EXHIBIT 10.17
REGISTRATION RIGHTS AGREEMENT
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THIS AGREEMENT (the "Agreement") is made as of February 1, 1999, by
and among XxxXxxx.xxx, Inc., a Delaware corporation (the "Company"), and each
Person listed on the Schedule of Holders attached hereto as Exhibit A (together
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the "Shareholders"). Unless otherwise provided in this Agreement, capitalized
terms used herein shall have the meanings set forth in Section 7 hereof.
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Recitals:
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A. The Company was founded by certain Shareholders listed on Exhibit
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A, and such Shareholders, gifted some of their stock to certain other
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Shareholders.
B. The Company and certain Shareholders entered into employment
agreements whereby the Shareholders purchased Stock in the Company.
C. The Company and certain Shareholders are parties to certain Stock
Exchange Agreements (the "Exchange Agreements") pursuant to which the
Shareholders received shares of the Company's common stock (the "Common Stock").
In order to induce the Shareholders to enter into the Exchange Agreements, the
Company agreed to provide the registration rights set forth in this Agreement.
D. Any other Persons who purchase or receive capital stock of the
Company may, with the consent of the Company's Board of Directors become parties
to this Agreement by executing the Joinder Agreement attached hereto as Exhibit
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B (which Joinder Agreement was attached to the Exchange Agreements as Exhibit F
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thereto).
Agreement
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In consideration of the premises and mutual covenants set forth
herein, the receipt and adequacy which are hereby acknowledged, the parties
hereto agree as follows:
1. Piggyback Registrations.
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(a) Right to Piggyback. Subject to any applicable lock-up and
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transfer restrictions contained in any Equity Subscription, Subscription,
Executive Stock Purchase or Stock Purchase Agreement pursuant to which the
Shareholders acquired their respective shares of Common Stock, whenever the
Company proposes to register any of its securities under the Securities Act
(other than pursuant to a registration on Form X-0, Xxxx X-0 or any successor
form) and the registration form to be used may be used for the registration of
Registrable Securities (a "Piggyback Registration"), the Company shall give
prompt written notice to all holders of Registrable Securities of its intention
to effect such a registration. The
Company shall include in such registration all Registrable Securities with
respect to which the Company has received written requests for inclusion therein
within 10 days after the receipt of the Company's notice. Notwithstanding the
foregoing, in the event of the Company's Initial Public Offering, no Piggyback
Registration shall be permitted without the approval of the Company's Board of
Directors.
(b) Priority on Primary Registrations. If a Piggyback Registration
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is an underwritten primary registration on behalf of the Company, and the
managing underwriters advise the Company in writing that in their opinion the
number of securities requested to be included in such registration exceeds the
number which can be sold in an orderly manner in such offering within a price
range acceptable to the Company, the Company shall include in such registration:
(i) first, the securities the Company proposes to sell; (ii) second, the
Registrable Securities requested to be included in such registration, pro rata
among the holders of such Registrable Securities on the basis of the number of
shares owned by such holders; and (iii) third, other securities requested to be
included in such registration, pro rata among the holders thereof on the basis
of the number of their securities requested to be included therein.
Priority on Secondary Registrations. If a Piggyback
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Registration is an underwritten secondary registration on behalf of the Company
or holders of the Company's securities and the managing underwriters advise the
Company in writing that in their opinion the number of securities requested to
be included in such registration exceeds the number which can be sold in an
orderly manner in such offering within a price range acceptable to the Company,
the Company shall include in such registration: (i) first, the securities, the
Company proposes to sell and the securities requested to be included therein by
the holders requesting such registration; (ii) second, the Registrable
Securities requested to be included in such registration, pro rata among the
holders of such Registrable Securities on the basis of the number of shares
owned by such holders; and (iii) third, other securities requested to be
included in such registration, pro rata among the holders thereof on the basis
of the number of their securities requested to be included therein.
2. Holdback Agreement. Each holder of Registrable Securities shall
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not effect any public sale or distribution (including sales pursuant to Rule
144) of equity securities of the Company, or any securities convertible into or
exchangeable or exercisable for such securities, during the seven days prior to
and for such period as requested by the underwriter managing the Piggyback
Registration for the period beginning on the effective date of any underwritten
Piggyback Registration in which Registrable Securities are included (except as
part of such underwritten registration).
