Exhibit 4.2
SECURITIES PURCHASE AGREEMENT
AMENDMENT NO. 1
THAT CERTAIN SECURITIES PURCHASE AGREEMENT (the "Agreement")
dated as of November 23, 1998, among Digital Courier Technologies, Inc., a
Delaware corporation (the "Company"), Xxxxx Xxxxxxx Strategic Growth Fund, Ltd.,
a Cayman Islands exempt company ("Xxxxx Xxxxxxx Limited"), and Xxxxx Xxxxxxx
Strategic Growth Fund, L.P., a New York limited partnership ("Xxxxx Xxxxxxx
XX"). Xxxxx Xxxxxxx Limited and Xxxxx Xxxxxxx XX, are each referred to herein as
a "Purchaser" and are collectively referred to herein as the "Purchasers." The
Purchasers and the Company hereby amend that Agreement, as of December 2, 1998,
by entering into this Amendment No. 1 (the "Amendment"). The Agreement and the
Amendment together are referred to as the Amended Agreement.
WHEREAS, subject to the terms and conditions set forth in the
Agreement, the Company issued and sold to the Purchasers, and the Purchasers
acquired from the Company, 400,000 units of the Company's securities (the
"Tranche A Units"), each Tranche A Unit to consisting of one share (each, a
"Tranche A Share") of the Company's common stock, par value $.0001 per share
(the "Common Stock), and a warrant to purchase one share of Common Stock (each,
a "Tranche A Warrant"); and
WHEREAS, subject to the terms and conditions set forth in this
Amendment, the Company desires to issue and sell to the Purchasers, and the
Purchasers desire to acquire from the Company, 400,000 units of the Company's
securities (the "Tranche A1 Units"), each Tranche A1 Unit to consist of one
share (each, a "Tranche A1 Share") of the Company's common stock, par value
$.0001 per share (the "Common Stock), a warrant to purchase one-half share of
Common Stock (each, a "Tranche A1 Warrant") and a warrant to purchase one-half
share of Common Stock (each, an "A1X Warrant"); and
WHEREAS, subject to the terms and conditions set forth in this
Amended Agreement, the Company desires to issue and sell to the Purchasers, and
the Purchasers desire to acquire from the Company, 800,000 units of the
Company's securities (the "Tranche B Units" and, together with the Tranche A
Units and the Tranche A1 Units, the "Units"), each Tranche B Unit to consist of
one share (each, a "Tranche B Share" and, together with the Tranche A Shares,
the "Shares") of Common Stock and one Warrant to purchase one share of Common
Stock (a "Tranche B Warrant," and, together with the Tranche A Warrants, the
Tranche A1 Warrants and the A1X Warrants, the "Warrants").
IN CONSIDERATION of the mutual covenants contained in this
Agreement, the Company and each Purchaser agree as follows:
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ARTICLE I
GENERAL PROVISIONS
1. The Agreement. Unless otherwise expressly stated herein to the contrary,
all the provisions of the Agreement remain valid, binding and in effect as
set forth in the Agreement, except as necessary to give effect to the
matters provided for in this Amendment.
2. Definitions. Capitalized terms not otherwise defined herein shall have the
meanings given to them in the Agreement. Defined terms used in the
Agreement are deemed to have the definitions given to them in the Amendment
after the date hereof.
3. Tranche B Closing. All provisions of the Agreement relating to the Tranche
B Closing, the Tranche B Units, the Tranche B Shares and the Tranche B
Warrants remain unchanged, except that the Company agrees to sell to the
Purchasers and the Purchasers agree to buy an additional 400,000 Tranche B
Units pursuant to this Amendment.
4. Representations and Warranties. The representations and warranties of the
Company and of the Purchasers set forth in Article II of the Agreement
remain in effect and are true and correct in all material respects as of
the date of the Agreement.
ARTICLE II
PURCHASE AND SALE OF THE TRANCHE A1 UNITS
2.1 Purchase and Sale.
(a) Subject to the terms and conditions set forth herein, the Company
shall issue and sell to the Purchasers, and the Purchasers,
severally and not jointly, shall purchase from the Company, on the
Tranche A1 Closing Date (as defined below), an aggregate of
400,000 Tranche A1 Units, for a purchase price of $4.50 per
Tranche A1 Unit or an aggregate purchase price of $1,800,000.
(b) Each Purchaser shall purchase that number of Units set forth
opposite such Purchaser's name in Schedule I attached hereto and
each Purchaser shall deliver to the Company the portion of the
purchase price for each of the Tranche A1 Units as set forth next
to its name on Schedule I.
2.2 The Tranche A1 Closing. The closing of the purchase and sale of the
Tranche A1 Units (the "Tranche A1 Closing") shall take place at the
offices of Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, or by transmission by facsimile and overnight
courier, immediately following the execution hereof or such later date or
different location as the parties shall agree, but not prior to the date
that the conditions set forth in Article V have been satisfied or waived
by the appropriate party (the "Tranche A1 Closing Date"). At the Tranche
A1 Closing:
(a) The Purchasers shall deliver to the Company an
aggregate of $1,800,000 in United States dollars in
immediately available funds to an account
designated in writing by the Company;
(b) Within three (3) business days after the Tranche A1
Closing Date, the Company shall deliver to Xxxxx
Xxxxxxx Limited the certificates representing the
number of Tranche A1 Shares purchased by Xxxxx
Xxxxxxx Limited as set forth in Schedule I hereto;
(c) The Company shall deliver to Xxxxx Xxxxxxx Limited
a Warrant, substantially in the form of Exhibit A
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hereto, representing the number of Tranche A1
Warrants purchased by Xxxxx Xxxxxxx Limited as set
forth in Schedule I hereto;
(d) The Company shall deliver to Xxxxx Xxxxxxx Limited
a Warrant, substantially in the form of Exhibit B
hereto, representing the number of A1X Warrants
purchased by Xxxxx Xxxxxxx Limited as set forth in
Schedule I hereto;
(e) Within three (3) business days after the Tranche A1
Closing Date, the Company shall deliver to Xxxxx
Xxxxxxx XX the certificates representing the number
of Tranche A1 Shares purchased by Xxxxx Xxxxxxx XX
as set forth in Schedule I hereto;
(f) The Company shall deliver to Xxxxx Xxxxxxx XX a
Warrant, substantially in the form of Exhibit A
hereto, representing the number of Tranche A1
Warrants purchased by Xxxxx Xxxxxxx XX as set forth
in Schedule I hereto;
(g) The Company shall deliver to Xxxxx Xxxxxxx XX a
Warrant, substantially in the form of Exhibit B
hereto, representing the number of A1X Warrants
purchased by Xxxxx Xxxxxxx XX as set forth in
Schedule I hereto;
(h) The parties shall execute and deliver each of the
documents referred to in Section 5.3 hereof; and
(i) The Company shall pay to Xxxxx Xxxxxxx Asset the
legal fees incurred by Xxxxx Xxxxxxx Asset in
connection with the preparation of the Amendment,
the other documents related to the Tranche A1
Closing and the Tranche A1 Closing promptly upon
the presentation of an invoice therefor.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations , Warranties and Agreements of the Company. The Company
hereby makes the representations and warranties set forth in Section 2.1
of the Agreement to each of the Purchasers in connection with the Tranche
A1 Closing. Each representation and warranty shall be deemed to be made
with respect the Agreement, the Amendment, the Amended and Restated
Registration Rights Agreement.
3.2 Representations and Warranties of the Purchasers. Each of the Purchasers,
severally and not jointly, hereby makes the representations and warranties
set forth in Section 2.2 of the Agreement to the Company in connection
with the Tranche A1 Closing. Each representation and warranty shall be
deemed to be made with respect the Agreement, the Amendment, the Amended
and Restated Registration Rights Agreement.
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ARTICLE IV
OTHER AGREEMENTS
4.1 Other Agreements. The agreements of the Company and of each Purchaser
set forth in Article III of the Agreement are deemed to be made with
respect to the Tranche A1 Units and the Tranche A1 Closing. All
references in such Article IV are deemed to be changed to reflect the
Tranche A1 Closing.
ARTICLE V
CONDITIONS
5.1 Conditions Precedent to the Obligation of the Company to Sell the Tranche A1
Units. The obligation of the Company to sell the Tranche A1 Units (and to pay
the legal fees of Xxxxx Xxxxxxx Asset) hereunder is subject to the satisfaction
or waiver (with prior written notice to each Purchaser) by the Company, at or
before the Tranche A1 Closing, of each of the following conditions:
(a) Accuracy of the Purchasers' Representations and Warranties. The
representations and warranties of each Purchaser in the Amended
Agreement shall be true and correct in all material respects as of
the date when made and as of the Tranche A1 Closing Date;
(b) Performance by the Purchasers. Each Purchaser shall have
performed, satisfied and complied in all material respects with
all covenants, agreements and conditions required by this
Agreement to be performed, satisfied or complied with by such
Purchaser at or prior to the Tranche A1 Closing; and
(c) No Injunction. No statute, rule, regulation, executive order,
decree, ruling or injunction shall have been enacted, entered,
promulgated or endorsed by any court or governmental authority of
competent jurisdiction which prohibits the consummation of any of
the transactions contemplated by the Amended Agreement or the
Transaction Documents.
5.2 Conditions Precedent to the Obligation of the Purchasers to
Purchase the Tranche A1 Units. The obligation of each Purchaser
hereunder to acquire and pay for the Tranche A1 Units is subject
to the satisfaction or waiver by such Purchaser, at or before the
Tranche A Closing, of each of the following conditions:
(a) Accuracy of the Company's Representations and
Warranties. The representations and warranties of
the Company set forth in the Amended Agreement and
in the Amended and Restated Registration Rights
Agreement shall be true and correct in all respects
as of the date when made and as of the Tranche A1
Closing Date;
(b) Performance by the Company. The Company shall have
performed, satisfied and complied in all respects
with all covenants, agreements and conditions
required by this Agreement to be performed,
satisfied or complied with by the Company at or
prior to the Tranche A1 Closing;
(c) No Injunction. No statute, rule, regulation,
executive order, decree, ruling or injunction shall
have been enacted, entered, promulgated or endorsed
by any court or governmental authority of competent
jurisdiction which prohibits the consummation of
any of the transactions contemplated by the Amended
Agreement and the Transaction Documents;
(d) No Suspensions of Trading in Common Stock. The
trading in the Common Stock shall not have been
suspended by the Commission or on Nasdaq which
suspension shall remain in effect;
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(e) Listing of Common Stock. Nasdaq shall have
approved, if required, for listing upon notice of
issuance the Shares and the Underlying Shares;
(f) Required Approvals. All Required Approvals shall
have been obtained other than those relating solely
to the Tranche B Units;
(g) Shares of Common Stock. The Company shall have duly
reserved the number of Underlying Shares required
by this Agreement and the Transaction Documents to
be reserved for issuance upon the exercise of the
Tranche A1 Warrants and the A1X Warrants;
(h) Change of Control. No Change of Control shall have
occurred between the date hereof and the Tranche A1
Closing Date. "Change of Control" means the
occurrence of any of (i) an acquisition after the
date hereof by an individual or legal entity or
"group" (as described in Rule 13d-5(b)(1)
promulgated under the Exchange Act), other than the
Purchasers or any of their Affiliates, of in excess
of 50% of the voting securities of the Company,
(ii) a replacement of more than one-half of the
members of the Company's Board of Directors which
is not approved by those individuals who are
members of the Board of Directors on the date
hereof in one or a series of related transactions,
(iii) the merger of the Company with or into
another entity, consolidation or sale of all or
substantially all of the assets of the Company in
one or a series of related transactions or (iv) the
execution by the Company of an agreement to which
the Company is a party or by which it is bound,
providing for any of the events set forth above in
(i), (ii) or (iii);
(i) Transfer Agent Instructions. The Irrevocable
Transfer Agent Instructions, in the form previously
agreed to, shall have been delivered to and
acknowledged in writing by the Company's transfer
agent.
