Exhibit 10.11
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "Agreement"), dated as of April 3,
2003, by and between FRONTLINE COMMUNICATIONS CORP., a Delaware corporation (the
"Company"), and Xxxxxxx Xxxxxxxx del Rio Arrangoiz ("Arrangoiz") and Xxxxxxx
Xxxxxxxx del Rio Xxxxxxx ("Requejo" and together with Arrangoiz "Sellers").
W I T N E S S E T H:
WHEREAS, Sellers, the Company and others have entered into that certain
Stock Purchase Agreement dated January 24, 2003 (the "Purchase Agreement")
pursuant to which, among other things, Sellers are receiving Two Hundred Twenty
Thousand (220,000) shares of Series C Convertible Preferred Stock of the
Company, par value $.01 ("Series C Preferred Stock"), which is convertible into
Twenty Two Million shares of common stock of the Company, par value $0.01 per
share ("Common Stock");
WHEREAS, it is a condition of the Purchase Agreement that the Company grant
to Sellers registration rights with respect to the Common Stock; and
WHEREAS, the Company desires to grant to Sellers registration rights with
respect to the Common Stock.
NOW, THEREFORE, in consideration of the premises and mutual covenants and
conditions contained herein and of other good and valuable consideration, the
receipt and adequacy of which is hereby acknowledged, the parties hereto agree
as follows:
ARTICLE I.
DEFINITIONS
SECTION 1.1 Definitions. The following terms shall have the meanings
ascribed to them below.
"Commission" means the United States Securities and Exchange Commission, or
any other federal agency at the time administering the Securities Act.
"Common Stock" has the meaning set forth in the recitals to this Agreement.
"Exchange Act" means the United States Securities Exchange Act of 1934, as
amended or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Company" has the meaning set forth in the preamble of this Agreement.
"Conversion Date" means the date that the Series C Preferred Stock is
converted into Common Stock, as set forth in the Certificate of Designation of
Series C Convertible Preferred Stock.
"Damages" has the meaning set forth in Section 4.1 hereof.
"Demand Registration" has the meaning set forth in Section 2.1(a) hereof.
"Indemnified Party" has the meaning set forth in Section 4.3 hereof.
"Indemnifying Party" has the meaning set forth in Section 4.3 hereof.
"Inspectors" has the meaning set forth in Section 3.1(k) hereof.
"Purchase Agreement" has the meaning set forth in the recitals of this
Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"Notices" has the meaning set forth in Section 6.7 hereof.
"Person" means any natural person, corporation, general partnership,
limited partnership, proprietorship, other business organization, trust, union
or association.
"Piggy-Back Registration" has the meaning set forth in Section 2.2 hereof.
"Registrable Securities" means the shares of Common Stock now owned or
hereafter acquired by Sellers, until (i) a Registration Statement with respect
to the sale of such shares of Common Stock has been declared effective by the
Commission and such shares of Common Stock have been disposed of pursuant to
such effective Registration Statement, or (ii) such shares of Common Stock are
sold under circumstances in which all of the applicable conditions of Rule 144
(or any similar provisions then in force) under the Securities Act are met, or
(iii) such shares of Common Stock have been otherwise transferred and the
Company has delivered a new certificate or other evidence of ownership for such
Common Stock not bearing a restrictive legend and not subject to any stop order
and such Common Stock may be publicly resold by the person receiving such
certificate without complying with the registration requirements of the
Securities Act, or (iv) such shares of Common Stock shall have ceased to be
outstanding.
"Registration Expenses" has the meaning set forth in Section 3.2 hereof.
"Registration Statement" means any registration statement of the Company
which covers any of the Registrable Securities pursuant to the provisions of
this Agreement, including the prospectus, amendments and supplements to such
registration statement, including post-effective
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amendments, all exhibits and all material incorporated by reference in such
registration statement.
"Securities Act" means the United States Securities Act of 1933, as
amended, or any similar federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Series C Preferred Stock" has the meaning set forth in the recitals to the
Agreement.
"Underwriter" means a securities dealer who purchases any Registrable
Securities as principal in an underwritten offering and not as part of such
dealer's market-making activities.
ARTICLE II.
REGISTRATION RIGHTS
SECTION 2.1 Demand Registration.
(a) Request for Registration by Sellers. At any time following the
one-year anniversary of the Conversion Date, Sellers may make written requests
on the Company for the registration of the offer and sale of all or part of the
Registrable Securities under the Securities Act (a "Demand Registration").
Subject to Section 2.1(b), the Company shall have no obligation to file more
than two (2) registration statements under the Securities Act with respect to a
Demand Registration. Any such request will specify the number of shares of
Registrable Securities proposed to be sold and will also specify the intended
method of disposition thereof. The Company shall use its best efforts to effect
the Demand Registration within sixty (60) days after the giving of such written
notice.
