EXHIBIT 10.4
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REGISTRATION RIGHTS AGREEMENT
by and among
DDi CORP.
AND
THE HOLDERS SIGNATORY HERETO
Dated as of ______________, 2005
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REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT (this "AGREEMENT"), dated as of _________,
2005, among those holders of Common Stock signatory hereto (the "HOLDERS") and
DDi CORP., a Delaware corporation (the "COMPANY").
WHEREAS:
A. Pursuant to that certain Standby Securities Purchase Agreement, dated
as of __________, 2005 (the "PURCHASE AGREEMENT"), between the Company and the
purchasers signatory thereto, upon the satisfaction of certain conditions, the
Company will issue Rights Offering Common Stock and Standby Commitment Fee
Warrants (as defined below) to the Holders.
B. Pursuant to the Standby Commitment Fee Warrants, the Company has agreed
to issue to the Holders upon the exercise thereof, shares of the Company's
Common Stock.
C. In order to induce the Holders to enter into the Purchase Agreement,
the Company has agreed to grant to the Holders as set forth herein certain
registration rights under the Securities Act (as defined below) and applicable
state securities laws with respect to the Rights Offering Common Stock and the
Warrant Common Stock (as defined below).
NOW, THEREFORE, in consideration of the foregoing, the parties hereto
agree as follows:
1. DEFINITIONS.
In addition to the terms defined elsewhere herein and the terms set forth
in the Purchase Agreement that are not otherwise defined herein, which shall
have the same meanings herein as in the Purchase Agreement, the following terms
shall have the following meanings when used herein with initial capital letters:
"ADVICE" has the meaning set forth in Section 3(b).
"AFFILIATE" means, with respect to any Person, any other Person that
directly or indirectly controls or is controlled by or is under common control
with such Person. For the purposes of this definition, "control", when used with
respect to any Person, means possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the 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.
"BLACK SCHOLES WARRANT VALUE" shall mean the value of a warrant as
determined by the Board of Directors as of the date of determination using the
Black-Scholes valuation formula (based upon the advice of an independent
investment bank of national standing selected by the Board of Directors), which
value shall be determined by customary nationally recognized investment banking
practices using such formula. For purposes of calculating such amount, (1) the
term of the warrants will be the time from the date of determination to the
expiration date
of such warrants, (2) the assumed volatility will be 35%, (3) the assumed
risk-free rate will equal the yield on three month U.S. Treasury securities, and
(4) the price for each share of Common Stock will be (x) the average closing
price of a share of Common Stock for the twenty consecutive trading days
immediately preceding, but not including, the date of determination as reported
on the principal national securities exchange on which the shares of Common
Stock are listed or admitted for trading or (y) if not listed or admitted for
trading on any national securities exchange, the average of the closing bid and
asked prices during such twenty trading day period in the over-the-counter
market as reported by the Nasdaq National Market or any comparable system or (z)
in all other cases, as determined in good faith by the Board of Directors of the
Company, based on the advice of an independent investment bank of national
standing selected by the Board of Directors.
"BUSINESS DAY" means a day other than a Saturday, Sunday or other day on
which banking institutions in New York, New York are permitted or required by
any applicable law to close.
"COMMISSION" means the Securities and Exchange Commission.
"COMMON STOCK" means all of the common stock, par value $0.001 per share,
of the Company.
"COMPANY" has the meaning set forth in the Preamble and also includes the
Company's successors.
"DELAY NOTICE" has the meaning set forth in Section 2(e).
"DELAY PERIOD" has the meaning set forth in Section 2(e).
"EFFECTIVENESS PERIOD" has the meaning set forth in Section 2(b).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"HOLDER" or "HOLDERS" has the meaning set forth in the Preamble or each
Person to whom a Holder Transfers Registrable Securities or Registrable
Liquidated Damages Warrant Securities in accordance with Article V of the
Purchase Agreement. The Holder of a Warrant shall be deemed to be the Holder of
Warrant Common Stock issuable with respect thereto.
"LIQUIDATED DAMAGES WARRANT" means any warrants issued as liquidated
damages pursuant to the provisions of this Agreement.
"NASD" means the National Association of Securities Dealers, Inc.
"PERSON" means a natural person, a partnership, a corporation, a limited
liability company, an association, a joint stock company, a trust, a joint
venture, an unincorporated organization or other entity, or a governmental
entity or any department, agency or political subdivision thereof.
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"PROSPECTUS" shall mean the prospectus included in a Resale Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities or Registrable Liquidated Damages Warrant Securities
covered by a Resale Registration Statement or a Warrant Resale Registration
Statement, and by all other amendments and supplements to a prospectus,
including post-effective amendments, and, in each case, including all documents
incorporated by reference therein.
"REGISTRABLE SECURITIES" means (i) the shares of Rights Offering Common
Stock, (ii) the shares of Warrant Common Stock, (iii) to the extent shares of
Common Stock acquired by the Holders in the Rights Offering are not freely
tradeable, any shares of Common Stock acquired by the Holders in the Rights
Offering and (iv) other shares of Common Stock owned by the Holders as of the
date of this Agreement, including any shares of Common Stock or other securities
that may be received by the Holders (x) as a result of a stock dividend, stock
split or other distribution of Common Stock in relation to the Rights Offering
Common Stock or the Warrant Common Stock or (y) on account of Rights Offering
Common Stock or Warrant Common Stock in a recapitalization, reorganization,
consolidation, merger, share exchange or other transaction involving the
Company, in each case upon the respective original issuance thereof, and at all
times subsequent thereto; provided, however, that the foregoing shall cease to
be "Registrable Securities" to the extent that (i) such securities have been
effectively registered under the Securities Act and disposed of in accordance
with the Registration Statement covering them or (ii) such securities are then
saleable by the holder thereof pursuant to Rule 144(k).
"REGISTRATION STATEMENT" means a Resale Registration Statement or a
Warrant Resale Registration Statement.
"RESALE REGISTRATION" shall mean a registration effected pursuant to
Section 2(a).
"RESALE REGISTRATION STATEMENT" shall mean a "resale" registration
statement of the Company pursuant to the provisions of Section 2(a) which covers
the resale of all of the Registrable Securities for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act, on Form S-3 (or
if such form is not available, any other appropriate available form) under the
Securities Act, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all documents
incorporated by reference therein.
"RIGHTS OFFERING COMMON STOCK" means the Company's Common Stock issued to
the Holders pursuant to the Purchase Agreement.
"RULE 144" shall mean Rule 144 promulgated under the Securities Act.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"STANDBY COMMITMENT FEE WARRANT" means one of the Common Stock Purchase
Warrants, dated as of __________, 2005, issued pursuant to the terms of the
Purchase Agreement, entitling the Holder thereof to purchase Warrant Common
Stock under the terms and subject to the conditions set forth therein.
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"TRANSFER" means and includes the act of selling, giving, transferring,
creating a trust (voting or otherwise), assigning or otherwise disposing of
(other than pledging, hypothecating or otherwise transferring as security or any
transfer upon any merger or, consolidation) (and correlative words shall have
correlative meanings); provided, however, that any transfer or other disposition
upon foreclosure or other exercise of remedies of a secured creditor after an
event of default under or with respect to a pledge, hypothecation or other
transfer as security shall constitute a Transfer.
"WARRANTS" means the Standby Commitment Fee Warrants and the Liquidated
Damages Warrants, collectively.
"WARRANT COMMON STOCK" means the Company's Common Stock issued or issuable
to the Holders upon the exercise of any of the Warrants.
"WARRANT RESALE REGISTRATION STATEMENT" shall mean a "resale" registration
statement of the Company that is filed pursuant to the provisions of Section
2(c) which covers the resale of all of the Warrant Common Stock issuable upon
the exercise of the Liquidated Damages Warrants for an offering to be made on a
continuous basis pursuant to Rule 415 under the Securities Act, on Form S-3 (or
if such form is not available, any other appropriate available form) under the
Securities Act, and all amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all documents
incorporated by reference therein.
2. RESALE REGISTRATION.
(a) Registration Requirement.