5.3 Documents and Certificates.. At the Tranche A1 Closing, the Company
shall have delivered to the Purchasers, the following in form and
substance reasonably satisfactory to the Purchasers:
(a) An opinion of the Company's legal counsel in the form attached
hereto as Exhibit C dated as of the Tranche A1 Closing Date;
(b) A stock certificate(s) representing the number of Tranche A1
Shares purchased by such Purchaser as set forth next to such
Purchaser's name on Schedule I, registered in the name of such
Purchaser, each in form satisfactory Documents and Certificates to
the Purchaser;
(c) A Warrant(s) representing the Tranche A1 Warrants purchased by
such Purchaser as set forth next to such Purchaser's name on
Schedule I, registered in the name of such Purchaser;
(d) A Warrant(s) representing the A1X Warrants purchased by such
Purchaser as set forth next to such Purchaser's name on Schedule
I, registered in the name of such Purchaser;
(e) The Company shall have executed and delivered the Amended and
Restated Registration Rights Agreement;
(f) Officer's Certificate. An Officer's Certificate dated the Tranche
A1 Closing Date and signed by an executive officer of the Company
confirming the accuracy of the Company's representations,
warranties and covenants as of such Closing Date and confirming
the compliance by the Company with the conditions precedent set
forth in Section 5.1 of this Amendment as of the Tranche A1
Closing Date.
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(g) Secretary's Certificate. A Secretary's Certificate dated the
Tranche A1 Closing Date and signed by the Secretary or Assistant
Secretary of the Company certifying (A) that attached thereto is a
true and complete copy of the Certificate of Incorporation of the
Company, as in effect on the Tranche A1 Closing Date, (B) that
attached thereto is a true and complete copy of the by-laws of the
Company, as in effect on the Tranche A1 Closing Date and (C) that
attached thereto is a true and complete copy of the resolutions
duly adopted by the Board of Directors of the Company authorizing
the execution, delivery and performance this Agreement and of the
Transaction Documents, and that such resolutions have not been
modified, rescinded or revoked.
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IN WITNESS WHEREOF, the parties hereto have caused this Securities
Purchase Agreement to be duly executed by their respective authorized persons as
of the date first indicated above.
DIGITAL COURIER TECHNOLOGIES, INC.
By:
------------------------------
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, LTD.
By:
------------------------------
Name:
Title:
XXXXX XXXXXXX STRATEGIC
GROWTH FUND, L.P.
By:
------------------------------
Name:
Title:
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED WITH THE SECURITIES
AND EXCHANGE COMMISSION IN RELIANCE UPON AN EXEMPTION FROM REGISTRATION UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT OR PURSUANT TO AN AVAILABLE EXEMPTION FROM, OR IN A TRANSACTION
NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT.
December 2, 1998
150,000 shares Warrant No. A1-2
DIGITAL COURIER TECHNOLOGIES, INC.
STOCK PURCHASE WARRANT
Registered Owner:
This certifies that, for value received, Digital Courier Technologies,
Inc., a Delaware corporation, the ("Company") grants the following rights to the
Registered Owner, or assigns, of this Warrant:
1. Issue. Upon tender (as defined in section 5 hereof) to the Company,
the Company shall issue to the Registered Owner, Xxxxx Xxxxxxx Strategic Growth
Fund, Ltd., or assigns, up to the number of shares specified in paragraph 2
hereof of fully paid and nonassessable shares of Common Stock, par value $.0001
per share ("Common Stock"), that the Registered Owner, or assigns, is otherwise
entitled to purchase.
2. Number of Shares. The total number of shares of Common Stock that
the Registered Owner, or assigns, of this Warrant is entitled to receive upon
exercise of this Warrant is 150,000 shares of Common Stock, subject to
adjustment from time to time as set forth in paragraph 6 below. The Company
shall at all times reserve and hold available sufficient shares of Common Stock
to satisfy all conversion and purchase rights represented by outstanding
convertible securities, options and warrants, including this Warrant. The
Company covenants and agrees that all shares of Common Stock that may be issued
upon the exercise of this Warrant shall, upon issuance, be duly and validly
issued, fully paid and nonassessable, and free from all taxes, liens and charges
with respect to the purchase and the issuance of the shares.
3. Exercise Price. (a) The initial exercise price of this Warrant, the
price at which the shares of stock issuable upon exercise of this Warrant may be
purchased, is $9.49 per share and upon the six-month anniversary of the date
hereof, shall be adjusted as set forth in section 3(b) hereof, and subject to
adjustment from time to time pursuant to the provisions of paragraph 6 below
(the "Exercise Price").
(b) At 5:00 p.m. on June 2, 1998 (the "Reset Date"), the Exercise
Price shall be adjusted to be equal to the lesser of (i) $ 9.49 per share, or
(ii) the average Per Share Market Value during any five (5) consecutive Trading
Days during the period of the 22 Trading Days immediately preceding the Reset
Date. The Registered Owner shall send written notice to the Company of the
Exercise Price, as adjusted pursuant to this paragraph, together with
computation of such adjusted Exercise Price and the computation of the average
Per Share Market Value for each such five-day period, no later than the second
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(2nd) Business Day after the Reset Date. The Exercise Price shall be deemed to
be adjusted to such new Exercise Price unless the Company notifies the
Registered Owner within one (1) Business Day after receipt of such written
notice from the Registered Owner that the Company disagrees with the computation
of such adjustment. If the Registered Owner and the Company fail to agree upon
the adjusted Exercise Price within one (1) Business Day after the Company has
given such notice, the Exercise Price shall be computed promptly by a securities
firm acceptable to both the Registered Owner and the Company, and such
computation shall be final.
4. Exercise Period. This Warrant may only be exercised beginning on
December 2, 1998 and up to and including December 1, 2003 (the "Exercise
Period"). If not exercised during this period, this Warrant and all rights
granted under this Warrant shall expire and lapse.
5. Tender. This Warrant may be exercised, in whole or in part, by
actual delivery of (i) the Exercise Price in cash, (ii) a duly executed Warrant
Exercise Form, a copy of which is attached to this Warrant as Exhibit A,
properly executed by the Registered Owner, or assigns, of this Warrant, and
(iii) by surrender of this Warrant. The payment and Warrant Exercise Form must
be delivered, personally or by mail, to the registered office of the Company.
Documents sent by mail shall be deemed to be delivered when they are received by
the Company.
6. Further Adjustment of Exercise Price.
(a) If the Company, at any time while this Warrant is
outstanding, (a) shall pay a stock dividend on its Common Stock, (b) subdivide
outstanding shares of Common Stock into a larger number of shares, (c) combine
outstanding shares of Common Stock into a smaller number of shares, or (d) issue
by reclassification of shares of Common Stock any shares of capital stock of the
Company, the Exercise Price shall be multiplied by a fraction the numerator of
which shall be the number of shares of Common Stock (excluding treasury shares,
if any) outstanding before such event and the denominator of which shall be the
number of shares of Common Stock outstanding after such event. Any adjustment
made pursuant to this paragraph (6)(a) shall become effective immediately after
the record date for the determination of shareholders entitled to receive such
dividend or distribution and shall become effective immediately after the
effective date in the case of a subdivision, combination or re-classification.
(b) If the Company, at any time while this Warrant is
outstanding, shall issue rights or warrants to all of the holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the Per Share Market Value of Common Stock at the
record date mentioned below, the Exercise Price shall be multiplied by a
fraction, the denominator of which shall be the number of shares of Common Stock
(excluding treasury shares, if any) outstanding on the date of issuance of such
rights or warrants plus the number of additional shares of Common Stock offered
for subscription or purchase, and the numerator of which shall be the number of
shares of Common Stock (excluding treasury shares, if any) outstanding on the
date of issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered would purchase
at such Per Share Market Value. Such adjustment shall be made whenever such
rights or warrants are issued, and shall become effective immediately after the
record date for the determination of shareholders entitled to receive such
rights or warrants. However, upon the expiration of any right or warrant to
purchase Common Stock the issuance of which resulted in an adjustment in the
Exercise Price pursuant to this paragraph (6)(b), if any such right or warrant
shall expire and all or any portion thereof shall not have been exercised, the
Exercise Price shall immediately upon such expiration be re-computed and
effective immediately upon such expiration be increased to the price which it
would have been (but reflecting any other adjustments in the Exercise Price made
pursuant to the provisions of section (g) after the issuance of such rights or
warrants) had the adjustment of the Exercise Price made upon the issuance of
such rights or warrants been made on the basis of offering for subscription or
purchase only that number of shares of Common Stock (if any) actually purchased
upon the exercise of such rights or warrants actually exercised.
(c) If the Company, at any time while this Warrant is
outstanding, shall distribute to all of the holders of Common Stock evidences of
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its indebtedness or assets or rights or warrants to subscribe for or purchase
any security (excluding those referred to in paragraphs 6(a) and (b) above),
then in each such case the Exercise Price at which the Warrant shall thereafter
be exercisable shall be determined by multiplying the Exercise Price in effect
immediately prior to the record date fixed for determination of shareholders
entitled to receive such distribution by a fraction the denominator of which
shall be the Per Share Market Value of Common Stock determined as of the record
date mentioned above, and the numerator of which shall be such Per Share Market
Value of the Common Stock on such record date less the then fair market value at
such record date of the portion of such assets or evidence of indebtedness so
distributed applicable to one outstanding share of Common Stock as determined by
the Board of Directors in good faith; provided, however, that in the event of a
distribution exceeding ten percent (10%) of the net assets of the Company, such
fair market value shall be determined by a nationally recognized or major
regional investment banking firm or firm of independent certified public
accountants of recognized standing (an "Appraiser") selected in good faith by
the Registered Owner of the Warrant; and provided, further, that the Company,
after receipt of the determination by such Appraiser shall have the right to
select an additional Appraiser meeting the same qualifications, in good faith,
in which case the fair market value shall be equal to the average of the
determinations by each such Appraiser. Such adjustment shall be made whenever
any such distribution is made and shall become effective immediately after the
record date mentioned above.
(d) All calculations under this section 6 shall be made to
the nearest cent or the nearest l/l00th of a share, as the case may be.
(e) Whenever the Exercise Price is adjusted pursuant to
paragraphs 6(a), (b) or (c), the Company shall promptly mail to the holder of
the Warrant, a notice setting forth the Exercise Price after such adjustment and
setting forth a brief statement of the facts requiring such adjustment.
