Exhibit 10.7
ZENGINE, INC.
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of September 30, 1999 (this
"AGREEMENT"), among ZENGINE, INC., a Delaware corporation (the "COMPANY"), and
the Persons executing a counterpart of this Agreement listed as Investors and
Founders on the signature pages of this Agreement.
PRELIMINARY STATEMENT
The Company desires to grant the registration rights set forth herein.
In consideration of the mutual representations and agreements set forth in this
Agreement, the Company and the Holders agree as follows.
AGREEMENT
SECTION 1. DEFINITIONS.
As used in this Agreement, the following terms shall have the following
meanings:
"AFFILIATE" means any entity controlling, controlled by or under
common control with a designated Person. For the purposes of this definition,
"control" shall have the meaning specified as of the date of this Agreement for
that word in Rule 405 promulgated by the Commission under the Securities Act.
"AT HOME" means At Home Corporation, a Delaware corporation.
"BOARD" means the Board of Directors of the Company.
"COMMISSION" means the Securities and Exchange Commission, and any
successor thereto.
"COMMON STOCK" means the Company's Common Stock, no par value per
share.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FOUNDERS" means the persons listed as Founders on the signature pages
to this Agreement.
"HOLDERS" means (a) the Investors and the Founders, and (b) any
subsequent legal or beneficial owner of Registrable Securities who has become a
party to this Agreement in accordance with the terms hereof.
"INVESTORS" means At Home and Wilblairco.
"PERSON" means an individual, partnership, corporation, business
trust, limited liability company, joint stock company, trust, unincorporated
association, joint venture, or other similar entity.
"QUALIFIED PUBLIC OFFERING" means the first sale to the public of
Common Stock pursuant to an effective registration statement under the
Securities Act under which (a) the aggregate price to the public of the Common
Stock actually sold to the public in such first sale, less the amount of
underwriters' and brokers' commissions and expense allowances paid by the
Company in connection with the original sale of such Common Stock, is $25.0
million or more, and (b) results in the Common Stock being listed on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market
(formerly known as the NASDAQ National Market).
"REGISTRABLE SECURITIES" means (a) any shares of Common Stock acquired
by the Investors pursuant to that certain Stock Purchase Agreement of even date
herewith by and among the Company, Miami Computer Supply Corporation and the
Investors (the "INVESTORS' COMMON STOCK"); (b) any shares of Common Stock owned
by a Founder on the date hereof or acquired by a Founder upon exercise of an
option to purchase Common Stock outstanding on the date hereof (the "FOUNDERS'
COMMON STOCK") (the Investors' Common Stock and the Founders' Common Stock are
sometimes collectively referred to herein as the "HOLDERS' COMMON STOCK"); (c)
any shares of Common Stock which were issued as, or were issued directly or
indirectly upon the conversion of other securities issued as, a dividend or
other distribution with respect to, or in replacement of, the Holders' Common
Stock; and (d) any shares of Common Stock then issuable directly or indirectly
upon the conversion or exercise of other securities issued as a dividend or
other distribution with respect to, or in replacement of, the Holders' Common
Stock; PROVIDED, HOWEVER, that outstanding shares of Common Stock shall no
longer be Registrable Securities when they shall have been (y) effectively
registered under the Securities Act and sold by the holder thereof in accordance
with such registration, or (z) sold to the public pursuant to Rule 144.
"RULE 144" means Rule 144 promulgated by the Commission under the
Securities Act, as such rule may be amended from time to time, or any successor
rule thereto.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"WILBLAIRCO" means Wilblairco Associates, an Illinois general
partnership.
SECTION 2. DEMAND REGISTRATIONS.
SECTION 2.1. At any time after 180 days after a Qualified Public Offering
or such shorter period after a Qualified Public Offering as to which the Company
may consent, which consent shall not be unreasonably withheld, by a written
notice to the Company, the Holder or Holders of Registrable Securities may from
time to time request that the Company register any Registrable Securities as
specified in the notice, under the Securities Act and under other relevant
securities laws, for disposition in accordance with methods stated in the notice
(a "DEMAND REGISTRATION").
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SECTION 2.2. When the Company receives a registration notice under Section
2.1, it shall, within 10 days of receipt of such notice, deliver a copy of the
registration notice to each Holder who is not a party to the registration
notice, each of whom may then specify, by notice to the Company within 10 days
of receipt of such notice, a number of Registrable Securities held by it which
it wishes to include in any registration pursuant to the registration notice
under Section 2.1.