3. Registration Procedures. Whenever the holders of Registrable
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Securities have requested that any Registrable Securities be registered pursuant
to this Agreement, the Company shall use its reasonable best efforts to effect
the registration and the sale of such Registrable Securities in accordance with
the intended method of disposition thereof, and pursuant thereto the Company
shall as expeditiously as possible:
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(a) prepare and file with the Securities and Exchange Commission a
registration statement with respect to such Registrable Securities and use its
reasonable best efforts to cause such registration statement to become
effective;
(b) notify each holder of Registrable Securities of the effectiveness
of each registration statement filed hereunder and prepare and file with the
Securities and Exchange Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as may be
necessary to keep such registration statement effective for a period of not less
than 90 days and comply with the provisions of the Securities Act with respect
to the disposition of all securities covered by such registration statement
during such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement; provided, however,
that if the Company is eligible to use Form S-3, the holders of Registrable
Securities may require the Company to keep such registration effective as a
"shelf registration" for a period of up to 180 days;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including each
preliminary prospectus) and such other documents as such seller may reasonably
request in order to facilitate the disposition of the Registrable Securities
owned by such seller;
(d) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions as any seller reasonably requests and do any and all other acts
and things which may be reasonably necessary or advisable to enable such seller
to consummate the disposition in such jurisdictions of the Registrable
Securities owned by such seller; provided that the Company shall not be required
to: (i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph; (ii) subject itself
to taxation in any such jurisdiction; or (iii) consent to general service of
process in any such jurisdiction;
(e) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, the Company shall
prepare a supplement or amendment to such prospectus so that, as thereafter
delivered to the purchasers of such Registrable Securities, such prospectus
shall not contain an untrue statement of a material fact or omit to state any
fact necessary to make the statements therein not misleading;
(f) cause all such Registrable Securities to be listed or quoted on
each securities exchange or market on which similar securities issued by the
Company are then listed; provided, however, that if the Company's securities are
not listed or quoted on a securities exchange or market, the Stockholders will
not have the right to a Piggyback Registration contained in this Agreement;
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(g) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(h) enter into such customary agreements (including underwriting
agreements in customary form) in order to expedite or facilitate the disposition
of such Registrable Securities;
(i) make available for inspection by any underwriter participating in
any disposition pursuant to such registration statement, and any attorney,
accountant or other agent retained by any such underwriter, all financial and
other records, pertinent corporate documents and properties of the Company, and
cause the Company's officers, directors, employees and independent accountants
to supply all information reasonably requested by any such underwriter,
attorney, accountant or agent in connection with such registration statement;
(j) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Securities and Exchange Commission, and
make available to its security holders, as soon as reasonably practicable, an
earnings statement covering the period of at least 12 months beginning with the
first day of the Company's first full calendar quarter after the effective date
of the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(k) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the qualification of
any Common Stock included in such registration statement for sale in any
jurisdiction, the Company shall use its reasonable best efforts promptly to
obtain the withdrawal of such order;
(l) subject to Section 3(d) above, use its reasonable best efforts
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to cause any Registrable Securities covered by such registration statement to be
registered with or approved by such other governmental agencies or authorities
as may be necessary to enable the sellers thereof to consummate the disposition
of such Registrable Securities;
(m) if the offering is underwritten, use its reasonable best efforts
to furnish on the date that Registrable Securities are delivered to the
underwriters for sale pursuant to such registration, an opinion dated such date
of counsel representing the Company for the purposes of such registration,
addressed to the underwriters covering such issues as are reasonably required by
such underwriters; and
(n) notwithstanding anything in the foregoing to the contrary, the
Company may delay the effectiveness of any registration statement, or suspend
offers and sales under any effective registration statement, at any time for an
aggregate of up to 90 days in any 12-month period if the Company's Board of
Directors determines, in good faith, that such delay or suspension would be in
the best interests of the Company.
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4. Registration Expenses.
