preparing and filing a registration statement or similar document in compliance with the Securities Act, and the declaration or ordering of effectiveness of such registration statement or document. -1- (f) The term "REGISTRABLE SECURITIES" means (i) the shares of Stock issuable or issued upon conversion of the Note, and (ii) any other Securities issued as (or issuable upon the conversion or exercise of any warrant, right or other security which is issued as) a dividend or other distribution with respect to, or in exchange for or in replacement of, the shares of Stock listed in clause (i) above. Notwithstanding the foregoing, Stock or other securities shall only be treated as Registrable Securities if and so long as they have not been (A) effectively registered under the Securities Act and sold or distributed to any Person pursuant to an effective registration statement covering it, or (B) sold in a transaction exempt from the registration and prospectus delivery requirement of the Securities Act so that all transfer restrictions, and restrictive legends with respect thereto, if any, axe removed upon the consummation of such sale. (g) The number of shares of "REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of shares of Stock that are Registrable Securities which are then issued and outstanding, plus those which are issuable pursuant to then exercisable or convertible securities. (h) The term "REGISTRATION EXPENSES " MEANS all expenses incident to the Company's performance of or compliance with ARTICLE 3 including, without limitation, all registration and filing fees; all fees and expenses of complying with securities or blue sky laws; all printing expenses; the fees and disbursements of counsel for the Company and of its independent public accountants, including the expenses of any special audits required by or incident to such performance and compliance; and the reasonable fees and disbursements of one counsel for the Holder. (i) The term "SEC" means the Securities and Exchange Commission. (j) The term "SELLING EXPENSES" means all underwriting discounts, selling commissions and transfer taxes applicable to the sale of Registrable Securities. ARTICLE III REGISTRATION RIGHTS SECTION 3.1. DEMAND REGISTRATION. (a) If at any time after conversion of the Convertible Preferred Shares, or exercise of the Warrants, the Company receives a written request from the Holder that the Company file a registration statement under the Securities Act covering the registration of all or a portion of the Registrable Securities of the Holder then outstanding, then the Company shall as soon as practicable effect such registration of the Registrable Securities of the Holder. Such obligation shall include, without limitation, the execution of an undertaking to file post-effective amendments and to effect appropriate registrations or qualifications under applicable blue sky or other state securities laws and appropriate compliance with exemptive regulations -2- issued under the Securities Act and any other governmental requirements or regulations. (b) If the Holder intends to use an underwriter to distribute the Registrable Securities covered by its request, it shall so advise the Company in its request. In such event, the Holder shall (together with the Company) enter into an underwriting agreement with an underwriter selected by the Holder, subject to the approval of the Company which shall not be unreasonably withheld. The Company shall not register any other securities in connection with any such demand registration, other than for its own account. Notwithstanding any other provision of this subsection, if the underwriter advises the Holder and the Company in writing that marketing factors require a limitation of the number of shares to be included in the underwriting, then shares, if any, other than Registrable Securities shall first be excluded from such registration to the extent required by such underwriting limitation. If the number of shares of Registrable Securities so excluded exceeds twenty percent (20%) of the number of shares of Registrable Securities which the Holder has requested be included in such registration, then the Holder shall be entitled either (i) to require that the registration be deferred for such period of time as the Holder, the Company and the underwriter may mutually agree upon, but in no event for more than ninety (90) days from delivery of a written notice of the Holder to the Company requesting such delay, or (ii) to withdraw the registration request, in which case it shall not count as a demand registration for purposes of the limitation in SECTION 3.1(d). The Company shall not effect a sale of any securities of the Company similar to the Registrable Securities being offered in the underwritten offering, or convertible or exercisable for Registrable Securities during the period commencing ten (10) days prior to and ending one hundred twenty (120) days after the effective date of the applicable registration statement. (c) Notwithstanding the foregoing, if the Company shall furnish to the Holder, a certificate signed by the President or Chief Executive Officer of the Company stating that in the good faith judgment of the board of directors of the Company, it would be seriously detrimental to the Company and its shareholders for such registration statement to be filed and it is therefore essential to defer the filing of such registration statement, the Company shall have the right to defer such filing for a period not more than ninety (90) days after receipt of the request of the Holder; PROVIDED, HOWEVER, that the Company may not utilize this right more than once. (d) The Company shall not be obligated to effect, or to take any action