(b) Effective Registration. A registration will not be deemed to have
been effected pursuant to Section 2.1(a) unless the Registration Statement
relating thereto has been declared effective by the Commission and the Company
has complied in all material respects with its obligations under this Agreement
and any underwriting or other distribution agreement relating to such
distribution with respect thereto and in the case of an underwritten offering,
all the Registrable Securities offered have been purchased by the underwriters;
provided that if, after the Registration Statement has become effective, the
offering and/or sale of Registrable Securities pursuant to such Registration
Statement is or becomes the subject of any stop order, injunction or other order
or requirement of the Commission or any other governmental or administrative
agency, or if any court or other governmental or quasi-governmental agency
prevents or otherwise limits the offer and/or sale of the Registrable Securities
pursuant to the Registration Statement, such registration will be deemed not to
have been effected.
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(c) Selection of Underwriter. If the offering of such Registrable
Securities pursuant to such Demand Registration is in the form of an
underwritten offering, the Sellers shall consent to the Company's selection of
such Underwriter(s), which consent shall not be unreasonably withheld.
SECTION 2.2 Piggy-Back Registration.
(a) If at any time during the first year following the Conversion
Date, the Company proposes to register any of its securities under the
Securities Act and the registration form to be used may be used for registration
of the Registrable Securities, then the Company shall give prompt written notice
of such proposed filing to Sellers as soon as practicable (but in no event less
than thirty (30) days before the anticipated filing date), and such notice shall
offer Sellers the opportunity to register no more than thirty-percent (30%) of
the Registrable Securities as Sellers may request (which request shall specify
the Registrable Securities intended to be disposed of by Sellers and the
intended method of distribution thereof) (a "Piggy-Back Registration"). If at
any time following the one-year anniversary of the Conversion Date, the Company
proposes to register any of its securities under the Securities Act and the
registration form to be used may be used for registration of the Registrable
Securities, then the Company shall give prompt written notice of such proposed
filing to Sellers as soon as practicable (but in no event less than thirty (30)
days before the anticipated filing date), and such notice shall offer Sellers
the opportunity to register up to 100% of the Registrable Securities as Sellers
may request (which request shall specify the Registrable Securities intended to
be disposed of by Sellers and the intended method of distribution thereof). The
Company shall use its best efforts to cause the managing Underwriter or
Underwriters of a proposed underwritten offering to permit such Registrable
Securities requested to be included in a Piggy-Back Registration to be included
on the same terms and conditions as any similar securities of the Company or any
other security holder included therein and to permit the sale or other
disposition of such Registrable Securities in accordance with the intended
method of distribution thereof. Sellers shall have the right to withdraw its
request for inclusion of its Registrable Securities in any Registration
Statement pursuant to this Section 2.2 by giving written notice to the Company
of their request to withdraw, provided that, except as otherwise set forth in
Section 2.3(c), in the event of such withdrawal, Sellers shall be responsible
for all fees and expenses (including fees and expenses of counsel) incurred by
Sellers prior to such withdrawal. The Company may withdraw a Piggy-Back
Registration at any time prior to the time it becomes effective.
(b) No failure to effect a registration under this Section 2.2 and to
complete the sale of Registrable Securities in connection therewith shall
relieve the Company of any other obligation under this Agreement (including,
without limitation, the Company's obligations under Sections 3.2 and 4.1).
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SECTION 2.3 Reduction of Offering.
(a) Demand Registration. Subject to Sellers' prior written consent,
the Company may include in a Demand Registration pursuant to Section 2.1
securities of the same class as the Registrable Securities for the account of
the Company and any other Persons who hold securities of the same class as the
Registrable Securities on the same terms and conditions as the Registrable
Securities to be included therein.
(b) Reduction of Offering. In the event that the managing Underwriter
of any underwritten offering described in Section 2.1 or 2.2 shall determine in
good faith that a limitation of the total number of shares to be included in the
offering is required or there will be an adverse effect on the offering price,
timing or distribution of the shares to be distributed, then the number of
shares to be included in such registration shall be reduced or limited to the
extent necessary to reduce the total number of shares requested to be included
in such offering to the number of shares, if any, recommended by such managing
Underwriter in the following order of priority:
(i) If the offering is a Demand Registration, (A) first, the
number of shares to be offered by all Persons other than Sellers to the extent
necessary to reduce the total number of shares as recommended by such managing
Underwriter, pro rata in proportion to the respective total number of shares
owned by such Persons, (B) second, if further reduction or limitation is
required, the number of shares to be offered by the Company for its own account
shall be reduced or limited, and (C) third, if further reduction or limitation
is required, the number of shares to be offered by Sellers.