(f) In case of (A) any reclassification of the Common Stock,
(B) any consolidation or merger of the Company with or into another person
pursuant to which (i) a majority of the Company's Board of Directors will not
constitute a majority of the board of directors of the surviving entity or (ii)
less than 51% of the outstanding shares of the capital stock of the surviving
entity will be held by the same shareholders of the Company prior to such
reclassification, consolidation or merger, (C) the sale or transfer of all or
substantially all of the assets of the Company, (D) any compulsory share
exchange pursuant to which the Common Stock is converted into other securities,
cash or property, (E) suspension from listing or delisting of the Common Stock
from the National Market System of the Nasdaq Stock Market or any other exchange
on which the Common Stock is listed for a period of five consecutive days, (F)
the Company's notice to any registered owner of the Tranche A Warrants or the
Tranche B Warrants, including by way of public announcement, at any time, of its
intention, for any reason, not to comply with proper requests for the exercise
of any such warrants, or (G) a breach by the Company of any representation,
warranty, covenant or other term or condition of the Purchase Agreement, the
Registration Rights Agreement or any other agreement, document, certificate or
other instrument delivered in connection with the transactions contemplated
thereby or hereby, except to the extent that such breach would not have a
Material Adverse Effect (as defined in Section 2.1(a) of the Purchase Agreement)
and except, in the case of a breach of a covenant which is curable, only if such
breach continues for a period of at least ten days after the Company knows or
reasonably should have known of the existence of such breach (clauses (A)
through (G) above referred to as a "Redemption Event"), the holder of the
Warrant shall have the right thereafter to exercise the Warrant for the shares
of stock and other securities, cash and property receivable upon or deemed to be
held by holders of Common Stock following such Redemption Event, and the holder
of the Warrant shall be entitled upon such event to receive such amount of
securities, cash or property as the shares of the Common Stock of the Company
into which the Warrant could have been converted immediately prior to such
Redemption Event would have been entitled.
(g) If:
A. the Company shall declare a dividend (or any other
distribution) on its Common Stock; or
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B. the Company shall declare a special nonrecurring cash
dividend on or a redemption of its Common Stock; or
C. the Company shall authorize the granting to the
holders of the Common Stock rights or warrants to
subscribe for or purchase any shares of capital stock
of any class or of any rights; or
D. the approval of any shareholders of the Company shall
be required in connection with any reclassification
of the Common Stock of the Company, any consolidation
or merger to which the Company is a party, any sale
or transfer of all or substantially all of the assets
of the Company, of any compulsory share of exchange
whereby the Common Stock is converted into other
securities, cash or property; or
E. the Company shall authorize the voluntary or
involuntary dissolution, liquidation or winding up of
the affairs of the Company;
then the Company shall cause to be filed at each office or agency maintained for
the purpose of exercise of this Warrant, and shall cause to be mailed to the
holder of this Warrant at its address as it shall appear below, at least 30
calendar days prior to the applicable record or effective date hereinafter
specified, a notice (provided such notice shall not include any material
non-public information) stating (x) the date on which a record is to be taken
for the purpose of such dividend, distribution, redemption, rights or warrants,
or if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distributions, redemption,
rights or warrants are to be determined or (y) the date on which such
reclassification, consolidation, merger, sale, transfer or share exchange is
expected to become effective or close, and the date as of which it is expected
that holders of Common Stock of record shall be entitled to exchange their
shares of Common Stock for securities, cash or other property deliverable upon
such reclassification, consolidation, merger, sale, transfer or share exchange;
provided, however, that the failure to mail such notice or any defect therein or
in the mailing thereof shall not affect the validity of the corporate action
required to be specified in such notice.
(h) Adjustment to Exercise Price. In order to prevent dilution
of the rights granted under this Warrant, the Exercise Price will be subject to
adjustment from time to time as provided in this Section 6(h).
(i) Adjustment of Exercise Price upon Issuance of Common
Stock. If at any time prior to the one year anniversary of the Reset
Date, the Company issues or sells, or is deemed to have issued or sold,
any shares of Common Stock (other than the Underlying Shares or shares
of Common Stock deemed to have been issued by the Company in connection
with an Approved Stock Plan (as defined below) or shares of Common
Stock issuable upon the exercise of any options or warrants outstanding
on the date hereof and listed in Schedule 2.1(c) of the Purchase
Agreement) for a consideration per share less than the Exercise Price
in effect immediately prior to such issuance or sale, then immediately
after such issue or sale, the Exercise Price then in effect shall be
reduced to an amount equal to the consideration per share of Common
Stock of such issuance or sale. If at any time prior to the one year
anniversary of the Reset Date, the Company issues or sells, or is
deemed to have issued or sold, any shares of Common Stock (other than
Underlying Shares, shares of Common Stock deemed to have been issued by
the Company in connection with an Approved Stock Plan (as defined
below) or shares of Common Stock issuable upon the exercise of any
options or warrants outstanding on the date hereof and listed in
Schedule 2.1(c) of the Purchase Agreement or shares of Common Stock
issued or deemed to have been issued as consideration for an
acquisition by the Company of a license or of a division, assets or
business (or stock constituting any portion thereof) from another
person) for a consideration per share which is (A) greater than the
Exercise Price in effect immediately prior to such issuance or sale and
(B) less the average of the Per Share Market Values on the five
consecutive Trading Days immediately preceding the date of such
issuance or sale (the price in this clause (B) is herein referred to as
"Market Price"), then immediately after such issue or sale, the
Exercise Price then in effect shall be reduced to an amount equal to
the product of (x) the Exercise Price in effect immediately prior to
such issue or sale and (y) the quotient determined by dividing (1) the
12
sum of (I) the product of (A) the Market Price and (B) the number of
shares of Common Stock Deemed Outstanding (as defined below)
immediately prior to such issue or sale, and (II) the consideration, if
any, received by the Company upon such issue or sale, by (2) the
product of (I) the Market Price and (II) the number of shares of Common
Stock Deemed Outstanding (as defined below) immediately after such
issue or sale; provided that no adjustment shall be made if such
adjustment would result in an increase of the Exercise Price in effect
immediately prior to such issuance or sale. For purposes of determining
the adjusted Exercise Price under this Section 6(h)(i), the following
shall be applicable:
(A) Issuance of Options. If at any time prior to the
one year anniversary of the Reset Date, the Company in any manner
grants any rights or options to subscribe for or to purchase Common
Stock or any stock or other securities convertible into or exchangeable
for Common Stock (such rights or options being herein called "Options"
and such convertible or exchangeable stock or securities being herein
called "Convertible Securities") and the price per share for which
Common Stock is issuable upon the exercise of such Options or upon
conversion or exchange of such Convertible Securities is less than the
Exercise Price in effect immediately prior to such grant, then the
Exercise Price shall be adjusted to equal the price per share for which
Common Stock is issuable upon the exercise of such Options or upon the
conversion or exchange of such Convertible Securities. If at any time
prior to the one year anniversary of the Reset Date, the Company in any
manner grants any Options (other than Underlying Shares, shares of
Common Stock deemed to have been issued by the Company in connection
with an Approved Stock Plan (as defined below) or shares of Common
Stock issuable upon the exercise of any options or warrants outstanding
on the date hereof and listed in Schedule 2.1(c) of the Purchase
Agreement and the price per share for which Common Stock is issuable
upon exercise of such Options or upon the conversions or exchange of
such Convertible Securities is (A) greater than the Exercise Price in
effect immediately prior to such issuance or sale and (B) less Market
Price, then immediately after such issue or sale, the Exercise Price
then in effect shall be reduced to an amount equal to the product of
(x) the Exercise Price in effect immediately prior to such grant and
(y) the quotient determined by dividing (1) the sum of (I) the product
of (A) the Market Price and (B) the number of shares of Common Stock
Deemed Outstanding (as defined below) immediately prior to such issue
or sale, and (II) the consideration, if any, received by the Company
upon such issue, sale, grant, exercise, conversion or exchange, by (2)
the product of (I) the Market Price and (II) the number of shares of
Common Stock Deemed Outstanding (as defined below) immediately after
such grant; provided that no adjustment shall be made if such
adjustment would result in an increase of the Exercise Price in effect
immediately prior to such grant. No adjustment of the Exercise Price
shall be made upon the actual issuance of such Common Stock or of such
Convertible Securities upon the exercise of such Options or upon the
actual issuance of such Common Stock upon conversion or exchange of
such Convertible Securities.
(B) Issuance of Convertible Securities. If at any
time prior to the one year anniversary of the Reset Date, the Company
in any manner issues or sells any Convertible Securities and the price
per share for which Common Stock is issuable upon such conversion or
exchange is less than the Exercise Price in effect immediately prior to
issuance or sale, then the Exercise Price shall be adjusted to equal
the price per share for which Common Stock is issuable upon the
conversion or exchange of such Convertible Securities. If at any time
prior to the one year anniversary of the Reset Date, the Company issues
or sells, or is deemed to have issued or sold, any Convertible
Securities and the price per share for which Common Stock issuable upon
conversion or exchange of such Convertible Securities is (A) greater
than the Exercise Price in effect immediately prior to such issuance or
sale and (B) less the Market Price, then immediately after such issue
or sale, the Exercise Price then in effect shall be reduced to an
amount equal to the product of (x) the Exercise Price in effect
immediately prior to such issue or sale and (y) the quotient determined
by dividing (1) the sum of (I) the product of (A) the Market Price and
(B) the number of shares of Common Stock Deemed Outstanding (as defined
below) immediately prior to such issue or sale, and (II) the
consideration, if any, received by the Company upon such issue or sale,
by (2) the product of (I) the Market Price and (II) the number of
shares of Common Stock Deemed Outstanding (as defined below)
immediately after such issue or sale; provided that no adjustment shall
be made if such adjustment would result in an increase of the Exercise
Price in effect immediately prior to such issuance or sale. No
13
adjustment of the Exercise Price shall be made upon the actual issue of
such Common Stock upon conversion or exchange of such Convertible
Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustment of
the Exercise Price had been or are to be made pursuant to other
provisions of this Section 6(h)(i), no further adjustment of the
Exercise Price shall be made by reason of such issue or sale.
(C) Change in Option Price or Rate of Conversion. If
there is a change at any time in (i) the purchase price provided for in
any Options, (ii) the additional consideration, if any, payable upon
the issue, conversion or exchange of any Convertible Securities or
(iii) the rate at which any Convertible Securities are convertible into
or exchangeable for Common Stock, then the Exercise Price in effect at
the time of such change shall be readjusted to the Exercise Price which
would have been in effect at such time had such Options or Convertible
Securities still outstanding provided for such changed purchase price,
additional consideration or changed conversion rate, as the case may
be, at the time initially granted, issued or sold; provided that no
adjustment shall be made if such adjustment would result in an increase
of the Exercise Price then in effect.
(D) Certain Definitions. For purposes of determining
the adjusted Exercise Price under this Section 6(h)(i), the following
terms have meanings set forth below:
(I) "Approved Stock Plan" shall mean any
contract, plan or agreement which has been approved by the Board of
Directors of the Company, pursuant to which the Company's securities
may be issued to any employee, officer, director or consultant.
(II) "Common Stock Deemed Outstanding"
means, at any given time, the number of shares of Common Stock issued
and outstanding at such time, plus the number of shares of Common Stock
deemed to be outstanding pursuant to Sections 6(h)(i)(A) and 6(h)(i)(B)
hereof regardless of whether the Options or Convertible Securities are
actually exercisable at such time, but excluding any shares of Common
Stock issuable upon exercise of the Warrants.
(E) Effect on Exercise Price of Certain Events. For
purposes of determining the adjusted Exercise Price under this Section
6(h)(i), the following shall be applicable:
(I) Calculation of Consideration Received.
