EXHIBIT G
REGISTRATION AGREEMENT
G-1
REGISTRATION AGREEMENT
DATED AS OF NOVEMBER 26, 2002
AMONG
VITALSTREAM HOLDINGS, INC.
AND THE
COMMON STOCKHOLDERS,
CONVERTIBLE NOTEHOLDERS
AND
WARRANT HOLDERS
OF
VITALSTREAM HOLDINGS, INC. REFERRED TO HEREIN
TABLE OF CONTENTS
1. DEFINITIONS.................................. 2
2. DEMAND REGISTRATIONS......................... 3
3. PIGGYBACK REGISTRATIONS...................... 5
4. HOLDBACK AGREEMENTS.......................... 6
5. REGISTRATION PROCEDURES...................... 6
6. REGISTRATION EXPENSES........................ 9
7. INDEMNIFICATION.............................. 10
8. PARTICIPATION IN UNDERWRITTEN REGISTRATIONS.. 11
9. MISCELLANEOUS................................ 11
REGISTRATION AGREEMENT
REGISTRATION AGREEMENT, dated as of November 26, 2002 (this
"Agreement"), by and among VitalStream Holdings, Inc., a Nevada corporation (the
"Company"), the holders of Common Stock listed on the Schedule of Common
Stockholders attached hereto (including such other holders of Common Stock who
may from time to time become parties hereto after the date hereof and be listed
on the Schedule of Common Stockholders) (the "Common Stockholders"), the holders
of Convertible Notes listed on the Schedule of Convertible Noteholders attached
hereto (including such other holders of Convertible Notes who may from time to
time become parties hereto after the date hereof and be listed on the Schedule
of Convertible Noteholders attached hereto) (the "Convertible Noteholders"), and
the holders of Warrants listed on the Schedule of Warrant Holders attached
hereto (including such other holders of Warrants who may from time to time
become parties hereto after the date hereof and be listed on the Schedule of
Warrant Holders attached hereto) (the "Warrant Holders").
WHEREAS, reference is made to that certain Asset Purchase Agreement,
dated as of November 1, 2002 (as amended and modified from time to time, the
"Asset Purchase Agreement"), by and among the Company, VitalStream Broadcasting
Corporation (the "Buyer"), Epoch Hosting, Inc. ("Hosting") and Epoch Networks,
Inc. ("Networks") pursuant to which the Buyer acquired substantially all of the
assets and assumed certain liabilities used in the conduct by Hosting and
Networks of their Hosting Businesses (as defined in the Asset Purchase
Agreement) in consideration for the issuance of shares of Common Stock by the
Company to Hosting.
WHEREAS, reference is also made to that certain Note and Warrant
Purchase Agreement, dated as of November 1, 2002 (as amended and modified from
time to time, the "Note and Warrant Purchase Agreement"), by and among the
Company and the purchasers referred to therein pursuant to which the Company
sold and the purchasers purchased the Convertible Notes and Warrants.
WHEREAS, pursuant to the Note and Warrant Purchase Agreement, the
Company issued shares of Common Stock to the purchasers of Convertible Notes and
Warrants referred to therein as payment of a commitment fee due and payable upon
the closing of the transactions contemplated by the Note and Warrant Purchase
Agreement.
WHEREAS, to induce the parties hereto to consummate the transactions
contemplated by the Asset Purchase Agreement and the Note and Warrant Purchase
Agreement, the Company, the Common Stockholders, the Convertible Noteholders and
the Warrant Holders have agreed to enter into this Agreement for the purposes of
providing for registration rights for Common Stock held by such holders.
NOW, THEREFORE, in consideration of the mutual covenants contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
NOW, THEREFORE, the parties hereto agree as follows:
1. Definitions. Except as defined in this Section 1 or unless
otherwise indicated herein, capitalized terms used in this Agreement have the
meanings ascribed to them in the Asset Purchase Agreement or the Note and
Warrant Purchase Agreement, as the case may be.
"Common Stock" means the Common Stock, par value $0.001 per share, of
the Company as more fully described in the certificate of incorporation of the
Company.