(ii) If the offering is a Piggy-Back Registration, (A) first, the
number of shares to be offered by the Persons other than Sellers holding
securities who are using a piggy-back registration right, pro rata in proportion
to the respective total number of shares owned by such Persons; (B) second, if
further reduction or limitation is required, the number of shares to be offered
by Sellers; (C) third, if further reduction or limitation is required, the
number of shares to be offered by the Persons holding securities who demanded
such registration pro rata in proportion to the respective total number of
shares owned by such Persons, and (D) fourth, if further reduction or limitation
is required, the number of shares to be offered by the Company for its own
account shall be reduced or limited.
(c) If, as a result of the proration provisions of this Section 2.3,
Sellers shall not be entitled to include all Registrable Securities in a Demand
Registration or Piggy-Back Registration that Sellers has requested to be
included, Sellers may elect to withdraw its request to include Registrable
Securities in such registration; provided that in the event of such withdrawal,
the Company shall be responsible for all fees and expenses (including fees and
expenses of counsel) incurred by Sellers prior to such withdrawal.
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SECTION 2.4 Subsequent Registration Rights. From and after the date of this
Agreement, the Company shall not, without the prior written consent of Sellers,
enter into any other agreement with any holder or prospective holder of any
securities of the Company which would allow such holder or prospective holder to
include such securities in any registration filed under Section 2.1 hereof,
unless under the terms of such agreement, such holder or prospective holder may
include such securities in any such registration only to the extent that the
inclusion of its securities will not reduce the amount of Registrable Securities
of Sellers which are included.
ARTICLE III.
REGISTRATION PROCEDURES
SECTION 3.1 Filings; Information. Whenever the Company is required to
effect or cause the registration of Registrable Securities pursuant to Section
2.1 or Section 2.2, the Company will use its best efforts to effect the
registration and the sale of such Registrable Securities in accordance with the
intended method of disposition thereof as quickly as practicable, and in
connection with any such request:
(a) The Company promptly will prepare and file with the Commission a
Registration Statement with respect to the offer and sale of such securities and
use its best efforts to cause such Registration Statement to become and remain
effective until the completion of the distribution contemplated thereby;
provided, however, the Company shall not be required to keep such Registration
Statement effective for more than 180 days (or such shorter period which will
terminate when all Registrable Securities covered by such Registration Statement
have been sold, but not prior to the expiration of the applicable period
referred to in Section 4(3) of the Securities Act and Rule 174 thereunder, if
applicable).
(b) The Company promptly will prepare and file with the Commission
such amendments and post-effective amendments to the Registration Statement as
may be necessary to keep such Registration Statement effective for as long as
such registration is required to remain effective pursuant to the terms hereof;
cause the prospectus to be supplemented by any required prospectus supplement,
and, as so supplemented, to be filed pursuant to Rule 424 under the Securities
Act; and comply with the provisions of the Securities Act applicable to it with
respect to the disposition of all Registrable Securities covered by such
Registration Statement during the applicable period in accordance with the
intended methods of disposition by Sellers set forth in such Registration
Statement or supplement to the prospectus.
(c) The Company, at least ten (10) days prior to filing a Registration
Statement or at least five (5) days prior to filing a prospectus or any
amendment or supplement to such Registration Statement or prospectus, will
furnish to (i) Sellers, (ii) counsel representing Sellers, (iii) each
Underwriter, if any, of the Registrable Securities covered by such Registration
Statement copies of such Registration Statement as proposed to be filed,
together with exhibits thereto, which documents will be subject to review and
approval by each of the foregoing within
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ten (10) days after delivery (except that such review and approval of any
prospectus or any amendment or supplement to such Registration Statement or
prospectus must be within five (5) days after delivery), and thereafter, furnish
to Sellers, counsel to Sellers and Underwriters, if any, for their review and
comment such number of copies of such Registration Statement, each amendment and
supplement thereto (in each case including all exhibits thereto and documents
incorporated by reference therein), the prospectus included in such Registration
Statement (including each preliminary prospectus) and such other documents or
information as Sellers, counsel to Sellers or the Underwriters may reasonably
request in order to facilitate the disposition of the Registrable Securities;
provided, however, that notwithstanding the foregoing, if the Company intends to
file any prospectus, prospectus supplement or prospectus sticker which does not
make any material changes in the documents already filed (including, without
limitation, any prospectus under Rule 430A or 424(b)), then counsel for Sellers
will be afforded such opportunity to review such documents prior to filing
consistent with the time constraints involved in filing such document, but in
any event no less than three (3) days.