Subject to the last sentence of this paragraph, the Company
shall prepare promptly and file with the Commission a Resale Registration
Statement meeting the requirements of the Securities Act within five (5)
Business Days following the Closing under the Purchase Agreement, and will use
its best efforts to cause the Resale Registration Statement to be declared
effective by the Commission as soon as practicable thereafter and in any event
not later than sixty (60) days after such filing. The Company's obligations to
file a Resale Registration Statement and to have it declared effective within
the time periods set forth in the first sentence of this Section 2(a) shall be
subject to the Company's right to deliver to the Holders a Delay Notice pursuant
to Section 2(e) hereof.
If a Resale Registration Statement is not filed with the
Commission within five (5) Business Days following the Closing under the
Purchase Agreement (subject to any bona fide Delay Period), the Company will pay
to each Holder, as liquidated damages and not as a penalty, an amount equal to
1.0% of the aggregate purchase price for the Unsubscribed Shares paid by such
Holder pursuant to Section 1.3 of the Purchase Agreement for each month or part
thereof that such Resale Registration Statement has not been filed, payable in
monthly installments. If the Resale Registration Statement is not declared
effective by the Commission within 60 days after it is filed with the Commission
(subject to any bona fide Delay Period), the
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Company will pay to each Holder, as liquidated damages and not as a penalty, an
amount equal to 1.0% of the aggregate purchase price for the Unsubscribed Shares
paid by such Holder pursuant to Section 1.3 of the Purchase Agreement for each
month or part thereof that such Resale Registration Statement has not been
declared effective, payable in monthly installments. The payment of liquidated
damages pursuant to this paragraph shall be made by the Company, at its option,
either in cash or in Liquidated Damages Warrants having a value (such value to
be determined as set forth below) equal to such liquidated damages. Such
Liquidated Damages Warrants shall contain the same terms as the Standby
Commitment Fee Warrants except that they shall have an exercise period of one
year from the date of actual issuance, and they shall have an exercise price (x)
with respect to the first installment of Liquidated Damages Warrants, equal to
the Average Share Price (as defined in the Purchase Agreement) on the date on
which the Company first becomes obligated to pay the liquidated damages and (y)
with respect to any subsequent installment of Liquidated Damages Warrants, on
the first Business Day of the month period for which such installment is
issuable. The value of such Liquidated Damages Warrants shall be equal to their
Black Scholes Warrant Value. Liquidated damages shall be deemed to commence
accruing on the day on which the event triggering such liquidated damages
occurs. The liquidated damages to be paid to the Holders pursuant to this
Section 2(a) shall cease to accrue (i) with respect to the liquidated damages
for failure to have the Resale Registration Statement filed with the Commission
on or prior to the fifth Business Day following the Closing, on the day that the
Resale Registration Statement has been filed with the Commission or (ii) with
respect to the liquidated damages for failure to have the Resale Registration
Statement declared effective on or prior to the sixtieth (60th) day after it is
filed with the Commission, on the day that the Resale Registration Statement has
been declared effective by the Commission. The parties hereto agree that the
liquidated damages provided for in this Section 2(a) constitute a reasonable
estimate of the damages that will be suffered by the Holders by reason of the
failure of the Resale Registration Statement to be filed and/or to be declared
effective, as the case may be, in accordance with this Agreement.
(b) Effectiveness Requirement.
The Company agrees to use its best efforts to keep the Resale
Registration Statement continuously effective and the Prospectus usable for
resales for a period commencing on the date that such Resale Registration
Statement is initially declared effective by the Commission and terminating on
the date when all of the Registrable Securities covered by such Resale
Registration Statement have been sold pursuant to such Resale Registration
Statement or have ceased to be Registrable Securities (the "EFFECTIVENESS
PERIOD"); provided, however, the Company is permitted to suspend sales of the
Registrable Securities during any Delay Period.
After the Resale Registration Statement has been declared
effective by the Commission, if at any time the Resale Registration Statement or
the Prospectus thereunder cannot be used for the resale of the Registrable
Securities for any reason (including without limitation by reason of a stop
order or the Company's failure to update the Resale Registration Statement but
subject to any bona fide Delay Period), then, subject to subsection (e) below,
the Company will pay to each Holder, as liquidated damages and not as a penalty,
an amount equal to 1.0% of the aggregate purchase price for the Unsubscribed
Shares paid by such Holder pursuant to Section 1.3 of the Purchase Agreement for
each month or part thereof that such Resale Registration Statement cannot be
used for the resale of the Registrable Securities, payable
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in monthly installments. The payment of liquidated damages pursuant to this
paragraph shall be made by the Company, at its option, either in cash or in
Liquidated Damages Warrants having a value (such value to be determined as set
forth below) equal to such liquidated damages. Such Liquidated Damages Warrants
shall contain the same terms as the Standby Commitment Fee Warrants except that
they shall have an exercise period of one year from the date of actual issuance,
and they shall have an exercise price (x) with respect to the first installment
of Liquidated Damages Warrants, equal to the Average Share Price (as defined in
the Purchase Agreement) on the date on which the Company first becomes obligated
to pay the liquidated damages and (y) with respect to any subsequent installment
of Liquidated Damages Warrants, on the first Business Day of the month period
for which such installment is issuable. The value of such Liquidated Damages
Warrants shall be equal to their Black Scholes Warrant Value. Liquidated damages
shall be deemed to commence accruing on the day on which the event triggering
such liquidated damages occurs. The liquidated damages to be paid to the Holders
pursuant to this Section 2(b) shall cease to accrue on the day the Holders have
received notice from the Company regarding the reinstatement of effectiveness of
the Resale Registration Statement. The parties hereto agree that the liquidated
damages provided for in this Section 2(b) constitute a reasonable estimate of
the damages that will be suffered by the Holders by reason of the failure of the
Resale Registration Statement to remain effective in accordance with this
Agreement.
(c) Warrant Resale Registration Statement.
Subject to the last sentence of this paragraph, if the Company
is not able to register the resale of the Warrant Common Stock issuable upon
exercise of the Liquidated Damages Warrants (the "REGISTRABLE LIQUIDATED DAMAGES
WARRANT SECURITIES") pursuant to the Resale Registration Statement, the Company
shall prepare promptly and file with the Commission a Warrant Resale
Registration Statement meeting the requirements of the Securities Act within ten
(10) Business Days following the issuance of any such Liquidated Damages
Warrants, and will use its best efforts to cause the Warrant Resale Registration
Statement to be declared effective by the Commission as soon as practicable
thereafter and in any event not later than sixty (60) days after such filing.
The Company's obligations to file a Warrant Resale Registration Statement and to
have it declared effective within the time periods set forth in the first
sentence of this Section 2(c) shall be subject to the Company's right to deliver
to the Holders a Delay Notice pursuant to Section 2(e) hereof.
If a Warrant Resale Registration Statement is not filed with
the Commission within ten (10) Business Days following the issuance of any such
Liquidated Damages Warrants (subject to any bona fide Delay Period), the Company
will pay to each Holder, as liquidated damages and not as a penalty, an amount
equal to 1.0% of the liquidated damages relating to such Liquidated Damages
Warrants for each month or part thereof that such Warrant Resale Registration
Statement has not been filed, payable in monthly installments. If the Warrant
Resale Registration Statement is not declared effective by the Commission within
60 days after it is filed with the Commission (subject to any bona fide Delay
Period), the Company will pay to each Holder, as liquidated damages and not as a
penalty, an amount equal to 1.0% of the liquidated damages relating to such
Liquidated Damages Warrants for each month or part thereof that such Warrant
Resale Registration Statement has not been declared effective, payable in
monthly installments. The payment of liquidated damages pursuant to this
paragraph shall be
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made by the Company, at its option, either in cash or in Liquidated Damages
Warrants having a value (such value to be determined as set forth below) equal
to such liquidated damages. Such Liquidated Damages Warrants shall contain the
same terms as the Standby Commitment Fee Warrants except that they shall have an
exercise period of one year from the date of actual issuance, and they shall
have an exercise price (x) with respect to the first installment of Liquidated
Damages Warrants, equal to the Average Share Price (as defined in the Purchase
Agreement) on the date on which the Company first becomes obligated to pay the
liquidated damages and (y) with respect to any subsequent installment of
Liquidated Damages Warrants, on the first Business Day of the month period for
which such installment is issuable. The value of such Liquidated Damages
Warrants shall be equal to their Black Scholes Warrant Value. Liquidated damages
shall be deemed to commence accruing on the day on which the event triggering
such liquidated damages occurs. The liquidated damages to be paid to the Holders
pursuant to this Section 2(c) shall cease to accrue (i) with respect to the
liquidated damages for failure to have the Warrant Resale Registration Statement
filed with the Commission on or prior to the tenth Business Day following the
Closing, on the day that the Warrant Resale Registration Statement has been
filed with the Commission or (ii) with respect to the liquidated damages for
failure to have the Warrant Resale Registration Statement declared effective on
or prior to the sixtieth (60th) day after it is filed with the Commission, on
the day that the Warrant Resale Registration Statement has been declared
effective by the Commission. The parties hereto agree that the liquidated
damages provided for in this Section 2(c) constitute a reasonable estimate of
the damages that will be suffered by the Holders by reason of the failure of the
Warrant Resale Registration Statement to be filed and/or to be declared
effective, as the case may be, in accordance with this Agreement.