"Convertible Notes" means those certain 10% Convertible Promissory
Notes of the Company issued to certain purchasers pursuant to the Note and
Warrant Purchase Agreement.
"Dolphin" means Dolphin Fund II.
"Dolphin Communications II" means Dolphin Communications Fund II, L.P.
"Dolphin Fund II" means Dolphin Communications II and Dolphin Parallel
II.
"Dolphin Holders" means Dolphin and any Affiliate of Dolphin that holds
Registrable Securities.
"Dolphin Parallel II" means Dolphin Communications Parallel Fund II
(Netherlands), L.P.
"Registrable Securities" means (a) any Common Stock issued pursuant to
the Note and Warrant Purchase Agreement, (b) any Common Stock issued or
issuable, directly or indirectly, upon conversion of the Convertible Notes, (c)
any Common Stock issued or issuable, directly or indirectly, upon exercise of
the Warrants and (d) any capital stock or other Equity Securities issued or
issuable directly or indirectly with respect to the Common Stock referred to in
clauses (a), (b) or (c) above by way of stock dividend or stock split or in
connection with a combination of shares, recapitalization, merger, consolidation
or other reorganization. As to any particular Registrable Securities, such
Registrable Securities shall cease to be Registrable Securities, when (i) they
have been distributed to the public pursuant to an offering registered under the
Securities Act or sold to the public through a broker, dealer or market maker in
compliance with Rule 144 under the Securities Act (or any similar rule then in
force), (ii) the holder of such Registrable Securities can sell all, but not
less than all, of the Registrable Securities held by such holder to the public
through a broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force) without exceeding such volume
limitations under such rule, or (iii) six years after the date of this
Agreement. For purposes of this Agreement, a Person shall be deemed to be a
holder of Registrable Securities, and such Registrable Securities shall be
deemed to be in existence, whenever such Person has the right to acquire
directly or indirectly such Registrable Securities (upon conversion or exercise
in connection with a transfer of securities or otherwise, but disregarding any
restrictions or limitations upon the exercise of such right), whether or not
such acquisition has actually been effected, and such Person shall be entitled
to exercise the rights of a holder of Registrable Securities hereunder. In
addition, for purposes of this Agreement, any Person who holds Registrable
Securities as a result of a transfer of Registrable Securities shall be deemed
to be the holder of Registrable Securities.
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"Registration Expenses" shall have the meaning set forth in Section
6(a).
"Warrants" means those certain warrants to purchase shares of the
Company's Common Stock issued pursuant to the Note and Warrant Purchase
Agreement.
2. Demand Registrations.
(a) Requests for Registration. (i) At any time and from time to
time after the first anniversary of the Closing Date (as defined in the Note and
Warrant Purchase Agreement), the Dolphin Holders owning a majority of the
Registrable Securities held by all Dolphin Holders may request registration
under the Securities Act of all or any portion of their Registrable Securities
on Form S-1 or any similar long-form registration ("Long-Form Registrations"),
and (ii) at any time and from time to time after the first anniversary of the
Closing Date (as defined in the Note and Warrant Purchase Agreement), the
holders of a majority of the Registrable Securities held by all Dolphin Holders
may request registration under the Securities Act of all or any portion of their
Registrable Securities on Form S-2 or S-3 or any similar short-form registration
("Short-Form Registrations"), if available; provided, however, that respect to
Section 2(a)(i) and Section 2(a)(ii) above, in the event the Company files with
the Securities and Exchange Commission a registration statement requesting
registration of securities (other than any post-effective amendment to any
registration statement filed by the Company prior to the date hereof; provided
that such post-effective amendment does not increase the number of shares of
Common Stock registered by such registration statement) (whether on behalf of
itself or any third Person), the limitation on registration requests until the
first anniversary of the Closing Date (as defined in the Note and Warrant
Purchase Agreement) set forth in Section 2(a)(i) and Section 2(a)(ii) above
shall immediately cease and the Dolphin Holders owning a majority of the
Registrable Securities held by all Dolphin Holders may request registration
under the Securities Act in accordance with the provisions of this Agreement.