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(a) Payment of Registration Expenses. All expenses incident to
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the Company's performance of or compliance with this Agreement, including
without limitation all registration and filing fees, fees and expenses of
compliance with securities or blue sky laws, printing expenses, messenger and
delivery expenses, fees and disbursements of custodians, and fees and
disbursements of counsel for the Company and all independent certified public
accountants, underwriters (excluding discounts and commissions) and other
Persons retained by the Company (all such expenses being herein called
"Registration Expenses"), shall be borne by the Company. The Company shall, in
addition, pay its internal expenses (including, without limitation, all salaries
and expenses of its officers and employees performing legal or accounting
duties), the expense of any annual audit or quarterly review, the expense of any
liability insurance and the expenses and fees for listing or quoting the
securities to be registered on each securities exchange on which similar
securities issued by the Company are then listed or on the NASD automated
quotation system.
(b) Payment of Registration Expenses by Holders of Registrable
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Securities. To the extent Registration Expenses are not required to be paid by
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the Company (including, without limitation, any underwriting discounts or
commissions that are the responsibility of the holders of Registrable
Securities), each holder of securities included in any registration hereunder
shall pay those Registration Expenses allocable to the registration of such
holder's securities so included, and any Registration Expenses not so allocable
shall be payable by all sellers of securities included in such registration in
proportion to the aggregate selling price of the securities to be so registered.
5. Indemnification.
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(a) Indemnification by the Company. The Company agrees to
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indemnify, to the extent permitted by law, each holder of Registrable
Securities, its officers and directors and each Person who controls such holder
(within the meaning of the Securities Act) against all losses, claims, damages,
liabilities and expenses caused by any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any omission or
alleged omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the same are
caused by or contained in any information furnished in writing to the Company by
such holder expressly for use therein, results from the failure of such holder
to provide information necessary for the registration statement to the Company,
or by such holder's failure to deliver a copy of the registration statement or
prospectus or any amendments or supplements thereto after the Company has
furnished such holder with a sufficient number of copies of the same. In
connection with an underwritten offering, as required by the underwriters, the
Company shall indemnify such underwriters, their officers and directors and each
Person who controls such underwriters (within the meaning of the Securities Act)
to the same extent as provided above with respect to the indemnification of the
holders of Registrable Securities.
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(b) Indemnification by the Holders of Registrable Securities. In
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connection with any registration statement in which a holder of Registrable
Securities is participating, each such holder shall furnish to the Company in
writing such information and affidavits as the Company reasonably requests for
use in connection with any such registration statement or prospectus and, to the
extent permitted by law, shall indemnify the Company, its directors and officers
and each Person who controls the Company (within the meaning of the Securities
Act) against any losses, claims, damages, liabilities and expenses resulting
from any untrue or alleged untrue statement of material fact contained in the
registration statement, prospectus or preliminary prospectus or any amendment
thereof or supplement thereto resulting from such information provided by such
holder or any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading and
not provided by such holder; provided that the obligation to indemnify shall be
individual, not joint and several, for each holder and shall be limited to the
net amount of proceeds received by such holder from the sale of Registrable
Securities pursuant to such registration statement.
(c) Procedure for Indemnification. Any Person entitled to
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indemnification hereunder shall (i) give prompt written notice to the
indemnifying party of any claim with respect to which it seeks indemnification
(provided that the failure to give prompt notice shall not impair any Person's
right to indemnification hereunder to the extent such failure has not prejudiced
the indemnifying party) and (ii) unless in such indemnified party's reasonable
judgment a conflict of interest between such indemnified and indemnifying
parties may exist with respect to such claim, permit such indemnifying party to
assume the defense of such claim with counsel reasonably satisfactory to the
indemnified party. If such defense is assumed, the indemnifying party shall not
be subject to any liability for any settlement made by the indemnified party
without its consent (but such consent shall not be unreasonably withheld). An
indemnifying party who is not entitled to, or elects not to, assume the defense
of a claim shall not be obligated to pay the fees and expenses of more than one
counsel for all parties indemnified by such indemnifying party with respect to
such claim, unless in the reasonable judgment of any indemnified party a
conflict of interest may exist between such indemnified party and any other of
such indemnified parties with respect to such claim. Notwithstanding anything in
this Section 5(C) to the contrary, in the event the Company determines, in good
faith, that a claim materially affects the interests of the Company, the Company
may solely control the defense of such claim with counsel reasonably
satisfactory to the Company. In the event the Company is an indemnified party
pursuant to this Section V, the indemnifying party may be subject to liability
if the Company settles a claim in good faith and in a reasonable manner.