SECTION 2.3. When the Company receives a registration notice under Section
2.1, it shall use its best efforts to effect the registration under the
Securities Act and applicable state securities laws of the Registrable
Securities specified in the registration notice under Section 2.1 and subsequent
notices under Section 2.2, all to the extent required to permit disposition by
such Holders in accordance with the intended methods of disposition described in
the registration notice.
SECTION 3. INCIDENTAL REGISTRATION.
The Company shall give at least thirty (30) days' advance written
notice to each Holder of the Company's intention to register any of its Common
Stock under the Securities Act. Each Holder may then specify, by notice to the
Company within 10 days of receipt of such notice, a number of shares of
Registrable Securities held by it which it wishes to include in the Company's
proposed registration (the "INCIDENTAL REGISTRATION"). Subject to the
limitations of Section 8, the Company will use its best efforts to effect the
registration under the Securities Act and applicable state securities laws of
Registrable Securities specified by Holders under this Section 3.
SECTION 4. LIMITATIONS ON REGISTRATION RIGHTS.
Notwithstanding any contrary provision of this Agreement:
(a) The Company shall not be required to effect a registration
pursuant to Section 2 unless the number of securities proposed to be
included in such registration (including any Registrable Securities to
be included pursuant to Section 2.2), have a proposed sale price
(which may be based upon the then current market price) equal to at
least $15.0 million.
(b) The Company shall not be required to effect more than three
(3) registrations pursuant to Section 2 (PROVIDED, HOWEVER, that a
demand for registration shall not count as a registration permitted
pursuant to Section 2 under this clause (a) if either (y) the
registration statement filed with respect to such registration is not
declared effective by the Commission, or (z) the Holders requesting
registration of Registrable Securities under Sections 2.1 and 2.2 do
not register and sell at least 75% of the Registrable Securities they
have requested be included in such registration for reasons other than
their voluntary decision not to do so).
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(c) The Company shall not be required to effect more than one
(1) Demand Registration in any six (6) month period.
(d) Section 3 shall not apply to a registration effected solely
to implement an employee benefit plan or a registration on Form S-4
(or any successor form) or to any other form or type of registration
which does not permit inclusion of the Registrable Securities pursuant
to Commission rule or practice.
(e) The Company may delay the filing of a registration statement
relating to a Demand Registration if (i) the Company has filed, or has
taken substantial steps toward filing, a registration statement
relating to the sale of any of the Company's securities (the "COMPANY
SECURITIES") in an underwritten offering and the managing underwriter
of such offering is of the opinion that the filing of a registration
statement with respect to a Demand Registration would adversely affect
the offering by the Company of the Company Securities, or (ii) the
Board of Directors of the Company determines in good faith, by
resolution, that the filing of a registration statement, if not so
deferred, would adversely affect a then-proposed or pending Company
financing, acquisition, merger or other corporate transaction;
PROVIDED that such delay may not exceed 40 days and such right may not
be exercised by the Company more than once in any 180 day period.
SECTION 5. REGISTRATION PROCEDURES.
SECTION 5.1. Subject to Section 4, whenever the Company is required by the
provisions of this Agreement to use its best efforts to effect the registration
of any Registrable Securities under the Securities Act, the Company will, as
expeditiously as possible:
(a) in the case of a registration required under Section 2, and
subject to Section 12 below, engage the underwriters designated by the Company
(and approved pursuant to Section 12 by the Investors giving notice under
Section 2);
(b) in connection with a request pursuant to Section 2, prepare and
file with the Commission within sixty (60) days after receipt of a request to
file a registration statement, on any form for which the Company then qualifies
or which counsel for the Company shall deem appropriate and which form shall be
available for the sale of the Registrable Securities in accordance with the
intended method of distribution thereof, and in connection with any registration
statement filed for Registrable Securities hereunder, use is best efforts to
cause such registration statement to become effective. In connection with the
preparation and filing of each registration statement registering Registrable
Securities under this Agreement, the Company will give the Holders of
Registrable Securities on whose behalf such Registrable Securities are to be so
registered and their underwriter, if any, and their respective counsel and
accountants, the opportunity to participate in the preparation of such
registration statement, each prospectus included therein or filed with the
Commission, and each amendment thereof or supplement thereto. Without limiting
the foregoing, each registration statement, prospectus, amendment, supplement or
any other document filed with respect to a registration under this
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Agreement shall be subject to the timely review and reasonable approval by the
Holders registering Registrable Securities in such registration and by their
counsel;
(c) prepare and file with the 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 one hundred twenty (120) days or such shorter period
which will terminate when all Registrable Securities covered by such
registration statement have been sold (but not before the expiration of the
ninety (90) day or shorter, as applicable, period referred to in Section 4(3) of
the Securities Act and Rule 174 or other comparable provisions thereunder, if
applicable), and comply with the provisions of the Securities Act applicable to
it with respect to the disposition of all securities covered by such
registration statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth in such
registration statement or supplement to the prospectus;
