EXHIBIT D
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (the "Agreement") is made and entered
into as of this 14th day of June, 2004 by and among VitalStream Holdings, Inc.,
a Nevada corporation (the "Company"), and the "Investors" named in that certain
Purchase Agreement by and among the Company and the Investors dated the date
hereof (the "Purchase Agreement") to the extent party thereto.
The parties hereby agree as follows:
1. Certain Definitions.
As used in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to any person, any other person which
directly or indirectly Controls, is Controlled by, or is under common Control
with, such person.
"Business Day" means a day, other than a Saturday or Sunday, on which
banks in Los Angeles are open for the general transaction of business.
"Common Stock" shall mean the Company's common stock, par value $0.001 per
share, and any securities into which such shares may hereinafter be
reclassified.
"Control" (including the terms "controlling", "controlled by" or "under
common control with") means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
"Dolphin Piggyback Securities" means the Registrable Securities (for
purposes of this sentence only, as defined in the Second Amended Registration
Rights Agreement) held by the Dolphin Holders (as defined in the Second Amended
Registration Rights Agreement).
"Investors" shall mean the Investors party hereto and any Affiliate or
permitted transferee of any Investor who is a party to this Agreement and
subsequent holder of any Warrants or Registrable Securities.
"Person" means an individual, corporation, partnership, limited liability
company, trust, business trust, association, joint stock company, joint venture,
sole proprietorship, unincorporated organization, governmental authority or any
other form of entity not specifically listed herein.
"Prospectus" shall mean the prospectus included in any Registration
Statement, as amended or supplemented by any prospectus supplement, with respect
to the terms of the offering of any portion of the Registrable Securities
covered by such Registration Statement and by all other amendments and
supplements to the prospectus, including post-effective amendments and all
material incorporated by reference in such prospectus.
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"Register," "registered" and "registration" refer to a registration made
by preparing and filing a Registration Statement or similar document in
compliance with the 1933 Act, and the declaration or ordering of effectiveness
of such Registration Statement or document.
"Registrable Securities" shall mean the Shares and the shares of Common
Stock issuable (i) upon the exercise of the Warrants, if any, and (ii) any other
securities issued or issuable with respect to or in exchange for Registrable
Securities; provided, that, a security shall cease to be a Registrable Security
upon (A) sale pursuant to a Registration Statement or Rule 144 under the 1933
Act, or (B) such security becoming eligible for sale by the Investors pursuant
to Rule 144(k).
"Registration Statement" shall mean any registration statement of the
Company filed under the 1933 Act that covers the resale of any of the
Registrable Securities pursuant to the provisions of this Agreement, amendments
and supplements to such Registration Statement, including post-effective
amendments, and all exhibits and all material incorporated by reference in such
Registration Statement.
"Required Investors" means the Investors holding seventy percent (70%) of
the Registrable Securities.
"SEC" means the U.S. Securities and Exchange Commission.
"Second Amended Registration Rights Agreement" means the Amended and
Restated Registration Agreement dated September 30, 2003 among the Company and
the other parties thereto, as superseded by the Second Amended and Restated
Registration Rights Agreement dated on or about the date hereof among the
Company and the Stockholders party thereto.
"Shares" means the shares of Common Stock issued to the Investors pursuant
to the Purchase Agreement.
"1933 Act" means the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder.
"1934 Act" means the Securities Exchange Act of 1934, as amended, and the
rules and regulations promulgated thereunder.
"Warrants" means, the warrants to purchase shares of Common Stock
issued to the Investors pursuant to the Purchase Agreement.
2. Registration.
(a) Registration Statement. Promptly following the closing of the
purchase and sale of the securities contemplated by the Purchase Agreement (the
"Closing Date") but no later than thirty (30) days after the Closing Date (the
"Filing Deadline"), the Company shall prepare and file with the SEC one
Registration Statement on Form S-2 (or, if Form S-2 is not then available to the
Company, on such form of registration statement as is then available to effect a
registration for resale of the Registrable Securities) covering the resale of
the Registrable Securities in an amount at least equal to the number of Shares
plus the number of shares of
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Common Stock issuable upon exercise in full of the Warrants. Such Registration
Statement shall include the plan of distribution substantially in the form
attached hereto as Exhibit A. Such Registration Statement also shall cover, to
the extent allowable under the 1933 Act and the rules promulgated thereunder
(including Rule 416), such indeterminate number of additional shares of Common
Stock resulting from stock splits, stock dividends or similar transactions with
respect to the Registrable Securities. The Registration Statement (and each
amendment) shall be provided in accordance with Section 3(c) to the Investors
and their counsel for their review and comment prior to its filing or other
submission; provided, however, in the event that the Company receives a notice
that the Registration Statement or amendment to the Registration Statement will
not be reviewed by the SEC, the Company may make immaterial updates to the prior
version of the Registration Statement or amendment and file such updated
Registration Statement or amendment without providing the Investors or their
counsel an opportunity to review the Registration Statement or amendment. If a
Registration Statement covering the Registrable Securities is not filed with the
SEC on or prior to the Filing Deadline, the Company will make pro rata payments
to each Investor, as liquidated damages and not as a penalty, in an amount equal
to .833% of the aggregate amount invested by such Investor for each 30-day
period or pro rata for any portion thereof following the date by which such
Registration Statement should have been filed for which no Registration
Statement is filed with respect to the Registrable Securities. Such payments
shall be made on the last day of each calendar month and shall be in lieu of any
other monetary damages the Investors may seek or obtain as a result of the
respective delay; provided, however, nothing herein shall prohibit an Investor
from seeking specific performance of the Company's obligations under this
Agreement. Such payments shall be made to each Investor in cash.