All registrations requested pursuant to this Section 2(a) are referred to herein
as "Demand Registrations". Each request for a Demand Registration shall specify
the approximate number of Registrable Securities requested to be registered
(which shall be no fewer than the lesser of (i) Registrable Securities with a
Market Price of $3,000,000, or (ii) 25% of the outstanding Registrable
Securities), the anticipated per share price range for such offering and the
intended method of distribution. Within ten (10) days after receipt of any such
request, the Company shall give written notice of such requested registration to
all other holders of Registrable Securities and, subject to the terms of Section
2(d) hereof, shall include in such registration (and in all related
registrations and qualifications under state blue sky laws or in compliance with
other registration requirements and in any related underwriting) all Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within fifteen (15) days after the receipt of the Company's
notice.
(b) Long-Form Registrations. The Dolphin Holders shall be entitled
to request two (2) Long-Form Registrations in which the Company shall pay all
Registration Expenses. A registration shall not count as one of the permitted
Long-Form Registrations until it has become effective, and any Long-Form
Registration shall not count as one of the permitted Long-Form Registrations
unless the holders of Registrable Securities are able to register and sell at
least 90% of the Registrable Securities requested to be included in such
registration; provided that in any event the Company shall pay all Registration
Expenses in connection with any registration initiated as a Long-Form
Registration whether or not it has become effective and
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whether or not such registration has counted as one of the permitted Long-Form
Registrations. All Long-Form Registrations shall be underwritten registrations.
(c) Short-Form Registrations. In addition to the Long-Form
Registrations provided pursuant to Section 2(b), the holders of Registrable
Securities shall be entitled to request an unlimited number of Short-Form
Registrations in which the Company shall pay all Registration Expenses. Demand
Registrations shall be Short-Form Registrations whenever the Company is
permitted to use any applicable short form and if the managing underwriters (if
any) agree to the use of a Short-Form Registration. The Company shall use its
best efforts to make Short-Form Registrations on Form S-3 available for the sale
of Registrable Securities.
(d) Priority on Demand Registrations. The Company shall not
include in any Demand Registration any securities which are not Registrable
Securities without the prior written consent of the holders of at least a
majority of the Registrable Securities initially requesting such registration.
If a Demand Registration is an underwritten offering and the managing
underwriters advise the Company in writing that in their opinion the number of
Registrable Securities and, if permitted hereunder, other securities requested
to be included in such offering exceeds the number of Registrable Securities and
other securities, if any, which can be sold in an orderly manner in such
offering within a price range acceptable to the holders of a majority of the
Registrable Securities initially requesting registration, the Company shall
include in such registration prior to the inclusion of any securities which are
not Registrable Securities the number of Registrable Securities requested to be
included which in the opinion of such underwriters can be sold in an orderly
manner within the price range of such offering, pro rata among the respective
holders thereof on the basis of the amount of Registrable Securities owned by
each such holder.
(e) Restrictions on Long-Form Registrations. The Company shall not
be obligated to effect any Demand Registration within 180 days after the
effective date of a previous Demand Registration. The Company may postpone for
up to 180 days the filing or the effectiveness of a registration statement for a
Demand Registration if the Company's board of directors determines in its
reasonable good faith judgment that such Demand Registration would reasonably be
expected to have a material adverse effect on any proposal or plan by the
Company or any of its Subsidiaries to engage in any acquisition of assets (other
than in the Ordinary Course of Business) or any merger, consolidation, tender
offer, reorganization or similar transaction; provided that in such event, the
holders of Registrable Securities initially requesting such Demand Registration
shall be entitled to withdraw such request and, if such request is withdrawn,
such Demand Registration shall not count as one of the permitted Demand
Registrations hereunder and the Company shall pay all Registration Expenses in
connection with such registration. The Company may delay a Demand Registration
hereunder only once in any twelve-month period.
(f) Selection of Underwriters. Within thirty (30) days following
submission of a request for registration pursuant to this Agreement, the Company
shall choose the managing underwriter administering the offering of any
Registrable Securities registered pursuant to this Agreement, which managing
underwriter shall be a nationally recognized or regionally recognized investment
bank. In the event that the Company fails to choose the managing underwriter
within such thirty (30) period, the holders of a majority of the Registrable
Securities
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initially requesting registration hereunder shall have the right to select the
managing underwriter to administer the offering.