(d) furnish to each Holder participating in the offering and the
managing underwriter or underwriters without charge, at least one signed copy of
the registration statement (including amendments) and any post-effective
amendment thereto and such reasonable number of conformed copies thereof and
such reasonable number of copies of the prospectus (including any preliminary
prospectus) and any amendments or supplements thereto, and any documents
incorporated by reference therein, as such Holder of Registrable Securities or
managing underwriter may request in order to facilitate the disposition of the
Registrable Securities being sold by such Holder (it being understood that the
Company consents to the use of the prospectus and any amendment or supplement
thereto by each Holder of Registrable Securities covered by the registration
statement and the managing underwriter or underwriters (or any other underwriter
or dealer who is required to deliver the prospectus), if any, in connection with
the offering and sale of the Registrable Securities covered by the prospectus or
any amendment or supplement thereto);
(e) notify any Holder on whose behalf Registrable Securities are
being registered under this Agreement 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 if entered and make every reasonable effort to
obtain the withdrawal of any order suspending the effectiveness of the
registration statement at the earliest possible moment;
(f) enter into a written agreement with the managing underwriter or
underwriters selected in the manner herein provided in such form and containing
such representations and warranties by the Company and such other terms and
provisions as are customarily contained in underwriting agreements with respect
to secondary distributions and as may be negotiated by the Company and the
managing underwriter or underwriters, including, without limitation, provisions
relating to indemnification and contribution. The Holders on whose behalf
Registrable Securities are to be distributed by such underwriters shall be
parties to any such underwriting agreement, and the representations and
warranties by, and the other agreements on the part of, the Company
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to and for the benefit of such underwriters shall also be made to and for the
benefit of such Holders of Registrable Securities;
(g) if requested by the managing underwriter or underwriters or any
Holder of Registrable Securities covered by the registration statement, promptly
incorporate in a prospectus supplement or post-effective amendment such
information as the managing underwriter or underwriters or such Holder
reasonably requests to be included therein, including, without limitation, with
respect to the number of Registrable Securities being sold by such Holder 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 offering
of the Registrable Securities to be sold in such offering; and make all required
filings of such prospectus supplement or post-effective amendment as soon as
reasonably possible after being notified of the matters to be incorporated in
such prospectus supplement or post-effective amendment;
(h) on or prior to the date on which the registration statement is
declared effective, use its best efforts to register or qualify, and cooperate
with the Holders of Registrable Securities included in such registration
statement, the underwriter or underwriters, if any, and their counsel in
connection with the registration or qualification of, the Registrable Securities
covered by the registration statement for offer and sale under the securities or
blue sky laws of each state and other jurisdiction of the United States as any
such Holder or underwriter reasonably requests in writing, to use its best
efforts to keep each such registration or qualification effective, including
through new filings, or amendments or renewals, during the period such
registration statement is required to be kept effective pursuant to Section 5(c)
above, and to do any and all reasonable acts or things necessary or advisable to
permit the disposition in all such jurisdictions of the Registrable Securities
covered by the applicable registration statement; PROVIDED, HOWEVER, that the
Company will not be required (i) to qualify generally to do business in any
jurisdiction where it would not otherwise be required to qualify, (ii) to
subject itself to taxation in such jurisdiction or (iii) to consent to general
service of process in any such jurisdiction;
(i) use its best efforts to cause the Registrable Securities included
in such registration statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the seller or
sellers or the underwriter or underwriters, if any, thereof to consummate the
disposition of such Registrable Securities;
(j) cooperate with the Holders of Registrable Securities covered by
the registration statement and the managing underwriter or underwriters, if any,
to facilitate the timely preparation and delivery of certificates (not bearing
any restrictive legends) representing securities to be sold under the
registration statement, and to allow such securities to be in such denominations
and registered in such names as the managing underwriter or underwriters, if
any, or such Holders may request;
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(k) promptly notify each Holder on whose behalf Registrable
Securities have been registered pursuant to this Agreement, at any time when a
prospectus relating thereto is required to be delivered under the Securities
Act, of the happening of any event as a result of which the prospectus included
in such registration statement (as then in effect) contains an untrue statement
of a material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein not misleading 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
delivered 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 required to be stated therein or necessary to make the statements therein
not misleading;
(l) use its best efforts to cause all such Registrable Securities
included in such registration statement to be listed by the date of the first
sale of Registrable Securities pursuant to such registration statement on the
national securities exchange or interdealer quotation system where such class of
securities is then being traded;
(m) subject to the execution of a confidentiality agreement
reasonably satisfactory to the Company, upon reasonable advance notice, make