(d) Warrant Resale Registration Statement Effectiveness Requirement.
The Company agrees to use its best efforts to keep the Warrant
Resale Registration Statement continuously effective and the Prospectus usable
for resales for a period commencing on the date that such Warrant Resale
Registration Statement is initially declared effective by the Commission and
terminating on the date when all of the Registrable Liquidated Damages Warrant
Securities covered by such Warrant Resale Registration Statement have been sold
pursuant to such Warrant Resale Registration Statement or have ceased to be
Registrable Liquidated Damages Warrant Securities; provided, however, the
Company is permitted to suspend sales of the Registrable Liquidated Damages
Warrant Securities during any Delay Period.
After the Warrant Resale Registration Statement has been
declared effective by the Commission, if at any time the Warrant Resale
Registration Statement or the Prospectus thereunder cannot be used for the
resale of the Registrable Liquidated Damages Warrant Securities for any reason
(including without limitation by reason of a stop order or the Company's failure
to update the Warrant Resale Registration Statement but subject to any bona fide
Delay Period), then, subject to subsection (e) below, the Company will pay to
each Holder, as liquidated damages and not as a penalty, an amount equal to 1.0%
of the liquidated damages relating to the related Liquidated Damages Warrants
for each month or part thereof that such Warrant Resale Registration Statement
cannot be used for the resale of the Registrable Liquidated Damages Warrant
Securities, payable in monthly installments. The payment of liquidated damages
pursuant to this paragraph shall be made by the Company, at its option,
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either in cash or in Liquidated Damages Warrants having a value (such value to
be determined as set forth below) equal to such liquidated damages. Such
Liquidated Damages Warrants shall contain the same terms as the Standby
Commitment Fee Warrants except that they shall have an exercise period of one
year from the date of actual issuance, and they shall have an exercise price (x)
with respect to the first installment of Liquidated Damages Warrants, equal to
the Average Share Price (as defined in the Purchase Agreement) on the date on
which the Company first becomes obligated to pay the liquidated damages and (y)
with respect to any subsequent installment of Liquidated Damages Warrants, on
the first Business Day of the month period for which such installment is
issuable. The value of such Liquidated Damages Warrants shall be equal to their
Black Scholes Warrant Value. Liquidated damages shall be deemed to commence
accruing on the day on which the event triggering such liquidated damages
occurs. The liquidated damages to be paid to the Holders pursuant to this
Section 2(d) shall cease to accrue on the day the Holders have received notice
from the Company regarding the reinstatement of effectiveness of the Warrant
Resale Registration Statement. The parties hereto agree that the liquidated
damages provided for in this Section 2(d) constitute a reasonable estimate of
the damages that will be suffered by the Holders by reason of the failure of the
Warrant Resale Registration Statement to remain effective in accordance with
this Agreement.
(e) Delay Period.
The term "DELAY PERIOD" means, with respect to any obligation
to file any Resale Registration Statement or any Warrant Resale Registration
Statement or to keep any Resale Registration Statement, Warrant Resale
Registration Statement or Prospectus usable for resales pursuant to this Section
2, the shortest period of time determined in good faith by the Company's Board
of Directors to be necessary when there exist circumstances relating to a
material pending development, including, but not limited to, a pending or
contemplated material acquisition or merger or other material transaction or
event, which would require additional disclosure by the Company in such Resale
Registration Statement, Warrant Resale Registration Statement or Prospectus of
previously non-public material information which the Company determines in good
faith upon the advice of counsel that it has a bona fide business purpose for
keeping confidential and non-public and the non-disclosure of which in such
Resale Registration Statement, Warrant Resale Registration Statement or
Prospectus might cause such Resale Registration Statement, Warrant Resale
Registration Statement or Prospectus to fail to comply with applicable
disclosure requirements or if the Company becomes ineligible to use the
registration form on which the Resale Registration Statement or Warrant Resale
Registration Statement is filed and declared effective (such circumstances,
"DELAY CIRCUMSTANCES"). A Delay Period shall commence on and include the date
that the Company gives written notice (a "DELAY NOTICE") to the Holders that the
Prospectus is no longer usable as a result of such Delay Circumstances and shall
end on the date when the Holders are advised in writing by the Company that the
current Delay Period has terminated (it being understood that the Company shall
give such notice to all Holders promptly upon making the determination that the
Delay Period has ended). If as a result of the circumstances giving rise to the
Delay Period the Prospectus included in the Resale Registration Statement or the
Warrant Resale Registration Statement has been amended to comply with the
requirements of the Securities Act, the Company shall enclose such revised
Prospectus with the notice to the Holders advising them that the Delay Period
has terminated. Notwithstanding anything herein to the contrary the Company is
only entitled to three (3) Delay Periods having durations of not more than
thirty (30) days each
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during any consecutive 12 month period, and not to exceed more than ninety (90)
days in the aggregate in any consecutive 12 month period. A Delay Period may not
commence if a prior Delay Period has terminated within the previous 30 days or
if three Delay Periods have occurred during the consecutive 12 month period
ending on the date that the Company gives notice that a Delay Period has
commenced. The Company covenants and agrees that it will not deliver a Delay
Notice with respect to a Delay Period unless the Company's employees, officers
and directors and their affiliates are also prohibited by the Company for the
duration of the Delay Period from effecting any public sales of shares of Common
Stock beneficially owned by them.
If at any time the Company breaches the terms of this Section
2(e) with respect to the number of Delay Periods in any 12 month period or if
the duration of any Delay Period exceeds 30 days, then, the Company will pay to
each Holder, as liquidated damages and not as a penalty, an amount equal to 1.0%
of the aggregate purchase price for the Unsubscribed Shares paid by such Holder
pursuant to Section 1.3 of the Purchase Agreement for each month or part thereof
that the Company is in violation of this Section 2(e), payable in monthly
installments. The payment of liquidated damages pursuant to this paragraph shall
be made by the Company, at its option, either in cash or in Liquidated Damages
Warrants having a value (such value to be determined as set forth below) equal
to such liquidated damages. Such Liquidated Damages Warrants shall contain the
same terms as the Standby Commitment Fee Warrants except that they shall have an
exercise period of one year from the date of actual issuance, and they shall
have an exercise price (x) with respect to the first installment of Liquidated
Damages Warrants, equal to the Average Share Price (as defined in the Purchase
Agreement) on the date on which the Company first becomes obligated to pay the
liquidated damages and (y) with respect to any subsequent installment of
Liquidated Damages Warrants, on the first Business Day of the month period for
which such installment is issuable. The value of such Liquidated Damages
Warrants shall be equal to their Black Scholes Warrant Value. Liquidated damages
shall be deemed to commence accruing on the day on which the event triggering
such liquidated damages occurs. The liquidated damages to be paid to the Holders
pursuant to this Section 2(e) shall cease to accrue on the day such Delay Period
that causes the Company to breach the terms of this Section 2(e) terminates. The
parties hereto agree that the liquidated damages provided for in this Section
2(e) constitute a reasonable estimate of the damages that will be suffered by
the Holders by reason of the breach by the Company of the terms of this Section
2(e).
(f) Notice.
