EXHIBIT 4.3
REGISTRATION RIGHTS AGREEMENT
▇▇▇▇▇▇▇▇.▇▇▇, INC
SEPTEMBER 1, 1998
TABLE OF CONTENTS
PAGE
1. DEFINITIONS...........................................................1
2. Registration..........................................................3
2.1 Piggyback Registrations.........................................3
2.2 Demand Registration.............................................4
2.3 Expenses of Registration........................................6
2.4 Obligations of the Company......................................6
2.5 Expiration of Registration Rights...............................10
2.6 Delay of Registration; Furnishing Information...................10
2.7 Indemnification.................................................10
2.8 Assignment of Registration Rights...............................12
2.9 Amendment of Registration Rights................................13
2.10 "Market Stand-Off" Agreement....................................13
2.11 Rule 144 Reporting..............................................13
3. INFORMATION RIGHTS....................................................14
3.1 Quarterly Reports...............................................14
3.2 Confidentiality.................................................14
4. GENERAL...............................................................15
4.1 Governing Law...................................................15
4.2 Survival........................................................15
4.3 Successors and Assigns..........................................15
4.4 Severability....................................................15
4.5 Amendment and Waiver............................................15
4.6 Delays or Omissions.............................................16
4.7 Notices.........................................................16
4.8 Attorneys' Fees.................................................16
4.9 Headings........................................................16
4.10 Entire Agreement................................................16
4.11 Counterparts....................................................16
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of September 1, 1998 (this
"Agreement"), by and among ▇▇▇▇▇▇▇▇.▇▇▇, inc., a Delaware corporation (the
"Company"), Dancing Bear Investments, Inc. ("▇▇▇▇"), ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
("Krizelman"), ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ("Paternot") and the persons listed on
Exhibit A hereto (the "Series A Investors").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, ▇▇▇▇ purchased from the Company fifty-one (51) shares of the
Company's Series D Preferred Stock and a warrant to purchase ten (10)
shares of the Company's Series E Preferred Stock (the "Warrant"), pursuant
to a Stock Purchase Agreement dated August 13, 1997 (the "Stock Purchase
Agreement");
WHEREAS, simultaneously therewith, ▇▇▇▇, the Company, the holders of
Series B Preferred Stock ("Series B Holders") and the holders of Series C
Preferred Stock ("Series C Holders," and together with the Series B
Holders, the "Series B and C Holders") entered into a Second Amended and
Restated Investor Rights Agreement, dated August 13, 1997 (the "Investor
Rights Agreement"), which provides certain registration rights to ▇▇▇▇ and
the Series B and C Holders, such registration rights terminating three
years after the date of the Initial Offering pursuant to Section 2.6 of
such agreement (the "Termination");
WHEREAS, Krizelman and Paternot each own Common Stock of the Company,
par value $0.001 per share ("Common Stock"), and do not possess
registration rights;
WHEREAS, the Series A Investors own Series A Preferred Stock, par
value $0.001 per share, of the Company ("Series A Preferred Stock") and do
not possess registration rights;
WHEREAS, the parties hereto desire to provide certain registration
rights, to be effective upon an Initial Offering (as defined herein), with
respect to the Common Stock (i) held by Krizelman and Paternot, (ii) issued
upon the conversion of Series A Preferred Stock held by each holder
thereof, and (iii) issued upon conversion of the Series D Preferred Stock,
Series E Preferred Stock or upon exercise of the Warrant held by ▇▇▇▇,
following Termination of existing registration rights held by ▇▇▇▇.
NOW, THEREFORE, in consideration of the market stand-off provisions
contained herein restricting the sale of securites of the Company held by
the parties hereto, amendment of the Warrant to be exercisable for a fixed
number of shares of Common Stock following an Initial Offering, and the
mutual promises, representations, warranties, covenants and conditions set
forth in this Agreement, the parties hereto agree as follows:
1. DEFINITIONS.
As used in this Agreement, the following terms shall have the
following respective meanings:
"COMMON STOCK" has the meaning given to it in the recitals hereto.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"HOLDER" means Krizelman, Paternot, ▇▇▇▇ and the Series A Investors,
and, pursuant to Section 2.8, their successors and assigns owning of record
Registrable Securities that have not been sold to the public.
"INITIAL OFFERING" means the Company's first firm commitment
underwritten public offering of its Common Stock registered under the
Securities Act raising gross proceeds for the Company in excess of Fifteen
Million Dollars ($15,000,000).
"INVESTOR RIGHTS AGREEMENT" has the meaning given to it in the
recitals hereto.
"REGISTER," "REGISTERED," and "REGISTRATION" refer to a registration
effected by preparing and filing a registration statement in compliance
with the Securities Act, and the declaration or ordering of effectiveness
of such registration statement or document.
"REGISTRABLE SECURITIES" means (i) Common Stock; (ii) Common Stock
issued or issuable upon conversion of the Series A Preferred Stock; (iii)
any Common Stock issued upon the conversion of any shares of Series D
Preferred Stock; (iv) any Common Stock issued upon exercise of the Warrant
(or upon the conversion of Series E Preferred Stock which was issued upon
exercise of the Warrant); and (v) any Common Stock of the Company 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, such above-described
securities. Notwithstanding the foregoing, Registrable Securities shall not
include any securities that have been sold by a person to the public either
pursuant to a registration statement or Rule 144 or any successor rule or
sold in a private transaction in which the transferor's rights under
Section 2 of this Agreement are not assigned.