(b) Expenses. The Company will pay all expenses associated with the
registration of the Registrable Securities, including filing and printing fees,
the Company's counsel and accounting fees and expenses, and fees and expenses
(including reasonable counsel fees) associated with clearing the Registrable
Securities for sale under applicable state securities or "blue sky" laws,
listing fees, transfer taxes, fees of transfer agents and registrars, fees and
expenses of one counsel to the Investors (with such counsel to be appointed by
the Investor holding the most Registrable Securities and with such fees to be
included as part of, and not to exceed when combined with all other fees
associated with the Purchase Agreement and the other Transaction Documents (as
defined in the Purchase Agreement), the cap described in Section 9.5 of the
Purchase Agreement). The Company shall not be required to pay any other fees or
expenses of the Investors in connection with the registration, including,
without limitation, discounts, commissions, fees of underwriters, selling
brokers, dealer managers or similar securities industry professionals with
respect to the Registrable Securities being sold.
(c) Effectiveness.
(i) The Company shall use its best efforts to have the
Registration Statement declared effective as soon as practicable. The Company
shall notify the Investors by facsimile or e-mail as promptly as practicable,
and in any event, within two (2) Business Days, after any Registration Statement
is declared effective and shall simultaneously provide the Investors with copies
of any related Prospectus to be used in connection with the sale or other
disposition of the securities covered thereby. If (A) a Registration Statement
covering the Registrable Securities is not declared effective by the SEC within
ninety (90) days after the
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Filing Deadline (the "Effectiveness Deadline"), or (B) after a Registration
Statement has been declared effective by the SEC, sales cannot be made pursuant
to such Registration Statement for any reason (including without limitation by
reason of a stop order, or the Company's failure to update the Registration
Statement), but excluding the inability of any Investor to sell the Registrable
Securities covered thereby due to market conditions and except as excused
pursuant to subparagraphs (ii) and (iii) below, then the Company will make pro
rata payments to each Investor, as liquidated damages and not as a penalty, in
an amount equal to .833% of the aggregate amount invested by such Investor for
each 30- day period or pro rata for any portion thereof following the date by
which such Registration Statement should have been effective (the "Blackout
Period"). Such payments shall be made within ten days of the end of each partial
or full calendar month with respect to which such payments are due and shall be
in lieu of any other monetary damages the Investors may seek or obtain as a
result of the respective delay; provided, however, nothing herein shall prohibit
an Investor from seeking specific performance of the Company's obligations under
this Agreement. The amounts payable as liquidated damages pursuant to this
paragraph shall be paid monthly within five (5) Business Days of the last day of
each month following the commencement of the Blackout Period until the
termination of the Blackout Period. Such payments shall be made to each Investor
in cash.
(ii) For not more than twenty (20) consecutive days or for a
total of not more than forty-five (45) days in any twelve (12) month period, the
Company may delay the disclosure of material non-public information concerning
the Company, by suspending the use of any Prospectus included in any
registration contemplated by this Section containing such information, the
disclosure of which at the time is not, in the good faith opinion of the
Company, upon advice of counsel, in the best interests of the Company (an
"Allowed Delay"); provided, that the Company shall promptly (a) notify the
Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such Investor any
of the facts or circumstances regarding) material non-public information giving
rise to an Allowed Delay, (b) advise the Investors in writing to cease all sales
under the Registration Statement until the end of the Allowed Delay and (c) use
its best efforts to terminate an Allowed Delay as promptly as practicable.
(iii) At any time (a) the Company is required to amend the
Registration Statement pursuant to Section 10(a)(3) under the Securities Act, or
(b) the Company is required to amend the Registration Statement to describe a
fundamental change in the information set forth in the Registration Statement
(including, without limitation, any transaction with respect to which the
Company is required to update the Registration Statement to include financial
statements and pro forma financial statements required by Rule 3-05 of
Regulation S-X), the Company shall be allowed up to thirty (30) days from the
date the amendment is required in order to file an amendment to the Registration
Statement and until the sixtieth day following the date the amendment is
required in order to cause the amended Registration Statement to be effective
(such 60-day period, the "Update Delay"); provided, that the Company shall
promptly after the occurrence of the event requiring amendment (a) notify the
Investors in writing of the existence of (but in no event, without the prior
written consent of an Investor, shall the Company disclose to such Investor any
of the facts or circumstances regarding) such material non-public information
giving rise to an Update Delay, (b) advise the Investors in writing to cease all
sales under the Registration Statement until the end of the Update Delay and (c)
use its best efforts to terminate an Update Delay as promptly as practicable.
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(d) Underwritten Offering. If the Company elects, in its discretion,
to engage an underwriter with respect to any offering pursuant to a Registration
Statement pursuant to Section 2(a) hereof, the Company shall have the right to
select an investment banker and manager to administer the offering, which
investment banker or manager shall be reasonably satisfactory to the Required
Investors.