If any Common Stock, Options or Convertible Securities are issued or
sold or deemed to have been issued or sold for cash, the consideration
received therefor will be deemed to be the net amount received by the
Company therefor. In case any Common Stock, Options or Convertible
Securities are issued or sold for a consideration other than cash, the
amount of the consideration other than cash received by the Company
will be the fair value of such consideration, except where such
consideration consists of securities, in which case the amount of
consideration received by the Company will be the arithmetic average of
the Per Share Market Values of such security for the five (5)
consecutive Trading Days immediately preceding the date of receipt. In
case any Common Stock, Options or Convertible Securities are issued to
the owners of the non-surviving entity in connection with any merger in
which the Company is the surviving entity the amount of consideration
therefor will be deemed to be the fair value of such portion of the net
assets and business of the non-surviving entity as is attributable to
such Common Stock, Options or Convertible Securities, as the case may
be. The fair value of any consideration other than cash or securities
will be determined jointly by the Company and the registered owners of
a majority of the Underlying Shares of Tranche A Warrants, the Tranche
A1 Warrants, A1X Warrants and the Tranche B Warrants then outstanding.
If such parties are unable to reach agreement within ten (10) days
after the occurrence of an event requiring valuation (the "Valuation
Event"), the fair value of such consideration will be determined within
forty-eight (48) hours of the tenth (10th) day following the Valuation
Event by an Appraiser selected by the Company. The determination of
such Appraiser shall be binding upon all parties absent manifest error.
(II) Integrated Transactions. In case any
Option is issued in connection with the issue or sale of other
securities of the Company, together comprising one integrated
14
transaction in which no specific consideration is allocated to such
Options by the parties thereto, the Options will be deemed to have been
issued for an aggregate consideration of $.01.
(III) Treasury Shares. The number of shares
of Common Stock outstanding at any given time does not include shares
owned or held by or for the account of the Company, and the disposition
of any shares so owned or held will be considered an issue or sale of
Common Stock.
(IV) Record Date. If the Company takes a
record of the holders of Common Stock for the purpose of entitling them
(1) to receive a dividend or other distribution payable in Common
Stock, Options or in Convertible Securities or (2) to subscribe for or
purchase Common Stock, Options or Convertible Securities, then such
record date will be deemed to be the date of the issue or sale of the
shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or the making of such other distribution
or the date of the granting of such right of subscription or purchase,
as the case may be.
(ii) Certain Events. If any event occurs of the type
contemplated by the provisions of Section 6(h)(i)
(subject to the exceptions stated therein) but not
expressly provided for by such provisions (including,
without limitation, the granting of stock
appreciation rights, phantom stock rights or other
rights with equity features), then the Company's
Board of Directors will make an appropriate
adjustment in the Exercise Price so as to protect the
rights of the Registered Holder, or assigns, of this
Warrant; provided, however, that no such adjustment
will increase the Exercise Price as otherwise
determined pursuant to this Section 6(h).
7. Call Option. If, at any time during the Exercise Period, the Per
Share Market Value equals or exceeds an amount equal to 200% of the
Exercise Price at such time for a period of 15 consecutive business
days, then the Company shall have the right during the 6 month period
commencing on the first business day after such 15-day period, upon
written notice to the Registered Owner, to cause such Registered Owner
to exercise this Warrant in full by delivering to the Company the
Exercise Price in cash, the Warrant Exercise Form and this Warrant as
specified in section 5 hereof within the period of ten (10) business
days commencing on the Registered Owner's receipt of such notice;
provided, however, that the Company can exercise the right specified in
this section 7 only if, in addition to the conditions specified herein,
there is an effective registration statement under the Securities Act
relating to the shares of Common Stock issuable upon the exercise of
this Warrant so that the Registered Owner may freely offer and sell
such shares of Common Stock without further registration under the
Securities Act or compliance with Rule 144 thereunder or any other
exemptive provision or rule thereunder so long as the Registered Owner
is not an Affiliate of the Company.
8. Definitions. Capitalized terms used herein and not otherwise defined
herein shall have the meanings given to such terms in the Amended Agreement. As
used in this Warrant, the following terms have the following meanings:
"Affiliate" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or under common control with
such Person. For the purposes of this definition, "control," when used with
respect to any Person, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of such Person,
whether through the ownership of voting securities, by contract or otherwise;
and the terms of "affiliated," controlling" and "controlled" have meanings
correlative to the foregoing.
"Amended Agreement" has the meaning assigned to it in Amendment No. 1
to the Purchase Agreement dated as of December 2, 1998.
"Appraiser" has the meaning assigned to it in section 6(c) hereof.
15
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in the state of
New York generally are authorized or required by law or other government actions
to close.
"Common Stock" means the shares of the Company's Common Stock, par
value $.0001 per share.
"Company" means Digital Courier Technologies, Inc., a Delaware
corporation.
"Convertible Securities" has the meaning assigned to it in section
6(h)(i)(A) hereof.
"Exercise Period" has the meaning assigned to it the section 4 hereof.
"Exercise Price" has the meaning assigned to it in section 3 hereof
"Market Price" has the meaning assigned to it in section 6(h)(i)
hereof.
"Options" has the meaning assigned to it in section 6(h)(i)(A) hereof.
"Per Share Market Value" means on any particular date (i) the closing
bid price per share of the Common Stock on such date on the National Market
System of the Nasdaq Stock Market or other registered national stock exchange on
which the Common Stock is then listed or if there is no such price on such date,
then the closing bid price on such exchange or quotation system on the date
nearest preceding such date, or (ii) if the Common Stock is not listed then on
the National Market System of the Nasdaq Stock Market or any registered national
stock exchange, the closing bid price for a share of Common Stock in the
over-the-counter market, as reported by the National Quotation Bureau
Incorporated (or similar organization or agency succeeding to its functions of
reporting prices) at the close of business on such date, or (iii) if the Common
Stock is not then publicly traded the fair market value of a share of Common
Stock as determined by an Appraiser selected in good faith by the holder of this
Warrant; provided, however, that the Company, after receipt of the determination
by such Appraiser, shall have the right to select an additional Appraiser, in
which case, the fair market value shall be equal to the average of the
determinations by each such Appraiser; and provided, further that all
determinations of the Per Share Market Value shall be appropriately adjusted for
any stock dividends, stock splits or other similar transactions during such
period.
"Purchase Agreement" means that certain Securities Purchase Agreement,
dated November 23, 1998 and as subsequently amended, among the Company, Xxxxx
Xxxxxxx Strategic Growth Fund, Ltd. and Xxxxx Xxxxxxx Strategic Growth Fund,
L.P.
"Redemption Event" has the meaning assigned to it in section 6(f)
hereof.
"Registered Owner" means Xxxxx Xxxxxxx Strategic Growth Fund, Ltd., or
such other Person as shown on the records of the Company as being the registered
owner of this Warrant.
"Registration Rights Agreement" means that certain Registration Rights
Agreement, dated November 23, 1998 and as subsequently amended, among the
Company, Xxxxx Xxxxxxx Strategic Growth Fund, Ltd. and Xxxxx Xxxxxxx Strategic
Growth Fund, L.P.
"Trading Day(s)" means any day on which the primary market on which
shares of Common Stock are listed is open for trading.
16
"Tranche A Warrant" means the warrant issuable at the Tranche A
Closing.
"Tranche A1 Warrant" means the warrant issuable at the Tranche A1
Closing in the form of Exhibit A to the Amended Agreement.
"A1X Warrant" means the warrant issuable at the Tranche A1 Closing in
the form of Exhibit B to the Amended Agreement.
"Tranche B Warrant" means the warrant issuable at the Tranche B
Closing.
"Underlying Shares" has the meaning assigned to it in section 2.1(d) of
the Purchase Agreement.
9. Registration Rights. The Company will undertake the registration of
the Common Stock into which such Warrants are exercisable at such times and upon
such terms pursuant to the provisions of the Registration Rights Agreement.
10.Reservation of Underlying Shares. The Underlying Shares are and
will at all times hereafter continue to be duly authorized and reserved for
issuance pursuant to this Warrant.
11.Notices. All notices or other communications required hereunder
shall be in writing and shall be sent either (i) by courier, or (ii) by telecopy
as well as by registered or certified mail, and shall be regarded as properly
given in the case of a courier upon actual delivery to the proper place of
address; in the case of telecopy, on the day following the date of transmission
if properly addressed and sent without transmission error to the correct number
and receipt is confirmed by telephone within 48 hours of the transmission; in
the case of a letter for which a telecopy could not be successfully transmitted
or receipt of which could not be confirmed as herein provided, three days after
the registered or certified mailing date if the letter is properly addressed and
postage prepaid; and shall be regarded as properly addressed if sent to the
parties or their representatives at the addresses given below:
To the Company: Digital Courier Technologies, Inc.
000 Xxxxx Xxxxxx, Xxxxx 000
X.X. Xxx 0000
Xxxx Xxxx, Xxxx 00000
Attn: Xxxxxxxx Xxxxxxx
Phone: 000-000-0000
Fax: 000-000-0000
To the holder: Xxxxx Xxxxxxx Strategic Growth Fund, L.P.
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
or such other address as any of the above may have furnished to the other
parties in writing by registered mail, return receipt requested.
[signature page follows]
17
IN WITNESS WHEREOF, the Company has caused this Warrant to be executed
by its duly authorized officer as of the date first set forth above.
DIGITAL COURIER TECHNOLOGIES, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
EXHIBIT A
Warrant Exercise Form
---------------------
TO: DIGITAL COURIER TECHNOLOGIES, INC.
The undersigned hereby: (1) irrevocably subscribes for and offers to
purchase _______ shares of Common Stock of Digital Courier Technologies, Inc.,
pursuant to Warrant No. ___ heretofore issued to ___________________ on
____________, 1998; (2) encloses a payment of $__________ for these shares at a
price of $____ per share (as adjusted pursuant to the provisions of the
18
Warrant); and (3) requests that a certificate for the shares be issued in the
name of the undersigned and delivered to the undersigned at the address
specified below.
Date: -------------------------
Investor Name: -------------------------
Taxpayer Identification
Number: -------------------------
By: -------------------------
Printed Name: -------------------------
Title: -------------------------
Address: -------------------------
-------------------------
-------------------------
Note: The above signature should correspond exactly with
the name on the face of this Warrant Certificate or
with the name of assignee appearing in assignment
form below.
AND, if said number of shares shall not be all the shares purchasable under the
within Warrant, a new Warrant Certificate is to be issued in the name of said
undersigned for the balance remaining of the shares purchasable thereunder less
any fraction of a share paid in cash and delivered to the address stated above.
AMENDED AND RESTATED REGISTRATION RIGHTS AGREEMENT
--------------------------------------------------
That certain Registration Rights Agreement made and entered
into as of November 23, 1998, among Digital Courier Technologies, Inc., a
Delaware corporation (the "Company"), Xxxxx Xxxxxxx Strategic Growth Fund, Ltd.,
a Cayman Islands exempt company ("Xxxxx Xxxxxxx Limited") and Xxxxx Xxxxxxx
Strategic Growth Fund, L.P., a New York limited partnership ("Xxxxx Xxxxxxx
XX"). Xxxxx Xxxxxxx XX and Xxxxx Xxxxxxx Limited are each referred to herein as
a "Purchaser" and are collectively referred to herein as the "Purchasers" is
hereby amended and restated as of December 2, 1998 and is referred to as the
Agreement.