"REGISTRABLE SECURITIES THEN OUTSTANDING" shall be the number of
shares determined by calculating the total number of shares of the
Company's Common Stock that are Registrable Securities and either (i) are
then issued and outstanding or (ii) are issuable pursuant to then
exercisable or convertible securities.
"REGISTRATION EXPENSES" means all expenses incurred by the Company in
complying with Sections 2.1 and 2.2, including, without limitation, all
registration and filing fees, printing expenses, fees and disbursements of
counsel for the Company, reasonable fees and disbursements of a single
special counsel for the Holders, blue sky fees and expenses and the expense
of any special audits incident to or required by any such registration (but
excluding the compensation of regular employees of the Company which shall
be paid in any event by the Company).
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SELLING EXPENSES" means all underwriting discounts and selling
commissions applicable to the sale.
"SERIES A INVESTORS" has the meaning given to it in the recitals
hereto.
"SERIES A PREFERRED STOCK" has the meaning given to it in the recitals
hereto.
"SERIES B HOLDERS" has the meaning given to it in the recitals hereto.
"SERIES B PREFERRED STOCK" means shares of Series B Preferred Stock,
par value $0.001 per share, of the Company.
"SERIES B AND C HOLDERS" has the meaning given to it in the recitals
hereto.
"SERIES C HOLDERS" has the meaning given to it in the recitals hereto.
"SERIES D PREFERRED STOCK" means the shares of Series D Preferred
Stock, par value $0.001 per share, of the Company.
"SERIES E PREFERRED STOCK" has the meaning given to it in the recitals
hereto.
"SEC" or "COMMISSION" means the Securities and Exchange Commission.
"STOCK PURCHASE AGREEMENT" has the meaning given to it in the recitals
hereto.
"WARRANT" has the meaning given to it in the recitals hereto.
2. REGISTRATION.
2.1 PIGGYBACK REGISTRATIONS. Except in connection with an Initial
Offering, the Company shall notify all Holders in writing at least fifteen
(15) days prior to the filing of any registration statement under the
Securities Act for purposes of a public offering of securities (other than
non-convertible debt securities) of the Company (including, but not limited
to, registration statements relating to secondary offerings of securities
of the Company, but excluding registration statements relating to employee
benefit plans or with respect to corporate reorganizations or shares sold
in connection with an acquisition, including other transactions under Rule
145 of the Securities Act) and will afford each such Holder an opportunity
to include in such registration statement all or part of such Registrable
Securities held by such Holder. Each Holder desiring to include in any such
registration statement all or any part of the Registrable Securities held
by it shall, within fifteen (15) days after the above-described notice from
the Company, so notify the Company in writing. Such notice shall state the
maximum number of Registrable Securities intended to be included in such
registration and the intended method of disposition of the Registrable
Securities by such Holder. If a Holder decides not to request inclusion of
all of its Registrable Securities in any registration statement thereafter
filed by the Company, such Holder shall nevertheless continue to have the
right to include any Registrable Securities in any subsequent such
registration statement or registration statements as may be filed by the
Company with respect to offerings of its securities, all upon the terms and
conditions set forth herein. Notwithstanding the foregoing, nothing in this
Section 2.1 shall be deemed to convey upon any Holder the right to include
in any registration statement filed in connection with an Initial Offering
all or part of such Holder's Registrable Securities.
(a) UNDERWRITING. If the registration statement under which the
Company gives notice under this Section 2.1 is for an underwritten
offering, the Company shall so advise the Holders. In such event, the right
of any such Holder to be included in a registration pursuant to this
Section 2.1 shall be conditioned upon such Holder's participation in such
underwriting and the inclusion of such Holder's Registrable Securities in
the underwriting to the extent provided herein; provided that each such
Holder shall agree to reasonable limitations on the ability to withdraw
from such underwriting. Each Holder proposing to distribute its Registrable
Securities through such underwriting shall enter into a custody agreement
and power of attorney, authorizing the Company to (i) sell the Registrable
Securities to be offered by such Holders and (ii) execute on the Holder's
behalf an underwriting agreement in customary form with the underwriter or
underwriters selected for such underwriting by the Company. If any Holder
is or will be unable to deliver any document reasonably required by the
underwriters in connection with the sale of such Registrable Securities,
including, but not limited to legal opinions and other closing
certificates, then the Company shall have no obligation to include such
Registrable Securities in such registration. Notwithstanding any other
provision of the Agreement, if the underwriter determines in good faith
that marketing factors require a limitation of the number of shares to be
underwritten, the number of shares that may be included in the underwriting
shall be allocated as follows: first, to the Company for its own account;
second, to the holders under the Investor Rights Agreement and the Holders
on a pro rata basis based on the total number of Registrable Securities
held by such persons; and third, to any stockholder of the Company (other
than a Holder or a holder under the Investor Rights Agreement) on a pro
rata basis. No such reduction shall reduce the securities being offered by
the Company for its own account to be included in the registration and
underwriting. In no event will shares of any other selling stockholder be
included in such registration which would reduce the number of shares which
may be included by Holders, and holders under the Investor Rights
Agreement, without the written consent of Holders, and holders under the
Investor Rights Agreement of not less than two-thirds (66 2/3%) of the
Registrable Securities proposed to be sold in the offering.