(d) The Company shall furnish to Sellers and to each Underwriter, if
any, such number of copies of the Registration Statement (including each
preliminary prospectus) as such Persons may reasonably request in order to
facilitate the intended disposition of the Registrable Securities covered by
such Registration Statement.
(e) If the offering is an underwritten offering, at the request of
Sellers, the Company shall use its reasonable efforts to furnish on the date
that Registrable Securities are delivered to the Underwriters for sale pursuant
to such Registration Statement: (i) an opinion dated such date of counsel
representing the Company for the purposes of such registration, addressed to the
Underwriters and to Sellers, stating that (A) such Registration Statement has
become effective under the Securities Act, (B) to the best knowledge of such
counsel, no stop order suspending the effectiveness thereof has been issued and
no proceedings for that purpose have been instituted or are pending or
contemplated under the Securities Act, (C) the Registration Statement complies
as to form in all material respects with the requirements of the Securities Act
and the applicable rules and regulations of the Commission thereunder, and such
counsel has no reason to believe that the Registration Statement or any
amendment thereto (including any documents incorporated in the prospectus), as
of its respective effective date (or as of its date of filing) contains any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading
(except that such counsel need not express any opinion as to financial
statements contained therein) and (D) to such other effects as reasonably may be
requested by counsel for the Underwriters or by Sellers or its counsel,
considering customary comparable underwritten transactions and (ii) on such date
and as of the date of the underwriting agreement, a letter dated such date from
the independent public accountants or chartered accountants retained by the
Company, addressed to the Underwriters and to Sellers, stating that they are
independent public accountants within the meaning of the Securities Act and
that, in the opinion of such
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accountants, the financial statements of the Company included in the
Registration Statement, comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information as to the
period ending no more than five (5) Business Days prior to the date of such
letter) with respect to such registration as such Underwriters reasonably may
request considering customary comparable underwritten transactions.
(f) The Company promptly will notify Sellers of (and in any event
within twenty-four (24) hours of the receipt of) any stop order issued or
threatened by the Commission and take all reasonable actions required to prevent
the entry of such stop order or to remove it at the earliest possible moment if
entered.
(g) On or prior to the date on which the Registration Statement is
declared effective by the Commission, the Company will use all reasonable
efforts to (i) register or qualify the Registrable Securities under such other
securities or blue sky laws of such other jurisdictions as Sellers reasonably
(in light of Sellers' intended plan of distribution) requests, and (ii) file
documents required to register such Registrable Securities with or approved by
such other governmental agencies or authorities as may be necessary by virtue of
the business and operations of the Company and do any and all other acts and
things that may be reasonably necessary or advisable to enable Sellers to
consummate the disposition of the Registrable Securities owned by Sellers;
provided that the Company will not be required to (A) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this paragraph (g), (B) subject itself to taxation in any such
jurisdiction or (C) consent to general service of process in any such
jurisdiction.
(h) The Company will notify Sellers, counsel to Sellers and any
Underwriter promptly (and in any event within 24 hours) and (if requested by any
such Person) confirm such notice in writing, (i) when a prospectus or any
prospectus supplement or post-effective amendment has been filed and, with
respect to a Registration Statement or any post-effective amendment, when the
same has become effective, (ii) of any request by the Commission or any other
federal or state governmental authority for amendments or supplements to a
Registration Statement or prospectus or for additional information to be
included in any Registration Statement or prospectus or otherwise, (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of a
Registration Statement or the initiation or threatening of any proceedings for
that purpose, (iv) of the issuance by any state securities commission or other
regulatory authority of any order suspending the qualification or exemption from
qualification of any of the Registrable Securities under state securities or
"blue sky" laws or the initiation of any proceedings for that purpose, and (v)
of the happening of any event which makes any statement made in a Registration
Statement or related prospectus or any document incorporated or deemed to be
incorporated by reference therein untrue or which requires the making of any
changes in such Registration Statement, prospectus or documents so that they
will not contain any untrue
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statement of a material fact or omit to state any material fact required to be
stated therein or necessary to make the statements in the Registration Statement
and prospectus not misleading in light of the circumstances in which they were
made; and, as promptly as practicable thereafter, prepare and file with the
Commission and furnish a supplement or amendment to such prospectus so that, as
thereafter deliverable to the purchasers of such Registrable Securities, such
prospectus will not contain any untrue statement of a material fact or omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(i) If requested by the managing Underwriter or Underwriters, Sellers
or Sellers' counsel, the Company will, unless otherwise advised by counsel,
promptly incorporate in a prospectus supplement or post-effective amendment such
information as the managing Underwriter or Underwriters requests, or Sellers'
counsel requests, to be included therein, including, without limitation, with
respect to the Registrable Securities being sold by Sellers to such Underwriter
or Underwriters, the purchase price being paid therefor by such Underwriter or
Underwriters and with respect to any other terms of the underwritten offering of
the Registrable Securities to be sold in such offering, and promptly make all
required filings of such prospectus supplement or post-effective amendment.