3. Company Obligations. The Company will use its best efforts to effect
the registration of the Registrable Securities in accordance with the terms
hereof, and pursuant thereto the Company will, as expeditiously as possible:
(a) use its best efforts to cause such Registration Statement to
become effective and to remain continuously effective for a period (the
"Effectiveness Period") that will terminate upon the earlier of (i) the date on
which all Registrable Securities covered by such Registration Statement as
amended from time to time, have been sold and (ii) the date on which all
Registrable Securities covered by such Registration Statement may be sold
pursuant to Rule 144(k) and advise the Investors in writing when the
Effectiveness Period has expired;
(b) prepare and file with the SEC such amendments and post-effective
amendments to the Registration Statement and the Prospectus as may be necessary
to keep the Registration Statement effective for the period specified in Section
3(a) and to comply with the provisions of the 1933 Act and the 1934 Act with
respect to the distribution of all of the Registrable Securities covered
thereby;
(c) provide copies to and permit a single counsel designated by the
Investor holding the largest amount of the Registrable Securities (which shall
be ▇▇▇▇▇▇ ▇▇▇▇ Nemerovski ▇▇▇▇▇▇ ▇▇▇▇ & Rabkin, A Professional Corporation,
unless the Company is otherwise notified) and a single counsel designated by
Dolphin Equity Partners, L.P. (which shall be ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇ LLP, unless the
Company is otherwise notified) to review each Registration Statement and all
amendments and supplements thereto no fewer than four (4) Business Days prior to
their filing with the SEC and not file any document to which any such counsel
reasonably objects; provided, however, in the event that the Company receives a
notice that the Registration Statement or amendment to the Registration
Statement will not be reviewed by the SEC, the Company may make immaterial
updates to the prior version of the Registration Statement or amendment and file
such updated Registration Statement or amendment without providing such counsel
an opportunity to review the Registration Statement or amendment.
(d) furnish to the Investors and their legal counsel (which may be
by email or portable document format (pdf) file) (i) promptly after the same is
prepared and publicly distributed, filed with the SEC, or received by the
Company (but not later than two (2) Business Days after the filing date, receipt
date or sending date, as the case may be) one (1) copy of any Registration
Statement and any amendment thereto, each preliminary prospectus and Prospectus
and each amendment or supplement thereto, and each letter written by or on
behalf of the Company to the SEC or the staff of the SEC, and each item of
correspondence from the SEC or the staff of the SEC, in each case relating to
such Registration Statement (other than any portion of any thereof which
contains information for which the Company has sought confidential treatment or
which includes material nonpublic information), and (ii) such number of copies
of a Prospectus, including a preliminary prospectus, and all amendments and
supplements thereto and
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such other documents as each Investor may reasonably request in order to
facilitate the disposition of the Registrable Securities owned by such Investor
that are covered by the related Registration Statement;
(e) in the event the Company selects an underwriter for the
offering, the Company shall enter into and perform its reasonable obligations
under an underwriting agreement, in usual and customary form, including, without
limitation, customary indemnification and contribution obligations, with the
underwriter of such offering;
(f) if required by the underwriter, the Company shall furnish, on
the effective date of the Registration Statement (except with respect to clause
(i) below) and on the date that Registrable Securities are delivered to an
underwriter, if any, for sale in connection with the Registration Statement, (i)
(A) in the case of an underwritten offering, an opinion, dated as of the closing
date of the sale of Registrable Securities to the underwriters, from independent
legal counsel representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in an
underwritten public offering, addressed to the underwriters and the Investors
participating in such underwritten offering or (B) in the case of an "at the
market" offering, an opinion, dated as of or promptly after the effective date
of the Registration Statement to the Investors, from independent legal counsel
representing the Company for purposes of such Registration Statement, in form,
scope and substance as is customarily given in a public offering, addressed to
the Investors, and (ii) a letter, dated as of the effective date of such
Registration Statement and confirmed as of the applicable dates described above,
from the Company's independent certified public accountants in form and
substance as is customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the underwriters
(including any Investor deemed to be an underwriter);
(g) use its best efforts to (i) prevent the issuance of any stop
order or other suspension of effectiveness and, (ii) if such order is issued,
obtain the withdrawal of any such order at the earliest possible moment;
(h) prior to any public offering of Registrable Securities, use its
best efforts to register or qualify or cooperate with the Investors and their
counsel in connection with the registration or qualification of such Registrable
Securities for offer and sale under the securities or blue sky laws of such
jurisdictions requested by the Investors and do any and all other acts or things
necessary or advisable to enable the distribution in such jurisdictions of the
Registrable Securities covered by the Registration Statement; provided, however,
that the Company shall not be required in connection therewith or as a condition
thereto to (i) qualify to do business in any jurisdiction where it would not
otherwise be required to qualify but for this Section 3(h), (ii) subject itself
to general taxation in any jurisdiction where it would not otherwise be so
subject but for this Section 3(h), or (iii) file a general consent to service of
process in any such jurisdiction;
(i) if applicable, list all Registrable Securities covered by a
Registration Statement to be listed on each securities exchange, interdealer
quotation system or other market on which similar securities issued by the
Company are then listed;
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(j) immediately notify the Investors, at any time when a Prospectus
relating to Registrable Securities is required to be delivered under the 1933
Act, upon discovery that, or upon the happening of any event as a result of