available at the Company's offices for inspection, during normal business hours,
by any Holder on whose behalf Registrable Securities are being registered under
this Agreement, any underwriter participating in any disposition pursuant to
such registration statement, and any attorney, accountant, or other agent
retained by any such Holder or underwriter (collectively, the "INSPECTORS"), all
financial and other records, pertinent corporate documents, and properties of
the Company and its subsidiaries (collectively, the "RECORDS") as shall be
reasonably necessary to permit them to perform a reasonable investigation of the
Company and cause the Company's officers, directors, employees counsel, and
public accountants to supply all information reasonably requested by any such
Inspector in connection with such registration statement;
(n) furnish, at the request of any Holder of Registrable Securities
sold in such offering, on any date that any Registrable Security is delivered to
the underwriters for sale pursuant to such registration or, if there is no
underwriter, on the effective date of the registration statement: (i) an opinion
dated such date from counsel representing the Company for the purposes of such
registration, addressed to the underwriters and to such Holder, stating that,
based solely on a communication received from the Commission, to the actual
knowledge of such counsel such registration statement has become effective under
the Securities Act and that (A) based solely on a communication received from
the Commission, to the actual 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, (B) the registration statement, the related prospectus, and each amendment
or supplement thereto, comply as to form in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder (except that such counsel need express no opinion as
to financial statements and other financial and statistical data and schedules
and information provided by the Holders and the underwriters in writing
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for inclusion in the registration statement or prospectus contained therein),
(C) the opinion covers such other items with respect to the registration as are
customarily covered in opinions of issuer's counsel delivered to underwriters in
connection with underwritten public offerings of securities and (D) a separate
letter from such counsel that states that such counsel has no reason to believe
that the registration statement, prospectus or any amendment or supplement
thereto, as of their respective effective or issue dates and as of the date of
the letter (except as to the financial statements, and other financial and
statistical data and schedules included therein, and as to the information
provided by the Holders and the underwriters in writing for inclusion therein,
as to which counsel need express no view), contained or contains an 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, in light of the
circumstances under which they were made, not misleading, and (ii) a letter
dated such date from the independent accountants retained by the Company,
addressed to the underwriters and such Holder, stating that they are independent
public accountants within the meaning of the Securities Act and that, in the
opinion of such accountants, the financial statements of the Company included in
the registration statement or the prospectus, or any amendment thereof or
supplement thereto, comply as to form in all material respects with then
applicable accounting requirements of the Securities Act, and such letter shall
additionally cover such other financial matters (including information with
respect to events subsequent to the date of such financial statements) with
respect to the registration (including with respect to such registration
statement and the prospectus included therein) in respect of which such letter
is being given as are customarily covered in accountant's letters delivered to
underwriters in connection with an underwritten public offering of securities;
(o) otherwise use its best efforts to comply with all applicable
rules and regulations of the Commission, to make generally available an earnings
statement covering a period of twelve (12) months, beginning within three (3)
months 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 (or other comparable provisions);
(p) keep all Holders of Registrable Securities reasonably advised as
to the initiation of proceedings for such registration and qualification and as
to the completion thereof, and will advise any such Holder, upon request, of the
progress of such proceedings; and
(q) in connection with any registration of Registrable Securities
under this Agreement, the Company will provide a transfer agent and registrar
for the Registrable Securities not later than the effective date of such
registration statement.
Each Holder of Registrable Securities as to which registration is being
effected pursuant hereto shall use its best efforts to cooperate with the
Company, and the Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company such
information regarding the distribution of such securities as the Company may
from time to time reasonably request in writing. Each Holder of Registrable
Securities agrees by
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acquisition of such Registrable Securities that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Section 5(k)
hereof, such Holder will forthwith discontinue disposition of Registrable
Securities pursuant to the registration statement covering such Registrable
Securities until such Holder's receipt of the copies of the supplemented or
amended prospectus contemplated by Section 5(k) hereof, and, if so directed by
the Company, such Holder will deliver to the Company (at the Company's expense)
all copies, other than permanent file copies then in such Holder's possession
(which shall not be circulated), of the prospectus covering such Registrable
Securities current at the time of receipt of such notice. In the event the
Company shall give any such notice, the period mentioned in Section 5(c) hereof
shall be extended by the number of days during the period from and including the
date of the giving of such notice pursuant to Section 5(k) hereof to and
including the date when each seller of Registrable Securities covered by such
registration statement shall have received the copies of the supplemented or
amended prospectus contemplated by Section 5(k) hereof.