(b) RIGHT TO TERMINATE REGISTRATION. The Company shall have the
right to terminate or withdraw any registration initiated by it under this
Section 2.1 prior to the effectiveness of such registration, whether or not
any Holder has elected to include securities in such registration, in which
event the Company shall give written notice to all Holders of record of
Registrable Securities. The Registration Expenses of such withdrawn
registration shall be borne by the Company in accordance with Section 2.3
hereof.
(c) LIMIT ON NUMBER. The Company shall not have any further
obligations under this Section 2.1 if the Company has already effected five
(5) registrations for any Holders pursuant to this Section 2.1. No rights
conveyed to a Holder in this Agreement shall be in duplication of any
rights conveyed to a holder for the same Registrable Securities pursuant to
the Investor Rights Agreement, and no such Holder shall be entitled to
Demand or Piggyback Registration Rights under both such agreements for the
same Registrable Securities.
2.2 DEMAND REGISTRATION. Subject to Section 2.2 (c), at any time and
from time to time after the closing of an Initial Offering, the Holders of
(x) twenty-five percent (25%) of all of the Registrable Securities or (y)
fifty percent (50%) of the sum of the total number of Registrable
Securities originally issued as Common Stock and the member of shares of
Common Stock issuable in respect of the Series A Preferred Stock, shall
have the right to require the Company to file a registration statement
under the Securities Act covering all or part of their respective
Registrable Securities, by delivering a written request therefor to the
Company specifying the number of Registrable Securities to be included in
such registration by such Holders and the intended method of distribution
thereof. All requests pursuant to this Section 2.2 are referred to herein
as "Demand Registration Requests," and the registrations requested are
referred to herein as "Demand Registrations." As promptly as practicable,
but no later than ten (10) days after receipt of a Demand Registration
Request, the Company will:
(a) promptly give written notice of the proposed registration,
and any related qualification or compliance, to all other Holders; and
(b) as soon as practicable, effect such registration and all such
qualifications and compliances as may be so requested and as would permit
or facilitate the sale and distribution of all or such portion of such
Holder's or Holders' Registrable Securities as are specified in such
request, together with all or such portion of the Registrable Securities of
any other Holder or Holders joining in such request as are specified in a
written request given within fifteen (15) days after receipt of such
written notice from the Company; provided, however, that the Company shall
not be obligated to effect any such registration, qualification or
compliance pursuant to this Section 2.2:
(i) if the Holders, together with the holders of any other
securities of the Company entitled to inclusion in such registration,
propose to sell Registrable Securities and such other securities (if any)
at an aggregate price to the public of less than $5,000,000; or
(ii) if the Company shall furnish to the Holders a
certificate signed by the Chairman of the Board of Directors 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
stockholders for such Registration to be effected at such time, in which
event the Company shall have the right to defer the filing of the
registration statement for a period of not more than one hundred twenty
(120) days after receipt of the request of the Holder or Holders under this
Section 2.2; provided that such right to delay a request shall be exercised
by the Company no more than once in any one-year period, or
(iii) if the Company has already effected four (4) Demand
Registrations for the Holders pursuant to this Section 2.2;
(iv) in any particular jurisdiction in which the Company
would be required to qualify to do business or to execute a general consent
to service of process in effecting such registration, qualification or
compliance; or
(v) if the registration statement with respect to a Demand
Registration would be declared effective within a period of 180 days after
the effective date of the registration statement pertaining to the Initial
Offering or within a period of ninety days (90) after the effective date of
the registration statement pertaining to subsequent public offerings (other
than registration statements relating to employee benefit plans or Rule 145
transactions).
(c) If the selling Holders intend to distribute the Registrable
Securities covered by their request by means of an underwriting, they shall
so advise the Company as a part of their request made pursuant to this
Section 2.2 and the Company shall include such information in the written
notice referred to in Section 2.2(a). In such event, the right of any
Holder to include its Registrable Securities in such registration shall be
conditioned upon such Holder's participation in such underwriting and the
inclusion of such Holder's Registrable Securities in the underwriting
(unless otherwise mutually agreed by a majority in interest of the selling
Holders and such Holder) to the extent provided herein. All Holders
proposing to distribute their securities through such underwriting shall
enter into an underwriting agreement in customary form with the underwriter
or underwriters selected for such underwriting by a majority in interest of
the selling Holders (which underwriter or underwriters shall be reasonably
acceptable to the Company). If any Holder is or will be unable to deliver
any document reasonably required by the underwriters in connection with the
sale of such Registrable Securities, including legal opinions and closing
certificates, then the Company shall have no obligation to include such
Registrable Securities in such registration. Notwithstanding any other
provision of this Section 2.2, if the underwriter advises the Company that
marketing factors require a limitation of the number of securities to be
underwritten then the Company shall so advise all Holders of Registrable
Securities which would otherwise be underwritten pursuant hereto, and the
number of shares that may be included in the underwriting shall be
allocated to the Holders of such Registrable Securities (and to any holders
of registrable securities making a concurrent Demand Registration Request
pursuant to Section 2.2 of the Investor Rights Agreement) on a pro rata
basis based on the number of Registrable Securities proposed to be
registered by all such selling Holders. Any Registrable Securities excluded
or withdrawn from such underwriting shall be withdrawn from the
registration.