which, the Prospectus included in a 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 light of the circumstances then existing, and at the request
of any such holder, promptly prepare and furnish to such holder 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 light of the circumstances then
existing;
(k) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC under the 1933 Act and the 1934 Act, and take
such other actions as may be reasonably necessary to facilitate the registration
of the Registrable Securities hereunder; and
(l) with a view to making available to the Investors the benefits of
Rule 144 (or its successor rule) and any other rule or regulation of the SEC
that may at any time permit the Investors to sell shares of Common Stock to the
public without registration, the Company covenants and agrees to: (i) make and
keep public information available, as those terms are understood and defined in
Rule 144, until the earlier of (A) six months after such date as all of the
Registrable Securities may be resold pursuant to Rule 144(k) or any other rule
of similar effect or (B) such date as all of the Registrable Securities shall
have been resold; (ii) file with the SEC in a timely manner all reports and
other documents required of the Company under the 1934 Act; and (iii) furnish to
each Investor upon request, as long as such Investor owns any Registrable
Securities, (A) a written statement by the Company that it has complied with the
reporting requirements of the 1934 Act, (B) a copy of the Company's most recent
Annual Report on Form 10-K or Quarterly Report on Form 10-Q, and (C) such other
information as may be reasonably requested in order to avail such Investor of
any rule or regulation of the SEC that permits the selling of any such
Registrable Securities without registration.
4. Due Diligence Review; Information. The Company shall make available,
during normal business hours, for inspection and review by the Investors,
advisors to and representatives of the Investors (who may or may not be
affiliated with the Investors), and any underwriter participating in any
disposition of shares of Common Stock on behalf of the Investors pursuant to a
Registration Statement or amendments or supplements thereto or any blue sky,
NASD or other filing, all financial and other records, all SEC Filings (as
defined in the Purchase Agreement) and other filings with the SEC, and all other
corporate documents and properties of the Company as may be reasonably necessary
for the purpose of such review, and cause the Company's officers, directors and
employees, within a reasonable time period, to supply all such information
reasonably requested by the Investors or any such representative, advisor or
underwriter in connection with such Registration Statement (including, without
limitation, in response to all questions and other inquiries reasonably made or
submitted by any of them), prior to and from time to time after the filing and
effectiveness of the Registration Statement for the sole purpose of enabling the
Investors and such representatives, advisors and underwriters and their
respective accountants and attorneys to conduct initial and ongoing due
diligence with respect to the Company and the accuracy of such Registration
Statement.
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Except for disclosures to any Investor whose representative or Affiliate
occupies a seat or has observation rights with respect to the board of directors
of the Company or any of its subsidiaries, the Company shall not disclose
material nonpublic information to the Investors, or to advisors to or
representatives of the Investors, unless prior to disclosure of such information
the Company identifies such information as being material nonpublic information
and provides the Investors, such advisors and representatives with the
opportunity to accept or refuse to accept such material nonpublic information
for review and any Investor wishing to obtain such information enters into an
appropriate confidentiality agreement with the Company with respect thereto.
5. Obligations of the Investors.
(a) Each Investor shall furnish in writing to the Company such
information regarding itself, the Registrable Securities held by it and the
intended method of disposition of the Registrable Securities held by it, as
shall be reasonably required to effect the registration of such Registrable
Securities and shall execute such documents in connection with such registration
as the Company may reasonably request. At least ten (10) Business Days prior to
the first anticipated filing date of any Registration Statement, the Company
shall notify each Investor of the information the Company requires from such
Investor if such Investor elects to have any of the Registrable Securities
included in the Registration Statement. An Investor shall provide such
information to the Company at least two (2) Business Days prior to the first
anticipated filing date of such Registration Statement if such Investor elects
to have any of the Registrable Securities included in the Registration
Statement.
(b) Each Investor, by its acceptance of the Registrable Securities
agrees to cooperate with the Company as reasonably requested by the Company in
connection with the preparation and filing of a Registration Statement
hereunder, unless such Investor has notified the Company in writing of its
election to exclude all of its Registrable Securities from such Registration
Statement.
(c) In the event the Company, at the request of the Investors,
determines to engage the services of an underwriter, such Investor agrees to
enter into and perform its obligations under an underwriting agreement, in usual
and customary form, including, without limitation, customary indemnification and
contribution obligations, with the managing underwriter of such offering and
take such other actions as are reasonably required in order to expedite or
facilitate the dispositions of the Registrable Securities.
(d) Each Investor agrees that, upon receipt of any notice from the
Company of either (i) the commencement of an Allowed Delay pursuant to Section
2(c)(ii) or an Update Delay pursuant to Section 2(c)(iii) or (ii) the happening
of an event pursuant to Section 3(j) hereof, such Investor will immediately
discontinue disposition of Registrable Securities pursuant to the Registration
Statement covering such Registrable Securities, until the Investor's receipt of
the copies of the supplemented or amended prospectus filed with the SEC and
until any related post-effective amendment is declared effective and, if so
directed by the Company, the Investor shall deliver to the Company (at the
expense of the Company) or destroy (and deliver to the Company a certificate of
destruction) all copies in the Investor's possession of the Prospectus covering
the Registrable Securities current at the time of receipt of such notice.