This Agreement is made pursuant to the Securities Purchase
Agreement, dated as of November 23, 1998 and as amended the date hereof among
the Company and the Purchasers (the "Purchase Agreement").
The Company and the Purchasers hereby agree as follows:
1. Definitions
Capitalized terms used and not otherwise defined herein shall
have the meanings given such terms in the Purchase Agreement. As used in this
Agreement, the following terms shall have the following meanings:
"Advice" has meaning set forth in Section 3(o) hereof.
"Affiliate" means, with respect to any Person, any other
Person that directly or indirectly controls or is controlled by or under common
control with such Person. For the purposes of this definition, "control," when
used with respect to any Person, means the possession, direct or indirect, of
the power to direct or cause the direction of the management and policies of
such Person, whether through the ownership of voting securities, by contract or
otherwise; and the terms of "affiliated," controlling" and "controlled" have
meanings correlative to the foregoing.
"Allowable Grace Period" has the meaning set forth in Section
3(p) hereof.
"Business Day" means any day except Saturday, Sunday and any
day which shall be a legal holiday or a day on which banking institutions in the
State of New York generally are authorized or required by law or other
government actions to close.
"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" means the Company's Common Stock, par value
$.0001 per share.
"Effectiveness Date" means (i) with respect to the Tranche A
Registration Statement the earlier of (A) the 90th day following the Tranche A
Closing Date, or (B) the fifth day after the Company received notice (written or
oral) from the Commission that the Commission Staff would not be reviewing the
Tranche A Registration Statement, and (ii) with respect to the Tranche B
Registration Statement the earlier of (A) the 90th day following the Tranche B
Closing Date, or (B) the fifth day after the Company received notice (written or
oral) from the Commission that the Commission Staff would not be reviewing the
Tranche B Registration Statement.
"Effectiveness Period" has the meaning set forth in Section
2(a) hereof.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Event" has the meaning set forth in Section 2(d) hereof.
"Filing Date" means (i) with respect to the shares of Common
Stock issuable at the Tranche A Closing and upon the exercise of the Tranche A
Warrants, as soon as practicable but in not event later than the 30th day
following the Tranche A Closing Date, and (ii) with respect to the shares of
Common Stock issuable at the Tranche B Closing and upon the exercise of the
Tranche B Warrants, as soon as practicable but in no event later than the 30th
day following the Tranche B Closing Date.
"Holder" or "Holders" means the holder or holders, as the case
may be, from time to time of Registrable Securities.
"Indemnified Party" has the meaning set forth in Section 5(c)
hereof.
"Indemnifying Party" has the meaning set forth in Section 5(c)
hereof.
"Losses" has the meaning set forth in Section 5(a) hereof.
"Person" means an individual or a corporation, partnership,
trust, incorporated or unincorporated association, joint venture, limited
liability company, joint stock company, government (or an agency or political
subdivision thereof) or other entity of any kind.
"Proceeding" means an action, claim, suit, investigation or
proceeding (including, without limitation, an investigation or partial
proceeding, such as a deposition), whether commenced or threatened.
"Prospectus" means the prospectus included in the Registration
Statement (including, without limitation, a prospectus that includes any
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A promulgated under the
Securities Act), as amended or supplemented by any prospectus supplement, with
respect to the terms of the offering of any portion of the Registrable
Securities covered by the Registration Statement, and all other amendments and
supplements to the Prospectus, including post-effective amendments, and all
material incorporated by reference in such Prospectus.
"Purchase Price" has the meaning set forth in Section 2(d)
hereof.
"Registrable Securities" means (a) with respect to the
Registration Statement to be filed after the Tranche A Closing, the shares of
Common Stock issuable upon (i) Tranche A Closing Date, (ii) the exercise of the
Tranche A Warrant, (iii) the Tranche A1 Closing Date, (iv) the exercise of the
Tranche A1 Warrant, (v) the exercise of the Xxxxxxx X0X Warrant and (vi) any
shares of the Company's capital stock issued as a result of any stock split,
stock dividend, recapitalization, exchange or similar event or otherwise, (b)
with respect to the Registration Statement to be filed after the Tranche B
Closing, the shares of Common Stock issuable upon (i) the Tranche B Closing
Date, (ii) the exercise of the Tranche B Warrant and (iii) any shares of the
Company's capital stock issued as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise. Such registered shares
of Common Stock shall be allocated among the Holders pro rata based on the total
number of Registrable Securities issued or issuable as of each date that a
Registration Statement, as amended, relating to the resale of the Registrable
Securities is declared effective by the SEC.
"Registration Delay Payment" has the meaning set forth in
Section 2(d) hereof.
"Registration Statement(s)" means the Tranche A Registration
Statement and the Tranche B Registration Statement and any additional
registration statements contemplated by Section 2(a), including (in each case)
the Prospectus, amendments and supplements to such registration statement or
Prospectus, including pre- and post-effective amendments, all exhibits thereto,
and all material incorporated by reference in such registration statement.
"Rule 144" means Rule 144 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 158" means Rule 158 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Rule 415" means Rule 415 promulgated by the Commission
pursuant to the Securities Act, as such Rule may be amended from time to time,
or any similar rule or regulation hereafter adopted by the Commission having
substantially the same effect as such Rule.
"Securities Act" means the Securities Act of 1933, as amended.
"Special Counsel" means any special counsel to the Holders,
for which the Holders will be reimbursed by the Company pursuant to Section 4.
"Tranche A Registration Statement" means the registration
statement filed under the Securities Act for the registration of the offer and
sale of the Registrable Securities issuable at the Tranche A Closing and the
Tranche A1 Closing.
"Tranche B Registration Statement" means the registration
statement filed under the Securities Act for the registration of the offer and
sale of the Registrable Securities issuable at the Trache B Closing.
"Tranche A Shares" means the shares of Common Stock issuable
at the Tranche A Closing.
"Tranche A1 Shares" means the shares of Common Stock issuable
at the Tranche A1 Closing.
"Tranche B Shares" means the shares of Common Stock issuable
at the Tranche B Closing.
"Tranche A Warrant" means the warrant issuable at the Tranche
A Closing.
"Tranche A1 Warrant" means the A1 warrant issuable at the
Tranche A1 Closing.
"Tranche A1X Warrant" means the A1Xwarrant issuable at the
Tranche A1 Closing.
"Tranche B Warrant" means the warrant issuable at the Tranche
B Closing.
"Underwritten Registration or Underwritten Offering" means a
registration in connection with which securities of the Company are sold to an
underwriter for reoffering to the public pursuant to an effective registration
statement.
2. Shelf Registration
(a) On or prior to each applicable Filing Date, the Company
shall prepare and file with the Commission the Tranche A Registration Statement
and the Tranche B Registration Statement covering all Registrable Securities
issued at the Tranche A Closing and the Tranche B Closing, respectively, for an
offering to be made on a continuous basis pursuant to a "Shelf" registration
statement under Rule 415. Each Registration Statement shall be on Form S-3 or
any successor form (except if the Company is not then eligible to register for
resale the Registrable Securities on Form S-3, in which case such registration
shall be on another appropriate form in accordance herewith). The Company shall
(i) not permit any securities other than the Registrable Securities from the
appropriate tranche and those securities listed in Schedule 2.1(r) to the
Purchase Agreement to be included in the Registration Statement and (ii) use its
commercially reasonable efforts to cause the Registration Statement to be
declared effective under the Securities Act as promptly as possible after the
filing thereof, but in any event on or prior to the Effectiveness Date, and to
keep such Registration Statement continuously effective under the Securities Act
until the date which is two years after the date that such Registration
Statement is declared effective by the Commission or such earlier date when all
Registrable Securities covered by such Registration Statement have been sold or
may be sold without volume restrictions pursuant to Rule 144 as determined by
the counsel to the Company pursuant to a written opinion letter, addressed to
the Company's transfer agent to such effect (the "Effectiveness Period").
(b) If the Registrable Securities are to be offered and sold
in an Underwritten Offering, and if the managing underwriters advise the Company
and such Holders in writing that in their opinion the amount of Registrable
Securities proposed to be sold in such Underwritten Offering exceeds the amount
of Registrable Securities which can be sold in such Underwritten Offering, there
shall be included in such Underwritten Offering the amount of such Registrable
Securities which in the opinion of such managing underwriters can be sold, and
such amount shall be allocated pro rata among the Holders proposing to sell
Registrable Securities in such Underwritten Offering.
(c) No Holder may participate in any Underwritten Offering
hereunder unless such Holder (i) agrees to sell its Registrable Securities on
the basis provided in any underwriting agreements approved by the Persons
entitled hereunder to approve such arrangements and (ii) completes and executes
all questionnaires, powers of attorney, indemnities, underwriting agreements and
other documents required under the terms of such arrangements.
(d) If (i) the Registration Statement covering all the
applicable Registrable Securities and required to be filed by the Company
pursuant to this Agreement is not (A) filed with the Commission on or before the
applicable Filing Date or (B) declared effective by the Commission on or before
the applicable Effectiveness Date or (ii) on any day after the Registration
Statement has been declared effective by the Commission, other than days during
an Allowable Grace Period, sales of all the Registrable Securities required to
be included on a Registration Statement cannot be made pursuant to the
respective Registration Statement (including, without limitation, because of a
failure to keep the Registration Statement effective, to disclose such
information as is necessary for sales to be made pursuant to the Registration
Statement, to register sufficient shares of Common Stock) (each such event
specified in (A) and (B) above, an "Event"), then, as partial relief for the
damages to any Holder by reason of any such delay in or reduction of its ability
to sell the Warrant Shares (which remedy shall not be exclusive of any other
remedies available at law or in equity), the Company shall pay to each Holder an
amount in cash (a "Registration Delay Payment") equal to two percent (2%) of the
product of (x) purchase price per Unit specified in Section 1.1 of the Purchase
Agreement (the "Purchase Price") multiplied by (y) the number of Registrable
Securities held by such Holder. Registration Delay Payments shall be paid on the
earlier of (I) the last Business Day of the calendar month during which such
Registration Delay Payments are incurred and (II) the third (3rd) Business Day
after the Event giving rise to the Registration Delay Payment is cured. In the
event the Company fails to make a Registration Delay Payment in a timely manner,
such Registration Delay Payment shall bear interest at the rate of 2.0% per
month (prorated for partial months) until paid in full. If the Company fails to
pay a Registration Delay Payment, including any interest thereon, within 15
Business Days of the date such Registration Delay Payment is due, or if the
Event giving rise to the Registration Delay Payment is not cured within 60 days
after such Event, then the Holder entitled to such Registration Delay Payment or
all Holders in the event of a failure to cure shall have the right at any time,
so long as the Company fails to make such Registration Delay Payments or to cure
the Event, to require the Company, upon written notice, to immediately pay to
the Holder entitled to the Registration Delay Payment or to all Holders in the
case of an uncured Event an amount in cash equal to the Purchase Price paid by
such Holder or Holders plus any unpaid interest relating to Registration Delay
Payments.