to effect, any registration pursuant to SECTION 3.1(a) AFTER the Company has effected two demand registrations and each such registration has been declared or ordered effective and kept effective for at least one hundred twenty (120) days. Notwithstanding the immediately preceding sentence or the provisions of SECTION 3.1(b), a registration will not count as a demand registration under SECTION 3.1(a) unless the Holder was able to sell a minimum of seventy-five (75%) of the shares sought to be registered in such registration. SECTION 3.2. COMPANY REGISTRATION. If at any time the Company proposes to register any of -3- its securities under the Securities Act, whether or not for sale for its own account, on a form and in a manner which would permit registration of its shares for sale to the public under the Securities Act (other than a registration statement relating either to the sale of securities to employees of the Company pursuant to a stock option, stock purchase or similar plan, an offering or sale of securities pursuant to a Form S-4 (or successor form) registration statement, or an SEC Rule 145 transaction), it will each such time give prompt written notice to the Holder of its intention to do so, describing such securities and specifying the form and manner and the other relevant facts involved in such proposed registration, and upon the written request of the Holder delivered to the Company within thirty (30) days after the giving of any such notice, the Company will effect the registration under the Securities Act of all Registrable Securities which the Company has been so requested to register by the Holder to the extent required to permit the disposition (in accordance with the intended methods thereof as aforesaid). The Company will use its commercially reasonable efforts to cause the Registrable Securities as to which registration shall have been so requested to be included in the securities to be covered by the registration statement proposed to be filed by the Company, all to the extent required to permit the sale or other disposition by the Holder of such Registrable Securities so registered. If any registration pursuant to this SECTION 3.2 shall be, in whole or in part, an underwritten public offering of securities, then the number of Registrable Securities to be included in such an underwriting may be reduced by the Company if and to the extent that the managing underwriter or underwriters shall be of the opinion that such inclusion would adversely affect the marketing, success or offering price of such offering as follows: first, all shares held by other persons requesting inclusion in such offering shall be reduced pro rata among such persons according to the number of shares requested by each such person to be registered, then all shares held by the Holder shall be reduced, and finally, shares to be sold by the Company shall be reduced. SECTION 3.3 FORM S-3 REGISTRATION. IF, at a time when Form S-3 (or any comparable successor form) is available for the registration of Registrable Securities and the Company is eligible to use Form S-3 (or such successor form) for such registration, the Company shall receive from the Holder a written request that the Company effect a registration on Form S-3 (or such successor form) of any of the Holder's Registrable Securities, the Company will promptly give written notice of the proposed registration to the Holder and, as soon as practicable, effect such registration and all such related qualifications and compliances as may be reasonably requested and as would permit or facilitate the sale and distribution of all Registered Securities as are specified in such request. The rights of the Holder to request registration under this SECTION 3.3 shall be in addition to all other registration rights in this Agreement. The Company shall have no obligation to effect a registration under SECTION 3.3 more than three times. SECTION 3.4. REGISTRATION EXPENSES. All Registration Expenses incurred in connection with any registration, qualification or compliance pursuant to SECTIONS 3.1, 3.2 AND 3.3 shall be borne by the Company; and all Selling Expenses shall be borne by the Holder and any other holders of the securities so registered pro rata on the basis of the number of their shares so registered. -4- SECTION 3.5. REGISTRATION PROCEDURES. (a) When the Company is required to effect the registration of any Registrable Securities under the Securities Act as provided in this ARTICLE 3, the Company shall as expeditiously as possible: (i) prepare and file with the SEC a registration statement on the appropriate form with respect to such Registrable Securities and use its best efforts to cause such registration statement to become effective as promptly as practicable, and upon the request of the Holder, keep such registration statement effective for at leastone hundred twenty (120) days; (ii) prepare and file with the SEC 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 and to comply with the provisions of the Securities Act with respect to the disposition of all Registrable Securities covered by such registration statement until the earlier of: (a) such time as all of such Registrable Securities have been disposed of in accordance with the intended methods of disposition by the Holder set forth in such registration statement; or (b) the expiration of one hundred and twenty (120) days after such registration statement becomes effective; (iii) furnish to the Holder such number of conformed copies of such registration statement and of each such amendment and supplement thereto (in each case including all exhibits), such number of copies of the prospectus included in such registration statement (including