(j) The Company will enter into customary agreements reasonably
satisfactory to the Company (including, if applicable, an underwriting agreement
in customary form and which is reasonably satisfactory to the Company) and take
such other actions as are reasonably required in order to expedite or facilitate
the disposition of such Registrable Securities (Sellers, at its option may,
require that any or all of the representations, warranties and covenants of the
Company to or for the benefit of such Underwriters also be made to and for the
benefit of Sellers).
(k) The Company will make available to Sellers (and will deliver to
their counsel) and each Underwriter, if any, subject to restrictions imposed by
the United States federal government or any agency or instrumentality thereof,
copies of all correspondence between the Commission and the Company, its counsel
or auditors and will also make available for inspection at reasonable times at
the Company's offices by Sellers, any Underwriter participating in any
disposition pursuant to such Registration Statement and any attorney, accountant
or other professional retained by Sellers or any Underwriter (collectively, the
"Inspectors"), all financial and other records, pertinent corporate documents
and properties of the Company as shall be reasonably necessary to enable them to
exercise their due diligence responsibility, and cause the Company's officers
and employees to supply all information reasonably requested by any Inspectors
in connection with such registration statement.
(l) In connection with an underwritten offering, the Company will
participate, to the extent reasonably requested by the managing Underwriter or
Underwriters for the offering
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or Sellers, in customary efforts to sell the securities under the offering,
including, without limitation, participating in "road shows"; provided that the
Company shall not be obligated to participate in more than two such selling
efforts in any 12-month period.
(m) The Company, during the period when the prospectus is required to
be delivered under the Securities Act, promptly will file all documents required
to be filed with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of
the Exchange Act.
(n) The Company will use all reasonable efforts to obtain a cold
comfort letter from the Company's independent public accountants in customary
form and covering such matters of the type customarily covered by cold comfort
letters, as Sellers may request.
(o) The Company shall cause all such Registrable Securities registered
pursuant hereunder to be listed on each securities exchange on which similar
securities issued by the Company are then listed.
(p) The Company shall provide a transfer agent and registrar for all
Registrable Securities registered pursuant to such Registration Statement and a
CUSIP number for all such Registrable Securities, in each case not later than
the effective date of such registration.
(q) The Company shall otherwise comply with all applicable rules and
regulations of the Commission.
(r) The Company may require Sellers to promptly furnish in writing to
the Company such information regarding the distribution of the Registrable
Securities as the Company may from time to time reasonably request and such
other information as may be legally required in connection with such
registration including, without limitation, all such information as may be
requested by the Commission or the National Association of Securities Dealers,
Inc.
(s) Sellers agree that, upon receipt of any notice from the Company of
the happening of any event of the kind described in Section 3.1(h) hereof,
Sellers will forthwith discontinue disposition of Registrable Securities
pursuant to the Registration Statement covering such Registrable Securities
until Sellers' receipt of the copies of the supplemented or amended prospectus
contemplated by Section 3.1(h) hereof, and, if so directed by the Company,
Sellers will deliver to the Company all copies, other than permanent file copies
then in Sellers' possession, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the period during which
such Registration Statement shall be maintained effective (including the period
referred to in Section 3.1(a) hereof) by the number of days during the period
from and including the date of the giving of notice pursuant to Section 3.1(h)
hereof to the
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date when the Company shall make available to Sellers covered by such
Registration Statement a prospectus supplemented or amended to conform with the
requirements of Section 3.1(h) hereof.
SECTION 3.2 Registration Expenses. The Company shall pay the following
registration expenses incurred in connection with the registration (the
"Registration Expenses"): (i) all registration and filing fees, (ii) fees and
expenses of compliance with securities or blue sky laws (including reasonable
fees and disbursements of counsel in connection with blue sky qualifications of
the Registrable Securities), (iii) processing, duplicating and printing
expenses, (iv) the Company's internal expenses (including, without limitation,
all salaries and expenses of its officers and employees performing legal or
accounting duties), (v) the fees and expenses incurred in connection with the
listing of the Registrable Securities, (vi) fees and disbursements of counsel
for the Company and fees and expenses for independent certified public
accountants retained by the Company (including the expenses of any comfort
letters or costs associated with the delivery by independent certified public
accountants of a comfort letter or comfort letters requested but not the cost of
any audit other than a year end audit), (vii) the fees and expenses of any
special experts retained by the Company in connection with such registration,
(viii) reasonable fees and expenses of one firm of counsel for Sellers and (ix)
any fees and disbursements of underwriters customarily paid by issuers or
sellers of securities. The Company shall have no obligation to pay any other
underwriting fees, discounts or commissions attributable to the sale of
Registrable Securities; such costs shall be borne by Sellers.