(g) Other Registration Rights. The Company represents and warrants
that, except for the agreements disclosed on Schedule 3(l) to the Asset Purchase
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. Except as provided
in this Agreement, the Company shall not grant to any Person the right to
request the Company to register any Equity Securities of the Company, or any
securities convertible or exchangeable into or exercisable for Equity Securities
of the Company, without the prior written consent of the holders of at least a
majority of the Registrable Securities held by all Dolphin Holders; provided
that the Company may grant rights to other Persons to (i) participate in
Piggyback Registrations so long as such rights are subordinate to the rights of
the holders of Registrable Securities with respect to such Piggyback
Registrations as set forth in Section 3(c) and Section 3(d) hereof and (ii)
request registrations so long as the holders of Registrable Securities are
entitled to participate in any such registrations with such Persons pro rata on
the basis of the number of shares owned by each such holder.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company proposes to register
any of its securities under the Securities Act (other than pursuant to a Demand
Registration) and the registration form to be used may be used for the
registration of Registrable Securities (a "Piggyback Registration"), the Company
shall give prompt written notice to all holders of Registrable Securities of its
intention to effect such a registration and, subject to the terms of Section
3(c) and Section 3(d) hereof, shall include in such registration (and in all
related registrations or qualifications under blue sky laws or in compliance
with other registration requirements and in any related underwriting) all
Registrable Securities with respect to which the Company has received written
requests for inclusion therein within twenty (20) days after the receipt of the
Company's notice.
(b) Piggyback Expenses. The Registration Expenses of the holders
of Registrable Securities shall be paid by the Company in all Piggyback
Registrations.
(c) Priority on Primary Registrations. If a Piggyback Registration
is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in such offering without adversely affecting the
marketability of the offering, the Company shall include in such registration
(i) first, the securities the Company proposes to sell, (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by each such holder, and (iii) third, other securities requested to
be included in such registration.
(d) Priority on Secondary Registrations. If a Piggyback
Registration is an underwritten secondary registration on behalf of holders of
the Company's securities, and the managing underwriters advise the Company in
writing that in their opinion the number of
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securities requested to be included in such registration exceeds the number
which can be sold in an orderly manner in such offering within a price range
acceptable to the holders initially requesting such registration, the Company
shall include in such registration (i) first, the securities requested to be
included therein by the holders requesting such registration and the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such securities on the basis of the number of securities so requested
to be included therein, and (ii) second, other securities requested to be
included in such registration.
(e) Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the selection of investment banker(s) and manager(s) for
the offering must be approved by the holders of a majority of the Registrable
Securities held by all Dolphin Holders included in such Piggyback Registration.
Such approval shall not be unreasonably withheld or delayed.
(f) Other Registrations. Unless required to do so by the terms of
one or more of the Other Registration Rights Agreements, if the Company has
previously filed a registration statement with respect to Registrable Securities
pursuant to Section 2 or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Company shall not file or
cause to be effected any other registration of any of its Equity Securities or
securities convertible or exchangeable into or exercisable for its Equity
Securities under the Securities Act (except on Form S-8 or any successor form),
whether on its own behalf or at the request of any holder or holders of such
securities, until a period of at least one 180 days has elapsed from the
effective date of such previous registration.
4. Holdback Agreements.
(a) Each holder of Registrable Securities shall not effect any
public sale or distribution (including sales pursuant to Rule 144) of Equity
Securities of the Company during the seven (7) days prior to and the ninety (90)
day period beginning on the effective date of any underwritten Demand
Registration (except as part of such underwritten registration), unless the
underwriters managing the registered public offering otherwise agree.
(b) The Company (i) shall not effect any public sale or
distribution of its Equity Securities, during the seven (7) days prior to and
during the ninety (90) day period beginning on the effective date of any
underwritten Demand Registration or any underwritten Piggyback Registration
(except as part of such underwritten registration or pursuant to registrations
on Form S-8 or any successor form), unless the underwriters managing the
registered public offering otherwise agree, and (ii) shall cause each holder of
its Common Stock, or any securities convertible into or exchangeable or
exercisable for Common Stock, purchased from the Company at any time after the
date of this Agreement (other than in a registered public offering or pursuant
to a right to purchase Common Stock existing on the date hereof) to agree not to
effect any public sale or distribution (including sales pursuant to Rule 144) of
any such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
registered public offering otherwise agree.