6. Participation in Underwritten Registrations. No Person may
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participate in any registration hereunder unless such Person:
(a) in the case of a registration which is underwritten, agrees to
sell such Person's securities on the basis provided in any underwriting
arrangements approved by the Company;
(b) as expeditiously as possible, notifies the Company, at any time
when a prospectus relating to such Person's Registrable Securities is required
to be delivered
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under the Securities Act, of the happening of any event as a result of which
such prospectus contains an untrue statement of a material fact or omits any
fact necessary to make the statements therein not misleading;
(c) complies with all reasonable requests made by the Company or
its counsel with respect to the registration of such Person's Registrable
Securities, including, without limitation, providing access to all relevant
books and records; and
(d) completes, executes and delivers all questionnaires, powers of
attorney, indemnities, underwriting agreements and other usual and customary
documents necessary or appropriate with respect to the offering of such Person's
Registrable Securities, and in the case of a registration which is underwritten,
necessary or appropriate under the terms of such underwriting arrangements
(subject to the provision in Section 6(a) above).
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7. Definitions.
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(a) The term "Initial Public Offering" means the first registered
public offering of the Common Stock by the Company under the Securities Act
which will result in an aggregate post-IPO market capitalization of the Company
of at least $100 million (determined by multiplying the outstanding shares of
the Common Stock by the initial offering price).
(b) The term "Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company, limited liability
company, trust or unincorporated organization.
(c) The term "Registration Expenses" has the meaning set forth in
Section 4 above.
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(d) The term "Registrable Securities" means (i) any Common Stock
issued (A) to the Company's founders (as noted on the Schedule of Holders) and
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(B) pursuant to the Exchange Agreements, (whether issued before or after the
date hereof), (C) pursuant to an employment agreement with the Company, (D) to a
member of the Company's Board of Directors or (E) to parties who, with the
consent of the Company's Board of Directors, become a party to this Agreement by
signing a Joinder Agreement substantially in the form of Exhibit B, (ii) any
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other Common Stock issued or issuable with respect to the securities referred to
in clause (i) by way of a gift, a stock dividend or stock split or in connection
with an exchange or combination of shares, recapitalization, merger,
consolidation or other reorganization, and (iii) any other shares of Common
Stock held by Persons holding securities described in clauses (i) and (ii),
inclusive, above. As to any particular Registrable Securities, such securities
shall cease to be Registrable Securities when they have been distributed to the
public pursuant to an offering registered under the Securities Act or sold to
the public through a broker, dealer or market maker in compliance with Rule 144
under the Securities Act (or any similar rule then in force).
(e) The term "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force.
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(f) The term "Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in force.
8. Miscellaneous.
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(a) No Inconsistent Agreements. The Company shall not hereafter
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enter into any agreement with respect to its securities which is inconsistent
with or violates the rights granted to the holders of Registrable Securities in
this Agreement.
(b) Adjustments Affecting Registrable Securities. The Company
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shall not take any action, or permit any change to occur, with respect to its
securities which would adversely affect the ability of the holders of
Registrable Securities to include such Registrable Securities in a registration
undertaken pursuant to this Agreement or which would adversely affect the
marketability of such Registrable Securities in any such registration
(including, without limitation, effecting a stock split or a combination of
shares).
(c) Remedies. Any Person having rights under any provision of
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this Agreement shall be entitled to enforce such rights specifically to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law. The parties hereto agree and
acknowledge that money damages may not be an adequate remedy for any breach of
the provisions of this Agreement and that any party may in its sole discretion
apply to any court of law or equity of competent jurisdiction (without posting
any bond or other security) for specific performance and for other injunctive
relief in order to enforce or prevent violation of the provisions of this
Agreement.
(d) Amendments and Waivers. Except as otherwise provided herein,
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the provisions of this Agreement may be amended or waived only upon the prior
written consent of the Company and holders of at least 51% of the Registrable
Securities.