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(e) No Investor may participate in any third party underwritten
registration hereunder unless it (i) agrees to sell the Registrable Securities
on the basis provided in any underwriting arrangements in usual and customary
form entered into by the Company, (ii) completes and executes all
questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents reasonably required under the terms of such underwriting
arrangements, and (iii) agrees to pay its pro rata share of all underwriting
discounts and commissions. Notwithstanding the foregoing, no Investor shall be
required to make any representations to such underwriter, other than those with
respect to itself and the Registrable Securities owned by it, including its
right to sell the Registrable Securities, and any indemnification in favor of
the underwriter by the Investors shall be several and not joint and limited in
the case of any Investor, to the net proceeds received by such Investor from the
sale of its Registrable Securities. The scope of any such indemnification in
favor of an underwriter shall be limited to the same extent as the indemnity
provided in Section 6(b) hereof.
6. Indemnification.
(a) Indemnification by the Company. The Company will indemnify and
hold harmless each Investor and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the 1933 Act, against any losses, claims, damages
or liabilities, joint or several, to which they may become subject under the
1933 Act or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) any untrue
statement or alleged untrue statement of any material fact contained in any
Registration Statement, any preliminary prospectus or final prospectus contained
therein, or any amendment or supplement thereof; (ii) any blue sky application
or other document executed by the Company specifically for that purpose or based
upon written information furnished by the Company filed in any state or other
jurisdiction in order to qualify any or all of the Registrable Securities under
the securities laws thereof (any such application, document or information
herein called a "Blue Sky Application"); (iii) 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 (iv) any violation by the Company
or its agents of any rule or regulation promulgated under the 1933 Act
applicable to the Company or its agents and relating to action or inaction
required of the Company in connection with such registration and will reimburse
such Investor, and each such officer, director, member, employee or agent and
each such 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 Company will not be
liable in any such case if and to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity with
information furnished by such Investor or any such controlling person in writing
specifically for use in such Registration Statement or Prospectus.
(b) Indemnification by the Investors. In connection with any
registration pursuant to the terms of this Agreement, each Investor will furnish
to the Company in writing such information as the Company reasonably requests
concerning the holders of Registrable Securities or the proposed manner of
distribution for use in connection with any Registration Statement or Prospectus
and agrees, severally but not jointly, to indemnify and hold harmless, to the
fullest extent permitted by law, the Company, its directors, officers, employees
and each person who
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controls the Company (within the meaning of the ▇▇▇▇ ▇▇▇) against any losses,
claims, damages, liabilities and expense (including reasonable attorney fees)
resulting from any untrue statement of a material fact or any omission of a
material fact required to be stated in the Registration Statement or Prospectus
or preliminary prospectus or amendment or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent that such untrue statement or omission is contained in any information
furnished in writing by such Investor to the Company specifically for inclusion
in such Registration Statement or Prospectus or amendment or supplement thereto.
In no event shall the liability of an Investor be greater in amount than the
dollar amount of the net proceeds (net of all expense paid by such Investor in
connection with any claim relating to this Section 6 and the amount of any
damages such Investor has otherwise been required to pay by reason of such
untrue statement or omission) received by such Investor upon the sale of the
Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
(c) Conduct of Indemnification Proceedings. Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice promptly as provided herein shall not
relieve the indemnifying party of its obligations hereunder, except to the
extent that such failure to give notice promptly shall materially adversely
affect the indemnifying party in the defense of any such claim or litigation. It
is understood that the indemnifying party shall not, in connection with any
proceeding in the same jurisdiction, be liable for fees or expenses of more than
one separate firm of attorneys at any time for all such indemnified parties. No
indemnifying party will, except with the consent of the indemnified party, not
to be unreasonably withheld, consent to entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such indemnified party of a release from all
liability in respect of such claim or litigation.
(d) Contribution. If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the 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
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations. No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the 1933 Act shall be entitled to
contribution from any person not guilty of such fraudulent misrepresentation. In
no
D-10
event shall the contribution obligation of a holder of Registrable Securities be
greater in amount than the dollar amount of the net proceeds (net of all
expenses paid by such holder in connection with any claim relating to this
Section 6 and the amount of any damages such holder has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission) received by it upon the sale of the Registrable Securities
giving rise to such contribution obligation (or that could be received by such
Investor upon the sale of the Registrable Securities included in such
Registration Statement at fair market value on the date of determination of
liability to the extent any Registrable Securities remain unsold).
7. Miscellaneous.
(a) Amendments and Waivers. This Agreement may be amended only by a
writing signed by the Company and the Required Investors. The Company may take
any action herein prohibited, or omit to perform any act herein required to be
performed by it, only if the Company shall have obtained the written consent to
such amendment, action or omission to act, of the Required Investors.