2.3 EXPENSES OF REGISTRATION. Except as specifically provided herein,
all Registration Expenses incurred in connection with any registration
under Section 2.1 or Section 2.2 shall be borne by the Company. All Selling
Expenses incurred in connection with any registrations hereunder shall be
borne by the holders of the securities so registered pro rata on the basis
of the number of shares so registered. The Company shall not, however, be
required to pay for expenses of any registration proceeding begun pursuant
to Section 2.2, the request of which has been subsequently withdrawn by the
requesting Holders unless (i) the withdrawal is based upon material adverse
information concerning the Company of which such Holders were not aware at
the time of such request, or (ii) the Holders of a majority of Registrable
Securities agree to forfeit their right to one requested registration
pursuant to Section 2.2, in which event such right shall be forfeited by
all Holders. If the Holders are required to pay the Registration Expenses,
such expenses shall be borne by the holders of securities (including
Registrable Securities) requesting such registration in proportion to the
number of shares for which registration was requested. If the Company is
required to pay the Registration Expenses of a withdrawn offering pursuant
to clause (i) above, then the Holders shall not forfeit their rights
pursuant to Section 2.2 to a registration.
2.4 OBLIGATIONS OF THE COMPANY. Whenever required to effect the
registration of any Registrable Securities, the Company shall, as
expeditiously as reasonably possible:
(a) Prepare and file with the SEC a registration statement with
respect to such Registrable Securities and use all reasonable efforts to
cause such registration statement to become effective and, upon the request
of the Holders of a majority of the Registrable Securities registered
thereunder, keep such registration statement effective for up to one
hundred eighty (180) days or, if earlier, until the Holder or Holders have
completed the distribution related thereto.
(b) Prepare and file with the SEC such amendments and supplements
to such registration statement and the prospectus used in connection with
such registration statement as may be necessary to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such registration statement.
(c) Furnish (without charge) to the selling Holders such number
of copies of the registration statement, each amendment and supplement
thereto (in each case including all exhibits) and the prospectus included
in such registration statement, including each preliminary prospectus, in
conformity with the requirements of the Securities Act, and such other
documents as they may reasonably request in order to facilitate the
disposition of Registrable Securities owned by them.
(d) Use all reasonable efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be reasonably
requested by the Holders, provided that the Company 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.
(e) In the event of any underwritten public offering, enter into
and perform its obligations under an underwriting agreement, in usual and
customary form of the managing underwriter(s) of such offering. Each Holder
participating in such underwriting shall also enter into and perform its
obligations under such an agreement.
(f) Promptly notify each Holder selling Registrable Securities,
and every other holder of securities, if any, covered by such registration
statement and each managing underwriter, if any: (i) when the registration
statement, any pre-effective amendment, the prospectus or any prospectus
supplement related thereto or post-effective amendment to the registration
statement has been filed and, with respect to the registration statement or
any post-effective amendment, when the same has become effective; (ii) of
any request by the Commission or state securities authority for amendments
or supplements to the registration statement or the prospectus related
thereto or for additional information; (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of the
registration statement or the initiation of any proceedings for the
purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose; and (v)
of the existence of any fact of which the Company becomes aware which
results in the registration statement, the prospectus related thereto or
any document incorporated therein by reference containing an untrue
statement of a material fact or omitting to state a material fact required
to be stated therein or necessary to make any statement therein not
misleading.
(g) Furnish, at the request of a majority of the Holders
participating in the registration, on the date that such Registrable
Securities are delivered to the underwriters for sale, if such securities
are being sold through underwriters or, if such securities are not being
sold through underwriters, on the date that the registration statement with
respect to such securities becomes effective: (i) an opinion, dated as of
such date, of the counsel representing the Company for the purposes of such
registration, in form and substance as is customarily given to the managing
underwriter in an underwritten public offering addressed to the
underwriters, if any, and to the Holders requesting registration of
Registrable Securities, and (ii) a "cold comfort" letter dated as of such
date, from the independent certified public accountants of the Company, in
form and substance as is customarily given by independent certified public
accountants to underwriters in an underwritten public offering addressed to
the underwriters, if any, and if permitted by applicable accounting
standards, to the Holders requesting registration of Registrable
Securities.
(h) Comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders, as soon
as reasonably practicable after the effective date of the registration
statement (and in any event within 16 months thereafter), an earnings
statement (which need not be audited) covering the period of at least
twelve consecutive months beginning with the first day of the Company's
first calendar quarter after the effective date of the registration
statement, which earnings statement shall satisfy the provisions of Section
11(a) of the Securities Act and Rule 158 thereunder.
(i) (i) Cause all such Registrable Securities covered by such
registration statement to be listed on the principal securities exchange on
which similar securities issued by the Company are then listed (if any), if
the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) if no similar securities are then so
listed, cause all such Registrable Securities to be listed on a national
securities exchange, secure designation of all such Registrable Securities
as a National Association of Securities Dealers, Inc. Automated Quotation
System ("NASDAQ") "national market system security" within the meaning of
Rule 11Aa2-1 of the Commission, secure NASDAQ authorization for such shares
and, without limiting the generality of the foregoing, take all actions
that may be reasonably required by the Company as the issuer of such
Registrable Securities in order to facilitate the managing underwriter's
arranging for the registration of at least two market makers as such with
respect to such shares with the National Association of Securities Dealers,
Inc.