ARTICLE IV.
INDEMNIFICATION AND CONTRIBUTION
SECTION 4.1 Indemnification by the Company. The Company shall, to the full
extent permitted by law, indemnify and hold harmless Sellers from and against
any loss, claim, damage, liability, reasonable attorneys' fees, cost or expense
and costs and expenses of investigating and defending any such claim, joint or
several, and any action in respect thereof (collectively, the "Damages") to
which Sellers may become subject under the Securities Act or otherwise, insofar
as such Damages (or actions or proceedings, whether commenced or threatened, in
respect thereof) arise out of, or are based upon, any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement or prospectus relating to the Registrable Securities or any amendment
or supplement thereto, or arises out of, or are based upon, any omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading or any violation by
the Company of any federal or state securities laws or any rule or regulation
thereof, except insofar as the same are based upon information furnished in
writing to the Company by Sellers expressly for use therein, and shall reimburse
Sellers for any legal and other expenses reasonably incurred by Sellers in
investigating or defending or preparing to defend against any such Damages or
proceedings; provided, however, that the Company shall not be liable to Sellers
to the extent that any such Damages (or action or proceeding in respect thereof)
arise out of or are based upon an untrue
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statement or omission made in any preliminary prospectus if (i) Sellers failed
to send or deliver a copy of the final prospectus with or prior to the delivery
of written confirmation of the sale by Sellers to the Person asserting the claim
from which such Damages arise, and (ii) the final prospectus would have
corrected such untrue statement or such omission; provided further, that the
Company shall not be liable to Sellers in any such case to the extent that any
such Damages arise out of or are based upon an untrue statement or omission in
any prospectus if (x) such untrue statement or omission is corrected in an
amendment or supplement to such prospectus, and (y) having previously been
furnished by or on behalf of the Company with copies of such prospectus as so
amended or supplemented, Sellers thereafter fails to deliver such prospectus as
so amended or supplemented prior to or concurrently with the sale of a
Registrable Security to the Person asserting the claim from which such Damages
arise.
SECTION 4.2 Indemnification by Sellers. Sellers shall, to the full extent
permitted by law, indemnify and hold harmless the Company, its officers,
directors, employees and agents and each Person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, together with the partners, officers, directors, employees and
agents of such controlling Person, to the same extent as the foregoing indemnity
from the Company to Sellers, but only with reference to information related to
Sellers, or its plan of distribution, furnished in writing by Sellers expressly
for use in any Registration Statement or prospectus relating to the Registrable
Securities, or any amendment or supplement thereto, or any preliminary
prospectus and the aggregate amount which may be recovered from Sellers pursuant
to the indemnification provided for in this Section 4.2 in connection with any
registration and sale of Registrable Securities shall be limited to the total
proceeds received by Sellers from the sale of such Registrable Securities. In
case any action or proceeding shall be brought against the Company or its
officers, directors, employees or agents or any such controlling Person or its
officers, directors, employees or agents, in respect of which indemnity may be
sought against Sellers, Sellers shall have the rights and duties given to the
Company, and the Company or its officers, directors, employees or agents, or
such controlling Person, or its officers, directors, employees or agents, shall
have the rights and duties given to Sellers, by the preceding paragraph.
SECTION 4.3 Conduct of Indemnification Proceedings. Promptly after receipt
by any person in respect of which indemnity may be sought pursuant to Section
4.1 or 4.2 (an "Indemnified Party") of notice of any claim or the commencement
of any action, the Indemnified Party shall, if a claim in respect thereof is to
be made against the Person against whom such indemnity may be sought (an
"Indemnifying Party"), notify the Indemnifying Party in writing of the claim or
the commencement of such action; provided that the failure to notify the
Indemnifying Party shall not relieve it from any liability which it may have to
an Indemnified Party except to the extent of any actual prejudice resulting
therefrom. If any such claim or action shall be brought against an Indemnified
Party, and it shall notify the Indemnifying Party thereof, the Indemnifying
Party shall be entitled to participate therein, and, to the extent that it
wishes,
12
jointly with any other similarly notified Indemnifying Party, to assume the
defense thereof with counsel reasonably satisfactory to the Indemnified Party.