The Company will, in the event a Registration Statement is
declared effective, notify each such Holder as promptly as practicable, and in
any event no later than the next Business Day, when such Registration Statement
has become effective and take such other actions as are required to permit
unrestricted resales of the Registrable Securities or Registrable Liquidated
Damages Warrant Securities, including providing to each Holder a reasonable
number of copies of the Prospectus which is a part of such Registration
Statement as is requested by such Holder. The Company further agrees to
supplement or amend each Registration Statement if and as required by the rules,
regulations or instructions applicable to the registration form used by the
Company for such Registration Statement or by the Securities Act or by any other
rules and regulations thereunder for registrations, and the Company agrees to
notify the Holders of Registrable Securities or Registrable Liquidated Damages
Warrant Securities of any such supplement or amendment promptly after its being
used or filed with the Commission.
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3. REGISTRATION PROCEDURES.
(a) Obligations of the Company.
In connection with its obligations under Section 2 with
respect to the Resale Registration Statement and any Warrant Resale Registration
Statement, the Company shall:
(i) prepare and file with the Commission a Resale
Registration Statement or Warrant Resale Registration
Statement as prescribed by Sections 2(a) and 2(c),
respectively, within the relevant time periods specified
in Sections 2(a) and 2(c), respectively, on Form S-3 (or
if such form is not available, any other appropriate
available form), which form shall (A) be available for
the resale of the Registrable Securities or Registrable
Liquidated Damages Warrant Securities by the selling
Holders thereof and (B) comply as to form in all
material respects with the requirements of the
applicable form and include all financial statements
required by the Commission to be filed therewith; the
Company shall use its best efforts to cause such Resale
Registration Statement or Warrant Resale Registration
Statement to become effective and remain effective and
the Prospectus usable for resales in accordance with
Section 2, subject to the proviso contained in Section
2(b) or Section 2(d), as applicable; provided, however,
that, no fewer than five (5) calendar days before filing
any Resale Registration Statement, Warrant Resale
Registration Statement or Prospectus or any amendments
or supplements thereto, the Company shall furnish to and
afford the Holders covered by such Resale Registration
Statement or Warrant Resale Registration Statement and
their counsel a reasonable opportunity to review copies
of all such documents (including copies of any documents
to be incorporated by reference therein and all exhibits
thereto) proposed to be filed and will cause its
officers and directors, counsel and independent
registered public accountants to respond to such
inquiries as shall be necessary, in the reasonable
opinion of respective counsel to conduct a reasonable
investigation within the meaning of the Securities Act;
and the Company shall not file any Resale Registration
Statement, Warrant Resale Registration Statement or
Prospectus or any amendments or supplements thereto in
respect of which the Holders must be afforded an
opportunity to review prior to the filing of such
document, other than filings required under the Exchange
Act, if the Holders or their counsel shall reasonably
object in a timely manner; and provided further,
however, the plan of distribution disclosed in the
Resale Registration Statement or the Warrant Resale
Registration Statement shall be in the form attached
hereto as Exhibit B, with such changes as the Holders
may reasonably request;
(ii) prepare and file with the Commission such amendments
(including post effective amendments) to any
Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness
Period, subject to the proviso contained in Section 2(b)
or Section 2(d), as the case
10
may be, or as reasonably requested by the Holders of a
majority of Registrable Securities or Registrable
Liquidated Damages Warrants Securities, as the case may
be, and cause each Prospectus to be supplemented, if so
determined by the Company or requested by the
Commission, by any required prospectus supplement and as
so supplemented to be filed pursuant to Rule 424 (or any
similar provision then in force), under the Securities
Act; respond as promptly as reasonably possible to any
comments received from the Commission with respect to
such Registration Statement, or any amendment,
post-effective amendment or supplement relating thereto;
and as promptly as reasonably possible, upon request,
provide the Holders true and complete copies of all
correspondence from and to the Commission relating to
such Registration Statement; and comply in all material
respects with the provisions of the Securities Act, the
Exchange Act and the rules and regulations promulgated
thereunder applicable to it with respect to the
disposition of all Registrable Securities or Registrable
Liquidated Damages Warrant Securities covered by such
Registration Statement during the Effectiveness Period
in accordance with the intended method or methods of
distribution by the selling Holders thereof described in
this Agreement;
(iii) register or qualify the Registrable Securities or
Registrable Liquidated Damages Warrant Securities under
all applicable state securities or "blue sky" laws of
such jurisdictions as any Holder shall reasonably
request in writing, keep each such registration or
qualification effective during the Effectiveness Period
and do any and all other acts and things which may be
reasonably necessary or advisable to enable such Holder
to consummate the disposition in each such jurisdiction
of such Registrable Securities or Registrable Liquidated
Damages Warrant Securities owned by such Holder;
provided, however, that the Company shall not be
required to (A) qualify as a foreign corporation or as a
dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this
Section 3(a)(iii), (B) file any general consent to
service of process in any jurisdiction where it would
not otherwise be subject to such service of process or
(C) subject itself to any material taxation in any such
jurisdiction if it is not then so subject;
(iv) promptly (and, in the case of (G) below, not less than
five (5) calendar days prior to such filing) notify each
Holder and promptly confirm such notice in writing, if
such notice was verbally given, (A) when the
Registration Statement covering such Registrable
Securities or Registrable Liquidated Damages Warrant
Securities has become effective and when any post
effective amendments thereto become effective, (B) of
the receipt of any comments from the Commission with
respect to any such document or a document incorporated
by reference therein, (C) of any request by the
Commission or any other federal or state securities
authority for amendments or supplements to such
Registration Statement or Prospectus or for additional
information after such Registration Statement has become
11
effective, (D) of the issuance or threatened issuance by
the Commission or any state securities authority of any
stop order suspending the effectiveness of such
Registration Statement or the qualification of the
Registrable Securities or Registrable Liquidated Damages
Warrant Securities in any jurisdiction described in
Section 3(a)(iii) or the initiation of any proceedings
for that purpose, (E) 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 or Registrable Liquidated
Damages Warrant Securities for sale in any jurisdiction
or the initiation or threatening of any proceeding for
such purpose, (F) of the happening of any event or the
failure of any event to occur or the discovery of any
facts, during the Effectiveness Period, which makes any
statement made in such Registration Statement or the
related Prospectus untrue in any material respect or
which causes such Registration Statement or Prospectus
to omit to state a material fact necessary in order to
make the statements therein, in the light of the
circumstances under which they were made, not misleading
and (G) when a Prospectus or Prospectus Supplement or
post-effective amendment to such Registration Statement
is proposed to be filed;
(v) use its best efforts to prevent the entry of any stop
order or other suspension of effectiveness of any
Registration Statement, or if entered, to obtain the
withdrawal of any such stop order or to avoid the
issuance of, or, if issued, obtain the withdrawal of any
suspension of the qualification (or exemption from
qualification) of any of the Registrable Securities or
Registrable Liquidated Damages Warrant Securities for
sale in any jurisdiction at the earliest possible
moment;
(vi) furnish to each Holder, without charge, one conformed
copy of the Registration Statement and any
post-effective amendment thereto (without documents
incorporated therein by reference or exhibits thereto,
unless requested) promptly after the filing of such
documents with the Commission, and additional conformed
copies of such Registration Statement as such Holder may
reasonably request;
(vii) promptly deliver to each selling Holder, without charge,
as many copies of the applicable Prospectus (including
each preliminary Prospectus) as such Holder from time to
time may reasonably request (it being understood that
the Company consents to the use of the Prospectus by
each of the selling Holders in connection with the
offering and sale of the Registrable Securities or the
Registrable Liquidated Damages Warrant Securities
covered by the Prospectus), such other documents
incorporated by reference therein and any exhibits
thereto as such selling Holder from time to time may
reasonably request in order to facilitate the
disposition of the Registrable Securities or Registrable
Liquidated Damages Warrant Securities by such Holder;
12
(viii) as soon as practicable after the resolution of any
matter or event specified in Sections 3(a)(iv)(B),
3(a)(iv)(C), 3(a)(iv)(E) and 3(a)(iv)(F) (subject to
the proviso contained in Section 2(b)), prepare and
file with the Commission a supplement or post-effective
amendment to the applicable Registration Statement or
the related Prospectus or any document incorporated
therein by reference or file any other required
document, and provide revised or supplemented
Prospectuses to the Holders so that, as thereafter
delivered to the purchasers of the Registrable
Securities or Registrable Liquidated Damages Warrant
Securities, such Prospectus will not include any untrue
statement of a material fact or omit to state a
material fact necessary in order to make the statements
therein, in the light of the circumstances under which