(j) Provide and cause to be maintained a transfer agent and
registrar for all such Registrable Securities covered by such registration
statement not later than the effective date of such registration statement.
(k) Use its best efforts to obtain the withdrawal of any order
suspending the effectiveness of the registration statement.
(l) Provide a CUSIP number for all Registrable Securities, not
later than the effective date of the registration statement.
(m) Make reasonably available its employees and personnel and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's businesses and the requirements of the
marketing process) in the marketing of Registrable Securities in any
underwritten offering.
(n) Promptly prior to the filing of any document which is to be
incorporated by reference into the registration statement or the prospectus
(after the initial filing of such registration statement) provide copies of
such document to counsel to the selling Holders of Registrable Securities
and to the managing underwriter, if any, and make the Company's
representatives reasonably available for discussion of such document and
make such changes in such document concerning the selling Holders prior to
the filing thereof as counsel for such selling Holders or underwriters may
reasonably request.
(o) Cooperate with the selling Holders of Registrable Securities
and the managing underwriter, if any, to facilitate the timely preparation
and delivery of certificates not bearing any restrictive legends
representing the Registrable Securities to be sold, and cause such
Registrable Securities to be issued in such denominations and registered in
such names in accordance with the underwriting agreement prior to any sale
of Registrable Securities to the underwriters or, if not an underwritten
offering, in accordance with the instructions of the selling Holders of
Registrable Securities at least three business days prior to any sale of
Registrable Securities.
(p) Take all such other commercially reasonable actions as are
necessary or advisable in order to expedite or facilitate the disposition
of such Registrable Securities.
The Company may require as a condition precedent to the Company's
obligations under this Section 2.5 that each seller of Registrable
Securities as to which any registration is being effected furnish the
Company such information regarding such seller and the distribution of such
securities as the Company may from time to time reasonably request provided
that such information shall be used only in connection with such
registration.
Each Holder of Registrable Securities acknowledges that in connection
with any underwritten offering, the underwriters may require an
over-allotment option covering up to 15% of the shares of capital stock
sold in the underwriter offering. The Company may at its option (a) provide
the shares subject to the over-allotment option (provided that all of the
Registrable Securities to be included in the underwriter offering are sold
in the initial underwritten offering) or (b) determine that up to 15% of
each Holder's Registrable Securities to be sold in the underwritten
offering shall not be included in the initial underwriter offering but
shall be reserved to satisfy the over-allotment option and the Holders of
Registrable Securities hereby agree to take all actions reasonably
necessary to comply with the Company's determination.
Each Holder of Registrable Securities agrees that upon receipt of any
notice from the Company of the happening of any event of the kind described
in Section 2.4(f)(v), such Holder will discontinue such Holder's
disposition of Registrable Securities pursuant to the registration
statement covering such Registrable Securities until such Holder's receipt
of the copies of the supplemented or amended prospectus contemplated by
Section 2.4(f)(v) and, if so directed by the Company, will deliver to the
Company (at the Company's expense) all copies, other than permanent file
copies, then in such Holder's possession of the prospectus covering such
Registrable Securities that was in effect at the time of receipt of such
notice. In the event the Company shall give any such notice, the applicable
period mentioned in Section 2.4(a) shall be extended by the number of days
during such period from and including the date of the giving of such notice
to and including the date when each seller of any Registrable Securities
covered by such registration statement shall have received the copies of
the supplemented or amended prospectus contemplated by Section 2.4(f).
If any such registration statement or comparable statement under "blue
sky" laws refers to any Holder by name or otherwise as the Holder of any
securities of the Company, then such Holder shall have the right to require
(i) the insertion therein of language, in form and substance satisfactory
to such Holder and the Company, to the effect that the holding by such
Holder of such securities is not to be construed as a recommendation by
such Holder of the investment quality of the Company's securities covered
thereby and that such holding does not imply that such Holder will assist
in meeting any future financial requirements of the Company, or (ii) in the
event that such reference to such Holder by name or otherwise is not in the
judgment of the Company, as advised by counsel, required by the Securities
Act or any similar federal statute or any state "blue sky" or securities
law then in force, the deletion of the reference to such Holder.
2.5 EXPIRATION OF REGISTRATION RIGHTS. A Holder's registration rights
shall expire if (i) the Company has completed its Initial Offering and is
subject to the provisions of the Exchange Act, and (ii) all Registrable
Securities held by and issued to such Holder may be sold under Rule 144
during any ninety (90) day period.
2.6 DELAY OF REGISTRATION; FURNISHING INFORMATION.
(a) No Holder shall have any right to obtain or seek an
injunction restraining or otherwise delaying any such registration as the
result of any controversy that might arise with respect to the
interpretation or implementation of this Section 2.
(b) It shall be a condition precedent to the obligations of the
Company to take any action pursuant to Section 2.1 or 2.2 that the selling
Holders shall furnish to the Company such information regarding themselves,
the Registrable Securities held by them and the intended method of
disposition of such securities as shall be required to effect the
registration of their Registrable Securities.