each preliminary prospectus and any summary prospectus), in conformity with the requirements of the Securities Act, such documents incorporated by reference in such registration statement or prospectus, and such other documents, as the Holder may reasonably request; (iv) use its best efforts to register and qualify all securities covered by such registration statement under such other securities or blue sky laws of such jurisdictions as the Holder shall reasonably request, and do any and all other acts and things which may be necessary or advisable to enable the Holder to consummate the disposition in such jurisdictions of its Registrable Securities covered by such registration statement, except that the Company shall not for any such purpose be required to qualify generally to do business as a foreign corporation in any jurisdiction wherein it is not so qualified, or to subject itself to taxation in any such jurisdiction, or to consent to general service of process in any such jurisdiction; -5- (v) furnish to the Holder a signed counterpart, addressed to the seller, of (A) an pinion of counsel for the Company, dated the effective date of such registration statement (and, if such registration includes an underwritten public offering, dated the date of the closing under the underwriting agreement), and (B) a "cold comfort" letter signed by the independent public accountants who have certified the Company's financial statements included in such registration statement, covering substantially the same matters with respect to such registration statement(and the prospectus included therein) and, in the case of such accountants' letter, with respect to events subsequent to the date of such financial statements, as are customarily covered in opinions of issuer's counsel and its accountants' letters delivered to underwriters in underwritten public offerings of securities and, in the case of the accountants' letter, such other financial matters, as the Holder may reasonably request; (vi) in the event of any underwritten public offering, enter into and perform its obligations under an underwriting agreement, in usual and customary form, with the managing underwriter of such offering; (vii) immediately notify the Holder, at any time when a prospectus relating thereto is required to be delivered under the Securities Act, of the happening of any event as a result of which the prospectus included in such registration statement, as then in effect, includes an untrue statement of a material fact or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading in the light of the circumstances then existing, and at the request of the Holder prepare and furnish a reasonable number of copies of a supplement to or an amendment of such prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, 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 the light of the circumstances then existing; and (viii) otherwise use its best efforts to comply with all applicable rules and regulations of the SEC, and make available to its securities holders, as soon as reasonably practicable, an earnings statement covering the period of at least twelve months, but not more than eighteen months, beginning with the first month of the first fiscal quarter after the effective date of such registration statement, which earnings statement shall satisfy the provisions of Section 11(a) of the Securities Act. The Company may require the Holder, when any registration is being effected with respect to any of the Holder's Registrable Securities, to furnish the Company such information regarding the Holder and the distribution of the securities as the Company may from time to time request -6- in writing for inclusion in the applicable registration statement as required by law or by the SEC in connection therewith. SECTION 3.6. PREPARATION; REASONABLE INVESTIGATION. In connection with the preparation and filing of each registration statement registering Registrable Securities under the Securities Act, the Company will give the Holder and any underwriter, if any, and their counsel and accountants, a reasonable opportunity to participate in the preparation of such registration statement and other documents related thereto, and will give them reasonable access to books and records and personnel such as is reasonably necessary to facilitate preparation of such documents and filing. SECTION 3.7. FURNISH INFORMATION. It shall be a condition precedent to the obligation of the Company to take any action pursuant to this ARTICLE 3 with respect to the Registrable Securities of the Holder that the Holder shall furnish to the Company such information regarding itself, the Registrable Securities held by it, and the intended method of disposition of such securities as shall be required to effect the registration of the Holder's Registrable Securities. SECTION 3.8. INDEMNIFICATION. In the event any Registrable Securities are included in a registration statement under this ARTICLE 3: (a) The Company will indemnify and hold harmless the Holder, its directors and officers, and each other person, if any, who controls the Holder within the meaning or the Securities Act, against any losses, claims, damages, liabilities and expenses (including reasonable legal fees and expenses and costs of investigation), joint or several, to which the Holder or any such director or officer or controlling person may become subject under the Securities Act or otherwise, insofar as such losses, claims, damages, liabilities or expenses (or actions or proceedings 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 securities were registered under the Securities Act, any preliminary prospectus, final prospectus or summary prospectus included therein, or