After notice from the Indemnifying Party to the Indemnified Party of its
election to assume the defense of such claim or action, the Indemnifying Party
shall not be liable to the Indemnified Party for any legal or other expenses
subsequently incurred by the Indemnified Party in connection with the defense
thereof other than reasonable costs of investigation; provided that the
Indemnified Party shall have the right to employ separate counsel to represent
the Indemnified Party and its controlling Persons who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Indemnified Party against the Indemnifying Party, but the fees and
expenses of such counsel shall be for the account of such Indemnified Party
unless (i) the Indemnifying Party and the Indemnified Party shall have mutually
agreed to the retention of such counsel or (ii) in the reasonable judgment of
the Company and such Indemnified Party, representation of both parties by the
same counsel would be inappropriate due to actual or potential conflicts of
interest between them, it being understood, however, that the Indemnifying Party
shall not, in connection with any one such claim or action or separate but
substantially similar or related claims or actions in the same jurisdiction
arising out of the same general allegations or circumstances, be liable for the
fees and expenses of more than one separate firm of attorneys (together with
appropriate local counsel) at any time for all Indemnified Parties, or for fees
and expenses that are not reasonable. No Indemnifying Party shall, without the
prior written consent of the Indemnified Party, effect any settlement of any
claim or pending or threatened proceeding in respect of which the Indemnified
Party is or could have been a party and indemnity could have been sought
hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Party from all liability arising out
of such claim or proceeding. Whether or not the defense of any claim or action
is assumed by the Indemnifying Party, such Indemnifying Party will not be
subject to any liability for any settlement made without its consent, which
consent will not be unreasonably withheld.
SECTION 4.4 Contribution. If the indemnification provided for in this
Article 4 is unavailable to the Indemnified Parties in respect of any Damages
referred to herein, then each Indemnifying Party, in lieu of indemnifying such
Indemnified Party, shall contribute to the amount paid or payable by such
Indemnified Party as a result of such Damages as between the Company on the one
hand and Sellers on the other, in such proportion as is appropriate to reflect
the relative fault of the Company and Sellers in connection with such statements
or omissions, as well as any other relevant equitable considerations. The
relative fault of the Company on the one hand and Sellers on the other shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by such party, and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
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SECTION 4.5 The Company and Sellers agree that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the Damages
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 4.4, Sellers shall not be required to contribute any amount in excess of
the amount by which the total price at which the Registrable Securities of
Sellers were offered to the public (less underwriting discounts and commissions)
exceeds the amount of any damages which Sellers has otherwise been required to
pay by reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
ARTICLE V.
INFORMATION AND OTHER OBLIGATIONS OF SELLERS
SECTION 5.1 Provision of Information. As a condition to exercising the
registration rights provided for herein, Sellers shall furnish to the Company
such information regarding Sellers and the distribution proposed by Sellers as
the Company may reasonably request in writing and as shall be reasonably
required in connection with any registration, qualification, or compliance
referred to in this Agreement.
SECTION 5.2 Underwriters. Sellers, with respect to any Registrable
Securities included in any registration, shall cooperate in good faith with the
Company and the underwriters, if any, in connection with such registration.
SECTION 5.3 Stop Orders. Sellers, with respect to any Registrable
Securities included in any registration, shall make no further sales or other
dispositions, or offers therefor, of such shares under such Registration
Statement if, during the effectiveness of such Registration Statement, an
intervening event should occur which, in the opinion of counsel to the Company,
makes the prospectus included in such Registration Statement no longer comply
with the Securities Act until such time as Sellers has received from the Company
copies of a new, amended or supplemented prospectus complying with the
Securities Act.
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ARTICLE VI.
MISCELLANEOUS
SECTION 6.1 Participation in Underwritten Registrations. Sellers shall not
be required to make any representations or warranties to or agreements with the
Company or the Underwriters other than representations, warranties or agreements
regarding Sellers and its ownership of the securities being registered on their
behalf and Sellers' intended method of distribution and any other representation
required by law.
SECTION 6.2 Rule 144 and 144A. The Company covenants that it will file any
reports required to be filed by it under the Securities Act and the Securities
Exchange Act of 1934, as amended and that it will take such further action as
Sellers may reasonably request, all to the extent required from time to time to
enable Sellers to sell Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (a) Rule 144
or Rule 144A under the Securities Act, as such Rules may be amended from time to
time, or (b) any similar rule or regulation hereafter adopted by the Commission.
Upon the request of Sellers, the Company will deliver to Sellers a written
statement as to whether it has complied with such requirements.