Notwithstanding the foregoing, this Agreement shall not be amended, nor will any
consent to any amendment, action or omission to act be granted, without the
consent of the holders of the Dolphin Piggyback Securities if such amendment,
action or omission would affect the holders of the Dolphin Piggyback Securities
differently than it would affect the Required Investors.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made as set forth in Section 9.4 of the Purchase
Agreement.
(c) Assignments and Transfers by Investors. The provisions of this
Agreement shall be binding upon and inure to the benefit of the Investors and
their respective successors and assigns. An Investor may transfer or assign, in
whole or from time to time in part, to one or more persons its rights hereunder
in connection with the transfer of Registrable Securities by such Investor to
such person, provided that such Investor complies with all laws applicable
thereto and provides written notice of assignment to the Company promptly after
such assignment is effected and the assignee executes a counterpart to this
Agreement assuming all rights and obligations of an Investor hereunder.
(d) Assignments and Transfers by the Company. This Agreement may not
be assigned by the Company (whether by operation of law or otherwise) without
the prior written consent of the Required Investors, provided, however, that the
Company may assign its rights and delegate its duties hereunder to any surviving
or successor corporation in connection with a merger or consolidation of the
Company with another corporation, or a sale, transfer or other disposition of
all or substantially all of the Company's assets to another corporation, without
the prior written consent of the Required Investors, after notice duly given by
the Company to each Investor; provided that such successor corporation assumes
the Company's obligations hereunder.
(e) Benefits of the Agreement. The terms and conditions of this
Agreement shall inure to the benefit of and be binding upon the respective
permitted successors and assigns of the parties. Nothing in this Agreement,
express or implied, is intended to confer upon any party other than the parties
hereto or their respective successors and assigns any rights, remedies,
D-11
obligations, or liabilities under or by reason of this Agreement, except as
expressly provided in this Agreement.
(f) Counterparts; Faxes. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. This Agreement may also
be executed via facsimile, which shall be deemed an original.
(g) Titles and Subtitles. The titles and subtitles used in this
Agreement are used for convenience only and are not to be considered in
construing or interpreting this Agreement.
(h) Severability. Any provision of this Agreement that is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof but shall be interpreted as if it
were written so as to be enforceable to the maximum extent permitted by
applicable law, and any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provisions hereof prohibited or
unenforceable in any respect.
(i) Further Assurances. The parties shall execute and deliver all
such further instruments and documents and take all such other actions as may
reasonably be required to carry out the transactions contemplated hereby and to
evidence the fulfillment of the agreements herein contained.
(j) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and understanding of the parties hereto in respect of
the subject matter contained herein. This Agreement supersedes all prior
agreements and understandings between the parties with respect to such subject
matter.
(k) Governing Law; Consent to Jurisdiction; Waiver of Jury Trial.
This Agreement shall be governed by, and construed in accordance with, the
internal laws of the State of California without regard to the choice of law
principles thereof. Each of the parties hereto irrevocably submits to the
exclusive jurisdiction of the state and federal courts of the State of
California for the purpose of any suit, action, proceeding or judgment relating
to or arising out of this Agreement and the transactions contemplated hereby.
Service of process in connection with any such suit, action or proceeding may be
served on each party hereto anywhere in the world by the same methods as are
specified for the giving of notices under this Agreement. Each of the parties
hereto irrevocably consents to the jurisdiction of any such court in any such
suit, action or proceeding and to the laying of venue in such court. Each party
hereto irrevocably waives any objection to the laying of venue of any such suit,
action or proceeding brought in such courts and irrevocably waives any claim
that any such suit, action or proceeding brought in any such court has been
brought in an inconvenient forum. EACH OF THE PARTIES HERETO WAIVES ANY RIGHT TO
REQUEST A TRIAL BY JURY IN ANY LITIGATION WITH RESPECT TO THIS AGREEMENT AND
REPRESENTS THAT COUNSEL HAS BEEN CONSULTED SPECIFICALLY AS TO THIS WAIVER.
D-12
(l) Other Registration Rights. The Company represents and warrants
that, except for the agreements disclosed in Schedule 7(l) to this Agreement
(the "Other Registration Rights Agreements"), it is not a party to, or otherwise
subject to, any other agreement granting registration rights to any other Person
with respect to any securities of the Company. The Company shall include in the
Registration Statement required by Section 2(a) of the Agreement the Dolphin
Piggyback Securities and may include in the Registration Statement required by
Section 2(a) of the Agreement any securities it is required to include pursuant
to any of the Other Registration Rights Agreements. The Company shall not
include in the Registration Statement required by Section 2(a) of this Agreement
any securities other than securities it is required to register pursuant to one
or more of the Other Registration Rights Agreements.
[signature page follows]
D-13
IN WITNESS WHEREOF, the parties have executed this Agreement or caused
their duly authorized officers to execute this Agreement as of the date first
above written.
The Company: VITALSTREAM HOLDINGS, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: DOLPHIN COMMUNICATIONS FUND II, L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: DOLPHIN COMMUNICATIONS PARALLEL
FUND II (NETHERLANDS), L.P.
By: Dolphin Communications II, L.P.,
Its General Partner
By: Dolphin Communications, L.L.C.,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇'▇▇▇▇▇▇▇
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: WALDENVC II, L.P.
By: WaldenVC LLC,
Its General Partner
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: General Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: ThinkEquity Investment Partners IV LLC
By: ThinkEquity Holdings LLC, Manager
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: CFO
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: Newlight Associates II, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: Newlight Associates II, (BVI), L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: Newlight Associates II-E, L.P.
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: General Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: NanoCap Fund LP
By: /s/ P. ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: P. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: Nanoap Qualified Fund LP
By: /s/ P. ▇▇▇▇ ▇▇▇▇▇▇▇▇
-----------------------------------
Name: P. ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: RS Orphan Fund, L.P.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Investment Advisory General
Partner
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
-----------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
-----------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: ▇▇▇▇▇▇ ▇▇▇▇
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
-----------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Investor: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------
Name:
Title:
[SIGNATURE PAGE TO REGISTRATION RIGHTS AGREEMENT]
Exhibit A
PLAN OF DISTRIBUTION
GENERAL
The selling stockholders, which as used herein includes donees, pledgees,
transferees or other successors-in-interest selling shares of common stock or
interests in shares of common stock received after the date of this prospectus
from a selling stockholder as a gift, pledge, partnership distribution or other
transfer, may, from time to time, sell, transfer or otherwise dispose of any or
all of their shares of common stock or interests in shares of common stock on
any stock exchange, market or trading facility on which the shares are traded or
in private transactions. These dispositions may be at fixed prices, at
prevailing market prices at the time of sale, at prices related to the
prevailing market price, at varying prices determined at the time of sale, or at
negotiated prices.
The selling stockholders may use any one or more of the following methods
when disposing of shares or interests therein:
- ordinary brokerage transactions and transactions in which the
broker-dealer solicits purchasers;
- block trades in which the broker-dealer will attempt to sell the
shares as agent, but may position and resell a portion of the block
as principal to facilitate the transaction;
- purchases by a broker-dealer as principal and resale by the
broker-dealer for its account;
- an exchange distribution in accordance with the rules of the
applicable exchange;
- privately negotiated transactions;
- through the writing or settlement of options or other hedging
transactions, whether through an options exchange or otherwise;
- broker-dealers may agree with the selling stockholders to sell a
specified number of such shares at a stipulated price per share;
- a combination of any such methods of sale; and
- any other method permitted pursuant to applicable law.
The selling stockholders may, from time to time, pledge or grant a
security interest in some or all of the shares of common stock owned by them
and, if they default in the performance of their secured obligations, the
pledgees or secured parties may offer and sell the shares of common stock, from
time to time, under this prospectus, or under an amendment to this
prospectus under Rule 424(b)(3) or other applicable provision of the Securities
Act amending the list of selling stockholders to include the pledgee, transferee
or other successors in interest as selling stockholders under this prospectus.
The selling stockholders also may transfer the shares of common stock in other
circumstances, in which case the transferees, pledgees or other successors in
interest will be the selling beneficial owners for purposes of this prospectus.
The selling stockholders may also sell shares by means of short sales to
the extent permitted by United States securities laws. Short sales involve the
sale by a selling shareholder, usually with a future delivery date, of shares of
common stock that the seller does not own. Covered short sales are sales made in
an amount not greater than the number of shares subject to the short seller's
warrant, exchange right or other right to acquire shares of common stock. A
selling shareholder may close out any covered short position by either
exercising its warrants or exchange rights to acquire shares of common stock or
purchasing shares in the open market. In determining the source of shares to
close out the covered short position, a selling shareholder will likely
consider, among other things, the price of shares of common stock available for
purchase in the open market as compared to the price at which it may purchase
shares of common stock pursuant to its warrants or exchange rights.
Naked short sales are any sales in excess of the number of shares subject
to the short seller's warrant, exchange right or other right to acquire shares
of common stock. A selling shareholder must close out any naked position by
purchasing shares. A naked short position is more likely to be created if a
selling shareholder is concerned that there may be downward pressure on the
price of the shares of common stock in the open market.
The existence of a significant number of short sales generally causes the
price of the shares of common stock to decline, in part because it indicates
that a number of market participants are taking a position that will profitable
only if the price of the shares of common stock declines. Purchases to cover
short sales may, however, increase the demand for the shares of common stock and
have the effect of raising or maintaining the price of the shares of common
stock.
The selling stockholders may also enter into option or other transactions
with broker-dealers or other financial institutions or the creation of one or
more derivative securities which require the delivery to such broker-dealer or
other financial institution of shares offered by this prospectus, which shares
such broker-dealer or other financial institution may resell pursuant to this
prospectus (as supplemented or amended to reflect such transaction).
The selling stockholders also may resell all or a portion of the shares in
open market transactions in reliance upon Rule 144 under the Securities Act of
1933, provided that they meet the criteria and conform to the requirements of
that rule.
The selling stockholders and any underwriters, broker-dealers or agents
that participate in the sale of the common stock or interests therein may be
"underwriters" within the meaning of Section 2(11) of the Securities Act. Any
discounts, commissions, concessions or profit they earn on any resale of the
shares may be underwriting discounts and commissions under the Securities Act.
Selling stockholders who are "underwriters" within the meaning of Section 2(11)
of the Securities Act will be subject to the prospectus delivery requirements of
the Securities Act.
-ii-
To the extent required, the shares of our common stock to be sold, the
names of the selling stockholders, the respective purchase prices and public
offering prices, the names of any agents, dealers or underwriters, any
applicable commissions or discounts with respect to a particular offer will be
set forth in an accompanying prospectus supplement or, if appropriate, a
post-effective amendment to the registration statement that includes this
prospectus.
DETERMINATION OF OFFERING PRICE AND PROCEEDS OF SALE
The offering price of the shares of common stock offered by this
prospectus is being determined by each of the selling stockholders on a
transaction-by-transaction basis based upon factors that such selling
stockholder considers appropriate. The offering prices determined by the selling
stockholders may, or may not, relate to a current market price but should not,
in any case, be considered an indication of the actual value of the shares of
common stock. We do not have any influence over the price at which selling
stockholders offer or sell the shares of common stock offered by this
prospectus.
The aggregate proceeds to the selling stockholders from the sale of the
common stock offered by them will be the purchase price of the common stock less
discounts or commissions, if any. Each of the selling stockholders reserves the
right to accept and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of common stock to be made directly or
through agents. We will not receive any of the proceeds from this offering. Upon
any exercise of the warrants by payment of cash, however, we will receive the
exercise price of the warrants.
EXPENSES, INDEMNIFICATION AND REGISTRATION OBLIGATIONS
We are paying the expenses incurred in connection with preparing and
filing this prospectus and the registration statement to which it relates, other
than selling commissions. We have not retained any underwriter, broker or dealer
to facilitate the offer or sale of the offered shares offered hereby. We will
pay no underwriting commissions or discounts in connection therewith.
We have agreed to indemnify the selling stockholders against liabilities,
including liabilities under the Securities Act and state securities laws,
relating to the registration of the shares offered by this prospectus. The
selling stockholders may indemnify any broker-dealers that participate in
transactions involving the sale of the shares against certain liabilities,
including liabilities arising under the Securities Act.
We have agreed with the selling stockholders to keep the registration
statement of which this prospectus constitutes a part effective until the
earlier of (1) such time as all of the shares covered by this prospectus have
been disposed of pursuant to and in accordance with the registration statement
or (2) the date on which the shares may be sold pursuant to Rule 144(k) of the
Securities Act.
-iii-
PASSIVE MARKET MAKING
We have advised the selling stockholders that while they are engaged in a
distribution of the shares offered pursuant to this prospectus, they are
required to comply with Regulation M promulgated under the Securities Exchange
Act of 1934, as amended. With certain exceptions, Regulation M precludes the
selling stockholders, any affiliate purchasers and any broker-dealers or other
persons who participate in the distribution from bidding for or purchasing, or
attempting to induce any person to bid for or purchase, any security that is
subject to the distribution until the entire distribution is complete.
Regulation M also restricts bids or purchases made in order to stabilize the
price of a security in connection with the distribution of that security. We do
not intend to engage in any passive market making or stabilization transactions
during the course of the distribution described in this prospectus. All of the
foregoing may affect the marketability of the shares offered pursuant to this
prospectus.
LIMITATIONS
We have advised the selling stockholders that, to the extent necessary to
comply with governing state securities laws, the offered securities should be
offered and sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, we have advised the selling stockholders that
the offered securities may not be offered or sold in any state unless they have
been registered or qualified for sale in the applicable state or an exemption
from the registration or qualification requirement is available with respect to
such offers or sales.
-iv-
SCHEDULE 7(l)
Other Registration Rights Agreements
Registration Rights Agreement dated April 23, 2002 entered into by and among
Sensar Corporation, Brookstreet Securities Corporation and ▇▇▇▇ ▇. ▇▇▇▇▇▇, as
amended by Finder's Fee Agreement dated January 17, 2003 entered into by and
between Brookstreet Securities Corporation and VitalStream Holdings, Inc.
The Stockholders and Registration Rights Agreement dated August 9, 2000, by and
among VitalStream, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and the Series B Holders
(as defined therein), as assumed by the Company and as amended, modified,
restated superseded or replaced from time to time [("AKKAD Agreement")]
Agreement dated May 6, 2002 between VitalStream Holdings, Inc. and The ▇▇▇▇▇▇▇
Companies
Warrant to Purchase Common Stock (Retainer Warrant) (25,000 shares), Warrant to
Purchase Common Stock (Success Warrant) (200,000 shares) and Warrant to Purchase
Common Stock (Success Warrant) (200,000 shares), each issued pursuant to the
▇▇▇▇▇▇▇ Agreement.
Engagement agreement between ThinkEquity Partners LLC and the Company dated
March 9, 2004, pursuant to which the Company has agreed to issue a warrant to
Think Equity Partners LLC to purchase shares of Common Stock equal to 3% of the
number of shares of Common Stock sold pursuant to the Purchase Agreement at the
Closing, and extend one time demand registration rights, unlimited piggyback
registration rights within the 3-year term of the warrant and "cashless"
exercise rights, subject to customary conditions and limitations.
The Amended and Restated Registration Agreement dated September 30, 2003 among
the Company and the other parties thereto (the "Dolphin Registration Rights
Agreement"), to be superseded by the Second Amended Registration Rights
Agreement in connection with the closing of the Conversion Agreement.
-v-