any amendment or supplement thereto, or any document incorporated by reference therein, or (ii) any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and the Company will reimburse the Holder, and each such director, officer, and controlling person for any legal or any other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, liability, action or proceeding; PROVIDED THAT the Company shall not be liable to such an indemnified person in any such case to the extent (but only to the extent) that any such loss, claim, damage, liability (or action or proceeding in respect thereof) or expense arises out of or is based upon an untrue statement or alleged untrue statement or omission or alleged omission made in such registration statement, any such preliminary prospectus, final prospectus summary prospectus, amendment or supplement or any documents incorporated by reference in any of the above in reliance upon and in conformity with written information furnished by such indemnified person to the Company and designated by such person to be -7- for use therein. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Holder or any such director, officer, or controlling person and shall survive the transfer of such securities by the Holder. (b) To the extent permitted by law, the Holder will indemnify and hold harmless the Company, each of its directors, each of its officers who has signed the registration statement and each other person, if any, who controls the Company within the meaning of the Securities Act, with respect to any statement in or omission from such registration statement, any preliminary prospectus, final prospectus or summary prospectus included therein, or any amendment or supplement thereto or any documents incorporated by reference in any of the above, if such statement or omission was made solely in reliance upon and in conformity with written information furnished to the Company through an instrument duly executed by the Holder specifically stating that it is for inclusion in such registration statement, preliminary prospectus, final prospectus, summary prospectus, amendment or supplement. Such indemnity shall remain in full force and effect regardless of any investigation made by or on behalf of the Company or any such director, officer or controlling person and shall survive the transfer of such securities by the Holder; PROVIDED, HOWEVER, that the Holder's liability hereunder shall not exceed the aggregate net offering proceeds received by the Holder. (c) If the indemnification provided for in this SECTION 3.8 is unavailable or insufficient to hold harmless an indemnified party in respect of any losses, claims, damages, liabilities, expenses or action in respect thereof referred to herein, then the indemnifying party shall contribute to the amount paid or payable by such indemnified party as a result of such losses, claims, damages, liabilities, expenses or actions in such proportion as is appropriate to reflect the relative fault of the indemnifying party on the one hand, and the indemnified party on the other, in connection with the statement or omissions which resulted in such losses, claims, damages, liabilities, expenses or actions as well as any other relevant equitable considerations, including the failure to give the notice required hereunder. The relative fault of the indemnifying party and the indemnified party shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact relates to information supplied by the indemnifying party or the indemnified party and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Holder agree that it would not be just and equitable if contributions pursuant to this SECTION 3.8(c) were determined by PRO RATA allocation or by any other method of allocation which did not take account of the equitable considerations referred to above. The amount paid or payable to an indemnified party as a result of the losses, claims, damages, liabilities or action in respect thereof, referred to above, shall be deemed to include any legal or other expenses reasonably incurred by such indemnified party in connection with investigating or defending any such action or claim. Notwithstanding the contribution provisions of this SECTION 3.8, in no event shall the amount contributed by the Holder exceed the aggregate net offering proceeds received by such seller from the sale of such shares. No person guilty of a fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who is not guilty of such fraudulent misrepresentation. -8- (d) Promptly after receipt by an indemnified party of notice of the commencement of any action or proceeding involving a claim referred to in the preceding subdivisions of this SECTION 3.8, such indemnified party will, if a claim in respect thereof is to be made against an indemnifying party, give written notice to the latter of the commencement of such action; PROVIDED, THAT the failure of any indemnified party to give notice as provided herein shall not relieve the indemnifying party of its obligations under the preceding subdivisions of this SECTION 3.8. In case any such action is brought against an indemnified party, the indemnifying party shall be entitled to participate in and to assume the defense thereof, jointly with any other indemnifying party similarly notified, to the extent that it may wish, with counsel reasonably satisfactory to such indemnified party, and after notice from the indemnifying party to such indemnified party of its election so to assume the defense thereof, the indemnifying party shall not be liable to such indemnified party for any legal or other expenses subsequently incurred by the latter in connection with the defense thereof; PROVIDED, HOWEVER, that if the indemnified