2.7 INDEMNIFICATION. In the event any Registrable Securities are
included in a registration statement under Sections 2.1 or 2.2:
(a) To the extent permitted by law, the Company will indemnify
and hold harmless each Holder, the partners, officers, directors and legal
counsel of each Holder, any underwriter (as defined in the Securities Act)
for such Holder and each person, if any, who controls such Holder or
underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities (joint or several) to
which they may become subject under the Securities Act, the Exchange 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") by the Company: (i) any untrue statement or alleged untrue
statement of a material fact contained in such registration statement,
including any preliminary prospectus or final prospectus contained therein
or any amendments or supplements thereto, (ii) 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 (iii) any
violation or alleged violation by the Company of the Securities Act, the
Exchange Act, any state securities law or any rule or regulation
promulgated under the Securities Act, the Exchange Act or any state
securities law in connection with the offering covered by such registration
statement; and the Company will reimburse each such Holder, partner,
officer or director, underwriter or controlling person for any 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 indemnity agreement contained in this Section 2.7(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 the Company, which consent shall not be unreasonably withheld or
delayed, nor shall the Company be liable in any such case for any such
loss, claim, damage, liability or action to the extent that it arises out
of or is based upon a Violation which occurs in reliance upon and in
conformity with written information furnished expressly for use in
connection with such registration by such Holder, partner, officer,
director, underwriter or controlling person of such Holder.
(b) To the extent permitted by law, each Holder will, if
Registrable Securities held by such Holder are included in the securities
as to which such registration qualifications or compliance is being
effected, indemnify and hold harmless the Company, each of its directors,
its officers, and legal counsel and each person, if any, who controls the
Company within the meaning of the Securities Act, any underwriter and any
other Holder selling securities under such registration statement or any of
such other Holder's partners, directors or officers or any person who
controls such Holder, against any losses, claims, damages or liabilities
(joint or several) to which the Company or any such director, officer,
controlling person, underwriter or other such Holder, or partner, director,
officer or controlling person of such other Holder may become subject under
the Securities Act, the Exchange 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 under
an instrument duly executed by such Holder and stated to be specifically
for use in connection with such registration; and each such Holder will
reimburse any legal or other expenses reasonably incurred by the Company or
any such director, officer, controlling person, underwriter or other
Holder, or partner, officer, director or controlling person of such other
Holder in connection with investigating or defending any such loss, claim,
damage, liability or action if it is judicially determined that there was
such a Violation; provided, however, that the indemnity agreement contained
in this Section 2.7(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 the Holder, which consent shall not be
unreasonably withheld or delayed; provided further, that in no event shall
any indemnity under this Section 2.7 exceed the proceeds from the offering
received by such Holder.
(c) Promptly after receipt by an indemnified party under this
Section 2.7 of notice of the commencement of any action (including any
governmental action), such indemnified party will, if a claim in respect
thereof is to be made against any indemnifying party under this Section
2.7, deliver to the indemnifying party a written notice of the commencement
thereof and the indemnifying party shall have the right to participate in
and, to the extent the indemnifying party so desires, jointly with any
other indemnifying party similarly noticed, to assume the defense thereof
with counsel mutually satisfactory to the parties; provided, however, that
an indemnified party shall have the right to retain its own counsel, with
the fees and expenses to be paid by the indemnifying party, if
representation of such indemnified party by the counsel retained by the
indemnifying party would be inappropriate due to actual or potential
differing interests or conflicting defenses 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 materially
prejudicial to its ability to defend such action, shall relieve such
indemnifying party of any liability to the indemnified party under this
Section 2.7, but the omission to deliver written notice to the indemnifying
party will not relieve it of any liability that it may have to any
indemnified party otherwise than under this Section 2.7.
(d) If the indemnification provided for in this Section 2.7 is
held by a court of competent jurisdiction to be unavailable to an
indemnified party with respect to any losses, claims, damages or
liabilities referred to herein, the indemnifying party, in lieu of
indemnifying such indemnified party thereunder, shall to the extent
permitted by applicable law contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability
in such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the
other in connection with the Violation(s) that resulted in such loss,
claim, damage or liability, as well as any other relevant equitable
considerations. The relative fault of the indemnifying party and of the
indemnified party shall be determined by a court of law by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission to state a material fact relates to
information supplied by the indemnifying party or by the indemnified party
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission; provided
that, in no event shall any contribution by a Holder hereunder exceed the
proceeds from the offering received by such Holder.
(e) The obligations of the Company and Holders under this Section
2.7 shall survive completion of any offering of Registrable Securities in a
registration statement. No indemnifying party, in the defense of any such
claim or litigation, shall, except with the consent of each indemnified
party, consent to entry of any judgment or enter into any settlement which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all
liability in respect to such claim or litigation. In the event any offering
of Registrable Securities is underwritten, and the underwriting agreement
provides for indemnification and/or contribution by the Company and the
Holders offering securities thereunder, the indemnification and/or
contribution obligations of the Company and the Holders hereunder shall in
no event exceed the obligations of the parties set forth in such
underwriting agreement.