If any Demand or Incidental Registration is to be underwritten, then
the Holders shall be parties to the underwriting agreement between the Company
and such underwriters who may, at their option, require that the Holders provide
usual and customary representations and warranties solely with respect to such
Holder to and for the benefit of such underwriters. No Holder may participate in
any underwritten Demand or Incidental Registration unless such Holder (i) agrees
to sell its Holders' Common Stock on the basis provided in any underwriting
arrangement, and (ii) completes and executes all questionnaires, powers of
attorney, indemnities regarding written information supplied by the Holders for
inclusion in the prospectus, securities escrow agreements, underwriting
agreements and other documents reasonably required under the terms of such
underwriting, to the satisfaction of the managing underwriter or underwriters.
All representations and warranties made by the Holders in the underwriting
agreement to and for the benefit of the underwriters shall also be made to and
for the benefit of the Company.
Each Holder participating in a Demand or Incidental Registration shall
promptly notify the Company and any managing underwriter, 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 any information
previously provided by such Holder in writing for inclusion in the prospectus
included in such registration statement is no longer true and correct in all
material respects. In such event, such Holder will provide the Company with such
information as may be necessary to permit the Company to amend or supplement the
prospectus so as not to include an untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein (solely as
they may relate to the Holder or its intended method of distribution) not
misleading, in light of the circumstances under which they were made.
SECTION 6. EXPENSES.
The Company shall pay all reasonable expenses incurred in effecting all
registrations of Registrable Securities pursuant to this Agreement, including,
without limitation, all registration and filing fees (including NASD filing
fees), listing fees, printing expenses, fees and disbursements of counsel and
accountants for the Company, underwriting expenses other than discounts and
commissions, the reasonable fees and expenses of not more than one firm of
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attorneys as counsel to the Investors and expenses of any audits incident to or
required by any such registration and expenses of complying with the securities
or blue sky laws of any jurisdictions pursuant to Section 5 of this Agreement.
SECTION 7. INDEMNIFICATION.
(a) INDEMNIFICATION BY COMPANY. The Company hereby agrees to indemnify
and to save and hold harmless each Holder of Registrable Securities, the
officers, directors and partners and partners of partners of any Holder, and
each Person, if any, who controls such Holder (within the meaning of the
Securities Act or the Exchange Act) from and against any and all losses, claims,
damages, liabilities and expenses (including reasonable attorneys fees and
expenses and reasonable costs of investigation) to which the Holder or any such
other Person may be subject, under the Securities Act or otherwise, arising out
of or based on any untrue or alleged untrue statement of a material fact
contained in any registration statement or prospectus relating to the
Registrable Securities or in any amendment or supplement thereto or in any
preliminary prospectus or the qualification of the Registrable Securities under
any state securities laws, or arising out of or 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 arising out of or
based upon any violation or alleged violation by the Company of the Securities
Act, the Exchange Act or any other federal or state securities laws, rules or
regulations applicable to the Company and relating to action or inaction by the
Company in connection with any such registration or qualification, except
insofar as the same arise out of reliance upon any untrue statement furnished in
writing to the Company by such Holder (or, if it is an underwritten offering, an
underwriter selected by such Holders), expressly for use therein; PROVIDED that
the Company shall not be required to indemnify any Holder of Registrable
Securities for damages caused by such Holder's continuing to use a prospectus
with respect to which such Holder has received a notice pursuant to Section 5(k)
hereof or if the Holder has given notice to the Company pursuant to the last
paragraph of Section 5. In connection with an underwritten offering, the Company
will, pursuant to a separate agreement to be negotiated between the Company and
such underwriters, agree to indemnify the underwriters thereof, their officers,
directors and partners and partners of partners, and each Person who controls
(within the meaning of the Securities Act or the Exchange Act) such underwriters
(collectively, "SECURITIES PROFESSIONALS"). In addition to its other obligations
under this Section 7(a), the Company agrees that, as an interim measure during
the pendency of any claim, action, investigation, inquiry or other proceeding
arising out of or based upon any statement or omission, or any alleged statement
or omission, described in this Section 7(a), it will reimburse the indemnified
parties on a monthly basis for all reasonable and documented legal and other
expenses incurred in connection with investigating or defending any such claim,
action, investigation, inquiry or other proceeding, notwithstanding the absence
of a judicial determination as to the propriety and enforceability of their
obligation to reimburse the indemnified parties for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction, PROVIDED that in the event such payments are
later held to have been improper by a court of competent jurisdiction such
indemnified person shall repay such amounts to the Company on demand. This
indemnity agreement will be in addition to any liability which the Company and
the Parent may otherwise have.