party or parties reasonably determine that there may be a conflict between the positions of the indemnifying party or parties and of the indemnified party or parties in conducting the defense of such action or proceeding or that there may be legal defenses available to such indemnified party or parties different from or in addition to those available to the indemnifying party or parties, then counsel for the indemnified party or parties shall be entitled to conduct the defense to the extent reasonably determined by such counsel to be necessary to protect the interests of the indemnified party or parties (and the indemnifying party or parties shall bear the reasonable legal and other expenses incurred in connection therewith). No indemnifying party will consent to entry of any judgment or enter into any settlement which does not include as an unconditional term thereof the giving by the claimant or plaintiff to such indemnified party of a full and final release from all liability in respect to such claim or litigation. SECTION 3.9. RULE 144 AND 144A. The Company will file the reports required to be filed by it under the Securities Act and the Securities Exchange Act of 1934 (the "EXCHANGE ACT') (or, if the Company is not required to file such reports, will, upon the request of the Holder, make publicly available other information necessary to comply with Rule 144(c) and Rule 144A, as applicable), and will take such further action as the Holder may reasonably request, all to the extent required from time to time to enable the Holder to sell shares of the Company without registration under the Securities Act within the limitation of the exemptions provided by (a) Rule 144 under the Securities Act, as such Rule may be amended from time to time, or (b) any similar rule or regulation hereafter adopted by the SEC. Upon the request of the Holder, the Company will deliver to the Holder (i) a verified, written statement of the President or Chief Financial Officer as to whether it has complied with such requirements; (ii) if applicable, a copy of the most recent annual or quarterly report of the Company; and (iii) such other reports and documents as the Holder may reasonably request to avail itself of Rule 144, 144A or any other rule or regulation of the SEC allowing the Holder to sell its shares of the Company without registration. -9- ARTICLE IV GENERAL SECTION 4.1. AMENDMENTS AND WAIVERS. Any term of this Agreement may be amended and the observance of any term of this Agreement may be waived (either generally or in a particular instance and either retroactively or prospectively) only with the written consent of the Company and the Holder. SECTION 4.2. NOTICES. Except as otherwise provided in this Agreement, notices and other communications under this Agreement shall be in writing and shall be delivered, or mailed by first-class mail, postage prepaid, addressed, if to the Holder, to the attention of Guenther Pfaff, addressed in the manner set forth beneath the Holder's signature below or at such address, or to the attention of such other officer, as the Holder shall have furnished to the Company in writing a notice properly given hereunder or, if to the Company, to the attention of its Secretary, addressed in the manner set forth beneath the Company's signature below, or at such other address, or to the attention of such other officer, as the Company shall have furnished to the Holder in a notice properly given hereunder. SECTION 4.3. ADJUSTMENTS. This Agreement shall apply to any shares of Stock issued to the Holder with respect to, upon exercise or conversion of, or in exchange for, any Registrable Securities, held by the Holder, by way of a stock dividend or stock split or in connection with a combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise, except for shares of capital stock which have been distributed by the Holder to the pursuant to a registration statement or Rule 144 (or any successor provision) under the Securities Act. SECTION 4.4. MISCELLANEOUS. (a) This Agreement shall be binding upon and inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto, whether so expressed or not. (b) This Agreement, together with the Note, embodies the entire agreement and understanding between the Holder and the Company and supersedes all prior agreements and understandings relating to the subject matter hereof. (c) Terms used but not defined in this Agreement shall have the meaning assigned to such terms in the Note. (d) The headings in this Agreement are for purposes of reference only and shall not limit or otherwise affect the meaning hereof. (e) This Agreement may be executed in two or more counterparts (including by facsimile), -10- each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (f) Time is of the essence under this Agreement. (g) This Agreement shall be governed by and construed under the internal laws of the State of Delaware without giving effect to conflicts of laws. Whenever possible, each provision of this Agreement shall be interpreted in such manner as to be effective and valid under applicable law, but if any provision of this Agreement shall be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating the remainder of such provision or the remaining provisions of this Agreement. -11- IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their respective duly authorized corporate officers as of the date first written above. NETWORK COMPUTING DEVICES, INC. By: Print Name: Rudolph G. Morin Title: President and CEO Attest: Print Name: Michael A. Garner Title: CFO Address for notices: 301 Ravendale Drive Mountain View, CA 94043 HOLDER: Dr. Guenther Pfaff Address for notices: Underbachstrasse 22 CH-6318 Walchwil Switzerland -12-