2.8 ASSIGNMENT OF REGISTRATION RIGHTS. The rights to cause the Company
to register Registrable Securities pursuant to this Section 2 may be
assigned by a Holder to a transferee or assignee of Registrable Securities
which (i) is a Holder's family member or trust for the benefit of an
individual Holder, or (ii) acquires at least ten thousand (10,000) shares
of Registrable Securities prior to conversion to Common Stock or one
hundred thousand (100,000) shares of Registrable Securities issued upon
conversion of the Shares (as adjusted for stock splits, combinations and
the like that occur after the original issuance of such shares); provided,
however, (A) the transferor shall, within ten (10) days after such
transfer, furnish to the Company written notice of the name and address of
such transferee or assignee and the securities with respect to which such
registration rights are being assigned, and (B) such transferee shall agree
to be subject to all restrictions set forth in this Agreement; provided,
further, that such transfer shall have been made in compliance with the
Bylaws, as applicable.
2.9 AMENDMENT OF REGISTRATION RIGHTS. Any provision of this Section 2
may be amended and the observance thereof may be waived (either generally
or in a particular instance and either retroactively or prospectively) only
with the written consent of the Company and the Holders of at least a
majority in interest of the Registrable Securities. Any amendment or waiver
effected in accordance with this Section 2.9 shall be binding upon each
Holder and the Company. By acceptance of any benefits under this Section 2,
Holders hereby agree to be bound by the provisions hereunder.
2.10 "MARKET STAND-OFF" AGREEMENT. If requested by the Company as the
representative of the underwriters of Common Stock (or other securities) of
the Company, each Holder shall not sell or otherwise transfer or dispose of
any Shares of Common Stock (or other securities) of the Company held by
each such Holder (other than those included in the registration) for a
period specified by the representative of the underwriters not to exceed a
period of seven (7) days prior to and one hundred eighty (180) days
following the effective date of a registration statement of the Company
filed under the Securities Act pertaining to the Company's Initial Offering
or a period of seven (7) days prior to and ninety (90) days following the
effective date of any other registration statement of the Company filed
under the Securities Act (other than registration statements relating to
employee benefit plans and transactions under Rule 145 of the Securities
Act), provided that all executive officers and directors of the Company
enter into similar agreements. The Company will also agree to a lock-up of
the same duration if requested by the underwriters of the Common Stock.
The obligations described in this Section 2.10 shall not apply to a
registration relating solely to employee benefit plans on Form S-1 or Form
S-8 or similar forms that may be promulgated in the future, or a
registration relating solely to shares issued in an acquisition or pursuant
to a Commission Rule 145 transaction on Form S-4 or similar forms that may
be promulgated in the future. The Company may impose stop-transfer
instructions with respect to the shares of Common Stock (or other
securities) subject to the foregoing restriction until the end of said one
hundred eighty (180) day period.
2.11 RULE 144 REPORTING. With a view to making available to the
Holders the benefits of certain rules and regulations of the SEC which may
permit the sale of the Registrable Securities to the public without
registration, the Company agrees to use its best efforts to:
(a) Make and keep public information available, as those terms
are understood and defined in SEC Rule 144 or any similar or analogous rule
promulgated under the Securities Act, at all times after the effective date
of the first registration filed by the Company for an offering of its
securities to the general public;
(b) File with the SEC, in a timely manner, all reports and other
documents required of the Company under the Exchange Act;
(c) So long as a Holder owns any Registrable Securities, furnish
to such Holder forthwith upon request: a written statement by the Company
as to its compliance with the reporting requirements of Rule 144 of the
Securities Act and of the Exchange Act (at any time after it has become
subject to such reporting requirements); a copy of the most recent annual
or quarterly report of the Company; and such other reports and documents as
a Holder may reasonably request in availing itself of any rule or
regulation of the SEC allowing it to sell any such securities without
registration.
3. INFORMATION RIGHTS.
3.1 QUARTERLY REPORTS. So long as a Holder owns at least ten thousand
(10,000) shares of the Shares or one hundred thousand (100,000) shares of
the Common Stock issued upon conversion of the Shares (as adjusted for
stock splits, combinations and the like that occur after the original
issuance of such shares), as soon as practicable after the end of each
fiscal quarter of the Company, and in any event within ninety (90) days
thereafter, the Company will furnish to such Holder an unaudited balance
sheet of the Company, as at the end of such fiscal quarter, and an
unaudited consolidated statement of income and an unaudited consolidated
statement of cash flows of the Company, for such quarter, all prepared in
accordance with generally accepted accounting principles consistently
applied. This obligation shall expire and terminate as to each Holder on
the effective date of the first registration statement for the public
offering of the Company's Common Stock.
3.2 CONFIDENTIALITY.
(a) Each Holder agrees not to disclose to any third party or use
Confidential Information (as hereinafter defined) of the Company for its
own use or for any purpose except to evaluate and enforce its equity
investment in the Company. Each Holder shall undertake to treat such
Confidential Information in a manner consistent with the treatment of its
own information of similar proprietary nature and agrees that it shall
protect the confidentiality of Confidential Information. Each transferee of
any Holder who receives Confidential Information shall agree to be bound by
such provisions.