they were made, not misleading;
(ix) a reasonable time prior to the filing of any document
which is to be incorporated by reference into a
Registration Statement or a Prospectus after the
initial filing of such Registration Statement, provide
a reasonable number of copies of such document to the
Holders as shall be reasonably requested by the
Holders, if any;
(x) cooperate with each seller of Registrable Securities or
Registrable Liquidated Damages Warrant Securities
covered by a Registration Statement and its counsel in
connection with any filings required to be made with
the NASD;
(xi) take all other steps reasonably necessary to effect the
registration of the Registrable Securities or
Registrable Liquidated Damages Warrant Securities
covered by a Registration Statement contemplated
hereby;
(xii) use its best efforts to cause all Registrable
Securities or Registrable Liquidated Damages Warrant
Securities registered pursuant to this Agreement to be
listed on each securities exchange, interdealer
quotation system or other market on which similar
securities issued by the Company are then listed;
(xiii) cooperate with the Holders to facilitate the timely
preparation and delivery of certificates representing
Registrable Securities or Registrable Liquidated
Damages Warrant Securities to be delivered to a
transferee pursuant to the Registration Statement,
which certificates shall be free, to the extent
permitted by the Purchase Agreement, of all restrictive
legends, and to enable such Registrable Securities or
Registrable Liquidated Damages Warrant Securities to be
in such denominations and registered in such names as
any such Holders may request;
(xiv) from and after the date of this Agreement, the Company
shall not, and shall not agree to, allow the holders of
any securities of the Company to include any of their
securities that are not Registrable Securities or
Registrable Liquidated Damages Warrant Securities in
the Registration
13
Statement under Section 2(a) or Section 2(c) hereof or
any amendment or supplement thereto without the consent
of the holders of a majority in interest of the
Registrable Securities or Registrable Liquidated Damages
Warrant Securities, as the case may be; and
(xv) notwithstanding any other provision of this Section
3(a), if the Company becomes ineligible to use the
registration form on which the Registration Statement is
filed and declared effective pursuant to Section 2(a) or
Section 2(c), thereby precluding any Holder from using
the related Prospectus, the Company shall use its best
efforts to prepare and file either a post effective
amendment to the Registration Statement to convert such
registration statement to, or a new Registration
Statement on, another registration form which the
Company is eligible to use within thirty (30) days after
the date that the Company becomes ineligible, provided
such other registration form shall be available for the
sale of the Registrable Securities or Registrable
Liquidated Damages Warrant Securities by the selling
Holders thereof and such amended or new Registration
Statement shall remain subject in all respects to the
provisions of this Section 3(a).
(b) Holders' Obligations.
(i) Each Holder agrees that, upon receipt of any notice from
the Company of the occurrence of any event specified in
Sections 3(a)(iv)(B), 3(a)(iv)(C), 3(a)(iv)(E),
3(a)(iv)(F) or any Delay Notice, such Holder will
forthwith discontinue disposition of Registrable
Securities or Registrable Liquidated Damages Warrant
Securities pursuant to the Registration Statement at
issue until such Holder's receipt of the copies of the
supplemented or amended Prospectus contemplated by
Section 3(a)(viii) or until it is advised in writing
(the "ADVICE") by the Company that the use of the
applicable Prospectus may be resumed, and, if so
directed by the Company, such Holder will deliver to the
Company (at the Company's expense) all copies in such
Holder's possession, other than permanent file copies
then in such Holder's possession, of the Prospectus
covering such Registrable Securities or Registrable
Liquidated Damages Warrant Securities current at the
time of receipt of such notice.
(ii) Each Holder agrees that the Company may require each
seller of Registrable Securities or Registrable
Liquidated Damages Warrant Securities as to which any
registration is being effected to furnish to it such
information regarding such seller as may be required by
the staff of the Commission to be included in the
applicable Registration Statement, the Company may
exclude from such registration the Registrable
Securities or Registrable Liquidated Damages Warrant
Securities of any seller who fails to furnish such
information which is not otherwise readily available to
the Company within ten (10) Business Days after
receiving such request, and the Company shall have no
obligation to register under the Securities Act the
Registrable Securities or Registrable Liquidated
14
Damages Warrant Securities of a seller who so fails to
furnish such information; provided that upon being
furnished with such information by a Holder, including
by any permitted transferee of Registrable Securities or
Registrable Liquidated Damages Warrant Securities,
whether before or after the Registration Statement is
declared effective, the Company shall as promptly as
reasonably practicable file a post-effective amendment
to the Registration Statement, or a supplement to the
Prospectus, for purposes of including such Holder as a
selling Holder under the Registration Statement.
4. REGISTRATION EXPENSES.
All Registration Expenses will be borne by the Company whether or not the
Registration Statement becomes effective. "REGISTRATION EXPENSES" means all fees
and expenses incident to the performance of, or compliance with, this Agreement
by the Company, including, without limitation, (i) all registration and filing
fees (including, without limitation, fees and expenses of compliance with
securities or "blue sky" laws (including, without limitation, fees and
disbursements of counsel for the selling Holders in connection with "blue sky"
qualifications of the Registrable Securities or Registrable Liquidated Damages
Warrant Securities and determination of the eligibility of the Registrable
Securities or Registrable Liquidated Damages Warrant Securities for investment
under the laws of such jurisdictions as the Holders of a majority of the
Registrable Securities or Registrable Liquidated Damages Warrant Securities
being sold may designate)), (ii) printing expenses (including, without
limitation, expenses of printing certificates for Registrable Securities or
Registrable Liquidated Damages Warrant Securities in a form eligible for deposit
with The Depository Trust Company and of printing Prospectuses if the printing
of Prospectuses is requested by the Holders of a majority of the Registrable
Securities or Registrable Liquidated Damages Warrant Securities included in any
Registration Statement), (iii) fees and disbursements of counsel for the Company
and one single special counsel for the Holders, (iv) all fees and expenses of
listing the Registrable Securities or Registrable Liquidated Damages Warrant
Securities pursuant to Section 3(a)(xii), and (v) fees and expenses of all other
Persons retained by the Company in connection with this Agreement; provided,
however, that Registration Expenses shall not include fees and expenses of any
counsel for the Holders except as provided in clause (iii) above and any local
counsel that are not included in the definition of Registration Expenses nor
shall it include underwriting fees, discounts or commissions relating to the
offer and sale of Registrable Securities or Registrable Liquidated Damages
Warrant Securities, which shall be borne by the Holders included in such
registration pro rata in proportion to the number of Registrable Securities or
Registrable Liquidated Damages Warrant Securities of such Holder included in
such registration. In addition, the Company will 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, the fees and expenses incurred in connection with the listing of the
securities to be registered on any securities exchange on which similar
securities issued by the Company are then listed and the fees and expenses of
any Person, including special experts, retained by the Company.
15
5. INDEMNIFICATION.
(a) Indemnification by the Company.
The Company will indemnify and hold harmless, to the fullest
extent permitted by law, each Holder whose Registrable Securities or Registrable
Liquidated Damages Warrant Securities are registered pursuant to this Agreement,
the officers, directors, agents, members, partners, limited partners and
employees of each of them, each Person who controls such Holder (within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act)
and the officers, directors, agents, members, partners, limited partners and
employees of any such controlling Person, from and against any and all losses,
claims, damages, liabilities, costs (including, without limitation, the costs of
investigation and attorneys' fees) and expenses (collectively, "LOSSES"), as
incurred, arising out of or based upon any untrue or alleged untrue statement of
a material fact contained in any Registration Statement, preliminary Prospectus
or Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as the same are based upon information furnished in
writing to the Company by such Holder expressly for use therein; provided,
however, that the Company will not be liable to any Holder to the extent that
any such Losses arise out of or are based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any preliminary
Prospectus if either (A) (i) after receiving copies thereof from the Company,
such Holder failed to send or deliver a copy of the Prospectus with or prior to
the delivery of written confirmation of the sale by such Holder to the Person
asserting the claim from which such Losses arise and (ii) the Prospectus would
have corrected in all material respects such untrue statement or alleged untrue
statement or such omission or alleged omission; or (B) such untrue statement or
alleged untrue statement, omission or alleged omission is corrected in all
material respects in an amendment or supplement to the Prospectus previously
furnished by or on behalf of the Company with copies of the Prospectus as so
amended or supplemented, and, after receiving copies thereof from the Company,
such Holder thereafter fails to deliver such Prospectus as so amended or
supplemented prior to or concurrently with the sale of a Registrable Security or
Registrable Liquidated Damages Warrant Security to the Person asserting the
claim from which such Losses arise. Such indemnity shall remain in full force
and effect regardless of any investigation made by or on behalf of any Holder or
any officer, director, agent or employee of such Holder.
(b) Indemnification by Holders of Registrable Securities or
Registrable Liquidated Damages Warrant Securities.
In connection with any Registration Statement in which a
Holder is participating, such Holder will furnish to the Company in writing such
information concerning the Holder as the Company reasonably requests concerning
such Holder for use in connection with any Registration Statement or Prospectus
and will severally and not jointly indemnify, to the fullest extent permitted by
law, the Company, its directors and 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, from and against any and all Losses
arising out of or based upon (i) any disposition of Registrable Securities or
Registrable Liquidated Damages Warrant Securities after
16
receiving notice of a Delay Period and prior to receiving Advice under Section
3(b)(i) that use of the Prospectus may be resumed or (ii) any untrue statement
of a material fact contained in any Registration Statement, Prospectus or
preliminary Prospectus or arising out of or based 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 finally judicially determined by a court of competent
jurisdiction to have been contained in any information so furnished in writing
by such Holder to the Company expressly for use in such Registration Statement
or Prospectus and to have been relied upon by the Company in the preparation of
such Registration Statement, Prospectus or preliminary Prospectus. Such
indemnity shall remain in full force and effect regardless of any investigation
made by or on behalf of the Company or any officer, director, agent or employee
of the Company. In no event will the liability of any selling Holder under this
Section 5(b) be greater in amount than the excess of the amount by which the
total price at which the Registrable Securities or Registrable Liquidated
Damages Warrant Securities sold by such Indemnifying Party and distributed to
the public pursuant to the applicable Registration Statement (net of all related
expenses) is over the amount of any damages which such Indemnifying Party has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) Conduct of Indemnification Proceedings.
If any Person shall become entitled to indemnity hereunder (an
"INDEMNIFIED PARTY"), such Indemnified Party shall give prompt notice to the
party from which such indemnity is sought (the "INDEMNIFYING PARTY") of any
claim or of the commencement of any action or proceeding with respect to which
such Indemnified Party seeks indemnification or contribution pursuant hereto;
and the Indemnifying Party shall have the right to 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 to so notify the
Indemnifying Party will not relieve the Indemnifying Party from any obligation
or liability except to the extent that it shall be finally determined by a court
of competent jurisdiction that the Indemnifying Party has been prejudiced
materially by such failure.
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; (2) the Indemnifying Party shall have
failed promptly to assume the defense of such proceeding and to employ counsel
reasonably satisfactory to the 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 the reasonable fees and expenses of one
separate counsel (and one local counsel in each applicable jurisdiction) shall
be at the expense of the Indemnifying Party).
17
All Losses (including any fees and expenses incurred in
connection with investigating or preparing to defend such action or proceeding)
will be paid to the Indemnified Party, as incurred, within ten (10) Business
Days of written notice thereof to the Indemnifying Party upon receipt of an
undertaking to repay such amount if it is ultimately determined that an
Indemnified Party is not entitled to indemnification hereunder. The Indemnifying
Party will not consent to entry of any judgment or enter into any settlement or
otherwise seek to terminate any action or proceeding in which any Indemnified
Party is or could be a party and as to which indemnification or contribution
could be sought by such Indemnified Party under this Section 5, unless such
judgment, settlement or other termination includes, as an unconditional term
thereof, the giving by the claimant or plaintiff to such Indemnified Party of a
release, in form and substance reasonably satisfactory to the Indemnified Party,
from all liability in respect of such claim or litigation for which such
Indemnified Party would be entitled to indemnification hereunder and shall not
include a statement as to the admission of fault or culpability of the
Indemnified Party.
(d) Contribution.
If the indemnification provided for in this Section 5 is
unavailable to an Indemnified Party under Section 5(a) or 5(b) hereof in respect
of any Losses or is insufficient to hold such Indemnified Party harmless, then
each applicable Indemnifying Party, in lieu of or in addition to indemnifying
such Indemnified Party, as applicable, will, jointly and severally, 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 or Indemnifying Parties, on the one hand, and such
Indemnified Party, on the other hand, 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 or
Indemnifying Parties, on the one hand, and such Indemnified Party, on the other
hand, will 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 related 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 will be deemed to include,
subject to any limitations set forth in Section 5(c), any reasonable legal or
other fees or expenses incurred by such party in connection with any action or
proceeding to the extent such party would have been indemnified for such fees
and expenses if the indemnification provided for in this Section 5(d) 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. Notwithstanding the provisions of this Section 5(d), an Indemnifying
Party that is a selling Holder will not be required to contribute any amount in
excess of the amount by which the total price at which the Registrable
Securities or Registrable Liquidated Damages Warrant Securities sold by such
Indemnifying Party and distributed to the public pursuant to the applicable
Registration Statement (net of all related expenses) exceeds the amount of any
damages which such Indemnifying Party has otherwise been required to pay by
18
reason of such untrue or alleged untrue statement or omission or alleged
omission. No Person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) will be entitled to contribution from
any Person who was not guilty of such fraudulent misrepresentation.
The indemnity, contribution and expense reimbursement
obligations of a party hereunder will be in addition to any liability such party
may otherwise have hereunder or otherwise.
6. MISCELLANEOUS.
(a) Reporting.
With a view to making available to the Holders the benefits of
Rule 144 or any other similar rule or regulation of the Commission that may at
the time permit the Holders to sell securities of the Company to the public
without registration, for so long as the Holders continue to own Registrable
Securities or Registrable Liquidated Damages Warrant Securities, the Company
shall use commercially reasonable efforts to:
(i) Make and keep public information available, as those
terms are understood and defined in Rule 144, and file
with the Commission in a timely manner all reports and
other documents required of the Company under the
Securities Act and the Exchange Act; and
(ii) Furnish to each Holder, for so long as the Holder owns
Registrable Securities or Registrable Liquidated Damages
Warrant Securities, promptly upon request, a written
statement by the Company, if true, that it has complied
with the applicable reporting requirements of Rule 144,
the Securities Act and the Exchange Act, a copy of the
most recent annual or quarterly report of the Company,
and such other information as may be reasonably
requested to permit the Holders to sell such securities
pursuant to Rule 144 without registration.
(b) Remedies.
In the event of a breach by the Company of its obligations
under this Agreement, each Holder, in addition to being entitled to exercise all
rights granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Agreement. The Company agrees that
monetary damages would not be adequate compensation for any loss 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 will waive the defense that a remedy at law would be
adequate.
(c) Amendments and Waivers.
(i) The provisions of this Agreement may not be amended,
modified or supplemented, and waivers or consents to
departures from the provisions hereof may not be given
unless the Company has obtained the written
19
consent of Holders of at least 75% of the
then-outstanding Registrable Securities and Registrable
Liquidated Damages Warrant Securities.
(ii) Any amendment or waiver effected in accordance with this
Section 6(c) shall be binding upon each holder of
Registrable Securities or Registrable Liquidated Damages
Warrant Securities at the time outstanding, each future
Holder of all such securities, and the Company.
(iii) No failure or delay by any party in exercising any
right, power or privilege hereunder will operate as a
waiver thereof, nor will any single or partial exercise
thereof preclude any other or further exercise thereof
or the exercise of any other right, power or privilege.
The rights and remedies herein provided will be
cumulative and not exclusive of any rights or remedies
provided by law.
(d) Notices.
All notices, requests and other communications to either party
hereunder must be in writing (including telecopy or similar writing) and must be
given:
(i) if to a Holder, to the address set forth opposite such
Holder's name on the signature pages hereto, with a copy
to such additional party as indicated on such page.
(ii) If to the Company, to:
DDi Corp.
0000 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Chief Financial Officer
with a copy to:
Paul, Hastings, Xxxxxxxx & Xxxxxx LLP
000 Xxxx Xxxxxx Xxxxx, Xxxxxxxxxxx Xxxxx
Xxxxx Xxxx, Xxxxxxxxxx 00000
Facsimile No. (000) 000-0000
Attention: Xxxx X. Xxxxx Xxxxxx, Esq.
or such other address or telecopier number as such Person may hereafter specify
by written notice to the other parties hereto given five (5) days prior to the
effectiveness of such change. Each such notice, request or other communication
will be effective only when actually delivered at the address specified in this
Section 6(d), if delivered prior to 5 p.m. (local time) and such day is a
business day, and if not, then such notice, request or other communication will
not be effective until the next succeeding business day. Written confirmation of
receipt (A) given by the recipient of such notice or other communication, (B)
mechanically or electronically generated by the sender's facsimile machine
containing the time, date, recipient facsimile
20
number and an image of the first page of such transmission, or (C) provided by a
courier or overnight courier service shall be rebuttable evidence of personal
service, receipt by facsimile or receipt from a reputable overnight delivery
service.
(e) Owner of Registrable Securities or Registrable Liquidated
Damages Warrant Securities.
The Company will maintain, or will cause its registrar and
transfer agent to maintain, a stock book with respect to the Common Stock, in
which all transfers of Registrable Securities or Registrable Liquidated Damages
Warrant Securities of which the Company has received notice will be recorded.
The Company may deem and treat the Person in whose name Registrable Securities
or Registrable Liquidated Damages Warrant Securities are registered in the stock
book of the Company as the owner thereof for all purposes, including, without
limitation, the giving of notices under this Agreement.
(f) Successors and Assigns.
Subject to this paragraph (f), this Agreement will inure to
the benefit of and be binding upon the successors and permitted assigns of each
of the parties and will inure to the benefit of each of the Holders. The Company
may not assign its rights or obligations hereunder. Holders may not assign their
rights and obligations under this Agreement; provided, however, that a Holder
may assign its rights and obligations under this Agreement to a third party in
connection with any transfer of Registrable Securities or Registrable Liquidated
Damages Warrant Securities (a "PERMITTED TRANSFEREE"). Notwithstanding the
foregoing, no Permitted Transferee shall be entitled to any of the transferring
Holder's rights under this Agreement (i) unless and until such Permitted
Transferee shall have acknowledged in writing its acceptance of such obligations
hereunder or (ii) if the transferring Holder notifies the Company in writing on
or prior to such transfer that the Permitted Transferee shall not have such
rights.
(g) Counterparts; Effectiveness.
This Agreement may be signed in any number of counterparts,
each of which will be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument. Facsimile counterpart
signatures shall be acceptable. This Agreement will become effective when each
party hereto receives a counterpart hereof signed by the other party hereto.
(h) Headings.
The descriptive headings herein are inserted for convenience
of reference only and are not intended to be part of or to limit or affect the
meaning or interpretation of this Agreement. All references herein to "Sections"
shall refer to corresponding provisions of this Agreement unless otherwise
expressly noted.
(i) Governing Law.
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York as applied to agreements among
New York residents entered into and to be performed entirely within New York,
without giving effect to the principles of conflict of laws thereof that would
cause the application of the laws of any other jurisdiction.
21
(j) Jurisdiction; Consent to Service of Process.
Each party hereby irrevocably submits, for itself and its
property, to the non-exclusive jurisdiction of the Supreme Court of the State of
New York located in New York, New York in the Borough of Manhattan or the United
States District Court for the Southern District of New York, and any appellate
court from any such court (as applicable, a "NEW YORK COURT"), in any suit,
action or proceeding arising out of or relating to this Agreement, or for
recognition or enforcement of any judgment resulting from any such suit, action
or proceeding, and each party hereby irrevocably and unconditionally agrees that
all claims in respect of any such suit, action or proceeding may be heard and
determined in the New York Court. Each party hereby irrevocably and
unconditionally waives, to the fullest extent it may legally and effectively do
so, (i) any objection which it may now or hereafter have to the laying of venue
of any suit, action or proceeding arising out of or relating to this Agreement
in the New York Court, (ii) the defense of an inconvenient forum to the
maintenance of such suit, action or proceeding in any such court, and (iii) the
right to object, with respect to such suit, action or proceeding, that such
court does not have jurisdiction over such party. Each party irrevocably
consents to service of process in any manner permitted by law.
(k) WAIVER OF JURY TRIAL.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY OR DISPUTE THAT MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES
AND THEREFORE EACH SUCH PARTY HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY
RIGHT SUCH PARTY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY CERTIFIES AND ACKNOWLEDGES THAT (I)
NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED,
EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE EVENT OF
LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, (II) EACH SUCH PARTY
UNDERSTANDS AND HAS CONSIDERED THE IMPLICATIONS OF THIS WAIVER, (III) EACH SUCH
PARTY MAKES THIS WAIVER VOLUNTARILY, AND (IV) EACH SUCH PARTY HAS BEEN INDUCED
TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS IN THIS SECTION 6(k).
(l) Severability.
The holding of any provision of this Agreement to be invalid
or unenforceable by a court of competent jurisdiction shall not affect any other
provision of this Agreement, which shall remain in full force and effect. If any
provision of this Agreement shall be declared by a court of competent
jurisdiction to be invalid, illegal or incapable of being enforced in whole or
in part, such provision shall be interpreted so as to remain enforceable to the
maximum extent permissible consistent with applicable law and the remaining
conditions and provisions or
22
portions thereof shall nevertheless remain in full force and effect and
enforceable to the extent they are valid, legal and enforceable, and no
provisions shall be deemed dependent upon any other covenant or provision unless
so expressed herein.
(m) Entire Agreement.
This Agreement constitutes the entire understanding and
agreement among the parties relating to the subject matter hereof and supersedes
any and all prior agreements, representations or understandings, both written
and oral, with respect to the subject matter hereof. Nothing in this Agreement,
express or implied, is intended to confer upon any Person, other than the
parties hereto and their respective successors and assigns, any rights,
remedies, obligations, or liabilities under or by reason of this Agreement,
except as expressly provided herein.
(n) No Strict Construction.
The parties hereto have participated jointly in the
negotiation and drafting of this Agreement. In the event an ambiguity or
question of intent or interpretation arises, this Agreement will be construed as
if drafted jointly by the parties hereto, and no presumption or burden of proof
will arise favoring or disfavoring any party by virtue of the authorship of any
of the provisions of this Agreement.
(o) Third Party Beneficiaries.
This Agreement and all of its provisions and conditions are
for the benefit of the parties to this Agreement, any Permitted Transferee and
solely with respect to the provisions of Section 5 hereof, any Indemnified
Party.
(p) Termination.
This Agreement shall terminate on the date on which there
cease to be any Registrable Securities and Registrable Liquidated Damages
Warrant Securities outstanding. The provisions of Section 5 and Section 6(o)
shall survive the termination of this Agreement.
(q) Independent Nature of Holders' Obligations and Rights.
The obligations of each Holder hereunder are several and not
joint with the obligations of any other Holder hereunder, and no Holder shall be
responsible in any way for the performance of the obligations of any other
Holder hereunder. Nothing contained herein or in any other agreement or document
delivered at any closing, and no action taken by any Holder pursuant hereto or
thereto, shall be deemed to constitute the Holders as a partnership, an
association, a joint venture or any other kind of entity, or create a
presumption that the Holders are in any way acting in concert with respect to
such obligations or the transactions contemplated by this Agreement. Each Holder
shall be entitled to protect and enforce its rights, including, without
limitation, the rights arising out of this Agreement, and it shall not be
necessary for any other Holder to be joined as an additional party in any
proceeding for such purpose.
23
(r) No Conflicting Agreements.
The Company represents, warrants and agrees that (i) it has
not entered into, and shall not, on or after the date of this Agreement, enter
into, any agreement that is inconsistent with the rights granted to the Holders
in this Agreement or otherwise conflicts with the provisions hereof, (ii) it has
not previously entered into any agreement which remains in effect granting any
registration rights with respect to any of the Company's securities to any
person and (iii) without limiting the generality of the foregoing, without the
written consent of the Holders of a majority of the Registrable Securities and
Registrable Liquidated Damages Warrant Securities, it shall not grant to any
person the right to request the Company to register any Company securities under
the Securities Act unless the rights so granted are not in conflict or
inconsistent with the provisions of this Agreement.
(s) No Inferences.
Nothing in this Agreement shall create any inference that any
Purchaser is required to register any securities of the Company for resale under
the Securities Act, other than the Common Stock issuable pursuant to the
Purchase Agreement and the Warrant Common Stock.
[Signature page follows]
24
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
DDi CORP.
By: _______________________________
Name:
Title:
S-1
[HOLDER]
By: _______________________________
Name:
Title:
Address for Notice:
S-2
EXHIBIT A
AFFIDAVIT
By executing signature line(s), the undersigned hereby certifies that
he/she/it is the principal beneficial owner of the securities of the Company set
forth below.
The undersigned certifies that it is (i) the sole beneficial owner of the
securities of the Company set forth below, or (ii) if not the sole beneficial
owner of the securities set forth below, shares beneficial ownership of the
securities set forth below with the additional signatories set forth below.
The undersigned understands that to be granted rights under the Agreement,
it must fill in the information on this form and return it to the Company, at
the address set forth in Section 6(d)(ii) of the Agreement.
SUBMISSION OF THIS AFFIDAVIT WILL ENTITLE THE UNDERSIGNED TO RIGHTS UNDER
THE AGREEMENT BUT THESE RIGHTS ARE SUBJECT TO THE TERMS AND CONDITIONS OF THE
AGREEMENT.
Class of Securities of the Company
Which the Undersigned Beneficially Owns: _______________________________________
Number of Securities of the Company
Which the Undersigned Beneficially Owns: _______________________________________
Name of
Beneficiary: _________________________________________
By: _________________________________________
Authorized Representative
Name:
Title:
If more than one beneficial owner:
Name of other
beneficial owner:
By: _________________________________________
Authorized Representative
Name:
Title:
A-1
EXHIBIT B
PLAN OF DISTRIBUTION
The selling Holders, or their pledgees, donees, transferees, or any of
their successors in interest selling shares received from a named selling Holder
as a gift, partnership distribution or other non-sale-related transfer after the
date of this prospectus (all of whom may be selling Holders), may offer and sell
the securities from time to time on any stock exchange or automated inter-dealer
quotation system on which the securities are listed, in the over-the-counter
market, in privately negotiated transactions or otherwise, at fixed prices that
may be changed, at market prices prevailing at the time of sale, at prices
related to prevailing market prices or at prices otherwise negotiated. The
selling Holders may sell the securities by one or more of the following methods,
without limitation:
(a) block trades in which the broker or dealer so engaged will attempt to
sell the securities as agent but may position and resell a portion of the block
as principal to facilitate the transaction;
(b) purchases by a broker or dealer as principal and resale by the broker
or dealer for its own account pursuant to this prospectus;
(c) on any national securities exchange or quotation service on which the
securities are listed or quoted at the time of sale;
(d) in the over-the-counter market;
(e) otherwise than on such exchanges or services or in the
over-the-counter market;
(f) ordinary brokerage transactions and transactions in which the broker
solicits purchases;
(g) privately negotiated transactions;
(h) short sales;
(i) through the writing of options on the securities, whether or not the
options are listed on an options exchange;
(j) through the distribution of the securities by any selling Holder to
its partners, members or stockholders;
(k) one or more underwritten offerings on a firm commitment or best
efforts basis;
(l) transactions which may involve crosses or block transactions;
B-1
(m) to cover hedging transactions (other than "short sales" as defined in
Rule 3b-3 under the Exchange Act) made pursuant to this prospectus;
(n) by pledge to secure debts or other obligations;
(o) any combination of any of these methods of sale; and
(p) any other method permitted pursuant to applicable law.
The selling Holders may also transfer the securities by gift. We do not
know of any arrangements by the selling Holders for the sale of any of the
securities.
The selling Holders may engage brokers and dealers, and any brokers or
dealers may arrange for other brokers or dealers to participate in effecting
sales of the securities. These brokers, dealers or underwriters may act as
principals, or as an agent of a selling Holder. Broker-dealers may agree with a
selling Holder to sell a specified number of the securities at a stipulated
price per security. If the broker-dealer is unable to sell securities acting as
agent for a selling Holder, it may purchase as principal any unsold securities
at the stipulated price. Broker-dealers who acquire securities as principals may
thereafter resell the securities from time to time in transactions in any stock
exchange or automated inter-dealer quotation system on which the securities are
then listed, at prices and on terms then prevailing at the time of sale, at
prices related to the then-current market price or in negotiated transactions.
Broker-dealers may use block transactions and sales to and through
broker-dealers, including transactions of the nature described above. The
selling Holders may also sell the securities in accordance with Rule 144 under
the Securities Act of 1933, as amended, rather than pursuant to this prospectus,
regardless of whether the securities are covered by this prospectus.
From time to time, one or more of the selling Holders may pledge,
hypothecate or grant a security interest in some or all of the securities owned
by them. The pledgees, secured parties or persons to whom the securities have
been hypothecated will, upon foreclosure in the event of default, be deemed to
be selling Holders. As and when a selling Holder takes such actions, the number
of securities offered under this prospectus on behalf of such selling Holder
will decrease. The plan of distribution for that selling Holder's securities
will otherwise remain unchanged. In addition, a selling Holder may, from time to
time, sell the securities short, and, in those instances, this prospectus may be
delivered in connection with the short sales and the securities offered under
this prospectus may be used to cover short sales.
To the extent required under the Securities Act of 1933, the aggregate
amount of selling Holders' securities being offered and the terms of the
offering, the names of any agents, brokers, dealers or underwriters and any
applicable commission with respect to a particular offer will be set forth in an
accompanying prospectus supplement. Any underwriters, dealers, brokers or agents
participating in the distribution of the securities may receive compensation in
the form of underwriting discounts, concessions, commissions or fees from a
selling Holder and/or purchasers of selling Holders' securities of securities,
for whom they may act (which compensation as to a particular broker-dealer might
be in excess of customary commissions).
The selling Holders and any underwriters, brokers, dealers or agents that
participate in the distribution of the securities may be deemed to be
"underwriters" within the meaning of the
B-2
Securities Act of 1933, and any discounts, concessions, commissions or fees
received by them and any profit on the resale of the securities sold by them may
be deemed to be underwriting discounts and commissions.
A selling Holder may enter into hedging transactions with broker-dealers
and the broker-dealers may engage in short sales of the securities in the course
of hedging the positions they assume with that selling Holder, including,
without limitation, in connection with distributions of the securities by those
broker-dealers. A selling Holder may enter into option or other transactions
with broker-dealers that involve the delivery of the securities offered hereby
to the broker-dealers, who may then resell or otherwise transfer those
securities. A selling Holder may also loan or pledge the securities offered
hereby to a broker-dealer and the broker-dealer may sell the securities offered
hereby so loaned or upon a default may sell or otherwise transfer the pledged
securities offered hereby.
The selling Holders and other persons participating in the sale or
distribution of the securities will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and regulations
thereunder, including Regulation M. This regulation may limit the timing of
purchases and sales of any of the securities by the selling Holders and any
other person. The anti-manipulation rules under the Securities Exchange Act of
1934 may apply to sales of securities in the market and to the activities of the
selling Holders and their affiliates. Furthermore, Regulation M may restrict the
ability of any person engaged in the distribution of the securities to engage in
market-making activities with respect to the particular securities being
distributed for a period of up to five business days before the distribution.
These restrictions may affect the marketability of the securities and the
ability of any person or entity to engage in market-making activities with
respect to the securities.
We have agreed to indemnify in certain circumstances the selling Holders
and any brokers, dealers and agents who may be deemed to be underwriters, if
any, of the securities covered by the registration statement, against certain
liabilities, including liabilities under the Securities Act of 1933. The selling
Holders have agreed to indemnify us in certain circumstances against certain
liabilities, including liabilities under the Securities Act of 1933, as amended.
The securities offered hereby were originally issued to the selling
Holders pursuant to an exemption from the registration requirements of the
Securities Act of 1933, as amended. We agreed to register the securities under
the Securities Act of 1933, and to keep the registration statement of which this
prospectus is a part effective until the date on which the selling Holders have
sold all of the securities. We have agreed to pay all expenses in connection
with this offering, including the fees and expenses of counsel or other advisors
to the selling Holders, but not including underwriting discounts, concessions or
commissions of the selling Holders.
We will not receive any proceeds from sales of any securities by the
selling Holders.
We cannot assure you that the selling Holders will sell all or any portion
of the securities offered hereby.
B-3