(e) Successors and Assigns. All covenants and agreements in this
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Agreement by or on behalf of any of the parties hereto shall bind and inure to
the benefit of the respective successors and assigns of the parties hereto
whether so expressed or not. In addition, whether or not any express assignment
has been made, the provisions of this Agreement which are for the benefit of
purchasers or holders of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent holder of Registrable Securities. Upon any
transfer of Registrable Securities, the holder of the Registrable Securities
shall use its best efforts to have the new holder of Registrable Securities sign
the Joinder Agreement attached hereto as Exhibit B.
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(f) Severability. Whenever possible, each provision of this
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Agreement shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Agreement is held to be prohibited
by or invalid under applicable law, such provision shall be ineffective only to
the extent of such prohibition or invalidity, without invalidating the remainder
of this Agreement.
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(g) Counterparts; Facsimile Transmission. This Agreement may be
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executed simultaneously in two or more counterparts, any one of which need not
contain the signatures of more than one party, but all such counterparts taken
together shall constitute one and the same Agreement. Each party to this
Agreement agrees that it will be bound by its own telecopied signature and that
it accepts the telecopied signature of each other party to this Agreement.
(h) Descriptive Headings. The descriptive headings of this
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Agreement are inserted for convenience only and do not constitute a part of this
Agreement.
(i) Governing Law. This Agreement shall be governed by and
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construed in accordance with the domestic laws of the State of Delaware, without
giving effect to any choice of law or conflict of law rules or provisions
(whether of the State of Delaware or any other jurisdiction) that would cause
the application of the laws of any jurisdiction other than the State of
Delaware.
(j) Notices. All notices, demands or other communications to be
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given or delivered under or by reason of the provisions of this Agreement shall
be in writing and shall be deemed to have been given when delivered personally
to the recipient, sent to the recipient by reputable overnight courier service
(charges prepaid) or 48 hours after deposited in the United States mail, first
class, to the recipient by postage prepaid or by facsimile. Such notices,
demands and other communications shall be sent to each Shareholder at the
addresses indicated on the Schedule of Holders and to the Company at the address
of its corporate headquarters or to such other address or to the attention of
such other Person as the recipient party has specified by prior written notice
to the sending party.
(k) Parties. The Persons described in Section 7 above may become
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parties to this Agreement by either signing this Agreement or by executing a
Joinder Agreement substantially in the form of Exhibit B attached hereto.
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(l) New Parties. During the term of this Agreement, the Company
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may, with the consent of the Company's Board of Directors, permit additional
Persons to become parties to this Agreement by executing a Joinder Agreement
substantially in the form of Exhibit B attached hereto, and the Schedule of
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Holders attached hereto as Exhibit A shall be revised and updated accordingly.
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(m) Termination of Agreement. All rights granted hereunder will
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expire and this Agreement will be terminated on the earlier of (i) the 4th
anniversary of the date of this Agreement, (ii) for any individual Shareholder,
at such time as such holder is able to sell all of his or her Registrable
Securities pursuant to Rule 144(k) under the Securities Act (or any similar rule
then in force) in one transaction or (iii) at such time as the Company has
registered the Registrable Securities via a shelf registration on Form S-3 (or a
successor form) and has kept such Form S-3 effective for at least one year.
Notwithstanding the foregoing, in the event that a holder of Registrable
Securities is unable to sell all of his or her then-remaining Registrable
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Securities pursuant to Rule 144(k) in a single transaction as of the 4th
anniversary of the date of this Agreement (where, for example, such holder is
deemed to be an "Affiliate" of the Company, as defined in the Securities Act),
the Agreement shall be extended until the 6th anniversary of the date of this
Agreement only with regard to such holder of Registrable Securities.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
XXXXXXX.XXX, INC.
By: /s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
President
/s/ Xxxxxxx X. Xxxxx
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Xxxxxxx X. Xxxxx
/s/ Xxxxx X. Xxxx
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Xxxxx X. Xxxx
/s/ Xxxxxxxx X. Xxxxxxx
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Xxxxxxxx X. Xxxxxxx
The Exhibits to this Registration Rights Agreement are not included with this
Registration Statement on Form S-1. The Registrant will provide these Exhibits
upon the request of the Securities and Exchange Commission.
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