(b) "Confidential Information" means any reports provided
pursuant to Section 3.1 and any other information disclosed by the Company
either directly or indirectly in a writing stamped "Confidential" or
"Proprietary" or, if disclosed orally, which is promptly confirmed in
writing to be Confidential Information. Confidential Information does not
include information, technical data or know-how which (i) is in the
Holder's possession at the time of disclosure as shown by such Holder's
files and records immediately prior to the time of disclosure; (ii) is
generally known not as a result of any action or inaction of the Holder;
(iii) is disclosed to a Holder on a non-confidential basis by a third party
having a legal right to disclose such information; or (iv) is approved for
release by written authorization of Company. The provisions of this Section
shall not apply (x) to the extent that a Holder is required to disclose
Confidential Information pursuant to any law, statute, rule or regulation
or any order or legal process of any court; or (y) to the disclosure of
Confidential Information to a Holder's counsel, accountants or other
professional advisors.
4. GENERAL.
4.1 GOVERNING LAW. This Agreement shall be governed by and construed
under the laws of the State of New York without giving effect to conflicts
of laws principles.
4.2 SURVIVAL. The representations, warranties, covenants, and
agreements made herein shall survive any investigation made by any Holder
and the closing of the transactions contemplated hereby. All statements as
to factual matters contained in any certificate or other instrument
delivered by or on behalf of the Company pursuant hereto in connection with
the transactions contemplated hereby shall be deemed to be representations
and warranties by the Company hereunder solely as of the date of such
certificate or instrument.
4.3 SUCCESSORS AND ASSIGNS. Except as otherwise expressly provided
herein, the provisions hereof shall inure to the benefit of, and be binding
upon, the successors, assigns, heirs, executors, and administrators of the
parties hereto and shall inure to the benefit of and be enforceable by each
person who shall be a holder of Registrable Securities from time to time;
provided, however, that prior to the receipt by the Company of adequate
written notice of the transfer of any Registrable Securities specifying the
full name and address of the transferee, the Company may deem and treat the
person listed as the holder of such shares in its records as the absolute
owner and holder of such shares for all purposes, including the payment of
dividends or any redemption price.
4.4 SEVERABILITY. In case any provision of the Agreement shall be
invalid, illegal, or unenforceable, the validity, legality, and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
4.5 AMENDMENT AND WAIVER.
(a) Except as otherwise expressly provided, this Agreement may be
amended or modified only upon the written consent of the Company and the
holders of fifty-one percent (51%) of the Registrable Securities.
(b) Except as otherwise expressly provided, the obligations of
the Company and the rights of the Holders under this Agreement may be
waived only with the written consent of fifty-one percent (51%) of the
Registrable Securities.
(c) Notwithstanding the foregoing, this Agreement may be amended
with only the written consent of the Company to include additional
purchasers of Shares as "Holders" and parties hereto.
4.6 DELAYS OR OMISSIONS. It is agreed that no delay or omission to
exercise any right, power, or remedy accruing to any Holder, upon any
breach, default or noncompliance of the Company under this Agreement shall
impair any such right, power or remedy, nor shall it be construed to be a
waiver of any such breach, default or noncompliance, or any acquiescence
therein, or of any similar breach, default or noncompliance thereafter
occurring. It is further agreed that any waiver, permit, consent, or
approval of any kind or character on any Holder's part of any breach,
default or noncompliance under the Agreement or any waiver on such Holder's
part of any provisions or conditions of this Agreement must be in writing
and shall be effective only to the extent specifically set forth in such
writing. All remedies, either under this Agreement, by law, or otherwise
afforded to Holders, shall be cumulative and not alternative.
4.7 NOTICES. All notices required or permitted hereunder shall be in
writing and shall be deemed effectively given: (i) upon personal delivery
to the party to be notified, (ii) when sent by confirmed facsimile if sent
during normal business hours of the recipient; if not, then on the next
business day, (iii) five (5) days after having been sent by registered or
certified mail, return receipt requested, postage prepaid, or (iv) two (2)
days after deposit with a recognized overnight courier, specifying next day
delivery, with written verification of receipt. All communications shall be
sent to the party to be notified at the address as set forth on Exhibit A
hereto or at such other address as such party may designate by ten (10)
days advance written notice to the other parties hereto.
4.8 ATTORNEYS' FEES. In the event that any dispute among the parties
to this Agreement should result in litigation, the prevailing party in such
dispute shall be entitled to recover from the losing party all fees, costs
and expenses of enforcing any right of such prevailing party under or with
respect to this Agreement, including without limitation, such reasonable
fees and expenses of attorneys and accountants, which shall include,
without limitation, all fees, costs and expenses of appeals.
4.9 HEADINGS. The titles of the sections and subsections of this
Agreement are for convenience of reference only and are not to be
considered in construing this Agreement.
4.10 ENTIRE AGREEMENT. This Agreement constitutes the full and entire
understanding and agreement between the parties with regard to the subject
matter hereof and supersedes all previous negotiations, agreements and
arrangements made between the parties with respect to such subject matter.
4.11 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be an original, but all of which together
shall constitute one instrument.
IN WITNESS WHEREOF, the parties hereto have executed this Registration
Rights Agreement as of the date set forth in the first paragraph hereof.
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By:
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Name:
Title:
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SERIES A INVESTOR
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Name:
EXHIBIT A
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SERIES A INVESTORS
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