5. Registration Procedures. Whenever the holders of Registrable
Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the
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Company shall use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended method of
disposition thereof and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the Securities and Exchange Commission a
registration statement, and all amendments and supplements thereto and related
prospectuses as may be necessary to comply with applicable securities laws, with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective (provided that before filing a
registration statement or prospectus or any amendments or supplements thereto,
the Company shall furnish to the counsel selected by the holders of a majority
of the Registrable Securities covered by such registration statement copies of
all such documents proposed to be filed, which documents shall be subject to the
review and comment of such counsel);
(b) notify each holder of Registrable Securities of the
effectiveness of each registration statement filed hereunder and prepare and
file with the Securities and Exchange Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
of not less than 180 days and comply with the provisions of the Securities Act
with respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the sellers thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number
of copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and do any and all other acts and things which
may be reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller (provided that the Company shall not be required to (i) qualify generally
to do business in any jurisdiction where it would not otherwise be required to
qualify but for this subparagraph, (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
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(f) cause all such Registrable Securities to be listed on each
securities exchange on which similar securities issued by the Company are then
listed and, if not so listed, to be listed on the NASD automated quotation
system, the OTC Bulletin Board or any successor to the OTC Bulletin Board;
(g) provide a transfer agent and registrar for all such
Registrable Securities not later than the effective date of such registration
statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) and take all such other actions as the holders of
a majority of the Registrable Securities held by all Dolphin Holders being sold
or the underwriters, if any, reasonably request in order to expedite or
facilitate the disposition of such Registrable Securities (including effecting a
stock split or a combination of shares);
(i) make available for inspection by any seller of Registrable
Securities, any underwriter participating in any disposition pursuant to such
registration statement and any attorney, accountant or other agent retained by
any such seller or underwriter, all financial and other records, pertinent
corporate documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(j) otherwise use its best efforts to comply with all applicable
rules and regulations of the Securities and Exchange Commission, and make
available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least twelve months beginning with
the first day of the Company's first full calendar quarter after the effective
date of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder; and
(k) permit any holder of Registrable Securities which holder, in
its sole and exclusive judgment, might be deemed to be an underwriter or a
controlling person of the Company, to participate in the preparation of such
registration or comparable statement and to require the insertion therein of
material, furnished to the Company in writing, which in the reasonable judgment
of such holder and its counsel should be included;
(l) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any common stock included in such registration statement for sale in any
jurisdiction, the Company shall use its best efforts promptly to obtain the
withdrawal of such order; and
(m) use its best efforts to cause such Registrable Securities
covered by such registration statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to enable the
sellers thereof to consummate the disposition of such Registrable Securities;
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6. Registration Expenses.
(a) All expenses incident to the Company's performance of or
compliance with this Agreement, including without limitation all registration,
qualification and filing fees, fees and expenses of compliance with securities
or blue sky laws, printing expenses, messenger and delivery expenses, fees and
disbursements of custodians, and fees and disbursements of counsel for the
Company and all independent certified public accountants and other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), shall be borne as provided in this Agreement, except that the
Company shall, in any event, pay its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
similar securities issued by the Company are then listed or on the NASD
automated quotation system, the OTC Bulletin Board or any successor to the OTC
Bulletin Board, and the underwriting expenses (including discounts and
commissions of the Company but excluding discounts and commissions of any other
Person) with respect to Piggy Back Registrations in which the Company has
elected to engage an underwriter.
(b) In connection with each Demand Registration and each Piggyback
Registration, the Company shall reimburse the holders of Registrable Securities
included in such registration for the reasonable fees and disbursements of one
counsel chosen by the holders of a majority of the Registrable Securities held
by all Dolphin Holders initially requesting such registration (the "Dolphin
Counsel") and for the reasonable fees and disbursements of each additional
counsel retained by any holder of Registrable Securities for the purpose of
rendering a legal opinion on behalf of such holder in connection with any
underwritten Demand Registration or Piggyback Registration, provided, however,
that the Company shall not be obligated to reimburse (i) the holders with
respect to the Dolphin Counsel for more than $25,000 (and the counsels of all
other holders for more than $10,000 in the aggregate) in connection with any
Demand Registration or Piggyback Registration on Form S-1 or any similar
long-form registration and (ii) the holders with respect to the Dolphin Counsel
for more than $13,000 (and the counsels of all other holders for more than
$5,000) in connection with any Demand Registration or Piggyback Registration on
Form S-2 or S-3 or any similar short-form registration (provided that such
Demand Registration or Piggyback Registration on Form S-2 or S-3 does not
involve the preparation of any registration statement, prospectus or similar
disclosure document containing substantially the information generally set forth
in a registration statement on Form S-1).
(c) To the extent Registration Expenses are not required to be
paid by the Company, each holder of securities included in any registration
hereunder shall pay those Registration Expenses allocable to the registration of
such holder's securities so included, and any Registration Expenses not so
allocable shall be borne by all sellers of securities included in such
registration in proportion to the aggregate selling price of the securities to
be so registered.
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7. Indemnification.
(a) The Company agrees to indemnify, to the extent permitted by
law, each holder of Registrable Securities, its officers and directors and each
Person who controls such holder (within the meaning of the Securities Act)
against all losses, claims, actions, damages, liabilities and expenses caused by
(i) any untrue or alleged untrue statement of material fact contained in any
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto or any omission or alleged omission of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or (ii) any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company and relating to
action or inaction required of the Company in connection with any such
registration, qualification or compliance, and to pay to each holder of
Registrable Securities, its officers and directors and each Person who controls
such holder (within the meaning of the Securities Act), as incurred, any legal
and any other expenses reasonably incurred in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action, except
insofar as the same are caused by or contained in any information furnished in
writing to the Company by such holder expressly for use therein or by such
holder's failure to deliver a copy of the registration statement or prospectus
or any amendments or supplements thereto after the Company has furnished such
holder with a sufficient number of copies of the same. In connection with an
underwritten offering, the Company shall indemnify such underwriters, their
officers and directors and each Person who controls such underwriters (within
the meaning of the Securities Act) to the same extent as provided above with
respect to the indemnification of the holders of Registrable Securities.
(b) In connection with any registration statement in which a
holder of Registrable Securities is participating, each such holder shall
furnish to the Company in writing such information and affidavits as the Company
reasonably requests for use in connection with any such registration statement
or prospectus and, to the extent permitted by law, shall indemnify the Company,
its directors and officers and each Person who controls the Company (within the
meaning of the Securities Act) against any losses, claims, damages, liabilities
and expenses resulting from any untrue or alleged untrue statement of material
fact contained in the registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, but only to the extent that such
untrue statement or omission is contained in any information or affidavit so
furnished in writing by such holder; provided that the obligation to indemnify
shall be individual, not joint and several, for each holder and shall be limited
to the net amount of proceeds received by such holder from the sale of
Registrable Securities pursuant to such registration statement.
(c) Any Person entitled to indemnification hereunder shall (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give prompt
notice shall not impair any Person's right to indemnification hereunder to the
extent such failure has not prejudiced the indemnifying party) and (ii) unless
in such indemnified party's reasonable judgment a conflict of interest between
such indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall
-10-
not be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent shall not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim. In such instance, the
conflicting indemnified parties shall have a right to retain one separate
counsel, chosen by the holders of a majority of the Registrable Securities
included in the registration, at the expense of the indemnifying party. No
indemnifying party, in the defense of such claim or litigation, shall, except
with the consent of each indemnified party, consent to the entry of any judgment
or enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of a
release from all liability in respect to such claim or litigation.
(d) The indemnification provided for under this Agreement shall
remain in full force and effect regardless of any investigation made by or on
behalf of the indemnified party or any officer, director or controlling Person
of such indemnified party and shall survive the transfer of securities. The
Company also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason.