3. Registration Procedures
In connection with the Company's registration obligations
hereunder, the Company shall:
(a) Prepare and file with the Commission on or prior to each
applicable Filing Date, a Registration Statement on Form S-3 or its successor
form (or if the Company is not then eligible to register for resale the
Registrable Securities on Form S-3 such registration shall be on another
appropriate form in accordance herewith) in accordance with the method or
methods of distribution thereof as specified by the Holders (except if otherwise
directed by the Holders), and cause the Registration Statement to become
effective and remain effective as provided herein; provided, however, that not
less than a reasonable time prior to the filing of the Registration Statement or
any related Prospectus or any amendment or supplement thereto (including any
document that would be incorporated therein by reference), the Company shall, if
reasonably practicable (i) upon request furnish to the Holders, their Special
Counsel and any managing underwriters, copies of all such documents proposed to
be filed (including documents incorporated by reference), which documents will
be subject to the review of such Holders, their Special Counsel and such
managing underwriters, and (ii) cause its officers and directors, counsel and
independent certified public accountants to respond to such inquiries as shall
be necessary, in the reasonable opinion of respective counsel to such Holders
and such underwriters, to conduct a reasonable investigation within the meaning
of the Securities Act. The Company shall not file the Registration Statement or
any such Prospectus or any amendments or supplements thereto to which the
Holders of a majority of the Registrable Securities, their Special Counsel, or
any managing underwriters, shall reasonably object.
(b) (i) Prepare and file with the Commission such amendments,
including post-effective amendments, to the Registration Statement as may be
necessary to keep the Registration Statement continuously effective as to the
applicable Registrable Securities for the Effectiveness Period and prepare and
file with the Commission any additional Registration Statements in order to
register for resale under the Securities Act all of the Registrable Securities;
(ii) cause the related Prospectus to be amended or supplemented by any required
Prospectus supplement, and as so supplemented or amended to be filed pursuant to
Rule 424 (or any similar provisions then in force) promulgated under the
Securities Act; (iii) respond as promptly as possible to any comments received
from the Commission with respect to the Registration Statement or any amendment
thereto and as promptly as possible provide the Holders true and complete copies
of all correspondence from and to the Commission relating to the Registration
Statement; and (iv) comply in all material respects with the provisions of the
Securities Act and the Exchange Act with respect to the disposition of all
Registrable Securities covered by the Registration Statement during the
applicable period in accordance with the intended methods of disposition by the
Holders thereof set forth in the Registration Statement as so amended or in such
Prospectus as so supplemented.
(c) Notify the Holders of Registrable Securities to be sold,
their Special Counsel and any managing underwriters as promptly as possible
(and, in the case of (i)(A) below, not less than a reasonable time prior to such
filing) and (if requested by any such Person) confirm such notice in writing no
later than one (1) Business Day following the day (i)(A) when a Prospectus or
any Prospectus supplement or post-effective amendment to the Registration
Statement is proposed to be filed; (B) when the Commission notifies the Company
whether there will be a "review" of such Registration Statement and whenever the
Commission comments in writing on such Registration Statement and (C) with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective; (ii) of any request by the Commission or any other
Federal or state governmental authority for amendments or supplements to the
Registration Statement or Prospectus or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement covering any or all of the Registrable Securities or the
initiation of any Proceedings for that purpose; (iv) if at any time any of the
representations and warranties of the Company contained in any agreement
(including any underwriting agreement) contemplated hereby ceases to be true and
correct in all material respects; (v) of the receipt by the Company of any
notification with respect to the suspension of the qualification or exemption
from qualification of any of the Registrable Securities for sale in any
jurisdiction, or the initiation or threatening of any Proceeding for such
purpose; and (vi) of the occurrence of any event that makes any statement made
in the Registration Statement or Prospectus or any document incorporated or
deemed to be incorporated therein by reference untrue in any material respect or
that requires any revisions to the Registration Statement, Prospectus or other
documents so that, in the case of the Registration Statement or the Prospectus,
as the case may be, it will not contain any untrue statement of a material fact
or omit to state any 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.
(d) Use its best efforts to avoid the issuance of, or, if
issued, obtain the withdrawal of (i) any order suspending the effectiveness of
the Registration Statement or (ii) any suspension of the qualification (or
exemption from qualification) of any of the Registrable Securities for sale in
any jurisdiction, at the earliest practicable moment.
(e) If requested by any managing underwriter or the Holders of
a majority in interest of the Registrable Securities to be sold in connection
with an Underwritten Offering, (i) promptly incorporate in a Prospectus
supplement or post-effective amendment to the Registration Statement such
information as the Company reasonably agrees should be included therein and (ii)
make all required filings of such Prospectus supplement or such post-effective
amendment as soon as practicable after the Company has received notification of
the matters to be incorporated in such Prospectus supplement or post-effective
amendment; provided, however, that the Company shall not be required to take any
action pursuant to this Section 3(e) that would, in the opinion of counsel for
the Company, violate applicable law or be materially detrimental to the business
prospects of the Company.
(f) Furnish to each Holder, their Special Counsel and any
managing underwriters, without charge, at least one conformed copy of each
Registration Statement and each amendment thereto, including financial
statements and schedules, all documents incorporated or deemed to be
incorporated therein by reference, and all exhibits to the extent requested by
such Person (including those previously furnished or incorporated by reference)
promptly after the filing of such documents with the Commission.
(g) Promptly deliver to each Holder, their Special Counsel,
and any underwriters, without charge, as many copies of the Prospectus or
Prospectuses (including each form of prospectus) and each amendment or
supplement thereto as such Persons may reasonably request; and the Company
hereby consents to the use of such Prospectus and each amendment or supplement
thereto by each of the selling Holders and any underwriters in connection with
the offering and sale of the Registrable Securities covered by such Prospectus
and any amendment or supplement thereto.
(h) Prior to any public offering of Registrable Securities,
use its best efforts to register or qualify or cooperate with the selling
Holders, any underwriters and their Special Counsel in connection with the
registration or qualification (or exemption from such registration or
qualification) of such Registrable Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions within the United States as
any Holder or underwriter requests in writing, to keep each such registration or
qualification (or exemption therefrom) effective during the Effectiveness Period
and to do any and all other acts or things necessary or advisable to enable the
disposition in such jurisdictions of the Registrable Securities covered by a
Registration Statement; provided, however, that the Company shall not be
required to qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action that would subject it to general service
of process in any such jurisdiction where it is not then so subject or subject
the Company to any material tax in any such jurisdiction where it is not then so
subject.
(i) Cooperate with the Holders and any managing underwriters
to facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold pursuant to a Registration Statement, which
certificates shall be free, to the extent permitted by applicable law, of all
restrictive legends, and to enable such Registrable Securities to be in such
denominations and registered in such names as any such managing underwriters or
Holders may request at least two (2) Business Days prior to any sale of
Registrable Securities.
(j) Upon the occurrence of any event contemplated by Section
3(c)(vi), as promptly as possible, prepare a supplement or amendment, including
a post-effective amendment, to the Registration Statement or a supplement to the
related Prospectus or any document incorporated or deemed to be incorporated
therein by reference, and file any other required document so that, as
thereafter delivered, neither the Registration Statement nor such Prospectus
will contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
(k) Use its best efforts to cause all Registrable Securities
relating to such Registration Statement to be listed on the National Market
System of the Nasdaq Stock Market and any other securities exchange, quotation
system, market or over-the-counter bulletin board, if any, on which similar
securities issued by the Company are then listed as and when required pursuant
to the Purchase Agreement.
(l) Enter into such agreements (including an underwriting
agreement in form, scope and substance as is customary in Underwritten
Offerings) and take all such other actions in connection therewith (including
those reasonably requested by any managing underwriters and the Holders of a
majority of the Registrable Securities being sold) in order to expedite or
facilitate the disposition of such Registrable Securities, and whether or not an
underwriting agreement is entered into, (i) make such representations and
warranties to such Holders and such underwriters as are customarily made by
issuers to underwriters in underwritten public offerings, and confirm the same
if and when requested; (ii) in the case of an Underwritten Offering obtain and
deliver copies thereof to the managing underwriters, if any, of opinions of
counsel to the Company and updates thereof addressed to each such underwriter,
in form, scope and substance reasonably satisfactory to any such managing
underwriters and Special Counsel to the selling Holders covering the matters
customarily covered in opinions requested in Underwritten Offerings and such
other matters as may be reasonably requested by such Special Counsel and
underwriters; (iii) immediately prior to the effectiveness of the Registration
Statement, and, in the case of an Underwritten Offering, at the time of delivery
of any Registrable Securities sold pursuant thereto, obtain and deliver copies
to the Holders and the managing underwriters, if any, of "cold comfort" letters
and updates thereof from the independent certified public accountants of the
Company (and, if necessary, any other independent certified public accountants
of any subsidiary of the Company or of any business acquired by the Company for
which financial statements and financial data is, or is required to be, included
in the Registration Statement), addressed to each selling Holder and each of the
underwriters, if any, in form and substance as are customary in connection with
Underwritten Offerings; (iv) if an underwriting agreement is entered into, the
same shall contain indemnification provisions and procedures no less favorable
to the selling Holders and the underwriters, if any, than those set forth in
Section 6 (or such other provisions and procedures acceptable to the managing
underwriters, if any, and holders of a majority of Registrable Securities
participating in such Underwritten Offering; and (v) deliver such documents and
certificates as may be reasonably requested by the Holders of a majority of the
Registrable Securities being sold, their Special Counsel and any managing
underwriters to evidence the continued validity of the representations and
warranties made pursuant to clause 3(1)(i) above and to evidence compliance with
any customary conditions contained in the underwriting agreement or other
agreement entered into by the Company.
(m) Make available for inspection by the selling Holders, any
representative of such Holders, any underwriter participating in any disposition
of Registrable Securities, and any attorney or accountant retained by such
selling Holders or underwriters, at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent corporate
documents and properties of the Company and its subsidiaries, and cause the
officers, directors, agents and employees of the Company and its subsidiaries to
supply all information in each case reasonably requested by any such Holder,
representative, underwriter, attorney or accountant in connection with the
Registration Statement; provided, however, that any information that is
determined in good faith by the Company in writing to be of a confidential
nature at the time of delivery of such information shall be kept confidential by
such Persons, unless (i) disclosure of such information is required by court or
administrative order or is necessary to respond to inquiries of regulatory
authorities; (ii) disclosure of such information, in the opinion of counsel to
such Person, is required by law; (iii) such information becomes generally
available to the public other than as a result of a disclosure or failure to
safeguard by such Person; or (iv) such information becomes available to such
Person from a source other than the Company and such source is not known by such
Person to be bound by a confidentiality agreement with the Company.
(n) Comply in all material respects with all applicable rules
and regulations of the Commission and make generally available to its security
holders earning statements satisfying the provisions of Section 11(a) of the
Securities Act and Rule 158 not later than 45 days after the end of any 12-month
period (or 90 days after the end of any 12-month period if such period is a
fiscal year) (i) commencing at the end of any fiscal quarter in which
Registrable Securities are sold to underwriters in a firm commitment or best
efforts Underwritten Offering and (ii) if not sold to underwriters in such an
offering, commencing on the first day of the first fiscal quarter of the Company
after the effective date of the Registration Statement, which statement shall
conform to the requirements of Rule 158.
(o) The Company may require each selling Holder to furnish to
the Company information regarding such Holder and the distribution of such
Registrable Securities as is required by law to be disclosed in the Registration
Statement, and the Company may exclude from such registration the Registrable
Securities of any such Holder who unreasonably fails to furnish such information
within a reasonable time after receiving such request.