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(b) INDEMNIFICATION BY HOLDER OF REGISTRABLE SECURITIES. In connection
with any registration statement in which a Holder of Registrable Securities is
participating, each such Holder will furnish to the Company in writing such
information with respect to such Holder as the Company reasonably requests for
use in connection with any such registration statement or prospectus and agrees
to indemnify, severally and not jointly, the Company, each of the Company's
directors and officers, and each Person, if any, who controls the Company
(within the meaning of the Securities Act or the Exchange Act) against any
losses, claims, damages, liabilities, and expenses (including reasonable and
documented attorneys' fees and expenses and reasonable costs of investigation)
arising out of or based on any untrue statement of a material fact or any
omission of a material fact required to be stated in the registration statement
or prospectus or any amendment thereof or supplement thereto or necessary to
make the statements therein not misleading, to the extent, but only to the
extent, that such untrue statement or omission is made in reliance upon and in
conformity with information with respect to such Holder furnished in writing to
the Company by such Holder specifically for use in such registration statement
or prospectus or amendment thereof or supplement thereto; PROVIDED, HOWEVER,
that the liability of any such Holder under this Section 7 (including, without
limitation, Section 7(d) below) shall in no event exceed the net proceeds of the
sale of Registrable Securities being sold pursuant to said registration
statement or prospectus by such Holder; and PROVIDED, FURTHER that no such
Holder shall be required to indemnify the Company for damages caused by any
Person (other than such Holder), including the Company, continuing to use a
prospectus (prior to its amendment or supplementation) after the Company has
received a notice by such Holder of any such untrue statement or omission
contained in such prospectus. In addition to its other obligations under this
Section 7(b), each Holder agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding arising out of
or based upon any statement or omission, or any alleged statement or omission,
described in this Section 7(b), it will reimburse the indemnified party on a
monthly basis for all reasonable and documented legal and other expenses
incurred in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety and enforceability of the Holder's
obligation to reimburse the indemnified party for such expenses and the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction, PROVIDED that in the event such payments are
later held to have been improper by a court of competent jurisdiction such
indemnified person shall repay such amounts to the Holder providing such
indemnification on demand. This indemnity agreement will be in addition to any
liability which the Holders may otherwise have.
(c) CONDUCT OF INDEMNIFICATION PROCEEDING. If any action, suit,
investigation or proceeding (including any governmental investigation) is
brought or asserted against an indemnified party in respect of which
indemnity may be sought hereunder, the indemnifying party shall assume the
defense thereof, including the employment of counsel reasonably satisfactory
to such indemnified party, to represent such indemnified party in connection
with investigating, defending or preparing to defend any such action, suit,
investigation or proceeding, and shall pay all reasonable and documented
expenses in connection therewith. Such indemnified party shall have the right
to employ separate counsel in any such action and either direct its own
defense or participate in the indemnified party's defense thereof, but the
reasonable and documented fees and expenses of such counsel shall be at the
expense of such indemnified
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party, unless (i) the indemnifying party has agreed to pay such fees and
expenses or (ii) the named parties to any such action, suit, investigation or
proceeding (including any impleaded parties) include both the indemnifying
party and the indemnified party, and such indemnified party shall have
reasonably concluded that there may be one or more legal defenses available
to such indemnified party which are different from or additional to those
available to the indemnifying party or (iii) the indemnifying party shall not
have provided counsel to take charge of such defense, then in any of such
events referred to in clause (i), (ii) or (iii), if such indemnified party
notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party
shall not have the right to assume the defense of such action or proceeding
on behalf of such indemnified party, it being understood, however, that the
indemnifying party shall not, in connection with any one such action, suit,
investigation or proceeding or separate but substantially similar or related
actions, suits, investigations or proceedings 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 the indemnified parties and,
if such indemnified parties are Holders, such firm shall be designated in
writing by a majority of the Holders. The indemnifying party shall not be
liable for any settlement of any such action, suit, investigation or
proceeding effected without its written consent (but such consent shall not
be unreasonably withheld), but if any action, suit, investigation or
proceeding is settled with the indemnifying party's consent, or if there be a
final judgment for the plaintiff in any such action, suit, investigation or
proceeding, the indemnifying party agrees to indemnify and hold harmless the
indemnifying party and such other Person from and against any loss or
liability (to the extent stated above) by reason of such settlement or
judgment. The indemnifying party will not consent to entry of any judgment or
enter into any settlement which does not include as an unconditional term
thereof the giving by the claimant or plaintiff to such indemnified party of
a release from all liability in respect of such action, claim or litigation.
(d) CONTRIBUTION. If the indemnification provided for in this Section 7
is unavailable to an indemnified party under this Section 7 in respect of any
losses, claims, damages, liabilities, expenses or judgments referred to herein,
then each such 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 losses, claims, damages, liabilities, expenses and judgments
in such proportion as is appropriate to reflect the relative fault of the
Company and of each such Holder in connection with such statements or omissions,
as well as any other relevant equitable considerations. The relative fault of
the Company and of each such Holder 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 the Company or such Holder and the party's relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company and such Holders agree that it would not
be just and equitable if contribution pursuant to this Section 7(d) were
determined by pro rata allocation (even if such Holders were treated as one
entity for such purposes) 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 losses, claims, damages, liabilities, expenses or judgments
referred to above 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
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investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), no Holder shall be required to contribute any
amount in excess of the amount by which the total price at which the Registrable
Securities of such Holder were offered to the public exceeds the amount of any
damages which such Holder 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.
SECTION 8. MARKETING RESTRICTIONS.
SECTION 8.1. PRIORITY ON DEMAND REGISTRATIONS PURSUANT TO SECTION 2. With
respect to a Demand Registration pursuant to Section 2 hereof, if in the opinion
of the managing underwriter or underwriters of a proposed offering the number of
Registrable Securities requested to be included in such offering exceeds the
number which can be sold in such offering or is reasonably likely to materially
and adversely affect the success or offering price of such offering, the shares
shall be included in such offering in the following priority (subject to Section
8.3 below): (i) first, shares of the Holders pro rata on the basis of the number
of shares requested to be included by each; (ii) next, shares requested to be
included by the Company; and (iii) next, any other shares of Common Stock
requested to be included by any other Person.
SECTION 8.2. PRIORITY ON INCIDENTAL REGISTRATIONS PURSUANT TO SECTION 3.
With respect to an Incidental Registration pursuant to Section 3 hereof, if in
the opinion of the managing underwriter or underwriters of such offering the
number of Registrable Securities which the Holders intend to include in such
offering exceeds the number which can be sold in such offering or is reasonably
likely to materially and adversely affect the success or offering price of such
offering, the shares shall be included in such offering in the following
priority (subject to Section 8.3 below): (i) first, shares requested to be
included by the Company; (ii) shares of the Holders pro rata on the basis of the
shares requested to be included by each; and (iii) next, shares of the holders
of any other registration rights granted by the Company in writing, pro rata in
accordance with the number of such securities each such holder has requested to
be included in such registration.
SECTION 8.3. ADDITIONAL REGISTRATION RIGHTS. The Company shall not grant to
any Person at any time after the date hereof the right to request the Company to
effect the registration or qualification or filing for exemption under the
Securities Act or any state securities laws of any securities of the Company
unless the agreement or agreements providing for such rights specifically
provide that the holders of such rights ("THIRD PARTY RIGHTS") may not
participate in any registration requested pursuant to a demand registration
pursuant to Section 2 unless the underwriters of the distribution confirm that
the inclusion of the securities proposed to be included pursuant to said Third
Party Rights will not materially adversely effect the offering pursuant to such
registration; PROVIDED, HOWEVER, that the Company may grant such Third Party
Rights to a Person who has purchased securities of the Company with an aggregate
cash purchase price of at least $2.0 million prior to the Company's first
Qualified Public Offering which rights may allow participation in a Demand
Registration pursuant to Section 2 as though
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such person was a Holder. The Company has not granted any registration rights to
any person prior to the date hereof.
SECTION 9. LOCKUP AGREEMENT.
Each Holder agrees in connection with any registration of any of the
Company's equity securities in a firm commitment underwritten offering that,
upon the request of the Company or the underwriters managing such offering of
the Company's securities, he or it will not sell, make any short sale of, loan,
grant any option for the purchase of, or otherwise dispose of any securities of
the Company (other than the securities included in the registration) without the
prior written consent of such underwriters, for such period of time (not to
exceed 180 days if the registration relates to the Company's Qualified Public
Offering and second public offering and 90 days for any other offering) from the
effective date of such registration as the Company or the underwriters may
specify. In connection with any registration pursuant to Section 2 which is a
firm commitment underwritten offering, the Company agrees that it will enter
into an agreement with the Holders and the underwriters restricting the
Company's ability to effect sales of its equity securities, PROVIDED such
agreement is in customary form and for a reasonable period of time from the
effective date of such registration. The Company further agrees that it shall
not proceed with any registration of the Company's securities unless and until
each of the officers and directors of the Company have agreed to the same
restrictions which the Holders have agreed to pursuant to the first sentence of
this Section 9.