SECTION 6.3 Suspension of Obligation to File. Notwithstanding the
provisions of Section 3.1(a), the Company's obligations to file a Registration
Statement, or cause such Registration Statement to become and remain effective,
shall be suspended for a period not to exceed 90 days if there exists at the
time material non-public information relating to the Company that, in the
reasonable opinion of the Company, should not be disclosed.
SECTION 6.4 Amendment and Modification. This Agreement may be amended,
modified and supplemented, and any of the provisions contained herein may be
waived, only by a written instrument signed by the Company and Sellers. The
failure of any party to enforce any of the provisions of this Agreement shall in
no way be construed as a waiver of such provisions and shall not affect the
right of such party thereafter to enforce each and every provision of this
Agreement in accordance with its terms.
SECTION 6.5 Binding Effect; Entire Agreement. This Agreement (including the
exhibits, schedules and appendices attached hereto), including the documents
referred to herein, embodies the entire agreement and understanding of the
Parties hereto and supersedes all prior agreements and understandings of the
Parties hereto relating to the subject matter herein contained.
SECTION 6.6 Severability. Any holding that a provision of this Agreement is
unenforceable, in whole or in part, will not affect the validity of the other
provisions of this Agreement.
15
SECTION 6.7 Notices. All notices under this Agreement, including reports,
shall be in writing in the English language addressed to the appropriate Party
at the address set forth by its name on this Agreement, and shall be deemed
given when received by the recipient and shall be delivered directly by hand to
authorized personnel or by registered mail, return receipt requested, telex
authenticated facsimile message or electronic mail, confirmed by registered
mail.
All notices shall be addressed:
If to Sellers: Arrangoiz and Xxxxxxx.
Xxxxxxxx Xxx Xx. 00
Xxx. Xxxx Xxx
00000 Xxxxxx, D.F.
Fax. (000) 000-0000
If to the Company: Frontline Communications Corp.
Xxx Xxxx Xxxx Xxxxx
0xx Xxxxx
Xxxxx Xxxxx, Xxx Xxxx 00000
Fax: (000) 000-0000
Attn: Xxxxxxx X. Xxxx-Xxxxxxxx
SECTION 6.8 GOVERNING LAW. This Agreement shall be construed, interpreted,
governed, and enforced by and under the laws of the State of New York, without
giving effect to the conflicts of law principles thereof.
SECTION 6.9 Headings. The headings in this Agreement are for convenience of
reference only and shall not constitute a part of this Agreement, nor shall they
affect their meaning, construction or effect.
SECTION 6.10 Counterparts. This Agreement may be executed in any number of
counterparts and by the different Parties hereto on separate counterparts, each
of which, when executed and delivered, shall be effective for purposes of
binding the Parties hereto, but all of which shall together constitute one and
the same instrument. Any signature page delivered by a fax machine or telecopy
machine shall be binding to the same extent as an original signature page. Any
Party who delivers such a signature page agrees to later deliver an original
counterpart to any Party which requests it.
SECTION 6.11 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the Parties named in this Agreement and their
respective successors and permitted assigns. No Party may assign either this
Agreement or any of its rights, interests or obligations hereunder without the
prior written approval of each of the other parties, except that
16
each of Sellers shall be entitled to assign or transfer their rights hereunder
to their respective beneficiaries or as part as an estate planning trust or
mechanism, by giving prior written notice to the Company.
SECTION 6.12 Remedies. In the event of a breach or a threatened breach by
any Party to this Agreement of its obligations under this Agreement, any Party
injured or to be injured by such breach will be entitled to specific performance
of its rights under this Agreement or to injunctive relief, in addition to being
entitled to exercise all rights provided in this Agreement and granted by law.
The Parties agree that the provisions of this Agreement shall be specifically
enforceable, it being agreed by the Parties that the remedy at law, inducing
monetary damages, for breach of any such provision will be inadequate
compensation for any loss and that any defense or objection in any action for
specific performance or injunctive relief that a remedy at law would be adequate
is waived.
SECTION 6.13 Interpretation. The Parties have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement shall be construed
as if drafted jointly by the Parties and no presumption or burden of proof shall
arise favoring or disfavoring any Party by virtue of the authorship of any of
the provisions of this Agreement.
[SIGNATURE PAGE FOLLOWS]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
/s/ Xxxxxxx Xxxxxxxx del Rio Arrangoiz /s/ Xxxxxxx Xxxxxxxx del Rio Xxxxxxx
-------------------------------------- ------------------------------------
Xxxxxxx Xxxxxxxx del Rio Arrangoiz Xxxxxxx Xxxxxxxx del Rio Xxxxxxx
/s/ Xxxxxxx X. Xxxx-Xxxxxxxx
-------------------------------------
Frontline Communications Corp.
Name:
____________________________
Title:
___________________________