If the Registration Statement refers to any Holder by name or
otherwise as the holder of any securities of the Company, then such Holder shall
have the right to require (if such reference to such Holder by name or otherwise
is not required by the Securities Act or any similar Federal statute then in
force) the deletion of the reference to such Holder in any amendment or
supplement to the Registration Statement filed or prepared subsequent to the
time that such reference ceases to be required.
Each Holder covenants and agrees that (i) it will not sell any
Registrable Securities under the Registration Statement until it has received
copies of the Prospectus as then amended or supplemented as contemplated in
Section 3(g) and notice from the Company that such Registration Statement and
any post-effective amendments thereto have become effective as contemplated by
Section 3(c) and (ii) it and its officers, directors or Affiliates, if any, will
comply with the prospectus delivery requirements of the Securities Act as
applicable to them in connection with sales of Registrable Securities pursuant
to the Registration Statement.
Each Holder agrees by its acquisition of such Registrable
Securities that, upon receipt of a notice from the Company of the occurrence of
any event of the kind described in Section 3(c)(ii), 3(c)(iii), 3(c)(iv),
3(c)(v) or 3(c)(vi), such Holder will forthwith discontinue disposition of such
Registrable Securities under the Registration Statement until such Holder's
receipt of the copies of the supplemented Prospectus and/or amended Registration
Statement contemplated by Section 3(j), or until it is advised in writing (the
"Advice") by the Company that the use of the applicable Prospectus may be
resumed, and, in either case, has received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such Prospectus or Registration Statement.
(p) If (a) there is material non-public information regarding
the Company which the Company's Board of Directors reasonably determines not to
be in the Company's best interest to disclose and which the Company is not
otherwise required to disclose, or (b) there is a significant business
opportunity (including but not limited to the acquisition or disposition of
assets (other than in the ordinary course of business) or any merger,
consolidation, tender offer or other similar transaction) available to the
Company which the Company's Board of Directors determines not to be in the
Company's best interest to disclose, then the Company may postpone or suspend
filing or effectiveness of a registration statement for a period not to exceed
20 consecutive days (an "Allowable Grace Period"), provided that the Company may
not postpone or suspend its obligation under this Section 3(p) for more than 30
days in the aggregate during any 365-day period and there shall be an aggregate
of not more than two (2) such suspensions during any 365-day period; provided,
however, that no such postponement or suspension shall be permitted for
consecutive 20 day periods, arising out of the same set of facts, circumstances
or transactions.
4. Registration Expenses
---------------------
(a) All fees and expenses incident to the performance of or
compliance with this Agreement by the Company, except as and to the extent
specified in Section 4(b), shall be borne by the Company whether or not pursuant
to an Underwritten Offering and whether or not the Registration Statement is
filed or becomes effective and whether or not any Registrable Securities are
sold pursuant to the Registration Statement. The fees and expenses referred to
in the foregoing sentence shall include, without limitation, (i) all
registration and filing fees (including, without limitation, fees and expenses
(A) with respect to filings required to be made with the Nasdaq Stock Market and
each other securities exchange or market on which Registrable Securities are
required hereunder to be listed and (B) in compliance with state securities or
Blue Sky laws (including, without limitation, fees and disbursements of counsel
for the Holders in connection with Blue Sky qualifications of the Registrable
Securities and determination of the eligibility of the Registrable Securities
for investment under the laws of such jurisdictions as the managing
underwriters, if any, or the Holders of a majority of Registrable Securities may
designate)), (ii) printing expenses (including, without limitation, expenses of
printing certificates for Registrable Securities and of printing prospectuses if
the printing of prospectuses is requested by the managing underwriters, if any,
or by the holders of a majority of the Registrable Securities included in the
Registration Statement), (iii) messenger, telephone and delivery expenses, (iv)
fees and disbursements of counsel for the Company and Special Counsel for the
Holders, in the case of the Special Counsel, to a maximum amount of $10,000, (v)
Securities Act liability insurance, if the Company so desires such insurance,
and (vi) fees and expenses of all other Persons retained by the Company in
connection with the consummation of the transactions contemplated by this
Agreement. In addition, the Company shall be responsible for all of its internal
expenses incurred in connection with the consummation of the transactions
contemplated by this Agreement (including, without limitation, all salaries and
expenses of its officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred in connection
with the listing of the Registrable Securities on any securities exchange as
required hereunder. If the Holders require an Underwritten Offering pursuant to
the terms hereof, the Company shall be responsible for all costs, fees and
expenses in connection therewith, except for the any underwriting commissions
and discounts.
5. Indemnification
---------------
(a) Indemnification by the Company. The Company shall,
notwithstanding any termination of this Agreement, indemnify and hold harmless
each Holder, the officers, directors, agents (including any underwriters
retained by such Holder in connection with the offer and sale of Registrable
Securities), brokers (including brokers who offer and sell Registrable
Securities as principal as a result of a pledge or any failure to perform under
a margin call of Common Stock), investment advisors and employees of each of
them, each Person who controls any such Holder (within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and the officers,
directors, agents and employees of each such controlling Person, to the fullest
extent permitted by applicable law, from and against any and all losses, claims,
damages, liabilities, costs (including, without limitation, costs of preparation
and attorneys' fees) and expenses (collectively, "Losses"), as incurred, arising
out of or relating to any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any Prospectus or any form of
prospectus or in any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or relating to any omission or alleged omission of
a material fact required to be stated therein or necessary to make the
statements therein (in the case of any Prospectus or form of prospectus or
supplement thereto, in light of the circumstances under which they were made)
not misleading (in the case of any Prospectus or form of Prospectus or
supplement thereto, in light of the circumstances under which they were made),
except to the extent, but only to the extent, that such untrue statements or
omissions are based solely upon information regarding such Holder furnished in
writing to the Company by such Holder expressly for use therein, which
information was reasonably relied on by the Company for use therein or to the
extent that such information relates to such Holder or such Holder's proposed
method of distribution of Registrable Securities and was reviewed and expressly
approved in writing by such Holder expressly for use in the Registration
Statement, such Prospectus or such form of Prospectus or in any amendment or
supplement thereto. The Company shall notify the Holders promptly of the
institution, threat or assertion of any Proceeding of which the Company is aware
in connection with the transactions contemplated by this Agreement.
(b) Indemnification by Holders. Each Holder shall, severally
and not jointly, indemnify and hold harmless the Company, the directors,
officers, agents and employees, each Person who controls the Company (within the
meaning of Section 15 of the Securities Act and Section 20 of the Exchange Act),
and the directors, officers, agents or employees of such controlling Persons, to
the fullest extent permitted by applicable law, from and against all Losses, as
incurred, arising solely out of or based solely upon any untrue statement of a
material fact contained in the Registration Statement, any Prospectus, or any
form of prospectus, or arising solely out of or based solely upon any omission
of a material fact required to be stated therein or necessary to make the
statements therein not misleading to the extent, but only to the extent, that
such untrue statement or omission is contained in any information so furnished
in writing by such Holder to the Company specifically for inclusion in the
Registration Statement or such Prospectus and that such information was
reasonably relied upon by the Company for use in the Registration Statement,
such Prospectus or such form of prospectus or to the extent that such
information relates to such Holder or such Holder's proposed method of
distribution of Registrable Securities and was reviewed and expressly approved
in writing by such Holder expressly for use in the Registration Statement, such
Prospectus or such form of Prospectus.
(c) Conduct of Indemnification Proceedings. If any Proceeding
shall be brought or asserted against any Person entitled to indemnity hereunder
(an "Indemnified Party"), such Indemnified Party promptly shall notify the
Person from whom indemnity is sought (the "Indemnifying Party") in writing, and
the Indemnifying Party shall assume the defense thereof, including the
employment of counsel reasonably satisfactory to the Indemnified Party and the
payment of all fees and expenses incurred in connection with defense thereof;
provided, however, that the failure of any Indemnified Party to give such notice
shall not relieve the Indemnifying Party of its obligations or liabilities
pursuant to this Agreement, except (and only) to the extent that it shall be
finally determined by a court of competent jurisdiction (which determination is
not subject to appeal or further review) that such failure shall have
proximately and materially adversely prejudiced the Indemnifying Party.
An Indemnified Party shall have the right to employ separate
counsel in any such Proceeding and to participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Indemnified Party or Parties unless: (1) the Indemnifying Party has agreed in
writing to pay such fees and expenses; or (2) the Indemnifying Party shall have
failed promptly to assume the defense of such Proceeding and to employ counsel
reasonably satisfactory to such Indemnified Party in any such Proceeding; or (3)
the named parties to any such Proceeding (including any impleaded parties)
include both such Indemnified Party and the Indemnifying Party, and such
Indemnified Party shall have been advised by counsel that a conflict of interest
is likely to exist if the same counsel were to represent such Indemnified Party
and the Indemnifying Party (in which case, 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 thereof and such counsel shall be at the expense of
the Indemnifying Party). The Indemnifying Party shall not be liable for any
settlement of any such Proceeding effected without its written consent, which
consent shall not be unreasonably withheld. No Indemnifying Party shall, without
the prior written consent of the Indemnified Party, effect any settlement of any
pending Proceeding in respect of which any Indemnified Party is a party, unless
such settlement includes an unconditional release of such Indemnified Party from
all liability on claims that are the subject matter of such Proceeding.
All fees and expenses of the Indemnified Party (including
reasonable fees and expenses to the extent incurred in connection with
investigating or preparing to defend such Proceeding in a manner not
inconsistent with this Section) shall be paid to the Indemnified Party, as
incurred, within 10 Business Days of written notice thereof to the Indemnifying
Party (regardless of whether it is ultimately determined that an Indemnified
Party is not entitled to indemnification hereunder; provided, that the
Indemnifying Party may require such Indemnified Party to undertake to reimburse
all such fees and expenses to the extent it is finally judicially determined
that such Indemnified Party is not entitled to indemnification hereunder).
(d) Contribution. If a claim for indemnification under Section
5(a) or 5(b) is unavailable to an Indemnified Party because of a failure or
refusal of a governmental authority to enforce such indemnification in
accordance with its terms (by reason of public policy or otherwise), then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such Losses, in such proportion as is appropriate to reflect the relative
fault of the Indemnifying Party and Indemnified Party in connection with the
actions, statements or omissions that resulted in such Losses as well as any
other relevant equitable considerations. The relative fault of such Indemnifying
Party and Indemnified Party shall be determined by reference to, among other
things, whether any action in question, including any untrue or alleged untrue
statement of a material fact or omission or alleged omission of a material fact,
has been taken or made by, or relates to information supplied by, such
Indemnifying Party or Indemnified Party, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
action, statement or omission. The amount paid or payable by a party as a result
of any Losses shall be deemed to include, subject to the limitations set forth
in Section 5(c), any reasonable attorneys' or other reasonable fees or expenses
incurred by such party in connection with any Proceeding to the extent such
party would have been indemnified for such fees or expenses if the
indemnification provided for in this Section was available to such party in
accordance with its terms.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this Section 5(d) were determined by pro
rata allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the immediately preceding
paragraph. 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.
The indemnity and contribution agreements contained in this
Section are in addition to any liability that the Indemnifying Parties may have
to the Indemnified Parties.