SECTION 10. COMPLIANCE WITH RULE 144.
In the event that the Company (a) registers a class of securities under
Section 12 of the Exchange Act, (b) issues an offering circular meeting the
requirements of Regulation A under the Securities Act or (c) commences to file
reports under Section 13 or 15(d) of the Exchange Act, then at the request of
any Holder who proposes to sell securities in compliance with Rule 144, the
Company shall, to the extent necessary to enable such Holder to comply with such
Rule, (y) promptly furnish to such Holder a written statement of compliance with
the filing requirements of the Commission as set forth in Rule 144 and (z) make
available to the public, and such Holders such information as will enable the
Holders to make sales pursuant to Rule 144.
SECTION 11. ASSIGNABILITY OF REGISTRATION RIGHTS.
The rights set forth in this Agreement shall not be assignable by a
Holder without the prior consent of the Company, which will not be unreasonably
withheld.
SECTION 12. DESIGNATION OF UNDERWRITER.
In the case of any registration effected pursuant to this Agreement,
the managing underwriters shall be selected by the Board and shall be reasonably
acceptable to the Investors participating in any such offering.
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SECTION 13. MISCELLANEOUS.
SECTION 13.1. AMENDMENT. This Agreement may be amended to effect any
amendment to or waiver under this Agreement, by a written agreement signed by
all of the following:
(a) the Company,
(b) the Investors, and
(c) in the case of any amendment that adversely affects any
right of the Founders, the Founders holding more than 50% of the
Registrable Securities then held by the Founders.
SECTION 13.2. SEVERABILITY. In the event that any court or any governmental
authority or agency declares all or any part of any Section of this Agreement to
be unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any other Section of this Agreement, and in the event that only a
portion of any Section is so declared to be unlawful or invalid, such
unlawfulness or invalidity shall not serve to invalidate the balance of such
Section.
SECTION 13.3. SUCCESSORS. All representations, warranties, covenants and
agreements of the parties contained in this Agreement or made in writing in
connection herewith, shall, except as otherwise provided herein, be binding upon
and inure to the benefit of their respective successors.
SECTION 13.4. NOTICES. All communications in connection with this Agreement
shall be in writing and shall be deemed properly given if hand delivered or sent
by telecopier (PROVIDED that such communication is confirmed by same-day deposit
in the United States mail) or overnight courier with adequate evidence of
delivery or sent by registered or certified mail, return receipt requested, and,
if to a Holder, addressed to such Holder's address as shown on the books of the
Company or its transfer agent, and if to the Company, at its offices at:
Company:
0000 Xxxxxxxxx Xxxxxxx Xxxxx
Xxxxxx, Xxxx 00000
Attention: President
or such other addresses or Persons as the recipient shall have designated to the
sender by a written notice given in accordance with this Section. Any notice
called for hereunder shall be deemed given when received.
SECTION 13.5. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware applicable to
agreements between Delaware residents entered into and to be performed entirely
within Delaware.
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SECTION 13.6. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original but all of which shall
together constitute one and the same Agreement.
SECTION 13.7. HEADINGS. The headings used herein are solely for the
convenience of the parties and shall not control or affect the meaning or
construction of any provisions hereof.
SECTION 13.8. ENTIRE AGREEMENT. This Agreement and the other documents and
agreements executed by the parties hereto on this date or referred to herein or
therein together constitute the entire agreement and understanding of the
parties hereto in respect of the subject matter referred to herein and therein,
and there are no restrictions, promises, representations, warranties, covenants,
or undertakings with respect to the subject matter hereof, other than those
expressly set forth or referred to herein or therein.
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IN WITNESS WHEREOF, the parties hereto have caused this Registration
Rights Agreement to be executed on the day first above written.
The Company: ZENGINE, INC.
By /s/ XXXXXX X. XXXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxxx
Investors: WILBLAIRCO ASSOCIATES
By /s/ XXXX XXXXX
----------------------------------
Xxxx Xxxxx
AT HOME CORPORATION
By /s/ XXXXX XXXX
----------------------------------
Xxxxx Xxxx
General Counsel
Founders: MIAMI COMPUTER SUPPLY CORPORATION
By /s/ XXX X. XXXXXXX
----------------------------------
Xxx X. Xxxxxxx
/s/ XXXXXX X. XXXXXXXX
----------------------------------
Xxxxxx X. Xxxxxxxx
/s/ XXXXX XXXXXXXXX
----------------------------------
Xxxxx Xxxxxxxxx
/s/ XXXXXXXXXXX XXXXXX
----------------------------------
Xxxxx Xxxxxx
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