8. Participation in Underwritten Registrations. No Person may
participate in any registration hereunder which is underwritten unless such
Person (a) agrees to sell such Person's securities on the basis provided in any
underwriting arrangements approved by the Person or Persons entitled hereunder
to approve such arrangements and (b) completes and executes all questionnaires,
powers of attorney, indemnities, underwriting agreements and other documents
required under the terms of such underwriting arrangements.
9. Miscellaneous.
(a) No Inconsistent Agreements; Entire Agreement. The Company
shall not hereafter enter into any agreement with respect to its securities
which is inconsistent with or violates the rights granted to the holders of
Registrable Securities in this Agreement. Except as otherwise expressly set
forth herein, this Agreement embodies the complete agreement and understanding
among the parties hereto with respect to the subject matter hereof and
supersedes and preempts any prior understandings, agreements or representations
by or among the parties, written or oral, which may have related to the subject
matter hereof in any way.
(b) Adjustments Affecting Registrable Securities. The Company
shall not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Remedies. Any Person having rights under any provision of this
Agreement shall be entitled to enforce such rights specifically to recover
damages caused by
-11-
reason of any breach of any provision of this Agreement and to exercise all
other rights granted by law. The parties hereto agree and acknowledge that money
damages may not be an adequate remedy for any breach of the provisions of this
Agreement and that, in addition to any other rights and remedies existing in its
favor, any party shall be entitled to specific performance and/or other
injunctive relief from any court of law or equity of competent jurisdiction
(without posting any bond or other security) in order to enforce or prevent
violation of the provisions of this Agreement.
(d) Successors and Assigns. All covenants and agreements in this
Agreement by or on behalf of any of the holders of Registrable Securities may be
transferred or assigned (but only with all related obligations) by a holder of
Registrable Securities to a transferee or assignee of such Registrable
Securities, provided: (i) such transferee or assignee shall agree in writing to
be bound by and subject to the terms and conditions of this Agreement and (ii)
such transfer or assignment shall be effective only upon the receipt by the
Company of written notice of such transfer or assignment.
(e) Counterparts. This Agreement may be executed simultaneously in
two or more counterparts, any one of which need not contain the signatures of
more than one party, but all such counterparts taken together shall constitute
one and the same Agreement.
(f) Descriptive Headings; Interpretation. Section headings used
herein are for convenience only and are not to affect the construction of, or to
be taken into consideration in interpreting, this Agreement. The use of the word
"including" or any variation or derivative thereof in this Agreement is by way
of example rather than by limitation.
(g) Notices; Business Days. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be deemed to have been given when
delivered personally to the recipient or when sent by facsimile followed by
delivery by reputable overnight courier service (charges prepaid), one day after
being sent to the recipient by reputable overnight courier service (charges
prepaid) or five days after being mailed to the recipient by certified or
registered mail, return receipt requested and postage prepaid. Any notice,
demand or other communication hereunder may be given by any other means
(including telecopy or electronic mail), but shall not be deemed to have been
duly given unless and until it is actually received by the intended recipient.
Such notices, demands and other communications shall be sent to (i) a
Convertible Noteholder at the address indicated on the Schedule of Convertible
Noteholders, (ii) a Warrant Holder at the address indicated on the Schedule of
Warrant Holders, (iii) a Common Stockholder at the address indicated on the
Schedule of Common Stockholders and (iv) the Company at the address indicated
below:
Xxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxx 00000
Facsimile: 000-000-0000
Attention: Xxxxxx X. Xxxxxx, Chief Operating Officer
with a copy (which shall not constitute notice to the Company)
to:
-00-
Xxxxx Xxxxx LLP
000 Xxxxx Xxxx Xxxxxx, Xxxxx 0000
Xxxx Xxxx Xxxx, Xxxx 00000
Facsimile: (000)000-0000
Attention: Xxxxx X. Xxxxx, Esq.
or to such other address or to the attention of such other Person as the
recipient party has specified by prior written notice to the sending party. If
any time period for giving notice or taking action hereunder expires on a day
which is a Saturday, Sunday or legal holiday in the state in which the Company's
chief-executive office is located, the time period shall automatically be
extended to the business day immediately following such Saturday, Sunday or
legal holiday.
(h) Amendments and Waivers; Effectiveness and Binding Nature of
this Agreement. Except as otherwise provided herein, the provisions of this
Agreement may be amended or waived only upon the prior written consent of (i)
the Company and (ii) the Dolphin Holders owning a majority of the Registrable
Securities held by all Dolphin Holders. Notwithstanding the foregoing, without
the consent of any other Person, the Company may restate any schedule hereto to
(A) add additional Persons who become holders of Common Stock, Convertible Notes
or Warrants and execute and deliver a counterpart to this Agreement or (B)
change the address for notice to any Person at such Person's request. 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.
(i) Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
(j) No Strict Construction. The parties hereto 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 hereto, 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.
(k) GOVERNING LAW. THE CORPORATE LAW OF THE STATE OF NEVADA HALL
GOVERN ALL ISSUES AND QUESTIONS CONCERNING THE RELATIVE RIGHTS OF THE COMPANY
AND ITS SECURITYHOLDERS. ALL OTHER ISSUES AND QUESTIONS CONCERNING THE
CONSTRUCTION, VALIDITY, INTERPRETATION AND ENFORCEMENT OF THIS AGREEMENT SHALL
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT GIVING EFFECT TO ANY CHOICE OF LAW OR CONFLICT OF LAW RULES OR
PROVISIONS (WHETHER OF THE STATE OF NEW YORK OR ANY OTHER JURISDICTION) THAT
WOULD CAUSE THE APPLICATION OF THE LAWS OF ANY JURISDICTION OTHER THAN
-00-
XXX XXXXX XX XXX XXXX. IN FURTHERANCE OF THE FOREGOING, THE INTERNAL LAW OF THE
STATE OF NEW YORK SHALL CONTROL THE INTERPRETATION AND CONSTRUCTION OF THIS
AGREEMENT, EVEN THOUGH UNDER THAT JURISDICTION'S CHOICE OF LAW OR CONFLICT OF
LAW ANALYSIS, THE SUBSTANTIVE LAW OF SOME OTHER JURISDICTION WOULD ORDINARILY
APPLY.
(l) WAIVER OF RIGHT TO JURY TRIAL. THE COMPANY AND EACH HOLDER OF
REGISTRABLE SECURITIES HEREBY WAIVE, TO THE EXTENT PERMITTED BY APPLICABLE LAW,
TRIAL BY JURY in any litigation in any court with respect to, in connection
with, or arising out of this Agreement or the validity, protection,
interpretation, collection or enforcement hereof; AND THE COMPANY AND EACH
HOLDER OF REGISTRABLE SECURITIES HEREBY WAIVE, TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE RIGHT TO INTERPOSE ANY SETOFF OR COUNTERCLAIM OR CROSS-CLAIM
in connection with any such litigation, irrespective of the nature of such
setoff, counterclaim or cross-claim except to the extent that the failure so to
assert any such setoff, counterclaim or cross-claim would permanently preclude
the prosecution of or recovery upon same. THE COMPANY AGREES THAT THIS SECTION
9(l) IS A SPECIFIC AND MATERIAL ASPECT OF THIS AGREEMENT AND ACKNOWLEDGES THAT
THE HOLDERS OF REGISTRABLE SECURITIES WOULD NOT HAVE ENTERED INTO THIS AGREEMENT
IF THIS SECTION 9(l) WERE NOT PART OF THIS AGREEMENT.
* * * * *
-14-
IN WITNESS WHEREOF, the parties have executed this Registration
Agreement as of the date first written above.
VITALSTREAM HOLDINGS, INC.
By: /s/ Xxxx Xxxxxxx
-----------------------------
Name: Xxxx Xxxxxxx
Title: President
COMMON STOCKHOLDERS
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/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
[SIGNATURE PAGE TO REGISTRATION AGREEMENT]
CONVERTIBLE NOTEHOLDERS
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/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
[SIGNATURE PAGE TO REGISTRATION AGREEMENT]
WARRANT HOLDERS
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/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
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/ Xxxxxxx Xxxxxx
------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: President