6. Rule 144
--------
As long as any Holder owns Registrable Securities, the Company
covenants to timely file (or obtain extensions in respect thereof and file
within the applicable grace period) all reports required to be filed by the
Company after the date hereof pursuant to Section 13(a) or l5(d) of the Exchange
Act and to promptly furnish the Holders with true and complete copies of all
such filings. As long as any Holder owns Registrable Securities, if the Company
is not required to file reports pursuant to Section 13(a) or l5(d) of the
Exchange Act, it will prepare and furnish to the Holders and make publicly
available in accordance with Rule 144(c) promulgated under the Securities Act
annual and quarterly financial statements, together with a discussion and
analysis of such financial statements in form and substance substantially
similar to those that would otherwise be required to be included in reports
required by Section 13(a) or 15(d) of the Exchange Act, as well as any other
information required thereby, in the time period that such filings would have
been required to have been made under the Exchange Act. The Company further
covenants that it will take such further action as any Holder may reasonably
request, all to the extent required from time to time to enable such Person to
sell Underlying Shares without registration under the Securities Act within the
limitation of the exemptions provided by Rule 144 promulgated under the
Securities Act, including providing any legal opinions referred to in the
Purchase Agreement. Upon the request of any Holder, the Company shall deliver to
such Holder a written certification of a duly authorized officer as to whether
it has complied with such requirements.
7. Miscellaneous
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(a) Remedies. In the event of a breach by the Company or by a
Holder, of any of their obligations under this Agreement, each Holder or the
Company, as the case may be, in addition to being entitled to exercise all
rights granted by law and under this Agreement, including recovery of damages,
will be entitled to specific performance of its rights under this Agreement. The
Company and each Holder agree that monetary damages would not provide adequate
compensation for any losses incurred by reason of a breach by it of any of the
provisions of this Agreement and hereby further agrees that, in the event of any
action for specific performance in respect of such breach, it shall waive the
defense that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any of
its subsidiaries has, as of the date hereof, nor shall the Company or any of its
subsidiaries, on or after the date of this Agreement, enter into any agreement
with respect to its securities that is inconsistent with the rights granted to
the Holders in this Agreement or otherwise conflicts with the provisions hereof.
Except as disclosed in Schedule 2.1(r) of the Purchase Agreement, neither the
Company nor any of its subsidiaries has previously entered into any agreement
granting any registration rights with respect to any of its securities to any
Person. Without limiting the generality of the foregoing, without the written
consent of the Holders of a majority of the then outstanding Registrable
Securities, the Company shall not grant to any Person the right to request the
Company to register any securities of the Company under the Securities Act
unless the rights so granted are subject in all respects to the prior rights in
full of the Holders set forth herein, and are not otherwise in conflict or
inconsistent with the provisions of this Agreement.
(c) No Piggyback on Registrations. Except as disclosed on
Schedule 7(c) of the Purchase Agreement, neither the Company nor any of its
security holders (other than the Holders in such capacity pursuant hereto) may
include securities of the Company in the Registration Statements, and the
Company shall not after the date hereof enter into any agreement providing such
right to any of its securityholders, unless the right so granted is subject in
all respects to the prior rights in full of the Holders set forth herein, and is
not otherwise in conflict or inconsistent with the provisions of this Agreement.
(d) Piggy-Back Registrations. If at any time when there is not
an effective Registration Statement the Registrable Securities, the Company
shall determine to prepare and file with the Commission a registration statement
relating to an offering for its own account or the account of others under the
Securities Act of any of its equity securities, other than on Form S-4 or Form
S-8 (each as promulgated under the Securities Act) or their then equivalents
relating to equity securities to be issued solely in connection with any
acquisition of any entity or business or equity securities issuable in
connection with stock option or other employee benefit plans, the Company shall
send to each Holder of Registrable Securities written notice of such
determination and, if within ten (10) days after receipt of such notice, any
such Holder shall so request in writing, (which request shall specify the
Registrable Securities intended to be disposed of by the Purchasers), the
Company will use reasonable efforts to effect the registration under the
Securities Act of all Registrable Securities which the Company has been so
requested to register by the holder, to the extent requisite to permit the
disposition of the Registrable Securities so to be registered, provided that if
at any time after giving written notice of its intention to register any
securities and prior to the effective date of the registration statement filed
in connection with such registration, the Company shall determine for any reason
not to register or to delay registration of such securities, the Company may, at
its election, give written notice of such determination to such Holder and,
thereupon, (i) in the case of a determination not to register, shall be relieved
of its obligation to register any Registrable Securities in connection with such
registration (but not from its obligation to pay expenses in accordance with
Section 4 hereof), and (ii) in the case of a determination to delay registering,
shall be permitted to delay registering any Registrable Securities being
registered pursuant to this Section 7(d) for the same period as the delay in
registering such other securities. The Company shall include in such
registration statement all or any part of such Registrable Securities such
Holder requests to be registered; provided, however, that the Company shall not
be required to register any Registrable Securities pursuant to this Section 7(d)
that are eligible for sale pursuant to Rule 144(k) of the Securities Act. In the
case of an underwritten public offering, if the managing underwriter(s) or
underwriter(s) should reasonably object to the inclusion of the Registrable
Securities in such registration statement, then if the Company after
consultation with the Underwriter's Representative should reasonably determine
that the inclusion of such Registrable Securities, would materially adversely
affect the offering contemplated in such registration statement, and based on
such determination recommends inclusion in such registration statement of fewer
or none of the Registrable Securities of the Holders, then (x) the number of
Registrable Securities of the Holders included in such registration statement
shall be reduced pro-rata among such Holders (based upon the number of
Registrable Securities requested to be included in the registration), if the
Company after consultation with the underwriter(s) recommends the inclusion of
fewer Registrable Securities, or (y) none of the Registrable Securities of the
Holders shall be included in such registration statement, if the Company after
consultation with the underwriter(s) recommends the inclusion of none of such
Registrable Securities; provided, however, that if securities are being offered
for the account of other persons or entities as well as the Company, such
reduction shall not represent a greater fraction of the number of Registrable
Securities intended to be offered by the Holders than the fraction of similar
reductions imposed on such other persons or entities (other than the Company).
(e) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions hereof
may not be given, unless the same shall be in writing and signed by the Company
and the Holders of at least two-thirds of the then outstanding Registrable
Securities; provided, however, that, for the purposes of this sentence,
Registrable Securities that are owned, directly or indirectly, by the Company,
or an Affiliate of the Company are not deemed outstanding. Notwithstanding the
foregoing, a waiver or consent to depart from the provisions hereof with respect
to a matter that relates exclusively to the rights of Holders and that does not
directly or indirectly affect the rights of other Holders may be given by
Holders of at least a majority of the Registrable Securities to which such
waiver or consent relates; provided, however, that the provisions of this
sentence may not be amended, modified, or supplemented except in accordance with
the provisions of the immediately preceding sentence.
(f) Notices. Any and all notices or other communications or
deliveries required or permitted to be provided hereunder shall be in writing
and shall be deemed given and effective on the earliest of (i) the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in this Section prior to 7:00 p.m. (New
York City time) on a Business Day, (ii) the Business Day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile telephone number specified in the Purchase Agreement later than 7:00
p.m. (New York City time) on any date and earlier than 11:59 p.m. (New York City
time) on such date, (iii) the Business Day following the date of mailing, if
sent by nationally recognized overnight courier service, or (iv) upon actual
receipt by the party to whom such notice is required to be given to each Holder
at its address set forth under its name on Schedule 1 attached hereto or such
other address as may be designated in writing hereafter, in the same manner, by
such Person. Copies of notices to any Holder shall be sent to Akin, Gump,
Strauss, Xxxxx & Xxxx, L.L.P., 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attn:Xxxxx X. Xxxx, Esq., fax: (000) 000-0000.
(g) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and permitted assigns of each of
the parties and shall inure to the benefit of each Holder. The Company may not
assign its rights or obligations hereunder without the prior written consent of
each Holder. Each Purchaser may assign its rights hereunder in the manner and to
the Persons as permitted under the Purchase Agreement.
(h) Assignment of Registration Rights. The rights of each
Holder hereunder, including the right to have the Company register for resale
Registrable Securities in accordance with the terms of this Agreement, shall be
automatically assignable by each Holder if: (i) the Holder agrees in writing
with the transferee or assignee to assign such rights, and a copy of such
agreement is furnished to the Company within a reasonable time after such
assignment, (ii) the Company is, within a reasonable time after such transfer or
assignment, furnished with written notice of (a) the name and address of such
transferee or assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned, (iii) following such
transfer or assignment the further disposition of such securities by the
transferee or assignees is restricted under the Securities Act and applicable
state securities laws, (iv) at or before the time the Company receives the
written notice contemplated by clause (ii) of this Section, the transferee or
assignee agrees in writing with the Company to be bound by all of the provisions
of this Agreement, and (v) such transfer shall have been made in accordance with
the applicable requirements of the Purchase Agreement. The rights to assignment
shall apply to the Holders (and to subsequent) successors and assigns.
(i) Counterparts. This Agreement may be executed in any number
of counterparts, each of which when so executed shall be deemed to be an
original and, all of which taken together shall constitute one and the same
Agreement. In the event that any signature is delivered by facsimile
transmission, such signature shall create a valid binding obligation of the
party executing (or on whose behalf such signature is executed) the same with
the same force and effect as if such facsimile signature were the original
thereof.
(j) Governing Law. The corporate laws of the State of Delaware
shall govern all issues concerning the relative rights of the Company and the
Purchasers as its stockholder. All other questions concerning the construction,
validity, enforcement and interpretation of this Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
regard to principles of conflicts of law. Each party hereby irrevocably submits
to the nonexclusive jurisdiction of the state and federal courts sitting in the
City of New York, Borough of Manhattan, for the adjudication of any dispute
hereunder or in connection herewith or with any transaction contemplated hereby
or discussed herein, and hereby irrevocably waives, and agrees not to assert in
any suit, action or proceeding, any claim that it is not personally subject to
the jurisdiction of any such court, that such suit, action or proceeding is
improper. Each party hereby irrevocably waives personal service of process and
consent to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
(k) Cumulative Remedies. The remedies provided herein are
cumulative and not exclusive of any remedies provided by law.
(l) Severability. If any term, provision, covenant or
restriction of this Agreement is held by a court of competent jurisdiction to be
invalid, illegal, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions set forth herein shall remain in full force and
effect and shall in no way be affected, impaired or invalidated, and the parties
hereto shall use their reasonable efforts to find and employ an alternative
means to achieve the same or substantially the same result as that contemplated
by such term, provision, covenant or restriction. It is hereby stipulated and
declared to be the intention of the parties that they would have executed the
remaining terms, provisions, covenants and restrictions without including any of
such that may be hereafter declared invalid, illegal, void or unenforceable.
(m) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(n) Shares Held by The Company and its Affiliates. Whenever
the consent or approval of Holders of a specified percentage of Registrable
Securities is required hereunder, Registrable Securities held by the Company or
its Affiliates (other than any Holder or transferees or successors or assigns
thereof if such Holder is deemed to be an Affiliate solely by reason of its
holdings of such Registrable Securities) shall not be counted in determining
whether such consent or approval was given by the Holders of such required
percentage.
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SIGNATURE PAGE TO FOLLOW]
IN WITNESS WHEREOF, the parties have executed this Registration Rights
Agreement as of the date first written above.
DIGITAL COURIER TECHNOLOGIES, INC.
By:
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Name:
Title:
XXXXX XXXXXXX STRATEGIC GROWTH FUND, LTD..
By:
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Name:
Title:
XXXXX XXXXXXX STRATEGIC GROWTH FUND, L.P.
.
By:
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Name:
Title:
